| Item 1.01 | Entry into a Material Definitive Agreement |
On November 13, 2020, T. Marzetti Company (“T. Marzetti”), a wholly-owned subsidiary of Lancaster Colony Corporation (the “Company”), entered into a Design/Build Agreement (the “Agreement”) with Gray Construction, Inc. (“Gray”) pursuant to which Gray will design, coordinate, and build an approximate 192,000 square foot addition onto T. Marzetti’s existing facility in Hart County, Kentucky (the “Project”). This Project will include additional processing, packaging, warehousing, employee facilities, and utilities to significantly increase the production capabilities of the current operations and support the continued growth of our dressing and sauce products for both our Retail and Foodservice segments. Subject to certain conditions in the Agreement, T. Marzetti will pay Gray no more than the guaranteed maximum price of approximately $113 million for the Project. The Agreement contains other terms and conditions that are customary for this type of project. The Project is expected to be completed by July 2022.
The foregoing description does not purport to be complete and is qualified in its entirety by reference to the complete text of the Agreement, a copy of which is attached as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.
| Item 7.01 | Regulation FD Disclosure |
Based on its current plans, the Company expects total capital expenditures for the Project to be approximately $121 million, of which an estimated $45 million will be spent in fiscal 2021 and most of the remaining amount will be spent in fiscal 2022. The Company estimates that its total capital expenditures for fiscal 2021, including $45 million for the Project, could range from $115 to $135 million.
Forward Looking Statements
The Company desires to take advantage of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 (the “PSLRA”). This Current Report on Form 8-K 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 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, many of which are beyond our control and could be amplified by the COVID-19 pandemic, which could cause our actual results to differ materially from those expressed in the forward-looking statements. Some of the key factors that could cause actual results to differ materially from those expressed in the forward-looking statements include:
| | • | | significant shifts in consumer demand and disruptions to our employees, communities, customers, supply chains, operations, and production processes resulting from COVID-19 and other epidemics, pandemics or similar widespread public health concerns and disease outbreak; |
| | • | | efficiencies in plant operations; |
| | • | | dependence on contract manufacturers, distributors and freight transporters, including their financial strength in continuing to support our business; |
| | • | | the potential for loss of larger programs or key customer relationships; |
| | • | | fluctuations in the cost and availability of ingredients and packaging; |
| | • | | capacity constraints that may affect our ability to meet demand or may increase our costs; |
| | • | | difficulties in designing and implementing our new enterprise resource planning system; |
| | • | | the success and cost of new product development efforts; |
| | • | | the ability to successfully grow recently acquired businesses; |
| | • | | cyber-security incidents, information technology disruptions, and data breaches; |
| | • | | changes in demand for our products, which may result from loss of brand reputation or customer goodwill; |
| | • | | price and product competition; |
| | • | | the lack of market acceptance of new products; |
| | • | | the impact of customer store brands on our branded retail volumes; |
| | • | | the reaction of customers or consumers to price increases we may implement; |
| | • | | adverse changes in freight, energy or other costs of producing, distributing or transporting our products; |
| | • | | stability of labor relations; |
| | • | | the extent to which recent and future business acquisitions are completed and acceptably integrated; |
| | • | | dependence on key personnel and changes in key personnel; |
| | • | | the effect of consolidation of customers within key market channels; |
| | • | | the impact of fluctuations in our pension plan asset values on funding levels, contributions required and benefit costs; |
| | • | | the possible occurrence of product recalls or other defective or mislabeled product costs; |
| | • | | maintenance of competitive position with respect to other manufacturers; |
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