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WESTERVILLE, Ohio, Nov. 3, 2022 /PRNewswire/ -- Lancaster Colony Corporation (Nasdaq: LANC) today reported results for the company's fiscal first quarter ended September 30, 2022.
Summary
CEO David A. Ciesinski commented, "We were very pleased to complete the quarter with record sales and higher profits. The slight decline in Retail segment sales compares to an increase of 15.6% in the prior-year quarter and also reflects the impact of the sales shift attributed to advance ordering during our fiscal fourth quarter ahead of our ERP go-live. Marzetti® refrigerated dressings and caramel dips performed well during the quarter, and we also added to our successful licensing program with the launch of the popular Arby's Horsey Sauce® and Arby's Sauce® products. Sales growth of 20.3% in the Foodservice segment was driven by inflationary pricing and volume gains from select quick-service restaurant customers in our mix of national chain restaurant accounts. While we continued to experience significant cost inflation, our pricing actions, including our most recent round of pricing for our Retail dressing and sauce products that took effect in early August, served to offset the higher input costs. The 7.2% increase in gross profit also reflects a more stable operating environment in addition to some improved manufacturing efficiencies as we have reduced headcount and exited less profitable SKUs."
"Looking ahead to our fiscal second quarter, Retail sales will benefit from our expanding licensing program while, in the Foodservice segment, we anticipate continued volume growth from some of our quick-service restaurant chain customers. Cost inflation will remain a headwind to our financial results, but the pricing actions we have implemented along with our cost savings initiatives will help to offset the increased costs. Note that our second quarter results will also reflect some startup costs as we begin producing product in the newly expanded section of our dressing and sauce facility in Horse Cave, Kentucky."
First Quarter Results
Consolidated net sales increased 8.5% to a first quarter record $425.5 million. Consolidated net sales were unfavorably impacted by an estimated $25 million in net sales that shifted into the quarter ended June 30, 2022 due to advance customer orders ahead of our July 1 ERP go-live. Of this $25 million in net sales, approximately $11 million were Retail and the remaining $14 million were Foodservice. Retail segment net sales declined 0.3% in the first quarter to $223.2 million. Retail segment sales volumes, measured in pounds shipped, decreased 15%. Excluding the unfavorable impacts of the advance ordering and the product line rationalizations we have implemented, Retail segment sales volumes declined 7%. In the Foodservice segment, net sales advanced 20.3% to $202.3 million. Foodservice sales volumes, measured in pounds shipped, declined 7%. Excluding the unfavorable impact of advance customer orders ahead of our ERP go-live, Foodservice segment sales volumes decreased 1%.
Consolidated gross profit improved 7.2%, or $6.7 million, to $99.1 million. The increase in gross profit was driven by the pricing actions taken that are now beginning to catch up to the significant inflationary costs we have experienced for commodities, packaging, labor, freight and warehousing. Gross profit also benefited from our actions taken to exit less profitable product lines and reduce headcount.
SG&A expenses declined $2.1 million to $49.8 million including expenditures for Project Ascent, our ERP initiative, which totaled $9.2 million in the current-year quarter versus $9.4 million last year. SG&A expenses also reflect lower levels of expenditures for consumer promotions in the current-year quarter.
Consolidated operating income grew $8.8 million, or 21.7%, to $49.3 million as our pricing actions effectively offset inflationary costs and our SG&A expenditures declined.
Net income improved $6.9 million to $37.6 million, or $1.36 per diluted share, versus $30.7 million, or $1.11 per diluted share, last year. Expenditures for Project Ascent reduced net income by $7.1 million, or $0.26 per diluted share, in the current-year quarter compared to $7.2 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 3, 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 and could be amplified by the COVID-19 pandemic, 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 September 30, | |||
2022 | 2021 | ||
Net sales | $ 425,537 | $ 392,056 | |
Cost of sales | 326,482 | 299,689 | |
Gross profit | 99,055 | 92,367 | |
Selling, general & administrative expenses | 49,757 | 51,856 | |
Operating income | 49,298 | 40,511 | |
Other, net | (270) | 20 | |
Income before income taxes | 49,028 | 40,531 | |
Taxes based on income | 11,436 | 9,876 | |
Net income | $ 37,592 | $ 30,655 | |
Net income per common share: (a) | |||
Basic | $ 1.37 | $ 1.11 | |
Diluted | $ 1.36 | $ 1.11 | |
Cash dividends per common share | $ 0.80 | $ 0.75 | |
Weighted average common shares outstanding: | |||
Basic | 27,450 | 27,459 | |
Diluted | 27,458 | 27,515 | |
(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, | |||
2022 | 2021 | ||
NET SALES | |||
Retail | $ 223,216 | $ 223,889 | |
Foodservice | 202,321 | 168,167 | |
Total Net Sales | $ 425,537 | $ 392,056 | |
OPERATING INCOME | |||
Retail | $ 42,900 | $ 48,178 | |
Foodservice | 31,929 | 15,825 | |
Corporate Expenses | (25,531) | (23,492) | |
Total Operating Income | $ 49,298 | $ 40,511 |
LANCASTER COLONY CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands) | |||
September 30, | June 30, | ||
ASSETS | |||
Current assets: | |||
Cash and equivalents | $ 64,219 | $ 60,283 | |
Receivables | 136,241 | 135,496 | |
Inventories | 165,939 | 144,702 | |
Other current assets | 11,402 | 11,300 | |
Total current assets | 377,801 | 351,781 | |
Net property, plant and equipment | 468,086 | 451,368 | |
Other assets | 285,346 | 287,225 | |
Total assets | $ 1,131,233 | $ 1,090,374 | |
LIABILITIES AND SHAREHOLDERS' EQUITY | |||
Current liabilities: | |||
Accounts payable | $ 135,367 | $ 114,972 | |
Accrued liabilities | 55,548 | 50,613 | |
Total current liabilities | 190,915 | 165,585 | |
Noncurrent liabilities and deferred income taxes | 78,247 | 80,102 | |
Shareholders' equity | 862,071 | 844,687 | |
Total liabilities and shareholders' equity | $ 1,131,233 | $ 1,090,374 | |
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SOURCE Lancaster Colony Corporation