This FAQ represents a set of Questions and Answers that were included in the most recent Landec Quarter Earnings Release (Read Press Release issued on January 3, 2018 for the quarter ended November 26, 2017) and offers comments for understanding Landec's business. Following the Disclaimer below, there is a list of questions. Thank you for your interest in Landec.
Important Cautions Regarding Forward-Looking Statements
Except for the historical information contained herein, the matters discussed in this news release are forward-looking statements that involve certain risks and uncertainties that could cause actual results to differ materially, including such factors among others, as the timing and expenses associated with operations, the ability to achieve acceptance of the Company's new products in the market place, weather conditions that can affect the supply and price of produce, the amount and timing of research and development funding and license fees from the Company's collaborative partners, the timing of regulatory approvals, the mix between domestic and international sales, and the risk factors listed in the Company’s Form 10-K for the fiscal year ended May 28, 2017 (See item 1A: Risk Factors) which may be updated in Part II, Item 1A Risk Factors in the Company’s Quarterly Reports on Form 10-Q. As a result of these and other factors, the Company expects to continue to experience significant fluctuations in quarterly operating results and there can be no assurance that the Company will remain consistently profitable. The Company undertakes no obligation to update or revise any forward-looking statements whether as a result of new developments or otherwise.
Starting in fiscal year 2019, even though the statutory federal rate is 21%, we are projecting that our effective tax rate will be approximately 24% to 26% as we will be losing certain tax benefits the Company has been able to utilize to reduce its overall effective rate during past years, such as the domestic manufacturing tax deduction to name one.
Other factors impacting the packaged fresh vegetables business gross margin in fiscal 2018 include higher labor rates and increased promotional spending. The labor rate in Apio’s packaged fresh vegetables business is expected to increase 10% to 12% in fiscal 2018 compared to last year as a result of a scarcity of plant labor workers in all of the locations where we process our products. Labor represents approximately 11% of the cost of sales in our packaged fresh vegetables business. We are also increasing in-store promotional spending this year to drive consumer trials of our salads as we gain new distribution.
In order to meet the Company’s goal of increasing its gross margin year-over-year, excluding unplanned incremental produce sourcing costs, Apio continues to shift its product mix to greater sales of higher-margin products, along with specific cost reduction initiatives.
Our goal is to continue to aggressively grow the Eat Smart market share and ACV for all our multi-serve salad kit products as well as our newly launched single-serve salad kit products.
Our continuing priorities are:
a) Focusing on innovation at Apio, O Olive and Lifecore in order to shift Landec’s overall product mix to higher margin products.
b) Increasing demand for our branded natural food products and biomaterials products to fill existing capacity, drive plant efficiencies and increase our return on invested capital.
c) Investing in capital expenditures, R&D, people and systems to drive growth in our three growth pillars: (1) Lifecore, (2) Eat Smart salads, and (3) natural food products.
|Apio Packaged Fresh Vegetables (a)||$||107,152||$||97,978||$||209,720||$||193,923|
|Apio Packaged Fresh Vegetables||9,445||12,001||24,460||26,407|
|Total Gross Profit||15,752||18,953||35,038||40,097|
|Total Operating. (Loss) Income||(554||)||3,264||1,968||8,734|