Snyder’s-Lance: Reports Results Q1/2016 Fiscal Results

Charlotte / NC. (sli) Snyder’s-Lance Inc. reported financial results for the first quarter of fiscal 2016 ended April 02, 2016. The first quarter financial results include one month of the consolidation of Diamond Foods Inc., following the acquisition which closed on February 29, 2016.

«This morning we announced solid first quarter results to begin the year», said Carl E. Lee, Jr., President and Chief Executive Officer. «While our top-line remains pressured by the same challenges facing the food industry, our team diligently managed costs and drove operational efficiencies to deliver strong earnings growth for our legacy business. Our performance in the quarter was led by «Lance», «Cape Cod», and «Late July» which all experienced revenue growth and market share gains. «Lance» sandwich crackers continues to benefit from our brand renovation process completed last year to drive brand and category growth. Lance’s improved product formulation, packaging design, and innovative new products like our Gluten Free sandwich crackers drove base business growth. After successfully renovating «Cape Cod» and «Lance» sandwich crackers to fuel top-line and bottom-line growth, we are leveraging our marketing, manufacturing and sales expertise to renovate and energize the pretzel category and our «Snyder’s of Hanover» brand. In addition to growing retail distribution and display support for «Snyder’s of Hanover», we recently launched our «Pretzels Baby» integrated marketing and advertising campaign. The early results are encouraging as we are generating positive social media response from both new and loyal consumers. We are confident that we will continue to build momentum as we move throughout the year, and I’m very proud of the team for their commitment and execution».

Lee continued, «During the first quarter, we closed the Diamond Foods acquisition. We quickly began to execute our integration plan, and we are already benefiting from the combination of these two great companies. The powerful combination gives Snyder’s-Lance an enhanced portfolio of brands across key snack food categories with a deeper, stronger combined team ready to unlock new distribution opportunities. We are now better positioned in the growing snack food industry, and we expect to realize significant cost and revenue synergies that will deliver earnings accretion and support further investment behind our brands. I’m very excited about the opportunities that lie ahead, and our ability to create even greater value for our shareholders as we execute our strategic plan».

First Quarter 2016 Financial Summary

The first quarter of fiscal 2016 financial results include the financial results of Diamond Foods beginning on February 29, 2016. All financial comparisons to the prior year are compared against the legacy Snyder’s-Lance results, where the prior year does not include any impact from the Diamond Foods acquisition.

• Net revenue for the first quarter of 2016 was 462.8 million USD, an increase of 15.0 percent compared to the first quarter of 2015 net revenue of 402.3 million USD. Excluding the contribution from Diamond Foods, net revenue for the first quarter of 2016 declined 0.7 percent compared to the first quarter of 2015 with volume growth of 1.2 percent offset by planned promotional activities.
• Adjusted Ebitda for the first quarter of 2016 was 55.7 million USD as compared to adjusted Ebitda of 38.4 million USD for the first quarter of 2015.
• Net income excluding special items for the first quarter of 2016 was 19.9 million USD, or 0.25 USD per diluted share on 80.8 million weighted average diluted shares outstanding. Net income excluding special items was 12.0 million USD for the first quarter of 2015, or 0.17 USD per diluted share on 71.0 million weighted average diluted shares outstanding.
• Including special items, the net loss for the first quarter of 2016 was 25.4 million USD, or 0.32 USD per share on 80.0 million weighted average shares outstanding. Net income including special items for the first quarter of 2015 was 10.6 million USD, or 0.15 USD per diluted share on 71.0 million weighted average diluted shares outstanding.
• Special items for the first quarter of 2016 included after-tax expenses of 45.3 million USD primarily associated with the acquisition of Diamond Foods. Special items for the first quarter of 2015 included after-tax expenses of 1.3 million USD primarily associated with severance charges and professional fees.

Fiscal 2016 Outlook

The Company has updated its fiscal 2016 outlook to reflect the recent acquisition of Diamond Foods and the Company’s expectations for the remainder of the year. As a result, the Company now expects earnings per diluted share to be in the range of 1.20 USD to 1.30 USD. The Company’s fiscal 2016 outlook excludes special items and charges associated with the acquisition of Diamond Foods, and includes an estimated negative impact of 0.10 USD to 0.12 USD per diluted share, from purchase accounting adjustments.

The Company’s 2016 full-year outlook also includes the following assumptions:

• Net revenue of 2.29 billion USD to 2.33 billion USD, an increase of approximately 39 percent to 41 percent;
  • Excluding the contribution from Diamond Foods net revenue growth is expected to be approximately flat to up 2 percent;
  • Net revenue contribution from Diamond Foods for the 10 months beginning February 29, 2016, of approximately 630 to 650 million USD, net of the impact of intercompany eliminations and reflecting the negative impact of net price realization from lower commodity costs and unfavorable foreign currency;
• Adjusted Ebitda of 310 million USD to 325 million USD; and
• Capital expenditures of 80 to 85 million USD

The Company’s 2016 full-year outlook is also based on the following assumptions, reflecting the acquisition of Diamond Foods:

• Net interest expense of 33 to 35 million USD;
• Effective tax rate of 34 percent to 35 percent; and
• Weighted average diluted share count of approximately 93 to 94 million shares.