Good afternoon and thank you for joining Landec's Fiscal 2022 Second Quarter Earnings call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. At that time, I will provide instructions on how to ask a question. Now, I would like to turn the call over to Jeff Sonnek, Investor Relations at ICR.

Good afternoon and thank you for joining us today to discuss Landec Corporation's second quarter fiscal 2022 earnings results. On the call today from the company are Dr. Albert Bolles, President and Chief Executive Officer; John Morberg, Chief Financial Officer; and Jim Hall, President of Lifecore. By now, everyone should have access to the press release, which went out today just after 1:00 PM Pacific or 4:00 PM Eastern. If you've not received the release, it's available on the Investor Relations portion of Landec's website at ir.landec.com. Before we begin today, I'd like to remind everyone of the safe harbor statement. Certain statements made in the course of this conference call contain forward-looking statements. It's important to note that the company's actual results could differ materially from those projected in such forward-looking statements. Additional information concerning risk factors that could cause actual results to differ materially from those in the forward-looking statements is contained from time to time in the company's filings with the SEC, including, but not limited to, the company's Form 10-K for fiscal year 2021. Copies of these filings may be obtained from the company's website. With that, I'd now like to turn the call over to Al.

Thanks Jeff. Good afternoon, everyone. And thank you for joining us today. On today's call, I will provide an update on our progress. The projects left, Jim will then review recent developments at Lifecore and then John Marburg will discuss our financial results and updated fiscal 2022 outlook. We will then open the call for your question. We've been quite busy since we last spoke to you in September. As you can now see, our focus has been on executing the sale of our Eat Smart, fresh packaged salad and vegetables business, which closed on December 13 for $73.5 million in cash. This asset sale marked an important milestone in Project SWIFT, and demonstrates ongoing efforts to extract value from our non core assets within our Curation Foods business, and reorients the company around our rapidly growing Lifecore Biomedical business, we have already utilized the net proceeds from the transaction to pay down debt, which instantly reduced our balance sheet leverage. This puts the business back on a firm foundation and allows us the flexibility to channel our resources to more fully support the growth and expansion of the Lifecore business, with the divestment of Eat Smart, and while there's more work to do, management is laser focused on the Lifecore business and remaining Curation assets that are growing at a higher rate, produce more attractive margins and have value that we believe is presently under appreciated. As such, we'll be focusing most of our attention and discussion going forward during our quarterly updates on Lifecore, which is generating the vast majority of our consolidated adjusted EBITDA and has provided Landec with a consistent and growing source, high margin revenue since the acquisition of the business in 2010. In fact, Lifecore's revenue has grown at a compound annual rate of 15.4% since then, which is really impressive performance. Before I pass the call over to Jim for a review of Lifecore, I also want to take a moment to characterize our financial reporting for the fiscal second quarter, as well as our guidance for the balance of the fiscal year. Since the Eat Smart sale occurred subsequent to fiscal second quarter end, we are providing you with a pro forma look at the Curation Foods segment for the first half of fiscal '22, as well as the full year fiscal '21 to add in your modeling the go forward business. John will share some greater insights on financials and related guidance. But I want to recognize the great performance that Lifecore. Revenue growth accelerated through a 7% increase in second quarter, which understates the accomplishment given some of the channel inventory headwinds we're working through in fiscal first half and adjusted EBITDA growth was 26%. Lifecore continues to perform well. We are excited for our strong fiscal second half of the year, and we couldn't be more excited about what lies ahead. With that, I'll pass the call over to Jim, for a deeper review of the Lifecore business.

Thank you, Al. We operate in the amazing CDMO industry with strong fundamentals, and Lifecore is perfectly positioned to take advantage of the growing CDMO opportunities to deliver attractive financial returns to all of our stakeholders. We are a beneficiary of the significant industry trends towards outsourcing of new drug development. And our syringe and vial filling capabilities align perfectly with the powerful trends in new injectable drug applications that are utilizing these capabilities. In fact, approximately 55% of all new drug applications are injectables, and prefilled syringe demand is growing at a 13% compound annual rate. Coupled this backdrop with limited injectable drug manufacturing capacity and Lifecore presented with an incredible opportunity to fill unmet demand with our existing capacity that we've been investing in over the past few years. Activity within our pipeline remained strong. In the fiscal second quarter, we initiated work on two new projects that we established development agreements for late in the first quarter. This maintains our development pipeline at 23 projects with 19 different customers, which are spread across early phase clinical development with five projects, phase one and two clinical development with eight projects, and phase three clinical development and scale up commercial validation activity with 10 projects. Moving forward, as we continue to build and prepare the organization to advance and expand our development pipeline, activity remains strong, and we are in active discussions with many potential new project candidates to continue to expand our pipeline. In addition, development activity for the existing pipeline continues to advance with several new statements of work being initiated in the first half of this fiscal year to continue advancing the projects through their development cycle. Lifecore also received three key FDA approvals during our fiscal second quarter. First, Lifecore was approved to manufacture a…

Thank you, Jim. Lifecore had a great fiscal second quarter, the business realized total revenues of $24.9 million or a 7.4% increase versus the prior year period, driven by a 17% increase in CDMO business, partially offset by a 27.8% decrease in its fermentation business, which was a result of timing of shipments within the fiscal year. Additionally, consider that we face headwind from excess channel inventory in the fiscal first half of the year, which we've largely moved through here early in the fiscal third quarter. Gross profit margin improved by approximately 185 basis points versus the prior year to 47%, largely due to improved revenue mix. Segment EBITDA totaled $9.1 million for the quarter, a 25.6% increase over the prior year, with an even margin of 36.6%. The Lifecore business is on track for a strong step up and growth in the fiscal second half of this year, as we move past the excess channel inventory. And we are supporting that with a reiteration of our Lifecore segment guidance on both the top line and EBITDA. We're guiding Lifecore revenues to a range of $105 million to $108 million, representing growth of approximately 7% to 10%. And adjusted EBITDA in the range of $26 million to $27 million, representing an increase of approximately 6% to 10%. As a reminder, the difference in growth rates this year, where EBITDA lags revenue is entirely due to the $1.6 million of P&L investment that we're utilizing as we prepare for our next phase of growth. Let's now shift to Curation Foods and related financials. We've recast our Curation segment results and have provided pro forma results for the first half of fiscal '22 and full year fiscal '21. Our hope is that this will provide the necessary basis to understand the…

Our first question is from Gerry Sweeney with Roth Capital.

Good afternoon, Al, John and Jim, thanks for taking my call. Wanted to start on obviously Lifecore because that's the focus. And congratulations again on the Eat Smart sale. But curious if this sale actually, how do we say that? Just curious, maybe if Lifecore, obviously, there's a lot of capital it has, capital intensive. And there may have been some constraints in the capital side, but also curious if this also constrained, maybe some customer acquisition opportunities. A lot of these potential opportunities are-- have not written in but are part of the phase three trials that are will just open up more customer opportunities through, in other words, I think some customers will get the food business as a drag and cause a little bit of caution and coming to Lifecore for opportunities.

Yes, Gerry, let me just start out here by saying this year; we have mentioned that it's an investment year at Lifecore. We have plans; we've already implemented some capital, close to $30 million in capital investments to grow those future opportunities. And as Jim mentioned, we've invested $1.06 million more in the new business development pipeline to attract more customers. And we've invested not only money, but we have added resources at Lifecore to bring in some new talent to really continue to drive that investment pipeline and bring more customers on board in the future. Jim, anything more you'd like to add to that or John?

Yes, sure. Hi, Gerry. This is Jim. To directly answer your question, I don't think it's going to have an impact one way or another, I think we're really happy and confident where things are heading with Lifecore. The activity in our development pipeline remains strong. Every aspect of our development pipeline continues to transfer and transition through the development phases, which ultimately turn into commercial opportunities for us. The work we've done to expand that pipeline with our investment and how we go out and target opportunities is on track, we've hired 10 out of the 11 key positions that we had identified to build up not only the development resources to accelerate the development pipeline, but I've also brought in a new VP of Corporate Strategy from the CDMO world to help us expand that. Darren Hieber is his name, and he's on board now and digging in and really helping us look differently at how we go out and target opportunities. And the knocks on the door still really, really frequent. There are a lot of things we're in discussion with that, hopefully, we'll onboard soon. So more to come on that front. But we're very happy where things are at, we spent a lot of time over the last quarter, trying to balance out the quarters. And when we're doing development work in the development activity. And the investment has allowed us to do that, as you see the performance in the second quarter, and projections for the rest of the year. So we're very comfortable with where Lifecore is at right now and where we're headed.

So suffice to say that that $1.6 million in business development is start is increasing the top pipeline base or opportunity, I guess that's the way to --

Yes, it's allowing us to react quicker and go after more. And our intent was to have that start impacting the back half of this fiscal or later in the second half of this fiscal year, but really start kicking in FY23 and beyond. But, yes, we're very happy with where we're at.

What is the capacity? I mean, obviously, 23 projects in the pipeline, and some of those may filter out depending on how some of the trials go and et cetera. But how much capacity do you have and the other I guess the follow on is, I think you are at 10,000 or was it 10 million units, and you're going to 22 million to hit that 22 million. How -- what does that pipeline have to look like? I know it's like a multi year process, but just trying to get an idea of how that sort of all plays out over the next couple years.

Yes, really. I mean, it's ultimately our goal to have that pipeline continue to build and we add resources to support that when needed, we still have room to expand and grow the pipeline with what we're adding now, to give you a specific number of projects are tough, just because it depends on the workload and where things are at. And how long they take to go through as an example. One of the projects that are in our late phase here is going very, very well. And I just signed the 43rd statement of work for that project. So you can see along, they -- to develop in various stages, but overall capacity to drive to 22 million, the things that really drive that are already in our pipeline. The investments focused to fill that out. And we're also; as you know because that we've talked about in the past, looking at beyond that, and starting to get the fill lines into go beyond the 22 million.

Our next question is from Mark Smith with Lake Street Capital Markets.

Hi, guys. First question for me is can you just walk through the remaining headwinds within Lifecore and kind of as you move through those anything that's remaining.

Any headwinds in Lifecore?

Yes, just as you talked a little bit about the industry, some of the things that slowed some of the growth this year, kind of how you're working through those and kind of your outlook.

Yes, well, our growth was impacted once again, by the $1.06 million in investment in building a more robust pipeline for us that we went through. The other impact was we were sitting on a high degree of inventory, late in Q4, and Q1 of HA, that was primarily driven by our customers primarily international and COVID. We have moved through that right more rapidly than what we have planned for. And we don't see any slowdown with the last phase here of, or the next phase of COVID. So those are the two headwinds that we have that I think we are pretty comfortable with. And we're moving forward. Jim, anything you want to add to that?

Yes, hey, Mark, Al covered it pretty well. Listen, we went into the year, especially in the optomic side of our business with heavier inventories, because of the slowdown due to COVID. We implemented very frequent meetings and planning meetings with supply chain groups from both our customers and Lifecore. So we're getting a lot more real time data. And we're happy to say that we aren't -- we have worked through the heavier inventories, orders are picked back up, demands picking back up, not in all markets, but generally an overall picking back up, haven't seen any impacts related to this latest phase, a COVID. And if we do will be all over it, since we talk very frequently with our customers on the inventory planning side of things, but it's worked through, you should start seeing the HA side of the business start picking back up in the second half, we're happy with where that's headed, and things are on track, as we laid out the fiscal year.

Perfect, and then you guys gave a lot of info on the pipeline. It's sounds like it remains very strong maybe this big picture, walk us through how selective you can be in deals and new partnerships and how much of this is really people knocking on your door versus having to go out and work for these new partnerships.

Yes, I mean, we're fairly selective in that, we want to make sure we're partnering with people that we can provide value to. And typically, we look at in Lifecore niches in the complex type, formulation, products, whether they're viscous, whether they're complex to formulate, or synthesize, those are things we look at, we want to make sure we add value, we want to make sure we're working with people that have experience and have a product with a market that we can support. And, but really, we're agnostic, if it's something we can provide value to. And we can partner with. We do it. And historically, Lifecore's primary driver was our performance. Our project pipeline, as you can see is 23 projects with 19 different customers. And so we have a lot of repeat customers, and we have some customers in that pipeline that are referred to us from people we've worked with, what the investments tended to do is start focusing more of a hunting style for us to go out and actually find things that are in development and be more aggressive and going after them. We think that's going to be a key part to expanding the pipeline beyond where it is today.

Yes, and Mark, based on our activity, and our track record of high quality facilities, the work, how well we execute at Lifecore and our relationships with FDA, we have a pretty high hit rate of folks that get in our pipeline that we end up keeping their business.

Perfect. And that leads really to my next question, just as we look at projects and commercialization, any updates there. Sounds like we've seen good things out of this inherent project any updates there on those that have really advanced to approval and now in commercialization?

Yes, I mean, the things that are in late phase three, I mean can't report on data or anything like that. But I can tell you they are progressing well, and on the timelines that we have laid out in our projections internally. He also heard me talk about three key FDA approvals. The first of those was for an optomic product in one of our customers, commercial customers' product portfolio, as it was the only one we were not approved to manufacture yet, but that approval will be key for us to continue expand business with them moving forward. The process approval was a key approval for not only Lifecore, but for our customer. And that allows us to really scale up to feed their -- not only their US launch, but o-US launch as well. And then the other key approval is our warehouse. We needed the additional space temperature controlled space for the -- to handle the increase in raw materials with the increase in our manufacturing capacity. So all three of those support where Lifecore is heading longer term. And were key approvals for us as we continue to grow.

Okay. And then last question, may just want to ask once on the remaining piece of Curation, those businesses look pretty solid. Can you just talk a little bit more any about the outlook and maybe insight into the timing or expectation on disposal of some of those assets?

Yes, let me talk a bit about avocado products. Mark, we launched this test market in Cincinnati and guacamole now, we got very, very strong results, we doubled our velocities 54% of households that purchase the product came back. So we have a very high repeat rate of 20%, gain of 54% of households that had not ever tried the product. So our key issue is always been trial. And once we get trial, we have very strong repeat. So we're very excited about guacamole now product and we're looking at converting that nationally in March, right to be completed before second to mile. We also launched a new product called only avocado, not just avocado without all the spices in it. And we were pleasantly surprised that we increased incremental sales by 60%. We've gotten a lot of new buyers in the category and we are looking at extending that nationally here beginning of the end of January, early February. So we're excited about the things that we're doing on the avocado products business. And part of projects lift has been for us to look at everything. And we were really pleased; the board was very pleased with the sale. And the price we got at $73.5 million on Eat Smart business really helped us in the last six months to really get our balance sheet in a much better spot by taking down $100 million in debt. And now we continue to work to process that we continue to work.

Our next question is from Mitchell Pinheiro with Sturdivant & Co.

Hi, good afternoon. So I have a bunch of questions. But I sort of follow up to what Gerry was asking, I guess to Jim, regarding capacity. You are currently a 10 million go into 22 million. Does that capacity, is it kind of go up literally or does it go up based on how your project pipeline and when does the capacity actually, is there any -- can you give us some timeline on that? And then also of the 10 million, what is your currently running capacity? Are you at 50% of that 10 million or higher? Any color would be helpful there?

Yes, Jim, you want to take that for, Mitch?

Sure. Hey, Mitch. So breakdown your question here. Currently, we're staffed and ancillary equipment to handle 10 million units, we typically try to keep our capacity ahead of demand and don't like demand ever to reach more than 80% of capacity if we can help it to handle fluctuations in demand, especially on the upside, so this fiscal year, with everything we got running through from a commercial standpoint, and later phase development, fills are doing approximately 8 million units. Maybe a little bit more than that. And as far as fill rates from the capacity, it's not linear. It just depends on the approval rate and the demand of those approvals. But it's our goal to fill that capacity as fast as we can. We haven't provided any forward looking guidance yet on how fast it gets filled. But the one thing I have talked about in the past that you've heard is that we're already investing in capacity beyond the filling capacity in the filling equipment beyond 22 million units, we have two fill lines on order now, it takes three to four years to get those in place. So that should give you some guidance in where we see and how fast we think we're going to need the additional capacity beyond 22 million units.

And so the 32 million that you're spending this year does that -- that doesn't take you to the 22 million does it?

Part of that is to fill out the 22 million units. Part of it is to go beyond for some of the longer lead time filling equipment. It's relatively pretty even breakout from about 30%, 35% or so of our capital spend this year fills out that 22 million units, we'll need to continue to spend capital over the next few years to continue to fill that all in, like I talked about when we don't, if lead times on equipment like lab equipment, or mixers, or filters or things like that are a lot shorter lead time, so we don't spend the money till we need it. And always keep our capacity to handle the 80% demand equation I talked about earlier. So the other parts of that are to go beyond 22 million units. We also spent capital this year to expand our development capabilities and expand our equipment offering there. And then the rest of the capital is just what we refer to as base or maintenance CapEx. So it's kind of broken out in those four buckets.

Do you think; I know you're not giving forward guidance, but from a capital expending perspective is next year going to be lower than the 32 million than this year?

John, you want to cover capital at all?

Yes, sure. Hey, Mitch. Yes. As Jim said we haven't yet given out guidance on our forward plans, we're still looking at those. And I think we've said in the past, our capital is going to be somewhat chunky, depending on the year and depending on the needs, depending on the lead times. So now we're still kind of working on that plan to have and be speaking towards that very soon, though.

Okay. And then back to Jim we have 23 projects in the pipeline, that was the same number as in Q1. The two new projects that you added that imply that two of the other projects moved into commercial production.

Yes, we had one move into commercial production, we had one preclinical product that is we don't consider active right now. So we took that off the list. It's not going away. It's just in a phase where we're not spending any time on it. And the two new ones that we added we basically signed the agreements right towards the end of our first quarter, and work really began this fiscal year. And so yes, the numbers the same as are reported in Q1 but the activity is a lot higher now because of the work actually started.

Okay. And then when it comes to HA and not in the fermentation side, but sort of as a strategic competency, core competency that you have, you had mentioned that a year ago or so that about 60% of your pipeline was HA related. And that to me, just as I read up 1HA, it seems like that would be a big strategic advantage and a large element of your pipeline build. Having the expertise with HA being a drug delivery system. Is that where a lot of the activity you see coming from the HA part or is your pipeline going forward, going to significantly diversify away from HA and related derivatives.

Yes, but actually with the current product mix in our pipeline, 70% of them utilize HA, it's a strong tool for us, and really what really has built our capabilities in our niche, and always going to be very important. And really, I know, in the several things we're talking about with this potential projects, a good percentage of those kind of in that same neighborhood as well, we're actively working on our HA, we want people that are developing products with pharmaceutical, injectable grade HA to come to Lifecore, the things we're working on, obviously, Lifecore is the major player in the HA world in the optomic market for viscoelastic. We have several things in that pipeline, from the optomic realm. Age related macular degeneration, dry eye advancements in viscoelastic formulations; those are things we're working on. But there are also quite a few things in management in general surgery, drug delivery, things like that, that utilize HA that are expanding beyond our historical optomic focus. Few things in orthopedics, cancer, tumor therapy, things like that. So from a drug delivery standpoint, so it is a focus, you've heard me talk that we sell research HA to the research community, to several 100 different researchers annually. That kind of seeds the future development in the HA world, sometimes that takes several years before something materializes into a product. But we're still happy with where things are going in our pipeline, I think, longer term, more non HA based products will be joining that pipeline, not taking it away anything away from the HA but there's just so much being developed in several applications that doesn't --don't utilize ha but utilize our skill set. So I think it'll start balancing out in the coming years.

Thank you. And then just one more question probably for John, and Al, perhaps, but when it comes to the corporate overhead and you talked about stranded costs, and you're right sizing the corporate structure. What -- right now Lifecore absorbs about $5 million of your overhead. And is that -- when you think of it when you're --when all said and done. We're nine months into the process as you get through some of the Curation expenses. I mean where -- what does that $5 million look like? It's going to grow, obviously, there are corporate expenses, but of your sort of other corporate expenses where how much can you take that down? You mentioned $2 million number in annualized savings. I wasn't sure how that fit in. If you could just talk a little bit about that it'd be helpful.

Yes, let me give you a high level and I'll let John get into details with you. We just closed Eat Smart business here in December, we're working through a reverse integration process right now, Mitch, and we're looking at, right sizing the corporate overhead, right sizing the avocado business as we go forward. So that's going to be a process as we stated those will take six to nine months. We've estimated around $2 million in stranded costs. But right now, we're really just working through the reverse integration. We have a TSA with a buyer that we're working through to make sure that we have a smooth, orderly transition for the business to them, with no customer interruptions, no quality issues. So we're in the midst of evaluating all of those costs right now, Mitch. John, anything you want to add there?

Yes, I think you handled it pretty well, there. And, Mitch, we've also had this corporate structure, we've been operating a basically holding company with two different companies working underneath it so for one point on Lifecore, we don't see changing that management fee or that allocation, certainly for the rest of this fiscal year. That's not impacting them. Instead, we'll see costs and the integration, reverse integration costs on the corporate line structure. So we see an opportunity there as we reverse integrate to make that structure fit within the platform that we have. And we'll also see on the Curation side, those stranded costs also be reverse integrated. So there's really kind of two buckets of potential savings here that we'll be working through over the next two to three quarters.

Okay, helpful. And that actually pump in one more question. So, we have right now, about $97 million of debt. When obviously you're going to generate cash, you still have another, $15 million - $20 million of capital spending to do base on your six months spent so far. So, when we get done this fiscal year how do you think debt's going to look, considering the meeting your TSA and things like that. Are we going -- are we going to see sort of like cash flow, breakeven for Curation for the rest of the year.

Yes, let me first tell you about where I think debt's going to end up. The $97 million will obviously go up from there with the CapEx spend. If you think about it, we're spending $32 million at Lifecore; we said we would spend up to $7 million at Curation. That number is now down to about a $1 million, obviously, with the sale. So if you had that we're also at a period of time, we're investing in our working capital, and it's on the Curation side primarily, on the avocado product seasonally, this is where we're buying, picking and creating our guacamole, the same on O Olive side. We're now into the picking and a crush season. And then obviously, we use that working capital over the summer months and into next year. So right now we see our debt somewhere around $130 million by the end of our fiscal year at the end of May. And from a cash flow perspective, you're right on the Curation side, we see that being essentially flat. So our use of debt in the end is really at this point CapEx and working capital for the balance of this fiscal year.

And that move that 30 if you get up to $130 million a debt is that $33 million, the incremental $33 million like basically half the capital spending and half working capital increase.

Yes, that's about right. Okay, if you recall, we thought we would be closer to $180 million plus our last conference call for a year end debt figures. So certainly the balance sheet is getting a lot better.

Our next question is from Anthony Vendetti with Maxim Group.

Okay, thanks. Yes, I just have, most of the questions been asked, but just a couple quick follow-ups just on the strategy officer, I guess, Jim, is that the only hire you're intending to make? Or you're looking to? Is this the first hire in an effort to expand the salesforce expand the marketing to try to drive even more projects into that funnel

Yes, hi, Anthony. Yes, this is the first obviously the strategic hire, I wanted somebody to come in to then do an assessment work with the rest of my executive team and me to look at what our strategy is, where we're going, where we want to go. And then what kind of gaps we have within the organization, across the board, right, with project management, development services, and then marketing and sales to support an expanded effort to bring more and targeted opportunities in here. So we're actively putting that together, there will be more. And we have that planned for later this fiscal year, in early next year, but the first step was to get that position filled. And we've done that and then are running full speed ahead.

Okay, so just before I have a quick question on the gross margin, just do you have a number of people that you're targeting to hire? Is it a couple more? Is it 10 more? Any range or is that process still ongoing to determine?

Yes, the process is still ongoing to determine, we've made some estimates that I don't want to talk about yet until we actually do finish the analysis, but it's been taken into account for our operating plans, moving forward and will for future fiscal years as well.

Yes, Anthony, we also added head of HR brought in a real talented people pro. So it's helping Jim build out the team or and as he said, he's working through that process right now and more to come later. Those were the two big --

Okay, great, and then just lastly. Okay, excellent. And then just lastly, on the gross margin a little bit better than we were expecting is that -- should that be considered the new bait is sort of a mid, low to mid 30s, or mid 30 combined, I guess, corporate gross margin. Is that how we should look at the combined business at this point?

Yes, John, you want to take that?

Yes, I mean, look on the gross margin side, obviously had a great quarter. And so much of that had to do with the revenue mix for the quarter; we had very strong development services, that revenue that really drove the gross margin story in the quarter. So and I think one of the interesting things that Jim could speak to is what he's trying to do, and balancing out the revenues for the year with a lot of our customers that would help generate kind of a more consistent profile in the gross margin and in the EBITDA margin side. So, I don't know, Jim, you want to speak to that?

Yes, I mean, in general, Lifecore, we had a strong margin performance in Q2, related to shifting of some of the development work into that quarter, but overall, we still manage the overall blend of the business in the margins to be in the upper 30s where we've historically done and that's where we should come out this fiscal year as well.

We have reached the end of the question-and-answer session and I will now turn the call over to Dr. Bolles for closing remarks.

Yes, we are really looking forward to the new business here, as we look forward to higher margin more profitable and a far more stable high growth business. So we're very excited about the future here at Landec. So thank you again for your interest in Landec Corporation and your participation on the call today. We look forward to talking to you once again, when we release our fiscal third quarter results. Thank you.

This concludes today's conference and you may disconnect your lines at this time. Thank you for your participation.