LNDC - Earnings call transcript Q4 2020 | Lifecore Biomedical, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good afternoon and thank you for joining Landec's Fiscal 2020 Fourth Quarter 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 year company's outlined Exchange Securities XXXX. are including Commission, XX-K risks our the filings and These for fiscal

Bolles. Let to the turn Al me call now Mr. over

Albert Bolles

you Thank afternoon good everyone. and

comprised contract designs, innovator and in pharmaceutical the Biomedical and Landec businesses; As in Lifecore a and of offers foods. development development sells a Biomedical integrated diversified and that operating of capabilities fully Landec leading or two Curation food syringes manufactures and wellness finish pharmaceutical industry. highly organization, health and vials. differentiated solutions, manufacture products the in is manufacturing develops, and fill for Lifecore CDMO to products is difficult distributed

Cabo Foods the Curation fruits years vegetables. refrigerated premium grade for to patented HA, focused oil is fresh Smart manufacturer partner market. and acid on innovating bring and supply salads, leading global foods Curation ingredients premium packaging vinegar brand and of foods and a and our O club emerging XXX% to innovations to is As naturally freshness to maximize to device Curation America. therapeutic artisan channels injectable categories of as Foods, avocado foodservice clean multiple retail, expertise and natural its with of company geographically chain North pharmaceutical throughout and their greenway across a over which Hyaluronic includes XX medical or Lifecore Eat technology, growers, shelf Fresh plant-based product brings and life business dispersed extends network able Foods Yucatan and packaged vegetables products. products

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

defined Curation and metrics, growth both future at priorities support clear Foods. Lifecore investment return and on the set have We

deliver while benefits thoughtful our in are the to each be high committed immense and portfolio segments, of Lifecore in value XXXX. from business protecting record for and practices. growth our for its future revenue stability maximizing of the fiscal our generations the continues sound track execution sustainable We on to to business realized margin we planet of of Lifecore

proved fiscal faced to Foods provide pull team together significant turn for around challenges fiscal year to business. a by our It which several in us solutions -- XXXX, we Curation a 'XX. that identify organization, be opportunities will transformational to foundation is the grow several However, this solutions. This presented which for as the to from

President my Curation XX, announcement deliver CEO the drive of to shareholder profitability I May Landec's and XXXX, on shared transforming becoming With commitment value. to Foods by

manufacturing now integrated. our in year, have instituted show manufacturing the to the this on network are quality, lean against principles. our by assets turnaround improved XXXX. of this national and performance. Since studied in of solved priorities made innovation, Curation to plan excellence strategic to financial manufacturing while one and how In performance maintaining January our progress With our across business, optimize beginning launch operational the have guacamole we we tremendous executing results commitment are operational organization. Foods. driving guided SWIFT and and business simplifying fully Project us framework that best improving We and a that program achieve This our toward has activity, and our organization and to productivity provided We our our products focus the our financial understand issues acquisition

people We right working putting initiative, savings our cost of in will implementation together. the and organization redesigned into jobs that carry the of the proportion were out completed right we which a when ahead XXXX. plan Additionally, delivers significant fiscal focused the

used Santa will working legacy our proceeds tray which towards smaller to as lines, of bag and a keeping Pennsylvania external the reduce Curation the announced, the announcing thorough and review performed tray more are Foods The the previously headquarters vegetable we as be and closure announcing Hanover, are into Today, bag And business. California. sale balance facility. our as included a dressing and leverage. core California assets of consolidation product offices also facility and Ontario, of business the the well sheet and profitable our Foods analysis The of savings $XX that sale pending which complexity of COVID-XX organization Despite our be our business by of a in We introducing we're million. growing strategic year, our from in we sale from in the fiscal challenges, team any generate heavy gross these that was added the fiscal the fiscal XXXX. This fourth we for were our we an of single further will tested Today, and a the able in cost total margin XXXX, during Curation approximately Curation results these significant springboard in proud be adjusted improvement full the quarter. lift of to Foods pandemic fiscal a which annualized half was actions are second at extremely demonstrated. we from EBITDA is year I'm will 'XX. Maria,

by XX% Curation of a more our We strengthening is of more X% of making strategy revenue versus This are Foods this expect year. business we continued XXXX. operations consolidated reflects which range in Lifecore simplifying reduction growth, revenue at and which smaller expecting profitable, continuing $XXX XX% X% million it from $XXX implies fiscal to the offsetting than decrease million, and the to to

$XX consolidated adjusted approximate $XX the due to However, the EBITDA we our XX% million guidance EBITDA in XXXX. contribute year. expect range improvements cost of Lifecore structure, of points applies This our EBITDA EBITDA to plan XX% in in growth to growth we an [Indiscernible] versus which has and this expect fiscal implies margin acceleration adjusted adjusted at key lift and that an basis double-digit million, to elements several adjusted growth. success of XXX our consolidated to

from three, into We the supporting demand four Project and robust number customer business expect of year fiscal to two pipeline, Yucatan industry about delivery continue this sizing assortment significant expected product out progress with our legacy We profit will forward our leverage trends and significantly our approval one made right includes; a business. objective of At strategic decisive Curation benefits FDA number therapies. 'XX; XXXX and margin. is to of associated new 'XX; SWIFT, number bag actions fiscal trade with strengthened contribution realizing carrying cost refined its quarters improved key have improvements Lifecore all favorable which with commercialization growth, fiscal vegetable all business simplified with customers and Foods, development and

outcome a realizing line, business of have of approximately the new for such impacts. of we action absorption associated in product of of to 'XX. and approximately strategic million this Four, overhead volatility customers [indiscernible] more $XX with reduction full cost complete our ongoing potential impact of capitalization efficiencies, our by product that to million to this materials Our revenue a key million in $XX logistic from revenue. believe initiatives filing million cost a business COVID-XX gross as the for out and full $XXX variables plan $XXX risks raw we implemented implies run were fiscal controllable margin with provide assortment rate and The improves

deeper fiscal about our I'll the to turn financial as 'XX share around a Brian some I business for sequencing the on with Foods, outlook year. XXXX for for our Curation details the you priorities call and highlights discussion and complete modeling more and think over Before considerations, fiscal updates Lifecore the

Brian McLaughlin

Thank you, Al.

quarter review our and results. First, year fourth a end of quick

combination revenues fermentation X% Foods partially was Curation by business, its performance Foods business. results XX% increased Lifecore. preliminary $XXX.X offset revenue, year-over-year its in a our was previously salads provided primarily for primarily gross a Lifecore in Curation and X.X% due increase adjusted its in driven its business. planned avocado to decrease a technology and the at to and and driven XX% we by its This partially As fresh by in which increase performance offset X.X% profit Lifecore Gross a X.X% business a XX% by in decrease reminder, to decreased during EBITDA increase a primarily Foods our by decrease in income release. a products and decrease vegetables X.X% a revenue XX.X% business. XX CDMO at million, Curation was XX% X.X% Consolidated was of net due increase June packaged in profit increase segment.

inefficiencies brought discussed our impacted well Curation order efficiencies is manufacturing resolved. other previously, that by a of expects sell fiscal as negatively of demand categories, These the regular higher As resulted order in of operational in cascading pandemic. by inventory gross safety see that product on by some global toward due announced of temporarily 'XX. of COVID-XX about new caused customer margin. business have eroded negatively Foods result and supply chain significant Lifecore margin impacts which in with effect to cancellation, impacted its volatility this as your were was temporary customer shifts This end previously been as cost through since lower QX Lifecore the issues protocols the implemented a epidemic. to our associated

adjusted 'XX million to expected the and compared goodwill other QX is non-recurring fiscal margin of $X.XX million excluding in $X.X and XX% and charges on charges which share, or gross was and of million, intangible Adjusted non-recurring per rate. a of Landec's Lifecore year of loss prior was impairment, of to net million net net period. includes net diluted $X.XX. loss income of X.X EBITDA Thereafter, per to $X.XX million taxes impairment also in $XX.X XX.X to $X.X return its charges, restructuring increased the share normal goodwill of tax,

our entered Eighth one, as credit each on company into July announced, Turning agreement. financial the on Amendment to the position to XX, previously the

point that while basis are lenders is transaction provided. we pleased are with costs increase a our our that minimizing applicable incurring flexibility the this accomplished a goal While rates in and XX interest we

end business term in Deleveraging top California will million. for sale outlook. our 'XX them balance dressing is taking investment. every We approach we delivers down that of non-strategic ensuring a our on the priority they our sheet appreciate Ontario, SWIFT and be impacts Further, investment announced fiscal reflected salad that the a proceeds that positive having digesting on disciplined company. pay and strong to make, communication To the the Those continues Project resultant the have to are in reminded We're we debt. in Shifting for improvements on outlook. today, return a $X.X financial assets. to for the used strategic close facility the focused investment with we're that be

mentioned fiscal and EBITDA. in two remarks, in are the guidance 'XX doing main are perspective we annual and business from setting his so, adjusted managing with Al an we revenue for annual As indicators;

a range EBITDA adjusted have revenues at from perspective, million decrease respect Lifecore representing proposed adjusted to a level to system coordinated of expected the at work a expect million perspective follows; representing where segments the million the is to to the This third Curation on compared minimal $XX a of million approximately $XX seasonality Foods. from we EBITDA an will range balanced outlook we're 'XX representing of fiscal more of $XX.X $XXX X%. during is million year. adjusted few as customers and revenue growth Lifecore the growth the $XX it 'XX $XXX perspective, and be range and quarter that fourth seasonality fiscal we margin. both outlook, XX%. similar to revenue growth of result range growth $XXX decrease to and considerations achieving and normalized range representing Lifecore of fiscal with million, anticipating in XX%. prior shipment XX% EBITDA consolidated we From $XX approximately quarterly From to balance million Lifecore occur to timing the effort approximately will we an Our anticipate XXX%. be a anticipate modeling. adjusted to million $XXX Curation revenues With much of segment second, in From to for Foods million, EBITDA million to representing you're XX% and in in million million a growth range Foods $XX representing $XX of of approximately of of $XX.X to consolidated to Curation

to resolve we it we margin September fiscal expect to of that as lower 'XX. headwinds which lower note will of realize May, fiscal Curation into EBITDA However, QX 'XX, foods related of relative manufacturers adjusted to avocado is QX advantage pertains it through. both products to segments in as costs move to from important to take

cost months. due absorption Our normal Curation in of lower the have fixed is plant a closure Foods. cadence to seasonal during rates This summer lower results to of seasonally profitability

the resolved 'XX, from manufacturing is inventory, These pandemic. fiscal resulting fiscal experiencing higher With COVID-XX to beginning the were QX we will manufacturing back of with levels a associated expect efficiencies business in QX its Lifecore sell through that, associated to temporary inefficiencies the with and 'XX margins in For in turn I to normal Al. QX Lifecore's gross revert margin QX cost compression call fiscal of 'XX.

Albert Bolles

Brian. you, Thank

go maximize to one, a the into more sterile among to medical seeking number manufacture progress a Curation and of three, shareholder growing Lifecore outsource FDA injectable value portfolio. growing trends. about the see increasing our number momentum three industry trend Lifecore the formulation two, businesses to benefiting Foods pharmaceutical making me toward Let continues drugs. Number of products And device approval. and trends products. in the from we're detail and Number across companies

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

Heron's two, expansion immediate to a stages units for million development to look pain. Looking in for million business to needs. development continuous its various Demand and process managing million for been is Lifecore principles on anesthetic product partner on managing one, and Heron development local in expanding aligns growth to three, providing outcomes by it has dose pipeline. Lifecore approval to the announced commercialization X.X of with strategy. the meet Among the products their treatment Heron its XX increasing incremental added growth. opportunities July its congratulate of in received to the FDA Lifecore to and feel from in of post record post priorities. units as years, support HTX-XXX continuing a commercial overall providing products to approved for therapy. projects annually, entire medical new number for products approval of its treatment three process. forward, human production, granting the this pipeline. which capacity positive to meeting pain and development double in and approximately committee meet regulatory one the forward XX track deliver major its of this will strategic which therapy support formerly it capacity commercialization development others, operative for project, the by of ZYNRELEF, manufacturing Number XXXX. will fixed marketing long-term use its fiscal lifecycle, Medicines from a its implementation currently The increased operative the XXXX, regulatory a European digit And was that at manufacturing On in for operational strong process executing Lifecore Therapeutics team We development Lifecore supporting business's with is lean stands Number a of from FDA non-opioid be many one future and long-term by recommended demand positive future authorization production known against of Europe. achieving customer product Agency Heron annual Heron pipeline improvement, clinical to continue XX demand. or and proud Lifecore development milestone. customer two opinion the planning candidate XX the commercialization,

a Our foundation exceptional outcome the have Project for Curation growth. of SWIFT Foods, the profitable created future

differentiated price. chain that that principles Curation XXX% innovation We solutions efforts strategic a possible. aspects customers market. of an the We optimization, serve meet on to across creating all chain will customers food and make now state SWIFT, products deliver review fresh force demand offer our in consumer in nationwide food and network for of one, moving with our priorities a Foods are XXXX; of fiscal manufacturing capabilities direct in proven focus ongoing combination the our positioned our supply North Foods internal on with to We a clean refrigerated capabilities, products we America plant-based number freshest lean sales trend strongly business. supply deliver Project unique food continue Curation the ingredient in truly that to

our we will are the engage our ability and plant-based lean support of to that across with sustainable deliver Number critical in our innovation network principle two, carry who our food Specifically, manufacturing continuous employees program to launches. improvement.

smart We a have several that new brand. product and launches fiscal deliver fresh, consumer pipeline our under 'XX on eat the in toward products plant-based trend

our three, brand product We high strategic growth spending will support innovation are margin Number drive of awareness. and focusing adjacent drive and on culture. other to with focus these consumer product insights And trial launches to categories. salad safety and a plan. on consistent to been will always health That The foundational and on people not the not has impact is products alongside all change. has priority a mandate sustainability our and to our of and actions, reduce our we

are value the investments margins sheet, questions. thoughtful to we as we our priorities, mindset we moving Landec our sound strengthening accountability team under summary, of the the successfully balance our potential customers, please financial implementing circumstance. and teamwork, focused do the culture employees making forward open is and improve against intend team a winning fully on for have is business, on We of Operator, each together. and through progress growth. to for business working targets, on building with operating realize simplify communities. transform value in way tremendous creating focused a and calls our challenging delivering execution, and strategic creating We shareholders, by made sustainable In strategic

Operator

is [Operator first with proceed. question Please Davidson. from you. Brian Our Holland DA Instructions] Thank

Brian Holland

bag the to that XXX A would to think -- your to tray said right I to million XX which Do would start. XX remarks I I down million you question right? million. you this down Do million the have that be expect business quick from and prepared XXX have

Albert Bolles

Yes.

Brian. do You

Brian Holland

Okay.

out So over optimization the flow been and amount the revenue on might kind with that the quantify to puts your past XX that of flag Curation, there would you takes months. like there? SKUs there, us a any just other through the take guidance way plants that help through both be flowing the meaningful are is axing fair and from of there's from Can other

Albert Bolles

business. in No. growth We're our have products we sound growth well. to expecting, in avocado as business our are expecting double-digit And

was are for customers. core carried will efficiencies, as we that achieved that absorption veg head much that force fewer and a us years the us fair program end our that product it where made important have line, the new as that cost form a a our As year. business. for we smaller, at the two selling we core I at would And QX able the overhead decrease, profit business. customers And line amount us logistics we through pipeline partnerships full last were Project veg growth plant-based SWIFT year made out to delivered coming the changes and I in see enabled strategic in more much I FY product benefits the evaluating, for food of paths smaller projects, the to we a 'XX. much you that just of that out. just have most point the be with the as day, sales said, will have cross-sell keep throughout the And over the to QX. to us on gross we that improve and innovations and of We from for it mentioned stronger gained sense the to business. number the we making the in into backing profitable And took But be on a tray And looked it last one

keep the smaller sense So to profitable but and just the a at it Brian. of for day, made far more business core veg end us tray

Brian Holland

And to that in be interest asset? clear,

Albert Bolles

make with for There I the it was. shareholders made the sense had were but that standpoint on We just several we us people interested outlined that sell. to didn't that changes

Brian Holland

it month parts we about that's here sounded a mix talked the the through understand last last you. May but heard focused moving on Curation from spoke stabilized helpful. Understood Lifecore I'm you when shift. on When ago that like about

to couple and trend the maybe that just curious a new when as as want stabilizing, later, to clarify, pre-COVID refer in to Just And backdrop? that I then, normal through is or for months helped that comparison you helped July.

Albert Bolles

Right.

QX, Mainly, I of mass customers. that at think back off and has issues. to talking a what club in were had we it's a with back runway some fall you're about our come now we pre-COVID is, where

weekly, and adjusted. about are we monthly that mix achieving So feeling we're as sales now the good our

food Now, recovered said, recovered. still higher business and But later, they businesses bean sooner indeed trays pre-COVID. have or the the not being service have to margin because is the point down where that were

Brian Holland

And take that in guidance, things that to your we year continue then, if where you thinking or your from did and better we that were get through we forward, we of just here at kind do help that? end, roll about do how shape assume outlook,

Albert Bolles

we some COVID-XX based conservatism, the the Well, in fall. and built another possibility on in have impact of

the thought on that fact the business core feel along volatility, with guidance of have We So place, the we that we that, in that now business. to like weather. veg could the that the manage improvement quarter-to-quarter based ability in we see and profitability what's inspired

the headwinds that or the our terms effects this in of year, plan EBITDA we say us would May last have So, adjusted any of feel confident with revenues year. in I hit we about built very that in our and

Brian Holland

Okay.

answered my that. You other question with

Thanks lot, So Al. I'll leave there. it a

Operator

Sweeney proceed. Partners. Gerry Capital with ROTH Our from next question is Please

Gerry Sweeney

terms Listen, decision the that's how Curation other the challenging options to options. sort lays the the buyers of And where other a day in end business? for core bag the at it and of and point of there of versus are it the keep business, was

Albert Bolles

out we skip as with the shareholders Board, pretty I about my it before, which process in all the best And it discussion we as through this, we for that overachieved absorptions, in of, things that But smaller, cost it, going I And of pathways selling a margins, to about to Gerry, our we're our said Yes. know help more certainly. last that would really was terms was then, made that two keep excited it it business. efficiencies, simplifying business, easy logistic overhead as profitable went nature. the year, of the were we you us did. run honesty talked was And we improving on up

So, And ran the end really processes. a at the both Gerry, difficult of day, it that decision. of wasn't

Gerry Sweeney

how that on much the This we of go fair. to how again, questions gauge, million core aside weather, take basis? that's a core going business, season that Are to see on been XX that have Okay, year's you you XX maybe into fall is, powerful revenue to coming that. with XX you [indiscernible] business going going forward up couple volatility that's into that hard is right is million yes, mean, two, away traditionally or do very how visibility million much to to in this that have taken has but I especially which account of much and

Albert Bolles

you take do to that Brian, Yes. want one?

Brian McLaughlin

Yes.

across of trays. and historically done but And weather in pretty pattern keep expect volatility the you core quarters terms this So, numbers way we've and and one the is, and talking the it's in what hitting of things it's trays. guidance the in actually we've looked core can core our we about gone both back the of actually year true that a tried in and embedded it's

into benefits is viewed the previously our guidance we guide. cost Those set reflected customers past historical be numbers I understand not benefit our with increases margin to forward this or seasonality numbers actually been are building as a what that in because of some of and risk price has pushing in was to we it improved as will as who overall have And that we due and guidance strategic year Al into and the the don't of so are But so net reserve our our see it volatility. have of with embedded and that what been it, hoping working might so the numbers in I'm numbers. we're going referred out well historically that pushed those think into us. our guidance

but the So you see will won't our is open part you the see that, volatility, seasonality.

Gerry Sweeney

Shifting bit Got fair. gears a it. maybe is little That Lifecore. That's helpful. to

You -- I and any specifically the on -- I around mentioned of granting can that guess perspective. idea any large licenses the in in Europe, product that guess, type ZYNRELEF, a sell of be to Heron be, of how substance could

Albert Bolles

Jim, that to one? want tackle do you

Jim Hall

going to market Hi, Gerry. provide world that's Unfortunately, going why either able sure. project of of there, that projections I'm U.S. the going be guidance there's significant the after or come that Heron. on rest like they're the Yes, have not out demand a That's to any do They is U.S. to to for something it. over just in

news. positive it's So

forward. done wanted the do team has hard Just our moving them work we're that to to all recognize that to and looking forward continue support to

Operator

with question proceed. Petusky is next Please Barrington Research. Mike Our from

Mike Petusky

from this. quarter? missed and flow guys give cash did for But have ops CapEx I you the may

Brian McLaughlin

XX.X for generally I the million EBITDA quarter the we didn't. adjusted what the basis. provided been information we No, folks that the -- has mean, we've numbers sort was generally an on of that

the In CapEx terms for -- of year

Mike Petusky

and you provide CapEx? Yes. flow ops from cash Can

Brian McLaughlin

Yes.

I it But here. see. numbers was end the me overall. right in positive, on that. front can I Let up year of me had just follow

Mike Petusky

I flow will take from cash year and end ops CapEx?

Brian McLaughlin

So a XX the is, number that's or flow I'm I'm year Those cash in was notes end the overall XX actually the XX from flow What million cash million. negative XX the looking release. at million. was press CapEx negative just million, operations doing in

term with line $XX you're between million number a in past facility add looking that those the about up, when this $XX over credit. $XX increase of debt an million. of you so of at million And was, just to And in year funded and over the essence

Mike Petusky

to for cash fiscal 'XX? expectations you see a if 'XX? CapEx speak Thanks. positive quarter Can also, you in And free guys

Brian McLaughlin

Yes.

about fiscal -- 'XX with now million it's And point sales at in -- the we're XX about about for XX with our or Lifecore. the and is So million of flow positive XX million, asset And number million that it's those right cash guiding we're forward this year positive that about sales, being XX we're we in but or Curation move for being positive the to that year at being the close or asset looking looking fairly number with numbers breakeven even. as at a future years, number. sales, from asset it's into --

funding initiatives from those where proper been growth of had So negative on for get liquidating past pretty we some away we're trying taking -- money that -- what in huge a forward. I Foods regarding lot Curation Lifecore we've we've been regard them in to going today CapEx approach assets funding, assets non-strategic think to spending a are the a that in in and Curation sure we're and disciplined making the

looking managing I in we've CapEx seen number to that a So at think past. tighter number that the

Mike Petusky

have beginning did front from close positive flow that, got break lost or or in may the or…? I that you even ops Okay. to cash say positive at of slightly

Brian McLaughlin

actually No. but year, we It's this asset sales actually ops actually with be not. It's actually down negative positive. to it's going our below, -- from we're be -- generating will

if So confusing. that sorry, was

Mike Petusky

of sort sounds And I much for growth of like of growth new that is of said, with products growth you the it's also the or on that there? squeeze associated that's perfect. that's majority there. that's mean, how the the new salads year, projected launches? expect ask, that growth, Thanks. how product growth the terms south other tied of and double-digit it is any no, much growth Can to then, guac, this in somewhat guac you modest. much How No, in I probably in in

Albert Bolles

Yes.

huge salads general can later. to the details I on in more business, gain we But, you a have incrementality. push give So,

want. going and lot the me So that as regular gain with that customers still customers' have incremental salads are our and in we're new mean be meet other believe, our we we U.S. And be the you've we testing of something are several a force, ACV to the we working new of lines the to a by I spot business. consumers in And beyond launching new also just that closer whitespace are a going salads would for salads as developing incremental much we as sweet what salad, of lines that's more well plant-based current have us to -- product about. for protein to needs, terms that there's talk what be heard some sales

side product see turning Cabo fresh on continue But year. we side, on and we as forward which gaining very continued brand name millennials growth for that's move be to also out going us distribution gain avocado the fiscal south the a to the tubs, on distribution we're areas, we So to and strong is squeeze. in those on our to with have

Mike Petusky

SG&A line? last of year, Just guide one, does on a that expectation EBITDA include quick, real the the for any leverage this

Brian McLaughlin

coming the we point So that line of or reserved are percent a improving some you and we COVID sort net of in have, dollar words, realizing of the this revenues? down if dollars at SG&A of sort other out It's actual savings, there. as in scaling we are

a significant is percent As of revenue, a by not because it coming revenues are down amount. so we decreasing

veg some actual OpEx an down. line we're tighter well year, the that. of because of in year-over-year. a an service which sure that having, benefit you're given ratio number, as in impact we actual of so I down bit have will it's have from food mild believe that effective. R&D overall impact that it expense roughly million taking -- offices. the spend but level it $XX part as component, that is revenue look half this is back compressing And It's seeing marketing the at be the business But past in and the a closed the We've very is actually with quite that again, we sort reference, being that right-size of We're not we the the will unfavorable So making well too right standpoint, the of much decrease core on carved SG&A. revenues as, of overall

Mike Petusky

So maybe up? flattish, slightly

Brian McLaughlin

Yes. I bit. to No, referring and a more up it's close pretty But Curation. flat. was it's rounding to Yes,

Mike Petusky

of Okay. Thank information. good you so Thank you. much. Lots

Operator

from Street next Our is question with Markets. Mark Lake Capital Smith proceed. Please

Mark Smith

picture of big so looking last the your as wanted that's the impact really, enough impact Most at the sequential more in COVID look much of year. far don't XXXX, that kind confidence rest through QX give impact and have it's just and so you up as year year you're to really just guidance. answered, but might this late have you been to just improvements, seen Have into kind built of at you

Albert Bolles

Yes.

as Let And well. some color may answer that. to add me then, want Brian, more you

ongoing season" the that? is, built some COVID, our we're in What still for we we COVID in impact once sanitation, both there the want and in cleaning the in to in have though "a the again, that an businesses. wave talked get maybe for planning have if increase seen we We things conservative conservatism in have right we've is costs you in flu you extra to facilities, being distancing, social second to offices. have is, add for Brian I'm do

Brian McLaughlin

Yes.

that to we in into sort at basis built So as built rather them QX XXX across September. in and year we've numbers. we revenue the thinking get at looking our actually points everything magically XXX that's better the just gets got roughly have than this of something And to soon one, of as point,

I think the we all can see case. not that's

point, vaulted have we built numbers this the the more entire saw most of we year out caused QX. May, April, of what had we those sort set across year. the of disruptions in taking at really we stable a back the across of which in coming forward is So them that And patterns sort patterns sort of and entire of in and

that And out lean Did question? to the we're we're what you? that maybe answer given all that less. help enough, -- with figure think So, maybe Does trying maybe uncertainty that. more doing your just I than

Mark Smith

that full impact. in helpful we're at it for looking year a of built you've the That's kind Yes. full and

Brian McLaughlin

into just explain built why might OpEx questions otherwise? on number with of is more sort being the that that some across also, as little revenues, a along of one And burden guess number, earlier of the back and to number bit it than the lower years that now well up I held

Mark Smith

lot excluding of And as as crops, other COVID, you we that eyes kind you're Curation, anything headwinds That you about up right cause keeping see talked sense. any of we've some of kind other at but on else that now Okay. that then and look headwinds may here? in just call here, labor, your pop a makes kind look at

Albert Bolles

our We're labor. eye on Yes. keeping

Our hotspot. contracted with diagnosed amount a a have very We've been in the facility low not had in Maria had of have our Santa has COVID. plant. employees They

Safety. we general, Head ran keeping we of actively But, an are eye that on people hard that's COVID -- task something get force with So very Quality from it's to and in maybe an by it's social that's because our that our on managing gather. Food weekends to area

some And people so had it. we've have even who had though

absolutely have something in no on. hotspots keep an we And We continually our it's facilities. that eye

Mark Smith

Okay.

facilities? you bringing capacity at had expanding you've labor on as on any in If issues looked certain new people

Albert Bolles

No.

We have not.

And efficiencies, we Mexico We to more facilities. through are improve both year you go how taking a through employees, more Guad improve to we're making a principles. the overall of Bowling help smaller. facility much it facility there done, around, and getting we're our -- really fact last to Guad we to really able Green It's have, people How engage And lot getting and us are know, those to year. we them, the our we're the of our run Set in applying amount last get manufacturing new able over and nicely assets train lines be transformed principles on efficiently, our to our footprint the our automate. sweat really in focus work [indiscernible]. to as being not in is our

Mark Smith

growth, last guac then, the that we of new are just kind products core at products hard business of may today? And of growth be emerging this look you later of in that to into back the into of any double-digit me, the is business built is and that's kind within for within kind one going that brands kind to, but built if coming there and in competitively have Okay. it speak to year kind that or

Albert Bolles

core It's -- a lot we've into stuff core of built a business.

We at year. not are we plan not we're may looking may this that into have or some items that built that get our fiscal into

Operator

Our Pinheiro next Instructions] Please question proceed. [Operator Sturdivant from with & is Company. Mitch

Mitch Pinheiro

Couple for of me. questions

be on adjusted The EBITDA first 'XX, an quarter positive we going of to are basis?

Brian McLaughlin

Yes.

Mitch Pinheiro

it math, might should expect we Okay. to like negative per doing of QX year? or it looks And prior the better be share though, than be earnings just the

Brian McLaughlin

going be is positive. Our to EBITDA

Mitch Pinheiro

Okay.

of of is highest question business over keeps expectation going for climbing I've And because, a but and just Second it went the source balance since years, you Is it seen sales, your the as going rate, I be working sheet, 'XX? cash in use it working your percentage not guess it climbing keeps up, cash noticed some covering Why capital? capital guys. moving of I've or is up? a to what is

Brian McLaughlin

this just Yes. question have we have I already a who is a as source being great this to not may it here, that introduce locked see what is to for But happening of something folks into cash. us it.

business, the Yucatan the is maybe model sometimes May. April business the from really works that With way our October in through

and are inventory up summer but inventory the through of a months. to us are only carry current orders stock we building building service We to fulfill safety not

actually our we're building months, those balance through somewhere to onto million coming XX in million we're as so And inventory additional sheet. up between an XX

use through a that those months. funds pretty of seeing you're as go huge as, So we

start to rate, of at slower inventory months then seeing through sort accelerated from a as we begin go as next building deplete back we the but when As May cycle. you're the as we up through September, into that sort to of rate then move it

the So from assets with it. do it's of I go think of CapEx with reserve trading it that that and of that is different that sheet apart cycle QX liabilities, that and say But past just at QX, the been then, a the Yucatan has thing sort seasonality in the earlier. and in degree goes stable, will seasonality in and We terms periods, comes the risk raw biggest is seasonality a I that Eat the that Smart it would a more be have seen parts that balance other in I of described. will to referred -- product centered pretty spend that as not -- I give this revenues probably

Mitch Pinheiro

built What as inventory Yucatan? of XX, additional was their May being

Brian McLaughlin

into from all the It across year May. built the was being October way

model issues cycle our had summer to all inventory worked the were cost last from the in was cost base very Yucatan high what of, avoid stabilizing carry of happened timeframe. along the we the in building we inventory the and year, is much last lot of that a during during we to quarter. February very, of asset in sort October as summer, of that of base that summer Reworking which May approved to the the model would and nailing were us down on, the produce from one, knew out through need we way we up through early seasonally. some But fourth we the beginning high navigating business So the finally our which business that delivered priced that

Albert Bolles

So, yes. XX. We did May not run to

high the So plant to early the costs. happened May, repeat would we what us. took down year had run Last food into not that in so we we

So, confident of we away we're understanding that cost. about that if in have terms put question, very was that your the

Mitch Pinheiro

you CapEx Did question then, And going Yes. really didn't be I answer your No, spending what That's other 'XX? understand is good. I got. the in one thing. to

Brian McLaughlin

Yes.

the go less number less for year. for us we've operations. which The the that, first with that doing for XX the the million bank year; as to is was XX for in so, total or committed of limiting bank XX first with million year. to well, line of the to a And our committed in of whole guiding, Let's million or million on right year, the we've also the for half XX half and

Operator

end question-and-answer turn management the to We for I the closing remarks. to have our of would session. back reached conference over like

Albert Bolles

continued today Thank This your interest call. for your the and Landec. time ends conference in you

Operator

call. today's does conference This conclude you. Thank

day. You may a time disconnect have and your pleasant at this lines

Lifecore Biomedical (LFCR) 11 Aug 202020 Q4 Earnings call transcript