Lancaster Colony Corporation (Nasdaq: LANC) today reported
results for the company’s fiscal third quarter ended March 31,
2024.
Summary
- Consolidated net sales increased 1.4% to a third quarter record
$471.4 million versus $464.9 million last year. Retail net sales
improved 0.3% to $248.1 million while Foodservice net sales grew
2.6% to $223.4 million.
- Consolidated gross profit increased $10.3 million, or 10.9%, to
$104.5 million driven by favorability in our pricing net of
commodity costs, or PNOC, our ongoing cost savings initiatives, and
volume growth. Consolidated gross profit was unfavorably impacted
by a $2.6 million inventory write-down resulting from the decision
to exit our perimeter-of-the-store bakery product lines,
specifically our Flatout® and Angelic Bakehouse® brands, which were
not significant contributors to our overall financial results.
- Consolidated operating income increased $5.7 million to $35.1
million due to solid growth in the underlying performance of the
business partially offset by the impacts of our decision to exit
our perimeter-of-the-store bakery product lines which resulted in
costs totaling $14.7 million. The exit costs include $12.1 million
in restructuring and impairment charges and the $2.6 million
inventory write-down. Of the $12.1 million in restructuring and
impairment charges, noncash impairment charges for fixed assets and
intangible assets accounted for $10.7 million.
- Net income was $1.03 per diluted share versus $0.89 per diluted
share last year. The exit costs reduced current-year net income by
$0.41 per diluted share.
CEO David A. Ciesinski commented, “We completed our fiscal third
quarter with record net sales of $471.4 million. In the Retail
segment, net sales increased 0.3% to $248.1 million driven by
volume gains for our successful licensing program, led by
Chick-fil-A® sauces and dressings; our newly introduced Subway®
sandwich sauces and Texas Roadhouse® steak sauces; and Olive
Garden® dressings. Sales volume for the Retail segment, measured in
pounds shipped, increased 1.5%, outpacing the sales dollar growth
as we invested in trade spending that supported household
penetration growth and new items. Retail segment sales compare to a
strong quarter last year when net sales increased 16.0% and volume
was up 6.1%. In our Foodservice segment, net sales increased 2.6%
to $223.4 million while Foodservice sales volume grew 3.9% as
increased demand from several of our national chain restaurant
customers and volume gains for our Marzetti® branded Foodservice
products more than offset deflationary pricing in the segment.”
“Our reported gross profit margin improved 190 basis points
versus last year to 22.2%, which reflects favorable pricing net of
commodity costs, or PNOC, following two years of unprecedented
inflation, in addition to the positive impacts of our cost savings
initiatives and volume growth. The $2.6 million inventory
write-down reduced gross profit margin by about 50 basis
points.”
“Following a review of our product portfolio, we made the
difficult decision to exit our perimeter-of-the-store bakery
product lines, specifically our Flatout and Angelic Bakehouse
brands, which were not significant contributors to our overall
financial results. Both brands were typically sold in the deli
section of the grocery store with product offerings that included
Flatout flatbread wraps and pizza crusts and Angelic Bakehouse
sprouted grain bread loaves and wraps. Unfortunately, due to a lack
of scale and direct-to-store distribution capabilities, we were not
able to achieve the desired operational or financial performance
for these product lines. Production at both the Flatout and Angelic
Bakehouse facilities ended on March 12, 2024. I extend my sincere
thanks to the Flatout and Angelic employees for their dedicated
service during their tenure with our company. With our decision to
exit these product lines now behind us, we will direct even greater
focus toward the continued growth of our core retail brands,
including New York BRAND® Bakery, Sister Schubert’s® and Marzetti®;
our retail licensing program; and our foodservice business.”
“Looking ahead to our fiscal fourth quarter, we anticipate
Retail sales will continue to benefit from our licensing program,
including incremental growth from the recent additions of Subway
and Texas Roadhouse sauces. In the Foodservice segment, we expect
continued volume growth from select quick-service restaurant
customers and our branded Foodservice products, while deflationary
pricing is projected to remain a headwind to Foodservice segment
net sales.”
Third Quarter Results
Consolidated net sales increased 1.4% to a third quarter record
$471.4 million versus $464.9 million last year. Retail segment net
sales improved 0.3% to $248.1 million while Retail segment sales
volume, measured in pounds shipped, was up 1.5%, driven by higher
demand for our licensed dressings and sauces. In the Foodservice
segment, net sales grew 2.6% to $223.4 million despite deflationary
pricing. Foodservice sales volume increased 3.9% led by volume
gains from select quick-service restaurant and pizza chain
customers in our mix of national accounts along with higher demand
for our Marzetti branded Foodservice products.
Consolidated gross profit increased $10.3 million, or 10.9%, to
a third quarter record $104.5 million, which reflects favorable
PNOC, our ongoing cost savings initiatives, and volume growth.
Consolidated gross profit was unfavorably impacted by a $2.6
million inventory write-down resulting from the company’s decision
to exit our perimeter-of-the-store bakery product lines,
specifically our Flatout and Angelic Bakehouse brands.
SG&A expenses declined $7.6 million to $57.2 million, driven
by the continued wind down of our expenditures for Project Ascent,
our ERP initiative, which decreased $5.7 million to $1.9 million
versus $7.6 million last year. SG&A expenses in the prior-year
quarter also included some nonrecurring legal charges for closed
operations.
The restructuring and impairment charges of $12.1 million
resulted from our decision to exit our perimeter-of-the-store
bakery product lines. The $12.1 million total includes noncash
impairment charges of approximately $6.2 million for fixed assets
and $4.5 million for intangible assets.
Consolidated operating income increased $5.7 million to $35.1
million, driven by favorable PNOC, the lower SG&A expenses, our
ongoing cost savings initiatives, and volume growth. Consolidated
operating income growth was unfavorably impacted by the $12.1
million in restructuring and impairment charges and the $2.6
million inventory write-down. The restructuring and impairment
charges were not allocated to our two reportable segments whereas
the inventory write-down was recorded in our Retail segment.
Net income increased $3.8 million to $28.4 million, or $1.03 per
diluted share, versus $0.89 per diluted share last year. In the
current-year quarter, costs related to our decision to exit our
perimeter-of-the-store bakery product lines reduced net income by a
total of $11.3 million, or $0.41 per diluted share. These exit
costs included the restructuring and impairment charges, which
reduced net income by $9.3 million, or $0.34 per diluted share, and
the inventory write-down, which reduced net income by $2.0 million,
or $0.07 per diluted share. Expenditures for Project Ascent
decreased net income by $1.5 million, or $0.05 per diluted share,
in the current-year quarter compared to $5.9 million, or $0.21 per
diluted share, in the prior-year quarter. Net income and earnings
per diluted share in the prior-year quarter benefited from a lower
overall effective tax rate.
Fiscal Year-to-Date Results
For the nine months ended March 31, 2024, net sales increased
3.7% to $1.42 billion compared to $1.37 billion a year ago. Net
income for the nine-month period totaled $123.8 million, or $4.50
per diluted share, versus the prior-year amount of $102.1 million,
or $3.71 per diluted share. In the current-year period, costs
related to our decision to exit our perimeter-of-the-store bakery
product lines reduced net income by a total of $11.3 million, or
$0.41 per diluted share. These exit costs included the
restructuring and impairment charges, which reduced net income by
$9.3 million, or $0.34 per diluted share, and the inventory
write-down, which reduced net income by $2.0 million, or $0.07 per
diluted share. Expenditures for Project Ascent reduced net income
by $5.9 million, or $0.22 per diluted share, in the current-year
period compared to $18.7 million, or $0.68 per diluted share, in
the prior-year period.
Conference Call on the Web
The company’s third quarter conference call is scheduled for
this morning, May 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;
- price and product competition;
- the impact of customer store brands on our branded retail
volumes;
- adequate supply of labor for our manufacturing facilities;
- stability of labor relations;
- adverse changes in freight, energy or other costs of producing,
distributing or transporting our products;
- the reaction of customers or consumers to pricing actions we
take to offset inflationary costs;
- 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;
- capacity constraints that may affect our ability to meet demand
or may increase our costs;
- the impact of any regulatory matters affecting our food
business, including any additional requirements imposed by the FDA
or any state or local government;
- dependence on key personnel and changes in key personnel;
- cyber-security incidents, information technology disruptions,
and data breaches;
- the potential for loss of larger programs or key customer
relationships;
- failure to maintain or renew license agreements;
- 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;
- 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
changes in consumer behavior or 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 good-fitting business acquisitions are
identified, acceptably integrated, and achieve operational and
financial performance objectives;
- 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 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
March 31,
Nine Months Ended
March 31,
2024
2023
2024
2023
Net sales
$
471,446
$
464,935
$
1,418,934
$
1,367,866
Cost of sales
366,952
370,698
1,084,250
1,072,472
Gross profit
104,494
94,237
334,684
295,394
Selling, general & administrative
expenses
57,211
64,829
164,872
165,361
Restructuring and impairment charges
12,137
—
12,137
—
Operating income
35,146
29,408
157,675
130,033
Other, net
1,748
607
4,030
815
Income before income taxes
36,894
30,015
161,705
130,848
Taxes based on income
8,544
5,460
37,920
28,728
Net income
$
28,350
$
24,555
$
123,785
$
102,120
Net income per common share: (a)
Basic and diluted
$
1.03
$
0.89
$
4.50
$
3.71
Cash dividends per common share
$
0.90
$
0.85
$
2.65
$
2.50
Weighted average common shares
outstanding:
Basic
27,436
27,465
27,437
27,462
Diluted
27,451
27,487
27,455
27,479
(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
March 31,
Nine Months Ended
March 31,
2024
2023
2024
2023
NET SALES
Retail
$
248,054
$
247,208
$
754,230
$
729,187
Foodservice
223,392
217,727
664,704
638,679
Total Net Sales
$
471,446
$
464,935
$
1,418,934
$
1,367,866
OPERATING
INCOME
Retail
$
47,313
$
36,943
$
159,958
$
129,195
Foodservice
24,334
22,405
78,112
81,030
Nonallocated Restructuring and Impairment
Charges
(12,137
)
—
(12,137
)
—
Corporate Expenses
(24,364
)
(29,940
)
(68,258
)
(80,192
)
Total Operating Income
$
35,146
$
29,408
$
157,675
$
130,033
LANCASTER COLONY CORPORATION
CONDENSED CONSOLIDATED BALANCE
SHEETS (Unaudited)
(In thousands)
March 31, 2024
June 30, 2023
ASSETS
Current assets:
Cash and equivalents
$
164,756
$
88,473
Receivables
102,637
114,967
Inventories
161,088
158,265
Other current assets
12,250
12,758
Total current assets
440,731
374,463
Net property, plant and equipment
483,662
482,206
Other assets
247,619
256,325
Total assets
$
1,172,012
$
1,112,994
LIABILITIES AND
SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$
120,528
$
111,758
Accrued liabilities
69,258
56,994
Total current liabilities
189,786
168,752
Noncurrent liabilities and deferred income
taxes
69,374
81,975
Shareholders’ equity
912,852
862,267
Total liabilities and shareholders’
equity
$
1,172,012
$
1,112,994
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240501127637/en/
Dale N. Ganobsik Vice President, Corporate Finance and Investor
Relations Lancaster Colony Corporation Phone: 614/224-7141 Email:
ir@lancastercolony.com
Lancaster Colony (NASDAQ:LANC)
Historical Stock Chart
From Sep 2024 to Oct 2024
Lancaster Colony (NASDAQ:LANC)
Historical Stock Chart
From Oct 2023 to Oct 2024