Landec Corporation (LNDC) reported a 91% dip in earnings for the first quarter due to higher labor, packaging and freight costs and expenses at Apio as well as the timing of production and shipments within fiscal 2019 hurt operating income at Lifecore. The top and bottom line exceeded analysts’ expectations.
Earnings for the quarter plunged 91% to $190,000 or $0.01 per share. The results were also hurt by higher net interest expense, loss at O and pre-commercialization loss at Now Planting. These were partially offset by an increase in the fair market value of its Windset investment and a decline in income tax expense.
Revenues grew 8% to $124.7 million as salad revenues growth drove Apio’s packaged fresh vegetables business revenues higher.
Looking ahead into the second quarter, Landec expects revenue in the range of $125 million to $129 million and net income to be breakeven to slightly positive. This forecast reflects the timing of production and shipments within the fiscal year for Lifecore, O and the recently launched line of Now Planting soups and the seasonality of its Eat Smart revenues and margins.
For the fiscal year 2019, the company reiterated its revenue growth outlook of 5% to 7% and earnings guidance of $0.45 to $0.50 per share. Landec expects cash flow from operations of $32 million to $36 million and capital expenditures in the range of $45 million to $50 million.
For the first quarter, revenues at Lifecore remained essentially flat, while gross margin dropped compared to last year. This was due to the timing of production and shipments within the fiscal year 2019. Landec said it will continue to expand Lifecore’s CDMO development pipeline to drive future commercial product sales
In the Natural Foods business, revenue increased 8% helped by growth in its Eat Smart business. Higher distribution in the U.S retail channel drove Eat Smart salad sales higher by 17%. However, gross margin was lower than last year due to higher labor, freight and packaging costs in its Eat Smart packaged fresh vegetable business.
Shares of Landec ended Tuesday’s regular session up 0.50% at $14.04 on the Nasdaq. The stock had risen over 10% in the past year and over 11% so far this year.