LNDC - Earnings call transcript Q1 2019 | Lifecore Biomedical, Inc.

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Operator

Good day, ladies and gentlemen and welcome to the Landec Corporation First Quarter Fiscal 2019 Earnings Conference Call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions].

As a reminder, this conference call is being recorded. to Corporation's host President like Molly today’s now Landec Hemmeter, and would introduce for your conference, I CEO. Please go ahead. Ladies conference call stand by momentarily. please and will gentlemen resume your by. for and Once your thank you please again stand patience difficulties. Good day ladies gentlemen, we the apologize for and technical Landec XXXX Conference Welcome Corporations Call. Quarter First Fiscal to Earnings At listen-only participants a all this in time are mode. will at that conduct question-and-answer and session a we time. Later instructions follow will Instructions]. [Operator

Molly would Hemmeter, reminder, conference Corporation's for call now I like this recorded. host to a CEO. As today’s and being conference, Landec President your introduce is

Molly A. Hemmeter

Call. Good Financial Landec's morning, is and First Quarter thank Chief me you Officer. for Fiscal joining Year on XXXX With Landec's today call the Greg Skinner, Earnings

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

innovator of brands, Now and grown new solutions, Foods and in packaged CDMO oils wellness business; which diversified our and Lifecore, As O vegetables, called fresh plant-forward our and Smart or vinegars; olive development of Planting, three includes growing businesses; brand a specifically contract to business, targeted the consumers. two and leading manufacturing, health comprised Eat Natural is California population Landec our

week. Planting Now last pure-plant brand retailers Our began to shipping of its line soups new

our lower first of Lifecore million year, last to X% continues slightly Eat in in the consolidated and $XX.X results of salads, million growth increased of due Landec's share. with of packaging salad was compared Landec's Gross Natural compared fiscal than and growth and revenues increase first absorptions Smart were XXXX. year plans, to consistent growth quarter million Eat and driven quarter in first the $XXX.X was generating the X% per first quarter of business, overhead Foods revenues shipments production strategic labor, Natural due the of our and freight compared of increased Foods million. by XX% Lifecore's first X% of increase the lower costs of primarily of the profit was our Foods packaged gross within due sales, $XX.X quarter and in year million quarter, Natural Eat revenues were to vegetables quarter three last as in gross in The XXXX last first the fresh quarter business. compared platforms, Eat products in year. platform. Smart to the the business. first to expected, an $X.X increased Lifecore, Lifecore's As $X.XX first Smart to fiscal which first year a a the last quarter the revenues quarter Smart of profit to in down last our increased its revenues result $XXX,XXX $X.X earnings business each Landec compared drive of emerging increased timing of profit of last primarily to with quarter year year to in quarter In

acid, Lifecore historical Our its premium capabilities beyond as growth to Lifecore the and of business supplier has profitability by strategy expanding been hyaluronic a HA. accelerate or

aseptic We products. difficult-to-handle CDMO, filling integrated of have for differentiated pharmaceutical final a completion providing achieved this fully services with to transition packaging Lifecore's the and formulation, fermentation,

second needs completed begin filling line projected quarter production further Lifecore's new able line to designed $XX of to be was million to in vials, will and to commercial as product CDMO provides products commercial Lifecore's during We CDMO, during address. its strategy drug This Lifecore Lifecore's of multipurpose expand breadth markets the quarter the which with fiscal drive The partner. is specifically the Lifecore fill will capacity growing market will incremental continue enhance quantities of fiscal commercial a begin XXXX. first Lifecore's to will expectations and with to the expands of installation which growth XXXX, in of pipelines align sales. validation new that development the investment and The capabilities products

product mix generate Foods capabilities the vary significant given to be transforming Although of our that business our manufactured comprised Natural dual it the in revenues utilization. business annually. combination into which company three due Foods million the brands; packaged used to increased makes vegetables fresh to market. a are differentiated Revenues O unique any Smart, Planting the the new of The innovative $XX new fill full line will on year. potential new contribution Natural primarily In and of can Eat net new to Now line during capacity filling brand. fill has will new Foods vials, has the syringes, At Natural it the utilized business, we truly also capacity, be $XX and an to million product and income provides line versatility

ability First, and new we innovation internal with disrupt launch capabilities market. have to proven the product

we deliver Together, a to make solutions Natural force and to reach Landec throughout fresh closely strategic our produce refrigerated America. the Foods capabilities our on-trend rapidly supply to with consumer. Second, to plant-based these North us positioned And ensure consumers. works fresh third, three direct customers sales have chain that allows uniquely our deliver products

in We shareholder the programs Natural will successful. profits a investments continue capital our and path impact make to the to in transformation but are in profit These long-term. and business negatively development invest establishing meaningful Foods short-term in enhanced this value to growth

brand fiscal good O XXXX. in is Our start to a off

year. Petaluma, fiscal last this new due recall, XXXX. and the may on year the in a at fires half the to Northern of vinegar end of second expected completed the longer delays fiscal facility historic production in during in-house California construction impact start permitting we of facility The up you California took located than As new the of

the O vinegars team and with introduced bottle Vinegar is bright, raw, facility wine the premium Olive better-tasting for retail harsh XXXX. new offering experiencing modernized artificial ended at the that market O to June Cider of entire that of weeks according in first increased growing The its elevates no apple or the shelf. U.S. Leveraging has truly consumer and And XXXX. fiscal O Vinegar in is apple operational, last rate facility, $XXX in Organic XX market unfiltered for without quarter this its average over the annual million sales the on product vinegar of aftertaste. with has O's results fresh first XX% this shipping of option. growth in new innovation fiscal cultures. began an broad O reaching With is XX%, organic preservatives, rapidly sale during design positive Apple O full three other of O Apple retail Cider a years, contains cider is XXXX. flavors very category of quarter organic developed U.S. Nielsen now during driven However, Organic its accounts Apple flavor Organic by Cider Cider products. penetrate live Vinegar and Apple the the to the with a a Safeway, Vinegar Teeter, market to Harris intends

growth able demonstrate Smart release short much channel. a retailers of that call, data of are XXXX tremendous the higher earlier expected. distribution period to In packaged XXXX. have than new time, of occurred to we attracting the with consumer salads salad grocery category actually a within to been we Eat U.S. was our early Eat new discussed delivered anticipated than in earnings Smart the This fiscal our As as year-over-year to XXXX XX% growth compared in last during fiscal salads fiscal

As such, we building are awareness consumer focusing our these driving and in efforts on stores. brand trial

in XX% fiscal grew of salads XXXX quarter Smart year. of the Eat stated, last first to previously first compared As quarter

During accounts customers. add salad fiscal the to existing first sales year, to we have gain quarter of new incremental this and continued

second, growth accounts of the each in growth gain private months loss fiscal nine our in and Mass quarter by to certain quarters assortment XXXX, been have first, and be salad simultaneously three relative in the the others. next strategies For a salad will a in in label resulting There customers sales in of sales impacted headwinds in strategic salad last the XXXX; fiscal year-ago among of account-specific of distribution regarding channel, our the in some shifts several business. significant

sales we initiatives fiscal in XXXX net label to salad are Mass channel. a private the that channel projecting due a in As reduction in result, in

Club are due the customers XXXX their reductions X% half X% continued and Eat year. Smart accounts launch of growth approximately fiscal to other salad sales. projected this compared with Even the Eat second distribution, have grow this salad items Smart by salad this and Smart to XXXX, With number XX% year a Eat salads in reduced of we fiscal business innovative to new also fiscal these impacting Our fiscal of also of are in to the The salads due for two XX.X% and XXXX over grow not business. rotations X% however, year costs concentrated that to fiscal year, X% in XXXX. our negatively effort to will significantly estimating and costs and in have an growth annual the XXXX select is line to headwinds per for costs increasing a years packaging. XX% operations. growth to top year weather only our to food increased fiscal tariffs food but average focus considerable reduce with industry of a our materials food entire on on also strong volatility XX.X% and in We raw Recent in facing freight fiscal enter labor, currently

Landec Hackett working and full team initiatives the the third-party the implement a fiscal quantify, reductions been to XXXX XXXX with above Group, food is in beyond that Hackett in have offset impact produce beyond. and fiscal consulting in year diligently engaged cost Group firm by these already operations the the increasing operations identify, in experience with to We Landec team year beginning industry, with savings our have The cost costs. to savings identify considerable identified and cost

Greg XXXX. Now of go me details second of is quarter during the call to from our that I fiscal highlights let financial Planting XXXX, the launch of quarter our Before soups about for more turn some fiscal first over into occurring the

Gregory S. Skinner

at per million of decrease Apio $XXX,XXX you, $X.XX primarily decrease of due income million the $X.X increase revenues morning, from expenses. million from quarter year-ago quarter. operations sales. $X.X and Apio's in The fiscal to and in the or was in year-ago costs profit first increased operating to in The packaged a the $X.X and continuing packaging Net in from a freight XXXX the first everyone. an share per business operating in decreased or million million a to, $X.X compared to due million $XXX,XXX $X.X increase $X.XX due first, in decrease to gross labor, XXXX an in to in quarter. in increase share X% income salad increase to or million vegetables Revenues Thank primarily $XXX.X good fiscal X% was increased quarter Molly $XXX.X compared driven by fresh

$XXX,XXX decrease a Lifecore shipments income Second, at timing fiscal to of the and production within due in operating XXXX.

investment of fair Windset tax. fiscal a O, increase $X.X $XXX,XXX operating expense. the a the $X at million the quarter income compared increase a company's interest loss Now decrease at net value million offset a in and in and during by quarter Planting. fifth, decreases the increase net Fourth, These the partially the were increase pre-commercialization first income Third, from $XXX,XXX market in $XXX,XXX $XXX,XXX a in in of to of year-ago XXXX in loss

our reiterating XXXX are fiscal guidance. We

We X% in fiscal to increase revenues compared to continue XXXX. annual to XXXX consolidated X% expect to fiscal

Foods Eat has business, grow the expect XX% Lifecore expect XX% However, to versus revenue X%. versus mix to We to Natural XX%, growth products to to now to X% X%, grow X% salad In XX%. we Smart now changed. our of

$X bags to Our $X Planting X% to million growth to $X X% and an our Foods Natural of million $XX resulting million Now and X% generate trays million grow and to in of business combined business to of versus revenues, to X%. overall in core revenues, O

to in project of share increase XXXX, to an from XX% XXXX to range fiscal fiscal estimated We net income continue compared to operations $X.XX. per $X.XX earnings continuing resulting in to consolidated XX%

We expect $XX capital consolidated million. cash to to of flow from expenditures and $XX million million $XX million operations of $XX

and the Planting fiscal $XXX we million Eat be year timing and within quarter O For of of margins. of and and for positive. $XXX reflects our second Now Lifecore, the the revenues million to of the to production net This fiscal seasonality breakeven and to slightly recently income line Smart revenues of shipments soups in the launched to be XXXX, the expect guidance range

the turn Molly. back me Let call to

Molly A. Hemmeter

The Greg. evolving our transformation of business is food rapidly. Thanks,

volatility packaged than commitment margins from higher that other fresh quickly We sourcing will gross less are meet products lines expanding product product consumer have include our fresh our food vegetable and exhibit ingredients. to to and clean These evolving offering. needs with vegetables historical XXX% products natural natural a produce

realization Natural dressings all-natural fronts diligently Smart all flavors the Smart our salad from been business. Eat made dips, artificial products, have multiple for Clean to XXX% and launched We working initiative including artificials vision the Eat of -- no ensure enable or Label that We Foods our ingredients of or with our on are to preservatives preservatives. toppings,

America the transition healthy meet Our motivations, Landec this eating has underserved this Landec commitment. throughout year on purchasing New consumers plant-forward commitment was calendar by consumer of lifestyles, complete who XXXX, eating, target and meet and are Group the Now of Planting. a large that needs of has identified define research To behaviors consumer, primarily launched of to Ventures extensive track plant-based. the group to end we North Through

their eating sections with of refrigerated Now are and Planting coming pure-plant from less meal Plant-forward of club retail meat will offer stores. XX% for consumers diet plants. approximately the fresh solutions

innovation grow force where through in Canada outside qualified and to XX% restaurants, it to segment approximately solutions of plant-forward U.S. and homes. is are and their consumer foot meal cooking meal fast-casual traditional their meals the where this will shopping of traffic coming solutions increase grocery. Landec's to uniquely fresh, consumer pure-plant approximately people kit deliver over pure-plant of are and consumer. the club Landec the to XX% As team, more and develop stores pure-plant direct and the solutions both by population, They entrepreneurial finding meet continues population with searching it of stores partner retail club at in sales this consumer produce represents chain, the supply in needs and meal for solutions represents and refrigerated the direct-to-consumer to retail years. deliver

Loblaws, last partners. Just strategic began Canada of our shipping week, Planting we Now in one foods to innovation

and profile extremely does fat, sodium, naturally and to differentiated the contain contains soups of celebrate with the them plant-based from amazing design the currently patented not soup allowing you of allowing separate flavors Now with that or a and Planting consumers unique unique-tasting offers to of kind a is add ingredients. desired. Planting crunchy, market an combination ingredient animal lower plant-based toppings Each toppings are ingredients in anything dairy Now soup keep itself, experience. the in packaging within and toppings from nutritious any natural the sugar lid, The fresh and delivers as these to plants

Tomato offer five Pepper their Hominy of Now Planting Bisque, XXX Sope Lemongrass Bean. Planting soups, offering Rice, initially will Cajun Curry Loblaws soups and initially retail in Red Now Verde, be XX-ounce will approximately stores. all five

in Foods Our invested a on-trend return deliver capital. that are with and is on developing that margins focus Natural on consumers higher and products our business and higher offering

among new olive kit The internal soups. through of into to We on continues scheduled addition the and entry Now our in and our New have successfully initiatives implemented especially a outsource from XX% including salad other A medical for compared services kit offering Apple previously O growth O in and Organic innovational from Foods XX% the this biomaterials. the more In we material pure-plant difficult-to-handle are multi-serve our upcoming debut XXXX, strong Natural XX%. and growing making XXXX disruptions be shared later of Planting recent natural strategy second salad is Vinegar, companies category, fiscal to months. increasing and XX% our the to double-digit to single-serve fiscal acquisitions Lifecore grow category, expected focus to fiscal with annual our the Cider Lifecore's Lifecore. and is growth specialty are our manufacturing, in to California-grown initiatives experiencing initiative Switching to XXXX, will vinegars, launch of year XXXX, year to this products to Lifecore to additional expectations up Landec its business, CDMO pharmaceutical fiscal effort. Group Ventures oils details revenue be trend we benefiting the

as Lifecore well is long-term number growing to projects the pipeline seeking new a the industry CDMO fuel FDA with integrated of approval, to growth. fully augment positioned its With products its in

years Lifecore existing We sales that growth expands revenue Lifecore development the and to in commercializes next its pipeline. products are generate on to average over five currently new as continue expect adds customers customers, to double-digit

to and and packaged launch we continue it for Looking At will consumers to beyond, Eat vegetable make to will new fresh to delicious fiscal products vegetables. that Smart, continue innovate. XXXX we easy eat

We distribution the will grow Apple including new Cider continue to of O our O products, Organic Vinegar.

plant-forward will products launch new pharmaceutical and and consumer. continue At addition we for will our filling will We adjust medical begin on the to the we soups in Planting pure-plant our focused in to syringes. needs to capabilities meet materials, processes difficult-to-handle and Now of the customers vials Lifecore,

focused businesses return and increase production volumes We to increasing invested our drive on capital. our also on of in are each efficiencies

costs Finally and our volatility are cost business. customers, offset increasing affecting very on on food business In will focus consumers delivering driving that is importantly, down in weather we value our and rising to continue focused efficiencies and we to summary, order in that to continued shareholders. the and

businesses, As efficiencies. business, transform the costs driving our Lifecore salads Eat Smart we simultaneously continue increasing to and our reducing platforms, will platform, Natural products while growth Foods three focus and CDMO our we on emerging

us Our goals. resources reaching our balance strategic our remains executing the financial objectives strong provides on and for sheet and

now are questions. open We for

Operator

our question And Anthony Instructions]. from [Operator first Vendetti comes Maxim with Group.

now open. is Your line

Anthony Vendetti

a validation, pipeline XXXX is this it new that online ready before after complete. you. getting customers is possible a was about and talk just to if bit validation a I the on you there's or Yes, go? there know between it begin Thank that that little I now process commercial is the wondering but period, lag will Lifecore a just production the or said there's for could Molly, you installation is fiscal

Molly A. Hemmeter

Anthony. Hello,

milestone that manufacturing. drug here new FDA the final approval will the yes, installation of we main is So is complete, but be

So supporting this rest expecting FDA through expecting we're fiscal the and approval go the trials. clinical ultimately, But validation the batches company to year, we're of remaining with come through to fiscal more approval, guess towards of I so there's end could our year year. we get a that early production the we but fiscal start the expectation. next commercial can possibility that's

Anthony Vendetti

is And that that release a in number of once you've to start -- have have is there press ready because about that approval? a potential, I Okay. pipeline are customers know you the FDA there's the put do you then

Molly A. Hemmeter

ready be to customer piece a ones date so is that come to utilize able Yes, we to of other also equipment. a have start and that later at that would

Anthony Vendetti

are switch And Ups O Now Planting great. the Okay, rollout of then a the line, success Smart Obviously, retails as Salad and just to have soup you had the you do of kits to SKUs same Shake gears think now, kits Shake with margins the you many and same the and following the carry, and Smart Salad how these initially Ups? do the Now sort the and and plan, particularly, salad Eat lot will Eat salad Planting. with

Molly A. Hemmeter

Okay. Thank you.

shipping So pure-plant soups, week. we just started soups our our last

tubs that up I when gave five think we think actually SKUs. toppings. SKUs, -- the Loblaws shipping the is because Canada. but started container previously names of ounce launching just I Our read patented are, in the to they're don't well, in We're launching we're first I five I a and They're I names customer with XX think and

launching five also XXX going okay But is from was about taking talk team my So shipping all got that get second Publix. confirmation also we Loblaws, their met is with will the X,XXX taking the we to launching I five five be I And in Publix SKUs them. had our that I of soups allowed are sales all to of morning our that stores. SKUs this to SKUs. be customers. it in customer started

to to out very and ours. of -- to these really, there in consumers. and soups going stores. is different going two we remember of we're segment going we're So in U.S. grab-and-go very that want to the and there. to with strong about in Publix, the Canada departments doing starting be with process really very plant-forward these on-trend both out believe categories of we're starting get partners strong completely the this something be Loblaws, out products these produce believe merchandising we're is going We be we're of partners get And ours is with and -- And

them go So we're with what these and the plant-forward that's testing much to together. plant-based stores very consumers after partnering we're with and

Anthony Vendetti

initiatives question awesome, last could Now in figure I one the identify you Group. implement in they them they have and Hackett that's ask to beyond out and you continue And of some will date then some to just ask and Did if savings XXXX? and end specified XXXX a consulting fiscal they on savings the expect or like be XXXX? -- Are beyond. do of these fiscal

Molly A. Hemmeter

get from cost Our to bigger working the aggressively we offset first, is, over We've materials fresh all -- costs. to and to goal just years. and rise. weather on several internally immediate cost volatility But see eyes continue to raw been increases

think come we we we goal I is on to start the in to that place. just projects and has several the that over order been these we we put My them so And target, the wanted now actually execute fresh to in it. have time-lining next can quantify years. specific eyes very get can hope situation, can in, right And assess

to eyes of over on I this. our good time, It's can, execute fresh think continue practice But it's a have business. team big to part Our these. a

just fresh be up Hackett this always We'll see, what ongoing. execute is right some so to I fresh consistent of a thing. eyes Group, we're people And But -- projects involved. of adding after with. the be a the involvement And internally couple good think, set, Group's we'll now, if coming their help eyes, probably Hackett's that will

Anthony Vendetti

I perfect. okay, Yes, Molly, it. Thanks appreciate

Molly A. Hemmeter

You're welcome.

Operator

ROTH Capital. with our comes Gerry and question you from Thank next Sweeney

now is Your open. line

Gerard Sweeney

Good Greg. morning Molly and

Molly A. Hemmeter

Gerry. Hi

Gerard Sweeney

this sort the fight any supermarkets into of supermarkets. an next Is bit some or moves side, growth forward effort how your maybe of A and a thoughts shift, to question this at think, maybe talked maybe about the products of a little I is year? the on by the this standard you some salad just repositioning on of

Molly A. Hemmeter

seeing referring right Yes, really mostly private label And to the we're the so seeing. think in we're trend you're this now. Mass I channel

the all it's And our over, growth when it's grow. in grow, partners Mass because about our we So channel. fighting not it's definitely not

So this of with sort we're thing retailers. in together

I lot some are differentiate and world, a think strategy the is Amazons themselves think that trend the looking people do of some are the that. private think employing, accounts employing a way that are to private label retailers against I can and label they

Now everybody's right? label into private and strategy is brands going label those go -- could we're with different, private XXX% to, we're go private from oh, cap to that heavily Everything going label to brands. then stick with two more

there in depending we're the decided we're to So strategy, isn't we're we our will and because it we're haven't other focus account, one And that projecting some they've it. just seeing, lost we on on in distribution cases, lose yet, seeing some gaining brand. but cases,

Again, So channel, that's it's what differentiate just the themselves. it's accounts kind in out a to try we're there. mismatch but Mass and of seeing

Gerard Sweeney

soup to very has the channel, besides think had the some are developing, that and of group? Canadian this the highlight be go been about of taking you almost group of focus and from some of Planting, response etcetera great. the fight I've and what Publix then you Now And before may is channels meal how kits talked you the the -- will some -- your existing that them off revenue, I obviously, and it. mean, does leveraging I it's some good, the play terms that can Got in tests on it, tasted the

Molly A. Hemmeter

question, wide in of been soups us showing customers. that do existing a it the to launch ways. out to to your these efficiently do we've we variety how We so more soups. going And help two leverage our business first debt Well,

our use all, supply we First of refrigerated can chain.

about they these that fresh, preservatives refrigerated, preservatives. So no and of are is artificial the so no things one soups

that use get on them. so So to with our them get meaning can code soups to chain, accounts, we mostly, these consumers can our existing enough enjoy our date shelf to truly supply refrigerated trucks left

from And standpoint, salads, so and our it phenomenal right, truck the helps put our by utilizing soups our which business the to is able trucks. also same logistics overall with on a we're

that customers that in of soups they board and shopping that the go plant-forward So believe that's shopper produce. is part produce, in our And these on Also, they this really it. okay. of totally impact in realize consumer. shops produce, consumer is believe And are because that plant-forward

And so those sell partners we're the in. in working and existing buyers produce with our department to

So business consumers. and existing it's relationships something to launch to way leveraging fresh infrastructure just another we're our

Gerard Sweeney

Foods, And least it, or -- the to the be at to that of -- whole that there, the Got was this this if a add-on then Now think is is Planting of another going want or going Foods commentary, mentioned in launch type question to line, I'm Natural an there brand out? another on okay. discuss I be -- you're assuming Natural you you to pushing out far another in

Molly A. Hemmeter

either. It's Yes. it's It's initiative. different revealed, brand a completely another but not advancing, not and it's

to that for we're group move that's busy and trying fresh. I venture our consumer we have and bigger that this we're going on is the new aggressively I'm after is send message asking the and think very momentum

comment. my And so that of was the nature

Gerard Sweeney

about you already Hackett the Group. final terms you some Okay. be little But engaged initiatives just can the That's what assumed. place or of I ideas of at of may and I costs, that in mitigating bit that a the packaging? labor, maybe, around freight looked talk some know question you have And in then have the

Molly A. Hemmeter

is automation. thing main the so Yes,

So when the always to pencil ROI. past you out hasn't automation in made sense

didn't sense. honesty, If labor, all just the you in the do just of cost math make and math it's -- the the innovation with

no ROI to there costs on Now automation not that is continuing considered is with before. the labor there rise, doubt that have we would

into. we're what looking And so that's

of these some cost-out of initiatives. year, And seeing we're the CAPEX is so that's because this too,

the spend to have you means that So automation on costs get out. to

it's So the thing right to we long-term, do. believe for the

are some in those so it's examples. automation, improvement all couple of innovation, are continuous So activities in is not a but things other on it of

Gerard Sweeney

I appreciate back will great, you. jump it. it, in thank I line, Got

Operator

our you question next Thank Chris Krueger and comes Street Markets. from Capital with Lake

Your is open. line now

Chris Krueger

morning. good Hi,

Molly A. Hemmeter

Good morning Chris.

Chris Krueger

be, looking know the I special it would the to going you plans would Where drive it? a any sell awareness produce that of in section. Planting, said it's marketing of kind to Hi, within or Now display like produce section be at

Molly A. Hemmeter

couple not Yes. or trying what, of ended Publix a know in I'm We're it up. sure and where you Loblaws places

leave to that. going I'm So

Let now. try to getting it's let's shelf me on think -- get delivered yet. I shelf on don't because right It's even

makes in We can more maybe within know produce. it's where discuss So the is next account we final it decision. being specifically call, those. the But

Chris Krueger

Alright, then Lifecore, customers. new at potential your looking with pipeline the

And any If $XX you have pipeline? think in you XXXX, utilization customers end you capacity potential like of like type you like look the of large, kind out of XXXX, more million do fiscal that percentage do by can to then? to or year what get

Gregory S. Skinner

Hey, Chris, any expanded to another It we $XX space in incremental building the of be it's million Greg. XXXX is in can't million is actually you one we've recall bringing [ph], overnight. in a because up And $XX to building. wouldn't that an just alone, line should as capacity, operational these there year. back within revenues add Lifecore up lines. significantly if the in we a But full be and XXXX already There set space one detail. that Yes. go said, Potentially and into

that I is will you what going tell to And from to another line. we're adding we going you us, think forward. expect that's be So what want that hear

Chris Krueger

some been gain that? share of the there targeting market. there's and or your Windset Is there been or in Canada take Alright, Windset whatever some investment, greenhouses able to was that talk advantage cannabis have hamper

Gregory S. Skinner

grows. that advantages And what specifically competition right time get is is But Windset there has now cannabis. a lot greenhouse-grown products happening as Windset into the products, which intent result, their is has at Yes, this the under-capacity one into is marijuana. moved wholeheartedly no to a for of business of somewhat this

So to forward that's see, as yet, some happened but It their they're a believe they hasn't power pricing going we'll result. belief. going have

Chris Krueger

last impact far U.S and Alright, the as question, goes? in any Southeast as the hurricane

Molly A. Hemmeter

We did costs any -- increase heavy the rains. specifically, had costs -- it impact. The didn't did we minimal impact slightly of but because it our affect

beans did of it and we plantings North Some Texas did able of plant anticipate in a more get were our it We Ohio into some to and and California. in bit Carolina.

with to part the first did part. costs. shortfall the bit increase that's gross some customers we first due is bean most what for in margin, So see little care a that able to our of profit were quarter was gross in that quarter green higher the that take of And pricing. But you in

Chris Krueger

you. thank Alright,

Operator

Thank you. Instructions]. [Operator

Walthausen Morales with Company. comes Our from next question Mike and

line now is open. Your

Michael Morales

Greg. the hi Hi Thanks Molly, question. taking for

longer-term is things the or a One noticed customer would the the those taking products I a younger it about more soup mind. marketing used in direct-to-consumer Has potentially more a line product into that's the selling approach of maybe towards company my in thought future, way? like direct-to-consumer Now on Planting from that it certainly looking be seems maybe base a

Molly A. Hemmeter

that selling Planting system. put we're companies same through soups to meal also company vegetables retailers. companies selling on could kit We're you that. at -- Coast, we buy we're not I'm West to so you about. looking Now through going already Eat direct We're buy on the including can touch can Smart Eat products what now, companies, our like talking But specifically meal But kit HelloFresh. online Smart

selling So a companies, already kit vegetables lot companies. own starting meal retailers and of those their to we're our are

kind of that found of it's And And plant-based. psychographic. lifestyle do more and of So the want want in demographics not about to I it a there, definitely most I we those but And is there's we these see you soups as age. really build being It's does start can a do eat -- it will consumer, from, think that to a in is of programs. business is is include that it belief that your younger. what out for kind the we psychographic awareness. it are this get meals where plant-forward where coming transforms younger eating about say what about though the we to it's system consumer

it you're you're and all, are mean It mean vegetarian. a doesn't food. are the in plant-based eating about segment ingredients XX% not what vegan. So a doesn't plant-forward But people of

really And so just emphasize, to millennium just isn't it age population. the want across I really It demographic. is

Michael Morales

made initiatives Sure, fresh you're be? remove of was some some just might you the take refresh details on you, thank looking to vegetables. think that's that volatility you sourcing I in products had on to new one And that those that through of remove packaged Can the maybe volatility efforts us to helpful. then what comments

Molly A. Hemmeter

that initiative products to is biggest our into and other move our to So product do mix. shift

other volatility shifting and the shelf use longer being So we're that the just vegetables is to still base life. in our some from plants removing way products fresh of vegetables that products their about have

refrigerated, And stored they still and basis. though cooked longer a ingredients so fully to a XX can slightly even the that foods, on because have XX they're be they are they life cooked, have they are longer shelf days of

volume is get think to didn't And XX% margin, over on The gain I in products got higher we Fresh. answer volumes, have our earlier, as someone we about was have which target the that the any get to of I to today than asked there, gross so soups. margins obviously we

same Olive volatility some So the the there, the first, margins way. volume supply kind gross to they much margin. have -- to from of get moving are target of over line. away daily also volatility Olive, We're there vegetable the our on XX% In O and again, fresh get have is side. products less they also O And

So that's products it say to to portfolio volatility. either. not our volatility correct main to will salad business add I much continue had our to strategy, our is has

on vegetables -- has business in of five years the bag about salad volatility experienced pretty the ever a Most business salad shorted is with don't those our types of we've ago. nature much consistent been mother I or ever entered We we customer think vegetables. volatility salads have business. since Our with

Michael Morales

and Sure, me. last thanks just for then

give that of rising for on you're looking were One was you called any that? costs what contemplating as levers mitigate the these you of can to price. to pull the magnitude of that out there detail Is some a

Molly A. Hemmeter

bag our price through But XX% that we for Right increases doing we how for. the going set with price go now, core target we're out target, typically year business. And and much this this working already don't remaining XX%. price out year. say, and actively, we're increases I'd on of in about gotten we've we're with increases are a we

Michael Morales

you very thank that's much you, Molly, very Got helpful, that's all from me.

Operator

and concludes now for call. turn that gentlemen you, Molly to further call Thank the I session for Hemmeter our over remarks. question-and-answer any would back to today's ladies like

Molly A. Hemmeter

for everyone the I thank joining call just on us today. to want

Lifecore, we costs are our and we also aggressively reducing are working in emerging three We very grow I business. know focused want fundamentals an salads business. and on But become our the food Natural to of has our This Foods to of to that it's the platforms; continuing products. emphasize on ours, essential focus ever-increasing

So on for on Thanks call. us giving updates today. that joining be each we'll

Operator

conclude participating you you all today's and This for conference. thank today's disconnect. Everyone have program in gentlemen, and day. may does wonderful Ladies a

Lifecore Biomedical (LFCR) 3 Oct 182019 Q1 Earnings call transcript