×

Snyder’s-Lance, Inc. Reports First Quarter 2017 Financial Results

  • Total net revenue from continuing operations increased 18.7%, including the contribution of Diamond Foods
  • Snyder's-Lance legacy net revenue increased 3.3%
  • GAAP earnings per share of $0.11
  • Earnings per share excluding special items* of $0.13
  • Company reaffirms recently revised full-year 2017 outlook

*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., May 08, 2017 (GLOBE NEWSWIRE) -- Snyder’s-Lance, Inc. (Nasdaq:LNCE) today reported financial results for the first quarter ended April 1, 2017 and reaffirmed its recently revised 2017 full-year outlook. Total net revenue from continuing operations in the first quarter of 2017 increased 18.7% compared to the first quarter of 2016, including the contribution of Diamond Foods. Snyder’s-Lance legacy net revenue increased 3.3% in the first quarter of 2017 compared to the first quarter of 2016. GAAP net income attributable to Snyder’s-Lance in the first quarter of 2017 was $11.2 million, or $0.11 per diluted share, as compared to a loss of $22.9 million from continuing operations, or $0.29 per diluted share, in the first quarter of 2016. Net income attributable to Snyder’s-Lance, excluding special items, for the first quarter of 2017 was $13.2 million, as compared to $20.8 million from continuing operations, excluding special items, in the first quarter of 2016. Earnings per diluted share, excluding special items, was $0.13 in the first quarter of 2017 compared to earnings per diluted share from continuing operations, excluding special items, of $0.26 in the first quarter of 2016.

"As we noted in the announcement of our preliminary first quarter results, our Company faced difficult challenges during the quarter that impacted our financial results," said Brian J. Driscoll, Interim Chief Executive Officer of Snyder’s-Lance. "We are moving aggressively to take action. Our organization has already begun to coalesce around a set of priorities and actions designed to unlock substantial profitability across the Company while sharply expanding our gross margins, over time. We expect these actions to significantly improve our financial performance and deliver long-term sustainable value for our shareholders.”

First Quarter 2017 Results

First Quarter Net Revenue by Product Category
(in thousands)Q1 2017
Net Revenue
Q1 2016
Net revenue*
Change
Branded$420,039$326,09528.8%
Partner Brand 72,946 76,828 (5.1)%
Other 38,516 44,946 (14.3)%
Total 531,501 447,869 18.7%
*Includes net revenue results from continuing operations only.

Total net revenue in the first quarter of 2017 was $531.5 million, an increase of 18.7% compared to $447.9 million from continuing operations in the first quarter of 2016. The net revenue increase was primarily driven by the benefit of two additional months of contribution from the Diamond Food brands. On a pro-forma basis, as if the transaction were completed on January 1, 2016, net revenue growth from continuing operations would have been approximately 1-2%.

Snyder’s-Lance legacy net revenue in the first quarter of 2017 increased 3.3% compared to the first quarter of 2016, driven by Branded category net revenue growth of 8.8%. Snyder’s-Lance legacy core brand net revenue increased 10.2%, with an approximate 10.5% increase in volume. This increase was led by strong growth in Snack Factory®, Snyder’s of Hanover®, Cape Cod® and Late July®, partially offset by a modest decline in Lance®. In addition, during the first quarter of 2017, net revenue from the Partner Brands category declined 5.1% compared to the first quarter of 2016, while net revenue from the Other category declined 14.3% compared to the first quarter of 2016. The decline in Other net revenue was due to a decrease in contract manufacturing volume.

Operating income in the first quarter of 2017 was $23.9 million, as compared to an operating loss of $27.3 million from continuing operations in the first quarter of 2016. Operating income, excluding special items, in the first quarter of 2017 was $28.0 million, or 5.3% as a percentage of net revenue, as compared to $36.1 million from continuing operations, or 8.1% as a percentage of net revenue, in the first quarter of 2016. The decline in operating margin from continuing operations was due to lower gross margin performance and operating expense de-leverage. Gross margin was negatively impacted by lower net price realization, adverse mix of branded sales, higher input costs, and lower overhead absorption, partially offset by synergy realization from the Diamond Foods acquisition. Operating expenses, as a percent of sales, increased as a result of higher planned marketing and advertising expenses to support growth of the Company’s core brands, higher service and distribution costs, and incremental amortization expense resulting from the Diamond Foods acquisition. These expenses were partially offset by synergy realization from the Diamond Foods acquisition and lower general and administrative expenses.

Net interest expense in the first quarter of 2017 increased to $9.0 million compared to $4.7 million in the first quarter of 2016. The increase in net interest expense was the result of additional debt utilized to finance the acquisition of Diamond Foods.

The GAAP effective income tax rate in the first quarter of 2017 was 29.2% as compared to 37.3% from continuing operations in the first quarter of 2016. The adjusted effective tax rate was 30.6% in the first quarter of 2017 as compared to 34.3% from continuing operations in the first quarter of 2016. The adjusted effective tax rate in the quarter was favorably impacted by the impact of exercises of non-qualified stock options.

GAAP net income attributable to Snyder’s-Lance in the first quarter of 2017 was $11.2 million, or $0.11 per diluted share, as compared to a loss of $22.9 million from continuing operations, or $0.29 per diluted share, in the first quarter of 2016. Net income attributable to Snyder’s-Lance, excluding special items, for the first quarter of 2017 was $13.2 million, as compared to $20.8 million from continuing operations in the first quarter of 2016. Earnings per diluted share, excluding special items, was $0.13 in the first quarter of 2017 compared to $0.26 from continuing operations in the first quarter of 2016.

Adjusted EBITDA in the first quarter of 2017 was $52.8 million, or 9.9% of revenue, as compared to adjusted EBITDA of $56.6 million from continuing operations, or 12.6% of revenue, in the first 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

For the full-year of fiscal 2017, the Company continues to expect net revenue to be between $2,200 million and $2,250 million, adjusted EBITDA to be between $290 million and $315 million, and earnings per diluted share, excluding special items, to be between $1.05 and $1.20.

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

  • Capital expenditures of $75 million to $85 million;
  • Net interest expense of $32 million to $35 million;
  • Effective tax rate of 33.5% to 35.5%; and
  • Weighted average diluted share count of approximately 98 million shares.

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 first quarter 2017 results at 10:00 a.m. ET on May 8, 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 15908826. A continuous telephone replay of the call will be available between 12:00 p.m. ET on May 8 and 12:00 a.m. ET on May 15. The replay telephone number is (855) 859-2056 for U.S. callers or (404) 537-3406 for international callers. The replay access code is 15908826. 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.

SNYDER’S-LANCE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income (Unaudited)
For the Quarters Ended April 1, 2017 and April 2, 2016
Quarter Ended
(in thousands, except per share data) April 1,
2017
April 2,
2016
Net revenue $531,501 $447,869
Cost of sales 346,735 304,779
Gross profit 184,766 143,090
Selling, general and administrative 159,463 121,555
Transaction and integration related expenses 1,107 48,978
Impairment charges 374
Other operating expense/(income), net 270 (505)
Operating income/(loss) 23,926 (27,312)
Other income, net (1,016) (328)
Income/(loss) before interest and income taxes 24,942 (26,984)
Loss on early extinguishment of debt 4,749
Interest expense, net 8,954 4,729
Income/(loss) before income taxes 15,988 (36,462)
Income tax expense/(benefit) 4,662 (13,614)
Income/(loss) from continuing operations 11,326 (22,848)
Loss from discontinued operations, net of income tax (2,546)
Net income/(loss) 11,326 (25,394)
Net income attributable to non-controlling interests 164 37
Net income/(loss) attributable to Snyder’s-Lance, Inc. $11,162 $(25,431)
Amounts attributable to Snyder's-Lance, Inc.:
Continuing operations $11,162 $(22,885)
Discontinued operations (2,546)
Net income/(loss) attributable to Snyder's-Lance, Inc. $11,162 $(25,431)
Basic earnings/(loss) per share:
Continuing operations $0.12 $(0.29)
Discontinued operations (0.03)
Total basic earnings/(loss) per share $0.12 $(0.32)
Weighted average shares outstanding - basic 96,193 79,953
Diluted earnings/(loss) per share:
Continuing operations $0.11 $(0.29)
Discontinued operations (0.03)
Total diluted earnings/(loss) per share $0.11 $(0.32)
Weighted average shares outstanding - diluted 97,620 79,953
Dividends declared per common share $0.16 $0.16


SNYDER’S-LANCE, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (Unaudited)
As of April 1, 2017 and December 31, 2016
(in thousands, except share and per share data) April 1,
2017
December 31,
2016
ASSETS
Current assets:
Cash and cash equivalents $20,193 $35,409
Restricted cash 446 714
Accounts receivable, net of allowances of $1,327 and $1,290, respectively 192,274 210,723
Receivable from the sale of Diamond of California 118,577
Inventories, net 181,157 173,456
Prepaid income taxes and income taxes receivable 4,963 5,744
Assets held for sale 21,636 19,568
Prepaid expenses and other current assets 31,201 27,666
Total current assets 451,870 591,857
Noncurrent assets:
Fixed assets, net 494,815 501,884
Goodwill 1,319,778 1,318,362
Other intangible assets, net 1,369,286 1,373,800
Other noncurrent assets 51,198 48,173
Total assets $3,686,947 $3,834,076
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt $49,000 $49,000
Accounts payable 112,453 99,249
Accrued compensation 26,897 44,901
Accrued casualty insurance claims 3,740 4,266
Accrued marketing, selling and promotional costs 46,819 50,179
Other payables and accrued liabilities 40,430 47,958
Total current liabilities 279,339 295,553
Noncurrent liabilities:
Long-term debt, net 1,104,237 1,245,959
Deferred income taxes, net 384,299 378,236
Accrued casualty insurance claims 13,990 13,049
Other noncurrent liabilities 22,304 25,609
Total liabilities 1,804,169 1,958,406
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.83 1/3 par value. 110,000,000 shares authorized; 96,591,878 and 96,242,784 shares outstanding, respectively 80,490 80,199
Preferred stock, $1.00 par value. 5,000,000 shares authorized; no shares outstanding
Additional paid-in capital 1,605,871 1,598,678
Retained earnings 191,485 195,733
Accumulated other comprehensive loss (14,269) (17,977)
Total Snyder’s-Lance, Inc. stockholders’ equity 1,863,577 1,856,633
Non-controlling interests 19,201 19,037
Total stockholders’ equity 1,882,778 1,875,670
Total liabilities and stockholders’ equity $3,686,947 $3,834,076


SNYDER’S-LANCE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (Unaudited)
For the Quarters Ended April 1, 2017 and April 2, 2016
Quarter Ended
(in thousands) April 1,
2017
April 2,
2016
Operating activities:
Net income/(loss) $11,326 $(25,394)
Adjustments to reconcile net income/(loss) to cash from operating activities:
Depreciation and amortization 24,607 20,558
Stock-based compensation expense 2,454 14,270
Loss/(gain) on sale of fixed assets, net 396 (25)
Gain on sale of route businesses, net (96) (536)
Loss on early extinguishment of debt 4,749
Impairment charges 374
Deferred income taxes 4,360 (15,734)
Provision for doubtful accounts 168 252
Changes in operating assets and liabilities, excluding business acquisitions, divestitures and foreign currency translation adjustments (12,575) 30,969
Net cash provided by operating activities 30,640 29,483
Investing activities:
Purchases of fixed assets (11,531) (11,976)
Purchases of route businesses (4,686) (11,909)
Purchase of equity method investment (1,500)
Proceeds from sale of fixed assets 106 153
Proceeds from sale of route businesses 2,862 11,785
Proceeds from sale of investments 321
Proceeds from sale of discontinued operations 121,681
Business acquisition, net of cash acquired (1,020,164)
Net cash provided by/(used in) investing activities 107,253 (1,032,111)
Financing activities:
Dividends paid to stockholders (15,410) (11,355)
Debt issuance costs (6,048)
Issuances of common stock 6,319 2,775
Excess tax benefits from stock-based compensation 176
Share repurchases, including shares surrendered for tax withholding (1,289) (5,995)
Payments on capital leases

(917)
Repayments of long-term debt (12,250) (106,170)
Proceeds from issuance of long-term debt 1,130,000
Repayments of revolving credit facility (165,000) (57,000)
Proceeds from revolving credit facility 35,000 57,000
Net cash (used in)/provided by financing activities (153,547) 1,003,383
Effect of exchange rate changes on cash 170 97
Net (decrease)/increase (15,484) 852
Cash, cash equivalents and restricted cash at beginning of period 36,123 40,071
Cash, cash equivalents and restricted cash at end of period $20,639 $40,923
Supplemental information:
Cash paid for income taxes, net of refunds of $327 and $217, respectively $227 $1,444
Cash paid for interest $8,596 $4,614
Non-cash investing activities:
Liability for dissenters and other future cash payments associated with the acquisition of Diamond Foods $ $13,688
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) April 1, 2017 April 2, 2016
Net revenue $531,501 $447,869
Cost of sales 346,735 304,779
Gross profit $184,766 $143,090
As a % of net revenue 34.8% 31.9%
Transaction and integration related expenses(1) 237 34
Emerald move(2) 635
Business restructuring(3) 200
Inventory step-up(4) 13,630
Other(5) (90) 349
Gross profit, excluding special items $185,748 $157,103
As a % of net revenue 34.9% 35.1%
(1) For the first quarter of 2017, transaction and integration related expenses primarily consists of legal fees, idle facility lease costs, severance and initial up-front employee benefit plan costs.
(2) Includes costs associated with the relocation of Emerald production from Stockton, CA to Charlotte, NC.
(3) Consists of severance and retention benefits associated with an organizational restructure.
(4) The inventory step-up represents the additional cost of sales recognized in Q1 2016 as a result of stepping up Diamond Foods inventory to fair value at the acquisition date.
(5) For the first quarter of 2016, other items primarily consist of the write off of spare parts associated with impaired fixed assets.


SNYDER’S-LANCE, INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Measures (Unaudited)
Operating income, excluding special items
Quarter Ended
(in thousands) April 1, 2017 April 2, 2016
Operating income/(loss) $23,926 $(27,312)
As a % of net revenue 4.5% (6.1)%
Transaction and integration related expenses(1)(2) 1,344 49,013
Emerald move(3) 2,091
Business restructuring(4) 770
Inventory step-up(5) 13,630
Impairment charges(6) 374
Other(7) (118) 392
Operating income, excluding special items $28,013 $36,097
As a % of net revenue 5.3% 8.1%
(1) For the first quarter of 2017, transaction and integration related expenses primarily consists of legal fees, idle facility lease costs, severance and initial up-front employee benefit plan costs.
(2) For the first quarter of 2016, transaction and integration related expenses included severance, retention and accelerated stock-based compensation which was recognized due primarily to change in control provisions and severance agreements with Diamond Foods personnel. The remaining costs were primarily professional fees and legal costs associated with completion of the acquisition and subsequent integration of Diamond Foods.
(3) Includes costs associated with the relocation of Emerald production from Stockton, CA to Charlotte, NC.
(4) Consists of severance and retention benefits associated with an organizational restructure.
(5) The inventory step-up represents the additional cost of sales recognized in Q1 2016 as a result of stepping up Diamond Foods inventory to fair value at the acquisition date.
(6) Consists of impairment charges for certain fixed assets.
(7) For the first quarter of 2016, other items primarily consist of the write off of spare parts associated with impaired fixed assets.


SNYDER’S-LANCE, INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Measures (Unaudited)
Earnings per diluted share, excluding special items
Quarter Ended
April 1, 2017 April 2, 2016
Earnings/(loss) per diluted share from continuing operations $0.11 $(0.29)
Transaction and integration related expenses(1)(2) 0.01
0.39
Emerald move(3) 0.01
Business restructuring(4) 0.01
Inventory step-up(5) 0.11
Loss on debt prepayment(6) 0.04
Other(7)(8) (0.01) 0.01
Earnings per diluted share, excluding special items $0.13 $0.26
(1) For the first quarter of 2017, transaction and integration related expenses primarily consists of legal fees, idle facility lease costs, severance and initial up-front employee benefit plan costs.
(2) For the first quarter of 2016, transaction and integration related expenses included severance, retention and accelerated stock-based compensation which was recognized due primarily to change in control provisions and severance agreements with Diamond Foods personnel. The remaining costs were primarily professional fees and legal costs associated with completion of the acquisition and subsequent integration of Diamond Foods.
(3) Includes costs associated with the relocation of Emerald production from Stockton, CA to Charlotte, NC.
(4) Consists of severance and retention benefits associated with an organizational restructure.
(5) The inventory step-up represents the additional cost of sales recognized in Q1 2016 as a result of stepping up Diamond Foods inventory to fair value at the acquisition date.
(6) The loss on extinguishment of debt was a result of the early repayment of our private placement loan due to the financing obtained for the acquisition of Diamond Foods.
(7) For the first quarter of 2017, other items primarily consist of proceeds from class action insurance settlement.
(8) For the first quarter of 2016, other items primarily consist of the write off of spare parts associated with impaired fixed assets.


SNYDER’S-LANCE, INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Measures (Unaudited)
EBITDA and Adjusted EBITDA
Quarter Ended
(in thousands) April 1, 2017 April 2, 2016
Income/(loss) from continuing operations $11,326 $(22,848)
Income tax expense/(benefit) 4,662 (13,614)
Interest expense, net 8,954 4,729
Loss on early extinguishment of debt 4,749
Depreciation 17,718 15,870
Amortization 6,889 4,287
EBITDA $49,549 $(6,827)
As a % of net revenue 9.3% (1.5)%
Transaction and integration related expenses(1)(2) 1,344 49,013
Emerald move(3) 2,091
Business restructuring(4) 770
Inventory step-up(5) 13,630
Impairment charges(6) 374
Other(7)(8) (938) 392
Adjusted EBITDA $52,816 $56,582
As a % of net revenue 9.9% 12.6%
(1) Transaction and integration related expenses primarily consists of legal fees, idle facility lease costs, severance and initial up-front employee benefit plan costs.
(2) For the first quarter of 2016, transaction and integration related expenses included severance, retention and accelerated stock-based compensation which was recognized due primarily to change in control provisions and severance agreements with Diamond Foods personnel. The remaining costs were primarily professional fees and legal costs associated with completion of the acquisition and subsequent integration of Diamond Foods.
(3) Includes costs associated with the relocation of Emerald production from Stockton, CA to Charlotte, NC.
(4) Consists of severance and retention benefits associated with an organizational restructure.
(5) The inventory step-up represents the additional cost of sales recognized in Q1 2016 as a result of stepping up Diamond Foods inventory to fair value at the acquisition date.
(6) Consists of impairment charges for certain fixed assets.
(7) For the first quarter of 2017, other items primarily consist of proceeds from class action insurance settlement.
(8) For the first quarter of 2016, other items primarily consist of the write off of spare parts associated with impaired fixed assets.


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) April 1, 2017 April 2, 2016
Net income/(loss) attributable to Snyder's-Lance from continuing operations $11,162 $(22,885)
Transaction and integration related expenses, net of tax(1)(2) 836 31,400
Emerald move, net of tax(3) 1,300
Business restructuring, net of tax(4) 479
Inventory step-up, net of tax(5) 8,743
Loss on debt prepayment, net of tax(6) 3,042
Impairment charges, net of tax(7) 239
Other, net of tax(8)(9) (584) 251
Net income attributable to Snyder's-Lance from continuing operations, excluding special items $13,193 $20,790
(1) Transaction and integration related expenses primarily consists of legal fees, idle facility lease costs, severance and initial up-front employee benefit plan costs.
(2) For the first quarter of 2016, transaction and integration related expenses included severance, retention and accelerated stock-based compensation which was recognized due primarily to change in control provisions and severance agreements with Diamond Foods personnel. The remaining costs were primarily professional fees and legal costs associated with completion of the acquisition and subsequent integration of Diamond Foods.
(3) Includes costs associated with the relocation of Emerald production from Stockton, CA to Charlotte, NC.
(4) Consists of severance and retention benefits associated with an organizational restructure.
(5) The inventory step-up represents the additional cost of sales recognized in Q1 2016 as a result of stepping up Diamond Foods inventory to fair value at the acquisition date.
(6) The loss on extinguishment of debt was a result of the early repayment of our private placement loan due to the financing obtained for the acquisition of Diamond Foods.
(7) Consists of impairment charges for certain fixed assets.
(8) For the first quarter of 2017, other items primarily consist of proceeds from class action insurance settlement.
(9) For the first quarter of 2016, other items primarily consist of the write off of spare parts associated with impaired fixed assets.


SNYDER’S-LANCE, INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Measures (Unaudited)
Adjusted effective income tax rate
Quarter Ended April 1, 2017
(in thousands)
GAAP Income Adjustments Adjusted Income
Income before income taxes $15,988 $3,266 $19,254
Income tax expense 4,662 1,235 5,897
Net income 11,326 2,031 13,357
Net income attributable to non-controlling interests 164 164
Net income attributable to Snyder's-Lance $11,162 $2,031 $13,193
Effective income tax rate 29.2% 30.6%
Quarter Ended April 2, 2016
(in thousands)
GAAP Income Adjustments Adjusted Income
(Loss)/income before income taxes $(36,462) $68,158 $31,696
Income tax (benefit)/expense (13,614) 24,483 10,869
Net (loss)/income (22,848) 43,675 20,827
Net income attributable to non-controlling interests 37 37
Net (loss)/income attributable to Snyder's-Lance $(22,885) $43,675 $20,790
Effective income tax rate(1) 37.3% 34.3%
(1) The tax rate on adjusted income varies from the tax rate of GAAP income for the first quarter of 2016 primarily due to the transaction costs incurred in the first quarter of 2016 which are not deductible for tax purposes.


Investor Contact Kevin Powers, Senior Director, Investor Relations kpowers@snyderslance.com, (704) 557-8279 Media Contact Joey Shevlin, Director, Corporate Communications & Public Affairs JShevlin@snyderslance.com, (704) 557-8850

Source:Snyder's-Lance Inc.