Lancaster Colony reports fiscal Q2 net earnings of US$39.3M, up 11% from year-ago period as net sales rise 3% to record US$336M
January 31, 2014
– Lancaster Colony Corporation (Nasdaq: LANC) today reported the following highlights for the company's second fiscal quarter ended December 31, 2013:
Net sales increased three percent to a record $336 million versus $326 million in the second quarter last year.
Net income increased 11 percent to $39,234,000 compared with $35,277,000 for the corresponding quarter a year ago. Net income per diluted share was $1.44 versus $1.28 in the year-ago quarter.
Specialty Foods sales increased seven percent in the quarter to a record $292.3 million, reflecting higher sales volumes to both retail and foodservice channels. Retail sales growth was influenced by the success of recently introduced products, broadly improved sales of frozen products, and generally comparable levels of trade and consumer promotions.
Foodservice sales improved primarily due to higher volume, especially to larger chain restaurants. Segment operating income totaled a record $59.4 million, up 18 percent from last year's level, primarily reflecting the higher sales volume and modestly reduced raw-material costs, with the latter impact estimated at approximately one percent of segment net sales.
Glassware and Candles sales decreased 19 percent to $43.3 million, reflecting reduced sales of seasonal products and more challenging retail conditions. As influenced by the lower sales and production volumes, segment operating income totaled $3.2 million compared with $5.6 million in the prior year second quarter. As announced yesterday, the net operating assets of this segment have been sold, which will result in this segment's historic results being classified as discontinued operations beginning in the third quarter. See the notes to the accompanying financial information for further details.
Corporate expenses in the current year's quarter of $3.2 million decreased slightly from the prior year's level.
The company's balance sheet remained strong with no debt at December 31, 2013 as well as over $176 million in cash and equivalents.
The regular quarterly cash dividend increased by 16 percent to $.44 per share compared to the prior year's distribution.
For the six months ended December 31, 2013, net sales were $621 million compared to $617 million for the first half last year. Net income was $64,035,000, or $2.34 per diluted share. In the prior year, six-month net income totaled $61,939,000, or $2.26 per diluted share.
Chairman and CEO John B. Gerlach, Jr. said, "We were quite pleased with the extent of the stronger sales and operating income achieved by the Specialty Foods segment. The market positions among our key retail product lines remained solid, and we believe we have made further inroads among key users of our foodservice products."
Looking ahead, Mr. Gerlach said, "We expect that retail channel sales in the second half of the fiscal year will benefit from improved distribution of existing products. While the near-term impact may be limited, some new products will also be introduced, including several frozen bread and pasta items. Although optimistic about our overall prospects for this period, we do anticipate a somewhat challenging third quarter comparison, which will reflect some noticeable shifting of sales volumes to our fiscal fourth quarter as a result of this year's later Easter. Based on current market conditions, we also expect to see continued benefit from modestly favorable net commodity costs over the balance of fiscal 2014. With added benefit from the recent divestiture, our financial condition continues to support future growth and long-term shareholder returns."
Conference Call on the Web
The company's second quarter conference call is scheduled for this morning, January 31, 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.