Lifecore Biomedical, Inc. Q4 FY2024 earnings call

• Paul Josephs joined as President and CEO in May 2024, confident in Lifecore's business potential. - Company resolved SEC filing issues with the May 2024 filing of Form 10-K. - Conducted a reduction in force to align headcount with business needs. - Focus areas: maximizing base business and customers, advancing development portfolio towards commercialization, and targeting new programs. - Ongoing review of operations, procedures, capabilities, and facilities.

For the full fiscal year 2024, Lifecore Biomedical recorded $128.3 million in revenues, a 24.2% increase over fiscal 2023. The growth was driven by a 17.7% increase in the hyaluronic acid (HA) raw material manufacturing/fermentation business and a 26.5% increase in the CDMO business. Gross profit for the full year of 2024 increased by 49.5% to $41.9 million, with a gross margin of 32.6% (up from 27.1% in 2023). Adjusted EBITDA for the full year of 2024 increased by $9.1 million or 82% to $20.2 million.

• Fiscal 2025 revenue guidance: $126.5 million to $130 million (flat vs 2024). Factors include a key customer rebalancing inventories, no new commercial launches due to FDA approval timing, revenue loss from a customer moving production in-house, and a completed development project not contributing. - Adjusted EBITDA guidance: $19 million to $21 million, excluding stock-based compensation costs of $9 million to $10 million. - CapEx expected to decline to $10 million to $14 million in 2025.

• Key customer inventory rebalancing temporarily limiting revenue growth. - Delayed FDA approvals preventing new commercial launches in 2025. - Revenue loss from a small commercial customer moving production in-house. - A completed development project not contributing to 2025 revenues.

Q: Talked about current projects in development pipeline.

A: Paul mentioned reviewing the development pipeline, removed some programs from forward-looking projections but the pipeline remains robust.

Q: Headwinds and new customer wins.

A: Key customer inventory rebalancing is a headwind, but commercial revenue remains strong with confidence in 2025 projections.

Q: Medium-term outlook and GLP-1 opportunities.

A: Confident in future growth, capable of supporting GLP-1s as part of the growing injectable market.

Q: EBITDA margins and RIF benefit.

A: RIF savings help in operating expenses, expecting margin improvement with higher revenue over time.