LNDC - Earnings call transcript Q1 2023 | Lifecore Biomedical, Inc.

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Operator

Good morning and thank you for joining Landec's Fiscal 2023 First 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 instructions on how to ask a question.

Now, I would like to turn the call over to Jeff Sonnek, Investor Relations at ICR. ahead. go please you, Thank

Jeff Sonnek

Good morning Landec us discuss for thank first quarter you Corporation's results. joining fiscal to and XXXX earnings

call Officer. company the Officer Lifecore today Hall, John the and Financial Executive of and are Chief Morberg, Chief President On Jim from

today, we have received begin investors also earnings post of a the on should also is our which available you company's we copy our Before release, website, where presentation.

course statements of remind everyone conference of Safe made we'd in statements. addition, Certain the company's actual forward-looking to like to contain materially results In important could such in note this forward-looking projected the Harbor call the is differ statement. It those statements. from that

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

Jim Hall

business. on we begin to Thank morning, joining strategic I'll thank brief focus everyone, of today the transform unveiled a that our update Lifecore with to you you, us. initiative standalone just eight a ago for and Good Jeff. weeks company the

and to With well those ticker accordingly, targeting are formal precision, respect sure underway. Curation formal of are Foods the are When so the we prepared. assets, is the monetize timing greater of corporate update the switch, terms remaining change. be branding market the will through we In processes a the for to have those to transition our working efforts activities November everyone to and legal we Lifecore

soon John continue to team a work in our communicate commitment importance today. emphasize we fiscal quarter, the I That an outcomes. said, not increase $XX.X updates possible. any want by of quarter our EBITDA provide pass with the and discuss a $X.X are this X% as in by cadence to which plan that ’XX yet our additional outlook, year. of reiterating consistent to Lifecore are ‘XX to X.X% potential we to commercial fiscal as to million, the the generating which and In grew position done Lifecore's to the ’XX the first in we fiscal our call the With efforts However, revenue at of both then million adjusted I'll on disclosed and of summary getting this some first financials fiscal were business the to provide that, beginning of performance, and

quarter the the required our moment. certification generating, and and facility the As a annual in our the of for cover off about and year a room maintenance. clean EBITDA, I'll in are solid we revenues idling seasonally of which of we're business first for year the remain terms due quarter is activity to Nonetheless, lines manufacturing reminder, lowest that to development start a excited

fully finish in a focus Acid from honed have Hyaluronic highly for fill more as sterile pharmaceutical regulated and development, integrated the manufacturing of XX-years our positioned differentiated complex well very highly a of than and capabilities grade, a been platform CDMO pharmaceutical remains grade business Our products. technical These injectable experience on injectable premier with products. complex capabilities building with

provide preferred the partner coupled positioned towards to as new ongoing with CDMO is a unique new outsourcing development Our expertise injectable drug of for services Lifecore means applications. trends drug ideally industry

estimated injectable of syringe XX% is expertise market and at CDMO drug In today. growing prefilled grade fact Lifecore demand pharmaceutical of XX% the is Approximately rate. injectables applications manufacturer injectable only new an with all the are compound in annual HA

drug past capacity, needed injectable years. investing of capacity limited during to manufacturing we've that this the deliver and will been industry's much in full few we continue incredible the take opportunity advantage Given

the customers. stages front, development XX our early development On project XX development active dispersed five eight clinical XX different X These and Phase development with XX up our commercial follows: various of Phase across are portfolio projects as portfolio scale with with and phase activity X X projects and from projects. remains clinical projects; projects; with robust clinical validation

date the is of drug programs, and We development have customers a These are off. XXXX work of a in of Three this the FDA calendar products of both are approval. the various are with continue other our with within year. all progressing two of efforts now and device projects which late before anticipated closely one to paying nearing their through eventual end calendar the FDA phase approvals PDUFA approval, medical stages

As to closely quarter, working these are these I mentioned are we last with for pre-approval plans. to preparing and inspections projects support their launch support product customers

the of believe revenue currently potential expect the projects to continue grow $XX project active activity we our of expand value $XX development to in the range it in portfolio, As million active the will of development life forecasted cycle development which to in projects, pertains revenue the portfolio. is as million over from we our the we the

our contracted $XX approval for range revenue of as this believe these to annually to value is opportunity agreements. of activities late mix Looking transferred we year received the represented are eight million the commercial the XX% and revenue XXXX. portfolio, supply million nearly $XXX stage our fiscal that in CDMO successfully at past active potential commercial products the in commercial projects FDA

a human activity community meaningful is new utilizing and to out now from to HA, CDMO from among naturally substance establish optimized is our segue in it current investments our Thus, highly HA past is people is HA of potential foundation utilizing the engagements. of our as for for CDMO biopharma that With we've you raw business developed which HA to XX-years. viscous good viewed products component announced sales. and therapies over the team by excipient and the an strategy approximately a vistas the characteristics we and expertise our highly in complex development. a we to is set commercial project which the are our active of and see remains the critical convert occurring utilizing XX%. place We XX% nearly prospective and mix produced our revenue in and HA it’s business we balance opportunities the revenue of our within project drug from updating year. Approximately complete a products allow have generated body last on generated targeted XX% continue in that injectable our ideal material that that portfolio is and HA

in Our These returns the XX in that which the partner. we team commercial stages people, ramping diligence is drugs our within span we new and CDMO doing XX first seeing our marketing, total and in classes immediate the discussion. funnel small, Lifecore's and projects companies that up pharma to CDMO prospective markets, job assortment large believe for of spans multiple presence fiscal development opportunities various which capabilities and expertise sales, seeking and an are in In a both of we end of speaks operations is devices with quarter, actively investment opportunities attractive opportunity are on industry market to an growing medical and added business development. impressive our of process the a

time of shift potential some aren't convert While slowdown we number in projects the dismiss will seeing number we others, of over as any and the opportunities.

On that future. trend we our will well increasing into support the the continue an to contrary, believe strategy expanded commercial

to continues company our front, multi-year of prepare operational the acceleration growth. On for a

organization with As I capabilities. best imperative is continue practices the forward to implementation of our it mentioned, that and push new we

team by anticipation our Last our enhanced company. reach approach advancements place fiscal coming adding capacity raise our With made optimizing to focused branding, entire to is Lifecore's operational capability are the the supported the and Our creating we in in working is diligently market. efficiencies complete, awareness they now and great in We’ve across years. in this which communicate new differentiated profile. of bolstered to year, we on marketing are facilities greater

automating and possible. wherever We modernizing are systems

or products Information platform the we've in and data and replaces our enhance with to the been that our rapid analytics June provides Management This integrated months. has coming instance, Laboratory product first LIMS manual transitioning in For late visibility LIMS a other System of on LIMS in qualified processes. and series inefficient

efficiency to requirements. our We organization and are savings with elegance. additional on entire include enhancing through on areas is us shifts prepare focus and and new workforce management, our opportunities working to also and do demand laser requires. so and team manufacturing sustainability our and supply energy of add Further, as our capacity to an lines These planning pharmaceutical efficient isolating resource our chain across focused capital

weekend shift additional organization. fact, recently manufacturing we across support just an our activity added In to increased

prepared Lifecore more While for anticipated robust well there's do, growth. always to very is

expansion tailwinds. ahead, to strong upon of characteristics our growth development teens pipeline, annual multi-year into project driving a the We portfolio, acceleration our Looking these and focused industry active towards continues high projects favorable of future of development revenue portfolio our be portfolio. by our development to expansion remain our driven on into conversion and mid prospective current based project

rigorous generating the to specifications the that on requirements specialized the balance manufactured our within approval. equipment testing, maximizing acceptance multi-year we must regulatory current project times to portfolio of future on lead must revenue we customer While known undergo also with capacity also concentrate our our capacity and continue the infrastructure, and is

and Our confidence development is known as be multi-year which by four the to our acceleration meet world-class prospective of enhanced decades and with provides management project revenue deliver projects projects further these us by opportunities system within experience to the new in will we plan a directly creating existing pipeline. growth portfolio quality our challenges this supported trajectory, in our

like Now, I his review. for the call to would John to financial turn

John Morberg

plan with updates the Thank we in shifting August. Lifecore's fiscal a before the of to performance outlook our you, aspects of some I'll shared ’XX financial Jim. start and that transition financial review around

is shipment first required and This manufacturing quarter to be quarter a clean room revenues. certification causes our This year. seasonally first of terms the lines slows facility our annual, idling lightest for As from of quarter maintenance. our results lowest quarter our seasonality and reminder, volumes in

year for the prior of we X.X% million prior EBITDA to outlook XX%. in due range ‘XX, quarter to our XX.X%, the with XX.X%, in representing which to of is which elective Lifecore profit a compares due point business primarily million million $XX gross higher for of revenue to prior versus HA period. EBITDA its and $X.X range in for the the the increased X% which reduced our year first for quarter to $X.X prior the was quarter in the increase by to XX% driven margin partially material to our to business consistent the with XX in our the range primarily to implies be our the increase ’XX business. of $XX.X ‘XX, range. revenue mix. total ’XX was year and fiscal to Lifecore This increase segment, X% Lifecore first improved adjusted X% manufacturing year. growth a due quarter For depreciation, CDMO the X% first $XXX of by the and growth in during which growth to fiscal range million of XX% revenues a was variance on increased The basis the of raw million, XX.X% EBITDA margin Lifecore Shifting adjusted million shipments offset the an with HA $XXX excess adjusted impact of to reiterating procedures. inventory $XX.X expectation pandemic first guidance The increased are in channel implies of guidance single-digit million, XX% growth to period, gross in in consistent global in

are to we longer on Curation Foods strategic due monetize no segment, those assets. our formal While actions providing remaining our guidance to

fiscal no we for from full For modeling Foods purposes, contribution Curation are the assuming year.

of our this full-year establishing reiterating to the Landec. guidance our is point, $X.X that intent corporate expect costs our reflects which formally in segment, transition infrastructure in $X Additionally, the to we that ongoing for which to continue the of we our at carry while the I'd process corporate the we remind organization, of organization to million. million other are On everyone is Lifecore, range

the manage term, believe will in expect transition and less this it's But Lifecore most we appropriate some Longer expenses we to progresses, be changes. continue. be think modest smaller As we will there those savings as organization. we complex the making those to near-term,

a EBITDA few respect of ’XX. adjusted contribution With full-year on assuming are So costs there a Foods corporate from basis, expect for we in Curation consolidated modeling note. to Lifecore, to net $XX.X to in be fiscal $XX.X the of considerations million million no the range of

which margins XXX ’XX continue ‘XX anticipate approximately shift due points have on expected towards to a year margins streams. XX%, to decline fiscal mix This fiscal performance. and with basis approximately is than relative in ‘XX revenue We fiscal which very revenues, to commercial year consistent to an our gross is by lower basis other higher

continue industry will an invest functions tailwinds. marketing as to we favorable in sales Additionally, taking the top line acceleration we and the of of advantage growth drive

As level of similar slightly perhaps to higher full-year. operating percentage approximately revenues as a a versus result, we XX a basis year, anticipate for prior points expenses by of the

’XX be to quarter timing. sequentially quarters. In from first out to from with we third the similar revenues the approximately would shipment is revenue that expect then year's third the of first quarter And Adjusted sequential which expect third is quarter this increase terms and a -- flat quarter, fourth growth the third and both quarters, flatten were expected continue to of then size to prior in and third year. fiscal similar expected as be reminder, quarter. quarterly in second to fiscal to to due Lifecore's but through cadence, revenue EBITDA Therefore, quarter we third fourth higher-than-expected, in of second to

still turning ended Net fiscal ready of next In process is of the $XX testing which to million, year cash Lifecore ’XX fillers $XX a the Now sheet, two CapEx and multi basis flat debt reflects $X.X impact which the ’XX fiscal was at equipment, remaining XX, bank flows. was to end acceptance bank fiscal the capital quarter, for first which quarter million. earmarked use reported million support on consistent expenditures, liabilities the which for of with $XXX.X is be ’XX with spent summer. balance and which debt Foods the net associated our of $XXX.X Curation isolator ’XX fiscal assets segment's in essentially will August and guidance Landec’s formulation in million for million, our

This included estimate this beyond a CapEx million base As open demand, with questions. our filling carryover reminder us track XX capacity approximately driven commercial commercialization capacity and development projected the in and call in of our growth our portfolio. current for on expected to And keeps units units ’XX. meet from million that, XX phases our business operator, project fiscal late of in by to million of $X.X growth is to expand in operational please the in products active from

Operator

Thank Jacob First The [Operator now open floor you. Stephens. is questions. for go of Johnson Instructions] question is ahead. from Please coming

Jacob Johnson

couple just finish John. the and but is market, comments for of about there, a talk Can Jim to a still capacity you of It the some yourself you just Jim, fill and out state the morning about the demand fill off tight finish providers? you maybe a start more. little differentiate Lifecore. follow-up bit other good And the of versus maybe nice with like just a sounds flush question. higher level how Hey, it then kind where at Congrats is year just supply to kicking there? talked industry? finish fill to Maybe on

Jim Hall

Sure. the Listen Good that streets. see field we're from activity Jacob. our from on salespeople we what coming morning, the in on hearing and the based

also a and couple people projects that I by we fact of a that of for way plays are it, earlier the it. other HA We capacity. because -- which capacity also part of board the on says the think of there. part additional which what's end know coming are the formulations the the our of of there differentiation the And lot I have way. discussed that of out years, on products big in your opportunities there's our right? looking and that And over more it, knocking And coming That's of ability we're question unused evaluating is is the is the based contains provide chunk HA business Lifecore People coming capability manufacturing complex door. isn't Lifecore. the during lot capacity the HA there's to a our that I on our provide next call that XX of in see our the in and no that has part I niche importance increased to on that you into opportunities think answers we and can know

hear you So biotech projects. funding people talking in about reduced

I think that's probably true.

situation probably there. I think that funded that funded projects our would typical getting earlier in of wouldn't phase funding a available experience in out though, what's was not there a lot is except be

out from drive see the capacity put slowdown helping So we've that's organization done limited and far to we're for the a not work the opportunities it. there listen We seeing the still additional in pay those opportunities is place forward. into really is approach from off. on projects to to And drive a active targeted moving continue marketing starting focus and to the converting now sales things Lifecore

Jacob Johnson

Jim. for Got question. to that my Thanks that it. next And segues

this, how XX process there. got of and kind terms funnel who you're are development selective of, you to And convert You've of just and projects talking decision you about into you work the as kind can then, and talk people of, that of with making those take kind in pipeline? them leads you

Jim Hall

evaluate we success sure what to what have work to really of that your is got of high didn't very and experience capacity core experience lot that and team lot projects XX-years to of a has wanted the and shouldn't one get right really of of has trying probability probability really, eliminate sure. driven our works projects and had those And and sooner historically picked got lot than later. we of Listen, spark to a there. Yes, and experienced and make experience been industry a a tries identify that's hard amazing to rather Lifecore we low competencies Lifecore a by identify with it's that's should and

through So funnel. on that's through pick the really ideas we what and we get work to bank as the

lot time unique thing a marketplace. getting on capabilities is spending effort our The of we're other Lifecore’s out to new marketing the

time where Google our and enhancing our paying to to telling is more we're attention us need really our and that's Ads, to trade what important the more get the ever, go content doing pipeline. For target website, we've presence, updating upgraded media social into first but opportunities show we what's

more still there's showing The up. do So there. work are to opportunities

as sure quickly getting because can the what a to Now things a are onboarded and of working now set up we're it’s and matter a make get that's and these just matter of as it's possible, we're organization with for them out the several doing process. through onboarded, it proposal

Jacob Johnson

And a then just I the people financial about one little those. And you lean operational I of University on talked it. wants last areas have Sigma key if mentioned that'd perspective, kind think think that a Lifecore been, a about I chime Jim, operational think in great to bunch about be just for you too. quarter educated last John of, of, for and kind you initiatives. some, and And me. Got think how Six should on talk improvements? Can from then we bit

Jim Hall

we Yes, and corner the want sure. out most organization we the our the as can. to Jacob, of get optimize every company, impacts right? actually of it's entire across processes and Obviously,

capacity. from support making there's development of operations lean the things business but organization and and increased a management So a to standpoint onboarded ops we and staff processing as help to only set efficiencies identified look up sure get that a business and not around projects project centered for the is as manufacturing manufacturing that, from point, well lot our and

our well. to allow another System data at out Information So partners quicker to as and quicker and it our it get Management LIMS is look example, to Laboratory us manage

you at and is of our organization and as get that onboarded And quickly implemented something ingrained call one add? people in so to employees entire across University the reasons is want onboarded, the to Lifecore. it's possible. we as what we that And John, culture Lifecore anything our operational

John Morberg

operating perspective margins from financial and impacts operating gross and a leverage or really two Jacob Hey, areas expenses. profit

to XXs And keep to talking secondly, over to EBITDA want the things margin low be XXs. able to in expense these then drive our that are gross profit leverage that And time, high so margin. Jim's operating all about we

So these efforts. that's focused where we're on very

Jacob Johnson

for and John Got for it. Thanks questions. Thanks Jim. the taking that

Jim Hall

Thanks, Jacob.

John Morberg

Jacob. Thanks,

Operator

Please [Operator Smith Instructions] ahead. go The coming next Capital from question Lake Street Markets. of Mark is

Mark Smith

Hi, guys.

talk projects, just to wanted Just little your pipeline feel of, a about prospects conversion of, then bit pipeline, Can kind generally into conversion about, and really how at look the just from kind that more. you you process?

Jim Hall

we those pipeline Obviously, at is is in things to in Sure. lot we how that funnel all to analyzing we're the the we discussion we're now. to Good process. run then and and not that Mark. that the with what way leads they have make XX and And them look through of morning, it a converts get are stage they then leads qualified proposal into monitor of going the

criteria at a part have gauge to or look of would We a good we part pretty and even experience that of funnel of of lot the set projects. them consider XX before we opportunities

of come of difficult our is I rate of those to how continue of in how for. of it majority many our fit of one intent set but don't phase percentage in and through? many capabilities. high. over the the onboarded they're It's can, of next more pretty those. many those on A period it is depends look The So you it's Will tell But through record I into lot what those fits we what can have niche historical as how track be as our to XX a will time. come thing that judge we as of have

picking Now utilize to best going skill be can that provide ones and our to. set the most just we the value it's

Mark Smith

for questions model of, John. a maybe Okay. And then couple, kind

sounds QX? that some seasonality just drives just of looking well with here year-over-year the it in guys of solid higher you really Just function solid How growth for was? cadence then QX a really are year a and in here revenue how last that that was growth guidance, like of QX QX

John Morberg

of from probably we're seeing timing half as again, biggest projects there be year going out are orders occurring. customers. is that of kind is And it's really the of the growth think where I the back to just of the lineup Mark, Yes. and

we a as actually back in bigger year. than the And So actually well. see dissimilar of last not year growth half the

Mark Smith

similarly coming kind projects year? about that CapEx, Okay. as of what's timing are in cadence here And larger just online, then CapEx the or very these little think we QX, spend of this spend this in expected

Jim Hall

really Yes. and the spend I'll a to have. rest stewards expected of ask of I'll start be a payments obviously little and we up We're going of to QX gave and works guidance will the capacity lot John good maintaining as to listen, a within on well. focuses in Lifecore be hard through we timing we weigh earlier. very But bit year. the our capital. progress the related that This for is spend It's what still pick

to to nothing here we do call the it is as so light whatever going other to spend until we spend is can need And and out to. and really projected than the QX was Lifecore not this manage timing.

John Morberg

Yes, is the to only and is next filler equipment focused and arrive thing our are of it of most that else primarily which to to isolator growth that related we on hope XX% summer. the CapEx add

the back result, or of a into pushes progress as year the it year. so the just a payments of half of kind And later lot the

Mark Smith

great. Thank you, Okay, guys.

Jim Hall

Mark. Thanks,

Operator

next is Petusky of Mike Thank you. Barrington The go Research. coming ahead. from question Please

Mike Petusky

Hey, good morning.

question the into So to wanted ask. that perfect I lead was a actually

of, questions, of Can longer of guess, speak current CapEx. investment? I think you in the of, a spending of, year what sort you period after Landec figure the is capital. lot you, a is most normalized term CapEx you terms the get of about Could sort elevated sort a what's guys or to to I just of alluded growth normalized normalized One through range --

Jim Hall

Yes, John, you want to take that?

John Morberg

Mike. Hey, Good morning. How Yes. you? are

Mike Petusky

good. Hey,

John Morberg

needs think shared it takes equipment here it our it it somewhat times, certainly are to we revenue. as need couple needs lumpy then a not got necessarily looking at you've to perfectly earning our and for of be we've CapEx orders had capacity few get place time starts and get we some But years a linear. and really validated filling to before or could we've I

look And focus, so of from spend that's we maintenance would on a focused to primarily, But XX% on plus that I is a big always going going we focused our CapEx that what the at to -- of and be should CapEx be be our part not CapEx. growth say perspective. so is of CapEx

other as you see transitioning company. So to a can that the part is, really we're growth

And a at at EBITDA result, very CapEx, intend turns focused the really in out years so reinvest multiples future. valuation look our when for annual the generate these couple We into annual And $XX on $XX we million our that basis. instance, build is of of into growing least on is increase this we the how space. you to into a $X with think next because in really at EBITDA in back to as worthwhile. to is million we're million and Lifecore investments, nice an EBITDA to additional million the And ROI, CDMO an $XX very EBITDA think to

Mike Petusky

really an this to is more elevated maybe isn't normal So that this a maybe like is forward, going range range say it forward? then fair going

Jim Hall

Yes.

yet in But the in pretty the forward. focus of a flow that, eventually cash a to probably company. part But I think to we today year. we years is By for -- short-term business. around once you on what on of free most CapEx would into get on the back nice we've again, turn not reinvest EBITDA than just give the couple Just given guidance being to that be trying would positioned for going here, through other that way, guidance this our a growth

Mike Petusky

want don't you can fiscal there or an that sort the mean, you year either expectation to And that? of sort of will process know end? calendar I year about by I duration complete a is assets. to end monetization comment speak that, But be of, lot

Jim Hall

Yes, sure.

like to the help hired process, So process created say sell unprecedented in realistic sale time but first represent they're aligned through virtue own we completely. to by that things that we we and of quickly and amount circumstances complicate like really interests, all a variables to we're to much self between projects our our I very said this Jim we're -- for working we've of done would thing off this which and asset committed the we've by this pandemic, imposed appreciate is take do those really shortages. goal with hope is see shareholders, obviously And we're we've advisers as our of the midst We've kind But done something own in each being exercise take. the when really those that in we've though had I, of the labor appropriate we're also our that underway. time already, with year-end. away from sell. We've a What inflation, each making who and extreme that been of a to you happen,

I done day we are intend this will soon to. company as get and are for every update as and as on to say we the is we quickly we'll So able it and market we it We we it. this work can on focused obviously know important as

Mike Petusky

confirm that Okay. wanted And just to I heard Alright, great. thing. one I

calendar date before and that think year, PDUFA two the before said end the of year the Jim likely the devices I earlier, of approved correct? end

Jim Hall

correct, Mike. That's

Mike Petusky

Thanks guys. it. Awesome. Really appreciate

Jim Hall

Talk Mike. soon. Thanks,

Operator

you. Thank

Please question final Pinheiro Mitch ahead. from go Sturdivant & going coming Our today of be to is Company.

Mitch Pinheiro

Good hi. morning. Yes,

Jim Hall

Good morning, Mitch.

John Morberg

morning. Good

Mitch Pinheiro

where of take at in get capacity you already there's FDA you that kind in our to finish sense. capacity the you about a Wouldn't I that process in Hey, lack sure go the But company therapies into have I'm new is process drugs, tight to little of again to a that the Could that want the new isn't that talk or into of capacity through company syringe advantage manufacturer sort one any the whole can immediate fill thing constrained therapy? not that of new about bit? beginning? So why area approved industry. that that talk embedded understand you

Jim Hall

of going there's people require identify whole drug process CDMO somebody little build to of future. capacity the again. Mitch, is going If What approval, the that a what that and in transition part Yes, being your And outsourced. you're bit on clarify confused to we're I can and the one, majority another have from seeing a of with is last development your we're of think them qualification CDMOs question. is lot would an that trying the finding, the already where is I'll to that approved

to So companies lock qualified they that qualification be available and would them. next is or develop two, Lifecore kind the and years their that's of got case they have capacity project with in a try as with has process product platform, of the pipeline that process. to for the four, several as where things in for what a to NDA somebody the capacity that three, and in this be looking they lot drug up for see up our a lock and product ability to an that future who would the But capacity demand. what grow they're part five products, for going they need And of

Mitch Pinheiro

was you it, talk you that it you building to expand next with. about I earmarked thought And so connected people, own that to here, capacity mostly of the that couple your over years you're already companies capacity had are as

So your you I if are you -- are CapEx a -- capacity? to is not, up A, that see B, And ramp to in further mean, true? theoretical is going we're that expand

Jim Hall

Right.

of already working we're a You're that right things that earmarked, good chunk capacity on. with we have

world grade have you the that's also planning of we're expand. to grow injectable We to because what in are planning and -- we going CDMO on. what And and we're additional continue capacity above and need this in think to know capacity and need, beyond --

planning of going to lines. is that it, to road, place now. to talked think need beyond evaluate ramp think we Mitch, additional in that to time I we're all And need the the I Lifecore not say we to constantly will like expand up is there's to I'll a trying to need kind sure capacity line when just make the you the moving in a get we year when fill timeline aligns it's we a right about we've three-plus be sure some spend, two at down need So know, evaluating capital wouldn't the We're have forward. point, support capacity. capacity fill make pipeline. what, And We've up. will that, sell investment taken of, about additional capacity talked we're

in so investment is of, And that you enough. the capacity what, making kind art early determining need of this

I is thing at our that's are out looking people we're other people willing field just as looking the from The mentioned there seeing and that we're and like -- with capacity in future something invest for to well. in help

Mitch Pinheiro

figure it in as of those capacity out by of drug pipeline must to, difficult of most to will most sort of I Yes. approval, those I just your be needs your XX projects you fail. mean, definition know, mean,

So what the be, -- mean, it needs your your be need drug capacity is, a I to seems know development, prospects to how capacity quite of challenge. will successful against

Jim Hall

and challenge, a coming once will trials. it is make -- into right, the not and through. Phase out why see we of you're successful we That’s X start it to data everything make some phase late It things

of a happen, the it We trial. of typically approval that's have capacity not matter it's of projects X is to pay attention and not Phase make a and four its the through driving will little more in why even years when next But thing everything are the the an not that three matter will that assurance though it requirement. but eight commercial everything other we late Phase is really to if,

thing attention need of pay batches, kind capacity game support how to qualification moves we batches, other much validation of forward model a portfolio we'll is The thing. and it clinical lot and as need that that we to to

is support all working working understanding have, of through they to to what them. move we not and a phenomenal does place the it's and in a move volume our with and So puzzle, this what partners as commercial we job that commercial expected we our listen need through contract and team as

Mitch Pinheiro

spending Okay. less there's at here the One times more asset you sales of be X you we're alternative. is going company question. growth know, know, so with leverage. perhaps than company, a leverage, you And -- you're but growth high to road. concerns attractive know, mean, get to leveraged sheet, that, as a that biomedical I capital to But the out Lifecore want plans down pricing with you the for of into mean, balance play sales Lifecore. sale of emerge sort don't come you asset asset can't And, your a obviously you that that the because it I just leverage, some kind you highly I want. you have know as

confident enough -- is how capital do keep about a yourself whatever So be that? talk Or at you does -- about as -- leverage? will reasonable -- you that a your Can that plans? deem you where sales that can Are that to spending that your bit? asset you think slowdown you little

Jim Hall

hence it's our no structure, project a consistent improving value. behind and Obviously, directly since towards a And swift the hard it's Yes. to threat you've of seen, debt been cash been we we've it's that couple the and we redeployed have leverage as that level the assets years and balance retirement intent work our in introduced it to common extract preserve we've optimize capital cash, and that sheet. improve secret our ago, unsustainable,

for will forward. improve great we the in business. alone next the to provide going And we're standalone leverage forward position say, our you do business. improve to going bank to a not we help off with what communication in I'm constantly assets in we're could continuing are it EBITDA And growth do Lifecore with will to While going sheet want two it deal balance a delever once of the ways, suffice to to banks, sell we also forecast a our to what's be, really it always looking stand

So we -- growth for still work. forward believe to way plans this a is great our make make that there us

Mitch Pinheiro

Lifecore Is Any -- a X times? it think Is X look I know you times? idea? forward, you target comfortably? mean, biomedical it I as there that is leverage can operate

Jim Hall

Yes, my a love to think the sense that short comfortably period I and I'd be more recognize we have of of, frames. three of range. above time is we kind to personal look, ultimately, range might in time But be we range be type in for mid times we mean, that. can We

Mitch Pinheiro

helpful. Okay. you, very All guys. right, Thank

Jim Hall

Thanks, Mitch.

John Morberg

you. Thank

Operator

the over any Mr. additional Thank back you. closing time, to At floor like for to this or turn I'd comments. Hall

Jim Hall

Lifecore. for exciting to Thanks we forward fiscal quarter very with are again release everyone our interest. These times look again second for We'll you your talking results. when

So you a have and day. thank good

Operator

participation. Ladies for thank and gentlemen, your This event. today's concludes you

your webcast You rest off lines and your log of may or day. this at disconnect enjoy the time the

Lifecore Biomedical (LFCR) 6 Oct 222023 Q1 Earnings call transcript