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%.