q1 2009 earning report of lance, inc

1st Quarter 20091st Quarter 2009Conference CallConference Call

April 24, 2009April 24, 2009

2

During this discussion Company management may make forward lookingstatements within the meaning of applicable securities law s. The statementsmay include projections regarding future earnings and resu lts which are basedupon the Company’s current expectations and assumptions, w hich are subject toa number of risks and uncertainties. Factors that could caus e actual results todiffer, including price competition and industry consolid ation, increases in costsor availability of ingredients, product price increases im pact on total revenue,risks from large customers, changes in consumer preference s, implementation ofa new information system, product recalls or safety concern s, food industry andregulatory factors, acquisition and divestiture risks, ab ility to execute strategicinitiatives, interest rate, foreign exchange rate and cred it risks, natural disastersor catastrophic events and current economic conditions are discussed in theCompany’s most recent Form 10-K filed with the Securities an d ExchangeCommission.

“Forward-Looking Statements”

1st Quarter 20091st Quarter 2009Financial ReviewFinancial Review

Rick PuckettRick PuckettExecutive Vice PresidentExecutive Vice President& Chief Financial Officer& Chief Financial Officer

4

Net Revenue Growth(Unaudited)

0.9%

4.6% 5.0%

7.4%8.5% 8.4%

13.9%

16.2%

9.0%

5.5%

2.5%

0.7%

4.5%

6.4%7.3%

9.7%

11.8% 11.8%

Q1-2007 Q2-2007 Q3-2007 Q4-2007 Q1-2008 Q2-2008 Q3-2008 Q4-2008 Q1-2009

Quarterly Trailing 4 Quarters

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Q1 2009 Net Sales Summary(Unaudited)

($ in millions)

Q1 2009

Branded 127.2$ 5.7$ 4.8%

Non Branded 88.6 12.1 15.8%

Total Net Sales 215.8$ 17.8$ 9.0%

2009 vs. 2008

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Gross Margin Trend(Unaudited)

42.0%43.9% 43.4%43.0% 43.6% 44.5%

41.6%37.2%

37.6%37.4%

36.6%39.4% 39.1%42.8% 42.6% 42.7% 43.1% 43.5% 43.6%

43.1% 41.7%40.3%

38.5%37.2% 37.8% 38.1%

Q1-2006 Q2-2006 Q3-2006 Q4-2006 Q1-2007 Q2-2007 Q3-2007 Q4-2007 Q1-2008 Q2-2008 Q3-2008 Q4-2008* Q1-2009


* Q4 2008 data excludes special items. For a corresponding reconciliation of Q4 2008 data excluding special items to Q4 2008 data including special items, see the reconciliation of non-GAAP measures in the Appendix.

7

SG&A % of Net Sales(Unaudited)

42.3%

38.3%37.0% 37.5%

38.2%

36.3%35.5% 35.6%

36.8%

34.9%

32.1%33.0%

34.1%

39.5% 39.2% 39.4%38.8%

37.7%

37.2%36.8%

36.4%36.0% 35.7%

34.7%34.1%

33.5%

Q1-2006 Q2-2006 Q3-2006 Q4-2006 Q1-2007 Q2-2007 Q3-2007 Q4-2007 Q1-2008 Q2-2008 Q3-2008 Q4-2008* Q1-2009



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Operating Profit** Margin Trend(Unaudited)

-0.3%

5.6%6.4%

5.5% 5.4%

8.2%

6.1%

1.5%

0.8%

2.5%

4.5%

6.4%

5.0%

3.3% 3.4% 3.3%

4.3%

5.7%

6.4% 6.3%

5.4%

4.2%

2.8% 2.4%

3.6%

4.6%

Q1-2006 Q2-2006 Q3-2006 Q4-2006 Q1-2007 Q2-2007 Q3-2007 Q4-2007 Q1-2008 Q2-2008 Q3-2008 Q4-2008* Q1-2009


** Operating profit percentage is a non-GAAP measure. For a corresponding reconciliation of operating profit percentage to the most comparable GAAP measure, see the reconciliation of non-GAAP in the Appendix.


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Q1 2009 Financial Summary(Unaudited)

Q1 2009 Q1 2008

Net Sales 215.8$ 198.0$

Gross Margin % 39.1% 37.6%

SG&A Expense % 34.1% 36.8%

Operating Profit %* 5.0% 0.8%

Tax Rate 35.6% 38.5%

Net Income 6.5$ 0.6$

Diluted EPS 0.20$ 0.02$

* Operating profit percentage is a non-GAAP measure. For a corresponding reconciliation of operating profit percentage to the most comparable GAAP measure, see the reconciliation of non-GAAP measures in the Appendix.

($ in millions, except for per share amounts)

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Key 1 st Quarter Statistics(Unaudited)

($ in millions)

** Net Debt is a non-GAAP measure. For a corresponding reconciliation of Net Debt to the most comparable GAAP measure, see the reconciliation of non-GAAP measures in the Appendix.

Q1 2009 Q1 2008

EBITDA* 74.0$ 60.5$

EBITDA* % of Sales 8.5% 7.8%

NET DEBT** (quarter-end) 109.6$ 73.6$ (Total Debt less Cash)

NET DEBT/EBITDA 1.5 1.2

Trailing 4 Quarters

* Excluding special items. EBITDA is a non-GAAP measure. For a corresponding reconciliation of EBITDA to the most comparable GAAP measure, see the reconciliation of non-GAAP measures in the Appendix.

11

Selected 1 st Quarter Cash Flow Items(unaudited)

($ in millions)

Q1 2009 Q1 2008

Cash Flow (used in)/from Operating Activities (3.9)$ 5.9$

Capital Expenditures (5.2) (7.1)

Free Cash Flow Before Dividends (9.1)$ (1.2)$

Dividends Paid (5.0)$ (5.0)$

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2009 Full Year Estimates

Net Sales $910 - $930

Diluted Earnings Per Share $1.10 - $1.20

Capital Spending $41 - $46

($ in millions, except for per share amounts)

Operations OverviewOperations Overview

Dave SingerDave SingerPresidentPresident

& Chief Executive Officer& Chief Executive Officer

1st Quarter Review� Record First Quarter revenues

� Peanut butter recall impacting revenue and earnings

� Archway integration on track

� New product launches

� New advertising campaign

� Continued supply chain & DSD improvements

� Clear focus for remainder of year

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Q&AQ&A

AppendixAppendix

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Reconciliation of Non-GAAP Measures

This presentation includes certain measures not derived in accordance with generally accepted accounting principles (“GAAP”). Such measures should not be considered substitutes for any measures derived in accordance with GAAP and may also be inconsistent with similar measures presented by other companies. Reconciliation of these non-GAAP financial measures to the most nearly comparable GAAP measures, if applicable, is presented on the slides that follow. The Company believes these non-GAAP financial measures provide useful information to investors as the measures emphasize core on-going operations and are helpful in comparing past and present operating results. The Company uses these measures to evaluate past performance and prospects for future performance. The presentation of non-GAAP financial measures by the Company should not be considered in isolation or as a substitute for the Company’s financial results prepared in accordance with GAAP.

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Reconciliation of Non-GAAP Measures: Special Items(Unaudited) Q4 2008 Q4 2008

Including Special ExcludingSpecial Items Items Special Items

Net Sales 215.3$ -$ 215.3$

COGS 131.3$ 0.9$ 130.5$

Gross Margin 84.0$ (0.9)$ 84.8$


SG&A 71.9$ 0.8$ 71.1$

SG&A % 33.4% 33.0%

Other (income)/expense, net (0.5)$ 0.3$ (0.8)$

Income from continuing operations

before interest and income taxes 12.5$ (1.9)$ 14.5$

Interest expense, net 0.9$ 0.0$ 0.8$


before income taxes 11.7$ (2.0)$ 13.6$

Income tax expense 4.1$ (0.7)$ 4.8$

Income tax rate 35.3% 35.2%

Net income from continuing operations 7.5$ (1.3)$ 8.8$

Weighted average shares outstanding -

diluted (in millions) 32.0 32.0 32.0

Diluted earnings per share 0.24$ (0.04)$ 0.28$ ($ in millions, except for per share amounts)

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Reconciliation of Non-GAAP Measures: Special Items(Unaudited) Full Yr. 2008 Full Yr. 2008

Including Special ExcludingSpecial Items Items Special Items

Net Sales 852.5$ -$ 852.5$

COGS 531.5$ 0.9$ 530.7$

Gross Margin 320.9$ (0.9)$ 321.8$


SG&A 291.7$ 0.8$ 290.9$

SG&A % 34.2% 34.1%

Other (income)/expense, net (0.9)$ 0.3$ (1.1)$


before interest and income taxes 30.1$ (1.9)$ 32.1$

Interest expense, net 3.0$ 0.0$ 3.0$


before income taxes 27.1$ (2.0)$ 29.1$

Income tax expense 9.4$ (0.7)$ 10.1$

Income tax rate 34.6% 34.6%

Net income from continuing operations 17.7$ (1.3)$ 19.0$

Weighted average shares outstanding -

diluted (in millions) 31.8 31.8 31.8

Diluted Earnings per share 0.56$ (0.04)$ 0.60$ ($ in millions, except for per share amounts)

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Reconciliation of Non-GAAP Measures: Operating Profit(Unaudited)

($ in millions)

Q1 Q12009 2008

Income before interest & income taxes 10.8$ 1.7$ Add Back

Other expense, net 0.1$ -$ Equals

Operating Profit 10.9$ 1.7$

Net Sales 215.8$ 198.0$

Operating Profit % of Net Sales 5.0% 0.8%

21($ in millions)

Q1 2009 Q1 2008 Income from continuing operations

before interest and income taxes 39.3$ 30.3$ Special items included in income from

continuing operations before interest

and income taxes (1.9)$ -$ Add Back

Depreciation & amortization 32.8$ 30.3$ Equals

EBITDA excluding special items 74.0$ 60.5$

Net sales 870.3$ 778.3$

EBITDA excluding special items % of Net sales 8.5% 7.8%

Trailing 4 Quarters

Reconciliation of Non-GAAP Measures: EBITDA(Unaudited)

22($ in millions)

Q1 2009 Q1 2008

Long-term Debt 112.0$ 74.7$ Less

Cash & Cash Equivalents 2.4$ 1.2$

Net Debt (quarter-end) 109.6$ 73.6$

Reconciliation of Non-GAAP Measures: Net Debt(Unaudited)

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Reconciliation of Non-GAAP Measures: Operating Profit Trend(Unaudited)

Q1-06 Q2-06 Q3-06 Q4-06 Q1-07 Q2-07 Q3-07 Q4-07 Q1-08 Q2-08 Q3-08 Q4-08 Q1-09 Income from continuing operations before interest & taxes (0.8)$ 10.1$ 12.2$ 9.8$ 9.9$ 15.2$ 11.6$ 1.9$ 1.7$ 5.2$ 10.7$ 12.5$ 10.8$

Special items included in income from continuing operations before interest & taxes (1.9)$ Add BackOther (income)/expense, net 0.2$ 0.5$ (0.2)$ (0.2)$ (0.1)$ 1.0$ 0.5$ 1.0$ (0.0)$ 0.2$ (0.5)$ (0.5)$ 0.1$

Special items included in other (income)/expense, net 0.3$ Equals

Operating profit excluding special items (0.6)$ 10.6$ 12.0$ 9.5$ 9.8$ 16.1$ 12.1$ 2.9$ 1.7$ 5.4$ 10.2$ 13.7$ 10.9$

Net sales 180.7$ 188.3$ 188.6$ 172.4$ 182.4$ 197.0$ 198.1$ 185.2$ 198.0$ 213.6$ 225.6$ 215.3$ 215.8$

Operating profit excluding special Items % of Net sales -0.3% 5.6% 6.4% 5.5% 5.4% 8.2% 6. 1% 1.5% 0.8% 2.5% 4.5% 6.4% 5.0%

($ in millions)

q1 2009 earning report of lance, inc

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