Snyder's-Lance, Inc. Reports Results for Third Quarter 2013

- Reports 2013 third quarter net revenue of $453 million, an increase of 11.4% over prior year
- Reports 2013 third quarter earnings per diluted share of $0.32 excluding special items
- Reports 2013 third quarter earnings per diluted share of $0.33 including special items
- Declares quarterly dividend of $0.16 per share of common stock

PR Newswire

CHARLOTTE, N.C., Nov. 7, 2013 /PRNewswire/ -- Snyder's-Lance, Inc. (LNCE) today reported results for its third quarter of 2013. Net revenue for the third quarter ended September 28, 2013 was $453 million, an increase of 11.4% compared to prior year net revenue of $407 million. Net income excluding special items in the third quarter of 2013 was $22.4 million, or $0.32 per diluted share, as compared to third quarter 2012 net income excluding special items of $19.2 million, or $0.28 per diluted share.  Net income was $22.9 million for the third quarter of 2013, or $0.33 per diluted share, compared to a net income of $17.8 million for the third quarter of 2012, or $0.26 per diluted share.  Special items for the third quarter of 2013 were $0.5 million in after-tax income primarily from the gain on the sale of assets associated with the consolidation of our Canadian manufacturing facilities.  Special items for the third quarter of 2012 were $1.4 million in after-tax expense which included expenses associated with the acquisition of Snack Factory and other merger related costs.

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Net income excluding special items for the first nine months of 2013 was $59.1 million, or $0.84 per diluted share, a gain of 27% as compared to net income excluding special items of $45.7 million, or $0.66 per diluted share, for the first nine months of 2012.  Net income was $55.7 million for the first nine months of 2013, or $0.80 per diluted share, compared to net income of $51.3 million for the first nine months of 2012, or $0.74 per diluted share. Special items for 2013 include after-tax income from the gain on the sale of assets, impairment charges and a substantial self-funded medical expense. Special items for 2012 include after-tax gains on the sale of route businesses from the merger integration and after-tax expenses for other merger related expenses.

"Net revenue for core branded products was up 20%, driven by Snack Factory and core brand market share gains that were supported with increased advertising and social media marketing efforts, including a movie tie-in promotion," commented Carl E. Lee, Jr., President and Chief Executive Officer. "We are pleased with our EPS performance in the third quarter of 2013 as we focus on finishing the year strong and building momentum as we head into 2014.  With our continued focus on emphasizing core brands and widening margins, our team delivered solid results including continued benefits from our acquisition of Snack Factory® Pretzel Crisps® which posted significant year over year sales.  In the third quarter, we were able to improve our gross margin as a percentage of net revenue on a higher mix of branded products, supported by good overall performance from our private brands team."

Mr. Lee continued, "Looking ahead, we are excited about our product lineup for next year.  We have a number of great new items and flavors in our core brands along with improvements in several of our more regional allied brands.  This pipeline of innovation is very robust and we anticipate solid growth as we move into 2014.  We also continue to grow our independent business owner (IBO) based distribution network, and have recently acquired additional routes in a key geography.  Snyder's-Lance is making progress on a number of fronts, and I want to thank everyone involved and especially our associates for their hard work and dedication that drives this company forward every day."

Dividend Declared
The Company also announced the declaration of a quarterly cash dividend of $0.16 per share on the Company's common stock.  The dividend is payable on November 29, 2013 to stockholders of record at the close of business on November 19, 2013.

2013 Estimates
The Company has updated its estimates for the full year 2013.  The Company estimates that its net revenue for the full year 2013 will be up 9% to 10% and earnings per diluted share will increase between 25% and 30%, excluding special items, compared to 2012.  Capital expenditures for 2013 are projected to be between $73 and $75 million.

Conference Call
Snyder's-Lance, Inc. has scheduled a conference call and presentation with investors at 10:00 am eastern time on Thursday, November 7, 2013 to discuss financial results.  To participate in the conference call, the dial-in number is (866) 814-7293 for U.S. callers or (702) 696-4943 for international callers.  A continuous telephone replay of the call will be available between 3:00 pm on November 7 and midnight on November 14. The replay telephone number is (855) 859-2056 for U.S. callers or (404) 537-3406 for international callers.  The replay access code is 90854513.  Investors may also access a web-based replay of the conference call at www.snyderslance.com.

About Snyder's-Lance, Inc.
Snyder's-Lance, Inc., headquartered in Charlotte, NC, manufactures and markets snack foods throughout the United States and internationally. The Company's products include pretzels, sandwich crackers, pretzel crackers, potato chips, cookies, tortilla chips, restaurant style crackers, nuts and other snacks. Snyder's-Lance has manufacturing facilities in North Carolina, Pennsylvania, Iowa, Indiana, Georgia, Arizona, Massachusetts, Florida, Ohio and Ontario, Canada. Products are sold under the Snyder's of Hanover®, Lance®, Cape Cod®, Pretzel Crisps®, Krunchers!®, Tom's®, Archway®, Jays®, Stella D'oro®, Eatsmart®, O-Ke-Doke®, Quitos® and Padrinos® brand names along with a number of private label and third party brands. Products are distributed nationally through grocery and mass merchandisers, convenience stores, club stores, food service outlets and other channels. LNCE-E

Cautionary Information about Forward Looking Statements
This news release contains statements which may be forward looking within the meaning of applicable securities laws. The statements include projections regarding future revenues, earnings and other results which are based upon the Company's current expectations and assumptions, which are subject to a number of risks and uncertainties. Factors that could cause actual results to differ include: general economic conditions; increases in cost or availability of ingredients, packaging, energy and employees; price competition and industry consolidation; loss of major customers or changes in product offerings with significant customers; successful integration and realization of anticipated benefits of acquisitions; loss of key personnel; ability to execute strategic initiatives; product recalls and concerns surrounding the quality or safety of products and ingredients; adulterated or misbranded products; disruptions to our supply chain or information technology systems; improper use of social media; changes in consumer preferences; distribution through independent business owners; inability to maintain existing markets or expand to other geographic markets; protection of trademarks and other proprietary intellectual rights; impairment in the carrying value of goodwill or other intangible assets; food industry and regulatory factors; interest rate and foreign exchange rate risks; and the interests of significant stockholders may conflict with those of other stockholders, which have been discussed in greater detail in our most recent Form 10-K and other reports filed with the Securities and Exchange Commission. Except as required by law, the Company undertakes no obligation to update or revise publicly any forward-looking statement as a result of new information, future developments or otherwise.

 

SNYDER'S-LANCE, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Income (Unaudited)

For the Quarters and Nine Months Ended September 28, 2013 and September 29, 2012

(in thousands, except per share data)

 



Quarter Ended


Nine Months Ended



September 28,
2013


September 29,
2012


September 28,
2013


September 29,
2012

Net revenue


$

453,023



$

406,565



$

1,310,646



$

1,198,808


Cost of sales


295,429



269,626



862,286



802,568


Gross margin


157,594



136,939



448,360



396,240











Selling, general and administrative


122,110



106,512



356,610



324,864


Impairment charges




80



1,900



207


Gain on sale of route businesses, net


(465)



(1,427)



(2,057)



(21,596)


Other (income)/expense, net


(5,099)



537



(8,603)



(124)


Income before interest and income taxes


41,048



31,237



100,510



92,889











Interest expense, net


3,742



1,692



10,702



6,258


Income before income taxes


37,306



29,545



89,808



86,631











Income tax expense


14,194



11,634



33,758



34,930


Net income


23,112



17,911



56,050



51,701


Net income attributable to noncontrolling interests


213



146



329



397


Net income attributable to Snyder's-Lance, Inc.


$

22,899



$

17,765



$

55,721



$

51,304











Basic earnings per share


$

0.33



$

0.26



$

0.80



$

0.75


Weighted average shares outstanding – basic


69,459



68,598



69,243



68,268











Diluted earnings per share


$

0.33



$

0.26



$

0.80



$

0.74


Weighted average shares outstanding – diluted


70,294



69,526



70,013



69,190











Cash dividends declared per share


$

0.16



$

0.16



$

0.48



$

0.48


 

 

SNYDER'S-LANCE, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

As of September 28, 2013 (Unaudited) and December 29, 2012

(in thousands, except share data)

 



September 28,
2013


December 29, 2012

ASSETS





Current assets:





Cash and cash equivalents


$

16,702



$

9,276


Accounts receivable, net of allowances of $2,300 and $2,159, respectively


152,266



141,862


Inventories


139,764



118,256


Prepaid income taxes


5,272




Deferred income taxes


9,361



11,625


Assets held for sale


22,707



11,038


Prepaid expenses and other current assets


26,492



28,676


Total current assets


372,564



320,733







Noncurrent assets:





Fixed assets, net of accumulated depreciation of $351,985 and $331,053, respectively


344,746



331,385


Goodwill


536,655



540,389


Other intangible assets, net


519,517



531,735


Other noncurrent assets


23,139



22,490


Total assets


$

1,796,621



$

1,746,732







LIABILITIES AND STOCKHOLDERS' EQUITY










Current liabilities:





Current portion of long-term debt


$

18,389



$

20,462


Accounts payable


59,276



54,791


Accrued compensation


26,780



31,037


Accrued selling and promotional costs


15,097



16,240


Income tax payable




1,263


Other payables and accrued liabilities


32,511



30,830


Total current liabilities


152,053



154,623







Noncurrent liabilities:





Long-term debt


526,405



514,587


Deferred income taxes


182,830



176,037


Other noncurrent liabilities


28,607



29,310


Total liabilities


889,895



874,557







Commitments and contingencies










Stockholders' equity:





Common stock, 69,508,697 and 68,863,974 shares outstanding, respectively


57,922



57,384


Preferred stock, no shares outstanding





Additional paid-in capital


759,839



746,155


Retained earnings


73,324



50,847


Accumulated other comprehensive income


12,874



15,118


Total Snyder's-Lance, Inc. stockholders' equity


903,959



869,504


Noncontrolling interests


2,767



2,671


Total stockholders' equity


906,726



872,175


Total liabilities and stockholders' equity


$

1,796,621



$

1,746,732


 

 

SNYDER'S-LANCE, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows (Unaudited)

For the Nine Months Ended September 28, 2013 and September 29, 2012

(in thousands)

 



Nine Months Ended



September 28,
2013


September 29,
2012

Operating activities:





Net income


$

56,050



$

51,701


Adjustments to reconcile net income to cash from operating activities:





Depreciation and amortization


44,805



39,255


Stock-based compensation expense


4,397



3,487


(Gain)/loss on sale of fixed assets, net


(1,022)



87


Gain on sale of route businesses


(2,057)



(21,596)


Impairment charges


1,900



207


Deferred income taxes


8,962



(7,419)


Changes in operating assets and liabilities, excluding business acquisitions


(38,562)



(5,938)


Net cash provided by operating activities


74,473



59,784







Investing activities:





Purchases of fixed assets


(55,874)



(55,962)


Purchases of route businesses


(26,798)



(27,747)


Proceeds from sale of fixed assets


4,552



8,185


Proceeds from sale of route businesses


25,004



88,672


Proceeds from sale of investments


921




Business acquisitions, net of cash acquired


(1,513)




Net cash (used in)/provided by investing activities


(53,708)



13,148







Financing activities:





Dividends paid to stockholders


(33,243)



(32,790)


Dividends paid to noncontrolling interests


(232)



(234)


Debt issuance costs




(567)


Issuances of common stock


10,514



10,741


Repurchases of common stock


(709)



(333)


Repayments of long-term debt


(16,279)



(1,647)


Net proceeds/(repayments) from revolving credit facilities


26,805



(59,869)


Net cash used in financing activities


(13,144)



(84,699)







Effect of exchange rate changes on cash


(195)



(274)







Increase/(decrease) in cash and cash equivalents


7,426



(12,041)


Cash and cash equivalents at beginning of period


9,276



20,841


Cash and cash equivalents at end of period


$

16,702



$

8,800







Supplemental information:





Cash paid for income taxes, net of refunds of $36 and $12,361, respectively


$

29,056



$

20,636


Cash paid for interest


$

9,806



$

5,801


 

 

SNYDER'S-LANCE, INC. AND SUBSIDIARIES

Reconciliation of Non-GAAP Measures (Unaudited)

For the Quarters and Nine Months Ended September 28, 2013 and September 29, 2012

(in thousands, except per share data)

 


Net of

Tax


Per Diluted Share

Quarter Ended September 28, 2013




Net income attributable to Snyder's-Lance, Inc.

$

22,899



$

0.326






Self-funded medical insurance claim

263



0.004


Gain on sale of Canadian assets

(799)



(0.012)






Net income attributable to Snyder's-Lance, Inc., excluding special items

$

22,363



$

0.318






Quarter Ended September 29, 2012




Net income attributable to Snyder's-Lance, Inc.

$

17,765



$

0.256






Merger related items

115



0.002


Snack Factory acquisition costs

304



0.004


Greenville closure costs

487



0.007


Gain on the sale of route businesses

(674)



(0.010)


Incremental income tax associated with non-deductible goodwill on the sale of route businesses

1,250



0.018






Net income attributable to Snyder's-Lance, Inc., excluding special items

$

19,247



$

0.277


 


Net of
Tax


Per Diluted Share

Nine Months Ended September 28, 2013




Net income attributable to Snyder's-Lance, Inc.

$

55,721



$

0.796






Self-funded medical insurance claim

2,995



0.043


Impairment charges

1,192



0.017


Gain on sale of Canadian assets

(799)



(0.012)






Net income attributable to Snyder's-Lance, Inc., excluding special items

$

59,109



$

0.844






Nine Months Ended September 29, 2012




Net income attributable to Snyder's-Lance, Inc.

$

51,304



$

0.741






Merger related items

1,452



0.021


Snack Factory acquisition costs

304



0.004


Corsicana/Greenville closure costs

1,751



0.025


Gain on the sale of route businesses

(13,465)



(0.194)


Incremental income tax associated with non-deductible goodwill on the sale of route businesses

4,341



0.063






Net income attributable to Snyder's-Lance, Inc., excluding special items

$

45,687



$

0.660


 

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