SNYDERS-LANCE CHARLOTTE, N.C., Nov. 4, 2014 /PRNewswire/ -- Snyder's-Lance, Inc. (Nasdaq-GS: LNCE) today reported results for its third quarter of 2014.
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Comments from Management
"We continue to successfully complete our transition to become a premium and differentiated branded snack food company" commented Carl E. Lee, Jr., President and Chief Executive Officer. "Our team successfully executed the carve-out of Private Brands and made good progress with the Baptista's integration. As a result, Baptista's has added substantial new 'better for you' product capabilities for 2015. We also just announced an increased investment in Late July, a market leader in organic and non-GMO snacks. Each of these projects would be noteworthy by themselves, so having a talented team that can manage these initiatives while executing the day to day operations is impressive. Revenue growth is pacing ahead of expectations on new products innovation and 'better for you' offerings, while we deal with the same headwinds all food companies are experiencing on base business. We continue to accelerate our efforts on three product and revenue fronts, 1) innovation 2) 'better for you' snacks and 3) base business renovation to drive excitement. We expect to finish 2014 strong and to have a fast start in 2015, having launched a number of Q4 consumer programs."
Mr. Lee continued, "As we execute our plans, we see our company growing and becoming an even stronger leader in innovation and 'better for you' snacking options. Snyder's-Lance is uniquely positioned to succeed as we have scale and an industry leading Direct Store Delivery (DSD) distribution system that is simply not available to many smaller emerging brands. Our efforts show we are nimble and able to respond to rapidly changing consumer tastes. As we complete 2014, we will look to build momentum on our top line leading into 2015, continue executing on our previously announced Cost Reduction & Margin Improvement program and positioning Snyder's-Lance brands to be the favorite destination of consumers for all of their snacking choices."
Third Quarter and Year to Date Results
Net revenue for the third quarter ended September 27, 2014 was $409 million, an increase of 6.2% compared to prior year net revenue of $385 million when adjusted for discontinued operations. Net income excluding special items in the third quarter of 2014 was $17.0 million, or $0.24 per diluted share, as compared to net income excluding special items of $16.7 million for the third quarter of 2013, or $0.24 per diluted share when adjusted for discontinued operations. Net income from continuing operations including special items was $13.7 million for the third quarter of 2014, or $0.19 per diluted share, as compared to net income from continuing operations including special items of $16.4 million for the third quarter of 2013, or $0.24 per diluted share. Net income from discontinued operations for the third quarter of 2014 included the recognition of an after-tax gain on the sale of Private Brands of $123.4 million, or $1.74 per diluted share. Special items associated with continuing operations for the third quarter of 2014 included after-tax expenses of $0.6 million for restructuring charges and professional fees and a $2.1 million deferred tax revaluation which was required as a result of the sale of Private Brands. Special items associated with continuing operations for the third quarter of 2013 included after-tax expenses of $0.3 million for self-funded medical expenses.
Net revenue and net income information for the first nine months of both 2014 and 2013 includes continuing and discontinued operations for the first six months of the year but excludes discontinued operations for the third quarter in order to ensure comparability. Net revenue for the nine months ended September 27, 2014 was $1.31 billion, an increase of 5.1% compared to prior year net revenue of $1.24 billion. Net income excluding special items for the first nine months of 2014 was $55.9 million, or $0.79 per diluted share, as compared to net income excluding special items of $53.4 million for the first nine months of 2013, or $0.76 per diluted share when adjusted to exclude discontinued operations for the third quarter of 2013. Special items associated with continuing operations for the first nine months of 2014 included after-tax expenses of $4.8 million for impairment charges, $2.3 million for restructuring charges, $2.0 million in professional fees, $0.6 million for self-funded medical expenses and a $2.1 million deferred tax revaluation. Special items associated with continuing operations for the third quarter of 2013 included after-tax expenses of $3.0 million for self-funded medical expenses and $1.2 million for impairment charges.
Net income including special items and discontinued operations for the first nine months of 2014 was $166.3 million, or $2.35 per diluted share, as compared to net income including special items and discontinued operations of $55.7 million for the first nine months of 2013, or $0.80 per diluted share. Net income from discontinued operations for the first nine months of 2014 included the recognition of an after-tax gain on the sale of Private Brands of $122.1 million, or $1.72 per diluted share. The gain on the sale of Private Brands also had an impact on our cash flow from operating activities. For the first nine months of 2014, we had net cash used in operating activities of $1.4 million, which was primarily due to approximately $89 million in taxes paid associated with the gain on the sale. When excluding this tax payment associated with the sale, net cash provided by operating activities is $87.6 million, which is consistent with our expectations.
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 28, 2014 to stockholders of record at the close of business on November 18, 2014.
Estimates provided for 2014
The Company estimates net revenue for the full year 2014 to increase into the range of $1.73 to $1.74 billion. Earnings per diluted share excluding special items are expected to be between $1.07 and $1.12, adjusted for recent transactions. Capital expenditures for 2014 are projected to be between $70 and $72 million, including capacity expansion for Baptista's.
Conference Call
Management will conduct a conference call and live webcast at 9:00 am eastern time on Tuesday, November 4, 2014 to review the Company's third quarter results. The conference call and accompanying slide presentation will be webcast live through the Investor Relations section of the Company's website, www.snyderslance.com. In addition, the slide presentation will be available to download and print approximately 30 minutes before the webcast at www.snyderslance.com. To participate in the conference call, the dial-in number is (844) 830-1960 for U.S. callers or (315) 625-6883 for international callers. The conference ID is 22883599. A continuous telephone replay of the call will be available between 3:00pm on November 4 and midnight on November 12. The replay telephone number is (855) 859-2056 for U.S. callers or (404) 537-3406 for international callers. The replay access code is 22883599. 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. Snyder's-Lance'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, Indiana, Georgia, Arizona, Massachusetts, Florida, Ohio and Wisconsin. Products are sold under the Snyder's of Hanover®, Lance®, Cape Cod®, Snack Factory® Pretzel Crisps®, Krunchers!®, Tom's®, Archway®, Jays®, Stella D'oro®, Eatsmart(TM), O-Ke-Doke®, and other brand names along with a number of 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 and statements regarding the Company's acquisition of Baptista's Bakery and the sale of its Private Brands, which are subject to a number of risks and uncertainties, including our ability to generate revenues and earnings generated by Private Brands and cost reductions to offset overhead costs previously covered by Private Brands. Factors that could cause actual results to differ include general economic conditions; volatility in the price, or availability of inputs, including raw materials, packaging, energy and labor; price competition and industry consolidation; changes in our top retail customer relationships; failure to successfully integrate acquisitions; loss of key personnel; failure to execute and accomplish our strategy; concerns with the safety and quality of certain food products or ingredients; adulterated, misbranded or mislabeled products or product recalls; disruption of our supply chain or information technology systems; improper use of social media; changes in consumer preferences and tastes or inability to innovate or market our products effectively; reliance on distribution through a significant number of independent business owners; protection of our trademarks and other intellectual property rights; impairment in the carrying value of goodwill or other intangible assets; new regulations or legislation; interest and foreign currency exchange rate volatility and the interests of a few individuals who control a significant portion of our outstanding shares of common stock 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.
SNYDER'S-LANCE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income (Unaudited)
For the Quarters and Nine Months Ended September 27, 2014 and September 28, 2013
Quarter Ended Nine Months Ended
------------- -----------------
(in thousands, except per share data) September 27, September 28, September 27, September 28,
2014 2013 2014 2013
--- ---- ---- ---- ----
Net revenue $409,308 $385,242 $1,181,920 $1,122,272
Cost of sales 266,088 243,767 760,625 714,005
------- ------- ------- -------
Gross margin 143,220 141,475 421,295 408,267
Selling, general and administrative 116,659 115,945 354,035 339,356
Impairment charges - - 7,503 1,900
Loss/(gain) on sale of route businesses, net 22 (465) (1,438) (2,057)
Other expense/(income), net 61 (4,541) 642 (7,158)
--- ------ --- ------
Income before interest and income taxes 26,478 30,536 60,553 76,226
Interest expense, net 2,984 3,742 10,485 10,702
----- ----- ------ ------
Income before income taxes 23,494 26,794 50,068 65,524
Income tax expense 9,809 10,174 17,719 25,184
----- ------ ------ ------
Income from continuing operations 13,685 16,620 32,349 40,340
Discontinued operations, net of income tax (Note 3) 124,097 6,492 133,942 15,710
Net income 137,782 23,112 166,291 56,050
Net income attributable to noncontrolling interests 16 213 32 329
Net income attributable to Snyder's-Lance, Inc. $137,766 $22,899 $166,259 $55,721
======== ======= ======== =======
Amounts attributable to Snyder's-Lance, Inc.:
Continuing operations $13,669 $16,407 $32,317 $40,011
Discontinued operations 124,097 6,492 133,942 15,710
Net income $137,766 $22,899 $166,259 $55,721
======== ======= ======== =======
Basic earnings per share:
Continuing operations $0.19 $0.24 $0.46 $0.58
Discontinued operations 1.77 0.09 1.91 0.22
Net income $1.96 $0.33 $2.37 $0.80
===== ===== ===== =====
Weighted average shares outstanding - Basic 70,266 69,459 70,142 69,243
Diluted earnings per share:
Continuing operations $0.19 $0.24 $0.46 $0.58
Discontinued operations 1.75 0.09 1.89 0.22
Net income $1.94 $0.33 $2.35 $0.80
===== ===== ===== =====
Weighted average shares outstanding - Diluted 71,001 70,294 70,869 70,013
Cash dividends declared per share $0.16 $0.16 $0.48 $0.48
SNYDER'S-LANCE, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (Unaudited)
As of September 27, 2014 and December 28, 2013
----------------------------------------------
(in thousands, except share data) September 27, December 28,
2014 2013
--- ---- ----
ASSETS
------
Current assets:
Cash and cash equivalents $113,244 $14,080
Accounts receivable, net of allowances of $1,718 and $1,535, respectively 133,567 121,599
Inventories 123,807 100,447
Prepaid income taxes - 9,094
Deferred income taxes 15,056 15,391
Assets held for sale 13,179 15,314
Prepaid expenses and other current assets 19,445 22,925
Current assets of discontinued operations (Note 3) - 37,416
--- ------
Total current assets 418,298 336,266
Noncurrent assets:
Fixed assets, net 421,896 312,527
Goodwill 484,387 422,318
Other intangible assets, net 508,661 516,607
Other noncurrent assets 19,727 22,250
Noncurrrent assets of discontinued operations (Note 3) - 154,626
--- -------
Total assets $1,852,969 $1,764,594
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Current portion of long-term debt $8,561 $17,291
Accounts payable 56,826 45,966
Accrued compensation 28,064 27,530
Accrued casualty insurance claims 4,443 6,262
Accrued selling and promotional costs 18,172 12,636
Income tax payable 29,544 -
Other payables and accrued liabilities 23,641 22,016
Current liabilities of discontinued operations (Note 3) - 14,503
--- ------
Total current liabilities 169,251 146,204
Noncurrent liabilities:
Long-term debt 442,406 480,082
Deferred income taxes 163,563 190,393
Accrued casualty insurance claims 7,715 5,567
Other noncurrent liabilities 21,559 24,143
Noncurrent liabilities of discontinued operations (Note 3) - 305
--- ---
Total liabilities 804,494 846,694
Commitments and contingencies
Stockholders' equity:
Common stock, $0.83 1/3 par value. Authorized 110,000,000 shares; 70,269,682 and 69,891,890 shares outstanding,
respectively 58,556 58,241
Preferred stock, $1.00 par value. Authorized 5,000,000 shares; no shares outstanding - -
Additional paid-in capital 773,934 765,172
Retained earnings 217,739 85,146
Accumulated other comprehensive (loss)/income (956) 10,171
---- ------
Total Snyder's-Lance, Inc. stockholders' equity 1,049,273 918,730
Noncontrolling interests (798) (830)
---- ----
Total stockholders' equity 1,048,475 917,900
Total liabilities and stockholders' equity $1,852,969 $1,764,594
========== ==========
SNYDER'S-LANCE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (Unaudited)
For the Nine Months Ended September 27, 2014 and September 28, 2013
Nine Months Ended
-----------------
(in thousands) September 27, September 28,
2014 2013
--- ---- ----
Operating activities:
Net income $166,291 $56,050
Adjustments to reconcile net income to cash from
operating activities:
Depreciation and amortization 46,084 44,805
Stock-based compensation expense 4,962 4,397
Loss/(gain) on sale of fixed assets, net 827 (1,022)
Gain on sale of route businesses (1,438) (2,057)
Gain on sale of Private Brands, excluding transaction
costs (229,322) -
Impairment charges 7,503 1,900
Deferred income taxes (26,899) 8,962
Provision for doubtful accounts 1,413 1,812
Changes in operating assets and liabilities, excluding
business acquisition and disposal 29,163 (40,374)
Net cash (used in)/provided by operating activities (1,416) 74,473
------ ------
Investing activities:
Purchases of fixed assets (52,990) (55,874)
Purchases of route businesses (19,102) (26,798)
Proceeds from sale of fixed assets 1,843 4,552
Proceeds from sale of route businesses 21,072 25,004
Proceeds from sale of investments - 921
Proceeds from sale of Private Brands 430,017 -
Business acquisition, net of cash acquired (202,230) (1,513)
-------- ------
Net cash provided by/(used in) investing activities 178,610 (53,708)
------- -------
Financing activities:
Dividends paid to stockholders (33,666) (33,243)
Dividends paid to noncontrolling interests - (232)
Debt issuance costs (1,854) -
Issuances of common stock 5,442 10,514
Repurchases of common stock (1,328) (709)
Repayments of long-term debt (11,624) (16,279)
Net (repayments)/proceeds from existing credit facilities (35,000) 26,805
Net cash used in financing activities (78,030) (13,144)
------- -------
Effect of exchange rate changes on cash - (195)
--- ----
Increase in cash and cash equivalents 99,164 7,426
Cash and cash equivalents at beginning of period 14,080 9,276
Cash and cash equivalents at end of period $113,244 $16,702
======== =======
Supplemental information:
Cash paid for income taxes, net of refunds of $192 and
$36, respectively $113,246 $29,056
Cash paid for interest $8,976 $9,806
SNYDER'S-LANCE, INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Measures (Unaudited)
For the Quarters Ended September 27, 2014 and September 28, 2013
----------------------------------------------------------------
(in thousands, except
per share data) Net of Per
Diluted
Tax
Share
--- -----
Quarter Ended
September 27, 2014
-------------------
Net income
attributable to
Snyder's-Lance,
Inc. $137,766 $1.940
Gain on the sale of
Private Brands (123,400) (1.738)
Restructuring charges 329 0.005
Professional fees 292 0.004
Deferred tax
revaluation 2,062 0.029
-----
Net income
attributable to
Snyder's-Lance,
Inc., excluding
special items* $17,049 $0.240
======= ======
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
Q3 2013 Discontinued
operations GAAP net
income (6,492) (0.093)
Q3 2013 Special items
associated with
discontinued
operations 799 0.012
--- -----
Net income from
continuing
operations excluding
special items** $16,670 $0.237
======= ======
* Includes both continuing and discontinued operations. All discontinued operations associated with the gain on the sale of Private Brands were treated as special items to ensure comparable presentation.
** Q3 2013 discontinued operations were excluded in order to ensure comparable presentation with 2014.
SNYDER'S-LANCE, INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Measures (Unaudited)
For the Nine Months Ended September 27, 2014 and September 28, 2013
-------------------------------------------------------------------
(in thousands,
except per share
data) Net of Per
Tax Diluted
Share
--- -----
Nine Months Ended
September 27, 2014
---
Net income
attributable to
Snyder's-Lance,
Inc. $166,259 $2.346
Gain on the sale of
Private Brands (122,091) (1.723)
Impairment charges 4,819 0.068
Restructuring
charges 2,297 0.033
Professional fees 1,983 0.028
Self-funded
medical insurance
claim 564 0.008
Deferred tax
revaluation 2,062 0.029
----- -----
Net income
attributable to
Snyder's-Lance,
Inc., excluding
special items* $55,893 $0.789
======= ======
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
Q3 2013
Discontinued
operations GAAP
net income (6,492) (0.093)
Q3 2013 Special
items associated
with discontinued
operations 799 0.012
--- -----
Net income from
continuing and
discontinued
operations for the
first six months
of 2013 and net
income from
continuing
operations for Q3
2013, excluding
special items** $53,416 $0.763
======= ======
* Includes both continuing and discontinued operations. All discontinued operations associated with the gain on the sale of Private Brands were treated as special items to ensure comparable presentation.
** Q3 2013 discontinued operations were excluded in order to ensure comparable presentation with 2014.
SNYDER'S-LANCE, INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Net Revenue and Operating Cash Flow disclosure
(Unaudited)
For the Nine Months Ended September 27, 2014 and September 28, 2013
-------------------------------------------------------------------
(in thousands, except per share
data) Net Revenue
------------------------------- -----------
Nine Months Ended September 27,
2014
---
Net Revenue from continuing
operations $1,181,920
Net Revenue from discontinued
operations 124,256
-------
Total Net Revenue included in
earnings release $1,306,176
==========
Nine Months Ended September 28,
2013
-------------------------------
Net Revenue from continuing
operations $1,122,272
Net Revenue from discontinued
operations -first nine months
2013 188,374
Net Revenue from discontinued
operations -Q3 2013* (67,781)
Net Revenue from discontinued
operations -first six months
2013* 120,593
-------
Total Net Revenue included in
earnings release $1,242,865
==========
* Q3 2013 net revenue from discontinued operations was excluded in order to ensure comparable presentation as the sale of Private Brands was completed at the beginning of Q3 2014.
(in thousands, except per share data) Operating
Cash Flow
--- ---------
Nine Months Ended September 27, 2014
---
Net cash used in operating activities $(1,416)
Taxes paid associated with the gain on
sale of Private Brands** 89,000
------
Net cash provided by operating
activities, excluding taxes paid** $87,584
=======
** Taxes paid for the gain on the sale of Private Brands were excluded as this operating cash outflow was generated by a non-recurring transaction.
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SOURCE Snyder's-Lance, Inc.
