Menlo Park, California, USA
October 5, 2011
Landec Corporation /quotes/zigman/59476/quotes/nls/lndc LNDC +3.64% , today reported results for the first quarter of fiscal year 2012 ended August 28, 2011. Revenues for the first quarter of fiscal year 2012 increased 13% to $73.3 million compared to revenues of $65.0 million for the first quarter a year ago. Net income was $1.8 million or $0.07 per share in the first quarter of fiscal year 2012 compared to $2.3 million or $0.09 per share for the first quarter of last year.
Revenues increased $8.3 million during the first quarter of fiscal year 2012 compared to the first quarter of fiscal year 2011 primarily due to a $3.2 million increase in value-added fresh-cut vegetable revenues at Apio Inc., Landec's food subsidiary, primarily driven by the growth of the overall produce category and new product introductions and a $4.9 million increase in Apio export revenues due to greater availability of fruit to export.
The decrease in net income for the first quarter of fiscal year 2012 compared to the first quarter of fiscal year 2011 was primarily due to (1) a $348,000 decrease in gross profit for Apio Packaging because of lower BreatheWay(R) packaging sales to Chiquita compared to the initial large orders of BreatheWay for avocados to build inventory for initial product launch that occurred during the first quarter of last year, (2) a $280,000 decrease in gross profit for Lifecore from a product sales mix change resulting from the timing of shipments of aseptically filled products versus fermentation products, which reduced Lifecore's gross margin to 38% for the quarter, compared to Lifecore's expected gross margin of approximately 50% for all of fiscal year 2012, and (3) a $493,000 decrease in operating income due to higher operating expenses as a result of increased brokerage and commission sales expenses from higher sales at Apio and from accruing for bonuses at Apio and Corporate which were not accrued during the first quarter of last year. These decreases in operating income were partially offset by $281,000 in accrued dividend income from our preferred stock investment in Windset Farms, and a $242,000 reduction in income tax expense due to lower pre-tax income.
Gary Steele, Landec Chairman and CEO, commented, "We had a productive first quarter, achieving revenue growth of 13% and cash flow from operations of $4.4 million, which is the same amount of operating cash generated in the first quarter last year. While net income was lower during the first quarter this year compared to the same quarter last year, we exceeded our internal plan for the quarter. We are tracking well towards meeting or exceeding our financial guidance for fiscal year 2012 of 5% or better revenue growth and 30% to 40% net income growth after adding back the one-time impairment charge of $4.8 million to net income for fiscal year 2011."
"On September 14, 2011, we announced that Monsanto Company had informed us that it intends to allow the co-exclusive technology license agreement between Landec and Monsanto to expire in accordance with its terms on December 1, 2011, without Monsanto exercising its purchase option. As a result, Monsanto will pay Landec a $4 million termination fee on or prior to December 1, 2011. Since entering into the license agreement with Monsanto, the Company has been recognizing $200,000 in revenue per quarter as a result of this guaranteed termination fee. Importantly, all rights to the Intellicoat(R)seed coating and controlled release technology will be returned to Landec, allowing us to broaden our early stage discussions with other leading seed and crop protection companies," added Steele.
"Also during the first quarter, Chiquita decided to renew its licensing and distribution agreement with Apio for an additional five years, thus maintaining Chiquita's exclusive right to use our BreatheWay technology for existing programs with bananas, avocados and mangos, and adding selective shipping container applications to the agreement. We are very pleased to continue working with Chiquita, one of the global market leaders in tropical fruit sourcing, distribution and marketing. Our agreement with Chiquita includes guaranteed minimum purchases of BreatheWay membranes for all fields in which Chiquita has exclusive rights," concluded Steele
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