Lancaster Colony Q1 Net Income Dips Despite Revenue Growth
Ohio-based packaged foods business Lancaster Colony Corporation (LANC) on Wednesday reported results for the first quarter ended September 30, 2021 that showed a dip in profit despite improvement in revenue. The comparative dip in performance is attributed to cost inflation as well as non-recurring special items of income in the previous year.
Net income for the period was $30.7 million or $1.11 per share as compared to $37.1 million or $1.35 per share in the first quarter of last year.
Net sales increased by 12.3 percent to a first quarter record of $392.1 million, from $349.2 million in the year-ago quarter. However, the sales growth, the favorable sales mix and the ongoing cost savings programs were offset by higher commodity and packaging costs, incremental expenditures attributed to increased co-manufacturing costs, and increased freight and warehousing costs.
Consolidated operating income declined by $8.4 million to $40.5 million in the current quarter, mainly due to a $5.7 million favorable impact in the prior period on account of non-cash reduction in the fair value of the contingent consideration for Bantam Bagels. The company also experienced significant cost inflation during the quarter that reduced its profit, before the pricing initiatives took full effect. SG&A expenses increased by $3.7 million on account of expenditures for Project Ascent, the ERP initiative as well as increased investments in personnel and business initiatives to support continued growth.
Cash dividend per common share has been increased to $0.75 from $0.70 in the previous period.
For the second quarter, the company expects the inflationary pricing, including retail segment pricing actions that took effect near the end of the fiscal first quarter, combined with the additional pricing in the Foodservice segment, to help in partially offsetting the anticipated input cost inflation.
Shares of Lancaster Colony Corporation are currently trading in pre-market at $163.98, down $5.24 or 3.10 percent from previous close.
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