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Landec Corporation Reports Second Quarter And First Half Fiscal Year 2011 Results

Landec Corporation (Nasdaq:LNDC), today reported results for the second quarter and first half of fiscal year 2011. For the second quarter of fiscal year 2011, revenues increased 15% to $70.2 million and net income increased 34% to $2.1 million compared to the second quarter of fiscal year 2010.

“We increased revenues and net income during the second quarter of fiscal year 2011 compared to the second quarter of fiscal year 2010 due to our recently acquired hyaluronan-based biomaterials subsidiary, Lifecore Biomedical, Inc., which generated $8.4 million in revenues with a gross margin of 64% contributing $5.4 million in gross profit. In our Apio, Inc. food business, as previously disclosed in our press release three weeks ago, prolonged cold and wet weather has adversely impacted produce sourcing for the produce industry and for Apio’s value-added, fresh-cut vegetable business,” stated Gary Steele, Chairman and CEO of Landec. “During the second quarter of fiscal year 2011 compared to the second quarter of fiscal year 2010, revenues increased $9.2 million, or 15%, while gross profit increased $4.4 million, or 60%, to $11.9 million and net income increased 34% to $2.1 million. Additionally in the second quarter of fiscal year 2011, gross margin improved 4.7 percentage points to 16.9% compared to 12.2% during the second quarter last year.”

The revenue growth of $9.2 million was due to the $8.4 million in Lifecore revenues and from a $2.6 million, or 15%, increase in Apio’s export revenues. This growth was partially offset by a $1.6 million, or 4%, decrease in revenues for Apio’s value-added, fresh-cut vegetable business as a result of weather-related produce sourcing issues and from Apio exiting some low margin business during the second half of fiscal year 2010.

For the second quarter of fiscal year 2011, Landec’s net income increased $521,000 to $2.1 million from net income of $1.5 million for the second quarter of fiscal year 2010. The increase in net income during the second quarter of fiscal year 2011 compared to the second quarter last year was due to the $2.8 million of net income before taxes from Lifecore. This increase was partially offset by a $909,000 decrease in gross profit from Apio’s value-added, fresh-cut vegetable business due to produce sourcing issues partially offset by lower promotional costs and reduced packaging costs and from a $768,000 increase in operating costs at Corporate and Landec Ag due primarily to an increase in stock based compensation expenses and as a result of the amendment to our agreement with Monsanto wherein beginning with the third quarter of last year Landec is now responsible for paying for all of Landec Ag’s operating expenses.

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