Company Performance - Lancaster Colony reported quarterly earnings of $1.54 per share, missing the Zacks Consensus Estimate of $1.61 per share, but showing an increase from $1.44 per share a year ago, resulting in an earnings surprise of -4.35% [1] - The company posted revenues of $457.84 million for the quarter, missing the Zacks Consensus Estimate by 5.46%, and down from $471.45 million year-over-year [2] - Over the last four quarters, Lancaster Colony has surpassed consensus EPS estimates only once and has topped consensus revenue estimates two times [2] Stock Performance - Lancaster Colony shares have increased approximately 11.4% since the beginning of the year, contrasting with a -5.5% decline in the S&P 500 [3] - The current consensus EPS estimate for the upcoming quarter is $1.46 on revenues of $468.3 million, and for the current fiscal year, it is $6.85 on revenues of $1.93 billion [7] Industry Outlook - The Zacks Industry Rank for Food - Miscellaneous is currently in the bottom 43% of over 250 Zacks industries, indicating potential challenges for stock performance [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact investor decisions [5]

[PART I – FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) This section presents unaudited condensed consolidated financial statements, notes, and management's discussion and analysis of operations [Item 1. Condensed Consolidated Financial Statements (unaudited)](index=3&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) This section presents the unaudited condensed consolidated balance sheets, statements of income, comprehensive income, cash flows, and shareholders' equity for Lancaster Colony Corporation and its subsidiaries, providing a snapshot of the company's financial position and performance for the periods ended March 31, 2025, and June 30, 2024 (balance sheet), and March 31, 2025 and 2024 (income, comprehensive income, cash flows, equity) [Condensed Consolidated Balance Sheets – March 31, 2025 and June 30, 2024](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20%E2%80%93%20March%2031%2C%202025%20and%20June%2030%2C%202024) This section provides a snapshot of the company's financial position at March 31, 2025, and June 30, 2024 | Metric | March 31, 2025 (in thousands) | June 30, 2024 (in thousands) | | :-------------------------------- | :---------------------------- | :--------------------------- | | Total Assets | $1,276,612 | $1,206,931 | | Property, Plant and Equipment-net | $537,887 | $477,696 | | Goodwill | $223,472 | $208,371 | | Total Shareholders' Equity | $996,248 | $925,772 | [Condensed Consolidated Statements of Income – Three and Nine Months Ended March 31, 2025 and 2024](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20%E2%80%93%20Three%20and%20Nine%20Months%20Ended%20March%2031%2C%202025%20and%202024) This section presents the company's financial performance for the three and nine months ended March 31, 2025 and 2024 Three Months Ended March 31 | Metric | 2025 (in thousands) | 2024 (in thousands) | Change (%) | | :-------------------------------- | :------------------ | :------------------ | :--------- | | Net Sales | $457,836 | $471,446 | (2.9)% | | Gross Profit | $105,962 | $104,494 | 1.4% | | Operating Income | $49,877 | $35,146 | 41.9% | | Net Income | $41,124 | $28,350 | 45.1% | | Diluted Net Income Per Common Share | $1.49 | $1.03 | 44.7% | Nine Months Ended March 31 | Metric | 2025 (in thousands) | 2024 (in thousands) | Change (%) | | :-------------------------------- | :------------------ | :------------------ | :--------- | | Net Sales | $1,433,695 | $1,418,934 | 1.0% | | Gross Profit | $349,554 | $334,684 | 4.4% | | Operating Income | $181,402 | $157,675 | 15.0% | | Pension Settlement Charge | $(13,968) | $0 | N/M | | Net Income | $134,818 | $123,785 | 8.9% | | Diluted Net Income Per Common Share | $4.89 | $4.50 | 8.7% | [Condensed Consolidated Statements of Comprehensive Income – Three and Nine Months Ended March 31, 2025 and 2024](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20%E2%80%93%20Three%20and%20Nine%20Months%20Ended%20March%2031%2C%202025%20and%202024) This section details the company's comprehensive income for the three and nine months ended March 31, 2025 and 2024 Three Months Ended March 31 | Metric | 2025 (in thousands) | 2024 (in thousands) | | :-------------------------------------- | :------------------ | :------------------ | | Net Income | $41,124 | $28,350 | | Other Comprehensive (Loss) Income, Net of Tax | $(46) | $75 | | Comprehensive Income | $41,078 | $28,425 | Nine Months Ended March 31 | Metric | 2025 (in thousands) | 2024 (in thousands) | | :-------------------------------------- | :------------------ | :------------------ | | Net Income | $134,818 | $123,785 | | Other Comprehensive (Loss) Income, Net of Tax | $9,604 | $226 | | Comprehensive Income | $144,422 | $124,011 | [Condensed Consolidated Statements of Cash Flows –Nine Months Ended March 31, 2025 and 2024](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20%E2%80%93Nine%20Months%20Ended%20March%2031%2C%202025%20and%202024) This section outlines the company's cash flow activities for the nine months ended March 31, 2025 and 2024 Nine Months Ended March 31 | Cash Flow Activity | 2025 (in thousands) | 2024 (in thousands) | | :-------------------------------- | :------------------ | :------------------ | | Net cash provided by operating activities | $173,317 | $217,454 | | Net cash used in investing activities | $(130,254) | $(57,358) | | Net cash used in financing activities | $(81,945) | $(83,813) | | Net change in cash and equivalents | $(38,882) | $76,283 | | Cash and equivalents at end of period | $124,561 | $164,756 | - Cash paid for acquisition: **$78,819 thousand** (2025)[17](index=17&type=chunk) [Condensed Consolidated Statements of Shareholders' Equity – Nine Months Ended March 31, 2025 and 2024](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity%20%E2%80%93%20Nine%20Months%20Ended%20March%2031%2C%202025%20and%202024) This section details changes in the company's shareholders' equity for the nine months ended March 31, 2025 and 2024 Shareholders' Equity Changes (in thousands) | Metric | March 31, 2025 | June 30, 2024 | | :-------------------------------- | :------------- | :------------ | | Total Shareholders' Equity | $996,248 | $925,772 | | Retained Earnings | $1,622,155 | $1,564,642 | | Accumulated Other Comprehensive Income (Loss) | $964 | $(8,640) | - Cash dividends for common stock: **$77,305 thousand** for the nine months ended March 31, 2025, compared to **$73,113 thousand** for the prior-year period[17](index=17&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed disclosures and explanations for the condensed consolidated financial statements, covering significant accounting policies, recent acquisition details, long-term debt, commitments, goodwill, income taxes, business segment performance, stock-based compensation, and pension benefits [Note 1 – Summary of Significant Accounting Policies](index=10&type=section&id=Note%201%20%E2%80%93%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the key accounting principles and recent accounting pronouncements impacting the financial statements - Planned closure of Milpitas, California sauce and dressing production facility, expected to conclude production by September 30, 2025, with estimated restructuring and impairment charges of approximately **$6 million** in the quarter ending June 30, 2025[25](index=25&type=chunk) - In the three months ended March 31, 2024, recorded an impairment charge of **$6.2 million** for property, plant and equipment and **$4.5 million** for intangible assets related to the decision to exit perimeter-of-the-store bakery product lines (Angelic Bakehouse and Flatout)[26](index=26&type=chunk)[27](index=27&type=chunk) - New FASB guidance on segment expenses (effective FY2025 annual, FY2026 interim), income taxes (effective FY2026 annual), and disaggregated income statement expenses (effective FY2028 annual, FY2029 interim) will impact disclosures but not financial position or results of operations[34](index=34&type=chunk)[35](index=35&type=chunk)[36](index=36&type=chunk) [Note 2 – Acquisition](index=13&type=section&id=Note%202%20%E2%80%93%20Acquisition) This note details the recent acquisition of a sauce and dressing production facility in Atlanta, Georgia - Acquisition of a sauce and dressing production facility in Atlanta, Georgia, from Winland Foods, Inc. completed on **February 18, 2025**[39](index=39&type=chunk) - Purchase price of **$78.8 million**, funded with cash on hand[39](index=39&type=chunk) - Goodwill recognized from acquisition: **$15.1 million**, allocated to the Foodservice segment[41](index=41&type=chunk)[42](index=42&type=chunk) [Note 3 – Long-Term Debt](index=13&type=section&id=Note%203%20%E2%80%93%20Long-Term%20Debt) This note describes the company's unsecured revolving credit facility and outstanding letters of credit - Unsecured revolving credit facility of up to **$150 million**, expiring **March 6, 2029**[44](index=44&type=chunk) - No borrowings outstanding under the Facility at **March 31, 2025**[47](index=47&type=chunk) - Standby letters of credit outstanding: **$2.6 million** at **March 31, 2025**[47](index=47&type=chunk) [Note 4 – Commitments and Contingencies](index=14&type=section&id=Note%204%20%E2%80%93%20Commitments%20and%20Contingencies) This note addresses various claims and litigation matters arising in the ordinary course of business - Various claims and litigation matters arising in the ordinary course of business are not expected to have a material effect on consolidated financial statements[48](index=48&type=chunk) [Note 5 – Goodwill](index=14&type=section&id=Note%205%20%E2%80%93%20Goodwill) This note provides a breakdown of goodwill by segment and explains changes due to recent acquisition Goodwill by Segment (in thousands) | Segment | March 31, 2025 | June 30, 2024 | | :---------- | :------------- | :------------ | | Retail | $157,396 | $157,396 | | Foodservice | $66,076 | $50,975 | | Total | $223,472 | $208,371 | - Increase in goodwill is primarily due to the **$15.1 million** Atlanta plant acquisition in February 2025, allocated to the Foodservice segment[49](index=49&type=chunk) [Note 6 – Income Taxes](index=14&type=section&id=Note%206%20%E2%80%93%20Income%20Taxes) This note presents the company's prepaid federal and accrued state and local income tax balances Income Tax Balances (in thousands) | Metric | March 31, 2025 | June 30, 2024 | | :-------------------------- | :------------- | :------------ | | Prepaid federal income taxes | $2,600 | $800 | | Accrued state and local income taxes | $700 | $300 | [Note 7 – Business Segment Information](index=14&type=section&id=Note%207%20%E2%80%93%20Business%20Segment%20Information) This note provides detailed net sales and operating income data for the Retail and Foodservice segments Net Sales by Segment (in thousands) | Segment | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Nine Months Ended March 31, 2025 | Nine Months Ended March 31, 2024 | | :---------- | :-------------------------------- | :-------------------------------- | :------------------------------- | :------------------------------- | | Retail | $241,532 | $248,054 | $761,855 | $754,230 | | Foodservice | $216,304 | $223,392 | $671,840 | $664,704 | | Total | $457,836 | $471,446 | $1,433,695 | $1,418,934 | Operating Income by Segment (in thousands) | Segment | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Nine Months Ended March 31, 2025 | Nine Months Ended March 31, 2024 | | :-------------------------------------- | :-------------------------------- | :-------------------------------- | :------------------------------- | :------------------------------- | | Retail | $45,578 | $47,313 | $170,790 | $159,958 | | Foodservice | $28,111 | $24,334 | $82,744 | $78,112 | | Nonallocated Restructuring and Impairment Charges | — | $(12,137) | — | $(12,137) | | Corporate Expenses | $(23,812) | $(24,364) | $(72,132) | $(68,258) | | Total | $49,877 | $35,146 | $181,402 | $157,675 | - Foodservice segment includes **$2.063 million** in net sales from a temporary supply agreement (TSA) for other dressings and sauces, commencing March 2025[56](index=56&type=chunk) [Note 8 – Stock-Based Compensation](index=16&type=section&id=Note%208%20%E2%80%93%20Stock-Based%20Compensation) This note details the company's stock-based compensation expense for various equity awards Stock-Based Compensation Expense (in thousands) | Type | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Nine Months Ended March 31, 2025 | Nine Months Ended March 31, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :------------------------------- | :------------------------------- | | Restricted Stock | $1,400 | $1,500 | $4,200 | $4,200 | | Performance Units | $200 | $1,600 | $2,300 | $3,700 | | Stock-Settled Stock Appreciation Rights (SSSARs) | $0 | $400 | $0 | $1,000 | - Unrecognized compensation expense for restricted stock: **$8.1 million** (weighted-average period of 2 years)[59](index=59&type=chunk) - Unrecognized compensation expense for performance units: **$5.4 million** (weighted-average period of 2 years)[60](index=60&type=chunk) [Note 9 – Pension Benefits](index=16&type=section&id=Note%209%20%E2%80%93%20Pension%20Benefits) This note discusses the termination of defined benefit pension plans and related settlement charges - Defined benefit pension plans were terminated effective **November 30, 2024**, following the merger of five frozen plans[62](index=62&type=chunk) - Incurred a one-time noncash settlement charge of **$14.0 million** for the nine months ended March 31, 2025, due to pension termination[62](index=62&type=chunk)[63](index=63&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=17&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides a narrative analysis of the company's financial condition and results of operations, discussing net sales, gross profit, operating income, segment performance, cash flows, liquidity, and future outlook for the three and nine months ended March 31, 2025, compared to the prior year [Overview](index=17&type=section&id=Overview) This section introduces Lancaster Colony Corporation's business, growth strategies, and recent strategic investments - Lancaster Colony Corporation is a manufacturer and marketer of specialty food products for the retail and foodservice channels, with over **95%** of products sold in the United States[67](index=67&type=chunk)[69](index=69&type=chunk) - Growth goals include introducing new products, expanding distribution, leveraging Retail brands, expanding Retail through strategic licensing, relying on Foodservice product development, and acquiring complementary businesses[70](index=70&type=chunk) - Recent investments include the acquisition of an Atlanta sauce and dressing facility (Feb 2025), a significant capacity expansion for the Marzetti dressing and sauce facility (completed March 2023), and the completion of the ERP system ('Project Ascent') implementation phase (August 2023)[70](index=70&type=chunk) [Results of Consolidated Operations](index=18&type=section&id=Results%20of%20Consolidated%20Operations) This section analyzes the company's consolidated net sales, gross profit, operating income, and diluted net income per share Breakdown of % Change in Consolidated Net Sales (Three Months Ended March 31, 2025) | Category | Change (%) | | :------------------------------------------ | :--------- | | Change in Core Sales Volume / Mix | (2.5)% | | Net Pricing Impact | 0.2 | | Perimeter-of-the-Store Bakery Product Lines Exited March 2024 | (1.0) | | Incremental Sales for Temporary Supply Agreement (TSA) | 0.4 | | Total Change in Net Sales | (2.9)% | Breakdown of % Change in Consolidated Net Sales (Nine Months Ended March 31, 2025) | Category | Change (%) | | :------------------------------------------ | :--------- | | Change in Core Sales Volume / Mix | 2.3 % | | Net Pricing Impact | (0.3) | | Perimeter-of-the-Store Bakery Product Lines Exited March 2024 | (1.1) | | Incremental Sales for Temporary Supply Agreement (TSA) | 0.1 | | Total Change in Net Sales | 1.0 % | - Consolidated gross profit for the three months ended March 31, 2025, increased **$1.5 million** to a record **$106.0 million**, benefiting from cost savings and modest cost deflation, offsetting lower sales volume and Atlanta plant startup costs[77](index=77&type=chunk) - Operating income for the three months ended March 31, 2025, grew **$14.7 million** to a record **$49.9 million**, reflecting higher gross profit, reduced SG&A expenses, and the absence of prior-year **$12.1 million** restructuring and impairment charges[84](index=84&type=chunk) - A one-time noncash pension settlement charge of **$14.0 million** was incurred for the nine months ended March 31, 2025[88](index=88&type=chunk) Effective Tax Rate (Nine Months Ended March 31) | Metric | 2025 | 2024 | | :------------- | :--- | :--- | | Effective rate | 22.0 % | 23.5 % | - Diluted net income per share for the three months ended March 31, 2025, was **$1.49**, up from **$1.03** in the prior year[91](index=91&type=chunk) - For the nine months, it was **$4.89**, up from **$4.50**[92](index=92&type=chunk) [Results of Operations - Segments](index=22&type=section&id=Results%20of%20Operations%20-%20Segments) This section provides a detailed analysis of net sales and operating income performance for the Retail and Foodservice segments - Retail segment net sales decreased **2.6%** for the three months ended March 31, 2025, due to the exit of perimeter-of-the-store bakery product lines (**1.9%** impact) and a challenging consumer environment[94](index=94&type=chunk) - For the nine months, Retail net sales increased **1.0%**, or **3.2%** excluding exited product lines, driven by licensing programs (Texas Roadhouse, Chick-fil-A, Subway sauces) and new gluten-free garlic bread[94](index=94&type=chunk) - Foodservice segment net sales decreased **3.2%** for the three months ended March 31, 2025, due to an industry-wide slowdown in restaurant traffic and menu changes[96](index=96&type=chunk) - For the nine months, Foodservice net sales increased **1.1%** due to increased demand from national chain restaurant accounts and Marzetti branded products[97](index=97&type=chunk) - Retail segment operating income decreased **3.7%** for the three months but increased **6.8%** for the nine months, benefiting from higher sales volume, favorable sales mix, cost savings, and modest cost deflation[94](index=94&type=chunk)[95](index=95&type=chunk) - Foodservice segment operating income increased **15.5%** for the three months and **5.9%** for the nine months, driven by cost savings, modest cost deflation, and higher sales volumes, partially offset by Atlanta plant startup costs and higher supply chain costs[97](index=97&type=chunk)[98](index=98&type=chunk) - Corporate expenses decreased for the three months but increased for the nine months, influenced by IT investments and incremental expenditures related to the Atlanta plant acquisition (**$1.7 million** for 3 months, **$3.3 million** for 9 months), partially offset by reduced compensation/benefits and prior-year Project Ascent expenses[99](index=99&type=chunk)[100](index=100&type=chunk) [Looking Forward](index=23&type=section&id=Looking%20Forward) This section outlines the company's expectations for future performance, market conditions, and strategic initiatives - Anticipates ongoing challenges in the consumer environment, with plans to respond through innovation and incremental distribution in Retail and continued partnership with Foodservice customers[101](index=101&type=chunk) - Retail segment sales are expected to benefit from licensing programs, including expanded distribution for Texas Roadhouse dinner rolls and Chick-fil-A sauce in the club channel[101](index=101&type=chunk) - Foodservice segment anticipates continued growth from select national chain restaurant accounts[101](index=101&type=chunk) - No significant impacts from commodity cost inflation or deflation are foreseen[101](index=101&type=chunk) - Further incorporation of the newly acquired Atlanta-based sauce and dressing plant into the manufacturing network is expected in the fiscal fourth quarter[101](index=101&type=chunk) [Financial Condition](index=24&type=section&id=Financial%20Condition) This section discusses the company's cash flow activities, liquidity, and capital expenditure plans - Net cash provided by operating activities for the nine months ended March 31, 2025, decreased to **$173.3 million** from **$217.5 million** in the prior year, primarily due to year-over-year changes in net working capital[103](index=103&type=chunk) - Cash used in investing activities for the nine months ended March 31, 2025, increased to **$130.3 million** from **$57.4 million** in the prior year, primarily reflecting the **$78.8 million** Atlanta plant acquisition[104](index=104&type=chunk) - Cash used in financing activities for the nine months ended March 31, 2025, decreased to **$81.9 million** from **$83.8 million** in the prior year, reflecting lower share repurchases partially offset by higher dividend payments[105](index=105&type=chunk) - The company has an unsecured revolving credit facility of up to **$150 million** with no outstanding borrowings at March 31, 2025, and believes its liquidity sources are adequate for the next 12 months and beyond[106](index=106&type=chunk)[109](index=109&type=chunk)[110](index=110&type=chunk) - Estimated capital expenditures for fiscal 2025 are **$65 million**[109](index=109&type=chunk) [Critical Accounting Policies](index=24&type=section&id=Critical%20Accounting%20Policies) This section confirms no changes to the critical accounting policies from the prior annual report - No changes in critical accounting policies from those disclosed in the 2024 Annual Report on Form 10-K[112](index=112&type=chunk) [Recent Accounting Pronouncements](index=25&type=section&id=Recent%20Accounting%20Pronouncements) This section refers to Note 1 for disclosures regarding recent accounting pronouncements - Recent accounting pronouncements and their impact are disclosed in Note 1 to the condensed consolidated financial statements[113](index=113&type=chunk) [Forward-Looking Statements](index=25&type=section&id=Forward-Looking%20Statements) This section highlights the inherent risks and uncertainties associated with forward-looking statements in the report - The report contains forward-looking statements subject to various important risks, uncertainties, and other factors that could cause actual results to differ materially[114](index=114&type=chunk) - Risk factors include plant efficiencies, successful business acquisitions, price and product competition, changes in demand, regulatory matters, labor supply, cost fluctuations (freight, energy, ingredients), tariffs, geopolitical events, dependence on contract manufacturers/distributors, key personnel, cyber-security incidents, loss of key customer relationships, capacity constraints, failure to maintain license agreements, product recalls, new product development success, customer consolidation, and litigation[115](index=115&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=27&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section confirms that there have been no material changes to the company's market risks since the disclosures in its 2024 Annual Report on Form 10-K - Market risks have not changed materially from those disclosed in the 2024 Annual Report on Form 10-K[116](index=116&type=chunk) [Item 4. Controls and Procedures](index=27&type=section&id=Item%204.%20Controls%20and%20Procedures) This section reports on the effectiveness of the company's disclosure controls and procedures as of March 31, 2025, and confirms no material changes to internal control over financial reporting during the quarter - Management concluded that disclosure controls and procedures were effective as of **March 31, 2025**[117](index=117&type=chunk) - No material changes were made to internal control over financial reporting during the most recent fiscal quarter[118](index=118&type=chunk) [PART II – OTHER INFORMATION](index=28&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity security sales, and a list of exhibits [Item 1. Legal Proceedings](index=28&type=section&id=Item%201.%20Legal%20Proceedings) This section states that there are no material legal proceedings, specifically environmental matters exceeding a $1 million threshold, to disclose in this quarterly report - No environmental matters to disclose in this Form 10-Q, using a **$1 million** materiality threshold[120](index=120&type=chunk) [Item 1A. Risk Factors](index=28&type=section&id=Item%201A.%20Risk%20Factors) This section confirms that there have been no material changes to the risk factors previously disclosed in the company's 2024 Annual Report on Form 10-K - No material changes to the risk factors disclosed under Item 1A in the 2024 Annual Report on Form 10-K[121](index=121&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=28&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the company's share repurchase program, including the remaining authorization and shares repurchased during the quarter, primarily for tax withholding obligations - Board of Directors approved a share repurchase authorization of **2,000,000** common shares in November 2010[122](index=122&type=chunk) - **1,123,842** common shares remained authorized for future repurchases at **March 31, 2025**[122](index=122&type=chunk) Common Stock Repurchases (Q3 FY2025) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | | :----------------- | :----------------------------- | :--------------------------- | | January 1-31, 2025 | 48 | $173.14 | | February 1-28, 2025 | 49 | $191.40 | | March 1-31, 2025 | 336 | $175.00 | | Total | 433 | $176.65 | - Repurchases primarily represent shares acquired in satisfaction of tax withholding obligations from vesting restricted stock[122](index=122&type=chunk) [Item 6. Exhibits](index=28&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q, including certifications and XBRL documents - Includes certifications of CEO and CFO under Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[125](index=125&type=chunk) - Includes XBRL Instance Document and Taxonomy Extension Documents[125](index=125&type=chunk) [SIGNATURES](index=29&type=section&id=SIGNATURES) This section provides the official signatures of the company's President, CEO, and CFO, certifying the report - Report signed by David A. Ciesinski (President, Chief Executive Officer and Director) and Thomas K. Pigott (Vice President, Chief Financial Officer and Assistant Secretary) on **April 30, 2025**[128](index=128&type=chunk)

FOR IMMEDIATE RELEASE SYMBOL: LANC April 30, 2025 TRADED: Nasdaq MORE. . . • Consolidated net sales declined 2.9% to $457.8 million versus $471.4 million last year. Retail segment net sales decreased 2.6% to $241.5 million. The decline in Retail net sales includes the impact of the company's exit from our perimeter-of-the-store bakery product lines in March 2024. Excluding all sales attributed to those product lines, Retail segment net sales decreased 0.7%. Foodservice segment net sales declined 3.2% to $21 ...

Core Viewpoint - The U.S. stock market experienced significant volatility due to tariff policies announced by the Trump administration, prompting a shift towards defensive stocks, particularly in the consumer staples sector, which is considered stable during economic fluctuations [2][5][6]. Group 1: Market Overview - U.S. stock markets had a strong rally in 2024, but the bull run halted in February 2025, with major indexes like the Dow, S&P 500, and Nasdaq Composite declining by 1.6%, 1.4%, and 4% respectively [3][4]. - The Atlanta Fed projected a contraction of 2.8% in the U.S. economy for the first quarter of 2025, raising concerns about a potential recession [8]. Group 2: Consumer Staples Sector - The consumer staples sector is characterized by its resilience and stability, making it a preferred choice for investors during market volatility [9][10]. - Companies in this sector provide essential products that are less sensitive to economic cycles, ensuring consistent demand [9]. Group 3: Featured Consumer Staples Stocks - **Tyson Foods Inc. (TSN)**: Expected revenue growth of 0.9% and earnings growth of 22.6% for the current year, with a dividend yield of 3.23% [15][12]. - **Molson Coors Beverage Co. (TAP)**: Anticipated revenue growth of 0.3% and earnings growth of 6.5%, with a dividend yield of 3.07% [18][16]. - **Primo Brands Corp. (PRMB)**: Projected revenue growth of over 100% and earnings growth of 54.5%, with a dividend yield of 1.34% [20][19]. - **Lancaster Colony Corp. (LANC)**: Expected revenue growth of 3.1% and earnings growth of 6.1%, with a dividend yield of 2% [23][21]. - **Utz Brands Inc. (UTZ)**: Forecasted revenue growth of 1.2% and earnings growth of 10.4%, with a dividend yield of 1.76% [26][24].

Market Overview - U.S. stock markets experienced a significant rally in 2024 following a strong bull run in 2023, but the bull run halted in February 2025 due to market fluctuations [1] - In February, the Dow, S&P 500, and Nasdaq Composite fell by 1.6%, 1.4%, and 4% respectively, with the Nasdaq posting its worst month since April 2024 [1] Economic Impact of Tariffs - Volatility in the markets is attributed to tariff and trade policies from the Trump administration, including a 25% tariff on imports from Canada and Mexico and a 10% tariff on China [4] - Concerns about the impact of these tariffs on the U.S. economy are rising, particularly as inflation remains above the Federal Reserve's target of 2% [5] - Personal spending, a key component of the U.S. economy, unexpectedly fell in January, alongside declines in retail sales and building construction [5][6] Consumer Staples Sector - The consumer staples sector is characterized as mature and fundamentally strong, with demand generally unaffected by economic cycles, making it a defensive investment option [8] - This sector is known for stability in earnings and cash flows, with many companies being regular dividend payers, thus providing portfolio stability during market fluctuations [9] Recommended Consumer Staples Stocks - **Tyson Foods Inc. (TSN)**: Expected revenue growth of 0.9% and earnings growth of 22.6% for the current year, with a dividend yield of 3.23% [14] - **Molson Coors Beverage Co. (TAP)**: Expected revenue growth of 0.3% and earnings growth of 6.5% for the current year, with a dividend yield of 3.07% [17] - **Primo Brands Corp. (PRMB)**: Expected revenue growth of over 100% and earnings growth of 54.5% for the current year, with a dividend yield of 1.34% [20] - **Lancaster Colony Corp. (LANC)**: Expected revenue growth of 3.1% and earnings growth of 6.1% for the current year, with a dividend yield of 2% [23] - **Utz Brands Inc. (UTZ)**: Expected revenue growth of 1.2% and earnings growth of 10.4% for the current year, with a dividend yield of 1.76% [26]

Core Viewpoint - Growth stocks are appealing due to their potential for above-average financial growth, but identifying strong candidates involves navigating inherent risks and volatility [1][2] Group 1: Company Overview - Lancaster Colony (LANC) is highlighted as a recommended growth stock with a favorable Growth Score and a top Zacks Rank [2][10] Group 2: Earnings Growth - Historical EPS growth for Lancaster Colony is 5.6%, but projected EPS growth for this year is 6%, surpassing the industry average of 4.6% [5][4] Group 3: Cash Flow Growth - Lancaster Colony's year-over-year cash flow growth stands at 27.7%, significantly higher than the industry average of 5.1% [6][7] - The company's annualized cash flow growth rate over the past 3-5 years is 6.2%, compared to the industry average of 4.3% [7] Group 4: Earnings Estimate Revisions - There has been a positive trend in earnings estimate revisions for Lancaster Colony, with the Zacks Consensus Estimate for the current year increasing by 1.5% over the past month [8][10] Group 5: Investment Potential - The combination of a Zacks Rank 2 and a Growth Score of A positions Lancaster Colony as a potential outperformer and a solid choice for growth investors [10]

Company Overview - Lancaster Colony (LANC) is a notable stock within the Consumer Staples sector, which consists of 180 individual stocks [2] - The company currently holds a Zacks Rank of 2 (Buy), indicating a favorable outlook based on earnings estimate revisions [3] Performance Analysis - Year-to-date, Lancaster Colony has increased by approximately 7.8%, while the average performance of Consumer Staples stocks has declined by 0.5%, showcasing LANC's outperformance [4] - In comparison, another Consumer Staples stock, RH, has risen by 2.2% year-to-date, with a consensus EPS estimate increase of 9.7% over the past three months [5] Industry Context - Lancaster Colony is categorized under the Food - Miscellaneous industry, which includes 43 companies and currently ranks 178 in the Zacks Industry Rank. This industry has seen an average decline of about 4.7% this year, indicating LANC's relative strength [6] - In contrast, RH is part of the Consumer Products - Staples industry, which has 30 stocks and is ranked 155, with a year-to-date performance of -1.4% [7]

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Group 1 - Lancaster Colony reported quarterly earnings of $2.22 per share, exceeding the Zacks Consensus Estimate of $1.94 per share, and up from $1.93 per share a year ago, representing an earnings surprise of 14.43% [1] - The company posted revenues of $509.3 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 3.24%, compared to year-ago revenues of $485.92 million [2] - Over the last four quarters, Lancaster Colony has surpassed consensus EPS estimates two times and topped consensus revenue estimates three times [2] Group 2 - The stock has underperformed the market, losing about 3.8% since the beginning of the year, while the S&P 500 has gained 1.9% [3] - The current consensus EPS estimate for the coming quarter is $1.62 on revenues of $481.1 million, and for the current fiscal year, it is $6.70 on revenues of $1.9 billion [7] - The Zacks Industry Rank for Food - Miscellaneous is currently in the bottom 21% of over 250 Zacks industries, indicating potential challenges for the stock's performance [8]

Financial Performance - Consolidated net sales for the three months ended December 31, 2024 increased 4.8% to a record $509.3 million compared to $485.9 million in the prior year, driven by higher sales in both Retail and Foodservice segments [64]. - Consolidated gross profit for the three months ended December 31, 2024 increased by $11.3 million to $132.8 million, attributed to higher sales volumes and a favorable sales mix [67]. - Operating income for the three months ended December 31, 2024 increased by $9.9 million to $75.7 million, supported by the increase in gross profit despite higher SG&A expenses [72]. - Consolidated net sales for the six months ended December 31, 2024 increased 3.0% to $975.9 million compared to $947.5 million in the prior year, with volume gains driving the increase [65]. - Diluted net income per share for Q2 2025 was $1.78, down from $1.87 in the prior year, impacted by a pension settlement charge of $0.39 and costs related to the Atlanta plant acquisition of $0.05 [76]. - For the six months ended December 31, 2024, diluted net income per share was $3.40, compared to $3.47 in the prior year, with similar impacts from the pension settlement charge and acquisition costs [77]. Expenses and Investments - Selling, general and administrative (SG&A) expenses for the three months ended December 31, 2024 rose 2.5% to $57.1 million, reflecting increased expenditures related to a planned acquisition and investments in personnel and IT [69]. - Corporate expenses for Q2 2024 totaled $23.7 million, up from $20.9 million in the prior year, primarily due to investments in personnel and costs related to the Atlanta plant acquisition [84]. - A one-time noncash pension settlement charge of $14.0 million was incurred for the three and six months ended December 31, 2024 due to the termination of a merged pension plan [74]. Sales Segments - Retail segment net sales for Q2 2024 increased by 6.3% to $280.8 million, driven by higher sales volumes and growth in the licensing program, with a 16.0% increase in operating income to $69.0 million [79][80]. - Foodservice segment net sales for Q2 2024 grew by 3.0% to $228.5 million, with operating income increasing by 11.7% to $30.3 million, supported by demand from national chain restaurant customers [81][82]. Cash Flow and Financing - Net cash provided by operating activities for the six months ended December 31, 2024, was $127.5 million, down from $141.5 million in the prior year, mainly due to changes in net working capital [88]. - Cash used in investing activities for the six months ended December 31, 2024, was $32.7 million, a decrease from $40.2 million in the prior year, reflecting lower property addition payments [89]. - The company maintains a revolving credit facility of up to $150 million, with no borrowings outstanding as of December 31, 2024, and compliance with all covenants [91][92]. Strategic Plans and Future Outlook - The company plans to continue expanding Retail and Foodservice segment sales through new product introductions, strategic licensing agreements, and potential acquisitions [62]. - The company expects continued growth in Retail sales driven by the licensing program and innovation investments, alongside anticipated volume growth in the Foodservice segment [86]. - The company plans to complete the acquisition of a sauce and dressing production facility in Atlanta for $75 million, expected to close in Q3 2025 [94]. Risks and Challenges - Market risks have not changed materially from those disclosed in the 2024 Annual Report on Form 10-K [102]. - The company faces inflationary pressures resulting in higher input costs [102]. - Changes in demand for products may result from shifts in consumer behavior or loss of brand reputation [102]. - The potential for loss of larger programs or key customer relationships is a concern [102]. - The success and cost of new product development efforts are critical for future growth [102]. - Geopolitical events could create unforeseen business disruptions impacting raw materials and energy costs [102]. - The company is monitoring the impact of regulatory matters affecting its food business, including FDA requirements [102]. - Capacity constraints may affect the ability to meet demand or increase costs [102]. - There is a dependence on contract manufacturers, distributors, and freight transporters for operational capacity and financial strength [102]. - The company is focusing on efficiencies in plant operations and overall supply chain network [102].