Exhibit 99.1
| | | |
FOR IMMEDIATE RELEASE
Thursday, January 29, 2009 | | SYMBOL: LANC
TRADED: Nasdaq |
LANCASTER COLONY REPORTS IMPROVED SECOND QUARTER SALES AND EARNINGS
COLUMBUS, Ohio, Jan. 29 —Lancaster Colony Corporation (Nasdaq: LANC) today reported higher sales, operating income and net income for the company’s second fiscal quarter ended December 31, 2008 compared with the corresponding quarter a year ago. Highlights of the quarter:
| • | | Consolidated net sales increased seven percent to $288 million versus $269 million in the second quarter last year. |
| • | | Income from continuing operations totaled $28,452,000 compared with $15,274,000 for the corresponding quarter a year ago. The current year’s quarter included pretax income of approximately $8.7 million (20 cents per share after taxes) associated with a distribution received under the Continued Dumping and Subsidy Offset Act (CDSOA). A year ago, second quarter results from continuing operations included a pretax CDSOA distribution of approximately $2.5 million (five cents per share after taxes), as well as a $5.7 million pretax loss (12 cents per share after taxes) on the sale of consumer and floral glass operations and a noncash pension settlement charge to corporate expenses of $3.0 million (six cents per share after taxes). |
| • | | Specialty Foods sales increased 14 percent in the quarter to $245.4 million, reflecting strength in both retail and foodservice sales. Contributing to this growth was higher pricing of most products and volume growth of several recently-introduced frozen products. Operating income totaled $39.7 million, up 40 percent from the year-ago level. Pricing initiatives have allowed the company to offset much of the commodity cost escalations that occurred over the last three years. The current year comparative quarterly results include an estimated unfavorable impact of these cost escalations exceeding $10 million. |
| • | | Glassware and Candles sales declined 21 percent to $42.8 million, reflecting softer demand for candles and the mid-November 2007 divestiture of certain glassware operations. Sales of the sold operations totaled approximately $7.6 million in the prior-year period. The segment’s operating loss in the most recent quarter totaled $1.0 million, compared to a prior-year loss of $0.8 million, including a $5.7 million loss on the divestitures. Current year performance was adversely impacted by factors such as higher material costs, lower sales volumes and reduced capacity utilization. |
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| • | | Net income for the quarter totaled $28,452,000, compared with second quarter net income last year of $15,998,000, which included income from discontinued automotive operations of $724,000. |
| • | | Net income per diluted share was $1.02 versus $.54 in the year-ago quarter, which included income from discontinued operations of two cents per share. Income from continuing operations was $1.02 per diluted share versus $.51 a year ago. |
| • | | The company’s balance sheet remained strong with debt at December 31, 2008 representing approximately 11 percent of total capitalization. |
For the six months ended December 31, 2008, net sales were $552 million compared to $513 million for the first six months last year. Net income was $39,472,000, or $1.40 per diluted share. In the prior year, net income totaled $31,568,000, or $1.05 per diluted share, including income from discontinued operations of $1,647,000, or $.05 per diluted share. Income from continuing operations for the six months was also $39,472,000, or $1.40 per diluted share, compared to $29,921,000, or $.99 per diluted share, earned in the first six months a year ago.
John B. Gerlach, Jr., chairman and CEO, said, “We were pleased with the quarter’s consolidated results given the many economic challenges faced by our customers and consumers. We were also encouraged to see a seasonally strong retail mix, higher sales volumes and various pricing actions begin to move Specialty Foods operating margins toward more historic levels.”
Looking ahead, Mr. Gerlach said, “For the balance of the fiscal year, we expect Specialty Foods results to benefit as key commodity costs moderate from the prior year’s unprecedented highs. However, we anticipate that the incremental contribution of the segment’s recent pricing initiatives will diminish over time. While Glassware and Candles operating performance is likely to remain challenged in the near-term, we are hopeful that recent declines in wax prices may begin contributing to better comparisons by the end of the fiscal year. It remains unclear how the currently unsettled market conditions will impact sales across both segments.”
Conference Call on the Web
The company’s second quarter conference call is scheduled for this morning, January 29, at 10:00 a.m. ET. You may access the call through a live webcast by using the link provided on the company’s Internet home page atwww.lancastercolony.com. Replays of the webcast will be made available on the company website.
About the Company
Lancaster Colony Corporation is a diversified manufacturer and marketer of consumer products focusing primarily on specialty foods for the retail and foodservice markets.
Forward-Looking Statements
We desire to take advantage of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 (the “PSLRA”). This news release contains various “forward—looking statements” within the meaning of the PSLRA and other applicable securities laws. Such statements can be identified by the use of the forward-looking words “anticipate,” “estimate,” “project,” “believe,” “intend,” “plan,” “expect,” “hope” or similar
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words. These statements discuss future expectations; contain projections regarding future developments, operations or financial conditions; or state other forward-looking information. Such statements are based upon assumptions and assessments made by us in light of our experience and perception of historical trends, current conditions, expected future developments; and other factors we believe to be appropriate. These forward-looking statements involve various important risks, uncertainties and other factors that could cause our actual results to differ materially from those expressed in the forward-looking statements. Actual results may differ as a result of factors over which we have no, or limited, control. Management believes these forward-looking statements to be reasonable; however, you should not place undue reliance on such statements that are based on current expectations. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update such forward-looking statements. More detailed statements regarding significant events that could affect our financial results are included in our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q as filed with the Securities and Exchange Commission and are available on our website at www.lancastercolony.com.
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| FOR FURTHER INFORMATION: | | John B. Gerlach, Jr., Chairman and CEO, or
John L. Boylan, Vice President, Treasurer and CFO
Lancaster Colony Corporation
Phone: 614/224-7141
—or—
Investor Relations Consultants, Inc.
Phone: 727/781-5577 or E-mail: lanc@mindspring.com
|
PAGE 4 / LANCASTER COLONY REPORTS IMPROVED 2ND QUARTER SALES & EARNINGS
LANCASTER COLONY CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (b)
(In thousands except per-share amounts)
| | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | Six Months Ended | |
| | | December 31, | | | December 31, | |
| | | 2008 | | | 2007 | | | 2008 | | | 2007 | |
| Net sales | | $ | 288,242 | | | $ | 269,447 | | | $ | 552,079 | | | $ | 513,405 | |
| Cost of sales | | | 230,079 | | | | 225,837 | | | | 454,247 | | | | 424,963 | |
| | | | | | | | | | | | | |
| Gross margin | | | 58,163 | | | | 43,610 | | | | 97,832 | | | | 88,442 | |
| Selling, general & administrative expenses | | | 21,917 | | | | 21,217 | | | | 42,178 | | | | 42,259 | |
| Restructuring and impairment charges | | | (8 | ) | | | 46 | | | | 1,606 | | | | 182 | |
| | | | | | | | | | | | | |
| Operating income | | | 36,254 | | | | 22,347 | | | | 54,048 | | | | 46,001 | |
| Interest expense | | | (639 | ) | | | (966 | ) | | | (1,130 | ) | | | (1,924 | ) |
| Interest income and other — net | | | 8,425 | | | | 2,774 | | | | 8,500 | | | | 2,929 | |
| | | | | | | | | | | | | |
| Income from continuing operations before income taxes | | | 44,040 | | | | 24,155 | | | | 61,418 | | | | 47,006 | |
| Taxes based on income | | | 15,588 | | | | 8,881 | | | | 21,946 | | | | 17,085 | |
| | | | | | | | | | | | | |
| Income from continuing operations | | | 28,452 | | | | 15,274 | | | | 39,472 | | | | 29,921 | |
| Income from discontinued operations, net of tax | | | — | | | | 724 | | | | — | | | | 1,647 | |
| | | | | | | | | | | | | |
| Net income | | $ | 28,452 | | | $ | 15,998 | | | $ | 39,472 | | | $ | 31,568 | |
| | | | | | | | | | | | | |
| |
| Net income per common share:(a) | | | | | | | | | | | | | | | | |
| |
| Continuing operations — basic and diluted | | $ | 1.02 | | | $ | .51 | | | $ | 1.40 | | | $ | .99 | |
| |
| Discontinued operations — basic and diluted | | $ | — | | | $ | .02 | | | $ | — | | | $ | .05 | |
| |
| Net income — basic and diluted | | $ | 1.02 | | | $ | .54 | | | $ | 1.40 | | | $ | 1.05 | |
| |
| Cash dividends per common share | | $ | .285 | | | $ | .28 | | | $ | .565 | | | $ | .55 | |
| |
| Weighted average common shares outstanding: | | | | | | | | | | | | | | | | |
| Basic | | | 27,948 | | | | 29,855 | | | | 28,105 | | | | 30,133 | |
| Diluted | | | 27,959 | | | | 29,860 | | | | 28,113 | | | | 30,140 | |
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| (a) | | Based on the weighted average number of shares outstanding during each period. |
| |
| (b) | | Certain automotive operations sold in the year ended June 30, 2008 have been reflected as discontinued operations in all periods presented. |
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PAGE 5 / LANCASTER COLONY REPORTS IMPROVED 2ND QUARTER SALES & EARNINGS
LANCASTER COLONY CORPORATION
BUSINESS SEGMENT INFORMATION (Unaudited) (b)
(In thousands)
| | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | Six Months Ended | |
| | | December 31, | | | December 31, | |
| | | 2008 | | | 2007 | | | 2008 | | | 2007 | |
| NET SALES | | | | | | | | | | | | | | | | |
| Specialty Foods | | $ | 245,393 | | | $ | 215,150 | | | $ | 466,179 | | | $ | 399,939 | |
| Glassware and Candles | | | 42,849 | | | | 54,297 | | | | 85,900 | | | | 113,466 | |
| | | | | | | | | | | | | |
| | | $ | 288,242 | | | $ | 269,447 | | | $ | 552,079 | | | $ | 513,405 | |
| | | | | | | | | | | | | |
| OPERATING INCOME (LOSS) | | | | | | | | | | | | | | | | |
| Specialty Foods | | $ | 39,651 | | | $ | 28,309 | | | $ | 63,140 | | | $ | 52,083 | |
| Glassware and Candles | | | (1,007 | ) | | | (780 | ) | | | (3,869 | ) | | | 1,633 | |
| Corporate expenses | | | (2,390 | ) | | | (5,182 | ) | | | (5,223 | ) | | | (7,715 | ) |
| | | | | | | | | | | | | |
| | | $ | 36,254 | | | $ | 22,347 | | | $ | 54,048 | | | $ | 46,001 | |
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LANCASTER COLONY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(In thousands)
| | | | | | | | | |
| | | December 31, | | | June 30, | |
| | | 2008 | | | 2008 | |
| ASSETS | | | | | | | | |
| Current assets: | | | | | | | | |
| Cash and equivalents | | $ | 30,340 | | | $ | 19,417 | |
| Receivables — net of allowance for doubtful accounts | | | 75,064 | | | | 59,409 | |
| Total inventories | | | 95,859 | | | | 120,303 | |
| Deferred income taxes and other current assets | | | 24,648 | | | | 34,545 | |
| | | | | | | |
| Total current assets | | | 225,911 | | | | 233,674 | |
| Net property, plant and equipment | | | 175,512 | | | | 179,573 | |
| Other assets | | | 105,936 | | | | 106,931 | |
| | | | | | | |
| Total assets | | $ | 507,359 | | | $ | 520,178 | |
| | | | | | | |
| | | | | | | | | |
| LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | | |
| Current liabilities: | | | | | | | | |
| Accounts payable | | $ | 34,309 | | | $ | 45,964 | |
| Accrued liabilities | | | 42,983 | | | | 42,785 | |
| | | | | | | |
| Total current liabilities | | | 77,292 | | | | 88,749 | |
| Long-term debt | | | 45,000 | | | | 55,000 | |
| Other noncurrent liabilities and deferred income taxes | | | 18,665 | | | | 17,211 | |
| Shareholders’ equity | | | 366,402 | | | | 359,218 | |
| | | | | | | |
| Total liabilities and shareholders’ equity | | $ | 507,359 | | | $ | 520,178 | |
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