Lancaster Colony Corporation (LANC) has reported a 12.88 percent rise in profit for the quarter ended Dec. 31, 2016. The company has earned $38.96 million, or $1.42 a share in the quarter, compared with $34.51 million, or $1.25 a share for the same period last year.
Revenue during the quarter went up marginally by 0.62 percent to $326.77 million from $324.77 million in the previous year period. Gross margin for the quarter expanded 295 basis points over the previous year period to 28.69 percent. Total expenses were 81.84 percent of quarterly revenues, down from 83.95 percent for the same period last year. This has led to an improvement of 212 basis points in operating margin to 18.16 percent.
Operating income for the quarter was $59.36 million, compared with $52.12 million in the previous year period.
Chairman and chief executive officer John B. Gerlach, Jr. commented, "While the top line headwinds of customer rationalization and deflationary pricing remained as expected for our foodservice channel in the second quarter, we were pleased with the uptick in retail channel sales from our frozen bread and pasta products. Looking ahead, commodity costs are expected to turn flat to modestly unfavorable in the back half of the fiscal year. We also expect continued deflationary pricing in the foodservice channel and ongoing softness in the foodservice industry, particularly the casual dining segment, to impact fiscal third quarter sales growth. In addition, this year’s fiscal third quarter will reflect some shifting of retail sales volumes to our fiscal fourth quarter as a result of the later Easter holiday. With respect to our recent acquisition of Angelic Bakehouse, a manufacturer and marketer of premium sprouted grain bakery products, the transaction closed on November 17, 2016 and the integration process is progressing well. We look forward to our pursuit of future growth opportunities for that business."
Working capital increases sharply
Lancaster Colony Corporation has recorded an increase in the working capital over the last year. It stood at $207.11 million as at Dec. 31, 2016, up 29.29 percent or $46.92 million from $160.20 million on Dec. 31, 2015. Current ratio was at 3.97 as on Dec. 31, 2016, up from 3.10 on Dec. 31, 2015.
Cash conversion cycle (CCC) has decreased to 19 days for the quarter from 34 days for the last year period. Days sales outstanding went up to 20 days for the quarter compared with 19 days for the same period last year.
Days inventory outstanding has decreased to 16 days for the quarter compared with 33 days for the previous year period. At the same time, days payable outstanding was almost stable at 17 days for the quarter, when compared with the previous year period.
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