LNDC - Earnings call transcript Q2 2022 | Lifecore Biomedical, Inc.

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Operator

Good afternoon and thank you for joining Landec's Fiscal 2022 Second Quarter Earnings call.

During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. At that time, I will provide instructions on how to ask a question.

Now, I would like to turn the call over to Jeff Sonnek, Investor Relations at ICR.

Jeff Sonnek

you quarter us fiscal thank Landec to and second Corporation's XXXX afternoon for today joining discuss Good earnings results.

today Chief out after or Morberg, access to call Bolles, today Lifecore. By Jim just the from press should are of PM company X:XX On have everyone Dr. Hall, President President and Pacific Financial release, Executive X:XX Chief John the PM now, Officer; Eastern. Officer; and the Albert which went

Investor release, the of it's received Relations not the portion website on you've ir.landec.com. at If Landec's available

we to from that Before note statements remind of projected those the forward-looking of begin the this contain forward-looking materially to in important the Certain in such statement. company's everyone statements. today, I'd It's call conference actual like safe results statements. made course differ harbor could

factors company's fiscal but now risk is like not obtained forward-looking over website. the could the I'd that, company's to, filings the that year With those from turn results filings the XX-K the be these to in cause statements of the to from to materially to call time may concerning limited with information including, Copies company's XXXX. Form Al. for Additional differ in contained time from actual SEC,

Albert Bolles

will review Thanks then On recent Jeff. joining left, developments our our on outlook. everyone. Lifecore will results discuss you provide update financial fiscal will us XXXX thank at today's then for Good afternoon, And today. an I and projects Marburg John call, progress. Jim updated and The

will been in last question. to quite We've open busy for September. we call spoke your We since you then the

Project Eat Smart, puts which to Smart, the fully already have ongoing $XX.X debt, rate, asset in focused on the appreciated. under business balance our on higher firm to Biomedical laser flexibility see, December business, XX of and rapidly in and resources management Curation which we instantly down to are have on pay company Curation an vegetables core and This business channel that to now and leverage. the foundation transaction our the there's within reorients margins business, been our can we closed SWIFT, proceeds while attractive executing with you non salad back and the a sale our business, cash. the our from allows and growth growing marked assets milestone us more work and Eat of value the more presently the our sheet of on business, more support packaged net from to has Lifecore the extract Foods is important Lifecore utilized Lifecore assets divestment expansion reduced is fresh sale at remaining and growing for million believe value As that efforts do, the demonstrates a produce our around focus This

since has As of such, growing our we'll Lifecore, EBITDA going business XXXX. acquisition a adjusted of in high on and be consolidated majority and vast our revenue with most of which during forward source, quarterly the generating focusing the our is provided and discussion margin consistent attention Landec updates the

revenue Lifecore's annual since compound impressive really grown has fact, In which then, at rate is of XX.X% performance. a

want Curation at Smart the as fiscal occurred end, fiscal the sale pro forma first subsequent half you Foods well over balance on growth to financials the understates pass Lifecore headwinds for to was 'XX fiscal second the in I year. to of business. for recognize review look as are inventory working as the which some the I fiscal financial to want But well I John second guidance call Eat well. perform for will the providing fiscal the given through share with characterize some Lifecore, of a modeling continues Revenue performance greater accelerated of related second full the fiscal add reporting go the to our quarter, channel Jim Before growth great forward in to a a also for the the adjusted we're that segment XX%. insights Since a Lifecore. 'XX, year quarter guidance. our take your in EBITDA as accomplishment through we first moment of increase X% and half quarter, to and

excited second the excited call over With Lifecore lies I'll ahead. of and for deeper are fiscal review the strong Jim, our more of business. we couldn't to that, half pass for year, about the We be what a

Jim Hall

strong in the We to Al. take to growing returns deliver with financial the all of attractive of Lifecore Thank is stakeholders. amazing industry to and CDMO CDMO operate fundamentals, our you, advantage perfectly positioned opportunities

a industry of We the align outsourcing new powerful drug And drug these new filling our significant trends development. and are trends of syringe perfectly the utilizing in applications that beneficiary towards are capabilities. capabilities with vial injectable

incredible our been the with late new new demand agreements years. in phase projects. projects, and is clinical eight for quarter, of across XX% injectables, initiated This two demand few first validation limited compound all projects, with capacity Activity past development clinical projects which five presented at on different and scale in pipeline we with clinical at XX with XX% early approximately capacity we maintains backdrop development syringe with phase with that development commercial phase within one our quarter. three two investing opportunity prefilled growing and to In customers, this a rate. existing up drug fill and fiscal manufacturing XX Coupled XX spread are established and annual applications are fact, remained over activity development second development with unmet an the work projects drug injectable the pipeline In our Lifecore that strong. we've

to and remains our discussions our Moving continue expand are activity and to expand new organization the pipeline, prepare potential project forward, candidates as with build we advance in to we to development continue strong, pipeline. and active many

also statements initiated in pipeline cycle. addition, advance second approvals several activity received the the through In key FDA new Lifecore our work of projects being half first three advancing continue to existing fiscal for quarter. year development fiscal their with this of continues to during development the

Lifecore existing approved was commercial our product portfolios. in key customers' product a manufacture one to First, of

Lifecore and FDA drug commercial requirements volumes to finally, And we received warehouse grow. registration validated to for process a raw new FDA we to one continue as received increase our Second, products. approved new manufacturing designed material our and support manufacturing recently that raw for scale state-of-the-art support approval material of customers we for

provide approvals quality class Lifecore's of key All components support continued were management these our validation growth world and future of to system.

investments and the meet reach needs. for capabilities through Lifecore ever to extend our and grow new We also see opportunity an industry's growing to

Our enables supports expertise class as quality and to devices management medical combination leader viscous products system materials specialized a that in biologics, out CDMO stand and us the industry. and our world drugs,

and necessary and capabilities. needs. and expected keep in year the focused generating and investment within The our open current We to revenue capital source looking complement that million allow pipeline this infrastructure the to are and sales, with new maximizing perspective, to preparing services ultimately investment on equipment to which focused operational From our the capital capacity with for a up reach to P&L resources fiscal qualify investments. $X.X development marketing our increase our capacity future customers sales expand and the on and continue new development is growth we're our this existing us channels through to expand expand to and

XX excellent continue and utilization growth the that is to units in approximately built infrastructure our we million today. full million expanding of filling the that expect years in capacity reach summary, drive utilization units our around. excited investments enhancement current $XX we're fiscal million capital us theoretical we're specifically, of capacity More that We in to to ahead. about towards of capacity allow 'XX will this beyond it operational In the position continued XX

capacity strong We our trends. strong us continue growth are industry ahead. generate years to and the from sustainable benefiting in to allow And the investments

Now, turn John. call would to like I to the over

John Morberg

quarter, XX% Jim. increase CDMO of increase a offset $XX.X you, year of shipments which XX.X% had million a was partially year. within business, revenues in fermentation prior period, the the timing a a of driven business, fiscal in total business Thank realized second its the a by decrease fiscal or Lifecore X.X% versus by great result

Lifecore move top we and in growth headwind we year, of excess a prior adjusted are of segment of this with from track quarter. we've for first the half points supporting over our revenue business profit representing million, revenues channel and approximately margin Gross million past through And excess a year representing improved mix. increase reiteration even that second The range XX.X% by the moved XX%. to approximately the line $XXX basis in We're here an versus as the largely range channel largely we inventory. million that inventory face half margin X% year, increase $XXX strong to million, And to growth with to on early EBITDA Segment $XX in XX%, of to improved fiscal XXX third to $X.X guidance fiscal the the year, fiscal step $XX X% both the XX%. due guiding on a prior of an of of quarter, million is to totaled Lifecore approximately which EBITDA consider the Lifecore Additionally, the EBITDA. a the of for in up XX.X%.

entirely due growth rates EBITDA our to where that phase $X.X P&L million this growth. As of is a investment reminder, next in the we the utilizing revenue year, we're lags difference prepare for as of

pro 'XX related fiscal and to shift We've and now financials. provided of for have full results Let's half Curation Curation first Foods our the recast year fiscal segment 'XX. and results forma

the products of mix. Foods hope million at avocado oil I'll the this a understand products is our XX% comparable segment few Curation necessary BreatheWay. our Together, which our the on results vinegar forma provide comprised of and foundation, with forma business prior period. make pro representing this annual olive the new midpoint approximately business, segment, avocado that that approximately O to pro is comments forward of With Our revenue represents and the just guidance, $XX.X of now basis will versus go year segment the

has pro million, increased sale period. quarter, forma the balance revenue Foods a of in XX.X% fiscal categorization EBITDA a fresh Curation business in with that the O packaged in compares the adjusted million of loss prior of of loss included representing salads $X.X olive First, avocado $X.X olive comprised X.X% Smart. the $XX.X been vegetables to historically prior which generated second to million increase Note sales. products we a that Eat O to and year use in

will remaining as but basis, the go to a think require a six please months you and a will consider business with sale for reverse midst the us execute. business we separation the on are that about with of EBITDA size, However, to of revenue in production commenced nine Smart pro The base. right adjusted forma fully Eat work smaller our take to forward This the infrastructure integration.

we There in which segment services approximately near savings. our the and weigh Smart $X work integration could Eat be on in million stranded term, transition buyer corporate to As will with through agreement reverse the costs of efforts. that the amount the margin annual

second business, As materially some anticipated about for the the of guidance in of these loss quarter on Eat providing business updated pro underlying so basis changing figures Smart it reported Avocado we message pertains of the key that bottom business as The as contribution the The the Olive the second a like sold for fiscal help sale like remaining is well in primary for fiscal that revenue now forma are BreatheWay. half. basis nuances 'XX, and performance under here not brought products, these a the we're change is up O outlook and basis by to assumptions Eat to the Smart. line on clear

quarter million and will as six well. a expense significant we our for debt out Net expect XXXX, Once The basis as right back point I Additionally, impacts additional through on savings be our segment. sale $X.X the Smart approximately have in of sole to over next corporate to bank $XXX.X reallocated million. fiscal a our November nine working the some that was from sizing allocation sheet XX, of other Eat we business corporate structure reported corporate has balance months second and time. again,

of This $XX been utilization at fiscal to $XX.X However, the sale 'XX on net proceeds the million. debt end million, would net debt an are Eat a for have Smart of pro forma basis, net compares $XXX.X approximately adjusting bank of million, significantly improvement do, million in flows $XXX still Windset the in but the of nearly reflects to or of more the cash stable. XX% our Eat which some quarter, year-to-date our first in period, have investment Smart work the and December. are sale more disposition the We

attributes more profile believe margin team is set for the could greatly And to appreciated investment this deliver our that, call of be and We by results begin operating to foundation value. growth that operator, shareholder improved. consistent the Our for work a questions. we attractive, as demonstrating solid structure better please significantly provides our with is open community

Operator

[Operator with Instructions] Sweeney Gerry Roth Our first Capital. question is from

GerrySweeney

opportunities actually, Good that's how curious in do words, capital a the not side, some in been the opportunities. afternoon, Jim, the and taking but maybe there of three of trials curious, again to just of and sale as written have because acquisition we Eat A also little up start will that other potential and may Smart if And but this if are-- call. thanks for I the are think that? it get open if a curious caution also to food intensive. customer have through, Lifecore some there's customer Al, this of some obviously, opportunities sale. has, congratulations Just Lifecore say part opportunities. capital lot my obviously cause more in the these on on Lifecore, John bit phase are constraints for constrained, lot But business focus. a And will drag customers maybe capital coming Wanted

Albert Bolles

here me Yes, year that start just by out have at Lifecore. this year; let we it's Gerry, investment an saying mentioned

million investment We we've the in we've but those more implemented capital, more to to And or Lifecore that on to more in have the anything some and resources new at $X.XX added like that pipeline pipeline close Jim plans; new future. customers money, million in you'd not really opportunities. only investments attract And to some bring business mentioned, to invested we've customers. have grow $XX board we to Jim, bring John? invested to to in development as capital future talent continue more already add drive

Jim Hall

discussion investment we're directly Gerry. I are The have Every answer our with to is This think it's way an strong. To happy which to and out still XX opportunities. ultimately commercial of that, onboard how the and transfer through that to with target soon. is in differently into and go confident another, us don't The we us development and positions really Jim. only look identified the Hi, up of us. board continues resources in his on that on frequent. he's our on had and digging key our knocks or in track, the development Corporate XX we development the of we aspect we've really pipeline we'll we're I've the heading now things Darren turn to a with sure. phases, of CDMO work door build go in and Hieber to new opportunities expand going at from out opportunities VP but and Strategy pipeline transition Yes, activity accelerate target helping not done remains your brought impact world help where one out think how the lot name, are a things development really, pipeline, Lifecore. expand to the And hired for development pipeline I and There also is really that. question, we've hopefully,

a of the work us in and projections see performance the for spent the out do has as happy second the at, to balance that quarter, we're on And development come to the year. more development And quarters. the But very trying we doing investment to lot rest the things are that, where quarter, last over time when activity. you front. in we're So of the allowed

is we're where at Lifecore headed. with comfortable where very and now right we're So

Gerry Sweeney

say that to $X.X that's base top -- in is million the development guess is start I suffice opportunity, increasing the business that So pipeline or to way

Jim Hall

the or us allowing after FYXX go this start kicking happy have it's this really the start where our with was of we're in of year, half at. back quicker later beyond. Yes, and and to but fiscal intent more. we're yes, in very half react that to fiscal But, impacting And second

Gerry Sweeney

year the how mean, you like? how other are next the I follow that it XX out and hit million obviously, at the the I of may units, multi does I like years. of I How think a some to XX on projects that just go process, is et pipeline -- an and trials you're all cetera. but and idea much capacity going do on of capacity? some to filter of to What depending it's how But XX have the plays look you XX out trying million those was the in have and XX,XXX over or couple to sort get million. guess what is, that know pipeline,

Jim Hall

really. still with and to to and adding build we're it's just when go expand Yes, an are I give support mean, have And have goal pipeline to long of and pipeline to what continue are specific we that add depends our tough, that resources because on the grow ultimately number how we you needed, it example. where to take as things the now, workload a through projects at. to they room

And going the are projects of of very I just XXrd phase well. work our project. for late here the signed statement that is that One in very,

that, beyond get the you lines we've million. past, know to to can stages, you -- focused The investments in pipeline. overall in because our go out. at to but already that fill that talked the they in looking that that into fill beyond XX see are to So and to also; XX the things develop the drive really And various we're along, about million, as capacity starting drive

Operator

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

Mark Smith

guys. Hi,

headwinds that's move those of remaining. me First through Lifecore within walk as you through and is just anything can kind question the remaining for you

Albert Bolles

in Lifecore? Any headwinds

Mark Smith

little talked as about the your industry, of year, bit how this outlook. the working of those a kind through and you some the that slowed things kind of some of Yes, just growth you're

Albert Bolles

our in growth was pipeline more $X.XX investment went impacted for robust well, through. Yes, we that us once by again, million building in the a

degree a COVID. The other impact our primarily and international on inventory, was was that high of customers driven by HA, in we sitting primarily and were late of QX, QX

that phase We see we last the right what we or than have COVID. for. phase have through next don't moved And rapidly any with of slowdown the of, planned here more

have are add we that? to want that headwinds we we're forward. two moving the And to anything are those that comfortable you Jim, think I with. So pretty

Jim Hall

Yes, pretty we hey, the meetings the Mark, business heavier because of We covered both optomic and it slowdown to Al especially COVID. in with with our into supply Listen, our Lifecore. groups due customers well. went implemented and side frequent year, inventories, planning meetings chain of very the from

our we with demands up So the with you half, start we're out start And real we side orders picking are happy over in HA that's since it's we picked seeing latest back on of aren't where more getting if picking we on should up, very a fiscal that back this in COVID. the happy the side as the laid the but we data. and things year. will through generally second all talk headed, customers overall of we're it, haven't track, an business we're heavier through, be back frequently a things, to worked but say planning phase, seen inventory to time related up, the have impacts inventories, And back any -- do picking lot worked all markets, not are up,

Mark Smith

big new a maybe you in door on walk your info this go through remains picture, of and and new then and having selective like to partnerships. sounds of much and us can people It's how how versus you partnerships Perfect, for is really knocking these lot guys the it this very on work deals out strong be pipeline. gave

Jim Hall

we performance. want Yes, do sure something niches can sure we can look add support. formulation, complex to. that type, value, want we're we're we we're product with provide value primary a we are they're products, synthesize, working sure with Lifecore if it's fairly viscous, to. And, experience at, to have the have partnering I to that agnostic, mean, And typically, and make we people in partner in look provide we those can selective that to And or we make Lifecore's with want formulate, we complex things it. we're we And whether that, to in whether they're driver with. can make We at people but a was historically, we market really, our value

XX Our customers. projects project pipeline, different with as you can is XX see

think of worked customers that a start with, so from we've of repeat what And we going out go us today. to development more to things going referred is the pipeline tended are actually that's some pipeline more and part to be a in us we people find them. have to expanding the a are that it investments customers, where aggressive in and that have lot be hunting for key style beyond to and do and focusing is after We

Albert Bolles

activity, our Mark, execute our of the business. we track pretty and hit based in a Lifecore end that our rate we keeping high have at of and record quality FDA, and well get pipeline work, that with up how Yes, relationships their on our high folks facilities, we

Mark Smith

any And that question, we to there. as and look commercialization, leads projects Perfect. my just updates at next really

out this there approval those commercialization? of on that and seen updates Sounds like things now to inherent any project really good we've in advanced have

Jim Hall

well, approvals. are the phase timelines on internally. in progressing that. heard mean, or tell our late FDA He report have you anything can't the can Yes, three on and I also I like that about out key they are three, in data we me things mean laid I that talk But projections

was their was Lifecore, only forward. we it not expand be for manufacture approval of continue process only will commercial The us moving those for product but needed them up as allows other o-US handle to warehouse. portfolio, to our not yet, in launch the to the approval our one with well. optomic for that not launch, space in only for approval approved And customers, first that but to materials were to of We customer. was an business -- product customers' key -- The one US us increase is our feed the key raw a as approval with manufacturing capacity. their controlled the for key increase really our space in temperature additional then but the scale And the

of is where term. key Lifecore approvals And us we were grow. support heading those So longer for continue as to three all

Mark Smith

Okay. And then maybe just want of those disposal last the of the once to just businesses bit those remaining about some into a assets? may pretty Can ask question, little talk on more on any piece look you Curation, solid. expectation and or insight the timing of outlook

Albert Bolles

talk avocado about doubled back. market we me Mark, strong this of that we very, let products. Yes, launched bit now, a and very XX% the results, our Cincinnati got purchase came guacamole households we product in velocities test

repeat that very of had of not a high have rate of gain the product. households we ever XX%, So tried XX%

trial. So have get we our very key issue repeat. is always strong And trial, been once we

second mile. and guacamole we're in at So converting right we're to to completed that nationally before about March, product now looking be excited very

January, were category of We and a that product avocado in buyers end surprised increased we called are lot We've new here of also it. gotten incremental the XX%. launched avocado, all a that the not of new we in sales extending the looking we by And beginning just February. at without early spices nationally pleasantly only

business with really for by very we continue process $XXX the about we're million months us was that $XX.X everything. to avocado part debt. look products to Eat helped And down the on million has a continue business. And the our pleased we we're board work. to been the of better much sale. really we at things in us on work in doing spot were we lift the pleased; So really balance six now last Smart to got at excited taking And price sheet to the that get projects And in

Operator

question with is next Pinheiro Sturdivant from Our Mitchell Co. &

Mitchell Pinheiro

afternoon. good Hi,

a questions. to what But bunch capacity. sort I up was guess of Jim, regarding asking, So of I Gerry to follow I have

on of Does is project give you into capacity XX kind the a And XX million. -- higher? any capacity? up also up there your and currently currently does helpful it when is there? running million, XX pipeline go You go can at that that are would then million XX% be you your or us it on actually, the does XX based literally that? million go what Any of or Are capacity, timeline is of some how color

Albert Bolles

to for, you Mitch? take that Jim, Yes, want

Jim Hall

Sure. Hey, Mitch.

capacity, breakdown as here. fluctuations got ancillary as equipment to demand and it's depends linear. our those with of demand fiscal try that and So ahead approval fills can capacity capacity approvals. fast units. demand, of like through units, XX fill from phase far so of standpoint, ever development, not and rates are question X And to commercial can. doing it's it rate goal later It handle just everything we're staffed little help from capacity the than our handle the a on as approximately year, upside, and that. million your on Maybe reach Currently, a bit XX% to to the But this typically fill as than we more keep we demand if million more to running we don't we in especially the

units, it takes years the million get equipment those beyond capacity fill place. we to beyond order to We filled. looking But four in XX gets fast one any the on on have have how we're that past haven't filling heard the forward already three that provided now, in two it guidance talked is thing yet you've filling the about I investing in in capacity lines

units. should additional XX in you how million capacity see some and So we guidance beyond fast that where think need the give we we're to going

Mitchell Pinheiro

million you the million that so doesn't you're -- spending take does that XX that And year it? the does this to XX

Jim Hall

fill all pretty XX%, next about it the a relatively we to XX% things capital continue capital filters in, like we Part It's on the don't, from lead to the of need or million I that talked I or XX units, demand earlier. is Part it. money or like that the lead lab of fill million few about to need And continue out even beyond of we'll this lead that equipment. so spend about handle breakout equipment, to the are over equipment to shorter our go units. till mixers, for that like is some don't years out if times so XX% we or filling time equation to capacity longer spend our time, keep of to when XX talked fills spend year always lot

XX So to beyond of the parts go million units. other that are

offering then capital to year CapEx. We or also maintenance to capital there. what is expand expand refer the our just And base this rest as development spent our capabilities of equipment and the we

in So those it's out kind broken buckets. four of

Mitchell Pinheiro

Do I know guidance, going not year? than a but giving XX million is capital perspective year lower from the to expending this you than think; be next forward you're

Jim Hall

you cover to want at all? capital John,

John Morberg

Mitch. Yes, sure. Yes. Hey,

our plans, needs, think As And I lead the depending those. Jim said be the depending yet haven't to given is capital and going times. said on on out at the on we've in somewhat year past, we still guidance our the forward we're depending chunky, looking on

working So be now plan of that still very and though. we're that towards speaking on kind have to soon,

Mitchell Pinheiro

projects you The that as we then two of the was the back into two And that new number same that projects added other in imply Jim commercial pipeline, have projects that the to in QX. XX Okay. production. moved

Jim Hall

now. into active preclinical product one Yes, we right is we that one had we don't move consider had commercial production,

a away. the added list. that So And we any phase this fiscal we we're began where it. end new work ones year. our the just not time and of the two we agreements in not It's first off signed took It's on going the right towards basically really spending quarter, that

activity yes, but the is as same now And are QX in lot because the of the work a started. actually the reported higher so numbers

Mitchell Pinheiro

where that delivery being but and of pipeline large in drug read away HA it then Having XHA, year of that a your going had competency the or would part lot comes strategic HA when that seems HA diversify the activity Is core expertise and to not so you pipeline about from a big a XX% me, of your strategic that you up was a and you And to ago advantage as significantly just HA your be going I And or Okay. pipeline with derivatives. HA a to coming that the is like related. related element of fermentation see side, forward, the a it competency, sort have, mentioned build. that system. as from

Jim Hall

obviously, grade come same percentage on, working developing of optomic viscoelastic. neighborhood but in those with Lifecore, talking I for world injectable kind in in the we're market things our really them actually the going us, projects, to and and of this a strong really, our about HA, of to things HA be we capabilities in for we're on it's with mix important. current always our XX% that good well, built pharmaceutical, niche, people potential with products has very product And want HA as what that several major a are the the Lifecore in Yes, working our is in the we're actively really HA, tool pipeline, to know, the utilize player

optomic things there are optomic working also are few Age management expanding in utilize from advancements several degeneration, related formulations; orthopedics, things general things those things that, a historical things therapy, beyond cancer, in things eye Few on. that. the viscoelastic drug our delivery, we're But that are like quite that macular tumor in in have surgery, HA focus. dry like that We in pipeline, realm.

our delivery it still products seeds annually. a term, That HA in but takes in developed away non research before it that materializes a more from joining sometimes --don't is HA but utilize So so HA a utilize will think, the several into to talk the several the kind different something researchers focus, we're taking that going so years research doesn't heard I pipeline, not longer But development applications anything there's community, drug world, based me you've with of pipeline, that product. to our just that being in skill be the are several things XXX we happy future much from where standpoint, sell ha away HA set.

So it'll the balancing years. think start out I coming in

Mitchell Pinheiro

more the you're all is overhead. the -- You savings. John, --when done. months that it into and where that wasn't that comes -- you does We're Lifecore and some about corporate when right number of It's of one where are the costs, that -- question What going what it then down? think how corporate your And how mean like? sure overhead in look Al, you you're of expenses but said right expenses, annualized sort $X now through you. corporate fit million get process I million probably talked sizing about you mentioned Thank perhaps, obviously, I absorbs much of to in. your just as expenses. Curation you $X for $X other structure. million stranded when of and when the to take but corporate grow, there can and And nine

talk just If that be could little bit helpful. a about it'd you

Albert Bolles

Yes, avocado we're Mitch, high business sizing just level working details process you. right integration the closed in a forward. and reverse and you we're We Eat John Smart into as let corporate looking the through sizing get right business me a let we now, here right go give December, I'll with overhead, at,

to going that's we six the a take We've right stranded in reverse nine really working integration. will million stated now, to just through But estimated costs. months. So $X as process be around we're those

buyer a business the a with that customer working TSA to for issues. have we're a through that orderly sure with have them, smooth, make quality to no We no we interruptions, transition

anything those there? Mitch. you John, the So we're evaluating to want of of midst add right now, all costs in

John Morberg

changing we've Mitch, one a Yes, it structure, on Lifecore, point structure. them. we've you And, underneath allocation, operating companies so fiscal or been basically the line well, see integration two working pretty I holding not costs handled different had impacting of that company corporate for the for this also That's see this management Instead, it that think corporate fee with we'll certainly the integration, on don't year. costs and we reverse rest there.

fit an costs Curation also we'll we on the also as to within see that make And those side, platform integrate stranded opportunity have. we reverse the there see that we structure So be integrated. reverse

kind buckets through we'll next two So of the to there's two be savings here of quarters. potential working three that really over

Mitchell Pinheiro

Okay, helpful. more pump that in actually one And question.

obviously spent now, do cash, $XX you're generate so - $XX of right When million capital still going about of on million you million to have we base far. So, another, spending debt. have your months to six $XX

how fiscal considering Are we you for going flow, So, when are of year. going breakeven the look, to this sort the like rest to -- we for the meeting get your think like do year going done debt's TSA Curation see things cash of we that. and

Albert Bolles

going where first The $XX up the with million I Yes, debt's go about up. tell let end spend. to me think you there from obviously will CapEx

million, the million you $XX up would think spend to said number about it, million now down That is we spending about with to $X If at we're we $X Curation. obviously, at Lifecore; sale. a

over So had working on now at period year. and seasonally, where and on a and is that capital, we creating Olive and on the side Curation product the next same we're our a O in also the working it's guacamole, summer the crush of picking then you capital time, we're buying, primarily, if our months And obviously, use investing season. we're into avocado side. We're into the picking this that

flow fiscal from of flat. that $XXX the somewhere we the the of So see right our Curation May. essentially by end perspective, our right side, million now end you're being And cash around at debt a year see we on

this fiscal working capital balance So for year. the and the debt of of end CapEx this point our use in is really at

Mitchell Pinheiro

you the spending to million is and get that a the basically capital capital incremental increase. And debt half half million that move million, working that up $XX $XXX XX like $XX if

Albert Bolles

that's Yes, right. about

last to end for Okay, debt a figures. if would we call you recall, be closer million year we thought our plus conference $XXX

lot certainly balance is sheet So the getting a better.

Operator

with Group. Anthony is Our next Maxim question Vendetti from

Anthony Vendetti

to? asked, intending guess, that the expand a this in the the just that Yes, quick drive to hire try projects the questions Jim, on hire thanks. into Okay, the salesforce to I looking an follow-ups make? to expand strategy I to you're officer, couple Is of is just but even effort marketing just only funnel been have, Or first you're the more most

Albert Bolles

want then targeted to an of more me come Yes, executive Anthony. organization, team where and to and obviously and across And project expanded at do first effort and the in assessment work to strategic right, we here. is in hi, is, to to this sales going, kind hire, somebody my then to gaps the our the what I we're the Yes, development we go. where opportunities management, marketing within then have board, with look strategy of with support services, what bring wanted rest an the

the fiscal to filled. there speed we've then next actively And full And will together, first this but in putting position running early done for So more. that are get was we that that we're planned have later and ahead. be year, step year, that

Anthony Vendetti

just is just couple XX targeting before do gross have you're Okay, a question ongoing of I a process Any more? it so have to number people the that it range or determine? you a still Is quick on to margin, hire? Is more? that

Jim Hall

yet process and moving until for determine, operating talk we estimates we've years taken been fiscal forward the account into to that for about our still made want plans, to well. future will but the don't I is Yes, it's actually as ongoing analysis, some do finish

Albert Bolles

pro. brought Anthony, HR a also we Yes, real added talented head in of people

working or more the he's build the he team So now that through later. big to it's Those Jim and helping and said, -- come right were two process out as

Anthony Vendetti

Okay, great, and lastly. then just

then the And a that corporate we combined Is that of should how lastly, considered little margin mid, XXs, gross better look that sort the XX bait mid at excellent. than should this combined, bit low on is to were the business or is just new guess, margin. I point? -- at be expecting mid Okay, gross a we

Albert Bolles

take to want you that? John, Yes,

John Morberg

margin quarter. mean, side, look on had the great gross a Yes, obviously I

And story the in margin for of revenue that we quarter; the with really drove services, so that much gross had mix to strong quarter. do very had the that the revenue development

that and interesting could of Jim one do, out balancing is trying for our help and in speak a lot more of in consistent generate kind the I side. the the the to a and of to things profile that would think he's revenues margin with year the EBITDA So customers gross what margin

to Jim, want to don't you that? know, So, speak I

Jim Hall

a manage year historically had this be business upper where we the to QX, come out blend strong performance fiscal still overall, some we've margins quarter, of well. work Lifecore, the overall XXs in and in the the that's shifting of general, of in into mean, I as in to we that but done related margin Yes, development the where we should

Operator

have of turn end closing Bolles and now will to the over question-and-answer I remarks. session We for Dr. reached the the call

Albert Bolles

as high are looking profitable to we look margin Yes, far business. really the we growth stable here, and higher more new a business to forward forward more

So we're very excited here about future at the Landec.

third We your So and talking once you on to in our your today. call Thank interest Corporation for to participation we when fiscal results. you. again, release forward quarter thank you Landec look the again

Operator

and Thank this may conference you today's disconnect your concludes This time. for your at lines participation. you

Lifecore Biomedical (LFCR) 6 Jan 222022 Q2 Earnings call transcript