Lancaster Colony Reports First Quarter Fiscal 2014 Results

Oct 31, 2013, 07:15 ET from Lancaster Colony Corporation

COLUMBUS, Ohio, Oct. 31, 2013 /PRNewswire/ -- Lancaster Colony Corporation (Nasdaq: LANC) today reported results for its fiscal 2014 first quarter that ended September 30, 2013:

  • Net sales reached $286 million, off two percent from prior-year first quarter sales of $291 million.
  • Specialty Foods net sales of $248 million were off slightly from the year-ago level, reflecting improved foodservice volumes offset by flat retail volumes and increased trade promotion costs.
  • Glassware and Candles net sales decreased ten percent from the year-ago quarter to $38 million, reflecting a decline in volume.
  • Net income of $24,801,000, or $.91 per diluted share, decreased from the prior-year's $26,662,000, or $.98 per diluted share.  The lower sales, combined with higher trade promotion costs and a less favorable sales mix in the Specialty Foods segment, led to this decline. 
  • Cash dividends were continued at the higher rate set in May 2013. The company's debt-free balance sheet reflected $133 million in cash and equivalents at September 30, 2013.

Chairman and CEO John B. Gerlach, Jr. said, "While pleased with our overall market positioning, we saw our first quarter's sales and results affected by a retail environment that remains challenged.  We believe our additional investments in promotional support behind selected retail food categories such as refrigerated dressings, croutons and garlic toast helped solidify our product placement."

Specialty Foods sales benefited from improved volumes of both foodservice and branded retail product lines, while sales of private label retail product lines decreased.  Additionally, higher trade promotion costs adversely affected both the segment's net sales and operating results.  Specialty Foods operating income of $39.5 million declined 7.5 percent.  As further affected by the higher foodservice sales mix, segment operating income margins fell to 15.9 percent, compared to 17.2 percent in the prior year.  The impact of fluctuations in product pricing and material costs was not significant. 

First quarter candle sales reflected challenging retail conditions, lower sales of contract-manufactured products and the impact of customer planogram changes in the prior year. Segment operating income of $1.2 million improved by approximately $0.6 million as a more favorable product mix offset the impact of lower net sales.                                                

Mr. Gerlach said, "Looking forward, we expect our seasonally stronger second quarter will reflect higher food volumes and modestly lower input costs.  Sales of seasonal and contract-manufactured candles will likely reflect softening, although these product sales tend to be lower-margined in nature.  We believe our continued balance sheet strength allows us considerable flexibility in supporting our future growth initiatives." 

Conference Call on the Web

The company's first quarter conference call is scheduled for this morning, October 31, at 10:00 a.m. ET.  You may access the call through a live webcast by using the link provided on the company's Internet home page at www.lancastercolony.com.  Replays of the webcast will be made available on the company website.

About the Company

Lancaster Colony Corporation is a diversified manufacturer and marketer of consumer products focusing primarily on specialty foods for the retail and foodservice markets.

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 potential for loss of larger programs or key customer relationships;
  • 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 reaction of customers or consumers to the effect of price increases we may implement;
  • changes in demand for our products, which may result from loss of brand reputation or customer goodwill;
  • the possible occurrence of product recalls or other defective or mislabeled product costs;
  • price and product competition;
  • fluctuations in the cost and availability of raw materials;
  • adverse changes in energy costs and other factors that may affect costs of producing, distributing or transporting our products;
  • maintenance of competitive position with respect to other manufacturers, including global sources of production;
  • dependence on key personnel;
  • stability of labor relations;
  • the uncertainty regarding the effect or outcome of any decision to explore further strategic alternatives for our nonfood operation;
  • dependence on contract copackers and limited or exclusive sources for certain goods;
  • changes in estimates in critical accounting judgments;
  • the outcome of any litigation or arbitration; 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   September 30,

2013

2012

Net sales

$

285,856

$

290,976

Cost of sales

224,218

225,259

Gross margin

61,638

65,717

Selling, general & administrative expenses

24,038

25,145

Operating income

37,600

40,572

Interest income and other – net

(48)

14

Income before income taxes

37,552

40,586

Taxes based on income

12,751

13,924

Net income

$

24,801

$

26,662

Net income per common share:(a)

Net income – basic and diluted

$

0.91

$

0.98

Cash dividends per common share

$

0.40

$

0.36

Weighted average common shares outstanding:

   Basic

27,268

27,229

   Diluted

27,312

27,264

(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,

2013

2012

NET SALES

   Specialty Foods

$

248,137

$

248,881

   Glassware and Candles

37,719

42,095

$

285,856

$

290,976

OPERATING INCOME

   Specialty Foods

$

39,543

$

42,758

   Glassware and Candles

1,169

608

   Corporate expenses

(3,112)

(2,794)

$

37,600

$

40,572

 

LANCASTER COLONY CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(In thousands)

September 30,   2013

June 30,   2013

ASSETS

Current assets:

   Cash and equivalents

$

133,075

$

123,386

   Receivables – net of allowance for doubtful accounts

82,890

70,398

   Total inventories

113,047

109,151

   Deferred income taxes and other current assets

18,360

23,123

      Total current assets

347,372

326,058

Net property, plant and equipment

186,997

189,695

Other assets

104,111

104,211

         Total assets

$

638,480

$

619,964

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

   Accounts payable

$

41,772

$

41,890

   Accrued liabilities

41,789

35,287

      Total current liabilities

83,561

77,177

Other noncurrent liabilities and deferred income taxes

42,053

41,565

Shareholders' equity

512,866

501,222

         Total liabilities and shareholders' equity

$

638,480

$

619,964

 

 

SOURCE Lancaster Colony Corporation



RELATED LINKS

http://www.lancastercolony.com