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].

Financial Performance - Consolidated net sales increased 4.8% to a record $509.3 million compared to $485.9 million last year[5] - Retail segment net sales grew 6.3% to $280.8 million, driven by licensing programs and key products like Texas Roadhouse dinner rolls and Buffalo Wild Wings sauces[3] - Foodservice segment net sales advanced 3.0% to $228.5 million, supported by higher demand from national chain restaurant accounts[5] - Consolidated gross profit increased by $11.3 million, or 9.3%, to a record $132.8 million, reflecting higher sales volumes and favorable sales mix[5] - Consolidated operating income increased by $9.9 million, or 15.1%, to a record $75.7 million[6] - Net income was $49.0 million, or $1.78 per diluted share, down from $51.5 million, or $1.87 per diluted share last year[8] - The noncash pension settlement charge reduced net income by $10.8 million, or $0.39 per diluted share[9] Expenses and Investments - SG&A expenses rose by $1.4 million to $57.1 million, including $1.6 million related to the planned acquisition of a sauce and dressing production facility[6] - The company anticipates continued growth in Retail sales from its licensing program and innovation investments in its brands[4] - The acquisition of the Atlanta-based sauce and dressing production facility is expected to close in the fiscal third quarter, enhancing operational efficiency and capacity[4] Assets and Liabilities - Total assets increased to $1,239,858 million as of December 31, 2024, up from $1,206,931 million on June 30, 2024, reflecting a growth of approximately 2.7%[23] - Current assets rose to $480,972 million, compared to $443,993 million in the previous period, marking an increase of about 8.3%[23] - Cash and equivalents increased significantly to $203,073 million, up from $163,443 million, representing a growth of approximately 24.2%[23] - Total current liabilities decreased to $167,250 million from $183,969 million, a reduction of about 9.1%[23] - Shareholders' equity improved to $979,866 million, compared to $925,772 million, indicating an increase of approximately 5.8%[23] - Accounts payable decreased to $104,506 million from $118,811 million, reflecting a decline of about 12.0%[23] - Noncurrent liabilities and deferred income taxes decreased to $92,742 million from $97,190 million, a decrease of approximately 4.6%[23] - Inventories slightly decreased to $167,170 million from $173,252 million, a decline of about 3.5%[23] - Other assets decreased to $280,343 million from $285,242 million, reflecting a decline of approximately 1.6%[23] - Accrued liabilities decreased to $62,744 million from $65,158 million, a reduction of about 6.0%[23]

Core Viewpoint - Wall Street anticipates a year-over-year increase in earnings for Lancaster Colony, with a focus on how actual results compare to estimates impacting stock price [1][2] Earnings Expectations - The upcoming earnings report is expected on February 4, 2025, with projected earnings of $1.94 per share, reflecting a +0.5% change year-over-year, and revenues of $494.3 million, up 1.7% from the previous year [3][2] Estimate Revisions - The consensus EPS estimate has been revised down by 0.31% over the last 30 days, indicating a bearish sentiment among analysts regarding the company's earnings prospects [4][10] Earnings Surprise Prediction - The Zacks Earnings ESP model suggests that the Most Accurate Estimate is lower than the consensus estimate, resulting in an Earnings ESP of -2.06%, which complicates predictions of an earnings beat [10][11] Historical Performance - In the last reported quarter, Lancaster Colony was expected to earn $1.70 per share but only achieved $1.62, resulting in a -4.71% surprise. Over the last four quarters, the company has beaten consensus EPS estimates twice [12][13] Conclusion - Lancaster Colony does not appear to be a strong candidate for an earnings beat, and investors should consider other factors before making investment decisions [16]

Core Insights - Lancaster Colony Corporation (LANC) is acquiring a sauce and dressing production facility in Atlanta, GA, from Winland Foods, Inc. for approximately $75 million, expected to close in Q1 2025 [1][2] Acquisition Details - The facility spans around 300,000 square feet, with 250,000 square feet dedicated to manufacturing operations [2] - This acquisition aims to enhance operational efficiency, increase production capacity, and improve proximity to key customers, thereby strengthening LANC's manufacturing network [3][4] Financial Performance - In Q1 of fiscal 2025, LANC reported a consolidated sales increase of 1.1% to $466.6 million and a gross profit growth of 1.9% to $110.8 million, attributed to higher volumes and cost-saving initiatives [5] - The Foodservice segment experienced a 3.5% increase in net sales, driven by demand from national chain-restaurant customers [8] Product Development and Market Position - LANC's licensing program, particularly with Subway sauces and Texas Roadhouse Dinner Rolls, is a key growth driver for its retail segment [6] - Marzetti, a brand under LANC, saw a 2.4% sales increase and a market share gain of approximately 25 basis points in Q1 [7] Financial Health - As of September 30, 2024, LANC had cash and cash equivalents totaling $135.1 million and no outstanding borrowings, indicating strong financial management [9] - The board of directors recently raised the quarterly dividend by 5 cents to 95 cents per share, marking 62 consecutive years of dividend increases [10] Stock Performance - LANC stock has gained approximately 4.7% in the past month, outperforming the industry decline of 6.1% and the S&P 500's growth of 0.6% [11] - The forward 12-month price-to-earnings ratio for LANC is 25.99X, significantly higher than the industry's ratio of 15.39X, indicating a higher valuation relative to expected earnings growth [12]

Financial Data and Key Metrics Changes - Consolidated net sales increased by 1.1% to a record $467 million for the first quarter [5] - Gross profit rose by 1.9% to a record $111 million, with gross margin improving by 20 basis points compared to the previous year [10][11] - First-quarter diluted earnings per share increased by $0.03 or 1.9% to $1.62, driven by a lower tax rate and return on invested cash [15] Business Line Data and Key Metrics Changes - Retail segment net sales declined by 1.1%, but excluding exited bakery lines, sales increased by 1.4% and volume grew by 1.9% [6] - Foodservice segment net sales grew by 3.5%, with volume measured in pounds shipped advancing by 3.1% [10] - Sister Schubert's brand sales advanced by 5.3%, and combined with Texas Roadhouse Dinner Rolls, sales were up 17.9% [9] Market Data and Key Metrics Changes - Marzetti brand in the produce dressing category grew sales by 2.4%, with market share increasing by 25 basis points [8] - Chick-fil-A sauces grew by 3.4%, while Buffalo Wild Wing sauces increased by 5% in the shelf-stable sauces and condiments categories [9] - The overall foodservice industry is experiencing slowing traffic trends, but the company is still seeing positive sales growth [10][21] Company Strategy and Development Direction - The company aims to accelerate core business growth, simplify the supply chain to reduce costs, and expand through focused M&A and strategic licensing [19] - New product introductions, such as Subway sauces and Texas Roadhouse Dinner Rolls, are expected to drive retail segment sales [20] - The company is optimistic about the licensing strategy, which has proven to be an incremental source of revenue [56] Management's Comments on Operating Environment and Future Outlook - Management noted that consumer headwinds may continue to exert downward pressure on traffic, but they expect to deliver low single-digit growth based on their book of business and innovation efforts [25][26] - The company anticipates that input costs will be neutral for the remainder of the year, with no significant inflationary pressures expected [21] - Management expressed cautious optimism about the consumer environment, indicating that while there are challenges, they believe consumers will eventually reach a point of equilibrium [28][29] Other Important Information - The company returned funds to shareholders with a quarterly cash dividend of $0.90 per share, representing a 6% increase from the prior year [17] - Capital expenditures for fiscal 2025 are forecasted to be between $70 million and $80 million, focusing on cost-saving projects and manufacturing improvements [16] Q&A Session Summary Question: What is driving the outperformance in foodservice? - Management attributed the outperformance to a mix of national chain customers and strong demand for chicken and sauces, particularly during football season [24][25] Question: What are the prospects for consumer trends in 2025? - Management expressed caution, noting that while wage growth has exceeded inflation, consumers are still making tough trade-offs [28][29] Question: Why is foodservice profitability diverging from retail? - Management explained that foodservice operating income declined due to higher labor and supply chain investments, while retail benefited more from cost-saving initiatives [32] Question: How is the Texas Roadhouse Dinner Rolls launch performing? - Early indications show strong consumer interest and repeat purchases, with plans for further distribution expansion [39][40] Question: What is the outlook for gross margins moving forward? - Management expects to continue improving gross margins through productivity initiatives and cost-saving measures, despite some headwinds from trade spending [44][46] Question: How does the licensing strategy impact potential partnerships? - Management noted that the success of existing partnerships, like Olive Garden, enhances attractiveness for new licensing opportunities [62][64] Question: What is the company's approach to acquisitions? - Management indicated a willingness to pursue both acquisitions and licensing opportunities simultaneously, focusing on value creation for shareholders [54][56]

Lancaster Colony (LANC) came out with quarterly earnings of $1.62 per share, missing the Zacks Consensus Estimate of $1.70 per share. This compares to earnings of $1.70 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of -4.71%. A quarter ago, it was expected that this specialty food maker would post earnings of $1.41 per share when it actually produced earnings of $1.35, delivering a surprise of -4.26%.Over the last four quarters ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2024 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 000-04065 | --- | --- | --- | |-------------------------------------------------------------------------------|------------------ ...