Landec Corporation has a market cap of $222 million; its shares were traded at around $8.67 with a P/E ratio of 17.7 and P/S ratio of 0.8. Landec Corporation had an annual average earning growth of 25.1% over the past 10 years.
Highlight of Business Operations:The increase in Apio's value-added revenues for the fiscal year ended May 27, 2012 compared to the same period last year was primarily due to the following factors: (1) a 11% increase in unit volume sales to existing customers resulting primarily from expanded product offerings, gaining additional distribution locations and growth in the fresh-cut vegetable category, (2) $9.1 million of revenues from GreenLine from the acquisition date of April 23, 2012 through the fiscal year ended May 27, 2012 and (3) a larger percentage of Apio's value-added revenues being generated from sales to club stores rather than retail grocery chains. These increases in revenue were partially offset by a product mix change in retail grocery chains to lower priced products from higher priced products.
Apio's value-added revenues for the fiscal year ended May 29, 2011 were unchanged compared to the fiscal year ended May 30, 2010. This was primarily due to increased unit sales volumes related to new product introductions which increased unit sales volumes by 1% and from a larger percentage of Apio's value-added revenues being generated from sales to club stores rather than retail grocery chains. These increases in revenue were virtually completely offset by less promotional activity in Apio s value-added business which reduced unit sales volumes by 2% and due to Apio exiting business that would have resulted in less than acceptable gross profit margins which reduced unit sales volumes by another 2%. On a net basis, Apio s value added unit sales volumes decreased 3% in fiscal year 2011 compared to fiscal year 2010.
Apio s export business is a buy/sell business that realizes a commission-based margin in the 6-7% range. Gross profit during the fiscal year ended May 29, 2011 was flat compared to the fiscal year ended May 30, 2010. The 12% increase in revenues was higher than the growth in gross profits because of an unfavorable product mix changes to lower margin products which resulted in a lower gross margin during fiscal year 2011 of 6.3% compared to a gross margin of 7.1% in fiscal year 2010.
Landec generated $22.2 million of cash flow from operating activities during the fiscal year ended May 27, 2012 compared to $14.5 million during the fiscal year ended May 29, 2011. The primary sources of cash from operating activities during fiscal year 2012 were $13.1 million of net income and non-cash related expenses, excluding the tax benefit from stock-based compensation, of $5.0 million and from a net increase of $4.1 million in working capital. The primary factors which increased working capital during fiscal year 2012 were (a) a $3.6 million decrease in prepaid expenses and other current assets primarily as a result of the $4.0 million termination payment made by Monsanto in November 2011 (see Note 4 to the Consolidated Financial Statements) (b) a $2.7 million increase in accrued compensation due primarily to accruing bonuses at both Corporate and Apio which were not accrued last year and (c) a $3.4 million increase in other accrued liabilities due primarily to recording the $3.9 million earn out liability associated with the acquisition of GreenLine. The primary factors which decreased working capital during fiscal year 2012 were (a) a $3.2 million increase in trade accounts receivable primarily due to a $2.5 million increase in receivables at Lifecore as a result of revenues for May 2012 being $2.4 million higher than May 2011 and a $700,000 increase at Apio, excluding GreenLine, as a result of revenues for May 2012 being $2.4 million higher than May 2011 and (b) a $2.5 million decrease in deferred revenue due primarily to the deferred license fees associated with the Monsanto Agreement.
Net cash used in investing activities for the fiscal year ended May 27, 2012 was $44.1 million compared to net cash used in investing activities of $29.4 million for the same period last year. The primary uses of cash in investing activities during fiscal year 2012 were for (a) the acquisition of GreenLine for $66.8 million, (b) the purchase of $5.4 million of property, plant and equipment primarily for the further expansion of Apio s value-added processing facility and the further automation of Apio s value-added processing facility and facility modifications and equipment purchased at Lifecore to support business growth. This was partially offset by uses of cash related to the net maturities and sales of $28.1 million of marketable securities.
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