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Lance, Inc. Reports 2008 First
Quarter Net Revenue of $198 Million, an Increase of 8.5% over First
Quarter 2007; First Quarter 2008 Earnings of $0.02 Per Share Impacted by
Continued Ingredient Cost Pressure
CHARLOTTE, N.C., April 25 /PRNewswire-FirstCall/ -- Lance, Inc. (
NASDAQ:LNCE
) today reported net revenue for the first quarter ended March 29, 2008 of
$198.0 million, an increase of 8.5% over its prior year net revenue of
$182.4 million.
The Company's branded product sales, which represented 62%
of total Company sales in the quarter, grew approximately 5%, driven by
double digit growth in Lance branded home-pack sandwich crackers and Cape
Cod branded potato chips, partially offset by the continued decline in
certain trade channels that the Company deemphasized as part of its
focused growth strategy.
The Company's non-branded business, which represented 38%
of total Company sales in the quarter, increased approximately 14%
compared to the prior year, driven by continued volume growth from
existing and new customers, new product introductions and higher selling
prices.
The acquisition of premium cookie manufacturer Brent &
Sam's on March 14, 2008 had no material impact on the Company's
consolidated first quarter net revenue or net income.
Lance realized first quarter 2008 net income from
continuing operations of $0.6 million, or $0.02 per diluted share,
compared to first quarter 2007 net income from continuing operations of
$5.9 million, or $0.19 per diluted share.
Net income in the first quarter of 2008 as compared to the
first quarter of 2007 was adversely impacted by an approximate $13 million
pre-tax increase in the cost of ingredients, primarily flour and vegetable
oils. As previously reported, the Company initiated price increases to its
customers in early 2008 aimed at offsetting these rising costs; however,
during the first quarter, and subsequent to the price increases, the cost
of these key ingredients continued to escalate, leading to a marked
decline in operating profit.
Comments from Management
"As anticipated, the escalating cost of flour and
vegetable oils significantly reduced our first quarter
profitability," commented Dave Singer, President and Chief Executive
Officer. "We have executed additional pricing actions that will take
effect during the second quarter. Our ingredient costs will be somewhat
higher in the 2008 second quarter than in the first quarter, and based on
our outlook for ingredient costs and our assessment of the competitive
situation, we will continue to consider further pricing actions as the
year progresses. Our first quarter sales volume was strong despite the
initial round of price increases, which is encouraging. We remain cautious
in our near-term outlook until we see additional data and evaluate the
impact on volume following our planned second quarter price
increases."
Mr. Singer added, "Although the higher cost of
ingredients led to significant margin pressure in the first quarter, our
underlying performance has remained solid relative to initiatives focused
on enhancing supply chain and DSD efficiencies. During the quarter we
continued to lower our supply chain costs and increase the leverage of our
DSD network with higher sales per route. As previously stated, we are
confident that our operating margins will rebound in the second half of
this year, as pricing is aligned with ingredient costs and we continue to
execute on our key operational initiatives."
Company Revises Revenue Estimate for 2008
Based on its assessment of the current pricing environment
and the addition of revenue related to the acquisition of Brent &
Sam's for the remainder of the year, the Company raised its 2008 full year
net sales estimate to a range of $805 to $835 million. Previously, on
February 14, 2008, the Company had provided a full year net sales estimate
range of $790 to $820 million.
Due to the continued volatility of ingredient costs, the
Company reaffirmed its previous estimate for full year earnings per
diluted share of $0.70 to $0.80. The Company believes that its earnings
per share will be heavily weighted toward the second half of 2008 due to
the timing of price increases needed to offset ingredient costs.
Dividend Declared
The Company also announced the declaration of a regular
quarterly cash dividend of $0.16 per share on the Company's common stock.
The dividend is payable on May 20, 2008 to stockholders of record at the
close of business on May 12, 2008.
LANCE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share and per-share amounts)
(unaudited)
Quarter Ended
March 29, 2008 March 31, 2007
Net sales $197,968 $182,426
Cost of sales 123,460 102,976
Gross margin 74,508 79,450
Selling, general and administrative 72,857 69,616
Other income, net (4) (90)
Income from continuing operations
before interest and taxes 1,655 9,924
Interest expense, net 606 604
Income tax expense 404 3,448
Net income from continuing operations $645 $5,872
Income from discontinued operations - 537
Income tax expense - 199
Net income from discontinued operations - 338
Net Income $645 $6,210
Basic earnings per share:
From continuing operations $ 0.02 $0.19
From discontinued operations - 0.01
Basic earnings per share $ 0.02 $0.20
Weighted average shares outstanding - basic 31,103,000 30,805,000
Diluted earnings per share:
From continuing operations $ 0.02 $0.19
From discontinued operations - 0.01
Diluted earnings per share $ 0.02 $0.20
Weighted average shares outstanding -
diluted 31,608,000 31,131,000
LANCE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
March 29, 2008 December 29, 2007
Assets:
Cash and cash equivalents $1,156 $8,647
Accounts receivable, net 73,843 64,081
Inventories 40,319 38,659
Other current assets 23,901 21,702
Total Current Assets 139,219 133,089
Fixed Assets, net 205,371 205,075
Goodwill and other intangibles, net 87,318 69,127
Other noncurrent assets 5,742 5,712
Total Assets $437,650 $413,003
Liabilities and Equity:
Accounts payable $32,518 21,169
Other current liabilities 48,220 53,468
Total Current Liabilities 80,738 74,637
Long-term debt 74,703 50,000
Other liabilities 41,740 41,269
Stockholders' equity 240,469 247,097
Total Liabilities and Stockholders' Equity $437,650 $413,003
LANCE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(in thousands)
(unaudited)
Quarter Ended
March 29, 2008 March 31, 2007
Operating Activities:
Net income $645 $6,210
Depreciation and amortization 7,925 6,981
Stock-based compensation expense 1,003 876
Loss/(gain) on sale of fixed assets 102 (140)
Changes in other operating assets and
liabilities (3,738) (5,916)
Net cash flow from operating activities 5,937 8,011
Investing Activities:
Purchases of fixed assets (7,057) (7,073)
Proceeds from sale of fixed assets 230 802
Business acquisitions net of cash acquired (24,123) -
Net cash used in investing activities (30,950) (6,271)
Financing Activities:
Dividends paid (5,019) (4,935)
Issuances of common stock 70 829
Proceeds from long-term debt 24,000 -
Repayments of debt from business acquisitions (1,495) -
Net cash from/(used in) financing activities 17,556 (4,106)
Effect of exchange rate changes on cash (34) 108
Decrease in cash and cash equivalents (7,491) (2,258)
Cash and cash equivalents at beginning of
period 8,647 5,504
Cash and cash equivalents at end of period $1,156 $3,246
Source: Lance, Inc.
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