Lancaster Colony Reports 4.8% Net Sales Increase to $509.3 Million in Q2 Fiscal 2025

Lancaster Colony Corporation reported its financial results for the second quarter of fiscal 2025, revealing a net sales increase of 4.8% to $509.3 million, compared to $485.9 million in the same period last year. For the six months ended December 31, 2024, net sales rose 3.0% to $975.9 million from $947.5 million. The growth in both the Retail and Foodservice segments was primarily driven by volume gains, although the Retail segment faced challenges due to the exit from certain bakery product lines in March 2024. Gross profit for the quarter reached $132.8 million, up from $121.5 million, reflecting improved sales volumes and a favorable sales mix.

The company experienced a notable increase in operating income, which rose to $75.7 million for the three months ended December 31, 2024, compared to $65.8 million in the prior year. This increase was attributed to higher gross profit, despite a rise in selling, general, and administrative (SG&A) expenses, which increased to $57.1 million from $55.7 million. The SG&A expenses included costs related to the planned acquisition of a sauce and dressing production facility in Atlanta, Georgia, for $75 million, expected to close in the fiscal third quarter. The pension settlement charge of $14 million also impacted net income, which totaled $49.0 million for the quarter, down from $51.5 million a year earlier.

In terms of operational metrics, Lancaster Colony's Retail segment reported net sales of $280.8 million, a 6.3% increase from the previous year, while the Foodservice segment saw a 3.0% increase to $228.5 million. The Retail segment's growth was bolstered by successful product launches and licensing agreements, particularly with brands like Texas Roadhouse and Buffalo Wild Wings. The company noted a 3.3% increase in consolidated sales volumes for the six months ended December 31, 2024, with a 2.7% increase in pounds shipped.

Looking ahead, Lancaster Colony anticipates continued growth in both segments, driven by expanding licensing programs and innovation in product offerings. The company expects to benefit from the acquisition of the Atlanta facility, which will enhance operational efficiency and capacity. Management remains optimistic about maintaining strong cash flow and plans to allocate capital effectively to support growth initiatives while ensuring adequate returns to shareholders. The company also reported a strong liquidity position, with no outstanding borrowings under its $150 million revolving credit facility as of December 31, 2024.