How Did Snyder’s-Lance End Fiscal 2015?

LNCE Announces Fiscal 2015 Results, Acquires Diamond Foods

(Continued from Prior Part)

Earnings took a toll

Snyder’s-Lance (LNCE) reported its fiscal 2015 results on February 29, 2016. The final results met the preliminary results that the company reported at the end of January. The fiscal 4Q15 EPS (earnings per share) was around $0.21—a YoY (year-over-year) fall of 30%. The company’s earnings have been on a declining trend for many quarters. However, it rose 8% in fiscal 3Q15. The earnings even missed analysts’ estimates by 34%. The shortfall in the earnings was a result of a loss of revenue. However, the company managed to offset part of the EPS decline due to its margin expansion program.

Fiscal 2015 earnings fell 7%

For fiscal 2015, the net income—excluding special items—was $71.9 million or $1.01 per diluted share. The net income excluding special items was $65.2 million for fiscal 2014 or $0.92 per diluted share. For the year, the EPS was in line with analysts’ estimates. The GAAP (generally accepted accounting principles) net earnings included special items for 2015. It was $50.7 million or $0.71 per diluted share. It was $59.3 million for fiscal 2014 or $0.84 per diluted share.

For 2015, special items included after-tax expenses of $21.3 million mainly associated with legal fees and accruals for expected settlements of certain litigation. Impairment charges and transaction-related expenses associated with the acquisition were also part of the special items.

The special items for 2014 included an after-tax gain on the revaluation of a prior equity investment in late July of $9.8 million. It was balanced by after-tax expenses of $15.7 million primarily associated with impairment charges, restructuring charges, and professional fees.

Earnings expectations in 2016

Snyder’s-Lance expects the acquisition to be immediately accretive to the annualized earnings in fiscal 2016. The company mentioned that it expects to provide fiscal 2016 estimates in early May with its fiscal 1Q16 financial results. It reaffirmed estimated annualized synergies from cost savings of $75 million. The company plans to reinvest ~$10 million in its growth plans.

Peers’ earnings

The company’s peers in the industry include Campbell Soup (CPB), Lancaster Colony (LANC), and WhiteWave Foods (WWAV). They reported EPS of $0.87, $1.25, and $0.36 in their last quarter, respectively. The Guggenheim S&P Equal Weight Consumer Staples ETF (RHS) and the PowerShares S&P 500 Low Volatility Portfolio (SPLV) invest 4.03% in Campbell Soup.

In the next part of the series, we’ll discuss the details of the Diamond Foods acquisition.

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Browse this series on Market Realist:

• Part 1 - Snyder’s-Lance Stock Fell 6% after Its Fiscal 2015 Results

• Part 3 - Snyder’s-Lance Completes the Acquisition of Diamond Foods

• Part 4 - Headwinds Impacted Snyder’s-Lance’s Revenue for 2015