Lancaster Colony(LANC) - 2025 Q4 - Annual Results

Company Announcement & Name Change Lancaster Colony Corporation officially changed its name to The Marzetti Company, effective June 27, 2025 - Effective June 27, 2025, Lancaster Colony Corporation changed its name to The Marzetti Company[1] Fourth Quarter Summary The company reported record sales and gross profit for the fourth quarter, driven by strong performance in both Retail and Foodservice segments, despite a decline in operating income and diluted EPS CEO Commentary on Q4 Performance CEO David A. Ciesinski highlighted record sales and gross profit for the quarter, attributing Retail segment growth to expanding distribution of popular products and new club channel sales, and Foodservice growth to inflationary pricing and increased demand from national chain customers - Retail segment sales growth of 3.1% was led by expanding distribution for Texas Roadhouse dinner rolls and new club channel sales for Chick-fil-A sauce[3] - New York Bakery frozen garlic bread achieved strong volume gains, including contributions from new gluten-free Texas Toast[3] - Foodservice segment net sales, excluding non-core TSA sales, increased 1.4% due to inflationary pricing, increased demand from national chain restaurant accounts, and branded Foodservice product sales gains[3] Fourth Quarter Key Financial Highlights Consolidated net sales increased 5.0% to a record $475.4 million, with gross profit also reaching a record $106.1 million. Operating income declined due to higher SG&A and increased restructuring charges, leading to a decrease in diluted EPS Fourth Quarter Key Financial Highlights | Metric | Q4 FY2025 | Q4 FY2024 | Change (%) | | :-------------------------------- | :---------- | :---------- | :--------- | | Consolidated Net Sales | $475.4 million | $452.8 million | +5.0% | | Consolidated Gross Profit | $106.1 million | $97.6 million | +8.7% | | Gross Profit Margin | 22.3% | 21.6% | +0.7 pp | | SG&A Expenses | $62.1 million | $53.2 million | +16.7% | | Consolidated Operating Income | $38.9 million | $41.7 million | -6.7% | | Net Income per Diluted Share | $1.18 | $1.26 | -6.3% | - Consolidated net sales increased 5.0% to a fourth quarter record $475.4 million; excluding $12.2 million in non-core TSA sales, consolidated net sales increased 2.3%[4] - SG&A expenses increased $8.9 million to $62.1 million, driven by higher marketing costs to support retail brands[4] - Consolidated operating income declined $2.8 million to $38.9 million, impacted by higher SG&A and increased restructuring and impairment charges ($5.1 million vs. $2.7 million last year)[4] Fourth Quarter Detailed Financial Results This section provides a detailed breakdown of the company's fourth-quarter financial performance, including net sales, gross profit, operating expenses, and net income across segments Net Sales and Segment Performance Consolidated net sales grew 5.0% to $475.4 million. Retail segment sales increased 3.1% (3.6% excluding exited bakery lines), while Foodservice sales grew 7.0% (1.4% excluding non-core TSA sales) Net Sales and Segment Performance | Segment | Q4 FY2025 Net Sales | Q4 FY2024 Net Sales | Change (%) | Volume Change (lbs) | | :---------- | :------------------ | :------------------ | :--------- | :------------------ | | Consolidated | $475.4 million | $452.8 million | +5.0% | N/A | | Retail | $241.6 million | $234.2 million | +3.1% | +2.1% | | Retail (excl. exited bakery) | N/A | N/A | +3.6% | +2.9% | | Foodservice | $233.9 million | $218.6 million | +7.0% | -1.7% | | Foodservice (excl. TSA) | N/A | N/A | +1.4% | -1.7% | - Foodservice segment sales include $12.2 million in non-core sales from a temporary supply agreement (TSA) with Winland Foods, Inc., related to an acquisition completed in February 2025[5] Gross Profit Consolidated gross profit increased by $8.5 million to a record $106.1 million, with the gross profit margin improving by 70 basis points to 22.3%, primarily due to cost savings programs and a favorable volume/mix in the Retail segment Gross Profit | Metric | Q4 FY2025 | Q4 FY2024 | Change | | :----------- | :---------- | :---------- | :------- | | Gross Profit | $106.1 million | $97.6 million | +$8.5 million | | Gross Margin | 22.3% | 21.6% | +70 bps | - Improvement driven by ongoing cost savings programs and a more favorable volume/mix for the Retail segment[5] Selling, General & Administrative Expenses SG&A expenses rose by $8.9 million to $62.1 million, mainly due to increased marketing investments for retail brands, higher personnel costs, and $0.5 million in incremental costs from the sauce and dressing plant acquisition Selling, General & Administrative Expenses | Metric | Q4 FY2025 | Q4 FY2024 | Change | | :---------------- | :---------- | :---------- | :------- | | SG&A Expenses | $62.1 million | $53.2 million | +$8.9 million | - Drivers include higher marketing costs to support retail brands, increased investments in personnel, and $0.5 million in incremental costs from the sauce and dressing plant acquisition[6] Restructuring and Impairment Charges Restructuring and impairment charges totaled $5.1 million in Q4 FY2025, primarily related to the planned closure of the Milpitas, California sauce and dressing facility. This compares to $2.7 million in the prior-year quarter for exiting bakery product lines Restructuring and Impairment Charges | Metric | Q4 FY2025 | Q4 FY2024 | Change | | :-------------------------------- | :---------- | :---------- | :------- | | Restructuring & Impairment Charges | $5.1 million | $2.7 million | +$2.4 million | - Current year charges ($4.5 million) are attributed to the planned closure of the Milpitas, California sauce and dressing facility, including impairment charges, termination benefits, and other closure costs[7] - Production at the Milpitas facility is expected to conclude during the quarter ending September 30, 2025[7] Operating Income Consolidated operating income decreased by $2.8 million to $38.9 million, primarily due to higher SG&A expenses and a $2.4 million increase in restructuring and impairment charges, partially offset by the higher gross profit Operating Income | Metric | Q4 FY2025 | Q4 FY2024 | Change | | :--------------- | :---------- | :---------- | :------- | | Operating Income | $38.9 million | $41.7 million | -$2.8 million | - Decline was impacted by higher SG&A expenses and the increase in restructuring and impairment charges, partially offset by higher gross profit[8] Net Income and Diluted Earnings Per Share Net income decreased by $2.3 million to $32.5 million, resulting in $1.18 per diluted share, down from $1.26 last year. Restructuring and impairment charges reduced current-year net income by $0.15 per diluted share, compared to $0.08 last year Net Income and Diluted Earnings Per Share | Metric | Q4 FY2025 | Q4 FY2024 | Change | | :----------------------- | :---------- | :---------- | :------- | | Net Income | $32.5 million | $34.8 million | -$2.3 million | | Diluted EPS | $1.18 | $1.26 | -$0.08 | - Restructuring and impairment charges reduced current-year net income by $4.0 million, or $0.15 per diluted share, compared to $2.1 million, or $0.08 per diluted share, in the prior year[9] - Incremental SG&A expenditures from the plant acquisition reduced net income by $0.4 million, or $0.01 per diluted share[9] Fiscal Year 2025 Financial Results The company reported a 2.0% increase in net sales to $1.91 billion and a 5.5% rise in net income to $167.3 million for fiscal year 2025, with diluted EPS reaching $6.07 Fiscal Year 2025 Financial Results | Metric | FY2025 | FY2024 | Change (%) | | :----------------------- | :----------- | :----------- | :--------- | | Net Sales | $1.91 billion | $1.87 billion | +2.0% | | Net Income | $167.3 million | $158.6 million | +5.5% | | Diluted EPS | $6.07 | $5.76 | +5.4% | - Fiscal 2025 results include a noncash pension settlement charge that reduced net income by $10.8 million, or $0.39 per diluted share[10] - Restructuring and impairment charges reduced net income by $4.0 million, or $0.15 per diluted share in FY2025, compared to $11.4 million, or $0.42 per diluted share in FY2024[10] - Incremental SG&A expenditures from the Atlanta-based sauce and dressing facility acquisition reduced net income by $2.9 million, or $0.11 per diluted share in FY2025[10] Fiscal Year 2026 Outlook The company anticipates sales growth in the Retail segment and support for Foodservice sales, while planning to offset modest input cost inflation through pricing and cost savings programs - Retail segment sales are expected to benefit from volume growth, including contributions from licensing programs and Marzetti, New York Bakery, and Sister Schubert's brands[11] - Foodservice segment sales are expected to be supported by select quick-service restaurant customers, with overall demand potentially impacted by external factors like U.S. economic performance and consumer behavior[11] - The company anticipates modest input cost inflation in fiscal 2026, which it plans to offset through contractual pricing and cost savings programs, focusing on continued margin improvement[11] Company Information & Disclosures This section provides an overview of The Marzetti Company, details regarding its conference call, and important disclosures about forward-looking statements and associated risk factors About The Marzetti Company The Marzetti Company is a manufacturer and marketer of specialty food products for both retail and foodservice channels - The Marzetti Company manufactures and markets specialty food products for retail and foodservice channels[13] Conference Call Information A conference call for the fourth quarter and fiscal year-end results was scheduled for August 21, 2025, at 10:00 a.m. ET, with access available via webcast on the company's investor relations website - The conference call was scheduled for August 21, 2025, at 10:00 a.m. ET[12] - A live webcast and replay are available on investors.marzetticompany.com[12] Forward-Looking Statements and Risk Factors The report includes forward-looking statements under the PSLRA safe harbor provisions, based on management's assumptions. These statements involve various risks and uncertainties that could cause actual results to differ materially, including operational efficiencies, competition, demand changes, inflation, and supply chain issues - The news release contains "forward-looking statements" under the Private Securities Litigation Reform Act of 1995 (PSLRA) safe harbor provisions[14] - Statements are based on management's assumptions and involve risks and uncertainties that could cause actual results to differ materially[14] - Key risk factors include plant operational efficiencies, price and product competition, success of new product development, changes in demand, impact of customer store brands, regulatory matters, acquisition integration, inflationary pressures, cost and availability of ingredients/packaging, freight/energy costs, customer reaction to pricing, trade policies, dependence on key personnel, labor supply/relations, geopolitical events, third-party dependence, cyber-security incidents, loss of key customer relationships, capacity constraints, license agreement failures, product recalls, customer consolidation, competitive position, litigation, consumer demand shifts, and critical accounting judgments[14][17] Condensed Consolidated Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements, including statements of income, business segment information, and balance sheets for the specified periods Condensed Consolidated Statements of Income The unaudited condensed consolidated statements of income show detailed revenue, cost of sales, gross profit, operating expenses, and net income for the three months and fiscal years ended June 30, 2025, and 2024 Condensed Consolidated Statements of Income | Metric (in thousands) | Q4 FY2025 (in thousands) | Q4 FY2024 (in thousands) | FY2025 (in thousands) | FY2024 (in thousands) | | :-------------------------------- | :---------- | :---------- | :---------- | :---------- | | Net sales | $475,427 | $452,825 | $1,909,122 | $1,871,759 | | Cost of sales | $369,335 | $355,207 | $1,453,476 | $1,439,457 | | Gross profit | $106,092 | $97,618 | $455,646 | $432,302 | | Selling, general & administrative expenses | $62,075 | $53,193 | $230,227 | $218,065 | | Restructuring and impairment charges | $5,102 | $2,737 | $5,102 | $14,874 | | Operating income | $38,915 | $41,688 | $220,317 | $199,363 | | Pension settlement charge | — | — | ($13,968) | — | | Net income | $32,529 | $34,828 | $167,347 | $158,613 | | Diluted EPS | $1.18 | $1.26 | $6.07 | $5.76 | | Cash dividends per common share | $0.95 | $0.90 | $3.75 | $3.55 | Business Segment Information This table provides a breakdown of net sales and operating income by segment (Retail and Foodservice) for the three months and fiscal years ended June 30, 2025, and 2024, along with nonallocated restructuring charges and corporate expenses Business Segment Information | Segment (in thousands) | Q4 FY2025 Net Sales (in thousands) | Q4 FY2024 Net Sales (in thousands) | FY2025 Net Sales (in thousands) | FY2024 Net Sales (in thousands) | | :--------------------- | :------------------ | :------------------ | :--------------- | :--------------- | | Retail | $241,554 | $234,194 | $1,003,409 | $988,424 | | Foodservice | $233,873 | $218,631 | $905,713 | $883,335 | | Total Net Sales | $475,427 | $452,825 | $1,909,122 | $1,871,759 | | | | | | | | Segment (in thousands) | Q4 FY2025 Operating Income (in thousands) | Q4 FY2024 Operating Income (in thousands) | FY2025 Operating Income (in thousands) | FY2024 Operating Income (in thousands) | | :--------------------- | :------------------------- | :------------------------- | :-------------------- | :-------------------- | | Retail | $40,905 | $47,702 | $211,695 | $207,660 | | Foodservice | $28,835 | $18,982 | $111,579 | $97,094 | | Nonallocated Restructuring and Impairment Charges | ($5,102) | ($2,737) | ($5,102) | ($14,874) | | Corporate Expenses | ($25,723) | ($22,259) | ($97,855) | ($90,517) | | Total Operating Income | $38,915 | $41,688 | $220,317 | $199,363 | Condensed Consolidated Balance Sheets The unaudited condensed consolidated balance sheets present the company's assets, liabilities, and shareholders' equity as of June 30, 2025, and June 30, 2024, showing changes in current assets, property, plant & equipment, and equity Condensed Consolidated Balance Sheets | Metric (in thousands) | June 30, 2025 (in thousands) | June 30, 2024 (in thousands) | | :-------------------------------- | :-------------- | :-------------- | | ASSETS | | | | Cash and equivalents | $161,476 | $163,443 | | Receivables | $95,817 | $95,560 | | Inventories | $169,301 | $173,252 | | Total current assets | $443,631 | $443,993 | | Net property, plant and equipment | $534,543 | $477,696 | | Total assets | $1,274,724 | $1,206,931 | | LIABILITIES AND SHAREHOLDERS' EQUITY | | | | Accounts payable | $117,962 | $118,811 | | Accrued liabilities | $68,332 | $65,158 | | Total current liabilities | $186,294 | $183,969 | | Noncurrent liabilities and deferred income taxes | $89,935 | $97,190 | | Shareholders' equity | $998,495 | $925,772 | | Total liabilities and shareholders' equity | $1,274,724 | $1,206,931 |