LANC - Earnings call transcript Q1 2020 | Lancaster Colony Corporation

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Operator

Good morning. My name is Sharon, and I will be your conference call facilitator today. At this time, I would like to welcome everyone to the Lancaster Colony Corporation Fiscal Year 2020 First Quarter Conference Call.

Conducting today's call will be Dave Ciesinski, President and CEO; and Tom Pigott, CFO. All lines have been placed on mute to prevent any background noise. completed remarks, have a will speakers period. question-and-answer the their there prepared be After you. Thank Instructions] [Operator

And the Treasurer to President Corporation. now begin of Ganobsik, is Investor Vice Dale Relations and for Colony conference Lancaster call, here

Dale Ganobsik

you, us for quarter joining conference Thank you XXXX fiscal today Good and Lancaster morning thank Sharon. for year call. Colony's first everyone,

XXXX. filings subject statements this risks discussion morning may Securities subject a available Harbor Safe the Also note with obligation these the risks based later this that to of these subsequent include Private that are and are materially, no the discussion and Our audio could results provisions events. Reform the update Litigation afternoon. These number call of of and cause contained A Act archived to site replay undertakes company will is be to Web lancastercolony.com to of forward-looking company's statements, statements the and of detailed uncertainties uncertainties this at which SEC. differ upon the company's our in actual

be regarding to will overview CFO, then questions. At will CEO share prepared respond outlook results. then Dave highlights the your and year. our our our Tom Dave remainder President strategic with the to of of for begin today's call, Pigott, some our happy our update our For the we remarks, initiatives fiscal an an comments Ciesinsk, and provide any financial of will for quarter. the of conclusion on will

Colony's Ciesinski. I'll to appreciate morning, now the turn call Dave? President participation CEO, Lancaster this and we again, Dave your Once over and

Dave Ciesinski

you as first review for our year quarter It's here Thanks, Dale, a to we pleasure be and XXXX. today fiscal results with everyone. morning good

our three identify number we ago, simplify complementary one, pillars. and Number growth. chain M&A of to cost and margins. our simple three Company core. And to three, grow Roughly our consists grow Number our launched base our two, business supply our reduce plan, accelerate Food which growth Better years execute

our several the team, last the strengthening harvesting growth focused our on implementing During plan, years, and we have results.

continued past business, During X.X%. we organic by strategy quarter, and this our leverage to net base grew sales our

Foodservice Retail sales of net branded under garlic and in Our return license by sales Marzetti X.X%. caramel was organic shelf-stable while dips, by sales and retail for our net bakery, organic growth increase dressings grew frozen of The a organic sold with by veggie segment which Sweet agreements. York New continued the such X.X%, produce panel segment We net grew initiatives sauces dips, of growth to taste. growth new fueled performance dressings, particularly in a Marzetti bread, New and and items Schubert's Treats. is Sister with retail improved renovation pleased successfully more team simplified Bakery The Pumpkin executing as Spice our and brand of also Cheese QX, our branded launch innovation team X-Cheese were such dips York as Sticks included the relevant ingredient our

higher Shifting led key the sales chain restaurant Foodservice quarter industrial over and quarter gain increased organic business, of consecutive our sales volume Foodservice sales period. of seventh by organic pasta. our It to predominantly noting average that for is X.X% growth X.X% customers, per in attention this is of products which gains with is worth frozen the distributors, net with the that increase segment was account net our through an national sold branded segment, for sales

were improving Six program, chain results quarter our posted supply which These is costs reducing Sigma Lean third results by strong driven year. now in productivity. another in team Our of its and

chain the cost in benefit was sales from a team's growth XX.X% go Combined increase to the profit, to source noted gross supply some million efforts transportation management in favorability savings to led margins, chain in the and new we strategy supply in live in excess the Our started our fiscal quarter. our January, per of of launched system, a increase with which commodity last achieved has to quarter. year. supply $XX Since for chain XXX-basis-point team savings in our our margin and simplify the grow first gross gross reduce and a our costs, costs

on Bantam our as Updating further you in Bagels recent invested continues retail our perform to with distribution. to we expectations, acquisitions, line expand

September Bantam to pleased sales also nearly IRI XX-week for are period We per for Bagels retail that ending data, XX. the doubled report

case a nationwide. FY'XX display On compared of sequential the sales in XX% about Starbucks the gaining achieved with placement QX improvement in QX, cafes Bantam is Foodservice side, in at FY'XX counter Bantam as

QX Consistent Baking with improvements Omni XXXX. facility, November shared focused supply in acquired which remains on fully team comments chain we operational our our we at during the FY'XX call, earnings implementing

We this most year. to of end be expect completed by these calendar the changes of

most made Overall, we base and our supply recent the growing our in business, through were first pleased quarter our our chain initiatives, with progress during acquisitions. fiscal costs integrating reducing

CFO, Tom turn our his QX financial over for our now the Pigott, on call I'll results. to commentary

Tom Pigott

Dave. of both $XXX.X quarter our by of a million. increases Retail and the the Foodservice exceeded the Thanks, quarter record Consolidated X.X% growth sales This net Overall, to first in increased segments. results driven expectations. was

Excluding acquisitions quarter. and net net sales sales organic to the increased the of X.X% Bantam Omni, attributed for

favorable behind Six in to was sales, $XX.X XX%. topline growth, million Bantam acquisition investments phase largest well increased million The higher Sigma in invested segment of increase Consolidated that related consumer project. cost Lean Dave Reported included the to promotional began program $XX.X drive business, we and we as costs. million scale SG&A personnel increased general, savings gross the to in our profit our $X.X costs. cost incremental from by our strategies increased to million. The increase or ERP driven Other incurred administrative spending highlighted. as commodity driver expenses retail was design from of as the increased as that we project which the $X.X Selling, net or higher XX.X% costs

plant investments well charge as charge income first QX. reduced record quarter restructuring points reflects higher $XXX,XXX to restructuring that of X.X% combined note the in closure $XX.X operating with gross growth It's increase as in basis increased the The related announced that to by income important operating SG&A, million. for the XXX the Consolidated profit, our quarter. the we investment to ERP the

Our an effective first from XX.X% of in fiscal stock this XX.X% reflected to compensation increased quarter XXXX. the rate tax tax as increase taxes. quarter on benefit lower state as a well increase in The

remainder of year rate is forecasted be Our fiscal to XX%. tax for the 'XX

$X.XX increased X.X% share $X.XX. per to earnings First-quarter or

investment reduced or With XXX The of expenditures regard earnings fiscal $XXX to reported million. million 'XX year points. items $X.XX, by per and by had impact. reduced these share project growth range $XX expenditures, restructuring basis capital continue $X.XX to Together be our in charge the share two ERP the $X.XX to a negative we earnings to in our per

expect expenditures Cave, QX $XX.X facility we Kentucky, property included Omni that leased. the frozen near roll of of Our previously be that ongoing dinner and the in our in was purchase million investments quarter, facility end the Horse Baking of complete the for capacity to the expansion second

investments growth, So, wrap and to programs savings up quarter discipline, fund topline the helped overall that cost featured future our growth. for pricing my favorability, commodity commentary, nice

Thank turn back over his you. will to it remarks. I closing for Now, Dave

Dave Ciesinski

Thanks, Tom.

commodity top modestly our in ahead in expectations generally year. in to consolidated turn costs Looking of projected growth our quarters then, half remained second line fiscal remaining flat back digits. be to our are low mid year, And the quarter. our for the Overall, to three fiscal inflationary of single the

of the Sigma Our program impact chain program strategic will supply and Lean offset realization Six net price combined help initiatives increases. procurement commodity team's including with our cost

We continued Bagel with and Bantam also anticipate Baking progress acquisitions. our Omni

automation for to end add the notable production be will and business. overall which of fiscal planned near completed Bantam, provide in capacity to expect profitability third of benefit Our investment growth we continued our quarter, a for that the

chain will also supply cost Baking Our and to upgrading our increase continue with and facility reduce team automating Omni productivity.

initiative, with you provide Ascent. update to an Project ERP like would I on our Finally,

us savings. recall, organic you the cost may will enable infrastructure into helping also provide drive long-term Project scalable us and acquisitions system facilitate As system old to to well for future while replace XX-year scale with and a growth ERP us Ascent

completed We have system and the software our vendor. of team building internal integrator and groundwork recently our selecting

beginning start now to 'XX. We of to project scheduled fiscal first the deployment phase are with in design of half the

more detail and share fiscal the to for you our with the Ascent have cost Project regarding to during call. timeline expect second We quarter earnings

separately understanding important project. will the cost ERP and We earnings to provide in project associated quarterly for with all our filings a expenditures to community investment of our and continue this of the SEC releases disclose the stakeholders clear

today, may have. This and questions any concludes happy prepared you remarks for answer we to be our would

Operator

first Your Jason Instructions] Lakes from line Review. Rodgers of from Great comes [Operator question

Jason Rodgers

expectations just just baked as a on the around the the everything had modeling margins. and out. of sustainability at costs question just level, going strong just in Obviously, that that forward, Yes, very wondering on margin material there far else XX% gross

Dave Ciesinski

able do of my that in turn Lean that inflationary commodity be part the year. as in program Sure. we to a have we we to then disciplined Jason, and of essentially for in our quarter are commentary, program to back pointed we in through offset out back going the and Sigma the place. combination We inflation expect think Six our to PNOC modestly flat, commodities be of second the

them view how generally a So, see I of think that today. things we you gives for

want anything Tom, don't else? you I if would know, to add

Tom Pigott

that did strong Dave some very benefit a the we favorability as commodity it to progresses. it's overall, we do mean, expect I Yes. quarter, as moderate and year in from highlighted,

Jason Rodgers

And the far raw was material lower could cost? that as quantify what you as benefit

Tom Pigott

in was it favorability. commodity So, approximately $X million

was savings We roughly procurement increased also it number, had some million. that but $X around that

Jason Rodgers

that at automate us of you thinking at of the far and kind as quarter, how All I Bantam right, those we could wonder be if the should Omni and you as about going cost forward? distribution to expanding and and idea those just an are what then, give incurring in Bantam, were processes

Dave Ciesinski

little them the a describe Sure. will for you front-end. I on bit

there two of First where help to and we one essentially areas, retail. to the distribution of with slotting which the Bantam, of in expand product continue are spending is is all

manufacturers, manual more be we the to a that product negotiating product. is. equipment in considerably and building eggs in at quarter. been prepared manufactured, have dozen envisioned for we that than of to completely cheese complete area where take the The faster be my that comments, third are new filling investing the Bantam, it's end-to-end line expect second or literally begun to we're or line where the at run on the our automated, going it's also scale. continue and off, and to as end We've of to project to with allow has in we will with mentioned the a pace people essence labor are it's cream a going whatever where or working that filling people bagel balls manually The an dozens line automated we're is this Today,

think you I somewhere March So, timing there. around know, roughly

gets the some give of case cases that point our Texas As is a replace -- was Bantam, for is Toast replace is we're nature or that. doing of their it I’ll what others repair of in in investing about when portion a it a upgrading of -- there you it business. York, processes They they to expense, we If some expensed. volume. what an there we year, co-packer were it's pertains taking automating business us CapEx to did an we bought to when capitalize as a We we're they and floor, were been floor the and of are the on over well, the in and and doing freezers, building, New last the a in cost bought can it November need we've RA floor, course in were ovens, if we XXXX entire our a half

end-up several a on at results a shutting particular The five other investment down we headwind three, time, these in for or of absorption factory heavy in we whenever we taking projects, the that four, end a two, period. area is maintenance lot days at that project the do which heavy with time, up days in

continue to taper in both period, put somewhere the going the single-digits and to expect as we're would running, venture together, I in get back-half. You they're the on to low-to-mid into and we work then those those

Tom Pigott

impact results. was a of Yes, combined the the the low-seven-digit impact two on quarter's

Jason Rodgers

Starbucks helpful. that -- that's distribution, just in fiscal of expanded 'XX? obviously much Bantam can And finally, is top a contribution line well Okay, doing to how the make with the

Tom Pigott

I material. be have the around disclosed, disclosed we could looking here in it know, Have think --? room. don't I I'm we

Dave Ciesinski

but as potential to growth in to I very that this number but we're of a at kind the as Yes, specific roll-out be think out visibility business, given now, we that of about certainly better get point, put we for a right happy mode, we optimistic information. progress, there don't the you share we're want we'll

Jason Rodgers

you. Okay, thank

Operator

Camma we with a question Instructions] Frank from Sidoti. have [Operator And

Frank Camma

Hey, doing? guys. good How you morning are

Dave Ciesinski

Frank. morning, Good

Tom Pigott

morning, Frank. Good

Frank Camma

you about either I SKUs don't but margin the was wondering not could from head you’d this quarter. benefit, how very revenue year quantify the at all, the I some the know if quarter benefit Dave, impacted talk in just up, maybe last a the wasn't that if or from profitable. from eliminating it

had that side, going probably into but I to revenue bit quarter, if the a guess, obviously, you headwind margin you talk So benefited, could about that? a of on the

Dave Ciesinski

Right. And think our focused announced is I if point you items remember, facility, where point, in where I cases restructuring to cases we're point Saraland where we here. would project. discontinued have we there. two probably closed several We Sister some in a One we Schubert,

business. you the some could IRI headwind that on at looking If you're see data,

at a thing the true profit, bottom the and of on to Tom. it that on go would pick-up look and significant and a well, the it disclose don't was -- it we on what by be roughly we'd our ahead, pretty flatbread segment, tune wraps, same was call If line, Angelic you about

Tom Pigott

about points growth basis of Yes, XXX say tuned they I would together impact.

Frank Camma

affected Got those since so have assuming the I'm must were lower your… that it, and than positively growth,

Dave Ciesinski

in Yes. lapped the October November. the Frank, out out Angelic in bread flat was lapped was and

Frank Camma

because you assume the talk -- Foodservice far seeing must the be that's what little that, I it Can in underlying last because but you helpful. just national doors? on you the side, a from is of give said, well -- they're I overall? you other doing it's about opening just Is it good, color they're that? the just us can you are talk can mentioned And you strength it see kind accounts more doing obviously okay, not are you Oh, accounts, there, as questions, but on as my more about more just customers, the if gaining particularly

Dave Ciesinski

growth single in of is some component largest growth our the same-store of the Well, from Sure. an key customers. sales increase

that piece to share And lion's well, think contributor just been new of Another other are coming some customers. largest has your the and cases, say way to would of sales but some powered increase it be some customers of biggest sales through, same-store of how customers, of same-store selling would would in least would customers growth openings, half as to the be our if all existing growth. together. but from about think openings then more and we from those it to sales at customers this, by has in you're store our or I The last new store trying been to next then customers be either existing

healthy building just on our So, about the talked we're it's penetration. pretty side, mix national and a overall accounts, it a driving now, we've -- we're and we're for on while branded share

Frank Camma

I all That's you. thank it, had. Got

Dave Ciesinski

Frank. Thanks,

Operator

the Ciesinski. call [Operator now turn time, not this will Instructions] to telephone And back at if we questions have do we any Mr.

Dave Ciesinski

second your results in morning. forward early We you for this our with everyone to sharing look February. quarter participation Thanks

Operator

call. conference today's concludes This

You may disconnect. now

Lancaster Colony (LANC) 4 Nov 192020 Q1 Earnings call transcript