Lancaster Colony reports fiscal Q3 net income of US$18.2M, down 6.3% from year-ago period, primarily because of higher costs in specialty foods segment; net sales up 7.1% to US$271M

Nevin Barich

COLUMBUS, Ohio , April 26, 2012 (press release) – Lancaster Colony Corporation (LANC) today reported results for the company's third fiscal quarter ended March 31, 2012. Highlights of the quarter:

* Net sales increased seven percent to $271 million versus $253 million in the third quarter last year, reflecting strong sales growth in the Specialty Foods segment.
* Net income totaled $18,222,000 compared with $19,441,000 for the corresponding quarter a year ago, primarily reflecting higher costs experienced within the Specialty Foods segment. Third quarter net income per diluted share totaled $.67 compared to $.71 a year ago.
* Specialty Foods sales increased nine percent to a third quarter record of $237 million on higher volume and pricing. Both retail and foodservice sales volumes improved, with this year's earlier Easter helping retail sales. Pricing contributed approximately half the quarter's increase in sales. The segment's operating income totaled $29.6 million compared to $31.7 million in the third quarter last year. Increased material, freight and marketing costs were only partially offset by improved pricing.
* Glassware and Candles sales declined four percent to $34 million on lower candle volume. However, the segment's operating income increased to $1.0 million from $0.7 million in the third quarter last year. Modest pricing improvement and a better sales mix helped offset lower sales.
* The company's balance sheet remained strong with no debt outstanding at March 31, 2012, and $168 million in cash and equivalents.
* The quarterly cash dividend was continued at the higher level of $.36 per share set last quarter.

For the nine months ended March 31, 2012, net sales were $857 million compared to $834 million a year ago. Net income was $69,853,000, or $2.56 per diluted share. Net income for the nine months last year totaled $77,071,000, or $2.77 per diluted share. Current year-to-date net income included pretax income of $2.7 million (six cents per share after taxes) from a second-quarter distribution received under the Continued Dumping and Subsidy Offset Act (CDSOA). In the prior year, net income included a pretax CDSOA distribution of $1.0 million (two cents per share after taxes).

John B. Gerlach, Jr., chairman and CEO, said, "We were pleased with the improvement in Specialty Foods sales, given the widely reported challenges faced by consumers. Our quarterly results were affected by the timing of certain marketing expenditures, as well as higher material and freight costs."

Looking ahead, Mr. Gerlach added, "We anticipate that retail food sales during our fiscal fourth quarter will be affected by the earlier Easter timing and continued economic pressures on consumers. Our Specialty Foods segment should benefit from ongoing success with recent retail product introductions, somewhat higher average pricing, lower marketing costs and less unfavorable commodity cost comparisons. In a seasonally slower fourth quarter, our Glassware and Candles segment will likely experience a continuation of third quarter trends. We believe that throughout fiscal 2012 we have maintained a solid base upon which to build further growth in fiscal 2013."

Conference Call on the Web

The company's third quarter conference call is scheduled for this morning, April 26, 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 diversified manufacturer and marketer of consumer products focusing primarily on specialty foods for the retail and foodservice markets.

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