Lancaster Colony(LANC) - 2024 Q4 - Annual Results

Overview of Q4 and Fiscal Year 2024 Results This section provides a comprehensive overview of the company's financial performance for the fourth quarter and the full fiscal year 2024 Fourth Quarter Fiscal 2024 Results Q4 fiscal 2024 saw a slight net sales decline to $452.8 million, offset by a 4.8% gross profit increase and a significant surge in operating income to $41.7 million, largely due to reduced restructuring charges, boosting diluted EPS to $1.26 Q4 Fiscal 2024 Key Financial Metrics | Metric | Q4 2024 | Q4 2023 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $452.8M | $454.7M | -0.4% | | Gross Profit | $97.6M | $93.2M | +4.7% | | Operating Income | $41.7M | $11.5M | +263.4% | | Net Income per Diluted Share | $1.26 | $0.33 | +281.8% | - The slight decline in consolidated net sales was driven by the tactical decision to exit perimeter-of-the-store bakery product lines in March 2024[1][3] - The significant increase in operating and net income was heavily influenced by a reduction in restructuring and impairment charges, which were $2.7 million in Q4 2024 compared to $25.0 million in Q4 2023[2][5][6] Full Fiscal Year 2024 Results For fiscal year 2024, net sales increased 2.7% to $1.87 billion, with net income substantially growing to $158.6 million ($5.76 per diluted share), reflecting improved results partly due to lower ERP initiative expenditures Full Fiscal Year 2024 Key Financial Metrics | Metric | FY 2024 | FY 2023 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $1.87B | $1.82B | +2.7% | | Net Income | $158.6M | $111.3M | +42.5% | | Net Income per Diluted Share | $5.76 | $4.04 | +42.6% | - Special charges in fiscal 2024 included $11.4 million ($0.42/share) for restructuring and impairment and $6.3 million ($0.23/share) for Project Ascent[7] - In comparison, fiscal 2023 special charges included $23.0 million ($0.84/share) for Project Ascent and $19.3 million ($0.70/share) for restructuring and impairment[7] Segment Performance Analysis This section analyzes the financial performance and key drivers for the Retail and Foodservice segments Retail Segment The Retail segment's Q4 net sales declined to $234.2 million due to product exits, though sales grew 1.4% excluding these, while full fiscal year sales increased 2.4% to $988.4 million and operating income surged 49% to $207.7 million - Excluding the exited perimeter-of-the-store bakery lines, Retail net sales increased 1.4% and sales volume increased 1.2% in the fourth quarter[3][4] - Growth drivers included newly introduced Subway® sandwich sauces, Texas Roadhouse® steak sauces, and solid volume gains for New York BRAND Bakery® frozen garlic bread[3] Retail Segment Performance (in thousands) | Metric | Q4 2024 | Q4 2023 | FY 2024 | FY 2023 | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $234,194 | $236,183 | $988,424 | $965,370 | | Operating Income | $47,702 | $10,269 | $207,660 | $139,464 | Foodservice Segment The Foodservice segment reported flat Q4 net sales of $218.6 million, as volume growth was offset by deflationary pricing, while full fiscal year sales grew 3.1% to $883.3 million and operating income declined 8.7% to $97.1 million - Q4 sales volume increased 4.2%, driven by increased demand from several national chain restaurant customers[3][4] - Flat net sales in Q4 reflect the unfavorable impact of deflationary pricing, which offset the volume growth[1][3] Foodservice Segment Performance (in thousands) | Metric | Q4 2024 | Q4 2023 | FY 2024 | FY 2023 | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $218,631 | $218,478 | $883,335 | $857,157 | | Operating Income | $18,982 | $25,319 | $97,094 | $106,349 | Fiscal 2025 Outlook and Forward-Looking Statements This section outlines the company's financial projections for fiscal year 2025 and discusses the inherent risks associated with forward-looking statements Fiscal 2025 Outlook For fiscal 2025, the company anticipates continued Retail segment sales growth driven by licensing and new products, with Foodservice volume influenced by quick-service restaurants and overall economic factors, while expecting margin improvement from cost savings without significant commodity inflation - Retail growth is expected from the licensing program, including an expanded partnership with Texas Roadhouse to include their dinner rolls[8] - New product introductions, such as a gluten-free garlic bread and continued momentum for Marzetti® refrigerated dressings, are also expected to contribute to Retail sales growth[8] - The company does not foresee significant impacts from commodity cost inflation or deflation and expects to drive margin improvement via cost savings programs[8] Forward-Looking Statements & Risk Factors The report includes a safe harbor statement for forward-looking statements, highlighting key risks such as price competition, consumer demand shifts, supply chain issues, inflationary pressures, and dependence on key customer relationships - The company's forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ[11] - Key risks include, but are not limited to: price competition, changes in consumer behavior, supply chain issues, inflationary pressures, fluctuations in ingredient costs, and the potential loss of key customers[11][13] Condensed Consolidated Financial Statements This section presents the company's condensed consolidated financial statements, including the statements of income and balance sheets Statements of Income The condensed income statement shows Q4 2024 net sales at $452.8 million with net income rising to $34.8 million, while full fiscal year 2024 net sales increased to $1.87 billion and net income grew to $158.6 million Condensed Consolidated Statements of Income (in thousands) | | Three Months Ended June 30, | Fiscal Year Ended June 30, | | :--- | :--- | :--- | | | 2024 | 2023 | 2024 | 2023 | | Net sales | $452,825 | $454,661 | $1,871,759 | $1,822,527 | | Gross profit | $97,618 | $93,174 | $432,302 | $388,568 | | Operating income | $41,688 | $11,475 | $199,363 | $141,508 | | Net income | $34,828 | $9,166 | $158,613 | $111,286 | | Diluted EPS | $1.26 | $0.33 | $5.76 | $4.04 | Balance Sheets The balance sheet strengthened as of June 30, 2024, with total assets increasing to $1.21 billion, driven by a rise in cash and equivalents to $163.4 million, and shareholders' equity growing to $925.8 million Condensed Consolidated Balance Sheets (in thousands) | | June 30, 2024 | June 30, 2023 | | :--- | :--- | :--- | | Assets | | | | Cash and equivalents | $163,443 | $88,473 | | Total current assets | $443,993 | $374,463 | | Total assets | $1,206,931 | $1,112,994 | | Liabilities & Equity | | | | Total current liabilities | $183,969 | $168,752 | | Shareholders' equity | $925,772 | $862,267 | | Total liabilities and shareholders' equity | $1,206,931 | $1,112,994 |