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Snyder's-Lance's Earnings: Demand Growth Fuels Top Line Gains

William Bias profile picture
William Bias


  • Snyder’s-Lance saw demand growth in its Cape Cod, Snyder’s Snack Factory, and Pretzel Crisp brands.
  • Snyder’s-Lance rightfully sold off its private brands business which helped spruce up its balance sheet.
  • Dividend sustainability has been lacking in the last five years.

On Nov. 5, snack food company Snyder's-Lance (NASDAQ: NASDAQ:LNCE) came out with its Q3 2014 quarterly statement that followed up with more detail on its earnings announcement on Nov. 4. The company saw lots of top line organic growth which represents a good thing. However, lower margin products impacted earnings from operations. Let's see how Snyder's-Lance is doing.

Revenue and net income increases

Snyder's-Lance saw its year-to-date revenue increase 5.3%. Volume growth and market share gains with its Cape Cod brand along with revenue expansion in its Snyder's, Snack Factory, and Pretzel Crisps contributed to revenue expansion. Moreover, volume growth in the company's partner brands segment contributed to growth in revenue. I always like to see demand growth contribute to revenue gains. However, acquisitions also contributed to part of Snyder's-Lance's year-to-date gains in revenue. Ironically, Snyder's-Lance's iconic sandwich crackers saw volume declines due to intensifying competition and packaging changes.

Snyder's-Lance's year-to-date net income increased 198% vs. the same time last year. Recognizing the value of brands, Snyder's-Lance sold off its private label at a gain which contributed the most to net income improvement. However, income from continuing operations declined 20% due to lower margins of the company's products within its Partner brands and the "other" segment. Increased marketing, freight, impairment charges, and acquisition related expenses contributed to the decline in income from continuing operations.

Free cash flow negative

Snyder's-Lance's free cash flow clocked in at negative $52.5 million vs. the same time last year. This stems primarily from the tax payment on the gain of its private brands business. This represents a one-time occurrence.

Balance sheet is in better shape

Snyder's-Lance's balance sheet is in better shape vs. the end of last year. Snyder's-Lance received $430 million in cash when it sold its private brands business helping the company's cash position. During the last

This article was written by

William Bias profile picture
I have been analyzing stocks since 1992 and a freelance writer since 2012.

Analyst’s Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.

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Comments (3)

I am ibo for Snyder/lance I was with lance for years .and since Snyder took over they are killing lance .cracker sales are the worst I have seen in 12 years .they don't care about there people that try to sell for them I have seen a lot of ibo lose there route I am about to be the same way they just don't care........
empire profile picture
LNCE has paid $0.16/Q since at least 2007. They did pay a big chunk of cash, $3.75/sh, to shareholders at the end of 2010 when they merged with Snyder's. Not having the FCF to cover dividends in 2014 is sad.

I first bought shares in Feb 2010 and have made decent money trading the stock.
Having said that, I find the quarterly EPS numbers to be inconsistent. The only consistency I gather from watching this stock is their ability to take 1-time charges. The kicker was in the 2Q2013 with after tax $1.2 mil impairment charges + $2.7 mil for a substantial self-funded medical expense (not expenses, expense). There seems to be a consistent leak somewhere between the top line and the bottom line that never makes it to shareholders.
Good pick. LNCE could also be a buyout candidate
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