Landec Corp Ca (LNDC) 10-Q Quarterly Report Thu Apr 07 2022

SANTA MARIA, CA – April 5, 2022 - Landec Corporation (Nasdaq: LNDC) (“Landec” or the “Company”), a diversified health and wellness company with two operating businesses, Lifecore Biomedical, Inc. (“Lifecore”) and Curation Foods, Inc. (“Curation Foods”), reported results for the fiscal 2022 third quarter ended February 27, 2022. As previously reported, on December 13, 2021 the Company closed on the sale of its Curation Food’s fresh packaged salads and vegetables business (the “Eat Smart Disposition”), and as such, those results are now reflected as discontinued operations in all periods presented within the Company’s financial statements. Looking forward, Landec continues to focus on creating shareholder value through strengthening its balance sheet, accelerating growth at Lifecore, and seeking opportunities to optimize its remaining assets.

CEO COMMENTS:

Dr. Albert Bolles, Chief Executive Officer of Landec Corporation commented, “Lifecore continued to build its development pipeline in the fiscal third quarter, adding two additional projects, which speaks to the ongoing demand for its specialized CDMO capabilities for complex projects. As expected, Lifecore delivered a strong quarter of revenue growth in the fiscal third quarter, as it resumed a more typical ordering cadence with its customers following a normalization of channel inventory that was temporarily inflated due to lower procedure volumes during the COVID pandemic peaks. While the timing of sales impacted mix, and as a result margin in the fiscal third quarter, we remain on track with the expectations we previously set forth for the full year and anticipate a strong finish to the year in the fiscal fourth quarter with respect to revenues and gross margins.”

Dr. Bolles added, “We continue to push ahead with Project SWIFT and following the Eat Smart Disposition in December, our focus has shifted to our remaining assets. We believe that our avocado products business remains well positioned within a growing industry supported by favorable consumer trends. While this business has been impacted by the inflationary environment, we expect our fiscal fourth quarter pricing actions combined with significant operational improvements to largely mitigate the associated margin pressure and put us in a position to meet our full year segment guidance from continuing operations. Our Board remains committed to enhancing shareholder value as we seek to optimize our remaining Curation Foods assets.”

FISCAL THIRD QUARTER 2022 BUSINESS HIGHLIGHTS:

•Revenues of $53.1 million, an increase of 18.8% year-over-year

•Gross profit of $13.9 million, a decrease of 3.8% year-over-year, primarily due to the timing and revenue mix at Lifecore

•Net loss from continuing operations of $7.1 million, which includes $4.6 million of restructuring and other non-recurring charges such as legal expenses, both net of tax

•Adjusted EBITDA of $6.4 million, compared to $7.3 million in the prior year period, a decrease of 12.3% year-over-year

•Lifecore segment adjusted EBITDA of $8.6 million, compared to $8.1 million in the prior year period, an increase of 5.9% year-over-year

The following information was filed by Landec Corp Ca (LNDC) on Tuesday, April 5, 2022 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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Inside Landec Corp Ca's 10-Q Quarterly Report:

Revenue - Product Highlight
The primary factors for the increase in working capital during the nine months ended February 27, 2022, was an $11.9 million increase in inventory driven by production in our Avocado Products division, a $7.5 million increase in accounts receivable driven by sales increases and timing of customer payments, a $4.2 million increase in other accrued liabilities due to timing of payments, and a $3.8 million increase in accrued compensation driven by severance accruals, partially offset by a $13.1 million increase in accounts payable due primarily to the increase in inventory and timing of payments.

Financial - Expense Highlight
Restructuring Costs During fiscal year 2020, the Company announced a restructuring plan to drive enhanced profitability, focus the business on its strategic assets and redesign the organization to be the appropriate size to compete and thrive.
Financial - Expense Highlight
-31- Table of Contents Interest Expense The increase in interest expense for the three and nine months ended February 27, 2022, compared to the same periods last year, was primarily a result of prepaid interest and prepayment penalties incurred related to payments made on our term debt resulting from the sales of our investment in Windset and the Eat Smart Disposition, combined with higher interest rates and an increase in deferred financing costs incurred as a result of our debt refinancing in December 2020.
Revenue - Product Highlight
Net cash provided by investing activities during the nine months ended February 27, 2022 was primarily due to the receipt $73.5 million related to the Eat Smart Disposition (partially offset by a $6.6 million working capital adjustment), $45.1 million related to the sale of the Company's investment in Windset, partially offset by the purchase of $18.5 million of equipment to support the growth of the Company's Lifecore and Curation Foods businesses.
Financial - Expense Highlight
The Company includes in cost of sales all of the following costs: raw materials (including raw product, packaging, syringes and fermentation and purification supplies), direct labor, overhead (including indirect labor, depreciation, and facility-related costs), and shipping and shipping-related costs.
Financial - Expense
The Yucatan Foods business added...Read more
Financial - Earnings
Lifecore The increase in gross...Read more
Other - Other
The New Credit Agreements contain...Read more
Revenue - Product
Expand medical applications for HA:...Read more
Financial - Expense
The increase in total SG&A...Read more
Financial - Expense
The decrease in total SG&A...Read more
Revenue - Product
Curation Foods The increase in...Read more
Revenue - Product
Lifecore The increase in Lifecore's...Read more
Other - Other
Concurrent with the close of...Read more
Financial - Income
The effective tax rate for...Read more
Financial - Expense
Refer to Note 8 -...Read more
Other - Other
All forward-looking statements attributable to...Read more
Other - Other
While we believe that our...Read more
Other - Other
Utilize manufacturing infrastructure to meet...Read more
Financial - Earnings
-29- Table of Contents Gross...Read more
Other - Other
Curation Foods Curation Foods Overview...Read more
Revenue - Product
The COVID-19 pandemic, as well...Read more
Other - Other
We believe that the major...Read more

Financial Statements, Disclosures and Schedules

Inside this 10-Q Quarterly Report

Material Contracts, Statements, Certifications & more

Landec Corp Ca provided additional information to their SEC Filing as exhibits

Exhibit 31.1: Rule 13A-14(A)/15D-14(A) Certification

Exhibit 31.2: Rule 13A-14(A)/15D-14(A) Certification

Exhibit 32.1: Section 1350 Certification

Exhibit 32.2: Section 1350 Certification

Ticker: LNDC
CIK: 1005286
Form Type: 10-Q Quarterly Report
Accession Number: 0001005286-22-000020
Submitted to the SEC: Thu Apr 07 2022 4:01:19 PM EST
Accepted by the SEC: Thu Apr 07 2022
Period: Sunday, February 27, 2022
Industry: Canned Fruits Veg Preserves Jams And Jellies