Blog Coverage Lancaster Colony Acquires Manufacturer of Premium Sprouted Grain Bakery Products

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LONDON, UK / ACCESSWIRE / November 4, 2016 / Active Wall St. blog coverage looks at the headline from Lancaster Colony Corp. (NASDAQ: LANC) as the company announced on November 03rd, 2016, that its wholly-owned subsidiary, T. Marzetti Company, has entered into a definitive agreement to acquire all of the assets of Angelic Bakehouse, Inc., a manufacturer and marketer of premium sprouted grain bakery products. Register with us now for your free membership and blog access at: http://www.activewallst.com/register/.

Yesterday, one of Lancaster Colony’s competitors within the Food – Major Diversified space, The Kraft Heinz Co. (NASDAQ: KHC), reported its fiscal quarter ending September 2016. AWS will be initiating a research report on Kraft Heinz in the coming days.

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From Bakery to Part of Million Dollar Group

The founders of Angelic Bakehouse, husband and wife James and Jenny Marino have built Angelic Bakehouse from a Milwaukee-based bakery they acquired in 2009 into a fast growth regional business and t brand with a variety of premium sprouted grain bakery products, including sliced bread, dinner rolls, pizza crusts and wraps. James and Jenny Marino will continue to lead the Angelic Bakehouse business post completion of the transaction. Angelic Bakehouse in 2016 launched its products in approximately 50 Costco stores in the Midwest.

Jenny Marino stated that there would be no job reductions due to the acquisition and she foresees scope for employment growth down the line.

Acquisition Details

Lancaster Colony announced that it will fund the acquisition internally with cash on hand and is not material to company’s financial. Annual sales for Angelic Bakehouse are approximately $12 million and the impact of the acquisition on Lancaster Colony’s earnings per share is expected to be near neutral for the current fiscal year ending June 30, 2017. Other terms of the transaction were not disclosed. The transaction is expected to close later in November.

Dave Ciesinski, Lancaster Colony’s President and Chief Operating Officer, stated of the acquisition:

“We are thrilled to add Angelic Bakehouse and their terrific line-up of non-GMO bakery products to our growing specialty foods business. As a regional retail brand in the Midwestern U.S., Angelic Bakehouse has placement in the growing specialty deli/bakery section of the grocery store. Beyond growth through geographic and channel expansion, we are also excited about the opportunities that the Angelic Bakehouse sprouted mash™ base provides for product innovation, a recent example being the introduction of Angelic Bakehouse® bread crisps in three different varieties.”

Earnings Results

On October 27th, 2016, Lancaster Colony reported that its Q1 FY17 net sales decreased 0.9% to $291.4 million versus $294.1 million in Q1 FY16.

The company noted that in its retail channel, net sales increased 3% with Olive Garden® dressings, Marzetti® caramel dips, New York BRAND® Bakery frozen garlic bread products, and Sister Schubert’s® frozen dinner rolls performing well. In its foodservice channel, Lancaster Colony’s net sales declined 5%. Despite the slight decline in net sales, Lancaster Colony’s operating income increased over 21% to $50.8 million on lower commodity costs, particularly eggs, a more favourable sales mix and reduced freight costs partially offset by a higher level of investment in marketing and retail promotions.

For Q1 FY17, Lancaster Colony reported that net income was $33.4 million, or $1.22 per diluted share, compared to $27.6 million, or $1.01 per diluted share, in Q1 FY16.

The regular quarterly cash dividend was continued at the higher level of $.50 per share set in November 2015.

The company’s balance sheet remained debt free as on September 30th, 2016 with $145.7 million in cash and equivalents.

Stock Performance

Lancaster Colony’s share price finished yesterday’s trading session at $126.10, marginally down 0.76%. A total volume of 138.3 thousand shares exchanged hands, which was higher than the 3 months average volume of 91.88 thousand shares. The stock has advanced 3.40% and 19.22% in the last six months and past twelve months, respectively. Furthermore, since the start of the year, shares of the company have gained 10.59%. The stock is trading at a PE ratio of 28.41 and has a dividend yield of 1.59%.

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