Landec(US:LFCR)2025-11-06 21:30Revenue and Profitability - Total revenues for the three months ended September 30, 2025, increased by 26% to $31,109,000 compared to $24,705,000 for the three months ended August 25, 2024[129]. - HA manufacturing revenues surged by 107% to $9,360,000, driven by increased demand from a customer due to supply chain initiatives[130]. - Gross profit rose by 45% to $7,791,000, with a gross profit margin of 25.0%, up from 21.8% in the prior year[129]. Operating Expenses and R&D - Operating expenses decreased by 36% to $10,858,000, primarily due to a $5,890,000 reduction in selling, general, and administrative expenses[132]. - R&D expenses slightly declined to $1,963,000, reflecting consistent product development activities[133]. Interest and Debt Management - Interest expense increased by 19% to $6,384,000 compared to $5,383,000 in the prior year[135]. - The company had $179.6 million in borrowings outstanding under the Term Loan Credit Facility at an effective annual interest rate of 20.9%[153]. - Interest paid-in-kind under the Term Loan Credit Facility for the three months ended September 30, 2025, was $4.4 million[153]. - The company repaid $2.5 million of borrowings under the Revolving Credit Facility in June 2025[154]. Cash Flow and Liquidity - As of September 30, 2025, the company had cash of $18.9 million and received $10.0 million from early payment of principal under its note receivable[140]. - The company had approximately $23.6 million available for borrowing under the Revolving Credit Facility, with a maximum committed amount of $40.0 million[141]. - Cash flow improved by $1.6 million in the three months ended September 30, 2025, primarily due to a $2.4 million improvement in operating cash flows[142]. - The company expects its existing cash and cash generated from operations to be sufficient to finance its current operational and capital requirements for at least the next twelve months[144]. Strategic Initiatives - The company plans to launch a new ERP system in Q1 2026 to enhance inventory control and financial management[120]. - Lifecore improved workforce productivity by over 20% in the past year through targeted initiatives[120]. - The company has guaranteed contractual minimum purchasing commitments with Alcon through 2031[113]. - A significant prepayment of $5,500,000 from Alcon will be settled starting January 2026 through monthly credit memos[113]. Preferred Stock and Dividends - As of September 30, 2025, there were $0.9 million of dividends in arrears on the Redeemable Convertible Preferred Stock, representing $12.50 per preferred share[147]. - The aggregate liquidation preference of the Redeemable Convertible Preferred Stock was $47.5 million as of September 30, 2025[148]. - The company is considering financing alternatives to fund the Series A liquidation preference, which may include equity financing or debt financing[149].