Landec (LNDC) Tops Q2 EPS by 1c, Reiterates Guidance

January 3, 2018 4:06 PM EST

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Landec (NASDAQ: LNDC) reported Q2 EPS of $0.02, $0.01 better than the analyst estimate of $0.01. Revenue for the quarter came in at $136.5 million versus the consensus estimate of $135.8 million.

Management Comments and Guidance for Fiscal 2018

“The performance of our growth businesses - Eat Smart Salads, O Olive and Lifecore - remain strong and each is expected to meet or exceed its growth goals for fiscal 2018, driving increased profitability and partially offsetting the produce sourcing cost increases that impacted the first six months of fiscal 2018,” stated Greg Skinner, Landec’s CFO.

“We are reiterating our revenue and net income guidance for fiscal 2018. Our net income guidance for fiscal 2018 assumes an effective income tax rate of approximately 31% to 32%, versus historical rates of approximately 36%, as a result of the new corporate income tax rates that became effective on January 1, 2018. This guidance assumes the excess costs from known produce sourcing issues during the second half of fiscal 2018 do not exceed what we have included in our second half fiscal 2018 projections. This guidance does not include the one-time reduction to our deferred tax liability and the related reduction in our income tax expense of approximately $7 to $9 million to be recorded during the third quarter of fiscal 2018 as a result of the new corporate income tax rates,” continued Greg Skinner.

“We are reiterating our guidance for the year as we expect sales and gross profit from new customers and new products to accelerate during the second half of the year and we expect a lower income tax rate in the second half of fiscal 2018. We continue to expect consolidated annual revenues to increase 2% to 4% in fiscal 2018 compared to fiscal 2017. Our projected annual revenue growth is based on our Eat Smart salad products growing 12% to 15%, up from our prior projection of 10% to 12% growth, Lifecore growing 8% to 10%, up from our prior projection of 6% to 8% growth and O Olive increasing revenues by approximately $5 to $6 million as originally projected. We now expect the revenues in Apio’s lower-margin core and export businesses to decrease $25 to $30 million in fiscal 2018 compared to the prior year, which is more than the $20 to $25 million decrease included in our initial guidance. Most all of this decrease was realized during the first six months of fiscal 2018 due to the $27.5 million decrease in revenues in Apio’s export business during that period. We also now expect that the fair market value change in our investment in Windset will be $3 to $4 million compared to our initial guidance of $4 million due primarily to the timing of new in-house production and product mix, resulting in a lower than originally projected EBITDA for Windset for calendar year 2017. We 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. We expect consolidated cash flow from operations of $30 million to $35 million and capital expenditures of $44 million to $48 million. For the third quarter of fiscal 2018, we expect 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,” concluded Skinner.

For earnings history and earnings-related data on Landec (LNDC) click here.



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