Lance income rises 18% in third quarter

by Eric Schroeder
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CHARLOTTE, N.C. — Net income and sales at Lance, Inc. increased in the third quarter to continue momentum gained by the company during the second quarter of fiscal 2010. Net income in the quarter ended Sept. 25 totaled $10,386,000, equal to 32c per share on the common stock, up 18% from $8,803,000, or 28c per share, in the same period a year ago. The most recent quarterly results included after-tax expenses of approximately $1.9 million associated with the proposed merger with Snyder’s of Hanover.

Sales during the third quarter totaled $237,683,000, up 1% from $234,902,000. Branded product sales, which represent about 58% of total revenue in the third quarter, rose 1%, as sales of branded products to dollar stores, mass merchandisers and distributors increased compared to the same quarter last year due to the acquisition of Stella D’oro, new product offerings and growth of existing products with new and established customers. Lance said the gains largely were offset by higher promotional costs compared to last year’s third quarter, as well as volume declines in certain channels, including up-and-down the street and food service.
Non-branded product sales also increased about 1% in the third quarter.

“While we are not satisfied with our growth during the third quarter of this year, we are generally pleased with the company’s overall performance in this tough economic environment,” said David V. Singer, president and chief executive officer. “Modest net revenue gains and good expense control, combined with continuing benefits of the foundational changes implemented over the past several years, continue to lead to solid profitability, which sustains the momentum we gained in the second quarter of 2010.

“For the balance of this year, we will remain focused on profitable growth and managing our costs. We recognize that cost escalations in our important commodities will need to be offset through pricing actions and continued cost efficiencies. We expect that price increases will be needed to maintain our margins as we go into next year, especially in our private brand product portfolio. In our branded business, we are cautiously optimistic that the requirement for promotional spending will ease as we move into 2011, helping to offset commodity pressures in these product lines.”

Mr. Singer said Lance expects to finalize its merger with Snyder’s of Hanover in the fourth quarter and begin the process of integrating the two companies.

“In the past several months we have completed several important steps toward finalizing this merger,” he said. “Snyder’s-Lance will be a strong organization that creates value for our stockholders and business partners by leveraging a portfolio of consumer preferred snack food brands and a strong national D.S.D. system. Both companies bring much to the table with their respective brands, distribution systems, retailer partnerships, and talented people.”

Lance revised its full-year earnings guidance to $1.18 to $1.23 per share from $1.15 to $1.25 per share, while narrowing its previously announced full-year 2010 net revenue estimate range to $935 million to $945 million from $930 million to $950 million. Capital expenditures are expected to be between $28 million and $31 million for the year.

For the nine months ended Sept. 25, net income was $21,890,000, or 68c per share, down 12% from $24,783,000, or 79c per share, in the same period a year ago. Net sales rose 1% to $694,717,000 from $687,065,000 a year ago.

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