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Investing.com -- Shares of Lancaster Colony Corp. (NASDAQ: NASDAQ:LANC) climbed 10% following the announcement of quarterly revenue that exceeded market expectations. The company reported a 4.8% increase in consolidated net sales, reaching a second-quarter record of $509.3 million, compared to $485.9 million in the same period last year.
The surge in Lancaster Colony’s stock can be attributed to its robust financial results for the fiscal second quarter ended December 31, 2024. The company experienced growth across its retail and foodservice segments, with retail net sales growing 6.3% to $280.8 million and foodservice net sales advancing 3.0% to $228.5 million. This growth was driven by both the company’s licensing program, with notable contributions from Texas Roadhouse® dinner rolls and Buffalo Wild Wings® sauces, and its own brands, such as Marzetti® caramel dips and refrigerated dressings.
Despite the overall positive financial results, the company did face a decline in net income, which came in at $1.78 per diluted share, a slight decrease from $1.87 per diluted share the previous year. The decrease was largely due to a noncash settlement charge of $14.0 million related to the termination of the company’s legacy pension plans. However, this did not seem to dampen investor confidence, as the stock price moved positively.
The company’s CEO, David A. Ciesinski, expressed satisfaction with the record sales, gross profit, and operating income. Ciesinski also highlighted the improved gross profit margin, which rose to 26.1%, up 110 basis points from last year, reflecting higher sales volumes, a more favorable sales mix, ongoing cost savings initiatives, and some modest cost deflation.
Looking forward, Lancaster Colony anticipates continued growth in its retail segment due to its expanding licensing program and innovation investments in its own brands. The foodservice segment is also expected to grow, driven by select customers in the company’s mix of national chain restaurant accounts. Additionally, the company is on track to complete the acquisition of an Atlanta-based sauce and dressing production facility during the fiscal third quarter, which is expected to enhance operational efficiency and manufacturing network.
Despite the increase in SG&A expenses, which included incremental expenditures for the planned acquisition, the company’s operating income grew significantly, showcasing its ability to manage costs effectively while pursuing strategic growth initiatives.
The market’s positive response to Lancaster Colony’s financial performance indicates a strong confidence in the company’s growth trajectory and operational strategy.
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