Landec Corp. (NASDAQ:LNDC) Q2 2020 Earnings Conference Call - Final Transcript

Jan 03, 2020 • 11:00 am ET

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Landec Corp. (NASDAQ:LNDC) Q2 2020 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good morning and thank you for joining Landec's Second Quarter of Fiscal Year 2020 Earnings Call.

With me on the call today is Dr. Albert Bolles, Landec's Chief Executive Officer; and Brian McLaughlin, Landec's Interim Chief Financial Officer; and Jim Hall, President of Lifecore, who is available to answer questions. Also joining today in Santa Maria is Dawn Kimball, Chief People Officer; Glenn Wells, SVP of Sales and Customer Service; Tim Burgess, SVP of Supply Chain; and Lisa Shanower, VP of Corporate Communications and Investor Relations.

During today's call, we will make forward-looking statements that involve certain risks and uncertainties that could cause actual results to differ materially. These risks are outlined in our filings with the Securities and Exchange Commission, including the company's Form 10-K for fiscal year 2019.

Let me turn the call over to Al Bolles.

Executive
Albert Bolles

Thank you and good morning, everyone. As a leading innovator in diversified health and wellness solutions, Landec is comprised of two operating businesses: Lifecore Biomedical and Curation Foods.

Landec designs, develops, manufactures and sells products for the food in pharmaceutical industry. Lifecore Biomedical is a fully integrated contract development and manufacturing organization, or CDMO, that offers highly differentiated capabilities in the development, fill, and finish of difficult to manufacture pharmaceutical products distributed in syringes and vials.

As a leading manufacturer of premium injectable Hyaluronic Acid, or HA, Lifecore brings over 35 years of expertise as a partner for global and emerging pharmaceutical and medical device companies across multiple therapeutic categories to bring their innovations to market.

Curation Foods, our natural foods business, is focused on innovating plant-based foods with 100% clean ingredients to retail, club and foodservice channels throughout North America. Curation Foods is able to maximize product freshness through its geographically dispersed network of growers, refrigerated supply chain and patented BreatheWay packaging technology, which naturally extends the shelf life of fruits and vegetables. Curation Foods brands include Eat Smart fresh packaged vegetables and salads, O Premium artisan oil and vinegar products, and Yucatan and Cabo Fresh avocado products.

We are focused on creating shareholder value by delivering against our financial targets, strengthening our balance sheet, investing in growth, implementing our strategic priorities to improve operating margins at Curation Foods and driving top line momentum at Lifecore.

For the second quarter of fiscal '20, consolidated revenues increased 14% to $142 million compared to the second quarter of last year. However, we experienced a greater-than-planned net loss and a decrease in gross profit and EBITDA during the second quarter of fiscal '20. This resulted in a second quarter net loss of $0.16 before restructuring and non-recurring charges. We have an extensive operating plan that we've launched to improve performance on Curation Foods that I will discuss in a moment.

Lifecore, Landec's high growth high quality CDMO business focused on product development, manufacturing of sterile injectable products, had another tremendous quarter with impressive growth in revenues and operating income while EBITDA more than doubled versus the prior year. The business continues to move its