The Company reported second quarter net income of $6.2 million, up 9% from the prior year's second quarter net income of $5.6 million, and earnings per diluted share of $0.20 compared to $0.19 in the prior year second quarter. Second quarter net income excluding special items was $6.5 million, down $0.8 million, or 10%, from last year's second quarter net income $7.3 million excluding special items. Earnings per diluted share excluding special items in the second quarter was $0.21, compared to $0.24 per diluted share excluding special items in the prior year second quarter. Special items in the second quarter of the 2006 included employee retention payments and asset impairment charges related to the Tom's integration. Special items in the second quarter of 2005 were related to CEO severance costs.
Comments from Management
"We are pleased with our results for the quarter, reflecting the continued momentum of our key initiatives and the efforts of a well-focused team," said David V. Singer, President and Chief Executive Officer. "The integration of the Tom's acquisition is going according to plan and, although there are some remaining integration items to complete, we are confident that much of the work is behind us. We also continue to achieve growth in our core product categories, with strong results reported in salty snacks and sandwich crackers. Focused on laying the groundwork for long-term growth, our strategic supply chain restructuring is underway and is expected to help us develop and enhance operating efficiencies. As we move into the second half of 2006, we are concerned about the negative impact of rising fuel costs and other commodities. We remain focused on executing on our initiatives as well as finding ways to mitigate rising costs."
Company's Fiscal 2006 Guidance
The Company reaffirmed its full year 2006 projection for net sales of approximately $750 to $775 million, and its estimate of earnings per diluted share of approximately $0.70 to $0.75 excluding special items.
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 August 18, 2006 to stockholders of record at the close of business on August 10, 2006.
Lance, Inc. has scheduled a conference call discussion with investors at 9:00 a.m. eastern time on Friday, July 28, 2006 to discuss second quarter 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 p.m. on July 28 and running through midnight August 4. The replay telephone number is (800) 642-1687. The international number is (706) 645-9291. The replay access code is 2325546. A web-based replay of the conference call will also be available in the investor relations section of Lance's web site, http://www.lance.com.
About Lance, Inc.
Lance, Inc. manufactures and markets snack foods throughout much of the United States and portions of 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, acquisition integration and divestitures are discussed in the Company's most recent Forms 10-K and 10-Q 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 July 1, 2006 June 25, 2005 (13 Weeks) (13 Weeks) Net sales and other operating revenue $192,814 $166,768 Cost of sales 106,409 89,748 Gross margin 86,405 77,020 Selling, marketing and delivery 61,834 54,904 General and administrative 11,901 11,412 Provisions for employees' retirement plans 1,846 1,381 Amortization of intangibles 61 - Other, net 237 (82) Earnings before interest and income taxes 10,526 9,405 Interest expense, net 828 550 Earnings before income taxes 9,698 8,855 Income taxes 3,539 3,219 Net income $6,159 $5,636 Earnings per share: Basic $0.20 $0.19 Diluted $0.20 $0.19 Weighted average shares outstanding: Basic 30,462,000 29,834,000 Diluted 30,935,000 30,146,000 LANCE, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) (unaudited) July 1, December 31, 2006 2005 Assets: Cash and cash equivalents $1,279 $3,543 Accounts receivable 67,598 59,088 Inventories 41,829 36,409 Deferred income tax 12,669 10,160 Assets held for sale - 3,020 Prepaid expenses and other 8,933 7,405 Total Current Assets 132,308 119,625 Property plant and equipment, net 201,555 186,093 Goodwill and other intangibles, net 60,799 59,873 Other assets 3,485 3,488 Total Assets $398,147 $369,079 Liabilities and Equity: Current portion of long-term debt $53,791 $36,000 Accounts payable 27,534 20,378 Other current liabilities 58,214 59,672 Total Current Liabilities 139,539 116,050 Long-term debt - 10,215 Other liabilities 39,741 41,105 Stockholders' equity 218,867 201,709 Total Liabilities and Stockholders' Equity $398,147 $369,079 LANCE, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) For the 26 Weeks Ended July 1, 2006 June 25, 2005 Operating Activities: Net income $5,394 $8,906 Depreciation and amortization 13,388 13,889 Loss on sale of property, net (4) (47) Deferred income taxes (3,796) (1,598) Changes in operating assets and liabilities (7,894) (14,265) Net cash from operating activities 7,088 6,885 Investing Activities: Purchases of property and equipment (27,198) (15,803) Acquisition of business, net of cash acquired - (4,829) Proceeds from sale of property 2,762 669 Net cash used in investing activities (24,436) (19,963) Financing Activities: Dividends paid (9,677) (9,495) Issuance of common stock 17,036 2,968 Net proceeds from revolving credit facilities 7,505 - Net cash from/(used in) financing activities 14,864 (6,527) Effect of exchange rate changes on cash 220 (56) Decrease in cash and cash equivalents (2,264) (19,661) Cash and cash equivalents at beginning of period 3,543 41,466 Cash and cash equivalents at end of period $1,279 $21,805 LANCE, INC. RECONCILIATION OF NON-GAAP MEASURES (in thousands, except per-share amounts) (unaudited) Quarter Ended July 1, 2006 Pretax Net of Per diluted Income Income Tax share Income, including special charges: $9,698 $6,159 $0.20 Tom's integration related charges 568 361 0.01 Income, excluding special charges $10,266 $6,520 $0.21 Quarter Ended June 25, 2005 Pretax Net of Per diluted Income Income Tax share Income, including special charges: $8,855 $5,636 $0.19 CEO severance related charges 2,478 1,634 0.05 Income, excluding special charges $11,333 $7,270 $0.24
SOURCE Lance, Inc.
Russell Allen, Director of Planning & IR
Financial Relations Board