Landec Corp. (NASDAQ:LNDC) Q4 2020 Earnings Conference Call - Final Transcript
Aug 11, 2020 • 05:00 pm ET
[Operator Instructions] Our first question is from Brian Holland with DA Davidson. Please proceed.
Yeah, thanks. Good afternoon, everyone.
Hey, Al. A quick question to start. Do I have this right from your prepared remarks that the -- you would expect the bag and tray business down to $100 million to $110 million which would be down I think you said $50 million to $60 million. Do I have that right?
Yes, you do, Brian.
Okay. So that would be -- that would take us from kind of where your guidance is to flat, right, exiting that out. There's been a fair amount of optimization both with -- from the plants and the SKUs over the past 12 months. Can you just help quantify the other puts and takes there that might be flowing through the revenue on Curation? Are there any other meaningful flow-throughs there?
No, we are expecting to have double-digit growth in our avocado products business and we are expecting growth in our salad business as well. As I said, we have a number of new innovations that are in the pipeline that will be coming out. And that growth you will see throughout the year as we head into Q2 and Q3.
But just back to the decrease, we've -- one of the most important projects of Project SWIFT was for us to evaluate. We took two paths on the core veg and tray business. And at the end of the day, we looked at selling it or making it a smaller, much more profitable business. And through the cost out program that we over delivered last year and the changes I made in the sales force we're able to form much stronger partnerships with fewer customers that have enabled us to improve our gross profit on that product line to the point where it just made sense for us to keep it as a much smaller business. And the benefits for us would be that we have a full plant based food product line to our strategic customers. We gained logistics efficiencies, overhead absorption and the cost out as I mentioned, from the core veg we achieved last year and carried a fair amount of it in FY '21. So at the end of the day, it just made sense for us to keep a smaller, but far more profitable core veg and tray business, Brian.
And to be clear, there was interest in that asset?
There was. We had several people that were interested. But with the changes that we made that I outlined it just didn't make sense for us from a shareholder's standpoint to sell.
Understood. That's helpful. When you last spoke about a month ago, talked about the mix shift, I'm focused on Curation here, understand the moving parts on Lifecore, but it sounded like that it's stabilized through May when we last heard from you. Just curious, a couple of months later has that held -- has that trend