Lancaster Colony(LANC) - 2021 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION This section covers the company's unaudited financial statements and management's discussion and analysis Item 1. Condensed Consolidated Financial Statements (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 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 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 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 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 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 This section provides detailed notes on accounting policies and specific financial statement line items Note 1 – Summary of Significant Accounting Policies 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] - The company capitalized $2.8 million of deferred software costs related to cloud computing arrangements for the six months ended December 31, 2020[25] - Earnings per share (EPS) is computed using the two-class method, including unvested restricted stock as participating securities[29] - There were no changes to significant accounting policies from those disclosed in the 2020 Annual Report on Form 10-K[32] - 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] Note 2 – Fair Value 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][37] 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][41] - No liability was recorded for Angelic's contingent consideration at December 31, 2020, or June 30, 2020, based on current projections[42] Note 3 – Long-Term Debt 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] - There were no borrowings outstanding under the facility at December 31, 2020, or June 30, 2020[45] - Standby letters of credit outstanding totaled $2.8 million at December 31,