Business Segment Reporting

9 Months Ended

Feb. 26, 2023

Segment Reporting [Abstract]

Business Segment Reporting

Business Segment Reporting

The Company historically operated using three strategic reportable business segments, aligned with how the Chief Executive Officer, who is the chief operating decision maker (“CODM”), manages the business: the Lifecore segment, the Curation Foods segment, and the Other segment.

The Lifecore segment sells products utilizing hyaluronan, a naturally occurring polysaccharide that is widely distributed in the extracellular matrix of connective tissues in both animals and humans, and non-HA products for medical use primarily in the Ophthalmic, Orthopedic and other markets.

The Curation Foods business included activities from three natural food brands, including O Olive Oil & Vinegar, Yucatan Foods, and Cabo Fresh. The Curation Foods segment includes sales of olive oils and wine vinegars under the O brand, and sales of avocado products under the brands Yucatan Foods and Cabo Fresh. In December 2021, the Company completed the Eat Smart Disposition and on February 7, 2023 the Company completed the sale of the avocado products business, including its Yucatan® and Cabo Fresh® brands. As a result, the Company met the requirements of ASC 205-20 to report the results of the Eat Smart and Yucatan Foods businesses as discontinued operations. The operating results for the Eat Smart and Yucatan Foods businesses, in all periods presented, have been reclassified to discontinued operations and are no longer reported in the Curation Foods business segment. See Note 1 – Organization, Basis of Presentation, and Summary of Significant Accounting Policies – Yucatan Foods and Discontinued Operations for further discussion.

The Other segment includes corporate general and administrative expenses, non-Lifecore and non-Curation Foods interest expense, interest income, and income tax expenses. Corporate overhead is allocated between segments based on actual utilization and relative size.

All of the Company’s assets are located within the United States of America.

The Company’s international sales by geography are based on the billing address of the customer and were as follows, excluding discontinued operations:

	Three Months Ended				Nine Months Ended
(In millions)	February 26, 2023		February 27, 2022		February 26, 2023		February 27, 2022
Switzerland	$	6.8	$	8.2	$	14.8	$	13.6
Canada	0.7		0.2		1.9		1.4
Czech Republic	0.7		0.7		2.4		2.4
Ireland	1.1		0.5		2.9		1.3
Australia	1.1		—		1.1		—
United Kingdom	0.6		0.9		1.4		2.2
All Other Countries	0.2		1.6		0.4		1.9

Operations by business segment consisted of the following:

(In thousands)	Lifecore		Curation Foods		Other		Total
Three Months Ended February 26, 2023
Net sales	$	26,330	$	1,270	$	—	$	27,600
Gross profit	6,072		(94)		—		5,978
Net (loss) income from continuing operations	851		280		(16,592)		(15,461)
Loss from discontinued operations, net of tax	—		(22,802)		(1,929)		(24,731)
Depreciation and amortization	1,878		243		10		2,131
Interest income	16		—		6		22
Interest expense	—		—		5,818		5,818
Income tax (benefit) expense	268		(3,019)		2,821		70
Corporate overhead allocation	739		241		(980)		—
Nine Months Ended February 26, 2023
Net sales	$	71,723	$	6,025	$	—	$	77,748
Gross profit	18,847		723		—		19,570
Net (loss) income from continuing operations	2,269		(1,974)		(35,008)		(34,713)
Loss from discontinued operations, net of tax	—		(27,350)		(1,929)		(29,279)
Depreciation and amortization	5,492		2,637		31		8,160
Dividend income	—		—		—		—
Interest income	47		—		6		53
Interest expense	—		1		13,714		13,715
Income tax (benefit) expense	717		(4,135)		3,496		78
Corporate overhead allocation	2,799		858		(3,657)		—
(In thousands)	Lifecore		Curation Foods		Other		Total
Three Months Ended February 27, 2022
Net sales	$	34,808	$	2,591	$	—	$	37,399
Gross profit	12,905		(39)		—		12,866
Net (loss) income from continuing operations	5,054		(5,380)		(6,312)		(6,638)
Loss from discontinued operations, net of tax	—		(3,407)		(3,041)		(6,448)
Depreciation and amortization	1,674		304		18		1,996
Interest income	18		—		2		20
Interest expense	—		26		4,079		4,105
Income tax (benefit) expense	1,596		(1,678)		(5)		(87)

Corporate overhead allocation	1,175		289		(1,464)		—
Nine Months Ended February 27, 2022
Net sales	$	81,707	$	8,433	$	—	$	90,140
Gross profit	30,384		1,249		—		31,633
Net (loss) income from continuing operations	11,317		4,640		(27,340)		(11,383)
Loss from discontinued operations, net of tax	—		(46,692)		(3,041)		(49,733)
Depreciation and amortization	4,894		364		70		5,328
Interest income	57		—		9		66
Interest expense	—		300		13,577		13,877
Income tax (benefit) expense	3,574		(13,422)		4,257		(5,591)
Corporate overhead allocation	3,389		778		(4,167)		—

During the nine months ended February 26, 2023 and February 27, 2022, the Company had sales concentrations of 10% or greater from two customers. The Company’s top two customers, from the Lifecore segment, accounted for 37% and 15% of total revenues for the nine months ended February 26, 2023, and 17% and 13% for the nine months ended February 27, 2022. The Company had accounts receivable concentrations of 10% or greater from two customers accounting for 47% and 10% of accounts receivable as of February 26, 2023, and two customers as of February 27, 2022 accounting for 25% and 19%.