WESTERVILLE, Ohio, Aug. 17, 2017 /PRNewswire/ -- Lancaster
Colony Corporation (Nasdaq: LANC) today reported results for the
fourth quarter and fiscal year ended June 30, 2017.
Highlights are as follows:
Fourth Quarter Results
- Total net sales increased 1.9% to $289.9
million versus $284.5 million
last year.
- Retail net sales grew 6.1% with Olive Garden®
dressings and Sister Schubert's® frozen dinner rolls
noted contributors to organic growth of 4.1%. Incremental sales
from Angelic Bakehouse, a producer of sprouted grain bakery
products acquired in mid-November
2016, also drove retail net sales. The impact of slightly
higher trade spending and coupon expenses was nearly offset by
reduced new product placement costs.
- Sales in the foodservice channel decreased 2.5% as the
restaurant industry continues to be challenged by declining
same-store sales and store traffic. Beyond these industry-wide
headwinds, our foodservice sales were lowered by residual
deflationary pricing and a recent second-sourcing initiative by one
of our customers. Our commitment to profitable growth also resulted
in a modest amount of foregone foodservice sales in the quarter.
Limited-time-offer programs with our national chain customers were
flat compared to the prior year.
- Gross profit declined $2.7
million to $72.5 million
driven by the impact of increased commodity costs, higher freight
costs and the deflationary foodservice pricing.
- Selling, general and administrative expenses rose $1.3 million as influenced by the addition of key
leadership personnel over the past year and foundational
investments in our business to support future growth and cost
savings. The current quarter also included a one-time pre-tax
benefit totaling $1.4 million from
the full settlement of a class-action lawsuit related to a provider
of in-store promotional advertising.
- Operating income declined to $42.6
million from $46.6 million in
the prior year on the lower gross profit and increased SG&A
expenses.
- Fourth quarter net income reached $28.5
million, or $1.04 per diluted
share, compared to $30.6 million, or
$1.12 per diluted share last
year.
Fiscal Year Results
- Total net sales increased 0.9% to a record $1,202 million versus $1,191 million last year. Retail net sales
advanced 3.6% for the year while foodservice net sales decreased
2.0% as both deflationary pricing and our targeted business
rationalization efforts in that channel hampered sales growth.
- Operating income decreased to $174.7
million from $184.6 million in
the prior year. Excluding the fiscal third quarter pre-tax charge
of $17.6 million resulting from the
company's withdrawal from an underfunded multiemployer pension
plan, fiscal year 2017 operating income increased $7.7 million to $192.3
million. Operating income benefited from lower input costs,
particularly eggs in the first half of the fiscal year, while
deflationary foodservice pricing and the investments made in
personnel and business growth initiatives during the second half
were offsetting factors.
- Net income declined to $115.3
million compared to $121.8
million a year ago while earnings per diluted share was
$4.20 versus $4.44 last year. The estimated impact of the
pension withdrawal costs on fiscal 2017 net income was $11.5 million or $.42 per diluted share.
- The regular quarterly cash dividend was increased for the 54th
consecutive year.
- The company's balance sheet remained strong, with no debt
outstanding and over $143 million in
cash and equivalents as of June 30,
2017.
Fiscal 2017 Commentary
CEO David A. Ciesinski stated, "Fiscal 2017 was a
year of significant change for Lancaster Colony as we positioned
ourselves for future growth with additions to our leadership team
to support the implementation of several strategic initiatives in
the areas of business planning, product innovation, brand
management, supply chain optimization and operational
improvements. In addition, we acquired Angelic Bakehouse, a
maker of premium sprouted grain bakery products with placement in
the growing specialty bakery/deli section of the store, to provide
another platform for product development and expansion. We
are also pleased to report another year of record sales."
Fiscal 2018 Outlook
Mr. Ciesinski added, "As we look
towards fiscal 2018, we expect retail sales will benefit from a
full year with Angelic Bakehouse and contributions from new product
introductions planned for launch throughout the year. On the
foodservice side, we have several initiatives planned in support of
profitable growth with both our existing customer base and new
business relationships. In the first half of the fiscal year,
we will continue to see an increase in SG&A expenses compared
to the prior year attributable to our investments in personnel and
strategic programs as well as the incremental amortization and
non-cash charges related to the Angelic Bakehouse business.
We also expect a slightly higher level of retail trade spending and
consumer marketing expense for certain retail brands in the fiscal
first quarter. Commodity costs are projected to be modestly
unfavorable during the course of fiscal 2018, particularly in the
first half of the year. Our supply chain team's recent lean
six sigma initiative, with blackbelts and greenbelts now in place,
will be focused on cost-saving opportunities and improved
efficiencies throughout our operations."
Conference Call on the Web
The company's fourth
quarter and fiscal year-end conference call is scheduled for this
morning, August 17, at 10:00 a.m. ET. You may
access a live webcast of the call 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 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:
- price and product competition;
- the impact of customer store brands on our branded retail
volumes;
- the effect of consolidation of customers within key market
channels;
- 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;
- adverse changes in freight, energy or other costs of
producing, distributing or transporting our products;
- the success and cost of new product development
efforts;
- the lack of market acceptance of new products;
- the ability to successfully grow recently acquired
businesses;
- the extent to which future business acquisitions are
completed and acceptably integrated;
- the possible occurrence of product recalls or other
defective or mislabeled product costs;
- dependence on key personnel and changes in key
personnel;
- 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;
- 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;
- 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;
- 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;
- 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
June
30,
|
|
Fiscal Year
Ended
June
30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Net sales
|
$
|
289,874
|
|
$
|
284,490
|
|
$
|
1,201,842
|
|
$
|
1,191,109
|
Cost of
sales
|
217,388
|
|
209,346
|
|
883,078
|
|
891,480
|
Gross
profit
|
72,486
|
|
75,144
|
|
318,764
|
|
299,629
|
Selling, general
& administrative expenses
|
29,867
|
|
28,521
|
|
126,381
|
|
115,059
|
Multiemployer pension
settlement and related costs
|
(4)
|
|
—
|
|
17,635
|
|
—
|
Operating
income
|
42,623
|
|
46,623
|
|
174,748
|
|
184,570
|
Other, net
|
331
|
|
21
|
|
768
|
|
63
|
Income before income
taxes
|
42,954
|
|
46,644
|
|
175,516
|
|
184,633
|
Taxes based on
income
|
14,467
|
|
16,030
|
|
60,202
|
|
62,869
|
Net income
|
$
|
28,487
|
|
$
|
30,614
|
|
$
|
115,314
|
|
$
|
121,764
|
|
|
|
|
|
|
|
|
Net income per common
share:(a)
|
|
|
|
|
|
|
|
Basic
|
$
|
1.04
|
|
$
|
1.12
|
|
$
|
4.21
|
|
$
|
4.45
|
Diluted
|
$
|
1.04
|
|
$
|
1.12
|
|
$
|
4.20
|
|
$
|
4.44
|
|
|
|
|
|
|
|
|
Cash dividends per
common share
|
$
|
0.55
|
|
$
|
0.50
|
|
$
|
2.15
|
|
$
|
6.96
|
|
|
|
|
|
|
|
|
Weighted average
common shares
outstanding:
|
|
|
|
|
|
|
|
Basic
|
27,396
|
|
27,357
|
|
27,376
|
|
27,336
|
Diluted
|
27,446
|
|
27,399
|
|
27,440
|
|
27,373
|
|
(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
June
30,
|
|
Fiscal Year
Ended
June
30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
NET SALES - Specialty
Foods
|
$
|
289,874
|
|
$
|
284,490
|
|
$
|
1,201,842
|
|
$
|
1,191,109
|
|
|
|
|
|
|
|
|
OPERATING
INCOME
|
|
|
|
|
|
|
|
Specialty
Foods
|
$
|
45,094
|
|
$
|
49,726
|
|
$
|
187,051
|
|
$
|
196,592
|
Corporate
expenses
|
(2,471)
|
|
(3,103)
|
|
(12,303)
|
|
(12,022)
|
Total Operating
Income
|
$
|
42,623
|
|
$
|
46,623
|
|
$
|
174,748
|
|
$
|
184,570
|
LANCASTER COLONY
CORPORATION
|
CONDENSED
CONSOLIDATED BALANCE SHEETS (Unaudited)
|
(In
thousands)
|
|
|
June 30,
2017
|
|
June 30,
2016
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and
equivalents
|
$
|
143,104
|
|
$
|
118,080
|
Receivables
|
69,922
|
|
66,006
|
Inventories
|
76,376
|
|
76,097
|
Other current
assets
|
11,744
|
|
7,644
|
Total current
assets
|
301,146
|
|
267,827
|
Net property, plant
and equipment
|
180,671
|
|
169,595
|
Other
assets
|
234,588
|
|
197,310
|
Total
assets
|
$
|
716,405
|
|
$
|
634,732
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
|
41,353
|
|
$
|
39,931
|
Accrued
liabilities
|
35,270
|
|
33,072
|
Total current
liabilities
|
76,623
|
|
73,003
|
Other noncurrent
liabilities and deferred income taxes
|
63,805
|
|
48,131
|
Shareholders'
equity
|
575,977
|
|
513,598
|
Total liabilities and
shareholders' equity
|
$
|
716,405
|
|
$
|
634,732
|
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SOURCE Lancaster Colony Corporation