Exhibit 99.1
| | | |
| | | CONTACTS: |
| | | Russell G. Allen, Director – Planning & IR (704) 557-8219 |
| | | Joseph Calabrese, Financial Relations Board (212) 827-3772 |
IMMEDIATE RELEASE
February 12, 2007
LANCE, INC. REPORTS RESULTS FOR THE FOURTH QUARTER AND FULL YEAR 2006
| | • | | Reports annual net revenue of $748.0 million, an increase of 10% from 2005 net revenue of $679.3 million, and earnings per diluted share were $0.60, including special items, and $0.66 per diluted share excluding special items. |
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| | • | | Announces plans to exit Company owned and operated vending business |
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| | • | | Provides estimates for the full year 2007 |
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| | • | | Declares regular quarterly cash dividend of $0.16 per share |
Charlotte, NC, — February 12, 2007— Lance, Inc. (Nasdaq-GS: LNCE) today reported 2006 full year net sales of $748.0 million, including discontinued operations, an increase of 10% over its prior year net sales of $679.3 million, including discontinued operations. Excluding the impact of an extra selling week in 2005, the sales increase in 2006 was approximately 11% over the prior year, with branded product sales increasing 14% and non-branded product sales up 7%. Net revenue from continuing operations was $730.1 million for 2006 compared to $651.4 million for 2005, an increase of 12.1%, or 13.5% excluding the extra selling week in 2005. The growth in branded product sales was driven largely by incremental Tom’s business and continued strength in sales of Lance® crackers and Cape Cod® potato chips. The growth in non-branded product sales was driven by additional contract manufacturing business, the Tom’s acquisition and modest growth in private label product sales.
Net Income for full year 2006 was $18.5 million, or $0.60 per diluted share, compared to the prior year net income of $18.5 million, or $0.61 per diluted share. Net income for 2006 excluding special items was $20.3 million, or $0.66 per diluted share, compared with the prior year’s net income of $22.4 million, or $0.74 per diluted share, excluding special items. Special items recorded in 2006 included employee retention payments and other charges related to the Tom’s integration. Special items recorded in 2005 included employee retention payments and asset impairment charges related to the Tom’s integration and CEO severance costs.
David V. Singer, President and Chief Executive Officer, commented “I am extremely pleased with the ground work that was accomplished during 2006 towards positioning our Company for improved operating results in the future. Lance implemented a significant number of initiatives during 2006 focused on improving our operational efficiency and developing a solid foundation for profitable growth. During the year we strengthened our management team, integrated the Tom’s acquisition into our manufacturing, distribution and administrative infrastructure, identified and began
implementing enhancements to our supply chain and began the design and implementation of a new enterprise-resource-planning (ERP) solution. We also achieved record sales for the Company in 2006, reflecting the incremental impact of the Tom’s acquisition along with continued growth in our core Lance® and Cape Cod® branded products. While the impact of our efforts to date is not fully demonstrated in our current financial results, we continue to make progress on operational initiatives that we are confident will support significant improvements in our growth and profitability over the next several years.”
Fourth Quarter Results
Net sales were $175.8 million for the 2006 fourth quarter including discontinued operations, a decline of 9% over the prior year’s fourth quarter net sales of $193.8 including discontinued operations. Excluding the impact of the extra selling week in the 2005 fourth quarter, the total sales decline was approximately 5%. Net income for the fourth quarter of 2006 was $5.6 million or $0.18 per diluted share, compared to net income in the prior year’s fourth quarter of $1.5 million, or $0.05 per diluted share. Fourth quarter 2005 net income, excluding special items related to the Tom’s acquisition was $3.8 million or $0.13 per diluted share.
Discontinuation of Company-Owned and Operated Vending Business
The Company also announced its decision to exit the Company-owned and operated vending business, and is now reporting the net impact of this business as a discontinued operation. The decision to exit the business is consistent with strategic plans to improve overall operational efficiency and profitability, allowing the Company to reallocate resources to channels of business with stronger growth and profit potential. In 2006, the Company-owned and operated vending business represented approximately 2% of the Company’s total sales and reduced earnings by $0.01 per share. The Company expects that the impact of this discontinued operation will be neutral to slightly dilutive to earnings per share during 2007.
The Company believes that there will not be material impairment charges as we disposition the assets related to this business. A reconciliation of reported results, including and excluding special items and reflecting discontinued operations follows.
| | | | | | | | | | | | | | | | | |
| | | Year Ended | | | Year Ended | |
| | | December 30, 2006 | | | December 31, 2005 | |
| | | | | | | Earnings | | | | | | | Earnings | |
| | | | | | | Per Diluted | | | | | | | Per Diluted | |
| | | Sales | | | Share | | | Sales | | | Share | |
| Reported Results | | | | | | | | | | | | | | | | |
| Results from Continuing Operations | | $ | 730.1 | | | $ | 0.61 | | | $ | 651.4 | | | $ | 0.58 | |
| Impact of Discontinued Operations | | | 17.9 | | | | (0.01 | ) | | | 27.9 | | | | 0.03 | |
| | | | | | | | | | | | | |
| Results Including Discontinued Operations | | $ | 748.0 | | | $ | 0.60 | | | $ | 679.3 | | | $ | 0.61 | |
| | | | | | | | | | | | | | | | | |
| Results Excluding Special Items | | | | | | | | | | | | | | | | |
| Results from Continuing Operations | | $ | 730.1 | | | $ | 0.67 | | | $ | 651.4 | | | $ | 0.71 | |
| Impact of Discontinued Operations | | | 17.9 | | | | (0.01 | ) | | | 27.9 | | | | 0.03 | |
| | | | | | | | | | | | | |
| Results Including Discontinued Operations | | $ | 748.0 | | | $ | 0.66 | | | $ | 679.3 | | | $ | 0.74 | |
| | | | | | | | | | | | | | | | | |
| | | Quarter Ended | | | Quarter Ended | |
| | | December 30, 2006 | | | December 31, 2005 | |
| | | | | | | Earnings | | | | | | | Earnings | |
| | | | | | | Per Diluted | | | | | | | Per Diluted | |
| | | Sales | | | Share | | | Sales | | | Share | |
| Reported Results | | | | | | | | | | | | | | | | |
| Results from Continuing Operations | | $ | 172.4 | | | $ | 0.20 | | | $ | 186.8 | | | $ | 0.06 | |
| Impact of Discontinued Operations | | | 3.4 | | | | (0.02 | ) | | | 7.0 | | | | (0.01 | ) |
| | | | | | | | | | | | | |
| Results Including Discontinued Operations | | $ | 175.8 | | | $ | 0.18 | | | $ | 193.8 | | | $ | 0.05 | |
| | | | | | | | | | | | | | | | | |
| Results Excluding Special Items | | | | | | | | | | | | | | | | |
| Results from Continuing Operations | | $ | 172.4 | | | $ | 0.20 | | | $ | 186.8 | | | $ | 0.14 | |
| Impact of Discontinued Operations | | | 3.4 | | | | (0.02 | ) | | | 7.0 | | | | (0.01 | ) |
| | | | | | | | | | | | | |
| Results Including Discontinued Operations | | $ | 175.8 | | | $ | 0.18 | | | $ | 193.8 | | | $ | 0.13 | |
Company Estimates Provided for 2007
The Company believes that its net sales from continuing operations for the full year 2007 will be approximately $760 to $785 million and that earnings per diluted share from continuing operations will be approximately $0.80 to $0.86. The impact of discontinued operations is expected to be neutral to slightly dilutive to earnings per share. Capital expenditures are expected to be approximately $48 million for the year as the Company continues to invest in its supply chain, direct store delivery (DSD) system and information system initiatives.
Mr. Singer concluded, “We understand that 2007 will be another year of significant transition for Lance as we continue to focus on fundamental improvements to our operations. During the year, the key areas of focus will be driving profitable sales growth through product and channel development, executing strategies to improve supply chain and DSD efficiency, exiting the DSD portion of our vending business in a controlled and efficient manner and continuing the implementation of our ERP initiative. We are excited about our future and believe that we will be able to achieve the expectations that we have provided. We also believe that we are positioning ourselves for expanded margins and more sales growth in the future.”
Dividend Declared
The Company 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 February 28, 2007 to stockholders of record at the close of business on February 20, 2007.
Conference Call
Lance, Inc. has scheduled a conference call with investors at 9:00 a.m. eastern time on Monday, February 12, 2007 to discuss fourth quarter and full year 2006 financial results. To participate in the call, the dial-in numbers are (800) 789-3681 for U.S. callers and (706) 634-1425 for international callers. The access code is “LANCE.” A continuous replay of the call will be available beginning at 12:00 noon on February 12th and running through midnight February 19th. The replay telephone number is (800) 642-1687. The international number is (706) 645-9291. The replay access code is 6834346. A web-based replay of the conference call will also be available in the investor relations section of Lance’s web site,www.lance.com.
About Lance, Inc.
Lance, Inc. manufactures and markets snack foods throughout most of the United States and Canada.
This news release contains statements which may be forward looking within the meaning of applicable securities laws. The statements may include projections regarding future earnings and 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, including price competition, industry consolidation, raw material costs, food industry factors, effectiveness of sales and marketing activities, interest rate, foreign exchange rate, and credit risks and acquisition integration and divestitures are discussed in the Company’s most recent Form 10-K filed with the Securities and Exchange Commission.
This press release presents measures not derived in accordance with generally accepted accounting principles (“GAAP”). Such measures should not be considered substitutes for any measures derived in accordance with GAAP and may also be inconsistent with similar measures presented by other companies. Reconciliation of these non-GAAP measures to the most nearly comparable GAAP measures, if applicable, is presented in the attached pages.
LANCE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share and per-share amounts)
(unaudited)
| | | | | | | | | |
| | | For the Quarter Ended |
| | | December 30, 2006 | | December 31, 2005 |
| | | (13 Weeks) | | (14 Weeks) |
| Net sales and other operating revenue | | $ | 172,402 | | | $ | 186,840 | |
| Cost of sales | | | 98,282 | | | | 109,359 | |
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| Gross margin | | | 74,120 | | | | 77,481 | |
| | | | | | | | | |
| Selling, marketing and delivery | | | 53,844 | | | | 63,813 | |
| General and administrative | | | 10,389 | | | | 10,681 | |
| Other expense/(income), net | | | (245 | ) | | | 129 | |
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| Income from continuing operations before interest and taxes | | | 10,132 | | | | 2,858 | |
| | | | | | | | | |
| Interest expense, net | | | 758 | | | | 534 | |
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| Income from continuing operations before taxes | | | 9,374 | | | | 2,324 | |
| Income taxes | | | 3,130 | | | | 608 | |
| |
| Net income from continuing operations | | $ | 6,244 | | | $ | 1,716 | |
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| | | | | | | | | |
| Loss from discontinued operations before taxes | | | (991 | ) | | | (294 | ) |
| Income tax benefit | | | (352 | ) | | | (118 | ) |
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| Loss from discontinued operations | | | (639 | ) | | | (176 | ) |
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| Net Income | | $ | 5,605 | | | $ | 1,540 | |
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| | | | | | | | | |
| Basic Earnings per share: | | | | | | | | |
| Earnings per share from continuing operations | | $ | 0.20 | | | $ | 0.06 | |
| Loss per share from discontinued operations | | | (0.02 | ) | | | (0.01 | ) |
| | | |
| Earnings per share | | $ | 0.18 | | | $ | 0.05 | |
| Weighted average shares outstanding | | | 30,756,000 | | | | 29,807,000 | |
| Diluted Earnings per share: | | | | | | | | |
| Earnings per share from continuing operations | | $ | 0.20 | | | $ | 0.06 | |
| Loss per share from discontinued operations | | | (0.02 | ) | | | (0.01 | ) |
| | | |
| Earnings per share | | $ | 0.18 | | | $ | 0.05 | |
| Weighted average shares outstanding | | | 31,033,000 | | | | 30,099,000 | |
LANCE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share and per-share amounts)
(unaudited)
| | | | | | | | | |
| | | For the Year Ended |
| | | December 30, 2006 | | December 31, 2005 |
| | | (52 Weeks) | | (53 Weeks) |
| Net sales and other operating revenue | | $ | 730,116 | | | $ | 651,437 | |
| Cost of sales | | | 415,576 | | | | 369,331 | |
| |
| Gross margin | | | 314,540 | | | | 282,106 | |
| | | | | | | | | |
| Selling, marketing and delivery | | | 239,222 | | | | 215,887 | |
| General and administrative | | | 42,914 | | | | 37,605 | |
| Other expense/(income), net | | | 191 | | | | (37 | ) |
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| Income from continuing operations before interest and taxes | | | 32,213 | | | | 28,651 | |
| | | | | | | | | |
| Interest expense, net | | | 3,156 | | | | 1,985 | |
| |
| Income from continuing operations before taxes | | | 29,057 | | | | 26,666 | |
| Income taxes | | | 10,111 | | | | 9,080 | |
| |
| Net income from continuing operations | | $ | 18,946 | | | $ | 17,586 | |
| |
| | | | | | | | | |
| Income/(loss) from discontinued operations before taxes | | | (717 | ) | | | 1,339 | |
| Income tax expense/(benefit) | | | (249 | ) | | | 455 | |
| |
| Income/(loss) from discontinued operations | | | (468 | ) | | | 884 | |
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| Net Income | | $ | 18,478 | | | $ | 18,470 | |
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| | | | | | | | | |
| Basic Earnings per share: | | | | | | | | |
| Earnings per share from continuing operations | | $ | 0.62 | | | $ | 0.59 | |
| Earnings/(loss) per share from discontinued operations | | | (0.01 | ) | | | 0.03 | |
| |
| Earnings per share | | $ | 0.61 | | | $ | 0.62 | |
| Weighted average shares outstanding | | | 30,467,000 | | | | 29,807,000 | |
| Diluted Earnings per share: | | | | | | | | |
| Earnings per share from continuing operations | | $ | 0.61 | | | $ | 0.58 | |
| Earnings/(loss) per share from discontinued operations | | | (0.01 | ) | | | 0.03 | |
| |
| Earnings per share | | $ | 0.60 | | | $ | 0.61 | |
| Weighted average shares outstanding | | | 30,844,000 | | | | 30,099,000 | |
LANCE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
| | | | | | | | | |
| | | December 30, 2006 | | | December 31, 2005 | |
| Assets: | | | | | | | | |
| Cash and cash equivalents | | $ | 5,504 | | | $ | 3,543 | |
| Accounts receivable | | | 61,690 | | | | 59,088 | |
| Inventories | | | 36,838 | | | | 36,409 | |
| Deferred income tax benefit | | | 8,811 | | | | 10,160 | |
| Assets held for sale | | | 6,552 | | | | 3,020 | |
| Prepaid expenses and other | | | 6,298 | | | | 7,405 | |
| | | | | | | |
| Total Current Assets | | | 125,693 | | | | 119,625 | |
| Property plant and equipment, net | | | 193,009 | | | | 186,093 | |
| Goodwill and other intangibles, net | | | 62,300 | | | | 59,873 | |
| Other assets | | | 4,450 | | | | 3,488 | |
| | | | | | | |
| Total Assets | | $ | 385,452 | | | $ | 369,079 | |
| | | | | | | |
| | | | | | | | | |
| Liabilities and Equity: | | | | | | | | |
| Current portion of long-term debt | | $ | — | | | $ | 36,000 | |
| Accounts payable | | | 18,194 | | | | 20,378 | |
| Other current liabilities | | | 55,254 | | | | 59,672 | |
| | | | | | | |
| Total Current Liabilities | | | 73,448 | | | | 116,050 | |
| | | | | | | | | |
| Long-term debt | | | 50,000 | | | | 10,215 | |
| Other liabilities | | | 39,604 | | | | 41,105 | |
| Stockholders’ equity | | | 222,400 | | | | 201,709 | |
| | | | | | | |
| Total Liabilities and Stockholders’ Equity | | $ | 385,452 | | | $ | 369,079 | |
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LANCE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(in thousands)
(unaudited)
| | | | | | | | | |
| | | For the Year Ended | |
| | | December 30, 2006 | | | December 31, 2005 | |
| Operating Activities: | | | | | | | | |
| Net income | | $ | 18,478 | | | $ | 18,470 | |
| Depreciation and amortization | | | 26,897 | | | | 28,539 | |
| Stock based compensation expense | | | 1,331 | | | | — | |
| Gain on sale of property, net | | | 591 | | | | 467 | |
| Deferred income taxes | | | 1,182 | | | | (3,518 | ) |
| Changes in operating assets and liabilities | | | (6,025 | ) | | | 4,683 | |
| Other, net | | | (3,357 | ) | | | (1,524 | ) |
| | | | | | | |
| Net cash flow provided by operating activities | | | 39,097 | | | | 47,117 | |
| | | | | | | | | |
| Investing Activities: | | | | | | | | |
| Purchases of property and equipment | | | (46,965 | ) | | | (27,624 | ) |
| Acquisition of businesses, net of cash acquired | | | — | | | | (43,797 | ) |
| Proceeds from sale of property | | | 7,340 | | | | 1,449 | |
| | | | | | | |
| Net cash used in investing activities | | | (39,625 | ) | | | (69,972 | ) |
| | | | | | | | | |
| Financing Activities: | | | | | | | | |
| Dividends paid | | | (19,556 | ) | | | (19,056 | ) |
| Issuance of common stock, net | | | 18,128 | | | | 4,353 | |
| Repayments of debt | | | — | | | | (41,237 | ) |
| Net Repayments under revolving credit facilities | | | (46,238 | ) | | | (7,500 | ) |
| Proceeds from debt | | | 50,000 | | | | 53,715 | |
| Repurchase of common stock | | | — | | | | (5,160 | ) |
| | | | | | | |
| Net cash from (used in) financing activities | | | 2,334 | | | | (14,885 | ) |
| | | | | | | | | |
| Effect of exchange rate changes on cash | | | 155 | | | | (183 | ) |
| | | | | | | | | |
| Increase/(decrease) in cash and cash equivalents | | | 1,961 | | | | (37,923 | ) |
| Cash and cash equivalents at beginning of period | | | 3,543 | | | | 41,466 | |
| | | | | | | |
| Cash and cash equivalents at end of period | | $ | 5,504 | | | $ | 3,543 | |
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LANCE, INC.
RECONCILIATION OF NON-GAAP MEASURES
(in thousands, except per-share amounts)
(unaudited)
Year Ended December 30, 2006
| | | | | | | | | |
| | | Net of | | | Per diluted | |
| | | Tax | | | share | |
| Net Income from continuing operations | | $ | 18,946 | | | $ | 0.61 | |
| | | | | | | | | |
| Tom’s integration related charges | | | 1,795 | | | | 0.06 | |
| | | | | | | | | |
| | | | | | | |
| Net Income from continuing operations, excluding special charges | | $ | 20,741 | | | $ | 0.67 | |
Year Ended December 31, 2005
| | | | | | | | | |
| | | Net of | | | Per diluted | |
| | | Tax | | | share | |
| Net Income from continuing operations | | $ | 17,586 | | | $ | 0.58 | |
| | | | | | | | | |
| CEO severance related charges | | | 1,634 | | | | 0.05 | |
| | | | | | | | | |
| Tom’s integration related charges | | | 2,257 | | | | 0.08 | |
| | | | | | | | | |
| | | | | | | |
| Net Income from continuing operations, excluding special charges | | $ | 21,477 | | | $ | 0.71 | |
Quarter Ended December 31, 2005
| | | | | | | | | |
| | | Net of | | | Per diluted | |
| | | Tax | | | share | |
| Net Income from continuing operations | | $ | 1,716 | | | $ | 0.06 | |
| | | | | | | | | |
| Tom’s integration related charges | | | 2,257 | | | | 0.08 | |
| | | | | | | | | |
| | | | | | | |
| Net Income from continuing operations, excluding special charges | | $ | 3,973 | | | $ | 0.14 | |
LANCE, INC.
RECONCILIATION OF NON-GAAP MEASURES
(in thousands, except per-share amounts)
(unaudited)
Year Ended December 30, 2006
| | | | | | | | | |
| | | Net of | | | Per diluted | |
| | | Tax | | | share | |
| Net Income | | $ | 18,478 | | | $ | 0.60 | |
| | | | | | | | | |
| Tom’s integration related charges | | | 1,795 | | | | 0.06 | |
| | | | | | | | | |
| | | | | | | |
| Net Income, excluding special charges | | $ | 20,273 | | | $ | 0.66 | |
Year Ended December 31, 2005
| | | | | | | | | |
| | | Net of | | | Per diluted | |
| | | Tax | | | share | |
| Net Income | | $ | 18,470 | | | $ | 0.61 | |
| | | | | | | | | |
| CEO severance related charges | | | 1,634 | | | | 0.05 | |
| | | | | | | | | |
| Tom’s integration related charges | | | 2,257 | | | | 0.08 | |
| | | | | | | | | |
| | | | | | | |
| Net Income, excluding special charges | | $ | 22,361 | | | $ | 0.74 | |
Quarter Ended December 31, 2005
| | | | | | | | | |
| | | Net of | | | Per diluted | |
| | | Tax | | | share | |
| Net Income | | $ | 1,540 | | | $ | 0.05 | |
| | | | | | | | | |
| Tom’s integration related charges | | | 2,257 | | | | 0.08 | |
| | | | | | | | | |
| | | | | | | |
| Net Income, excluding special charges | | $ | 3,797 | | | $ | 0.13 | |
