Landec Corporation (LNDC) has reported a 12.20 percent rise in profit for the quarter ended Aug. 28, 2016. The company has earned $3.31 million, or $0.12 a share in the quarter, compared with $2.95 million, or $0.11 a share for the same period last year.
Revenue during the quarter went down marginally by 2.19 percent to $132.39 million from $135.36 million in the previous year period. Gross margin for the quarter expanded 269 basis points over the previous year period to 15.97 percent. Total expenses were 95.87 percent of quarterly revenues, down from 97.09 percent for the same period last year. This has led to an improvement of 122 basis points in operating margin to 4.13 percent.
Operating income for the quarter was $5.47 million, compared with $3.94 million in the previous year period.
“For the first quarter, our consolidated gross margin increased 270 basis points to 16.0% and net income increased 12% to $0.12 per share compared to the first quarter of last year. These results are in line with our strategy to innovate new products and continually shift our product mix to higher value items,” commented Molly Hemmeter, Landec’s president and chief executive officer. “As expected, revenues for the first quarter decreased 2% compared to the first quarter of last year primarily due to a strategic decision to reduce low margin business in our packaged fresh vegetables business during the second half of fiscal 2016. However, our efforts to shift away from non-strategic low margin business and to innovate and grow higher margin products as a larger percent of our business is resulting in continued improvement of gross margin, operating income and net income, and has us on target to meet our stated performance goals for fiscal 2017.”
For the second-quarter, Landec Corp projects revenue to be in the range of $137 million to $142 million. Landec Corp projects revenue to grow in the range of 3 percent to 6 percent for the financial year 2017. For fiscal year 2017, Landec Corp expects net income to grow in the range of $50 percent to $70 percent. The company forecasts diluted earnings per share to be in the range of $0.05 to $0.07 for the second-quarter. For financial year 2017, the company forecasts diluted earnings per share to be in the range of $0.53 to $0.60.
Working capital declines
Landec Corporation has witnessed a decline in the working capital over the last year. It stood at $34.34 million as at Aug. 28, 2016, down 5.92 percent or $2.16 million from $36.50 million on Aug. 30, 2015. Current ratio was at 1.64 as on Aug. 28, 2016, down from 1.72 on Aug. 30, 2015.
Cash conversion cycle (CCC) has decreased to 16 days for the quarter from 26 days for the last year period. Days sales outstanding were almost stable at 31 days for the quarter, when compared with the last year period.
Days inventory outstanding has decreased to 12 days for the quarter compared with 21 days for the previous year period. At the same time, days payable outstanding went up to 27 days for the quarter from 26 for the same period last year.
Debt increases substantially
Landec Corporation has witnessed an increase in total debt over the last one year. It stood at $55.78 million as on Aug. 28, 2016, up 37.39 percent or $15.18 million from $40.60 million on Aug. 30, 2015. Total debt was 16.23 percent of total assets as on Aug. 28, 2016, compared with 11.85 percent on Aug. 30, 2015. Debt to equity ratio was at 0.26 as on Aug. 28, 2016, up from 0.18 as on Aug. 30, 2015. Interest coverage ratio improved to 8.38 for the quarter from 7.84 for the same period last year.
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