Shares of Seneca Foods Corporation (SENEA Quick QuoteSENEA - Free Report) have lost 3.4% since the company reported its earnings for the quarter ended March 31, 2025. This compares to the S&P 500 Index’s 0.7% decline over the same time frame. Over the past month, the stock lost 3.7% against the S&P 500’s 0.9% rise.

SENEA’s Financial Performance Snapshot

Seneca reported net sales of $345.8 million for the fourth quarter of fiscal 2025, up 12.3% from $307.9 million in the same quarter last year. However, net earnings were modest at $0.6 million, or $0.09 per share, against a net loss of $2.2 million or $0.32 per share, in the prior-year quarter. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

Full-year net sales rose 8.2% to $1.58 billion from $1.46 billion, driven by higher volumes, favorable mix and pricing actions. Despite the revenue increase, annual net earnings declined 34.9% to $41.2 million from $63.3 million. Earnings per share dropped 31.1% from $8.56 to $5.90 on a diluted basis.

Gross margin as a percentage of net sales also compressed notably, from 6.7% to 4.5% for the quarter and from 12.9% to 9.5% for the year.

Seneca’s Other Key Business Metrics

Seneca's adjusted net earnings for the year, which exclude LIFO-related charges, came in at $67.1 million compared with $80.2 million a year ago — a 16.3% decline. This suggests core profitability deterioration despite higher sales, reflecting cost pressures. EBITDA was $136.9 million, down 18.1% from $167.3 million, while FIFO-adjusted EBITDA dropped 9.6% to $171.4 million from $189.6 million, both indicating a weaker operational performance compared to fiscal 2024.

Segment-wise, the vegetable division continued to dominate, comprising 91.1% of the food packaging revenues, with canned vegetables alone accounting for 83.2% of total net sales. Canned vegetable sales rose to $1.31 billion in fiscal 2025 from $1.20 billion in 2024, a 9.1% increase. Frozen vegetables rose to $124.7 million from $120.8 million (up 3.2%), fruit products reached $92.4 million from $87.4 million (up 5.7%) and snacks rose to $14.9 million from $13.4 million (up 11.9%). The “Other” category, including can and seed sales and aircraft operations, posted growth of 1% to $32.5 million from $32.2 million.

SENEA’s Management Commentary

President and CEO Paul Palmby commented on the solid top-line performance despite adverse weather, tariff fluctuations and input cost inflation. Palmby highlighted that strong operating cash flow enabled a $297 million reduction in net debt year over year, which is a significant achievement in a high-cost environment. Nevertheless, he cautioned that high-cost inventories from the 2024 pack continued to compress margins, especially in the fiscal fourth quarter.

Factors Influencing Seneca’s Headline Numbers

Several factors weighed on margins and profitability during the fiscal year. The company faced elevated input costs across raw materials, packaging, transportation and labor. Although some cost pressures began to ease in fiscal 2025, they remained above historical levels. Additionally, Seneca struggled to fully pass on these costs to customers in a timely manner, leading to margin erosion.

The decline in margins was primarily attributed to higher input costs — including raw materials, labor and distribution — which outpaced the benefits from pricing adjustments. SENEA’s use of the LIFO inventory valuation method resulted in a significant charge of $34.5 million for the fiscal year, up 54.3% from $22.3 million in the prior fiscal year, reducing reported profitability. These elevated LIFO charges reflected the cost pressure of high-priced inventory carried into fiscal 2025.

In addition, segment-specific dynamics such as commodity volatility and changing consumer demand played roles. The vegetable segment, which comprises 91.1% of food-related sales, faced margin compression even amid volume growth. Despite implementing sales price increases, Seneca acknowledged that these adjustments often lag behind cost escalation, especially in a competitive market landscape.

Seneca also cited a rainy growing season as a challenge, likely impacting yields and increasing procurement and processing complexities. The seasonal nature of its operations, particularly in the third quarter, exacerbated cost management issues as inventories and accounts payable peaked during harvest cycles.

SENEA’s Guidance

Seneca did not provide formal earnings or sales guidance for fiscal 2026 in either the earnings press release or the 10-K filing. However, the company did highlight its ongoing efforts to manage costs through short-term supply contracts and operational efficiency initiatives. Management also suggested that certain cost pressures, such as labor and raw materials, had begun to stabilize during fiscal 2025, potentially easing some margin constraints in the near term. Management also highlighted ongoing investment in technology and logistics to drive future margin recovery.

Seneca’s Other Developments

There were no acquisitions, divestitures or significant restructuring initiatives disclosed by management for the quarter ended March 31, 2025. SENEA’s capital allocation focused on debt reduction, and no dividends were paid. Stock repurchases continued on a modest scale, with 9,891 Class A shares repurchased during February 2025 from the company’s employee savings plan at an average price of $79.53 per share.