Snyder's-Lance, Inc.
Nov 7, 2017

Snyder's-Lance, Inc. Reports Third Quarter 2017 Financial Results

*Descriptions of measures excluding special items are provided in "Use and Definition of Non-GAAP Measures" and reconciliations are provided in the tables at the end of this release. 

CHARLOTTE, N.C., Nov. 07, 2017 (GLOBE NEWSWIRE) -- Snyder's-Lance, Inc. (Nasdaq-GS:LNCE) today reported financial results for the third quarter ended September 30, 2017 and updated its full-year 2017 outlook.  Total net revenue from continuing operations in the third quarter of 2017 increased 3.7% compared to the third quarter of 2016 with core branded growth of 4.9% year over year.  The GAAP net loss attributable to Snyder's-Lance from continuing operations in the third quarter of 2017 was $57.7 million, or $0.60 per diluted share, as compared to net income of $25.7 million, or $0.26 per diluted share, in the third quarter of 2016.  GAAP results include a non-recurring, non-cash impairment charge of $84.9 million after-tax related to the impairment of certain brand trademarks and goodwill associated with the Diamond Foods acquisition. Net income attributable to Snyder's-Lance from continuing operations, excluding special items, for the third quarter of 2017 was $32.7 million, as compared to $29.6 million, in the third quarter of 2016.  Earnings per diluted share from continuing operations, excluding special items, were $0.33 in the third quarter of 2017, compared to $0.30 in the third quarter of 2016. 

"Our third quarter financial performance continued to improve along several dimensions.  Gross margin performance was strong at 37.1% of net revenue compared to 36.8% in 2016.  Selling, general and administrative performance also improved to 26.3% of net revenue compared to 28.0% last year.  On top of these improving profitability trends, our branded net revenue growth continues to outpace the category, and we are on track to deliver our full-year targets," said Brian J. Driscoll, President and Chief Executive Officer of Snyder's-Lance.  "Looking ahead to 2018, our organization is beginning to make progress in our performance transformation plan as indicated by these results.  While we have much work to do, we firmly believe that we have the opportunity to unlock substantial profitability improvements over time, and will unlock the considerable potential of our branded portfolio to drive improved total shareholder return." 

Third Quarter 2017 Results

Third Quarter Net Revenue by Product Category
(in thousands)  Q3 2017
Net Revenue
 Q3 2016
Net Revenue(1)
 Change
         
Core Brands(2)  $   407,785  $  388,570 4.9%
Allied Brands(3)     39,604     38,261 3.5%
Branded     447,389     426,831 4.8%
Partner Brand     73,978     73,821 0.2%
Other      42,817     43,251 -1.0%
Total    $   564,184  $  543,903 3.7%
(1) Includes net revenue results from continuing operations only.
(2) The Company's Core Brands include: Snyder's of Hanover®, Lance®, Kettle Brand®, KETTLE® Chips, Cape Cod®, Snack Factory® Pretzel Crisps®, Pop Secret®, Emerald® and Late July®.
(3) The Company's Allied Brands include: Krunchers!®, Tom's®, Archway®, Jays®, Stella D'oro®, Eatsmart Snacks™, O-Ke-Doke® and Metcalfe's skinny®

 

Total net revenue in the third quarter of 2017 was $564.2 million, an increase of 3.7% compared to $543.9 million from continuing operations in the third quarter of 2016. Branded net revenue increased 4.8% as a result of a 3.5% increase in the Company's Allied Brands and a 4.9% increase in Core Brands.  The Core Brand net revenue increase was led by growth in Late July®, Snack Factory® Pretzel Crisps®, Lance®, Snyder's of Hanover®, Cape Cod®, and KETTLE® Chips, partially offset by a decline in Emerald®, Pop Secret®, and Kettle Brand®.  In addition, during the third quarter of 2017, net revenue from the Partner Brand category increased 0.2% while net revenue from the Other category declined 1.0%, each compared to the third quarter of 2016.  

The GAAP operating loss in the third quarter of 2017 was $53.8 million, as compared to GAAP operating income of $45.7 million from continuing operations in the third quarter of 2016.  The GAAP operating loss in the quarter was due to $114.5 million in pre-tax expenses which affected comparability.  These expenses were primarily related to $104.7 million in non-cash impairment charges reflecting the write-downs of the Company's European reporting unit goodwill, and the Company's KETTLE® Chips trademark in the United Kingdom and Pop Secret® trademark.  Operating income, excluding special items affecting comparability, in the third quarter of 2017 was $60.6 million, or 10.7% as a percentage of net revenue, as compared to $51.1 million from continuing operations, or 9.4% as a percentage of net revenue, in the third quarter of 2016.  The operating margin expansion was the result of lower general and administrative expenses, and supply chain productivity and cost initiatives. These were partially offset by higher service and distribution costs primarily related to trucking capacity, as well as continued higher than normal manufacturing costs due to the ramping up of Emerald® production capacity in Charlotte, NC that was previously located in the Stockton, CA manufacturing facility.  The Company expects these costs to abate over time. 

Net interest expense in the third quarter of 2017 was $10.1 million compared to $9.2 million in the third quarter of 2016.  The GAAP effective income tax rate from continuing operations in the third quarter of 2017 was 9.5% as compared to 29.4% in the third quarter of 2016.  The decrease in the GAAP effective income tax rates was primarily due to the aforementioned special items affecting comparability.  Excluding special items, the effective income tax rate from continuing operations was 35.4% in the third quarter of 2017 as compared to 28.9% in the third quarter of 2016. The increase in the effective income tax rate, excluding special items, was primarily due to lower income from the Company's U.K. operations.  

The GAAP net loss attributable to Snyder's-Lance from continuing operations in the third quarter of 2017 was $57.7 million, or $0.60 per diluted share, as compared to net income of $25.7 million, or $0.26 per diluted share, in the third quarter of 2016.  The GAAP net loss was the result of the aforementioned special items affecting comparability. Net income attributable to Snyder's-Lance from continuing operations, excluding special items, for the third quarter of 2017, was $32.7 million, as compared to $29.6 million, in the third quarter of 2016.  Earnings per diluted share from continuing operations, excluding special items, was $0.33 in the third quarter of 2017 compared to $0.30, in the third quarter of 2016. 

Adjusted EBITDA from continuing operations in the third quarter of 2017 was $85.2 million, or 15.1% of net revenue, as compared to adjusted EBITDA from continuing operations of $74.7 million, or 13.7% of net revenue, in the third quarter of 2016.  Adjusted EBITDA is a non-GAAP measure defined herein under "Use and Definition of Non-GAAP Measures," and is reconciled to net income in the tables that accompany this release. 

Outlook

Based on the Company's year-to-date performance, and expectations for the remainder of the year, for the full-year of fiscal 2017, the Company now expects net revenue to be between $2,205 million and $2,255 million, adjusted EBITDA to be between $305 million and $320 million, and earnings per diluted share, excluding special items, to be between $1.12 and $1.17.

The Company's 2017 full-year outlook also includes the following assumptions:

Full-year 2017 GAAP guidance is not provided in this release due to the likely occurrence of one or more of the following items where the Company is unable to reliably forecast the timing and magnitude: continued transaction related costs associated with the divestiture of Diamond of California and integration of legacy Diamond Foods operations, other potential transactions and their related costs, settlements of contingent liabilities, possible gains or losses on the sale of businesses or other assets, restructuring costs, impairment charges, and the income tax effects of these potential items. 

Conference Call

Management will host a conference call to discuss the Company's third quarter 2017 results at

10:00 a.m. ET on November 7, 2017.  The conference call will be webcast live through the Investor Relations section of the Snyder's-Lance website (www.snyderslance.com).  To participate in the conference call, the dial-in number is (844) 830-1960 for U.S. callers or (315) 625-6883 for international callers.  The conference ID is 5389359.  A continuous telephone replay of the call will be available between 12:00 p.m. ET on November 7 and 12:00 a.m. ET on November 14.  The replay telephone number is (855) 859-2056 for U.S. callers or (404) 537-3406 for international callers.  The replay access code is 5389359.  Investors may also access a web-based replay of the conference call at www.snyderslance.com

About Snyder's-Lance, Inc.

Snyder's-Lance, Inc., headquartered in Charlotte, NC, manufactures and markets snack foods throughout the United States and internationally. Snyder's-Lance's products include pretzels, sandwich crackers, pretzel crackers, potato chips, cookies, tortilla chips, restaurant style crackers, popcorn, nuts and other snacks. Products are sold under the Snyder's of Hanover®, Lance®, Kettle Brand®, KETTLE® Chips, Cape Cod®, Snack Factory® Pretzel Crisps®, Pop Secret®, Emerald®, Late July®, Krunchers! ®, Tom's®, Archway®, Jays®, Stella D'oro®, Eatsmart Snacks™, O-Ke-Doke®, Metcalfe's skinny®, and other brand names along with a number of third party brands. Products are distributed nationally through grocery and mass merchandisers, convenience stores, club stores, food service outlets and other channels. For more information, visit the Company's corporate web site: www.snyderslance.com.

LNCE-E

Use and Definition of Non-GAAP Measures

Snyder's-Lance's management uses non-GAAP financial measures to evaluate our operating performance and to facilitate a comparison of the Company's operating performance on a consistent basis and to provide measures that, when viewed in combination with its results prepared in accordance with GAAP, allow for a more complete understanding of factors and trends affecting the Company's business than GAAP measures alone.  The non-GAAP measures and related comparisons should be considered in addition to, not as a substitute for, our GAAP disclosure, as well as other measures of financial performance reported in accordance with GAAP, and may not be comparable to similarly titled measures used by other companies. Our management believes these non-GAAP measures are useful for providing increased transparency and assisting investors in understanding our ongoing operating performance. 

Operating Income and Gross Profit, Excluding Special Items

Operating income and gross profit, excluding special items, are provided because Snyder's-Lance believes it is useful information for understanding our results by improving the comparability of our results. Additionally, operating income and gross profit, excluding special items, provide transparent and useful information to management, investors, analysts and other parties in evaluating and assessing the Company's primary operating results after removing the impact of unusual, non-operational or restructuring or transaction related activities that affect comparability. Operating income and gross profit, excluding special items, are two measures management uses for planning and budgeting, monitoring and evaluating financial and operating results, and in the analysis of ongoing operating trends. 

Net Income, Earnings per Share and Effective Income Tax Rate, Excluding Special Items

Net income, earnings per share, and the effective income tax rate, excluding special items, are metrics provided to present the reader with the after-tax impact of operating income, excluding special items, in order to improve the comparability and understanding of the related GAAP measures. Net income, earnings per share, and the effective income tax rate, excluding special items, provide transparent and useful information to management, investors, analysts and other parties in evaluating and assessing our primary operating results after removing the impact of unusual, non-operational or restructuring or transaction related activities that affect comparability. Net income, earnings per share, and the effective income tax rate, excluding special items, are measures management uses for planning and budgeting, monitoring and evaluating financial and operating results.

Adjusted EBITDA

Snyder's-Lance defines adjusted EBITDA as earnings before interest expense, income taxes, depreciation and amortization ("EBITDA"), further adjusted to exclude restructuring or transaction related expenses, and other non-cash or non-operating items as well as any other unusual items that impact the comparability of our financial information.

Management uses adjusted EBITDA as a key metric in the evaluation of underlying Company performance, in making financial, operating and planning decisions.  The Company believes this measure is useful to investors because it increases transparency and assists investors in understanding the underlying performance of the Company and in the analysis of ongoing operating trends. Additionally, Snyder's-Lance believes adjusted EBITDA is frequently used by analysts, investors and other interested parties in their evaluation of companies, many of which present an adjusted EBITDA measure when reporting their results. The Company has historically reported adjusted EBITDA to analysts and investors and believes that its continued inclusion provides consistency in financial reporting and enables analysts and investors to perform meaningful comparisons of past, present and future operating results.

Adjusted EBITDA should not be considered as an alternative to net income, determined in accordance with GAAP, as an indicator of the Company's operating performance, as an indicator of cash flows, or as a measure of liquidity. While EBITDA and adjusted EBITDA and similar measures are frequently used as measures of operations and the ability to meet debt service requirements, they are not necessarily comparable to other similarly titled captions of other companies due to the potential inconsistencies in the method of calculation. 

Cautionary Information about Forward Looking Statements

In this press release, we make statements which may be forward-looking within the meaning of applicable securities laws, which represent our current judgment about possible future events. The statements include projections regarding future revenues, earnings and other results.  In making these statements we rely on current expectations, assumptions and analyses based on our experience and perception of historical trends, current conditions and expected future developments as well as other factors we consider appropriate under the circumstances. We believe these judgments are reasonable, but these statements are not guarantees of any events or financial results, and our actual results may differ materially due to a variety of important factors, both positive and negative. These factors include among others:  changes in general economic conditions; price or availability of raw materials, packaging, energy and labor; food industry competition; changes in top customer relationships; consolidation of the retail environment; decision by British voters to exit the European Union; failure to realize anticipated benefits of acquisitions and divestitures; loss of key personnel; failure to execute strategic initiatives; safety and quality of food products; adulterated or misbranded products; disruption of our supply chain or information technology systems; improper use or misuse of social media; ability to anticipate changes in consumer preferences and trends; distribution through independent operators; protection of trademarks and intellectual property; impairment in the carrying value of goodwill or other intangible assets; new regulations or legislation; interest and foreign currency exchange rate volatility; concentration of capital stock ownership; increasing legal complexity and potential litigation; failure to realize the expected benefits from the acquisition of Diamond Foods; the inability to successfully execute international expansion strategies; additional risks from foreign operations; our substantial debt; and the restrictions and limitations on our business operations in the agreements and instruments governing our debt.

Our most recent report on Form 10-K and our other reports filed with the U.S. Securities and Exchange Commission provide information about these and other factors, which we may revise or supplement in future reports. We caution readers not to place undue reliance on forward-looking statements. We do not undertake to update any forward-looking statements that it may make except as required by applicable law. All subsequent written and forward-looking statements attributed to Snyder's-Lance or any person acting on its behalf are expressly qualified in their entirety by the factors referenced above. 

Investor and Media Contact
Kevin Powers, Senior Director, Investor Relations and Communications
kpowers@snyderslance.com, (704) 557-8279

 

 

(Tables to Follow)

 


SNYDER'S-LANCE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of (Loss)/Income (Unaudited)

  Quarter Ended   Nine Months Ended
(in thousands, except per share data) September 30,
 2017
 October 1,
 2016
 September 30,
 2017
 October 1,
 2016
Net revenue $564,184  $543,903  $1,675,280  $1,553,064 
Cost of sales 357,993   344,807  1,074,036  999,322 
Gross profit 206,191  199,096  601,244  553,742 
          
Selling, general and administrative expenses 154,811  152,980  493,513  434,656 
Transaction and integration related expenses 276  3,656  1,861  62,579 
Impairment charges 105,230  507   113,150  1,370 
Other operating (income)/expense, net (279) (3,776) 196  (5,195)
Operating (loss)/income (53,847) 45,729  (7,476) 60,332 
         
Other (income)/expense, net (227) 305  (1,461) (250)
(Loss)/income before interest and income taxes (53,620) 45,424  (6,015 ) 60,582 
         
Loss on early extinguishment of debt       4,749 
Interest expense, net 10,141  9,215  28,587  23,305 
(Loss)/income before income taxes (63,761) 36,209  (34,602) 32,528 
         
Income tax (benefit)/expense (6,043) 10,663  6,889  9,430 
(Loss)/income from continuing operations (57,718 ) 25,546  (41,491) 23,098 
Income from discontinued operations, net of income taxes 1,473  3,655  1,132  326 
Net (loss)/income  (56,245) 29,201  (40,359) 23,424 
Net income/(loss) attributable to non-controlling interests 18  (114) 772  (141)
Net (loss)/income attributable to Snyder's-Lance, Inc. $(56,263) $29,315  $(41,131) $23,565 
         
Amounts attributable to Snyder's-Lance, Inc.:        
Continuing operations $(57,736) $25,660  $(42,263) $23,239 
Discontinued operations 1,473  3,655  1,132  326 
Net (loss)/income attributable to Snyder's-Lance, Inc. $(56,263) $29,315  $(41,131) $23,565 
         
Basic (loss)/earnings per share:        
Continuing operations $(0.60) $0.26  $ (0.44) $0.26 
Discontinued operations 0.02  0.04  0.01   
Total basic (loss)/earnings per share $(0.58) $0.30  $(0.43) $0.26 
         
Weighted average shares outstanding - basic 96,642  95,881  96,428  90,504 
         
Diluted (loss)/earnings per share:        
Continuing operations $(0.60) $0.26  $(0.44) $0.26 
Discontinued operations 0.02  0.04  0.01   
Total diluted (loss)/earnings per share $(0.58) $0.30  $(0.43) $0.26 
         
Weighted average shares outstanding - diluted 96,642  97,012  96,428  91,493 
         
Dividends declared per common share $0.16  $0.16  $0.48  $0.48 
                 
                 


SNYDER'S-LANCE, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (Unaudited)

(in thousands, except share and per share data) September 30,
 2017
   December 31,
 2016
ASSETS    
Current assets:    
Cash and cash equivalents $22,690  $35,409 
Restricted cash 446  714 
Accounts receivable, net of allowances of $1,400 and $1,290, respectively 220,856  210,723 
Receivable from the sale of Diamond of California   118,577 
Inventories, net 194,769  173,456 
Prepaid income taxes and income taxes receivable 7,526  5,744 
Assets held for sale 20,790  19,568 
Prepaid expenses and other current assets 32,558  27,666 
Total current assets 499,635  591,857 
     
Noncurrent assets:    
Fixed assets, net 495,798  501,884 
Goodwill 1,280,934  1,318,362 
Other intangible assets, net 1,306,955  1,373,800 
Other noncurrent assets 53,031  48,173 
Total assets $3,636,353  $ 3,834,076 
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
Current liabilities:    
Current portion of long-term debt $49,000  $49,000 
Accounts payable 123,629  99,249 
Accrued compensation 30,806  44,901 
Accrued casualty insurance claims 3,302  4,266 
Accrued marketing, selling and promotional costs 56,868  50,179 
Other payables and accrued liabilities 42,980  47,958 
Total current liabilities 306,585  295,553 
     
Noncurrent liabilities:    
Long-term debt, net 1,070,153  1,245,959 
Deferred income taxes, net 392,105  378,236 
Accrued casualty insurance claims 14,845  13,049 
Other noncurrent liabilities 22,508  25,609 
Total liabilities 1,806,196  1,958,406 
     
Commitments and contingencies    
     
Stockholders' equity:    
Common stock, $0.83 1/3 par value. 110,000,000 shares authorized; 96,967,937 and 96,242,784 shares outstanding, respectively 80,802  80,199 
Preferred stock, $1.00 par value. 5,000,000 shares authorized; no shares outstanding    
Additional paid-in capital 1,624,318  1,598,678 
Retained earnings 108,229  195,733 
Accumulated other comprehensive loss (3,001) (17,977)
Total Snyder's-Lance, Inc. stockholders' equity 1,810,348  1,856,633 
Non-controlling interests 19,809  19,037 
Total stockholders' equity 1,830,157  1,875,670 
Total liabilities and stockholders' equity $3,636,353  $3,834,076 
 
 


SNYDER'S-LANCE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (Unaudited)

  Nine Months Ended
(in thousands) September 30, 2017   October 1, 2016
Operating activities:    
Net (loss)/income $(40,359) $23,424 
Adjustments to reconcile net (loss)/income to cash from operating activities:    
Depreciation and amortization 73,250  72,687 
Stock-based compensation expense 11,456  22,542 
Loss/(gain) on sale of fixed assets, net 1,047  (25)
Gain on sale of Diamond of California (1,795)  
Gain on sale of route businesses, net (1,744) (650)
Changes in fair value of investments   179 
Loss on early extinguishment of debt   4,749 
Impairment charges 113,150  1,370 
Deferred income taxes 7,260  7,139 
Provision for doubtful accounts 639  218 
Changes in operating assets and liabilities, excluding business acquisitions, divestitures and foreign currency translation adjustments (28,631) 35,165 
Net cash provided by operating activities 134,273  166,798 
     
Investing activities:    
Purchases of fixed assets (54,828) (55,823)
Purchases of route businesses (43,977) (16,467)
Purchase of equity method investment (1,500)  
Proceeds from sale of fixed assets and insurance recoveries 290  1,094 
Proceeds from sale of route businesses 45,070  14,894 
Proceeds from sale of investments 321   
Proceeds from sale of discontinued operations 120,480   
Business acquisitions, net of cash acquired (2,561) (1,043,042)
Net cash provided by/(used in) investing activities 63,295  (1,099,344)
     
Financing activities:    
Dividends paid to stockholders (46,373) (42,078)
Debt issuance costs (2,441) (6,047)
Issuances of common stock 16,669  9,001 
Excess tax benefits from stock-based compensation   577 
Share repurchases, including shares surrendered for tax withholding (1,882) (8,485)
Payments on capital leases (1,642) (1,745)
Repayments of long-term debt (36,750) (232,560)
Proceeds from issuance of long-term debt   1,130,000 
Repayments of revolving credit facility (283,500) (75,000)
Proceeds from revolving credit facility 144,500  147,000 
Net cash (used in)/provided by financing activities (211,419) 920,663 
     
Effect of exchange rate changes on cash 864  (660)
     
Net decrease (12,987) (12,543)
Cash, cash equivalents and restricted cash at beginning of period 36,123  40,071 
Cash, cash equivalents and restricted cash at end of period $23,136  $27,528 
     
Supplemental information:    
Cash paid for income taxes, net of refunds of $330 and $1,522, respectively $4,972  $5,060 
Cash paid for interest $ 27,233  $22,414 
     
Non-cash investing activities:     
Decrease/(increase) in fixed asset expenditures included in accounts payable $1,239  $(1,649)
     
Non-cash financing activities:    
Common stock and stock-based compensation issued for business acquisitions $  $800,987 
         
         


SNYDER'S-LANCE, INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Measures (Unaudited)
Gross profit, excluding special items

  Quarter Ended
(in thousands) September 30,
 2017
 October 1,
 2016
Net revenue $564,184  $543,903 
Cost of sales 357,993  344,807 
Gross profit from continuing operations  $206,191  $199,096 
As a % of net revenue 36.5% 36.6%
     
Transaction and integration related expenses(1)   442 
Emerald move(2) 2,440   
Transformation initiative(3) 805    
Other(4)   554 
     
Gross profit from continuing operations, excluding special items $209,436  $200,092 
As a % of net revenue 37.1% 36.8%

(1)  Transaction and integration related expenses consist of severance and relocation benefits for Diamond Foods personnel.
(2)  Expenses associated with the relocation of Emerald production from Stockton, CA to Charlotte, NC.
(3) Transformation initiative costs primarily consist of expenses associated with the closure of our Perry, FL manufacturing facility, as well as severance benefits related to our performance transformation plan.
(4)  Other items primarily consist of Metcalfe's transaction-related expenses including severance benefits, as well as an inventory step-up related to this acquisition.


SNYDER'S-LANCE, INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Measures (Unaudited)
Operating income, excluding special items

  Quarter Ended
(in thousands) September 30,
 2017
 October 1 ,
 2016
Operating (loss)/income from continuing operations $(53,847) $45,729 
As a % of net revenue (9.5)% 8.4%
     
Transaction and integration related expenses(1)(2) 276   4,098 
Emerald move and required packaging changes(3) 2,478  314 
Transformation initiative(4)  7,019   
Other impairment charges(5) 104,720   
Other(6) (18) 918 
     
Operating income from continuing operations, excluding special items $ 60,628  $51,059 
As a % of net revenue 10.7 % 9.4%

(1)  For the third quarter of 2017, transaction and integration related expenses primarily consist of idle facility lease costs.
(2)  For the third quarter of 2016, transaction and integration related expenses primarily consist of professional fees, severance, and retention costs associated with the acquisition of Diamond Foods.
(3)  Expenses associated with the relocation of Emerald production from Stockton, CA to Charlotte, NC.
(4) Transformation initiative costs primarily consist of expenses associated with the closure of our Perry, FL manufacturing facility, as well as severance benefits and professional fees related to our performance transformation plan.
(5)  Impairment charges recorded for certain trademarks and our European reporting unit goodwill.
(6)  For the third quarter of 2016, other items primarily consist of Metcalfe's transaction-related expenses including transaction costs and severance benefits, as well as an inventory step-up related to this acquisition.


SNYDER'S-LANCE, INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Measures (Unaudited)
Earnings per diluted share, excluding special items

  Quarter Ended
  September 30,
 2017
  October 1,
 2016
(Loss)/earnings per diluted share from continuing operations $(0.60) $0.26 
     
Transaction and integration related expenses(1)(2) (0.01) 0.03 
Emerald move and required packaging changes(3)  0.02   
Transformation initiative(4) 0.05   
Other impairment charges(5) 0.87   
Other(6)   0.01 
     
Earnings per diluted share from continuing operations, excluding special items $0.33  $0.30 

(1)  For the third quarter of 2017, transaction and integration related expenses primarily consist of idle facility lease costs. The after-tax net benefit is due to the reversal of discrete tax items which were initially recorded during the second quarter of 2017.
(2)  For the third quarter of 2016, transaction and integration related expenses primarily consist of professional fees, severance, and retention costs associated with the acquisition of Diamond Foods.
(3)  Expenses associated with the relocation of Emerald production from Stockton, CA to Charlotte, NC.
(4) Transformation initiative costs primarily consist of expenses associated with the closure of our Perry, FL manufacturing facility, as well as severance benefits and professional fees related to our performance transformation plan.
(5)  Impairment charges recorded for certain trademarks and our European reporting unit goodwill.
(6)  For the third quarter of 2016, other items primarily consist of Metcalfe's transaction-related expenses including transaction costs and severance benefits, as well as an inventory step-up related to this acquisition.


SNYDER'S-LANCE, INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Measures (Unaudited)
EBITDA and Adjusted EBITDA

  Quarter Ended
(in thousands) September 30,
 2017
 October 1,
 2016
(Loss)/income from continuing operations $(57,718) $25,546 
Income tax (benefit)/expense (6,043) 10,663 
Interest expense, net 10,141  9,215 
Depreciation  17,489  18,494 
Amortization 6,832  5,448 
EBITDA from continuing operations $(29,299) $69,366 
As a % of net revenue (5.2)% 12.8%
     
Transaction and integration related expenses(1)(2) 276  4,098 
Emerald move and required packaging changes(3) 2,478  314 
Transformation initiative(4) 7,019   
Other impairment charges(5) 104,720   
Other(6) (19) 918 
     
Adjusted EBITDA from continuing operations $85,175  $74,696 
As a % of net revenue 15.1% 13.7%

(1)  For the third quarter of 2017, transaction and integration related expenses primarily consist of idle facility lease costs.
(2)  For the third quarter of 2016, transaction and integration related expenses primarily consist of professional fees, severance, and retention costs associated with the acquisition of Diamond Foods.
(3)  Expenses associated with the relocation of Emerald production from Stockton, CA to Charlotte, NC.
(4) Transformation initiative costs primarily consist of expenses associated with the closure of our Perry, FL manufacturing facility, as well as severance benefits and professional fees related to our performance transformation plan.
(5)  Impairment charges recorded for certain trademarks and our European reporting unit goodwill.
(6)  For the third quarter of 2016, other items primarily consist of Metcalfe's transaction-related expenses including transaction costs and severance benefits, as well as an inventory step-up related to that acquisition.


SNYDER'S-LANCE, INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Measures (Unaudited)
Net income attributable to Snyder's-Lance, excluding special items

  Quarter Ended
(in thousands)  September 30,
 2017
 October 1,
 2016
Net (loss)/income attributable to Snyder's-Lance, Inc. from continuing operations $(57,736) $25,660 
     
Transaction and integration related expenses, net of tax(1)(2) (442) 3,338 
Emerald move and required packaging changes, net of tax(3) 1,602  259 
Transformation initiative, net of tax(4) 4,470   
Other impairment charges, net of tax(5) 84,856   
Impact of tax restructuring(6)   (383)
Other, net of tax(7) (11) 758 
      
Net income attributable to Snyder's-Lance, Inc. from continuing operations, excluding special items $32,739  $29,632 

(1)  For the third quarter of 2017, transaction and integration related expenses primarily consist of idle facility lease costs. The after-tax net benefit is due to the reversal of discrete tax items which were initially recorded during the second quarter of 2017.
(2)  For the third quarter of 2016, transaction and integration related expenses primarily consist of professional fees, severance, and retention costs associated with the acquisition of Diamond Foods.
(3)  Expenses associated with the relocation of Emerald production from Stockton, CA to Charlotte, NC.
(4) Transformation initiative costs primarily consist of expenses associated with the closure of our Perry, FL manufacturing facility, as well as severance benefits and professional fees related to our performance transformation plan.
(5)  Impairment charges recorded for certain trademarks and our European reporting unit goodwill.
(6)  Discrete tax item for the impact of tax restructuring.
(7)  For the third quarter of 2016, other items primarily consist of Metcalfe's transaction-related expenses including transaction costs and severance benefits, as well as an inventory step-up related to that acquisition.


SNYDER'S-LANCE, INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Measures (Unaudited)
Adjusted effective income tax rate

Quarter ended September 30, 2017      
(in thousands) Income from Continuing Operations
      GAAP Income Adjustments Adjusted Income
(Loss)/income before income taxes $(63,761) $114,474  $50,713 
Income tax (benefit)/expense (6,043) 23,999  17,956 
Net (loss)/income (57,718) 90,475  32,757 
Net income attributable to non-controlling interests 18    18 
Net (loss)/income attributable to Snyder's-Lance, Inc. $(57,736) $90,475  $32,739 
       
Effective income tax rate(1) 9.5 %   35.4%
       
       
Quarter ended October 1, 2016      
(in thousands) Income from Continuing Operations
  GAAP Income Adjustments Adjusted Income
Income before income taxes $36,209  $5,330  $41,539 
Income tax expense 10,663  1,358  12,021 
Net income 25,546  3,972  29,518 
Net loss attributable to non-controlling interests (114)   (114)
Net income attributable to Snyder's-Lance, Inc. $25,660  $3,972  $29,632 
       
Effective income tax rate 29.4%   28.9%

(1)  The tax rate on adjusted income varies from the tax rate on GAAP income for the third quarter of 2017 primarily due to the tax effect of the goodwill impairment recognized, which is non-deductible for tax purposes, and the discrete tax impact of the trademark impairments recognized in the third quarter of 2017.

Source: Snyder's-Lance, Inc.

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