Lance Inc. posts first quarter loss, misses expectations and cuts outlook for the year

Lance 1Q and outlook disappoint; shares tumble

CHARLOTTE, N.C. — Shares of Lance Inc. tumbled 16 percent after the snack foods maker posted a first-quarter loss, missed expectations and cut its outlook for the year.

Before noon shares had hit a 52-week low.

The seller of Cape Cod potato chips and private-label snacks lost $770,000, or 2 cents per share, in the three months that ended March 27. In the year-ago period the company reported net income of $6.5 million, or 21 cents a share.

Excluding one-time expenses of $1.9 million for an unsuccessful acquisition, the company would have earned 4 cents a share.

Analysts, whose estimates typically exclude one-time items, had expected earnings per share of 27 cents on revenue of $226.9 million, according to Thomson Reuters.

Revenue rose 2.7 percent to $221.6 million, from $215.8 million last year.

The company, based in Charlotte, N.C., said net sales for its branded products fell 1 percent. Those products make up 57 percent of its revenue. That drop was attributed to more promotional pricing. It noted double-digit revenue declines from convenience stores, food service establishments and other areas, due to the pullback in consumer spending.

“Because we expected higher sales in the first quarter, we committed additional costs to support future growth,” CEO David Singer said in a statement. “The combination of higher costs, softer than planned volume, and less productive promotions lowered our profit margin significantly in the quarter.

The company cut its outlook. It now expects revenue to range from $930 million to $950 million this year, down from its prior range of $965 million to $990 million.

It expects earnings per share to range from $1.10 to $1.25, excluding special items. Previously the company estimated earnings per share between $1.41 and $1.53.

Analysts had expected the company to earn $1.46 a share on revenue of $972.1 million, according to Thomson Reuters.

Janney Capital Markets analyst Mitchell B. Pinheiro downgraded shares of the company to “neutral” from “buy” on the weak quarter and outlook.

He cut his 2010 earnings per share estimate to $1.20 from $1.50 and said his 2011 estimates are under review.

Shares of the company will fall, he said. He cut his target share price to $28 from $33.

“We believe the valuation needs to contract to compensate for the earnings volatility and lack of ability for the company to control its own destiny in the marketplace,” he told clients in a note.

Shares of Lance fell $3.68 to $19.87 near the close of trading, up from an earlier low of $17.96.