Charlotte / NC. (li) Snyder´s-Lance Inc. reported results for its third quarter of 2014. Net revenue increased to 409 million USD, plus 6.2 percent over prior year adjusted for discontinued operations. Earnings per diluted share was flat year over year at 0.24 USD excluding discontinued operations and special items. Earnings per diluted share of 0.19 USD excluding discontinued operations but including special items.
Comments from Management
«We continue to successfully complete our transition to become a premium and differentiated branded snack food company» commented Carl E. Lee, Jr., President and Chief Executive Officer. «Our team successfully executed the carve-out of Private Brands and made good progress with the Baptista´s integration. As a result, Baptista´s has added substantial new «better for you» product capabilities for 2015. We also just announced an increased investment in Late July, a market leader in organic and non-GMO snacks. Each of these projects would be noteworthy by themselves, so having a talented team that can manage these initiatives while executing the day to day operations is impressive. Revenue growth is pacing ahead of expectations on new products innovation and «better for you» offerings, while we deal with the same headwinds all food companies are experiencing on base business. We continue to accelerate our efforts on three product and revenue fronts, 1) innovation 2) «better for you» snacks and 3) base business renovation to drive excitement. We expect to finish 2014 strong and to have a fast start in 2015, having launched a number of Q4 consumer programs».
Lee continued, «As we execute our plans, we see our company growing and becoming an even stronger leader in innovation and «better for you» snacking options. Snyder´s-Lance is uniquely positioned to succeed as we have scale and an industry leading Direct Store Delivery (DSD) distribution system that is simply not available to many smaller emerging brands. Our efforts show we are nimble and able to respond to rapidly changing consumer tastes. As we complete 2014, we will look to build momentum on our top line leading into 2015, continue executing on our previously announced Cost Reduction + Margin Improvement program and positioning Snyder´s-Lance brands to be the favourite destination of consumers for all of their snacking choices».
Third Quarter and Year to Date Results
Net revenue for the third quarter ended September 27, 2014 was 409 million USD, an increase of 6.2 percent compared to prior year net revenue of 385 million USD when adjusted for discontinued operations. Net income excluding special items in the third quarter of 2014 was 17.0 million USD, or 0.24 USD per diluted share, as compared to net income excluding special items of 16.7 million USD for the third quarter of 2013, or 0.24 USD per diluted share when adjusted for discontinued operations. Net income from continuing operations including special items was 13.7 million USD for the third quarter of 2014, or 0.19 USD per diluted share, as compared to net income from continuing operations including special items of 16.4 million USD for the third quarter of 2013, or 0.24 USD per diluted share. Net income from discontinued operations for the third quarter of 2014 included the recognition of an after-tax gain on the sale of Private Brands of 123.4 million USD, or 1.74 USD per diluted share. Special items associated with continuing operations for the third quarter of 2014 included after-tax expenses of 0.6 million USD for restructuring charges and professional fees and a 2.1 million USD deferred tax revaluation which was required as a result of the sale of Private Brands. Special items associated with continuing operations for the third quarter of 2013 included after-tax expenses of 0.3 million USD for self-funded medical expenses.
Net revenue and net income information for the first nine months of both 2014 and 2013 includes continuing and discontinued operations for the first six months of the year but excludes discontinued operations for the third quarter in order to ensure comparability. Net revenue for the nine months ended September 27, 2014 was 1.31 billion USD, an increase of 5.1 percent compared to prior year net revenue of 1.24 billion USD. Net income excluding special items for the first nine months of 2014 was 55.9 million USD, or 0.79 USD per diluted share, as compared to net income excluding special items of 53.4 million USD for the first nine months of 2013, or 0.76 USD per diluted share when adjusted to exclude discontinued operations for the third quarter of 2013. Special items associated with continuing operations for the first nine months of 2014 included after-tax expenses of 4.8 million USD for impairment charges, 2.3 million USD for restructuring charges, 2.0 million USD in professional fees, 0.6 million USD for self-funded medical expenses and a 2.1 million USD deferred tax revaluation. Special items associated with continuing operations for the third quarter of 2013 included after-tax expenses of 3.0 million USD for self-funded medical expenses and 1.2 million USD for impairment charges.
Net income including special items and discontinued operations for the first nine months of 2014 was 166.3 million USD, or 2.35 USD per diluted share, as compared to net income including special items and discontinued operations of 55.7 million USD for the first nine months of 2013, or 0.80 USD per diluted share. Net income from discontinued operations for the first nine months of 2014 included the recognition of an after-tax gain on the sale of Private Brands of 122.1 million USD, or 1.72 USD per diluted share. The gain on the sale of Private Brands also had an impact on our cash flow from operating activities. For the first nine months of 2014, we had net cash used in operating activities of 1.4 million USD, which was primarily due to approximately 89 million USD in taxes paid associated with the gain on the sale. When excluding this tax payment associated with the sale, net cash provided by operating activities is 87.6 million USD, which is consistent with our expectations.
Dividend Declared
The Company also announced the declaration of a quarterly cash dividend of 0.16 USD per share on the Company´s common stock. The dividend is payable on November 28, 2014 to stockholders of record at the close of business on November 18, 2014.
Estimates provided for 2014
The Company estimates net revenue for the full year 2014 to increase into the range of 1.73 to 1.74 billion USD. Earnings per diluted share excluding special items are expected to be between 1.07 USD and 1.12 USD, adjusted for recent transactions. Capital expenditures for 2014 are projected to be between 70 and 72 million USD, including capacity expansion for Baptista´s.
