Lancaster Colony Reports Improved Second Quarter Sales and Earnings

Jan 28, 2010, 07:17 ET from Lancaster Colony Corporation

COLUMBUS, Ohio, Jan. 28 /PRNewswire-FirstCall/ -- Lancaster Colony Corporation (Nasdaq: LANC) today reported higher sales, operating income and net income for the company's second fiscal quarter ended December 31, 2009 compared with the corresponding quarter a year ago.  Highlights of the quarter:

  • Consolidated net sales increased six percent to $304 million versus $288 million in the second quarter last year.
  • Net income totaled $39,527,000 compared with $28,452,000 for the corresponding quarter a year ago. Net income per diluted share was $1.40 versus $1.02 in the year-ago quarter.  The current year's quarter included pretax income of approximately $0.9 million (two cents per share after taxes) from a distribution received under the Continued Dumping and Subsidy Offset Act (CDSOA). A year ago, second quarter results included a pretax CDSOA distribution of approximately $8.7 million (20 cents per share after taxes).
  • Specialty Foods sales decreased one percent in the quarter to $243.1 million, which reflected a decrease in foodservice sales, largely offset by sales growth in the retail channel. Contributing to the retail sales growth were volume increases among both frozen and non-frozen products. Similar to fiscal first quarter comparisons, foodservice sales declined due to weaker volumes and reduced pricing due to lower commodity costs.  Operating income of $56.1 million, up 42 percent from the year-ago level, reflected a stronger retail sales mix, improvements in operational efficiencies and an estimated favorable impact in excess of $13 million from raw-material cost reductions.  The quarter's results absorbed more than $1 million in costs associated with the previously announced closing of a salad dressing facility.
  • Glassware and Candles sales increased 42 percent to $61.0 million, which reflected improved consumer demand for high-quality value-priced candles, increased placement of seasonal items and customers shifting certain seasonal purchases from the fiscal first quarter.  Segment operating income totaled $6.1 million, compared to a prior-year second quarter operating loss of $1.0 million.  Current-year performance reflects higher sales, lower material costs and improved capacity utilization.
  • The company's balance sheet remained strong with no debt at December 31, 2009, as well as over $91 million in cash and equivalents.

For the six months ended December 31, 2009, net sales were $558 million compared to $552 million for the first half last year. Net income was $67,932,000, or $2.41 per diluted share. In the prior year, six-month net income totaled $39,472,000, or $1.40 per diluted share.

John B. Gerlach, Jr., chairman and CEO, said, "For both the quarter and six months ended December 31, we were very pleased with the bottom line progress made by both of our operating segments in what clearly remains a challenging economic environment."

Looking ahead, Mr. Gerlach said, "Our key retail brands are benefiting from our enhanced marketing efforts. However, we believe second half year-over-year comparative results will be less robust than the first-half comparisons as we face further pressure on foodservice sales, substantially less benefit from lower ingredient costs, and the seasonal dip in food and candle retail sales dynamics.  For the long-term we will continue to leverage our food and candle new product development efforts aimed at providing sustainable top-line growth."

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 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 that could cause our actual results to differ materially from those expressed in the forward-looking statements. Actual results may differ as a result of factors over which we have no, or limited, control. Management believes these forward-looking statements to be reasonable; however, you should not place undue reliance on such statements that are based on current expectations. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update such forward-looking statements. More detailed statements regarding significant events that could affect our financial results are included in our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q as filed with the Securities and Exchange Commission and are available on our website at www.lancastercolony.com.

    
    
                             LANCASTER COLONY CORPORATION
                     CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
                        (In thousands except per-share amounts)
    
    
                           Three Months Ended           Six Months Ended
                              December 31,                December 31,
                            2009        2008            2009        2008
    
    Net sales             $304,115    $288,242        $558,275    $552,079
    Cost of sales          219,338     230,079         409,791     454,247
    
    Gross margin            84,777      58,163         148,484      97,832
    Selling, general &
     administrative
     expenses               24,400      21,917          44,868      42,178
    Restructuring and
     impairment charges      1,216          (8)          2,046       1,606
    
    Operating income        59,161      36,254         101,570      54,048
    Interest expense             -        (639)              -      (1,130)
    Interest income and
     other – net               927       8,425             952       8,500
    
    Income before income
     taxes                  60,088      44,040         102,522      61,418
    Taxes based on income   20,561      15,588          34,590      21,946
    
    Net income            $ 39,527    $ 28,452        $ 67,932    $ 39,472
    
    Net income per common
     share:(a)
    Net income- basic and
     diluted                 $1.40       $1.02           $2.41       $1.40
    
    Cash dividends per
     common share             $.30       $.285           $.585       $.565
    
    Weighted average
     common  shares
     outstanding:
      Basic                 28,147      27,948          28,114      28,105
      Diluted               28,176      27,955          28,145      28,110
    
    
    (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,
                                   2009        2008        2009        2008
    NET SALES
      Specialty Foods            $243,099    $245,393    $459,440    $466,179
      Glassware and Candles        61,016      42,849      98,835      85,900
    
                                 $304,115    $288,242    $558,275    $552,079
    
    
    OPERATING INCOME (LOSS)
      Specialty Foods            $ 56,146    $ 39,651    $ 99,298    $ 63,140
      Glassware and Candles         6,142      (1,007)      7,813      (3,869)
      Corporate expenses           (3,127)     (2,390)     (5,541)     (5,223)
    
                                 $ 59,161    $ 36,254    $101,570    $ 54,048
    
    
    
                       LANCASTER COLONY CORPORATION
             CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
                              (In thousands)
    
    
                                                       December 31,   June 30,
                                                           2009        2009
    ASSETS
    Current assets:
      Cash and equivalents                               $ 91,391    $ 38,484
      Receivables – net of allowance for
       doubtful accounts                                   85,484      61,152
      Total inventories                                    82,296     102,523
      Deferred income taxes and other current
       assets                                              23,231      20,653
    
        Total current assets                              282,402     222,812
    Net property, plant and equipment                     164,959     170,900
    Other assets                                          103,894     104,769
    
    
            Total assets                                 $551,255    $498,481
    
    
    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current liabilities:
      Accounts payable                                   $ 37,643    $ 41,180
      Accrued liabilities                                  32,695      33,399
    
        Total current liabilities                          70,338      74,579
    Other noncurrent liabilities and deferred
     income taxes                                          21,971      21,346
    Shareholders' equity                                  458,946     402,556
    
            Total liabilities and shareholders' equity   $551,255    $498,481

SOURCE Lancaster Colony Corporation



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