Menlo Park, California, USA
March 26, 2012
Landec Corporation today reported results for the third quarter and first nine months of fiscal year 2012. Revenues for the third quarter of fiscal year 2012 increased 9% to $80.1 million compared to revenues of $73.5 million for the third quarter of fiscal year 2011. Net income increased 107% to $4.8 million, or $0.18 per diluted share, compared to net income of $2.3 million, or $0.09 per diluted share, during the third quarter of fiscal year 2011.
Third Quarter Results
The revenue growth of $6.6 million was due to an $8.7 million increase in revenues in Apio’s value-added business, which includes the fresh-cut specialty packaged vegetable business, Apio Cooling, and Apio Packaging. The growth in Apio’s value-added vegetable business resulted from a year over year 24% increase in unit volume sales which were facilitated by new distribution gains and normal weather patterns during this year’s third quarter compared to very poor weather conditions during the third quarter of last year which resulted in significant produce sourcing issues. These increases in revenue were partially offset by a $1.1 million decrease in revenues at Lifecore due to the timing of shipments within the fiscal year compared to the third quarter of last year and a $1.3 million decrease in revenues in our Technology Licensing business primarily due to the termination of the Monsanto license agreement at the end of the second quarter of fiscal year 2012.
The $2.5 million increase in net income resulted from a $1.7 million increase in pre-tax income from Apio’s value-added business and a $3.8 million increase in pre-tax income from our investment in Windset Farms, based on a recent appraisal and the requirement to record most of the increase in the fair market value of our Windset investment in the third quarter instead of the fourth quarter. These increases in net income in the third quarter were partially offset by a $1.3 million reduction in license fees from the termination of the Monsanto license agreement and a $1.6 million increase in the income tax expense due to higher pre-tax income.
Gary Steele, Landec’s Chairman and CEO, commented, "We had a very good third quarter. Our Apio value-added business grew revenues 18% during the quarter based on a significant increase in the fresh-cut vegetable business unit volume sales due to new distribution gains and good produce sourcing during the quarter that resulted from normal weather patterns. Pre-tax income for Apio and Windset combined grew $5.4 million during the third quarter compared to last year’s third quarter due to increased sales and margins in its value-added vegetable business and the contribution from our investment in Windset Farms. Although revenues in our Lifecore biomaterials business were down $1.1 million compared to the third quarter of last year as a result of the timing of shipments, for fiscal year 2012 Lifecore is expected to exceed last year's revenues and meet or exceed its pre-tax income plan for fiscal year 2012."
Nine Months Results
Revenues for the first nine months of fiscal year 2012 increased $26.3 million, or 13%, to $234.9 million compared to revenues of $208.6 million for the same period a year ago. Net income for the first nine months increased 49% to $9.9 million or $0.38 per diluted share compared to net income of $6.7 million or $0.25 per diluted share for the same period last year.
The increase in revenues during the first nine months of fiscal year 2012 compared to the first nine months of fiscal year 2011 resulted from: (1) a $17.6 million, or 14%, increase in Apio’s value-added business, (2) a $9.7 million, or 20%, increase in Apio’s export business, and (3) a $458,000, or 2%, increase in Lifecore’s biomaterials business. These increases in revenue were partially offset by a $1.4 million decrease in revenues in our Technology Licensing business primarily due to the termination of the Monsanto licensing agreement at the end of the second quarter of fiscal year 2012.
Net income for the first nine months of fiscal year 2012 increased $3.3 million compared to the first nine months of last year, primarily due to a $5.6 million increase in pre-tax income from our investment in Windset Farms and a $1.9 increase in pre-tax income from Apio’s value-added and export businesses. These increases were partially offset by (1) a $1.5 million decrease in pre-tax income in our Technology Licensing business primarily due to the termination of the Monsanto licensing agreement at the end of the second quarter of fiscal year 2012, (2) a $2.2 million increase in the income tax expense due to higher pre-tax income, and (3) a $463,000 decrease in pre-tax income at Lifecore due to changes in product mix to higher sales of lower margin products, primarily during the first six months of fiscal year 2012.
Landec ended the quarter with $37.6 million in cash and marketable securities and for the first nine months of fiscal year 2012, Landec generated $8.5 million in cash from operations.
Guidance
Based on our financial results for the first nine months of fiscal year 2012 and our outlook for the remainder of the fiscal year, which reflect the solid performance and financial contributions of Apio, Windset and Lifecore, we are increasing our guidance for revenue growth and guiding to the top end of the range for growth in net income for the full fiscal year 2012.
For fiscal year 2012, we now expect revenues to grow 9% to 10% compared to our original guidance of 5% or better growth. In addition, we now expect net income to grow approximately 40%, after adding back the one-time impairment charge of $4.8 million to net income for fiscal year 2011, compared to our original guidance of 30% to 40%.
Landec Corporation is a materials science company that leverages its proprietary polymer technologies, application development and innovation capabilities to develop and commercialize new products in agricultural, biomedical and industrial markets. Landec has two proprietary polymer technology platforms: Intelimer Polymers® and Sodium Hyaluronate (“NaHy”) that are the foundation for its business. Landec’s subsidiary, Apio, has become the leader in US fresh-cut specialty packaged vegetables by combining Landec’s proprietary food packaging technology with the capabilities of a large national food supplier, processor and distributor. Through its subsidiary, Lifecore Biomedical, Landec is now a premium supplier of hyaluronan-based materials and medical products to ophthalmic, orthopedic and veterinary markets worldwide. Landec’s Licensing Partnerships work closely with market-leading companies to develop and commercialize differentiated polymer-based products. For more information about the Company, visit Landec’s website at www.landec.com
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