Landec Corporation Announces Earnings Results for the Second Quarter and Six Months of 2018; Provides Earnings Guidance for the Third Quarter and Fourth Quarter and Reaffirms Consolidated Earnings Guidance for the Fiscal Year 2018
January 03, 2018 at 04:18 pm EST
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Landec announced earnings results for the second quarter and six months of 2018. For the quarter, the company's revenue rose to $136.5 million from $135.9 million. The slight increase was primarily due to a $9.2 million or 9% increase in revenues in Apio's packaged fresh vegetables business and a $2.2 million or 18% decrease in revenues at Lifecore. These increases were offset by $11.7 million or 46% decrease in Apio's lower-margin export business, which was greater than planned, but consistent with strategy to transition to higher margin business. Net income in the second quarter of fiscal 2018 was $487,000 or $0.02 per share compared to $1.3 million or $0.05 per share in the year ago quarter. The decrease was a result of; first, a $2.6 million decrease in gross profit in Apio's packaged fresh vegetable business due to a $3.9 million in incremental cost -- sourcing cost as a result of the hurricanes and tropical storms during the quarter; second, a $1 million decrease in export gross profit due to lower export revenues; and third, a $617,000 increase in consolidated operating expenses due to increase in R&D activities, partially offset by lower SG&A expenses. These decreases in net income were partially offset by; first, a $1.3 million increase in the fair market value of the company's Windset investment during the second quarter of fiscal 2018 compared to no increase in the year ago quarter; second, a $1.2 million write-off of unamortized debt issuance cost from the refinancing of debt during the second quarter of last year; third, a $279,000 increase in gross profit at Lifecore; and fourth, a $486,000 decrease in income tax expenses.
For the six months, the company's revenues decreased 3% to $259.8 million from $268.3 million in the same period last year. The decrease was primarily due to a higher than expected $27.5 million or 56% decrease in revenues in Apio's export business, which was partially offset by $15.8 million or 8% increase in Apio's packaged fresh vegetable business and by a $2 million or 8% increase in revenues at Lifecore. Net income in the first six months of fiscal 2018 was $2.6 million or $0.09 per share compared to $4.6 million $0.17 per share in the first 6 months of fiscal 2017. The decrease was a result of; first, a $1.9 million decrease in gross profit in Apio's packaged fresh vegetable business, primarily due to a $4 million in incremental produce sourcing cost as a result of the hurricanes and tropical storms primarily impacting the second quarter of fiscal 2018; second, a $1.6 million decrease in export gross profits due to lower export revenues; third, a $1.3 million decrease in gross profit at Lifecore due to an unfavorable product mix shift and lower overhead absorption in the first 6 months compared to the first 6 months of last year; and fourth, a $1.7 million increase in consolidated operating expenses due to an increase in R&D activities, partially offset by lower SG&A expenses. These decreases in net income were partially offset by; first, a $2.2 million increase in the fair market value of the company's Windset investment during the first 6 months of fiscal 2018 compared to no increase in the first 6 months of last year; second, a $1.2 million write-off of unamortized debt issuance cost from the refinancing of debt during the second quarter of last year; and third, a $1.3 million decrease in income tax expenses.
The company continues to expect consolidated annual revenues to increase 2% to 4% in fiscal 2018 compared to fiscal 2017 and the company continue to project consolidated net income to increase 35% to 55% in fiscal 2018 compared to fiscal 2017, resulting in an estimated earnings per share range of $0.52 to $0.58. The company expected consolidated cash flow from operations of $30 million to $35 million and capital expenditures of $44 million to $48 million. It should be noted that because of the new federal tax rate, which went into effect on January 1, 2018, the company will have a lower tax rate in both third and fourth fiscal quarters, resulting in an overall effective tax rate for fiscal 2018 of approximately 31% to 32%.
For the third quarter of 2018, the company sees consolidated revenues to be in the range of $140 million to $145 million and consolidated net income to be $0.14 to $0.16 per share. Therefore, the company estimated effective tax rate for the third quarter will be approximately 28% to 29%.
Fourth quarter tax rate will be approximately 31% to 32%.
Lifecore Biomedical, Inc. is a fully integrated contract development and manufacturing organization (CDMO). The Company designs, develops, manufactures and sells differentiated products for biomaterials markets and license technology applications to partners. The Company offers highly differentiated capabilities in the development, fill and finish of sterile, injectable-grade pharmaceutical products in syringes and vials. It is involved in the manufacture of pharmaceutical-grade sodium hyaluronate (HA) in bulk form, as well as formulated and filled syringes and vials for injectable products used in treating a spectrum of medical conditions and procedures. The Company uses its fermentation process and aseptic formulation and filling expertise to develop HA-based products for multiple applications and to take advantage of non-HA devices and drug opportunities.
Landec Corporation Announces Earnings Results for the Second Quarter and Six Months of 2018; Provides Earnings Guidance for the Third Quarter and Fourth Quarter and Reaffirms Consolidated Earnings Guidance for the Fiscal Year 2018