Landec Corporation

Good afternoon, and thank you for joining Landex Fiscal 2022 Third Quarter Earnings Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. At that time, I'll provide instructions on how to ask a question. Now, I'd like to turn the call over to Jeff Sonick, Investor Relations at ICR.

Good afternoon, and thank you for joining us today to discuss Landex Corporation's Third Quarter Fiscal 2022 Earnings Results. On the call today from the company are Dr. Albert Bowles, President and Chief Executive Officer, Jim Hall, President of LifeCorps, and John Moorberg, Chief Financial Officer. By now, everyone should have had access to the press release, which went out today, just after 1 p.m. Pacific or 4 p.m. Eastern. If you have not received the release, it's available on the investor relations portion of Landec's website at ir.landec.com. Before we begin today, I'd like to remind everyone of the Safe Harbor Statement. Certain statements made in the course of this conference call contain forward-looking statements. It is important to note that the company's actual results could differ materially from those projected in such forward-looking statements. Additional information concerning risk factors that could cause actual results to differ materially from those in the forward-looking statements is contained from time to time in the company's filings with the SEC, including but not limited to the company's Form 10-K for fiscal year 2021. Copies of these filings may be obtained from the company's website. And with that, I'd like to turn over the call to Al.

Thanks, Jeff. Good afternoon, everyone, and thank you for joining us today. On today's call, I will provide a brief overview of our businesses. Jim Hall will then review recent developments at LifeCorps, and then John Moorberg will discuss our financial results in fiscal 2022 outlook that we are reiterating today. We will then open the call for your questions. In fiscal third quarter, our life core business grew revenue by 28% to $34.8 million, and we are excited to announce that we added two new projects to the development pipeline. Business return to more normalized rates of revenue in fiscal third quarter following the drawdown of channel inventory that our customers worked through in FISCO first half. As a reminder, this was expected and was a result of pandemic-induced delays to elective procedure volumes. We expect that the reversion to a more consistent operating environment at healthcare facilities will also create more consistent ordering patterns for LifeCore's products going forward. However, I note that the degree of the rebound in fiscal third quarter exceeded our expectation. As a result, delivery timing and mix weighed on adjusted EBITDA generation in fiscal third quarter. Nonetheless, we expect this to reverse in fiscal fourth quarter, and we are confident that we are on track to achieve our guidance for full fiscal year 2022. With respect to curation foods, we believe that our avocado products business remains well positioned within a growing industry supported by favorable consumer trends. While the business has been impacted by the inflationary environment recently, we expect our pricing actions that become effective in fiscal fourth quarter combined with significant operational improvements will largely mitigate the associated margin pressure and allow us to meet our full year segment guidance from continuing operations. As we look ahead, we believe this business is well positioned for long-term growth. Our high pressure processing, or HPP, investment is opening inroads with major customers for private label placements, which is an area of the industry that is experiencing recent growth that is more than two times that of the industry as a whole. We think this asset has significant value. Our brands have a stronger consumer reception versus our competition. We have double the amount of repeat purchasers compared to our competition. And we have a best in class, efficient and automated production facility in Mexico. As it pertains to Project SWIFT, our team is working through the reverse integration process following our December 13th sale of our Eat Smart Fresh Packaged Salad and Vegetables business and making excellent progress. We remain focused on maximizing the value of our remaining assets, which we believe are each well positioned in their respective markets, both for avocado products and premium olive oil and vinegars. Our board and I remain committed to maximizing shareholder value as we seek to optimize our remaining Creation Foods assets, deploy excess cash toward debt repayment, and fund growth initiatives to meet anticipated demand from LifeCorps' accelerating development pipeline. I also want to take a moment to characterize our financial reporting for the fiscal third quarter, as well as our guidance for the balance of the fiscal year. With the sale of Eatsmart in fiscal third quarter, we have shifted that business into discontinued operations for the fiscal year to date period. As you may recall, during the fiscal second quarter, we provided pro forma guidance for a curation food segment, which assumed the elimination of the eat smart contribution for the full fiscal year. As if it had been sold at the beginning of the fiscal year. As such, our guidance for the full fiscal year 2022 remains in place and reflects the continuing operations of the go forward businesses within a curation foods operating segment. In summary, we've accomplished a lot so far this year. We monetized our one-set investment ahead of schedule for $45.1 million. We successfully realized $73.5 million of value from our Eat Smart business through its sale. And as I discussed, we made significant operational improvements to our remaining curation food assets, which we are actively working to optimize. We recognize shareholders' desire to take action quickly, and we look forward to providing you additional updates as we execute on our strategy. With that, I'll pass the call over to Jim for a deeper review of the LifeCorps business.