Landec first quarter revenues increase 39% to $102.1 million

Landec Corporation (NASDAQ: LNDC) today reported results for the first quarter of fiscal year 2013 ended August 26, 2012. Revenues increased 39% to $102.1 million compared to revenues of $73.3 million for the first quarter a year ago. Net income increased 40% to $2.5 million or $0.10 per share compared to $1.8 million or $0.07 per share for the first quarter of last year.

The revenue growth of $28.8 million during the first quarter of fiscal year 2013 compared to the first quarter of last year was due to (1) $19.9 million of revenues from GreenLine Holding Company, ("GreenLine") which was acquired by Apio, Inc., our specialty packaged food subsidiary, on April 23, 2012, (2) a $5.4 million increase in revenues in Apio's non-GreenLine value-added businesses, which includes the Apio fresh-cut specialty packaged vegetable business, Apio Cooling and Apio Packaging, (3) a $4.0 million increase in Apio's export revenues due to a 3% increase in export unit volume sales and favorable pricing, and (4) an $851,000 increase in revenues at Lifecore Biomedical, Inc., our biomaterials subsidiary, due primarily to a shipment of product in the first quarter that was planned for the second quarter. The first quarter growth of $5.4 million in Apio's non-GreenLine value-added businesses resulted primarily from a year-over-year 22% increase in unit volume sales of fresh-cut specialty packaged products due to new product offerings, new distribution gains and overall growth in the fresh-cut vegetable category. These increases in revenue were partially offset by a $1.3 million decrease in revenues in our Technology Licensing business due to the termination of the Monsanto license agreement at the end of the second quarter of fiscal year 2012.

For the first quarter of fiscal year 2013, net income increased $727,000, or 40%, due to a $2.9 million net increase in Apio's pre-tax income. The increases in Apio's pre-tax income were comprised of: (1) $1.2 million from GreenLine, (2) a $1.2 million increase from Apio's non-GreenLine value-added and export businesses, and (3) a $1.3 million increase in the fair market value of our Windset investment compared to the increase in Windset's fair market value during the first quarter of last year. These increases in Apio's pre-tax income were partially offset by new amortization expenses associated with the acquisition of GreenLine and increased variable operating expenses from the increase in non-GreenLine revenues at Apio. The net Apio increase in pre-tax income of $2.9 million was partially offset by: (1) a $1.3 million reduction in license fees from the termination of the Monsanto license agreement, (2) a $593,000 decrease in pre-tax income at Lifecore due primarily to the timing of production and operating expenses within the fiscal year, and (3) a $382,000 increase in the income tax expense.

Landec ended the first quarter of fiscal year 2013 with $10.8 million in cash and marketable securities. During the first quarter of fiscal year 2013, Landec increased cash flow from operations by 17% to $5.1 million from $4.4 million during the first quarter of fiscal year 2012. Capital expenditures were $2.0 million for property, plant and equipment. In addition, the Company paid down debt by $5.5 million and paid a $10 million earn-out payment related to the acquisition of Lifecore.

Gary Steele, Landec Chairman and CEO, commented, "We had a productive first quarter with revenues growing 39% and net income increasing 40%. Net income and margins were adversely impacted during the first quarter of fiscal year 2013 by the drought in the Midwest which resulted in approximately $1.2 million of incremental costs associated with the sourcing of green beans. Conversely, net income was positively impacted by the shift of $1.9 million of revenue and $1.0 million of pre-tax profit at Lifecore to the first quarter that had been planned for the second quarter. Without this shift, revenues and profits for Lifecore would have been in line with our plan and guidance for the first quarter in which we had expected Lifecore to record lower revenues and profits during the first quarter compared to the first quarter of last year. The drought issue in the first quarter and the shift in a shipment at Lifecore do not change our expected results for the first half or for the full fiscal year of 2013."

"Our strategy for growth is to focus on our core food and biomedical materials businesses, while capitalizing on our technology and on our strong channels of distribution in order to drive growth across all our businesses. We are making good progress as evidenced by the growth in revenues, gross profit and net income during last fiscal year and the first quarter of this fiscal year. We are tracking well towards meeting our financial guidance for fiscal year 2013, which is to grow revenues by approximately 30% and net income by 25% to 35%," concluded Steele.