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8-K - FORM 8-K - SNYDER'S-LANCE, INC.d433550d8k.htm

Exhibit 99.1

 

 

CONTACTS:

Mark Carter, VP and Investor Relations Officer (704) 557-8386

Joe Calabrese, Financial Relations Board (212) 827-3772

IMMEDIATE RELEASE

November 7, 2012

Snyder’s-Lance, Inc. Reports Results for Third Quarter 2012

 

   

Reports net revenues of $407 million

   

Reports overall branded growth of 5.0%, excluding the impact of IBO conversion

   

Reports 2012 third quarter earnings per diluted share of $0.26 and reports $0.28 excluding special items

   

Declares quarterly dividend of $0.16 per share of common stock

Charlotte, NC, - November 7, 2012 – Snyder’s-Lance, Inc. (Nasdaq-GS: LNCE) today reported results for its third quarter of 2012. Net revenues for the third quarter ended September 29, 2012 were $407 million, a decrease of 3.6% compared to prior year net revenues of $422 million. Net revenue, when adjusted for the impact of the independent business owner (“IBO”) route system conversion, was flat year over year. Revenues from the company’s branded products grew by 5.0% excluding the impact of IBO conversion. Net income was $17.8 million for the third quarter of 2012, or $0.26 per diluted share, compared to a net income of $8.8 million for the third quarter of 2011 or $0.13 per diluted share. Net income excluding special items in the third quarter of 2012 was $19.2 million, or $0.28 per diluted share, as compared to third quarter 2011 net income excluding special items of $10.7 million, or $0.16 per diluted share. Special items for the third quarter of 2012 were $1.4 million in expense, after tax which included expenses associated with the acquisition of Snack Factory, LLC and certain affiliates, in addition to other merger related costs. Special items for the third quarter of 2011 included after-tax expenses of $1.9 million primarily for merger and integration related expenses.

Comments from Management

“We are pleased with our financial results in the third quarter, and are especially excited with our branded growth of 5.0% excluding the impact of the IBO conversion.” commented David V. Singer, Chief Executive Officer. “Our growth continues to be driven by our core brands (Snyder’s of Hanover® pretzels, Lance® sandwich crackers and Cape Cod® kettle chips), which together were up over 7% for the quarter excluding the impact of the IBO conversion. Branded sales growth has been a priority this year and I’m very excited with our progress. Our non-branded sales were down a little over 7% in the third quarter reflecting decisions to discontinue sales to certain customers who did not accept price increases. These decisions reduced revenue, but led to widening profit margins compared to past quarters and freed production capacity to support profitable growth consistent with our plan to grow profits and shareholder value.”

Mr. Singer continued, “Given our emphasis on growing our branded business, we are especially excited about the completion of our recent acquisition of the fast growing Pretzel Crisps® brand, which strengthens our branded portfolio and positions us to continue to drive increased branded revenue. The entire team at Snack Factory has done an amazing job of growing that brand through hard work, innovation and product quality with a passion for success. While we are just now in the earliest stages of working together, it’s clear to me that great things are ahead for the entire Snyder’s-Lance family.”

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 30, 2012 to stockholders of record at the close of business on November 20, 2012.


2012 Estimates

The Company believes that its net revenue for the full year 2012, including Snack Factory and the IBO impact, will be flat to about 2% down when compared to 2011. Estimates for earnings per diluted share are expected to increase between 30% and 35% as compared to 2011, including the impact of Snack Factory. Capital expenditures for 2012 are projected to be between $75 and $80 million as investments are made in plant improvements, quality, capacity and innovation. The previous estimate for capital expenditures was $77 to $82 million.

Conference Call

Snyder’s-Lance, Inc. has scheduled a conference call and presentation with investors at 9:00 am eastern time on Wednesday, November 7th, 2012 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 1:00 pm on November 7th and midnight on November 14th. The replay telephone number is (855) 859-2056 for U.S. callers or (404) 537-3406 for international callers. The replay access code is 48755466. Investors may also access a web-based replay of the conference call at www.snyderslance.com.

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.

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, 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®, O-Ke-Doke® and Grande® 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; business disruption from merger integration and conversion of our distribution network to independent operators, including failure to realize anticipated synergies in a timely manner or the loss of key personnel; failure to realize the anticipated benefits of our Snack Factory acquisition; failure to maintain proper and effective internal controls; ability to execute strategic initiatives; product recalls and concerns surrounding the quality or safety of products and ingredients; disruptions to our supply chain or information technology systems; changes in consumer preferences; inability to maintain existing markets or expand to other geographic markets; potential threats to trademarks and other proprietary intellectual rights; 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.


SNYDER’S-LANCE, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Income (Unaudited)

For the Quarters and Nine Months Ended September 29, 2012 and October 1, 2011

(in thousands, except per share data)

 

     Quarter Ended     Nine Months Ended  
     September 29,
2012
    October 1,
2011
    September 29,
2012
    October 1,
2011
 

Net revenue

   $ 406,565      $ 421,897      $ 1,198,808      $ 1,222,909   

Cost of sales

     269,626        280,892        802,568        797,095   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross margin

     136,939        141,005        396,240        425,814   

Selling, general and administrative

     106,512        126,816        324,864        384,856   

Gain on sale of route businesses, net

     (1,427     (3,462     (21,596     (3,788

Other expense/(income), net

     617        (779     83        9,730   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before interest and income taxes

     31,237        18,430        92,889        35,016   

Interest expense, net

     1,692        3,037        6,258        8,064   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     29,545        15,393        86,631        26,952   

Income tax expense

     11,634        6,608        34,930        10,830   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     17,911        8,785        51,701        16,122   

Net income/(loss) attributable to noncontrolling interests

     146        (45     397        291   
  

 

 

   

 

 

   

 

 

   

 

 

 

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

   $ 17,765      $ 8,830      $ 51,304      $ 15,831   
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic earnings per share

   $ 0.26      $ 0.13      $ 0.75      $ 0.24   

Weighted average shares outstanding – basic

     68,598        67,706        68,268        67,268   

Diluted earnings per share

   $ 0.26      $ 0.13      $ 0.74      $ 0.23   

Weighted average shares outstanding – diluted

     69,526        68,787        69,190        68,324   

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 29, 2012 (Unaudited) and December 31, 2011

(in thousands, except share data)

 

      September 29,
2012
     December 31,
2011
 
ASSETS      

Current assets:

     

Cash and cash equivalents

   $ 8,800       $ 20,841   

Accounts receivable, net of allowances of $1,938 and $1,884, respectively

     139,569         143,238   

Inventories

     109,025         106,261   

Income tax receivable

     —           18,119   

Deferred income taxes

     9,298         21,042   

Assets held for sale

     11,439         57,822   

Prepaid expenses and other current assets

     21,902         20,705   
  

 

 

    

 

 

 

Total current assets

     300,033         388,028   

Noncurrent assets:

     

Fixed assets, net of accumulated depreciation of $331,485 and $328,648, respectively

     324,913         313,043   

Goodwill

     369,932         367,853   

Other intangible assets, net

     379,871         376,062   

Other noncurrent assets

     22,557         21,804   
  

 

 

    

 

 

 

Total assets

   $ 1,397,306       $ 1,466,790   
  

 

 

    

 

 

 
LIABILITIES AND STOCKHOLDERS’ EQUITY      

Current liabilities:

     

Current portion of long-term debt

   $ 4,347       $ 4,256   

Accounts payable

     51,412         52,930   

Accrued compensation

     25,312         29,248   

Accrued selling and promotional costs

     14,325         21,465   

Income tax payable

     484         —     

Other payables and accrued liabilities

     35,789         47,247   
  

 

 

    

 

 

 

Total current liabilities

     131,669         155,146   

Noncurrent liabilities:

     

Long-term debt

     191,551         253,939   

Deferred income taxes

     176,943         196,244   

Other noncurrent liabilities

     23,475         22,870   
  

 

 

    

 

 

 

Total liabilities

     523,638         628,199   

Commitments and contingencies

     —           —     

Stockholders’ equity:

     

Common stock, 68,676,060 and 67,820,798 shares outstanding, respectively

     57,228         56,515   

Preferred stock, no shares outstanding

     —           —     

Additional paid-in capital

     743,519         730,338   

Retained earnings

     54,053         35,539   

Accumulated other comprehensive income

     16,225         13,719   
  

 

 

    

 

 

 

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

     871,025         836,111   

Noncontrolling interests

     2,643         2,480   
  

 

 

    

 

 

 

Total stockholders’ equity

     873,668         838,591   
  

 

 

    

 

 

 

Total liabilities and stockholders’ equity

   $ 1,397,306       $ 1,466,790   
  

 

 

    

 

 

 


SNYDER’S-LANCE, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows (Unaudited)

For the Nine Months Ended September 29, 2012 and October 1, 2011

(in thousands)

 

     Nine Months Ended  
     September 29,
2012
    October 1,
2011
 

Operating activities

    

Net income

   $ 51,701      $ 16,122   

Adjustments to reconcile net income to cash provided by operating activities:

    

Depreciation and amortization

     39,255        41,965   

Stock-based compensation expense

     3,487        1,761   

Loss/(gain) on sale of fixed assets, net

     87        (68

Gain on sale of route businesses, net

     (21,596     (3,788

Impairment of fixed assets

     207        10,119   

Changes in operating assets and liabilities, excluding business acquisitions

     (13,357     6,679   
  

 

 

   

 

 

 

Net cash provided by operating activities

     59,784        72,790   
  

 

 

   

 

 

 

Investing activities

    

Purchases of fixed assets

     (55,962     (43,359

Purchases of route businesses

     (27,747     (19,689

Proceeds from sale of fixed assets

     8,185        2,701   

Proceeds from sale of route businesses

     88,672        19,595   

Proceeds from sale of investments

     —          960   

Business acquisitions, net of cash acquired

     —          (15,394
  

 

 

   

 

 

 

Net cash provided by/(used in) investing activities

     13,148        (55,186
  

 

 

   

 

 

 

Financing activities

    

Dividends paid to stockholders

     (32,790     (32,071

Dividends paid to noncontrolling interests

     (234     (281

Acquisition of additional interest in Melisi Snacks, Inc.

     —          (3,500

Deferred financing costs

     (567     —     

Issuances of common stock

     10,741        8,248   

Repurchases of common stock

     (333     —     

Repayments of long-term debt

     (1,647     —     

Net repayments of revolving credit facilities

     (59,869     (2,547
  

 

 

   

 

 

 

Net cash used in financing activities

     (84,699     (30,151
  

 

 

   

 

 

 

Effect of exchange rate changes on cash

     (274     (274
  

 

 

   

 

 

 

Decrease in cash and cash equivalents

     (12,041     (12,821

Cash and cash equivalents at beginning of period

     20,841        27,877   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 8,800      $ 15,056   
  

 

 

   

 

 

 

Supplemental information:

    

Cash paid/(received) for income taxes, net of refunds of $12,361 and $7,251, respectively

   $ 20,636      $ (5,699

Cash paid for interest

   $ 5,801      $ 7,191   


SNYDER’S-LANCE, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

For the Quarters and Nine Months Ended September 29, 2012 and October 1, 2011

(in thousands)

 

     Quarter Ended     Nine Months Ended  
     September 29,
2012
    October 1,
2011
    September 29,
2012
    October 1,
2011
 

Net income

   $ 17,911      $ 8,785      $ 51,701      $ 16,122   

Net unrealized gains/(losses) on derivative instruments, net of income tax

     5        (530     (288     (75

Foreign currency translation adjustment

     2,468        (6,416     2,794        (3,651
  

 

 

   

 

 

   

 

 

   

 

 

 

Total other comprehensive income/(loss)

     2,473        (6,946     2,506        (3,726
  

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income

     20,384        1,839        54,207        12,396   

Comprehensive (income)/loss attributable to noncontrolling interests, net of income tax of $80, $55, $176 and $209, respectively

     (146     45        (397     (291
  

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income attributable to Snyder’s-Lance, Inc.

   $ 20,238      $ 1,884      $ 53,810      $ 12,105   
  

 

 

   

 

 

   

 

 

   

 

 

 


SNYDER’S-LANCE, INC. AND SUBSIDIARIES

Reconciliation of Non-GAAP Measures (Unaudited)

For the Quarters and Nine Months Ended September 29, 2012 and October 1, 2011

(in thousands)

 

     Net of
Tax
    Per Diluted
Share
 

Quarter Ended September 29, 2012

    

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

   $ 17,765      $ 0.26   

Merger related items

     115        0.00   

Snack Factory acquisition costs

     304        0.00   

Greenville closure costs

     487        0.01   

Gain on the sale of route businesses

     (674     (0.01

Incremental income tax associated with non-deductible goodwill

on the sale of route businesses

     1,250        0.02   
  

 

 

   

 

 

 

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

   $ 19,247      $ 0.28   
  

 

 

   

 

 

 

Quarter Ended October 1, 2011

    

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

   $ 8,830      $ 0.13   

Merger-related costs – severance and professional fees

     2,224        0.04   

Gain on sale of route businesses

     (3,218     (0.05

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

     2,861        0.04   
  

 

 

   

 

 

 

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

   $ 10,697      $ 0.16   
  

 

 

   

 

 

 

Nine Months Ended September 29, 2012

    

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

   $ 51,304      $ 0.74   

Merger related items

     1,452        0.02   

Snack Factory acquisition costs

     304        0.00   

Corsicana/Greenville closure costs

     1,751        0.03   

Gain on the sale of route businesses

     (13,465     (0.19

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

     4,341        0.06   
  

 

 

   

 

 

 

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

   $ 45,687      $ 0.66   
  

 

 

   

 

 

 

Nine Months Ended October 1, 2011

    

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

   $ 15,831      $ 0.23   

Merger-related costs – severance and professional fees

     11,699        0.18   

Impairment of route trucks

     6,481        0.09   

Gain on sale of route businesses

     (3,218     (0.05

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

     2,861        0.04   
  

 

 

   

 

 

 

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

   $ 33,654      $ 0.49