Charlotte / NC. (sli) Snyder’s-Lance Inc. reported financial results for the fourth quarter and full-year ended December 30, 2017. On December 18, 2017, Snyder’s-Lance and Campbell Soup Company announced a definitive merger agreement under which Campbell Soup Company will acquire Snyder’s-Lance for USD 50 per share in an all-cash transaction valued at approximately USD 6.0 billion, including Snyder’s-Lance’s net debt. As such, the Company will not be providing its outlook for fiscal 2018 or longer-term targets and will not be holding a conference call to discuss the Company’s financial results for the fourth quarter and fiscal year ended December 30, 2017. Completion of the transaction is subject to approval by the Company’s shareholders and other customary closing conditions. The parties expect to close the transaction late in the first quarter of 2018.
Fourth Quarter 2017 Highlights
- Total net revenue from continuing operations decreased 0.8 percent; core branded growth of 1.1 percent
- GAAP earnings per share of USD 1.92 from continuing operations
- EPS from continuing operations excluding special items increased 22.2 percent to USD 0.33
- GAAP net income from continuing operations of USD 188.8 million
- Net income from continuing operations excluding special items increased 23.8 percent to USD 32.7 million
- Adjusted Ebitda increased 1.8 percent to USD 78.5 million
Full-Year 2017 Highlights
- Total net revenue from continuing operations increased 5.6 percent; core branded growth of 9.1 percent
- GAAP net income per share of USD 1.50 from continuing operations
- EPS from continuing operations excluding special items decreased 2.7 percent to USD 1.08
- GAAP net income from continuing operations of USD 146.6 million
- Net income from continuing operations excluding special items increased 1.9 percent to USD 105.5 million
- Adjusted Ebitda increased 3.2 percent to USD 293.3 million
Fourth Quarter 2017 Results
Total net revenue in the fourth quarter of 2017 was USD 551.6 million, a decrease of 0.8 percent compared to USD 556.2 million from continuing operations in the fourth quarter of 2016. Branded net revenue increased 0.6 percent as a result of a 1.1 percent increase in the Company’s Core Brands partially offset by a 3.7 percent decrease in Allied Brands. The Core Brand net revenue increase was led by growth in Late July®, Cape Cod®, KETTLE® Chips, Lance®, Snyder’s of Hanover®, and Snack Factory® Pretzel Crisps®, partially offset by a decline in Pop Secret®, Emerald®, and Kettle Brand ®. In addition, during the fourth quarter of 2017, net revenue from the Partner Brand category decreased 2.2 percent while net revenue from the Other category declined 13.7 percent, each compared to the fourth quarter of 2016.
GAAP operating income in the fourth quarter of 2017 was USD 46.0 million, as compared to GAAP operating income of USD 44.3 million from continuing operations in the fourth quarter of 2016. Operating income from continuing operations and excluding special items affecting comparability, in the fourth quarter of 2017 was USD 54.8 million, or 9.9 percent as a percentage of net revenue, as compared to USD 52.1 million from continuing operations, or 9.4 percent as a percentage of net revenue, in the fourth 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 promotional trade spend, 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.
Net interest expense in the fourth quarter of 2017 was USD 10.2 million compared to USD 9.3 million in the fourth quarter of 2016. Excluding special items, the effective income tax rate from continuing operations was 26.5 percent in the fourth quarter of 2017 as compared to 37.8 percent in the fourth quarter of 2016. The decrease in the effective income tax rate, excluding special items, was primarily due to the impact of adopting new accounting guidance, which resulted in excess tax benefits for certain share-based payments, which were previously included in equity.
GAAP net income attributable to Snyder’s-Lance from continuing operations in the fourth quarter of 2017 was USD 188.8 million, or USD 1.92 per diluted share, as compared to net income of USD 18.7 million, or USD 0.19 per diluted share, in the fourth quarter of 2016. The significant increase in GAAP net income was primarily due to a non-recurring, non-cash gain of USD 162.4 million as the result of the impact of the Income Tax Reform Act enacted in December 2017 (the “Tax Act”). Net income attributable to Snyder’s-Lance from continuing operations, excluding special items, for the fourth quarter of 2017, was USD 32.7 million, as compared to USD 26.4 million, in the fourth quarter of 2016. Earnings per diluted share from continuing operations, excluding special items, was USD 0.33 in the fourth quarter of 2017 compared to USD 0.27, in the fourth quarter of 2016.
Adjusted Ebitda from continuing operations in the fourth quarter of 2017 was USD 78.5 million, or 14.2 percent of net revenue, as compared to adjusted Ebitda from continuing operations of USD 77.1 million, or 13.9 percent of net revenue, in the fourth quarter of 2016.
Full-Year 2017 Results
Total net revenue for the full-year 2017 was 2’226.8 million, an increase of 5.6 percent compared to USD 2’109.2 million from continuing operations in 2016. Branded net revenue increased 8.5 percent as a result of a 2.3 percent increase in the Company’s Allied Brands revenue and a 9.1 percent increase in Core Brands revenue. In addition, during the full-year 2017, net revenue from the Partner Brand category decreased 2.9 percent while net revenue from the Other category declined 7.2 percent, each compared to the full-year of 2016.
GAAP operating income from continuing operations for the full-year 2017 was USD 38.5 million, as compared to GAAP operating income of USD 104.6 million from continuing operations in 2016. GAAP operating income was negatively impacted by USD 157.1 million in pre-tax expenses which affected comparability. These expenses were primarily related to USD 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 from continuing operations and excluding special items affecting comparability, for the full-year 2017 was USD 195.7 million, or 8.8 percent as a percentage of net revenue, as compared to USD 189.5 million from continuing operations, or 9.0 percent as a percentage of net revenue, in 2016.
Net interest expense for the full-year 2017 was USD 38.8 million compared to USD 32.6 million in 2016. Excluding special items, the effective income tax rate from continuing operations was 32.5 percent in 2017 as compared to 34.1 percent in 2016.
GAAP net income attributable to Snyder’s-Lance from continuing operations for the full-year 2017 was USD 146.6 million, or USD 1.50 per diluted share, as compared to net income of USD 42.0 million, or USD 0.45 per diluted share, in 2016. The significant increase in GAAP net income was primarily due to a non-recurring, non-cash gain of USD 162.4 million as the result of the impact of the Tax Act. Net income attributable to Snyder’s-Lance from continuing operations, excluding special items, for the full-year 2017, was USD 105.5 million, as compared to USD 103.5 million, in 2016. Earnings per diluted share from continuing operations, excluding special items, was USD 1.08 for the full-year 2017 compared to USD 1.11, in 2016.
Adjusted Ebitda from continuing operations for the full-year 2017 was USD 293.3 million, or 13.2 percent of net revenue, as compared to adjusted Ebitda from continuing operations of USD 284.1 million, or 13.5 percent of net revenue, in 2016.
