Lancaster Colony Corporation (Nasdaq: LANC) released its financial results for the fiscal second quarter ended December 31, 2023. Here is a summary of the key highlights:
Financial Highlights:
- Consolidated net sales achieved a 1.8% increase, reaching a second-quarter record of $485.9 million, compared to $477.4 million in the previous year.
- Retail net sales experienced a 2.0% growth, totaling $264.0 million, while Foodservice net sales saw a 1.5% increase, reaching $221.9 million.
- Consolidated gross profit surged by $19.4 million, or 19.0%, reaching a second-quarter record of $121.5 million.
- Consolidated operating income rose by $14.4 million, or 28.1%, setting a second-quarter record of $65.8 million.
- Net income per diluted share was $1.87, compared to $1.45 per diluted share in the corresponding period last year.
CEO Commentary:
CEO David A. Ciesinski expressed satisfaction with the record-breaking sales and profits for the quarter. He attributed Retail segment growth to the success of their licensing program, notable volume gains for New York BRAND® Bakery frozen garlic bread, and increased demand for Reames® frozen egg noodles. In the Foodservice segment, higher sales were driven by increased demand from national chain restaurant accounts and volume growth for branded Foodservice products. However, Foodservice segment sales were affected by deflationary pricing during the period.
Outlook for the Fiscal Third Quarter:
Looking ahead to the fiscal third quarter, the company anticipates continued benefits from the expanding licensing program in the Retail segment and sustained volume growth from select quick-service restaurant customers in the Foodservice segment. The company expects continued favorable pricing net of commodity costs but at a sequentially lower level compared to the fiscal second quarter, with deflationary pricing remaining a challenge for Foodservice segment net sales.
Additional Details on Second Quarter Results:
- Retail segment net sales growth of 2.0% was attributed to volume gains from the licensing program, particularly Chick-fil-A® sauces and dressings, as well as successful products like New York BRAND® Bakery frozen garlic bread and Reames® frozen egg noodles.
- Retail segment sales volume, measured in pounds shipped, declined 1.9%, but excluding certain impacts, it increased by 1.2%.
- Foodservice segment net sales increased by 1.5%, driven by higher demand from national chain restaurant accounts and volume growth for branded Foodservice products despite deflationary pricing.
- Consolidated gross profit margin improved to 25.0%, reflecting favorable pricing net of commodity costs following two years of inflation and the positive impacts of cost savings initiatives.
- SG&A expenses rose to $55.7 million due to increased consumer spending and higher brokerage costs.
- Consolidated operating income increased by $14.4 million to a second-quarter record of $65.8 million, driven by higher gross profit partially offset by increased SG&A expenses.
- Net income increased to $51.5 million, or $1.87 per diluted share, compared to $1.45 per diluted share in the prior-year quarter.
Fiscal Year-to-Date Results:
For the six months ended December 31, 2023, net sales increased by 4.9% to $947.5 million compared to $902.9 million a year ago. Net income for the six-month period was $95.4 million, or $3.47 per diluted share, compared to $77.6 million, or $2.81 per diluted share, in the prior-year period. Project Ascent expenditures decreased net income by $4.5 million, or $0.16 per diluted share, in the current-year period, and by $12.8 million, or $0.47 per diluted share, in the prior-year period.
