WESTERVILLE, Ohio,
April 26, 2018 /PRNewswire/ -- Lancaster Colony
Corporation (Nasdaq: LANC) today reported results for the company's
fiscal third quarter ended March 31, 2018. Highlights
for the quarter are as follows:
- Consolidated net sales increased 0.8% to a third quarter record
$296.2 million versus $293.8 million last year.
- Retail net sales were essentially flat at $152.0 million. Sales of shelf-stable dressings
and sauces under license agreements remained a growth driver while
frozen bread sales volumes declined from the prior-year quarter as
we recovered from the disruptions in the supply of our garlic toast
products. We implemented pricing actions for our primary
refrigerated produce dressings and dips as planned, but our net
price realization for the quarter was marginalized by offsetting
trade spend, including our previous commitments to retailer
promotional activities.
- Foodservice net sales grew 1.5% to $144.2 million driven by pricing actions taken to
help offset higher freight and commodity costs combined with volume
increases for frozen yeast rolls and frozen pasta.
- Consolidated gross profit declined $4.0
million to $67.9 million due
to the impact of significantly increased freight charges and higher
commodity costs. The Foodservice segment pricing and savings
realized from our lean six sigma program served to partially offset
the higher costs.
- Selling, general and administrative expenses declined
$2.0 million on reduced spending for
consumer promotions and cost savings gained through the realignment
of our retail broker network.
- Consolidated operating income increased from $22.0 million to $37.7
million. Excluding the pre-tax charge of $17.6 million in the prior-year quarter resulting
from the company's withdrawal from an underfunded multiemployer
pension plan, operating income declined $1.9
million or 5.0%. Based on the factors referenced above and
excluding the multiemployer pension plan withdrawal charge,
consolidated operating margin decreased about 80 basis points.
Retail segment operating margin declined from 19.2% to 17.3% while
Foodservice segment operating margin improved from 9.6% to
9.9%.
- Net income was $27.6 million, or
$1.00 per diluted share, compared to
$14.5 million, or $.53 per diluted share last year. Note that the
lower tax rate of 27.4% in the current year reflects the favorable
impact of the recent federal tax legislation commonly referred to
as the Tax Cuts and Jobs Act of 2017 ("Tax Act"). The
aforementioned multiemployer pension plan withdrawal charge reduced
the prior year's net income by approximately $11.5 million or $.42 per diluted share.
- The regular quarterly cash dividend paid on March 30, 2018 was maintained at the higher
amount of $.60 per share set in
November 2017. The company's balance
sheet remained debt free on March 31,
2018 with $187.3 million in
cash and equivalents.
For the nine months ended March 31,
2018, net sales increased to $914.8
million compared to $912.0
million a year ago. Net income for the nine-month
period totaled $102.9 million, or
$3.74 per diluted share, versus the
prior-year amount of $86.8 million,
or $3.16 per diluted share. As
previously reported in our fiscal second quarter earnings release,
in addition to the favorable impact of a lower federal income tax
rate, the Tax Act also resulted in a one-time deferred tax benefit
to this fiscal year's net income of $9
million or $.33 per diluted
share. Conversely, last year's net income amount was
unfavorably impacted by the costs resulting from the company's
withdrawal from an underfunded multiemployer pension plan of
approximately $11.5 million or
$.42 per diluted share.
CEO David A. Ciesinski commented,
"We were pleased to report record net sales in our fiscal third
quarter and were particularly encouraged by the higher Foodservice
segment sales as our pricing actions took hold to help offset
increased commodity and freight costs while the segment's overall
sales volumes held nearly flat. Our lean six sigma program
also had another successful quarter in identifying and implementing
cost-saving projects throughout our supply chain. In the
Retail segment, we finished the quarter with the disruption in the
production and supply of our frozen garlic bread products behind us
and are now positioned to return to growth and resume promotional
support for that product line in the coming quarters. Freight
costs were a notable headwind to our fiscal third quarter results
and are expected to remain so through our fiscal fourth
quarter. We have initiatives in place or planned for both the
short- and long-term to address higher freight and commodity costs
including further Retail pricing actions, a more optimized
distribution network and tactical procurement."
Conference Call on the Web
The company's third quarter
conference call is scheduled for this morning, April 26, 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:
- adverse changes in freight, energy or other costs of
producing, distributing or transporting our products;
- fluctuations in the cost and availability of ingredients and
packaging;
- the reaction of customers or consumers to price increases we
may implement;
- price and product competition;
- the impact of customer store brands on our branded retail
volumes;
- dependence on contract manufacturers, distributors and
freight transporters;
- capacity constraints that may affect our ability to meet
demand or may increase our costs;
- the success and cost of new product development
efforts;
- the lack of market acceptance of new products;
- dependence on key personnel and changes in key
personnel;
- the effect of consolidation of customers within key market
channels;
- 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;
- 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;
- efficiencies in plant operations;
- the impact of any regulatory matters affecting our food
business, including any required labeling changes and their impact
on consumer demand;
- 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
March 31,
|
|
Nine Months Ended
March 31,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Net sales
|
$
|
296,174
|
|
$
|
293,834
|
|
$
|
914,755
|
|
$
|
911,968
|
Cost of
sales
|
228,261
|
|
221,929
|
|
687,424
|
|
665,690
|
Gross
profit
|
67,913
|
|
71,905
|
|
227,331
|
|
246,278
|
Selling, general
& administrative expenses
|
30,248
|
|
32,253
|
|
98,075
|
|
96,514
|
Multiemployer pension
settlement and related costs
|
—
|
|
17,639
|
|
—
|
|
17,639
|
Operating
income
|
37,665
|
|
22,013
|
|
129,256
|
|
132,125
|
Other, net
|
375
|
|
144
|
|
1,145
|
|
437
|
Income before income
taxes
|
38,040
|
|
22,157
|
|
130,401
|
|
132,562
|
Taxes based on
income
|
10,419
|
|
7,686
|
|
27,474
|
|
45,735
|
Net income
|
$
|
27,621
|
|
$
|
14,471
|
|
$
|
102,927
|
|
$
|
86,827
|
|
|
|
|
|
|
|
|
Net income per common
share: (a)
|
|
|
|
|
|
|
|
Basic
|
$
|
1.01
|
|
$
|
0.53
|
|
$
|
3.75
|
|
$
|
3.17
|
Diluted
|
$
|
1.00
|
|
$
|
0.53
|
|
$
|
3.74
|
|
$
|
3.16
|
|
|
|
|
|
|
|
|
Cash dividends per
common share
|
$
|
0.60
|
|
$
|
0.55
|
|
$
|
1.75
|
|
$
|
1.60
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
27,405
|
|
27,379
|
|
27,399
|
|
27,369
|
Diluted
|
27,458
|
|
27,442
|
|
27,456
|
|
27,438
|
|
|
|
|
|
|
|
|
(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,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
NET SALES
|
|
|
|
|
|
|
|
|
|
|
|
Retail
|
$
|
152,011
|
|
$
|
151,782
|
|
$
|
493,441
|
|
$
|
487,238
|
Foodservice
|
144,163
|
|
142,052
|
|
421,314
|
|
424,730
|
Total Net
Sales
|
$
|
296,174
|
|
$
|
293,834
|
|
$
|
914,755
|
|
$
|
911,968
|
|
|
|
|
|
|
|
|
OPERATING
INCOME
|
|
|
|
|
|
|
|
Retail
|
$
|
26,321
|
|
$
|
29,129
|
|
$
|
96,504
|
|
$
|
106,840
|
Foodservice
|
14,296
|
|
13,590
|
|
42,393
|
|
52,756
|
Multiemployer Pension
Settlement and Related Costs
|
—
|
|
(17,639)
|
|
—
|
|
(17,639)
|
Corporate
Expenses
|
(2,952)
|
|
(3,067)
|
|
(9,641)
|
|
(9,832)
|
Total Operating
Income
|
$
|
37,665
|
|
$
|
22,013
|
|
$
|
129,256
|
|
$
|
132,125
|
LANCASTER COLONY
CORPORATION
CONDENSED
CONSOLIDATED BALANCE SHEETS (Unaudited)
(In
thousands)
|
|
|
|
|
|
March 31,
2018
|
|
June 30,
2017
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and
equivalents
|
$
|
187,330
|
|
|
$
|
143,104
|
|
Receivables
|
76,731
|
|
|
69,922
|
|
Inventories
|
88,114
|
|
|
76,376
|
|
Other current
assets
|
11,840
|
|
|
11,744
|
|
Total current
assets
|
364,015
|
|
|
301,146
|
|
Net property, plant
and equipment
|
187,413
|
|
|
180,671
|
|
Other
assets
|
235,137
|
|
|
234,588
|
|
Total
assets
|
$
|
786,565
|
|
|
$
|
716,405
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
|
58,187
|
|
|
$
|
41,353
|
|
Accrued
liabilities
|
36,329
|
|
|
35,270
|
|
Total current
liabilities
|
94,516
|
|
|
76,623
|
|
Other noncurrent
liabilities and deferred income taxes
|
59,186
|
|
|
63,805
|
|
Shareholders'
equity
|
632,863
|
|
|
575,977
|
|
Total liabilities and
shareholders' equity
|
$
|
786,565
|
|
|
$
|
716,405
|
|
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SOURCE Lancaster Colony Corporation