Lancaster Colony Reports Second Quarter Sales and Earnings
COLUMBUS, Ohio, Jan. 28, 2005 -- Lancaster Colony Corporation today reported net income for the company's second fiscal quarter ended December 31, 2004 reached $38,119,000, or $1.08 per diluted share, compared with net income of $26,650,000, or $.74 per diluted share in the second quarter last year. Net sales increased two percent to $297 million versus $291 million a year ago.
Earnings for the quarter included pretax income of $26.2 million (47 cents per share after taxes) associated with a distribution received under the Continued Dumping and Subsidy Offset Act. A similar distribution contributed pretax income of $2.0 million (three cents per share after taxes) in the second quarter a year ago. Also included in the prior year's second quarter results were pretax income of $1.2 million (two cents per share after taxes) related to a bad-debt recovery and pretax income of $1.0 million (two cents per share after taxes) related to the liquidation of LIFO inventories carried at substantially lower prior years' costs.
For the six months ended December 31, 2004, net income totaled $56,497,000 compared to $46,350,000 earned in the corresponding period a year ago. Diluted earnings per share were $1.60 compared to $1.29 for the first six months last year. Six-month net sales were $579 million compared to $558 million last year. In the first half this year, LIFO-related pretax income amounted to $.6 million (one cent per share after taxes) compared with $2.6 million (five cents per share after taxes) a year ago.
John B. Gerlach, Jr., chairman and CEO of Lancaster Colony Corporation, said, "Increased sales of specialty foods contributed to the top line improvement for the quarter, but our operations faced higher nonfood material costs as well as generally higher freight and energy costs. Pricing relief is difficult except through new product development."
Specialty Foods net sales totaled $177 million, up eight percent over the prior year's second quarter total. Segment operating income was essentially unchanged from the prior year's total at $31 million. Most of the segment's top line growth was internally generated although Warren Frozen Foods, acquired in December 2003, contributed approximately $5 million of the sales increase. Segment operating margins reflect a less favorable sales mix and certain frozen bread production inefficiencies.
Glassware and Candles net sales totaled $68 million in the second quarter, a seven percent decline from the year-ago quarter. Segment operating income totaled $3.7 million, compared to $6.8 million in the year ago quarter. Comparative operating income was impacted by the prior year's LIFO-related income and bad-debt recovery. For the year-to-date period, the segment achieved higher sales and more efficient glassware manufacturing, but remains confronted by intense competitive pressures in retail markets.
Automotive sales totaled $52 million, a four percent decline from the second quarter level in the prior year. Improved sales of aluminum truck accessories were more than offset by a decline in sales of automotive floor mats. Segment operating income for the quarter was down $2.7 million to $1.1 million, as this segment's profitability remained adversely affected by markedly higher costs for many key raw materials.
Looking forward, Mr. Gerlach stated, "We continue our efforts to improve our sales and profitability through new product development and marketing efforts, including introducing significantly redesigned packaging for our high-profile line of produce salad dressings. Operating results in the second half of our fiscal year will likely benefit from a reduction in certain food ingredient costs, although this benefit will be mitigated by continuing higher costs for many nonfood raw materials." As of December 31, 2004, the company remained debt free, with over $204 million in cash and equivalents as well as $606 million in shareholders' equity.
The company's second quarter conference call is scheduled for this morning, January 28, 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 http://www.lancastercolony.com/ . The webcast will be archived and available on the company's website.
This news release contains forward-looking statements related to future growth and earnings opportunities. Such statements are based upon certain assumptions and assessments made by management of the company in light of its experience and perception of historical trends, current conditions, expected future developments and other factors it believes to be appropriate. Actual results may differ as a result of factors over which the company may have no, or limited, control including the strength of the economy, slower than anticipated sales growth, the extent of operational efficiencies achieved, the success of new product introductions, price and product competition, and increases in raw materials costs. Management believes these forward-looking statements to be reasonable; however, undue reliance should not be placed on such statements, which are based on current expectations. The company undertakes no obligation to publicly update such forward-looking statements. More detailed statements regarding significant events which could affect the company's financial results are included in the company's Forms 10-K and 10-Q filed with the Securities and Exchange Commission.
LANCASTER COLONY CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(In thousands except per-share amounts)
Three Months Ended Six Months Ended
December 31, December 31,
2004 2003 2004 2003
Net sales $ 297,349 $ 291,196 $ 578,833 $ 557,848
Cost of sales 237,990 226,145 465,457 436,990
Gross margin 59,359 65,051 113,376 120,858
Selling, general &
administrative expenses 25,531 24,903 50,307 49,072
Restructuring and
impairment charge 45 -- 487 --
Operating income 33,783 40,148 62,582 71,786
Interest income and
other - net 27,059 2,480 27,686 2,826
Income before income taxes 60,842 42,628 90,268 74,612
Taxes based on income 22,723 15,978 33,771 28,262
Net income $ 38,119 $ 26,650 $ 56,497 $ 46,350
Net income per
common share:(a)
Basic $ 1.09 $ .75 $ 1.60 $ 1.30
Diluted $ 1.08 $ .74 $ 1.60 $ 1.29
Cash dividends per
common share $ .25 $ .23 $ .48 $ .43
Weighted average common
shares outstanding:
Basic 35,084 35,719 35,220 35,741
Diluted 35,144 35,798 35,276 35,815
(a) Based on the weighted average number of shares outstanding during each period.
LANCASTER COLONY CORPORATION
BUSINESS SEGMENT INFORMATION (Unaudited)
(In thousands)
Three Months Ended Six Months Ended
December 31, December 31,
2004 2003 2004 2003
NET SALES
Specialty Foods $ 177,075 $ 163,888 $ 337,684 $ 318,705
Glassware and Candles 67,842 72,709 131,574 128,835
Automotive 52,432 54,599 109,575 110,308
$ 297,349 $ 291,196 $ 578,833 $ 557,848
OPERATING INCOME
Specialty Foods $ 31,036 $ 31,096 $ 58,415 $ 57,409
Glassware and Candles 3,684 6,764 4,763 9,870
Automotive 1,098 3,804 3,354 7,455
Corporate expenses (2,035) (1,516) (3,950) (2,948)
$ 33,783 $ 40,148 $ 62,582 $ 71,786
LANCASTER COLONY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
December 31, June 30,
2004 2004
(Unaudited)
ASSETS
Current assets:
Cash and equivalents $ 204,670 $ 178,503
Receivables - net of allowance
for doubtful accounts 109,001 94,623
Total inventories 142,798 155,076
Deferred income taxes and
other current assets 29,224 22,803
Total current assets 485,693 451,005
Net property, plant and equipment 154,350 159,494
Other assets 103,268 102,388
Total assets $ 743,311 $ 712,887
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 42,428 $ 47,383
Accrued liabilities 61,642 45,348
Total current liabilities 104,070 92,731
Other noncurrent liabilities
and deferred taxes 33,696 33,371
Shareholders' equity 605,545 586,785
Total liabilities
and shareholders' equity $ 743,311 $ 712,887
SUBJECT TO YEAR-END AUDIT.