Snyder's-Lance, Inc. (NASDAQ: LNCE) announced on January 27, 2016 that a meeting date has been set for shareholders to vote on approving the recently announced acquisition of Diamond Foods, Inc. (NASDAQ: DMND) ("Diamond Foods" or "Diamond").
This announcement signals completion of customary reviews of the transaction by the FTC and SEC. A meeting date of February 26, 2016 is set for the vote of the stockholders of Diamond and Snyder's-Lance, with full details regarding time, location and how to vote shares included in the prospectus/joint proxy statement included in the company's S-4 filing which is available online and is being mailed to all stockholders of Snyder's-Lance and Diamond. Closing is expected to occur shortly thereafter.
The Company reaffirmed estimated annualized synergies from cost savings of $75 million, with approximately $10 million to be re-invested in the company's growth plans. In addition, revenue synergies are expected to be a good source of growth in the future.
The Company also announced today that preliminary unaudited net sales for the full year are estimated to be $1.66 billion, an increase of 4% compared to prior year when adjusted for the 53rd week in 2014, which accounted for approximately $30 million in net revenue.
Fourth quarter 2015 unaudited net revenue is anticipated to be lower than expected given several factors which contributed to estimated net sales of $406 million vs. approximately $430 million, the lower end of the company's guidance. The lower net revenue is expected to result in earnings per share for full year 2015 of $1.00 to $1.02, excluding special items, on a fully diluted basis.
For full year 2015, GAAP earnings per share, which include special items, is expected to be $0.70 to $0.72 on a fully diluted basis. Special items for 2015 primarily include asset impairments related to restructuring, Diamond-related transaction expenses and certain litigation-related fees and expected settlements.
Despite challenges of the most recent quarter and a tougher retailing environment across the industry, Snyder's-Lance delivered a number of positive results for full year 2015, including;
- Top line growth of around 4% for the full year 2015 when adjusted for the 53rd week in 2014, driven by core brands growth of over 6.5%
- Expanded operating margins for the full year, accelerating in the fourth quarter to an estimated 200 bps improvement over prior year
- The launch of a company wide "Drive For 10" cost savings initiative, which along with other cost focused efforts helped to drive improved Q4 margins, and will continue into 2016
- All five core brands (Snyder's of Hanover®, Lance®, Cape Cod®, Snack Factory® Pretzel Crisps® and Late July®) gained market share for the year
Carl E. Lee, Jr., President and Chief Executive Officer of Snyder's-Lance:
"We remain positive on our prospects for 2016 and beyond."
"We have identified the events that pressured our top line in Q4, including contract manufacturing and some branded sales losses resulting from a heavy storm and extended power outage at one of our largest bakeries. We saw larger than expected revenue declines related to strategic changes in a large customer which impacted space, displays and store inventory levels for some of our branded products. While we are experiencing an overall tougher retailing environment, the issues related to the bakery shutdown are completely resolved and we continue to push for ways of developing new revenue opportunities with our largest customers."
"In 2016, we are focused on both top line sales and driving efficiency through our 'Drive for 10' cost savings initiative. We continue to deliver on our strategy of being a premium snack company focused on delivering consumer needs and are actively planning for integration of the Diamond Foods business. We are confident in our ability to drive cost synergies through the combination of our two businesses and expect to achieve our estimated annualized target of $75 million. We believe top-line synergies will be a good source of growth for the combined company as we achieve greater operating scale and broaden our geographic reach."
For Snyder's-Lance, not including any benefits from the acquisition of Diamond Foods, 2016 net revenue growth is expected to be between 2% - 4%. As we continue to expect headwinds with a major customer, we are adjusting our estimates for EPS, excluding special items, to $1.24 to $1.32 for 2016. Capital expenditures are projected to be $50 - $55 million for the full year.
The preliminary, unaudited results excluding special items contained in this press release are based on management's initial review of operations for the quarter and year ended January 2, 2016 and remain subject to completion of the Company's customary annual closing and independent audit. Final adjustments and other material developments may arise between the date of this press release and the date Snyder's-Lance announces fourth quarter results and the filing of the Company's Annual Report on Form 10-K with the SEC. The Company plans to have a follow up analyst call after the final results have been audited.