Westerville / OH. (lc) Lancaster Colony Corporation reported results for the company’s fiscal second quarter ended December 31, 2023. Summary:
- Consolidated net sales increased 1.8 percent to a second quarter record USD 485.9 million versus USD 477.4 million last year. Retail net sales grew 2.0 percent to USD 264.0 million while Foodservice net sales advanced 1.5 percent to USD 221.9 million.
- Consolidated gross profit increased USD 19.4 million, or 19.0 percent, to a second quarter record USD 121.5 million.
- Consolidated operating income increased USD 14.4 million, or 28.1 percent, to a second quarter record USD 65.8 million.
- Net income was USD 1.87 per diluted share versus USD 1.45 per diluted share last year.
CEO David A. Ciesinski : «We were very pleased to complete the quarter with record sales and profit. In addition to carryover pricing, Retail segment net sales growth of 2.0 percent was driven by volume gains for our successful licensing program, continued strong performance for our New York «Brand» Bakery frozen garlic bread and increased demand for our «Reames» frozen egg noodles. In the Foodservice segment, sales growth of 1.5 percent was led by higher demand from several of our national chain restaurant accounts along with volume growth for our branded Foodservice products. It is worth noting that, during the period, Foodservice segment sales were adversely impacted by deflationary pricing.»
«Our reported gross profit margin improved to 25.0 percent, an increase of 360 basis points versus last year, which reflects favorable pricing net of commodity costs, or PNOC, following two years of unprecedented inflation, in addition to the positive impacts of our cost savings initiatives.»
«Looking ahead to our fiscal third quarter, we project Retail sales will continue to benefit from our expanding licensing program while, in the Foodservice segment, we expect sustained volume growth from select quick-service restaurant customers. We anticipate continued favorability in our pricing net of commodity costs, but at a sequentially lower level compared to our fiscal second quarter. Deflationary pricing is expected to remain a headwind to Foodservice segment net sales.»
Second Quarter Results
Consolidated net sales increased 1.8 percent to a second quarter record USD 485.9 million versus USD 477.4 million last year. Retail segment net sales grew 2.0 percent to USD 264.0 million. Beyond the favorable impact of our fiscal 2023 pricing actions, key contributors to the increase in Retail segment net sales included our licensing program. Retail segment sales volume, measured in pounds shipped, declined 1.9 percent. Excluding the impacts of a recent value engineering initiative and our reduced commitment to private label bread, Retail sales volume increased 1.2 percent. In the Foodservice segment, net sales improved 1.5 percent to USD 221.9 million despite deflationary pricing. Foodservice sales volume, measured in pounds shipped, increased 4.6 percent led by higher demand from several of our national chain restaurant accounts along with volume growth for our branded Foodservice products.
Consolidated gross profit increased USD 19.4 million, or 19.0 percent, to a second quarter record USD 121.5 million, which reflects favorability in our pricing net of commodity costs and the impact of our cost savings initiatives. Partial offsets to these positive factors included higher labor costs and increased depreciation expense.
SG+A expenses rose USD 4.9 million to USD 55.7 million driven by increased consumer spending and higher brokerage costs. Expenditures for Project Ascent, our ERP initiative, continued to wind down with costs totaling USD 2.0 million in the current-year quarter versus USD 7.5 million last year.
Consolidated operating income grew USD 14.4 million, or 28.1 percent, to a second quarter record USD 65.8 million driven by the increase in gross profit partially offset by the higher SG+A expenses.
Net income increased USD 11.5 million to USD 51.5 million, or USD 1.87 per diluted share, versus USD 1.45 per diluted share last year. Expenditures for Project Ascent reduced net income by USD 1.5 million, or USD 0.06 per diluted share, in the current-year quarter compared to USD 5.7 million, or USD 0.21 per diluted share, in the prior-year quarter.
Fiscal Year-to-Date Results
For the six months ended December 31, 2023, net sales increased 4.9 percent to USD 947.5 million compared to USD 902.9 million a year ago. Net income for the six-month period totaled USD 95.4 million, or USD 3.47 per diluted share, versus the prior-year amount of USD 77.6 million, or USD 2.81 per diluted share. In the current-year period, spend for Project Ascent decreased net income by USD 4.5 million, or USD 0.16 per diluted share. In the prior-year period, spend for Project Ascent decreased net income by USD 12.8 million, or USD 0.47 per diluted share.