Long accustomed to tickling palates with such treats as Toastchees and Slim Jims, North Carolina snack makers Lance (LNCE-NASDAQ) and GoodMark Foods (GDMK-NASDAQ) are trying to spice up their earnings to whet investors' appetites, too.
Both companies enjoy reputations for good management and occupy solid market positions, but sharp competition and rising commodity prices have helped flatten their earnings and stock prices in recent years. Though revenues at Charlotte-based Lance have increased from $407 million in 1988 to $461 million in 1992, net income, at $39 million last year, has remained fairly stagnant. The stock of the cookie and salted-snack manufacturer has hovered around $22 in the past 18 months and has unnderperformed the over-the-counter market index since 1990.
At Raleigh-based GoodMark Foods, the nation's leading maker of meat snacks, sales have increased 9% since 1989 to $141.2 million. Earnings have bounced around to last year's record $4.9 million. Its stock price has fluctuated from $10.50 to $16.75 in the past year, registering at $16.50 in lat August.
Both companies have a lot on their plates. "Lance and GoodMark are in very hotly contested portions of the food industry," noted David Leibowitz, an analyst with Republic New York Securities in New York City. But, he adds, "both are specialists that have grown and succeeded because of capable management, strong branded products and healthy consumer franchises. Lance and GoodMark are maintaining a tight grip on their market share--and may even be increasing their shares incrementally."
Lance, founded in 1913, sells its popular snack products principally through convenience stores and vending machines in 36 states. More than 10% of its stock is held by the Van Every Family (Philip Van Every, founder P.L. Lance's grandson, became president in 1943 and retired as chairman in 1973), so Lance has been conservatively managed. It has a reputation for watching costs and carries no long-term debt. Recently, earnings have been hit by fluctuating costs of raw materials and expenses from building a $32 million plant in Columbia, S.C.
Now, Lance is picking up its pace. Though CEO Bill Disher says the company traditionally has "added a state to its distribution network every five years," it's expanding more rapidly. "We've got vending distributors in Las Vegas and Salt Lake City now, and we're continuing to move West." More capacity from the Columbia plant will boost Lance's ability to...