Milling & Baking News - May 5, 2009 - 16

Financial Results

Lance earnings higher in quarter;
guidance for full year raised
CHARLOTTE, N.C. - Seeming to
have weathered the storm from a peanut recall that had significant, but indirect, effects on the company, Lance,
Inc. announced higher earnings for
the first quarter ended March 31 and
raised earnings guidance for 2009.
Lance net income in the first quarter was $6,452,000, equal to 20c per
share on the common
stock, up dramatically from $645,000, or
2c, in the first quarter
last year. Sales were
$215,809,000, up 9%
from $197,968,000.
Lance estimated the
impact of the peanut
recall on earnings at 5c
per share (diluted). Integration costs associated
with the December 2008
acquisition of Archway
Cookies L.L.C. cut earnings by another 2c.
Results during the first
quarter of 2008 were lowered by sharply higher
prices for the company's
principal baking ingredients of flour and vegetable
oil, which Lance said were
not immediately passed
along to customers.
Sales growth during the
first quarter of 2009 was driven by
subsequent price increases as well as
the Archway acquisition.
While Lance manufactures its own
peanut butter and was not directly
affected by the Peanut Corporation
of America recall, the company said
its sales were hurt by "broad press

addition, we are very pleased with
the continued growth of our private
brands business."
In an April 24 conference call, Mr.
coverage" which "amplified con- Singer said Lance's peanut butter
cracker market share has increased
sumers' fears."
Lance said demand for peanut butter significantly since February.
"We currently anticipate pretty well
sandwich crackers began to rebound
by March but estimated that the inci- normal volume levels for the remaindent cost the company $2.5 million in der of the year," he said.
Lance said its Archway integration
revenues in the quarter. This revenue
reduction together with extra associ- was on track. The Ashland, Ohio, faated public relations expenses resulted cility acquired in the Archway transaction was operating again before the
in the 5c cost to earnings.
"We are very pleased with end of 2008, initially producing prithe underlying earnings mo- vate label cookies to reduce overtime
mentum in the quarter," said at other Lance facilities. In early 2009,
David V. Singer, president and Lance relaunched Archway brand
cookies, which had not been
actively marketed since Oc'As we anticipated, sales of our
tober 2008.
Non-branded
product
most popular product, peanut
sales rose 16% in the first
butter sandwich crackers,
quarter from the same pewere impacted by the January
riod in 2008, reflecting
recall of peanut butter.'
higher selling prices, vol- David V. Singer, president
ume growth from new and
and chief executive officer
existing
customers
and
new product introductions.
Three percentage points of
chief executive officer. "As we the non-branded revenue growth was
anticipated, sales of our most attributed to the March 2008 acquisipopular product, peanut but- tion of Brent & Sam's.
Lance raised its full-year earnings
ter sandwich crackers, were
impacted by the January recall guidance to $1.10 to $1.20 per share,
of peanut butter. Although we up from $1 to $1.15 as its February
make our own peanut butter guidance. Revenues in 2009 were profor our sandwich crackers and jected at $910 million to $930 million,
did not recall any of our sandwich up from $900 million to $920 million.
"Throughout the remainder of the
cracker products, consumers reduced
their consumption of all products year, we will remain focused on miticontaining peanut butter, including gating the impact of the peanut butours. Despite this pressure, and the ter recall, integrating and growing
initial costs associated with ramping the Archway business, capturing the
up sales and production of the newly efficiencies driven by our operational
acquired Archway brand, we still de- improvements and driving continued
livered solid first-quarter results. In sales growth," Mr. Singer said. MBN

Krispy Kreme narrows loss in year
WINSTON-SALEM, N.C. - Krispy
Kreme Doughnuts, Inc. sustained a
loss of $4,061,000 for the year ended
Feb. 1, which compared with a loss of
$67,051,000 during the previous year.
Revenue for the year was
$383,984,000, down 11% from
$429,319,000 during fiscal 2008.
"We are seeing early signs of
progress toward achieving a number of our strategic goals," said Jim
Morgan, chairman, president and
chief executive officer. "We earned
an operating profit for the fourth
quarter and also for the year, our
16 / May 5, 2009

Milling & Baking News

first annual operating profit since
fiscal 2004. We've also made measurable progress in implementing
our initiatives."
Other progress includes the opening of the company's first new small
retail concept shops, reaching sufficient scale in several markets to begin
using a more comprehensive marketing portfolio, domestic franchisees
opening five new small retail shops,
and enhancing off-premise route
profitability by closely focusing on
door economics.
For the fourth quarter ended

Feb. 1, the company sustained a loss of
$303,000, which compared with a loss
of $31,815,000 during the same quarter
of the previous year. Revenue for the
quarter was $91,768,000, down 17%
from $110,948,000 during the same
quarter of the previous year.
"While there is still much work to
be done, we continue to believe our
strategies are the right ones, and our
extraordinarily committed employees
will continue to successfully implement those strategies," Mr. Morgan
said. "We look forward to seeing the
benefits of those strategies more fully
reflected in our financial results in the
quarters and years ahead." MBN
bakingbusiness.com / world-grain.com

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Milling & Baking News - May 5, 2009

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