The Marzetti Company · NASDAQ:MZTI
The Marzetti — Lancaster Colony — CL King's 18th Annual Best Ideas Conference 2020
37 slides from The Marzetti's conference presentation, Sep 16, 2020
Slide 1: CL King's 18th Annual Best Ideas Conference
Lancaster Colony Corporation CL KING’S 18TH ANNUAL BEST IDEAS CONFERENCE September 16, 2020
Slide 2: Safe Harbor Statement
Safe Harbor Statement 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 Lit
Slide 3: About Lancaster Colony Corporation
About Lancaster Colony Corporation • Manufacturer and Marketer of Specialty Food Products • Established in 1961 • Headquartered in Westerville, Ohio • FY20 Net Sales of $1.3 Billion (primarily U.S.) • 16 Production Facilities in Nine States • Over 3,200 Employees 3
Slide 4: Company Highlights
Company Highlights • Leading Market Share Positions in Retail Food Categories • Supplier to 18 of the Top 25 National Restaurant Chains • Long History of Sustained Organic Sales Growth • Strong Cash Flows • One of 13 U.S. Companies to have Increased Regular Cash Dividend for 57 Consecutive Years 4
Slide 5: The Better Food Company … Our Journey to Date
Company Update The Better Food Company … Our Journey to Date 1. Defined Winning - Pursue Top Quartile Financial Performance • Grow Organic Sales Low- to Mid-Single Digit • Grow Operating Margins 2. Developed Strategy • Strategic Growth Initiatives - Accelerate Base Business Growth - Simplify Supply
Slide 6: Retail Sales Mix (54% of Total Net Sales)
Retail Sales Mix (54% of Total Net Sales) Refrigerated Frozen Dressings, Dips Breads & Other 41% 30% Shelf-Stable Dressings & Croutons 29% * * * Based on approximated net sales for the 12 months ending June 30, 2020. Calculation of Retail Sales at 54% of Total Net Sales excludes Foodservice sales at
Slide 7: Foodservice Sales Mix (46% of Total Net Sales)
Foodservice Sales Mix (46% of Total Net Sales) Branded & Other 23% National Accounts 77% QSR Customers Based on approximated net sales for the 12 months ending June 30, 2020. Excludes Foodservice sales attributed to temporary supply agreement resulting from the Nov ‘18 acquisition of Omni Baking. 7
Slide 8: Retail Segment Growth Initiatives
Retail Segment Growth Initiatives Initiative Brand Products Initial Ship Date Innovation/Renovation February 2020 Cheese Sticks July 2019 Cheese Crisps Feb 2020 August 2019 * March 2020 (Regional Pilot Test) Licensing * March 2020 * February 2020 (Dollar, Value, Drug) * Expansion February 2020 Chann
Slide 9: Invest to Accelerate Base Business Growth
Strategic Growth Initiatives Invest to Accelerate Base Business Growth Dinner Roll Plant Capacity Expansion Innovation Center 9
Slide 10: Simplify Supply Chain: Lean Six Sigma
Strategic Growth Initiatives Simplify Supply Chain Lean Six Sigma • Recently certified our first three home- grown blackbelts! • > 90 Green Belt graduates to date • April / May graduates saved > $500K • Classes transitioned to online during quarantine • Expanded access to statistical tools throughou
Slide 11: Simplify Supply Chain: Strategic Procurement
Strategic Growth Initiatives Simplify Supply Chain Strategic Procurement • Should-Cost Modeling • More Extensive Competitive Bidding • Strategic Supplier Selection • Extending Payment Terms 11
Slide 12: Transportation Initiatives: Project T²
Strategic Growth Initiatives Simplify Supply Chain Transportation Initiatives Project T² • Transportation Management System • Expanded Base of Dedicated Carriers • Lane and Truckload Optimization • Mixing Centers • Other Initiatives Underway 12
Slide 13: Focused M&A
Strategic Growth Initiatives Focused M&A • Angelic Bakehouse (Nov ‘16) • Bantam Bagels (Oct ‘18) • Omni Baking (Nov ‘18) 13
Slide 14: Successful Track Record of Growth through Acquisitions
Successful Track Record of Growth through Acquisitions $ in Millions $1,200 11%* Compound Annual Growth Rate 2018 2016 2003 2015 2000 $600 1997 1978 1989 1969 1971 1980 1990 2000 2010 2020 Net sales information is presented as originally reported in Lancaster Colony's Annual Report for the fiscal ye
Slide 15: Strengthened Organization
Strengthened Organization 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 and Operating Income Growth 15
Slide 16: Net Sales Summary
Net Sales Summary Fiscal Years Ended June 30, 2018 through June 30, 2020 $ in Millions Consolidated $1,223 $1,308 $1,334 Net Sales +6.9% +2.0% $1,400 $1,200 $573 $632 Total $598 Total $1,000 -5.3% +10.3% Foodservice Foodservice $651 $620 $800 +13.7% -4.7% $22 $19 $600 $400 $650 $657 $714 $200 +1.0%
Slide 17: Consolidated Gross Margin
Gross Margin Consolidated Gross Margin Fiscal Years Ended June 30, 2018 through June 30, 2020 (Gross Profit as a Percent of Net Sales) 30.0% 26.8% 24.9% 25.0% 24.8% 20.0% FY18 FY19 FY20 17
Slide 18: EBITDA
EBITDA Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)* Fiscal Years Ended June 30, 2018 through June 30, 2020 $ in Millions $225 $217 $211 $203 $175 FY18 FY19 FY20 * Calculation of EBITDA values presented above exclude non-cash change in contingent consideration. See Appendi
Slide 19: Fiscal Year Financial Performance: EPS Waterfall
Lancaster Colony Corporation – Fiscal Year Financial Performance Summarized Earnings Per Share Waterfall – Fiscal Years Ended June 30 Twelve Months Ended June 30, 2019 (FY19) to Twelve Months Ended June 30, 2020 (FY20) (Diluted Earnings Per Share) $5.46 $0.69 $4.97 ($0.48) ($0.45) $0.03 ($0.28) FY19
Slide 20: Strong Balance Sheet
Strong Balance Sheet $ in Millions June 30 2018 2019 2020 Cash and Equivalents $206 $196 $198 Total Debt $0 $0 $0 • Debt Free • Credit Revolver of $150 Million, Expandable up to $225 Million 20
Slide 21: Investing to Grow While Returning Cash to Shareholders
Investing to Grow While Returning Cash to Shareholders FY20 – Major Cash Uses Share Repurchases Cash Priorities • Invest in Existing Business Regular Dividend Payments Capital Expenditures • Good-Fitting Acquisitions • Regular Dividends • Opportunistic Share Repurchases and Special Dividends 21
Slide 22: Appendix A: Financial Information
Appendix A Financial Information 22
Slide 23: EBITDA Calculation Details
EBITDA Calculation Details Calculation of Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) * ($ in Millions) Fiscal Years Ended June 30, 2018 2019 2020 Income Before Income Taxes $174.203 $195.542 $179.077 Depreciation and Amortization $26.896 $31.848 $37.963 Change in Conting
Slide 24: Capital Expenditure History
Capital Expenditure History $ in Millions $83 $71 $34 $31 $23 $26 $18 $17 $15 $16 11 12 13 14 15 16 17 18 19 20 Fiscal years ended June 30. Note: Capital Expenditure values noted above represent only those expenditures attributed to the company’s Retail and Foodservice operations (Corporate expendit
Slide 25: Regular Cash Dividends Per Share
Regular Cash Dividends Per Share $ Per Share $2.75 $2.55 $2.35 $2.15 $1.96 $1.82 $1.72 $1.52 $1.41 $1.29 11 12 13 * 14 15 16 * 17 18 19 20 Regular cash dividends for the fiscal years ended June 30. * Excludes special cash dividends of $5.00 per share paid in FY13 and $5.00 per share paid in FY16. 25
Slide 26: Appendix B: Retail Brand Market Share and Related Information
Appendix B Retail Brand Market Share and Related Information 26
Slide 27: Portfolio of Strong Brands
Portfolio of Strong Brands (Sales and Market Share Data per IRI*) Marzetti® Marzetti® Simply Dressed® Olive GardenSM Ref. Dressing Dips $ Sales: 64.6MM $ Sales: 122.6MM $ Sales: 39.2MM $ Sales: 100.7MM $ Share: 14.6% $ Share: 81.5% $ Share: 8.9% $ Share: 5.1% (Excludes Simply Dressed ® ) New York Br
Slide 28: Marzetti Refrigerated Dressing Market Share
Refrigerated Dressing Market Share All Others Marzetti 19.2% 23.4% Bolthouse 11.8% Litehouse 24.1% Marie’s 21.5% Total Category Sales: $443.2 MM 52 weeks ending 6/28/20, Source: IRI, Total U.S. Multi-Outlet 28
Slide 29: Marzetti Refrigerated Dressing Distribution
Marzetti Refrigerated Dressing Distribution ACV Distribution 41 - 70% 71 - 90% Total U.S. Multi-Outlet 71.8% ACV Weighted Distribution 52 weeks ending 6/28/20, Source: IRI, Total U.S. Multi-Outlet 29
Slide 30: Marzetti Produce Dip Market Share
Produce Dip Market Share Marzetti 81.5% Private Label 3.4% All Others 2.0% Litehouse 11.0% Concord 2.1% Total Category Sales: $150.4 MM 52 weeks ending 6/28/20, Source: IRI, Total U.S. Multi-Outlet 30
Slide 31: Marzetti Dip Distribution
Marzetti Dip Distribution ACV Distribution 31 - 80% 81 - 100% Total U.S. Multi-Outlet 71.7% ACV Weighted Distribution 52 weeks ending 6/28/20, Source: IRI, Total U.S. Multi-Outlet 31
Slide 32: New York Bakery Frozen Garlic Bread Market Share
Frozen Garlic Bread Market Share Pepperidge Farm New York Bakery 14.1% 39.0% All Others 5.7% Private Label 33.1% Cole’s 8.1% Total Category Sales: $597.9 MM 52 weeks ending 6/28/20, Source: IRI, Total U.S. Multi-Outlet 32
Slide 33: New York Bakery Frozen Garlic Bread Distribution
New York Bakery Frozen Garlic Bread Distribution ACV Distribution 90 - 100% Total U.S. Multi-Outlet 93.8% ACV Weighted Distribution 52 weeks ending 6/28/20, Source: IRI, Total U.S. Multi-Outlet 33
Slide 34: Sister Schubert's Frozen Roll Market Share
Frozen Roll Market Share Private Label Sister Schubert’s 4.9% 52.7% All Others 13.1% Rhodes 29.3% Total Category Sales: $245.4 MM 52 weeks ending 6/28/20, Source: IRI, Total U.S. Multi-Outlet 34
Slide 35: Sister Schubert's Distribution
Sister Schubert's Distribution ACV Distribution 21 - 40% 41 - 60% 61 - 100% Total U.S. Multi-Outlet 77.3% ACV Weighted Distribution 52 weeks ending 6/28/20, Source: IRI, Total U.S. Multi-Outlet 35
Slide 36: Crouton Market Share
Crouton Market Share Marzetti, Cardini’s, Mrs. Cubbison’s / New York Bakery, Fresh Gourmet 19.4% Chatham Village 35.2% All Others 6.3% Private Label 33.8% Rothbury Farms 5.3% Total Category Sales: $232.0 MM 52 weeks ending 6/28/20, Source: IRI, Total U.S. Multi-Outlet 36
Slide 37: New York Bakery Crouton Distribution
New York Bakery Crouton Distribution ACV Distribution 71 - 100% Total U.S. Multi-Outlet 84.4% ACV Weighted Distribution 52 weeks ending 6/28/20, Source: IRI, Total U.S. Multi-Outlet 37
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