Lancaster Colony’s sales are heated by sauces.
WESTERVILLE, OH — In the face of uncertainty and challenges brought on by the coronavirus (COVID-19) during the last six months, Lancaster Colony Corp. achieved record sales and gross profit for the end of its fiscal 2020 year.
After a 9.1% decrease from $150.549 million, or $5.48 per share, in the fiscal year that ended June 30, net income for the year ended June 30 was $136.983 million, or $4.98 per share on the common stock. According to Lancaster, net income was down by $13.7 million this year as opposed to $1.4 million the previous year due to Project Ascent expenses. A $17.1 million non-cash reduction to the fair value of the acquisition-related contingent consideration for Angelic Bakehouse had a positive impact on the results from the previous year, which was somewhat offset by an increase of $900,000 in a comparable consideration for Bantam Bagels.
In contrast, net sales rose from $1.308 billion to $1.334 billion, a roughly 2% rise.
Net income decreased by 8% to $30.385 million, or $1.10 per share, in the fourth quarter that ended on June 30 from $33.010 million, or $1.20 per share, in the same period the previous year. The amount of net sales decreased to $320.854 million from $323.67 million.
The Retail segment’s operating income increased 5.7% from $135.093 million in fiscal 2019 to $142.822 million in fiscal 2020. Conversely, sales rose from $656.621 million to $714.127 million, an 8.8% rise.
The COVID-19’s effects led to an increase in food consumption at home, which helped retail net sales, according to president and CEO David A. Ciesinski during a conference call with analysts on August 27. “We were happy to observe that our Retail segment’s Q4 sales growth was boosted by approximately 4.5 percentage points, mostly due to the introduction of our new products. Notable drivers of growth were the sauces we are selling separately in a regional pilot test in Florida for Chick-fil-A and the Buffalo Wild Wings sauces we provide in single bottles. Exclusive licence agreements are in place for the Buffalo Wild Wings and Chick-fil-A sauces.
“Retail sales trends remained robust in the fourth quarter for our Sister Schubert’s frozen dinner rolls, New York Bakery frozen garlic bread, and Olive Garden dressings, following a strong third quarter.”
Operating income in the Foodservice sector dropped 10% to $66.480 million in fiscal 2020 from $73.828 million, while sales went down to $620.261 million from $651.166 million.
There had a negative impact on the foodservice segment by COVID-19, especially in April, but made a significant comeback in May and June, driven by our national account base’s quick-service restaurant patrons, Mr. Ciesinski stated.
According to vice president and chief financial officer Thomas K. Pigott, Lancaster invested $82.6 million in capital expenditures in fiscal 2020, which included purchases of the Omni Baking factory, which was previously leased, and a project to expand the capacity of frozen dinner rolls. According to Mr. Pigott, the company anticipates spending between $65 million and $85 million on capital projects overall in fiscal 2021.
“To meet the rapid growth in demand for our products, we’re in the process of evaluating additional and potentially significant investments,” he stated. “This projection will be enhanced by these projects. We’ll supplywe will provide you with further information about our ideas when they are further developed.