Snyder’s-Lance ‘very disappointing’ in Q1, says interim CEO
Net revenue in Q1 2017 grew 18.7% on last year to $531.5m, but this was behind the company's forecast.
'Significantly behind our expectations'
Brian Driscoll, interim CEO of Snyder's-Lance, said: "Our first quarter financial results were very disappointing and significantly behind our expectations.
“Category softness, lower net price realization, unfavorable favorable mix, cost headwinds and certain execution lapses converged stalling our earnings momentum and pressuring our full year outlook."
The net revenue increase was primarily driven by two additional months of contribution from Diamond Food brands.
Snyder’s-Lance acquired Diamond Food in February 2016 for $1.27bn, but sold the business in less than a year to private equity firm Blue Road Capital to focus on growing its core brands, BakeryandSnacks previously reported.
The former CEO of Snyder’s-Lance, Carl Lee Jr., recently announced his retirement amid sluggish results earlier this year.
Kettle Chips faces private label pressure in Brexit Britain
Snyder’s-Lance reported Q1 sales growth for its brands Snack Factory, Snyder’s of Hanover, Cape Cod and Late July, but posted Lance posted a modest decline.
Though Snyder’s total branded revenue increased 29% to $420m in Q1, net revenue from its partner brands category declined 5.1%, and its net revenue from the other category declined 14.3% due to a decrease in contract manufacturing volume.
One of the big drivers of the decline in the acquired brands is the Kettle Chips business in the UK, CFO at Snyder’s-Lance, Alexander Pease, said during the company’s earnings conference call.
“Private brands in the UK have been gaining strength, so we’re seeing some headwinds there, as well as the impact of Brexit sort of encouraging people to move toward more value consciousness rather than the premium product line,” Pease said.
Anticipating around $2.2bn revenue for full-year 2017
Snyder’s-Lance expects full-year 2017 net revenue to be between $2.2bn and $2.25bn, adjusted EBITDA to be between $290m and $315m, and earnings per diluted share, excluding special items, to be between $1.05 and $1.20, said the company.
“For the full year , we expect modest operating margin expansion resulting from gross margin expansion, and for SGA (selling, general and administrative) expenses as a percentage of net revenue to be relatively flat,” Pease said.
“We expect second and third quarter earnings per share consistent with last year and earnings growth to meaningfully accelerate in the fourth quarter,” he added.