- Snyder's-Lance reported first quarter earnings for fiscal 2016 Tuesday, the first quarter since finalizing the company's acquisition of Diamond Foods. This contributed to about one month's worth of financial results. Net revenue rose 15% to $462.8 million, which missed analysts' estimates. Excluding the Diamond Foods acquisition, net revenue dipped 0.7%.
- Quarterly net income excluding special items came in at $19.9 million, or $0.25 per diluted share, compared to $12.0 million, or $0.17 per share, last year. Including special items, which were namely after-tax expenses associated with the Diamond Foods acquisition, the company reported a net loss of $25.4 million, or $0.32 per share.
- Snyder's-Lance expects full-year fiscal 2016 net revenue to increase about 39% to 41% to $2.29 billion to $2.33 billion, which primarily reflects the contribution of Diamond Foods. Excluding the acquisition, the company anticipates net revenue growth to be around flat to a 2% increase.
Snyder's-Lance's acquisition of Diamond Foods demonstrates how beneficial an acquisition can be to spur a company's future as growth begins to flatten out, as organic growth has for the company. While Snyder's-Lance has released a number of gluten-free products in the past, the snack company wasn't one immediately associated with better-for-you products.
By acquiring Diamond Foods, Snyder's-Lance could expand its better-for-you portfolio, which already included brands like Late July, while still maintaining a selection of more indulgent foods, particularly in the realm of salty snacks. Pre-merger, better-for-you products accounted for about one-third of the company's sales.
Just a few weeks before the acquisition, a report from Deutsche Bank suggested that Snyder's-Lance itself could be a purchase target, and that could still be true. Its growth had been stronger than most other packaged food companies, but according to the report, companies that might be interested could be preoccupied.
Kellogg was one potential acquirer named, and with its recent earnings report, Kellogg reported a 2.6% sales decline for the quarter for its U.S. snacks business, the company's largest. The company hopes that Pringles can boost international sales, but a takeover of Snyder's-Lance (and with it, Diamond Foods) could provide Kellogg with a turnaround avenue.
If Snyder's-Lance can achieve the synergies and cost savings it anticipates with Diamond Foods (about $75 million annually), in addition to the top line and better-for-you portfolio boost, Diamond Foods could seal the deal in making Snyder's-Lance a more attractive acquisition target.