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Landec Corp. Reports Operating Results (10-Q/A)

January 02, 2013 | About:
10qk

10qk

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Landec Corp. (LNDC) filed Amended Quarterly Report for the period ended 2012-08-26.

Landec Corporation has a market cap of $244.5 million; its shares were traded at around $9.83 with a P/E ratio of 18.9 and P/S ratio of 0.8. Landec Corporation had an annual average earning growth of 23.4% over the past 10 years.

Highlight of Business Operations:

The increase in Lifecore s revenues for the three months ended August 26, 2012 compared to the same period last year was due to a 15% increase in revenues in Lifecore s aseptic filling business and an 8% increase in revenues in Lifecore s fermentation business, primarily for Ophthalmic products.

Apio s export business is a buy/sell business that realizes a commission-based margin in the 5-8% range. The increase in gross profit for Apio s export business during the three months ended August 26, 2012 compared to the same period last year was due to the 19% increase in revenues. The 19% increase in revenues was lower than the growth in gross profit because of favorable product mix changes to higher margin products which resulted in a higher gross margin during the first quarter of fiscal year 2013 of 5.3% compared to a gross margin of 4.7% during the first quarter of fiscal year 2012.

The decrease in gross profit during the three months ended August 26, 2012 compared to the same period last year was due to the timing of production within the fiscal year resulting in lower overhead absorption. Although there was a 12% increase in revenues, lower overhead absorption resulted in a lower gross margin during the first quarter of fiscal year 2013 of 30% compared to a gross margin of 38% during the first quarter of fiscal year 2012.

The increase in S,G&A expenses for the three months ended August 26, 2012 compared to the same period last year was primarily due to the following factors: (1) $1.3 million of S,G&A expenses at GreenLine which was acquired on April 23, 2012, (2) an $800,000 increase in SG&A at Apio, excluding GreenLine, due to the amortization of the customer base intangible acquired in the acquisition of GreenLine, an increase in salary and bonus expenses and additional sales and marketing expenses associated with the increase in revenues, (3) a $278,000 increase at Lifecore due to the timing of the recognition of certain S,G&A expenses within the fiscal year and (4) a $170,000 increase at Corporate due to increased accounting fees.

Landec generated $5.1 million of cash from operating activities during the three months ended August 26, 2012, compared to $4.4 million for the three months ended August 28, 2011. The primary sources of cash from operating activities during the three months ended August 26, 2012 were from (1) generating $4.5 million (restated) of net income, largely offset by the $4.3 million (restated) increase in the fair market value of Windset which is a non-cash income item, (2) $1.9 million of depreciation and amortization, and (3) a net decrease of $861,000 in working capital, excluding the decrease in income taxes receivable which is offset by the tax benefit from stock-based compensation. The primary factors which decreased working capital during the first quarter of fiscal year 2013 were (a) a $1.7 million decrease in receivables primarily due to the timing of receipts at Lifecore and (b) a $4.1 million increase in accounts payable resulting from the timing of payments at Apio. The primary factors which increased working capital during the first quarter of fiscal year 2013 were (a) a $1.5 million increase in inventories at Apio as a result of building inventory for a projected increase in revenues, (b) a $1.8 million decrease in accrued compensation as a result of paying bonuses earned in fiscal year 2012 during the first quarter of fiscal year 2013, and (c) a $1.4 million decrease in other accrued liabilities at Apio.

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