LNDC - Earnings call transcript Q1 2021 | 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 2021 First Quarter Earnings Call. With me on the call today is Dr. Albert Bolles, Landec's Chief Executive Officer; Brian McLaughlin, Landec's Chief Financial Officer; and Jim Hall, President of Lifecore.

During today's call, we may make forward-looking statements that involve certain risks and uncertainties that could cause actual results to differ materially. These risks are outlined in our filings with the Securities and Exchange Commission, including the Company's Form 10-K for fiscal year 2020.

conference Al the turn me over Bolles. to Let

Albert Bolles

everyone. you. And afternoon, good Thank

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

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

Lifecore balance EBITDA work we Curation our priorities net to by aligned our Furthermore, toward We momentum growth, organization our ratio, which top financial and implementing are against is continue improving around. targets, strategic delivering at in value adjusted driving Foods. margins leverage our focused improve creating investing sheet line to at shareholder on and

that to taking criteria are Xwork of to the dollars stringent in on place we formal we through: a shareholders. implementation investment return disciplined strengthen putting is process a the are allocation are approach ensure maximizing position First, our capital to with We for

focus our we on is companywide flow our while Second, greater reduce operations operational with improving we can drive year. believe prior to budget, cash excellence, free expected our versus the efficiency which of CapEx

of an salad our results the readying is to XXXX, in time. We the long-term quarter California for $X.X in performance, we balance assets stability is decisive Even team of $X.X and to our as entire you our while strengthen strategy benefits growth, of with its forward dedication this strengthening Hanover communicating reflected this and on began some Lifecore, from business, the in add of reflects headwinds through, managed smaller we from pay on but quarter in our a and concerted XXX% Project to of that At our in closed to essential look drove executive XX%. sale And adjusted facility for basis, simplifying effort gross the the consolidated sale fiscal related margin our X% balance manufacturing to a lingering dressing and of divest Third, track frontline revenue increase the Ontario, debt. X, X, and business EBITDA. our Lifecore on profitable. and September fourth, hard on organization SWIFT, our financial been COVID record profit the Curation by to delivering fiscal sheet outcomes year-over-year we reflects is at XX% million, team Curation decrease XXXX, the momentum have of our Project it work that SWIFT's more improved commitment we of assets of employees of making this increase the ensuring continued high those at refinancing and continued facility we our On XXXX. the our in deliver the while and In executing to delivered see much a seasonality it down Foods part to On August we first non-strategic performance fermentation of closed million. quarter better operations of appropriate continues. to more Foods, first planned fiscal on during visible to the actions fourth our solutions

confidence strong we spoke is XX% prior the XXXX versus I prior we fiscal margin our are earnings us the in midpoint guidance visible state about As of achieve that have steady a for $XX most on targets that in call, the shareholders, continue puts a during to which million adjusted of EBITDA the million to delivering previously. detailed This reiterating to increase year and range at we've implies today. $XX the our pace

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

financial on XXXX more outlook and share and for our outlook deeper I to the call for Lifecore turn details a and Brian related modeling considerations. around priorities discussion I'll XXXX Foods, highlights fiscal Curation for and fiscal over Before the our

Brian McLaughlin

delivered in by $XXX.X Al. you, the I in have driven we've the increased segment by was to revenue margin was where was quarter offset XX.X% period. The the profit led our its significant first reduction which the Lifecore decrease and revenue tray period. the fresh planned products a a business. XXX an pandemic. softness The revenues, of Project by in in decrease Consolidated million. planned extent XX.X% gross the new a historically. legacy an of our profit dining in vegetable and with derived performance revenue by during gross and COVID-XX nearly was our to due The continued primarily as Consolidated this packaged its Further, as basis this increased our framework. growth salad segment. of XX.X%, consumer avocado and Foods business that up and improved that of to increase retail decreased shifted results. of driven to in Thank X% primarily gross in our mitigate our revenue due on shipment some from resulted Foods' our business to our performance revenues Squeeze avocado business, efforts start to fermentation was business Foods cost the increase seasonality increase Lifecore's fiscal on incremental lower Curation Curation as quarter from gross X.X% will higher COVID, growth points product. vegetable to and first SWIFT, to avocado products fiscal review throughout XX.X% decrease gross is business business XXX% increase experienced by margin in exponential shopping a primarily than planned tray a offsetting with operational XXXX business the driven nearly with on single-serve balance quarter improved At CDMO revenues. as X.X% Combined, distribution year-over-year year the foodservice XX% its The financial experienced in double prior-year was Avocado first growth Curation impressive, our compared lesser increase to was the result in connection reflects patterns a a improvements by and the focusing fermentation Foods, business goal innovative ZEST well profit business. in a Lifecore profit salads during legacy Partially Curation vegetable in product innovation of prior aspect as in timing reduction to our key and margin increase compared

three by future factors, were gains which quarters. addressed these offset we partially we have believe key However, for

First, during in the due at an automation COVID-XX to travel restrictions experienced we due Curation inefficiencies pandemic. unplanned Foods, installation to equipment delay, turn operational

had east. Foods pattern and Second, extreme Historically, in higher Curation our raw not resulting material weather quarter due in costs of weather impacted operation. profitability we cold have first west at heat the extreme to a impacting from the

the which business traditionally. other of charges and was loss to non-recurring Lifecore segment has guidance in million That which approximately the third, the the taxes, half gross sale Going high of remainder been margin it historical headwinds the and primarily profit margin manufactured now we gross has higher first feel matters net net cost Hanover prior-year inventory impacts quarter. fiscal avocado includes have loss facility facility rates. run sold year. been due returned forward, through fourth or fourth of weather inventory call, of share, to has quarter sell-through forecasted in associated Yucatan gross are during our of the fiscal a what And experienced was $X.XX adequately result, at per Mexico. quarter its we a first $XX our Landec's quarter our million ongoing our with during for during into restructuring of legal of and the discussed And $X.X fiscal as we cost as potential

Excluding in these an up in per $X.XX, first period. EBITDA negative XXX% cash flow GAAP $X.X non-recurring was $X.X adjusted million charges diluted net operations the fiscal million, versus from year-ago the $XX of $X.XX. $X.X versus share increase the prior-year period. million to increased Adjusted million or was loss million of quarter, $XX.X

mentioned balanced in Lifecore. Foods, of Curation consistency first seasonal his well more improving from Al operations the contribution as demonstrates our As the our remarks, at performance as quarter

our XXXX, on we fiscal under covenants compliance are Turning the as credit financial of all first August to in agreement. this our with financial of position, end XX, company's quarter

fiscal total ratio was operating XX, for asset by the X.X primarily the quarter XX, agreement Our as to XXXX, from leverage to ended sales. X X.X for which fiscal performance and XXXX recent our the ended to credit fourth calculated improved August May X quarter first under driven improved

million XX, credit agreement, million $XXX.X under million revolving outstanding our term loan. XXXX, we $XXX.X including $XX borrowings under under our of August in credit and our had facility As

the under we top refinancing matures during Deleveraging fiscal disclosed, and significantly generation sheet in XXXX. to focus, implemented XXXX. credit the in near-term, adjusted in borrowings drive ability continues the previously our turnaround EBITDA XXXX, debt be corporate September confident a primary priority. improved is operational our the As balance our company's of our XX, remain fiscal following agreement We to efforts

from support of to Shifting range fiscal as to continue million profitability Lifecore X%. aim representing Curation Foods expect $XX consolidated revenues to revenues XX%. adjusted range the a Curation demonstrate to to to year revenues an operating million, million, our $XX Lifecore. the decrease a we million XXX%. continuing $XX approximately Our $XXX for to and $XX.X growth of range of of representing as approximately adjusted million approximately range representing outlook, planned Consolidated of XX%. $XXX approximately Lifecore to million in reestablish Curation XX%, baseline this consistency of in million growth to $XX the guidance representing we mentioned, a in growth annual Foods our the reiterating of results our in segment, EBITDA of million, $XX Al of continue Foods approximately range and while growth of million, is From growth to decrease million representing $XXX from million, $XX.X are in million, XX%. $XXX to approximately perspective, representing follows. And of $XX EBITDA the XXXX within to

down, metrics to the reporting we Additionally, two first allocation Foods each in management the one, Lifecore, and XX-Q are Other. quarter breaks new Curation segment, filing, corporate which

first million and at million segment as $X.X fiscal level, total of capital Curation to the Curation level Lifecore follows. that capital million quarterly The fiscal are three $X.X other at In million a Foods company million XX% expenditures the and were first on overhead are expenditures costs business total for with to XX% budgeted Lifecore, to the allocated segment Foods. represents allocated providing Other. quarter XXXX, quarter to Landec's consolidated we $X.X the $X.X you as $X.X the approximately corporate follows, of The management remaining were and not fees segments operating in the corporate and basis. for allocated public segment the

Regarding seasonality, we quarter. are last from reiterating statements our

I'll to year. deliver through variation adjusted balance to margin, EBITDA expect and terms year-end that, to anticipate Foods We Lifecore we Curation And at means call revenue seasonality of the of continue levels to to at normalized the fiscal to adjusted growth are turn means and minimal the in historical Foods forward EBITDA, our in quarterly state With Curation we back which continue for both the as steady goal marching previously Lifecore Al. by back detailed.

Albert Bolles

Thank you, Brian.

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

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

of to meet development currently is the a long-term capacity annually, to Number record production two, two product of managing commercialization fuel continuing product deliver strategy. development to future plan three meet aligns in to FDA one business' double-digit one, stages development products planning growth customer has the which development from approved capacity forward, projects by managing by for business its a Lifecore And demand, three, development while with management expanding against building strategic on Looking various capital to will its current operational its priorities. its commercialization, detailed expansion supporting track pipeline, long-term Lifecore number clinical Number growth. commercial be of commercialization strong and Lifecore product goal to XX for in their lifecycle, from pipeline. with needs. executing appropriate and overall

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

positioned now truly capabilities with deliver differentiated solutions into operational to Project one, Foods' plant-based a SWIFT. fiscal Curation strongly priorities Curation number the combination excellence moving marketplace. customers unique to of are include, that in in We XXXX food make Foods on-trend,

Lean efforts our the This operations Lean is to aspect we we the manufacturing of that program, facing which and operations. the ZEST improving who the continuous optimization, engage critical carrying network. strategic on support more review layer aspects tackled to In in the employees principles entire and business. are implemented surgical sustainable ability our continue in our are Mexico our looking our fiscal of network issues manufacturing for during and principles of successful across in a to at opportunities the ongoing key focus will the with initially next of through fiscal We year, begins improvement. our all XXXX, ZEST business. were is approach our with of are And deliver major

now at and functioning at functions have addition, also and they In all internal that work organization operations and SWIFT, our through our profitability. ensure network will to we efficiency look Project streamlined are that optimization we maximum

in are we at plant-based two, operations logistics on Number ensure now is an to embarking this rightsized our example, launches. department analysis and of food that For effective efficient our serving our innovation organization. customers

focus We delicious food for who nutritious designed continue to as and plant themselves flexitarians. define consumers forward innovation on to provide

by of consumption plant-based this of flexitarian meatless conducted meals segment by actively XX% meat Marketing eating will week. is Our per XXXX. Produce study two and represent to and US an animal XXXX, protein to in five the Power consumer the population According Institute Food decreasing consumer

we are on kit to their shoppers' to this demand. trend, meet salad actively delivers with our business customers addition in our that In existing co-development

of co-developed unique our featuring with currently legumes, from grains ingredients, protein have salad Smart. testing from Eat come that paired protein such and We expect kits seeds, a plant to consumers as grains vegetables hardy entrée are and

plant We are desire delivering Smart increased on new adjacent for product pursuing for the options. expansion the actively categories, meal consumer protein also innovation with based brand Eat into

Avocado our Squeeze product. distribution We for have growth some achieved exciting also

will which in the We which to channel products approximately grocery products' is have in versus business trial opportunities substantially brand is mass and to category, growth, and and at spending Foods growth Nielsen. of grown focus Curation awareness. three, we with overall the over XX% are for product culture. is on drive the points strategic high the distribution these support growing X,XXX avocado year-over-year avocado to launches reflected Number business, according and These X% about margin

to impact stated, and products not has a safety previously change. people always is sustainability priority to will fits the of our health and This reduce planet. As that our mandates all not foundational and our of our the been alongside have on and actions

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

Operator

[Operator Instructions].

Holland first question Our from DA comes from Brian Davidson.

Brian Holland

progress. the on Congrats

of me. Just a quick couple ones from

operations Firstly, you then, few weather. materials in talked issues obviously, few related about to related to raw small the quarter a to and due

Just us just subsequent confidence you an going on talk isn't carryover doesn't back could previously forward. then, the the maybe that and you this production you maybe exactly where is just if happened were in inefficiencies, just in here hang to fully no And us the you the that understand, you side expressed there that through are weather help and this issue issue quarters. same confidence going maybe Can thing forward? what on

Albert Bolles

we a restrictions, because had And in we came to of had it installed piece and planned travel that We get installed. of QX couldn't from the COVID, QX. equipment operational at fully Italian of that have an supplier the end

Zoom now. a Italy going. to to it's installed, found way get equipment it get with and it the had in use up but supplier we creative We installed to with So, the technicians,

for timeframe. impact in big a the So, that us primarily was June

and at money. us It's the Santa area Maria cost was accordingly. It outbreaks of we won't sanitation in – more time also there period, enhanced and our COVID PPE We continued that very a health weeks to to move Santa been Barbara visit want have use. gold we an us. for standard, example had that said become several we them positive for ago County the

stay bounce expecting that's green back to pressure of pick we running running we It's thought So, of a all, softness did little of and And we Brian. was is we where more beans, qualms about just July ahead downward to we this That operations. to terms starting expected. it from us, trays but had up would a were continued bit pandemic. now foodservice in behind something in we some there. Foodservice, we've I just is the had COVID better. are some primarily But in where from no operation have be. good. was our suppliers. August the on all where of

the of coldness, In of events said, weather, we some as weather significant due recent in see into Brian we and we California hit more in and QX that right expecting. the little a of very QX and and a I to we typically built were got heat our terms bit are the have But numbers. weather QX comfortable we QX amount seasonality than

Brian Holland

with about speaking, If bit that later sounds Avocado timeframe. quarter-end, it's this August is news distribution. I little resets, could ask generally retail like a some I've heard what there the shelf Squeeze, good year, September-October

that So, larger brands assortments, Are kind about retailers more relatively what narrowing in And large brands. progress supporting just consumers first these the I how second How CPG should I'm product can to of there these assortments quarter? – then, coming? is, distribution you to remind gains they asking us your favor trust, narrow thing in we here is expect more the keep get bigger? the quickly you're guess, going hearing –

but sort support this this through on noise – crowded kind first, you to curious in here getting backdrop? product, of plan cutting congratulations with just that So, new how that of

Albert Bolles

tub we year, the learned I why seeing That's were the as in a customers. points we some markets in Squeeze Brian, tested that And business. with We've our of we're and do throughout our those test year and things, We that now we and got Squeeze product last X,XXX the rest tested that growth distribution. doing along see some things with for steady won't this well, confirm you And really it. can continued we know, growth product. we growth Avocado us we've implemented of over good better.

real I have look brand. We have because this some when Fresh – upsides, Brian, Cabo ACV, at we in

we on only tubs on have resonates Squeeze both with ACV that And X% have millennials. the on and And brand the We really only Cabo. have the we ACV. on And Squeeze XX% product. side,

that we've We're by with should other we to companies years year. our we're have of with see co-branding a with – where for shelf product working we to some programs, say. now promotion had this of continuing in us this customers, even I So, working we call couple and double-digit line that it together supporting specific we are going growth see it are talkers, I'll merchandising, – primarily grow

kind we're get mechanisms can Instacart guacamole. you not like So, on buy grocery are store. and that Those e-commerce everybody going things if you also to also are through we some chips, of now That doing the know some the working is we area is growing. side because

sure of So, potpourri things, on return very dollars. of We're it's do gives us the our right making marketing we a targeted what on Brian.

Brian Holland

and again luck of going forward. Congrats best

Operator

Thank you.

Pinheiro question comes from & next of Sturdivant Co. Our Mitch

Mitch Pinheiro

Just of questions admin a couple here.

don't even suggested, should I give QX more share on you seasonality – on be looks based [indiscernible], it know Is based should like and you've the per basis, an positive. earnings be be QX you correct? but as your guidance that that solidly balanced, should given, First, or on

Brian McLaughlin

well. Brian, forward. correct. as a solid, that's and expecting we we're Yeah QX very move QX as Yeah, strong QX

Mitch Pinheiro

Okay.

Brian McLaughlin

confidence a numbers. of have lot We our in

Mitch Pinheiro

And fairly – also the quarter? we going here of that be had level is does kind the planned that to last same reduction, in that steady,

Albert Bolles

from business steady reduction. was. a million yes. coming reiterated It's We've around of sort before veg $XXX we in it Yes, $XXX that see that fairly million core

Mitch Pinheiro

look going how capacity subject quick be interesting. a handed It's – demand you going to the five-year it based I capacity and back XX%. somewhere needs their the is breaks the I When Lifecore. numbers into changing out the I XXXX. to Just on in the it numbers appreciate that with to back anticipated around is be math, down the and on through at CAGR looks did there like the somewhere envelope XXXX

Albert Bolles

have pretty why capacity through out. that built Jim, close. for to everybody kind It be we the in. can that's Yeah, that of don't confusing talk you figure

James Hall

our needed next reality, capacity theoretical at five commercialization the rate Mitch, years we you're XX by In looking that development approaching we're and pretty million four over pipeline the spot-on. FY how years, capacity to into much should translates be that unit of XXXX. and

Mitch Pinheiro

demand XX%. How Should Okay. at looking rebalanced overall expect XXXX but up to to Is of that If X% higher in look that I a in that? $X.X $X.X we million get from to you're a XXXX, a to what going guidance CAGR? we into right, your XXXX, is million, double sort year? at revenue at to we Are digits acceleration is look rate? only – should see around higher right going

James Hall

average a some said over little time going higher we to revenue our are next bit But be be lower little the is mid-teens years out. Like be double-digit and going some period that of mid-teens and obviously in to consistent that a to CAGR over in pretty that it's growth years. going to the reality, five bit

Mitch Pinheiro

And XXXX? to be to or spread that? Okay. over spending Is as your years how you relates look it the do about it five at as going capital you out four years then, think

Albert Bolles

the than make since to units as and long also going we years the on million out times, continue need to discussion start capacity finish. going to to invest units that Things towards pushing to our fill don't three in needs additional more XX filling and described to fill require project Like to from the million basically XX to business lead units. and invest start over And to we've filling to years to we short-term takes in capacity years. that XX capital XX four investments going we're be out the million Lifecore We're capacity to need our dictate. investment, needed XX years next capacity

spend additional the of the So, will needed capacity. kind of investment the capital follow

Mitch Pinheiro

year? $X.X capital quarter. still I track for million in Brian, you $XX I on Okay. spending the guess, the And the then, for in see million Are

Brian McLaughlin

Yeah. Yeah.

back-end We expect our the it loaded more to at in half. point. that's this anticipation be But first than

Mitch Pinheiro

quarter. is question Hanover that And the right? last just after closed Is on sale the

Brian McLaughlin

Yeah. the Al It closed I'll quarter on just in let one. end. that jump after

Mitch Pinheiro

to upcoming out reduction Yeah. source there quarter? I a will there Will debt, Just the $X.X trying where want debt the – use or see be. working we'll figure be any in ask, capital million? just to if any in capital the

Brian McLaughlin

trying sure to the make just understand I'm I question.

So, generated they build and flow referred operations as think start of into us cost QX. where the pretty all fall, first course a with cadence the the we just just cash Yucatan of deplete That, those cash I definitely out their strong to quite just given Al but a in over well quarter, coupled due bit summer as and think again. just and of flow in improved we – I with the the inventories before has manufacturing the we from to such up with inventories strength then up the the business, margin that structures of

of balance there happens there. cash see be at will we of before operations sales. the But slightly the Yucatan, at the QX, the that point, the that cash and CapEx best will into we asset We for move as year this is factoring up over as believe we flow part building overall positive we'll in use a point, from expect of that we as start funds the flow year, versus sheet, stock on we have move this latter end, as into we and that course position can also be to safety favorable

Albert Bolles

that we've QX here in away Bowling Green and that and the in Hanover I'll for us customers Guadalupe seeing from start managed benefits into move just to into very will our that the has hiccups well P&L we any Mitch, savings. without of and production the say to the gone consolidation do in

Operator

comes question Mark next Markets. Capital Street Smith from at Our Lake

Mark Smith

where to us they I kind but ask that anything in like wanted and out avocado update? decent products, going? new about product And of else growth food innovation launches are business us the new give into It insight any through products. just new more or you business, sounds year? walk how coming is at, Can this

Albert Bolles

if amount innovation our with the process. year, we oil really focused effort have we fair – had product. vinegar that last as opposed and way want Romaine on that's it, spent we Mark, did lettuce lost to capability We and run olive redoing on, had to what a of to our if were put we previously consumers

along So, insights consumer time our research the building our have with both we with behavioral spent through really our capability, customers.

insights is with So, what's kit now that side, shopper. really particularly you for our customers customizing us, approach on, behavior you're consumer the key bringing and side. our if of salad going on see salad to we're we're their innovation for on different more about And will, partnering

think insight flexitarian we have consumer. an the really we here with So,

mentioned, our very California a in and we I that rapidly it's off is to As customer start. out. with salad and goal Northern a launched it's plant-based have protein just growing grow And major a terrific here one to

very protein. is it's We that's another also is to have a us. which partnership customer important Costco great because The plant-based

We plant-based different type in product. have a much that's December protein launch also customer broader of major with another a with

fiscal protein plant-based of out bringing a year. that we So, we this will have be products pipeline

we Kroger seeing benefit now We that more have we're right that our done some have a the also than are much salads right think have with those we And has process. Canada. the previous basic also on QX, of going presentations customers and in are with launching priced launched doing flavors new couple co-developed in the we're in also that with up that innovation we are in QX, other better

It's to our salad to insights. approach going with be be their going co-development going growing, we targeted and to everybody. to the our customers So, everything linking we're very operate insights with really get but with think business isn't and

as On we're the avocado product side, to Squeeze support going continue I said, to year. this

are from We of Squeeze. lot expecting a growth

We have somewhat whole graphics. in graphics confusing. think redone our that the category is We

can up squeeze that the both behind graphics. we as Cabo some the So insights tub a the we get is Fresh move brand really we category have our we think And category in forward. and we're in there cleaning that

am have we have where ago like what very don't about get strategic be targeted. innovation happy looks year be year. But spend So, deep pipeline our behind and to and very so this our I for it. is a I smart innovation going was how very We versus with we pocketbooks, to

Mark Smith

kind you're And you on how the that go And give performed sequentially, quarter? club Can business more brought even any trends we that update next us quarter? this Costco. you during into up as of seeing

Albert Bolles

QX at there a People We've and often and to we COVID didn't it right? that with you shelf-stable going business, were will, masks buying talked going come in in lot a want the necessarily less line seen about of back. As they more, products. and on club stand business zig-zag if has wear was the

it customer The think figured figured out. the consumer has I out. has it

expecting are products with have are the with we other to them and see goes that's same that here growth we we working with solid So, customer Sam's. that coming And on.

Mark Smith

continued at And opportunities then, bit bit just you through a little last we me. guys to one SG&A? there especially cost a going forward, Are Can look cut walk maybe there? for as on initiatives

Albert Bolles

right lot We sizing year. of did SG&A a last of

program the driven I focused improving we our a also across SWOT business. dive products on both improving segments, two primarily think there's assets, do are, of we big our job by logistics. think as of We the underway yields I But productivity mentioned, the our equipment, our opportunity there. better us the operating and deep salad that's have a avocado is continued [ph] doing that efficiencies initiatives into

– sacred or have is now. may the we what's may a have we to not right-sized rightsize our might want way we What the to can at a have. one been be Now in the Mark. program that past advantage competitive cows we right look no here, that logistics There take network, how

focused really the on side. we're logistics So,

Operator

question Mike comes Barrington from Petusky next of Our Research.

Michael Petusky

this mentioned you the about on, or you Have West Coast? anything impact might If sourcing, commented I fires, the how that cetera, it. missed on et said guys

Albert Bolles

broccoli fires. But No, impact heat we haven't the the talked had some has about primarily. on

But us We been of we right in anything has that's heat been or been a problem experienced have losing farmland the have some terms built have we It's impact. in. problem. either. any the issues, for seasonality seen not just extreme amount And not like a that, broccoli but ash of

Michael Petusky

Okay.

– forward. be an So that's in not at to issue perceived this least time, point at that's moving not

Albert Bolles

Correct.

Michael Petusky

number it number you if quarter, heard actually was an the to the think have flow I ops first that? And was What if but it, missed in I allusion quantified. I cash the

Albert Bolles

Yeah, Brian.

Brian McLaughlin

negative A $XX $XX swing our $XX versus million. year. prior million. Yeah, a comments of favorable it's Within initial $X.X million million.

Michael Petusky

And then, what avocado was in the in the business gross margin QX?

Brian McLaughlin

The this gross end – certainly or margins of QX. spoke at in QX, the and this we to guided

that plant, sort of compressed to fixed a the and expense carrying business of the gross margins through bit are plant. in because having the During when – closed the summer, we're the costs we're we

gross actually out, pull we're you range, the back is so high to margins spoken of is the that sort we've plants which the territory in what's mid to again the we'll starting up that be the past, the you back within absorbing now But that that If in in the sort if happening out, cost. are and XXs. up then pull now, which of

Michael Petusky

actually all growth, in Squeeze of business Outside flat? was of did it grow or the at that the sort quarter

Albert Bolles

grew X%. it It grew. No, actually

Michael Petusky

Outside grew of the it Squeeze, X%?

Albert Bolles

Yeah, Squeeze. seeing tub Fresh along the our we're distribution Cabo with increased line of

So, we're not our same time, business. the at but emphasizing de-emphasizing are Squeeze, tub we

Michael Petusky

And then, digits? means slight? salads? about they in Were in they down beans sense? just talk green green Can and both Were you low-single what salads. you give softness think up the softness a bean you and I Can mentioned just

Albert Bolles

a but to be. back, foodservice Yeah. starting it more good what we had It's The third we back. in should primarily of was had We're in though, still down projected. and green business it than see coming what side. QX beans it's news, That about come the softness

Michael Petusky

third of expected? the third be, you what a it about it have was a down would number say of you should When that

Brian McLaughlin

would that expect. foodservice our No. we It's of A business third two-thirds is of number related. the

Michael Petusky

the term. of And indicate that million can what sort $X roughly know least all is about resolution near modeling But is is limited release a you say believe press in litigation in comment right you you feel can? on that just – there you can are or Yucatan and of that seems does if guys the no Is the in that a to reason it of question. legal in This last this quarter you sort at the rest. I around a

Albert Bolles

say slowed the us expect to about Like here being we up things or We were got I is Yeah. disruption I and at by back have now. it can process behind of the expecting this up I The is we lot of have in end operate is with can night, our me them. issue the that's the and year, best have to keep plant that say. all of no have by But working concerns COVID. the this resolution to able business. a any about I one one not us here

Michael Petusky

of for When of you end year, clarification. Just calendar end period, say correct?

Brian McLaughlin

No.

Albert Bolles

we're it things. end. but anticipating to always calendar, fiscal. these be We're hard predict But It's could the nearing

Operator

Our Maxim next question Group. comes from Anthony with Vendetti

Anthony Vendetti

a be that of wondering for talk sometime plant-based And to be was going only bit could I towards is if product. you Landec's or those the the more know timeline the going is the products? Is I to that more year. is this fiscal little it about then, year? end co-developed

Albert Bolles

the right with we're Anthony. So, already product out now,

test have now. we into a with So, Costco launched

been It's have we So, doing out. well.

over. the period throughout expand after test is – that the is goal to Our

bigger another have It's coming major up. December. We Sam's in with launch much

come QX and as launch and with these do they're well. were we and to we QX. then that year, us other to So, development are in as December gain able out who working distribution to of have I And then, starting to during but the in us customers the going said, be most throughout the enabled

Anthony Vendetti

gross need good current products, gross margin do they levels, margin to be I'm these levels, the margin. not the once sure up a volume corporate gross certain volume gross the But better? as greater get for corporate may as to at you plant-based or anticipate margin the than be

Albert Bolles

to better. the in some these year expect door our in We on put better than goes expect reach some terms margin of We've what a them we controls to last and gross having – average. out stricter to be target be

Operator

would this no further Albert closing for the comments. turn at Bolles are floor There time. I questions back over like to to

Albert Bolles

for a Landec. everybody, you, and day. today good interest for in Have your continued time Thank your

Operator

This concludes today's conference.

support. your at lines You you time. participation may and Thank disconnect for this your

Lifecore Biomedical (LFCR) 7 Oct 202021 Q1 Earnings call transcript