Snyder's-Lance reaches 'key turning point'
by Eric Schroeder
CHARLOTTE, N.C. — The sale of its private label business and the acquisition of Baptista’s Bakery combined to make the second quarter of 2014 “a key turning point” for Snyder’s-Lance, Inc., the company’s top executive said.
“A lot has been achieved over the last 90 days as we execute day in and day out to build our overall business and improve our shareholder value,” Carl Lee, president and chief executive officer, said during an Aug. 7 conference call with analysts. “But even more important we’ve been able to continue to execute our strategic plan and achieve a couple of milestones that we truly think are noteworthy and really reposition our company for extended growth and a very bright future.”
Those milestones included the sale of the company’s private label business to Shearer’s and the acquisition of Baptista’s Bakery. During the conference call, Mr. Lee welcomed the opportunity to expand on why Snyder’s-Lance made a move to buy Baptista’s.
“A natural question I would have, maybe looking from the outside in, is why would you buy your contract manufacturer?” he said. “Why would you invest your hard earned capital there? For us it was an absolute strategic move because Pretzel Crisps is an important part of our overall future. And, with Baptista’s Bakery's capabilities, we’ve launched a number of new items here already. We’ve got a number of new items coming so it gives us a chance to continue to expand that brand and improve our overall margins. But what I’m really excited about even above that, which is important, is that we’ve got a lot of new items for 2015 that Baptista’s Bakery is making for our distribution business.”
Mr. Lee said the company will begin to roll out new items under the Snyder’s of Hanover and Cape Cod brands that are made at the Baptista’s Bakery facility. Doing so will allow the company to continue to tap into Baptista’s Bakery’s “unique” skill set and equipment that has been used to deliver on-trend, consumer driven new items.
“So that’s important,” he said. “I think the first big opportunity and win with Baptista’s Bakery is the innovation pipeline that we’re expanding, on the success we already have, using their capabilities.”
Mr. Lee also said Baptista’s Bakery adds critical mass and scale.
“It increases our purchasing scale, increases our chance to tie in with them and drive some synergies through logistics, purchasing, overhead, other areas,” he said.
Net income at Snyder’s-Lance in the second quarter ended June 28 was $11,677,000, equal to 17c per share on the common stock, down 10% from $12,979,000, or 19c per share, in the same period a year ago. Excluding special items, net income was $20,619,000, up from $16,903,000 a year ago. Net revenue totaled $399,596,000, up 6% from $378,489,000.
For the six months ended June 28, net income was $28,493,000, or 41c per share, down 13% from $32,822,000, or 47c per share, in the same period a year ago. Net revenue was $772,612,000, up 5% from $737,030,000.
Mr. Lee pointed to core brands as a driving force behind the sales growth during the first half of the year.
“We’ve had an incredible year so far with Cape Cod as we have strong growth in all these core markets, as we’ve had strong growth in some new channels and also as we begin to expand it out to the West coast,” Mr. Lee explained. “So Cape Cod has done a tremendous job of growing for us, and we’ve seen a long-term ability to continue to expand the brand. And we’re excited about tying it into popcorn. That’s performing quite well. And not only do we have a great kettle chip, we’ve had a great platform for some additional growth long term. Pretzel Crisps continues to do well. There’s more and more traffic going into the deli, and we’re right there to seize it with a direct sales force that’s in place to continue to expand our visibility, our distribution and to leverage our new items.”
The company’s Snyder’s of Hanover brand also has performed well.
“The innovation there, the Sweet and Salty, the Pretzel Spoonz and some of the other items have performed extremely well,” Mr. Lee said.
Overall, Mr. Lee said Snyder’s-Lance has “accomplished a lot in 2014.”
“We were aggressive,” he said. “We set milestones. We set very aggressive targets and we’ve achieved those and all of that’s been building to the transformation that we’re talking about now for our company. Today we are clearly a focused, branded snack company positioned at the center of consumer trends, which we welcome and we dig into deeper and deeper every day.”