Lance Inc.: Reports 2009 Full Year Results

Charlotte / NC. (li) Lance Inc. reported net revenue of 918,2 million USD for the full year ended December 26, 2009; an increase of eight percent over its prior year net revenue of 852,5 million USD.

Branded product net revenue, which represented 58 percent of total 2009 net revenue, increased four percent over total 2008 net revenue. This included growth from incremental revenue associated with the Archway acquisition, higher net selling prices, new branded product introductions and double digit growth in our core sales channels and products. Incremental growth was partially offset by volume declines from sales to convenience store, food service and up-and-down-the-street customers, reflecting continued softness in the overall economy as well as our continued efforts to drive more profitability in these channels through optimization.

Private Brand net revenue, which represented 32 percent of total 2009 net revenue, increased 15 percent compared with the prior year, driven by continued revenue growth from existing and new customers, an increase in the mix of national brand equivalent items, and the full year impact of price adjustments made in 2008. Net revenue from contract manufacturing customers, which represented ten percent of total 2009 net revenue, increased nine percent compared with the prior year, driven by growth from new customers.

The Company realized full year 2009 net income of 36,5 million USD excluding special items, or 1,13 USD per diluted share, as compared to full year 2008 net income of 19,0 million USD excluding special items, or 0,60 USD per diluted share. Special items recognized during 2009 consisted of pre-tax expenses of 1,1 million USD, or 0,02 USD per diluted share, related to the acquisition and integration of Stella D´Oro. Special items in 2008 consisted of a pre-tax charge of 1,2 million USD to change the Company´s vacation policy, and acquisition and pre-tax start-up costs of 0,8 million USD associated with the Archway acquisition in the fourth quarter. Including special items identified above, 2009 net income was 35,8 million USD, or 1,11 USD per diluted share, and 2008 net income was 17,7 million USD or 0,56 USD per diluted share.

A significant portion of the increase in 2009 full year earnings compared with 2008 reflects a rebound in profit margins which were reduced in 2008 due to substantially higher ingredient costs. In addition, earnings improvement growth reflects growth in our existing business lines, acquisition-related revenue growth and improved operating efficiencies throughout the organization. These gains were partially offset by a significant investment in advertising, incremental costs associated with acquisition integration, information system implementation costs and reinvestment in the operating structure of the business, all of which are intended to drive and support revenue and profit growth over the long term.

Lance realized fourth quarter 2009 net income, excluding special items, of 11,6 million USD, or 0,36 USD per diluted share, compared with fourth quarter 2008 net income of 8,8 million USD, or 0,28 USD per diluted share. Special items in the fourth quarters of 2009 and 2008 consist of the previously noted items in the explanation of 2009 and 2008 full year special items. Including special items, 2009 fourth quarter net income was 11,0 million USD, or 0,34 USD per diluted share, and 2008 net income was 7,5 million USD, or 0,24 USD per diluted share.

Comments from Management

«Our 2009 results are indicative of the turnaround we have achieved at Lance», commented David V. Singer, President and Chief Executive Officer. «These record sales and solid EPS reflect several years of hard work on the part of our nearly 5’000 employees. We have built an excellent organization that is focused on growth and leveraging a business model that converts top line growth into accelerated profit growth. We are planning another year of solid growth and continued profitability improvement in 2010.

While the significant improvement versus our historical sales and earnings level is gratifying, our fourth quarter branded revenue was still less than anticipated, resulting in fourth quarter earnings somewhat below our expectations. Achieving long-term profitable growth is our highest priority, however we are also committed to delivering improvement in our profit margins in the near-term. As such, we are making short-term adjustments, which include efforts to accelerate our top-line growth rate and more closely aligning operating expenses with the pace of revenue growth in early 2010».

Dividend Declared

The Company also announced the declaration of a quarterly cash dividend of 0,16 USD per share on the Company´s common stock. The dividend is payable on March 01, 2010 to stockholders of record at the close of business on February 22, 2010.

Company Estimates Provided for 2010

The Company believes that its net revenue for the full year 2010 will increase between 5,0 percent and 7,5 percent and that its earnings per diluted share will increase between 25 percent and 35 percent. Given the influence of incremental holiday cookie sales related to the Archway acquisition and an expectation of continued near-term softness in sales in small format accounts, the Company believes that the seasonality of its revenues will be more heavily weighted toward the back half of the year, resulting in about 40 percent of the estimated EPS occurring in the first half of the year. Capital expenditures are expected to be approximately 40 to 45 million USD for the year as the Company continues to invest in its supply chain and information system initiatives (source).