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Lancaster Colony reports Q2 sales and earnings

Published 27 January 2017

Lancaster Colony Corporation reported results for the company's second fiscal quarter ended December 31, 2016.

 Highlights for the quarter are as follows:

  • Net sales increased 0.6% to $326.8 million versus $324.8 million last year.
  • In the retail channel, net sales increased 3% with Olive Garden dressings, New York BRAND Bakery frozen garlic bread products, Sister Schubert'sfrozen dinner rolls, Flatout flatbreads and Reames frozen noodles contributing to growth. Retail sales gains were impacted by increased trade promotions and product placement costs. Net sales in the foodservice channel declined 2% reflecting both our targeted business rationalization efforts and deflationary pricing from lower egg costs, partially offset by a pickup in limited time offer promotional programs with national chain restaurants.
  • Operating income increased $7.2 million to $59.4 million on lower commodity costs, particularly eggs, and a more favorable sales mix as partially offset by a greater investment in retail trade and increased consumer promotions and product placement costs.
  • Net income was $39.0 million, or $1.42 per diluted share compared to $34.5 million or $1.25 per diluted share last year.
  • The regular quarterly cash dividend paid on December 30, 2016 was $.55per share, a ten percent increase from the prior year's level excluding the special dividend paid in December 2015. The company's balance sheet remained debt free on December 31, 2016 with $118.5 million in cash and equivalents.

For the six months ended December 31, 2016, net sales were essentially flat at$618.1 million compared to $618.9 million a year ago. Net income for the six-month period totaled $72.4 million, or $2.63 per diluted share versus the prior-year amount of $62.1 million, or $2.26 per diluted share.

Note that as detailed in the company's 8-K filing issued on January 24, 2017, the reported financial results for the upcoming fiscal third quarter will include the impact of a pre-tax charge of $17.7 million in settlement costs and related expenses resulting from the company's withdrawal from an underfunded multiemployer pension plan.

Chairman and CEO John B. Gerlach, Jr. commented, "While the top line headwinds of customer rationalization and deflationary pricing remained as expected for our foodservice channel in the second quarter, we were pleased with the uptick in retail channel sales from our frozen bread and pasta products.Looking ahead, commodity costs are expected to turn flat to modestly unfavorable in the back half of the fiscal year.We also expect continued deflationary pricing in the foodservice channel and ongoing softness in the foodservice industry, particularly the casual dining segment, to impact fiscal third quarter sales growth.In addition, this year's fiscal third quarter will reflect some shifting of retail sales volumes to our fiscal fourth quarter as a result of the later Easter holiday.

With respect to our recent acquisition of Angelic Bakehouse, a manufacturer and marketer of premium sprouted grain bakery products, the transaction closed onNovember 17, 2016 and the integration process is progressing well. We look forward to our pursuit of future growth opportunities for that business."

Source: Company Press Release