Lancaster Colony Reports Second Quarter Sales And Earnings

28 Jan, 2016, 07:20 ET from Lancaster Colony Corporation

COLUMBUS, Ohio, Jan. 28, 2016 /PRNewswire/ -- Lancaster Colony Corporation (Nasdaq: LANC) today reported results for the company's second fiscal quarter ended December 31, 2015. Highlights for the quarter are as follows:

  • Net sales increased 7.0% to $324.8 million versus $303.4 million last year.  Excluding sales contributed by the Flatout® flatbread business acquired in March 2015, net sales increased 4.2%.
  • Excluding Flatout®, retail channel net sales improved only modestly with sales volumes nearly flat.  Retail sales benefited from pricing actions taken to help counter higher egg costs attributed to the U.S. avian influenza outbreak while increased spending on retail trade promotions and continued softness in our frozen roll business combined to limit sales growth.  In the foodservice channel, sales improved on continued strong growth from national chain restaurants along with pricing actions taken in response to higher egg costs.
  • Consolidated operating income increased to $52.1 million from $50.2 million on the pickup in sales volume, reduced freight costs and lower costs for certain ingredients, most notably soybean oil, partially offset by the net impact of higher egg prices, increased retail trade spending and a less favorable sales mix.
  • Net income was $34.5 million, or $1.25 per diluted share compared to $33.0 million or $1.20 per diluted share last year.  The lower tax rate in the current-year quarter reflects the tax benefit from the December 2015 special dividend payment of $5.00 per share for shares held in the company's ESOP.
  • In addition to the December 2015 special dividend payment of $5.00 per share, the regular quarterly cash dividend was increased nine percent to $0.50 per share.  The company's balance sheet remained debt free on December 31, 2015 with $87.1 million in cash and equivalents.  

For the six months ended December 31, 2015, net sales were up 9.8% to $618.9 million compared to $563.4 million a year ago.  Excluding sales contributed by the Flatout® flatbread business, net sales increased 6.2%.  Net income for the six-month period totaled $62.1 million, or $2.26 per diluted share compared to the prior-year amount of $55.7 million, or $2.04 per share.

Chairman and CEO John B. Gerlach, Jr. commented, "We closed our seasonally strong second quarter with record sales and improved operating income.  As we move into our third quarter, assuming no recurrence of a widespread avian influenza outbreak, we anticipate pricing actions taken during the first half of our fiscal year will fully offset higher egg costs with egg prices now trending down from their recent peaks.  Other commodity costs are expected to remain modestly favorable in the third quarter, as are freight costs. In our fiscal second half, we are projecting an increase in product placement, marketing, and promotional costs in support of new product introductions.  In addition, an initiative to selectively rationalize some of our foodservice business in the coming quarters is expected to slow future sales growth in that channel."

Conference Call on the Web

The company's second quarter conference call is scheduled for this morning, January 28, 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 manufacturer and marketer of specialty food products 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 another large outbreak of avian influenza in the U.S. and the resulting fluctuations in the cost and availability of egg-based ingredients;
  • our ability to successfully implement an initiative to selectively rationalize business within our foodservice channel;
  • fluctuations in the cost and availability of other raw materials and packaging;
  • the reaction of customers or consumers to the effect of price increases we may implement;
  • the potential for loss of larger programs or key customer relationships;
  • the effect of consolidation of customers within key market channels;
  • price and product competition;
  • 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;
  • the outcome of any litigation or arbitration;
  • the impact of fluctuations in our pension plan asset values on funding levels, contributions required and benefit costs;
  • the ability to successfully grow the Flatout business;
  • the extent to which future business acquisitions are completed and acceptably integrated;
  • dependence on key personnel;
  • changes in financial markets;
  • access to any required financing;
  • 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  December 31,

Six Months Ended  December 31,

2015

2014

2015

2014

Net sales

$

324,769

$

303,411

$

618,854

$

563,398

Cost of sales

241,175

224,758

467,293

427,321

Gross margin

83,594

78,653

151,561

136,077

Selling, general & administrative expenses

31,479

28,437

57,558

51,257

Operating income

52,115

50,216

94,003

84,820

Interest income and other – net

(205)

(47)

(83)

(39)

Income before income taxes

51,910

50,169

93,920

84,781

Taxes based on income

17,399

17,215

31,781

29,066

Net income

$

34,511

$

32,954

$

62,139

$

55,715

Net income per common share: (a)

Basic

$

1.26

$

1.21

$

2.27

$

2.04

Diluted

$

1.25

$

1.20

$

2.26

$

2.04

Cash dividends per common share

$

5.50

$

0.46

$

5.96

$

0.90

Weighted average common shares outstanding:

Basic

27,328

27,294

27,324

27,290

Diluted

27,374

27,323

27,359

27,319

(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  December 31,

Six Months Ended  December 31,

2015

2014

2015

2014

NET SALES - Specialty Foods

$

324,769

$

303,411

$

618,854

$

563,398

OPERATING INCOME

   Specialty Foods

$

55,429

$

53,240

$

100,390

$

90,739

   Corporate expenses

(3,314)

(3,024)

(6,387)

(5,919)

         Total Operating Income

$

52,115

$

50,216

$

94,003

$

84,820

 

LANCASTER COLONY CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(In thousands)

December 31,  2015

June 30,  2015

ASSETS

Current assets:

   Cash and equivalents

$

87,141

$

182,202

   Receivables – net of allowance for doubtful accounts

60,752

62,437

   Total inventories

80,471

77,899

   Other current assets (b)

8,032

7,672

      Total current assets

236,396

330,210

Net property, plant and equipment

169,891

172,311

Other assets

197,610

199,635

         Total assets

$

603,897

$

702,156

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

   Accounts payable

$

43,506

$

38,823

   Accrued liabilities

32,693

35,821

      Total current liabilities

76,199

74,644

Other noncurrent liabilities and deferred income taxes (b)

45,092

46,594

Shareholders' equity

482,606

580,918

         Total liabilities and shareholders' equity

$

603,897

$

702,156

(b)  Prior-year balances for other current assets and other noncurrent liabilities and deferred income taxes were restated to reflect the impact of the adoption of new accounting guidance about the presentation of deferred tax assets and liabilities. With the adoption, our net deferred tax liability for all periods presented has been classified as noncurrent. For June 30, 2015, $12.8 million of current deferred tax assets were reclassified to the noncurrent deferred income taxes liability.

 

SOURCE Lancaster Colony Corporation



RELATED LINKS

http://www.lancastercolony.com