The Marzetti Company · NASDAQ:MZTI
The Marzetti — Lancaster Colony — Baird's 2021 Global Consumer, Technology & Services Conference
41 slides from The Marzetti's conference presentation, Jun 9, 2021
Slide 1: Baird's 2021 Global Consumer, Technology & Services Conference
Lancaster Colony Corporation Baird’s 2021 Global Consumer, Technology & Services Conference June 9, 2021
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 P3 • 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 3,100 Employees
Slide 4: Company Highlights
Company Highlights P4 • Leading Market Share Positions in Retail Food Categories • Supplier to 19 of the Top 30 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 58 Consecutive Years
Slide 5: In 2016, We Defined Our Better Food Company Strategy
In 2016, We Defined Our Better Food Company Strategy P5 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 Chain
Slide 6: Retail Sales Mix (54% of Total Net Sales)
Retail Sales Mix (54% of Total Net Sales) P6 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
Slide 7: Foodservice Sales Mix (46% of Total Net Sales)
Foodservice Sales Mix (46% of Total Net Sales) P7 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.
Slide 8: Retail Segment Growth Initiatives
Retail Segment Growth Initiatives P8 Initiative Brand/(Retailer) Products Initial Ship Date Fall 2021 Innovation/Renovation Cheese Sticks July 2019 Cheese Crisps Feb 2020 Simply Plant Based Salad Dressings Fall 2021 * April 2021 (National Distribution) Licensing * March 2020 * February 2020 Commence
Slide 9: Chick-fil-A Retail Channel Distribution Overview
Retail Segment Growth Initiatives P9 Chick-fil-A Retail Channel Distribution Overview Wave One Wave Two Wave Three Wave Four Florida Pilot Test Initial Shipments Initial Shipments Initial Shipments March 2020 Start Late Oct 2020 Feb 2021 Late April 2021 Chick-fil-A products are produced and sold to
Slide 10: Strategic Growth Initiatives: Simplify Supply Chain
Strategic Growth Initiatives P10 Simplify Supply Chain Lean Six Sigma • 13 waves of Green Belts trained • > 90 Green Belt graduates to date • Monthly calls with Directors to review progress and share best practices • Training program has saved >$4MM annually Material Yield Improvement and Control •
Slide 11: Strategic Growth Initiatives: Strategic Procurement
Strategic Growth Initiatives P11 Simplify Supply Chain Strategic Procurement • Should-Cost Modeling • More Extensive Competitive Bidding • Strategic Supplier Selection • Extending Payment Terms
Slide 12: Transportation Initiatives: Project T²
Strategic Growth Initiatives P12 Simplify Supply Chain Transportation Initiatives Project T² • Transportation Management System • Expanded Base of Dedicated Carriers • Lane and Truckload Optimization • Mixing Centers • Other Initiatives Underway
Slide 13: Successful Track Record of Growth through Acquisitions
Successful Track Record of Growth through Acquisitions P13 $ 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 fisca
Slide 14: Strengthened Organization
Strengthened Organization P14 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 15: Dressing Plant Capacity Expansion Project
Strengthened Organization P15 Investing in Plants to Drive Efficiency and Support Growth Dressing Plant Capacity Expansion Project * * * • Adds 192,000 square feet to existing facility in Hart County, KY • Provides increased processing, warehousing and utilities to expand production capacity and sup
Slide 16: Lancaster Colony's Commitment to ESG
Lancaster Colony’s Commitment to ESG P16 Governance • Recent Appointments to Board of Directors Reflect Commitment to Diversity • Established New ESG Leadership Position – Vice President of Corporate Affairs & ESG • Formally Instituted ESG Program - Formation of Executive Committee with Board Suppor
Slide 17: Strong Third Quarter Results
Strong Third Quarter Results P17 Fiscal 2021 – Third Quarter Financial Performance $ in Millions FY21 Q3 Results vs. Prior Year (Except Per Share Values) (Three Months Ended March 31, 2021) Value $ Change % Change Consolidated $357.2 $35.9 11% Net Sales Gross Profit $90.6 $13.6 18% SG&A $53.2 $6.3 1
Slide 18: Year-To-Date Net Sales Growth of 6.7%
Year-To-Date Net Sales Growth of 6.7% P18 Net Sales Summary Fiscal-Year-To-Date – Nine Months Ended March 31, 2020 and March 31, 2021 $ in Millions Consolidated $1,014 $1,082 Net Sales +3.0% +6.7% $1,200 $1,000 $463 Total $472 Total Foodservice -1.9% $800 +0.4% Foodservice $467 $492 -5.1% +2.0% $600
Slide 19: Year-To-Date Gross Margin Improvement
Year-To-Date Net Sales Growth of 6.7% Year-To-Date Gross Margin Improvement P19 Consolidated Gross Margin Fiscal-Year-To-Date – Nine Months Ended March 31, 2020 and March 31, 2021 (Gross Profit as a Percent of Net Sales) 30.0% 26.5% 26.8% 25.0% 20.0% FYTD - Mar '20 FYTD - Mar '21
Slide 20: Strong Balance Sheet
Strong Balance Sheet P20 $ in Millions June 30 Mar 31 2018 2019 2020 2021 Cash and Equivalents $206 $196 $198 $211 Total Debt $0 $0 $0 $0 • Debt Free • Credit Revolver of $150 Million, Expandable up to $225 Million
Slide 21: Investing to Grow While Returning Cash to Shareholders
Investing to Grow While Returning Cash to Shareholders P21 FY20 – Major Cash Uses Cash Priorities Share Repurchases • Invest in Existing Business Regular Dividend Payments - FY21 capital expenditures estimated at Capital Expenditures $110 Million • Good-Fitting Acquisitions • Regular Dividends - Qua
Slide 22: FY 2022 Outlook
FY 2022 Outlook P22 * * * • Top Line Growth Fueled by Foodservice Recovery and New Retail Items • Manage Crosswinds - Pace of Economic Recovery and COVID Impacts - Commodity Inflation and Pricing - Labor Challenges • Ongoing Investments to Support Long-Term Growth * Products for these brands are pro
Slide 23: Appendix A: Financial Information
Appendix A Financial Information
Slide 24: Net Sales Summary
Net Sales Summary A1 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.
Slide 25: Gross Margin
Gross Margin A2 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
Slide 26: EBITDA
EBITDA A3 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.
Slide 27: EBITDA Calculation Details
EBITDA Calculation Details A4
Slide 28: Capital Expenditure History
Capital Expenditure History A5 $ 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 expen
Slide 29: Regular Cash Dividends Per Share
Regular Cash Dividends Per Share A6 $ 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.
Slide 30: Appendix B: Retail Brand Market Share and Related Information
Appendix B Retail Brand Market Share and Related Information
Slide 31: Portfolio of Strong Brands (Sales and Market Share Data per IRI)
Portfolio of Strong Brands (Sales and Market Share Data per IRI*) B1 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
Slide 32: Marzetti Refrigerated Dressing Market Share
Refrigerated Dressing Market Share B2 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
Slide 33: Marzetti Refrigerated Dressing Distribution
Marzetti Refrigerated Dressing Distribution B3 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
Slide 34: Marzetti Produce Dip Market Share
Produce Dip Market Share B4 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
Slide 35: Marzetti Dip Distribution
Marzetti Dip Distribution B5 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
Slide 36: New York Bakery Frozen Garlic Bread Market Share
Frozen Garlic Bread Market Share B6 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
Slide 37: New York Bakery Frozen Garlic Bread Distribution
New York Bakery Frozen Garlic Bread Distribution B7 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
Slide 38: Sister Schubert's Frozen Roll Market Share
Frozen Roll Market Share B8 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
Slide 39: Sister Schubert's Distribution
Sister Schubert's Distribution B9 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
Slide 40: Crouton Market Share
Crouton Market Share B10 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
Slide 41: New York Bakery Crouton Distribution
New York Bakery Crouton Distribution B11 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
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