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Lancaster Colony Corporation LANC is set to enhance its operational capabilities with the planned acquisition of a sauce and dressing production facility in Atlanta, GA, from Winland Foods, Inc.
Key Details of Lancaster Colony's Acquisition Deal
Lancaster Colony expects to close the asset purchase transaction, valued at approximately $75 million, in the first quarter of calendar year 2025, subject to standard closing requirements. The facility covers around 300,000 square feet, with approximately 250,000 square feet allocated for manufacturing operations. Let us explore how this acquisition is expected to benefit LANC moving forward.
Through this acquisition, LANC will strengthen its sauce and dressing operations by improving operational efficiency, increasing production capacity and enhancing proximity to key customers, while also bolstering the company’s manufacturing network. After thoroughly evaluating several options, it determined that this asset purchase is the most practical and cost-effective solution to support continued growth and meet long-term needs.
This move reinforces Lancaster Colony’s position in the food manufacturing industry. By leveraging the strategic advantages of this acquisition, the company is poised to strengthen its competitive edge and address future market demands effectively.
What More Should Investors Know About LANC?
The company’s continued emphasis on supply-chain productivity, value engineering and revenue management remains central to its strategy for driving financial performance. This focus contributed to LANC’s strong results in the first quarter of fiscal 2025, with a consolidated sales increase of 1.1% to $466.6 million and a gross profit growth of 1.9% to $110.8 million, driven by higher volumes, an improved product mix and cost-saving initiatives.
LANC’s licensing program continues to be a key driver of growth for its retail segment, highlighted by the success of Subway sauces, launched this past spring. The company is also highly encouraged by the recent introduction of Texas Roadhouse Dinner Rolls. Given the strong excitement around these flavorful rolls, LANC is planning a phased expansion, similar to the approach taken with the Chick-fil-A sauce a few years ago.
Marzetti, one of the brands of the company, achieved a 2.4% increase in sales and a gain of approximately 25 basis points in market share in the first quarter. When including Chick-fil-A dressings, sales in the category grew 2.6% and market share expanded about 40 basis points in the produce dressing segment.
LANC’s Foodservice segment saw a 3.5% increase in net sales in the first quarter of fiscal 2025, driven by higher demand from national chain-restaurant customers and volume growth for branded Foodservice products. The company expects this trend to continue, with further volume gains from selected national-chain accounts.
Lancaster Colony ended the first quarter of fiscal 2025 with cash and cash equivalents totaling $135.1 million. As of Sept. 30, 2024, the company had no outstanding borrowings, underscoring its commitment to prudent financial management.
LANC looks well-positioned on the dividend front. Recently, its board of directors raised the quarterly dividend by 5 cents to 95 cents per share. This increase marks 62 consecutive years of increasing regular cash dividends, a notable achievement as LANC is one of only 12 U.S. companies with such an impressive history of dividend increases.