Snyder’s-Lance Announces Full Year 2015 Results

February 29, 2016 Mergers & Acquisitions 0

Snyder’s-Lance Announces Full Year 2015 Results

PR Newswire

CHARLOTTE, N.C., Feb. 29, 2016

CHARLOTTE, N.C., Feb. 29, 2016 /PRNewswire/ — Snyder’s-Lance, Inc. (NASDAQ: LNCE) today announced Full Year, 2015 results. Preliminary unaudited results were previously announced in a press release and conference call on January 27, 2016. Given that the final results did not vary from this preliminary release, management will not hold a call to discuss results for full year 2015.

Snyder's-Lance Inc. Logo

Full Year Financial Summary

  • Net revenue for the full year 2015 was $1.66 billion, an increase of 2.2% compared to full year 2014 net revenue of $1.62 billion and an increase of 4.1% excluding the impact of the additional 53rd week in 2014. The additional week in 2014 was $30.4 million in net revenue.
  • Net income excluding special items for the full year 2015 was $71.9 million, or $1.01 per diluted share, as compared to net income excluding special items of $65.2 million for the full year 2014, or $0.92 per diluted share.
  • GAAP net income, which includes special items, for the full year 2015, was $50.7 million, or $0.71 per diluted share, as compared to GAAP net income of $59.3 million for the full year 2014, or $0.84 per diluted share.
  • Special items for the full year 2015 included after-tax expenses of $21.3 million primarily associated with legal fees and accruals for expected settlements of certain litigation, impairment charges and transaction-related expenses associated with the Diamond Foods acquisition. Special items for the full year 2014 included an after-tax gain on the revaluation of our prior equity investment in Late July of $9.8 million which was more than offset by after-tax expenses of $15.7 million primarily associated with impairment charges, restructuring charges and professional fees.

Diamond Foods Acquisition and Estimates for 2016

Earlier today, Snyder’s-Lance also announced the completion of the acquisition of Diamond Foods, Inc., an industry leading snack foods company. Given that the transaction closed today, Snyder’s-Lance cannot provide consolidated estimates for 2016 at this time. Snyder’s-Lance expects to provide full year 2016 estimates of net revenue, EPS and capital spending for the combined company during its first quarter 2016 earnings call, anticipated to be held in early May.

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, popcorn, 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, California, Oregon, Wisconsin and the United Kingdom. Products are sold under the Snyder’s of Hanover, Lance, Cape Cod, Snack Factory Pretzel Crisps, Late July, Kettle Brand, KETTLE, Pop Secret, Emerald, Diamond of California, and other brand names along with a number of third party brands. Products are distributed internationally through grocery and mass merchandisers, convenience stores, club stores, food service outlets and other channels. LNCE-E

Cautionary Information about Forward Looking Statements

This press 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 or an economic turndown; 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; inability to maintain profitability in the face of a consolidating retail environment; failure to successfully integrate acquisitions or execute divestitures; 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; inadequacies in, or security breaches of, our 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 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 Years Ended January 2, 2016 and January 3, 2015

Quarter Ended

Year Ended

(in thousands, except per share data)

January 2,
2016

January 3,
2015

January 2,
2016

January 3,
2015

Net revenue

$

405,857

$

439,000

$

1,656,399

$

1,620,920

Cost of sales

259,899

281,833

1,077,110

1,042,458

Gross margin

145,958

157,167

579,289

578,462

Selling, general and administrative

116,408

124,497

472,236

478,532

Settlements of certain litigation

—

—

5,675

—

Impairment charges

11,997

5,544

11,997

13,047

(Gain)/loss on sale of route businesses, net

(545)

329

(1,913)

(1,109)

Gain on the revaluation of prior equity investment

—

(16,608)

—

(16,608)

Other expense/(income), net

1,569

(892)

838

(250)

Income before interest and income taxes

16,529

44,297

90,456

104,850

Interest expense, net

2,864

2,857

10,853

13,342

Income before income taxes

13,665

41,440

79,603

91,508

Income tax expense

6,652

14,572

28,885

32,291

Income from continuing operations

7,013

26,868

50,718

59,217

(Loss)/income from discontinued operations, net of
income tax

—

(626)

—

133,316

Net income

7,013

26,242

50,718

192,533

Net (loss)/income attributable to noncontrolling
interests

(30)

(90)

33

(58)

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

$

7,043

$

26,332

$

50,685

$

192,591

Amounts attributable to Snyder’s-Lance, Inc.:

Continuing operations

$

7,043

$

26,958

$

50,685

$

59,275

Discontinued operations

—

(626)

—

133,316

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

$

7,043

$

26,332

$

50,685

$

192,591

Basic earnings per share:

Continuing operations

$

0.10

$

0.38

$

0.72

$

0.84

Discontinued operations

—

(0.01)

—

1.90

Total basic earnings per share

$

0.10

$

0.37

$

0.72

$

2.74

Diluted earnings per share:

Continuing operations

$

0.10

$

0.38

$

0.71

$

0.84

Discontinued operations

—

(0.01)

—

1.88

Total diluted earnings per share

$

0.10

$

0.37

$

0.71

$

2.72

Cash dividends declared per share

$

0.16

$

0.16

$

0.64

$

0.64

SNYDER’S-LANCE, INC. AND SUBSIDIARIES

Consolidated Balance Sheets (Unaudited)

As of January 2, 2016 and January 3, 2015

(in thousands, except share data)

2015

2014

ASSETS

Current assets:

Cash and cash equivalents

$

39,105

$

35,373

Restricted cash

966

966

Accounts receivable, net of allowances of $917 and $1,778, respectively

131,339

126,093

Inventories

110,994

116,236

Prepaid income taxes and income taxes receivable

2,321

4,175

Assets held for sale

15,678

11,007

Prepaid expenses and other current assets

21,210

22,112

Total current assets

321,613

315,962

Noncurrent assets:

Fixed assets, net

401,465

423,612

Goodwill

539,119

541,539

Other intangible assets, net

528,658

545,212

Other noncurrent assets

27,403

23,874

Total assets

$

1,818,258

$

1,850,199

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Current portion of long-term debt

$

8,541

$

8,561

Accounts payable

54,207

57,407

Accrued compensation

26,196

33,154

Accrued casualty insurance claims

4,262

4,320

Accrued marketing, selling and promotional costs

18,806

15,889

Other payables and accrued liabilities

32,248

21,595

Total current liabilities

144,260

140,926

Noncurrent liabilities:

Long-term debt

379,855

438,376

Deferred income taxes, net

157,591

155,404

Accrued casualty insurance claims

11,931

13,755

Other noncurrent liabilities

17,034

15,030

Total liabilities

710,671

763,491

Commitments and contingencies

Stockholders’ equity:

Common stock, $0.83 1/3 par value. 110,000,000 shares authorized; 70,968,054 and 70,406,086 shares
outstanding, respectively

59,138

58,669

Preferred stock, $1.00 par value. Authorized 5,000,000 shares; no shares outstanding

—

—

Additional paid-in capital

791,428

776,930

Retained earnings

238,314

232,812

Accumulated other comprehensive loss

(630)

(1,007)

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

1,088,250

1,067,404

Noncontrolling interests

19,337

19,304

Total stockholders’ equity

1,107,587

1,086,708

Total liabilities and stockholders’ equity

$

1,818,258

$

1,850,199

SNYDER’S-LANCE, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows (Unaudited)

For the Fiscal Years Ended January 2, 2016, January 3, 2015 and December 28, 2013

(in thousands)

2015

2014

2013

Operating activities:

Net income

$

50,718

$

192,533

$

79,084

Adjustments to reconcile net income to cash from operating activities:

Depreciation and amortization

70,379

65,164

59,631

Stock-based compensation expense

5,616

6,529

5,944

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

420

1,304

(2,640)

Gain on sale of Private Brands, excluding transaction costs

—

(229,322)

—

Gain on the purchase of additional interest in Late July

—

(16,608)

—

Gain on sale of route businesses, net

(1,913)

(1,109)

(2,590)

Impairment charges

11,997

13,047

1,900

Derecognition of cumulative translation adjustment

737

—

—

Deferred income taxes

2,433

(19,499)

10,360

Provision for doubtful accounts

1,104

1,600

1,828

Changes in operating assets and liabilities, excluding business acquisitions and disposals:

Accounts receivable

(6,349)

1,368

(5,266)

Inventory

5,242

(7,131)

4,461

Other current assets

2,463

5,972

(3,083)

Accounts payable

(2,468)

3,135

1,893

Other accrued liabilities

6,970

(149)

(6,960)

Other noncurrent assets

709

3,741

1,830

Other noncurrent liabilities

(1,904)

(7,550)

(5,656)

Net cash provided by operating activities

146,154

13,025

140,736

Investing activities:

Purchases of fixed assets

(51,468)

(72,056)

(74,579)

Purchases of route businesses

(22,568)

(21,359)

(29,692)

Proceeds from sale of fixed assets

1,776

2,122

9,448

Proceeds from sale of route businesses

27,408

22,400

30,745

Proceeds from sale of investments

826

—

2,298

Proceeds from sale of Private Brands

—

430,017

—

Business acquisitions, net of cash acquired

—

(262,323)

(3,131)

Changes in restricted cash

—

234

—

Net cash (used in)/provided by investing activities

(44,026)

99,035

(64,911)

Financing activities:

Dividends paid to stockholders

(45,183)

(44,925)

(44,892)

Acquisition of remaining interest in Patriot Snacks Real Estate, LLC

—

(150)

—

Debt issuance costs

(5,065)

(1,854)

—

Issuances of common stock

7,862

6,816

9,776

Excess tax benefits from stock-based compensation

2,326

1,051

1,500

Repurchases of common stock

(836)

(1,331)

(770)

Repayments of long-term debt

(7,500)

(15,374)

(20,508)

Net repayments of existing credit facilities

(50,000)

(35,000)

(16,127)

Net cash used in financing activities

(98,396)

(90,767)

(71,021)

Increase in cash and cash equivalents

3,732

21,293

4,804

Cash and cash equivalents at beginning of fiscal year

35,373

14,080

9,276

Cash and cash equivalents at end of fiscal year

$

39,105

$

35,373

$

14,080

Non-cash financing activities:

Acquisition of remaining interest in Michaud Distributors

$

—

$

—

$

10,150

Supplemental information:

Cash paid for income taxes, net of refunds of $2,608, $381, and $151, respectively

$

23,068

$

160,906

$

39,313

Cash paid for interest

$

11,523

$

13,798

$

15,131

SNYDER’S-LANCE, INC. AND SUBSIDIARIES

Reconciliation of Non-GAAP Measures (Unaudited)

For the Years Ended January 2, 2016 and January 3, 2015

(in thousands, except per share data)

Net of
Tax

Per
Diluted
Share

Year Ended January 2, 2016

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

$

50,685

$

0.710

Impairment charges

7,840

0.110

Severance and relocation charges

1,011

0.014

Settlements and legal fees associated with certain litigation

4,784

0.067

Professional fees

305

0.004

Transaction-related expenses

6,442

0.090

Self-funded medical insurance claim

546

0.008

Recovery expenses for power outage and flood

328

0.005

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

$

71,941

$

1.008

Year Ended January 3, 2015

Income from continuing operations

$

59,275

$

0.836

Gain on the revaluation of prior equity investment

(9,799)

(0.138)

Impairment charges

8,555

0.121

Restructuring charges

2,297

0.032

Professional fees

2,211

0.031

Self-funded medical insurance claim

564

0.008

Deferred tax revaluation

2,062

0.029

Income from continuing operations, excluding special items

$

65,165

$

0.919

SNYDER’S-LANCE, INC. AND SUBSIDIARIES

Reconciliation of Non-GAAP Net Revenue (Unaudited)

For the Year Ended January 3, 2015

(in thousands, except per share data)

Net Revenue

Year Ended January 3, 2015

Net revenue

$

1,620,920

Estimated 53rd week

(30,400)

Total net revenue excluding estimated 53rd week

$

1,590,520

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SOURCE Snyder’s-Lance, Inc.

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