Q1 2009 Earning Report of Lance, Inc.

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Q1 2009 Earning Report of Lance, Inc.

  1. 1. 1st Quarter 2009 Conference Call April 24, 2009
  2. 2. “Forward-Looking Statements” During this discussion Company management may make forward looking statements 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 and industry consolidation, increases in costs or availability of ingredients, product price increases impact on total revenue, risks from large customers, changes in consumer preferences, implementation of a new information system, product recalls or safety concerns, food industry and regulatory factors, acquisition and divestiture risks, ability to execute strategic initiatives, interest rate, foreign exchange rate and credit risks, natural disasters or catastrophic events and current economic conditions are discussed in the Company’s most recent Form 10-K filed with the Securities and Exchange Commission. 2
  3. 3. 1st Quarter 2009 Financial Review Rick Puckett Executive Vice President & Chief Financial Officer
  4. 4. Net Revenue Growth (Unaudited) 16.2% 13.9% 11.8% 11.8% 9.7% 9.0% 8.5% 8.4% 7.4% 7.3% 6.4% 5.5% 5.0% 4.6% 4.5% 2.5% 0.7% 0.9% Q1-2007 Q2-2007 Q3-2007 Q4-2007 Q1-2008 Q2-2008 Q3-2008 Q4-2008 Q1-2009 Quarterly Trailing 4 Quarters 4
  5. 5. Q1 2009 Net Sales Summary (Unaudited) Q1 2009 2009 vs. 2008 Branded $ 127.2 $ 5.7 4.8% Non Branded 88.6 12.1 15.8% Total Net Sales $ 215.8 $ 17.8 9.0% ($ in millions) 5
  6. 6. Gross Margin Trend (Unaudited) 43.9% 43.4%43.0% 43.6% 44.5% 41.6% 42.0% 37.2% 37.6% 43.5% 43.6% 43.1% 42.7% 42.8% 42.6% 39.4% 39.1% 43.1% 37.4% 41.7% 36.6% 40.3% 38.1% 38.5% 37.8% 37.2% Q1-2006 Q2-2006 Q3-2006 Q4-2006 Q1-2007 Q2-2007 Q3-2007 Q4-2007 Q1-2008 Q2-2008 Q3-2008 Q4-2008* Q1-2009 Quarterly Trailing 4 Quarters * Q4 2008 data excludes special items. For a corresponding reconciliation of Q4 2008 data excluding special items to Q4 2008 data including special items, see the reconciliation of non-GAAP measures in the Appendix. 6
  7. 7. SG&A % of Net Sales (Unaudited) 42.3% 39.5% 39.2% 39.4% 38.8% 38.2% 38.3% 37.0% 37.5% 37.2% 36.8% 36.8% 37.7% 36.4% 36.3% 36.0% 35.7% 35.5% 35.6% 34.7% 34.9% 34.1% 34.1% 33.0% 33.5% 32.1% Q1-2006 Q2-2006 Q3-2006 Q4-2006 Q1-2007 Q2-2007 Q3-2007 Q4-2007 Q1-2008 Q2-2008 Q3-2008 Q4-2008* Q1-2009 Quarterly Trailing 4 Quarters * Q4 2008 data excludes special items. For a corresponding reconciliation of Q4 2008 data excluding special items to Q4 2008 data including special items, see the reconciliation of non-GAAP measures in the Appendix. 7
  8. 8. Operating Profit** Margin Trend (Unaudited) 8.2% 6.4% 6.4% 6.1% 5.6% 5.5% 5.4% 6.4% 6.3% 5.0% 5.7% 4.5% 5.4% 4.6% 4.3% 2.5% 4.2% 3.6% 3.4% 3.3% 3.3% 1.5% 2.8% 2.4% 0.8% -0.3% Q1-2006 Q2-2006 Q3-2006 Q4-2006 Q1-2007 Q2-2007 Q3-2007 Q4-2007 Q1-2008 Q2-2008 Q3-2008 Q4-2008* Q1-2009 Quarterly Trailing 4 Quarters * Q4 2008 data excludes special items. For a corresponding reconciliation of Q4 2008 data excluding special items to Q4 2008 data including special items, see the reconciliation of non-GAAP measures in the Appendix. ** Operating profit percentage is a non-GAAP measure. For a corresponding reconciliation of operating profit percentage to the most comparable GAAP measure, see the reconciliation of non-GAAP in the Appendix. 8
  9. 9. Q1 2009 Financial Summary (Unaudited) Q1 2009 Q1 2008 Net Sales $ 215.8 $ 198.0 Gross Margin % 39.1% 37.6% SG&A Expense % 34.1% 36.8% Operating Profit %* 5.0% 0.8% Tax Rate 35.6% 38.5% Net Income $ 6.5 $ 0.6 Diluted EPS $ 0.20 $ 0.02 * Operating profit percentage is a non-GAAP measure. For a corresponding reconciliation of operating profit percentage to the most comparable GAAP measure, see the reconciliation of non-GAAP measures in the Appendix. ($ in millions, except for per share amounts) 9
  10. 10. Key 1st Quarter Statistics (Unaudited) Trailing 4 Quarters Q1 2009 Q1 2008 EBITDA* $ 74.0 $ 60.5 EBITDA* % of Sales 8.5% 7.8% NET DEBT** (quarter-end) $ 109.6 $ 73.6 (Total Debt less Cash) NET DEBT/EBITDA 1.5 1.2 * Excluding special items. EBITDA is a non-GAAP measure. For a corresponding reconciliation of EBITDA to the most comparable GAAP measure, see the reconciliation of non-GAAP measures in the Appendix. ** Net Debt is a non-GAAP measure. For a corresponding reconciliation of Net Debt to the most comparable GAAP measure, see the reconciliation of non-GAAP measures in the Appendix. ($ in millions) 10
  11. 11. Selected 1st Quarter Cash Flow Items (unaudited) Q1 2009 Q1 2008 Cash Flow (used in)/from Operating Activities $ (3.9) $ 5.9 Capital Expenditures (5.2) (7.1) Free Cash Flow Before Dividends $ (9.1) $ (1.2) Dividends Paid $ (5.0) $ (5.0) ($ in millions) 11
  12. 12. 2009 Full Year Estimates Net Sales $910 - $930 Diluted Earnings Per Share $1.10 - $1.20 Capital Spending $41 - $46 ($ in millions, except for per share amounts) 12
  13. 13. Operations Overview Dave Singer President & Chief Executive Officer
  14. 14. 1st Quarter Review Record First Quarter revenues Peanut butter recall impacting revenue and earnings Archway integration on track New product launches New advertising campaign Continued supply chain & DSD improvements Clear focus for remainder of year 14
  15. 15. Q&A
  16. 16. Appendix
  17. 17. Reconciliation of Non-GAAP Measures This presentation includes certain 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 financial measures to the most nearly comparable GAAP measures, if applicable, is presented on the slides that follow. The Company believes these non-GAAP financial measures provide useful information to investors as the measures emphasize core on- going operations and are helpful in comparing past and present operating results. The Company uses these measures to evaluate past performance and prospects for future performance. The presentation of non-GAAP financial measures by the Company should not be considered in isolation or as a substitute for the Company’s financial results prepared in accordance with GAAP. 17
  18. 18. Reconciliation of Non-GAAP Measures: Special Items (Unaudited) Q4 2008 Q4 2008 Including Special Excluding Special Items Items Special Items Net Sales $ 215.3 $ - $ 215.3 COGS $ 131.3 $ 0.9 $ 130.5 Gross Margin $ 84.0 $ (0.9) $ 84.8 Gross Margin % 39.0% 39.4% SG&A $ 71.9 $ 0.8 $ 71.1 SG&A % 33.4% 33.0% Other (income)/expense, net $ (0.5) $ 0.3 $ (0.8) Income from continuing operations before interest and income taxes $ 12.5 $ (1.9) $ 14.5 Interest expense, net $ 0.9 $ 0.0 $ 0.8 Income from continuing operations before income taxes $ 11.7 $ (2.0) $ 13.6 Income tax expense $ 4.1 $ (0.7) $ 4.8 Income tax rate 35.3% 35.2% Net income from continuing operations $ 7.5 $ (1.3) $ 8.8 Weighted average shares outstanding - diluted (in millions) 32.0 32.0 32.0 Diluted earnings per share $ 0.24 $ (0.04) $ 0.28 18 ($ in millions, except for per share amounts)
  19. 19. Reconciliation of Non-GAAP Measures: Special Items (Unaudited) Full Yr. 2008 Full Yr. 2008 Including Special Excluding Special Items Items Special Items Net Sales $ 852.5 $ - $ 852.5 COGS $ 531.5 $ 0.9 $ 530.7 Gross Margin $ 320.9 $ (0.9) $ 321.8 Gross Margin % 37.6% 37.8% SG&A $ 291.7 $ 0.8 $ 290.9 SG&A % 34.2% 34.1% Other (income)/expense, net $ (0.9) $ 0.3 $ (1.1) Income from continuing operations before interest and income taxes $ 30.1 $ (1.9) $ 32.1 Interest expense, net $ 3.0 $ 0.0 $ 3.0 Income from continuing operations before income taxes $ 27.1 $ (2.0) $ 29.1 Income tax expense $ 9.4 $ (0.7) $ 10.1 Income tax rate 34.6% 34.6% Net income from continuing operations $ 17.7 $ (1.3) $ 19.0 Weighted average shares outstanding - diluted (in millions) 31.8 31.8 31.8 Diluted Earnings per share $ 0.56 $ (0.04) $ 0.60 19 ($ in millions, except for per share amounts)
  20. 20. Reconciliation of Non-GAAP Measures: Operating Profit (Unaudited) Q1 Q1 2009 2008 Income before interest & income taxes $ 10.8 $ 1.7 Add Back Other expense, net $ 0.1 $ - Equals Operating Profit $ 10.9 $ 1.7 Net Sales $ 215.8 $ 198.0 5.0% 0.8% Operating Profit % of Net Sales ($ in millions) 20
  21. 21. Reconciliation of Non-GAAP Measures: EBITDA (Unaudited) Trailing 4 Quarters Q1 2009 Q1 2008 Income from continuing operations before interest and income taxes $ 39.3 $ 30.3 Special items included in income from continuing operations before interest and income taxes $ (1.9) $ - Add Back Depreciation & amortization $ 32.8 $ 30.3 Equals EBITDA excluding special items $ 74.0 $ 60.5 Net sales $ 870.3 $ 778.3 EBITDA excluding special items % of Net sales 8.5% 7.8% ($ in millions) 21
  22. 22. Reconciliation of Non-GAAP Measures: Net Debt (Unaudited) Q1 2009 Q1 2008 Long-term Debt $ 112.0 $ 74.7 Less Cash & Cash Equivalents $ 2.4 $ 1.2 $ 109.6 $ 73.6 Net Debt (quarter-end) ($ in millions) 22
  23. 23. Reconciliation of Non-GAAP Measures: Operating Profit Trend (Unaudited) Q1-06 Q2-06 Q3-06 Q4-06 Q1-07 Q2-07 Q3-07 Q4-07 Q1-08 Q2-08 Q3-08 Q4-08 Q1-09 Income from continuing operations before interest & taxes $ (0.8) $ 10.1 $ 12.2 $ 9.8 $ 9.9 $ 15.2 $ 11.6 $ 1.9 $ 1.7 $ 5.2 $ 10.7 $ 12.5 $ 10.8 Special items included in income from continuing operations before interest & taxes $ (1.9) Add Back Other (income)/expense, net $ 0.2 $ 0.5 $ (0.2) $ (0.2) $ (0.1) $ 1.0 $ 0.5 $ 1.0 $ (0.0) $ 0.2 $ (0.5) $ (0.5) $ 0.1 Special items included in other (income)/expense, net $ 0.3 Equals Operating profit excluding special items $ (0.6) $ 10.6 $ 12.0 $ 9.5 $ 9.8 $ 16.1 $ 12.1 $ 2.9 $ 1.7 $ 5.4 $ 10.2 $ 13.7 $ 10.9 Net sales $ 180.7 $ 188.3 $ 188.6 $ 172.4 $ 182.4 $ 197.0 $ 198.1 $ 185.2 $ 198.0 $ 213.6 $ 225.6 $ 215.3 $ 215.8 Operating profit excluding special Items % of Net sales -0.3% 5.6% 6.4% 5.5% 5.4% 8.2% 6.1% 1.5% 0.8% 2.5% 4.5% 6.4% 5.0% ($ in millions) 23

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