10-Q

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 September 30, 2021

or

☐ 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	ý	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 October 15, 2021, there were approximately 27,530,000 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 – September 30, 2021 and June 30, 2021	3
	Condensed Consolidated Statements of Income – Three Months Ended September 30, 2021 and 2020	4
	Condensed Consolidated Statements of Comprehensive Income – Three Months Ended September 30, 2021 and 2020	5
	Condensed Consolidated Statements of Cash Flows – Three Months Ended September 30, 2021 and 2020	6
	Condensed Consolidated Statements of Shareholders’ Equity – Three Months Ended September 30, 2021 and 2020	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	22
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		24
INDEX TO EXHIBITS		25

2

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)	September 30, 2021		June 30, 2021
ASSETS
Current Assets:
Cash and equivalents	$	130,089	$	188,055
Receivables	108,365		97,897
Inventories:
Raw materials	48,077		48,895
Finished goods	110,292		72,980
Total inventories	158,369		121,875
Other current assets	13,033		15,654
Total current assets	409,856		423,481
Property, Plant and Equipment:
Land, buildings and improvements	270,972		252,174
Machinery and equipment	442,262		424,015
Total cost	713,234		676,189
Less accumulated depreciation	321,198		311,567
Property, plant and equipment-net	392,036		364,622
Other Assets:
Goodwill	208,371		208,371
Other intangible assets-net	57,625		58,766
Operating lease right-of-use assets	24,157		22,455
Other noncurrent assets	23,091		23,590
Total	$	1,115,136	$	1,101,285
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	127,753	$	110,338
Accrued liabilities	52,034		63,585
Total current liabilities	179,787		173,923
Noncurrent Operating Lease Liabilities	18,353		17,228
Other Noncurrent Liabilities	27,495		28,285
Deferred Income Taxes	39,446		38,702
Commitments and Contingencies
Shareholders’ Equity:
Preferred stock-authorized 3,050,000 shares; outstanding-none
Common stock-authorized 75,000,000 shares; outstanding-September-27,529,867 shares; June-27,531,040 shares	130,832		128,617
Retained earnings	1,492,200		1,482,220
Accumulated other comprehensive loss	(8,211)		(8,253)
Common stock in treasury, at cost	(764,766)		(759,437)
Total shareholders’ equity	850,055		843,147
Total	$	1,115,136	$	1,101,285

See accompanying notes to condensed consolidated financial statements.

3

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

	Three Months Ended  September 30,
(Amounts in thousands, except per share data)	2021		2020
Net Sales	$	392,056	$	349,237
Cost of Sales	299,689		256,583
Gross Profit	92,367		92,654
Selling, General and Administrative Expenses	51,856		48,198
Change in Contingent Consideration	—		(5,687)
Impairment Charges	—		1,195
Operating Income	40,511		48,948
Other, Net	20		4
Income Before Income Taxes	40,531		48,952
Taxes Based on Income	9,876		11,873
Net Income	$	30,655	$	37,079
Net Income Per Common Share:
Basic and diluted	$	1.11	$	1.35
Weighted Average Common Shares Outstanding:
Basic	27,459		27,461
Diluted	27,515		27,495

See accompanying notes to condensed consolidated financial statements.

4

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

	Three Months Ended  September 30,
(Amounts in thousands)	2021		2020
Net Income	$	30,655	$	37,079
Other Comprehensive Income:
Defined Benefit Pension and Postretirement Benefit Plans:
Amortization of loss, before tax	100		168
Amortization of prior service credit, before tax	(45)		(45)
Total Other Comprehensive Income, Before Tax	55		123
Tax Attributes of Items in Other Comprehensive Income:
Amortization of loss, tax	(23)		(39)
Amortization of prior service credit, tax	10		10
Total Tax Expense	(13)		(29)
Other Comprehensive Income, Net of Tax	42		94
Comprehensive Income	$	30,697	$	37,173

See accompanying notes to condensed consolidated financial statements.

5

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Three Months Ended  September 30,
(Amounts in thousands)	2021		2020
Cash Flows From Operating Activities:
Net income	$	30,655	$	37,079
Adjustments to reconcile net income to net cash provided by operating activities:
Impacts of noncash items:
Depreciation and amortization	11,262		10,409
Change in contingent consideration	—		(5,687)
Deferred income taxes and other changes	800		3,179
Stock-based compensation expense	2,274		1,772
Impairment charges	—		1,195
Pension plan activity	(137)		(57)
Changes in operating assets and liabilities:
Receivables	(10,468)		(10,389)
Inventories	(36,494)		(25,514)
Other current assets	2,238		(626)
Accounts payable and accrued liabilities	(1,302)		12,282
Net cash (used in) provided by operating activities	(1,172)		23,643
Cash Flows From Investing Activities:
Payments for property additions	(30,227)		(14,411)
Other-net	134		(137)
Net cash used in investing activities	(30,093)		(14,548)
Cash Flows From Financing Activities:
Payment of dividends	(20,675)		(19,270)
Purchase of treasury stock	(5,329)		(15)
Tax withholdings for stock-based compensation	(59)		(1,854)
Other-net	(638)		(141)
Net cash used in financing activities	(26,701)		(21,280)
Net change in cash and equivalents	(57,966)		(12,185)
Cash and equivalents at beginning of year	188,055		198,273
Cash and equivalents at end of period	$	130,089	$	186,088
Supplemental Disclosure of Operating Cash Flows:
Net cash payments for income taxes	$	15	$	1,617

See accompanying notes to condensed consolidated financial statements.

6

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(UNAUDITED)

	Three Months Ended September 30, 2021
(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, 2021	27,531	$	128,617	$	1,482,220	$	(8,253)	$	(759,437)	$	843,147
Net income				30,655						30,655
Net pension and postretirement benefit gains, net of $13 tax effect						42				42
Cash dividends - common stock ($0.75 per share)				(20,675)						(20,675)
Purchase of treasury stock	(30)							(5,329)		(5,329)
Stock-based plans	29	(59)								(59)
Stock-based compensation expense		2,274								2,274
Balance, September 30, 2021	27,530	$	130,832	$	1,492,200	$	(8,211)	$	(764,766)	$	850,055

	Three Months Ended September 30, 2020
(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, 2020	27,524	$	125,153	$	1,421,121	$	(12,070)	$	(750,904)	$	783,300
Net income				37,079						37,079
Net pension and postretirement benefit gains, net of $29 tax effect						94				94
Cash dividends - common stock ($0.70 per share)				(19,270)						(19,270)
Purchase of treasury stock	—							(15)		(15)
Stock-based plans	16	(1,854)								(1,854)
Stock-based compensation expense		1,772								1,772
Balance, September 30, 2020	27,540	$	125,071	$	1,438,930	$	(11,976)	$	(750,919)	$	801,106

See accompanying notes to condensed consolidated financial statements.

7

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 2021 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, 2022 refers to fiscal 2022, which is the period from July 1, 2021 to June 30, 2022.

Deferred Software Costs

We capitalize certain costs related to hosting arrangements that are service contracts (cloud computing arrangements). Capitalized costs are included in Other Current Assets or Other Noncurrent Assets and are amortized on a straight-line basis over the estimated useful life. For the three months ended September 30, 2021 and 2020, we capitalized $0.3 million and $1.6 million, respectively, of deferred software costs related to cloud computing arrangements.

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: 

	September 30,
	2021		2020
Construction in progress in Accounts Payable	$	22,685	$	3,556

Accrued Compensation and Employee Benefits

Accrued compensation and employee benefits included in Accrued Liabilities was $18.2 million and $32.5 million at September 30, 2021 and June 30, 2021, 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.

8

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  September 30,
	2021		2020
Net income	$	30,655	$	37,079
Net income available to participating securities	(87)		(79)
Net income available to common shareholders	$	30,568	$	37,000
Weighted average common shares outstanding – basic	27,459		27,461
Incremental share effect from:
Nonparticipating restricted stock	3		3
Stock-settled stock appreciation rights	49		31
Performance units	4		—
Weighted average common shares outstanding – diluted	27,515		27,495
Net income per common share – basic and diluted	$	1.11	$	1.35

Accumulated Other Comprehensive Loss

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

	Three Months Ended  September 30,
	2021		2020
Accumulated other comprehensive loss at beginning of period	$	(8,253)	$	(12,070)
Defined Benefit Pension Plan Items:
Amortization of unrecognized net loss	107		173
Postretirement Benefit Plan Items:
Amortization of unrecognized net gain	(7)		(5)
Amortization of prior service credit	(45)		(45)
Total other comprehensive income, before tax	55		123
Total tax expense	(13)		(29)
Other comprehensive income, net of tax	42		94
Accumulated other comprehensive loss at end of period	$	(8,211)	$	(11,976)

Significant Accounting Policies

There were no changes to our Significant Accounting Policies from those disclosed in our 2021 Annual Report on Form 10-K.

Recent Accounting Standards

There are no recently issued or adopted accounting standards that will impact our consolidated financial statements.

Note 2 – Fair Value

Fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. GAAP sets forth a three-level fair value hierarchy, which prioritizes the inputs used in measuring fair value. The three levels are as follows:

Level 1 – defined as observable inputs, such as quoted market prices in active markets.

Level 2 – defined as inputs other than quoted prices in active markets that are either directly or indirectly observable.

9

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share data)

Level 3 – defined as unobservable inputs in which little or no market data exists, therefore, requiring an entity to develop its own assumptions.

Our financial assets and liabilities subject to the three-level fair value hierarchy consist principally of cash and equivalents, accounts receivable, accounts payable, contingent consideration payable and defined benefit pension plan assets. The estimated fair value of cash and equivalents, accounts receivable and accounts payable approximates their carrying value.

Our contingent consideration, which resulted from the earn-out associated with our acquisition of Bantam Bagels, LLC (“Bantam”), is measured at fair value on a recurring basis and is included in Other Noncurrent Liabilities on the Condensed Consolidated Balance Sheets. The following table summarizes our contingent consideration:

	Fair Value Measurements at September 30, 2021
	Level 1		Level 2		Level 3		Total
Contingent consideration - Bantam	$	—	$	—	$	3,470	$	3,470
	Fair Value Measurements at June 30, 2021
	Level 1		Level 2		Level 3		Total
Contingent consideration - Bantam	$	—	$	—	$	3,470	$	3,470

Bantam Contingent Consideration

This contingent consideration resulted from the earn-out associated with our October 19, 2018 acquisition of Bantam. In general, the terms of the acquisition specify the sellers will receive an earn-out based upon a pre-determined multiple of the defined adjusted EBITDA of Bantam for the twelve months ending December 31, 2023. The initial fair value of the contingent consideration was determined to be $8.0 million. The fair value is measured on a recurring basis using a Monte Carlo simulation that randomly changes revenue growth, forecasted adjusted EBITDA and other uncertain variables to estimate an expected value. We record the present value of this amount by applying a discount rate. As this fair value measurement is based on significant inputs not observable in the market, it represents a Level 3 measurement within the fair value hierarchy. Our fair value measurement at September 30, 2020 resulted in a $5.7 million reduction in the fair value of Bantam’s contingent consideration based on changes in Bantam’s forecasted adjusted EBITDA for the twelve months ending December 31, 2023. The changes in forecasted adjusted EBITDA primarily reflected the impact of a SKU rationalization by a Foodservice customer resulting in the loss of sales to that customer after November 30, 2020. This adjustment was recorded in our Foodservice segment.

The following table represents our Level 3 fair value measurements using significant other unobservable inputs for Bantam’s contingent consideration:

	Three Months Ended  September 30,
	2021		2020
Contingent consideration at beginning of period	$	3,470	$	9,157
Change in contingent consideration included in operating income	—		(5,687)
Contingent consideration at end of period	$	3,470	$	3,470

Note 3 – Long-Term Debt

At September 30, 2021 and June 30, 2021, 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 19, 2025, and all outstanding amounts are then due and payable. Interest is variable based upon formulas tied to LIBOR or an alternate base rate defined in the Facility. In the event that LIBOR becomes unavailable or is no longer deemed an appropriate reference rate, the Facility allows for the use of a benchmark replacement rate. 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.

10

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share data)

The Facility contains certain restrictive covenants, including limitations on indebtedness, 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 September 30, 2021 and June 30, 2021, we had no borrowings outstanding under the Facility. At September 30, 2021 and June 30, 2021, we had $2.8 million of standby letters of credit outstanding, which reduced the amount available for borrowing under the Facility. We paid no interest for the three months ended September 30, 2021 and 2020.

Note 4 – Commitments and Contingencies

At September 30, 2021, 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 will not have a material effect on our consolidated financial statements.

We have a significant remaining commitment of approximately $78 million related to a capacity expansion project at our dressing and sauce facility in Horse Cave, Kentucky.

Our acquisition of Bantam included a provision for contingent consideration for the earn-out associated with this transaction. See further discussion in Note 2.

Note 5 – Goodwill and Other Intangible Assets

Goodwill attributable to the Retail and Foodservice segments was $157.4 million and $51.0 million, respectively, at September 30, 2021 and June 30, 2021.

The following table summarizes our identifiable other intangible assets:

	September 30, 2021		June 30, 2021
Tradenames (20 to 30-year life)
Gross carrying value	$	62,531	$	62,531
Accumulated amortization	(13,064)		(12,421)
Net carrying value	$	49,467	$	50,110
Customer Relationships (2 to 15-year life)
Gross carrying value	$	17,007	$	17,507
Accumulated amortization	(12,763)		(12,912)
Net carrying value	$	4,244	$	4,595
Technology / Know-how (10-year life)
Gross carrying value	$	8,020	$	8,020
Accumulated amortization	(4,111)		(3,973)
Net carrying value	$	3,909	$	4,047
Non-compete Agreements (5-year life)
Gross carrying value	$	191	$	191
Accumulated amortization	(186)		(177)
Net carrying value	$	5	$	14
Total net carrying value	$	57,625	$	58,766

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LANCASTER COLONY CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share data)

In the three months ended September 30, 2020, we recorded impairment charges of $1.2 million related to certain tradename and technology / know-how intangible assets for Bantam, which reflect the impact of a SKU rationalization by a Foodservice customer resulting in the loss of sales to that customer after November 30, 2020. The impairment charges represent the excess of the carrying value over the fair value of estimated discounted cash flows for the remaining useful lives of the intangible assets. The impairment charges are reflected in Impairment Charges in the Condensed Consolidated Statements of Income and were recorded in our Foodservice segment. We also reduced the remaining useful life for Bantam’s Foodservice customer relationship and have recorded accelerated amortization expense.

Amortization expense for our other intangible assets, which is reflected in Selling, General and Administrative Expenses, was as follows:

	Three Months Ended  September 30,
	2021		2020
Amortization expense	$	1,141	$	1,341

Total annual amortization expense for each of the next five years is estimated to be as follows:

2023	$	4,180
2024	$	4,180
2025	$	3,920
2026	$	3,290
2027	$	3,119

Note 6 – Income Taxes

Accrued federal income taxes of $2.3 million and accrued state and local income taxes of $0.6 million were included in Accrued Liabilities at September 30, 2021. Prepaid federal income taxes of $5.1 million and prepaid state and local income taxes of $1.1 million were included in Other Current Assets at June 30, 2021.

Note 7 – 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 placement of products in grocery produce departments through our refrigerated salad dressings, vegetable dips and fruit dips. Our flatbread products and sprouted grain bakery products are generally placed in the specialty bakery/deli section of the grocery store. We also have products typically marketed in the shelf-stable section of the grocery store, which include salad dressings, slaw dressing, sauces and croutons. Within the frozen food section of the grocery store, we sell yeast rolls, garlic breads and mini stuffed bagels.

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 and include salad dressings, sandwich and dipping sauces, frozen breads and yeast rolls. The majority of our Foodservice sales are products sold under private label to restaurants. We also manufacture and sell various branded Foodservice products to distributors. Finally, within this segment, we sold other roll products under a temporary supply agreement resulting from the acquisition of Omni Baking Company LLC. The temporary supply agreement was terminated effective October 31, 2020.

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 September 30, 2021 is generally consistent with that of June 30, 2021.

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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  September 30,
	2021		2020
Net Sales
Retail	$	223,889	$	193,725
Foodservice	168,167		155,512
Total	$	392,056	$	349,237
Operating Income
Retail	$	48,178	$	42,658
Foodservice	15,825		27,421
Corporate Expenses	(23,492)		(21,131)
Total	$	40,511	$	48,948

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

	Three Months Ended  September 30,
	2021		2020
Retail
Shelf-stable dressings, sauces and croutons	$	90,527	$	58,944
Frozen breads	74,719		72,843
Refrigerated dressings, dips and other	58,643		61,938
Total Retail net sales	$	223,889	$	193,725
Foodservice
Dressings and sauces	$	124,759	$	114,951
Frozen breads and other	43,408		37,792
Other roll products	—		2,769
Total Foodservice net sales	$	168,167	$	155,512
Total net sales	$	392,056	$	349,237

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

	Three Months Ended  September 30,
	2021		2020
Foodservice
National accounts	$	126,128	$	118,078
Branded and other	42,039		34,665
Other roll products	—		2,769
Total Foodservice net sales	$	168,167	$	155,512

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LANCASTER COLONY CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share data)

Note 8 – Stock-Based Compensation

There have been no changes to our stock-based compensation plan as disclosed in our 2021 Annual Report on Form 10-K. However, as permitted under this plan, we made an initial grant of performance units in August 2021. These performance units have either a market condition or a performance condition and will vest 3 years after the grant date. Dividend equivalents earned during the vesting period will be paid at the time the awards vest.

Our stock-settled stock appreciation rights (“SSSARs”) compensation expense was $1.0 million and $0.9 million for the three months ended September 30, 2021 and 2020, respectively. At September 30, 2021, there was $5.7 million of unrecognized compensation expense related to SSSARs that we will recognize over a weighted-average period of 2 years.

Our restricted stock compensation expense was $1.1 million and $0.9 million for the three months ended September 30, 2021 and 2020, respectively. At September 30, 2021, there was $8.9 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 $0.2 million for the three months ended September 30, 2021. At September 30, 2021, there was $3.5 million of unrecognized compensation expense related to performance units that we will recognize over a weighted-average period of 3 years.

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

Our fiscal year begins on July 1 and ends on June 30. Unless otherwise noted, references to “year” pertain to our fiscal year; for example, 2022 refers to fiscal 2022, which is the period from July 1, 2021 to June 30, 2022.

The following discussion should be read in conjunction with our condensed consolidated financial statements and the notes thereto, all included elsewhere in this report, and our 2021 Annual Report on Form 10-K. The forward-looking statements in this section and other parts of this report involve risks, uncertainties and other factors, including statements regarding our plans, objectives, goals, strategies, and financial performance. Our actual results could differ materially from the results anticipated in these forward-looking statements due to these factors. For more information, see the section below entitled “Forward-Looking Statements.”

OVERVIEW

Business Overview

Lancaster Colony Corporation is a manufacturer and marketer of specialty food products for the retail and foodservice channels.

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.

Over 95% of our products are sold in the United States. Foreign operations and export sales have not been significant in the past and are not expected to be significant in the future based upon existing operations. We do not have any fixed assets located outside of the United States.

Our business has the potential to achieve future growth in sales and profitability due to attributes such as:

•leading Retail market positions in several product categories with a high-quality perception;

•recognized innovation in Retail products;

•a broad customer base in both Retail and Foodservice accounts;

•well-regarded culinary expertise among Foodservice customers;

•recognized leadership in Foodservice product development;

•experience in integrating complementary business acquisitions; and

•historically strong cash flow generation that supports growth opportunities.

Our goal is to grow both Retail and Foodservice segment sales over time by:

•introducing new products and expanding distribution;

•leveraging the strength of our Retail brands to increase current product sales;

•expanding Retail growth through strategic licensing agreements;

•continuing to rely upon the strength of our reputation in Foodservice product development and quality; and

•acquiring complementary businesses.

With respect to long-term growth, we continually evaluate the future opportunities and needs for our business specific to our plant infrastructure, IT platforms and other initiatives to support and strengthen our operations. Recent examples of resulting investments include:

•a significant capacity expansion project for our Marzetti dressing and sauce facility in Horse Cave, Kentucky that we expect to complete in the first quarter of fiscal 2023;

•a capacity expansion project for one of our Marzetti dressing and sauce facilities in Columbus, Ohio that we expect to complete in the second quarter of fiscal 2022;

•a significant infrastructure improvement and capacity expansion project for our frozen pasta facility in Altoona, Iowa that we expect to complete during the second quarter of fiscal 2022;

•a significant capacity expansion project for our Sister Schubert’s frozen dinner roll facility in Horse Cave, Kentucky that was completed in January 2020; and

•the establishment of a Transformation Program Office in 2019 that serves to coordinate our various capital and integration efforts, including our enterprise resource planning system (“ERP”) project and related initiatives, Project Ascent, that is currently underway.

Project Ascent commenced in late 2019 and entails the replacement of our primary customer and manufacturing transactional systems, warehousing systems, and financial systems with an integrated SAP S/4HANA system. Post implementation, Project Ascent will evolve into an on-going Center of Excellence (“COE”) that will provide oversight for all future upgrades of the S/4HANA environment, evaluation of future software needs to support the business, acquisition integration support and master

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data standards. Most of the on-going COE costs are expected to consist of annual software maintenance and support, consulting and professional fees and wages and benefits.

We also continue to review potential acquisitions that we believe will complement our existing product lines, enhance our profitability and/or offer good expansion opportunities in a manner that fits our overall strategic goals.

RECENT EVENTS

A novel strain of coronavirus (“COVID-19”) was first identified in Wuhan, China in December 2019. On March 11, 2020, the World Health Organization designated COVID-19 as a global pandemic. COVID-19 has surfaced in all regions around the world and resulted in business slowdowns or shutdowns. In the U.S., state and local governments recommended or mandated actions intended to slow the transmission of COVID-19. These measures included limitations on public gatherings, social distancing requirements, travel restrictions, closures of bars and dine-in restaurants, stay-at-home orders, quarantines and restrictions that prohibited many non-essential employees from going to work.

We have two major priorities while navigating through this period of volatility and uncertainty:

1.to ensure the health, safety and welfare of our employees; and

2.to continue to play our part in the vital food supply chain by adequately supplying our customers while maintaining the financial strength of our business.

With respect to our efforts to ensure the health, safety and welfare of our employees, we continue to monitor the latest guidance from authorities, including the Centers for Disease Control and Prevention and other federal, state and local public health departments, regarding COVID-19 and adopt the appropriate measures to ensure we continue to operate safely and support our employees. We also engaged a pulmonology and critical care physician to advise us on our employee safety protocols. Based on the advice of these experts and our commitment to the health, safety and welfare of our employees, we implemented some policy changes and put in place a range of safety modifications and guidelines in our factories, distribution centers and offices, including but not limited to:

•conducted extensive cleaning and sanitation of workstations and common areas before, during, and after each shift;

•employed social distancing guidelines and modifications at workspaces and in break areas;

•staggered the timing of shift changes and breaks;

•relaxed attendance requirements and enhanced our paid leave policy; and

•provided every employee an extra vacation day in 2021 to allow flexibility with scheduling COVID-19 vaccination appointments.

After 16 months and once the vaccine became broadly available, we discontinued our temporary incentive pay compensation (“hero pay”) to our front-line employees at the end of fiscal 2021.

With respect to our second priority, as of the date of this filing, there has been no material adverse change in our ability to manufacture and distribute our products. We have not experienced any significant disruptions to our shipping or warehousing operations or sourcing of raw materials. We have also secured additional second-sourcing options to help limit the risk of supply disruptions.

The effects of COVID-19 on consumer behavior have impacted the relative demand for our Retail and Foodservice products. Specifically, since the onset of the COVID-19 pandemic near the end of our fiscal 2020 third quarter, there has been an overall shift in consumer demand towards increased at-home food consumption and away from in-restaurant dining. While this shift in demand has been inconsistent and volatile, on balance it has positively impacted our Retail segment sales and negatively impacted our Foodservice segment sales. From an operations standpoint, the shift in demand combined with other COVID-19-related issues such as higher hourly wage rates paid to our front-line employees, increased costs for personal protective equipment, higher expenditures attributed to incremental co-manufacturing volumes, and overall lower operating efficiencies have unfavorably impacted the operating results of both our segments.

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RESULTS OF CONSOLIDATED OPERATIONS

(Dollars in thousands, except per share data)	Three Months Ended  September 30,
	2021			2020			Change
Net Sales	$	392,056		$	349,237		$	42,819	12	%
Cost of Sales	299,689			256,583			43,106		17	%
Gross Profit	92,367			92,654			(287)		—	%
Gross Margin	23.6		%	26.5		%
Selling, General and Administrative Expenses	51,856			48,198			3,658		8	%
Change in Contingent Consideration	—			(5,687)			5,687		(100)	%
Impairment Charges	—			1,195			(1,195)		(100)	%
Operating Income	40,511			48,948			(8,437)		(17)	%
Operating Margin	10.3		%	14.0		%
Other, Net	20			4			16		400	%
Income Before Income Taxes	40,531			48,952			(8,421)		(17)	%
Taxes Based on Income	9,876			11,873			(1,997)		(17)	%
Effective Tax Rate	24.4		%	24.3		%
Net Income	$	30,655		$	37,079		$	(6,424)	(17)	%
Diluted Net Income Per Common Share	$	1.11		$	1.35		$	(0.24)	(18)	%

Net Sales

Consolidated net sales for the three months ended September 30, 2021 increased 12% to a first quarter record $392.1 million versus $349.2 million last year. Excluding all sales resulting from the November 2018 acquisition of Omni Baking Company LLC (“Omni”), consolidated net sales for the three months ended September 30, 2021 increased 13%. Sales growth for the quarter reflected higher net sales for both the Retail and Foodservice segments. See discussion of net sales by segment following the discussion of “Earnings Per Share” below.

Gross Profit

Consolidated gross profit for the three months ended September 30, 2021 decreased slightly to $92.4 million compared to $92.7 million in the prior-year period as the sales growth, a more favorable sales mix and our ongoing cost savings programs were offset by higher commodity and packaging costs, incremental expenditures attributed to increased co-manufacturing costs, and increased freight and warehousing costs.

Selling, General and Administrative Expenses

Selling, general and administrative (“SG&A”) expenses increased 8% for the quarter reaching $51.9 million for the three months ended September 30, 2021. This increase reflected higher expenditures for Project Ascent, which increased $1.1 million to $9.4 million for the quarter. Excluding Project Ascent, SG&A expenses for the quarter ended September 30, 2021 were 6% higher than the prior-year period, reflecting increased investments in personnel and business initiatives to support continued growth. Project Ascent expenses are included within Corporate Expenses. A portion of the costs that have been classified as Project Ascent expenses represent ongoing costs that will continue subsequent to the ERP implementation.

	Three Months Ended  September 30,
(Dollars in thousands)	2021		2020		Change
SG&A Expenses - Excluding Project Ascent	$	42,427	$	39,912	$	2,515	6	%
Project Ascent Expenses	9,429		8,286		1,143		14	%
Total SG&A Expenses	$	51,856	$	48,198	$	3,658	8	%

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Change in Contingent Consideration

There was no change in contingent consideration for the three months ended September 30, 2021. For the three months ended September 30, 2020, the change in contingent consideration resulted in a benefit of $5.7 million. This prior-year benefit was attributed to a reduction in the fair value of the contingent consideration liability for Bantam Bagels, LLC (“Bantam”) based on our September 30, 2020 fair value measurement. The fair value adjustment resulted from the impact of a SKU rationalization by a Foodservice customer, and therefore the entire adjustment was reflected within the Foodservice segment. See further discussion in Note 2 to the condensed consolidated financial statements.

Impairment Charges

There were no impairment charges recorded for the three months ended September 30, 2021.We recorded impairment charges of $1.2 million for the three months ended September 30, 2020 related to certain tradename and technology / know-how intangible assets for Bantam as a result of the impact of the above-referenced SKU rationalization by a Foodservice customer. The impairment charges represent the excess of the carrying value over the fair value of estimated discounted cash flows for the remaining useful lives of the intangible assets and were reflected within our Foodservice segment.

Operating Income

Operating income decreased $8.4 million to $40.5 million for the three months ended September 30, 2021. The prior-year quarter included the $5.7 million benefit related to Bantam’s contingent consideration. In the current-year quarter, operating income was negatively affected by higher commodity and packaging costs, increased co-manufacturing costs, higher freight and warehousing costs, investments in personnel and business initiatives to support continued growth, and increased expenditures for Project Ascent. These unfavorable factors were partially offset by the increased sales and our ongoing cost savings programs. See discussion of operating results by segment following the discussion of “Earnings Per Share” below.

Taxes Based on Income

Our effective tax rate was 24.4% and 24.3% for the three months ended September 30, 2021 and 2020, respectively. For the three months ended September 30, 2021 and 2020, our effective tax rate varied from the statutory federal income tax rate as a result of the following factors:

	Three Months Ended  September 30,
	2021		2020
Statutory rate	21.0	%	21.0	%
State and local income taxes	3.5		3.0
Net windfall tax benefits - stock-based compensation	—		(0.7)
Other	(0.1)		1.0
Effective rate	24.4	%	24.3	%

We include the tax consequences related to stock-based compensation within the computation of income tax expense. We may experience increased volatility to our income tax expense and resulting net income dependent upon, among other variables, the price of our common stock and the timing and volume of share-based payment award activity such as employee exercises of stock-settled stock appreciation rights and vesting of restricted stock awards. For the three months ended September 30, 2021 and 2020, the impact of net windfall tax benefits from stock-based compensation reduced our effective tax rate by less than 0.1% and 0.7%, respectively.

Earnings Per Share

As influenced by the factors noted above, particularly the higher commodity costs and the prior-year quarter’s benefit related to Bantam’s contingent consideration, diluted net income per share for the first quarter of 2022 totaled $1.11, as compared to $1.35 per diluted share in the prior year. Diluted weighted average common shares outstanding have remained relatively stable for the current and prior-year periods ended September 30.

Expenditures for Project Ascent reduced diluted earnings per share by $0.26 and $0.23 for the three months ended September 30, 2021 and 2020, respectively. In the prior year, the favorable impact of the adjustment to Bantam’s contingent consideration increased diluted earnings per share by $0.16 while impairment charges had an unfavorable impact of $0.03 per diluted share.

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RESULTS OF OPERATIONS - SEGMENTS

Retail Segment

	Three Months Ended  September 30,
(Dollars in thousands)	2021			2020			Change
Net Sales	$	223,889		$	193,725		$	30,164	16	%
Operating Income	$	48,178		$	42,658		$	5,520	13	%
Operating Margin	21.5		%	22.0		%

For the three months ended September 30, 2021, Retail segment net sales reached $223.9 million, a 16% increase from the prior-year total of $193.7 million. The increase was driven by volume gains for Chick-fil-A® sauces and Buffalo Wild Wings® sauces, both of which are sold under exclusive licensing agreements, and higher sales of our New York BRAND Bakery® frozen garlic bread.

For the three months ended September 30, 2021, Retail segment operating income increased 13% to $48.2 million, reflecting the increase in sales, including some inflationary pricing, a more favorable sales mix and reduced promotional spending, as partially offset by higher commodity and packaging costs and increased freight and warehousing costs.

Foodservice Segment

	Three Months Ended  September 30,
(Dollars in thousands)	2021			2020			Change
Net Sales	$	168,167		$	155,512		$	12,655	8	%
Operating Income	$	15,825		$	27,421		$	(11,596)	(42)	%
Operating Margin	9.4		%	17.6		%

For the three months ended September 30, 2021, Foodservice segment net sales grew 8% to $168.2 million compared to $155.5 million in the prior-year period driven by inflationary pricing and volume gains for our branded Foodservice products. Excluding all sales resulting from the November 2018 acquisition of Omni, Foodservice segment net sales increased 10%. Omni sales attributed to a temporary supply agreement totaled $2.8 million in the prior-year quarter. There were no such sales in the current-year quarter as the temporary supply agreement was terminated effective October 31, 2020.

The decline in Foodservice segment operating income for the three months ended September 30, 2021 was driven by the impact of last year’s $5.7 million benefit related to Bantam’s contingent consideration, as well as increased commodity costs and higher warehousing expenses. Operating income was favorably impacted by inflationary pricing.

Corporate Expenses

For the three months ended September 30, 2021 and 2020, corporate expenses totaled $23.5 million and $21.1 million, respectively. This increase was driven by expenditures for Project Ascent, which totaled $9.4 million and $8.3 million for the three months ended September 30, 2021 and 2020, respectively. For the three months ended September 30, 2021 and 2020, we also capitalized an additional $0.3 million and $1.6 million, respectively, of ERP-related expenditures for application development stage activities.

LOOKING FORWARD

Looking forward to our fiscal second quarter, we expect our licensing program to remain an important source of growth for Retail segment sales while our Foodservice segment should continue to benefit from higher demand for our branded Foodservice products and growth from select quick-service restaurant and pizza chain customers in our mix of national chain restaurant accounts. We anticipate the inflationary environment to continue in the coming quarter, including higher commodity costs, particularly for soybean oil, along with increased costs for packaging, freight and labor. Inflationary pricing, including Retail segment pricing actions that took effect near the end of our fiscal first quarter combined with additional pricing in the Foodservice segment, will help to partially offset the input cost inflation. Our ongoing cost savings programs and other net price realization efforts will also serve to reduce the unfavorable impacts of inflation in the fiscal second quarter.

Our fiscal second quarter financial results will continue to be impacted by the COVID-19 pandemic, which has caused shifts in consumer demand between the retail and foodservice channels and resulted in higher costs to produce our products and service our customers. The extent of this impact on our financial results is difficult to forecast due to ongoing regional ebbs and flows of COVID-19 cases and the associated changes to the COVID-19 guidelines provided by or mandates imposed by health authorities and government agencies, which creates uncertainty for the restaurant industry and consumer behavior over an unpredictable timeline.

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FINANCIAL CONDITION

Cash Flows

For the three months ended September 30, 2021, net cash used in operating activities totaled $1.2 million, as compared to net cash provided by operating activities of $23.6 million in the prior-year period. This decrease was primarily due to the year-over-year changes in net working capital, particularly accounts payable and accrued liabilities, as well as inventories.

Cash used in investing activities for the three months ended September 30, 2021 was $30.1 million, as compared to $14.5 million in the prior year. This increase primarily reflects a higher level of payments for property additions in the current year. Our current-year capital expenditures include spending on a capacity expansion project at our dressing and sauce facility in Horse Cave, Kentucky that we expect to complete in the first quarter of fiscal 2023, a capacity expansion project for one of our Marzetti dressing and sauce facilities in Columbus, Ohio that we expect to complete in the second quarter of fiscal 2022, and infrastructure improvements and capacity expansion investments at our frozen pasta facility in Altoona, Iowa that we expect to complete in the second quarter of fiscal 2022.

Cash used in financing activities for the three months ended September 30, 2021 of $26.7 million increased from the prior-year total of $21.3 million. This increase was primarily due to a higher level of share repurchases.

Liquidity and Capital Resources

Under our unsecured revolving credit facility (“Facility”), we may borrow up to a maximum of $150 million at any one time. We had no borrowings outstanding under the Facility at September 30, 2021. At September 30, 2021, we had $2.8 million of standby letters of credit outstanding, which reduced the amount available for borrowing under the Facility. The Facility expires in March 2025, and all outstanding amounts are then due and payable. Interest is variable based upon formulas tied to LIBOR 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 indebtedness, asset sales and acquisitions, and financial covenants relating to interest coverage and leverage. At September 30, 2021, we were in compliance with all applicable provisions and covenants of this facility, and we exceeded the requirements of the financial covenants by substantial margins. At September 30, 2021, there were no events that would constitute a default under this facility.

We currently expect to remain in compliance with the Facility’s covenants for the foreseeable future. However, a default under the Facility could accelerate the repayment of any then outstanding indebtedness and limit our access to $75 million of additional credit available under the Facility. Such an event could require a reduction in or curtailment of cash dividends or share repurchases, reduce or delay beneficial expansion or investment plans, or otherwise impact our ability to meet our obligations when due.

We believe that cash provided by operating activities and our existing balances in cash and equivalents, in addition to that available under the Facility, should be adequate to meet our liquidity needs over the next 12 months, including the projected levels of capital expenditures and dividend payments. If we were to borrow outside of the Facility under current market terms, our average interest rate may increase and have an adverse effect on our results of operations. Based on our current plans and expectations, we believe our capital expenditures for 2022 could total between $170 and $190 million, which includes approximately $105 million in initial expenditures attributed to a substantial investment for a capacity expansion project at our dressing and sauce facility in Horse Cave, Kentucky that we expect to complete in the first quarter of fiscal 2023.

Beyond the next 12 months, we expect that cash provided by operating activities will be the primary source of liquidity for the foreseeable future. This source, combined with our existing balances in cash and equivalents and amounts available under the Facility, is expected to be sufficient to meet our overall cash requirements.

We have various contractual and other obligations that are appropriately recorded as liabilities in our condensed consolidated financial statements. Certain other contractual obligations are not recognized as liabilities in our condensed consolidated financial statements. Examples of such obligations are commitments to purchase raw materials or packaging inventory that has not yet been received as of September 30, 2021, as well as purchase orders and longer-term purchase arrangements related to the procurement of services, including IT service agreements, and property, plant and equipment. The majority of these obligations is expected to be due within one year. See further discussion below of our obligation related to the capacity expansion project at our dressing and sauce facility in Horse Cave, Kentucky.

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In November 2020, T. Marzetti Company (“T. Marzetti”), a wholly-owned subsidiary of ours, entered into a Design/Build Agreement (the “Agreement”) with Gray Construction, Inc. (“Gray”) under which Gray will design, coordinate and build additional dressing and sauce manufacturing and warehousing capacity for the T. Marzetti facility in Hart County, Kentucky (the “Project”). The Project will result in an expansion of the current facility footprint. Subject to certain conditions in the Agreement, T. Marzetti will pay Gray no more than the guaranteed maximum price of approximately $113 million for the Project. The Agreement contains other terms and conditions that are customary for this type of project. Expected to be completed in the first quarter of fiscal 2023, we have a remaining commitment of approximately $78 million for the Project.

CRITICAL ACCOUNTING POLICIES

There have been no changes in critical accounting policies from those policies disclosed in our 2021 Annual Report on Form 10-K.

RECENT ACCOUNTING PRONOUNCEMENTS

Recent accounting pronouncements and their impact on our consolidated financial statements are disclosed in Note 1 to the condensed consolidated financial statements.

FORWARD-LOOKING STATEMENTS

We desire to take advantage of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 (the “PSLRA”). This Quarterly Report on Form 10-Q contains various “forward-looking statements” within the meaning of the PSLRA and other applicable securities laws. Such statements can be identified by the use of the forward-looking words “anticipate,” “estimate,” “project,” “believe,” “intend,” “plan,” “expect,” “hope” or similar words. These statements discuss future expectations; contain projections regarding future developments, operations or financial conditions; or state other forward-looking information. Such statements are based upon assumptions and assessments made by us in light of our experience and perception of historical trends, current conditions, expected future developments and other factors we believe to be appropriate. These forward-looking statements involve various important risks, uncertainties and other factors that could cause our actual results to differ materially from those expressed in the forward-looking statements. Actual results may differ as a result of factors over which we have no, or limited, control including, without limitation, the specific influences outlined below, many of which could be amplified by the COVID-19 pandemic. Management believes these forward-looking statements to be reasonable; however, one should not place undue reliance on such statements that are based on current expectations. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update such forward-looking statements, except as required by law.

Items which could impact these forward-looking statements include, but are not limited to:

•significant shifts in consumer demand and disruptions to our employees, communities, customers, supply chains, operations, and production processes resulting from COVID-19 and other epidemics, pandemics or similar widespread public health concerns and disease outbreaks;

•fluctuations in the cost and availability of ingredients and packaging;

•inflationary pressures resulting in higher input costs;

•capacity constraints that may affect our ability to meet demand or may increase our costs;

•dependence on contract manufacturers, distributors and freight transporters, including their operational capacity and financial strength in continuing to support our business;

•adequate supply of labor for our manufacturing facilities;

•efficiencies in plant operations;

•the reaction of customers or consumers to price increases we may implement;

•cyber-security incidents, information technology disruptions, and data breaches;

•complexities related to the design and implementation of our new enterprise resource planning system;

•stability of labor relations;

•adverse changes in freight, energy or other costs of producing, distributing or transporting our products;

•the potential for loss of larger programs, including licensing agreements, or key customer relationships;

•changes in demand for our products, which may result from loss of brand reputation or customer goodwill;

•price and product competition;

•the possible occurrence of product recalls or other defective or mislabeled product costs;

•the success and cost of new product development efforts;

•the lack of market acceptance of new products;

•the impact of customer store brands on our branded retail volumes;

•the extent to which recent and future business acquisitions are completed and acceptably integrated;

•the ability to successfully grow recently acquired businesses;

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•dependence on key personnel and changes in key personnel;

•the effect of consolidation of customers within key market channels;

•maintenance of competitive position with respect to other manufacturers;

•changes in estimates in critical accounting judgments;

•the impact of any regulatory matters affecting our food business, including any required labeling changes and their impact on consumer demand;

•the outcome of any litigation or arbitration;

•the impact of fluctuations in our pension plan asset values on funding levels, contributions required and benefit costs; and

•certain other factors, including the information disclosed in our discussion of risk factors under Item 1A of our 2021 Annual Report on Form 10-K.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Our market risks have not changed materially from those disclosed in our 2021 Annual Report on Form 10-K.

Item 4. Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures. As of the end of the period covered by this Quarterly Report on Form 10-Q, our management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of September 30, 2021 to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is 1) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and 2) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, in a manner that allows timely decisions regarding required disclosure.

(b) Changes in Internal Control Over Financial Reporting. No changes were made to our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

Item 1. Legal Proceedings

We are required to disclose certain environmental matters when a governmental authority is a party to the proceedings and such proceedings involve potential monetary sanctions that we reasonably believe will be in excess of an applied threshold not to exceed $1 million. We are using a threshold of $1 million as we believe this amount is reasonably designed to result in disclosure of such proceedings that are material to our business or financial condition. Applying this threshold, there are no environmental matters to disclose in this Form 10-Q.

Item 1A. Risk Factors

There have been no material changes to the risk factors disclosed under Item 1A in our 2021 Annual Report on Form 10-K.

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

(c) In November 2010, our Board of Directors approved a share repurchase authorization of 2,000,000 common shares, of which 1,239,539 common shares remained authorized for future repurchases at September 30, 2021. This share repurchase authorization does not have a stated expiration date. In the first quarter, we made the following repurchases of our common stock:

Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans	Maximum Number of Shares that May Yet be Purchased Under the Plans
July 1-31, 2021	—	$	—	—	1,269,701
August 1-31, 2021 (1)	5,062	$	177.73	5,062	1,264,639
September 1-30, 2021	25,100	$	176.45	25,100	1,239,539
Total	30,162	$	176.67	30,162	1,239,539

(1)Includes 162 shares in August 2021 that were repurchased in satisfaction of tax withholding obligations arising from the vesting of restricted stock granted to employees under the Lancaster Colony Corporation 2015 Omnibus Incentive Plan.

Item 6. Exhibits

See Index to Exhibits following Signatures.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		LANCASTER COLONY CORPORATION
			(Registrant)
Date:	November 3, 2021	By:	/s/ DAVID A. CIESINSKI
			David A. Ciesinski
			President, Chief Executive Officer
			and Director
			(Principal Executive Officer)
Date:	November 3, 2021	By:	/s/ THOMAS K. PIGOTT
			Thomas K. Pigott
			Vice President, Chief Financial Officer
			and Assistant Secretary
			(Principal Financial and Accounting Officer)

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LANCASTER COLONY CORPORATION AND SUBSIDIARIES

FORM 10-Q

SEPTEMBER 30, 2021

INDEX TO EXHIBITS

Exhibit Number	Description
10.1(a)(b)	Form of Performance Unit Award Agreement for Employees and Consultants under the Lancaster Colony Corporation 2015 Omnibus Incentive Plan
31.1(b)	Certification of CEO under Section 302 of the Sarbanes-Oxley Act of 2002
31.2(b)	Certification of CFO under Section 302 of the Sarbanes-Oxley Act of 2002
32(c)	Certification of CEO and CFO under Section 906 of the Sarbanes-Oxley Act of 2002
101.INS(b)	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH(b)	Inline XBRL Taxonomy Extension Schema Document
101.CAL(b)	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF(b)	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB(b)	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE(b)	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104(b)	The cover page of Lancaster Colony Corporation’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021, formatted in Inline XBRL (included within Exhibit 101 attachments)
(a)	Indicates a management contract or compensatory plan, contract or arrangement in which any Director or any Executive Officer participates.
(b)	Filed herewith
(c)	Furnished herewith

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EX-10.1

Exhibit 10.1

LANCASTER COLONY CORPORATION

FORM OF PERFORMANCE UNIT AWARD AGREEMENT

This Performance Unit Award Agreement (this “Agreement”) is dated as of __________, by and between Lancaster Colony Corporation, an Ohio corporation (the “Company”), and __________________, an Employee or Consultant for the Company (the “Grantee”).

W I T N E S S E T H

WHEREAS, the Company desires to award Performance Units to the Grantee, subject to the terms and conditions of the Lancaster Colony Corporation 2015 Omnibus Incentive Plan (the “Plan”) and the terms and conditions described below;

WHEREAS, the Grantee wishes to accept such award, subject to the terms and conditions of the Plan and the terms and conditions described below;

WHEREAS, the Company hereby confirms to the Grantee the grant, effective on __________ (the “Grant Date”), pursuant to the Plan, of a target award of _____ Performance Units that may be earned upon achievement of the RTSR goal (described in Section 4(a)(i) of this Agreement) and _______ Performance Units that may be earned upon achievement of the Revenue goal (described in Section 4(a)(ii) of this Agreement, calculated in the manner described under Section 4 of this Agreement (“Awarded Units”) subject to the terms and conditions of the Plan and the terms and conditions described below; and

WHEREAS, the parties hereto understand and agree that any terms used and not defined herein have the same meanings as in the Plan.

NOW, THEREFORE, the Company and the Grantee hereby agree as follows:

1.Definitions. As used in this Agreement:

(a)“Account” means a bookkeeping entry of the Company to which Performance Units awarded under this Agreement are credited.

(b)“Certification Date” means the date that the Committee certifies that the performance goals under Section 4 of this Agreement have been achieved, which generally is the date that the Awarded Units vest except as otherwise provided in this Agreement or the Plan.

(c)“Compete” means to do any of the following as an officer, director, employee, independent contractor, consultant, owner, partner, member, shareholder, equity holder, or joint venturer of a competitor of the Company, or in any other capacity whatsoever with a competitor of the Company: (a) to directly or indirectly work for a competitor; or (b) to directly or indirectly assist a competitor with one of its existing or prospective goods or services that directly or indirectly competes, will directly or indirectly compete, or would directly or indirectly compete with a good or service directly or indirectly offered, or that may or will be directly or indirectly offered, by the Company.

(d)Confidential Information” means any and all non-public information regarding the Company, its goods, or its services. “Confidential Information” includes any information that qualifies as a “trade secret” under the Uniform Trade Secrets Act or the common law of any state. Additionally, the term “Confidential Information” includes the aforementioned non-public information that has become public because a person or entity breached an obligation to maintain its confidentiality.

(e) “Innovations” shall mean all discoveries, developments, designs, ideas, innovations, improvements, inventions, formulas, processes, techniques, and know-how (whether or not patentable or registrable under copyright, trademark or similar statutes) made, conceived, reduced to practice or learned by the Grantee either alone or jointly with another while in the employ of the Company, or disclosed to a third party by the Grantee within one (1) year of leaving its employ, that

(i) relate directly to the Company’s business or the production of any character of goods or materials sold or used by the Company,

(ii) result from tasks assigned to the Grantee by the Company, or

(iii) result from the use of premises or equipment owned, leased, or otherwise acquired by the Company.

(f)“Performance Period” means the period beginning on July 1, 20__, and ending on June 30, 20__.

(g)“Performance Restrictions” means the vesting requirements related to the achievement of performance goals identified in Section 4 of this Agreement.

(h)“Protected Territory” includes the following geographic areas: (a) all states and territories of the United States of America; and (b) any other geographic area where it is reasonably necessary for the protection of the Company’s legitimate interests to restrict Employee from competing and such restriction does not impose an undue hardship on Employee or disregard the interests of the public.

(i)“Revenue Goal Awarded Units” means the portion of the Awarded Units that may be earned upon achievement of the Revenue goal described in Section 4(a)((ii)) of this Agreement.

(j)“RTSR Awarded Units” means the portion of the Awarded Units earned upon achievement of the RTSR goal described in Section 4(a)(i) of this Agreement.

(k)“Third Party” or “Third Parties” means, individually or collectively, any current or prospective client, vendor, or other person or entity in an existing or potential business relationship with the Company during Employee’s employment with the Company or within the two (2) years following Employee’s termination of employment with the Company.

(l)“Third Party Confidential Information” means any and all non-public information provided to Employee, on a confidential basis, by or on behalf of any existing or potential client, vendor, or other person or entity in an existing or potential business relationship with the Company. Additionally, the term “Third Party Confidential Information” includes the aforementioned non-public information that has become public because a person or entity breached an obligation to maintain its confidentiality.

(m)For purposes of this Agreement, the “Company” shall include any Affiliate of the Company.

2.Provisions of the Plan Controlling. The Grantee specifically understands and agrees that the Awarded Units are being granted under the Plan, and are being granted to the Grantee as Performance Units pursuant to the Plan, copies of which the Grantee acknowledges the Grantee has read and understands and by which the Grantee agrees to be bound. The provisions of the Plan are incorporated herein by reference. Any capitalized term in this Agreement that is not defined in the Agreement shall have the definition set forth in the Plan. In the event of a conflict between the terms and conditions of the Plan and this Agreement, the provisions of the Plan will control.

3.Performance Unit Accounts. The number of Performance Units granted under this Agreement shall be credited to the Grantee’s Account. The Account shall be maintained on the books of the Company until full payment of the balance thereof has been made to the Grantee (or the Grantee’s beneficiaries if the Grantee is deceased). No funds shall be set aside or earmarked for the Account, which shall be purely a bookkeeping device.

4.Vesting of Awarded Units.

(a)Unless the Committee, in its sole and absolute discretion, determines that the acceleration of vesting is appropriate, the Performance Restrictions shall lapse and Awarded Units shall be earned and vest only upon both (1) the Committee’s certification of the results in (i) and (ii) below (including interpolation between the results, expressed as a percentage of the target except as otherwise noted below) and (2) the Grantee’s continued service through the last day of the Performance Period (except as otherwise provided in this Agreement in the events of death, Disability, Retirement, or a Change in Control). If those conditions are satisfied, the total number of Awarded Units will be equal to the sum of Awarded Units under subsections (i) and (ii) below.

(i)RTSR Awarded Units shall be earned and vest, and the related Performance Restrictions on such number of RTSR Awarded Units shall lapse, based on the Company’s RTSR over the Performance Period in accordance with the following schedule:

RTSR* Percentile Ranking Among TSR Peer Group**	Vested Portion of Award as a % of Target
<25th	0%
25th	20%
50th	100% (Target)
75th	150%
90th	200%

*RTSR (Relative Total Shareholder Return) means the Company’s Total Shareholder Return (“TSR”) compared to the TSRs of the TSR Peer Group. TSR means the growth in the price of a share of the Company’s common stock, calculated in a manner pursuant to Exhibit A. Payout shall be based upon the Company’s TSR compared to the TSR for the companies in the Peer Group using the PERCENTILE function in Microsoft Excel to determine the TSR value at the percentages listed in the schedule above.

** TSR Peer Group means the peer group of companies set forth on Exhibit B hereto.

Notwithstanding the foregoing, if the Company’s TSR is negative for the Performance Period, the maximum payout possible for this 50% component of the Award will be 100% of Target Performance Units regardless of relative performance.

(ii) Revenue Goal Awarded Units shall be earned and vest, and the related Performance Restrictions on such number of Revenue Goal Awarded Units shall lapse, based on the Company’s achievement of the Revenue Goals listed below as of the last day of the Performance Period in accordance with the following schedule:

Revenue* Goal	Vested Portion of Award as a % of Target
< $ [Min]	0%
$ [Min]	20%
$ [Target]	100% (Target)
$ [Max]	200%

*Revenue Goal means growth in revenue during the Performance Period as calculated in the attached Exhibit C; provided, however, that the calculation of the Revenue Goal will exclude the impact of extraordinary events listed in Section 14(e) of the Plan.

(iii) With respect to both RTSR and the Revenue Goals, if a performance goal is achieved at a level that is greater than the minimum requirements to trigger vesting of a number of Awarded Units but less than the next highest level that triggers a higher number of the Awarded Units to vest, the applicable number of Awarded Units will be linearly interpolated. Linear interpolation means that an increase in a goal above one specified level but below another level will result in a similar incremental increase in the vested number of Awarded Units. Such linear interpolation will be calculated in a manner consistent with the example in Exhibit C of this Agreement.

(iv) After the number of Awarded Units is calculated for a specific performance goal, the number of Awarded Units calculated under paragraph (i) above (for RTSR) and paragraph (ii) above (for Revenue) will be added together, and the sum produce the total number of Awarded Units that vest under this Agreement.

(b)As soon as practicable after the end of the Performance Period, the Committee will certify in writing whether the Performance Restrictions have been met for the Performance Period and determine the number of Awarded Units, if any, that will be payable to the Grantee; provided, however, that if the Committee certifies that the Performance Restrictions have been met, the Committee may, in its sole discretion, adjust the number of Awarded Units payable to the Grantee with respect to the Award to reflect the effect of extraordinary events upon the Performance Restrictions, as provided under the Plan. The date of the Committee’s certification under this Section shall hereinafter be referred to as the “Certification Date.” The Company will notify the Grantee (or the executors or administrators of the Grantee’s estate, if appropriate) of the Committee’s certification following the Certification Date (such notice being the “Determination Notice”).

(c)Except as set forth below, if Grantee’s Continuous Status as an Employee or Consultant is terminated for any reason prior to the Certification Date, the Grantee shall forfeit all Awarded Units credited to the Grantee’s Account. Notwithstanding the foregoing, if the Grantee is Retirement eligible on or before the Grant Date, in the event that Grantee’s Continuous Status as an Employee or Consultant terminates on or after the first day of the thirteenth month of the Performance Period as a result of Retirement, the Grantee shall vest in a portion of the Awarded Units after the Certification Date; provided that the Committee actually certifies that the Performance Restrictions for the Performance Period have been met. Such portion shall be equal to (i) one-third of the Awarded Units if the Grantee’s termination occurs more than 12 months but no greater than 24 months after the start of the Performance Period and (ii) two-thirds of the Awarded Units if the Grantee’s termination occurs more than 24 months after the start of the Performance Period but before the Certification Date. For purposes of this Agreement, “Retirement” means the Grantee’s attainment of age 63 and 10 years of Service. Further notwithstanding the foregoing, in the event that Grantee’s Continuous Status as an Employee or Consultant terminates any time after the start of the Performance Period because of either (i) Grantee’s Disability or (ii) Grantee’s death, Grantee shall fully and immediately vest in all Awarded Units, calculated as though target performance had been achieved for each of the RTSR and Revenue Goals. If Grantee dies after Retirement but before the Certificate Date, Grantee’s termination of Continuous Status as an Employee or Consultant will be deemed to have occurred as a result of death and not Retirement.

5.Delivery of Shares. Once Awarded Units have vested under this Agreement, the Company will convert the Awarded Units in the Grantee’s Account into Shares on a one-for-one basis and deliver the total number of Shares due to the Grantee as soon as administratively possible after such date, but no later than the 15th day of the 3rd month after the end of the Performance Period; provided, however, that if the Awarded Units vested because Grantee’s termination of Continuous Status as an Employee or Consultant due to Grantee’s Disability or death, the Shares shall be delivered no later than the 15th day of the 3rd month after such termination date. Notwithstanding any provision to the contrary, if, in the reasonable determination of the Company, the Grantee is a “specified employee” for purposes of Code Section 409A, then, if necessary to avoid the imposition of additional taxes or interest under Code Section 409A, the Company shall not deliver the Shares otherwise payable upon the Grantee’s termination of Continuous Status as an Employee or Consultant until the date that is at least 6 months following the Grantee’s termination and separation of service under Code Section 409A. The delivery of the Shares shall be subject to payment of the applicable withholding tax liability and the forfeiture provisions of this Agreement. If the Grantee dies before the Company has distributed any portion of the vested Awarded Units, the Company will transfer any Shares in accordance with the Grantee’s written beneficiary designation or to the Grantee’s estate if no written beneficiary designation is provided.

6.Dividend Equivalents but no Voting Rights. Unless and until Shares have been issued to the Grantee, the Grantee shall not have any privileges of a stockholder of the Company with respect to any Awarded Units subject to this Agreement or otherwise afford any rights to which Shares are entitled with respect to any such Awarded Units. Notwithstanding the foregoing, the Grantee shall be entitled to receive dividend equivalents with respect to the number of Awarded Units that vest. Each dividend equivalent represents the right to receive an amount equal to the dividends that are declared and paid during the period beginning on the Grant Date and ending on the Certification Date with respect to the Share represented by the related vested Awarded Unit, subject to the same terms and conditions as Awarded Units under this Agreement. The dividend equivalents on the vested Awarded Unit shall be payable only when and to the extent that the underlying Awarded Unit vests and becomes settled. Any dividend equivalents will be distributed to the Grantee in accordance with Section 5 of this Agreement or forfeited, depending on whether or not the applicable Awarded Units have vested under this Agreement. Any such distributions will be made in (i) cash, for any dividend equivalents relating to cash dividends and/or (ii) Shares, for any dividend equivalents relating to Share dividends.

7.Additional Shares. If the Company pays a stock dividend or declares a stock split on or with respect to any of its Common Stock, or otherwise distributes securities of the Company to the holders of its Common Stock, the shares of stock or other securities of the Company issued with respect to the Awarded Units then subject to the restrictions contained in this Agreement shall be held in escrow and shall be distributed to the Grantee on the Certification Date, unless the Grantee forfeits the Awarded Units pursuant to Section 4 hereof, in which case the Grantee shall also forfeit the right to receive such stock or other securities. If the Company shall distribute to its shareholders shares of stock of another corporation, the shares of stock of such other corporation distributed with respect to the Awarded Units then subject to the restrictions contained in this Agreement shall be held in escrow and shall be distributed to the Grantee on such Certification Date, unless the Grantee forfeits the Awarded Units pursuant to Section 4 hereof, in which case the Grantee shall also forfeit the right to receive such stock.

8.Effect of Change in Control. Notwithstanding anything in this Agreement to the contrary, including Section 4, in the event of a Change in Control, no cancellation, termination, acceleration of vesting, lapse of any restriction (performance or otherwise), or settlement or other payment shall occur with respect to any Awarded Units, if and only if the Committee (as constituted immediately before the consummation of the Change in Control) reasonably determines in good faith before the Change in Control that (i) this outstanding Award will be honored or assumed, or new rights substituted (such honored, assumed, or substituted Award being referred to as a “Replacement Award”) by the successor, and (ii) such Replacement Award:

(i)be (A) based on shares of common stock that are traded on a registered U.S. securities exchange or (B) an award of cash having the same economic value;

(ii)provide the Grantee with rights and entitlements substantially equivalent to or better than the rights, terms and conditions applicable under this Agreement, including, but not limited to, an identical or better vesting schedule and identical or better timing and methods of payment;

(iii)have substantially equivalent economic value to the Awarded Units under this Agreement, determined at the time of the Change in Control; and

(iv)have terms and conditions that provide that in the event that the Grantee’s Continuous Status as an Employee or Consultant is involuntarily terminated by the Company for any reason other than for Cause within two years following the Change in Control, any conditions on the Grantee’s rights under, or any restrictions on transfer applicable to, the Awarded Units shall be waived or shall lapse, as the case may be, and any performance-based restrictions shall be deemed to have been achieved at target level performance.

If, however, Replacement Awards are not granted in accordance with this section, restrictions on the Awarded Units shall terminate; any performance-based restrictions shall be deemed to have been achieved at target level performance; and such Awarded Units shall be immediately payable, except to the extent that later payment is necessary to comply with Code Section 409A.

9.Adjustments. The Awarded Units shall be subject to adjustment in accordance with Section 17 of the Plan.

10.Withholding Taxes. To the extent that the Company is required to withhold federal, state, local or foreign taxes in connection with any delivery of Shares to the Grantee, and the amounts available to the Company for such withholding are insufficient, it shall be a condition to the receipt of such delivery that the Grantee make arrangements satisfactory to the Company for payment of the balance of such taxes required to be withheld. The Grantee may elect that all or any part of such withholding requirement be satisfied by retention by the Company of a portion of the Shares to be delivered to the Grantee. If such election is made, the Shares so retained shall be credited against such withholding requirement at the Fair Market Value (as such term is defined in the Plan) of a Share. In no event shall the Fair Market Value of Shares to be withheld pursuant to this Section 10 to satisfy applicable withholding taxes in connection with the benefit exceed the minimum amount of taxes required to be withheld.

11.Notices. Any notices required or permitted by the terms of this Agreement or the Plan must be in writing, shall be delivered to the Grantee at his or her address on file with the Company or to the Company addressed as follows (or to such other address or addresses of which notice in the same manner has previously been given), and will be deemed to have been duly given (a) when delivered in person, (b) when dispatched by electronic mail or facsimile transfer, (c) one business day after having been dispatched by a nationally recognized overnight courier service or (d) three business days after being sent by registered or certified mail, return receipt requested, postage prepaid:

Lancaster Colony Corporation

380 Polaris Parkway, Suite 400

Westerville, Ohio 43082

Attention: Corporate Secretary

12.No Employment Contract; Right to Terminate Employment. The grant of the Awarded Units to the Grantee is a voluntary, discretionary award being made on a one-time basis and it does not constitute a commitment to make any future awards. The grant of the Awarded Units and any payments made hereunder will not be considered salary or other compensation for purposes of any severance pay or similar allowance, except as otherwise required by law. Nothing in this Agreement will give the Grantee any right to continue employment or to Continuous Status as an Employee or Consultant with the Company or any of its Subsidiaries, as the case may be, or interfere in any way with the right of the Company or any of its subsidiaries to terminate the employment of the Grantee at any time.

13.Relation to Other Benefits. Any economic or other benefit to the Grantee under this Agreement or the Plan shall not be taken into account in determining any benefits to which the Grantee may be entitled under any profit‑sharing, retirement or other benefit or compensation plan maintained by the Company or a subsidiary of the Company and shall not affect the amount of any life insurance coverage available to any beneficiary under any life insurance plan covering employees of the Company or a Subsidiary of the Company.

14.Innovations. In consideration of the Awarded Units, the Grantee agrees:

(a)For purposes of this Section 14, the “Company” shall mean Lancaster Colony Corporation or any of its parent, subsidiary, or affiliated companies. All Innovations shall belong to and be the exclusive property of the Company.

(b)The Grantee will promptly disclose all Innovations to the Company and will assign all of the Grantee’s right, title and interest to such Innovations, whether in the United States and any foreign country, to the Company and its successors and assigns. The Grantee will from time to time, upon request and at the expense of the Company, sign all instruments necessary for the filing and prosecution of any copyrights, patents, mask works, and applications for letters patent of the United States or any foreign country which the Company may desire to file upon such inventions without additional compensation. The Grantee will render all reasonable assistance to the Company and its agents in preparing applications and other documents and do all things that may be reasonable and necessary to protect the rights of the Company and vest in it all such inventions, discoveries, applications, and patents, even if the Grantee is no longer employed by the Company, provided that the Company compensates the Grantee at a reasonable rate for time actually spent by the Grantee on assistance occurring after termination of employment.

(c)That upon termination of employment with the Company for any reason, the Grantee will immediately deliver to the Company all drawings, blueprints, sketches, notebooks, formulae, notes, manuals and other documents reflecting Confidential Information or Innovations, and the Grantee will not retain any copies or versions of such information.

15.Improper Use or Disclosure of Confidential Information. In consideration of the Awarded Units, the Grantee agrees to the following terms on maintaining confidentiality of certain non-public information:

(a)For purposes of this Section 15, the “Company” shall mean Lancaster Colony Corporation or any of its parent, subsidiary, or affiliated companies.

(b)The Grantee agrees that during employment with the Company, and at any time thereafter regardless of the reasons for termination, the Grantee will not directly or indirectly do any of the following:

(i) use, or attempt to use, any Confidential Information or Third Party Confidential Information, except as required for the performance of the Grantee’s lawful job duties for the Company;

(ii) disclose, or attempt to disclose, any Confidential Information to any person or entity who, at the time of the disclosure or attempted disclosure, does not have access to the information that was authorized by an agent of the Company with actual authority to provide such access; and/or

(iii) disclose, or attempt to disclose, any Third Party Confidential Information to any person or entity who, at the time of the disclosure or attempted disclosure, does not have access to the information that was authorized by (1) an agent of the Company with actual authority to provide such access and/or (2) an agent of the owner of the Third Party Confidential Information with actual authority to provide such access.

(c)Nothing in Section 15 of this Agreement restricts the Grantee from exercising any rights conferred by Section 7 of the National Labor Relations Act. Additionally, nothing in Section 15 of this Agreement restricts the Grantee from exercising any other rights that are conferred by federal, state, and/or local law and that an agreement such as this is prohibited by law from restricting. Further, nothing in Section 15 of this Agreement restricts the Grantee from reporting conduct the Grantee reasonably, and in good faith, believes to be a violation of federal, state, and/or local law. However, in exercising such rights or in making such reports, the Grantee must act in good faith and not unreasonably or unnecessarily disclose any Confidential Information or Third Party Confidential Information. Furthermore, if any Confidential Information is to be disclosed outside of the Company in exercising such rights or in making such reports, then the Grantee is required to provide prior written notice of the disclosure to Company management, so long as such prior written notice is not prohibited by law. If any Third Party Confidential Information is to be disclosed outside of the Company in exercising such rights or in making such reports, then the Grantee is required to provide prior written notice of the disclosure to Company management and to the management of any affected owner of Third Party Confidential Information, so long as such prior written notice is not prohibited by law. The Grantee must provide the prior written notice on or before the moment the Grantee makes the disclosure.

16.Unfair Competition. In consideration of the Awarded Units, the Grantee agrees to be prohibited from engaging in unfair competition with the Company both during and after employment as follows:

(a)For purposes of this Section 16, the “Company” shall mean Lancaster Colony Corporation or any of its Affiliates.

(b)The Grantee acknowledges that, by working for the Company, he or she will: (i) have access to, learn about, and work with the Company’s valuable and unique Confidential Information, all of which the Company developed through substantial, time, effort, and expense; (ii) be in contact and develop relationships with Third Parties, the contacts and relationships with whom the Company developed through substantial time, effort, and expense; and (iii) receive valuable training, knowledge, and expertise, some or all of which the Grantee gained in whole or in part through substantial time, effort, and expense by the Company. For these reasons, the Grantee acknowledges and agrees that the Company has legitimate interests in restricting the Grantee’s competitive activities both during and after employment with the Company and that the restrictions contained in this Section 16 are necessary to protect those legitimate business interests, are designed to eliminate competition that would be unfair to the Company, are reasonable in time and scope, and do not confer a benefit upon the Company which is disproportionate to any detriment to the Grantee.

(c)The Grantee agrees that during employment with the Company, and for a period of one (1) year thereafter regardless of the reasons for termination, the Grantee will not Compete with the Company, or prepare to Compete with the Company, within the Protected Territory. This restriction applies regardless of whether the Grantee is physically present in the Protected Territory engaging in prohibited competition or whether the Grantee uses means of communication, such as the telephone or the Internet, to engage in prohibited competition within the Protected Territory while physically outside of the Protected Territory. Notwithstanding the foregoing, nothing in this Agreement shall prohibit the Grantee from purchasing or owning less than five percent (5%) of the publicly traded securities of any competitor of the Company’s, provided that such ownership represents a passive investment and that the Grantee is not a controlling person of, or a member of a group that controls, such competitor.

(d)The Grantee agrees that during employment with the Company and for a period of two (2) years thereafter regardless of the reasons for termination, the Grantee will not, to any tangible or intangible detriment of the Company, directly or indirectly do any of the following:

(i) solicit in any way, or attempt to solicit in any way, any business from a Third Party;

(ii) accept any business from, or attempt to accept any business from, a Third Party; and/or

(iii) induce in any way, or attempt to induce in any way, a Third Party to terminate or diminish in any way its existing or prospective business relationship with the Company.

(e)The Grantee agrees that during employment with the Company and for a period of two (2) years thereafter regardless of the reasons for termination, the Grantee will not directly or indirectly do any of the following:

(i) solicit in any way, or attempt to solicit in any way, any current or prospective employee of the Company to decline any prospective employment with the Company or to terminate his or her current employment with the Company; and/or

(ii) induce in any way, or attempt to induce in any way, any current or prospective employee of the Company to decline any prospective employment with the Company or to terminate his or her current employment with the Company.

17.Miscellaneous and Remedies. In consideration of the Awarded Units, the Grantee agrees to be bound by the following:

(a)For purposes of this Section 17, the “Company” shall mean Lancaster Colony Corporation or any of its Affiliates.

(b)The Grantee represents that the Grantee currently has no restrictions on competition imposed by any agreement with any prior employer, including without limitation any non-competition restriction or non-solicitation restriction, that would prevent the Grantee from working for the Company and performing all lawful duties that the Company may require of the Grantee. By signing this Agreement, the Grantee certifies that the Grantee has made every good faith effort to determine whether any such restrictions exist. The Grantee agrees that the Grantee is prohibited from using or disclosing any confidential business information or trade secrets of a prior employer. This prohibits without limitation any disclosure of such information or trade secrets to any employee of the Company or any use of such information or trade secrets as part of the Grantee’s job duties with the Company. The Grantee further acknowledges that the Company will never directly or indirectly request Employee to improperly use or disclose any

prior employer’s confidential information or trade secrets. If any Company employee does make such a request, the Grantee shall immediately report the request to the Company’s Human Resources Department.

(c)The Grantee agrees to notify any of the Grantee’s actual or prospective employers of the existence and terms of this Agreement and agrees that the Company may notify such employers of the terms of this Agreement as well.

(d)The Grantee agrees that any breach, threatened breach, or attempted breach by the Grantee of Sections 14, 15, and/or 16 of this Agreement will cause immediate and irreparable harm to the Company that cannot be adequately remedied by money damages and will entitle the Company to immediate injunctive relief and/or specific performance in any court of competent jurisdiction, as well as to all other legal or equitable remedies and Uniform Trade Secrets Act remedies, where applicable, to which the Company may be entitled.

(e)If a jury or court of competent jurisdiction finds that the Grantee has breached Section 15 of this Agreement, and this finding becomes final after any appeals are exhausted, then the Grantee is liable to the Company, for each breach, in an amount equal to ten percent (10%) of the Grantee’s last total annual compensation provided by the Company. The Grantee agrees that if the Grantee breaches Section 15 of this Agreement then Company will suffer actual damages in an amount that would be difficult if not impossible to determine and that the liquidated damages imposed for a breach of Section 15 of this Agreement represent the damages fairly estimated by the parties to result from any breach and do not constitute a penalty. Furthermore, the Grantee agrees that the imposition of these liquidated damages does not demonstrate or imply that the Company would not suffer irreparable harm from any breach of this Agreement and does not render improper the award of injunctive relief.

(f)The Grantee agrees that if the Grantee breaches, threatens to breach, or attempts to breach any of the provisions of Section 16(c) following termination of employment with the Company, then the post-employment restricted period for Section 16(c) shall be extended to encompass the period of one (1) year from the date the Company obtains a court order providing preliminary or permanent injunctive relief enjoining the Grantee from any or all acts and/or omissions contrary to Section 16(c). Similarly, if the Grantee breaches, threatens to breach, or attempts to breach any of the provisions of Sections 16(d) and/or 16(e) following termination of employment with the Company, then the restricted period for Sections 16(d) and/or 16(e) shall be extended to encompass the period of two (2) years from the date the Company obtains a court order providing preliminary or permanent injunctive relief enjoining the Grantee from any acts and/or omissions contrary to Sections 16(d) and/or 16(e).

(g)If the Company is, in its sole judgment, compelled to assert a cause of action against the Grantee to enforce or remedy any breach, threatened breach, or attempted breach of Sections 14, 15, and/or 16 of this Agreement, then the Grantee agrees to reimburse the Company for its reasonable attorneys’ fees and other reasonable expenses incurred in the investigation and successful prosecution or settlement of any such cause of action in addition to any damages or other remedies obtained by the Company.

(h)If any part of the restrictions contained in Section 16 of this Agreement are found unenforceable by any court of competent jurisdiction, then the parties agree that they intend for the court to enforce the restrictions to the extent reasonable or enforceable and to not decline enforcement. The parties agree that, in any litigation over Section 16 of this Agreement, they will jointly advocate this position to the court and/or any jury.

18.Information.Information about the Grantee and the Grantee’s participation in the Plan may be collected, recorded and held, used and disclosed for any purpose related to the administration of the Plan. The Grantee understands that such processing of this information may need to be carried out by the Company and its Subsidiaries and by third party administrators whether such persons are located within the Grantee’s country or elsewhere, including the United States of America. The Grantee consents to the processing of information relating to the Grantee and the Grantee’s participation in the Plan in any one or more of the ways referred to above.

19.Benefit of Agreement. Subject to the provisions of the Plan and the other provisions hereof, this Agreement is for the benefit of and is binding on the heirs, executors, administrators, successors and assigns of the parties hereto.

20.Entire Agreement. This Agreement, together with the Plan, embodies the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersedes all prior oral or written agreements and understandings relating to the subject matter hereof. No statement, representation, warranty, covenant or agreement not expressly set forth in this Agreement shall affect or be used to interpret, change or restrict the express terms and provisions of this Agreement; provided, however, in any event, this Agreement shall be subject to and governed by the Plan. The Administrator shall have authority, subject to the express provisions of the Plan and this Agreement, to establish, amend and rescind rules and regulations relating to the Plan, and to make all other determinations that are, in the judgment of the

Administrator, necessary or desirable for the administration of the Plan. The Administrator may correct any defect, supply any omission or reconcile any inconsistency in the Plan or in this Agreement in the manner and to the extent it shall deem expedient to carry the Plan into effect and it shall be the sole and final judge of such expediency. All actions by the Administrator under the provisions of this Section 20 shall be conclusive for all purposes. The Grantee specifically understands and agrees that the Awarded Units are being granted under the Plan, copies of which Plan the Grantee acknowledges the Grantee has read, understands and by which the Grantee agrees to be bound.

21.Amendments. Any amendment to the Plan shall be deemed to be an amendment to this Agreement to the extent that the amendment is applicable hereto; provided, however, that no amendment shall adversely affect the rights of the Grantee with respect to the Awarded Units without the Grantee’s consent.

22.Severability. It is the intention and agreement of the Company and the Grantee that this Agreement shall be construed in such a manner as to impose only those restrictions on the conduct of the Grantee that are reasonable in light of the circumstances as they then exist and as are necessary to assure the Company of the intended benefit of this Agreement. In the event that one or more of the provisions of this Agreement shall be invalidated for any reason by a court of competent jurisdiction, any provision so invalidated shall be deemed to be separable from the other provisions hereof, and the remaining provisions hereof shall continue to be valid and fully enforceable.

23.Governing Law. This Agreement is made under, and shall be construed in accordance with the internal substantive laws of the State of Ohio.

24.Waivers and Consents. The terms and provisions of this Agreement may be waived, or consent for the departure therefrom granted, only by written document executed by the party entitled to the benefits of such terms or provisions. No such waiver or consent shall be deemed to be or shall constitute a waiver or consent with respect to any other terms or provisions of this Agreement, whether or not similar. Each such waiver or consent shall be effective only in the specific instance and for the purpose for which it was given, and shall not constitute a continuing waiver or consent.

25.Electronic Delivery and Consent to Electronic Participation. The Company may, in its sole discretion, decide to deliver any documents related to the Awarded Units and participation in the Plan or future grants of Restricted Stock that may be granted under the Plan by electronic means. Notwithstanding anything in this Agreement to the contrary, Grantee hereby consents to receive such documents by electronic delivery and to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company, including the acceptance of Restricted Stock grants and the execution of award agreements through electronic signature.

[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

Executed in the name and on behalf of the Company in Westerville, Ohio as of __________.

LANCASTER COLONY CORPORATION
By:
	Name:
	Title:

ACCEPTANCE OF AGREEMENT

    Grantee hereby: (a) acknowledges receiving a copy of the Plan, which has either been previously delivered or is provided with this Agreement, and represents that he or she is familiar with and understands all provisions of the Plan and this Agreement; (b) voluntarily and knowingly accepts this Agreement and the Awarded Units granted to him or her under this Agreement subject to all provisions of the Plan and this Agreement; and (c) represents that he or she understands that the acceptance of this Agreement through an on-line or electronic system, if applicable, carries the same legal significance as if he or she manually signed the Agreement. Grantee further acknowledges receiving a copy of the Company’s most recent annual report to shareholders and other communications routinely distributed to the Company’s shareholders and a copy of the prospectus pertaining to the Plan.

Grantee Name:

Exhibit A

Calculation of TSR

Total Shareholder Return (“TSR”) means, with respect to the Company, the growth in the price of a share of the Company’s common stock plus dividends during the Performance Period in accordance with the following formula:

TSR = [(Ending Stock Price plus Cumulative Dividends Paid) / Beginning Stock Price] – 1.

“Beginning Stock Price” means the average closing price as reported on the Nasdaq Stock Market (or such other principal exchange on which the Company’s common stock is then listed for trading) of one (1) share of the Company’s common stock for the last twenty (20) trading days immediately prior to the first day of the Performance Period.

“Ending Stock Price” means the average closing price as reported on the Nasdaq Stock Market (or such other principal exchange on which the Company’s common stock is then listed for trading) of one (1) share of the Company’s common stock for the last twenty (20) trading days prior to and including the final day of the Performance Period.

“Dividends Paid” shall include all dividends declared, with an ex-dividend date within the Performance Period, if any, with respect to the Company’s common stock underlying the Performance Units.

TSR for each member of the TSR Peer Group shall be calculated on the same principles as set forth above for the Company.

Exhibit B

Peer Group

The __ companies set forth in the S&P 1500 Packaged Food and Meats Index

•Peer Group companies will be adjusted as follows for activity during the Performance Period

◦If the Company or a member of the Peer Group splits its stock, such company’s TSR will be adjusted for the stock split

◦If a member of the Peer Group has announced to be acquired by another company, the company will be removed from the Peer Group for the entire Performance Period

▪The Committee has the discretion to reinstitute the peer company if the deal falls through

◦If a member of the Peer Group sells, spins‐off, or disposes of a portion of its business representing more than 50% of such Company’s total assets during the Performance Period, such Company will be removed from the Peer Group

◦If a member of the Peer Group acquires another company, the acquiring Peer Group company will remain in the Peer Group for the Performance Period

◦If a member of the Peer Group is delisted on all major stock exchanges, such delisted company will remain in the Peer Group, positioned below the lowest performing member of the Peer Group

◦Members of the Peer Group that file for bankruptcy, liquidation or similar reorganization during the Performance Period will remain in the Peer Group, positioned below the lowest performing nonbankrupt member of the Peer Group

◦No new Peer Group companies may be added during the course of a Performance Period.

◦In addition, the Compensation Committee shall have the authority to make other appropriate adjustments in response to a change in circumstances that results in a member of the Peer Group no longer satisfying the criteria for which such member was originally selected

Exhibit C

Calculation of Revenue Goal

Revenue Growth Metric - FY__ Target Established at _% CAGR
($ in Thousands)
			FY__ Revenue as % of Target				Share Payout as % of Units Granted
FY__ Revenue					CAGR *
>=	$_________		>=	___%	>=	___%	200% (Maximum)
	$_________	(Target)		___%		___%	100%
	$_________			___%		___%	20% (Threshold)
<	$_________		<	___%	<	___%	—%

EX-31.1

Exhibit 31.1

Certification by Chief Executive Officer

I, David A. Ciesinski, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Lancaster Colony Corporation;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	November 3, 2021	By:	/s/ DAVID A. CIESINSKI
			David A. Ciesinski
			Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification by Chief Financial Officer

I, Thomas K. Pigott, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Lancaster Colony Corporation;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	November 3, 2021	By:	/s/ THOMAS K. PIGOTT
			Thomas K. Pigott
			Chief Financial Officer

EX-32

Exhibit 32

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

PURSUANT TO 18, UNITED STATES CODE, SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Lancaster Colony Corporation (the “Company”) on Form 10-Q for the quarter ending September 30, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), David A. Ciesinski, Chief Executive Officer of the Company, and Thomas K. Pigott, Chief Financial Officer of the Company, respectively, do each hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that:

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

By:	/s/ DAVID A. CIESINSKI
	David A. Ciesinski
	Chief Executive Officer
November 3, 2021
By:	/s/ THOMAS K. PIGOTT
	Thomas K. Pigott
	Chief Financial Officer
November 3, 2021

The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.

XML

Cover - shares shares in Thousands	3 Months Ended
	Sep. 30, 2021	Oct. 15, 2021
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2021
Document Transition Report	false
Entity File Number	000-04065
Entity Registrant Name	Lancaster Colony Corporation
Entity Incorporation, State or Country Code	OH
Entity Tax Identification Number	13-1955943
Entity Address, Address Line One	380 Polaris Parkway
Entity Address, Address Line Two	Suite 400
Entity Address, City or Town	Westerville
Entity Address, State or Province	OH
Entity Address, Postal Zip Code	43082
City Area Code	(614)
Local Phone Number	224-7141
Title of 12(b) Security	Common Stock, without par value
Trading Symbol	LANC
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		27,530
Amendment Flag	false
Document Fiscal Period Focus	Q1
Entity Central Index Key	0000057515
Document Fiscal Year Focus	2022
Current Fiscal Year End Date	--06-30

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2021	Jun. 30, 2021
Current Assets:
Cash and equivalents	$ 130,089	$ 188,055
Receivables	108,365	97,897
Inventories:
Raw materials	48,077	48,895
Finished goods	110,292	72,980
Total inventories	158,369	121,875
Other current assets	13,033	15,654
Total current assets	409,856	423,481
Property, Plant and Equipment:
Land, buildings and improvements	270,972	252,174
Machinery and equipment	442,262	424,015
Total cost	713,234	676,189
Less accumulated depreciation	321,198	311,567
Property, plant and equipment-net	392,036	364,622
Other Assets:
Goodwill	208,371	208,371
Other intangible assets-net	57,625	58,766
Operating lease right-of-use assets	24,157	22,455
Other noncurrent assets	23,091	23,590
Total	1,115,136	1,101,285
Current Liabilities:
Accounts payable	127,753	110,338
Accrued liabilities	52,034	63,585
Total current liabilities	179,787	173,923
Noncurrent Operating Lease Liabilities	18,353	17,228
Other Noncurrent Liabilities	27,495	28,285
Deferred Income Taxes	39,446	38,702
Commitments and Contingencies
Shareholders' Equity:
Preferred stock-authorized 3,050,000 shares; outstanding-none
Common stock-authorized 75,000,000 shares; outstanding-September-27,529,867 shares; June-27,531,040 shares	130,832	128,617
Retained earnings	1,492,200	1,482,220
Accumulated other comprehensive loss	(8,211)	(8,253)
Common stock in treasury, at cost	(764,766)	(759,437)
Total shareholders' equity	850,055	843,147
Total	$ 1,115,136	$ 1,101,285

XML

Condensed Consolidated Balance Sheets (Parenthetical) - shares	Sep. 30, 2021	Jun. 30, 2021
Statement of Financial Position [Abstract]
Preferred stock, shares authorized	3,050,000	3,050,000
Preferred stock, shares outstanding	0	0
Common stock, shares authorized	75,000,000	75,000,000
Common stock, shares outstanding	27,529,867	27,531,040

XML

Condensed Consolidated Statements Of Income - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Sep. 30, 2021	Sep. 30, 2020
Income Statement [Abstract]
Net Sales	$ 392,056	$ 349,237
Cost of Sales	299,689	256,583
Gross Profit	92,367	92,654
Selling, General and Administrative Expenses	51,856	48,198
Change in Contingent Consideration	0	(5,687)
Impairment Charges	0	1,195
Operating Income	40,511	48,948
Other, Net	20	4
Income Before Income Taxes	40,531	48,952
Taxes Based on Income	9,876	11,873
Net Income	$ 30,655	$ 37,079
Net Income Per Common Share:
Basic and diluted (in dollars per share)	$ 1.11	$ 1.35
Weighted Average Common Shares Outstanding:
Basic (in shares)	27,459	27,461
Diluted (in shares)	27,515	27,495

XML

Condensed Consolidated Statements Of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2021	Sep. 30, 2020
Statement of Comprehensive Income [Abstract]
Net Income	$ 30,655	$ 37,079
Defined Benefit Pension and Postretirement Benefit Plans:
Amortization of loss, before tax	100	168
Amortization of prior service credit, before tax	(45)	(45)
Total Other Comprehensive Income, Before Tax	55	123
Tax Attributes of Items in Other Comprehensive Income:
Amortization of loss, tax	(23)	(39)
Amortization of prior service credit, tax	10	10
Total Tax Expense	(13)	(29)
Other Comprehensive Income, Net of Tax	42	94
Comprehensive Income	$ 30,697	$ 37,173

XML

Condensed Consolidated Statements Of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2021	Sep. 30, 2020
Cash Flows From Operating Activities:
Net income	$ 30,655	$ 37,079
Impacts of noncash items:
Depreciation and amortization	11,262	10,409
Change in contingent consideration	0	(5,687)
Deferred income taxes and other changes	800	3,179
Stock-based compensation expense	2,274	1,772
Impairment Charges	0	1,195
Pension plan activity	(137)	(57)
Changes in operating assets and liabilities:
Receivables	(10,468)	(10,389)
Inventories	(36,494)	(25,514)
Other current assets	2,238	(626)
Accounts payable and accrued liabilities	(1,302)	12,282
Net cash (used in) provided by operating activities	(1,172)	23,643
Cash Flows From Investing Activities:
Payments for property additions	(30,227)	(14,411)
Other-net	134	(137)
Net cash used in investing activities	(30,093)	(14,548)
Cash Flows From Financing Activities:
Payment of dividends	(20,675)	(19,270)
Purchase of treasury stock	(5,329)	(15)
Tax withholdings for stock-based compensation	(59)	(1,854)
Other-net	(638)	(141)
Net cash used in financing activities	(26,701)	(21,280)
Net change in cash and equivalents	(57,966)	(12,185)
Cash and equivalents at beginning of year	188,055	198,273
Cash and equivalents at end of period	130,089	186,088
Supplemental Disclosure of Operating Cash Flows:
Net cash payments for income taxes	$ 15	$ 1,617

XML

Condensed Consolidated Statements Of Shareholders' Equity - USD ($) $ in Thousands	Total	Common Stock Outstanding [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Loss [Member]	Treasury Stock [Member]
Balance (in shares) at Jun. 30, 2020		27,524,000
Balance at Jun. 30, 2020	$ 783,300	$ 125,153	$ 1,421,121	$ (12,070)	$ (750,904)
Net income	37,079		37,079
Net pension and postretirement benefit gains, net of tax effect	94			94
Cash dividends - common stock	(19,270)		(19,270)
Purchase of treasury stock (in shares)		0
Purchase of treasury stock	(15)				(15)
Stock-based plans (in shares)		16,000
Stock-based plans	(1,854)	$ (1,854)
Stock-based compensation expense	1,772	$ 1,772
Balance (in shares) at Sep. 30, 2020		27,540,000
Balance at Sep. 30, 2020	$ 801,106	$ 125,071	1,438,930	(11,976)	(750,919)
Balance (in shares) at Jun. 30, 2021	27,531,040	27,531,000
Balance at Jun. 30, 2021	$ 843,147	$ 128,617	1,482,220	(8,253)	(759,437)
Net income	30,655		30,655
Net pension and postretirement benefit gains, net of tax effect	42			42
Cash dividends - common stock	(20,675)		(20,675)
Purchase of treasury stock (in shares)		(30,000)
Purchase of treasury stock	(5,329)				(5,329)
Stock-based plans (in shares)		29,000
Stock-based plans	(59)	$ (59)
Stock-based compensation expense	$ 2,274	$ 2,274
Balance (in shares) at Sep. 30, 2021	27,529,867	27,530,000
Balance at Sep. 30, 2021	$ 850,055	$ 130,832	$ 1,492,200	$ (8,211)	$ (764,766)

XML

Condensed Consolidated Statements Of Shareholders' Equity (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2021	Sep. 30, 2020
Statement of Stockholders' Equity [Abstract]
Tax effect included in net pension and postretirement benefit gains	$ 13	$ 29
Common stock, dividends per share (in dollars per share)	$ 0.75	$ 0.70

XML

Summary Of Significant Accounting Policies

3 Months Ended

Sep. 30, 2021

Accounting Policies [Abstract]

Summary Of Significant Accounting Policies

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 2021 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, 2022 refers to fiscal 2022, which is the period from July 1, 2021 to June 30, 2022.

Deferred Software Costs

We capitalize certain costs related to hosting arrangements that are service contracts (cloud computing arrangements). Capitalized costs are included in Other Current Assets or Other Noncurrent Assets and are amortized on a straight-line basis over the estimated useful life. For the three months ended September 30, 2021 and 2020, we capitalized $0.3 million and $1.6 million, respectively, of deferred software costs related to cloud computing arrangements.

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: 

	September 30,
	2021		2020
Construction in progress in Accounts Payable	$	22,685	$	3,556

Accrued Compensation and Employee Benefits

Accrued compensation and employee benefits included in Accrued Liabilities was $18.2 million and $32.5 million at September 30, 2021 and June 30, 2021, 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.

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

	Three Months Ended  September 30,
	2021		2020
Net income	$	30,655	$	37,079
Net income available to participating securities	(87)		(79)
Net income available to common shareholders	$	30,568	$	37,000
Weighted average common shares outstanding – basic	27,459		27,461
Incremental share effect from:
Nonparticipating restricted stock	3		3
Stock-settled stock appreciation rights	49		31
Performance units	4		—
Weighted average common shares outstanding – diluted	27,515		27,495
Net income per common share – basic and diluted	$	1.11	$	1.35

Accumulated Other Comprehensive Loss

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

	Three Months Ended  September 30,
	2021		2020
Accumulated other comprehensive loss at beginning of period	$	(8,253)	$	(12,070)
Defined Benefit Pension Plan Items:
Amortization of unrecognized net loss	107		173
Postretirement Benefit Plan Items:
Amortization of unrecognized net gain	(7)		(5)
Amortization of prior service credit	(45)		(45)
Total other comprehensive income, before tax	55		123
Total tax expense	(13)		(29)
Other comprehensive income, net of tax	42		94
Accumulated other comprehensive loss at end of period	$	(8,211)	$	(11,976)

Significant Accounting Policies

There were no changes to our Significant Accounting Policies from those disclosed in our 2021 Annual Report on Form 10-K.

Recent Accounting Standards

There are no recently issued or adopted accounting standards that will impact our consolidated financial statements.

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Fair Value

3 Months Ended

Sep. 30, 2021

Fair Value Disclosures [Abstract]

Fair Value

Fair Value

Fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. GAAP sets forth a three-level fair value hierarchy, which prioritizes the inputs used in measuring fair value. The three levels are as follows:

Level 1 – defined as observable inputs, such as quoted market prices in active markets.

Level 2 – defined as inputs other than quoted prices in active markets that are either directly or indirectly observable.

Level 3 – defined as unobservable inputs in which little or no market data exists, therefore, requiring an entity to develop its own assumptions.

Our financial assets and liabilities subject to the three-level fair value hierarchy consist principally of cash and equivalents, accounts receivable, accounts payable, contingent consideration payable and defined benefit pension plan assets. The estimated fair value of cash and equivalents, accounts receivable and accounts payable approximates their carrying value.

Our contingent consideration, which resulted from the earn-out associated with our acquisition of Bantam Bagels, LLC (“Bantam”), is measured at fair value on a recurring basis and is included in Other Noncurrent Liabilities on the Condensed Consolidated Balance Sheets. The following table summarizes our contingent consideration:

	Fair Value Measurements at September 30, 2021
	Level 1		Level 2		Level 3		Total
Contingent consideration - Bantam	$	—	$	—	$	3,470	$	3,470
	Fair Value Measurements at June 30, 2021
	Level 1		Level 2		Level 3		Total
Contingent consideration - Bantam	$	—	$	—	$	3,470	$	3,470

Bantam Contingent Consideration

This contingent consideration resulted from the earn-out associated with our October 19, 2018 acquisition of Bantam. In general, the terms of the acquisition specify the sellers will receive an earn-out based upon a pre-determined multiple of the defined adjusted EBITDA of Bantam for the twelve months ending December 31, 2023. The initial fair value of the contingent consideration was determined to be $8.0 million. The fair value is measured on a recurring basis using a Monte Carlo simulation that randomly changes revenue growth, forecasted adjusted EBITDA and other uncertain variables to estimate an expected value. We record the present value of this amount by applying a discount rate. As this fair value measurement is based on significant inputs not observable in the market, it represents a Level 3 measurement within the fair value hierarchy. Our fair value measurement at September 30, 2020 resulted in a $5.7 million reduction in the fair value of Bantam’s contingent consideration based on changes in Bantam’s forecasted adjusted EBITDA for the twelve months ending December 31, 2023. The changes in forecasted adjusted EBITDA primarily reflected the impact of a SKU rationalization by a Foodservice customer resulting in the loss of sales to that customer after November 30, 2020. This adjustment was recorded in our Foodservice segment.

The following table represents our Level 3 fair value measurements using significant other unobservable inputs for Bantam’s contingent consideration:

	Three Months Ended  September 30,
	2021		2020
Contingent consideration at beginning of period	$	3,470	$	9,157
Change in contingent consideration included in operating income	—		(5,687)
Contingent consideration at end of period	$	3,470	$	3,470

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Long-Term Debt

3 Months Ended

Sep. 30, 2021

Debt Disclosure [Abstract]

Long-Term Debt

Long-Term DebtAt September 30, 2021 and June 30, 2021, 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 19, 2025, and all outstanding amounts are then due and payable. Interest is variable based upon formulas tied to LIBOR or an alternate base rate defined in the Facility. In the event that LIBOR becomes unavailable or is no longer deemed an appropriate reference rate, the Facility allows for the use of a benchmark replacement rate. 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 indebtedness, 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 September 30, 2021 and June 30, 2021, we had no borrowings outstanding under the Facility. At September 30, 2021 and June 30, 2021, we had $2.8 million of standby letters of credit outstanding, which reduced the amount available for borrowing under the Facility. We paid no interest for the three months ended September 30, 2021 and 2020.

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Commitments And Contingencies

3 Months Ended

Sep. 30, 2021

Commitments and Contingencies Disclosure [Abstract]

Commitments And Contingencies

Commitments and Contingencies

At September 30, 2021, 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 will not have a material effect on our consolidated financial statements.

We have a significant remaining commitment of approximately $78 million related to a capacity expansion project at our dressing and sauce facility in Horse Cave, Kentucky.

Our acquisition of Bantam included a provision for contingent consideration for the earn-out associated with this transaction. See further discussion in Note 2.

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Goodwill And Other Intangible Assets

3 Months Ended

Sep. 30, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill And Other Intangible Assets

Goodwill and Other Intangible Assets

Goodwill attributable to the Retail and Foodservice segments was $157.4 million and $51.0 million, respectively, at September 30, 2021 and June 30, 2021.

The following table summarizes our identifiable other intangible assets:

	September 30, 2021		June 30, 2021
Tradenames (20 to 30-year life)
Gross carrying value	$	62,531	$	62,531
Accumulated amortization	(13,064)		(12,421)
Net carrying value	$	49,467	$	50,110
Customer Relationships (2 to 15-year life)
Gross carrying value	$	17,007	$	17,507
Accumulated amortization	(12,763)		(12,912)
Net carrying value	$	4,244	$	4,595
Technology / Know-how (10-year life)
Gross carrying value	$	8,020	$	8,020
Accumulated amortization	(4,111)		(3,973)
Net carrying value	$	3,909	$	4,047
Non-compete Agreements (5-year life)
Gross carrying value	$	191	$	191
Accumulated amortization	(186)		(177)
Net carrying value	$	5	$	14
Total net carrying value	$	57,625	$	58,766

In the three months ended September 30, 2020, we recorded impairment charges of $1.2 million related to certain tradename and technology / know-how intangible assets for Bantam, which reflect the impact of a SKU rationalization by a Foodservice customer resulting in the loss of sales to that customer after November 30, 2020. The impairment charges represent the excess of the carrying value over the fair value of estimated discounted cash flows for the remaining useful lives of the intangible assets. The impairment charges are reflected in Impairment Charges in the Condensed Consolidated Statements of Income and were recorded in our Foodservice segment. We also reduced the remaining useful life for Bantam’s Foodservice customer relationship and have recorded accelerated amortization expense.

Amortization expense for our other intangible assets, which is reflected in Selling, General and Administrative Expenses, was as follows:

	Three Months Ended  September 30,
	2021		2020
Amortization expense	$	1,141	$	1,341

Total annual amortization expense for each of the next five years is estimated to be as follows:

2023	$	4,180
2024	$	4,180
2025	$	3,920
2026	$	3,290
2027	$	3,119

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Income Taxes	3 Months Ended
	Sep. 30, 2021
Income Tax Disclosure [Abstract]
Income Taxes	Income TaxesAccrued federal income taxes of $2.3 million and accrued state and local income taxes of $0.6 million were included in Accrued Liabilities at September 30, 2021. Prepaid federal income taxes of $5.1 million and prepaid state and local income taxes of $1.1 million were included in Other Current Assets at June 30, 2021.

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Business Segment Information

3 Months Ended

Sep. 30, 2021

Segment Reporting [Abstract]

Business Segment Information

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 placement of products in grocery produce departments through our refrigerated salad dressings, vegetable dips and fruit dips. Our flatbread products and sprouted grain bakery products are generally placed in the specialty bakery/deli section of the grocery store. We also have products typically marketed in the shelf-stable section of the grocery store, which include salad dressings, slaw dressing, sauces and croutons. Within the frozen food section of the grocery store, we sell yeast rolls, garlic breads and mini stuffed bagels.

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 and include salad dressings, sandwich and dipping sauces, frozen breads and yeast rolls. The majority of our Foodservice sales are products sold under private label to restaurants. We also manufacture and sell various branded Foodservice products to distributors. Finally, within this segment, we sold other roll products under a temporary supply agreement resulting from the acquisition of Omni Baking Company LLC. The temporary supply agreement was terminated effective October 31, 2020.

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 September 30, 2021 is generally consistent with that of June 30, 2021.

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

	Three Months Ended  September 30,
	2021		2020
Net Sales
Retail	$	223,889	$	193,725
Foodservice	168,167		155,512
Total	$	392,056	$	349,237
Operating Income
Retail	$	48,178	$	42,658
Foodservice	15,825		27,421
Corporate Expenses	(23,492)		(21,131)
Total	$	40,511	$	48,948

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

	Three Months Ended  September 30,
	2021		2020
Retail
Shelf-stable dressings, sauces and croutons	$	90,527	$	58,944
Frozen breads	74,719		72,843
Refrigerated dressings, dips and other	58,643		61,938
Total Retail net sales	$	223,889	$	193,725
Foodservice
Dressings and sauces	$	124,759	$	114,951
Frozen breads and other	43,408		37,792
Other roll products	—		2,769
Total Foodservice net sales	$	168,167	$	155,512
Total net sales	$	392,056	$	349,237

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

	Three Months Ended  September 30,
	2021		2020
Foodservice
National accounts	$	126,128	$	118,078
Branded and other	42,039		34,665
Other roll products	—		2,769
Total Foodservice net sales	$	168,167	$	155,512

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Stock-Based Compensation

3 Months Ended

Sep. 30, 2021

Share-based Payment Arrangement [Abstract]

Stock-Based Compensation

Stock-Based Compensation

There have been no changes to our stock-based compensation plan as disclosed in our 2021 Annual Report on Form 10-K. However, as permitted under this plan, we made an initial grant of performance units in August 2021. These performance units have either a market condition or a performance condition and will vest 3 years after the grant date. Dividend equivalents earned during the vesting period will be paid at the time the awards vest.

Our stock-settled stock appreciation rights (“SSSARs”) compensation expense was $1.0 million and $0.9 million for the three months ended September 30, 2021 and 2020, respectively. At September 30, 2021, there was $5.7 million of unrecognized compensation expense related to SSSARs that we will recognize over a weighted-average period of 2 years.

Our restricted stock compensation expense was $1.1 million and $0.9 million for the three months ended September 30, 2021 and 2020, respectively. At September 30, 2021, there was $8.9 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 $0.2 million for the three months ended September 30, 2021. At September 30, 2021, there was $3.5 million of unrecognized compensation expense related to performance units that we will recognize over a weighted-average period of 3 years.

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Summary Of Significant Accounting Policies (Policy)

3 Months Ended

Sep. 30, 2021

Accounting Policies [Abstract]

Basis Of Presentation

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 2021 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, 2022 refers to fiscal 2022, which is the period from July 1, 2021 to June 30, 2022.

Deferred Software Costs

Deferred Software CostsWe capitalize certain costs related to hosting arrangements that are service contracts (cloud computing arrangements). Capitalized costs are included in Other Current Assets or Other Noncurrent Assets and are amortized on a straight-line basis over the estimated useful life.

Property, Plant And Equipment

Property, Plant and EquipmentProperty, 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.

Earnings Per Share

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.

Recent Accounting Standards

Recent Accounting Standards

There are no recently issued or adopted accounting standards that will impact our consolidated financial statements.

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Summary Of Significant Accounting Policies (Tables)

3 Months Ended

Sep. 30, 2021

Accounting Policies [Abstract]

Schedule Of Construction In Progress In Accounts Payable

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: 

	September 30,
	2021		2020
Construction in progress in Accounts Payable	$	22,685	$	3,556

Schedule Of Basic And Diluted Net Income Per Common Share Calculations

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

	Three Months Ended  September 30,
	2021		2020
Net income	$	30,655	$	37,079
Net income available to participating securities	(87)		(79)
Net income available to common shareholders	$	30,568	$	37,000
Weighted average common shares outstanding – basic	27,459		27,461
Incremental share effect from:
Nonparticipating restricted stock	3		3
Stock-settled stock appreciation rights	49		31
Performance units	4		—
Weighted average common shares outstanding – diluted	27,515		27,495
Net income per common share – basic and diluted	$	1.11	$	1.35

Schedule Of Amounts Reclassified Out Of Accumulated Other Comprehensive Loss

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

	Three Months Ended  September 30,
	2021		2020
Accumulated other comprehensive loss at beginning of period	$	(8,253)	$	(12,070)
Defined Benefit Pension Plan Items:
Amortization of unrecognized net loss	107		173
Postretirement Benefit Plan Items:
Amortization of unrecognized net gain	(7)		(5)
Amortization of prior service credit	(45)		(45)
Total other comprehensive income, before tax	55		123
Total tax expense	(13)		(29)
Other comprehensive income, net of tax	42		94
Accumulated other comprehensive loss at end of period	$	(8,211)	$	(11,976)

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Fair Value (Tables)

3 Months Ended

Sep. 30, 2021

Business Acquisition [Line Items]

Schedule Of Contingent Consideration Measured At Fair Value On A Recurring Basis

Our contingent consideration, which resulted from the earn-out associated with our acquisition of Bantam Bagels, LLC (“Bantam”), is measured at fair value on a recurring basis and is included in Other Noncurrent Liabilities on the Condensed Consolidated Balance Sheets. The following table summarizes our contingent consideration:

	Fair Value Measurements at September 30, 2021
	Level 1		Level 2		Level 3		Total
Contingent consideration - Bantam	$	—	$	—	$	3,470	$	3,470
	Fair Value Measurements at June 30, 2021
	Level 1		Level 2		Level 3		Total
Contingent consideration - Bantam	$	—	$	—	$	3,470	$	3,470

Bantam Bagels [Member]

Business Acquisition [Line Items]

Schedule Of Level 3 Fair Value Measurements Using Significant Other Unobservable Inputs For Contingent Consideration

The following table represents our Level 3 fair value measurements using significant other unobservable inputs for Bantam’s contingent consideration:

	Three Months Ended  September 30,
	2021		2020
Contingent consideration at beginning of period	$	3,470	$	9,157
Change in contingent consideration included in operating income	—		(5,687)
Contingent consideration at end of period	$	3,470	$	3,470

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Goodwill And Other Intangible Assets (Tables)

3 Months Ended

Sep. 30, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Summary Of Other Intangible Assets

The following table summarizes our identifiable other intangible assets:

	September 30, 2021		June 30, 2021
Tradenames (20 to 30-year life)
Gross carrying value	$	62,531	$	62,531
Accumulated amortization	(13,064)		(12,421)
Net carrying value	$	49,467	$	50,110
Customer Relationships (2 to 15-year life)
Gross carrying value	$	17,007	$	17,507
Accumulated amortization	(12,763)		(12,912)
Net carrying value	$	4,244	$	4,595
Technology / Know-how (10-year life)
Gross carrying value	$	8,020	$	8,020
Accumulated amortization	(4,111)		(3,973)
Net carrying value	$	3,909	$	4,047
Non-compete Agreements (5-year life)
Gross carrying value	$	191	$	191
Accumulated amortization	(186)		(177)
Net carrying value	$	5	$	14
Total net carrying value	$	57,625	$	58,766

Schedule Of Amortization Expense

Amortization expense for our other intangible assets, which is reflected in Selling, General and Administrative Expenses, was as follows:

	Three Months Ended  September 30,
	2021		2020
Amortization expense	$	1,141	$	1,341

Estimated Annual Amortization Expense

Total annual amortization expense for each of the next five years is estimated to be as follows:

2023	$	4,180
2024	$	4,180
2025	$	3,920
2026	$	3,290
2027	$	3,119

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Business Segment Information (Tables)

3 Months Ended

Sep. 30, 2021

Segment Reporting [Abstract]

Summary Of Financial Information Attributable To Reportable Segments

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

	Three Months Ended  September 30,
	2021		2020
Net Sales
Retail	$	223,889	$	193,725
Foodservice	168,167		155,512
Total	$	392,056	$	349,237
Operating Income
Retail	$	48,178	$	42,658
Foodservice	15,825		27,421
Corporate Expenses	(23,492)		(21,131)
Total	$	40,511	$	48,948

Disaggregation Of Net Sales By Class Of Similar Products

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

	Three Months Ended  September 30,
	2021		2020
Retail
Shelf-stable dressings, sauces and croutons	$	90,527	$	58,944
Frozen breads	74,719		72,843
Refrigerated dressings, dips and other	58,643		61,938
Total Retail net sales	$	223,889	$	193,725
Foodservice
Dressings and sauces	$	124,759	$	114,951
Frozen breads and other	43,408		37,792
Other roll products	—		2,769
Total Foodservice net sales	$	168,167	$	155,512
Total net sales	$	392,056	$	349,237

Disaggregation Of Foodservice Net Sales By Type Of Customer

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

	Three Months Ended  September 30,
	2021		2020
Foodservice
National accounts	$	126,128	$	118,078
Branded and other	42,039		34,665
Other roll products	—		2,769
Total Foodservice net sales	$	168,167	$	155,512

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Summary Of Significant Accounting Policies (Narrative) (Details) - USD ($) $ in Millions	3 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Jun. 30, 2021
Accounting Policies [Abstract]
Amount capitalized for deferred software costs related to cloud computing arrangements	$ 0.3	$ 1.6
Accrued compensation and employee benefits	$ 18.2		$ 32.5

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Summary Of Significant Accounting Policies (Schedule Of Construction In Progress In Accounts Payable) (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2021	Sep. 30, 2020
Accounting Policies [Abstract]
Construction in progress in Accounts Payable	$ 22,685	$ 3,556

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Summary Of Significant Accounting Policies (Schedule Of Basic And Diluted Net Income Per Common Share Calculations) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Sep. 30, 2021	Sep. 30, 2020
Accounting Policies [Abstract]
Net income	$ 30,655	$ 37,079
Net income available to participating securities	(87)	(79)
Net income available to common shareholders	$ 30,568	$ 37,000
Weighted average common shares outstanding - basic (in shares)	27,459	27,461
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Incremental share effect from stock-settled stock appreciation rights (in shares)	49	31
Diluted (in shares)	27,515	27,495
Net income per common share - basic and diluted (in dollars per share)	$ 1.11	$ 1.35
Nonparticipating restricted stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Incremental share effect from awards with forfeitable dividends (in shares)	3	3
Performance units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Incremental share effect from awards with forfeitable dividends (in shares)	4	0

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Summary Of Significant Accounting Policies (Schedule Of Amounts Reclassified Out Of Accumulated Other Comprehensive Loss) (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2021	Sep. 30, 2020
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Accumulated other comprehensive loss at beginning of period	$ (8,253)	$ (12,070)
Total other comprehensive income, before tax	55	123
Total tax expense	(13)	(29)
Other comprehensive income, net of tax	42	94
Accumulated other comprehensive loss at end of period	(8,211)	(11,976)
Defined Benefit Pension Plan [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Amortization of unrecognized net (gain) loss	107	173
Postretirement Benefit Plan [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Amortization of unrecognized net (gain) loss	(7)	(5)
Amortization of prior service credit	$ (45)	$ (45)

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Fair Value (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Jun. 30, 2021	Oct. 19, 2018
Business Acquisition [Line Items]
Decrease in the fair value of contingent consideration	$ 0	$ 5,687
Bantam Bagels [Member]
Business Acquisition [Line Items]
Fair value of contingent consideration	3,470		$ 3,470	$ 8,000
Decrease in the fair value of contingent consideration	$ 0	$ 5,687

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Fair Value (Schedule Of Contingent Consideration Measured At Fair Value On A Recurring Basis) (Details) - Bantam Bagels [Member] - USD ($) $ in Thousands	Sep. 30, 2021	Jun. 30, 2021	Oct. 19, 2018
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration	$ 3,470	$ 3,470	$ 8,000
Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration	0	0
Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration	0	0
Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration	$ 3,470	$ 3,470

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Fair Value (Schedule Of Level 3 Fair Value Measurements Using Significant Other Unobservable Inputs For Contingent Consideration) (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2021	Sep. 30, 2020
Business Acquisition [Line Items]
Change in contingent consideration included in operating income	$ 0	$ (5,687)
Bantam Bagels [Member]
Business Acquisition [Line Items]
Contingent consideration at beginning of period	3,470	9,157
Change in contingent consideration included in operating income	0	(5,687)
Contingent consideration at end of period	$ 3,470	$ 3,470

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Long-Term Debt (Narrative) (Details) - USD ($)	3 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Jun. 30, 2021
Debt Disclosure [Abstract]
Maximum borrowing capacity	$ 150,000,000		$ 150,000,000
Maximum borrowing capacity on obtaining consent of the issuing bank	$ 225,000,000		225,000,000
Line of credit facility, expiration date	Mar. 19, 2025
Minimum interest coverage ratio	250.00%
Maximum leverage ratio	350.00%
Line of credit facility, amount outstanding	$ 0		0
Standby letters of credit, amount outstanding	2,800,000		$ 2,800,000
Interest paid	$ 0	$ 0

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Commitments And Contingencies (Narrative) (Details) $ in Millions	Sep. 30, 2021 USD ($)
Commitments and Contingencies Disclosure [Abstract]
Commitment related to a capacity expansion project	$ 78

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Goodwill And Other Intangible Assets (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Jun. 30, 2021
Goodwill [Line Items]
Goodwill	$ 208,371		$ 208,371
Impairment of intangible assets	0	$ 1,195
Retail [Member]
Goodwill [Line Items]
Goodwill	157,400		157,400
Foodservice [Member]
Goodwill [Line Items]
Goodwill	$ 51,000		$ 51,000

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Goodwill And Other Intangible Assets (Summary Of Other Intangible Assets) (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2021	Jun. 30, 2021
Finite-Lived Intangible Assets [Line Items]
Net carrying value	$ 57,625	$ 58,766
Tradenames (20 to 30-year life) [Member]
Finite-Lived Intangible Assets [Line Items]
Gross carrying value	62,531	62,531
Accumulated amortization	(13,064)	(12,421)
Net carrying value	49,467	50,110
Customer Relationships (2 to 15-year life) [Member]
Finite-Lived Intangible Assets [Line Items]
Gross carrying value	17,007	17,507
Accumulated amortization	(12,763)	(12,912)
Net carrying value	4,244	4,595
Technology / Know-how (10-year life) [Member]
Finite-Lived Intangible Assets [Line Items]
Gross carrying value	8,020	8,020
Accumulated amortization	(4,111)	(3,973)
Net carrying value	$ 3,909	4,047
Finite-lived other intangible assets useful life (in years)	10 years
Non-compete Agreements (5-year life) [Member]
Finite-Lived Intangible Assets [Line Items]
Gross carrying value	$ 191	191
Accumulated amortization	(186)	(177)
Net carrying value	$ 5	$ 14
Finite-lived other intangible assets useful life (in years)	5 years
Minimum [Member] | Tradenames (20 to 30-year life) [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-lived other intangible assets useful life (in years)	20 years
Minimum [Member] | Customer Relationships (2 to 15-year life) [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-lived other intangible assets useful life (in years)	2 years
Maximum [Member] | Tradenames (20 to 30-year life) [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-lived other intangible assets useful life (in years)	30 years
Maximum [Member] | Customer Relationships (2 to 15-year life) [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-lived other intangible assets useful life (in years)	15 years

XML

Goodwill And Other Intangible Assets (Schedule Of Amortization Expense) (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2021	Sep. 30, 2020
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization expense	$ 1,141	$ 1,341

XML

Goodwill And Other Intangible Assets (Estimated Annual Amortization Expense) (Details) $ in Thousands	Sep. 30, 2021 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
2023	$ 4,180
2024	4,180
2025	3,920
2026	3,290
2027	$ 3,119

XML

Income Taxes (Narrative) (Details) - USD ($) $ in Millions	Sep. 30, 2021	Jun. 30, 2021
Federal [Member]
Income Tax Authority [Line Items]
Accrued income taxes	$ 2.3
Prepaid income taxes		$ 5.1
State and Local [Member]
Income Tax Authority [Line Items]
Accrued income taxes	$ 0.6
Prepaid income taxes		$ 1.1

XML

Business Segment Information (Summary Of Financial Information Attributable To Reportable Segments) (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2021	Sep. 30, 2020
Segment Reporting Information [Line Items]
Net Sales	$ 392,056	$ 349,237
Operating Income	40,511	48,948
Retail [Member]
Segment Reporting Information [Line Items]
Net Sales	223,889	193,725
Operating Income	48,178	42,658
Foodservice [Member]
Segment Reporting Information [Line Items]
Net Sales	168,167	155,512
Operating Income	15,825	27,421
Corporate [Member]
Segment Reporting Information [Line Items]
Operating Income	$ (23,492)	$ (21,131)

XML

Business Segment Information (Disaggregation Of Net Sales By Class Of Similar Products) (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2021	Sep. 30, 2020
Disaggregation of Revenue [Line Items]
Total net sales	$ 392,056	$ 349,237
Retail [Member]
Disaggregation of Revenue [Line Items]
Total net sales	223,889	193,725
Foodservice [Member]
Disaggregation of Revenue [Line Items]
Total net sales	168,167	155,512
Shelf-stable dressings, sauces and croutons [Member] | Retail [Member]
Disaggregation of Revenue [Line Items]
Total net sales	90,527	58,944
Frozen breads [Member] | Retail [Member]
Disaggregation of Revenue [Line Items]
Total net sales	74,719	72,843
Refrigerated dressings, dips and other [Member] | Retail [Member]
Disaggregation of Revenue [Line Items]
Total net sales	58,643	61,938
Dressings and sauces [Member] | Foodservice [Member]
Disaggregation of Revenue [Line Items]
Total net sales	124,759	114,951
Frozen breads and other [Member] | Foodservice [Member]
Disaggregation of Revenue [Line Items]
Total net sales	43,408	37,792
Other roll products [Member] | Foodservice [Member]
Disaggregation of Revenue [Line Items]
Total net sales	$ 0	$ 2,769

XML

Business Segment Information (Disaggregation Of Foodservice Net Sales By Type Of Customer) (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2021	Sep. 30, 2020
Disaggregation of Revenue [Line Items]
Total net sales	$ 392,056	$ 349,237
Foodservice [Member]
Disaggregation of Revenue [Line Items]
Total net sales	168,167	155,512
Foodservice [Member] | National accounts [Member]
Disaggregation of Revenue [Line Items]
Total net sales	126,128	118,078
Foodservice [Member] | Branded and other [Member]
Disaggregation of Revenue [Line Items]
Total net sales	42,039	34,665
Foodservice [Member] | Other roll products [Member]
Disaggregation of Revenue [Line Items]
Total net sales	$ 0	$ 2,769

XML

Stock-Based Compensation (Narrative) (Details) - USD ($) $ in Millions	3 Months Ended
	Sep. 30, 2021	Sep. 30, 2020
Performance Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period (in years)	3 years
Compensation expense	$ 0.2
Unrecognized compensation expense	$ 3.5
Weighted-average period over which remaining compensation expense will be recognized (in years)	3 years
Stock Settled Stock Appreciation Rights SARS [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense	$ 1.0	$ 0.9
Unrecognized compensation expense	$ 5.7
Weighted-average period over which remaining compensation expense will be recognized (in years)	2 years
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense	$ 1.1	$ 0.9
Unrecognized compensation expense	$ 8.9
Weighted-average period over which remaining compensation expense will be recognized (in years)	2 years