Lancaster Colony Reports Modest Net Sales and Net Income Growth in Q3 2024

Lancaster Colony Corporation reported its financial results for the three months ended September 30, 2024, showing a modest increase in net sales and net income compared to the same period in the previous year. Consolidated net sales reached $466.6 million, up 1.1% from $461.6 million in the prior year. This growth was primarily driven by the Foodservice segment, which saw net sales increase to $227.0 million from $219.4 million. In contrast, the Retail segment experienced a decline, with net sales decreasing to $239.6 million from $242.2 million, attributed to the exit from perimeter-of-the-store bakery product lines in March 2024.

Gross profit for the quarter was $110.8 million, reflecting an increase of $2.1 million from $108.7 million in the prior year. However, operating income decreased to $55.9 million from $56.8 million, influenced by a 5.8% rise in selling, general, and administrative (SG&A) expenses, which totaled $55.0 million compared to $51.9 million in the previous year.

Net income for the quarter was reported at $44.7 million, an increase from $44.0 million in the same period last year. The diluted net income per share rose to $1.62 from $1.59, indicating improved profitability on a per-share basis. The effective tax rate for the quarter was 22.8%, down from 23.7% in the prior year, benefiting from net windfall tax benefits from stock-based compensation.

Cash and equivalents as of September 30, 2024, totaled $135.1 million, a decrease from $163.4 million at the end of June 2024. Net cash provided by operating activities was $19.9 million, significantly lower than $35.6 million in the prior year, primarily due to changes in net working capital. Cash used in financing activities decreased to $28.4 million from $30.6 million, reflecting lower share repurchases.

Strategically, Lancaster Colony has focused on growth through product innovation and expansion. Recent investments include a capacity expansion project for its Marzetti dressing and sauce facility, completed in March 2023, and the implementation of an ERP system, which was completed in August 2023 without major disruptions. The company maintains a strong balance sheet, with total shareholders’ equity increasing to $945.1 million from $878.8 million year-over-year. As of September 30, 2024, Lancaster Colony had no outstanding borrowings under its $150 million unsecured revolving credit facility, ensuring liquidity for future operations.