Landec(US:LFCR)2021-07-29 02:35Financial Data and Key Metrics Changes - Full-year consolidated revenues reached $544 million, exceeding expectations by $12 million, driven by both Curation Foods and Lifecore [8] - Consolidated adjusted EBITDA for the year was $31.4 million, surpassing guidance by $2.4 million, marking a 43% increase year-over-year [46] - Cash provided by operations improved by $32.1 million compared to the prior year, totaling $15 million for the full year [47] - Net debt at the end of the fourth quarter was $192.6 million, with pro forma net debt after debt repayment at $151.2 million, improving the net leverage ratio by 1.3 turns [48] Business Line Data and Key Metrics Changes Lifecore Segment - Fourth quarter revenues were $25.8 million, a 1.3% increase year-over-year, with full-year revenue growth of 14.3% to $98.1 million [38][40] - Adjusted EBITDA for Lifecore was $7.7 million in Q4, a 2.6% increase, with a full-year adjusted EBITDA of $24.5 million, reflecting a 22% year-over-year increase [39][40] Curation Foods Segment - Fourth quarter revenues totaled $114 million, a 12.7% decline from the prior year, with an adjusted EBITDA of $5.9 million [41][44] - Full-year revenues for Curation Foods declined 11.6% to $446.1 million, but adjusted EBITDA increased by 148% to $11 million [44] Market Data and Key Metrics Changes - Lifecore's revenue growth trajectory is expected to be in the low to mid-teens compound annual growth rate over the long term [9] - Curation Foods is experiencing growth in avocado products, although overall revenues are expected to be flat to slightly negative year-over-year [13] Company Strategy and Development Direction - The company plans to invest in Lifecore with additional CapEx and sales and marketing to expand development channels, anticipating full-year consolidated revenues of $545 million to $554 million for FY'22 [11][50] - Curation Foods is focusing on operational efficiencies and enhancing gross margins, aiming for a steady state gross margin of 11% to 14% [34][56] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of Lifecore despite COVID-19 disruptions, with expectations for revenue growth to recover in the second half of FY'22 [12][52] - Inflationary pressures are being addressed through cost control measures and potential price increases to maintain gross margins [33][61] Other Important Information - The company has entered into a logistics agreement with Castellini to improve delivery performance and efficiency [31][75] - A director resigned for personal reasons, and the board size was reduced from 11 to 10 directors [14] Q&A Session Summary Question: Inflationary pressures in Curation Foods - Management noted that inflation is primarily from direct materials, and they are focused on efficiency programs to mitigate costs while being open to price increases [60][61] Question: Changes in consumer behavior with reopening - Management highlighted growth in food service, particularly in green beans and salads, and mentioned new shipping channels like Amazon [63] Question: Lifecore's inventory levels and customer orders - Management indicated that customer inventory levels built during COVID are expected to normalize, impacting revenue growth in the first half of FY'22 [65][68] Question: Castellini Transportation agreement - The agreement is expected to enhance delivery frequency and efficiency, leading to reduced shrinkage and improved customer service [72][75] Question: Project SWIFT savings and efficiency - Management stated that Project SWIFT is ongoing, focusing on simplification and efficiency, with approximately $20 million in assets sold to date [84][86] Question: CapEx expectations for FY'22 - CapEx is expected to be $32 million for Lifecore and up to $7 million for Curation Foods, with a focus on expanding capacity [100] Question: Avocado business performance - Management acknowledged a slowdown in the avocado category but remains confident in mid- to high-single digit growth rates for their products [108]