- Total net revenue from continuing operations increased
3.7%; core branded growth of 4.9%
- GAAP net loss per share of $0.60 from continuing
operations including non-recurring, non-cash expense of $0.87 per
share
- EPS from continuing operations excluding special items*
increased 10% to $0.33
- GAAP net loss from continuing operations of $57.7
million including non-recurring, non-cash expense of $84.9
million
- Net income from continuing operations excluding special
items* increased 10% to $32.7 million
- Adjusted EBITDA* increased 14% to $85.2
million
- Company updates full-year 2017
outlook
*Descriptions of measures excluding special items are provided
in “Use and Definition of Non-GAAP Measures” and reconciliations
are provided in the tables at the end of this release.
Snyder’s-Lance, Inc. (Nasdaq-GS:LNCE) today reported financial
results for the third quarter ended September 30, 2017 and updated
its full-year 2017 outlook. Total net revenue from continuing
operations in the third quarter of 2017 increased 3.7% compared to
the third quarter of 2016 with core branded growth of 4.9% year
over year. The GAAP net loss attributable to Snyder’s-Lance
from continuing operations in the third quarter of 2017 was $57.7
million, or $0.60 per diluted share, as compared to net income of
$25.7 million, or $0.26 per diluted share, in the third quarter of
2016. GAAP results include a non-recurring, non-cash
impairment charge of $84.9 million after-tax related to the
impairment of certain brand trademarks and goodwill associated with
the Diamond Foods acquisition. Net income attributable to
Snyder’s-Lance from continuing operations, excluding special items,
for the third quarter of 2017 was $32.7 million, as compared to
$29.6 million, in the third quarter of 2016. Earnings per
diluted share from continuing operations, excluding special items,
were $0.33 in the third quarter of 2017, compared to $0.30 in the
third quarter of 2016.
"Our third quarter financial performance continued to improve
along several dimensions. Gross margin performance was strong
at 37.1% of net revenue compared to 36.8% in 2016. Selling,
general and administrative performance also improved to 26.3% of
net revenue compared to 28.0% last year. On top of these
improving profitability trends, our branded net revenue growth
continues to outpace the category, and we are on track to deliver
our full-year targets," said Brian J. Driscoll, President and Chief
Executive Officer of Snyder’s-Lance. “Looking ahead to 2018,
our organization is beginning to make progress in our performance
transformation plan as indicated by these results. While we
have much work to do, we firmly believe that we have the
opportunity to unlock substantial profitability improvements over
time, and will unlock the considerable potential of our branded
portfolio to drive improved total shareholder return.”
Third Quarter 2017 Results
Third Quarter Net Revenue by Product
Category |
(in thousands) |
|
|
Q3 2017 Net
Revenue |
|
Q3 2016 Net
Revenue(1) |
|
Change |
|
|
|
|
|
|
|
|
|
Core Brands(2) |
|
|
$ |
407,785 |
|
$ |
388,570 |
|
4.9 |
% |
Allied Brands(3) |
|
|
|
39,604 |
|
|
38,261 |
|
3.5 |
% |
Branded |
|
|
|
447,389 |
|
|
426,831 |
|
4.8 |
% |
Partner Brand |
|
|
|
73,978 |
|
|
73,821 |
|
0.2 |
% |
Other |
|
|
|
|
42,817 |
|
|
43,251 |
|
-1.0 |
% |
Total |
|
|
|
$ |
564,184 |
|
$ |
543,903 |
|
3.7 |
% |
(1) Includes net revenue results from
continuing operations only. (2) The Company's Core Brands include:
Snyder's of Hanover®, Lance®, Kettle Brand®, KETTLE® Chips, Cape
Cod®, Snack Factory® Pretzel Crisps®, Pop Secret®, Emerald® and
Late July®. (3) The Company's Allied Brands include: Krunchers!®,
Tom's®, Archway®, Jays®, Stella D'oro®, Eatsmart Snacks™,
O-Ke-Doke® and Metcalfe’s skinny® |
Total net revenue in the third quarter of 2017 was $564.2
million, an increase of 3.7% compared to $543.9 million from
continuing operations in the third quarter of 2016. Branded net
revenue increased 4.8% as a result of a 3.5% increase in the
Company’s Allied Brands and a 4.9% increase in Core Brands.
The Core Brand net revenue increase was led by growth in Late
July®, Snack Factory® Pretzel Crisps®, Lance®, Snyder’s of
Hanover®, Cape Cod®, and KETTLE® Chips, partially offset by a
decline in Emerald®, Pop Secret®, and Kettle Brand®. In
addition, during the third quarter of 2017, net revenue from the
Partner Brand category increased 0.2% while net revenue from the
Other category declined 1.0%, each compared to the third quarter of
2016.
The GAAP operating loss in the third quarter of 2017 was $53.8
million, as compared to GAAP operating income of $45.7 million from
continuing operations in the third quarter of 2016. The GAAP
operating loss in the quarter was due to $114.5 million in pre-tax
expenses which affected comparability. These expenses were
primarily related to $104.7 million in non-cash impairment charges
reflecting the write-downs of the Company’s European reporting unit
goodwill, and the Company’s KETTLE® Chips trademark in the United
Kingdom and Pop Secret® trademark. Operating income,
excluding special items affecting comparability, in the third
quarter of 2017 was $60.6 million, or 10.7% as a percentage of net
revenue, as compared to $51.1 million from continuing operations,
or 9.4% as a percentage of net revenue, in the third quarter of
2016. The operating margin expansion was the result of lower
general and administrative expenses, and supply chain productivity
and cost initiatives. These were partially offset by higher service
and distribution costs primarily related to trucking capacity, as
well as continued higher than normal manufacturing costs due to the
ramping up of Emerald® production capacity in Charlotte, NC that
was previously located in the Stockton, CA manufacturing
facility. The Company expects these costs to abate over
time.
Net interest expense in the third quarter of 2017 was $10.1
million compared to $9.2 million in the third quarter of
2016. The GAAP effective income tax rate from continuing
operations in the third quarter of 2017 was 9.5% as compared to
29.4% in the third quarter of 2016. The decrease in the GAAP
effective income tax rates was primarily due to the aforementioned
special items affecting comparability. Excluding special
items, the effective income tax rate from continuing operations was
35.4% in the third quarter of 2017 as compared to 28.9% in the
third quarter of 2016. The increase in the effective income tax
rate, excluding special items, was primarily due to lower income
from the Company’s U.K. operations.
The GAAP net loss attributable to Snyder’s-Lance from continuing
operations in the third quarter of 2017 was $57.7 million, or $0.60
per diluted share, as compared to net income of $25.7 million, or
$0.26 per diluted share, in the third quarter of 2016. The
GAAP net loss was the result of the aforementioned special items
affecting comparability. Net income attributable to Snyder’s-Lance
from continuing operations, excluding special items, for the third
quarter of 2017, was $32.7 million, as compared to $29.6 million,
in the third quarter of 2016. Earnings per diluted share from
continuing operations, excluding special items, was $0.33 in the
third quarter of 2017 compared to $0.30, in the third quarter of
2016.
Adjusted EBITDA from continuing operations in the third quarter
of 2017 was $85.2 million, or 15.1% of net revenue, as compared to
adjusted EBITDA from continuing operations of $74.7 million, or
13.7% of net revenue, in the third quarter of 2016. Adjusted
EBITDA is a non-GAAP measure defined herein under “Use and
Definition of Non-GAAP Measures,” and is reconciled to net income
in the tables that accompany this
release.
Outlook
Based on the Company’s year-to-date performance, and
expectations for the remainder of the year, for the full-year of
fiscal 2017, the Company now expects net revenue to be between
$2,205 million and $2,255 million, adjusted EBITDA to be between
$305 million and $320 million, and earnings per diluted share,
excluding special items, to be between $1.12 and $1.17.
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 income tax rate of 35.5% to 36.5%; and
- Weighted average diluted share count of approximately 98
million shares.
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 Foods 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.
Conference Call
Management will host a conference call to discuss the Company's
third quarter 2017 results at
10:00 a.m. ET on November 7, 2017. 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 5389359. A continuous telephone replay of
the call will be available between 12:00 p.m. ET on November 7 and
12:00 a.m. ET 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 5389359. 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.
Operating Income and Gross Profit, Excluding Special Items
Operating income and gross profit, excluding special items, are
provided because Snyder’s-Lance believes it is useful information
for understanding our results by improving the comparability of our
results. Additionally, operating income and gross profit, excluding
special items, provide transparent and useful information to
management, investors, analysts and other parties in evaluating and
assessing the Company’s primary operating results after removing
the impact of unusual, non-operational or restructuring or
transaction related activities that affect comparability. Operating
income and gross profit, excluding special items, are two measures
management uses for planning and budgeting, monitoring and
evaluating financial and operating results, and in the analysis of
ongoing operating trends.
Net Income, Earnings per Share and Effective Income Tax Rate,
Excluding Special Items
Net income, earnings per share, and the effective income tax
rate, 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, earnings
per share, and the effective income tax rate, 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, earnings per share, and the
effective income tax rate, 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.
Investor and Media ContactKevin
Powers, Senior Director, Investor Relations and
Communicationskpowers@snyderslance.com, (704) 557-8279
(Tables to Follow)
SNYDER’S-LANCE, INC. AND
SUBSIDIARIESCondensed Consolidated Statements of
(Loss)/Income (Unaudited)
|
|
Quarter Ended |
|
Nine Months Ended |
(in
thousands, except per share data) |
|
September 30, 2017 |
|
October 1, 2016 |
|
September 30, 2017 |
|
October 1, 2016 |
Net revenue |
|
$ |
564,184 |
|
|
$ |
543,903 |
|
|
$ |
1,675,280 |
|
|
$ |
1,553,064 |
|
Cost of sales |
|
357,993 |
|
|
344,807 |
|
|
1,074,036 |
|
|
999,322 |
|
Gross profit |
|
206,191 |
|
|
199,096 |
|
|
601,244 |
|
|
553,742 |
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses |
|
154,811 |
|
|
152,980 |
|
|
493,513 |
|
|
434,656 |
|
Transaction and
integration related expenses |
|
276 |
|
|
3,656 |
|
|
1,861 |
|
|
62,579 |
|
Impairment charges |
|
105,230 |
|
|
507 |
|
|
113,150 |
|
|
1,370 |
|
Other operating
(income)/expense, net |
|
(279 |
) |
|
(3,776 |
) |
|
196 |
|
|
(5,195 |
) |
Operating
(loss)/income |
|
(53,847 |
) |
|
45,729 |
|
|
(7,476 |
) |
|
60,332 |
|
|
|
|
|
|
|
|
|
|
Other (income)/expense,
net |
|
(227 |
) |
|
305 |
|
|
(1,461 |
) |
|
(250 |
) |
(Loss)/income before
interest and income taxes |
|
(53,620 |
) |
|
45,424 |
|
|
(6,015 |
) |
|
60,582 |
|
|
|
|
|
|
|
|
|
|
Loss on early
extinguishment of debt |
|
— |
|
|
— |
|
|
— |
|
|
4,749 |
|
Interest expense,
net |
|
10,141 |
|
|
9,215 |
|
|
28,587 |
|
|
23,305 |
|
(Loss)/income before
income taxes |
|
(63,761 |
) |
|
36,209 |
|
|
(34,602 |
) |
|
32,528 |
|
|
|
|
|
|
|
|
|
|
Income tax
(benefit)/expense |
|
(6,043 |
) |
|
10,663 |
|
|
6,889 |
|
|
9,430 |
|
(Loss)/income from
continuing operations |
|
(57,718 |
) |
|
25,546 |
|
|
(41,491 |
) |
|
23,098 |
|
Income from
discontinued operations, net of income taxes |
|
1,473 |
|
|
3,655 |
|
|
1,132 |
|
|
326 |
|
Net (loss)/income |
|
(56,245 |
) |
|
29,201 |
|
|
(40,359 |
) |
|
23,424 |
|
Net income/(loss)
attributable to non-controlling interests |
|
18 |
|
|
(114 |
) |
|
772 |
|
|
(141 |
) |
Net (loss)/income
attributable to Snyder’s-Lance, Inc. |
|
$ |
(56,263 |
) |
|
$ |
29,315 |
|
|
$ |
(41,131 |
) |
|
$ |
23,565 |
|
|
|
|
|
|
|
|
|
|
Amounts
attributable to Snyder's-Lance, Inc.: |
|
|
|
|
|
|
|
|
Continuing
operations |
|
$ |
(57,736 |
) |
|
$ |
25,660 |
|
|
$ |
(42,263 |
) |
|
$ |
23,239 |
|
Discontinued
operations |
|
1,473 |
|
|
3,655 |
|
|
1,132 |
|
|
326 |
|
Net (loss)/income
attributable to Snyder's-Lance, Inc. |
|
$ |
(56,263 |
) |
|
$ |
29,315 |
|
|
$ |
(41,131 |
) |
|
$ |
23,565 |
|
|
|
|
|
|
|
|
|
|
Basic
(loss)/earnings per share: |
|
|
|
|
|
|
|
|
Continuing
operations |
|
$ |
(0.60 |
) |
|
$ |
0.26 |
|
|
$ |
(0.44 |
) |
|
$ |
0.26 |
|
Discontinued
operations |
|
0.02 |
|
|
0.04 |
|
|
0.01 |
|
|
— |
|
Total basic
(loss)/earnings per share |
|
$ |
(0.58 |
) |
|
$ |
0.30 |
|
|
$ |
(0.43 |
) |
|
$ |
0.26 |
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding - basic |
|
96,642 |
|
|
95,881 |
|
|
96,428 |
|
|
90,504 |
|
|
|
|
|
|
|
|
|
|
Diluted
(loss)/earnings per share: |
|
|
|
|
|
|
|
|
Continuing
operations |
|
$ |
(0.60 |
) |
|
$ |
0.26 |
|
|
$ |
(0.44 |
) |
|
$ |
0.26 |
|
Discontinued
operations |
|
0.02 |
|
|
0.04 |
|
|
0.01 |
|
|
— |
|
Total diluted
(loss)/earnings per share |
|
$ |
(0.58 |
) |
|
$ |
0.30 |
|
|
$ |
(0.43 |
) |
|
$ |
0.26 |
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding - diluted |
|
96,642 |
|
|
97,012 |
|
|
96,428 |
|
|
91,493 |
|
|
|
|
|
|
|
|
|
|
Dividends declared per
common share |
|
$ |
0.16 |
|
|
$ |
0.16 |
|
|
$ |
0.48 |
|
|
$ |
0.48 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SNYDER’S-LANCE, INC. AND
SUBSIDIARIESCondensed Consolidated Balance Sheets
(Unaudited)
(in
thousands, except share and per share data) |
|
September 30, 2017 |
|
December 31, 2016 |
ASSETS |
|
|
|
|
Current
assets: |
|
|
|
|
Cash and
cash equivalents |
|
$ |
22,690 |
|
|
$ |
35,409 |
|
Restricted cash |
|
446 |
|
|
714 |
|
Accounts
receivable, net of allowances of $1,400 and $1,290,
respectively |
|
220,856 |
|
|
210,723 |
|
Receivable from the sale of Diamond of California |
|
— |
|
|
118,577 |
|
Inventories, net |
|
194,769 |
|
|
173,456 |
|
Prepaid
income taxes and income taxes receivable |
|
7,526 |
|
|
5,744 |
|
Assets
held for sale |
|
20,790 |
|
|
19,568 |
|
Prepaid
expenses and other current assets |
|
32,558 |
|
|
27,666 |
|
Total current
assets |
|
499,635 |
|
|
591,857 |
|
|
|
|
|
|
Noncurrent
assets: |
|
|
|
|
Fixed
assets, net |
|
495,798 |
|
|
501,884 |
|
Goodwill |
|
1,280,934 |
|
|
1,318,362 |
|
Other
intangible assets, net |
|
1,306,955 |
|
|
1,373,800 |
|
Other
noncurrent assets |
|
53,031 |
|
|
48,173 |
|
Total assets |
|
$ |
3,636,353 |
|
|
$ |
3,834,076 |
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
Current
liabilities: |
|
|
|
|
Current
portion of long-term debt |
|
$ |
49,000 |
|
|
$ |
49,000 |
|
Accounts
payable |
|
123,629 |
|
|
99,249 |
|
Accrued
compensation |
|
30,806 |
|
|
44,901 |
|
Accrued
casualty insurance claims |
|
3,302 |
|
|
4,266 |
|
Accrued
marketing, selling and promotional costs |
|
56,868 |
|
|
50,179 |
|
Other
payables and accrued liabilities |
|
42,980 |
|
|
47,958 |
|
Total current
liabilities |
|
306,585 |
|
|
295,553 |
|
|
|
|
|
|
Noncurrent
liabilities: |
|
|
|
|
Long-term
debt, net |
|
1,070,153 |
|
|
1,245,959 |
|
Deferred
income taxes, net |
|
392,105 |
|
|
378,236 |
|
Accrued
casualty insurance claims |
|
14,845 |
|
|
13,049 |
|
Other
noncurrent liabilities |
|
22,508 |
|
|
25,609 |
|
Total liabilities |
|
1,806,196 |
|
|
1,958,406 |
|
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
|
|
|
|
Stockholders’
equity: |
|
|
|
|
Common
stock, $0.83 1/3 par value. 110,000,000 shares authorized;
96,967,937 and 96,242,784 shares outstanding, respectively |
|
80,802 |
|
|
80,199 |
|
Preferred
stock, $1.00 par value. 5,000,000 shares authorized; no shares
outstanding |
|
— |
|
|
— |
|
Additional paid-in capital |
|
1,624,318 |
|
|
1,598,678 |
|
Retained
earnings |
|
108,229 |
|
|
195,733 |
|
Accumulated other comprehensive loss |
|
(3,001 |
) |
|
(17,977 |
) |
Total Snyder’s-Lance,
Inc. stockholders’ equity |
|
1,810,348 |
|
|
1,856,633 |
|
Non-controlling interests |
|
19,809 |
|
|
19,037 |
|
Total stockholders’
equity |
|
1,830,157 |
|
|
1,875,670 |
|
Total liabilities and stockholders’ equity |
|
$ |
3,636,353 |
|
|
$ |
3,834,076 |
|
|
|
SNYDER’S-LANCE, INC. AND
SUBSIDIARIESCondensed Consolidated Statements of
Cash Flows (Unaudited)
|
|
Nine Months Ended |
(in
thousands) |
|
September 30, 2017 |
|
October 1, 2016 |
Operating
activities: |
|
|
|
|
Net
(loss)/income |
|
$ |
(40,359 |
) |
|
$ |
23,424 |
|
Adjustments to reconcile net (loss)/income to cash from operating
activities: |
|
|
|
|
Depreciation and amortization |
|
73,250 |
|
|
72,687 |
|
Stock-based compensation expense |
|
11,456 |
|
|
22,542 |
|
Loss/(gain) on sale of fixed assets, net |
|
1,047 |
|
|
(25 |
) |
Gain on
sale of Diamond of California |
|
(1,795 |
) |
|
— |
|
Gain on
sale of route businesses, net |
|
(1,744 |
) |
|
(650 |
) |
Changes
in fair value of investments |
|
— |
|
|
179 |
|
Loss on
early extinguishment of debt |
|
— |
|
|
4,749 |
|
Impairment charges |
|
113,150 |
|
|
1,370 |
|
Deferred
income taxes |
|
7,260 |
|
|
7,139 |
|
Provision
for doubtful accounts |
|
639 |
|
|
218 |
|
Changes
in operating assets and liabilities, excluding business
acquisitions, divestitures and foreign currency translation
adjustments |
|
(28,631 |
) |
|
35,165 |
|
Net cash provided by
operating activities |
|
134,273 |
|
|
166,798 |
|
|
|
|
|
|
Investing
activities: |
|
|
|
|
Purchases
of fixed assets |
|
(54,828 |
) |
|
(55,823 |
) |
Purchases
of route businesses |
|
(43,977 |
) |
|
(16,467 |
) |
Purchase
of equity method investment |
|
(1,500 |
) |
|
— |
|
Proceeds
from sale of fixed assets and insurance recoveries |
|
290 |
|
|
1,094 |
|
Proceeds
from sale of route businesses |
|
45,070 |
|
|
14,894 |
|
Proceeds
from sale of investments |
|
321 |
|
|
— |
|
Proceeds
from sale of discontinued operations |
|
120,480 |
|
|
— |
|
Business
acquisitions, net of cash acquired |
|
(2,561 |
) |
|
(1,043,042 |
) |
Net cash provided
by/(used in) investing activities |
|
63,295 |
|
|
(1,099,344 |
) |
|
|
|
|
|
Financing
activities: |
|
|
|
|
Dividends
paid to stockholders |
|
(46,373 |
) |
|
(42,078 |
) |
Debt
issuance costs |
|
(2,441 |
) |
|
(6,047 |
) |
Issuances
of common stock |
|
16,669 |
|
|
9,001 |
|
Excess
tax benefits from stock-based compensation |
|
— |
|
|
577 |
|
Share
repurchases, including shares surrendered for tax withholding |
|
(1,882 |
) |
|
(8,485 |
) |
Payments
on capital leases |
|
(1,642 |
) |
|
(1,745 |
) |
Repayments of long-term debt |
|
(36,750 |
) |
|
(232,560 |
) |
Proceeds
from issuance of long-term debt |
|
— |
|
|
1,130,000 |
|
Repayments of revolving credit facility |
|
(283,500 |
) |
|
(75,000 |
) |
Proceeds
from revolving credit facility |
|
144,500 |
|
|
147,000 |
|
Net cash (used
in)/provided by financing activities |
|
(211,419 |
) |
|
920,663 |
|
|
|
|
|
|
Effect of
exchange rate changes on cash |
|
864 |
|
|
(660 |
) |
|
|
|
|
|
Net
decrease |
|
(12,987 |
) |
|
(12,543 |
) |
Cash, cash
equivalents and restricted cash at beginning of
period |
|
36,123 |
|
|
40,071 |
|
Cash, cash
equivalents and restricted cash at end of period |
|
$ |
23,136 |
|
|
$ |
27,528 |
|
|
|
|
|
|
Supplemental
information: |
|
|
|
|
Cash paid for income
taxes, net of refunds of $330 and $1,522, respectively |
|
$ |
4,972 |
|
|
$ |
5,060 |
|
Cash paid for
interest |
|
$ |
27,233 |
|
|
$ |
22,414 |
|
|
|
|
|
|
Non-cash
investing activities: |
|
|
|
|
Decrease/(increase) in
fixed asset expenditures included in accounts payable |
|
$ |
1,239 |
|
|
$ |
(1,649 |
) |
|
|
|
|
|
Non-cash
financing activities: |
|
|
|
|
Common stock and
stock-based compensation issued for business acquisitions |
|
$ |
— |
|
|
$ |
800,987 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SNYDER’S-LANCE, INC. AND
SUBSIDIARIESReconciliation of Non-GAAP Measures
(Unaudited)Gross profit, excluding special
items
|
|
Quarter Ended |
(in
thousands) |
|
September 30, 2017 |
|
October 1, 2016 |
Net revenue |
|
$ |
564,184 |
|
|
$ |
543,903 |
|
Cost of sales |
|
357,993 |
|
|
344,807 |
|
Gross profit
from continuing operations |
|
$ |
206,191 |
|
|
$ |
199,096 |
|
As a % of net
revenue |
|
36.5 |
% |
|
36.6 |
% |
|
|
|
|
|
Transaction and
integration related expenses(1) |
|
— |
|
|
442 |
|
Emerald move(2) |
|
2,440 |
|
|
— |
|
Transformation
initiative(3) |
|
805 |
|
|
— |
|
Other(4) |
|
— |
|
|
554 |
|
|
|
|
|
|
Gross profit
from continuing operations, excluding special items |
|
$ |
209,436 |
|
|
$ |
200,092 |
|
As a % of net
revenue |
|
37.1 |
% |
|
36.8 |
% |
(1) Transaction and integration related
expenses consist of severance and relocation benefits for Diamond
Foods personnel.(2) Expenses associated with the relocation
of Emerald production from Stockton, CA to Charlotte, NC.(3)
Transformation initiative costs primarily consist of expenses
associated with the closure of our Perry, FL manufacturing
facility, as well as severance benefits related to our performance
transformation plan.(4) Other items primarily consist of
Metcalfe's transaction-related expenses including severance
benefits, as well as an inventory step-up related to this
acquisition.
SNYDER’S-LANCE, INC. AND
SUBSIDIARIESReconciliation of Non-GAAP Measures
(Unaudited)Operating income, excluding special
items
|
|
Quarter Ended |
(in
thousands) |
|
September 30, 2017 |
|
October 1, 2016 |
Operating
(loss)/income from continuing operations |
|
$ |
(53,847 |
) |
|
$ |
45,729 |
|
As a % of net
revenue |
|
(9.5 |
)% |
|
8.4 |
% |
|
|
|
|
|
Transaction and
integration related expenses(1)(2) |
|
276 |
|
|
4,098 |
|
Emerald move and
required packaging changes(3) |
|
2,478 |
|
|
314 |
|
Transformation
initiative(4) |
|
7,019 |
|
|
— |
|
Other impairment
charges(5) |
|
104,720 |
|
|
— |
|
Other(6) |
|
(18 |
) |
|
918 |
|
|
|
|
|
|
Operating
income from continuing operations, excluding special
items |
|
$ |
60,628 |
|
|
$ |
51,059 |
|
As a % of net
revenue |
|
10.7 |
% |
|
9.4 |
% |
(1) For the third quarter of 2017,
transaction and integration related expenses primarily consist of
idle facility lease costs.(2) For the third quarter of 2016,
transaction and integration related expenses primarily consist of
professional fees, severance, and retention costs associated with
the acquisition of Diamond Foods.(3) Expenses associated with
the relocation of Emerald production from Stockton, CA to
Charlotte, NC.(4) Transformation initiative costs primarily consist
of expenses associated with the closure of our Perry, FL
manufacturing facility, as well as severance benefits and
professional fees related to our performance transformation
plan.(5) Impairment charges recorded for certain trademarks
and our European reporting unit goodwill.(6) For the third
quarter of 2016, other items primarily consist of Metcalfe's
transaction-related expenses including transaction costs and
severance benefits, as well as an inventory step-up related to this
acquisition.
SNYDER’S-LANCE, INC. AND
SUBSIDIARIESReconciliation of Non-GAAP Measures
(Unaudited)Earnings per diluted share, excluding
special items
|
|
Quarter Ended |
|
|
September 30, 2017 |
|
October 1, 2016 |
(Loss)/earnings
per diluted share from continuing operations |
|
$ |
(0.60 |
) |
|
$ |
0.26 |
|
|
|
|
|
|
Transaction and
integration related expenses(1)(2) |
|
(0.01 |
) |
|
0.03 |
|
Emerald move and
required packaging changes(3) |
|
0.02 |
|
|
— |
|
Transformation
initiative(4) |
|
0.05 |
|
|
— |
|
Other impairment
charges(5) |
|
0.87 |
|
|
— |
|
Other(6) |
|
— |
|
|
0.01 |
|
|
|
|
|
|
Earnings per
diluted share from continuing operations, excluding special
items |
|
$ |
0.33 |
|
|
$ |
0.30 |
|
(1) For the third quarter of 2017,
transaction and integration related expenses primarily consist of
idle facility lease costs. The after-tax net benefit is due to the
reversal of discrete tax items which were initially recorded during
the second quarter of 2017.(2) For the third quarter of 2016,
transaction and integration related expenses primarily consist of
professional fees, severance, and retention costs associated with
the acquisition of Diamond Foods.(3) Expenses associated with
the relocation of Emerald production from Stockton, CA to
Charlotte, NC.(4) Transformation initiative costs primarily consist
of expenses associated with the closure of our Perry, FL
manufacturing facility, as well as severance benefits and
professional fees related to our performance transformation
plan.(5) Impairment charges recorded for certain trademarks
and our European reporting unit goodwill.(6) For the third
quarter of 2016, other items primarily consist of Metcalfe's
transaction-related expenses including transaction costs and
severance benefits, as well as an inventory step-up related to this
acquisition.
SNYDER’S-LANCE, INC. AND
SUBSIDIARIESReconciliation of Non-GAAP Measures
(Unaudited)EBITDA and Adjusted EBITDA
|
|
Quarter Ended |
(in
thousands) |
|
September 30, 2017 |
|
October 1, 2016 |
(Loss)/income from
continuing operations |
|
$ |
(57,718 |
) |
|
$ |
25,546 |
|
Income tax
(benefit)/expense |
|
(6,043 |
) |
|
10,663 |
|
Interest expense,
net |
|
10,141 |
|
|
9,215 |
|
Depreciation |
|
17,489 |
|
|
18,494 |
|
Amortization |
|
6,832 |
|
|
5,448 |
|
EBITDA from
continuing operations |
|
$ |
(29,299 |
) |
|
$ |
69,366 |
|
As a % of net
revenue |
|
(5.2 |
)% |
|
12.8 |
% |
|
|
|
|
|
Transaction and
integration related expenses(1)(2) |
|
276 |
|
|
4,098 |
|
Emerald move and
required packaging changes(3) |
|
2,478 |
|
|
314 |
|
Transformation
initiative(4) |
|
7,019 |
|
|
— |
|
Other impairment
charges(5) |
|
104,720 |
|
|
— |
|
Other(6) |
|
(19 |
) |
|
918 |
|
|
|
|
|
|
Adjusted EBITDA
from continuing operations |
|
$ |
85,175 |
|
|
$ |
74,696 |
|
As a % of net
revenue |
|
15.1 |
% |
|
13.7 |
% |
(1) For the third quarter of 2017,
transaction and integration related expenses primarily consist of
idle facility lease costs.(2) For the third quarter of 2016,
transaction and integration related expenses primarily consist of
professional fees, severance, and retention costs associated with
the acquisition of Diamond Foods.(3) Expenses associated with
the relocation of Emerald production from Stockton, CA to
Charlotte, NC.(4) Transformation initiative costs primarily consist
of expenses associated with the closure of our Perry, FL
manufacturing facility, as well as severance benefits and
professional fees related to our performance transformation
plan.(5) Impairment charges recorded for certain trademarks
and our European reporting unit goodwill.(6) For the third
quarter of 2016, other items primarily consist of Metcalfe's
transaction-related expenses including transaction costs and
severance benefits, as well as an inventory step-up related to that
acquisition.
SNYDER’S-LANCE, INC. AND
SUBSIDIARIESReconciliation of Non-GAAP Measures
(Unaudited)Net income attributable to
Snyder's-Lance, excluding special items
|
|
Quarter Ended |
(in
thousands) |
|
September 30, 2017 |
|
October 1, 2016 |
Net
(loss)/income attributable to Snyder’s-Lance, Inc. from continuing
operations |
|
$ |
(57,736 |
) |
|
$ |
25,660 |
|
|
|
|
|
|
Transaction and
integration related expenses, net of tax(1)(2) |
|
(442 |
) |
|
3,338 |
|
Emerald move and
required packaging changes, net of tax(3) |
|
1,602 |
|
|
259 |
|
Transformation
initiative, net of tax(4) |
|
4,470 |
|
|
— |
|
Other impairment
charges, net of tax(5) |
|
84,856 |
|
|
— |
|
Impact of tax
restructuring(6) |
|
— |
|
|
(383 |
) |
Other, net of
tax(7) |
|
(11 |
) |
|
758 |
|
|
|
|
|
|
Net income
attributable to Snyder’s-Lance, Inc. from continuing operations,
excluding special items |
|
$ |
32,739 |
|
|
$ |
29,632 |
|
(1) For the third quarter of 2017,
transaction and integration related expenses primarily consist of
idle facility lease costs. The after-tax net benefit is due to the
reversal of discrete tax items which were initially recorded during
the second quarter of 2017.(2) For the third quarter of 2016,
transaction and integration related expenses primarily consist of
professional fees, severance, and retention costs associated with
the acquisition of Diamond Foods.(3) Expenses associated with
the relocation of Emerald production from Stockton, CA to
Charlotte, NC.(4) Transformation initiative costs primarily consist
of expenses associated with the closure of our Perry, FL
manufacturing facility, as well as severance benefits and
professional fees related to our performance transformation
plan.(5) Impairment charges recorded for certain trademarks
and our European reporting unit goodwill.(6) Discrete tax
item for the impact of tax restructuring.(7) For the third
quarter of 2016, other items primarily consist of Metcalfe's
transaction-related expenses including transaction costs and
severance benefits, as well as an inventory step-up related to that
acquisition.
SNYDER’S-LANCE, INC. AND
SUBSIDIARIESReconciliation of Non-GAAP Measures
(Unaudited)Adjusted effective income tax
rate
Quarter ended
September 30, 2017 |
|
|
|
|
|
|
(in thousands) |
|
Income from Continuing
Operations |
|
|
GAAP Income |
|
Adjustments |
|
Adjusted Income |
(Loss)/income
before income taxes |
|
$ |
(63,761 |
) |
|
$ |
114,474 |
|
|
$ |
50,713 |
|
Income tax
(benefit)/expense |
|
(6,043 |
) |
|
23,999 |
|
|
17,956 |
|
Net
(loss)/income |
|
(57,718 |
) |
|
90,475 |
|
|
32,757 |
|
Net income attributable
to non-controlling interests |
|
18 |
|
|
— |
|
|
18 |
|
Net
(loss)/income attributable to Snyder’s-Lance, Inc. |
|
$ |
(57,736 |
) |
|
$ |
90,475 |
|
|
$ |
32,739 |
|
|
|
|
|
|
|
|
Effective
income tax rate(1) |
|
9.5 |
% |
|
|
|
35.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended
October 1, 2016 |
|
|
|
|
|
|
(in thousands) |
|
Income from Continuing
Operations |
|
|
GAAP Income |
|
Adjustments |
|
Adjusted Income |
Income before
income taxes |
|
$ |
36,209 |
|
|
$ |
5,330 |
|
|
$ |
41,539 |
|
Income tax expense |
|
10,663 |
|
|
1,358 |
|
|
12,021 |
|
Net
income |
|
25,546 |
|
|
3,972 |
|
|
29,518 |
|
Net loss attributable
to non-controlling interests |
|
(114 |
) |
|
— |
|
|
(114 |
) |
Net income
attributable to Snyder’s-Lance, Inc. |
|
$ |
25,660 |
|
|
$ |
3,972 |
|
|
$ |
29,632 |
|
|
|
|
|
|
|
|
Effective
income tax rate |
|
29.4 |
% |
|
|
|
28.9 |
% |
(1) The tax rate on adjusted income varies from the tax
rate on GAAP income for the third quarter of 2017 primarily due to
the tax effect of the goodwill impairment recognized, which is
non-deductible for tax purposes, and the discrete tax impact of the
trademark impairments recognized in the third quarter of 2017.
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