Snyder’s-Lance, Inc. (Nasdaq:LNCE) today announced a CEO transition
and reported preliminary unaudited financial results for the first
quarter ended April 1, 2017.
CEO Transition Underway
Snyder’s-Lance, Inc. has announced that its President and CEO,
Carl E. Lee, Jr., has retired after 12 years of service to the
Company. Brian J. Driscoll, former President and CEO of
Diamond Foods and a current Director of Snyder’s-Lance, has agreed
to step in as interim CEO.
In announcing the transition, Chairman of the Board, James
Johnston said the following, “On behalf of the entire
Snyder’s-Lance organization, the Board of Directors would like to
thank Carl for his many contributions to the Company, and welcome
Brian into his new role.” Mr. Johnston continued, “We see
great potential in the strategic direction of the Company, and are
excited to have access to Brian’s talent and experience to bring
the Company to the next level of performance. With increased
focus on margin expansion and profitable growth, we are confident
that Brian has the skills to address some of the recent performance
challenges, as well as drive the Company to a level of
profitability more in line with the expectations of our
shareholders.”
Brian Driscoll has more than 35 years of experience in the food
industry having served most recently as the President and CEO of
Diamond Foods until its acquisition by Snyder’s-Lance in February
of 2016. In response to his most recent appointment, Mr.
Driscoll said, “I am honored and excited to be asked by the Board
to fulfill this critical role for the Company at such an important
time in its development. I plan to immediately diagnose the
underlying drivers of the Company’s margin and revenue performance
and put in place strategies to continue to deliver on the
expectations of our shareholders.”
The Company has announced that it will launch a national search
for a permanent replacement to Mr. Lee. Mr. Driscoll is
considered a strong candidate for that role, and will have full
faith and confidence of the Board to develop and execute the
Company’s strategies until a permanent decision is made.
Preliminary Unaudited Financial Results
For the first quarter of 2017, the Company expects net revenue
in the range of $530 million to $532 million, an increase of
approximately 18% to 19% from continuing operations in the first
quarter of 2016, which benefited from two additional months of
contribution from the Diamond brands. On a pro-forma basis,
as if the transaction were completed on January 1, 2016, growth
would have been approximately 1-3%. Snyder’s-Lance legacy
branded net revenue is expected to increase approximately 8% to
9%.
GAAP net income attributable to Snyder’s-Lance, Inc. in the
first quarter of 2017 is expected to be in the range of $11 million
to $12 million, or $0.11 to $0.12 per diluted share. Net
income attributable to Snyder’s-Lance, Inc. excluding special items
is expected to be in the range of $13 million to $14 million, or
$0.13 to $0.14 per diluted share. Adjusted EBITDA in
the first quarter of 2017 is expected to be in the range of $52
million to $54 million. Net income, excluding special items,
and adjusted EBITDA are non-GAAP measures defined herein under “Use
and Definition of Non-GAAP Measures,” and are reconciled to GAAP
net income in the tables that accompany this release.
“Our Company faced difficult challenges during the first quarter
that have negatively impacted earnings,” said Alex Pease, Executive
Vice President and Chief Financial Officer. “Although we saw
sales and market share growth in the majority of our categories,
this has come at a higher cost than planned. Increased
investments in promotional and marketing spending combined with
gross margin pressure had an adverse effect on our performance and
more than offset the benefits of synergy delivery related to the
Diamond Foods transaction.”
Mr. Pease continued, “Under Brian’s leadership, we are moving
aggressively to take the actions necessary to improve
earnings. Specifically, we are focused on improving cost of
goods productivity, net price realization, and accelerating our
zero-based budgeting plans. We are not satisfied with our
early 2017 performance, and our organization is laser-focused on
improved execution and continuous improvement to return the
business back to more expected levels of profitability.”
The Company expects to report final results for its first
quarter ended April 1, 2017 before the market opens on May 8,
2017.
The Company does not plan to release preliminary financial
information on an ongoing basis. The financial information
presented above is preliminary and based upon information available
as of the date of this release. As of the date of this release, the
Company has not completed the financial reporting process and
review of its first fiscal quarter ended April 1, 2017. During the
course of that process, the Company may identify items that would
require it to make adjustments, some of which may be material, to
the preliminary financial information presented above.
Revised 2017 Full-Year Outlook
Based on the Company’s year to date performance and the current
outlook for the remainder of the year, the Company is revising its
previous full-year expectations provided on February 13,
2017. For the full-year of fiscal 2017, the Company now
expects net revenue to be between $2,200 million and $2,250
million, adjusted EBITDA to be between $290 million and $315
million, and earnings per diluted share from continuing operations,
excluding special items, to be between $1.05 and
$1.20.
Full-year 2017 GAAP guidance is not provided in this release due to
the likely occurrence of one or more of the following items where
the Company is unable to reliably forecast the timing and
magnitude: Continued transaction related costs associated with the
divestiture of Diamond of California and integration of legacy
Diamond operations, other potential transactions and their related
costs, settlements of contingent liabilities, possible gains or
losses on the sale of businesses or other assets, restructuring
costs, impairment charges, and the income tax effects of these
potential items.
The Company’s 2017 full-year outlook also includes the following
assumptions:
- Capital expenditures of $75 million to $85 million;
- Net interest expense of $37 million to $40 million;
- Effective tax rate of 33.5% to 35.5%; and
- Weighted average diluted share count of approximately 98
million shares.
Conference Call
Management will host a conference call today at 8:30 a.m. ET to
discuss the Company's preliminary unaudited first quarter financial
results and updated full-year 2017 outlook. The conference call
will be webcast live through the Investor Relations section of the
Snyder's-Lance website (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 9408303. A continuous telephone replay of
the call will be available between 12:00 p.m. ET on April 17 and
12:00 a.m. ET on April 24. The replay telephone number is
(855) 859-2056 for U.S. callers or (404) 537-3406 for international
callers. The replay access code is 9408303. 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, popcorn, nuts and other
snacks. Products are sold under the Snyder's of Hanover®, Lance®,
Kettle Brand®, KETTLE® Chips, Cape Cod®, Snack Factory® Pretzel
Crisps®, Pop Secret®, Emerald®, Late July®, Krunchers! ®, Tom's®,
Archway®, Jays®, Stella D'oro®, Eatsmart Snacks™, O-Ke-Doke®,
Metcalfe’s skinny®, 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. For more information,
visit the Company's corporate web site:
www.snyderslance.com.LNCE-E
Use and Definition of Non-GAAP Measures
Snyder’s-Lance’s management uses non-GAAP financial measures to
evaluate our operating performance and to facilitate a comparison
of the Company’s operating performance on a consistent basis and to
provide measures that, when viewed in combination with its results
prepared in accordance with GAAP, allow for a more complete
understanding of factors and trends affecting the Company’s
business than GAAP measures alone. The non-GAAP measures and
related comparisons should be considered in addition to, not as a
substitute for, our GAAP disclosure, as well as other measures of
financial performance reported in accordance with GAAP, and may not
be comparable to similarly titled measures used by other companies.
Our management believes these non-GAAP measures are useful for
providing increased transparency and assisting investors in
understanding our ongoing operating performance.
Net Income and Earnings per Share, Excluding Special ItemsNet
income and earnings per share, from continuing operations,
excluding special items, are metrics provided to present the reader
with the after-tax impact of operating income, excluding special
items, in order to improve the comparability and understanding of
the related GAAP measures. Net income and earnings per share,
excluding special items, provide transparent and useful information
to management, investors, analysts and other parties in evaluating
and assessing our primary operating results after removing the
impact of unusual, non-operational or restructuring or transaction
related activities that affect comparability. Net income and
earnings per share, excluding special items, are measures
management uses for planning and budgeting, monitoring and
evaluating financial and operating results.
Adjusted EBITDA
Snyder’s-Lance defines adjusted EBITDA as earnings before
interest expense, income taxes, depreciation and amortization
(“EBITDA”), further adjusted to exclude restructuring or
transaction related expenses, and other non-cash or non-operating
items as well as any other unusual items that impact the
comparability of our financial information.
Management uses adjusted EBITDA as a key metric in the
evaluation of underlying Company performance, in making financial,
operating and planning decisions. The Company believes this
measure is useful to investors because it increases transparency
and assists investors in understanding the underlying performance
of the Company and in the analysis of ongoing operating trends.
Additionally, Snyder’s-Lance believes adjusted EBITDA is frequently
used by analysts, investors and other interested parties in their
evaluation of companies, many of which present an adjusted EBITDA
measure when reporting their results. The Company has historically
reported adjusted EBITDA to analysts and investors and believes
that its continued inclusion provides consistency in financial
reporting and enables analysts and investors to perform meaningful
comparisons of past, present and future operating results.
Adjusted EBITDA should not be considered as an alternative to
net income, determined in accordance with GAAP, as an indicator of
the Company’s operating performance, as an indicator of cash flows,
or as a measure of liquidity. While EBITDA and adjusted EBITDA and
similar measures are frequently used as measures of operations and
the ability to meet debt service requirements, they are not
necessarily comparable to other similarly titled captions of other
companies due to the potential inconsistencies in the method of
calculation.
Cautionary Information about Forward Looking
Statements
In this press release, we make statements which may be
forward-looking within the meaning of applicable securities laws,
which represent our current judgment about possible future events.
The statements include projections regarding future revenues,
earnings and other results. In making these statements we
rely on current expectations, assumptions and analyses based on our
experience and perception of historical trends, current conditions
and expected future developments as well as other factors we
consider appropriate under the circumstances. We believe these
judgments are reasonable, but these statements are not guarantees
of any events or financial results, and our actual results may
differ materially due to a variety of important factors, both
positive and negative. These factors include among others:
changes in general economic conditions; price or availability of
raw materials, packaging, energy and labor; food industry
competition; changes in top customer relationships; consolidation
of the retail environment; decision by British voters to exit the
European Union; failure to realize anticipated benefits of
acquisitions and divestitures; loss of key personnel; failure to
execute strategic initiatives; safety and quality of food products;
adulterated or misbranded products; disruption of our supply chain
or information technology systems; improper use or misuse of social
media; ability to anticipate changes in consumer preferences and
trends; distribution through independent operators; protection of
trademarks and intellectual property; impairment in the carrying
value of goodwill or other intangible assets; new regulations or
legislation; interest and foreign currency exchange rate
volatility; concentration of capital stock ownership; increasing
legal complexity and potential litigation; failure to realize the
expected benefits from the acquisition of Diamond Foods; the
inability to successfully execute international expansion
strategies; additional risks from foreign operations; our
substantial debt; and the restrictions and limitations on our
business operations in the agreements and instruments governing our
debt. Our most recent report on Form 10-K and our other reports
filed with the U.S. Securities and Exchange Commission provide
information about these and other factors, which we may revise or
supplement in future reports. We caution readers not to place undue
reliance on forward-looking statements. We do not undertake to
update any forward-looking statements that it may make except as
required by applicable law. All subsequent written and
forward-looking statements attributed to Snyder’s-Lance or any
person acting on its behalf are expressly qualified in their
entirety by the factors referenced above.
(Tables Follow)
Reconciliation of Non-GAAP Measures
(Unaudited) |
|
|
|
|
|
Preliminary net income attributable to
Snyder's-Lance, excluding special items |
|
|
|
|
(in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Low range |
|
High range |
|
|
|
|
|
|
Net Income attributable to Snyder's-Lance |
|
|
$ |
11.0 |
|
|
$ |
12.0 |
|
|
|
|
|
|
|
Transaction and integration related expenses, net of tax |
|
|
|
0.8 |
|
|
|
0.8 |
|
Emerald move and required packaging changes |
|
|
|
1.3 |
|
|
|
1.3 |
|
Business restructuring |
|
|
|
0.5 |
|
|
|
0.5 |
|
Class action insurance settlement |
|
|
|
(0.5 |
) |
|
|
(0.5 |
) |
Other, net of tax |
|
|
|
(0.1 |
) |
|
|
(0.1 |
) |
Special items |
|
|
|
2.0 |
|
|
|
2.0 |
|
|
|
|
|
|
|
Net income attributable to Snyder's-Lance, excluding
special items |
|
|
$ |
13.0 |
|
|
$ |
14.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Non-GAAP Measures
(Unaudited) |
|
|
|
|
|
Preliminary EBITDA and adjusted EBITDA |
|
|
|
|
|
(in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Low range |
|
High range |
|
|
|
|
|
|
Net Income |
|
|
$ |
11.0 |
|
|
$ |
12.0 |
|
Income tax expense |
|
|
|
4.2 |
|
|
|
5.2 |
|
Interest expense |
|
|
|
8.9 |
|
|
|
8.9 |
|
Depreciation |
|
|
|
17.7 |
|
|
|
17.7 |
|
Amortization |
|
|
|
6.9 |
|
|
|
6.9 |
|
EBITDA |
|
|
$ |
48.7 |
|
|
$ |
50.7 |
|
|
|
|
|
|
|
Transaction and integration related expenses |
|
|
|
1.3 |
|
|
|
1.3 |
|
Emerald move and required packaging changes |
|
|
|
2.1 |
|
|
|
2.1 |
|
Business restructuring |
|
|
|
0.8 |
|
|
|
0.8 |
|
Class action insurance settlement |
|
|
|
(0.8 |
) |
|
|
(0.8 |
) |
Other |
|
|
|
(0.1 |
) |
|
|
(0.1 |
) |
Special items |
|
|
|
3.3 |
|
|
|
3.3 |
|
|
|
|
|
|
|
Adjusted EBITDA |
|
|
$ |
52.0 |
|
|
$ |
54.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Non-GAAP Measures
(Unaudited) |
|
|
|
|
|
Preliminary earnings per diluted share, excluding special
items |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Low range |
|
High range |
|
|
|
|
|
|
Earnings per diluted share |
|
|
$ |
0.11 |
|
|
$ |
0.12 |
|
|
|
|
|
|
|
Transaction and integration related expenses |
|
|
|
0.01 |
|
|
|
0.01 |
|
Business restructuring |
|
|
|
0.01 |
|
|
|
0.01 |
|
Emerald move and required packaging changes |
|
|
|
0.01 |
|
|
|
0.01 |
|
Class action insurance settlement |
|
|
|
(0.01 |
) |
|
|
(0.01 |
) |
Special items |
|
|
|
0.02 |
|
|
|
0.02 |
|
|
|
|
|
|
|
Earnings per diluted share, excluding special
items |
|
|
$ |
0.13 |
|
|
$ |
0.14 |
|
|
|
|
|
|
|
Investor Contact
Kevin Powers, Senior Director, Investor Relations
kpowers@snyderslance.com, (704) 557-8279
Media Contact
Joey Shevlin, Director, Corporate Communications & Public Affairs
JShevlin@snyderslance.com, (704) 557-8850
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