Landec Corp. (NASDAQ:LNDC) Q4 2020 Earnings Conference Call - Final Transcript

Aug 11, 2020 • 05:00 pm ET


Landec Corp. (NASDAQ:LNDC) Q4 2020 Earnings Conference Call - Final Transcript


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Albert Bolles

to deliver shareholder value. We are executing against this commitment by maintaining our focus on innovation, simplifying our business, improving our quality, while driving productivity and operational excellence across the organization.

Since the launch of Project SWIFT in January of 2020, this program has guided our organization toward improved operational and financial performance and provided us a framework to achieve our strategic priorities and turn around Curation Foods. In one year we have made tremendous progress and the results are beginning to show in our financial performance.

We studied our network of national manufacturing assets to understand how to best optimize our business and institute lean manufacturing principles. With this activity we solved the manufacturing issues at our guacamole products plant and now have that acquisition fully integrated. Additionally, we completed the implementation of our cost out initiative which delivered savings that were ahead of plan and a significant proportion will carry into fiscal 2021.

We redesigned the organization putting the right people in the right jobs focused and working together. We also performed a thorough analysis of our core assets and product lines, which included the strategic review of our legacy vegetable bag and tray business. Today we are announcing that we are keeping a smaller and more profitable bag and tray business as well as announcing the sale of our Ontario, California dressing facility. The proceeds of this sale will be used to reduce the balance sheet leverage. And as previously announced, we are working towards the pending closure and sale of our Hanover, Pennsylvania facility and the consolidation of our external business offices into our Curation Foods headquarters in Santa Maria, California.

The total annualized cost savings from these actions will be approximately $11 million. This was an extremely heavy lift for any organization in a single year which was further tested by the added complexity from the COVID-19 pandemic during the fiscal fourth quarter. Despite these challenges, we were able to generate a significant improvement in Curation Foods' gross margin and adjusted EBITDA in the second half of fiscal 2020 which is the springboard that we will be growing from in fiscal '21. I'm proud of the resolve that our Curation Foods team demonstrated.

Today, we are introducing our full year fiscal 2021 outlook. We expect consolidated revenue from continuing operations in the range of $530 million to $550 million which implies a decrease of 10% to 7% versus fiscal 2020. This revenue reduction reflects our continued strategy of simplifying and strengthening the Curation Foods business by making it smaller and more profitable, which is more than offsetting the 8% to 13% growth we are expecting at Lifecore this year.

However, due to the improvements in our cost structure, we expect consolidated adjusted EBITDA in the range of $33 million to $37 million, which implies growth of 50% to 68% and our consolidated adjusted EBITDA guidance implies an approximate 250 basis points lift in adjusted EBITDA margin versus fiscal 2020. This plan has several key elements