Lancaster Colony(LANC) - 2026 Q1 - Quarterly Report

Financial Performance - Consolidated net sales for the three months ended September 30, 2025 increased 5.8% to $493.5 million compared to $466.6 million in the prior year, driven by core volume increases and inflationary pricing in the Foodservice segment [70]. - Gross profit for the same period rose by $8.0 million to a record $118.8 million, with an adjusted gross margin increase of 80 basis points [73]. - Retail segment net sales increased 3.5% to $247.8 million, supported by higher sales volumes and contributions from the licensing program [81]. - Foodservice segment net sales grew 8.2% to $245.6 million, driven by increased demand from national chain restaurant customers [82]. - Operating income for the Foodservice segment surged 43.0% to $34.8 million, aided by cost savings programs and a favorable sales mix [83]. - Diluted net income per share increased to $1.71, compared to $1.62 in the prior year, despite restructuring charges reducing earnings by $0.03 [79]. - Adjusted Consolidated Net Sales for the three months ended September 30, 2025, were $482.8 million, while reported Net Sales were $493.5 million [98]. - Adjusted Operating Income for the three months ended September 30, 2025, was $60.4 million, reflecting an 8.1% increase from $55.9 million in the prior year [99]. Expenses and Taxation - Selling, general and administrative expenses rose 6.3% to $58.4 million, reflecting higher marketing costs and increased brokerage expenses [74]. - The effective tax rate for the three months ended September 30, 2025 was 22.4%, slightly down from 22.8% in the prior year [78]. Cash Flow and Investments - For the three months ended September 30, 2025, net cash provided by operating activities increased to $69.5 million from $19.9 million in the prior-year period, primarily due to favorable changes in net working capital and higher net income [88]. - Cash used in investing activities decreased to $18.8 million from $19.9 million in the prior year, reflecting a lower level of payments for property additions [89]. - Cash used in financing activities increased to $30.0 million from $28.4 million in the prior year, driven by higher dividend payments [89]. - The company expects capital expenditures for 2026 to total between $75 million and $85 million [93]. Future Outlook - The company anticipates continued growth in Retail segment sales driven by licensing programs and expects modest inflation in input costs to be offset by contractual pricing [85]. - The acquisition of a sauce and dressing production facility in Atlanta is expected to enhance manufacturing capabilities and contribute to future growth [86]. - The company anticipates cash provided by operating activities will be the primary source of liquidity beyond the next 12 months [94]. - The company remains in compliance with all covenants of its credit facility and expects to maintain compliance for the foreseeable future [92]. Obligations - The company has various contractual obligations, including commitments to purchase raw materials and lease commitments, with the majority expected to be due within one year [95]. - As of September 30, 2025, the company had no borrowings under its $150 million unsecured revolving credit facility, with $2.6 million in standby letters of credit outstanding [90].