We hosted a live Black Book presentation on Snyder’s-Lance August 19th at 11:00am ET.
Watch a replay of this presentation below.
https://cdn.jwplayer.com/players/3s5a8Z5R-KY3o17gg.js
OVERVIEW
We view LNCE as a high quality, small cap name in the Consumer Staples space. The company’s brands are well positioned in the snacking category to allow for sustainable volume growth and margin expansion for the next 3-5 years.
Their direct-store-delivery distribution network (DSD network) is vital to success. It allows LNCE to have feet on the street, being stewards of the brand, working with store management and making sure product is always on shelf. Think about the power Coca-Cola harnesses by having their own distribution network, this is the same thing but for snacks.
LNCE is gone through a period of capex investment over the last three year. Now we are on the other side of that and seeing the company investing in advertising to grow volumes, while expanding their distribution. This will lead to great margin expansion over the near term as they gain efficiencies.
M&A opportunities are abundant for this company as they look across the landscape. Management has stated that when thinking about returning cash to shareholders the first thought is on M&A, then share buybacks and dividends come second. Angie’s, KIND Snacks, Justin’s and thinkThin jump to mind as possible acquisition targets.
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Howard Penney
Managing Director
Shayne Laidlaw
Analyst