Seneca Stock Gains on Strong Q3 Earnings and Margin Expansion

Shares of Seneca Foods Corporation SENEA have gained 1.2% since the company reported its earnings for the quarter ended Dec. 27, 2025. This compares to the S&P 500 Index’s 0.5% rise over the same time frame. Over the past month, the stock gained 6.3% against the S&P 500’s 0.9% decline.

SENEA’s Earnings Snapshot

Seneca reported third-quarter fiscal 2026 net sales of $508.3 million, up 1.1% from $502.9 million in the prior-year quarter. The increase was driven by favorable selling prices and product mix, partially offset by lower sales volume. Net earnings rose sharply to $44.8 million, or $6.48 per diluted share, from $14.7 million, or $2.10 per diluted share a year ago. Operating income rose 133.7% to $59.9 million from $25.7 million in the year-ago quarter, reflecting a significant expansion in gross margin to 16.4% from 9.8%.

On a year-to-date basis, net sales for the nine months ended Dec. 27, 2025, increased 2.7% to $1.27 billion from $1.23 billion in the comparable prior-year period. Net earnings for the nine-month period climbed 120.1% to $89.4 million, or $12.89 per diluted share, from $40.6 million, or $5.81 per diluted share, in the prior year.

Segment-wise, the Vegetable business generated fiscal third-quarter earnings before income taxes of $48.4 million, up 102.7% from $23.9 million a year ago, while the Fruit and Snack segment contributed $6.3 million, up 62.3% from $3.9 million in the prior-year quarter.

Seneca’s Segment and Product Performance

Revenue growth in the quarter was primarily driven by pricing and product mix, partially offset by lower sales volumes. Canned and frozen vegetables posted a combined increase, benefiting from an $8.9 million favorable impact from pricing and mix, partly offset by a $2.5 million decline due to lower volumes. Fruit products and snack products experienced modest sales declines, largely attributable to lower volumes.

For the nine-month period, canned and frozen vegetables recorded a combined $29.4 million sales increase, reflecting both higher volumes and improved pricing and mix. Fruit products saw a slight decrease, while snack products were relatively stable year over year.

Seneca Foods Corp. Price, Consensus and EPS Surprise

Seneca Foods Corp. price-consensus-eps-surprise-chart | Seneca Foods Corp. Quote

SENEA’s Margin Expansion and Operating Drivers

The significant improvement in profitability was driven by margin expansion. Gross margin for the quarter rose to 16.4% from 9.8% in the prior-year period. The company recorded a LIFO credit of $2.6 million in the quarter against a $10.9 million LIFO charge a year earlier, contributing to lower cost of goods sold on a GAAP basis.

On a nine-month basis, gross margin improved to 14.8% from 10.9%, aided by a $22.1 million LIFO credit against a $22.9 million LIFO charge in the prior-year period.

Selling, general and administrative expenses edged up to 4.6% of net sales in the fiscal third quarter from 4.5% a year earlier, reflecting routine workforce-related costs. Interest expense declined 47.4%, falling to $4.1 million in the quarter from $7.8 million in the prior-year period, driven by lower average borrowings and a reduced weighted average interest rate.

Cash flow from operating activities for the first nine months totaled $114.2 million compared with $243.6 million in the prior-year period. The year-over-year change reflects movements in working capital, including inventories and accounts payable. The company reduced long-term debt to $242.7 million from $298.7 million a year earlier, reflecting continued deleveraging.

Seneca’s Management Commentary

President and Chief Executive Officer Paul Palmby said the fiscal third quarter delivered record sales and near-record FIFO profitability, citing an excellent holiday selling season and more normalized costs following a poor 2024 harvest season. He added that strong operating results and reductions in working capital drove robust cash flow and continued decreases in net debt.

SENEA’s Guidance

Seneca did not provide formal financial guidance for the quarter ended Dec. 27, 2025. While management discussed operating trends, cost normalization and working capital improvements, the company did not issue quantitative outlook targets for revenue, earnings, margins, capital expenditures or cash flow.

Seneca’s Other Developments

During the nine months ended Dec. 27, 2025, Seneca repurchased 86,142 shares of its Class A common stock for $8.7 million. As of Dec. 27, 2025, the company held 5,391,443 shares in treasury.

Additionally, SENEA entered into a receivables purchase agreement in August 2025 with a $50.0 million purchase limit to enhance liquidity and working capital flexibility.

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