US Snack Food Producer Lance Inc. Reports Record Net Revenues for Third Quarter
|
Source: Lance, Inc.
30/10/2009
|
|
Charlotte, N.C., Oct 30, 2009 - Lance, Inc. today announced record net revenues for the third quarter ended September 26, 2009 of $234.9 million, an increase of 4% compared with 2008 third quarter net revenues of $225.6 million. Of the 4% growth, approximately 2% was driven by higher net selling prices, with the remainder due to increased volume, including the positive impact of the Company's December 2008 Archway acquisition.
The Company's branded product sales, which represented approximately 58% of total revenue in the quarter, increased 1% from the third quarter of 2008. Growth from higher net selling prices, incremental sales from new branded product introductions and incremental revenue associated with the Archway acquisition was largely offset by volume declines from the Company's convenience store, food service and up-and-down-the-street customers. Declines in sales to these customers reflect a continued softness in the overall economy.
The Company's private brands product sales in the 2009 third quarter increased approximately 12% from the prior year comparable period, driven by higher selling prices and volume growth from new product introductions. Revenues from the Company's contract manufacturing business increased approximately 4% in the quarter, primarily reflecting higher volume.
Lance achieved third quarter 2009 net income of $8.8 million, or $0.27 per diluted share, compared with third quarter 2008 net income of $6.8 million, or $0.21 per diluted share. During the quarter advertising and merchandising spending increased approximately $3.3 million, as compared to the same quarter 2008. The Company also experienced incremental pre-tax costs of approximately $1.3 million in the third quarter related to several planned items. These items related to the closure and relocation of production from Little Rock, AR to Charlotte, NC and a significant ERP implementation during the quarter.
On October 13, 2009, the Company announced its purchase of the Stella D'oro brand as well as certain manufacturing equipment and inventory from Stella D'oro Biscuit Co., Inc. During the third quarter, the Company incurred costs associated with the acquisition of approximately $0.2 million.
Net revenue for the nine months ended September 26, 2009 totaled $687.1 million, an increase of approximately 8% compared with the same period in the prior year. Of this growth, approximately 3% was related to the acquisitions of Brent & Sam's in March 2008 and Archway in December 2008. For the first nine months of 2009, net income was $24.8 million, or $0.77 per diluted share, compared to net income of $10.2 million, or $0.32 per diluted share, for the first nine months of the prior year.
Comments from Management
"Sales results for the third quarter were mixed," commented David V. Singer, President and Chief Executive Officer. "While we saw continued growth in some of our key product categories, rapid acceleration in the sale of Archway products and solid growth from new product introductions, we faced declines in our sales to convenience store, food service and small up-and-down-the-street customers, which together make up over one-quarter of our branded sales. Operationally, we remain focused on driving our strategies for growth and margin enhancement and, during the quarter, we continued to invest in the long-term strength of our brands with significant incremental advertising spending."
Mr. Singer concluded, "Our earnings estimates for the year reflect an increase in margins for the fourth quarter compared to the third quarter. This increase will be driven by lower anticipated commodity costs, our planned timing of advertising spending, which is anticipated to be approximately $2.5 million less than the third quarter, and the absence of costs associated with the closure of our Little Rock facility and lower ERP implementation costs."
Company 2009 Estimates Updated
Based on its assessment of the current operating environment, the Company tightened its 2009 full year diluted earnings per share estimate to a range of $1.15 to $1.20, its full year sales estimate to a range of $915 to $925 million, and its full year capital expenditures estimate to a range of $43 to $45 million. These estimates include the operating impact of the Stella D'oro brand acquisition, which is anticipated to add less than $5 million in revenue and be neutral to earnings. Prior estimates, which were previously announced on July 24, 2009, included a full year diluted earnings per share estimate range of $1.15 to $1.25, a full year sales estimate range of $910 to $930 million and a full year capital expenditure range of $41 to $46 million.
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 20, 2009 to stockholders of record at the close of business on November 10, 2009.
.
LANCE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share and per-share amounts)
(unaudited)
Quarter Ended
-------------
Sept. 26, Sept. 27,
2009 2008
-------- ---------
Net revenue $234,902 $225,587
Cost of sales 140,129 143,040
------- -------
Gross margin 94,773 82,547
Selling, general and administrative 80,019 72,337
Other expense/(income), net 644 (536)
--- ----
Income before interest and taxes 14,110 10,746
Interest expense, net 796 708
Income tax expense 4,511 3,229
----- -----
Net Income $8,803 $6,809
====== ======
Basic earnings per share $0.28 $0.22
Weighted average shares
outstanding - basic 31,622,000 31,243,000
Diluted earnings per share $0.27 $0.21
Weighted average shares outstanding -
diluted 32,519,000 31,911,000
LANCE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share and per-share amounts)
(unaudited)
Nine Months Ended
-----------------
Sept. 26, Sept. 27,
2009 2008
------ ------
Net revenue $687,065 $637,169
Cost of sales 411,171 400,192
------- -------
Gross margin 275,894 236,977
Selling, general and
administrative 233,996 219,762
Other expense/(income), net 1,252 (379)
----- ----
Income before interest and taxes 40,646 17,594
Interest expense, net 2,518 2,173
Income tax expense 13,345 5,258
------ -----
Net Income $24,783 $10,163
======= =======
Basic earnings per share $0.79 $0.33
Weighted average shares
outstanding - basic 31,526,000 31,176,000
Diluted earnings per share $0.77 $0.32
Weighted average shares
outstanding - diluted 32,286,000 31,765,000
LANCE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
Sept. 26, Dec. 27,
2009 2008
------ ------
Assets:
Cash and cash equivalents $8,629 $807
Accounts receivable, net 87,422 74,406
Inventories 53,940 43,112
Other current assets 22,142 22,711
------ ------
Total Current Assets 172,133 141,036
Fixed assets, net 217,618 216,085
Goodwill and other intangibles, net 107,172 104,076
Other noncurrent assets 5,555 4,949
----- -----
Total Assets $502,478 $466,146
======== ========
Liabilities and Equity:
Accounts payable $29,379 $25,939
Other current liabilities 62,346 58,630
Short-term debt - 7,000
-- -----
Total Current Liabilities 91,752 91,569
Long-term debt 100,000 91,000
Other liabilities 46,906 48,070
Stockholders' equity 263,847 235,507
------- -------
Total Liabilities and Stockholders'
Equity $502,478 $466,146
======== ========
LANCE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(in thousands)
(unaudited)
Nine Months Ended
-----------------
Sept. 26, Sept. 27,
2009 2008
------ ------
Operating Activities:
Net income $24,783 $10,163
Depreciation and amortization 25,945 23,917
Stock-based compensation
expense 4,709 3,348
Loss/(gain) on sale of fixed
assets 529 (333)
Changes in operating assets
and liabilities,
excluding business
acquisition (10,871) (9,994)
------- ------
Net cash provided by
operating activities 45,095 27,101
Investing Activities:
Purchases of fixed assets (28,667) (30,616)
Proceeds from sale of fixed
assets 667 2,737
Business acquisitions, net of
cash acquired -- (23,931)
- -------
Net cash used in investing
activities (28,000) (51,810)
Financing Activities:
Dividends paid (15,280) (15,083)
Issuance of common stock 3,679 2,292
Proceeds from existing credit
facilities 2,000 32,131
Repayments of debt from
business acquisitions - (2,239)
-- ------
Net cash (used in)/provided
by financing activities (9,601) 17,101
Effect of exchange rate
changes on cash 328 (58)
--- ---
Increase/(decrease) in cash
and cash equivalents 7,822 (7,666)
Cash and cash equivalents at
beginning of period 807 8,647
--- -----
Cash and cash equivalents at
end of period $8,629 $981
====== ====
|