WESTERVILLE, OHIO — Lancaster Colony Corp., the maker of Marzetti salad dressings, Sister Schubert's dinner rolls and Flatout flatbreads, made strides during the first quarter of fiscal 2020, growing its base business, reducing costs through supply chain initiatives and integrating recent acquisitions.
As a result, net income in the first quarter ended Sept. 30 rose to $40,745,000, equal to $1.48 per share on the common stock, up 4% from $39,028,000, or $1.42 per share, in the prior-year period. Net sales totaled $337,054,000, up 6% from $316,654,000.
Retail segment operating income was $35,435,000, up 4% from $33,948,000 in the comparable quarter, on net sales of $166,077,000, up 2% from $162,748,000.
“The increase in Retail organic net sales was fueled by growth of our Marzetti branded produce dressings, veggie dips and caramel dips, a return to growth for New York Bakery frozen garlic bread and continued growth of shelf-stable dressings and sauces sold under license agreements,” David A. Ciesinski, president and chief executive officer, said during a Nov. 4 conference call with analysts. “We were particularly pleased with the performance of our retail team in Q1, which included relevant new innovation items, such as the launch of New York Bakery 3-Cheese Cheese Sticks and Sister Schubert’s pumpkin spice sweet treats. The team is also successfully executing brand renovation initiatives, such as our Marzetti branded dips with a more simplified ingredient panel and improved taste.”
Food service operating income was $23,789,000, up 26% from $18,861,000, on sales of $170,977,000, up 11% from $153,906,000. The segment benefited from growth in national chain restaurant accounts, branded products and frozen pasta products.
“Since we launched our strategy to simplify our supply chain, to reduce our costs and grow our margins, the supply chain team has achieved gross savings in excess of $20 million per year,” Mr. Ciesinski said. “Updating you on our recent acquisitions, Bantam Bagels continues to perform in line with our expectations as we invested to further expand retail distribution. We’re also pleased to report that per I.R.I. data, retail sales for Bantam Bagels nearly doubled for the 52-week period ended Sept. 29.”
Thomas K. Pigott, chief financial officer, said capital expenditures in fiscal 2020 are projected to be in the range of $80 million to $100 million. The company incurred $43.2 million in capital expenditures during the first quarter, which included ongoing investments for the capacity expansion at the company’s frozen dinner roll facility in Horse Cave, Ky., which Lancaster expects to be complete near the end of the second quarter, and the purchase of the Omni Baking facility property that was previously leased.