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Snack maker Lance Inc., based in Charlotte, N.C., reported net revenue for its third quarter ended Sept. 30, 2006 of $191.9 million, an increase of 12 percent over prior year third quarter.
Branded product sales were up $18.7 million, or 18 percent, reflecting growth from incremental Tom's business and continued growth in sales of Lance sandwich crackers and Cape Cod potato chips, partially offset by declines in vending and food service products. Non-branded product sales increased by $1.3 million, or 2 percent, during the third quarter, reflecting the continued softness in the mass merchandiser channel driven by significantly lower promotions by major customers, the company said.
The company reported third quarter net income of $7.5 million, down 7 percent from the prior year's third quarter net income of $8 million. Third quarter net income excluding special items was $7.8 million, down 3 percent from last year's third quarter.
"We are pleased with our third quarter performance, which was in line with our earnings expectations," said David V. Singer, president and CEO. "During the quarter, we continued to achieve growth in our core product categories. We also continued to make progress on our key initiatives during the quarter, including plant consolidations, opening of distribution centers in Texas and Florida, shifting of salty snack production to acquired facilities and beginning the implementation of a much-needed enterprise computer system solution.
"As we move into the fourth quarter, we are experiencing substantially higher flour costs, which have jumped significantly in the last several weeks. Additionally, we believe that we will experience softness in non-branded revenue as compared to our original expectations."
As a result of the higher flour costs and revenue shortfalls, the company revised its full-year net sales from $750-$775 million down to $745-$750 million and earnings estimates of 70-75 cents down to 64-67 cents.
Looking to 2007, the company remained confident that executing its strategic initiatives, as well as taking additional steps to mitigate rising costs, would drive sustainable long-term profitable growth. "The implementation of the enterprise computer system and the upgrading of its direct-store-distribution infrastructure will drive improved margins over the longer term," Singer said.