Lancaster Colony sales up, earnings down

WESTERVILLE, OHIO. — Regardless of sturdy gross sales from the corporate’s baked meals manufacturers, together with Sister Schubert’s “strongest vacation efficiency ever,” elevated prices pressured profitability at Lancaster Colony Corp. within the firm’s most up-to-date fiscal quarter.

Web earnings at Lancaster Colony within the second quarter ended Dec. 31, 2021, was $34.37 million, equal to $1.25 per share on the widespread inventory, down 23% from $44.63 million, or $1.62 per share, throughout the second quarter of fiscal 2021. Web gross sales had been $428.43 million, up 14% from $375.02 million.

David A. Ciesinski, president and chief government officer, mentioned sturdy gross sales of Sister Schubert’s dinner rolls and sauces offered underneath the Chick-fil-A and Buffalo Wild Wings manufacturers underneath license agreements, along with greater costs weren’t sufficient to offset greater prices emanating from a number of instructions.

“Whereas pricing actions served to offset important commodity value inflation and better freight charges, we weren’t in a position to absolutely get better the opposite industry-wide value pressures similar to elevated wage charges within the intervals,” Mr. Ciesinski mentioned.

He mentioned the corporate’s margins additionally had been squeezed by a choice to considerably improve utilization of co-manufacturers to assist meet rising demand for the corporate’s bottled sauces.

The corporate’s grain-based meals strains carried out properly, Mr. Ciesinski mentioned.

“On a two-year stack foundation for the quarter, IRI retail scanner information reveals sturdy gross sales development and share positive factors for a number of of our branded merchandise, together with Marzetti produce dressings, Sister Schubert’s frozen dinner rolls, New York Bakery garlic bread and Reams frozen noodles,” he mentioned.

Through the quarter, internet gross sales had been up 10% due to greater costs and quantity positive factors related to an enlargement of the corporate’s licensing program in its sauces enterprise and the sturdy efficiency of its Sister Schubert’s frozen dinner rolls. The ten% acquire adopted Retail gross sales development of 19.5% throughout the identical interval final 12 months. Measured in kilos, gross sales development was 4% within the second quarter, 12% in final 12 months’s second quarter.

“For the quarter versus prior 12 months, IRI information confirmed sturdy share positive factors for our frozen breads with Sister Schubert’s dinner rolls up 150 foundation factors to 54.1% and New York Bakery garlic bread up 230 foundation factors to 42.5%,” Mr. Ciesinski mentioned. “With gross sales of $61.6 million, Q2 was Sister Schubert’s strongest vacation efficiency ever, because of nice retail execution in a troublesome atmosphere.”

Through the quarter Lancaster Colony recorded two particular objects associated to the Bantam Bagels enterprise. The corporate revalued the contingent consideration legal responsibility to the sellers utilizing honest worth accounting. The revaluation translated right into a constructive adjustment of $2.2 million, together with $0.9 recorded to the corporate’s Retail enterprise and $1.3 million to the Foodservice enterprise. On the similar time, Lancaster Colony revalued its intangible property line on its steadiness sheet for the Bantam Bagels enterprise, recorded as a $0.9 million impairment for the Retail phase.

Wanting ahead, Mr. Ciesinski mentioned challenges from greater prices will proceed to adversely influence outcomes.

“We anticipate the unfavorable impacts of upper enter prices, elevated freight and warehousing prices, elevated expenditures attributed to the enduring provide chain challenges, and better labor prices will stay a headwind to our monetary leads to the approaching quarter,” he mentioned. “The inflationary pricing together with our ongoing value financial savings applications and internet worth realization efforts will assist to partially offset these greater prices.”

The corporate additionally mentioned it closed a frozen garlic bread manufacturing plant in Baldwin Park, Calif. The corporate is discontinuing its Mamma Bella line of frozen garlic bread. The corporate took a $1 million restructuring/impairment cost in reference to the choice to shut the California plant.

Within the six months ended Dec. 31, Lancaster Colony’s internet earnings was $65.03 million, or $2.36 per share, down 20% from $81.71 million, or $2.97. Web gross sales had been $820.48 million, up 13% from $724.25 million.