LANCASTER COLONY CORPORATION COLUMBUS, Ohio, Jan. 29, 2015 /PRNewswire/ -- Lancaster Colony Corporation (Nasdaq: LANC) today reported results for the company's second fiscal quarter ended December 31, 2014. All prior-period financial results of the Glassware and Candles segment have been reclassified as discontinued operations due to the sale of effectively all the net operating assets of that segment on January 30, 2014. Highlights for the quarter:
-- Net sales reached a second quarter record of $303.4 million, up 3.8%
from the prior-year level of $292.3 million. Higher foodservice volume
drove the growth in net sales, with sales to national chain restaurants
a strong point. Retail net sales improved modestly with New York
Brand(®) frozen garlic bread, Olive Garden(®) retail dressings, and
Marzetti(®) refrigerated dressings noted contributors. Retail sales
growth was limited by increased promotional spending on certain product
offerings.
-- Operating income declined 10.6% to $50.2 million as the benefit of the
higher sales volumes were more than offset by a less favorable sales
mix, elevated freight expense, increased marketing and promotional costs
in support of our retail brands and recent product introductions, and
higher production costs attributed to continued capacity constraints in
our dressing operations.
-- Income from continuing operations was $33.0 million compared with $37.1
million last year. Earnings per diluted share from continuing
operations were $1.20 versus $1.36 a year ago.
-- Second quarter net income also totaled $33.0 million or $1.20 per
diluted share as there was no impact from discontinued operations.
Prior-year net income was $39.2 million or $1.44 per share, including a
contribution of $2.1 million or $.08 per share from discontinued
operations.
-- The regular quarterly cash dividend was increased to $.46 per share.
The company's balance sheet remained debt free on December 31, 2014 with
$256.1 million in cash and equivalents.
For the six months ended December 31, 2014, net sales were $563.4 million compared to $540.4 million for the first half last year. Income from continuing operations totaled $55.7 million or $2.04 per share. Net income was also $55.7 million or $2.04 per share with no impact from discontinued operations in the current year. Prior-year income from continuing operations was $61.2 million or $2.24 per share and net income was $64.0 million or $2.34 per diluted share. The income from discontinued operations for the six months ended December 31, 2013 totaled $2.8 million or $.10 per diluted share.
Chairman and CEO John B. Gerlach, Jr. commented, "While we were pleased with the record sales for the quarter, our operating results were hampered by continued incremental costs attributed to capacity constraints in dressing manufacturing and a less favorable sales mix. Looking forward to the second half of our fiscal year, we will begin to capture the cost benefits from the recently completed dressing capacity expansion project. Commodity costs, net of deflationary pricing in foodservice, are expected to be near neutral over the balance of fiscal 2015. This year's earlier Easter holiday will also shift some sales into our fiscal third quarter."
Conference Call on the Web
The company's second quarter conference call is scheduled for this morning, January 29, 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 loss of larger programs or key customer relationships;
-- the effect of consolidation of customers within key market channels;
-- the success and cost of new product development efforts;
-- the lack of market acceptance of new products;
-- price and product competition;
-- the reaction of customers or consumers to the effect of price increases
we may implement;
-- 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;
-- fluctuations in the cost and availability of raw materials and
packaging;
-- capacity constraints that may affect our ability to meet demand or may
increase our costs;
-- dependence on contract manufacturers;
-- maintenance of competitive position with respect to other manufacturers;
-- adverse changes in freight, energy or other costs of producing,
distributing or transporting our products;
-- stability of labor relations;
-- dependence on key personnel;
-- changes in estimates in critical accounting judgments;
-- the outcome of any litigation or arbitration; 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) (b)
(In thousands except per-share amounts)
Three Months Ended Six Months Ended
December 31, December 31,
------------ ------------
2014 2013 2014 2013
---- ---- ---- ----
Net sales $303,411 $292,281 $563,398 $540,418
Cost of sales 224,758 210,658 427,321 401,624
------- ------- ------- -------
Gross margin 78,653 81,623 136,077 138,794
Selling, general & administrative expenses 28,437 25,438 51,257 46,178
------ ------ ------ ------
Operating income 50,216 56,185 84,820 92,616
Interest income and other - net (47) (86) (39) (124)
--- --- --- ----
Income from continuing operations before income taxes 50,169 56,099 84,781 92,492
Taxes based on income 17,215 18,966 29,066 31,307
Income from continuing operations 32,954 37,133 55,715 61,185
Income from discontinued operations, net of tax - 2,101 - 2,850
--- ----- --- -----
Net income $32,954 $39,234 $55,715 $64,035
======= ======= ======= =======
Net income per common share:(a)
Continuing operations - basic $1.21 $1.36 $2.04 $2.24
Continuing operations - diluted $1.20 $1.36 $2.04 $2.24
Discontinued operations - basic and diluted $ - $0.08 $ - $0.10
Net income - basic $1.21 $1.44 $2.04 $2.35
Net income - diluted $1.20 $1.44 $2.04 $2.34
Cash dividends per common share $0.46 $0.44 $0.90 $0.84
Weighted average common shares outstanding:
Basic 27,294 27,244 27,290 27,256
Diluted 27,323 27,299 27,319 27,306
(a) Based on the weighted average number of shares outstanding during each period.
(b) All glassware and candles operations have been reflected as discontinued in the prior-year periods.
LANCASTER COLONY CORPORATION
BUSINESS SEGMENT INFORMATION (Unaudited) (b)
(In thousands)
Three Months Ended Six Months Ended
December 31, December 31,
------------ ------------
2014 2013 2014 2013
---- ---- ---- ----
NET SALES - Specialty Foods $303,411 $292,281 $563,398 $540,418
---------------------------
OPERATING INCOME
----------------
Specialty Foods $53,240 $59,413 $90,739 $98,956
Corporate expenses (3,024) (3,228) (5,919) (6,340)
------ ------ ------ ------
Total Operating Income $50,216 $56,185 $84,820 $92,616
======= ======= ======= =======
LANCASTER COLONY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (b)
(In thousands)
December 31, June 30,
2014 2014
---- ----
ASSETS
------
Current assets:
Cash and equivalents $256,148 $211,539
Receivables - net of allowance for doubtful accounts 58,910 57,808
Total inventories 68,881 74,516
Deferred income taxes and other current assets 16,837 23,428
------ ------
Total current assets 400,776 367,291
Net property, plant and equipment 171,096 168,674
Other assets 102,605 102,665
------- -------
Total assets $674,477 $638,630
======== ========
LIABILITIES AND
SHAREHOLDERS' EQUITY
---------------------
Current liabilities:
Accounts payable $41,487 $37,907
Accrued liabilities 31,036 31,165
------ ------
Total current liabilities 72,523 69,072
Other noncurrent
liabilities and deferred
income taxes 40,687 40,961
Shareholders' equity 561,267 528,597
------- -------
Total liabilities and
shareholders' equity $674,477 $638,630
======== ========
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SOURCE Lancaster Colony Corporation
