Excluding special items, Snyder’s-Lance earnings rise 12%

by Eric Schroeder
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CHARLOTTE, N.C. — Impairment charges and other expenses hurt earnings at Snyder’s-Lance, Inc. in the second quarter of fiscal 2013. Net income in the quarter ended June 29 was $12,979,000, equal to 19c per share on the common stock, down 33% from $19,325,000, or 28c per share, in the same period a year ago.

Excluding special items, though, net income increased 12% in the most recent quarter to $16,903,000, up from $15,045,000 in the same period a year ago.

Net revenue rose 10% to $439,051,000, up from $399,400,000 in the same period a year ago.

“For the second quarter, our overall net sales growth of 10% year-over-year is exciting, and is driven by a combination of acquired and organic sales,” Carl Lee, president and chief executive officer, said during an Aug. 6 conference call with analysts. “Our plan of emphasizing our core brand of Snyder’s of Hanover, Lance, Cape Cod, and Snack Factory Pretzel Crisps is proving to be a solid path forward for creating shareholder value. And we’re finding more and more ways to connect with the needs of our consumers with our traditional snacks. Our gluten-free pretzels, our reduced-fat Cape Cod, our whole grain sandwich crackers, are just a couple examples, and they all are performing quite well. I believe the first half of 2013 shows our team is capable of winning in many ways.”

Mr. Lee said Snyder’s-Lance increased its investment in marketing and advertising during the second quarter to build brand awareness and drive sales in the second half of the year. As part of that effort, the company stepped up its advertising spending to launch a new television advertising campaign for Snyder’s of Hanover pretzels and also increased social media promotional activities for the 100-year anniversary of the Lance brand.

Snyder’s-Lance also continued to benefit from the acquisition of Snack Factory Pretzel Crisps, which posted significant year-over-year revenue and market share gains.

In addition to innovation, Snyder’s-Lance during the quarter also invested in expanding capacity and driving additional productivity gains, Mr. Lee said during the call.

“Over the course of the quarter we combined two private brand plants in Canada into one facility that improves our cost structure and service levels,” he explained. “While it did create incremental costs during the quarter, it will improve overall margins and service levels going forward. Another example, we upgraded our kettle operation to expand capacity and enhance quality. During the quarter we also had the official opening of our brand new R.&D. center in Hanover. This completely new facility supports our house consumer research, new product development, ongoing quality enhancements, and food safety.”

For the six months ended June 29, net income was $32,822,000, or 47c per share, down from $33,539,000, or 49c per share, in the same period a year ago. Excluding special items, net income in the first six months of fiscal 2013 was $36,746,000, which compared with $26,440,000 in the same period a year ago. Net revenues for the first half of fiscal 2013 totaled $857,623,000, up 8% from $792,243,000.

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