Landec second quarter revenues increase 16% to $81.6 million

Landec Corporation (Nasdaq:LNDC), today reported results for the second quarter and first half of fiscal year 2012. Revenues for the second quarter of fiscal year 2012 increased 16% to $81.6 million compared to revenues of $70.2 million for the second quarter of fiscal year 2011. Net income increased 63% to $3.3 million, or $0.13 per share, compared to net income of $2.1 million, or $0.08 per share, during the second quarter of fiscal year 2011.

The revenue growth of $11.4 million was due to growth in Landec's food and biomaterials businesses, specifically: (1) a $6.0 million increase in Apio's value-added business, which includes the fresh-cut specialty packaged vegetable business, Apio Cooling, and Apio Packaging, (2) a $4.6 million increase in Apio's export business, and (3) an $813,000 increase in Lifecore's biomaterials business.

The $1.2 million increase in net income resulted from $1.4 million of pre-tax income from our investment in Windset Farms and a $1.1 million increase in pre-tax income from Apio's value-added and export businesses. These increases were partially offset by an $840,000 increase in the income tax expense due to higher pre-tax income and by an increase of approximately $400,000 in marketing and business development expenses.

Gary Steele, Landec's Chairman and CEO, commented, "We had a very good second quarter, achieving revenue growth of 16% and net income growth of 63%. Our Apio food business grew revenues and profits in both its value-added business and its export business. The growth for these businesses can be primarily attributed to increased sales volumes and normal weather patterns so far this year. Overall Apio's revenues increased 18% and its pre-tax net income more than doubled during the quarter compared to the second quarter of last year. Our Lifecore business increased revenues 10% during the quarter and pre-tax income was flat with the second quarter of last year due to the timing of production, which resulted in reduced absorption of overhead costs during the quarter."

Revenues for the first six months of fiscal year 2012 increased $19.8 million, or 15%, to $154.9 million compared to revenues of $135.1 million for the same period a year ago. Net income for the first six months increased 18% to $5.2 million or $0.20 per diluted share compared to net income of $4.4 million or $0.16 per diluted share for the same period last year.

The increase in revenues during the first six months of fiscal year 2012 compared to the first six months of fiscal year 2011 resulted from: (1) an $8.8 million increase in Apio's value-added business, (2) a $9.5 million increase in Apio's export business, and (3) a $1.6 million increase in Lifecore's biomaterials business.

Net income for the first six months of fiscal year 2012 increased $793,000 compared to the first six months of last year, primarily due to $1.7 million of pre-tax income from our investment in Windset Farms and a $679,000 increase in pre-tax income from Apio's value-added and export businesses. These increases were partially offset by (1) a $650,000 decrease in pre-tax income as a result of accruing performance-based bonuses at Apio and Corporate which were not accrued during the first six months of last year, (2) a $598,000 increase in the income tax expense due to higher pre-tax income, and (3) a $236,000 decrease in pre-tax income for Lifecore due to the timing of production, which resulted in reduced absorption of overhead costs. Production levels for Lifecore are projected to be higher in the second half of fiscal year 2012 resulting in higher absorption of overhead costs.