-- Recorded Revenues of $128.3 million for Fiscal 2024; Year-Over-Year Increase of 24.2% --
-- High Value Pipeline Continues to Advance Toward Commercialization --
-- State-of-the-Art Technology Enhancements to Expand Capacity
and New Business Opportunities -
Conference Call Tomorrow Morning at 8:30 a.m. ET
CHASKA, Minn., Aug. 26, 2024 (GLOBE NEWSWIRE) -- Lifecore Biomedical, Inc. (NASDAQ: LFCR) ("Lifecore" or the "Company"), a fully integrated contract development and manufacturing organization ("CDMO"), today announced its financial results for the fourth quarter and full year of fiscal 2024.
Highlights from Fiscal 2024:
"Operationally, fiscal 2024 was a strong year for the Company as we recorded $128.3 million in revenues, representing a 24.2% increase over fiscal 2023," stated Paul Josephs, president & chief executive officer of Lifecore. "We are exceedingly pleased with this performance and top line growth. I am proud of the progress made by the Company to overcome its recent challenges and very pleased to have submitted our fiscal 2024 10-K today, bringing us current with all SEC filings.
"During my first 90 days as chief executive officer, I have been evaluating all aspects of the organization in an effort to identify opportunities to optimize processes, reduce operating expenses, and enhance productivity. Following my initial operational review, it was clear that the Company's headcount was oversized for its current business. While such decisions are difficult, a reduction in force was required, which we executed in July. We are now confident that we are right sized for our current pipeline as well as near-term growth. With respect to capabilities and capacity, the Company currently expects its new 5-head isolator filler to be GMP-ready in September.
"Looking ahead, a primary focus is the financial growth of our organization. We expect to accomplish this by focusing on three key areas (1) maximizing our base business; (2) advancing our development portfolio towards commercialization; and, (3) attracting new business spanning our complete range of capabilities and services. We believe we can accomplish this while maintaining superior support for the growing needs of our existing customers. Leaning on my extensive experience building and executing commercial strategies at multiple CDMO's, I am leading the team in refining our business development strategy to expand our visibility, broaden our outreach, and ultimately, increase our new project pipeline. We believe Lifecore's key differentiators are the robustness of our quality management system, our decades of proven experience, and our unique ability to handle complex and viscous formulations. I'm confident that, as other potential partners become aware of these capabilities, they will discover the exceptional value that we offer to them and their patients."
Fiscal Fourth Quarter 2024 Financial Highlights
- Revenue of $37.9 million, an increase of 21.6% year-over-year.
- Gross profit of $17.3 million, an increase of $9.5 million, or 122.0% year-over-year.
- Net loss from continuing operations of $7.1 million, as compared to $37.0 million year-over-year, which includes $23.7 million in loss on debt extinguishment in the prior year period.
- Adjusted EBITDA of $10.4 million, which excludes $1.6 million of stock-based compensation, as compared to Adjusted EBITDA of $3.7 million, which excludes $0.8 million in stock-based compensation.
Fiscal Year 2024 Financial Highlights
- Revenue of $128.3 million, an increase of 24.2% year-over-year.
- Gross profit of $41.9 million, an increase of $13.9 million, or 49.5% year-over-year.
- Net income from continuing operations of $9.3 million, which includes a $39.5 million decrease in the fair value of the debt derivative liability, as compared to a net loss from continuing operations of $64.2 million year-over-year, which includes $23.7 million in loss on debt extinguishment in the prior year period.
- Adjusted EBITDA of $20.2 million, which excludes $6.2 million of stock-based compensation, as compared to Adjusted EBITDA of $11.1 million, which excludes $3.6 million in stock-based compensation.
Corporate Developments
New Business
- The Lifecore business development team continued to engage with potential and existing customers to promote expanded capacity and field site visits along with opportunities directed toward utilization of isolator capabilities with virtual to large pharma as well as closing development services programs.
- Lifecore has added resources to our business development team and increased our marketing spend to expand our reach into key pharmaceutical and biotech regions. Furthermore, we are addressing our organizational structure to maximize the focus on driving new and impactful opportunities into the company.
Capabilities and Capacity
- Lifecore's 5-head isolator filler is expected to be GMP-ready in September 2024. The addition of this 5-head isolator filler represents more than a doubling of Lifecore's current theoretical capacity and represents a significant portion of the previously disclosed 70 million units in theoretical capacity.
Consolidated Fiscal Fourth Quarter 2024 Results
| (Unaudited and in thousands, except per-share data) | Three Months Ended | Change | |||||||||||||
| May 26, 2024 | May 28, 2023 | Amount | % | ||||||||||||
| Revenues | $ | 37,886 | $ | 31,146 | $ | 6,740 | 21.6 | % | |||||||
| Gross profit | $ | 17,272 | $ | 7,779 | $ | 9,493 | 122.0 | % | |||||||
| Net loss from continuing operations | $ | (7,085 | ) | $ | (36,998 | ) | $ | 29,913 | 80.9 | % | |||||
| Adjusted EBITDA | $ | 10,412 | $ | 3,717 | $ | 6,695 | 180.1 | % | |||||||
Fiscal fourth quarter 2024 revenue increased $6.7 million year-over-year to $37.9 million, representing an increase of 21.6% as compared to the prior year period. Revenue growth was primarily driven by a 21.2% increase in its hyaluronic acid (HA) raw material manufacturing (fermentation) business and a 21.8% increase in its CDMO business. The increase in HA raw material manufacturing revenue was primarily due to the higher demand in the current year from existing customers. The increase in CDMO revenues was primarily due to an increase in development services, a new commercial launch in the second quarter of fiscal 2024 and the positive impact of revised contract negotiations on legacy products.
Fiscal fourth quarter 2024 gross profit increased $9.5 million or 122.0% to $17.3 million, as compared to $7.8 million in the prior year period, primarily due to a favorable volume increase, resulting in an increase in gross profits of $1.5 million and favorable rate increases, resulting in an increase of gross profits of $8.0 million. The favorable rate increase was primarily due to a favorable revenue mix with stronger development services revenue and the positive impact of revised contract negotiations on legacy commercial products. This resulted in a gross profit margin improvement by 2060 basis points ("bps") to 45.6%, as compared to 25.0% in the prior year period.
Fiscal fourth quarter 2024 net loss from continuing operations was $7.1 million, compared to net loss from continuing operations of $37.0 million in the prior year period, which included a loss on debt extinguishment of $23.7 million due to the refinancing of the term debt to a related party. Adjusted EBITDA increased $6.7 million or 180.1% to $10.4 million, which excludes $1.6 million of stock-based compensation expense, as compared to adjusted EBITDA of $3.7 million in the prior year period, which excludes $0.8 million of stock-based compensation expense.
Consolidated Full Year Fiscal 2024 Results
| (Unaudited and in thousands, except per-share data) | Twelve Months Ended | Change | |||||||||||||
| May 26, 2024 | May 28, 2023 | Amount | % | ||||||||||||
| Revenues | $ | 128,261 | $ | 103,269 | $ | 24,992 | 24.2 | % | |||||||
| Gross profit | $ | 41,850 | $ | 27,985 | $ | 13,865 | 49.5 | % | |||||||
| Net income (loss) from continuing operations | $ | 9,331 | $ | (64,236 | ) | $ | 73,567 | (114.5 | )% | ||||||
| Adjusted EBITDA | $ | 20,206 | $ | 11,091 | $ | 9,115 | 82.2 | % | |||||||
Full year fiscal 2024 revenue increased $25.0 million year-over-year to $128.3 million, representing an increase of 24.2% as compared to the prior year period. Revenue growth was primarily driven by a 18% increase in its HA raw material manufacturing (fermentation) business and a 27% increase in its CDMO business. The increase in HA raw material manufacturing revenue was primarily due to the higher demand in the current year from existing customers. The increase in CDMO revenues was primarily due to the previously announced commercialization of a new product in the second quarter of fiscal 2024, increased demand from existing customers, price increases from amended commercial agreements at the beginning of the calendar year and a modest increase in development services projects.
Full year fiscal 2024 gross profit increased $13.9 million or 49.5% to $41.9 million, as compared to $28.0 million in the prior year period, primarily due to increased revenues resulting in a favorable volume variance of $6.8 million and favorable rate variance of $7.1 million due to a favorable revenue mix and adjustments to write down inventories to their net realizable value in the comparable periods. Gross profit margin increased 553 basis points to 32.6% in fiscal year 2024 from 27.1% in the prior year period primarily due to a favorable revenue mix, increased customer pricing on amended commercial agreements and an increase due to adjustments to write down inventories to their net realizable value in the prior year comparable period.
Full year fiscal 2024 net income from continuing operations was $9.3 million, which reflected a favorable $39.5 million non-cash fair market value adjustment to the debt derivative liability which is included in other income, compared to net loss from continuing operations of $64.2 million in the prior year period, which included a loss on debt refinancing of $23.7 million. Adjusted EBITDA increased $9.1 million or 82.2% to $20.2 million, which excluded $6.2 million of stock-based compensation expense, as compared to adjusted EBITDA of $11.1 million in the prior year period, which excluded $3.6 million of stock-based compensation expense.
Fiscal 2024 Cash Flow & Balance Sheet
Cash used in operating activities was $0.2 million for the fiscal year ended May 26, 2024 compared to $17.4 million used in the prior fiscal year ended May 28, 2023. Cash used by investing activities was $17.9 million compared to $4.8 million used in the prior year period, which included $16.7 million of proceeds from the sale of a divested business. Capital expenditures were $17.9 million for the fiscal year ended May 26, 2024 compared to $21.5 million in the prior year period, and were primarily focused on investing in Lifecore's long-term growth initiatives. Cash provided by financing activities was $7.5 million for the fiscal year ended May 26, 2024 compared to $39.7 million provided in the prior year period, which included $42.9 million of proceeds from preferred and common stock issuances.
Net term and revolver debt at the end of fiscal year 2024 was $175.2 million, including $8.5 million of cash.
Fiscal 2025 Outlook
The Company is providing guidance on a consolidated basis for full year fiscal 2025.
- Revenue: Expected to be in the range of $126.5 million to $130 million
- Adjusted EBITDA: Expected to be in the range of $19 million to $21 million. As noted above, the Company has changed its presentation of adjusted EBITDA to exclude stock-based compensation expense, which is anticipated to be in the range of $9.0 million to $10.0 million during fiscal 2025.
- Capital expenditures: Expected to be in the range of $10 million to $14 million, excluding capitalized interest.
Sets Date for Conference Call
Lifecore Biomedical will host a conference call tomorrow morning, August 27, 2024, at 8:30 a.m. ET to discuss fiscal 2024 fourth quarter financial results. To participate in the conference call via telephone, dial toll-free: 1-877-407-3982 (U.S.) or 1-201-493-6780 (International). A replay of the call will be available through September 3, 2024, by calling toll-free: 1-844-512-2921 (U.S.) or 1-412-317-6671 (International) and entering code 13748493.
A live webcast of the call can be accessed via Lifecore's investor website on the Investor Events & Presentations page at: https://ir.lifecore.com/events-presentations. An archived version of the webcast will be available on the website for 30 days.
About Lifecore Biomedical
Lifecore Biomedical, Inc. is a fully integrated contract development and manufacturing organization (CDMO) that offers highly differentiated capabilities in the development, fill and finish of sterile injectable pharmaceutical products in syringes, vials and cartridges, including complex formulations. As a leading manufacturer of premium, injectable-grade hyaluronic acid, Lifecore brings more than 40 years of expertise as a partner for global and emerging biopharmaceutical and biotechnology companies across multiple therapeutic categories to bring their innovations to market. For more information about the Company, visit Lifecore's website at www.lifecore.com.
Non-GAAP Financial Information
This press release contains non-GAAP financial information, including Adjusted EBITDA. The Company has included a reconciliation of Adjusted EBITDA to Net (loss) income, the most directly comparable financial measure calculated in accordance with GAAP. See the section entitled "Non-GAAP Financial Information and Reconciliations" in this release for the Company's definition of Adjusted EBITDA.
The Company has disclosed these non-GAAP financial measures to supplement its consolidated financial statements presented in accordance with GAAP. These non-GAAP financial measures exclude/include certain items that are included in the Company's results reported in accordance with GAAP. Management believes these non-GAAP financial measures provide useful additional information to investors about trends in the Company's operations and are useful for period-over-period comparisons. These non-GAAP financial measures should not be considered in isolation or as a substitute for the comparable GAAP measures. In addition, these non-GAAP financial measures may not be the same as similar measures provided by other companies due to the potential differences in methods of calculation and items being excluded/included. These non-GAAP financial measures should be read in conjunction with the Company's consolidated financial statements presented in accordance with GAAP.
Important Cautions Regarding Forward-Looking Statements
This press release contains forward-looking statements regarding future events and our future results that are subject to the safe harbor created under the Private Securities Litigation Reform Act of 1995 and other safe harbors under the Securities Act of 1933 and the Securities Exchange Act of 1934. Words such as "anticipate", "estimate", "expect", "project", "plan", "intend", "believe", "may", "might", "will", "should", "can have", "likely" and similar expressions are used to identify forward-looking statements. In addition, all statements regarding our preliminary estimates of historical financial data for the Historical Periods, current operating and financial expectations in light of historical results, anticipated capacity and utilization, anticipated liquidity, and anticipated future customer relationships usage are forward-looking statements. All forward-looking statements involve certain risks and uncertainties that could cause actual results to differ materially, including such factors among others, as the outcome of any evaluation of the Company's strategic alternatives or any discussions with any potential bidders related thereto, the competition of the Company's financial closing procedures, the Company's ability to successfully enact its business strategies, including with respect to installation, capacity generation and its ability to attract demand for its services, the Company's ability to become current with its reports with the Securities and Exchange Commission (the "SEC"), and the timing thereof, the Company's ability to regain compliance with applicable listing standards under Nasdaq, and its ability expand its relationship with its existing customers or attract new customers, the impact of inflation on the Company's business and financial condition, indications of a change in the market cycles in the CDMO market; changes in business conditions and general economic conditions both domestically and globally including rising interest rates and fluctuation in foreign currency exchange rates, access to capital; and other risk factors set forth from time to time in the Company's SEC filings, including, but not limited to, the Annual Report on Form 10-K for the year ended May 26, 2024 (the "2024 10-K"). For additional information about factors that could cause actual results to differ materially from those described in the forward-looking statements, please refer to our filings with the Securities and Exchange Commission, including the risk factors contained in the 2024 10-K. Forward-looking statements represent management's current expectations as of the date hereof and are inherently uncertain. Except as required by law, we do not undertake any obligation to update forward-looking statements made by us to reflect subsequent events or circumstances.
Lifecore Biomedical, Inc. Contact Information:
Stephanie Diaz (Investors)
Vida Strategic Partners
415-675-7401
sdiaz@vidasp.com
Tim Brons (Media)
Vida Strategic Partners
415-675-7402
tbrons@vidasp.com
| LIFECORE BIOMEDICAL, INC. CONSOLIDATED CONDENSED BALANCE SHEETS (In thousands, except par value) | |||||||
| May 26, 2024 | May 28, 2023 | ||||||
| ASSETS | |||||||
| Current Assets: | |||||||
| Cash | $ | 8,462 | $ | 19,091 | |||
| Accounts receivable, less allowance for credit losses | 20,343 | 19,907 | |||||
| Accounts receivable, related party | 10,810 | 9,117 | |||||
| Inventories, net | 39,979 | 40,841 | |||||
| Prepaid expenses and other current assets | 1,439 | 4,919 | |||||
| Total Current Assets | 81,033 | 93,875 | |||||
| Property and equipment, net | 148,598 | 134,390 | |||||
| Operating lease right-of-use assets | 2,442 | 4,282 | |||||
| Goodwill | 13,881 | 13,881 | |||||
| Intangible assets | 4,200 | 4,200 | |||||
| Other long-term assets | 3,806 | 2,917 | |||||
| Total Assets | $ | 253,960 | $ | 253,545 | |||
| LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT) | |||||||
| Current Liabilities: | |||||||
| Accounts payable | $ | 16,334 | $ | 22,097 | |||
| Accrued compensation | 5,533 | 4,145 | |||||
| Other accrued liabilities | 9,986 | 7,142 | |||||
| Current portion of lease liabilities | 4,133 | 1,270 | |||||
| Deferred revenues | 1,088 | 552 | |||||
| Deferred revenues, related party | 1,025 | 3,503 | |||||
| Current portion of long-term debt, net, related party | 773 | 580 | |||||
| Total Current Liabilities | 38,872 | 39,289 | |||||
| Long-term debt, less current portion, net, related party | 100,819 | 84,256 | |||||
| Revolving credit facility | 19,691 | 16,809 | |||||
| Debt derivative liability, related party | 25,400 | 64,900 | |||||
| Long-term lease liabilities, less current portion | 4,944 | 9,709 | |||||
| Deferred taxes, net | 543 | 380 | |||||
| Deferred revenues, less current portion, related party | 4,703 | 2,940 | |||||
| Other non-current liabilities | 5,086 | 174 | |||||
| Total Liabilities | 200,058 | 218,457 | |||||
| Series A Convertible Preferred stock, $0.001 par value; 2,000 shares authorized; 43 and 39 shares issued and outstanding at May 26, 2024 and May 28, 2023, respectively | 42,587 | 39,318 | |||||
| Stockholders' Equity: | |||||||
| Common stock, $0.001 par value; 50,000 shares authorized; 30,547 and 30,322 shares issued and outstanding at May 26, 2024 and May 28, 2023, respectively | 30 | 30 | |||||
| Additional paid-in capital | 177,808 | 174,276 | |||||
| Accumulated deficit | (166,523 | ) | (178,536 | ) | |||
| Total Stockholders' Equity (Deficit) | 11,315 | (4,230 | ) | ||||
| Total Liabilities, Convertible Preferred Stock and Stockholders' Equity | $ | 253,960 | $ | 253,545 | |||
| LIFECORE BIOMEDICAL, INC. CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (In thousands, except per share amounts) | |||||||||||
| Year Ended | |||||||||||
| May 26, 2024 | May 28, 2023 | May 29, 2022 | |||||||||
| Revenues | $ | 77,674 | $ | 99,247 | $ | 111,270 | |||||
| Revenues, related party | 50,587 | 4,022 | - | ||||||||
| Total revenues | 128,261 | 103,269 | 111,270 | ||||||||
| Cost of goods sold | 86,411 | 75,284 | 72,204 | ||||||||
| Gross profit | 41,850 | 27,985 | 39,066 | ||||||||
| Operating costs and expenses: | |||||||||||
| Research and development | 8,575 | 8,736 | 7,839 | ||||||||
| Selling, general and administrative | 40,463 | 38,969 | 34,659 | ||||||||
| Gain on sale of divested business | - | (2,108 | ) | - | |||||||
| Restructuring costs | 1,656 | 4,184 | 8,359 | ||||||||
| Total operating costs and expenses | 50,694 | 49,781 | 50,857 | ||||||||
| Operating loss | (8,844 | ) | (21,796 | ) | (11,791 | ) | |||||
| Interest expense, net | (3,428 | ) | (17,229 | ) | (15,470 | ) | |||||
| Interest expense, related party | (14,662 | ) | (352 | ) | - | ||||||
| Transition services income | - | 349 | 5,814 | ||||||||
| Loss on debt extinguishment | - | (23,741 | ) | - | |||||||
| Other (expense) income, net | (3,052 | ) | (1,159 | ) | 760 | ||||||
| Other income, related party | 39,500 | - | - | ||||||||
| Net income (loss) from continuing operations before taxes | 9,514 | (63,928 | ) | (20,687 | ) | ||||||
| Provision for income tax (expense) benefit | (183 | ) | (308 | ) | 5,211 | ||||||
| Net income (loss) from continuing operations | 9,331 | (64,236 | ) | (15,476 | ) | ||||||
| Discontinued operations: | |||||||||||
| Income (loss) from discontinued operations, net of tax | 2,700 | (35,327 | ) | (101,929 | ) | ||||||
| Income tax (expense) benefit | (18 | ) | - | 690 | |||||||
| Loss from discontinued operations | 2,682 | (35,327 | ) | (101,239 | ) | ||||||
| Net income (loss) | $ | 12,013 | $ | (99,563 | ) | $ | (116,715 | ) | |||
| Basic net (loss) income per share: | |||||||||||
| Income (loss) from continuing operations | $ | 0.31 | $ | (2.14 | ) | $ | (0.53 | ) | |||
| Income (loss) from discontinued operations | 0.09 | (1.18 | ) | (3.44 | ) | ||||||
| Total basic net income (loss) per share | $ | 0.40 | $ | (3.32 | ) | $ | (3.97 | ) | |||
| Diluted net (loss) income per share: | |||||||||||
| Income (loss) from continuing operations | $ | 0.25 | $ | (2.14 | ) | $ | (0.53 | ) | |||
| Income (loss) from discontinued operations | 0.07 | (1.18 | ) | (3.44 | ) | ||||||
| Total diluted net income (loss) per share | $ | 0.32 | $ | (3.32 | ) | $ | (3.97 | ) | |||
| Shares used in per share computation | |||||||||||
| Basic | 30,474 | 29,958 | 29,466 | ||||||||
| Diluted | 36,658 | 29,958 | 29,466 | ||||||||
| Year Ended | |||||||||||
| May 26, 2024 | May 28, 2023 | May 29, 2022 | |||||||||
| Net loss applicable to common shareholders | $ | 12,013 | $ | (99,563 | ) | $ | (116,715 | ) | |||
| Other comprehensive (loss) income, net of tax: | |||||||||||
| Net unrealized gains (losses) on interest rate swaps (net of tax effect of $(0), $(430), and $(445)) | $ | - | $ | 586 | $ | 772 | |||||
| Other comprehensive (loss) income, net of tax | $ | - | $ | 586 | $ | 772 | |||||
| Total comprehensive (loss) income | $ | 12,013 | $ | (98,977 | ) | $ | (115,943 | ) | |||
| LIFECORE BIOMEDICAL, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited and in thousands) | |||||||||||
| Year Ended | |||||||||||
| May 26, 2024 | May 28, 2023 | May 29, 2022 | |||||||||
| Cash flows from operating activities: | |||||||||||
| Net income (loss) | $ | 12,013 | $ | (99,563 | ) | $ | (116,715 | ) | |||
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||||||||||
| Depreciation and amortization | 8,859 | 13,177 | 18,061 | ||||||||
| Loss on debt extinguishment | - | 23,741 | - | ||||||||
| Stock-based compensation expense | 6,201 | 3,612 | 2,608 | ||||||||
| Provision (benefit) for expected credit losses | 263 | 163 | (14 | ) | |||||||
| Deferred taxes | 163 | 357 | (6,825 | ) | |||||||
| Net loss on disposal of property and equipment | 18 | 38 | 152 | ||||||||
| Non-cash restructuring and impairment of assets charges | 1,402 | 640 | - | ||||||||
| Impairment of goodwill and long-lived and indefinite-lived assets | - | 1,300 | 78,146 | ||||||||
| Loss on disposal of property and equipment related to restructuring, net | - | - | 5,185 | ||||||||
| Gain on sale of BreatheWay | - | (2,108 | ) | - | |||||||
| Loss on sale of Eat Smart | - | - | 336 | ||||||||
| Loss on sale of Yucatan | - | 20,663 | - | ||||||||
| Loss on sale of O Olive | - | 319 | - | ||||||||
| Interest expense, related party | 14,209 | 343 | - | ||||||||
| Change in debt derivative liability, related party | (39,500 | ) | - | - | |||||||
| Other, net | - | 86 | (426 | ) | |||||||
| Changes in current assets and current liabilities: | |||||||||||
| Accounts receivable, net | (699 | ) | 19,941 | (6,138 | ) | ||||||
| Accounts receivable, related party | (1,693 | ) | (9,117 | ) | - | ||||||
| Inventories | 862 | (14,811 | ) | (2,180 | ) | ||||||
| Other assets | 2,380 | 2,156 | (689 | ) | |||||||
| Accounts payable | (6,676 | ) | 16,038 | 9,343 | |||||||
| Accrued compensation | 1,388 | (4,483 | ) | (2,546 | ) | ||||||
| Other accrued liabilities | 319 | 3,982 | (873 | ) | |||||||
| Accrued interest - related party | 453 | 9 | - | ||||||||
| Deferred revenues | 536 | (367 | ) | (18 | ) | ||||||
| Deferred revenues, related party | (715 | ) | 6,443 | - | |||||||
| Net cash used in operating activities | (217 | ) | (17,441 | ) | (22,593 | ) | |||||
| Cash flows from investing activities: | |||||||||||
| Purchases of property and equipment | (17,921 | ) | (21,482 | ) | (29,940 | ) | |||||
| Proceeds from sales of property and equipment | - | - | 1,141 | ||||||||
| Eat Smart sale net working capital adjustment | - | - | (9,839 | ) | |||||||
| Proceeds from the sale of divested business, net of cash acquired | - | 16,671 | 73,500 | ||||||||
| Proceeds from sale of investment in non-public company | - | - | 45,100 | ||||||||
| Net cash (used in) provided by investing activities | (17,921 | ) | (4,811 | ) | 79,962 | ||||||
| Cash flows from financing activities: | |||||||||||
| Taxes paid by Company for employee stock plans | (152 | ) | (274 | ) | (789 | ) | |||||
| Principal payments on finance leases | (135 | ) | - | - | |||||||
| Principal payments on equipment financing, related party | (579 | ) | - | - | |||||||
| Proceeds from long-term debt, related party | - | 150,000 | - | ||||||||
| Proceeds from long-term debt | - | - | 20,000 | ||||||||
| Payments on long-term debt | - | (123,690 | ) | (86,411 | ) | ||||||
| Proceeds from revolving credit facility | 149,586 | 31,450 | 55,111 | ||||||||
| Payments on revolving credit facility | (146,704 | ) | (54,640 | ) | (44,111 | ) | |||||
| Proceeds from exercise of stock options | 724 | - | - | ||||||||
| Payments for debt issuance costs | (231 | ) | (6,050 | ) | (821 | ) | |||||
| Proceeds from long-term customer deposit | 5,000 | - | - | ||||||||
| Proceeds from sale of common stock, net of issuance costs | - | 4,822 | - | ||||||||
| Proceeds from sale of convertible preferred stock, net of issuance costs | - | 38,082 | - | ||||||||
| Net cash provided by (used in) financing activities | 7,509 | 39,700 | (57,021 | ) | |||||||
| Net (decrease) increase in cash and cash equivalents | $ | (10,629 | ) | $ | 17,448 | $ | 348 | ||||
| Cash and cash equivalents, beginning of period | 19,091 | 1,643 | 1,295 | ||||||||
| Cash and cash equivalents, end of period | $ | 8,462 | $ | 19,091 | $ | 1,643 | |||||
| Supplemental disclosure of cash flow information: | |||||||||||
| Cash paid during the period for interest | $ | 2,730 | $ | 31,024 | $ | 16,888 | |||||
| Cash paid during the period for income taxes, net of refunds received | $ | 72 | $ | 23 | $ | 441 | |||||
| Supplemental disclosure of non-cash investing and financing activities: | |||||||||||
| Purchases of property and equipment on trade vendor credit | $ | 7,858 | $ | 6,945 | $ | 2,260 | |||||
| Convertible Preferred Stock PIK dividend | $ | (3,078 | ) | $ | (1,163 | ) | $ | - | |||
| Debt derivative | $ | - | $ | 64,900 | $ | - | |||||
Non-GAAP Financial Information and Reconciliations
Adjusted EBITDA is a non-GAAP financial measure. We define adjusted EBITDA as net (loss) income before (i) interest expense, net of interest income, (ii) provision for income tax expense (benefit), (iii) depreciation and amortization, (iv) restructuring costs, (v) reorganization costs, (vi) change in fair value derivatives, (vii) financing fees (non-interest), (viii) contract cancellations, (ix) loss on debt extinguishment, (x) start-up costs, (xi) franchise tax equivalent to income tax, (xii) stockholder activist settlement costs, (xiii) gain on sale of divested business, (xiv) loss from discontinued operations, net of taxes, and (xv) stock-based compensation. See "Non-GAAP Financial Information" above for further information regarding the Company's use of non-GAAP financial measures.
| (in thousands) | Three Months Ended | Twelve Months Ended | ||||||||||||||
| May 26, 2024 | May 28, 2023 | May 26, 2024 | May 28, 2023 | |||||||||||||
| Revenues | $ | 23,146 | $ | 27,124 | $ | 77,674 | $ | 99,247 | ||||||||
| Revenues, related party | 14,740 | 4,022 | 50,587 | 4,022 | ||||||||||||
| Total revenues | 37,886 | 31,146 | 128,261 | 103,269 | ||||||||||||
| Cost of goods sold | 20,614 | 23,367 | 86,411 | 75,284 | ||||||||||||
| Gross profit | 17,272 | 7,779 | 41,850 | 27,985 | ||||||||||||
| Operating costs and expenses: | ||||||||||||||||
| Research and development | 2,161 | 2,115 | 8,575 | 8,736 | ||||||||||||
| Selling, general and administrative | 12,224 | 12,294 | 40,463 | 38,969 | ||||||||||||
| Gain on sale of divested business | - | - | - | (2,108 | ) | |||||||||||
| Restructuring costs | 738 | 8 | 1,656 | 4,184 | ||||||||||||
| Total operating costs and expenses | 15,123 | 14,417 | 50,694 | 49,781 | ||||||||||||
| Operating income (loss) | 2,149 | (6,638 | ) | (8,844 | ) | (21,796 | ) | |||||||||
| Interest expense, net | (882 | ) | (5,557 | ) | (3,428 | ) | (17,229 | ) | ||||||||
| Interest expense, related party | (4,907 | ) | (352 | ) | (14,662 | ) | (352 | ) | ||||||||
| Transition services income | - | 349 | - | 349 | ||||||||||||
| Loss on debt extinguishment | - | (23,741 | ) | - | (23,741 | ) | ||||||||||
| Other (expense) income, net | (1,102 | ) | (829 | ) | (3,052 | ) | (1,159 | ) | ||||||||
| Other (expense) income, related party | (2,400 | ) | - | 39,500 | - | |||||||||||
| Net (loss) income from continuing operations before taxes | (7,142 | ) | (36,768 | ) | 9,514 | (63,928 | ) | |||||||||
| Provision for income tax benefit (expense) | 57 | (230 | ) | (183 | ) | (308 | ) | |||||||||
| Net income (loss) from continuing operations | (7,085 | ) | (36,998 | ) | 9,331 | (64,236 | ) | |||||||||
| Discontinued operations: | ||||||||||||||||
| (Loss) income from discontinued operations, net of tax | - | (2,286 | ) | 2,700 | (35,327 | ) | ||||||||||
| Income tax benefit (expense) | 3 | - | (18 | ) | - | |||||||||||
| Loss from discontinued operations | 3 | (2,286 | ) | 2,682 | (35,327 | ) | ||||||||||
| Net (loss) income | $ | (7,082 | ) | $ | (39,284 | ) | $ | 12,013 | $ | (99,563 | ) | |||||
| EBITDA | ||||||||||||||||
| Net (loss) income | $ | (7,082 | ) | $ | (39,284 | ) | $ | 12,013 | $ | (99,563 | ) | |||||
| Interest expense, net of interest income | 5,789 | 5,909 | 18,090 | 17,581 | ||||||||||||
| Provision for income tax (benefit) expense | (57 | ) | 230 | 183 | 308 | |||||||||||
| Depreciation and amortization on property and equipment | 2,014 | 2,110 | 7,954 | 10,315 | ||||||||||||
| Total EBITDA | 664 | (31,035 | ) | 38,240 | (71,359 | ) | ||||||||||
| Restructuring costs | 738 | 8 | 1,656 | 4,184 | ||||||||||||
| Reorganization costs | 2,614 | 6,600 | 9,796 | 15,949 | ||||||||||||
| Change in fair value of debt derivative liability, related party | 2,400 | - | (39,500 | ) | - | |||||||||||
| Financing fees (non-interest) | 1,142 | 535 | 3,513 | 788 | ||||||||||||
| Contract cancellation and other costs | 270 | 716 | 567 | 716 | ||||||||||||
| Loss on debt extinguishment | - | 23,741 | - | 23,741 | ||||||||||||
| Start-up costs | 484 | - | 1,684 | - | ||||||||||||
| Franchise tax equivalent to income tax | 46 | 50 | 272 | 241 | ||||||||||||
| Stockholder activist settlement | 459 | - | 459 | - | ||||||||||||
| Gain on sale of divested business | - | - | - | (2,108 | ) | |||||||||||
| (Income) loss from discontinued operations, net of taxes | (3 | ) | 2,286 | (2,682 | ) | 35,327 | ||||||||||
| Adjusted EBITDA, before SBC | 8,814 | 2,901 | 14,005 | 7,479 | ||||||||||||
| Stock-based Compensation | 1,598 | 816 | 6,201 | 3,612 | ||||||||||||
| Adjusted EBITDA | $ | 10,412 | $ | 3,717 | $ | 20,206 | $ | 11,091 | ||||||||
