Westerville / OH. (lc) Lancaster Colony Corporation reported results for the company ‘s fiscal first quarter ended September 30, 2023. Summary:
- Consolidated net sales increased 8.5 percent to a first quarter record USD 461.6 million. Retail segment net sales improved 8.5 percent to USD 242.2 million while Foodservice segment net sales advanced 8.4 percent to USD 219.4 million. Note that last year ‘s first quarter sales were unfavorably impacted by an estimated USD 25 million in net sales that had shifted into the quarter ended June 30, 2022 due to advance customer orders ahead of our July 1, 2022 ERP go-live date.
- Consolidated gross profit increased 9.8 percent to USD 108.7 million.
- Consolidated operating income increased 15.2 percent to USD 56.8 million.
- Net income was USD 1.59 per diluted share versus USD 1.36 per diluted share last year.
CEO David A. Ciesinski commented, «We were very pleased to complete the quarter with record sales and higher profits. Retail segment net sales growth of 8.5 percent was led by the continued strong performance of our successful program for licensed dressings and sauces and another solid quarter for our «New York Brand Bakery» frozen garlic bread products. Foodservice segment net sales growth of 8.4 percent reflects increased demand from many of our national chain restaurant accounts in addition to sales gains for our branded Foodservice products. As a reminder, last year ‘s first quarter sales were unfavorably impacted by an estimated USD 25 million in net sales that had shifted into the quarter ended June 30, 2022 in advance of our ERP go-live.»
«Our reported gross profit margin reflects a sequential improvement of 310 basis points from our fiscal fourth quarter as we moved past some initial transitory costs associated with our long-term strategic investments in increased production capacity at our dressing and sauce facility in Horse Cave, Kentucky and our new ERP network.»
«Looking ahead to our fiscal second quarter, we anticipate Retail sales will continue to benefit from our expanding licensing program, including incremental growth from the new products, flavors and sizes we introduced in fiscal 2023. In the Foodservice segment, we anticipate continued volume growth from select customers in our mix of national chain restaurant accounts. Regarding inflation, while our input costs remain high, in total we do not anticipate a significant impact from inflationary costs in the upcoming quarter versus the prior-year period.»
First Quarter Results
Consolidated net sales increased 8.5 percent, or USD 36.0 million, to a first quarter record USD 461.6 million. Retail segment net sales advanced 8.5 percent, or USD 19.0 million, to USD 242.2 million while Foodservice segment net sales increased 8.4 percent, or USD 17.1 million, to USD 219.4 million. In the prior year, first quarter net sales were unfavorably impacted by an estimated USD 25 million in net sales that had shifted into the quarter ended June 30, 2022 due to advance customer orders ahead of our ERP go-live. Of this USD 25 million in net sales, approximately USD 11 million were Retail and the remaining USD 14 million were Foodservice. In this year ‘s first quarter, Retail segment sales volumes, measured in pounds shipped, increased 7.1 percent while Foodservice segment sales volumes increased 8.6 percent. Excluding the impact of last year ‘s shift in sales due to our ERP go-live, both the Retail and Foodservice segment sales volumes increased 1.4 percent.
Consolidated gross profit grew 9.8 percent, or USD 9.7 million, to USD 108.7 million. The increase in gross profit was driven by the higher sales volumes, some continued favorability in pricing net of commodity costs, and our cost savings programs. In aggregate, the input costs for our commodity basket were generally consistent with last year ‘s level. In last year ‘s first quarter, gross profit was unfavorably impacted by an estimated USD 5 million due to the aforementioned shift of net sales into the quarter ended June 30, 2022 ahead of our ERP go-live.
SG+A expenses increased USD 2.2 million to USD 51.9 million in support of the continued growth of our business, including a more normalized level of expenditures for consumer promotions, increased investments in personnel and higher brokerage costs attributed to the sales growth. These increased costs were partially offset by reduced expenditures for Project Ascent, our ERP initiative, which totaled USD 3.8 million in the current-year quarter versus USD 9.2 million last year.
Consolidated operating income grew USD 7.5 million, or 15.2 percent, to USD 56.8 million driven by the increase in gross profit partially offset by the higher SG+A expenses.
Net income improved USD 6.4 million to USD 44.0 million, or USD 1.59 per diluted share, versus USD 37.6 million, or USD 1.36 per diluted share, last year. Expenditures for Project Ascent reduced net income by USD 3.0 million, or USD 0.11 per diluted share, in the current-year quarter compared to USD 7.1 million, or USD 0.26 per diluted share, in the prior-year quarter.