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Snyder's-Lance, Inc. Reports Results for Full Year 2013

-- Reports net revenue growth of 9% compared to prior year

CHARLOTTE, N.C., Feb. 7, 2014 /PRNewswire/ -- Snyder's-Lance, Inc. (Nasdaq-GS: LNCE) today reported results for its fiscal year 2013.  Net revenue for the year ended December 28, 2013, was $1.76 billion, an increase of 8.8% from prior year net revenue of $1.62 billion, primarily driven by sales of our core brands.  Consistent with our long term guidance of 3% to 5%, organic net revenue growth for the full year was 4%.  The Company realized full year net income of $81.3 million, excluding special items, or $1.16 per diluted share, as compared to full year 2012 net income of $66.1 million, excluding special items, or $0.95 per diluted share, an increase of 22%.  Net income, including special items, was $78.7 million, or $1.12 per diluted share, for the full year 2013 compared to $59.1 million or $0.85 per diluted share for 2012, an increase of 33%.  Full year 2013 net income was negatively impacted by an increased effective tax rate of 36.8% compared to 34.7% for full year 2012.  This higher than normal effective tax rate reduced 2013 earnings per share by approximately $0.04 when compared to last year's effective tax rate.

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Special items for 2013 totaled $2.6 million, after tax expense, and included approximately $1.6 million income in gain on the sale of assets, approximately $1.2 million of impairment charges and approximately $3.0 million of self-funded medical expense.  Special items for 2012 were $7.0 million, after tax expense, and included approximately $2.6 million in severance costs and professional fees related to merger and integration activities, approximately $6.6 million in asset impairment charges, approximately $4.9 million in charges related to consolidation activities, and approximately $1.2 million in expenses associated with the acquisition of Snack Factory. Special items for 2012 also included gains on the sale of route businesses of approximately $8.3 million, net of the incremental taxes incurred on these gains.  

Fourth quarter 2013 net revenue was $451 million, an increase of 7.4% compared to prior year fourth quarter net revenue of $420 million, primarily led by sales of our core brands which grew organically by 6.8%.  Fourth quarter 2013 net income was $22.2 million, excluding special items, which was 8.8% above the $20.4 million of net income, excluding special items, for the prior year. Net income including special items was $23.0 million for the fourth quarter 2013 compared to fourth quarter 2012 net income including special items of $7.8 million.  Fourth quarter 2013 net income was negatively impacted by the higher than normal effective tax rate mentioned above.

Comments from Management
"During this past year we grew earnings by 22% excluding special items, and grew our sales by 9%," commented Carl E. Lee, Jr., President and Chief Executive Officer.  "For 2013, we saw strong growth in our core branded items with solid distribution gains and share growth. Organically, core brands grew 5.4%, as we continued to invest in quality, capacity and innovation.  Our overall operating margin increased in 2013 by 70 basis points, thanks to our team's execution of our strategic plan.  We increased our investment in advertising and marketing by over 20% from the prior year to support building our brands.  In 2013 we strengthened our position as a leader in premium, differentiated snacks and are excited about the potential of 2014."

Mr. Lee continued, "Looking ahead, our team has worked hard to build a strong innovation pipeline for 2014 to drive core brand growth with unique value-added products.  We expect to continue improving our operating margin in the coming year while also significantly increasing our investment in advertising and marketing to support core brand growth.  Our primary goals of emphasizing our core brands, growing sales across the entire product portfolio, expanding our DSD network and controlling costs to widen margins are on target. We continue to look for branded products and distribution opportunities to build on this great foundation we've put in place.  In 2014, plans call for growing our business consistent with consumer trends, supported by our expanding "better for you" product portfolio.  I'd like to thank everyone at Snyder's-Lance for a solid 2013 and look forward to an exciting and productive 2014."

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 March 5, 2014 to stockholders of record at the close of business on February 26, 2014.

Estimates provided for 2014
The Company estimates that its net revenue for the full year 2014 will be up 3% to 5% organically when compared to 2013.  Earnings per diluted share are expected to increase between 10% and 16% compared to 2013 earnings per diluted share, excluding special items.  Capital expenditures for 2014 are projected to be between $70 and $75 million as investments are made in plant improvements, quality, capacity and innovation.

Conference Call
Management will conduct a conference call and live webcast at 9:00 am eastern time on Friday, February 7, 2014 to review the Company's full year results. The conference call and accompanying slide presentation will be webcast live through the Investor Relations section of the Company's website, www.snyderslance.com.  In addition, the slide presentation will be available to download and print approximately 30 minutes before the webcast at www.snyderslance.com. To participate in the conference call, the dial-in number is (866) 814-7293 for U.S. callers or (702) 696-4943 for international callers.  A continuous telephone replay of the call will be available between 1:00 pm on February 7 and midnight on February 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 39929513.  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. The Company's products include pretzels, sandwich crackers, pretzel crackers, potato chips, cookies, tortilla chips, restaurant style crackers, nuts and other snacks. Snyder's-Lance has manufacturing facilities in North Carolina, Pennsylvania, Iowa, Indiana, Georgia, Arizona, Massachusetts, Florida, Ohio and Ontario, Canada. Products are sold under the Snyder's of Hanover®, Lance®, Cape Cod®, Snack Factory® Pretzel Crisps®, Krunchers!®, Tom's®, Archway®, Jays®, Stella D'oro®, Eatsmart™, O-Ke-Doke®, Quitos™ and other brand names along with a number of private label and third party brands. Products are distributed nationally through grocery and mass merchandisers, convenience stores, club stores, food service outlets and other channels. LNCE-E

Cautionary Information about Forward Looking Statements
This news release contains statements which may be forward looking within the meaning of applicable securities laws. The statements include projections regarding future revenues, earnings and other results which are based upon the Company's current expectations and assumptions, which are subject to a number of risks and uncertainties. Factors that could cause actual results to differ include: general economic conditions; increases in cost or availability of ingredients, packaging, energy and employees; price competition and industry consolidation; loss of major customers or changes in product offerings with significant customers; successful integration and realization of anticipated benefits of acquisitions; loss of key personnel; ability to execute strategic initiatives; product recalls and concerns surrounding the quality or safety of products and ingredients; adulterated or misbranded products; disruptions to our supply chain or information technology systems; improper use of social media; changes in consumer preferences; distribution through independent business owners; inability to maintain existing markets or expand to other geographic markets; protection of trademarks and other proprietary intellectual rights; impairment in the carrying value of goodwill or other intangible assets; food industry and regulatory factors; interest rate and foreign exchange rate risks; and the interests of significant stockholders may conflict with those of other stockholders, which have been discussed in greater detail in our most recent Form 10-K and other reports filed with the Securities and Exchange Commission. Except as required by law, the Company undertakes no obligation to update or revise publicly any forward-looking statement as a result of new information, future developments or otherwise.

 

SNYDER'S-LANCE, INC. AND SUBSIDIARIES

Consolidated Statements of Income

For the Quarters and Years Ended December 28, 2013 (Unaudited) and December 29, 2012

(in thousands, except per share data)




Quarter Ended


Year Ended



December 28,

 2013


December 29,

 2012


December 28,

 2013


December 29,

 2012

Net revenue


$

450,403



$

419,826



$

1,761,049



$

1,618,634


Cost of sales


300,748



277,209



1,163,034



1,079,777


Gross margin


149,655



142,617



598,015



538,857











Selling, general and administrative


113,951



115,733



470,561



440,597


Impairment charges




11,655



1,900



11,862


Gain on sale of route businesses, net


(533)



(739)



(2,590)



(22,335)


Other income, net


(2,220)



(283)



(10,823)



(407)


Income before interest and income taxes


38,457



16,251



138,967



109,140











Interest expense, net


3,706



3,229



14,408



9,487


Income before income taxes


34,751



13,022



124,559



99,653











Income tax expense


11,717



5,212



45,475



40,143


Net income


23,034



7,810



79,084



59,510


Net income attributable to noncontrolling interests


35



28



364



425


Net income attributable to Snyder's-Lance, Inc.


$

22,999



$

7,782



$

78,720



$

59,085











Basic earnings per share


$

0.33



$

0.11



$

1.13



$

0.86


Weighted average shares outstanding – basic


69,801



68,725



69,383



68,382











Diluted earnings per share


$

0.33



$

0.11



$

1.12



$

0.85


Weighted average shares outstanding – diluted


70,631



69,586



70,158



69,215











Cash dividends declared per share


$

0.16



$

0.16



$

0.64



$

0.64





SNYDER'S-LANCE, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

As of December 28, 2013 (Unaudited) and December 29, 2012

(in thousands, except share data)




December 28,

 2013


December 29,

2012

ASSETS





Current assets:





Cash and cash equivalents


$

14,080



$

9,276


Accounts receivable, net of allowances of $1,579 and $2,159, respectively


144,988



141,862


Inventories


113,750



118,256


Prepaid income taxes


9,094




Deferred income taxes


15,391



11,625


Assets held for sale


15,314



11,038


Prepaid expenses and other current assets


23,649



28,676


Total current assets


336,266



320,733







Noncurrent assets:





Fixed assets, net


349,256



331,385


Goodwill


537,141



540,389


Other intangible assets, net


519,669



531,735


Other noncurrent assets


22,262



22,490


Total assets


$

1,764,594



$

1,746,732







LIABILITIES AND STOCKHOLDERS' EQUITY










Current liabilities:





Current portion of long-term debt


$

17,291



$

20,462


Accounts payable


54,510



52,753


Accrued compensation


29,792



31,037


Accrued casualty insurance claims


6,262



4,779


Accrued selling and promotional costs


13,257



16,240


Income tax payable




1,263


Other payables and accrued liabilities


25,092



28,089


Total current liabilities


146,204



154,623







Noncurrent liabilities:





Long-term debt


480,082



514,587


Deferred income taxes


190,393



176,037


Accrued casualty insurance claims


5,567



9,759


Other noncurrent liabilities


24,448



19,551


Total liabilities


846,694



874,557







Commitments and contingencies










Stockholders' equity:





Common stock, 69,919,364 and 68,863,974 shares outstanding, respectively


58,241



57,384


Preferred stock, no shares outstanding





Additional paid-in capital


765,172



746,155


Retained earnings


85,146



50,847


Accumulated other comprehensive income


10,171



15,118


Total Snyder's-Lance, Inc. stockholders' equity


918,730



869,504


Noncontrolling interests


(830)



2,671


Total stockholders' equity


917,900



872,175


Total liabilities and stockholders' equity


$

1,764,594



$

1,746,732





SNYDER'S-LANCE, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the Fiscal Years Ended December 28, 2013 (Unaudited) and December 29, 2012

(in thousands)




December 28,

 2013


December 29,

 2012

Operating activities:





Net income


$

79,084



$

59,510


Adjustments to reconcile net income to cash from operating activities:





Depreciation and amortization


59,631



53,764


Stock-based compensation expense


5,944



4,693


(Gain)/loss on sale of fixed assets, net


(2,640)



597


Gain on sale of route businesses


(2,590)



(22,335)


Impairment charges


1,900



11,862


Deferred income taxes


10,360



(15,279)


Provision for doubtful accounts


1,828



1,479


Changes in operating assets and liabilities, excluding business acquisitions


(12,781)



(1,523)


Net cash provided by operating activities


140,736



92,768







Investing activities:





Purchases of fixed assets


(74,579)



(80,304)


Purchases of route businesses


(29,692)



(28,523)


Proceeds from sale of fixed assets


9,448



9,324


Proceeds from sale of route businesses


30,745



93,896


Proceeds from sale of investments


2,298



1,444


Business acquisitions, net of cash acquired


(3,131)



(344,181)


Net cash used in investing activities


(64,911)



(348,344)







Financing activities:





Dividends paid to stockholders


(44,421)



(43,777)


Dividends paid to noncontrolling interests


(471)



(234)


Debt issuance costs




(2,028)


Issuances of common stock


9,776



9,710


Excess tax benefits from stock-based compensation


1,500



2,618


Repurchases of common stock


(770)



(335)


Repayments of long-term debt


(20,508)



(2,476)


Proceeds from long-term debt




325,211


Net repayments from revolving credit facilities


(16,127)



(44,841)


Net cash (used in)/provided by financing activities


(71,021)



243,848







Effect of exchange rate changes on cash




163







Increase/(decrease) in cash and cash equivalents


4,804



(11,565)


Cash and cash equivalents at beginning of period


9,276



20,841


Cash and cash equivalents at end of period


$

14,080



$

9,276







Non-cash investing activities:





Acquisition of remaining interest in Michaud Distributors


10,150









Supplemental information:





Cash paid for income taxes, net of refunds of $151 and $12,591, respectively


$

39,313



$

33,554


Cash paid for interest


$

15,131



$

10,533





SNYDER'S-LANCE, INC. AND SUBSIDIARIES

Reconciliation of Non-GAAP Measures (Unaudited)

For the Quarters and Years Ended December 28, 2013 and December 29, 2012

(in thousands, except per share data)



Net of

Tax


Per Diluted

Share

Quarter Ended December 28, 2013




Net income attributable to Snyder's-Lance, Inc.

$

22,999



$

0.326






Gain on sale of Canadian assets

(846)



(0.012)






Net income attributable to Snyder's-Lance, Inc., excluding special items

$

22,153



$

0.314






Quarter Ended December 29, 2012




Net income attributable to Snyder's-Lance, Inc.

$

7,782



$

0.110






Merger related items

1,149



0.020


Snack Factory acquisition costs

876



0.010


Manufacturing consolidation activities

3,238



0.040


Trademark impairment

4,966



0.070


Disposal costs and fixed asset impairments

1,896



0.030


Gain on sale of route businesses

(411)



0.000


Incremental income tax associated with non-deductible goodwill on the sale of route businesses

897



0.010






Net income attributable to Snyder's-Lance, Inc., excluding special items

$

20,393



$

0.290




Net of

Tax


Per Diluted

Share

Year Ended December 28, 2013




Net income attributable to Snyder's-Lance, Inc.

$

78,720



$

1.122






Self-funded medical insurance claim

2,995



0.043


Impairment charges

1,192



0.017


Gain on sale of Canadian assets

(1,645)



(0.024)






Net income attributable to Snyder's-Lance, Inc., excluding special items

$

81,262



$

1.158






Year Ended December 29, 2012




Net income attributable to Snyder's-Lance, Inc.

$

59,085



$

0.850






Merger related items

2,589



0.040


Snack Factory acquisition costs

1,163



0.020


Manufacturing consolidation activities

4,921



0.070


Trademark impairment

4,966



0.070


Disposal costs and fixed asset impairments

1,621



0.030


Gain on sale of route businesses

(13,869)



(0.210)


Incremental income tax associated with non-deductible goodwill on the sale of route businesses

5,604



0.080






Net income attributable to Snyder's-Lance, Inc., excluding special items

$

66,080



$

0.950


 

SOURCE Snyder's-Lance, Inc.

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