Shares of Seneca Foods Corporation (SENEA Quick QuoteSENEA - Free Report) have gained 4.6% since the company reported results for the quarter ended Sept. 27, 2025, even as the S&P 500 Index slipped 0.6% over the same span. In the past month, Seneca shares lost 5.6%, against a 1.6% rise in the S&P 500.

SENEA’s Earnings Snapshot

Seneca turned in a much stronger quarter than a year ago on both the top and bottom lines. Net sales for the second quarter of fiscal 2026 rose 8.1% to $460 million from $425.5 million, driven primarily by higher volumes and, to a lesser extent, favorable pricing and mix. Gross margin expanded sharply to 13.4% of sales from 10.1%, while operating income jumped 68% to $41.5 million from $24.7 million, lifting operating margin to 9% from 5.8%. Net earnings surged 123.6% to $29.7 million from $13.3 million, with diluted earnings per share (EPS) climbing 125.8% to $4.29 from $1.90.

EBITDA rose 44.6% to $55.7 million from $38.5 million, driven by higher earnings and lower interest expense. On a non-GAAP basis, adjusted net earnings for the quarter edged down 2.6% to $23.9 million from $24.6 million, and FIFO EBITDA decreased 10.2% to $47.9 million from $53.5 million.

For the six-month period, net sales increased 3.7% to $757.5 million from $730.2 million, while diluted EPS rose 73.8% to $6.43 from $3.70. The six-month FIFO EBITDA declined 18.4% to $73.2 million from $89.7 million, reflecting the sell-through of higher-cost inventory from 2024.

Seneca’s Segment and Product Performance

Canned and frozen vegetables remain the core of the business and led the quarter’s growth. Net sales of canned vegetables rose about 7.4% year over year to $377.3 million from $351.3 million, while frozen vegetable sales increased 14.8% to $44.9 million from $39.1 million. Fruit products were up 2.1% to $22.8 million from $22.3 million, snack products grew about 22.9% to $4.9 million from $4 million, and the “other” category—which includes items such as seed, cans and ends and certain ancillary revenues — increased around 15% to $10.1 million from $8.8 million.

On a segment basis (reported on a FIFO basis), second-quarter net sales were $422.2 million for the Vegetable segment, $27.8 million for Fruit/Snack, and $10.1 million for Other. Vegetable earnings before income taxes were $25.5 million, while Fruit/Snack and Other contributed $3.7 million and $1.9 million, respectively. These figures reconcile to total FIFO earnings before income taxes of $31 million, before the positive LIFO adjustment.

For the six-month period, canned and frozen vegetable sales together accounted for most of the 3.7% increase in total net sales, with fruit slightly lower and snacks and other categories higher than a year earlier.

SENEA’s Other Key Business Metrics

Beyond headline earnings, Seneca’s profitability profile improved meaningfully. For both the quarter and year-to-date period, gross margin and operating margin expanded compared with the prior-year periods, while interest expense as a percentage of sales declined markedly. The company recorded a LIFO credit that reduced the cost of products sold by $7.7 million in the quarter, versus a $15 million LIFO charge that increased the cost of products sold in the year-ago quarter, providing a notable tailwind to reported results.

Interest expense fell 48% to $4.7 million from $9 million for the quarter and to $10.1 million from $19.4 million for the six months (down 47.9%), driven mainly by lower average borrowings and a lower weighted-average interest rate under the revolving credit facility.

The balance sheet showed progress on deleveraging. Long-term debt declined to $246.4 million from $406.6 million a year earlier, while total debt (including current portions) also came down, though inventories remain sizable at $786.5 million on a LIFO basis.

Seneca’s Management Commentary

Management characterized the quarter as a solid step toward getting operations back to a more normal footing after the prior year’s harvest and cost headwinds. President and CEO Paul Palmby pointed out that both unit volumes and net sales rose at healthy rates in the quarter, with volumes growing slightly faster than revenues, reflecting solid demand across key product lines. Palmby also emphasized that the current-year harvest has generally been in line with internal plans for most crops, a notable improvement from the weak harvest a year earlier, and that this is contributing to more predictable costs and inventory positions that better support customers’ needs. At the same time, management acknowledged that FIFO gross margin is still being held back somewhat because the company is continuing to sell through higher-cost inventory produced in 2024, even as underlying cost trends begin to normalize.

Factors Influencing SENEA’s Results

The combination of higher volumes, favorable mix and lower financing costs was central to the year-over-year improvement. Seneca attributed the 8.1% quarterly sales increase largely to higher sales volumes, with a smaller boost from pricing and product mix; canned and frozen vegetables together accounted for most of the gain. The LIFO credit significantly reduced cost of products sold relative to the prior-year charge, enhancing gross margin and EBITDA on a reported basis. At the same time, adjusted earnings and FIFO EBITDA softened as SENEA continued to work through last year’s high-cost inventory, illustrating that underlying profitability excluding LIFO benefits remains under some pressure.

Seneca’s Guidance and Outlook

Seneca did not provide formal quantitative guidance for the upcoming quarters or the full fiscal year in the materials reviewed. Management’s commentary instead focused on operational drivers such as crop yields, cost normalization and inventory levels, along with a detailed discussion of ongoing input-cost pressures and the company’s efforts to mitigate them through pricing actions and cost controls. SENEA also cited potential effects of tariffs, energy costs, and changing consumer preferences as ongoing uncertainties.

SENEA’s Other Developments

During the quarter, Seneca focused primarily on core operations and balance sheet management rather than major strategic moves. The company did not undertake any significant acquisitions, divestitures or large-scale restructuring initiatives. Capital allocation activity included modest share repurchases, with SENEA buying back a small amount of its common stock into treasury, signaling a measured approach to returning cash to shareholders while it continues to reduce leverage and navigate a still-evolving cost environment.