lndc-20220828

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Quarter Ended August 28, 2022, or


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition period for _________ to _________.

Commission file number: 000-27446

LANDEC CORPORATION

(Exact name of registrant as specified in its charter)


Delaware			94-3025618
(State or other jurisdiction of incorporation or organization)			(IRS Employer Identification Number)


2811 Airpark Drive
Santa Maria,	California	93455
(Address of principal executive offices)		(Zip Code)

(650) 306-1650

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common stock, par value $0.001 per share	LNDC	The NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

☐

Accelerated Filer

☒

Emerging Growth Company

☐

Non Accelerated Filer

☐

Smaller Reporting Company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of October 3, 2022, there were 29,595,554 shares of common stock outstanding.

Table of Contents

LANDEC CORPORATION

FORM 10-Q

For the Fiscal Quarter Ended August 28, 2022

INDEX


			Page




Part I.	Financial Information

Item 1.	Financial Statements

	a)	Consolidated Balance Sheets as of August 2 8 , 2022 and May 29 , 20 2 2	1

	b)	Consolidated Statements of Comprehensive (Loss) Income for the Three Months Ended August 2 8 , 2022 and August 2 9 , 2021	2

	c)	Consolidated Statement of Changes in Stockholders' Equity for the Three Months Ended August 2 8 , 2022 and August 2 9 , 2021	3

	d)	Consolidated Statements of Cash Flows for the Three Months Ended August 2 8 , 2022 and August 2 9 , 2021	4

	e)	Notes to Consolidated Financial Statements	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		19

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		26

Item 4.	Controls and Procedures		26

Part II.	Other Information		28

Item 1.	Legal Proceedings		28

Item 1A.	Risk Factors		28

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		28

Item 3.	Defaults Upon Senior Securities		28

Item 4.	Mine Safety Disclosures		28

Item 5.	Other Information		28

Item 6.	Exhibits		29

	Signatures		30

Table of Contents

LANDEC CORPORATION

CONSOLIDATED BALANCE SHEETS

(In thousands, except par value)


	August 28, 2022		May 29, 2022
	(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	4,222	$	1,643
Accounts receivable, less allowance for credit losses	40,934		48,172
Inventories	64,285		66,845
Prepaid expenses and other current assets	7,157		7,052

Total Current Assets	116,598		123,712


Property and equipment, net	129,024		130,435
Operating lease right-of-use assets	8,229		8,580
Goodwill	13,881		13,881
Trademarks/tradenames, net	8,400		8,400
Customer relationships, net	6,875		7,150
Other assets	2,793		3,002

Total Assets	$	285,800	$	295,160

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	16,366	$	15,802
Accrued compensation	6,373		9,238
Other accrued liabilities	7,832		7,647
Current portion of lease liabilities	5,021		5,026
Deferred revenue	803		919
Line of credit	44,000		40,000
Current portion of long-term debt, net	2,704		599

Total Current Liabilities	83,099		79,231

Long-term debt, net	95,865		97,579
Long-term lease liabilities	9,447		9,983
Deferred taxes, net	291		232
Other non-current liabilities	199		190

Total Liabilities	188,901		187,215

Stockholders’ Equity:
Common stock, $0.001 par value; 50,000 shares authorized; 29,593 and 29,513 shares issued and outstanding at August 28, 2022 and May 29, 2022, respectively	30		30
Additional paid-in capital	168,070		167,352
Retained earnings (accumulated deficit)	(70,915)		(58,851)
Accumulated other comprehensive loss	(286)		(586)
Total Stockholders’ Equity	96,899		107,945
Total Liabilities and Stockholders’ Equity	$	285,800	$	295,160

See accompanying notes to the consolidated financial statements.

-1-

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LANDEC CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(Unaudited)

(In thousands, except per share amounts)


	Three Months Ended
	August 28, 2022		August 29, 2021
Product sales	$	43,355	$	41,632
Cost of product sales	37,534		31,197
Gross profit	5,821		10,435
Operating costs and expenses:
Research and development	2,048		1,873
Selling, general and administrative	10,883		9,470



Restructuring costs	1,047		1,834
Total operating costs and expenses	13,978		13,177
Operating loss	(8,157)		(2,742)

Interest income	15		27
Interest expense	(3,678)		(6,678)

Other income (expense), net	(180)		109
Net loss before tax	(12,000)		(9,284)
Income tax (expense) benefit	(64)		1,651
Net loss from continuing operations	(12,064)		(7,633)




Loss from discontinued operations, net of tax	—		(1,844)
Net loss	$	(12,064)	$	(9,477)

Basic net loss per share:
Loss from continuing operations	$	(0.41)	$	(0.26)
Loss from discontinued operations	—		(0.06)
Total basic net loss per share	$	(0.41)	$	(0.32)

Diluted net loss per share:
Loss from continuing operations	$	(0.41)	$	(0.26)
Loss from discontinued operations	—		(0.06)
Total diluted net loss per share	$	(0.41)	$	(0.32)

Shares used in per share computation:
Basic	29,577		29,424
Diluted	29,577		29,424

Other comprehensive income (loss), net of tax:
Net unrealized gain (losses) on interest rate swaps (net of tax effect of $(16) and $(90))	$	300	$	366
Other comprehensive income (loss), net of tax	300		366
Total comprehensive loss	$	(11,764)	$	(9,111)

See accompanying notes to the consolidated financial statements.

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LANDEC CORPORATION

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

(Unaudited)

(In thousands)


Three Months Ended August 28, 2022
				Additional Paid-in Capital		Retained Earnings (Accumulated Deficit)		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity
	Common Stock
	Shares	Amount
Balance at May 29, 2022	29,513	$	30	$	167,352	$	(58,851)	$	(586)	$	107,945
Issuance of stock under stock plans, net of shares withheld	80	—		—		—		—		—
Taxes paid by Company for employee stock plans	—	—		(67)		—		—		(67)
Stock-based compensation	—	—		785		—		—		785
Net loss	—	—		—		(12,064)		—		(12,064)
Other comprehensive income, net of tax	—	—		—		—		300		300
Balance at August 28, 2022	29,593	$	30	$	168,070	$	(70,915)	$	(286)	$	96,899

SEC Form 10-Q filed by Landec Corporation