The Marzetti Company · NASDAQ:MZTI
The Marzetti — Lancaster Colony — Stephens Annual Investment Conference 2023
44 slides from The Marzetti's conference presentation, Nov 16, 2023
Slide 1: Stephens Annual Investment Conference
Lancaster Colony Corporation Stephens Annual Investment Conference November 16, 2023
Slide 2: Safe Harbor Statement
Safe Harbor Statement P2 This presentation was prepared by Lancaster Colony Corporation for information purposes only and is not an offer or solicitation with respect to the purchase or sale of Company securities. We desire to take advantage of the “safe harbor” provisions of the Private Securities
Slide 3: About Lancaster Colony Corporation
About Lancaster Colony Corporation P3 • Manufacturer and Marketer of Specialty Food Products • Established in 1961 • Headquartered in Westerville, Ohio • Fiscal 2023 Net Sales of $1.8 Billion (primarily U.S.) • 15 Production Facilities in Nine States • Approximately 3,350 Employees
Slide 4: Company Highlights
Company Highlights P4 • Leading Market Share Positions in Retail Food Categories • Supplier to 18 of the Top 30 National Restaurant Chains • Growing and Consumer-Relevant Retail Licensing Program • Long History of Sustained Organic Sales Growth • Strong Cash Flows • One of 13 U.S. Companies to have
Slide 5: Evolution of Our "Better Food Company" Strategy
Evolution of Our "Better Food Company" Strategy P5 1. Defined Winning - Pursue Top Quartile Financial Performance • Grow Organic Sales Volumes Low- to Mid-Single Digit (pounds shipped basis) • Grow Operating Margins 2. Developed Strategy • Strategic Growth Initiatives - Accelerate Base Business Grow
Slide 6: Retail Sales Mix (53% of Total Net Sales)
Retail Sales Mix (53% of Total Net Sales) P6 Refrigerated Dressings, Frozen Dips & Other Breads 21% 35% Shelf-Stable Dressings, Sauces & Croutons 44% * * * * Based on reported net sales for the 12 months ending June 30, 2023. * Products for these brands are produced and sold under exclusive licensin
Slide 7: Foodservice Sales Mix (47% of Total Net Sales)
Foodservice Sales Mix (47% of Total Net Sales) P7 Branded & Other 21% National Accounts 79% QSR Customers Based on reported net sales for the 12 months ending June 30, 2023.
Slide 8: Retail Segment Growth Initiatives: Licensing
Retail Segment Growth Initiatives P8 Initiative Brand Products Initial Ship Date Added Larger 24 oz. Chick-fil-A Sauce and new BBQ and Siracha Flavors * National Launch March 2023 Chick-fil-A Refrigerated Dressings National Launch Licensing May 2023 * Arby’s Sauce and Horsey Sauce Launch Fall 2022 *
Slide 9: Retail Segment Growth Initiatives: Renovation
Retail Segment Growth Initiatives P9 Initiative Brand Products Initial Ship Date Added new Licensing * Caesar flavor to Olive Garden Product Line March 2023 Introduced New Filled Bites Product Line Fall 2022 Renovation Innovation & Restaged Lineup of Marzetti Simply Refrigerated Dressings May 2023 *
Slide 10: Consumer-Relevant Retail Licensing Program
Retail Segment Growth Initiatives P10 Consumer-Relevant Retail Licensing Program • Successfully developed exclusive licensing agreements through our proven culinary expertise, strong reputation and longstanding relationships in the foodservice channel combined with our demonstrated sales execution i
Slide 11: FY24 Supply Chain Path Forward … Execute to Grow
Strategic Growth Initiatives P11 FY24 Supply Chain Path Forward … Execute to Grow • Maintain continuous supply across the entire supply chain • With successful implementation of new ERP system complete, shift to leveraging the system’s capabilities • With strategic manufacturing asset (Horse Cave dr
Slide 12: Simplify Supply Chain and Reduce Costs: Value Engineering
Strategic Growth Initiatives P12 Simplify Supply Chain and Reduce Costs Value Engineering (VE) to Help Offset Cost Inflation and Improve Profitability VE Approach Identify opportunities to reduce product and packaging costs that consumer doesn’t value • Lower-cost packaging materials • Alternative/s
Slide 13: Simplify Supply Chain and Reduce Costs: Strategic Procurement
Strategic Growth Initiatives P13 Simplify Supply Chain and Reduce Costs Strategic Procurement • Should-Cost Modeling • More Extensive Competitive Bidding • Strategic Supplier Selection • Extending Payment Terms
Slide 14: Transportation and Warehousing Initiatives
Strategic Growth Initiatives P14 Simplify Supply Chain and Reduce Costs Transportation and Warehousing Initiatives Project T² • Installed New Transportation Management System • Adopted One-Touch Strategy for Truckload Optimization • Improved Carrier Management Through Data Analytics and Collaborativ
Slide 15: Long History of Sustained Growth
Long History of Sustained Growth P15 $ in Millions $2,000 11% Compound Annual Growth Rate a $1,500 2003 $1,000 2000 1997 $500 1989 1978 1969 1971 1980 1990 2000 2010 2023 Net sales information is presented as originally reported in Lancaster Colony's Annual Report for the fiscal years ending June 30
Slide 16: Strengthened Organization
Strengthened Organization P16 Strengthened Leadership Team • Supply Chain • R&D and Quality • Retail • Foodservice • Information Technology • Finance Established Transformation Program Office • ERP Initiative Aligned Compensation Incentives with Sales Growth, Operating Income Growth and Shareholder
Slide 17: Investing to Drive Efficiency and Support Growth
Strengthened Organization P17 Investing to Drive Efficiency and Support Growth Significant Capacity Expansion Project for Dressings and Sauces * * * * • Added 192,000 square feet to existing facility in Horse Cave, KY • Provides increased processing, warehousing and utilities to expand production ca
Slide 18: Fiscal 2024 – First Quarter Financial Performance
Fiscal 2024 – First Quarter Financial Performance P18 FY24 Q1 Results vs. Prior Year Three Months Ended September 30, 2023 ($ in Millions, Except Per Share Values)
Slide 19: Strong Balance Sheet
Strong Balance Sheet P19 $ in Millions June 30 Sep 30 2021 2022 2023 2023 Cash and Equivalents $188 $60 $88 $74 Total Debt $0 $0 $0 $0 • Debt Free • Credit Revolver of $150 Million, Expandable up to $225 Million • Recent Investments in Capacity Expansion Projects and ERP System (Project Ascent) to S
Slide 20: Investing to Grow While Returning Cash to Shareholders
Investing to Grow While Returning Cash to Shareholders P20 Fiscal 2023 – Major Cash Uses Cash Priorities Share Repurchases $9.2 MM Project Ascent $29.9 MM • Invest in Existing Business Regular Dividend Payments $92.4 MM - Fiscal 2024 capital expenditures estimated at Capital Expenditures $90.2 MM $7
Slide 21: Supplemental Financial Information
Appendix A Supplemental Financial Information
Slide 22: Results of Consolidated Operations – Most Recent Fiscal Quarter
Results of Consolidated Operations – Most Recent Fiscal Quarter A1
Slide 23: Financial Performance – Fiscal Year Ended June 30, 2023
Financial Performance – Fiscal Year Ended June 30, 2023 A2 $ in Millions Fiscal 2023 Results vs. Prior Year (Except Per Share Values) (Twelve Months Ended June 30, 2023) Value $ Change % Change Consolidated Net Sales $1,822.5 $146.1 8.7% Gross Profit $388.6 $32.8 9.2% SG&A $222.1 $10.0 4.7% Restruct
Slide 24: Summarized Earnings Per Share Waterfall – Fiscal Year 2022 to 2023
Summarized Earnings Per Share Waterfall – Fiscal Year 2022 to 2023 A3 Twelve Months Ended June 30, 2022 to Twelve Months Ended June 30, 2023 (Diluted Earnings Per Share) $0.28 $4.04 $0.25 $0.36 $3.25 ($0.10) Business Impact of FY22 Net Reduction Net Reduction FY22 In ERP (Project In Restructuring &
Slide 25: Results of Consolidated Operations – Most Recent Fiscal Year Periods
Results of Consolidated Operations – Most Recent Fiscal Year Periods A4
Slide 26: Fiscal Year Net Sales Results
Fiscal 23 and 22 Sales Gains Driven by Pricing Actions Taken to Offset Inflation A5 Fiscal 21 Sales Impacted by COVID-19 Demand Shifts Fiscal Year Net Sales Results Fiscal Years Ended June 30 $ in Millions $2,000 $1,823 $1,676 +8.7% +14.3% $1,467 +9.9% $1,500 $857 $761 +12.6% +19.3% $638 +2.9% $1,00
Slide 27: Fiscal EBITDA Improves With Pricing Actions Taken to Offset Inflation
Fiscal 23 EBITDA Improves With Pricing Actions Taken to Offset Inflation A6 Fiscal 22 Impacted by Inflationary Costs, Supply Chain Disruptions and Other COVID-19 Factors Fiscal Year Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)* Fiscal Years Ended June 30 $ in Millions $250
Slide 28: Fiscal Year EBITDA Calculation Details
Fiscal Year EBITDA Calculation Details A7 Calculation of Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) * ($ in Millions) Fiscal Years Ending June 30, 2021 2022 2023 Income Before Income Taxes ** $186 $112 $140 Depreciation and Amortization $45 $46 $51 Change in Contingent C
Slide 29: Capital Expenditure History
Capital Expenditure History A8 $ in Millions $132 $88 $90 $83 $71 $31 $27 $16 $18 $17 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Fiscal years ended June 30.
Slide 30: Regular Cash Dividends Per Share
Regular Cash Dividends Per Share A9 $ Per Share $3.35 $3.15 $2.95 $2.75 $2.55 $2.35 $2.15 $1.96 $1.82 $1.72 * 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Regular cash dividends for the fiscal years ended June 30. * Excludes special cash dividend of $5.00 per share paid in FY16.
Slide 31: Retail Brand Market Share and Related Information
Appendix B Retail Brand Market Share and Related Information
Slide 32: Portfolio of Strong Brands and Licensing Relationships
Portfolio of Strong Brands and Licensing Relationships (Retailer Sales and Market Share Data per Circana*) B1 Marzetti® Sister Schubert’s® Licensed Brands ^ Ref. Dressing Dips $ Sales: 160.0MM Olive Garden SM $ Sales: 122.4MM $ Sales: 142.9MM $ Sales: 134.7MM $ Share: 78.9% $ Share: 53.2% $ Share: 2
Slide 33: Marzetti Refrigerated Dressing Market Share
Refrigerated Dressing Market Share B2 All Others Marzetti 20.1% 24.1% Bolthouse 12.1% Litehouse 24.1% Marie’s 19.6% Total Category Sales: $508.9 MM 52 weeks ending 7/2/23, Source: Circana, Total U.S. Multi-Outlet
Slide 34: Marzetti Refrigerated Dressing Distribution
Marzetti Refrigerated Dressing Distribution B3 ACV Distribution 41 - 70% 71 - 90% Total U.S. Multi-Outlet 66.3% ACV Weighted Distribution 52 weeks ending 7/2/23, Source: Circana, Total U.S. Multi-Outlet
Slide 35: Marzetti Produce Dip Market Share
Produce Dip Market Share B4 Marzetti 78.9% Litehouse 11.8% All Others 6.5% Concord 1.8% Jimmy’s 1.0% Total Category Sales: $181.1 MM 52 weeks ending 7/2/23, Source: Circana, Total U.S. Multi-Outlet
Slide 36: Marzetti Dip Distribution
Marzetti Dip Distribution B5 ACV Distribution 21 - 80% 81 - 100% Total U.S. Multi-Outlet 71.2% ACV Weighted Distribution 52 weeks ending 7/2/23, Source: Circana, Total U.S. Multi-Outlet
Slide 37: New York Bakery Frozen Garlic Bread Market Share
Frozen Garlic Bread Market Share B6 Pepperidge Farm New York Bakery 9.9% 42.3% All Others 11.9% Private Label 35.9% Total Category Sales: $765.1 MM 52 weeks ending 7/2/23, Source: Circana, Total U.S. Multi-Outlet
Slide 38: New York Bakery Frozen Garlic Bread Distribution
New York Bakery Frozen Garlic Bread Distribution B7 ACV Distribution 70 - 89 90 - 100% Total U.S. Multi-Outlet 89.8% ACV Weighted Distribution 52 weeks ending 7/2/23, Source: Circana, Total U.S. Multi-Outlet
Slide 39: Sister Schubert's Frozen Roll Market Share
Frozen Roll Market Share B8 Private Label Sister Schubert’s 3.2% 53.2% All Others 22.2% Rhodes 21.4% Total Category Sales: $300.4 MM 52 weeks ending 7/2/23, Source: Circana, Total U.S. Multi-Outlet
Slide 40: Sister Schubert's Distribution
Sister Schubert's Distribution B9 ACV Distribution 21 - 40% 41 - 70% 71 - 100% Total U.S. Multi-Outlet 80.8% ACV Weighted Distribution 52 weeks ending 7/2/23, Source: Circana, Total U.S. Multi-Outlet
Slide 41: Crouton Market Share
Crouton Market Share B10 Marzetti, Cardini’s, Mrs. Cubbison’s / Fresh Gourmet New York Bakery, 18.8% All Others Chatham Village 7.5% 33.7% PrivateLabel 37.9% Rothbury Farms 1.9% Total Category Sales: $284.8 MM 52 weeks ending 7/2/23, Source: Circana, Total U.S. Multi-Outlet
Slide 42: New York Bakery Crouton Distribution
New York Bakery Crouton Distribution B11 ACV Distribution 71 - 100% Total U.S. Multi-Outlet 83.1% ACV Weighted Distribution 52 weeks ending 7/2/23, Source: Circana, Total U.S. Multi-Outlet
Slide 43: Leader Amongst Peers in the Retail Channel
Lancaster Colony Is The Leader Amongst Our Peers In The Retail Channel B12 For Both Dollar Sales Growth and Unit Sales Growth Per Circana * Compound Annual Growth Rates - Calendar Year 2019 to 2022 Dollar Sales Unit Sales CAGR CAGR LANCASTER COLONY 14.5% 8.8% Peer A 9.7% 2.2% Peer B 9.5% 2.0% Peer C
Slide 44: Lancaster Colony Corporation contact details
Lancaster Colony Corporation • 380 Polaris Parkway, Suite 400 • Westerville, Ohio 43082 www.lancastercolony.com NOV 23
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