LNDC - Earnings call transcript Q3 2020 | Lifecore Biomedical, Inc.

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Operator

Good afternoon, and thank you for joining Landec's Third Quarter 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 Chief Financial Officer; and Mr. Jim Hall, President of Lifecore, who is available to answer questions.

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

Al now Thank me turn call to Let the you, Mr. sir. over Bolles.

begin. may You

Albert Bolles

you good everyone. Thank and afternoon

industry. a sells solutions, is wellness food products Lifecore and for comprised health designs, Landec pharmaceutical businesses: Landec Curation operating the innovator Foods. diversified two develops, As leading Biomedical and in of manufactures and and

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

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

business, is and natural clean channels on Curation packaging growers, Foods Curation ingredients foods and chain, maximize dispersed shelf refrigerated its network fruit supply technology, retail, of BreatheWay geographically plant-based XXX% vegetables. throughout club, life to Foods, is extends and foodservice the product freshness naturally able foods of America. with which through patented focused our to North innovating

packaged Curation avocado artisan Yucatan Food and include products. vegetables Eat Cabo vinegar products, and fresh brands salads, premium Fresh and O Smart oil and

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

planet our maximizing practice. a execution and segments, to with protecting of sound the sustainable thoughtful future generations, We portfolio each the our value for business are of through while in committed

impacts are and a rapidly changing we the ongoing given new today landscape with facing COVID-XX. environment clearly associated However,

taking Disease following the COVID-XX about and health Prevention Control escalated for and World are Centers threat global Organization very of guidance it seriously. public the We the Health the from

response, community. we ensure consumers, establish leaders teams preparedness to for possible immediately employees, closely employees to about health and safety and so Our business of working activated they most of and In The the responsible and This best first and phenomenal priority is tracking is communicate consortium goal that partners, our are emergency to keep share products, we and do information is team the a quickly. with to is products work, COVID-XX adapt updated can our continuity doing safe. everything practices.

safety to Food supply product and are fully of public. the considered pharmaceutical our currently functional Therefore, continue. businesses and ongoing that essential expect we manufacturing for remain operations health the and

duration, performance. we related of Given the and ongoing to uncertainty on company's accurately global reach the magnitude, COVID-XX geographic pandemic, any surrounding the are financial unable impact forecast

have However, which we've is that in confidence we to full-year improvements based business. on the made guidance, largely reiterating fundamental

X% operations implications, grow pandemic. to million $XX fiscal and of other Our to for to potential $XXX revenue adjusted $X.XX, range million, consolidated guidance continuing earnings to COVID-XX non-recurring of and adjusted calls X% restructuring and to share of excluding of million $XX to per any $X.XX and million; charges, a tax impact $XXX 'XX EBITDA

to share the of substantial generate expect restructuring per line in $X.XX, earnings quarter guidance of with fourth profits third adjusted reporting are quarter the our to year. to $X.XX charges, we non-recurring recent $X.XX continue we Today, of in and and excluding fiscal

to achieve we our time, We see this point supply are don't to in At chain. well goals. positioned our impacts any

and major we fluid XXXX. needs ongoing our in believe suppliers We supply situation, continue we can this in all with are discussions in fiscal that to

at to Lifecore, which unaffected track deliver fourth Quarter-to-date, continues remained be business its on to quarter targets. largely has

and quickly shifting For product the accommodate Curation changing Foods demand business, we to shifting mix. are customer

in in increase pandemic, vegetable XXoz retail the reduction with XXoz vegetables typically demand for and club and large seen and at sold have for guacamole such sold in consumed and we trays. demand an channels, as prepare to fresh-cut a groups, settings consumers the salads, tubs social for as example, products For packaged

closely monitor and be plans from to chain could experience we any that the as that the these prepared continue Should will for will any the market we trends We significant quarter, continue at consumer will appropriate or expect supply deviation situation we communicate to impact to issues the shopping fluctuate. our fourth patterns time.

Long and in that Lifecore five existing development low-to-mid-teen over as new pipeline. on its to generate expand expect customers they products growth term, we that sales customers average are to years currently next to revenue continue the commercialize

the Curation which a of For is turnaround, Foods, in timeline midst is my immediate.

best basis business We on and The is are by rate I our of measure reach are actions SWIFT a quarter-by-quarter judged steady on decisive XXXX. progress believe performance this the the Project a we to run success. path implementing target state day-to-day to our basis, driving has end fiscal the on within a business and

momentum are will fourth a metrics the implementing, accelerate financial into improvements level, with On Landec operational quarter. consolidated to third beginning we've been quarter the catch this the and up

growth fiscal 'XX quarter metrics earnings those delivered generated of quarter, adjusted of fiscal improvement margin, key points comparing when third EBITDA adjusted in per share improvement million, example, $X.X For recorded financial in have basis gross in we second to $X.XX. XXX and

Before tenure a I announce and with our Interim Financial the Foods fresh McLaughlin CFO. Chief him been in at background serve foods Landec’s a Brian made industry positive experienced as banking XX Brian's specialized appointed Curation share Officer. coupled choice with more Landec's Curation to I years to momentum of that Foods, natural am as and on details Lifecore has pleased

has team. permanent have great Brian working deep his this future growth. was assume with for I to positioning Brian week, to to and look timing we made a the our forward Brian's lenders business is to our to role instrumental credit we that The leadership our experience on right continued in strides agreement as and fortunate last feel amend for CFO. completed already

turn With the for Brian the highlights. that, to financial over I’ll call

Brian McLaughlin

Thank you, Al.

business planned driven million by to in decrease X% a in centered which million in focus or business, $X.X driven This the offset in products. was bag business million, tray revenues in increase by review increase third and Curation decreased revenue a on $XXX.X to packaged and First, Lifecore of development by our a a results. continue we Foods, revenues Consolidated in higher quarter which decrease vegetable the X% $X.X primarily revenue. by decrease a as X% partially margin XX% was was

fiscal the profit when Foods costs, times in fourth and avocado decreased Curation supply gross in of in combination over tray of two Gross Lifecore business. products negatively related Foods X% X% X% avocados impacting quarter the cost were XXXX, raw due gross produced weather bag materials centered impacted fiscal of to of Smart during the Curation quarter decrease vegetable high-cost events of an than year-over-year profit the current profit. decrease by Eat primarily the XXXX and sell-through was and first and higher a

now and was of both impact that through impacted shipping, by quarter, achieved businesses this the during run of inventory Curation end previously and majority Lifecore products issue quarter. announced fruit our negatively Lifecore temporary a at noting fiscal of and high-cost production sold on and a the XX% Foods business avocado the avocado improve has should fiscal third the shipment. was timing profit and is The rate production in fourth for gross timing

prior restructuring charges. the $X.XX of This which in million net $X.XX, non-recurring a was year, $XX.X charges per Landec's income third million. net included share loss of million third to translates for and of million of which $XX.X quarter, a restructuring the $X.X $XX.X quarter non-recurring share taxes, net includes and loss of decrease to compared per of fees

versus was share charges, Excluding up adjusted $X.XX of per third-quarter earnings our $X.XX per these $X.XX to recent share. guidance

for million same the the Adjusted quarter to quarter EBITDA declined compared year. $X.X last $XXX,XXX to

comparison EBITDA When in the improved However, the the third by to fashion, adjusted quarter to second quarter. quarter fiscal EBITDA fiscal of is progress more in $X.X sequential million the has business fiscal this compared second the made. adjusted viewed representative in

nine-month in increase bean or supplies $X.X million year-to-date due Shifting on from in $X.X fiscal the million Foods prior revenues versus These an occurring contributed to our green X, by 'XX. million, business resulting revenue; $X.X the partially XX% to in increased Lifecore which or X% and revenue, revenue million $XX period tray of increase the revenues. events decrease commentary salad and planned percent in by $XX.X results, December packaged a X% acquisition and by consolidated limited Yucatan on bag XXXX, driven in weather $XXX.X were million in and quarters first decrease a in the offset a of to revenues increases million vegetable second a

increase the and which X% Net X% the Landec of million increase profit a profit includes $XX in per in This gross due first of fees a Curation a per $X.XX, fiscal Foods. charges. nine prior non-recurring $X.X compared million share and gross to of gross taxes restructuring months in combination of profit the loss charges to share for of million $XX.X of translates loss income non-recurring Lifecore decreased million year-over-year net registered includes of in $XX.X and which decrease 'XX, net $XX.X to to $X.XX loss XX% year-to-date of restructuring million. year,

per was $X.XX. adjusted share charges, these year-to-date loss Excluding

year registered prior of decrease 'XX. the year The half million, $X.X the Year-to-date year-over-year nine-month fiscal first adjusted $X.X versus in EBITDA of decrease a period. was million concentrated largely

compliance on sufficient during ratio financial previously flexibility from believe within ended fourth among the fiscal for the other adjusted to Turning quarter our covenant fiscal in as quarter, Amendment We maintain increased X.XX:X we the the third amended confidence the February XX, Agreement, delivering announced to our into have to Credit growth. leverage EBITDA XX, March Seventh position, things our XXXX, given which to X:X agreement XXXX. entered we

that of unfold. They to that costs terms also that having of that complete goals are fiscal quarter while have compared beginning positive agreement. our the we pleased is short-term in a business are understand and the a first and our Beginning with existing Project is covenants to the lenders substantively the our minimizing the the understanding impact flexibility SWIFT on accomplished remain unchanged credit financial XXXX, transaction This our provided. improvements

a We top initiative focused as within deleveraging a strategic are key SWIFT. at priority, which Project on is

every return Lifecore a priorities the basis, and future have taking set support We we Curation. clear on metrics investment fund are for at a investment. going to On forward both approach growth disciplined to

to $XXX million EBITDA we X% $X.XX of of operations Shifting as to adjusted from to reiterating our a to to to are to outlook, range X% $XX remarks, consolidated which and million, in revenue of $X.XX. our grow share earnings continuing per million his mentioned guidance adjusted million, $XX $XXX Al calls for full-year

impact share restructuring implications and a earnings potential the and any tax non-recurring reminder, EBITDA charges, As excludes adjusted of COVID-XX pandemic. per

very incorporates substantial against our annual feel Our the fourth fiscal a quarter. We in confident ability plan. profits guidance during to this lift execute in

turn to call With that, Al. I'll the back

Albert Bolles

Brian. you, Thank

the value businesses that detail portfolio. Foods Curation Lifecore about me we're shareholder into Let go maximize in our and progress our more making across

of number growing three, among see benefiting seeking pharmaceutical the number Lifecore momentum injectable trend outsource products trend sterile formulation spanning manufactured and the growing commercialization. device trends. to industry number companies to Number the toward three increasing and products and drugs; continues the FDA stage medical development to from clinical approval; one, two, a

highly to value in establish As continues benefits differentiated by their ability integrated a these to market, improve their on high barriers partners patient commercialization and Lifecore's is CDMO, capitalize and time through lives which its speed therapies. innovative and has efficiency Lifecore positioned to decreasing competition. tailwinds immense fully their of to for an

development product the strategy. to increased will life product of development priorities. Lifecore Number managing new business's project; its XX cycle revenue expanding from third of projects one commercialization, in added quarter clinical development fuel executing the which strategic development business by increasing Lifecore the forward, its growth the its and its overall three XX% aligns XXXX Looking to long-term fiscal in pipeline, against year-over-year. Business pipeline stages development one, with various

by of XX capacity approximately the future leading demand units the two, and annually. million stands capacity X.X has at meet needs. production fiscal managing in facility expansion XXXX units Number commercial approximately customer to Demand million operational and producing

And resulted a their recent XXXX. in approved the for a year recently commercialization The to deliver calendar on key record continuing reinspection commercialization currently pipeline. one manufacturing be for number Lifecore by track product that product and three, of in development is process. step approval which FDA a recommended FDA expects to in development strong no on of this approval XXX observations, site Lifecore's FDA partner's based in product

cadence future, achieve track the targeting is one on XXXX. this regulatory fiscal to approval in annually is approximately Looking Lifecore to and beginning product

we Project are At to in improved and components in Curation unfold impact year SWIFT our as continue the Foods, performance three being fiscal core financial positive 'XX. will its [inaudible] next to implement

facilities manufacturing First, and the a in the at lean teamwork network into Today, continued which practices Santa productivity efficiency, the of comprised the Curation on focus Maria. optimization, this Foods is maximizes implemented and new centralization being our offices organization. at headquarters the of

our divesting strategic focus non-core on simplifies by the business a assets. assets, which maximizing Second,

alternatives strategic year generate its its divesting vegetable legacy exploring company's currently yet-to-be-operational of million which to dressing $XXX business, for fiscal related are net We and the facility. for tray assets salad Ontario, and California sales the XXXX, manufacturing

to and previously $X talent, appropriate share And the annualized $X.XX developing reducing these The approximately after-tax million compete. order announced or to headcount elevating size, in will be the per organization redesigning third, from internal savings basis. actions and on an cost total

Our profitability. quarter point fiscal an inflection plan in marks of fourth important terms

drivers implies spend recognize ability minutes corporate recognize that key million of per fiscal Curation adjusted Foods, fiscal a in confident Lifecore I'll that to As business quarter of to a will EBITDA so $XX $XX guidance, Curation guidance fourth to you greater million EBITDA and fourth meet understanding million adjusted our few of confidence. allocation, remain my fiscal business 'XX million. two Foods the and will our quarter We at describing $XX have our $X

continued engagement. our employee stands success continuous for operational not zero a that is cost a to empowerment, only noise; focus and implement shift also organization; Mindset, the truly Today, practices and us containment. employee as daily to manufacturing extensive ZEST such accountability First and announcing recalls, and but same drive across accidents is capital a investment. lean ZEST. the a cornerstone we of our strategy about defects, Empowerment, new on ZEST operational engagement impact which called allowing is employee improvement program Standardization, Training, are and change; cultural without efficiency to improve excellence, for Zero

a as operations We bottom the has you turned which manufacturing at of lean cost gross structure XX% in this end results these is transformation profitability. products Mexico the business cost at our was the to margin have XX% can now improved principles, measure principles delivered and to fiscal reduction operating for the are look margin, improvements This third basis run of significantly Today, the has positive achieved. and realizing impact that The case. avocado the when line referred gross in our we in at in they business per the implemented quarter the rate. ZEST, the business of team

we to we As in forecasted final fiscal gross of have our cost inventory operational margin efficiencies, high out confidence in group accelerating XX% quarter. move the and a realize of fourth

our out the initiated U.S. ZEST as have continuous of We the to of facilities, our all process process. part rolling framework improvement

The Curation of driver is The second component costs, significant also forecast. quarter key strategy driver and key our at track our reduction fourth Foods recognized structural savings, to Curation our with which a of is fiscal containment and projected million a is Out million of of Program XX% quarter. Foods Cost fourth on of the 'XX $XX being to savings $XX achieve goal in in fiscal our is

Even My and is achieve and financial the in shape. implement working right This time shoulder professionally. I working all has We're take you. enormously though forward moving we’re all the contributions being, to for our employees this resulting to we to focused the together. already jobs, our strategic without and the grateful agenda cannot of am simplify all improvement in together. business and us people is personally shoulder team through profitability our beginning change individual right said, Thank improved challenging the environment results affected advancing that not for

margin plan, implementing have strengthening environment. despite team balance The In the fiscal against financial focused to fluidity be on creating in value our summary, secure deliver changes confident operating necessary to delivering we make consumers to customers, long-term investing our by our is to successful our and fourth shareholders. growth Landec the am and confidence strategic and in improve our value sheet, quarter to profitable of our in priorities targets, the I growth. plan

the Operator, please call questions. for open

Operator

the Thank with line you. question. [Operator Please Roth with Gerry Instructions] Our first from your proceed question comes Sweeney of Capital.

Gerry Sweeney

Hey, good Brian Al, afternoon and Jim.

got I think there. everybody's I names right

Albert Bolles

today? you hi How are Yeah, doing Gerry.

Gerry Sweeney

Good.

mean to going just of obviously lot then excitement little a turnaround, COVID-XX have got everything. a Curation I bit to add dose Lifecore, a we So on. and we of

with to So business. going I'm veggie the start

sell either or to obviously it. downsize know you You want

is out shine of reducing on start this think letting initiatives really through basis year to and I to a and some cost beyond. these go-forward key next volatility

where business, you it gave and some is the that longer-term growth portion does stand, does of objectives on Where that and other profitability.

of perspective half be, as look question you second to shrink what How would it it the my cost happens So if down structure that it substantially? and/or from we at your well? sell do

Albert Bolles

Yeah.

decision can't right. it. had LOI of always Blair; have and that – put a we have with William process are right, come absolutely made It the LOIs volatility back, we has the now we to We strategic been sell We've we you process. bids source were you're the several out; control. Gerry, going of working through have So in

in the five moving have company they our with days. Obviously, facility, XX but will on that we'll could facility we're another they it's one point now looked to a William next maybe and the at. the the it, weekend. had process, had probably over that's the be We know lot COVID We to the more before they've is joining all where follow so four, in LOI and XX the at Blair probably go in, requirements along.

price going business through the increases at and our cases, margins in allows customers, process are need of don't to In where significantly reduces will now. be we in we of we sell sell them. certainly have, XX it, And obviously, on that debt. few pay strategic where customers, could proceeds we we get go down option, focus we should a taken a it, closer the us backup that around least will the or XX at If business by to if to that them have the we size we that improving to which many haven't half looking

believe So, to wouldn’t any obviously a a with core a but weather volatility smaller, would have debt, higher comfortably enables few up that we absorb business much, pay get if proceeds live margin, issue. much on there us but to we much profitable with model to that that's more veg indeed we allows focused a down we that's end a customers us

Gerry Sweeney

comes to the Got Just the of some out? your structure internally things cost it. cost shrinking how though happens that, selling? What versus the to maybe much point like and with overhead --

Albert Bolles

handle that Brian, to you Yeah want do one?

Brian McLaughlin

Yeah, Hi Gerry.

So, chats have break-even to Hackett work very structure. detailed margin path we the on order In a back either we're our at to we cost and options in outlined process a in phone clear impact, case, positive. with previous the Group, or calls and reduce for not either least ready get to if us the a

Gerry Sweeney

switching size? okay. heading Got transition gears like to this in well other the a Yucatan, then maybe bit; concerns the environment pretty to products selling at XX%. margins Are great Any see or some it, that? And there about tub of Yucatan concern XX%, any with the just the little from is

Albert Bolles

also product it's and We've of seen soft little stock. but have in the lot a we as used in an weeks are last salads out mentioned, that know the the is We've to been uptick Gerry. there’s a stores of you we gatherings. seen our early the in a in groups just little products they Well on – tell that observationally because see how you nature of know – of the of couple sizes, yeah, obviously bigger

next in but come back to So, so, week the on we're it. we eye or a expect close keeping the business

the we for than two and profitable the little to the of we news had now versus forecasted. out, that half had highly quarters softer we good year. selling in is But first a what products us live bottom the through just what not are falling like it's the a It's is are

Gerry Sweeney

may so Yeah, And versus that's great, can Obviously and so that today we question there and fill Lifecore? pretty capacity on some push too. in going the Obviously you're stuff Are or chugging manufacturing the completely XX% units more along the COVID-XX that one to more of any that. plenty have is if nature? bit well of outlining little get the a on more and concerns the is expectation around that, any this Lifecore. on capacity, drugs COVID-related just you elective

Albert Bolles

know an like there’s know of the elective things you is Well, you procedure. cataract that some

We customers, ahead shipping speakers] have surgery of not going are slowdown that any any just is anyway, and to right. in our and because date people of if with a go it's to [multiple elective slowed this, the have an down later done there year

that's Yeah, and where close yeah, so today on situation. we're we keeping no real major eye concerns, a the certainly are but

Gerry Sweeney

Congratulations great great. to percentage on It's through. the jump of Okay, the see again line. I'll in back it. metric Thanks.

Albert Bolles

Gerry. you, Thank

Operator

question question. comes next with line proceed Anthony from Group. Please Our the your with Vendetti of Maxim The

Anthony Vendetti

in talk thanks. demand was reiterated a your Can of you Sure, or increased of see how some way of products demand, way in guidance. terms COVID-XX I positive for you in either wondering, terms the your in a about you exactly business inflection? negative impacting chain supply

Albert Bolles

we're right, so deemed food healthcare for right, both on mandatory fortunate that in as side. and are Yeah, on side businesses being the the

home uptick major staying think you environment you people pretty in able product are don't chain seen uptick our now, the eating going in store of stable a are But I and kind the salads largely home. some in has interrupted. to It's are salads not know where food frozen. or supply like to well we you're at will know those companies. remained you shelf and to be do you other think products, this continue like have see that people would We

We – continually very close our have a work with with our growers. we relationship

issues have facilities. with no into our We supply coming

Guad the have geographically food East in so products our on on dispersed around. trucks, refrigerated we're to with side two own able Coast, the have the plant California. We're We along where plants we move

to of on we're people able environment. this food flux side sort in with the – So

orders know to we that's any date. in once in safety right where And now. employee sort and put we're have shipments place side, at hasn't for you we Jim Lifecore of in Obviously standards again, change on or very that seen high the

on trying environment obviously QX, is know I are piece, you're COVID is, One to but great we'll a and think the it's there. business, quarters, that money couple products half we're where get you there. to not there’s have at, we that's do been turn for that revenue two there's confidence on the the now margin other what making to a high of so the pieces my shipping able be avocado for products corner So

We are We've million tracking number our beginning managing really probably I the seemed about more well $XX it. very, very high program. project making but stretch. the with the towards of you at $XX know like cost our year, know been a to out million We're very end. confident there,

on So of on track from also have least that fourth with Foods. the been wise. the weather year it’s least time remains the side volatile the a quarter’s and when Curation we produce Historically volatility

So confidence what are in as that’s our fourth us on quarter. gives are you track programs know we the and

Anthony Vendetti

and Lifecore Okay. working just vaccine the as treatments companies point it particularly pharmaceutical there, an is some are the vaccines, some the to possible develop And that side, follow-up to on Lifecore development in possible programs? could of is companies with and that at see all it biotechnology uptick

Albert Bolles

but I'll detail ahead that Jim you. answer long and probably That's go more let in for more term,

Jim Hall

would contribute of road, or to have pipeline. to products. ability seen short Hi that though not much would our Nothing so the development products, capacity those had the that impact or Anthony. term, in interest developed vaccines one's we've production if of long but the those some we've Potentially down development Lifecore the term

Anthony Vendetti

queue. Okay, in I'll that's hop back the thanks, helpful. Alright

Albert Bolles

Thank you.

Operator

Mitch with line Sturdivant. question Proceed with Our of Pinheiro the from your comes next question.

Mitch Pinheiro

hi. Yeah,

Albert Bolles

you? Mitch, Hi how are

Mitch Pinheiro

is it be. All well, there. could Hello as

could As as is be. well it

a Just of couple questions. quick

system, out that? plans With marketing to the in change food do see you or to your disruption Squeeze our roll related any the

Albert Bolles

No.

we about spend bit on were talked the we've remember, you introductions. new more money quarter to our product If that in going a fourth

two know trying we We repeat. have right and models and large when we testing we in the awareness, are on get trial customers; U.S. in drive to one now; very awareness get We one the trial of various Canada, that product.

learning the that isn't to the want in testing of in down terms we that quarter. now gain So and right us fourth slowing

that next to financial because on We've bit a QX. a to intact our the on learning are our seen again the these awareness shift shifts, really of and to impact of customers resets work from complete move some testing major remain build May but little But fiscal plans of need for COVID-XX, with customers year. minor Those two and June. us much in have from we begin just anyway to us Squeeze the to really wouldn't really in

Mitch Pinheiro

Okay.

far with from As that? as ability I supplier, are you that raw normalized. Lifecore, activities COVID from know it supplier your your shortage know impair comfortable anything the or again you with with Is material

Albert Bolles

the You’re syringe talking about supply issue?

Mitch Pinheiro

Yes.

Albert Bolles

is No, but Jim, that to that? add there anything else you to want

Jim Hall

It's just impacted No, this now hasn't customers issue and that to with our was but and been. clarify, open. by actual shouldn't providing an just Mitch, be hey supplier, stable – of that, that to supply very was through one not and that has sure been

and this raw something very have during eye on on that it's our working an COVID critical we're So hard all enough like to keeping materials sure make supplies period. we and

Mitch Pinheiro

two BreatheWay? other things; then Okay. update And any on

Albert Bolles

the and we and continue with we have to don't that talk our and about. continuing very Driscoll's going cycle roll into well BreatheWay, expand to want much development we which It's We're raspberries. testing out for

We customers to to a them have line, benefit some prove where interesting can line, other believe very with product product bring higher working their that. and we're margin we technology the a

are with What particular profitability we're we for we get do make who worked with the really that us want we and partner with that around find kind We customers. really to past very customers we In to to somebody, work sure the that there’s enough have to scale are are can of about BreatheWay scale. that we've achieve. going be to smaller with trying

Mitch Pinheiro

current products, to On are aware been environment? something shelf your has the own does customers life product, due the of your to that longer aspect

Albert Bolles

packages, it. quite aware don't extra our shelf on they're it. life. they honest you, get the of it with pay of of only benefit to those all that we for We be Yes, put But don't an few days

shrinkage decrease on some us So the in unlike we're able side, pay that are not other projects the benefit the benefit our a BreatheWay. with that of terms to willing for, it's but on is being to customers working of

Mitch Pinheiro

then final this spending and What for your to Okay, by year-end? update question. plans that capital just year? might Any be number

Albert Bolles

Yeah, handle Brian I'll numbers. capital the have

Brian McLaughlin

Yeah.

So tightly. much more managing we're numbers those

I been in During spend range $XX time process or half on to somewhere capital we supporting while the where numbers about stingy spending drew in making the million range that to the money, focus call, out the $XX to same million we're really our we're of part very second lower discipline as sure million spending QX right $XX and adding reduced our becoming That the number’s platforms. perhaps. at believe growth

So very, about on in very putting diligent the are right and and capital spend it focused money very we disciplined becoming on we places. how

Mitch Pinheiro

So that, up the think the you'll for end fiscal you year, year? for do where with

Brian McLaughlin

$XX a will that we confident The number has bank amendment of come that at I'm in million below number. it and

Albert Bolles

If a I may, on things. just couple just of side, capital the

I think an Ontario in it's example. capital,” the approach haven't being the fair to a say to had that “disciplined we facility past

to spend capital more committee, across in process if capital stricter on get a and much that where capital money, the we're We enterprise, the returns. going put have the we a we're expecting

needed. the a Cost has start to of of have. why mean more we greatly I waste that is of we're that automation, OEV Project shift a come done through real automation, the which so our we equipment, and the more the $XX million cultural get which the of out equipment was essentially that's efficiencies to capital Out zero from And ZEST, lot focus moving investments Program, operational mindset That's and

Curation going to our Foods. at that's decrease of usage So capital

that provide to there. Obviously, our to priority the is they Lifecore need capital the growth continue generate the needed side on to

On efficiencies through lot years, side, of money the think the and a spend achieve Curation capital. without we that over to of next Foods can we productivity few a ZEST, having on lot

Mitch Pinheiro

thank much. you Alright, very

Operator

next Our from Barrington your Mike, Petusky with [Operator of question. proceed question the Instructions] comes Mike line Research. with please

Michael Petusky

this, the you? for and missed give have guacamole may businesses but you I QX did Thanks. could salads revenue or guys

Albert Bolles

Brian?

Brian McLaughlin

and have level. it that Yeah, We the manage no, kind segment guidance. we give not not normally at would of full we

Michael Petusky

how they actually or either of portion? down up performed, Okay. Can any much? the on sort They key say you were or guidance how

Brian McLaughlin

Yeah, sure.

As and year-to-date year-over-year X%. press up be was a a $X.X on are salad in release we about as well, basis, indicated would the on that basis million, in

You can there. math the do even backwards

highly side has that core veg down It's On said purposely. a the a been volatile we're and core lot indicated already. on we're that veg down, we've segment managing

the side, a us. bean we've for it's had category – On high margin

We cost variance have issues we're down well. area as of in had some near sort issues not that having that veg, so year-over-year anywhere the core we're and supply there,

Michael Petusky

million guys that million. you QX to I point think $XX at come said would in Guacamole, one had $XX at you thought

assumptions think holiday impacted. part I current your seem up I like you meaningful lead about QX? be talk that me, meaningfully to of to obviously could would that I sort assume Cinco to be that would guacamole in a around of the just revenue that mean de Mayo. Could for

Albert Bolles

Brian, Yeah to...? you if want

Brian McLaughlin

million bit, In about that bucks earlier, yeah. again model, we've bit that the guacamole hitting eye the we've we’ve built into revenue we fourth the back to just but but conservative, or feeling keeping that guidance think a number. of we've may have discussions Sure, provided, back, number. paired some mentioned our the couple current quarter guidance a We're or an that issues the on Al be earlier so, -- a from had. already I already just good which We're here paired ladders

than confident feel out. threw in we’ll point think a this So at I just bucks pretty come number that we million the of or so couple you probably lower

Michael Petusky

Okay.

doing planning you were QX impact that assumption margin as So, of in in huge what of the gross the part how well. a QX, guidance because much business does on that was that on

Brian McLaughlin

indicated again little of we a profit, year. Al gross the the that bit figure that pairing gross are for back same there still and we on be tracking Yeah, there’s full provided but the may margin the into profit toward ladders guidance

Michael Petusky

$X.X but the from speak at this that? you have on then idea can going great you it expense, jarring, want And to guys and legal I detail, where you to no $XXX,XXX million, $X.X can know we to saying I speak don't you all? speak essentially ends, can't it to eye-popping, million to the mean in to speak or that

Albert Bolles

and it. – situation with and Harvest the can't can't more talk it. right have [ph] best I to you Pacific on mean, handle we're the know and now have really we we about to Printback We lawyers working speak really how there's much

Michael Petusky

$X.X EBITDA that excluded million, was with that EPS Brian, from adjusted adjusted that or…? Was – and

Brian McLaughlin

Yeah, it was.

the You'll we in it's also believe that those that fair do dollars believe a I note and of recoverable. press release not all amount if be will ultimately

Michael Petusky

Thank I've Okay, got. that's all you.

Albert Bolles

Thank you.

Operator

Proceed your comes Our question. with with line Mike & Morales from of the next question Company. Walthausen

Albert Bolles

Mike. Hi

Mike Morales

staying everything all taking Jim. going questions. Al, and my that's thanks for you're with safe afternoon on, Brian Hope and healthy Good

how it some all that getting us there that go some maybe that automation already out Hey, in $XX that automation risk the $XX to – and give out equipment now to the the Can $XX much happening from and gave just the Brian guidance of the it? you is of disruption equipment you that in? too, sense as essentially is color out helpful. around yet help pushed cost million, of with there tied was relates million just to million using and of initiatives to CapEx has or the And is a and of

Albert Bolles

that had couple but in. final meaningful. a affected Yeah, in go essentially equipment by it's We that’s not weeks, is piece one of to

Okay.

track like with well feel the in. equipment pretty we're we on So going

Mike Morales

the Help And of helpful. capacity Lifecore. that's the on us guess toward? to is of number, what it utilization helpful going reduced understand commentary then as relates mean Okay, relates CapEx, money it as to the even least the I that I is balance

Brian McLaughlin

and year of of the supported. is the to cash that the speak being Lifecore. majority to let going second the it uses The sort platforms are that in of I'll half Jim of

Jim Hall

Mike. hi Yeah,

the had of using this out in I filling before, of for capacity what money think conversation for we're our that commercialization the but the we've some pipeline. products is

is we're for type the and know work grow of as continue There really of or have for formulation have. number currently we a – some $XX packaging million they still up based infrastructure some fillers are products we the the to things You these theoretical number set on operations.

The based on and facility the we also to go on years, other rates and base thing that capacity in are spend three the will that we think based infrastructure on to starting late $XX commercialization over of million. products pipeline, beyond four to or next project fill money the that our that we

it takes longer three the put time remember, I you to and the four, additional by regulatory sometimes years If go you through approval even capacity about talked to get you process. – know equipment ordered, then installed

kind demand. managing of future combination, So meet a all focused to the but that's capacity on

Mike Morales

of that's I in given past, the your Great! could there, it mean of FDA with in experience that the for there Is outlook the in the anything in – I'm exactly the relates right the sure resources. now FDA seeing uncertainty all the Jim, not some Lifecore you're programs That's pipeline helpful. as products out Lifecore? in impact the how that reallocate the would timing to pipeline whether

Jim Hall

and of We now, calendar that not know right expecting the seeing we're anything on final the approval during FDA product complete are in already this year is you and primary review. stages

in phase customers basis – several opportunities but seen enrolling a and clinical, haven't in several to any daily have Phase obviously haven't We Phase almost in clinically and we we our X early on are and slowdown. that talk X

that the we approval. big with hasn't slowing in cause so reallocated, where seen delays time are are haven't but are trial are If impacted potentially a that Things ongoing place trials clinical could anything. future, there, them, down the resources at

we transfer our manufactured, that any of or doesn't volume The it the transitioning comment other I'll minimal pipeline are increasing related, of FDA make tech another very input. in take opportunities is from so already product some supplier that

in other moving still and pretty operation the where how that in is forward. our needs capacity will reason that's we're the confident So pipeline heading impact

Mike Morales

Sure.

near-term like horizon it opportunities of longer-term as nothing be that relates may sounds that's changing have on a expectation? depending a opportunity guys your it uncertainties. you excited, maybe on But most potential the guess So I lot to the

Jim Hall

No, no. we anything haven't to-date, seen

Mike Morales

gentlemen Alright, and for thank questions, taking be much my well. very you

Albert Bolles

Thank you.

Jim Hall

You too.

Operator

and and our the back to Dr. I would call we Ladies any end remarks. closing like over gentlemen, reached for turn Bolles to of have question-and-answer session the

Albert Bolles

and stay Thank Landec, in much. you great everybody and safe very there. for out Thank you interest have day your a

Operator

This conference call. concludes today's

this your participation at disconnect your a You and you have may Thank time. now lines wonderful day! for

Lifecore Biomedical (LFCR) 31 Mar 202020 Q3 Earnings call transcript