Columbus / OH. (lc) Lancaster Colony Corporation reported results for the company’s third fiscal quarter ended March 31, 2017. Highlights for the quarter are as follows:
- Total net sales increased 2.1 percent to a third quarter record 293.8 million USD versus 287.8 million USD last year.
- In the retail channel, excluding contributions from the Angelic Bakehouse business acquired in November 2016, net sales were up 0.8 percent. New York BRAND® Bakery frozen garlic toast products and Reames frozen noodles performed well, but retail growth was slowed by the anticipated shift of some Easter holiday sales into the fiscal fourth quarter and ongoing heightened competition in the refrigerated dressings category. Coupon expense was lower, due in part to the timing of Easter promotions, while retail trade spending and product placement costs were comparable to the prior-year quarter.
- Net sales in the foodservice channel overcame the impact of both deflationary pricing from lower egg costs and our targeted business rationalization efforts to post a 1.3 percent increase as sales volumes to certain national chain restaurant customers improved.
- Operating income decreased from 43.9 million USD to 22.0 million USD. Excluding the pre-tax charge of 17.6 million USD resulting from the company’s withdrawal from an underfunded multiemployer pension plan as detailed in the company’s 8-K filing issued on January 24, 2017, operating income declined 9.8 percent from 43.9 million USD to 39.6 million USD. Despite the higher sales volume, the 1.0 million USD decrease in gross profit primarily reflects the net impact of deflationary foodservice pricing. The 3.3 million USD rise in selling, general and administrative expenses was driven by recent investments in additional personnel and business initiatives to support future growth, and increased amortization expense and other recurring non-cash charges attributed to the Angelic Bakehouse business that was acquired in November 2016. These costs were offset in part by a lower level of spend for consumer promotions.
- Including the costs resulting from the company’s withdrawal from the underfunded multiemployer pension plan, net income was 14.5 million USD or 0.53 USD per diluted share compared to 29.0 million USD or 1.06 USD per diluted share last year. The estimated impact of the pension costs on net income was 11.5 million USD or 0.42 USD per diluted share.
- The regular quarterly cash dividend paid on March 31, 2017 was continued at the higher amount of 0.55 USD per share set in November 2016. The company’s balance sheet remained debt free on March 31, 2017 with 124.8 million USD in cash and equivalents.
For the nine months ended March 31, 2017, net sales increased to 912.0 million USD compared to 906.6 million USD a year ago. Including the costs resulting from the company’s withdrawal from the underfunded multiemployer pension plan, net income for the nine-month period totalled 86.8 million USD, or 3.16 USD per diluted share versus the prior-year amount of 91.1 million USD, or 3.32 USD per diluted share.
Chairman and CEO John B. Gerlach, Jr. commented, «We were encouraged by the sales growth in the foodservice channel and the positive contributions from select areas within retail as well. Looking forward to the final quarter of our fiscal year, commodity costs are expected to swing slightly unfavorable from a generally flat third quarter. We also foresee a diminishing level of deflationary pricing in the foodservice channel and anticipate retail sales volumes to benefit modestly from this year’s later Easter holiday».
