LANCASTER COLONY CORPORATION 
COLUMBUS, Ohio, Jan. 26, 2017 /PRNewswire/ -- Lancaster Colony Corporation (Nasdaq: LANC) today reported results for the company's second fiscal quarter ended December 31, 2016. Highlights for the quarter are as follows:
-- Net sales increased 0.6% to $326.8 million versus $324.8 million last
year.
-- In the retail channel, net sales increased 3% with Olive Garden(®)
dressings, New York BRAND(®) Bakery frozen garlic bread products,
Sister Schubert's(®) frozen dinner rolls, Flatout(®) flatbreads and
Reames(®) frozen noodles contributing to growth. Retail sales gains
were impacted by increased trade promotions and product placement costs.
Net sales in the foodservice channel declined 2% reflecting both our
targeted business rationalization efforts and deflationary pricing from
lower egg costs, partially offset by a pickup in limited time offer
promotional programs with national chain restaurants.
-- Operating income increased $7.2 million to $59.4 million on lower
commodity costs, particularly eggs, and a more favorable sales mix as
partially offset by a greater investment in retail trade and increased
consumer promotions and product placement costs.
-- Net income was $39.0 million, or $1.42 per diluted share compared to
$34.5 million or $1.25 per diluted share last year.
-- The regular quarterly cash dividend paid on December 30, 2016 was $.55
per share, a ten percent increase from the prior year's level excluding
the special dividend paid in December 2015. The company's balance sheet
remained debt free on December 31, 2016 with $118.5 million in cash and
equivalents.
For the six months ended December 31, 2016, net sales were essentially flat at $618.1 million compared to $618.9 million a year ago. Net income for the six-month period totaled $72.4 million, or $2.63 per diluted share versus the prior-year amount of $62.1 million, or $2.26 per diluted share.
Note that as detailed in the company's 8-K filing issued on January 24, 2017, the reported financial results for the upcoming fiscal third quarter will include the impact of a pre-tax charge of $17.7 million in settlement costs and related expenses resulting from the company's withdrawal from an underfunded multiemployer pension plan.
Chairman and CEO John B. Gerlach, Jr. commented, "While the top line headwinds of customer rationalization and deflationary pricing remained as expected for our foodservice channel in the second quarter, we were pleased with the uptick in retail channel sales from our frozen bread and pasta products. Looking ahead, commodity costs are expected to turn flat to modestly unfavorable in the back half of the fiscal year. We also expect continued deflationary pricing in the foodservice channel and ongoing softness in the foodservice industry, particularly the casual dining segment, to impact fiscal third quarter sales growth. In addition, this year's fiscal third quarter will reflect some shifting of retail sales volumes to our fiscal fourth quarter as a result of the later Easter holiday.
With respect to our recent acquisition of Angelic Bakehouse, a manufacturer and marketer of premium sprouted grain bakery products, the transaction closed on November 17, 2016 and the integration process is progressing well. We look forward to our pursuit of future growth opportunities for that business."
Conference Call on the Web
The company's second quarter conference call is scheduled for this morning, January 26, at 10:00 a.m. ET. You may access a live webcast of the call via the 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 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:
-- the ability to successfully integrate the acquisition of Angelic
Bakehouse, Inc. and subsequently grow the business;
-- price and product competition;
-- the impact of any regulatory matters affecting our food business,
including any required labeling changes and their impact on consumer
demand;
-- the potential for loss of larger programs or key customer relationships;
-- the impact of customer store brands on our branded retail volumes;
-- fluctuations in the cost and availability of ingredients and packaging;
-- the reaction of customers or consumers to the effect of price increases
we may implement;
-- the effect of consolidation of customers within key market channels;
-- the success and cost of new product development efforts;
-- the lack of market acceptance of new products;
-- the possible occurrence of product recalls or other defective or
mislabeled product costs;
-- changes in demand for our products, which may result from loss of brand
reputation or customer goodwill;
-- maintenance of competitive position with respect to other manufacturers;
-- adverse changes in freight, energy or other costs of producing,
distributing or transporting our products;
-- capacity constraints that may affect our ability to meet demand or may
increase our costs;
-- dependence on contract manufacturers;
-- efficiencies in plant operations;
-- stability of labor relations, including the impact of contract
negotiations with collective bargaining units;
-- the outcome of any litigation or arbitration;
-- the impact, if any, of certain contingent liabilities associated with
our withdrawal from a multiemployer pension plan;
-- the impact of fluctuations in our pension plan asset values on funding
levels, contributions required and benefit costs;
-- the extent to which future business acquisitions are completed and
acceptably integrated;
-- dependence on key personnel and changes in key personnel;
-- changes in estimates in critical accounting judgments; 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 Six Months Ended
December 31, December 31,
2016 2015 2016 2015
---- ---- ---- ----
Net sales $326,773 $324,769 $618,134 $618,854
Cost of sales 233,034 241,175 443,761 467,293
------- ------- ------- -------
Gross profit 93,739 83,594 174,373 151,561
Selling, general & administrative expenses 34,381 31,479 64,261 57,558
------ ------ ------ ------
Operating income 59,358 52,115 110,112 94,003
Other, net 206 (205) 293 (83)
--- ---- --- ---
Income before income taxes 59,564 51,910 110,405 93,920
Taxes based on income 20,608 17,399 38,049 31,781
------ ------ ------ ------
Net income $38,956 $34,511 $72,356 $62,139
======= ======= ======= =======
Net income per common share: (a)
Basic $1.42 $1.26 $2.64 $2.27
Diluted $1.42 $1.25 $2.63 $2.26
Cash dividends per common share $0.55 $5.50 $1.05 $5.96
Weighted average common shares outstanding:
Basic 27,366 27,328 27,364 27,324
Diluted 27,441 27,374 27,435 27,359
(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 Six Months Ended
December 31, December 31,
2016 2015 2016 2015
---- ---- ---- ----
NET SALES - Specialty Foods $326,773 $324,769 $618,134 $618,854
---------------------------
OPERATING INCOME
----------------
Specialty Foods $62,052 $55,429 $116,877 $100,390
Corporate expenses (2,694) (3,314) (6,765) (6,387)
------ ------ ------ ------
Total Operating Income $59,358 $52,115 $110,112 $94,003
======= ======= ======== =======
LANCASTER COLONY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(In thousands)
December 31, June 30,
2016 2016
---- ----
ASSETS
------
Current assets:
Cash and equivalents $118,507 $118,080
Receivables - net of allowance for doubtful accounts 71,438 66,006
Inventories 80,115 76,097
Other current assets 6,899 7,644
----- -----
Total current assets 276,959 267,827
Net property, plant and equipment 176,925 169,595
Other assets 237,574 197,310
------- -------
Total assets $691,458 $634,732
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable $39,420 $39,931
Accrued liabilities 30,425 33,072
------ ------
Total current liabilities 69,845 73,003
Other noncurrent liabilities and deferred income taxes 62,130 48,131
Shareholders' equity 559,483 513,598
------- -------
Total liabilities and shareholders' equity $691,458 $634,732
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SOURCE Lancaster Colony Corporation
