Lancaster Colony Corporation (NASDAQ:LANC) Q2 2021 Earnings Conference Call February 4, 2021 10:00 AM ET Company Participants Dale Ganobsik - IR Dave Ciesinski - President & CEO Tom Pigott - CFO Conference Call Participants Ryan Bell - Consumer Edge Brian Holland - D.A. Davidson & Company Todd Brooks - CL King & Associates Operator Good morning. My name is Michelle, and I will be your conference call facilitator for today. At this time, I would like to welcome everyone to the Lancaster Colony Corporation F ...

[PART I – FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) This section covers the company's unaudited financial statements and management's discussion and analysis [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 financial statements, including balance sheets, income statements, comprehensive income statements, cash flow statements, and statements of shareholders' equity, along with detailed notes on accounting policies, fair value measurements, debt, commitments, intangible assets, income taxes, business segments, and stock-based compensation [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the company's unaudited condensed consolidated balance sheets for the specified periods **Condensed Consolidated Balance Sheet Highlights (Amounts in thousands):** | Item | December 31, 2020 | June 30, 2020 | | :-------------------------- | :------------------ | :------------ | | Cash and equivalents | $216,381 | $198,273 | | Total inventories | $109,047 | $85,048 | | Total current assets | $426,264 | $385,612 | | Property, plant and equipment-net | $314,630 | $293,288 | | Goodwill | $208,371 | $208,371 | | Total Assets | $1,054,310 | $993,353 | | Total current liabilities | $140,628 | $126,259 | | Total shareholders' equity | $826,360 | $783,300 | | Total Liabilities and Shareholders' Equity | $1,054,310 | $993,353 | [Condensed Consolidated Statements of Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) This section presents the company's unaudited condensed consolidated statements of income for the specified periods **Condensed Consolidated Statements of Income Highlights (Amounts in thousands, except per share data):** | Item | Three Months Ended Dec 31, 2020 | Three Months Ended Dec 31, 2019 | Six Months Ended Dec 31, 2020 | Six Months Ended Dec 31, 2019 | | :---------------------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Net Sales | $375,015 | $355,117 | $724,252 | $692,171 | | Gross Profit | $106,845 | $99,889 | $199,499 | $191,997 | | Operating Income | $58,598 | $54,078 | $107,546 | $105,782 | | Net Income | $44,630 | $43,424 | $81,709 | $84,169 | | Basic Net Income Per Common Share | $1.62 | $1.58 | $2.97 | $3.06 | | Diluted Net Income Per Common Share | $1.62 | $1.58 | $2.96 | $3.06 | [Condensed Consolidated Statements of Comprehensive Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This section presents the company's unaudited condensed consolidated statements of comprehensive income for the specified periods **Condensed Consolidated Statements of Comprehensive Income Highlights (Amounts in thousands):** | Item | Three Months Ended Dec 31, 2020 | Three Months Ended Dec 31, 2019 | Six Months Ended Dec 31, 2020 | Six Months Ended Dec 31, 2019 | | :----------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Net Income | $44,630 | $43,424 | $81,709 | $84,169 | | Other Comprehensive Income, Net of Tax | $94 | $69 | $188 | $139 | | Comprehensive Income | $44,724 | $43,493 | $81,897 | $84,308 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section presents the company's unaudited condensed consolidated statements of cash flows for the specified periods **Condensed Consolidated Statements of Cash Flows Highlights (Amounts in thousands):** | Item | Six Months Ended Dec 31, 2020 | Six Months Ended Dec 31, 2019 | | :---------------------------------- | :---------------------------- | :---------------------------- | | Net cash provided by operating activities | $90,856 | $105,379 | | Net cash used in investing activities | $(29,918) | $(57,922) | | Net cash used in financing activities | $(42,830) | $(41,519) | | Net change in cash and equivalents | $18,108 | $5,938 | | Cash and equivalents at end of period | $216,381 | $202,226 | [Condensed Consolidated Statements of Shareholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity) This section presents the company's unaudited condensed consolidated statements of shareholders' equity for the specified periods **Condensed Consolidated Statements of Shareholders' Equity Highlights (Amounts in thousands):** | Item | December 31, 2020 | December 31, 2019 | | :-------------------------- | :------------------ | :------------------ | | Balance, June 30 | $783,300 | $726,873 | | Net income (6 months) | $81,709 | $84,169 | | Cash dividends - common stock (6 months) | $(39,925) | $(37,114) | | Purchase of treasury stock (6 months) | $(19) | $(1,472) | | Balance, December 31 | $826,360 | $772,758 | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed notes on accounting policies and specific financial statement line items [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 policies applied in preparing financial statements - The unaudited condensed consolidated financial statements are prepared in accordance with **U.S. GAAP** for interim financial information and **SEC Article 10 of Regulation S-X**[24](index=24&type=chunk) - The company capitalized **$2.8 million** of deferred software costs related to cloud computing arrangements for the six months ended December 31, 2020[25](index=25&type=chunk) - Earnings per share (EPS) is computed using the **two-class method**, including unvested restricted stock as participating securities[29](index=29&type=chunk) - There were no changes to significant accounting policies from those disclosed in the **2020 Annual Report on Form 10-K**[32](index=32&type=chunk) - The company adopted new guidance on fair value measurement disclosures on July 1, 2020, with **no impact** on financial position or results of operations[34](index=34&type=chunk) [Note 2 – Fair Value](index=12&type=section&id=Note%202%20%E2%80%93%20Fair%20Value) This note details the company's fair value measurements and related hierarchy for financial instruments - Fair value measurements are categorized into a **three-level hierarchy**: Level 1 (quoted market prices), Level 2 (observable inputs), and Level 3 (unobservable inputs)[36](index=36&type=chunk)[37](index=37&type=chunk) **Contingent Consideration Fair Value (Amounts in thousands):** | Item | December 31, 2020 | June 30, 2020 | | :-------------------------- | :------------------ | :------------ | | Contingent consideration - Bantam | $3,470 | $9,157 | | Contingent consideration - Angelic | $0 | $0 | | Total contingent consideration | $3,470 | $9,157 | - A **$5.7 million reduction** in the fair value of Bantam's contingent consideration was recorded for the six months ended December 31, 2020, due to changes in forecasted adjusted EBITDA reflecting a SKU rationalization by a Foodservice customer[40](index=40&type=chunk)[41](index=41&type=chunk) - No liability was recorded for Angelic's contingent consideration at December 31, 2020, or June 30, 2020, based on current projections[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 long-term debt arrangements, including credit facilities and covenants - The company has an unsecured credit facility of up to **$150 million**, with potential to expand to **$225 million**, expiring on March 19, 2025[43](index=43&type=chunk) - There were **no borrowings outstanding** under the facility at December 31, 2020, or June 30, 2020[45](index=45&type=chunk) - Standby letters of credit outstanding totaled **$2.8 million** at December 31,

Lancaster Colony Corporation (NASDAQ:LANC) Q1 2021 Earnings Conference Call November 4, 2020 10:00 AM ET Company Participants Dale Ganobsik - Vice President, Investor Relations and Treasurer Dave Ciesinski - President and Chief Executive Officer Tom Pigott - Chief Financial Officer Conference Call Participants Brian Holland - D.A. Davidson & Company Todd Brooks - C.L. King & Associates Ryan Bell - Consumer Edge Research Operator Good morning. My name is Joanne, and I'll be your conference call facilitator t ...

PART I – FINANCIAL INFORMATION [Item 1. Condensed Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for the three months ended September 30, 2020, and 2019, detailing financial position, performance, and cash flows [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to **$1.024 billion** from **$993.4 million** as of September 30, 2020, driven by higher inventories and property, plant, and equipment | (Amounts in thousands) | September 30, 2020 | June 30, 2020 | | :--- | :--- | :--- | | **Total current assets** | $408,407 | $385,612 | | **Property, plant and equipment-net** | $299,477 | $293,288 | | **Total Assets** | **$1,024,368** | **$993,353** | | **Total current liabilities** | $139,819 | $126,259 | | **Total shareholders' equity** | $801,106 | $783,300 | | **Total Liabilities and Shareholders' Equity** | **$1,024,368** | **$993,353** | [Condensed Consolidated Statements of Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Net sales increased to **$349.2 million** for the three months ended September 30, 2020, but operating income and net income declined, resulting in lower diluted EPS | (Amounts in thousands, except per share data) | Three Months Ended Sep 30, 2020 | Three Months Ended Sep 30, 2019 | | :--- | :--- | :--- | | **Net Sales** | $349,237 | $337,054 | | **Gross Profit** | $92,654 | $92,108 | | **Operating Income** | $48,948 | $51,704 | | **Net Income** | $37,079 | $40,745 | | **Basic and diluted EPS** | $1.35 | $1.48 | [Condensed Consolidated Statements of Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Comprehensive income for the quarter ended September 30, 2020, decreased to **$37.2 million** from **$40.8 million** in the prior year, primarily due to lower net income | (Amounts in thousands) | Three Months Ended Sep 30, 2020 | Three Months Ended Sep 30, 2019 | | :--- | :--- | :--- | | **Net Income** | $37,079 | $40,745 | | **Other Comprehensive Income, Net of Tax** | $94 | $70 | | **Comprehensive Income** | **$37,173** | **$40,815** | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations decreased to **$23.6 million** for the three months ended September 30, 2020, primarily due to increased inventories, with shifts in investing and financing activities | (Amounts in thousands) | Three Months Ended Sep 30, 2020 | Three Months Ended Sep 30, 2019 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $23,643 | $40,095 | | **Net cash used in investing activities** | ($14,548) | ($43,345) | | **Net cash used in financing activities** | ($21,280) | ($19,577) | | **Net change in cash and equivalents** | ($12,185) | ($22,827) | [Condensed Consolidated Statements of Shareholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity) Total shareholders' equity increased to **$801.1 million** as of September 30, 2020, driven by **$37.1 million** in net income, partially offset by **$19.3 million** in cash dividends - For the three months ended September 30, 2020, shareholders' equity increased by **$17.8 million**, reflecting **$37.1 million** in net income less **$19.3 million** in cash dividends (**$0.70 per share**)[19](index=19&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail accounting policies, fair value measurements, and segment performance, highlighting a **$5.7 million** reduction in contingent consideration and a **$1.2 million** impairment charge, alongside COVID-19 impacts on Retail and Foodservice - A **$5.7 million** reduction in the fair value of Bantam's contingent consideration was recorded, reflecting the impact of a SKU rationalization by a Foodservice customer[37](index=37&type=chunk) - Impairment charges of **$1.2 million** were recorded related to certain tradename and technology/know-how intangible assets for Bantam due to the loss of future sales to a Foodservice customer[47](index=47&type=chunk) | (Amounts in thousands) | Three Months Ended Sep 30, 2020 | Three Months Ended Sep 30, 2019 | | :--- | :--- | :--- | | **Retail Net Sales** | $193,725 | $166,077 | | **Foodservice Net Sales** | $155,512 | $170,977 | | **Total Net Sales** | **$349,237** | **$337,054** | | **Retail Operating Income** | $42,658 | $39,016 | | **Foodservice Operating Income** | $27,421 | $26,975 | | **Total Operating Income** | **$48,948** | **$51,704** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=15&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Consolidated net sales grew **4%** to **$349.2 million**, driven by Retail segment growth offset by Foodservice decline, while operating income decreased **5%** to **$48.9 million** due to higher SG&A and manufacturing costs - Retail segment net sales increased **17%** to **$193.7 million**, driven by higher demand for at-home food consumption due to the COVID-19 outbreak[86](index=86&type=chunk) - Foodservice segment net sales decreased **9%** to **$155.5 million** as demand remained constrained by the impacts of COVID-19 on the restaurant industry[87](index=87&type=chunk) - SG&A expenses increased **22%** to **$48.2 million**, primarily due to a **$5.6 million** increase in expenditures for the Project Ascent ERP implementation, totaling **$8.3 million** for the quarter[75](index=75&type=chunk) - A favorable adjustment of **$5.7 million** related to Bantam's contingent consideration increased Foodservice operating income and diluted EPS by **$0.16** for the quarter[78](index=78&type=chunk)[85](index=85&type=chunk)[88](index=88&type=chunk) - The company expects capital expenditures for fiscal 2021 to be between **$70 million** and **$90 million**[97](index=97&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=22&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company reports no material changes to its market risks since the 2020 Annual Report on Form 10-K - There have been no material changes to market risks since the 2020 Annual Report on Form 10-K[103](index=103&type=chunk) [Item 4. Controls and Procedures](index=22&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of September 30, 2020, with no material changes to internal control over financial reporting during the quarter - Based on an evaluation as of September 30, 2020, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective[104](index=104&type=chunk) - No material changes were made to the company's internal control over financial reporting during the most recent fiscal quarter[105](index=105&type=chunk) PART II – OTHER INFORMATION [Item 1A. Risk Factors](index=23&type=section&id=Item%201A.%20Risk%20Factors) The company reports no material changes to the risk factors previously disclosed in its 2020 Annual Report on Form 10-K - There have been no material changes to the risk factors disclosed in the company's 2020 Annual Report on Form 10-K[107](index=107&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=23&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased **86** shares at an average price of **$171.22** per share, primarily for tax withholding, with **1,315,825** shares remaining authorized for future repurchase as of September 30, 2020 | Period | Total Number of Shares Purchased | Average Price Paid Per Share ($) | | :--- | :--- | :--- | | July 1-31, 2020 | — | $ — | | August 1-31, 2020 | 42 | $168.66 | | September 1-30, 2020 | 44 | $173.66 | | **Total** | **86** | **$171.22** | - As of September 30, 2020, **1,315,825** common shares remained authorized for future repurchases under the company's share repurchase authorization[108](index=108&type=chunk) [Item 6. Exhibits](index=23&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications under the Sarbanes-Oxley Act and XBRL data files - The exhibits filed with this report include certifications from the CEO and CFO as required by the Sarbanes-Oxley Act of 2002, along with Inline XBRL documents[116](index=116&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2020 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 Lancaster Colony Corporation (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorp ...

Lancaster Colony Corporation (NASDAQ:LANC) Q2 2020 Results Earnings Conference Call February 4, 2020 10:00 AM ET Company Participants Dale Ganobsik - Vice President of Investor Relations, Treasurer Dave Ciesinski - President, Chief Executive Officer Tom Pigott - Vice President, Chief Financial Officer, Assistant Secretary Conference Call Participants Jamesmichael Sherman-Lewis - D.A. Davidson Todd Brooks - C.L. King Operator Good morning. My name is Jason and I will be your conference call facilitator today ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 Form 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 2019 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 Lancaster Colony Corporation (Exact name of registrant as specified in its charter) (State or other jurisdiction of incor ...

Lancaster Colony Corporation (NASDAQ:LANC) Q1 2020 Earnings Conference Call November 4, 2019 10:00 AM ET Company Participants Dale Ganobsik - VP, IR and Treasurer Dave Ciesinski - President and CEO Tom Pigott - CFO Conference Call Participants Jason Rodgers - Great Lakes Review Frank Camma - Sidoti & Company Operator Good morning. My name is Sharon, and I will be your conference call facilitator today. At this time, I would like to welcome everyone to the Lancaster Colony Corporation Fiscal Year 2020 First ...

PART I – FINANCIAL INFORMATION [Condensed Consolidated Financial Statements](index=4&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) The unaudited condensed consolidated financial statements for Q1 2020 show increased assets, equity, net sales, and net income, reflecting the adoption of new lease accounting guidance [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to **$962.3 million** and shareholders' equity to **$749.7 million** as of September 30, 2019, with new lease accounting impacting liabilities Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | September 30, 2019 | June 30, 2019 | | :--- | :--- | :--- | | **Assets** | | | | Cash and equivalents | $173,461 | $196,288 | | Total current assets | $368,651 | $368,569 | | Property, plant and equipment-net | $280,859 | $247,044 | | Operating lease right-of-use assets | $24,584 | $— | | **Total Assets** | **$962,341** | **$905,399** | | **Liabilities & Equity** | | | | Total current liabilities | $136,573 | $119,706 | | Noncurrent Operating Lease Liabilities | $19,638 | $— | | **Total Shareholders' Equity** | **$749,665** | **$726,873** | [Condensed Consolidated Statements of Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Net sales increased **6.4%** to **$337.1 million**, driving gross profit up **13.4%** and net income rising **4.4%** to **$40.7 million** Consolidated Income Statement Highlights (in thousands, except per share data) | Metric | Three Months Ended Sep 30, 2019 | Three Months Ended Sep 30, 2018 | Change (%) | | :--- | :--- | :--- | :--- | | Net Sales | $337,054 | $316,654 | +6.4% | | Gross Profit | $92,108 | $81,199 | +13.4% | | Operating Income | $51,704 | $49,120 | +5.3% | | Net Income | $40,745 | $39,028 | +4.4% | | Diluted EPS | $1.48 | $1.42 | +4.2% | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow was **$40.1 million**, but investing activities used **$43.3 million**, primarily for property additions, leading to a net cash decrease Cash Flow Summary (in thousands) | Activity | Three Months Ended Sep 30, 2019 | Three Months Ended Sep 30, 2018 | | :--- | :--- | :--- | | Net cash provided by operating activities | $40,095 | $40,860 | | Net cash used in investing activities | ($43,345) | ($9,811) | | Net cash used in financing activities | ($19,577) | ($18,866) | | **Net change in cash and equivalents** | **($22,827)** | **$12,183** | - The significant increase in cash used for investing activities was primarily due to payments for property additions, which rose to **$43.2 million** from **$9.7 million** year-over-year[17](index=17&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Key notes detail new lease accounting adoption, recent acquisitions, contingent consideration valuation, and segment performance showing growth - The company adopted new lease guidance on July 1, 2019, recognizing a right-of-use asset of **$31.7 million** and a lease liability of **$33.5 million**, with no impact on operations or cash flows[29](index=29&type=chunk) - In fiscal 2019, the company acquired Omni Baking Company for **$22.3 million** and Bantam Bagels for a base price of **$33.1 million**, plus potential contingent consideration[30](index=30&type=chunk)[31](index=31&type=chunk) - Contingent consideration for the Bantam acquisition was valued at **$9.0 million** as of September 30, 2019, based on a Level 3 fair value measurement using a Monte Carlo simulation[36](index=36&type=chunk)[37](index=37&type=chunk) Segment Performance - Three Months Ended Sep 30 (in thousands) | Segment | Net Sales 2019 | Net Sales 2018 | Operating Income 2019 | Operating Income 2018 | | :--- | :--- | :--- | :--- | :--- | | Retail | $166,077 | $162,748 | $35,435 | $33,948 | | Foodservice | $170,977 | $153,906 | $23,789 | $18,861 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management reported record Q1 net sales of **$337.1 million**, up **6%**, with gross profit up **13%**, despite higher SG&A and restructuring charges [Results of Consolidated Operations](index=24&type=section&id=Results%20of%20Consolidated%20Operations) Consolidated net sales increased **6%** to **$337.1 million**, with gross profit up **13%**, but operating income growth was tempered by increased SG&A and restructuring Consolidated Operations Summary (in thousands) | Metric | Q1 2020 | Q1 2019 | Change | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $337,054 | $316,654 | $20,400 | 6% | | Gross Profit | $92,108 | $81,199 | $10,909 | 13% | | SG&A Expenses | $39,455 | $32,079 | $7,376 | 23% | | Operating Income | $51,704 | $49,120 | $2,584 | 5% | | Net Income | $40,745 | $39,028 | $1,717 | 4% | - Excluding sales from the Bantam and Omni acquisitions, consolidated net sales increased **3%** for the quarter[79](index=79&type=chunk) - SG&A expenses increased by **$7.4 million**, driven by a **$2.7 million** spend on the ERP initiative, increased consumer promotions, and incremental expenses from the Bantam acquisition[81](index=81&type=chunk)[82](index=82&type=chunk) - The company recorded **$0.9 million** in restructuring and impairment charges related to the closure of its frozen bread plant in Saraland, Alabama[84](index=84&type=chunk)[85](index=85&type=chunk) [Results of Operations - Segments](index=25&type=section&id=Results%20of%20Operations%20-%20Segments) Retail segment net sales grew **2%** and operating income **4%**, while Foodservice net sales surged **11%** and operating income **26%** - Retail segment net sales grew **2%**, or **1.5%** excluding the Bantam acquisition, driven by Marzetti® dressings and dips, frozen garlic bread, and licensed dressings[90](index=90&type=chunk) - Foodservice segment net sales grew **11%**, or **4%** excluding acquisitions, attributed to national chain restaurant accounts, branded products, and frozen pasta, with Omni acquisition contributing **$7.9 million**[92](index=92&type=chunk) - Foodservice operating income increased **26%**, benefiting from higher sales volumes and cost savings from the lean six sigma program[93](index=93&type=chunk) [Looking Forward](index=26&type=section&id=Looking%20Forward) The company anticipates a strong Q2 driven by holiday sales and product expansion, with elevated SG&A and moderately unfavorable commodity costs expected later - The second quarter is typically the strongest sales quarter due to the holiday season[95](index=95&type=chunk) - Anticipates continued sales growth for Bantam in both Retail and Foodservice segments, as retail distribution expands and foodservice trends with Starbucks® remain positive[95](index=95&type=chunk) - Commodity costs are expected to be similar to the prior year in Q2 but turn 'moderately unfavorable' in the second half of the fiscal year[95](index=95&type=chunk) [Financial Condition](index=26&type=section&id=Financial%20Condition) Operating cash flow was **$40.1 million**, with capital expenditures increasing to **$43.3 million** for capacity expansion, maintaining strong liquidity - Increased capital expenditures include spending on a capacity expansion project at the frozen dinner roll facility in Horse Cave, Kentucky, expected to be completed near the end of Q2[97](index=97&type=chunk) - The company expects capital expenditures for fiscal 2020 to total between **$80 million** and **$100 million**[102](index=102&type=chunk) - As of September 30, 2019, the company had no borrowings outstanding under its **$150 million** revolving credit facility and was in compliance with all covenants[99](index=99&type=chunk)[100](index=100&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=28&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company reports no material changes to market risks from those disclosed in its 2019 Annual Report on Form 10-K - There were no material changes to market risks from the 2019 Annual Report on Form 10-K[107](index=107&type=chunk) [Controls and Procedures](index=28&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were effective as of September 30, 2019, with no material changes to internal control over financial reporting - The CEO and CFO concluded that disclosure controls and procedures were effective as of September 30, 2019[108](index=108&type=chunk) - No material changes were made to internal control over financial reporting during the most recent fiscal quarter[109](index=109&type=chunk) PART II – OTHER INFORMATION [Risk Factors](index=29&type=section&id=Item%201A.%20Risk%20Factors) The company reports no material changes to the risk factors previously disclosed in its 2019 Annual Report on Form 10-K - There have been no material changes to the risk factors disclosed in the 2019 Annual Report on Form 10-K[112](index=112&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=29&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased **10,279** common shares at **$142.49** per share, with **1,344,144** shares remaining authorized for future repurchase Common Stock Repurchases - Q1 2020 | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | July 1-31, 2019 | 40 | $148.22 | | August 1-31, 2019 | 239 | $145.90 | | September 1-30, 2019 | 10,000 | $142.39 | | **Total** | **10,279** | **$142.49** | - As of September 30, 2019, **1,344,144** common shares remained authorized for future repurchase under the Board-approved plan[113](index=113&type=chunk) [Exhibits](index=29&type=section&id=Item%206.%20Exhibits) This section references the Index to Exhibits, listing certifications and XBRL data files submitted with the Form 10-Q

Financial Data and Key Metrics Changes - Consolidated net sales increased by 5% to a record $323.7 million in Q4 2019 compared to $308.2 million last year, with a 1.3% increase excluding acquisitions [6] - Consolidated gross profit improved by $2 million to $78.2 million, but gross profit margin decreased by 50 basis points from 24.7% to 24.2% due to headwinds from recent acquisitions [10] - Net income for Q4 totaled $33 million, or $1.20 per diluted share, compared to $32.4 million, or $1.18 per diluted share last year [15] - For the full fiscal year, consolidated net income increased by 6.9% to a record $150.5 million, or $5.46 per diluted share [19] Business Line Data and Key Metrics Changes - Retail net sales declined by 1.4% to $154.5 million, with a 2.2% decline when excluding Bantam Bagels [7] - Foodservice net sales grew by 11.7% to $169.1 million, with a 4.8% increase in organic net sales [8] - Retail segment operating income increased by $2.4 million to $32.3 million, while foodservice segment operating income also increased by $2.4 million to $18.4 million [13][14] Market Data and Key Metrics Changes - Retail sales data indicated growth in four out of six categories, with share position increases in two categories [16] - The foodservice segment showed strong growth, particularly in national chain restaurant accounts and branded products [9] Company Strategy and Development Direction - The company completed two acquisitions in fiscal year 2019, which are expected to play a significant role in future growth [24][27] - The company is focused on improving operational efficiency through supply chain initiatives and automation projects [22] - The company plans to introduce new products in fiscal year 2020 to drive retail sales growth [44][46] Management's Comments on Operating Environment and Future Outlook - Management anticipates an uptick in commodity costs for fiscal year 2020, with pricing initiatives and cost-saving programs expected to offset these costs [48] - The company remains optimistic about the foodservice segment's performance despite potential economic challenges [75] Other Important Information - The company reported a 23% increase in operating cash flow to $198 million for fiscal year 2019 [35] - Capital expenditures for fiscal year 2020 are expected to remain elevated at $80 million to $100 million [40] Q&A Session Summary Question: Changes in retail sales and competition - Management noted that they gained share in two out of six categories, remained flat in three, and lost share in one category due to a retailer's merchandising decision [52] Question: Ongoing expenses related to Omni and Bantam Bagels - Management indicated that Bantam Bagels is expected to improve margins with a new automated line by the end of the calendar year, while Omni is incurring temporary overhead costs due to factory repairs [56][59] Question: Impact of commodity costs - Management highlighted broad-based commodity inflation concerns, estimating a 2-3% increase across various commodities [78]