Landec Corporation Lowers Net Income Guidance
Industry-Wide Severe Produce Shortages Continue, Overall Revenues Still on
MENLO PARK, Calif., Nov. 22, 2013 (GLOBE NEWSWIRE) -- Landec Corporation
(Nasdaq:LNDC), a materials science company that develops and markets
innovative and patented products for healthy living applications in food and
biomedical markets, announced that it expects second quarter of fiscal 2014
net income to be approximately $0.13 per diluted share due to severe shortages
of produce resulting in much higher than projected costs for raw materials in
the Company's value-added vegetable business.
Landec's food business, Apio, Inc., enters into annual contracts with growers
for produce which are based on a fixed price per delivered pound. Apio also
enters into contracts with its customers which are on a fixed price per unit.
In periods of severe produce sourcing shortages, the Company will purchase
produce on the open market at prices in excess of our contracted prices in
order to meet the demand of our customers. Because the sales prices to our
customers are fixed, the excess we pay for produce above contract during times
of shortage negatively impacts the Company's bottom line.
"Profitability during the second quarter has been severely impacted by an
industry-wide shortage of produce which has resulted in higher than projected
costs for most of our key produce items," stated Gary Steele, Landec Chairman
and CEO."A variety of factors have contributed to these produce shortages,
but the primary cause has been an unusual confluence of extraordinarily
unfavorable weather conditions along the East Coast, California and Mexico,
the top three growing areas for vegetables in North America.The higher than
projected costs are expected to result in a significantly lower gross margin
in our value-added vegetable business during the second quarter of fiscal 2014
compared to the prior and year-ago quarters. It appears that shortages and
quality issues will also continue into our third quarter."
"In 25 years of working in the produce industry, I have never experienced such
a prolonged period of adverse growing, supply and quality conditions," stated
Ron Midyett, Apio President and CEO."These disruptive conditions have
occurred during historically stable growing and sourcing periods and we have
yet to enter the winter months which are typically the most unpredictable
weather months of the year."
For all of fiscal 2014, the Company currently expects to meet or exceed its
original revenue guidance which was to grow revenues approximately 6%.
Year-over-year consolidated net income is now estimated to be flat to up 5%
compared to our original guidance for net income growth of approximately 20%,
after excluding the $3.9 million earn out adjustment in fiscal 2013.
"Looking forward, demand for our value-added specialty packaged produce
products remains strong, particularly for our new vegetable salad products,"
added Steele. "As a result, we currently expect Apio to meet or exceed its
revenue plan for fiscal 2014.Our Lifecore Biomedical business continues to
perform well, and we expect Lifecore to meet or exceed both its revenue and
net income plan for the fiscal year. Additionally, Windset Farms' 64-acre
hydroponic greenhouse expansion in Santa Maria, California is now fully
operational and producing commercial products. Landec remains profitable with
a strong balance sheet and good growth prospects ahead."
About Landec Corporation
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 food and
biomaterials markets. Landec's subsidiary, Apio, has become the leader in US
fresh-cut specialty packaged vegetables sold in North America based on
combining Landec's proprietary food packaging technology and the strength of
two major national brands, Eat Smart® and GreenLine®, with the capabilities of
large scale processing and national distribution. Lifecore Biomedical, a
subsidiary of Landec, is a premium supplier of hyaluronan-based materials and
medical products to ophthalmic, orthopedic and veterinary markets worldwide.
In addition, Lifecore Biomedical provides specialized aseptic fill and finish
services in a cGMP validated manufacturing facility for supplying commercial,
clinical and pre-clinical products. Landec will also periodically work with
market-leading companies to develop and commercialize differentiated
polymer-based products under R&D and royalty agreements. For more information
about the company, visit Landec's website at www.landec.com.
Important Cautions Regarding Forward-Looking Statements
Except for the historical information contained herein, the matters discussed
in this news release are forward-looking statements that involve certain risks
and uncertainties that could cause actual results to differ materially,
including such factors among others, as the timing and expenses associated
with operations, the ability to achieve acceptance of the Company's new
products in the market place, the ability to integrate GreenLine's operations
into the Company, weather conditions that can affect the supply and price of
produce, the amount and timing of research and development funding and license
fees from the Company's collaborative partners, the timing of regulatory
approvals, the mix between domestic and international sales, and the risk
factors listed in the Company's Form 10-K for the fiscal year ended May 26,
2013 (See item 1A: Risk Factors) which may be updated in Part II. Item 1A Risk
Factors in the Company's Quarterly Reports on Form 10-Q. As a result of these
and other factors, the Company expects to continue to experience significant
fluctuations in quarterly operating results and there can be no assurance that
the Company will remain consistently profitable. The Company undertakes no
obligation to update or revise any forward-looking statements whether as a
result of new developments or otherwise.
CONTACT: At the Company:
Gregory S. Skinner
Vice President Finance and CFO
Matt Glover or Michael Koehler
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