Q3 2025 Lifecore Biomedical Inc Earnings Call

April 3, 2025

Listen only mode.

Stephanie Diaz: Now I'd like to turn the call over to Stephanie Diaz manager of Investor Relations for life core.

Speaker Change: Good afternoon, and thank you for joining us today to discuss like core bio medicals third quarter fiscal 2025 earnings results.

Paul Jusits: Hosting the call today from life core or Paul just shifts President and Chief Executive Officer, and Ryan Lake Chief Financial Officer.

Paul Jusits: Before we begin today, we'd like to remind everyone that certain statements made in the course of this conference call contains forward looking statements. It is important to note that the forward looking statements made during this call reflect management's judgment and analysis only as of today April 32025, and the Companys actual results could differ materially from those pre.

Ryan Lake: Our financial performance for the quarter was steady and consistent with guidance. As such, we are reiterating our financial guidance for the fiscal year and expect revenue to be approximately $126.5 to $130 million and adjusted EBITDA to be in the range of $19 to $21 million. And with our cash balance bolstered by the sale of our isolator filler, we believe we remain well positioned for future growth.

Good afternoon, and thank you for joining life course fiscal 2025.

Third quarter earnings call during the call all participants will be in a listen only mode.

Paul Jusits: <unk> in such forward looking statements.

Paul Jusits: For a more thorough discussion of the risks and uncertainties associated with any forward looking statements. Please see the disclaimer regarding forward looking statements that is included in our fiscal 2025 third quarter earnings release, which was furnished to the SEC today on form 8-K, as well as our other filings with the Securities and Exchange Commission, including but not limited.

Speaker Change: Now I would like to turn the call over to Stephanie Diaz manager of Investor Relations for life core.

Ryan Lake: concludes my financial overview.

Ryan Lake: For those interested in reviewing our non-GAAP reconciliations, please refer to our 8k filing or the press release issued today.

Speaker Change: Good afternoon, and thank you for joining us today to discuss like core bio medicals third quarter fiscal 2025 earnings results.

Paul Josephs: I'll now turn the call back over to Paul for an update on operations and achievements during the period. Thank you, Ryan. During the third quarter, our team continued to successfully execute against our plan that was outlined during our Investor Day presentation last November. This strategy is focused on driving a 12% revenue CAGR and increasing EBITDA margins to over 25% over the next few years. Key contributors to this growth plan include maximizing our existing customer business, the advancement of programs currently within our late-stage development pipeline towards commercialization, and finally, winning new and impactful business that will continue to fill our project pipeline from early-stage work to commercialization.

Speaker Change: Added to the Companys Form 10-Q for the third quarter of fiscal 2025, which was filed this afternoon with that I'd like to turn the call over to Paul Joseph <unk>, Chief Executive Officer.

Paul Joseph: Hosting the call today from life core or Paul Joseph <unk>, President and Chief Executive Officer, and Ryan Lake Chief Financial Officer.

Paul Joseph: Before we begin today, we'd like to remind everyone that certain statements made in the course of this conference call contain forward looking statements. It is important to note that the forward looking statements made during this call reflect management's judgment and analysis only as of today April 32025, and the Companys actual results could differ materially from those.

Speaker Change: Thank you Stephanie good afternoon, everyone and thank you for joining us for our fiscal 2025 third quarter update.

Speaker Change: During the third quarter <unk> continued to aggressively and successfully execute against our stated plan for the year with noteworthy accomplishments across multiple areas of our business.

Paul Joseph: Projected in such forward looking statements.

Paul Joseph: For a more thorough discussion of the risks and uncertainties associated with any forward looking statements. Please see the disclaimer regarding forward looking statements that is included in our fiscal 'twenty 'twenty five third quarter earnings release, which was furnished to the SEC today on form 8-K, as well as our other filings with the Securities and Exchange Commission, including but not limited.

Speaker Change: During the period, our team signed multiple new agreements with both new and existing customers.

Speaker Change: Our revenues for the period remains strong and on target for our guidance for the year.

Speaker Change: And our cash balance was strengthened through the sale of one of our unused billing.

Paul Josephs: During the third quarter, we continue to make substantive progress in each of these core areas. First, with respect to maximizing our existing customer business, our team continues to make meaningful progress on an expansion program with one of our large multinational partners. As we communicated in our 2024 Investor Day, this partnership is poised to deliver a significant inflection point in volume demand in 2027, and this impactful project remains on target. We are excited to expand our business with this partner and serve their needs in a more meaningful way. their continued and growing confidence in Lifecore as a partner continues to serve as validation for the quality work of our team.

Speaker Change: Lastly, significant improvements and efficiencies were incorporated throughout our business.

Speaker Change: As to the Companys Form 10-Q for the third quarter of fiscal 2025, which was filed this afternoon with that I'd like to turn the call over to Paul Joseph Chief Executive Officer.

Speaker Change: Enhance our overall operations and improve our margins.

Speaker Change: We will provide additional details on business development and operations for the period following an overview of our third quarter fiscal 2025 financial results.

Paul Joseph: Thank you Stephanie good afternoon, everyone and thank you for joining us for our fiscal 2025 third quarter update.

Paul Joseph: During the third quarter <unk> continued to aggressively and successfully execute against our stated plan for the year with noteworthy accomplishments across multiple areas of our business.

Ryan: With that I'll turn the call over to Ryan.

Ryan: Thank you Paul in conjunction with my comments I'd like to recommend that participants refer to life course Form 10-Q filing with the Securities and Exchange Commission, which we filed today.

Paul Joseph: During the period, our team signed multiple new agreements with both new and existing customers.

Ryan: I'll now go over our results for the third quarter and nine months ended February 23, 2025, beginning with results for the quarter.

Paul Joseph: Our revenues for the period remains strong and on target for our guidance for the year.

Ryan: Revenues for the three months ended February 23, 2025 were $35 2 million a decrease of 2% compared to $35 7 million for the comparable prior year period. The decrease in revenues was primarily due to 1 million $5 decrease in <unk> revenues, primarily due to completion.

Paul Josephs: With respect to our second strategic goal, which is the advancement of our pipeline towards commercialization. Several important milestones were achieved during the quarter, giving us great optimism for this important objective. as previously disclosed. Ten of Lifecore's late-stage pipeline programs are poised for potential FDA approval and commercialization by 2028. And while there is no guarantee that they will all reach the finish line, even a modest subset of this group could generate substantial and impactful growth for the company in the midterm. During the quarter, our project management team signed statements of work with multiple partners in our late-stage pipeline, which will continue to move these programs closer to commercialization.

Paul Joseph: And our cash balance was strengthened through the sale of our unused spillane.

Paul Joseph: Lastly, significant improvements and efficiencies were incorporated throughout our business.

Paul Joseph: Enhance our overall operations and improve our margins.

Paul Joseph: I will provide additional details on business development and operations for the period following an overview of our third quarter fiscal 2025 financial results.

Ryan: A discreet developed in revenue project life cycles, and timing of customer projects offset by our hyaluronic acid or HCA manufacturing revenues, which increased 1 million primarily from increased demand from our customers due to their supply chain initiatives.

Ryan: With that I will turn the call over to Ryan.

Ryan: Thank you Paul in conjunction with my comments I'd like to recommend that participants refer to <unk> Form 10-Q filings with the Securities and Exchange Commission, which we filed today.

Ryan: Gross profit for the three months ended February 23, 2025 was $9 8 million compared to $11 9 million for the same period last year.

I'll now go over our results for the third quarter and nine months ended February 23, 2025, beginning with results for the quarter.

Ryan: The $2 million decline in gross profit is due to a $3 million decrease in <unk> gross profit primarily due to prior year adjustments of inventories to their net realizable value and lower development revenue offset by a $1 million increase in IHA manufacturing gross profit due to increased.

Paul Josephs: This includes a significant statement of work with a large multinational partner. Separately, one of the aforementioned programs is committed now to advancing to a process performance qualification or PPQ campaign at Lifecore in late 2025 or early 2026. TPQ programs are particularly important as they are a pre-commercialization requirement.

Ryan: <unk> and manufacturing variances.

Ryan: Selling general and administrative expenses for the three months ended February 23, 2025, or $10 1 million compared to $9 8 million for the same period last year.

Ryan: A discrete development revenue project life cycles, and timing of customer projects offset by our hyaluronic acid or manufacturing revenues, which increased $1 million primarily from increased demand from our customers due to their supply chain initiatives.

Ryan: Excluding the increase in stock based compensation SG&A decreased by $7 million due to lower finance and accounting consulting.

Paul Josephs: And while we caution that the execution of a PPQ campaign is only the beginning of a one- to two-year journey towards commercial approval and subsequent manufacturing, we cannot understate the importance that we believe such programs may have on our growth now and in the future, as we expect they will drive an increase in revenue, capacity utilization, and ultimately an improvement in our margins. For more information, visit www.fema.gov We are pleased with the advancement of these late stage programs and believe the progress during the quarter continues to support our expectations for commercialization of the programs in the midterm.

Ryan: Gross profit for the three months ended February 23, 2025 was $9 8 million compared to $11 9 million for the same period last year.

Ryan: Also included in SG&A expenses for the current period is $2 2 million primarily related to litigation expenses related to an activist investor matter and as Securities class action lawsuit with.

Ryan: The $2 million decline in gross profit is due to a 3 million dollar decrease in <unk> gross profit primarily due to prior year adjustments of inventories to their net realizable value and lower development revenue offset by a $1 million increase in <unk>.

Ryan: The prior period included $2 3 million, primarily related to incremental audit and consulting fees related to the financial restatement and expenses related to the divestiture of curation foods.

Ryan: Manufacturing gross profit due to increased volumes and manufacturing variances.

Ryan: For the three months ended February 23, 2025, the company recorded a net loss of $14 8 million or 47 loss per diluted share as compared to net income of $15 6 million and 42 cents of income per diluted share for the same period last year, which included a one time favorable 21.

Ryan: Selling general and administrative expenses for the three months ended February 23, 2025 were $10 1 million compared to $9 8 million for the same period last year, excluding the increase in stock based compensation SG&A decreased by $7 million due to lower finance and accounting consult.

Paul Josephs: Turning now to the third area of our strategic growth focus. Our team continues to sign new and impactful business at various stages of development. Lifecore has added six new customers during the first nine months of our fiscal 2025. Notably, this includes a new agreement with Nursem Laboratories signed during the third quarter. Nursing selected Lifecore to provide CDMO services focused on supporting clinical development of its lead campaign, NRS 033. NRS 033 is a novel treatment for opioid use disorder and alcohol use disorder that is currently entering phase two in clinical development. Under the newly signed agreement, Lifecore will continue to provide nursing with filled syringes for use in clinical development of NRS 033.

Ryan: Noncash fair market value adjustments to the debt derivative liability associated with the term loan credit facility and.

<unk>.

Ryan: Also included in SG&A expenses for the current period is $2 2 million, primarily related to litigation expenses related to an activist investor matter and as Securities class action lawsuit.

Ryan: Adjusted EBITDA for the three months ended February 23, 2025 was $5 7 million a decrease of <unk> 7 million compared to $6 4 million in the prior year period.

Ryan: Prior period included $2 3 million, primarily related to incremental audit and consulting fees related to the financial restatement and expenses related to the divestiture of curation foods.

Ryan: The decrease in adjusted EBITDA was primarily due to the decrease in gross profit exclusive of inventory and equipment write off of $1 1 million.

Ryan: I will now review results for the first nine months of fiscal 2025.

For the three months ended February 23, 2025, the company recorded a net loss of $14 8 million or <unk> 47 loss per diluted share as compared to net income of $15 6 million and <unk> 42 cents of income per diluted share for the same period last year, which included a one time favorable 'twenty.

Ryan: Revenues for the nine months ended February 23, 2025 were $92 4 million, an increase of 2% compared to $90 4 million for the comparable prior year period. The increase in revenues was due to a $3 million increase in Asia manufacturing demand, primarily due to our largest cut.

Paul Josephs: Subsequent to the quarter end, we added a seventh new customer, signing an agreement with Humanetics that is focused in on the company's exciting Bio 300 program. We will be responsible for conducting a tech transfer of the existing fill finish process for Bio 300, including a formulation development, gap assessment, and filling of a pilot net. This will be followed by analytical method work, including feasibility assessments designed to estimate future development work for the product candidate. Bio 300 is the exact type of promising cutting edge biopharmaceutical product we strive to support, and we are excited to have been selected by Humanetics to provide these services.

Ryan: $1 million noncash fair market value adjustment to the debt derivative liability associated with the term loan credit facility.

Ryan: <unk> supply chain initiatives. This was slightly offset by a decrease in <unk> revenues, primarily due to completion of discrete development revenue project life cycles and timing of customer projects.

Ryan: Adjusted EBITDA for the three months ended February 23, 2025 was $5 7 million a decrease of <unk> 7 million compared to $6 4 million in the prior year period.

Ryan: Gross profit for the nine months ended February 23, 2025 was $26 3 million compared to $24 6 million for the same period last year.

Ryan: The decrease in adjusted EBITDA was primarily due to the decrease in gross profit exclusive of inventory and equipment write off of $1 1 million.

Ryan: The $1 $7 million improvement in gross profit is primarily due to an increase in manufacturing gross profit due to increased volumes and manufacturing variances.

Ryan: I will now review results for the first nine months of fiscal 2025.

Ryan: <unk> gross profit was essentially flat year over year due to offsetting factors.

Paul Josephs: Though Lifecore's past focus was on complex, highly viscous formulations, our new business development team is dedicated to the promotion of our broad capabilities to best position the company to support products across multiple modalities. Given this goal, we are very pleased with the continued expansion and evolution of our new business pipeline. Each of these programs is currently undergoing qualification review, and we believe we will be successful in adding multiple new programs to our manufacturing pipeline in the months ahead.

Ryan: Selling general and administrative expenses for the nine months ended February 23, 2025 were $35 1 million compared to $28 2 million for the same period last year, excluding a $3 $8 million increase in stock based compensation SG&A is up $3 1 million primarily from <unk>.

Ryan: Shifting of legacy matters included in SG&A for the current period is $9 $5 million, primarily related to various legacy legal matters and costs associated with the financial restatement.

Ryan: Gross profit for the nine months ended February 23, 2025 was $26 3 million compared to $24 6 million for the same period last year.

Ryan: The prior period included $7 2 million, primarily related to incremental audit and consulting fees related to the financial restatement and expenses related to strategic alternatives and the divestiture of curation foods.

Ryan: The $1 $7 million improvement in gross profit is primarily due to an increase in manufacturing gross profit due to the increased volumes and manufacturing variances.

Paul Josephs: I would now like to shift the focus toward the important organizational strategies and measures that we are actively implementing to enhance our sustainability and profitability. Specifically, we are reducing operational expenses, facilitating a performance-driven culture, and strengthening our recognized commitment to quality. While we made progress in each of these initiatives during the quarter, I would like to highlight the substantial improvements that we have made in reducing the cost of our operations over the past few months.

Ryan: <unk> gross profit was essentially flat year over year due to offsetting factors.

Ryan: For the nine months ended February 23, 2025, the company recorded a net loss of $37 6 million and $1 24 of loss per diluted share as compared to net income of $19 1 million and 52 cents of income per diluted share for the same period last year, which included a one time favorable <unk>.

Ryan: Selling general and administrative expenses for the nine months ended February 23, 2025 were $35 1 million compared to $28 2 million for the same period last year.

Ryan: Excluding a $3 $8 million increase in stock based compensation SG&A is up $3 1 million primarily from a shift of legacy matters included in SG&A for the current period is $9 $5 million, primarily related to various legacy legal matters and costs associated with the financial restatement.

Ryan: $41 $9 million noncash fair market value adjustment to the debt derivative liability associated with the term loan credit facility adjust.

Paul Josephs: First and foremost, Lifecore utilizes state-of-the-art technologies and employs what we believe to be the best CDMO talent in the industry. Our commitment to quality is unwavering, and we will never reduce the cost required to maintain the high standards that our customers and the patients they serve expect. With that said, our new leadership team reviews monthly metrics, trends, and opportunities. We continue to identify meaningful areas that can improve our efficiency and productivity without compromising the quality service we deliver. We have and are continuing to take action to capitalize on these opportunities and continue to reduce operational expenses as a percent of our overall revenue.

Ryan: Adjusted EBITDA for the nine months ended February 23, 2025 was $10 4 million, a <unk> 6 million increase from $9 8 million in the prior year period. The increase in adjusted EBITDA was primarily due to the increase in gross profit exclusive of inventory and equipment write off of $2 8 million.

Ryan: The prior year period included $7 2 million, primarily related to incremental audit and consulting fees related to the financial restatement and expenses related to strategic alternatives and the divestiture of curation foods for.

Ryan: Our financial performance for the quarter was steady and consistent with guidance.

Ryan: As such we are reiterating our financial guidance for the fiscal year and expect revenue to be approximately $126 $5 million to $130 million and adjusted EBITDA to be in the range of $19 million to $21 million and with our cash balance bolstered by the sale of our Isolator filler, we believe we remain well positioned for future growth.

Ryan: $1 $9 million noncash.

Ryan: Noncash fair market value adjustment to the debt derivative liability associated with the term loan credit facility.

Paul Josephs: Specifically, our product production efficiencies have continued to improve throughout the fiscal year. A prime example is the better coordination between our supply chain and operations team, which has resulted in a less volatile production schedule that has allowed us to better manage our workforce without compromising customer service. In addition, via enhanced training and improved management processes, we are experiencing improved productivity in all direct labor areas, aseptic, packaging, and fermentation. Finally, we have also improved our fermentation processing efficiency, which has resulted in an increase in our yield and less waste.

Ryan: This concludes my financial overview for those interested in reviewing our non-GAAP reconciliations. Please refer to our 8-K filing or the press release issued today I'll now turn the call back over to Paul for an update on operations and achievements during the period.

Ryan: Adjusted EBITDA for the nine months ended February 23, 2025 was $10 4 million, a <unk> 6 million increase from $9 $8 million in the prior year period.

Paul: Thank you Ryan.

Ryan: The increase in adjusted EBITDA was primarily due to the increase in gross profit exclusive of inventory and equipment write off of <unk> 8 million.

Paul: During the third quarter, our team continued to successfully execute against our plan that was outlined during our Investor day presentation last November.

Ryan: Our financial performance for the quarter was steady and consistent with guidance as such we are reiterating our financial guidance for the fiscal year and expect revenue to be approximately 126, five to a $130 million and adjusted EBITDA to be in the range of 19% to $21 million and with our cash balance bolstered by the <unk>.

Paul: This strategy is focused on driving a 12% revenue CAGR and increasing EBITDA margins over 25% over the next few years.

Paul: Key contributors to this growth plan include maximizing our existing customer business. The advancement of programs currently within our late stage development pipeline towards commercialization and finally, winning new and impactful business that will continue to fill our project pipeline primarily stage work to commercialization.

Ryan: Sales of our Isolator filler, we believe we remain well positioned for future growth.

Paul Josephs: With respect to our business operations, we have eliminated numerous consulting relationships in favor of hiring the right number of employees in-house. For example, we have now rebuilt our finance team by eliminating unnecessary outside parties and hiring a small number of highly experienced and talented personnel. Our new finance team is focused, efficient, and more than keeping us in compliance with all regulatory requirements, and has quickly added value to our overall business.

Ryan: This concludes my financial overview for those interested in reviewing our non-GAAP reconciliations please refer to our 8-K filing or the press release issued today.

Paul: During the third quarter, we continued to make substantive progress in each of these core areas.

Paul Joseph: Now I'll turn the call back over to Paul for an update on operations and achievements during the period.

Paul: First with respect to maximizing our existing customer business or our team continued to make meaningful progress on an expansion program with one of our large multinational partners.

Paul Joseph: Thank you Ryan.

Paul Joseph: During the third quarter, our team continued to successfully execute against our plan that was outlined during our Investor day presentation last November.

Paul: As we communicated in our 2024 Investor Day. This partnership is poised to deliver a significant inflection point in volume demand in 2027.

Paul Joseph: This strategy is focused on driving a 12% revenue CAGR and increasing EBITDA margins to over 25% over the next few years.

Paul Josephs: In addition to common sense cost cutting measures, we have also made key investments that we that will further enhance our operations. One example is recent implementation of live production monitors. The data captured by this system assists management and assessing performance and measuring output, allowing our team to make adjustments in real time to increase efficiency. With an eye to efficiency, our team is implementing similar enhancements throughout our company, including updating of our pricing with customers in order to account for inflationary toxins.

Paul Joseph: Key contributors to this growth plan include maximizing our existing customer business. The advancement of programs currently within our late stage development pipeline towards commercialization and finally, winning new and impactful business that will continue to fill our project pipeline primarily stage work to commercialization.

Paul: Most impactful project remains on target.

Paul: We are excited to expand our business with our partner and serve their needs in a more meaningful way.

Paul: There are continued and growing confidence in <unk> as a partner continues to serve as validation for the quality work of our team.

Paul: With respect.

Paul: <unk> to our second strategic goal, which is the advancement of our pipeline towards commercialization.

Paul Joseph: <unk>.

Paul Joseph: During the third quarter, we continued to make substantive progress in each of these core areas.

Paul: Several important milestones were achieved during the quarter, giving.

Paul Joseph: First with respect to maximizing our existing customer business or our team.

Paul Josephs: In closing, I believe it is evident that we are executing aggressively against the plan we articulated last November. We are working with existing customers to accommodate their future manufacturing needs. We are supporting our late stage clients as they advance towards potential regulatory approval and commercialization, and we are successfully pursuing new business opportunities in an expanded range of products and formulations across multiple modalities.

Paul: Giving us great optimism for this important objective.

Paul Joseph: To make meaningful progress on our expansion program with one of our large multinational partners.

Paul: As previously disclosed.

Paul: 10 of <unk> late stage pipeline programs are poised for potential FDA approval and commercialization by 2028.

Paul Joseph: As we communicated in our 2024 Investor Day. This partnership is poised to deliver a significant inflection point in volume demand in 2027.

Paul: And while there is no guarantee that they will all reached the finish line even a modest subset of this group could generate substantial and then powerful growth for the company in the midterm.

Paul Joseph: And Thats impactful project remains on target.

Paul Joseph: We're excited to expand our business with our partner and serve their needs in a more meaningful way.

Paul: During the quarter, our project management team signed statements of work with multiple partners in our late stage pipeline, which will continue to move these programs closer to commercialization.

Paul Josephs: Further, we are reorganizing our business to better support the value creation derived from our three-pronged growth strategy. Steps taken to date have resulted in newfound efficiencies in performance across our workforce and increased production outputs. This has been done without disruption to our business or those of our customers, and we continue to deliver exceptional quality throughout the organization.

Paul Joseph: Our continued and growing confidence in <unk> as a partner continues to serve as validation for the quality work of our team.

Paul Joseph: With respect to our second strategic goal, which is the advancement of our pipeline towards commercialization.

Paul: This includes a significant statement of work with a large multinational partner.

Paul: Separately one of the aforementioned program is committed now to advancing to our process performance qualification or <unk> campaign at lifeboat in late 2025 or early 2026.

Paul Joseph: Several important milestones were achieved during the quarter.

Paul Joseph: US great optimism for this important objective.

Paul Joseph: As previously disclosed tenant.

Paul Josephs: Looking ahead, we believe that our plan and actions today are positioning us well to meet the goals and objectives that we have articulated for fiscal 2025.

Paul Joseph: <unk> late stage pipeline programs are poised for potential FDA approval and commercialization by 2028.

Paul: <unk> Q programs are particularly important as they are pretty group commercialization requirement.

Paul Josephs: We look forward to reporting on our progress in the coming months.

Paul Joseph: And while there is no guarantee that they will all reach the finish line, even a modest subset of this group could generate substantial and then powerful growth for the company in the midterm.

Paul: And while we caution that the execution of our <unk> campaign is only the beginning of a one to two year journey towards commercial approval and subsequent manufacturing we cannot understate the importance that we believe such programs may have on our growth now and in the future.

Paul Josephs: This concludes our prepared remarks for today.

Unknown Executive: Operators, you may now open the call for questions. Thank you. If you would like to ask a question, please press star 11 on your telephone. You will then hear an automated message advising your hand is raised. If you would like to withdraw your question, please press star one one again.

Paul Joseph: During the quarter, our project management team signed statements of work with multiple partners in our late stage pipeline, which will continue to move these programs closer to commercialization.

Michael Petusky: One moment for the first question. And our first question will be coming from the line of Matthew Hewitt of Craig Callum Capital Group. Your line is open. Good afternoon, and thank you for taking the questions. Obviously, a front of mind for everybody over the last 24 hours is on the tariff front. And while it's at least at the moment clear that pharmaceuticals are not going to be impacted or hit with there has been chatter about wanting or the desire to bring back drug manufacturing in the US. And I'm just curious what you've heard over the past couple of months, from prospective customers that you've been talking about?

Paul: As we expect they will drive an increase in revenue.

Paul Joseph: This includes a significant statement of work with a large multinational partner.

Paul: Passenger utilization and ultimately an improvement in our margin.

Paul Joseph: Separately one of the aforementioned programs is committed now to advancing to our process performance qualification or PQ campaign at life Corp. In late 2025 or early 2026.

Paul: We are pleased with the advancement of these late stage programs and believe the progress during the quarter continues to support our expectations for commercialization of the programs in the mid term.

Paul: Turning now to the third area of our strategic growth focus our team continues to sign new and impactful business at various stages of development.

Paul Joseph: <unk> Q programs are particularly important as they are <unk> commercialization that requirement.

Speaker Change: <unk> added six new customers during the first nine months of our fiscal 2025.

Paul Joseph: And while we caution that the execution of our <unk> campaign is only the beginning of a one to two year journey towards commercial approval and subsequent manufacturing we cannot understate the importance that we believe such programs may have on our growth now and in the future.

Speaker Change: Notably this includes a new agreement with <unk> laboratories signed during the third quarter.

Paul Josephs: And are you seeing that desire and willingness to, you know, repatriate drug manufacturing year? And what does that mean for you as you look at the remainder of this calendar year?

Speaker Change: <unk> selected <unk> to provide <unk> services focused on supporting clinical development of its lead campaign and Rs 033.

Paul Joseph: As we expect they will drive an increase in revenue.

Paul Josephs: Good afternoon. Thanks for the question.

Paul Joseph: Passenger utilization and ultimately an improvement in our margins.

Speaker Change: <unk> 033 is a novel treatment for opioid use disorder and alcohol use disorder that is currently entering phase III clinical development.

Paul Josephs: Last month, we were at one of our largest conferences, the drug, what's called DCAT in New York, Drug, Chemical and Associated Technologies Conference. We met with a number of large multinational pharmaceutical companies. In my past number of years I've been in this business, I've never heard as much discussion, a lot of it's theoretical around Western manufacturing and the importance of domestic manufacturing, driven a lot by what we're characterizing as administrative uncertainty. So nothing quantitative to move on today, but certainly from a qualitative perspective, based on the near-term discussions that we've had, are certainly top of mind for a lot of our customers and prospects.

Paul Joseph: We are pleased with the advancement of these late stage program and believe the progress during the quarter continues to support our expectations for commercialization of the programs in the mid term.

Speaker Change: Under the newly signed agreement LIBOR core will continue to provide <unk> with filled syringes for use in clinical development of Mris 033.

Paul Joseph: Turning now to the third area of our strategic growth focus our team continues to sign new and impactful business at various stages of development.

Speaker Change: Subsequent to the quarter end, we added seven new customers signing an agreement with kubernetes that has focused on the company's exciting buyout 300 program.

Paul Joseph: <unk> added six new customers during the first nine months of our fiscal 2025.

Paul Joseph: Notably this included a new agreement with <unk> laboratories signed during the third quarter.

Speaker Change: We will be responsible for conducting a tech transfer of the existing fill finish process for <unk> 300, including a formulation development GAAP assessment and filling up a pilot batch.

Paul Joseph: There are some selected <unk> to provide <unk> services focused on supporting clinical development of its lead campaign and Rs zero III <unk> III.

Speaker Change: And this will be followed by analytical method work, including feasibility assessments designed to estimate future development work for the product candidate.

Michael Petusky: That's helpful. Thank you.

Paul Josephs: And then maybe just, and I'm sorry if I miss this, but the human ethics contract post quarter that you signed, congratulations. What stage is that also a later stage, obviously, if it's a tech transfer, but how should we be thinking about that? Think of it as a phase two, Matt. It was a site transfer from another contract manufacturer where they thought there was a better value proposition to work with Lifecore Biomedical. So we're excited to work with them in our backyard and it's a promising project. We're excited. That's great.

Paul Joseph: 033 is a novel treatment for opioid use disorder and alcohol use disorder that is currently entering phase III clinical development.

Speaker Change: <unk> 300 is the exact type of promising cutting edge biopharmaceutical product, we strive to support.

For the newly signed agreement LIBOR core will continue to provide <unk> with built surrendered for use in clinical development of Srs zero three.

Speaker Change: And we are excited to have been selected by human genetics to provide these services.

Speaker Change: Though life course, Pos focus was on complex highly viscous formulations or new business development team is dedicated to the promotion of our broad capabilities to best position the company to support products across multiple modalities.

Paul Joseph: Subsequent to the quarter end, we added seven new customer signing an agreement with kubernetes that has focused on the company's exciting bio 300 program.

Paul Joseph: He will be responsible for conducting a tech transfer of the existing fill finish process for <unk> 300, including a formulation development GAAP assessment and filling up a pilot batch.

Speaker Change: Given this goal we are very pleased with the continued expansion and evolution of our new business pipeline.

Michael Petusky: One moment for the next question. And our next question will be coming from the line of Michael Petusky of Barrington Research. Your line is open.

Speaker Change: Each of these programs is currently undergoing qualification review and we believe we will be successful in adding multiple new program to our manufacturing pipeline in the months ahead.

Paul Joseph: This will be followed by analytical method work, including feasibility assessment.

Paul Joseph: <unk> to estimate future development work for the product candidate.

Michael Petusky: Hey, good afternoon, guys. So, Paul, I guess, if you if you touched on this, I missed it in the prepared remarks, you know, last quarter, you talked about, hey, we've got, you know, we've identified 50 opportunities, 30% of these are multinationals. So I'm just wondering, you know, roughly 90 days later, you know, is there anything you can sort of say about, you know, those conversations or progress or how how, you know, your capabilities are sort of being seen by, by particularly some of the bigger, bigger guys, but, you know, anything you want to say about, you know, as you try to sort of build the.

Speaker Change: I would now like to shift the focus to the important organizational strategy. The measures that we are actively implementing to enhance our sustainability and profitability.

Paul Joseph: <unk> 300 is the exact type of promising cutting edge biopharmaceutical product, we strive to support.

Paul Joseph: And we are excited to have been selected by human genetics to provide these services.

Speaker Change: Specifically, we are reducing operational expenses, facilitating a performance driven culture and strengthening our recognized commitment to quality.

Paul Joseph: Though life course pass focus was on complex highly viscous formulations or new business development team is dedicated to the promotion of our broad capabilities to best position the company to support products across multiple modalities.

Speaker Change: While we made progress in each of these initiatives during the quarter I would like to highlight the substantial improvements that we have made in reducing the cost of our operations over the past few months.

Paul Joseph: Given this goal we are very pleased with the continued expansion and evolution of our new business pipeline.

Speaker Change: First and foremost like core utilizes state of the art technologies.

Paul Josephs: Thanks for the question, Mike. Yeah, we continue to be pleased with the progress and I think composition of our pipeline. Obviously, now the key is for us to continue to move those programs through the various stages of the sales process towards closure. I will say from a leading indicator perspective, we had, I believe it's four large multinationals on site at Lifecore during the quarter, which is three of those in January, which is a big number for us, relatively speaking. So it tells me that our strategy is working. And certainly at last month at DCAT, we certainly met with more large multinational companies than heretofore the organization has met with.

Paul Joseph: Each of these programs is currently undergoing qualification review and we believe we will be successful in adding multiple new program to our manufacturing pipeline in the months ahead.

Speaker Change: And employees, what we believe to be the best CMO talent in the industry.

Speaker Change: Our commitment to quality is unwavering and we will never reduce the costs required to maintain the high standards that our customers and the patients they serve expect.

Paul Joseph: I would now like to shift the focus to the important organizational strategies and measures that we are actively implementing to enhance our sustainability and profitability.

Speaker Change: With that said, our new leadership team reviews monthly metrics trends and opportunities. We continue to identify a meaningfully meaningful areas that can improve our efficiency and productivity without compromising the quality service we deliver.

Paul Joseph: Specifically, we are reducing operational expenses, facilitating a performance driven culture and strengthening our recognized commitment to quality.

Speaker Change: And are continuing to take action to capitalize on these opportunities and continue to reduce operational expenses as a percent of our overall revenue.

Paul Joseph: While we made progress in each of these initiatives during the quarter I would like to highlight the substantial improvements that we've made in reducing the cost of our operations over the past few months.

Speaker Change: Specifically, our product production efficiencies have continued to improve throughout the fiscal year.

Paul Joseph: First and foremost light core utilizes state of the art technologies and employed what we believe to be the best CMO talent in the industry.

Paul Josephs: One of the busiest schedules that I've been a part of and based on the feedback from the legacy team, certainly the quality of the companies we were meeting with was better than it's ever been.

Speaker Change: A prime example is the better coordination between our supply chain and operations team, which has a resulted in a less volatile production schedule that has allowed us to better manage our work.

Paul Joseph: Our commitment to quality is unwavering and we will never reduce the costs required to maintain the high standards that our customers and the patients they serve expect.

Michael Petusky: A quick one for Ryan. Ryan, I haven't had a chance to go through the queue yet. What was the cash flow from Ops and CapEx in the order, if you have it?

Speaker Change: Of course without compromising customer service.

Speaker Change: In addition via enhanced training and the improved management processes, we are experiencing improved productivity and all direct labor areas.

Paul Joseph: With that said, our new leadership team reviewed monthly metrics trends and opportunities. We continue to identify a meaningfully meaningful areas that can improve our efficiency and productivity without compromising the quality service we deliver.

Ryan Lake: Yeah, thanks for the question, Michael. So, you know, we saw some daylight this quarter and had positive cash flow from operations of about $2 million. And this is despite some one time non recurring expenses that we had from legacy legal matters of over $2 million. And there was still a portion of the filler as well that had not been paid for. So, looking at the proceeds and capital spending items net for the quarter within investing activities. You know, it was. a net for the quarter within investing activities. You know, I believe we were pretty close to free cash flow break even for the quarter.

Speaker Change: Septic packaging and fermentation.

Speaker Change: Finally, we have also improved our fermentation and processing efficiencies, which has resulted in an increase in our yield and less waste.

Paul Joseph: We have and are continuing to take action to capitalize on these opportunities and continue to reduce operational expenses as a percent of our overall revenue.

Speaker Change: With respect to our business operations, we have eliminated numerous consulting relationship.

Paul Joseph: Specifically, our product production efficiencies have continued to improve throughout the fiscal year.

Speaker Change: In favor of hiring the right number of employees in house for.

Speaker Change: For example, we have now rebuilt our finance team by eliminating unnecessary outside parties and the hiring of a small number of highly experienced and talented personnel.

Paul Joseph: Prime example is the better coordination between our supply chain and operations team, which has a resulted in a less volatile production schedule that has allowed us to better manage our workforce without compromising customer service.

Speaker Change: Our new finance team is focused efficient and more than keeping us in compliance with all regulatory requirements and is quickly added value to our overall business.

Ryan Lake: I just want to make sure I'm Interpreting that comment correctly. So CapEx was roughly around 2 million as well. Yeah, net of roughly three and a half million of the filler that was paid for. So it looked like CapEx spending was up a little bit, but it wasn't you have to net it against some of the proceeds that we received from the filler.

Paul Joseph: In addition, we enhanced training and the improved management processes, we are experiencing improved productivity and all direct labor areas aseptic packaging and fermentation.

Speaker Change: In addition to common sense cost cutting measures. We have also made key investments that we that will further enhance our operations.

Paul Joseph: Finally, we have also improved our fermentation and processing efficiencies, which has resulted in an increase in our yield and less waste.

Speaker Change: One example is a recent implementation of live production monitoring.

Ryan Lake: Any outlook just on, I guess, the, you know, remainder of the fiscal being the last quarter in terms of, I guess, expectations around Cashflow from Ops or free cash generation. Any, any thoughts? Yeah, so, you know, I think importantly, too, to note is, you know, we ended the Q3 with a little over $30 million in liquidity, close to $31 million. So, including cash off the balance sheet was a little over $5 million, and then availability under our revolver was a little over $25 million. So, just to reiterate, we had used approximately $17 million of the proceeds from the pipe and filler sale to reduce the revolver to save on interest expense, while maintaining the same level of liquidity.

Speaker Change: The data captured by the system assist management in assessing performance and measuring output, allowing our teams to make adjustments in real time to increase efficiencies.

Paul Joseph: With respect to our business operations, we have eliminated numerous consulting relationship.

Paul Joseph: In favor of hiring the right number of employees in house.

Speaker Change: With an eye to efficiency our team is implementing similar enhancements throughout our company, including updating of our pricing with customers in order to account for inflationary factors.

Paul Joseph: For example, we have now rebuilt our finance team by eliminating unnecessary outside parties and the hiring of a small number of highly experienced and talented personnel.

Speaker Change: In closing I believe it is evident that we are executing aggressively against the plan we articulated last November.

Paul Joseph: Our new finance team is focused efficient and more than keeping us in compliance with all regulatory requirements and is quickly added value to our overall business.

Speaker Change: We are working with existing customers to accommodate their future manufacturing.

Speaker Change: We are supporting our late stage clients as they advance towards potential regulatory approval and commercialization and we are successfully pursuing new business opportunities and an expanded range of products and formulations across multiple modalities.

Paul Joseph: In addition to the common cost cutting measures. We have also made key investments that we that will further enhance our operations.

Paul Joseph: One example is a recent implementation of live production monitoring.

Ryan Lake: So, we expect this to continue to improve as we receive the remaining $10 million in proceeds from the filler sale. And as we think about kind of the remainder of the year, you know, we're still expecting to be cash flow positive from operations in the second half. And certainly, depending on the course of timing of any of the one-time non-recurring items, we expect to see a pretty dramatic improvement in free cash flow altogether in the second half of the year. And depending on the timing of capital expenditures, I think, as you'll recall, Michael, we previously communicated we'd expect to be free cash flow neutral for the second half.

Paul Joseph: The data captured by the system assist management in assessing performance and measuring output, allowing our team to make adjustments in real time to increase efficiencies.

Further we are reorganizing our business to better support the value creation derived from our three pronged growth strategy.

Paul Joseph: With an eye to efficiency our team is implementing similar enhancements throughout our company, including updating of our pricing with customers in order to account for inflationary factors.

Speaker Change: Steps taken to date have resulted in new found efficiencies and performance across our workforce and increased production outputs.

Speaker Change: This has been done without disruption to our business or those of our customers and we continue to deliver exceptional quality throughout the organization.

Paul Joseph: In closing I believe it is evident that we are executing aggressively against the plan we articulated last November.

Looking ahead, we believe that our plan and actions today are positioning us well to meet the goals and objectives that we have articulated for fiscal 2025.

Paul Joseph: We are working with existing customers to accommodate their future manufacturing.

Paul Joseph: We are supporting our late stage clients as they advance towards potential regulatory approval and commercialization and we are successfully pursuing new business opportunities in an expanded range of products and formulations across multiple modalities.

Speaker Change: We look forward to reporting on our progress in coming months.

Ryan Lake: And we still believe that and perhaps even slightly positive.

Speaker Change: This concludes our prepared remarks for today operator, you may now open the call for questions.

Ryan Lake: And then I guess, you know, you've made, I guess, a comment or two around, you know, continuing to look at reducing operating expenses. And obviously, you're making really good progress on that SG&A line. I'm just curious, should we look at sort of Q3's SG&A level as sort of the run rate? Or do you feel like there's material improvement even that you can get off of, you know, what has been pretty darn good improvement in a short period of time?

Speaker Change: Thank you if you would like to ask a question. Please press star one on your telephone.

Paul Joseph: Further we are reorganizing our business to better support the value creation derived from our three pronged growth strategy.

Speaker Change: You will then hear an automated message advising your hand is raised if you would like to withdraw your question. Please press star one again, one moment for the first question.

Paul Joseph: Steps taken to date have resulted in new found efficiencies and performance across our workforce and increased production outputs.

And our first question will come from the line of Matthew Hewitt.

Paul Joseph: This has been done without disruption to our business or those of our customers and we continue to deliver exceptional quality throughout the organization.

Speaker Change: Calum Capital Group your line is open.

Ryan Lake: That's a great question. So, you know, SG&A was down sequentially, and it's been trending down ever since the first quarter. You know, we're still expecting to see G&A spend decrease overall in the second half of the year compared to the first half. And, you know, as we mentioned earlier, we've made some great progress over the past couple of months, off-boarding consultants, and also the expectations around stock-based compensation. We're expecting that to continue to trend down. You know, I think one of the things to look at as well is, you know, what we tried to call out were some of the legacy legal matters and items. And if you look at the quarter, I mean, that was over $2 million.

Matthew Hewitt: Good afternoon, and thank you for taking the questions obviously front of mind for everybody over the last 24 hours is on the tariff front and while it's at least at the moment clear that pharmaceuticals are not going to be impacted or with attacks. There has been chatter.

Paul Joseph: Looking ahead, we believe that our plan and actions today are positioning us well to meet the goals and objectives that we have articulated for fiscal 2025.

Paul Joseph: We look forward to reporting on our progress in coming months.

Paul Joseph: This concludes our prepared remarks for today operator, you may now open the call for questions.

Matthew Hewitt: About wanting or the desire to bring back drug manufacturing in the U S and I'm just curious what you've heard over the past couple of months from prospective customers that <unk> been talking about and are you seeing that desire and willingness to.

Paul Joseph: Thank you if you would like to ask a question. Please press star one on your telephone.

Paul Joseph: You will then hear an automated message advising your hand is raised if you would like to withdraw your question. Please press star one again, one moment for the first question.

Matthew Hewitt: Repatriate drug manufacturing here and what does that mean for you as you look at the remainder of this calendar year.

Matthew Hewitt: Good afternoon, and thanks for the question.

Matthew Hewitt: And our first question will come from the line of Matthew Hewitt.

Matthew Hewitt: Last month, we were at one of our largest conferences the drug.

Ryan Lake: I mean, once those things are behind us, right, we should see a pretty dramatic decrease in overall SG&A spend. And you'll also have noticed within the quarter, there's about a $700,000 improvement due to lower finance and accounting consulting compared to the prior year.

Speaker Change: Calum Capital Group your line is open.

Matthew Hewitt: Called <unk> in New York.

Speaker Change: Good afternoon, and thank you for taking the questions obviously front of mind for everybody over the last 24 hours is on the tariff front and while it's at least at the moment, it's clear that pharmaceuticals are not going to be impacted or with attacks.

Matthew Hewitt: <unk> chemical and associated technologies conference and we met with a number of large multinational pharmaceutical companies.

Matthew Hewitt: And I had in my past number of years I've been in this business I've never heard as much discussion a lot of it's theoretical.

Speaker Change: There has been chatter.

Michael Petusky: All right, very good. Thanks, guys.

Matthew Hewitt: Around western manufacturing and the importance of domestic manufacturing driven a lot by what we're characterizing as administrative uncertainty.

Speaker Change: About wanting or the desire to bring back drug manufacturing in the U S and I'm just curious what you've heard over the past couple of months from prospective customers that <unk> been talking about and are you seeing that desire and willingness to.

Unknown Executive: Thank you and that does conclude today's Q&A session.

Unknown Executive: I would like to turn the call over to Sorry, turn the call back over for closing remarks. Thank you. Thank you, operator.

Matthew Hewitt: No.

Matthew Hewitt: Nothing quantitative to move on today, but certainly from a qualitative perspective based on the near term discussions that we've had all certainly top of mind for a lot of our customers and prospects.

Speaker Change: Repatriate drug manufacturing here and what does that mean for you as you look at the remainder of this calendar year.

Paul Josephs: In closing, I wish to thank our investors who continue to support our growth strategy for the future. I also wish to acknowledge our customers and collaborators who continue to entrust Lifecore as their partner of choice. And most importantly, I wish to extend my sincere gratitude to our incredibly hardworking and talented team for driving each of the successes that we have at Lifecore. With the support of each of these stakeholders and with our strategic priorities, both clear and achievable, we believe we are well positioned to achieve growth and sustainable profitability in the coming years.

Matthew Hewitt: That's helpful. Thank you and then maybe just.

Speaker Change: Good afternoon, and thanks for the question.

Speaker Change: Last month, we were at one of our largest conferences the drug.

Matthew Hewitt: And I'm, sorry, if I missed this but the human ethics contract post quarter that you're saying congratulations.

Speaker Change: On <unk>, and New York drugs, chemical and associated Technologies Conference.

Matthew Hewitt: What stage is that also a later stage, obviously, if it's a tech transfer but how.

Speaker Change: Met with a number of large multinational pharmaceutical companies.

Matthew Hewitt: How should we be thinking about that.

Matt: Think of it as a phase III Matt.

Speaker Change: And I had in my past number of years I've been in this business I've never heard as much discussion a lot of it's theoretical.

Matthew Hewitt: Site transfer from another contract manufacturer.

Matt: They thought there was a bit better.

Matt: Our value proposition to work with like Gore biomedical So we're excited to work with them.

Speaker Change: Around western manufacturing and the importance of domestic manufacturing driven a lot by what we're characterizing as administrative uncertainty.

Unknown Executive: That concludes our call today. Thank you for participating. Thank you all for participating in today's conference call.

Matt: Our backyard.

Matt: Promising project we're excited.

Matt: That's great. Thank you.

Unknown Executive: You may now disconnect.

Speaker Change: <unk>.

Nothing quantitative to move on today, but certainly from a qualitative perspective based on the near term discussions that we've had are certainly top of mind for a lot of our customers and prospects.

Matt: Thank you. Thank you one moment for the next question.

Speaker Change: And our next question will be coming from the line of Michael <unk> of Barrington Research. Your line is open.

Speaker Change: That's helpful. Thank you and then maybe just.

Speaker Change: And I'm, sorry, if I missed this but the human ethics contract post quarter that you're saying congratulations.

Michael: Hey, good afternoon guys.

Matt: Hum.

Matt: Yes.

Speaker Change: If you touched on this I missed it in the prepared remarks last quarter, you talked about Hey, we've got.

Speaker Change: What stage is that also a later stage, obviously, if it's a tech transfer but how.

Speaker Change: How should we be thinking about that.

<unk> identified 50 opportunities, 30% of either multinational so I'm just wondering.

Matt: Think of it as a phase III Matt.

Site transfer from another contract manufacturer.

Speaker Change: Roughly 90 days later.

Speaker Change: Is there anything you can sort of say about <unk>.

They thought they were.

Matt: Our value proposition to work with like Gore biomedical So we're excited to work with them.

Speaker Change: Conversations or progress or how how your capabilities are being seen by by particularly some of the bigger bigger guys, but.

Matt: Our backyard.

Matt: Promising project we're excited.

Matt: That's great. Thank you.

Speaker Change: Anything you want to say about.

I wanted to try to sort of.

Matt: Thank you. Thank you one moment for the next question.

Speaker Change: Build the customer base. Thanks.

Mike: Yeah. Thanks, Thanks for the question Mike.

Speaker Change: Yes, we continue to be pleased with the progress.

Speaker Change: And our next question will be coming from the line of Michael <unk> of Barrington Research. Your line is open.

Mike: The composition of our pipeline obviously now.

Speaker Change: The key is for us to continue to move those programs through.

Michael: Hey, good afternoon guys.

Paul Joseph: So Paul I.

Speaker Change: Through the various stages of the sales process towards.

Speaker Change: Yes.

Speaker Change: If you touched on this I missed it in the prepared remarks last quarter, you talked about Hey, we've got.

Speaker Change: Closure, I will say from a leading indicator perspective.

Speaker Change: We had I believe it's four large multinationals on site at life core during the during the quarter, which is.

Speaker Change: We've identified 50 opportunities 30% of either multinationals I am just wondering.

Speaker Change: Roughly 90 days later.

Speaker Change: Three of those in January which is.

Speaker Change: Is there anything you can say about <unk>.

Speaker Change: Number for us.

Speaker Change: Relatively speaking so it tells me that.

Speaker Change: Conversations or progress or how your capabilities are being seen by particularly some of the bigger bigger guys, but.

Speaker Change: Our strategy is working and certainly at last last month at <unk>.

Certainly meant with more large multinational companies then here too for the organization as met with one of the busiest schedule that I've been a part of and based on the feedback from the legacy team certainly the quality of the companies in your meeting with.

Speaker Change: Anything you want to say about.

Speaker Change: Are you trying to sort of.

Speaker Change: Build the customer base.

Mike: Yeah. Thanks, Thanks for the question Mike.

Mike: Yes, we continue to be pleased with the progress.

Mike: The composition of our pipeline obviously now.

Speaker Change: With better than it's ever been.

Mike: The key is for us to continue to move those programs through.

Speaker Change: Awesome.

Speaker Change: One for Brian Brian I haven't had a chance to go through the Q yet so what was the cash flow from ops and capex in the quarter. If you have that.

Mike: Through the various stages of the sales process towards.

Mike: Closure, I will say from a leading indicator perspective.

Mike: We had I believe it's four large multinationals on site at life core during the during the quarter would use.

Michael: Yes, thanks for the question Michael So.

Speaker Change: We saw some daylight this quarter and had positive cash flow from operations of about $2 million.

Mike: Three of those in January which is.

Mike: Number for us.

Michael: This is despite some one time nonrecurring.

Mike: Relatively speaking so it tells me that our our strategy is working and certainly at <unk> last month at <unk>, We certainly met with more large multinational companies then here too for the organizations as met with one of the busiest schedule that I've been a part of.

Speaker Change: Expenses that we had from legacy legal matters of over $2 million.

Speaker Change: There was still a portion of the pillar as well that had not been paid for so looking at the proceeds and capital spending items net for the quarter within investing activities.

Mike: Based on the feedback from the legacy team certainly the quality of the companies in your meeting with.

Speaker Change: It was let's see.

Speaker Change: Net for the quarter within investing activities I believe we're pretty.

Mike: It's better than it's ever been.

Mike: Awesome.

Speaker Change: Close to free cash flow breakeven for the quarter.

Mike: Quick one for Brian Brian I haven't had a chance to go through the Q yet so what was the cash flow from ops and capex in the quarter. If you have that.

Speaker Change: Yes, I just want to make sure I'm right.

Speaker Change: Interpreting that comment correctly, so capex was roughly around $2 million as well.

Speaker Change: Yes, thanks for the question Michael So.

Speaker Change: Net of roughly $3 5 million of the filler that was paid for it. So it looks like Capex spending was up a little bit but it wasn't you have to netted against some of the proceeds that we received from.

Speaker Change: We saw some daylight this quarter and had positive cash flow from operations of about $2 million in there.

Speaker Change: This is despite some one time nonrecurring.

Speaker Change: The solar.

Speaker Change: Expenses that we had from legacy legal matters of over $2 million.

Speaker Change: Okay, and then the outlook just on I guess the rims.

Speaker Change: The remainder of the physical being.

Speaker Change: There was still a portion of the pillar as well that had not been paid for so looking at the proceeds and capital spending items net for the quarter within investing activities.

Speaker Change: Last quarter in terms of I guess expectations around.

Cash flow from ops or free cash generation.

Speaker Change: Any thoughts on that.

Speaker Change: Yeah. So I think importantly to note as we ended Q3 with a little over $30 million in liquidity close to $31 million, so including cash off the balance sheet was a little over $5 million and unveil ability under our revolver was a little over $25 million.

Speaker Change: It was let's see.

Speaker Change: Net for the quarter within investing activities I believe we're pretty.

Speaker Change: Close to free cash flow breakeven for the quarter.

Speaker Change: I just want to make sure im.

Speaker Change: Interpreting that comment correctly, so capex was roughly around $2 million as well.

Speaker Change: So just.

Speaker Change: Or just to reiterate we.

Speaker Change: Yes.

Roughly three 5 million of the filler that was paid for so it looked like capex spending was up a little bit but it wasn't yet to netted against some of the proceeds that we received from.

Speaker Change: Have used approximately $17 million of the proceeds from the pipe and filler sale to reduce the revolver.

Speaker Change: To save on interest expense, while maintaining the same level of liquidity. So we expect this to continue to improve as we received the remaining $10 million in proceeds from the solar sale.

Speaker Change: Facility.

Speaker Change: Okay, Let me outlook just on I guess the.

Speaker Change: Remainder of the fiscal being the last quarter in terms of I guess expectations around.

Speaker Change: Cash flow from ops or free cash generation.

Speaker Change: As we think about kind of the remainder of the year.

Speaker Change: Any thoughts on that.

Speaker Change: Yes, So I think importantly, too to note as we ended Q3 with a little over $30 million in liquidity close to $31 million, so including cash off the balance sheet was a little over $5 million and availability under our revolver was a little over $25 million. So.

Speaker Change: We're still expecting to be cash flow positive from operations in the second half and certainly depending on the corpse of timing of any of the onetime nonrecurring items.

Speaker Change: We expect to see a pretty dramatic improvement in free cash flow altogether in the second half of the year and depending on the timing of capital expenditures I think as you'll recall, Michael we previously communicated we would expect to be free cash flow neutral for the second half and we still believe that and perhaps even slightly positive.

Just as.

Speaker Change: Just to reiterate we.

Speaker Change: Have used approximately $17 million of the proceeds from the pipe and filler sale to reduce the revolver.

Speaker Change: Okay, Awesome, and then I guess.

Speaker Change: I guess, a comment or two around continuing to look at reducing operating expenses and obviously you are making really good progress on that SG&A line I'm just curious.

Speaker Change: Should we look at sort of Q3's SG&A level.

Speaker Change: As we think about kind of the remainder of the year.

Speaker Change: Sort of the run rate or do you feel like there's a material improvement even even that you can get off of what has been pretty pretty darn good improvement in a short period of time.

Speaker Change: We're still expecting to be cash flow positive from operations in the second half and certainly depending on of course, the timing of any of the onetime nonrecurring items.

Speaker Change: That's a great question, so SG&A was down sequentially and it's been trending down ever since the first quarter.

Speaker Change: We're still expecting to see G&A spend decrease.

Speaker Change: Overall in the second half of the year compared to the first half.

Speaker Change: As we mentioned earlier, we've made some great progress over the past couple of months off boarding consultants in.

Speaker Change: Okay, Awesome, and then I guess.

Speaker Change: I guess, a comment or two around continuing to look at reducing operating expenses and obviously you are making really good progress on that SG&A line I'm just curious.

Speaker Change: Also the expectations around stock based compensation will or expecting that to continue to trend down.

Speaker Change: Should we look at sort of Q3's SG&A level.

Speaker Change: I think one.

Speaker Change: One of the things to look at as well as what we tried to call out or some of the legacy legal matters and items and if you look at the quarter I mean that was over $2 million.

Speaker Change: Sort of the run rate or do you feel like there is material.

Speaker Change: <unk>, even even that you can get off of what has been pretty pretty darn good improvement in a short period of time.

Speaker Change: Once those things are behind US right, we should see a pretty dramatic decrease in overall SG&A spend and you will also have noticed within the quarter. There was about a $700000 improvement due to lower financing accounting consulting compared to the prior year.

Speaker Change: That's a great question, so SG&A was down sequentially and it's been trending down ever since the first quarter.

Speaker Change: We're still expecting to see G&A spend decrease overall in the second half of the year compared to the first half.

Speaker Change: Alright, very good thanks, guys.

As we mentioned earlier, we've made some great progress over the past couple of months off boarding consultants.

Speaker Change: Thank you.

Speaker Change: Thank you and that does concludes today's Q&A session I would like to turn the call over to.

Speaker Change: Also the expectations around stock based compensation will or expecting that to continue to trend down.

Speaker Change: Sorry ill turn the call back over for closing remarks. Thank you.

Speaker Change: I think.

Speaker Change: Thank you operator in closing I wish to thank our investors, who continue to support our growth strategy for the future.

Speaker Change: One of the things to look at as well as what we tried to call out where some of the legacy legal matters and items and if you look at the quarter I mean that was over $2 million.

Speaker Change: I also wish to acknowledge our customers and collaborators who continue to entrust life Gore as their partner of choice.

Speaker Change: Once those things are behind US right, we should see a pretty dramatic decrease in overall SG&A spend and you also have noticed within the quarter. There was about a $700000 improvement due to lower financing accounting consulting compared to the prior year.

Speaker Change: And most importantly, I wish to extend my sincere gratitude to our incredibly hardworking and talented team for driving each of the successes that we have at LIBOR.

Speaker Change: With the support of each of these stakeholders and with our strategic priorities, both clear and achievable. We believe we are well positioned to achieve growth and sustainable profitability in the coming years.

Speaker Change: Okay, all right very good thanks, guys.

Speaker Change: That concludes our call today, thank you for participating.

Speaker Change: Thank you.

Speaker Change: Thank you and that does conclude today's Q&A session I would like to turn the call over to.

Speaker Change: Thank you all for participating in today's conference call you may now disconnect.

Speaker Change: Sorry ill turn the call back over for closing remarks. Thank you.

Speaker Change: Thank you operator in closing I wish to thank our investors, who continue to support our growth strategy for the future.

Speaker Change: I also wish to acknowledge our customers and collaborators who continue to entrust life Gore as their partner of choice.

Speaker Change: And most importantly, I wish to extend my sincere gratitude to our incredibly hardworking and talented team for driving each of the successes that we have at LIBOR with.

Speaker Change: With the support of each of these stakeholders and with our strategic priorities are clear and achievable. We believe we are well positioned to achieve growth and sustainable profitability in the coming years.

Speaker Change: That concludes our call today, thank you for participating.

Speaker Change: Thank you all for participating in today's conference call you may now disconnect.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Sure.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Yes.

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Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Good afternoon, and thank you for joining life course fiscal 2025 third quarter earnings call. During the call all participants will be in a listen only mode now.

Speaker Change: Now I would like to turn the call over to Stephanie Diaz manager of Investor Relations for life core.

Speaker Change: Good afternoon, and thank you for joining us today to discuss like core biomedical third quarter fiscal 2025 earnings results hosting the call today from a life core or Paul Joseph <unk>, President and Chief Executive Officer and Ray.

Speaker Change: Lake Chief Financial Officer.

Speaker Change: We begin today, we'd like to remind everyone that certain statements made in the course of this conference call contain forward looking statements. It is important to note that the forward looking statements made during this call reflect management's judgment and analysis only as of today April <unk> 2025, and the Companys actual results could differ materially from those.

Speaker Change: And such forward looking statements.

Speaker Change: For a more thorough discussion of the risks and uncertainties associated with any forward looking statements. Please see the disclaimer regarding forward looking statements that is included in our fiscal 2025 third quarter earnings release, which was furnished to the SEC today on form 8-K, as well as our other filings with the Securities and exchange commission, including but not limit.

Speaker Change: Good to the Companys Form 10-Q for the third quarter of fiscal 2025, which was filed this afternoon with that I'd like to turn the call over to Paul Joseph Chief Executive Officer.

Paul Joseph: Thank you Stephanie good afternoon, everyone and thank you for joining us for our fiscal 2025 third quarter update.

Paul Joseph: During the period, our team slide multiple new agreements with both new and existing customers.

Paul Joseph: Our revenues for the period remains strong and on target for our guidance for the year.

Paul Joseph: And our cash balance was strengthened through the sale of our unused still a.

Paul Joseph: Lastly, significant improvements and efficiencies were incorporated throughout our business.

Paul Joseph: Hence, our overall operations and improve our margins.

Paul Joseph: I will provide additional details on business development and operations for the period. Following an overview of our third quarter fiscal 2025 financial results for that I will turn the call over to Ryan.

Speaker Change: I'll now go over our results for the third quarter and nine months ended February 23, 2025, beginning with results for the quarter.

Speaker Change: Revenues for the three months ended February 23, 2025 were $35 2 million a decrease of 2% compared to $35 7 million for the comparable prior year period. The decrease in revenues was primarily due to 1 million $5 decrease in <unk> revenues, primarily due to completion.

Speaker Change: <unk> of discrete development revenue project life cycles, and timing of customer projects offset by our hyaluronic acid or HCA manufacturing revenues, which increased $1 million, primarily from increased demand from our customers due to their supply chain initiatives.

Speaker Change: Gross profit for the three months ended February 23, 2025 was $9 8 million compared to $11 9 million for the same period last year.

Speaker Change: $2 million decline in gross profit is due to a $3 million decrease in <unk> gross profit primarily due to prior year adjustments of inventories to their net realizable value and lower development revenue offset by a $1 million increase in IHA manufacturing gross profit due to increased volumes.

Speaker Change: Manufacturing variances.

Speaker Change: Selling general and administrative expenses for the three months ended February 23, 2025 were $10 1 million compared to $9 8 million for the same period last year, excluding the increase in stock based compensation SG&A decreased by $7 million due to lower finance and accounting.

Speaker Change: <unk> also included in SG&A expenses for the current period is $2 2 million primarily related to litigation expenses related to an activist investor matter and as Securities class action lawsuit.

Speaker Change: The prior year period included $2 3 million, primarily related to incremental audit and consulting fees related to the financial restatement and expenses related to the divestiture of curation foods.

Speaker Change: For the three months ended February 23, 2025, the company recorded a net loss of $14 8 million or <unk> 47 loss per diluted share as compared to net income of $15 6 million and 42 cents of income per diluted share for the same period last year, which included a one time favorable 21.

Noncash fair market value adjustment to the debt derivative liability associated with the term loan credit facility.

Speaker Change: Adjusted EBITDA for the three months ended February 23, 2025 was $5 7 million a decrease of <unk> 7 million compared to $6 4 million in the prior year period.

Speaker Change: The decrease in adjusted EBITDA was primarily due to the decrease in gross profit exclusive of inventory and equipment write off of $1 1 million.

Speaker Change: I will now review results for the first nine months of fiscal 2025.

Speaker Change: Revenues for the nine months ended February 23, 2025 were $92 4 million, an increase of 2% compared to $90 4 million for the comparable prior year period. The increase in revenues was due to a $3 million increase in Asia manufacturing demand, primarily due to our largest.

Speaker Change: <unk> supply chain initiatives. This was slightly offset by a decrease in <unk> revenues, primarily due to completion of discrete development revenue project life cycles and timing of customer projects.

Speaker Change: Gross profit for the nine months ended February 23, 2025 was $26 3 million compared to $24 6 million for the same period last year.

Speaker Change: The $1 $7 million improvement in gross profit is primarily due to an increase in manufacturing gross profit due to increased volumes and manufacturing variances.

Speaker Change: <unk> gross profit was essentially flat year over year due to offsetting factors.

Speaker Change: Selling general and administrative expenses for the nine months ended February 23, 2025 were $35 1 million compared to $28 2 million for the same period last year, excluding a $3 $8 million increase in stock based compensation SG&A is up $3 1 million primarily from <unk>.

Speaker Change: Chip of legacy matters included in SG&A for the current period is $9 $5 million, primarily related to various legacy legal matters and costs associated with the financial restatement.

Speaker Change: The prior period included $7 2 million, primarily related to incremental audit and consulting fees related to the financial restatement and expenses related to strategic alternatives and the divestiture of curation foods.

Speaker Change: For the nine months ended February 23, 2025, the company recorded a net loss of $37 6 million and $1 24 of loss per diluted share as compared to net income of $19 1 million and 52 cents of income per diluted share for the same period last year, which included a one time favorable <unk>.

Speaker Change: $41 $9 million noncash fair market value adjustment to the debt derivative liability associated with the term loan credit facility adjust.

Speaker Change: Adjusted EBITDA for the nine months ended February 23, 2025 was $10 4 million, a <unk> 6 million increase from $9 8 million in the prior year period. The increase in adjusted EBITDA was primarily due to the increase in gross profit exclusive of inventory and equipment write off of <unk> 8 million.

Speaker Change: Our financial performance for the quarter was steady and consistent with guidance.

Speaker Change: As such we are reiterating our financial guidance for the fiscal year and expect revenue to be approximately $126 $5 million to $130 million and adjusted EBITDA to be in the range of 19% to $21 million and with our cash balance bolstered by the sale of our Isolator filler, we believe we remain well positioned for future growth.

Speaker Change: This concludes my financial overview for those interested in reviewing our non-GAAP reconciliations. Please refer to our 8-K filing or the press release issued today I'll now turn the call back over to Paul for an update on operations and achievements during the period.

Paul Joseph: Thank you Ryan.

Paul Joseph: During the third quarter, our team continued to successfully execute against our plan that was outlined during our Investor day presentation last November.

Paul Joseph: This strategy is focused on driving a 12% revenue CAGR and increasing EBIT margins to over 25% over the next few years.

Paul Joseph: Finally, winning new and impactful business that will continue to fill our project pipeline for them early stage work to commercialization.

Paul Joseph: During the third quarter, we continued to make substantive progress in each of these core areas.

Paul Joseph: First with respect to maximizing our existing customer business or our team continued to make meaningful progress on an expansion program with one of our large multinational partners.

Paul Joseph: As we communicated in our 2024 Investor Day. This partnership is poised to deliver a significant inflection point in volume demand in 2027.

Paul Joseph: Most impactful project remains on target we are.

Paul Joseph: We're excited to expand our business with this partner and serve their needs in a more meaningful way.

Paul Joseph: There are continued and growing confidence in <unk> as a partner continues to serve as validation for the quality work of our team.

Paul Joseph: With respect to our second strategic goal.

Paul Joseph: Is the advancement of our pipeline towards commercialization seven.

Paul Joseph: Several important milestones were achieved during the quarter.

Paul Joseph: Giving us great optimism for this important objective.

Paul Joseph: As previously disclosed.

Paul Joseph: End of life quarters late stage pipeline programs are poised for potential FDA approval and commercialization by 2028.

Paul Joseph: And while there is no guarantee that they will all reach the finish line.

Paul Joseph: While a modest subset of this group could generate substantial and impactful growth for the company in the midterm.

Paul Joseph: This includes a significant statement of work with a large multinational partners.

Paul Joseph: Separately one of the aforementioned programs is committed now to advancing to our process performance qualification or PQ campaign at <unk> in late 2025 or early 2026.

Paul Joseph: <unk> Q programs are particularly important as they are brinker commercialization the requirement.

Paul Joseph: As we expect they will drive an increase in revenue capacity utilization and ultimately an improvement in our margins.

Paul Joseph: We are pleased with the advancement of these late stage programs and believe the progress during the quarter continues to support our expectations for commercialization of the programs in the mid term.

Paul Joseph: Turning now to the third area of our strategic growth focus our team continues to sign new and impactful business at various stages of development.

Paul Joseph: <unk> added six new customers during the first nine months of our fiscal 2025.

Paul Joseph: Notably this included a new agreement with <unk> laboratories signed during the third quarter.

Paul Joseph: There are some selected <unk> to provide <unk> services focused on supporting clinical development of its lead campaign and Rs zero <unk> III <unk> III.

Paul Joseph: 033 is a novel treatment for opioid use disorder and alcohol use disorder that is currently entering phase III clinical development.

Paul Joseph: Under the newly signed agreement LIBOR core will continue to provide <unk> with build surrenders for use in clinical development of Srs zero.

Paul Joseph: Subsequent to the quarter end, we added seven new customers signing an agreement with kubernetes that has focused on the company's exciting buyout 300 program.

Paul Joseph: We will be responsible for conducting a tech transfer of the existing bill finished process for bio 300, including a formulation development GAAP assessment and filling up a pilot batch.

Paul Joseph: This will be followed by analytical method work, including feasibility assessments designed to estimate future development work for the product candidate.

Paul Joseph: <unk> 300 is the exact type of promising cutting edge biopharmaceutical product, we strive to support.

Paul Joseph: And we are excited to have been selected by human genetics to provide these services.

Paul Joseph: Though life course, Pos focus was on complex highly viscous formulations or new business development team is dedicated to the promotion of our broad capabilities to best position the company to support products across multiple modalities.

Paul Joseph: Given this goal we are very pleased with the continued expansion and evolution of our new business pipeline.

Paul Joseph: I would now like to shift the focus to the important organizational strategies and measures that we are actively implementing to enhance our sustainability and profitability spin.

Paul Joseph: Specifically, we are reducing operational expenses.

Paul Joseph: <unk>, a performance driven culture and strengthening our recognized commitment to quality.

Paul Joseph: First and foremost light core utilizes state of the art technologies and employees, what we believe to be the best CMO talent in the industry.

Paul Joseph: Our commitment to quality is unwavering and we will never reduce the costs required to maintain the high standards that our customers and the patients they serve expect.

Paul Joseph: With that said, our new leadership team reviews monthly metrics trends and opportunities we continue to identify a meaningfully meaningful areas.

Paul Joseph: Can improve our efficiency and productivity without compromising the quality service we deliver.

Paul Joseph: We have and are continuing to take action to capitalize on these opportunities and continue to reduce operational expenses as a percent of our overall revenue.

Paul Joseph: Specifically, our product production efficiencies have continued to improve throughout the fiscal year.

Paul Joseph: In addition via enhanced training and the improved management processes, we are experiencing improved productivity and all direct labor areas aseptic packaging and fermentation.

Paul Joseph: Finally, we have also improved our fermentation and processing efficiencies, which has resulted in an increase in our yield and less waste.

Paul Joseph: With respect to our business operations, we have eliminated numerous consulting relationship.

In favor of hiring the right number of employees in house.

For example, we have now rebuilt our finance team by eliminating unnecessary outside parties and the hiring of a small number of highly experienced and talented personnel.

Paul Joseph: Our new finance team is focused efficient and more than keeping us in compliance with all regulatory requirements and is quickly added value to our overall business.

Paul Joseph: In addition to the common cost cutting measures. We have also made key investments that we that will further enhance our operations.

Paul Joseph: One example is recent implementation of live production monitoring.

Paul Joseph: The data captured by the system assist management in assessing performance and measuring output, allowing our teams to make adjustments in real time to increase efficiencies.

Paul Joseph: In closing I believe it is evident that we are executing aggressively against the plan we articulated last November.

Paul Joseph: We are working with existing customers to accommodate their future manufacturing needs.

We are supporting our late stage clients as they advance towards potential regulatory approval and commercialization and we are successfully pursuing new business opportunities in an expanded range of products and formulations across multiple modalities.

Paul Joseph: Further we are reorganizing our business to better support the value creation derived from our three pronged growth strategy.

Paul Joseph: Steps taken to date have resulted in new found efficiencies and performance across our workforce and increased production outputs.

Paul Joseph: This has been done without disruption to our business or those of our customers and we continue to deliver exceptional quality throughout the organization.

Paul Joseph: Looking ahead, we believe that our plan and actions today are positioning us well to meet the goals and objectives that we have articulated for fiscal 2020, we look forward to reporting on our progress in coming months.

Paul Joseph: This concludes our prepared remarks for today operator, you may now open the call for questions.

Speaker Change: Thank you if you would like to ask a question. Please press star one on your telephone.

Speaker Change: You will then hear an automated message advising your hand is raised if you would like to withdraw your question. Please press star one again, one moment for the first question.

Speaker Change: And our first question will come from the line of Matthew Hewitt.

Speaker Change: Craig Hallum Capital Group Your line is open.

Speaker Change: There has been chatter.

Speaker Change: About wanting or the desire to bring back drug manufacturing in the U S and I'm just curious what you've heard over the past couple of months.

Speaker Change: From prospective customers that <unk> been talking about and are you seeing that desire and willingness to.

Speaker Change: Repatriate drug manufacturing here and what does that mean for you as you look at the remainder of this calendar year.

Speaker Change: Good afternoon, and thanks for the question.

Speaker Change: Last month, we were at one of our largest conferences the drug.

Speaker Change: <unk> D Cat in New York.

Speaker Change: Chemical and associated Technologies conference and we met with a number of large multinational pharmaceutical companies.

Speaker Change: And I had.

Speaker Change: In my past number of years I've been in this business I've never heard as much discussion a lot of it's theoretical around western manufacturing and the importance of domestic manufacturing driven a lot by what we're characterizing an administrative uncertainty.

Speaker Change: So nothing quantitative to move on today, but certainly from a qualitative perspective based on the near term discussions that we've had all certainly top of mind for a lot of our customers and prospects.

Speaker Change: That's helpful. Thank you and then maybe just.

Speaker Change: I am sorry, if I missed this but the human ethics contract post quarter that you're saying congratulations what stage is that also a later stage, obviously, if it's a tech transfer but.

Speaker Change: How should we be thinking about that.

Matthew Hewitt: Think of it as a phase III Matt.

Speaker Change: Site transfer from another contract manufacturer.

Speaker Change: They thought there was a better value proposition to work with life core biomedical. So we're excited to work with them in our backyard and it's a promising project we're excited.

Speaker Change: That's great. Thank you.

Speaker Change: Thank you thank.

Speaker Change: Thank you one moment for the next question.

Speaker Change: And our next question will be coming from the line of Michael <unk> of Barrington Research. Your line is open.

Speaker Change: Hey, good afternoon guys.

Paul Joseph: So Paul I.

Yes.

Speaker Change: If you touched on this I missed it in the prepared remarks last quarter, you talked about Hey, we've got.

Speaker Change: We've identified 50 opportunities 30% of either multinational so I'm just wondering.

Speaker Change: Roughly 90 days later.

Speaker Change: Is there anything you can sort of say about <unk>.

Speaker Change: Conversations or progress or how your capabilities are being seen by particularly some of the bigger bigger guys, but.

Speaker Change: Anything you want to say about.

Speaker Change: I wanted to try to sort of.

Speaker Change: Build the customer base.

Mike: Sure. Thanks, Thanks for the question Mike.

Speaker Change: Yes, we continue to be pleased with the progress.

Speaker Change: The composition of our pipeline obviously now.

Speaker Change: The key is for us to continue to move those programs through.

Speaker Change: Through the various stages of the sales process towards.

Speaker Change: Closure, I will say from a leading indicator perspective.

Speaker Change: We had I believe it's four large multinationals on site at life core during the during the quarter would use.

Speaker Change: Three of those in January which is.

Speaker Change: Number for us.

Speaker Change: Relatively speaking so it tells me that our strategy is working and certainly at last last month at <unk>, We certainly met with more large multinational companies then here too for the organizations as met with one of the busiest schedule that I've been a part of.

Speaker Change: Based on the feedback from the legacy team certainly the quality of the companies in your meeting with.

Speaker Change: It's better than it's ever been.

Speaker Change: Awesome.

Speaker Change: Quick one for Brian Brian I haven't had a chance to go through the Q yet so what was the cash flow from ops and capex in the quarter. If you have that.

Brian Brian: Yes, thanks for the question Michael So.

Brian Brian: We saw some daylight this quarter and had positive cash flow from operations of about $2 million in there.

Brian Brian: This is despite some one time nonrecurring.

Brian Brian: Expenses that we had from legacy legal matters of over $2 million.

Brian Brian: There was still a portion of the pillar as well that had not been paid for so looking at the proceeds and capital spending items net for the quarter within investing activities.

Brian Brian: It was let's see.

Brian Brian: Net for the quarter within investing activities I believe we're pretty.

Brian Brian: Close to free cash flow breakeven for the quarter.

Brian Brian: Yes, I just want to make sure I am.

Brian Brian: Interpreting that comment correctly, so capex was roughly around $2 million as well.

Brian Brian: Net of roughly $3 5 million of the filler that was paid for so it looked like capex spending was up a little bit but it wasn't yet netted against some of the proceeds that we received from.

Brian Brian: Filler.

Brian Brian: Okay, and then the outlook just on I guess the rims.

Brian Brian: The remainder of the physical being.

Brian Brian: Last quarter in terms of I guess expectations around.

Brian Brian: Cash flow from ops or free cash generation.

Brian Brian: Any thoughts on that.

Brian Brian: Yes, So I think importantly to note as we ended Q3 with a little over $30 million in liquidity close to $31 million. So.

Brian Brian: <unk> cash off the balance sheet was a little over $5 million and availability under our revolver was a little over $25 million. So just.

Brian Brian: Or just to reiterate we had.

Brian Brian: Have used approximately $17 million of the proceeds from the pipe and filler sale to reduce the revolver.

Brian Brian: To save on interest expense, while maintaining the same level of liquidity. So we expect this to continue to improve as we received the remaining $10 million in proceeds from the solar sale.

Brian Brian: As we think about kind of the remainder of the year.

Brian Brian: We're still expecting to be cash flow positive from operations in the second half and certainly depending on the course, the timing of any of the onetime nonrecurring items.

Brian Brian: We expect to see a pretty dramatic improvement in free cash flow all together in the second half of the year and depending.

Speaker Change: Depending on the timing of capital expenditures I think as you'll recall, Michael we previously communicated we would expect to be free cash flow neutral for the second half and we still believe that and perhaps even slightly positive.

Brian Brian: Okay, Awesome, and then I guess.

Brian Brian: I guess, a comment or two around continuing to look at reducing operating expenses and obviously you are making really good progress on that SG&A line I'm just curious.

Brian Brian: Should we look at sort of Q3's SG&A level.

Brian Brian: As sort of the run rate or do you feel like theres material improvement, even even that you can get off of what has been pretty pretty darn good improvement in a short period of time.

Brian Brian: That's a great question, so SG&A was down sequentially and it's been trending down ever since the first quarter.

Brian Brian: We're still expecting to see G&A spend decrease.

Brian Brian: Overall in the second half of the year compared to the first half.

Brian Brian: As we mentioned earlier, we've made some great progress over the past couple of months off boarding consultants in.

Brian Brian: Also the expectations around stock based compensation will or expecting that to continue to trend down.

Brian Brian: I think.

Brian Brian: One of the things to look at as well as what we tried to call out or some of the legacy legal matters and items and if you look at the quarter I mean that was over $2 million.

Brian Brian: Once those things are behind US right, we should see a pretty dramatic decrease in overall SG&A spend.

Brian Brian: You will also have noticed within the quarter there was about a $700000 improvement due to lower financing accounting consulting compared to the prior year.

Brian Brian: Alright, very good thanks, guys.

Brian Brian: Thank you.

Speaker Change: Thank you and that does concludes today's Q&A session I would like to turn the call over to.

Speaker Change: Sorry ill turn the call back over for closing remarks. Thank you.

Speaker Change: Thank you operator in closing I wish to thank our investors, who continue to support our growth strategy for the future.

Speaker Change: I also wish to acknowledge our customers and collaborators who continue to entrust life Gore as their partner of choice.

Speaker Change: And most importantly, I wish to extend my sincere gratitude to our incredibly hard working and talented team for driving each of the successes that we have at LIBOR.

Speaker Change: That concludes our call today, thank you for participating.

Speaker Change: Thank you all for participating in today's conference call you may now disconnect.

Q3 2025 Lifecore Biomedical Inc Earnings Call

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