Lancaster Colony Corporation (Nasdaq: LANC) today reported
results for the company’s fiscal first quarter ended September 30,
2023.
Summary
- Consolidated net sales increased 8.5% to a first quarter record
$461.6 million. Retail segment net sales improved 8.5% to $242.2
million while Foodservice segment net sales advanced 8.4% to $219.4
million. Note that last year’s first quarter sales were unfavorably
impacted by an estimated $25 million in net sales that had shifted
into the quarter ended June 30, 2022 due to advance customer orders
ahead of our July 1, 2022 ERP go-live date.
- Consolidated gross profit increased 9.8% to $108.7
million.
- Consolidated operating income increased 15.2% to $56.8
million.
- Net income was $1.59 per diluted share versus $1.36 per diluted
share last year.
CEO David A. Ciesinski commented, “We were very pleased to
complete the quarter with record sales and higher profits. Retail
segment net sales growth of 8.5% was led by the continued strong
performance of our successful program for licensed dressings and
sauces and another solid quarter for our New York BRAND® Bakery
frozen garlic bread products. Foodservice segment net sales growth
of 8.4% reflects increased demand from many of our national chain
restaurant accounts in addition to sales gains for our branded
Foodservice products. As a reminder, last year’s first quarter
sales were unfavorably impacted by an estimated $25 million in net
sales that had shifted into the quarter ended June 30, 2022 in
advance of our ERP go-live.”
“Our reported gross profit margin reflects a sequential
improvement of 310 basis points from our fiscal fourth quarter as
we moved past some initial transitory costs associated with our
long-term strategic investments in increased production capacity at
our dressing and sauce facility in Horse Cave, Kentucky and our new
ERP network.”
“Looking ahead to our fiscal second quarter, we anticipate
Retail sales will continue to benefit from our expanding licensing
program, including incremental growth from the new products,
flavors and sizes we introduced in fiscal 2023. In the Foodservice
segment, we anticipate continued volume growth from select
customers in our mix of national chain restaurant accounts.
Regarding inflation, while our input costs remain high, in total we
do not anticipate a significant impact from inflationary costs in
the upcoming quarter versus the prior-year period.”
First Quarter Results
Consolidated net sales increased 8.5%, or $36.0 million, to a
first quarter record $461.6 million. Retail segment net sales
advanced 8.5%, or $19.0 million, to $242.2 million while
Foodservice segment net sales increased 8.4%, or $17.1 million, to
$219.4 million. In the prior year, first quarter net sales were
unfavorably impacted by an estimated $25 million in net sales that
had shifted into the quarter ended June 30, 2022 due to advance
customer orders ahead of our ERP go-live. Of this $25 million in
net sales, approximately $11 million were Retail and the remaining
$14 million were Foodservice. In this year’s first quarter, Retail
segment sales volumes, measured in pounds shipped, increased 7.1%
while Foodservice segment sales volumes increased 8.6%. Excluding
the impact of last year’s shift in sales due to our ERP go-live,
both the Retail and Foodservice segment sales volumes increased
1.4%.
Consolidated gross profit grew 9.8%, or $9.7 million, to $108.7
million. The increase in gross profit was driven by the higher
sales volumes, some continued favorability in pricing net of
commodity costs, and our cost savings programs. In aggregate, the
input costs for our commodity basket were generally consistent with
last year’s level. In last year’s first quarter, gross profit was
unfavorably impacted by an estimated $5 million due to the
aforementioned shift of net sales into the quarter ended June 30,
2022 ahead of our ERP go-live.
SG&A expenses increased $2.2 million to $51.9 million in
support of the continued growth of our business, including a more
normalized level of expenditures for consumer promotions, increased
investments in personnel and higher brokerage costs attributed to
the sales growth. These increased costs were partially offset by
reduced expenditures for Project Ascent, our ERP initiative, which
totaled $3.8 million in the current-year quarter versus $9.2
million last year.
Consolidated operating income grew $7.5 million, or 15.2%, to
$56.8 million driven by the increase in gross profit partially
offset by the higher SG&A expenses.
Net income improved $6.4 million to $44.0 million, or $1.59 per
diluted share, versus $37.6 million, or $1.36 per diluted share,
last year. Expenditures for Project Ascent reduced net income by
$3.0 million, or $0.11 per diluted share, in the current-year
quarter compared to $7.1 million, or $0.26 per diluted share, in
the prior-year quarter.
Conference Call on the Web
The company’s first quarter conference call is scheduled for
this morning, November 2, at 10:00 a.m. ET. Access to a live
webcast of the call is available through a link on the company’s
Internet home page at www.lancastercolony.com. A replay of the
webcast will also be made available on the company’s website.
About the Company
Lancaster Colony Corporation is a manufacturer and marketer of
specialty food products for the retail and foodservice
channels.
Forward-Looking Statements
We desire to take advantage of the “safe harbor” provisions of
the Private Securities Litigation Reform Act of 1995 (the “PSLRA”).
This news release contains various “forward-looking statements”
within the meaning of the PSLRA and other applicable securities
laws. Such statements can be identified by the use of the
forward-looking words “anticipate,” “estimate,” “project,”
“believe,” “intend,” “plan,” “expect,” “hope” or similar words.
These statements discuss future expectations; contain projections
regarding future developments, operations or financial conditions;
or state other forward-looking information. Such statements are
based upon assumptions and assessments made by us in light of our
experience and perception of historical trends, current conditions,
expected future developments; and other factors we believe to be
appropriate. These forward-looking statements involve various
important risks, uncertainties and other factors, many of which are
beyond our control, which could cause our actual results to differ
materially from those expressed in the forward-looking statements.
Some of the key factors that could cause actual results to differ
materially from those expressed in the forward-looking statements
include:
- efficiencies in plant operations and our overall supply chain
network;
- the reaction of customers or consumers to pricing actions we
take to offset inflationary costs;
- price and product competition;
- the impact of customer store brands on our branded retail
volumes;
- adequate supply of labor for our manufacturing facilities;
- adverse changes in freight, energy or other costs of producing,
distributing or transporting our products;
- inflationary pressures resulting in higher input costs;
- fluctuations in the cost and availability of ingredients and
packaging;
- dependence on contract manufacturers, distributors and freight
transporters, including their operational capacity and financial
strength in continuing to support our business;
- stability of labor relations;
- dependence on key personnel and changes in key personnel;
- cyber-security incidents, information technology disruptions,
and data breaches;
- capacity constraints that may affect our ability to meet demand
or may increase our costs;
- geopolitical events, such as Russia’s invasion of Ukraine, that
could create unforeseen business disruptions and impact the cost or
availability of raw materials and energy;
- the potential for loss of larger programs or key customer
relationships;
- failure to maintain or renew license agreements;
- significant shifts in consumer demand and disruptions to our
employees, communities, customers, supply chains, production
planning, operations, and production processes resulting from the
impacts of epidemics, pandemics or similar widespread public health
concerns and disease outbreaks;
- changes in demand for our products, which may result from loss
of brand reputation or customer goodwill;
- the possible occurrence of product recalls or other defective
or mislabeled product costs;
- the success and cost of new product development efforts;
- the lack of market acceptance of new products;
- the extent to which business acquisitions are completed and
acceptably integrated;
- the ability to successfully grow acquired businesses;
- the effect of consolidation of customers within key market
channels;
- maintenance of competitive position with respect to other
manufacturers;
- the outcome of any litigation or arbitration;
- changes in estimates in critical accounting judgments;
- the impact of any regulatory matters affecting our food
business, including any required labeling changes and their impact
on consumer demand;
- the impact of fluctuations in our pension plan asset values on
funding levels, contributions required and benefit costs; and
- risks related to other factors described under “Risk Factors”
in other reports and statements filed by us with the Securities and
Exchange Commission, including without limitation our Annual Report
on Form 10-K and Quarterly Reports on Form 10-Q (available at
www.sec.gov).
Forward-looking statements speak only as of the date they are
made, and we undertake no obligation to update such forward-looking
statements, except as required by law. Management believes these
forward-looking statements to be reasonable; however, you should
not place undue reliance on statements that are based on current
expectations.
LANCASTER COLONY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS
OF INCOME (Unaudited)
(In thousands except per-share
amounts)
Three Months Ended September
30,
2023
2022
Net sales
$
461,572
$
425,537
Cost of sales
352,850
326,482
Gross profit
108,722
99,055
Selling, general & administrative
expenses
51,947
49,757
Operating income
56,775
49,298
Other, net
857
(270
)
Income before income taxes
57,632
49,028
Taxes based on income
13,681
11,436
Net income
$
43,951
$
37,592
Net income per common share: (a)
Basic
$
1.60
$
1.37
Diluted
$
1.59
$
1.36
Cash dividends per common share
$
0.85
$
0.80
Weighted average common shares
outstanding:
Basic
27,449
27,450
Diluted
27,473
27,458
(a) Based on the weighted average number
of shares outstanding during each period.
LANCASTER COLONY CORPORATION
BUSINESS SEGMENT INFORMATION
(Unaudited)
(In thousands)
Three Months Ended September
30,
2023
2022
NET SALES
Retail
$
242,184
$
223,216
Foodservice
219,388
202,321
Total Net Sales
$
461,572
$
425,537
OPERATING
INCOME
Retail
$
53,124
$
42,900
Foodservice
26,633
31,929
Corporate Expenses
(22,982
)
(25,531
)
Total Operating Income
$
56,775
$
49,298
LANCASTER COLONY CORPORATION
CONDENSED CONSOLIDATED BALANCE
SHEETS (Unaudited)
(In thousands)
September 30, 2023
June 30, 2023
ASSETS
Current assets:
Cash and equivalents
$
73,746
$
88,473
Receivables
120,076
114,967
Inventories
177,808
158,265
Other current assets
14,628
12,758
Total current assets
386,258
374,463
Net property, plant and equipment
489,095
482,206
Other assets
254,949
256,325
Total assets
$
1,130,302
$
1,112,994
LIABILITIES AND
SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$
120,337
$
111,758
Accrued liabilities
46,871
56,994
Total current liabilities
167,208
168,752
Noncurrent liabilities and deferred income
taxes
84,326
81,975
Shareholders’ equity
878,768
862,267
Total liabilities and shareholders’
equity
$
1,130,302
$
1,112,994
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231101683104/en/
Dale N. Ganobsik Vice President, Corporate Finance and Investor
Relations Lancaster Colony Corporation Phone: 614/224-7141 Email:
ir@lancastercolony.com
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