WESTERVILLE, OHIO — The successful completion of the acquisitions of Bantam Bagels and Omni Baking Co. helped propel sales and earnings momentum at Lancaster Colony Corp. in the second quarter.
Net income in the second quarter ended Dec. 31, 2018, totaled $47,907,000, equal to $1.74 per share on the common stock, up 4% from $45,920,000, or $1.67 per share, in the same period a year ago.
Net sales increased 9% to $349,581,000 from $319,665,000.
For the six months ended Dec. 31, net income totaled $86,935,000, or $3.16 per share, up 15% from $75,306,000 in the same period a year ago. Net sales rose nearly 8% to $666,235,000.
“We were pleased to finish our fiscal second quarter with record sales in organic growth of 12.2% in our Foodservice segment and 3.5% in the Retail segment,” David A. Ciesinski, president and chief executive officer, said during a Jan. 31 conference call with analysts. “While we incurred acquisition-related expenses during the quarter and some one-time charges in other areas of the business, we continue to make great progress in positioning our business for future growth. We’re excited to have successfully completed two acquisitions in the past quarter, with Bantam Bagels providing us an entry into the large and fast-growing frozen breakfast category and Omni Baking offering us much improved control over the supply and production of our frozen garlic bread products.
“Looking ahead, it’s worth noting that we’ve identified opportunities for meaningful improvements at Omni Baking. We will begin implementing these improvements over the second half of our fiscal year. As a result, we expect some modest near-term headwind to our financial results as our supply chain team works to fully integrate our facility.
“Overall, our core strategic plan remains the same: To grow our base business; to simplify our supply chain and achieve cost savings; and to selectively identify good-fitting acquisitions that will drive us forward.”
Mr. Ciesinski also spoke to some of the challenges specific to Angelic Bakehouse, which Lancaster acquired in late 2016.
“Over the course of the past year, we’ve launched a new strategy with greater focus on premium sprouted grain wraps and less emphasis on certain other products, particularly private label loaf bread,” he said. “This strategic shift has created some short-term underperformance, which contributed to the reduction in contingent consideration for the earnout payment, but we remain very positive about the future of Angelic Bakehouse and the opportunities that lie ahead for that business.”
Douglas A. Fell, chief financial officer, said capital expenditures for property additions totaled $28 million in the first half of fiscal 2019. Lancaster expects full-year capital expenditures to be in the range of $60 million to $80 million as the company focuses on projects to increase capacity and productivity. Mr. Fell said the company has several packaging and end-of-line automation projects underway and recently broke ground on its Sister Schubert’s capacity expansion project, which is expected to be up and running about a year from now.