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Company argue they have “exceeded both our revenue and operating income expectations”
Landec Corporation (Nasdaq:LNDC), a developer and marketer of products for healthy living applications in the food and biomedical markets, reported results for the first quarter of fiscal 2015 ended August 31, 2014.
“For the first quarter, we exceeded both our revenue and operating income expectations because of positive operating results at Apio driven by sales increases in our higher margin vegetable salad kits and stir fry kits, which we collectively refer to as our superfood products,” commented Gary Steele, Landec’s Chairman and CEO. “Consolidated revenues increased 22% and operating income increased 79% compared to the first quarter last year.”
Summary of First Quarter 2015 Results
– Consolidated revenues increased 22% to $133.6 million with Apio’s value-added vegetable business up 26% and Apio’s export business up 24% compared to the first quarter of last year. Revenues for the Lifecore Biomedical business were down 21% compared to the first quarter of last year due to expected lower sales of fermentation products. It should be noted that the first quarter of this year had one extra week (see details below).
– Operating income increased 79% to $3.5 million compared to last year’s first quarter due to a 13% increase in gross profit, essentially flat operating costs and one extra week.
– Net income decreased 50% to $0.09 per share compared to the first quarter of last year. This decrease was primarily due to the significantly smaller increase in the fair market value of the Company’s investment in Windset Farms of $200,000 recognized in the first quarter of fiscal 2015 compared to a $5.4 million change in the fair market value recognized in the first quarter of last year when Windset’s 64-acre expansion was added to its projections.
– Cash totaled $8.5 million at quarter end after generating $3.9 million in cash flow from operations, increasing net borrowings by $5.7 million, increasing the Company’s investment in Windset by $11 million and spending $4.1 million for capacity expansion during the quarter. The Company had $35.2 million available under its lines of credit as of August 31, 2014.
Continued Steele, “Revenues in Apio’s value-added vegetable business increased 26% due to a 28% increase in unit volume sales in Apio’s value-added vegetable business driven by the growth of our new superfood products. The growth in revenues coupled with a favorable product mix change resulted in a 33% gross profit increase in our value-added vegetable business.
“Other operating highlights for the first quarter included: (1) Apio launching an additional product in its family of new superfood products, (2) completing a new superfood processing line at Apio, which is now fully operational enabling us to meet all of our current demand while leaving ample capacity to meet future projected increases in demand, (3) increasing our ownership in Windset to 26.9% from 20.1%, and (4) increasing Apio’s line of credit by $15 million to $40 million and securing a new $25 million equipment line from GE Capital that carries a 3.53% fixed interest rate with a 5-year term, against which the Company borrowed $7.1 million during the quarter.”
