Company keeping door open on acquisitions following successful integration of Flatout flatbreads business.


COLUMBUS, OHIO — A little more than a year ago, specialty food maker Lancaster Colony Corp. acquired Flatout Holdings, a manufacturer of flatbreads, a move that has provided a boost to the company’s bottom line. The company once again is opening the door to expanding its portfolio.

On April 8, Lancaster entered into a new unsecured credit facility that expires in April 2021, and slightly increased its borrowing capacity to $150 million from $120 million. The moves, the company said, give it considerable flexibility to address cash requirements in support of future growth initiatives and acquisition opportunities.

Specifically, Lancaster has its eye on branded retail businesses and product lines that are “on trend,” Jay Gerlach, chairman and chief executive officer, said in an April 28 conference call with analysts.

“It can be a wide spectrum of things that might fall under that,” he said. “We continue to actively look. We are pretty open-minded to size, but maybe ideally for us it’s something in the $50 million to $100 million in revenue range. But we could certainly go smaller than that, maybe a fair bit smaller. And we would certainly be open to larger opportunities if we thought the opportunity and the fit were appropriate. So, the credit line certainly could be used to fund not only acquisition growth but other capital needs, particularly capital project kind of investment. So it does give us that flexibility. So those are the primary things we would be thinking about to potentially use that line for.”

While private label products may not be in Lancaster’s acquisition future, branded products with a “better-for-you” angle may, Mr. Gerlach said.

“(Potential acquisitions) would encompass things like the broad natural and organic space; even G.M.O.-free product,” he said. “All of those we would be open-minded to and looking at as potential opportunities. As you know, the trends with the consumer are definitely going in those directions.

“If you look back five years ago, one, they are probably less things to look at, but it wouldn’t have been quite as high a priority for us as it would be today. So I think we’d definitely consider those. As you know many, of those kinds of product lines’ businesses are somewhat smaller. So when I mentioned $50 million to $100 million, some of these natural, organic kinds of brands — product lines — you might find down in the $10 million, $15 million, $20 million areas. So we are certainly open to those size of things as we go forward.”

As Lancaster considers potential acquisitions, the company also is taking a look at broadening its geographical reach. Canada and Mexico were mentioned as two possible new markets. Mr. Gerlach said Lancaster has a larger presence in Canada than in Mexico, and has developed some nice positioning in the country for some of its products, including the Veggie Dip product line.

“So yes, we are looking for opportunities to do more in the Canadian market,” he said. “Probably not that level of current priority for Mexico, but we are certainly doing a little bit of business there and open to expanding that.”

Net income in the third quarter ended March 31 was $29,011,000, equal to $1.06 per share on the common stock, up 42% from $20,403,000, or 75c per share, in the same period a year ago. Sales increased 9% to $287,765,000 from $263,400,000. For the nine months ended March 31 net income was $91,150,000, or $3.33 per share, up from $76,118,000, or $2.78 per share, in the same period a year ago. Net sales increased to $906,619,000 from $826,798,000.