Lancaster Colony Reports First Quarter Sales And Earnings

COLUMBUS, Ohio, Oct. 27, 2016 /PRNewswire/ -- Lancaster Colony Corporation LANC today reported results for the company's first fiscal quarter ended September 30, 2016.  Highlights for the quarter are as follows:

• Net sales decreased 0.9% to $291.4 million versus $294.1 million last year.
• In the retail channel, net sales increased 3% with Olive Garden^® dressings, Marzetti^® caramel dips, New York BRAND^® Bakery frozen garlic bread products and Sister Schubert's^® frozen dinner rolls performing well. Higher coupon expenses and product placement costs served to limit retail sales growth. In the foodservice channel, net sales declined 5% as influenced by our targeted business rationalization efforts, deflationary pricing from lower egg costs and weakness in limited time offer promotional programs with national chain restaurants.
• Despite the slight decline in net sales, operating income increased over 21% to $50.8 million on lower commodity costs, particularly eggs, a more favorable sales mix and reduced freight costs partially offset by a higher level of investment in marketing and retail promotions. The change in corporate expenses for the current quarter largely reflects costs related to closed business operations.
• Net income was $33.4 million, or $1.22 per diluted share compared to $27.6 million or $1.01 per diluted share last year.
• The regular quarterly cash dividend was continued at the higher level of $.50 per share set in November 2015. The company's balance sheet remained debt free on September 30, 2016 with $145.7 million in cash and equivalents.

Chairman and CEO John B. Gerlach, Jr. commented, "While our top line was challenged by the customer rationalization and deflationary pricing in the foodservice channel, we were encouraged by the improved contributions from our frozen bread businesses in the retail channel and pleased to report record high first quarter operating income.  Although we have seen a heightened level of competition within the refrigerated dressing category in recent months, we remain very positive about this category and our leading market position. Looking ahead, commodity costs are expected to remain favorable in the second quarter then turn flat for the back half of the fiscal year.  On the innovation front, retailer acceptance of the recently introduced Bake & Break™ garlic bread loaf from New York Bakery has been trending favorably.  We also launched a new Sister Schubert's Shareable™ bread loaf and added a red wine balsamic flavor to our lineup of Olive Garden retail dressings."

Conference Call on the Web

The company's first quarter conference call is scheduled for this morning, October 27, at 10:00 a.m. ET.  You may access a live webcast of the call via the link on the company's Internet home page at www.lancastercolony.com.  A replay of the webcast will also 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 channels.

Forward-Looking Statements

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," "plan," "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, many of which are beyond our control, which could cause our actual results to differ materially from those expressed in the forward-looking statements. Some of the key factors that could cause actual results to differ materially from those expressed in the forward-looking statements include:

• price and product competition;
• the impact of any regulatory matters affecting our food business, including any required labeling changes and their impact on consumer demand;
• the potential for loss of larger programs or key customer relationships;
• fluctuations in the cost and availability of ingredients and packaging;
• the reaction of customers or consumers to the effect of price increases we may implement;
• the effect of consolidation of customers within key market channels;
• the success and cost of new product development efforts;
• the lack of market acceptance of new products;
• 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;
• adverse changes in freight, energy or other costs of producing, distributing or transporting our products;
• capacity constraints that may affect our ability to meet demand or may increase our costs;
• dependence on contract manufacturers;
• efficiencies in plant operations;
• stability of labor relations, including the impact of our current contract negotiations with a collective bargaining unit;
• the outcome of any litigation or arbitration;
• the impact of fluctuations in our pension plan asset values on funding levels, contributions required and benefit costs;
• the extent to which future business acquisitions are completed and acceptably integrated;
• dependence on key personnel and changes in key personnel;
• changes in estimates in critical accounting judgments; 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).

Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update such forward-looking statements, except as required by law. Management believes these forward-looking statements to be reasonable; however, you should not place undue reliance on statements that are based on current expectations.

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SOURCE Lancaster Colony Corporation