Lancaster postponing Project Ascent’s implementation
Citing a variety of reasons, Lancaster Colony Corp. has opted to defer the launch of Project Ascent until the beginning of fiscal 2023. The project, on which Lancaster started working in the 2019 fiscal year’s fourth quarter, would enable the business to replace its 1995-installed ERP system. The initiative was initially supposed to take the corporation two years to implement.
David A. Ciesinski, president and chief executive officer of Lancaster, was questioned on the choice to postpone implementation and to emphasize the possible impact on cost reductions during a conference call with analysts on August 26 to present fiscal 2021 results.
In his opening remarks, Mr. Ciesinski stated that “everything that you’re seeing out there in the news today” is the primary cause for the delay.
He clarified, “It’s the combination of labor uncertainty and widespread uncertainty in the global supply chain, end-to-end volatility in demand that’s coming via our customers.” They are making significant progress during one moment and retreating during another. Because of all of that uncertainty as well as the fact that our foodservice clients—like Chick-fil-A—rely on us primarily in many cases, we felt it wouldn’t be prudent to push forward with the project in the hopes of getting it going only to find ourselves in a situation where we were unable to meet the needs of our clients. After consulting extensively with both our customers and our internal team, we took a step back and assessed our current position in the food industry and as a nation. Based on this, we concluded that the end of the fiscal year 2022 is likely too unpredictable for us to choose a window.
Lancaster is well aware of the effects the COVID Delta variation is beginning to have on the supply chain, according to Mr. Ciesinski. A volatile mixture has resulted from the labor challenges that many manufacturers are facing. According to him, Lancaster is concentrated on long-term success.
He remarked, “We feel uniquely positioned with a strong portfolio of customers, a strong P&L, and a very strong balance sheet.” The reason behind our choice to simply look ahead and say, “We want to make sure that we’re leveraging all of those to set ourselves up for not just a good quarter or a couple of good quarters, but really multiple years of a successful run,” was these.
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“So, taking advantage of that moment, we decided what we wanted to do. And how would we like to gradually use this time? To ensure that we’re making the most of this time, we’ve chosen to restructure the deployment timetable and push ahead some of the improvements that we would have been working on in later periods.
And to be very honest, in other situations, we have used project participants. Additionally, because of some short-term problems that have come up in the company, we have been able to leverage our own internal labor force to help us manage some of these challenges, as well as the daily ups and downs. However, I suppose what I would like to get across to you is that we are still fully dedicated to the initiative’s significance and believe we are in a good position to implement it. However, as I once heard from an old supervisor, a long term cannot exist without a short term. Additionally, we were careful not to put ourselves in a situation where we a bad choice. We’ve burned one or more of our customers, and it really took us off our growth trajectory.”
In summary, Lancaster’s net income for the fiscal year that concluded on June 30 was $142.33 million, or $5.17 per share on common stock. This is a 3.9% increase from $136.98 million, or $4.98 per share, in the previous year. From $1.33 billion to $1.47 billion during the same time last year, net sales increased by 9.9%.