Equibles

10-Q

Seneca Foods Corp (SENEB)

10-Q 2024-02-08 For: 2023-12-30
View Original
Added on April 04, 2026

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark one)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 30, 2023

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to

Commission File Number

0-01989

Seneca Foods Corporation

(Exact name of Registrant as specified in its charter)

New York 16-0733425
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
350 WillowBrook Office Park, Fairport, New York 14450
(Address of principal executive offices) (Zip code)

(

585) 495-4100

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class Trading Symbol Name of Exchange on<br> <br>Which Registered
Common Stock Class A, $.25 Par SENEA NASDAQ Global Select Market
Common Stock Class B, $.25 Par SENEB NASDAQ Global Select Market

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☒ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by checkmark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards pursuant to Section 13(a) of the Exchange Act ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares outstanding of each of the Registrant’s classes of common stock as of January 26, 2024, are as follows:

Class Shares Outstanding
Common Stock Class A, $0.25 Par 5,456,549
Common Stock Class B, $0.25 Par 1,660,953

Table of Contents

Seneca Foods Corporation

Quarterly Report on Form 10-Q

Table of Contents

PART I.  FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets (Unaudited) 1
Condensed Consolidated Statements of Net Earnings (Unaudited) 2
Condensed Consolidated Statements of Comprehensive Income (Unaudited) 2
Condensed Consolidated Statements of Cash Flows (Unaudited) 3
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) 4
Notes to Condensed Consolidated Financial Statements (Unaudited) 5
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 16
Item 3. Quantitative and Qualitative Disclosures about Market Risk 23
Item 4. Controls and Procedures 23
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 24
Item 1A. Risk Factors 24
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 24
Item 3. Defaults Upon Senior Securities 24
Item 4. Mine Safety Disclosures 24
Item 5. Other Information 25
Item 6. Exhibits 25
SIGNATURES 26

SENECA FOODS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

(Unaudited)

December 31,<br> 2022 March 31,<br> 2023
Assets **** **** **** **** **** **** **** ****
Current assets:
Cash and cash equivalents 7,168 $ 5,579 $ 5,236
Restricted cash 7,251 6,937 7,020
Accounts receivable, net of allowance for credit losses of 51, 77 and 34, respectively 89,928 94,947 97,101
Inventories 968,889 774,121 670,898
Refundable income taxes 1,153 - 6,976
Other current assets 3,906 5,898 6,808
Total current assets 1,078,295 887,482 794,039
Property, plant and equipment, net 307,714 297,676 301,212
Right-of-use assets operating, net 20,538 26,012 23,235
Right-of-use assets financing, net 23,146 33,882 33,571
Pension assets 59,003 51,786 59,304
Other assets 841 1,670 1,360
Total assets 1,489,537 $ 1,298,508 $ 1,212,721
Liabilities and Stockholders' Equity **** **** **** **** **** **** **** ****
Current liabilities:
Accounts payable 125,182 $ 156,065 $ 69,232
Deferred revenue 8,708 14,412 9,956
Accrued vacation 10,997 11,682 11,143
Accrued payroll 13,083 12,469 16,772
Other accrued expenses 29,530 26,921 23,293
Income taxes payable 5,967 2,427 -
Current portion of long-term debt and lease obligations 30,582 21,344 25,792
Total current liabilities 224,049 245,320 156,188
Long-term debt, less current portion 611,349 399,948 432,695
Operating lease obligations, less current portion 13,617 17,219 16,675
Financing lease obligations, less current portion 13,102 17,382 17,293
Deferred income tax liability, net 30,820 34,434 31,481
Other liabilities 3,162 3,933 3,639
Total liabilities 896,099 718,236 657,971
Commitments and contingencies
Stockholders' equity:
Preferred stock 351 607 351
Common stock, 0.25 par value per share 3,050 3,043 3,049
Additional paid-in capital 99,430 98,862 99,152
Treasury stock, at cost (195,706 ) (170,088 ) (168,573 )
Accumulated other comprehensive loss (20,488 ) (26,468 ) (20,488 )
Retained earnings 706,801 674,316 641,259
Total stockholders' equity 593,438 580,272 554,750
Total liabilities and stockholders’ equity 1,489,537 $ 1,298,508 $ 1,212,721

All values are in US Dollars.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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SENECA FOODS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF NET EARNINGS

(In thousands, except per share data)

(Unaudited)

Three Months Ended Nine Months Ended
December 30,<br> 2023 December 31,<br> 2022 December 30,<br> 2023 December 31,<br> 2022
Net sales $ 444,481 $ 473,254 $ 1,150,620 $ 1,178,289
Costs and expenses:
Cost of product sold 390,448 419,465 983,180 1,059,878
Selling, general and administrative 22,921 21,914 63,801 60,636
Plant restructuring (42 ) 1,829 107 1,937
Other operating expense (income), net 392 229 (1,151 ) (2,411 )
Total costs and expenses 413,719 443,437 1,045,937 1,120,040
Operating income 30,762 29,817 104,683 58,249
Other income and expenses:
Other non-operating income (1,825 ) (2,017 ) (4,500 ) (5,070 )
Interest expense, net 9,388 4,277 23,146 8,037
Earnings before income taxes 23,199 27,557 86,037 55,282
Income taxes 5,524 6,503 20,472 12,994
Net earnings $ 17,675 $ 21,054 $ 65,565 $ 42,288
Earnings per share:
Basic $ 2.47 $ 2.77 $ 8.86 $ 5.36
Diluted $ 2.45 $ 2.74 $ 8.78 $ 5.31
Weighted average common shares outstanding:
Basic 7,131 7,582 7,391 7,858
Diluted 7,202 7,655 7,462 7,931

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

SENECA FOODS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)

Three Months Ended Nine Months Ended
December 30,<br> 2023 December 31,<br> 2022 December 30,<br> 2023 December 31,<br> 2022
Comprehensive income:
Net earnings $ 17,675 $ 21,054 $ 65,565 $ 42,288
Total $ 17,675 $ 21,054 $ 65,565 $ 42,288

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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SENECA FOODS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

Nine Months Ended
December 30,<br> 2023 December 31,<br> 2022
Cash flows from operating activities:
Net earnings $ 65,565 $ 42,288
Adjustments to reconcile net earnings to net cash from operating activities:
Depreciation and amortization 38,070 39,721
LIFO charge 19,643 79,333
Gain on the sale of assets (1,843 ) (2,191 )
Deferred income taxes (661 ) 1,418
Stock-based compensation expense 207 109
Pension expense 300 1,110
Changes in operating assets and liabilities:
Accounts receivable 7,173 24,722
Inventories (317,634 ) (449,459 )
Other current assets (1,112 ) 910
Income taxes 11,790 7,873
Accounts payable 55,950 68,463
Accrued expenses and other (5,574 ) (3,777 )
Net cash used in operating activities (128,126 ) (189,480 )
Cash flows from investing activities:
Additions to property, plant and equipment (31,843 ) (56,509 )
Proceeds from the sale of assets 7,987 5,013
Net cash used in investing activities (23,856 ) (51,496 )
Cash flows from financing activities:
Borrowings under revolving credit facility 657,476 783,346
Repayments under revolving credit facility (579,966 ) (490,046 )
Borrowings under term loans 124,433 -
Principal payments on term loans (14,252 ) (2,976 )
Payments on financing leases (6,401 ) (6,515 )
Purchase of treasury stock (27,133 ) (41,209 )
Dividends (12 ) (12 )
Net cash provided by financing activities 154,145 242,588
Net increase in cash, cash equivalents and restricted cash 2,163 1,612
Cash, cash equivalents and restricted cash, beginning of the period 12,256 10,904
Cash, cash equivalents and restricted cash, end of the period $ 14,419 $ 12,516
Supplemental disclosures of cash flow information:
Cash paid for:
Interest, net of capitalized interest $ 22,112 $ 7,228
Income taxes $ 8,791 $ 3,082
Noncash transactions:
Right-of-use assets obtained in exchange for lease obligations $ 4,268 $ 8,237
Right-of-use assets derecognized upon early lease termination $ 2,392 $ 2,874
Assets acquired from exercise of finance lease purchase options, net of accumulated depreciation $ 5,183 $ -
Property, plant and equipment purchased on account $ 95 $ 970
Sale of property, plant and equipment in exchange for note receivable $ - $ 750

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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SENECA FOODS CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

(In thousands)

(Unaudited)

Accumulated
Additional Other
Preferred Common Paid-In Treasury Comprehensive Retained
Stock Stock Capital Stock Loss Earnings
First Quarter FY 2024: **** **** **** **** **** **** **** **** **** **** **** **** **** **** **** ****
Balances, March 31, 2023 $ 351 $ 3,049 $ 99,152 $ (168,573 ) $ (20,488 ) $ 641,259
Net earnings - - - - - 23,111
Cash dividends declared on preferred stock - - - - - (12 )
Issue stock for bonus program - - 72 - - -
Equity incentive program - - 80 - - -
Purchase treasury stock - - - (2,177 ) - -
Balances, July 1, 2023 $ 351 $ 3,049 $ 99,304 $ (170,750 ) $ (20,488 ) $ 664,358
Second Quarter FY 2024: **** **** **** **** **** **** **** **** **** **** **** **** **** **** **** ****
Net earnings - - - - - 24,779
Equity incentive program - 1 88 - - -
Purchase treasury stock - - - (17,467 ) - -
Balances, September 30, 2023 $ 351 $ 3,050 $ 99,392 $ (188,217 ) $ (20,488 ) $ 689,137
Third Quarter FY 2024: **** **** **** **** **** **** **** **** **** **** **** **** **** **** **** ****
Net earnings - - - - - 17,675
Cash dividends declared on preferred stock - - - - - (11 )
Equity incentive program - - 38 - - -
Purchase treasury stock - - - (7,489 ) - -
Balances, December 30, 2023 $ 351 $ 3,050 $ 99,430 $ (195,706 ) $ (20,488 ) $ 706,801
First Quarter FY 2023: **** **** **** **** **** **** **** **** **** **** **** **** **** **** **** ****
Balances, March 31, 2022 $ 644 $ 3,041 $ 98,641 $ (128,879 ) $ (26,468 ) $ 632,051
Net earnings - - - - - 5,103
Cash dividends declared on preferred stock - - - - - (12 )
Issue stock for bonus program - 1 76 - - -
Equity incentive program - - 33 - - -
Purchase treasury stock - - - (15,923 ) - -
Balances, July 2, 2022 $ 644 $ 3,042 $ 98,750 $ (144,802 ) $ (26,468 ) $ 637,142
Second Quarter FY 2023: **** **** **** **** **** **** **** **** **** **** **** **** **** **** **** ****
Net earnings - - - - - 16,131
Equity incentive program - - 37 - - -
Preferred stock conversion (32 ) 1 31 - - -
Purchase treasury stock - - - (21,069 ) - -
Balances, October 1, 2022 $ 612 $ 3,043 $ 98,818 $ (165,871 ) $ (26,468 ) $ 653,273
Third Quarter FY 2023: **** **** **** **** **** **** **** **** **** **** **** **** **** **** **** ****
Net earnings - - - - - 21,054
Cash dividends declared on preferred stock - - - - - (11 )
Equity incentive program - - 39 - - -
Preferred stock conversion (5 ) - 5 - - -
Purchase treasury stock - - - (4,217 ) - -
Balances, December 31, 2022 $ 607 $ 3,043 $ 98,862 $ (170,088 ) $ (26,468 ) $ 674,316
6% Voting 10% Voting
--- --- --- --- --- ---
Cumulative Cumulative Participating Class A Class B
Callable Convertible Convertible Common Common
Par 0.25 Par 0.025 Par 0.025 Par 0.25 Par 0.25
Shares authorized and designated:
December 30, 2023
Shares outstanding:
December 30, 2023

All values are in US Dollars.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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SENECA FOODS CORPORATION

NOTES TO CONDENSED CONSOLIDATED STATEMENTS

(Unaudited)

1. Basis of Preparation and Presentation

Seneca Foods Corporation (the “Company”) is a leading provider of packaged fruits and vegetables with 26 facilities in eight states in support of its operations. The Company’s principal products include canned vegetables, frozen vegetables, jarred fruit, and other food products. The products are sold nationwide by major grocery outlets, including supermarkets, mass merchandisers, limited assortment stores, club stores and dollar stores. Additionally, products are sold to food service distributors, restaurant chains, industrial markets, other food packagers, export customers in approximately 60 countries, and federal, state and local governments for school and other food programs.

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

The unaudited condensed consolidated financial statements included herein have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) applicable to interim financial statements. While these statements reflect all adjustments (consisting of items of a normal recurring nature) that are, in the opinion of management, necessary for a fair presentation of the results of the interim period, they do not include all of the information and footnotes required by United States generally accepted accounting principles (“U.S. GAAP”) for complete financial statement presentation. The condensed consolidated financial statements should be read in conjunction with the financial statement disclosures in the Company’s Annual Report on Form 10-K/A (Amendment No. 1) for the fiscal year ended March 31, 2023.

Due to the seasonal nature of the business, quarterly operating results and cash flows are not necessarily indicative of the results that may be expected for other interim periods or the full year. All references to years are fiscal years ended or ending March 31 unless otherwise indicated. Certain percentage tables may not foot due to rounding.

The preparation of financial statements in accordance with U.S. GAAP requires management to make certain estimates and assumptions. Such estimates and assumptions affect the reported amounts of assets and liabilities as well as disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors that management believes to be reasonable under the circumstances, including the current economic environment. The Company adjusts such estimates and assumptions when facts and circumstances dictate. Actual results could differ materially from those estimates.

The Company uses the same accounting policies in preparing quarterly and annual financial statements. A summary of significant accounting policies followed by the Company are set forth in Note 1 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K/A (Amendment No. 1) for the fiscal year ended March 31, 2023.

Reclassifications—Certain prior year amounts have been reclassified for consistency with the current year presentation within the condensed consolidated financial statements. There was no impact to any totals or subtotals previously reported on the condensed consolidated financial statements as a result of the reclassifications. In addition, the Company’s condensed consolidated balance sheet as of  December 31, 2022 has been adjusted to reflect the beginning balance of certain items in accordance with the restated March 31, 2022 consolidated balance sheet shown on the Company’s Annual Report on Form 10-K/A (Amendment No. 1) that was filed with SEC on July 31, 2023.

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SENECA FOODS CORPORATION

NOTES TO CONDENSED CONSOLIDATED STATEMENTS

(Unaudited)

Recently Issued Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”) related to income tax disclosures. The amendments in this update are intended to enhance the transparency and decision usefulness of income tax disclosures primarily through changes to the rate reconciliation and income taxes paid information. This update is effective for annual periods beginning after December 15, 2024, though early adoption is permitted. The Company plans to adopt this pronouncement for its fiscal year beginning April 1, 2025, and is in the process of analyzing the impact on its consolidated financial statements.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”) to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. This update is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and requires retrospective application to all prior periods presented in the financial statements. Early adoption is permitted. The Company plans to adopt this pronouncement for its fiscal year beginning April 1, 2024, and is in the process of analyzing the impact on its consolidated financial statements.

All other newly issued accounting pronouncements not yet effective have been deemed either not applicable or were related to technical amendments or codification.

2. Revenue Recognition

Revenue recognition is completed for most customers at a point in time when product control is transferred to the customer. In general, control transfers to the customer when the product is shipped or delivered to the customer based upon applicable shipping terms, as the customer can direct the use and obtain substantially all of the remaining benefits from the asset at this point in time. The Company does sell certain finished goods inventory for cash on a bill and hold basis. The terms of the bill and hold agreement provide that title to the specified inventory is transferred to the customer prior to shipment and the Company has the right to payment (prior to physical delivery) which results in recorded revenue as determined under the revenue recognition standard.

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SENECA FOODS CORPORATION

NOTES TO CONDENSED CONSOLIDATED STATEMENTS

(Unaudited)

In the following table, revenue is disaggregated by product category groups (in thousands):

Three Months Ended Nine Months Ended
December 30, December 31, December 30, December 31,
2023 2022 2023 2022
Canned vegetables $ 372,690 $ 392,942 $ 952,226 $ 976,026
Frozen vegetables 27,454 33,754 92,039 93,560
Fruit products 32,022 33,371 71,561 75,674
Snack products 3,463 3,360 10,817 10,035
Other 8,852 9,827 23,977 22,994
$ 444,481 $ 473,254 $ 1,150,620 $ 1,178,289

As a result of certain contracts with customers, the Company has contract asset balances of $0.5 million, $0.7 million, and $0.6 million as of December 30, 2023, December 31, 2022, and March 31, 2023, respectively, which are included in other current assets on the condensed consolidated balance sheets. The Company records deferred revenue for prepaid case and labeling and storage services which have been collected from bill and hold sales. Amounts are recognized in revenue as the associated performance obligation is satisfied and control has transferred to the customer.

3. Earnings per Common Share

Earnings per share for the three and nine months ended December 30, 2023 and December 31, 2022 are as follows (in thousands, except per share amounts):

Three Months Ended Nine Months Ended
December 30, December 31, December 30, December 31,
2023 2022 2023 2022
Basic
Net earnings $ 17,675 $ 21,054 $ 65,565 $ 42,288
Deduct preferred stock dividends paid 6 6 17 17
Undistributed net earnings 17,669 21,048 65,548 42,271
Earnings attributable to participating preferred shareholders 21 82 73 169
Earnings attributable to common shareholders $ 17,648 $ 20,966 $ 65,475 $ 42,102
Weighted average common shares outstanding 7,131 7,582 7,391 7,858
Basic earnings per common share $ 2.47 $ 2.77 $ 8.86 $ 5.36
Diluted
Earnings attributable to common shareholders $ 17,648 $ 20,966 $ 65,475 $ 42,102
Add dividends on convertible preferred stock 5 5 15 15
Earnings attributable to common stock on a diluted basis $ 17,653 $ 20,971 $ 65,490 $ 42,117
Weighted average common shares outstanding-basic 7,131 7,582 7,391 7,858
Additional shares issued related to the equity compensation plan 4 6 4 6
Additional shares to be issued under full conversion of preferred stock 67 67 67 67
Total shares for diluted 7,202 7,655 7,462 7,931
Diluted earnings per common share $ 2.45 $ 2.74 $ 8.78 $ 5.31

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SENECA FOODS CORPORATION

NOTES TO CONDENSED CONSOLIDATED STATEMENTS

(Unaudited)

4. Inventories

The Company uses the last-in, first-out (“LIFO”) method of valuing inventory. An actual valuation of inventory under the LIFO method is made at the end of each fiscal year based on the inventory levels and costs at that time. Accordingly, interim LIFO calculations are based on management’s estimates of expected year-end inventory levels, production pack yields, sales and the expected rate of inflation or deflation for the year. The interim LIFO calculations are subject to adjustment in the final year-end LIFO inventory valuation.

As of December 30, 2023, December 31, 2022, and March 31, 2023, first-in, first-out (“FIFO”) based inventory costs exceeded LIFO based inventory costs, resulting in a LIFO reserve of $322.1 million, $250.2 million, and $302.4 million, respectively. In order to state inventories at LIFO, the Company recorded an increase to cost of products sold of $12.0 million and $30.9 million for the three months ended December 30, 2023 and December 31, 2022, respectively, and an increase to cost of products sold of $19.6 million and $79.3 million for the nine months ended December 30, 2023 and December 31, 2022, respectively.

The following table shows inventory by category and the related LIFO reserve (in thousands):

As of:
December 30, December 31, March 31,
2023 2022 2023
Finished products $ 912,430 $ 738,331 613,622
In process 111,939 67,380 75,123
Raw materials and supplies 266,603 218,572 284,593
1,290,972 1,024,283 973,338
Less excess of FIFO cost over LIFO cost 322,083 250,162 302,440
Total inventories $ 968,889 $ 774,121 $ 670,898
5. Property, Plant and Equipment
--- ---

Property, plant and equipment is comprised of the following (in thousands):

As of:
December 30, December 31, March 31,
2023 2022 2023
Land and land improvements $ 48,401 $ 46,832 $ 46,978
Buildings and improvements 233,255 210,991 214,110
Machinery and equipment 444,709 423,901 421,067
Office furniture, vehicles and computer software 13,934 11,397 11,738
Construction in progress 27,703 46,395 40,539
Property, plant and equipment, cost 768,002 739,516 734,432
Less: accumulated depreciation (460,288 ) (441,840 ) (433,220 )
Property, plant and equipment, net $ 307,714 $ 297,676 $ 301,212

Depreciation expense totaled $9.3 million and $8.7 million for the three months ended December 30, 2023 and December 31, 2022, respectively. For the nine months ended December 30, 2023 and December 31, 2022, depreciation expense totaled $27.4 million and $25.1 million, respectively.

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SENECA FOODS CORPORATION

NOTES TO CONDENSED CONSOLIDATED STATEMENTS

(Unaudited)

6. Long-Term Debt

Long-term debt is comprised of the following (in thousands):

As of:
December 30, December 31, March 31,
2023 2022 2023
Revolving credit facility $ 258,108 $ 313,808 $ 180,598
Term loans
Term Loan A-1
Outstanding principal 86,000 90,000 89,000
Unamortized debt issuance costs (45 ) (76 ) (68 )
Term Loan A-1, net 85,955 89,924 88,932
Term Loan A-2
Outstanding principal 287,250 - 173,500
Unamortized debt issuance costs (964 ) - (551 )
Term Loan A-2, net 286,286 - 172,949
Other 214 216 216
Total long-term debt 630,563 403,948 442,695
Less current portion 19,214 4,000 10,000
Long-term debt, less current portion $ 611,349 $ 399,948 $ 432,695

Revolving Credit Facility

On March 24, 2021, the Company entered into a Fourth Amended and Restated Loan and Security Agreement that provides for a senior revolving credit facility of up to $400.0 million that is seasonally adjusted (the “Revolver”). Maximum borrowings under the Revolver total $300.0 million from April through July and $400.0 million from August through March. The Revolver balance is included in Long-Term Debt in the accompanying condensed consolidated balance sheets due to the Revolver’s March 24, 2026 maturity. In order to maintain availability of funds under the facility, the Company pays a commitment fee on the unused portion of the Revolver. The Revolver is secured by substantially all of the Company’s accounts receivable and inventories and contains borrowing base requirements as well as a financial covenant, if certain circumstances apply. The Company utilizes its Revolver for general corporate purposes, including seasonal working capital needs, to pay debt principal and interest obligations, and to fund capital expenditures and acquisitions.

Seasonal working capital needs are affected by the growing cycles of the vegetables the Company packages. The majority of vegetable inventories are produced during the months of June through November and are then sold over the following year. Payment terms for vegetable produce are generally three months but can vary from a few days to seven months. Accordingly, the Company’s need to draw on the Revolver may fluctuate significantly throughout the year.

On September 14, 2022, the Company entered into a First Amendment to the Fourth Amended and Restated Loan and Security Agreement (the “Revolver Amendment”) which amended several provisions to replace LIBOR with SOFR plus a spread adjustment as the interest rate benchmark on the Revolver. The transition to SOFR did not materially impact the interest rates applied to the Company’s borrowings. No other material changes were made to the terms of the Company’s Revolver as a result of the Revolver Amendment.

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SENECA FOODS CORPORATION

NOTES TO CONDENSED CONSOLIDATED STATEMENTS

(Unaudited)

The following table illustrates certain quantitative data for Revolver borrowings during fiscal year 2024 and fiscal year 2023 (in thousands):

As of:
December 30, December 31, March 31,
2023 2022 2023
Outstanding borrowings $ 258,108 $ 313,808 $ 180,598
Weighted average interest rate 6.70 % 5.85 % 6.34 %
Three Months Ended: Nine Months Ended:
--- --- --- --- --- --- --- --- --- --- --- --- ---
December 30, December 31, December 30, December 31,
2023 2022 2023 2022
Maximum amount of borrowings $ 275,912 $ 327,881 $ 275,912 $ 327,881
Average outstanding borrowings $ 210,034 $ 269,833 $ 131,346 $ 140,996
Weighted average interest rate 6.76 % 5.11 % 6.77 % 4.50 %

Term Loans

On May 28, 2020, the Company entered into an Amended and Restated Loan and Guaranty Agreement with Farm Credit East, ACA that provides for a $100.0 million unsecured term loan. The amended and restated agreement has a maturity date of June 1, 2025 and converted the term loan to a fixed interest rate of 3.3012% until maturity in addition to requiring quarterly principal payments of $1.0 million, which commenced during fiscal year 2021. This agreement contains certain covenants, including maintaining a minimum EBITDA and minimum tangible net worth.

On January 20, 2023, the Company entered into a Second Amended and Restated Loan and Guaranty Agreement with Farm Credit East, ACA (the “Agreement”) which governs two term loans, as summarized below:

Term Loan A-1: The Agreement continues certain aspects of the existing $100.0 million term loan described above, namely Term Loan A-1 will continue to bear interest at a fixed interest rate of 3.3012%, mature on June 1, 2025, require quarterly principal payments of $1.0 million, and remain unsecured.

Term Loan A-2: The Agreement adds an additional term loan in the amount of $175.0 million that will mature on January 20, 2028, and is secured by a portion of the Company’s property, plant and equipment. Term Loan A-2 bears interest at a variable interest rate based upon SOFR plus an additional margin determined by the Company’s leverage ratio. Quarterly payments of principal outstanding on Term Loan A-2 in the amount of $1.5 million commenced on March 1, 2023.

On May 23, 2023, the Agreement was amended by the Second Amended and Restated Loan and Guaranty Agreement Amendment which amends, restates and replaces in its entirety Term Loan A-2 (the “Amendment”). The Amendment provides a single advance term facility in the principal amount of $125.0 million to be combined with the outstanding principal balance of $173.5 million on Term Loan A-2 into one single $298.5 million term loan (“Amended Term Loan A-2”). Amended Loan Term A-2 is secured by a portion of the Company’s property, plant and equipment and bears interest at a variable interest rate based upon SOFR plus an additional margin determined by the Company’s leverage ratio. Quarterly payments of principal outstanding on Amended Term Loan A-2 in the amount of $3.75 million commenced on June 1, 2023. The Amendment continues all aspects of Term Loan A-1 as defined in the Agreement. As of December 30, 2023, the interest rate on Amended Term Loan A-2 was 7.10%.

The Amendment contains restrictive covenants usual and customary for loans of its type, in addition to financial covenants including minimum EBITDA and minimum tangible net worth. In connection with Amended Term Loan A-2, the Company incurred $1.1 million of financing costs which will be deferred and amortized over the life of the term loan.

As of December 30, 2023, the Company was in compliance with all covenants for its revolving credit facility and term loan agreements.

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SENECA FOODS CORPORATION

NOTES TO CONDENSED CONSOLIDATED STATEMENTS

(Unaudited)

7. Leases

The Company determines whether an arrangement is a lease at inception of the agreement. Presently, the Company leases land, machinery and equipment under various operating and financing leases.

Right-of-Use (“ROU”) assets represent the Company’s right to use the underlying assets for the lease term, and lease obligations represent the net present value of the Company’s obligation to make payments arising from these leases. ROU assets and lease obligations are recognized at commencement date based on the present value of lease payments over the lease term using the implicit lease interest rate or, when unknown, an incremental borrowing rate based on the information available at commencement date or April 1, 2019 for leases that commenced prior to that date.

Lease terms may include options to extend or terminate the lease, and the impact of these options are included in the calculation of the ROU asset and lease obligation only when the exercise of the option is at the Company’s sole discretion and it is reasonably certain that the Company will exercise that option. The Company will not separate lease and non-lease components for its leases when it is impractical to separate the two. In addition, the Company may have certain leases that have variable payments based solely on output or usage of the leased asset. These variable operating lease assets are excluded from the Company’s balance sheet presentation and expensed as incurred. Leases with an initial term of 12 months or less, or short-term leases, are not recorded on the accompanying condensed consolidated balance sheets.

ROU assets and lease obligations for the Company’s operating and financing leases are disclosed separately in the Company’s condensed consolidated balance sheets. The components of lease cost were as follows (in thousands):

Three Months Ended Nine Months Ended
December 30, December 31, December 30, December 31,
2023 2022 2023 2022
Lease cost: **** **** **** **** **** **** **** ****
Amortization of ROU assets $ 1,419 $ 1,703 $ 4,903 $ 4,960
Interest on lease liabilities 180 239 602 720
Finance lease cost 1,599 1,942 5,505 5,680
Operating lease cost 1,919 2,926 6,077 10,810
Total lease cost $ 3,518 $ 4,868 $ 11,582 $ 16,490
Cash paid for amounts included in the measurement of lease liabilities:
--- --- --- --- --- --- ---
Operating cash flows from finance leases $ 602 $ 720
Operating cash flows from operating leases 7,880 12,343
Financing cash flows from finance leases 6,401 6,515
$ 14,883 $ 19,578
Right-of-use assets obtained in exchange for new finance lease liabilities $ 106 $ 4,053
Right-of-use assets obtained in exchange for new operating lease liabilities $ 4,162 $ 4,184
Weighted-average lease term (years):
Financing leases 4.5 4.6
Operating leases 4.6 4.6
Weighted-average discount rate (percentage):
Financing leases 3.9 % 3.6 %
Operating leases 4.7 % 4.4 %

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SENECA FOODS CORPORATION

NOTES TO CONDENSED CONSOLIDATED STATEMENTS

(Unaudited)

Undiscounted future lease payments under non-cancelable operating and financing leases, along with a reconciliation of undiscounted cash flows to operating and financing lease obligations, respectively, as of December 30, 2023 were as follows (in thousands):

Years ending March 31: Operating Financing
Balance of 2024 $ 849 $ 1,713
2025 6,457 5,296
2026 4,661 4,210
2027 3,525 3,152
2028 3,269 2,774
2029-2034 2,969 2,965
Total minimum payment required $ 21,730 $ 20,110
Less interest 2,050 1,703
Present value of minimum lease payments 19,680 18,407
Amount due within one year 6,063 5,305
Long-term lease obligations $ 13,617 $ 13,102
8. Income Taxes
--- ---

The Company’s effective tax rate was 23.8% and 23.5% for the nine months ended December 30, 2023 and December 31, 2022, respectively. The effective tax rate increased in the current nine-month interim period primarily due to state rate changes having an unfavorable impact on the effective rate which increased the rate by 0.3%.

9. Retirement Plans

The net periodic benefit (income) cost for the Company’s pension plan consisted of (in thousands):

Three Months Ended Nine Months Ended
December 30, December 31, December 30, December 31,
2023 2022 2023 2022
Service cost including administration $ 1,327 $ 1,310 $ 4,800 $ 6,180
Interest cost 2,914 2,193 8,550 6,941
Expected return on plan assets (4,926 ) (4,027 ) (13,275 ) (12,079 )
Amortization of prior service cost 22 22 60 68
Amortization of net loss 165 (205 ) 165 -
Net periodic benefit (income) cost $ (498 ) $ (707 ) $ 300 $ 1,110

There were no pension contributions made during the nine months ended December 30, 2023 and December 31, 2022.

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SENECA FOODS CORPORATION

NOTES TO CONDENSED CONSOLIDATED STATEMENTS

(Unaudited)

10. Stockholders’ Equity

During the nine months ended December 30, 2023, the Company repurchased 524,598 shares of its Class A Common Stock at a cost of $27.1 million, which are included in Treasury Stock. During the nine months ended December 31, 2022, the Company repurchased 766,071 shares of its Class A Common Stock at a cost of $41.2 million. The Company did not repurchase any of its Class B Common Stock in either nine-month interim period. As of December 30, 2023, there are 5,090,840 shares or $195.7 million of repurchased stock being held as Treasury Stock. These shares are not considered outstanding.

11. Fair Value of Financial Instruments

Cash and cash equivalents, restricted cash, accounts receivable, accounts payable, and accrued expenses are reflected in the condensed consolidated balance sheets at carrying value, which approximates fair value due to the short-term maturity of these instruments.

On a quarterly basis, the Company estimates the fair values for financial instruments that are recorded at carrying value on the condensed consolidated balance sheets. The estimated fair value for long-term debt (classified as Level 2 in the fair value hierarchy) is determined by the quoted market prices for similar debt (comparable to the Company’s financial strength) or current rates offered to the Company for debt with the same maturities. The fair value and carrying value of the Company’s long-term debt are as follows (in thousands):

As of:
December 30, December 31, March 31,
2023 2022 2023
Carrying value $ 630,563 $ 403,948 $ 442,695
Fair value $ 624,896 $ 396,408 $ 436,293
12. Restructuring
--- ---

The following table summarizes the rollforward of restructuring charges recorded and the accruals established (in thousands):

Restructuring Payable
Severance Other Costs Total
Balance March 31, 2023 $ 117 $ - $ 117
First quarter charge (42 ) 182 140
Second quarter charge - 9 9
Third quarter charge - (42 ) (42 )
Cash payments/write offs (75 ) (149 ) (224 )
Balance December 30, 2023 $ - $ - $ -
Severance Other Costs Total
--- --- --- --- --- --- --- --- ---
Balance March 31, 2022 $ - $ - $ -
First quarter charge - 56 56
Second quarter charge - 52 52
Third quarter charge 389 1,440 1,829
Cash payments/write offs - (1,548 ) (1,548 )
Balance December 31, 2022 $ 389 $ - $ 389

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SENECA FOODS CORPORATION

NOTES TO CONDENSED CONSOLIDATED STATEMENTS

(Unaudited)

The restructuring charges pertain to the vegetable reportable segment. During the three and nine months ended December 30, 2023, respectively, the Company incurred restructuring charges primarily due to plants that were closed in previous periods. During the three and nine months ended December 31, 2022, respectively, the Company incurred restructuring charges primarily associated with ceasing production of green beans at a plant in the Northeast. The charges were comprised of severance costs and a write down of production equipment that was sold during the subsequent twelve months.

13. Legal Proceedings and Other Contingencies

In the ordinary course of its business, the Company is made a party to certain legal proceedings seeking monetary damages, including proceedings involving product liability claims, workers’ compensation along with other employee claims, tort and other general liability claims, for which it carries insurance, as well as patent infringement and related litigation. The Company is in a highly regulated industry and is also periodically involved in government actions for regulatory violations and other matters surrounding the manufacturing of its products, including, but not limited to, environmental, employee, and product safety issues. While it is not feasible to predict or determine the ultimate outcome of these matters, the Company does not believe that an adverse decision in any of these legal proceedings would have a material adverse impact on its financial position, results of operations, or cash flows.

14. Asset Acquisition

On November 8, 2023, the Company executed an Asset Purchase Agreement and associated License Agreement with B&G Foods, Inc., (the “Seller”) to acquire certain assets from the Seller relating to its Green Giant® shelf-stable vegetable product line (the “transaction”). The acquired assets include inventory and an associated license which allows the Company to manufacture, market, distribute, and sell Green Giant® shelf-stable vegetable products within the United States in perpetuity. The preliminary purchase price was approximately $55.6 million in cash and was funded from borrowings under the Company’s Revolver. The purchase price is subject to contingent consideration in the form of certain post-closing adjustments which are expected to be finalized prior to the Company’s fiscal year ending on March 31, 2024.

The transaction was accounted for as an asset acquisition in accordance with Accounting Standards Codification (“ASC”) 805-50, Business Combinations – Related Issues, because substantially all of the fair value of the gross assets acquired were concentrated in a singular asset, the acquired inventory, which was recorded at a value of $52.9 million. Additionally, a portion of the purchase price was used to settle preexisting liabilities of $2.7 million comprised mainly of deferred revenue for which the associated performance obligation had not yet been performed by the Company for the Seller prior to the transaction date.

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SENECA FOODS CORPORATION

NOTES TO CONDENSED CONSOLIDATED STATEMENTS

(Unaudited)

15. Segment Information

The Company conducts its business almost entirely in food packaging with two reportable segments: vegetable and fruit/snack. The reportable segments reflect how the Company's Chief Executive Officer, who is the Chief Operating Decision Maker (“CODM”), allocates resources and evaluates performance, and how the Company's internal management financial reporting is structured. The Company's CODM evaluates the performance of these reportable segments with a focus on earnings (loss) before income taxes as the measure of segment profit or loss.

The other category consists of the Company's non-food operations including revenue derived from the sale of cans, ends, seed, outside revenue from the Company's trucking and aircraft operations, and certain corporate items. These ancillary activities do not qualify as an operating segment and are not eligible for aggregation with one of the identified operating segments; therefore they are combined and presented within the “other” category.

During the Company’s fiscal year 2024 reassessment, the Company updated how its existing operating segments (vegetable, fruit, snack) are reported. A primary factor of the reassessment was the Company's vegetable operations which have become a larger strategic focus of the Company, as evidenced by the recent asset acquisition described in Note 14 to the Condensed Consolidated Financial Statements. Fruit was previously reported with vegetable. The fruit and snack segments are now managed together as one reportable segment, leaving vegetable as its own reportable segment. The update reflects the products offered within the segments and the manner in which the business is currently managed. The prior year amounts within the segment disclosure information have been recast to conform to the current year presentation.

Segment information is provided on a FIFO basis which is consistent with how financial information is prepared internally and provided to the CODM. The LIFO impact on earnings (loss) before income taxes and total assets is shown separately for purposes of reconciling to the U.S. GAAP financial statement measure shown on the condensed consolidated statements of net earnings and condensed consolidated balance sheets.

The following table summarizes certain financial data for the Company’s reportable segments (in thousands):

**** **** **** **** **** Three Months Ended December 30, 2023
**** **** Fruit and **** **** **** LIFO **** ****
Vegetable Snack Other Impact Total
Net sales $ 400,144 $ 35,485 $ 8,852 $ - $ 444,481
Earnings (loss) before income taxes 33,304 2,217 (295 ) (12,027 ) **** 23,199
Total assets 1,705,008 103,542 3,070 (322,083 ) **** 1,489,537
**** **** **** **** **** **** Three Months Ended December 31, 2022
--- --- --- --- --- --- --- --- --- --- --- ---
**** **** Fruit and **** **** LIFO **** ****
Vegetable Snack Other Impact Total
Net sales $ 426,696 $ 36,731 $ 9,827 $ - $ 473,254
Earnings (loss) before income taxes 56,300 34 2,121 (30,898 ) **** 27,557
Total assets 1,454,204 90,855 3,611 (250,162 ) **** 1,298,508
**** **** **** **** **** **** Nine Months Ended December 30, 2023 **** **** **** **** ****
--- --- --- --- --- --- --- --- --- --- --- ---
**** **** Fruit and **** **** LIFO **** ****
Vegetable Snack Other Impact Total
Net sales $ 1,044,265 $ 82,378 $ 23,977 $ - $ 1,150,620
Earnings (loss) before income taxes 92,461 4,416 8,803 (19,643 ) **** 86,037
Total assets 1,705,008 103,542 3,070 (322,083 ) **** 1,489,537
**** **** **** **** **** **** Nine Months Ended December 31, 2022
--- --- --- --- --- --- --- --- --- --- --- --- ---
**** **** Fruit and **** **** LIFO **** ****
Vegetable Snack Other Impact Total
Net sales $ 1,069,586 $ 85,709 $ 22,994 $ - $ 1,178,289
Earnings (loss) before income taxes 124,604 (1,640 ) 11,651 (79,333 ) **** 55,282
Total assets 1,454,204 90,855 3,611 (250,162 ) **** 1,298,508

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Seneca Foods Corporation is a leading provider of packaged fruits and vegetables, with facilities located throughout the United States. Our product offerings include canned, frozen and jarred produce and snack chips that are sold under private label as well as national and regional brands that the Company owns or licenses, including Seneca®, Libby’s®, Green Giant®, Aunt Nellie’s®, Cherryman®, Green Valley® and READ®. Canned fruits and vegetables are sold nationwide by major grocery outlets, including supermarkets, mass merchandisers, limited assortment stores, club stores and dollar stores. We also sell products to foodservice distributors, restaurant chains, industrial markets, other food processors, export customers in approximately 60 countries and federal, state and local governments for school and other food programs. Additionally, the Company packs canned and frozen vegetables under contract packing agreements.

Business Trends

We purchase raw materials, including raw produce, steel, ingredients and packaging materials from growers, commodity processors, steel producers and packaging suppliers. Raw materials and other input costs, such as labor, fuel, utilities and transportation, are subject to fluctuations in price attributable to a number of factors. Fluctuations in commodity prices can lead to retail price volatility and can influence consumer and trade buying patterns. The cost of raw materials, fuel, labor, distribution and other costs related to our operations can increase from time to time significantly and unexpectedly.

We continue to experience material cost inflation for many of our raw materials and other input costs attributable to a number of factors, including but not limited to, supply chain disruptions (including raw material shortages), labor shortages, the conflict between Russia and Ukraine, and the conflict in Israel and Gaza. While we have no direct exposure to these conflicts, we have experienced increased costs for transportation, energy and raw materials due in part to their negative impact on the global economy. We attempt to manage cost inflation risks by locking in prices through short-term supply contracts, advance grower purchase agreements, and by implementing cost saving measures. We also attempt to offset rising input costs by raising sales prices to our customers. However, increases in the prices we charge our customers may lag behind rising input costs. Competitive pressures also may limit our ability to quickly raise prices in response to rising costs. To the extent we are unable to avoid or offset any present or future cost increases our operating results could be materially adversely affected.

Results of Operations

Net Sales:

The following table presents net sales by product category (in thousands):

Three Months Ended Nine Months Ended
December 30, December 31, December 30, December 31,
2023 2022 2023 2022
Canned vegetables $ 372,690 $ 392,942 $ 952,226 $ 976,026
Frozen vegetables 27,454 33,754 92,039 93,560
Fruit products 32,022 33,371 71,561 75,674
Snack products 3,463 3,360 10,817 10,035
Other 8,852 9,827 23,977 22,994
$ 444,481 $ 473,254 $ 1,150,620 $ 1,178,289

Three Months Ended December 30, 2023 and December 31, 2022

Net sales totaled $444.5 million for the three months ended December 30, 2023 as compared with $473.3 million for the three months ended December 31, 2022. The overall net sales decrease of $28.8 million, or 6.1%, was predominantly due to lower sales volumes having an unfavorable impact of $50.9 million to net sales, partially offset by $22.1 million of favorability due to higher selling prices and a favorable mix impact, as compared to the prior year three-month interim period.

Net sales for canned vegetables, frozen vegetables, and fruit products decreased $20.3 million, $6.3 million and $1.3 million, respectively, over the prior year quarter driven by lower volume. Higher pricing in each of these categories, which was necessitated by the material cost increases that the Company is experiencing, partially offset the unfavorable impact to net sales that was generated by the lower volume. Net sales in the snack products category remained relatively consistent quarter over quarter with a $0.1 million increase. The remaining net sales decrease of $1.0 million was contributed by non-food packaging sales related to the sale of cans and ends, and outside revenue from trucking and aircraft operations.

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Nine Months Ended December 30, 2023 and December 31, 2022

Net sales totaled $1,150.6 million for the nine months ended December 30, 2023 as compared with $1,178.3 million for the nine months ended December 31, 2022. The overall net sales decrease of $27.7 million, or 2.4%, was predominantly due to lower sales volumes having an unfavorable impact of $105.6 million to net sales, partially offset by higher selling prices and favorable mix, contributing favorability of $77.9 million, as compared to the prior year nine-month interim period.

Net sales for canned vegetables, frozen vegetables, and fruit products decreased $23.8 million, $1.5 million and $4.1 million, respectively, over the prior year nine-month interim period as increased pricing did not offset lower sales volume for these categories. Net sales in the snack products category remained relatively consistent year-over-year with a $0.8 million increase. The remaining net sales increase of $1.0 million as compared to the prior year nine-month period was contributed by non-food packaging sales related to the sale of cans and ends, and outside revenue from trucking and aircraft operations.

Operating and Non-Operating Income*:*

The following table presents components of operating and non-operating income as a percentage of net sales (percentages shown as absolute values):

Three Months Ended Nine Months Ended
December 30, December 31, December 30, December 31,
2023 2022 2023 2022
Gross margin 12.2 % 11.4 % 14.6 % 10.0 %
Selling, general, and administrative expense 5.2 % 4.6 % 5.5 % 5.1 %
Other operating income, net 0.1 % 0.0 % 0.1 % 0.2 %
Operating income 6.9 % 6.3 % 9.1 % 4.9 %
Other non-operating income 0.4 % 0.4 % 0.4 % 0.4 %
Interest expense, net 2.1 % 0.9 % 2.0 % 0.7 %
Income taxes 1.2 % 1.4 % 1.8 % 1.1 %

Three Months Ended December 30, 2023 and December 31, 2022

Gross margin: Gross margin for the three months ended December 30, 2023 was 12.2% as compared with 11.4% for the three months ended December 31, 2022. The increase in gross margin for the three months ended December 30, 2023 was due primarily to the Company incurring a decrease in the LIFO charge for the current quarter as compared to the prior year quarter. The Company’s LIFO charge for the three months ended December 30, 2023 was $12.0 million as compared to a LIFO charge of $30.9 million for the three months ended December 31, 2022.

Selling, General, and Administrative: Selling, general, and administrative costs as a percentage of net sales for the three months ended December 30, 2023, were 5.2% as compared with 4.6% for the prior year quarter. The increase in selling, general, and administrative costs as a percentage of net sales was largely driven by the decrease in net sales and the fixed nature of certain other expenses. Also, there were routine increases to other expenses within the category, such as cost of living wage adjustments.

Other Operating Expense (Income), net: The Company had net other operating expense of $0.4 million during the three months ended December 30, 2023, which was driven by $0.6 million of transition service fees incurred in connection with the asset acquisition. Refer to Note 14 of the Notes to Condensed Consolidated Statements contained herein for further details of that transaction. During the three months ended December 31, 2022, the Company had net other operating expense of $0.2 million, which was driven primarily by a write down of idle production equipment to estimated selling price, less commission, as the assets met the criteria to be classified as held for sale at December 31, 2022. The write down was partially offset by a gain on the sale of an aircraft.

Restructuring: During the three months ended December 30, 2023, the Company incurred restructuring charges primarily related to plants that were closed in previous periods. During the three months ended December 31, 2022, the Company ceased production of green beans at a plant in the Northeast. As a result, the Company incurred severance costs and a write down of production equipment that was sold during the subsequent twelve months.

Other Non-Operating Income: Other non-operating income totaled $1.8 million and $2.0 million for the three months ended December 30, 2023, and December 31, 2022, respectively, and is comprised of the non-service related pension amounts that are actuarially determined.

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Interest Expense, net: Interest expense as a percentage of net sales was 2.1% for the three months ended December 30, 2023, as compared to 0.9% for the three months ended December 31, 2022. Interest expense increased from $4.3 million in the prior year quarter to $9.4 million for the current quarter as a result of higher interest rates and increased long-term debt levels.

Nine Months Ended December 30, 2023 and December 31, 2022

Gross margin: Gross margin for the nine months ended December 30, 2023 was 14.6% as compared with 10.0% for the nine months ended December 31, 2022. The increase in gross margin for the nine months ended December 30, 2023 was due primarily to the Company incurring a decrease to the LIFO charge for the current nine-month interim period as compared the prior year nine-month interim period. The Company’s LIFO charge for the nine months ended December 30, 2023 was $19.6 million as compared to a LIFO charge of $79.3 million for the nine months ended December 31, 2022.

Selling, General, and Administrative: Selling, general, and administrative costs as a percentage of net sales for the nine months ended December 30, 2023, were 5.5% as compared with 5.1% for the prior year nine-month interim period. The increase in selling, general, and administrative costs as a percentage of net sales was primarily due to net sales decreasing slightly year over year and the fixed nature of certain other expenses within the category. There were also routine increases to labor costs due to annual cost of living wage adjustments which impacted the current nine-month period.

Other Operating Income, net: The Company had net other operating income of $1.2 million during the nine months ended December 30, 2023, which was driven primarily by $1.8 million from the sale of non-operational assets in the Pacific Northwest, offset by $0.6 million of transition service fees during the nine-month period. During the nine months ended December 31, 2022, the Company had net other operating income of $2.4 million, which was driven primarily by a gain on the sale of the Company’s western trucking fleet amongst other fixed assets and a true-up of the supplemental early retirement plan accrual, partially offset by the aforementioned write down of idle production equipment.

Restructuring : During the nine months ended December 30, 2023, the Company incurred restructuring charges primarily due to equipment moves from plants that were closed in the previous fiscal year. During the nine months ended December 31, 2022, the Company incurred restructuring charges primarily associated with ceasing production of green beans at a plant in the Northeast. The charges were comprised of severance costs and a write down of production equipment that was sold during the subsequent twelve months.

Other Non-Operating Income: Other non-operating income totaled $4.5 million and $5.1 million for the nine months ended December 30, 2023, and December 31, 2022, respectively, and is comprised of the non-service related pension amounts that are actuarially determined.

Interest Expense, net: Interest expense as a percentage of net sales was 2.0% for the nine months ended December 30, 2023, as compared to 0.7% for the nine months ended December 31, 2022. Interest expense increased from $8.0 million in the prior year nine-month interim period to $23.1 million for the current nine-month interim period as a result of higher interest rates and increased long-term debt levels.

Income Taxes : ****

The Company’s effective tax rate was 23.8% and 23.5% for the nine months ended December 30, 2023 and December 31, 2022, respectively. The effective tax rate increased in the current nine-month interim period primarily due to state rate changes having an unfavorable impact on the effective rate which increased the rate by 0.3%.

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Liquidity and Capital Resources

The financial condition of the Company is summarized in the following table and explanatory review (dollar amounts in thousands, except per share data):

December 30, December 31, March 31, March 31,
2023 2022 2023 2022
Working capital:
Balance $ 854,246 $ 642,162 $ 637,851 $ 377,531
Change in quarter $ 129,552 $ 87,494
Current portion of long-term debt and lease obligations $ 30,582 $ 21,344 $ 25,792 $ 26,020
Long-term debt, less current portion $ 611,349 $ 399,948 $ 432,695 $ 109,624
Operating lease obligations, less current portion $ 13,617 $ 17,219 $ 16,675 $ 22,533
Financing lease obligations, less current portion $ 13,102 $ 17,382 $ 17,293 $ 19,942
Total stockholders' equity per equivalent common share (1) $ 82.50 $ 75.85 $ 71.95 $ 68.66
Stockholders' equity per common share $ 83.33 $ 76.52 $ 72.61 $ 69.41
Current ratio 4.81 3.62 5.08 3.18

Note (1): Equivalent common shares are either common shares or, for convertible preferred shares, the number of common shares that the preferred shares are convertible into. See Note 12 of the Notes to Consolidated Financial Statements of the Company’s 2023 Annual Report on Form 10-K/A (Amendment No. 1) for conversion details.

Material Cash Requirements : The Company’s primary liquidity requirements include debt service, capital expenditures, and working capital needs. The Company may also seek strategic acquisitions to leverage existing capabilities and further build upon its existing business. Liquidity requirements are funded primarily through cash generated from operations and external sources of financing, including the revolving credit facility. The Company believes that its operations along with existing liquidity sources will satisfy its cash requirements for at least the next twelve months. The Company has borrowed funds and continues to believe that it has the ability to do so at reasonable interest rates, however additional borrowings would result in increased interest expense. The Company does not have any off-balance sheet financing arrangements.

Summary of Cash Flows : The following table presents a summary of the Company’s cash flows from operating, investing, and financing activities (in thousands):

Nine Months Ended
December 30,<br> 2023 December 31,<br> <br>2022
Cash used in operating activities $ (128,126 ) $ (189,480 )
Cash used in investing activities (23,856 ) (51,496 )
Cash provided by financing activities 154,145 242,588
Increase in cash, cash equivalents and restricted cash 2,163 1,612
Cash, cash equivalents and restricted cash, beginning of period 12,256 10,904
Cash, cash equivalents and restricted cash, end of period $ 14,419 $ 12,516

Net Cash Used in Operating Activities : For the nine months ended December 30, 2023, cash used in operating activities was $128.1 million, which consisted of a use of cash of $249.4 million by operating assets and liabilities partially offset by net earnings of $65.6 million, adjusted by non-cash charges of $55.7 million. The non-cash charges were largely driven by $38.1 million of depreciation and amortization and $19.6 million LIFO charge. The change in operating assets and liabilities was due to inventories being a principal use of cash as the nine-month period covered the primary seasonal pack harvest month. The increase in inventories was also impacted by finished goods acquired in the asset acquisition, refer to Note 14 of the Notes to Condensed Consolidated Statements contained herein for further details of that transaction.

For the nine months ended December 31, 2022, cash used in operating activities was $189.5 million, which consisted of a use of cash of $351.3 million by operating assets and liabilities partially offset by net earnings of $42.3 million, adjusted by non-cash charges of $119.5 million. The non-cash charges were largely driven by $39.7 million of depreciation and amortization and $79.3 million LIFO charge. The change in operating assets and liabilities was largely due to inventories being a use of cash driven by the material cost inflation to various production inputs. The increase in inventories was partially offset by an associated increase in accounts payable.

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The cash requirements of the business fluctuate significantly throughout the year to coincide with the seasonal growing cycles of vegetables. The majority of the inventories are produced during the packing months, from June through November, and are then sold over the following year. Cash flow from operating activities is one of the Company’s main sources of liquidity.

Net Cash Used in Investing Activities : Net cash used in investing activities was $23.8 million for the nine months ended December 30, 2023, and consisted of cash used for capital expenditures of $31.8 million partially offset by proceeds from the sale of assets totaling $8.0 million.

Net cash used in investing activities was $51.5 million for the nine months ended December 31, 2022, and consisted of cash used for capital expenditures of $56.5 million partially offset by proceeds from the sale of assets totaling $5.0 million.

Net Cash Provided by Financing Activities : Net cash provided by financing activities was $154.1 million for the nine months ended December 30, 2023, driven primarily by a net increase in the Company’s debt borrowings of $187.6 million during the nine-month interim period. Additionally, the Company used cash of $27.1 million to purchase treasury stock and $6.4 million to make payments on financing leases, which partially offset the increased cash provided.

Net cash provided by financing activities was $242.6 million for the nine months ended December 31, 2022, driven by a net increase in debt borrowings of $290.3 million. These cash proceeds were partially offset by purchasing treasury stock of $41.2 million and by making payments of $6.5 million on financing leases.

Impact of Seasonality on Financial Position and Results of Operations:

While individual vegetables have seasonal cycles of peak production and sales, the different cycles are somewhat offsetting. Minimal food packaging occurs in the Company's last fiscal quarter ending March 31, which is the optimal time for maintenance, repairs and equipment changes in its packaging plants. The supply of commodities, current pricing, and expected new crop quantity and quality affect the timing and amount of the Company’s sales and earnings. When the seasonal harvesting periods of the Company's major vegetables are newly completed, inventories for these packaged vegetables are at their highest levels. For peas, the peak inventory time is mid-summer and for corn and green beans, the Company's highest volume vegetables, the peak inventory is in mid-autumn. The seasonal nature of the Company’s production cycle results in inventory and accounts payable reaching their lowest point late in the fourth quarter/early in the first quarter prior to the new seasonal pack commencing. As the seasonal pack progresses, these components of working capital both increase until the pack is complete.

The Company’s fruit and vegetable sales exhibit seasonal increases in the third fiscal quarter due to increased retail demand during the holiday seasons. In addition, the Company sells canned and frozen vegetables to a co-pack customer on a bill and hold basis at the end of each pack cycle, which typically occurs during the second and third quarters. The seasonal nature of the Company’s sales, particularly holiday driven retail sales, result in the accounts receivable balance reaching its highest point at the end of the second and third fiscal quarters, while typically being the lowest at the end of the first quarter.

Non-GAAP Financial Measures:

Adjusted net earnings, EBITDA, and FIFO EBITDA are non-GAAP financial measures and are provided for information purposes only. The Company believes these non-GAAP financial measures provide investors with helpful information to evaluate financial performance, perform comparisons from period to period, and to compare results against the Company’s industry peers. A non-GAAP financial measure is defined as a numerical measure of our financial performance that excludes or includes amounts so as to be different from the most directly comparable measure calculated and presented in accordance with GAAP in our condensed consolidated balance sheets and related condensed consolidated statements of net earnings, comprehensive income, stockholders’ equity and cash flows. The Company does not intend for this information to be considered in isolation or as a substitute for other measures prepared in accordance with GAAP.

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Adjusted net earnings is calculated on a FIFO basis which excludes the impact from the application of LIFO. Set forth below is a reconciliation of reported earnings before income taxes to adjusted net earnings (in thousands):

Three Months Ended Nine Months Ended
December 30,<br> <br>2023 December 31,<br> <br>2022 December 30,<br> <br>2023 December 31,<br> <br>2022
Earnings before income taxes, as reported $ 23,199 $ 27,557 $ 86,037 $ 55,282
LIFO charge 12,027 30,898 19,643 79,333
Adjusted earnings before income taxes 35,226 58,455 105,680 134,615
Income taxes (1) 8,519 14,197 25,363 32,748
Adjusted net earnings $ 26,707 $ 44,258 $ 80,317 $ 101,867
(1) For the three months ended December 30, 2023 and December 31, 2022, income taxes on adjusted earnings before taxes were calculated using the income tax provision amounts of $5.5 million and $6.5 million, respectively, and applying the statutory rate of 24.9% for each of the respective periods to the pre-tax LIFO charge.<br> <br><br> <br>For the nine months ended December 30, 2023 and December 31, 2022, income taxes on adjusted earnings before taxes were calculated using the income tax provision amounts of $20.5 million and $13.0 million, respectively, and applying the statutory rate of 24.9% for each of the respective periods to the pre-tax LIFO charge.
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The Company believes EBITDA is often a useful measure of a Company’s operating performance because EBITDA excludes charges for depreciation, amortization, and interest expense as well as the Company’s provision for income tax expense. EBITDA is frequently used as one of the bases for comparing businesses in the Company’s industry. FIFO EBITDA also excludes non-cash charges related to the LIFO inventory valuation method. The Company’s revolving credit facility and term loan agreements use FIFO EBITDA in the financial covenants thereunder. Set forth below is a reconciliation of reported net earnings to EBITDA and FIFO EBITDA (in thousands):

Three Months Ended Nine Months Ended
EBITDA and FIFO EBITDA: December 30,<br> <br>2023 December 31,<br> <br>2022 December 30,<br> <br>2023 December 31,<br> <br>2022
Net earnings $ 17,675 $ 21,054 $ 65,565 $ 42,288
Income tax expense 5,524 6,503 20,472 12,994
Interest expense, net of interest income 9,388 4,277 23,146 8,037
Depreciation and amortization 12,645 12,980 38,070 39,721
Interest amortization (1) (113 ) (60 ) (327 ) (181 )
EBITDA 45,119 44,754 146,926 102,859
LIFO charge 12,027 30,898 19,643 79,333
FIFO EBITDA $ 57,146 $ 75,652 $ 166,569 $ 182,192
(1) Reconciling item needed to exclude debt issuance cost amortization from the amount shown for interest expense.
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New Accounting Standards

Refer to Note 1, “Basis of Preparation and Presentation”, to the Condensed Consolidated Financial Statements contained herein.

Critical Accounting Policies and Estimates

A description of the Company's critical accounting policies and estimates is contained in the Company’s Annual Report on Form 10-K/A (Amendment No. 1) for the fiscal year ended March 31, 2023. There were no material changes to the Company's critical accounting policies or estimates during the three and nine months ended December 30, 2023.

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Forward-Looking Information

This Quarterly Report on Form 10-Q contains “forward-looking statements” as that term is used in the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the fact that they address future events, developments, and results and do not relate strictly to historical facts. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate, or imply future results, performance, or achievements, and may contain the words "will," "anticipate," "estimate," "expect," "project," "intend," "plan," "believe," "seeks," "should," "likely," "targets," "may", "can" and variations thereof and similar expressions. Forward-looking statements are subject to known and unknown risks, uncertainties, and other important factors that could cause actual results to differ materially from those expressed. We believe important factors that could cause actual results to differ materially from our expectations include, but are not limited to, the following:

● the effects of rising costs and availability of raw fruit and vegetables, steel, ingredients, packaging, other raw materials, distribution and labor;
● crude oil prices and their impact on distribution, packaging and energy costs;
● an overall labor shortage, ability to retain a sufficient seasonal workforce, lack of skilled labor, labor inflation or increased turnover impacting our ability to recruit and retain employees;
● climate and weather affecting growing conditions and crop yields;
● our ability to successfully implement sales price increases and cost saving measures to offset cost increases;
● the loss of significant customers or a substantial reduction in orders from these customers;
● effectiveness of our marketing and trade promotion programs;
● competition, changes in consumer preferences, demand for our products and local economic and market conditions;
● the impact of a pandemic on our business, suppliers, customers, consumers and employees;
● unanticipated expenses, including, without limitation, litigation or legal settlement expenses;
● product liability claims;
● the anticipated needs for, and the availability of, cash;
● the availability of financing;
● leverage and the ability to service and reduce debt;
● foreign currency exchange and interest rate fluctuations;
● the risks associated with the expansion of our business;
● the ability to successfully integrate acquisitions into our operations;
● our ability to protect information systems against, or effectively respond to, a cybersecurity incident or other disruption;
● other factors that affect the food industry generally, including:
o recalls if products become adulterated or misbranded, liability if product consumption causes injury, ingredient disclosure and labeling laws and regulations and the possibility that consumers could lose confidence in the safety and quality of certain food products;
--- ---
o competitors’ pricing practices and promotional spending levels;
o fluctuations in the level of our customers’ inventories and credit and other business risks related to our customers operating in a challenging economic and competitive environment; and
o the risks associated with third-party suppliers, including the risk that any failure by one or more of our third-party suppliers to comply with food safety or other laws and regulations may disrupt our supply of raw materials or certain finished goods products or injure our reputation; and
● changes in, or the failure or inability to comply with, U.S., foreign and local governmental regulations, including health, environmental, and safety regulations.
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Any of these factors, as well as such other factors as discussed in our other periodic filings with the SEC, could cause our actual results to differ materially from our anticipated results. The information provided in this Form 10-Q is based upon the facts and circumstances known as of the date of this report, and any forward-looking statements made by us in this Form 10-Q speak only as of the date on which they are made. Except as required by law, we undertake no obligation to update these forward-looking statements after the date of this Form 10-Q to reflect events or circumstances after such date, or to reflect the occurrence of unanticipated events.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

In the ordinary course of business, the Company is exposed to various market risk factors, including changes in general economic conditions, competition and raw material pricing and availability. There have been no material changes to the Company’s exposure to market risk since March 31, 2023. In addition, the Company is exposed to fluctuations in interest rates, primarily related to its revolving credit facility and Amended Term Loan A-2. To manage interest rate risk, the Company uses both fixed and variable interest rate debt plus fixed interest rate lease obligations.

Item 4. Controls and Procedures

The Company maintains a system of internal and disclosure controls and procedures designed to ensure that information required to be disclosed in reports filed or submitted under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported on a timely basis. The Company’s Board of Directors, operating through its Audit Committee, which is composed entirely of independent outside directors, provides oversight to the financial reporting process.

As reported in the Company’s amended Annual Report on Form 10-K/A for the year ended March 31 2023, subsequent to the year-end audit, the Company’s management identified a material weakness in the Company’s internal control over financial reporting relating to the accounting for valuing inventory using the LIFO method, specifically the review controls in place with respect to a year-end adjustment to the calculation of the LIFO reserve were not effective.  An actual valuation of inventory under the LIFO method is made at the end of each fiscal year based on the inventory levels and costs at that time. During the formulaic valuation of actual inventory values at fiscal year-end, incorrect quantities were applied to the calculation which resulted in an understatement of the LIFO reserve as of March 31, 2023 and 2022. In contrast, interim LIFO calculations are based on management’s estimates of expected year-end inventory levels, production pack yields, sales and the expected rate of inflation or deflation for the year. The interim LIFO calculations are subject to adjustment in the final year-end LIFO inventory valuation.

A material weakness relating to the year-end adjustment to the calculation of the LIFO reserve cannot be considered remediated until the applicable remedial controls operate for a sufficient time. Notwithstanding the existence of the above-mentioned material weakness, the Company believes that the consolidated financial statements in this filing fairly present, in all material respects, the Company’s financial position, results of operations and cash flows as of the dates, and for the periods presented, in conformity with U.S. generally accepted accounting principles. Additionally, our management has concluded that the Company’s interim LIFO calculations are not impacted by this material weakness.

An evaluation was performed under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities and Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that, as of December 30, 2023, our disclosure controls and procedures were effective. The Company continues to examine, refine and formalize its disclosure controls and procedures and to monitor ongoing developments in this area.

In response to the previously disclosed material weakness, the Company has identified certain remedial actions to mitigate the material weakness, including the implementation of new controls and the enhancement of existing controls to reconcile the inventory quantities used in the year-end LIFO calculation to the quantities in the Company’s enterprise resource planning system. The Company will also utilize newly developed software, equipped with analytical features allowing for comparison and trend analysis to previous periods, to perform the LIFO calculation. The Company’s management will review and investigate material irregularities identified by this software and document the cause of those irregularities prior to approval of the final LIFO calculation.

Other than the remedial actions noted above, there have been no changes during the period covered by this report to the Company's internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II – OTHER INFORMATION

Item 1. Legal Proceedings

Refer to Note 13, “Legal Proceedings and Other Contingencies,” to the Condensed Consolidated Financial Statements contained herein.

Item 1A. Risk Factors

There have been no material changes to the risk factors disclosed in the Company’s Annual Report Form 10-K for the period ended March 31, 2023 except to the extent factual information disclosed elsewhere in this Form 10-Q relates to such risk factors.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Total Number of Average Price Maximum Number
Shares Purchased Paid per Share Total Number of Shares (or Approximate Dollar Value)
Purchased as Part of of Shares that May Yet
Class A Class B Class A Class B Publicly Announced Be Purchased Under the
Period Common Common Common Common Plans or Programs Plans or Programs
10/1/2023 -
10/31/2023 (1) 109,515 - $           54.54 - 99,115
11/1/2023 -
11/30/2023 17,192 - $           54.23 - 17,192
12/1/2023 -
12/31/2023 (2) 11,210 - $           51.78 - 0
Total 137,917 - $           54.27 - 116,307 605,273
(1) Includes 10,400 shares that were purchased in open market transactions by the trustees under the Seneca Foods Corporation Employees' Savings Plan to provide employee matching contributions under the plan.
--- ---
(2) Includes 11,210 shares that were purchased in open market transactions by the trustees under the Seneca Foods Corporation Employees' Savings Plan to provide employee matching contributions under the plan.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

None.

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Item 5. Other Information

(c) Trading Plans

During the quarterly period ended December 30, 2023, no director or Section 16 officer adopted or terminated any Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (in each case, as defined in Item 408(a) of Regulation S-K).

Item 6. Exhibits

Exhibit<br> <br>Number Description
31.1 Certification of Paul L. Palmby pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2 Certification of Michael S. Wolcott pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32 Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS Inline XBRL Instance Document
101.1.SCH Inline XBRL Taxonomy Extension Calculation Schema Document
101.2.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.3.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document
101.4.LAB Inline XBRL Taxonomy Extension Label Linkbase Document
101.5.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document
104 Cover page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101)

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

SENECA FOODS CORPORATION
By: /s/ Paul L. Palmby
Paul L. Palmby
President and Chief Executive<br> <br>Officer
(Principal Executive Officer)
February 8, 2024
By: /s/ Michael S. Wolcott
Michael S. Wolcott
Chief Financial Officer
(Principal Financial Officer)
February 8, 2024

26

ex_620687.htm

EXHIBIT 31.1

CERTIFICATION

I, Paul L. Palmby, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Seneca Foods Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
--- ---
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
--- ---
4. The Registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
--- ---
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
--- ---
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
--- ---
(c) Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
--- ---
(d) Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
--- ---
5. The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):
--- ---
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
--- ---
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.
--- ---
/s/ Paul L. Palmby
---
Paul L. Palmby
President and Chief Executive Officer
(Principal Executive Officer)
February 8, 2024

ex_620688.htm

EXHIBIT 31.2

CERTIFICATION

I, Michael S. Wolcott, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Seneca Foods Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
--- ---
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
--- ---
4. The Registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
--- ---
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
--- ---
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
--- ---
(c) Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
--- ---
(d) Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
--- ---
5. The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):
--- ---
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
--- ---
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.
--- ---
/s/ Michael S. Wolcott
---
Michael S. Wolcott
Chief Financial Officer
(Principal Financial Officer)
February 8, 2024

ex_620689.htm

EXHIBIT 32

CERTIFICATION PURSUANT TO

  1. U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Seneca Foods Corporation (the "Registrant") on Form 10-Q for the period ended December 30, 2023 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), we, Paul L. Palmby, President and Chief Executive Officer, and Michael S. Wolcott, Chief Financial Officer of the Registrant, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to 906 of the Sarbanes-Oxley Act of 2002, that, to our knowledge:

(1)  The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)  The information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

/s/ Paul L. Palmby
Paul L. Palmby
President and Chief Executive Officer
(Principal Executive Officer)
February 8, 2024
/s/ Michael S. Wolcott
Michael S. Wolcott
Chief Financial Officer
(Principal Financial Officer)
February 8, 2024

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