Despite a troubled year – with the sudden resignations of its CEO and CFO – Snyder’s-Lance has continued to perform well in its third quarter due to its aggressive ‘multi-year transformation plan.’, said , said new president and CEO Brian Driscoll.
“The actions we've taken to stabilize the business and reverse certain trends are taking hold,” he said.
“While we have much work to do, we firmly believe that we have the opportunity to unlock substantial profitability improvements over time, and will unlock the considerable potential of our branded portfolio to drive improved total shareholder return.”
He also attributed Q3 momentum to “an integrated marketing plan, including regional TV, radio, digital, social media and consumer promotions.”
Third quarter sales were posted at $564.2m, a 3.7% increase over the $543.9m in Q3 2016.
Net income rose by 10.5% to $32.7m, compared to $29.6m a year ago, while adjusted EBITDA increased 14% to $85.2m.
Core growth
Snyder’s reported branded net revenue continued to outpace the category with a 4.9% rise primarily coming from the company’s chips and pretzel brands, including Late July, Snack Factory Pretzel Crisps, Lance, Snyder’s of Hanover, Cape Cod and Kettle Chips.
Earnings per diluted share just missed the $0.34 forecast, coming in at $0.33, compared to $0.30 the year prior.
Performance progress
Operating income in the third quarter of 2017 was $60.6m, or 10.7% of net revenue, compared to $51.1m, or 9.4% of net revenue, in the same period last year.
Operating cost improvements came from cost-cutting and supply chain productivity initiatives, as well as higher service and distribution costs related to trucking capacity.
The company said the higher than normal manufacturing costs due to the ramping up of the Emerald production capacity in Charlotte are likely to decrease with time.
“This capital project has been more challenging than we expected, resulting in higher costs than planned and service level disruptions.
“That said, while there'll be a lingering cost and service effect in Q4 associated with this, we have been making encouraging progress of late, and are confident these pressures will abate and margins will improve dramatically once we have the line operating at a more normal level of efficiency,” said Driscoll.
Snyder's also invested $7.8m to expand its Baptista's Bakery facility, which focuses on baked and better-for-you snack foods to gear up against the rising competition in the category.
It further closed a chips plant in Florida, cutting about 250 jobs.
Adjusted outlook
However, the snack producer said it was on track to deliver full-year sales results of $2.2bn to $2.26bn.
EBITDA is expected to be between $305m and $320m, and earnings per diluted share (EPS) to be between $1.12 and $1.17.