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Logistics of Curation Foods outsourced to Castellini Company

Landec Corporation, a diversified health and wellness company with two operating businesses, Lifecore Biomedical, Inc. and Curation Foods, Inc., today announced that it has entered into a transportation management, warehousing, and transportation services agreement with Castellini Company LLC to outsource Curation Foods’ fresh packaged salads and vegetables logistics management, including transportation, warehousing and distribution.

Dr. Albert Bolles, Landec’s Chief Executive Officer, stated, “Project SWIFT continues to guide our business simplification process as we work to streamline our business, drive profitability and enhance stockholder value. Through our review of all facets of Curation Foods’ operations, it was clear that we would benefit from engaging with a strategic logistics partner to increase our distribution reach into markets that we do not currently serve, improve efficiency by increased distribution frequency in existing markets and reduce our overall operating costs, thereby bringing greater value to our stockholders. To that end, we are excited to announce a strategic partnership with Castellini – a leading logistics management company – to help us seek to achieve these goals.”

Under the terms of the agreement, Castellini will oversee the management, contracting and pricing negotiations with freight carriers, perform dispatch services and freight carrier performance management for the Curation Foods business, which we expect will reduce logistics costs for that business. In connection with this arrangement, Landec will seek to further optimize its logistics network and streamline the Curation Foods’ business by seeking to sell its Rock Hill, South Carolina distribution facility, close its Vero Beach, Florida facility, transfer its Rock Tavern, New York facility to Castellini, and reduce overall Curation Foods’ employee headcount by 56, with a majority of those employees being offered positions with Castellini to service our account.

As a result of this arrangement, Landec expects to record approximately $3.0 million of restructuring costs, including approximately $2.0 million in non-cash expenses, in fiscal 2021 fourth quarter, associated with early lease termination expenses related to trucks and other equipment not being transferred to Castellini, employee severance costs and general integration costs. The cash impact of the restructuring costs is anticipated to be offset by net proceeds of approximately $1.0 million associated with the expected sale of the Company’s Rock Hill facility.

As a result of this arrangement and the anticipated streamlining activities described herein, Landec expects to achieve annualized cost synergies of approximately $1.0 million in logistics operating expenses beginning in fiscal year 2022. In addition, we expect to pursue incremental revenue opportunities for Curation Foods by accessing new markets not currently served.   

Tim Burgess, Curation Foods’ Senior Vice President, Supply Chain, stated, “We are excited to partner with Castellini, one of the largest fresh produce distributors in the United States. We believe that their logistics expertise, built over 125 years of operations, will provide Curation Foods with increased service levels, including almost daily deliveries in many markets, as well as deliveries into new markets that aren’t currently served by our existing distribution network. This results in fresher produce and salads for our existing customers, longer shelf life for our customers and supports our mission of expanding access to our fresh plant-based products.”

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