lanc-20241231

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


Form			10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 000-04065



Lancaster Colony Corporation
(Exact name of registrant as specified in its charter)


Ohio		13-1955943
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

380 Polaris Parkway	Suite 400
Westerville	Ohio	43082
(Address of principal executive offices)		(Zip Code)


(614)			224-7141
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, without par value	LANC	NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes ☐ No ý

As of January 10, 2025, there were approximately 27,572,000 shares of Common Stock, without par value, outstanding.

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

TABLE OF CONTENTS




PART I – FINANCIAL INFORMATION		3

Item 1.	Condensed Consolidated Financial Statements (unaudited):

	Condensed Consolidated Balance Sheets – December 3 1 , 2024 and June 30, 2024	3

	Condensed Consolidated Statements of Income – Three and Six Months Ended December 3 1 , 2024 and 2023	4

	Condensed Consolidated Statements of Comprehensive Income – Three and Six Months Ended December 3 1 , 2024 and 2023	5

	Condensed Consolidated Statements of Cash Flows – Six Months Ended December 3 1 , 2024 and 2023	6

	Condensed Consolidated Statements of Shareholders’ Equity – Six Months Ended December 31 , 2024 and 2023	7

	Notes to Condensed Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	21

Item 4.	Controls and Procedures	22

PART II – OTHER INFORMATION		23

Item 1.	Legal Proceedings	23

Item 1A.	Risk Factors	23

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	23



Item 6.	Exhibits	23

SIGNATURES		25

PART I – FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)


(Amounts in thousands, except share data)	December 31, 2024		June 30, 2024
ASSETS
Current Assets:
Cash and equivalents	$	203,073	$	163,443
Receivables	99,150		95,560
Inventories:
Raw materials	45,059		38,212
Finished goods	122,111		135,040
Total inventories	167,170		173,252
Other current assets	11,579		11,738
Total current assets	480,972		443,993
Property, Plant and Equipment:


Property, plant and equipment-gross	896,620		877,526
Less accumulated depreciation	418,077		399,830
Property, plant and equipment-net	478,543		477,696
Other Assets:
Goodwill	208,371		208,371

Operating lease right-of-use assets	51,528		55,128
Other noncurrent assets	20,444		21,743
Total	$	1,239,858	$	1,206,931
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	104,506	$	118,811
Accrued liabilities	62,744		65,158
Total current liabilities	167,250		183,969
Noncurrent Operating Lease Liabilities	41,528		44,557
Other Noncurrent Liabilities	13,807		15,357
Deferred Income Taxes	37,407		37,276
Commitments and Contingencies
Shareholders’ Equity:
Preferred stock-authorized 3,050,000 shares; outstanding-none
Common stock-authorized 75,000,000 shares; outstanding-December-27,571,897 shares; June-27,527,090 shares	156,934		153,616
Retained earnings	1,607,211		1,564,642
Accumulated other comprehensive income (loss)	1,010		(8,640)
Common stock in treasury, at cost	(785,289)		(783,846)
Total shareholders’ equity	979,866		925,772
Total	$	1,239,858	$	1,206,931

See accompanying notes to condensed consolidated financial statements.

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)


	Three Months Ended December 31,				Six Months Ended December 31,
(Amounts in thousands, except per share data)	2024		2023		2024		2023
Net Sales	$	509,301	$	485,916	$	975,859	$	947,488
Cost of Sales	376,533		364,448		732,267		717,298
Gross Profit	132,768		121,468		243,592		230,190
Selling, General and Administrative Expenses	57,107		55,714		112,067		107,661


Operating Income	75,661		65,754		131,525		122,529
Pension Settlement Charge	(13,968)		—		(13,968)		—
Other, Net	1,541		1,425		3,560		2,282
Income Before Income Taxes	63,234		67,179		121,117		124,811
Taxes Based on Income	14,241		15,695		27,423		29,376





Net Income	$	48,993	$	51,484	$	93,694	$	95,435






Net Income Per Common Share:
Basic and Diluted	$	1.78	$	1.87	$	3.40	$	3.47




Weighted Average Common Shares Outstanding:
Basic	27,480		27,425		27,468		27,437
Diluted	27,495		27,440		27,487		27,457

See accompanying notes to condensed consolidated financial statements.

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)


	Three Months Ended December 31,				Six Months Ended December 31,
(Amounts in thousands)	2024		2023		2024		2023
Net Income	$	48,993	$	51,484	$	93,694	$	95,435
Other Comprehensive Income:
Defined Benefit Pension and Postretirement Benefit Plans:
Net loss arising during the period, before tax	(1,549)		—		(1,549)		—
Pension settlement charge, before tax	13,968		—		13,968		—
Amortization of loss, before tax	133		143		265		287
Amortization of prior service credit, before tax	(46)		(45)		(91)		(90)
Total Other Comprehensive Income, Before Tax	12,506		98		12,593		197
Tax Attributes of Items in Other Comprehensive Income:
Net loss arising during the period, tax	362		—		362		—
Pension settlement charge, tax	(3,264)		—		(3,264)		—
Amortization of loss, tax	(32)		(33)		(62)		(67)
Amortization of prior service credit, tax	11		10		21		21
Total Tax Expense	(2,923)		(23)		(2,943)		(46)
Other Comprehensive Income, Net of Tax	9,583		75		9,650		151
Comprehensive Income	$	58,576	$	51,559	$	103,344	$	95,586

See accompanying notes to condensed consolidated financial statements.

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


	Six Months Ended December 31,
(Amounts in thousands)	2024		2023
Cash Flows From Operating Activities:
Net income	$	93,694	$	95,435
Adjustments to reconcile net income to net cash provided by operating activities:
Impacts of noncash items:
Depreciation and amortization	29,406		27,525

Deferred income taxes and other changes	(1,144)		2,272
Stock-based compensation expense	4,915		5,423



Pension plan activity	14,253		96
Changes in operating assets and liabilities:
Receivables	(3,590)		14,779
Inventories	6,082		73
Other current assets	159		(413)
Accounts payable and accrued liabilities	(16,265)		(3,667)
Net cash provided by operating activities	127,510		141,523
Cash Flows From Investing Activities:
Payments for property additions	(28,660)		(37,136)



Other-net	(4,045)		(3,080)
Net cash used in investing activities	(32,705)		(40,216)
Cash Flows From Financing Activities:
Payment of dividends	(51,125)		(48,255)
Purchase of treasury stock	(1,443)		(6,692)
Tax withholdings for stock-based compensation	(1,597)		(3)

Principal payments for finance leases	(1,010)		(982)
Net cash used in financing activities	(55,175)		(55,932)




Net change in cash and equivalents	39,630		45,375
Cash and equivalents at beginning of year	163,443		88,473
Cash and equivalents at end of period	$	203,073	$	133,848
Supplemental Disclosure of Operating Cash Flows:
Net cash payments for income taxes	$	20,913	$	14,278

See accompanying notes to condensed consolidated financial statements.

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(UNAUDITED)


	Six Months Ended December 31, 2024
(Amounts in thousands, except per share data)	Common Stock Outstanding			Retained Earnings		Accumulated Other Comprehensive (Loss) Income		Treasury Stock		Total Shareholders’ Equity
	Shares	Amount
Balance, June 30, 2024	27,527	$	153,616	$	1,564,642	$	(8,640)	$	(783,846)	$	925,772
Net income				44,701						44,701
Net pension and postretirement benefit gains, net of $20 tax effect						67				67
Cash dividends - common stock ($0.90 per share)				(24,866)						(24,866)
Purchase of treasury stock	(7)							(1,440)		(1,440)
Stock-based plans	46	(1,551)								(1,551)
Stock-based compensation expense		2,369								2,369
Balance, September 30, 2024	27,566	$	154,434	$	1,584,477	$	(8,573)	$	(785,286)	$	945,052
Net income				48,993						48,993
Pension settlement charge, net of $3,264 tax effect						10,704				10,704
Other net pension and postretirement benefit losses, net of $(341) tax effect						(1,121)				(1,121)
Cash dividends - common stock ($0.95 per share)				(26,259)						(26,259)
Purchase of treasury stock	—							(3)		(3)
Stock-based plans	6	(46)								(46)
Stock-based compensation expense		2,546								2,546
Balance, December 31, 2024	27,572	$	156,934	$	1,607,211	$	1,010	$	(785,289)	$	979,866

See accompanying notes to condensed consolidated financial statements.

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (continued)

(UNAUDITED)


	Six Months Ended December 31, 2023
(Amounts in thousands, except per share data)	Common Stock Outstanding			Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Total Shareholders’ Equity
	Shares	Amount
Balance, June 30, 2023	27,528	$	143,870	$	1,503,963	$	(9,365)	$	(776,201)	$	862,267
Net income				43,951						43,951
Net pension and postretirement benefit gains, net of $23 tax effect						76				76
Cash dividends - common stock ($0.85 per share)				(23,445)						(23,445)
Purchase of treasury stock	(40)							(6,650)		(6,650)
Stock-based plans	29	—								—
Stock-based compensation expense		2,569								2,569
Balance, September 30, 2023	27,517	$	146,439	$	1,524,469	$	(9,289)	$	(782,851)	$	878,768
Net income				51,484						51,484
Net pension and postretirement benefit gains, net of $23 tax effect						75				75
Cash dividends - common stock ($0.90 per share)				(24,810)						(24,810)
Purchase of treasury stock	—							(42)		(42)
Stock-based plans	4	(3)								(3)
Stock-based compensation expense		2,854								2,854
Balance, December 31, 2023	27,521	$	149,290	$	1,551,143	$	(9,214)	$	(782,893)	$	908,326

See accompanying notes to condensed consolidated financial statements.

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share data)

Note 1 – Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of Lancaster Colony Corporation and our wholly-owned subsidiaries, collectively referred to as “we,” “us,” “our,” “registrant” or the “Company” and have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and SEC Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In our opinion, the interim condensed consolidated financial statements reflect all adjustments necessary for a fair presentation of the results of operations and financial position for such periods. All such adjustments reflected in the interim condensed consolidated financial statements are considered to be of a normal recurring nature. Intercompany transactions and accounts have been eliminated in consolidation. The results of operations for any interim period are not necessarily indicative of results for the full year. Accordingly, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in our 2024 Annual Report on Form 10-K. Unless otherwise noted, the term “year” and references to a particular year pertain to our fiscal year, which begins on July 1 and ends on June 30; for example, 2025 refers to fiscal 2025, which is the period from July 1, 2024 to June 30, 2025.

Property, Plant and Equipment

Property, plant and equipment are recorded at cost, except for those acquired as part of a business combination, which are recorded at fair value at the time of purchase. We use the straight-line method of computing depreciation for financial reporting purposes based on the estimated useful lives of the corresponding assets. Purchases of property, plant and equipment included in Accounts Payable and excluded from the property additions and the change in accounts payable in the Condensed Consolidated Statements of Cash Flows were as follows:


	December 31,
	2024		2023
Construction in progress in Accounts Payable	$	5,902	$	6,408

Accrued Compensation and Employee Benefits

Accrued compensation and employee benefits included in Accrued Liabilities was $22.5 million and $31.6 million at December 31, 2024 and June 30, 2024, respectively.

Earnings Per Share

Earnings per share (“EPS”) is computed based on the weighted average number of shares of common stock and common stock equivalents (restricted stock, stock-settled stock appreciation rights and performance units) outstanding during each period. Unvested shares of restricted stock granted to employees are considered participating securities since employees receive nonforfeitable dividends prior to vesting and, therefore, are included in the earnings allocation in computing EPS under the two-class method. Basic EPS excludes dilution and is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted EPS is computed by dividing income available to common shareholders by the diluted weighted average number of common shares outstanding during the period, which includes the dilutive potential common shares associated with nonparticipating restricted stock, stock-settled stock appreciation rights and performance units.

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share data)

Basic and diluted net income per common share were calculated as follows:


	Three Months Ended December 31,				Six Months Ended December 31,
	2024		2023		2024		2023
Net income	$	48,993	$	51,484	$	93,694	$	95,435
Net income available to participating securities	(136)		(157)		(260)		(292)
Net income available to common shareholders	$	48,857	$	51,327	$	93,434	$	95,143

Weighted average common shares outstanding – basic	27,480		27,425		27,468		27,437
Incremental share effect from:
Nonparticipating restricted stock	3		3		4		3
Stock-settled stock appreciation rights (1)	2		7		3		9
Performance units	10		5		12		8
Weighted average common shares outstanding – diluted	27,495		27,440		27,487		27,457

Net income per common share – basic and diluted	$	1.78	$	1.87	$	3.40	$	3.47

(1)Excludes the impact of 0.1 million weighted average stock-settled stock appreciation rights outstanding for the three and six months ended December 31, 2023 because their effect was antidilutive.

Accumulated Other Comprehensive Income (Loss)

The following table presents the amounts reclassified out of accumulated other comprehensive income (loss) by component:


	Three Months Ended December 31,				Six Months Ended December 31,
	2024		2023		2024		2023
Accumulated other comprehensive loss at beginning of period	$	(8,573)	$	(9,289)	$	(8,640)	$	(9,365)
Defined Benefit Pension Plan Items:
Net loss arising during the period	(1,549)		—		(1,549)		—
Settlement charge (1)	13,968		—		13,968		—
Amortization of unrecognized net loss (1)	147		158		294		317
Postretirement Benefit Plan Items:
Amortization of unrecognized net gain	(14)		(15)		(29)		(30)
Amortization of prior service credit	(46)		(45)		(91)		(90)
Total other comprehensive income, before tax	12,506		98		12,593		197
Total tax expense	(2,923)		(23)		(2,943)		(46)
Other comprehensive income, net of tax	9,583		75		9,650		151

Accumulated other comprehensive income (loss) at end of period	$	1,010	$	(9,214)	$	1,010	$	(9,214)

(1)Included in the computation of net periodic benefit cost for our pension plans. See Note 8 for additional information.

Significant Accounting Policies

There were no changes to our Significant Accounting Policies from those disclosed in our 2024 Annual Report on Form 10-K.

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share data)

Recent Accounting Standards

In November 2023, the Financial Accounting Standards Board (“FASB”) issued new accounting guidance related to the disclosure requirements for reportable segments. The new guidance requires enhanced disclosures about significant segment expenses. Additionally, all current annual disclosures about a reportable segment’s profit or loss and assets will also be required in interim periods. The new guidance also requires disclosure of the title and position of the Chief Operating Decision Maker (“CODM”) and explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. The amendments should be applied retrospectively to all prior periods presented in the financial statements. This guidance will be effective for our annual disclosures in fiscal 2025 and for our interim-period disclosures in fiscal 2026. As the guidance only relates to disclosures, there will be no impact on our financial position or results of operations.

In December 2023, the FASB issued new accounting guidance related to the disclosure requirements for income taxes. The new guidance requires annual disclosures in the rate reconciliation table to be presented using both percentages and reporting currency amounts, and this table must include disclosure of specific categories. Additional information will also be required for reconciling items that meet a quantitative threshold. The new guidance also requires enhanced disclosures of income taxes paid, including the amount of income taxes paid disaggregated by federal, state and foreign taxes and the amount of income taxes paid disaggregated by individual jurisdictions that exceed a quantitative threshold. The amendments should be applied on a prospective basis, but retrospective application is permitted. This guidance will be effective for our annual disclosures in fiscal 2026. As the guidance only relates to disclosures, there will be no impact on our financial position or results of operations.

In November 2024, the FASB issued new accounting guidance requiring disclosure of disaggregated income statement expenses. For each relevant expense caption presented on the face of the income statement, the following expense components must be presented in a tabular format within the notes to the financial statements at each interim and annual reporting period: purchases of inventory, employee compensation, depreciation, intangible asset amortization and depletion expense. Certain amounts already required to be disclosed under current GAAP requirements must also be presented in the same disclosure as the new disaggregation requirements. The new guidance also requires disclosure of a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively. Additionally, the total amount of selling expenses must be disclosed, and, in annual reporting periods, our definition of selling expenses must also be provided. The amendments should be applied either prospectively to financial statements issued for reporting periods after the effective date or retrospectively to any or all prior periods presented in the financial statements. This guidance will be effective for our annual disclosures in fiscal 2028 and for our interim-period disclosures in fiscal 2029. As the guidance only relates to disclosures, there will be no impact on our financial position or results of operations.

Note 2 – Long-Term Debt

At December 31, 2024 and June 30, 2024, we had an unsecured credit facility (“Facility”) under which we could borrow, on a revolving credit basis, up to a maximum of $150 million at any one time, with potential to expand the total credit availability to $225 million based on consent of the issuing banks and certain other conditions. The Facility expires on March 6, 2029, and all outstanding amounts are then due and payable. Interest is variable based upon formulas tied to SOFR or an alternate base rate defined in the Facility. We must also pay facility fees that are tied to our then-applicable consolidated leverage ratio. Loans may be used for general corporate purposes. Due to the nature of its terms, when we have outstanding borrowings under the Facility, they will be classified as long-term debt.

The Facility contains certain restrictive covenants, including limitations on liens, asset sales and acquisitions. There are two principal financial covenants: an interest expense test that requires us to maintain an interest coverage ratio not less than 2.5 to 1 at the end of each fiscal quarter; and an indebtedness test that requires us to maintain a consolidated leverage ratio not greater than 3.5 to 1, subject to certain exceptions. The interest coverage ratio is calculated by dividing Consolidated EBIT by Consolidated Interest Expense, and the leverage ratio is calculated by dividing Consolidated Net Debt by Consolidated EBITDA. All financial terms used in the covenant calculations are defined more specifically in the Facility.

At December 31, 2024 and June 30, 2024, we had no borrowings outstanding under the Facility. At December 31, 2024 and June 30, 2024, we had $2.6 million and $2.2 million, respectively, of standby letters of credit outstanding, which reduced the amount available for borrowing under the Facility. We paid no interest for the three and six months ended December 31, 2024 and 2023.

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share data)

Note 3 – Commitments and Contingencies

At December 31, 2024, we were a party to various claims and litigation matters arising in the ordinary course of business. Such matters did not have a material effect on the current-year results of operations and, in our opinion, their ultimate disposition is not expected to have a material effect on our consolidated financial statements.

On November 18, 2024, we entered into a purchase agreement to acquire a sauce and dressing production facility and related real estate in the Atlanta, Georgia area along with certain equipment and assets contained in the facility for a purchase price of $75 million in cash, subject to closing adjustments. The transaction is expected to close during our fiscal third quarter ending March 31, 2025.

Note 4 – Goodwill

Goodwill attributable to the Retail and Foodservice segments was $157.4 million and $51.0 million, respectively, at December 31, 2024 and June 30, 2024.

Note 5 – Income Taxes

Accrued federal income taxes of $7.9 million were included in Accrued Liabilities at December 31, 2024. Prepaid federal income taxes of $0.8 million were included in Other Current Assets at June 30, 2024. Accrued state and local income taxes of $1.0 million and $0.3 million were included in Accrued Liabilities at December 31, 2024 and June 30, 2024, respectively.

Note 6 – Business Segment Information

Our financial results are presented as two reportable segments: Retail and Foodservice. Costs that are directly attributable to either Retail or Foodservice are charged directly to the appropriate segment. Costs that are deemed to be indirect, excluding corporate expenses and other unusual significant transactions, are allocated to the two reportable segments using a reasonable methodology that is consistently applied.

Retail - The vast majority of the products we sell in the Retail segment are sold through sales personnel, food brokers and distributors in the United States. We have products typically marketed in the shelf-stable section of the grocery store, which include licensed sauces and dressings, along with our own branded salad dressings and croutons. Within the frozen food section of the grocery store, we sell yeast rolls and garlic breads. We also have placement of products in grocery produce departments through our refrigerated salad dressings, licensed dressings, vegetable dips and fruit dips.

Foodservice - The vast majority of the products we sell in the Foodservice segment are sold through sales personnel, food brokers and distributors in the United States. Most of the products we sell in the Foodservice segment are custom-formulated sauces, salad dressings, frozen breads and yeast rolls. The majority of our Foodservice sales are products sold under private label to national chain restaurant accounts. We also manufacture and sell various branded Foodservice products to distributors.

As many of our products are similar between our two segments, our procurement, manufacturing, warehousing and distribution activities are substantially integrated across our operations in order to maximize efficiency and productivity. Consequently, we do not prepare, and our Chief Operating Decision Maker does not review, separate balance sheets for the reportable segments. As such, our external reporting does not include the presentation of identifiable assets by reportable segment. The composition of our identifiable assets at December 31, 2024 is generally consistent with that of June 30, 2024.

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share data)

We evaluate our Retail and Foodservice segments based on net sales and operating income which follow:


	Three Months Ended December 31,				Six Months Ended December 31,
	2024		2023		2024		2023
Net Sales
Retail	$	280,752	$	263,992	$	520,323	$	506,176
Foodservice	228,549		221,924		455,536		441,312
Total	$	509,301	$	485,916	$	975,859	$	947,488
Operating Income
Retail	$	69,037	$	59,521	$	125,212	$	112,645
Foodservice	30,324		27,145		54,633		53,778

Corporate Expenses	(23,700)		(20,912)		(48,320)		(43,894)
Total	$	75,661	$	65,754	$	131,525	$	122,529

The following table sets forth net sales disaggregated by class of similar products for the Retail and Foodservice segments:


	Three Months Ended December 31,				Six Months Ended December 31,
	2024		2023		2024		2023
Retail
Shelf-stable dressings, sauces and croutons	$	103,584	$	95,168	$	204,609	$	193,749
Frozen breads	129,262		121,696		213,161		201,326
Refrigerated dressings, dips and other	47,906		47,128		102,553		111,101
Total Retail net sales	$	280,752	$	263,992	$	520,323	$	506,176
Foodservice
Dressings and sauces	$	167,598	$	162,730	$	337,937	$	328,001
Frozen breads and other	60,951		59,194		117,599		113,311

Total Foodservice net sales	$	228,549	$	221,924	$	455,536	$	441,312
Total net sales	$	509,301	$	485,916	$	975,859	$	947,488

The following table provides an additional disaggregation of Foodservice net sales by type of customer:


	Three Months Ended December 31,				Six Months Ended December 31,
	2024		2023		2024		2023
Foodservice
National accounts	$	175,785	$	170,884	$	351,732	$	342,470
Branded and other	52,764		51,040		103,804		98,842

Total Foodservice net sales	$	228,549	$	221,924	$	455,536	$	441,312

Note 7 – Stock-Based Compensation

There have been no changes to our stock-based compensation plan as disclosed in our 2024 Annual Report on Form 10-K.

Our restricted stock compensation expense was $1.4 million and $1.5 million for the three months ended December 31, 2024 and 2023, respectively. Year-to-date restricted stock compensation expense was $2.8 million for the current-year period compared to $2.7 million for the prior-year period. At December 31, 2024, there was $9.3 million of unrecognized compensation expense related to restricted stock that we will recognize over a weighted-average period of 2 years.

Our performance units compensation expense was $1.1 million and $1.0 million for the three months ended December 31, 2024 and 2023, respectively. Year-to-date performance units compensation expense was $2.1 million for both the current-year and prior-year periods. At December 31, 2024, there was $6.9 million of unrecognized compensation expense related to performance units that we will recognize over a weighted-average period of 2 years.

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share data)

Our stock-settled stock appreciation rights (“SSSARs”) compensation expense was $0.3 million for the three months ended December 31, 2023. Year-to-date SSSARs compensation expense was $0.6 million for the prior-year period. At December 31, 2024, there was no unrecognized compensation expense related to SSSARs.

Note 8 – Pension Benefits

Prior to November 30, 2024, we sponsored multiple defined benefit pension plans that covered certain former employees under collective bargaining contracts related to closed or sold operations. All these plans were previously frozen. In August 2024, our Board of Directors approved the merger of all five pension plans and the termination of the resulting merged plan. The merged plan was terminated effective November 30, 2024. Lump sum distributions and annuity purchases from a highly rated insurance company were completed in December 2024. No additional pension plan contributions were required. As a result of the pension termination, we incurred a one-time noncash settlement charge of $14.0 million for the three and six months ended December 31, 2024.

The following table summarizes the components of net periodic benefit cost for our pension plans:


	Three Months Ended December 31,				Six Months Ended December 31,
	2024		2023		2024		2023
Components of net periodic benefit cost
Interest cost	$	330	$	346	$	659	$	691
Expected return on plan assets	(334)		(344)		(668)		(688)
Amortization of unrecognized net loss

SEC Form 10-Q filed by Lancaster Colony Corporation