Landec Corporation (Nasdaq: LNDC), a diversified health and
wellness company with two operating businesses, Curation Foods,
Inc. and Lifecore Biomedical, Inc., announced today that management
and the Board of Directors have launched a process to explore
strategic alternatives for its legacy vegetable bag and tray
business, which includes the potential divestiture of that
business. The Company believes that these changes will improve the
Company’s operating cost structure, simplify our supply chain,
enhance profitability and strengthen its balance sheet with an
overall aim to deliver long-term value to shareholders.
“We have been evaluating our commoditized
vegetable bag and tray business since my appointment as CEO.
Our team’s approach to growth and profitability is to focus on
leveraging the strength of our higher-margin product and innovation
platforms. Consistent with my philosophy of ‘getting smaller to get
bigger’, we believe that rightsizing the legacy business will
result in improved financial performance and enable Curation Foods
to set a course for sustainable profitable growth,” said Dr. Albert
Bolles, Landec’s President and CEO. “This step is part of the next
phase of our previously announced shareholder value creation
program, Project SWIFT, which is designed to turn around Curation
Foods and transform it into an agile, competitive company. During
this transformation, we will remain fully committed to providing
our customers, grower partners and consumers with the highest level
of service and continuity.”
Curation Foods’ legacy vegetable bag and tray
business, which includes Eat Smart and private label brands,
generated net sales of $160 million for fiscal year 2019. The
Company has engaged investment-banking firm, William Blair, to
identify strategic alternatives for the business and to evaluate
bids. There is no assurance that this sale process will result in a
transaction or the timing of such transaction.
Further details regarding this decision will be
discussed on a conference call for the investment community today,
February 27, at 5:00 p.m. EST; details can be found below.
Exploring Strategic Alternatives a Key Step in Project
SWIFT
Project SWIFT aims to strengthen
the Curation Foods business by simplifying and
streamlining the business. The Company believes that these actions
chart a clear path towards improving the overall financial
performance of Landec, creating long-term value for our
shareholders, employees and customers. These actions are centered
on:
- Network and operational
optimization: Maximizing efficiency and productivity with
the previously announced consolidation and centralization of
Curation Foods offices into its Innovation Center headquarters in
Santa Maria, CA, as well as continuous improvement in plant
operations with lean manufacturing practices.
- Focus on strategic
assets: Simplifying the business and divesting non-core
assets, including today’s announcement regarding exploring the
strategic alternatives for the core vegetable and tray business,
together with previously announced intent to sell the Company’s
Ontario, CA, salad dressing manufacturing facility.
- Organizational
redesign: Continued refinement of the organization so that
it can be competitive with industry benchmarks and appropriate for
the Company’s future direction, with a focus on strategic
initiatives, developing and elevating internal talent and reducing
headcount.
Project SWIFT provides a framework rooted in
solid, achievable goals that align the Company’s resources.
The Company anticipates that the outcome of the actions
announced to date will provide for operational efficiency with
annualized cost savings of $5.0 million, including the $3.7 million
of planned savings that we previously announced in our fiscal
second quarter reporting. Once the program is fully implemented,
Curation Foods aims to deliver the following steady-state organic
growth and profitability targets on a run-rate basis by the end of
fiscal 2021:
- Curation Foods Organic Revenue Growth: 5%
- Curation Foods Gross Margin:
11% to 14%
- Curation Foods EBITDA Margin:
4% to 6%
Updating Fiscal 2020 Guidance
The Company is lowering its full fiscal year
2020 guidance, excluding restructuring and non-recurring charges,
to account for an acceleration in the Company’s planned reduction
in its vegetable bag and tray business, on-going unanticipated
legal fees and incremental marketing spending to promote awareness
and trial of the Yucatan Squeeze innovation. Updated fiscal
year 2020 guidance is as follows:
- Revenues from continuing operations
to grow 4% to 6% (range of $580 million to $590 million) compared
to fiscal 2019
- Earnings per share in the range of
$0.16-$0.20
- Consolidated EBITDA in the range of
$30 million to $34 million
The Company is lowering its fiscal third quarter 2020 guidance,
excluding restructuring and non-recurring charges, to account for a
shift in timing of revenue at Lifecore from fiscal third quarter to
fiscal fourth quarter. Lifecore remains on target to meet its goals
for fiscal 2020. Updated fiscal third quarter guidance is as
follows:
- Revenues from continuing operations
in the range of $147 million to $151 million
- Earnings per share per share in the
range of $0.02 to $0.06
- Consolidated EBITDA in the range of
$5 million to $9 million
Dr. Bolles concluded, “As part of our
transformation process, we have strengthened and reinvigorated our
team. This team has been working side-by-side to develop an
executable strategic plan with the goal of generating a material
lift in the Curation Foods business segment’s profitability, while
simultaneously mitigating our commodity risk, through the
implementation of Project SWIFT. We believe that the actions we’ve
outlined are beginning to yield measureable financial results and
that this will become apparent in our fiscal fourth quarter, where
we will benefit from normalized margins within our Yucatan business
for the first time following an implementation of our lean
manufacturing program. Looking ahead, we have substantial
opportunity to enhance our competitive position with a team that is
focused on driving profitable growth. We believe that our
steady-state financial targets are within reach and I’m confident
in our ability to transform this business by the end of fiscal
2021.”
Conference Call and WebcastThe
live webcast can be accessed on Landec’s website on the Investor
Events & Presentations page. The webcast will be available for
30 days.
Date: Today – Thursday, February 27, 2020Time:
5:00 p.m. Eastern time (2:00 p.m. Pacific time)Direct Webcast link:
http://ir.Landec.com/events.cfm
To participate in the conference call via
telephone, dial toll-free: (855) 327-6837 or (631) 891-4304. Please
call the conference telephone number 5-10 minutes prior to the
start time so the operator can register your name and organization.
If you have any difficulty with the webcast or connecting to the
call, please contact ICR at (646) 277-1263.
A replay of the call will be available through
Thursday, March 5, 2020 by calling toll-free: (844) 512-2921 or
direct (412) 317-6671, and entering code 10008761.
About Landec CorporationLandec
Corporation (NASDAQ: LNDC) is a leading innovator of diversified
health and wellness solutions with two operating businesses:
Curation Foods, Inc. and Lifecore Biomedical, Inc. Landec
designs, develops, manufactures, and sells products for the food
and biopharmaceutical industry. Curation Foods is focused on
innovating and distributing plant-based foods with 100% clean
ingredients to retail, club and foodservice channels throughout
North America. Curation Foods is able to maximize product freshness
through its geographically dispersed family of growers,
refrigerated supply chain and patented BreatheWay® packaging
technology. Curation Foods brands include Eat Smart® fresh
packaged vegetables and salads, O Olive Oil &
Vinegar® premium artisan products, and Yucatan® and Cabo
Fresh® avocado products. Lifecore Biomedical is a fully integrated
contract development and manufacturing organization (CDMO) that
offers highly differentiated capabilities in the development fill
and finish of sterile, injectable pharmaceutical products in
syringes and vials. As a leading manufacturer of premium,
injectable grade Hyaluronic Acid, Lifecore brings 35 years of
expertise as a partner for global and emerging biopharmaceutical
and biotechnology companies across multiple therapeutic categories
to bring their innovations to market. For more information about
the Company, visit Landec’s website at www.landec.com.
Non-GAAP Financial
Information This press release contains non-GAAP
financial information relating to EBITDA. The Company has disclosed
this non-GAAP financial measure to supplement its consolidated
financial statements presented in accordance with GAAP. This
non-GAAP financial measure excludes/includes certain items that are
included in the Company’s results reported in accordance with GAAP.
Management believes these non-GAAP financial measures provide
useful additional information to investors about trends in the
Company’s operations and are useful for period-over-period
comparisons. This non-GAAP financial measure should not be
considered in isolation or as a substitute for the comparable GAAP
measures. In addition, this non-GAAP financial measure may not be
the same as similar measures provided by other companies due to the
potential differences in methods of calculation and items being
excluded/included. It should be read in conjunction with the
Company’s consolidated financial statements presented in accordance
with GAAP.
Important Cautions Regarding
Forward-Looking StatementsExcept for the historical
information contained herein, the matters discussed in this news
release are forward-looking statements that involve certain risks
and uncertainties that could cause actual results to differ
materially, including such factors among others, as the timing and
expenses associated with operations, the ability to achieve
acceptance of the Company's new products in the market place,
weather conditions that can affect the supply and price of produce,
government regulations affecting our business, the timing of
regulatory approvals, the ability to successfully integrate Yucatan
Foods into the Curation Foods business, and the mix between
domestic and international sales. For additional information about
factors that could cause actual results to differ materially from
those described in the forward-looking statements, please refer to
our filings with the Securities and Exchange Commission (“SEC”),
including the risk factors contained in our most recent Quarterly
Report on Form 10-Q and Annual Report on Form 10-K. Forward-looking
statements represent management’s current expectations and are
inherently uncertain. Except as required by law, we do not
undertake any obligation to update forward-looking statements made
by us to reflect subsequent events or circumstances.
|
Contact
Information: |
|
Investor
Relations: |
Jeff Sonnek |
(646) 277-1263 |
jeff.sonnek@icrinc.com |
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