Lancaster Colony Corporation today announced its results for the fiscal fourth quarter and year ended June 30, 2024.
Fourth Quarter Overview
Net sales for the fourth quarter decreased by 0.4% to $452.8 million. The retail segment saw a 0.8% decline in net sales, totaling $234.2 million, primarily due to the exit from perimeter-of-the-store bakery product lines in March. Conversely, the foodservice segment’s net sales remained stable at $218.6 million, with deflationary pricing counteracting volume growth.
Gross profit for the quarter increased by $4.4 million to $97.6 million, and operating income rose by $30.2 million to $41.7 million. The quarter’s operating income was affected by $2.7 million in restructuring and impairment charges, compared to a $25.0 million reduction last year.
Net income for the fourth quarter was $1.26 per diluted share, a significant improvement from $0.33 per diluted share in the previous year. Restructuring and impairment charges reduced this year’s net income by $0.08 per share, compared to a $0.70 per share reduction last year.
CEO David A. Ciesinski stated, “We are pleased to report a 4.8% increase in gross profit despite a slight decline in sales. Our licensed products, such as Subway® sandwich sauces and Texas Roadhouse® steak sauces, contributed to incremental sales growth, while our New York BRAND® Bakery frozen garlic bread saw solid volume gains. Excluding the perimeter-of-the-store bakery lines we exited, retail net sales rose by 1.4%, and sales volume increased by 1.2%. In the Foodservice segment, flat net sales reflect deflationary pricing, but sales volume grew by 4.2% due to higher demand from national chain restaurant customers.”
Fourth Quarter Financial Details
- Net sales fell 0.4% to $452.8 million, with retail segment sales down 0.8% and foodservice segment sales stable.
- Excluding exited product lines, retail net sales grew 1.4%, and sales volume increased by 1.2%.
- Gross profit rose by $4.4 million to $97.6 million, benefiting from cost savings programs despite higher labor costs and deflationary pricing.
- SG&A expenses decreased by $3.5 million to $53.2 million, primarily due to reduced expenditures on Project Ascent and lower consumer spending, partially offset by higher personnel and IT investments.
- Restructuring and impairment charges totaled $2.7 million, linked to the exit from perimeter-of-the-store bakery product lines. The previous year’s charges were $25.0 million for the Flatout product line.
Operating income increased by $30.2 million to $41.7 million, driven by improved gross profit and reduced SG&A expenses, and net income rose by $25.7 million to $34.8 million, or $1.26 per diluted share.
Fiscal Year Results
For the fiscal year ended June 30, 2024, net sales grew by 2.7% to $1.87 billion. Net income totaled $158.6 million, or $5.76 per diluted share, compared to $111.3 million, or $4.04 per diluted share, in the previous year. Restructuring and impairment charges reduced this year’s net income by $11.4 million, or $0.42 per share, while expenditures for Project Ascent reduced net income by $6.3 million, or $0.23 per share. In fiscal 2023, similar charges reduced net income by $42.3 million in total.
Fiscal 2025 Outlook
Mr. Ciesinski added, “Looking ahead to fiscal 2025, we expect Retail segment sales to benefit from ongoing volume growth, bolstered by our licensing program and new product introductions. Our partnership with Texas Roadhouse now includes their popular dinner rolls, with a regional pilot test launched in June. We also anticipate continued strong sales for our New York BRAND® Bakery frozen garlic bread and Marzetti® refrigerated dressings. In the Foodservice segment, we foresee growth driven by select quick-service restaurant customers, although external factors such as economic performance may impact demand. We do not anticipate significant impacts from commodity cost fluctuations and aim to drive margin improvement through ongoing cost savings programs.”
