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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Lancaster Colony Corporation | NASDAQ:LANC | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
2.50 | 1.37% | 185.50 | 179.90 | 227.44 | 187.03 | 181.91 | 183.54 | 129,131 | 22:30:00 |
Lancaster Colony Corporation (Nasdaq: LANC) today reported results for the company’s fiscal third quarter ended March 31, 2024.
Summary
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:
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
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