Lancaster Colony Reports Third Quarter Sales and Earnings
COLUMBUS, Ohio, April 29 -- Lancaster Colony Corporation today reported net income of $16,112,000 or 46 cents per diluted share for the company's third fiscal quarter ended March 31, 2005. For the corresponding quarter a year ago, net income totaled $16,045,000 or 45 cents per diluted share. The current year's third quarter net sales increased three percent to $277 million versus net sales of $269 million in the third quarter last year.
The current year's third quarter results included non-cash asset impairment charges affecting non-food operations that totaled $1.6 million before taxes (three cents per share after taxes). The prior year's third quarter amounts included pretax income of $0.8 million (one cent per share after taxes) related to the liquidation of LIFO inventories carried at substantially lower prior years' costs.
For the nine months ended March 31, 2005, net income reached $72,609,000, compared to $62,395,000 earned in the first nine months a year ago. Diluted earnings per share were $2.07 compared to $1.74 a year ago. Nine months net sales were $856 million compared to $827 million last year.
The most recent nine-months results included pretax income of $26.2 million (47 cents per share after taxes) associated with a second quarter distribution under the Continued Dumping and Subsidy Offset Act (CDSOA). In the prior year, the pretax CDSOA distribution was $2.0 million (three cents per share after taxes). Also received in the prior year's second quarter was a pretax bad-debt recovery of $1.2 million (two cents per share after taxes). Pretax LIFO-related income during the latest nine months totaled $0.9 million (two cents per share after taxes) compared to $3.4 million (six cents per share after taxes) in the corresponding period of a year ago.
John B. Gerlach, Jr., chairman and CEO, said, "We were pleased that all of our operating segments reported improved sales, particularly the continued growth in our Specialty Foods business."
Specialty Foods sales in the third quarter increased four percent to $163.7 million with both retail and foodservice volumes exceeding levels of the comparable quarter a year earlier. Operating income was up one percent to $24.4 million. The latest quarter saw growth across a number of product lines, most notably frozen breads and rolls. Somewhat lower material costs prevailed in the quarter, but the segment also experienced a less favorable product mix in frozen breads, higher freight costs and start-up expenses associated with the opening of a new frozen foods distribution center.
Sales of the Automotive segment improved slightly to $57.3 million in the third quarter. Operating income for the quarter declined to $0.2 million from $2.0 million a year ago. Improved sales of aluminum accessory items continued to be largely offset by lower floormat sales. Substantial increases in raw material costs have generally led to the segment's reduced operating results. Automotive results during the most recent quarter also included a non-cash impairment charge of approximately $0.7 million related to certain idle floormat manufacturing equipment.
Net sales during the most recent quarter of the Glassware and Candles segment also increased slightly to $55.8 million. Operating income for the quarter improved to $1.6 million versus $1.1 million in the year-ago quarter. Higher candle volumes and further improvements in glass manufacturing helped offset higher material costs and less LIFO-related income. Segment operating income for the quarter also included a non-cash impairment charge of approximately $0.9 million related to certain glassware manufacturing equipment.
Looking ahead, Mr. Gerlach said, "We anticipate favorable consumer reaction to several new food items, including T. Marzetti's recently repackaged line of produce dressings and new microwavable products being introduced under the Sister Schubert's brand. In the current quarter, we expect to begin production of aluminum automotive accessories supporting a large, new OEM program. Our Glassware and Candles segment will likely experience seasonally low sales in the fourth quarter, and we may reduce glass production to better balance inventories with future needs. The fourth quarter should see lower food, but higher nonfood, material costs. Our debt- free balance sheet and solid cash flows continue to provide an excellent base for future growth."
The company's third quarter conference call is scheduled for this morning, April 29, at 10:00 a.m. EDT. 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/ . Replays of the webcast will be made available on the company website.
We desire to take advantage of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 (the "PSLRA"). This news release contains various "forward-looking statements" within the meaning of the PSLRA and other applicable securities laws. Such statements can be identified by the use of the forward-looking words "anticipate," "estimate," "project," "believe," "intend," "expect," "hope" or similar words. These statements discuss future expectations, contain projections regarding future developments, operations or financial conditions, or state other forward- looking information. Such statements are based upon assumptions and assessments made by us in light of our experience and perception of historical trends, current conditions, expected future developments and other factors we believe to be appropriate. These forward-looking statements involve various important risks, uncertainties and other factors that could cause our actual results to differ materially from those expressed in the forward-looking statements. Actual results may differ as a result of factors over which we 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 that are based on current expectations. We undertake no obligation to publicly update such forward-looking statements. More detailed statements regarding significant events that could affect our financial results are included in our annual report on Form 10-K for the year ended June 30, 2004 filed with the Securities and Exchange Commission.
LANCASTER COLONY CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(In thousands except per-share amounts)
Three Months Ended Nine Months Ended
March 31, March 31,
2005 2004 2005 2004
Net sales $276,822 $269,463 $855,655 $827,311
Cost of sales 225,522 219,659 690,979 656,649
Gross margin 51,300 49,804 164,676 170,662
Selling, general &
administrative
expenses 25,080 24,401 75,387 73,473
Restructuring and
impairment charge 1,621 -- 2,108 --
Operating income 24,599 25,403 87,181 97,189
Interest income and
other - net 1,105 457 28,791 3,283
Income before income
taxes 25,704 25,860 115,972 100,472
Taxes based on
income 9,592 9,815 43,363 38,077
Net income $16,112 $16,045 $72,609 $62,395
Net income per
common share:(a)
Basic $.46 $.45 $2.07 $1.75
Diluted $.46 $.45 $2.07 $1.74
Cash dividends per
common share $.25 $.23 $.73 $.66
Weighted average
common shares
outstanding:
Basic 34,742 35,736 35,060 35,740
Diluted 34,799 35,814 35,117 35,814
(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 Nine Months Ended
March 31, March 31,
2005 2004 2005 2004
NET SALES
Specialty Foods $163,709 $156,748 $501,393 $475,453
Glassware and
Candles 55,774 55,658 187,348 184,493
Automotive 57,339 57,057 166,914 167,365
$276,822 $269,463 $855,655 $827,311
OPERATING INCOME
Specialty Foods $24,371 $24,085 $82,786 $81,494
Glassware and
Candles 1,555 1,147 6,318 11,017
Automotive 232 2,025 3,586 9,480
Corporate expenses (1,559) (1,854) (5,509) (4,802)
$24,599 $25,403 $87,181 $97,189
LANCASTER COLONY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
March 31, June 30,
2005 2004
(Unaudited)
ASSETS
Current assets:
Cash, cash equivalents and
short-term investments $182,081 $178,503
Receivables - net of allowance
for doubtful accounts 107,713 94,623
Total inventories 147,166 155,076
Deferred income taxes and
other current assets 27,223 22,803
Total current assets 464,183 451,005
Net property, plant and equipment 150,271 159,494
Other assets 103,078 102,388
Total assets $717,532 $712,887
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $46,573 $47,235
Accrued liabilities 48,477 45,496
Total current liabilities 95,050 92,731
Other noncurrent liabilities
and deferred taxes 33,254 33,371
Shareholders' equity 589,228 586,785
Total liabilities
and shareholders' equity $717,532 $712,887
SUBJECT TO YEAR-END AUDIT.