Earnings call transcript: Lancaster Colony Q3 2025 misses EPS forecast

Lancaster Colony Corporation reported its financial results for the third quarter of 2025, revealing a decline in both earnings per share (EPS) and revenue compared to forecasts. The company posted an EPS of $1.49, falling short of the expected $1.58. Revenue also missed expectations, reaching $457.84 million against a forecast of $483.95 million. Following the announcement, Lancaster Colony’s stock price dropped 14.61%, closing at $164.71, a significant decline from its previous close of $192.90. According to InvestingPro data, the company maintains a GREAT financial health score of 3.23/5, with particularly strong scores in profitability (4.17/5) and cash flow (4.1/5). The stock currently trades at a P/E ratio of 29.3x, suggesting premium valuation metrics relative to peers.

Key Takeaways

• Lancaster Colony’s EPS and revenue both fell short of forecasts for Q3 2025.
• The stock price plummeted by 14.61% after the earnings announcement.
• The company achieved record gross profit despite a decline in net sales.
• New product launches and acquisitions are part of the company’s growth strategy.
• The market remains challenging with softness in edible categories and food service.

Company Performance

Lancaster Colony faced a challenging third quarter, with consolidated net sales declining by 2.9% to $458 million. Despite this, the company achieved a record gross profit of $106 million, indicating strong operational efficiency. The gross margin improved by 90 basis points to 23.1%, reflecting cost management efforts. InvestingPro analysis reveals the company’s impressive 55-year streak of maintaining dividend payments, with a current dividend yield of 1.97%. The company remains debt-free, holding $124.6 million in cash, which positions it well for future investments and acquisitions. This strong balance sheet is reflected in InvestingPro’s assessment, highlighting that Lancaster Colony holds more cash than debt and maintains liquid assets exceeding short-term obligations.

Financial Highlights

• Revenue: $457.84 million, down 2.9% year-over-year
• Earnings per share: $1.49, up 44.7% year-over-year
• Gross margin: 23.1%, up 90 basis points

Earnings vs. Forecast

Lancaster Colony’s actual EPS of $1.49 missed the forecast of $1.58 by 5.7%. Revenue also fell short, coming in at $457.84 million compared to the expected $483.95 million, a miss of 5.4%. This performance contrasts with the previous quarters where the company met or exceeded expectations, indicating potential challenges in the current market environment.

Market Reaction

The market reacted negatively to Lancaster Colony’s earnings miss, with the stock price dropping 14.61% in pre-market trading. The stock’s decline is significant compared to its 52-week range, moving closer to its low of $157.71. This sharp decline reflects investor concerns over the company’s ability to meet financial targets amid current market challenges.

Outlook & Guidance

Looking ahead, Lancaster Colony anticipates low single-digit volumetric and revenue growth. The company expects modest profit improvement and does not foresee significant commodity cost inflation. The tax rate for the remainder of the fiscal year is estimated at 22%. Strategic initiatives include expanding product distribution and investing in manufacturing improvements. With a beta of 0.39, the stock demonstrates lower volatility compared to the broader market. For deeper insights into Lancaster Colony’s financial health and growth prospects, including exclusive ProTips and comprehensive valuation metrics, investors can access the detailed Pro Research Report available on InvestingPro.

Executive Commentary

Dave Ciezinski, President and CEO, expressed confidence in the company’s future despite the challenging market. "We believe against this complicated backdrop, we’re positioned to continue to outperform," he stated. Ciezinski highlighted the potential for growth in the retail sector, noting, "Our view is on a volumetric basis, little soft in food service, room to grow in retail."

Risks and Challenges

• Supply Chain Issues: Continued investment in manufacturing improvements is necessary to address potential disruptions.
• Market Saturation: Softness in edible categories and food service could hinder growth.
• Macroeconomic Pressures: Economic factors, such as inflation and consumer spending, may impact future performance.
• Competitive Landscape: Maintaining market share in key categories like frozen rolls and garlic bread remains critical.
• Weather Impact: Unpredictable weather conditions could affect restaurant traffic and sales.

Q&A

During the earnings call, analysts inquired about the impact of Easter timing on sales, promotional strategies, and trade investments. The company also addressed the weather’s impact on the food service segment, highlighting the challenges faced due to reduced restaurant traffic in the third quarter.

Full transcript - Lancaster Colony Corporation (LANC) Q3 2025:

Kathy, Conference Call Facilitator: Good morning. My name is Kathy, and I’ll be your conference call facilitator today. At this time, I would like to welcome everyone in the Lancaster Colony Corporation fiscal year twenty twenty five third quarter conference call. Conducting today’s call will be Dave Cisinski, President and CEO and Tom Pickett, CFO. All lines have been placed on mute to prevent any background noise.

After the speakers have completed their prepared remarks, there will be a question and answer period. If you’d like to ask a question during this time, simply press star one one on your telephone keypad. If you’d like to withdraw your question, press 11 again. Thank you. And now to begin the conference call, here is Dale Gnobsik, Vice President of Corporate Finance and Investor Relations for Lancaster Colony Corporation.

Please go ahead.

Dale Gnobsik, Vice President of Corporate Finance and Investor Relations, Lancaster Colony Corporation: Good morning, everyone, and thank you for joining us today for Lancaster Colony’s Fiscal Year Twenty Twenty Five Third Quarter Conference Call. Our discussion this morning may include forward looking statements, which are subject to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are subject to a number of risks and uncertainties that could cause actual results to differ materially, and the company undertakes no obligation to update these statements based upon subsequent events. A detailed discussion of these risks and uncertainties is contained in the company’s filings with the SEC. Also note that the audio replay of this call will be archived and available at our company’s website, lancastercolony.com, later this afternoon.

Dave Ciezinski, President and CEO, Lancaster Colony Corporation: For today’s call, Dave Szczynski, our

Dale Gnobsik, Vice President of Corporate Finance and Investor Relations, Lancaster Colony Corporation: President and CEO, will begin with the business update and highlights for the quarter. Tom Pigott, our CFO, will then provide an overview of the financial results. Dave will then share some comments regarding our current strategy and outlook. At the conclusion of our prepared remarks, we’ll be happy to respond to any of your questions. Once again, we appreciate your participation this morning.

I’ll now turn the call over to Lancaster Colony’s President and CEO, Dave Ciezinski. Dave?

Dave Ciezinski, President and CEO, Lancaster Colony Corporation: Thanks Dale, and good morning everyone. It’s a pleasure to be here with you today as we review our third quarter results for fiscal year twenty twenty five. In our fiscal third quarter, which ended March 31, consolidated net sales declined 2.9% to $458,000,000 Despite the lower sales, we are pleased to report third quarter records for both gross profit, which reached $106,000,000 and operating income, which grew to $50,000,000 In our retail segment, net sales decreased 2.6%. Excluding the perimeter of the store bakery lines we exited in March of twenty twenty four, retail sales decreased 0.7%. This decline also reflects the shift of some sales into our fiscal fourth quarter due to the later Easter holiday, along with the more challenging consumer environment that resulted in softer demand.

Despite these headwinds, our retail segment’s licensing program remained a source of growth in the quarter, as we began shipping Chick fil A sauce into the club channel and our Texas Roadhouse dinner rolls continue to perform very well. Net sales for our category leading New York bakery frozen garlic bread products also grew in the period. Cercona scanner data for the quarter ending March 31 showed solid performance for several of our licensed items and our core brands. In the frozen dinner roll category, our own Sister Shepherd’s brand and our licensed Texas Roadhouse brand combined to grow 11.6, resulting in a market share increase of five twenty basis points to a category leading 60.9%. In the frozen garlic bread category, our New York bakery brand grew sales 6.8%, adding 180 basis points of market share for a category leading share of 43.9%.

In the produce dressing category, sales of Chick fil A dressings grew 4%. When combined with our Marzetti brand dressings, our share totaled a category leading 27.2%. In the shelf stable sauces and condiments category, sales of Chick fil A sauces grew 2.3%, while Buffalo Wild Wings sauces gained 1.2%. Both sauces picked up market share as sales for the entire category grew only 10 basis points. In the Foodservice segment, net sales declined 3.2%, driven by weather and industry wide declines in restaurant traffic, and the impact of menu changes as some customers shifted to value offerings.

Finally, we are pleased to report record third quarter gross profit of $106,000,000 When compared to last year’s third quarter, gross profit margin improved 90 basis points to 23.1%. Our focus on supply chain productivity, value engineering and revenue management all remain core elements to further improve our margins and financial performance. I’ll now turn the call over to Tom Pigott, our CFO, for his commentary on our third quarter results. Tom?

Tom Pickett, CFO, Lancaster Colony Corporation: Thanks, Dave. Overall, the company drove gross margin and operating income growth despite the top line decline through strong execution on the fundamentals. Third quarter consolidated net sales decreased by 2.9% to $457,800,000 Breaking down the revenue performance, lower core volume and product mix drove a two fifty basis point decline. Net pricing was accretive by approximately 20 basis points. Last year’s exit of the perimeter of the store bakery product lines accounted for 100 basis points of the decline.

In addition, the company reported 2,100,000 in sales, or 40 basis points of growth, that resulted from a temporary supply agreement with Windland Foods, the seller of the Atlanta based manufacturing facility that we acquired in mid February. We entered into this agreement to facilitate the closing of the transaction. These temporary and non core sales are expected to end by March of twenty six. Consolidated gross profit increased by $1,500,000 or 1.4% versus the prior year quarter to $106,000,000 and gross margin expanded by 90 basis points. The gross profit growth was driven by our cost savings initiatives, favorable pricing data commodities, as the company held pricing while commodity costs modestly declined, and the impact of last year’s write down resulting from the product line exits.

These favorable items offset the impact of the revenue declines, as well as the startup manufacturing costs at the Atlanta facility. Selling, general and administrative expenses decreased by $1,100,000 or 2%. The decline reflects reduced compensation and benefit expenditures, some of which is timing related, and lower expenditures for Project Ascent. These favorabilities were partially offset by 1,700,000 of integration costs related to the acquisition of the Atlanta facility. These costs are primarily comprised of legal and professional fees.

Consolidated operating income increased $14,700,000 or 41.9%. In the prior year quarter, the company recorded 14,700,000 of primarily non cash expenses, as a result of the product line exits. Dollars 12,100,000.0 was recorded in restructuring and impairment, and $2,600,000 was recorded as an inventory write down

Speaker 4: and cost of goods sold.

Tom Pickett, CFO, Lancaster Colony Corporation: In the current year quarter, the company recorded $1,700,000 of integration costs related to the Atlanta facility acquisition. Excluding these items, operating income growth was driven by the lower SG and A costs and the gross margin improvement. Our tax rate for the quarter was 20.7% versus 23.2 in the prior year quarter. We estimate our tax rate for the remainder of fiscal ’twenty five to be 22%. Third quarter diluted earnings per share increased $0.46 or 44.7% to $1.49 Incremental SG and A expenses attributed to the integration of the Atlanta facility reduced EPS by $05 in the current year quarter.

Last year’s restructuring impairment costs, along with the inventory write down, reduced EPS by $0.41 per share. The remaining EPS growth was driven by the underlying performance of the business, as well as the lower tax rate. With regard to capital expenditures, our payments for property additions totaled $43,700,000 for the year to date period. For fiscal ’twenty five, we are forecasting total capital expenditures of $65,000,000 We continue to invest in both cost saving projects, and other manufacturing improvements, including the newly acquired Atlanta based manufacturing facility. In addition to investing in our business, we also returned funds to shareholders.

Our quarterly cash dividend of $0.95 per share, paid on March 31, represented a 6% increase from the prior year’s amount. Our enduring streak of annual dividend increases stands at sixty two years. Our financial position remains strong with a debt free balance sheet and $124,600,000 in cash. The decline in this balance reflects the $78,800,000 deployed to acquire the Atlanta based manufacturing facility. So to wrap up my commentary, our third quarter results demonstrate strong execution across a number of areas in a more difficult operating environment.

In addition, we continue to make investments to support further growth in cost savings. I’ll now turn it back over to Dave for his closing remarks. Thank you.

Dave Ciezinski, President and CEO, Lancaster Colony Corporation: Thanks Tom. As we look ahead, Lancaster Colony will continue to leverage the combined strength of our team, our operating strategy and our balance sheet in support of the three simple pillars of our growth plan. So one, accelerate core business growth. Two, simplify our supply chain to reduce our cost and grow our margins. And three, to expand our core with focused M and A and strategic licensing.

Looking ahead to our fiscal fourth quarter, we anticipate some ongoing challenges with consumer environment, but we are positioned to respond. In the retail segment, we will focus on innovation and incremental distribution of relevant new items. In the food service segment, our award winning culinary team will continue to partner with our customers to support their growth through collaboration on new menu items and other opportunities. We project that our retail segment sales will benefit from our licensing program, including expanding distribution for the recently introduced Texas Roadhouse dinner rolls and the extension of Chick fil A sauce into the club channel. In the Foodservice segment, we anticipate continued growth from select customers in our mix of national chain restaurant accounts.

With respect to our input costs, in aggregate, we do not anticipate significant impacts from commodity cost inflation or deflation in the coming quarter. I would now like to comment on a couple of strategic matters for our business. First, you may have noticed as part of our 10 Q filing this morning that we announced the planned closure of our sauce and dressing facility in Milpitas, California, as part of an ongoing initiative to better optimize our manufacturing network. I can assure you, this was a very difficult decision as it impacts 78 of our employees. I extend my most sincere thanks to all of them for their dedication and commitment to our business during their time with us.

Second, we completed the acquisition of the Atlanta based sauce and dressing facility in mid February. Strategically, this plant represents a significant addition to our manufacturing network. And I believe we’re off to a great start from an integration and operations standpoint. Through the execution of these two strategic items, we believe our supply chain is better positioned to cost effectively support the growth of our key customers for years to come. Specific to the acquisition, I would like to thank all of the members of our supply chain, R and D, HR and IT teams that worked tirelessly during the acquisition integration phase that began with the transaction signing in mid November and continued through the startup of production in mid March.

The execution process for both the integration and production startup was exceptional, thanks to the team’s thoughtful planning and tremendous leadership. In addition, I would like to welcome the plant’s employees that have joined our Marzetti team. These new teammates have impressed me with their enthusiasm, team first attitude, and strong work ethic. They have demonstrated a firm commitment to the continued growth and future success of our business. I look forward to working with them in the years to come.

Finally, I would like to take a moment to welcome Tanya Berman as the new President of our Retail Business. Tanya is a strong addition to our executive leadership team and a great fit to lead our Retail Business. Her background includes twenty five years of general management and marketing with a proven record of driving growth across many categories in the food and consumer packaged goods industry. Most recently, she served as Senior Vice President at Mondelez, leading their US portfolio of cookie and cracker brands. Previously, she held leadership roles at Mars Wrigley, Bayer Consumer Care and Johnson and Johnson Consumer Products.

Based on Tanya’s tremendous experience with iconic brands, I’m very confident in her ability to innovate, market and grow our brands as we continue to deliver on our company’s growth strategy. This concludes our prepared remarks for today, and we’d be happy to answer any questions you may have. Operator?

Kathy, Conference Call Facilitator: Thank you. Your first question comes from the line of Jim Salera with Stephens. Your line is now open.

Jim Salera, Analyst, Stephens: Hey, It’s Tom. Good morning, Jim. Thanks for taking our question.

Dave Ciezinski, President and CEO, Lancaster Colony Corporation: Good morning.

Jim Salera, Analyst, Stephens: I wanted to maybe start by just asking on the foodservice side of the business. Obviously, well documented kind of consumer slowdown, especially across QSR with kind of consumer uncertainty this year. How should we think about your ability to collaborate with your foodservice partners on the demand generation side? And is there anything we can do to have maybe a little bit more contribution on supporting traffic? Or do we really just need to wait for industry traffic to improve to see the food service piece

Speaker 4: of the business kind of

Jim Salera, Analyst, Stephens: get back to normal growth?

Dave Ciezinski, President and CEO, Lancaster Colony Corporation: Yes. So Jim, maybe I’ll start by commenting on Q3 and then we’ll sort of pivot and talk about the outlook. If you pull apart Q3’s volume, there are several drivers that were underlying the results. The first was weather, which I think is pretty well documented as you’ve heard other peer companies or concept operators come out with their results. And just maybe to elaborate on that for you, we had several of our big customers that had stores closed for upwards of a week and on the outside ten days, believe it or not, because of weather.

So January was materially impacted by that. More broadly, we are seeing a diminution in traffic. That’s one that we’re watching carefully. It was slow through January due to weather in February. What I would point to though is in March, it looked like it was modestly better as we looked at the NPD CREST.

The other contributor, and this is a little bit unique to us, is that we had several of our concept operators we were working with on sauce programs that pivoted their menus to focus on value in the period. So you put it all together, it gets you into that sort of zone. As we look forward, our outlook is that unless something materially changes up or down in the economy, we’re still looking at our food service volume outlook that is probably down in the low single digits, low, low single digits. Having said that, we see the ability to get price in there because of egg inflation. So our view is it’s going to remain soft.

We’re probably going to be doing better than most of our peers, but we’re not looking for a material change there.

Jim Salera, Analyst, Stephens: Okay, that’s helpful. And then just thinking over on the retail side, if we look at kind of the puts and takes with the Chick fil A sauce distribution in club the increased distribution on the Texas Load House rolls, how should we balance that against maybe just some core softness, again, more broad based with the consumer? Do those are those distribution gains enough to kind of more than offset what we see in consumer softness? Do you kind of

Tom Pickett, CFO, Lancaster Colony Corporation: expect a wash from those two?

Dave Ciezinski, President and CEO, Lancaster Colony Corporation: No, we believe so. So again, if you pull apart Q3, if you allow me, I’ll do the same thing. Let’s maybe start with volume. And if you look at, I think our reported volume was down 2.6% or 2.2%. And then you pull out flat out in Angelic, which we exited a year ago at this time, that takes us down about 90 basis points on volume.

And then you adjust for Easter and some other trade moves that we’ve made there, our business we believe would be growing on volume. If you look at revenue, sort of the same thing holds because we weren’t getting much pricing. If you go in and you look at consumption in the period, consumed sales, our business was actually up 2.2%, me, 2% ex Angelic and flat out in the period. And our pounds were up actually 50 basis points, and that’s lapping Easter in the period. So our view on our retail business, again, notwithstanding a material change, things inflect down or inflect up, but if things kind of stay the course, we say line of sight to low single digit volumetric growth on volume and on revenue.

And the way that we expect to get there is, as you pointed out, contribution on new items. Now we have some pipeline build in the period on Chick fil A, but we didn’t really have any sales in the period Chick fil A club through consumption. And then Texas Roadhouse. Now Texas Roadhouse just recently is expanding into general retail and it’s not really going to be until our next fiscal year that we begin to ship that to all outlets. As you sort of pull apart other elements of the business, I think there’s some high points there that may be worth mentioning.

We continue to grow our Texas toast business. We grew share and we grew volume in the period. It’s performing quite well, both on toast and on our bread sticks and on sweet. Sister Schubert’s sort of hard to look at, just because Easter pretty significantly impacts that item in the period. But notwithstanding Easter, we believe that business continues to be well positioned.

Maybe as a proof point, we actually grew share on that item in the period as well. As you move down to our own brands, Marzetti, Classics continues to be strong. It was improving. Simply is a bit of a soft point. And then our license program in general, Chick fil A was up, Buffalo Wild Wings was up, Olive Garden was down, but we’re lapping a lot of support in the same time last year.

So you put it all together, allow me to kind of bring it up. Our view is on a volumetric basis, little soft in food service, room to grow in retail, volume kind of sets up because of those offsets, probably flattish on a consolidated basis with our revenue being up in the low single digit range as we go forward.

Jim Salera, Analyst, Stephens: Great. I appreciate all the color, Dave. Very helpful.

Tom Pickett, CFO, Lancaster Colony Corporation: Absolutely.

Kathy, Conference Call Facilitator: Thank you. Your next question comes from the line of Scott Marks with Jefferies. Your line is now open.

Scott Marks, Analyst, Jefferies: Hey, good morning, guys. Thanks so much taking our questions First question, I guess, as I look at the retail business performance and I kind of break down across the different platforms, it looks like most of the, I guess, weakness in the segment or where maybe it came in below expectations was on the refrigerated dressings and dips side, whereas frozen breads and shelf staples seem to have held up pretty well. So wondering if you can just kind of speak to that weakness and kind of help us understand what’s going on with that part of the business.

Dave Ciezinski, President and CEO, Lancaster Colony Corporation: Yeah, it’s a great question. And I would say that was significantly impacted by the timing of Easter. If you look at that, we get a seasonal bump. Don’t have to restate the calendar, but you remember last year’s Easter was on March 31. So all of those shipments and the consumption would have been in third quarter.

This year Easter switched to April 20. And it resulted in a drag on both when you look at the I’m assuming that you’re looking at consumption data inside of there. As you pull those apart, now that sort of macro adjustment notwithstanding, I would tell you that our classics continues to be strong. We’re picking up share. Chick fil A dressing in refrigerated continues to be strong.

It’s growing share also. Our Simply Dress as a platform continues to need work. Maybe the only other thing that I would mention is that as you look at the category, that category was down about three points in the quarter, which is softer than it had been. Some was Easter and some might be just sort of a broader consumer shift.

Scott Marks, Analyst, Jefferies: Understood. Thank you for that. And next question from me would be just around kind of the promotional environment at retail. Think we’ve heard some

Dave Ciezinski, President and CEO, Lancaster Colony Corporation: before I jump to that, if I may, one thing that may be worth mentioning, I talk dressings on dips. We did implement a material down weighting of dips in the prior year, which were lapping. So, you’re looking at the pounds in there in particular, you’re going to see something that overstates what’s happening in terms of units. So again, it’s Easter timing, but the one unique nuance on that was the down weighting that we did to get some price realization that we’re continuing to cycle through. So back to trade, finish your question, please.

Scott Marks, Analyst, Jefferies: Yeah, sure. Thanks for that. Yeah, just in terms of what we’re seeing on a promotional environment, I think we’ve heard from some larger peers of yours about retail performance and maybe the need to invest a little bit more in pricing in some of their brands and categories. Wondering what you see from your perspective.

Dave Ciezinski, President and CEO, Lancaster Colony Corporation: So it’s a great question. If you remember last year in our Q3 and Q4, we took our trade rate up, which elevated our year against year, fiscal year twenty five versus ’24 trade rate. We made the decision going into fiscal year twenty five that what we wanted to do was sort of level load that trade. So we took the incremental increase that we had in Qs three and four, as we went into this fiscal year, and we split that evenly across all four quarters. As a result, our trade rate was modestly up in Q1 and Q2 and was modestly down in Q3 and is planned to be modestly down in Q4.

As we look at our categories, we don’t think that we have a pricing problem right now. And as we pulled apart where we spent, there were some areas where we felt like we got really strong performance quality support from our retailers and others where we felt like it just wasn’t worth the investment. And if you look at that, you can see some of that leverage in our consumption data where you can see actually our consumed sales were up more than our pounds. And if you look at it, we call that either a sweat up where you’re getting leverage between your gross sales and your net sales, or a sweat down where you’re losing leverage because of trade. We’ve chosen, at least at this point, to be a little bit more careful on trade just because even in this environment, we just don’t think that we’re getting a financial return on it.

Scott Marks, Analyst, Jefferies: Understood. Thanks so much. We’ll pass it on.

Kathy, Conference Call Facilitator: Thank you. Your next question comes from the line of Andrew Wolf with CL King. Your line is now open.

Andrew Wolf, Analyst, CL King: Hi. Good morning.

Tom Pickett, CFO, Lancaster Colony Corporation: Wanted to ask

Andrew Wolf, Analyst, CL King: an open end question sort of Surcana and just competitive dynamic related on items being sold on promotion, kind of in your major categories and, you know, your stance. I mean, in the past, you basically said you don’t I don’t wanna put completely put words in your mouth that I don’t think you’ve wanted to spend that much promotionally. Maybe it wasn’t the most effective way. Trade promotions, maybe it was better to have end cap placement and some other things like that. I just wanted an update on what you’re seeing competitively and what your thinking is.

Dave Ciezinski, President and CEO, Lancaster Colony Corporation: Maybe start first Andrew with a high level view. If you looked at all edibles, all edibles were really soft in the period, I would say with some categories doing slightly better than others. So I do think in the quarter at a total grocery store, there are a number of categories that are undergoing some pressure. So you sort of pull in and you look more closely at us. We continue to believe that trade has a role, but for us, a reduced price on the shelf with a yellow tack, for example, just doesn’t get the sort of lift that we would need to offset the investment in trade.

Where we might see a benefit is if we make an investment and we get an end cap, then what we’re likely to see is we’re likely to pick up incremental households or get some pantry load, which in the case of sauces results in expandable consumption. And maybe to go a click deeper, I’ll run through some of the categories. If you look at our Texas toast, it really is consolidating around our brand where we’re picking up share, we were north of 43% in private label, and we both are continuing to perform well with some of the other contributors donating share. If you go into the role category, it’s us and it’s Rhodes. The newest news in the category is that we’re bringing in Texas Roadhouse.

But here’s what’s interesting, that’s actually growing the category. It’s not cannibalizing the category. We’re bringing consumers from the other parts of the store with other brands, and we’re bringing them into Frozen to buy that. So private label is not really outperforming there, I wouldn’t say. Some of our big retailers have tried to focus on private label items.

I won’t name their names, but they’re not performing particularly well. So we continue to believe that we’re set up there to continue to perform. Refrigerated dressings, private label has really never been a material contributor and that remains. As you cycle through, Lighthouse is doing well behind their larger 20 ounce size. It’s a squeeze bottle.

With some of the other branded players, Marie’s Panera and others losing share with the growth driver being modestly our brand, our classics and Chick fil A, and our Simply is one that’s donating some share as well across to Chick fil A and others. But again, private label isn’t much of an item as we look there. As you swing across the license soft space, I would say some of our retailers have looked at introducing private label knockoffs, but again, they haven’t performed particularly well. And I’m pointing in this case to Chick fil A Sauce and Buffalo Wild Wings. I think the area where we want to continue to watch is shelf stable dressings, where we have seen some trade down in that category.

If you remember, we talked at length about a year and a half ago about watching our opening price point on our 16 ounce item. That may be one that we want to watch going forward. And then finally, albeit a smaller piece of our business, futons is one where we are seeing maybe a little bit larger shift to private label. But as really plays out for our business, private label still isn’t the biggest opportunity or obstacle. For us, it comes down to relevant new items and executing our plan.

Andrew Wolf, Analyst, CL King: Okay. Got it. Thank you. And I’m gonna just ask one, hopefully, quick question, but that was an excellent overview because don’t always get that kind of a competitive overview and a lot of you know, that’s really where at least I’d wanna hear about what’s going on right in those categories. Just on, the

Dave Ciezinski, President and CEO, Lancaster Colony Corporation: Easter shift, any chance you

Andrew Wolf, Analyst, CL King: can quantify that in dollar terms or percentage? I know it’s an estimate, but what do you think it impacted the quarter might aid the current quarter by?

Dave Ciezinski, President and CEO, Lancaster Colony Corporation: Yes. Well, it’s at least one point is what we’re pegging it at. So if you go back to the adjusted volume notwithstanding the discontinuation where we were down about 90 basis points. We think it’s at least a point marginally better than a point that’s in there.

Andrew Wolf, Analyst, CL King: Got it. Okay. That’s it for me. Thank you.

Tom Pickett, CFO, Lancaster Colony Corporation: You’re welcome. Thank you.

Kathy, Conference Call Facilitator: Next question comes from the line of Alton Stump with Loop Capital. Your line is now open.

Speaker 4: Great. Thank you. Good morning. Thanks for taking my questions. I guess, first off, on foodservice side, I’m glad that you brought up weather.

I think it was in response to the first question here in the Q and A because certainly weather was absolutely terrible during the first two months of the year. Maybe kind of similar to the last question, any way that you kind of quantify how much of an impact you think that had on your foodservice volumes for the full quarter? I know you mentioned that things did get marginally better in March.

Dave Ciezinski, President and CEO, Lancaster Colony Corporation: I think the best I can kind of point to maybe just macro traffic. If you look at things overall where traffic in the first couple of months, January and February, were off three points ish or thereabouts softer than they had been trending. As you swing into March, and again this is NPD press data, traffic improved, still off, but it improved by more than a hundred basis points. As we looked at some of our specific customers, again, I don’t want to name names, but the weather was particularly hard in let’s say the Upper Midwest and the Northeast. And we had one concept that comes to mind with 3,000 restaurants, and they mentioned that they had 200 of restaurants that were impacted by weather.

And it ended up being more material than I think even we appreciated as we cycled through that month. So really hard to put up a peg on it. The best number I can give you is MPD CREST, but it was a material contributor.

Speaker 4: Understood, thank you for that color, Dave. And then I guess just on the retail side, obviously, you’ve got several major new things coming from a SKU standpoint. But with the new sauce, with new Chick fil A sauce going into club, how big of a deal do think that could be, not just in its own right, but also from a marketing perspective to sort of introduce that brand to a new channel of customers?

Dave Ciezinski, President and CEO, Lancaster Colony Corporation: Yeah, it’s a great question, often. Chick fil A is a tremendous brand and I would put it in the same campus mega brands like Heinz Ketchup or Hidden Valley Ranch. And if you look at brands like that club as a material part of their overall portfolio, and really what it allows you to do is reach consumers oftentimes that are slightly more affluent, that have larger families, and they use it as a stock up occasion. And given that the sauce is an expandable consumable, I think it’s going to be an important overall contributor to our business as we go forward. So we’re thrilled.

We didn’t start shipping it till the very, very end of the quarter. We’re starting to see early returns on the scan data at Sam’s and at Costco, and it’s exceeding our expectations in both of those channels. So we continue to be very excited by that one. So I think what we’ve talked about there is, oftentimes if you look at a mix of a mature brand, a Kraft Mac and Cheese, a Heinz Ketchup like I mentioned earlier. Club oftentimes might be 15% or so of the overall total of the business.

It’s a meaningful channel and we’re thrilled that it’s there. And I think predicated on its performance, it may open up opportunities for other Chick fil A items to move into club also at some point in time. A Texas Roadhouse, that rollout continues to proceed at pace. If you remember, we had it in a test, then we expanded, and that was Walmart only. We’ve expanded it now into four states that’s just starting, that started in early April.

And in August, we’re going to be expanding it into full retail, all mass, all retail, and we’re already in discussions about maybe moving that item into club at some point. The exciting thing here is that we’re able to do this on existing lines, we’ve just simply had to add labor. We’ve gone back, we’ve added that labor, we’re building the capacity, and we’re watching consumption and it continues to be really strong. A great new item that we’re excited about and a great brand platform.

Speaker 4: Great. Thank you so much for all of that detail. I’ll hop back in the queue.

Tom Pickett, CFO, Lancaster Colony Corporation: Thank you all, Nico.

Kathy, Conference Call Facilitator: Thank you. If you’d like to ask a question, please press star one one on your telephone keypad. If there are no further questions, we’d now like to turn the call back to Mr. Susinski for his concluding comments.

Dave Ciezinski, President and CEO, Lancaster Colony Corporation: Thank you, operator, and thank you everybody for joining. And maybe I’ll just provide a couple of summary comments. I mean, there’s a lot of noise today in the macro environment and we believe against this complicated backdrop, we’re positioned to continue to outperform behind strong brands, both the brands we own and the brands we license, relevant categories, advantaged food service customers. And then moving beyond that, as you look at some of the other sources of volatility out there, for example, tariffs and make America healthy, we believe we have modest exposure to both. And then finally, we really didn’t get into it in the call today, but we’ve taken actions over the last several months just to continue to strengthen our supply chain network and reduce our overall landed costs, which should allow us line of sight even in this environment to improve our margin structure.

So we feel like, again, against a very complicated backdrop, we’re positioned to continue to outperform. We see line of sight to revenue growth and margin improvement and modest profit improvement. So again, we look forward to meeting with you in August. If you have additional questions, we look forward to hearing from you. That’s all for today.

Kathy, Conference Call Facilitator: Thank you for your participation. This does conclude today’s call. You may now disconnect.

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