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Exhibit 99.1 | ||||
FOR IMMEDIATE RELEASE | SYMBOL: LANC | |||
October 25, 2018 | TRADED: Nasdaq |
• | Consolidated net sales increased 5.9% to a first quarter record $316.7 million versus $298.9 million last year. |
• | Retail net sales grew 0.4% to $162.7 million as the impact of price increases taken in response to higher freight and commodity costs and continued volume gains for shelf-stable dressings and sauces sold under license agreements helped drive improvement. The Retail net sales results also reflect a reduced level of trade spending and coupon expenses compared to the prior year. Note that organic sales growth in the prior-year quarter was a relatively strong 4.0% and included some benefit from the timing of seasonal shipments of caramel dips and frozen dinner rolls that did not recur this year. |
• | Foodservice net sales advanced a strong 12.5% to $153.9 million as the segment benefited from a number of factors including: higher sales volumes from existing business; additional sales from new business; incremental sales resulting from temporary supply and service issues experienced by some of our foodservice competitors; pricing actions we implemented beginning in January to help offset higher freight and commodity costs; and a comparison to a relatively weak prior-year quarter with a reported sales decline of 1.4%. Limited-time-offer program sales to our national chain restaurant accounts were slightly below last year’s level. |
• | Consolidated gross profit grew $5.7 million or 7.6% to $81.2 million as the increased sales volumes, pricing actions, lower trade spending and coupon expenses, continued cost savings from our lean six sigma program and improved operating efficiencies more than offset higher freight and commodity costs. |
• | Selling, general and administrative expenses held nearly even at $32.1 million compared to last year’s $31.3 million as reduced spending for digital advertising and lower brokerage costs were offset by incremental investments in salaried personnel to support our continued growth. |
• | Consolidated operating income increased 11.2% to $49.1 million from $44.2 million in the prior year driven by the gross profit improvement. Consolidated operating margin improved 70 basis points to 15.5% as influenced by the factors referenced above. Retail segment operating margin improved from 20.3% to 20.9% while Foodservice segment operating margin increased from 10.7% to 12.3%. |
• | Net income was $39.0 million, or $1.42 per diluted share, compared to $29.4 million, or $1.07 per diluted share, last year. Note that the lower tax rate of 22.6% in the current year compared to the prior-year rate of 34.2% primarily reflects the favorable impact of the Tax Cuts and Jobs Act of 2017. |
• | The regular quarterly cash dividend was continued at the higher level of $.60 per share set in November 2017. The company’s balance sheet remained debt free on September 30, 2018 with $218 million in cash and equivalents. |
• | the ability to successfully grow recently acquired businesses; |
• | the extent to which recent and future business acquisitions are completed and acceptably integrated; |
• | stability of labor relations; |
• | fluctuations in the cost and availability of ingredients and packaging; |
• | adverse changes in freight, energy or other costs of producing, distributing or transporting our products; |
• | price and product competition; |
• | the reaction of customers or consumers to price increases we may implement; |
• | the potential for loss of larger programs or key customer relationships; |
• | the impact of customer store brands on our branded retail volumes; |
• | capacity constraints that may affect our ability to meet demand or may increase our costs; |
• | dependence on contract manufacturers, distributors and freight transporters; |
• | changes in estimates in critical accounting judgments; |
• | the success and cost of new product development efforts; |
• | the lack of market acceptance of new products; |
• | dependence on key personnel and changes in key personnel; |
• | the effect of consolidation of customers within key market channels; |
• | the possible occurrence of product recalls or other defective or mislabeled product costs; |
• | changes in demand for our products, which may result from loss of brand reputation or customer goodwill; |
• | maintenance of competitive position with respect to other manufacturers; |
• | efficiencies in plant operations; |
• | the impact of any regulatory matters affecting our food business, including any required labeling changes and their impact on consumer demand; |
• | the outcome of any litigation or arbitration; |
• | the impact, if any, of certain contingent liabilities associated with our withdrawal from a multiemployer pension plan; |
• | the impact of fluctuations in our pension plan asset values on funding levels, contributions required and benefit costs; and |
• | risks related to other factors described under “Risk Factors” in other reports and statements filed by us with the Securities and Exchange Commission, including without limitation our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q (available at www.sec.gov). |
FOR FURTHER INFORMATION: | Douglas A. Fell, Vice President and CFO, or |
Dale N. Ganobsik, Vice President, Investor Relations and Treasurer | |
Lancaster Colony Corporation | |
Phone: 614/224‑7141 | |
Email: ir@lancastercolony.com |
Three Months Ended September 30, | |||||||
2018 | 2017 | ||||||
Net sales | $ | 316,654 | $ | 298,916 | |||
Cost of sales | 235,455 | 223,441 | |||||
Gross profit | 81,199 | 75,475 | |||||
Selling, general & administrative expenses | 32,079 | 31,299 | |||||
Operating income | 49,120 | 44,176 | |||||
Other, net | 1,314 | 508 | |||||
Income before income taxes | 50,434 | 44,684 | |||||
Taxes based on income | 11,406 | 15,298 | |||||
Net income | $ | 39,028 | $ | 29,386 | |||
Net income per common share: (a) | |||||||
Basic and diluted | $ | 1.42 | $ | 1.07 | |||
Cash dividends per common share | $ | 0.60 | $ | 0.55 | |||
Weighted average common shares outstanding: | |||||||
Basic | 27,424 | 27,396 | |||||
Diluted | 27,514 | 27,451 |
Three Months Ended September 30, | |||||||
2018 | 2017 | ||||||
NET SALES | |||||||
Retail | $ | 162,748 | $ | 162,144 | |||
Foodservice | 153,906 | 136,772 | |||||
Total Net Sales | $ | 316,654 | $ | 298,916 | |||
OPERATING INCOME | |||||||
Retail | $ | 33,948 | $ | 32,869 | |||
Foodservice | 18,861 | 14,690 | |||||
Corporate Expenses | (3,689 | ) | (3,383 | ) | |||
Total Operating Income | $ | 49,120 | $ | 44,176 |
September 30, 2018 | June 30, 2018 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and equivalents | $ | 217,935 | $ | 205,752 | |||
Receivables | 83,398 | 72,960 | |||||
Inventories | 102,822 | 90,861 | |||||
Other current assets | 6,315 | 9,304 | |||||
Total current assets | 410,470 | 378,877 | |||||
Net property, plant and equipment | 195,772 | 190,813 | |||||
Other assets | 233,941 | 234,801 | |||||
Total assets | $ | 840,183 | $ | 804,491 |
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 67,483 | $ | 57,978 | |||
Accrued liabilities | 40,018 | 35,789 | |||||
Total current liabilities | 107,501 | 93,767 | |||||
Other noncurrent liabilities and deferred income taxes | 58,663 | 58,442 | |||||
Shareholders’ equity | 674,019 | 652,282 | |||||
Total liabilities and shareholders’ equity | $ | 840,183 | $ | 804,491 |
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