10:24:52 EDT Thu 28 Mar 2024
Enter Symbol
or Name
USA
CA



Neptune Announces Second Quarter Results

2016-10-12 16:00 ET - News Release

LAVAL, QUEBEC -- (Marketwired) -- 10/12/16

Financial and Operational Highlights(1):


--  Revenues reached $11.6 million, up 165% versus last year 
--  Gross margin on sales rose to 20.4% compared to 14% last year 
--  Neptune will receive net US$6 million in royalty payments from patent
    agreement with Aker Biomarine, ending all litigation 
--  Completed first sale of NKO in Chinese market and of MaxSimil®, and
    announced expanded worldwide distribution rights of MaxSimil 
--  Cash balance at August 31 of $7.1 million from $3.5 million as at
    February 29, 2016 for the Nutraceutical segment 
--  Revised annual revenue guidance from $43 million to $45 million

Neptune Technologies & Bioressources Inc. ("Neptune" or the "Corporation") (NASDAQ:NEPT)(TSX:NTB), today announced its financial and operating results for the second quarter ended August 31, 2016. All amounts are in Canadian dollars.

"We are very happy to report substantial year over year revenue growth and also a sequential increase in revenue over the first quarter of Fiscal 2017," stated Jim Hamilton, President and CEO of Neptune. "These results reflect continued progress in our transformation into a provider of great nutrition solutions for optimal health and wellbeing."

Mr. Hamilton continued, "Growth in the second quarter and the successful evolution into a nutrition solutions provider reflect the contribution of both our Biodroga turnkey solutions and our specialty ingredients business. Turnkey solutions now amount to approximately 55% of revenue and we are targeting an average annual growth of 20% over the upcoming years. Furthermore, our specialty ingredients business has now recorded its first sale in the Chinese market, while we realized the first sales from our newest specialty ingredient, MaxSimil. We are very enthusiastic about MaxSimil and have secured expanded worldwide distribution rights to fully capitalize on its market potential."

Mr. Hamilton added, "Subsequent to the quarter end, we were pleased to announce that we have entered into a broad patent cross-licensing agreement with Aker Biomarine, thus ending all outstanding litigation. The settlement provides Neptune with $6 million US in net royalty payments, which will strengthen the balance sheet and enable us to further invest in and grow wellness solutions."

Mr. Hamilton concluded, "Our growth and diversification strategy has continued to gain momentum. As a result, we have revised our annual revenue guidance for Fiscal 2017 and now expect revenues of above $45 million (from $43 million) and continue to anticipate a double-digit Adjusted EBITDA margin."

(1) Neptune Nutraceutical segment.

Second Quarter Financial Results

Nutraceutical Business Results


--  Nutraceutical revenues were $11.6 million for the three-month period
    ended August 31, 2016, versus $4.4 million in the second quarter ended
    August 31, 2015. 
--  Net loss was $668,000 for the current quarter, versus a net loss of $1.9
    million in the prior year. 
--  Adjusted EBITDA(1) was $769,000 for the current quarter, compared to a
    Non-IFRS operating loss(1) of $1.6 million in the prior year. 

The reduction of the net loss for the quarter reflects improvement of the EBITDA and finance income. The prior year net loss also included unallocated production overhead costs. The Nutraceutical segment second quarter EBITDA improvement was mainly driven by higher revenues and a stronger gross margin, in percentage and in dollars, related to cost reduction initiatives, including plant efficiencies and the Biodroga acquisition contribution.

Project Turbo, a company-wide initiative to drive efficiencies and operating performance, was put in place during the second quarter of Fiscal 2016. To date (as of August 31, 2016), approximately 85% of total expected cost savings, or approximately $5.0 million, were realized.

Consolidated Results (including Acasti Pharma)


--  Consolidated revenues totalled $11.6 million for the three-month period
    ended August 31, 2016, up from $4.4 million for the quarter ended August
    31, 2015. 
--  Net loss was $2.4 million for the current quarter, versus a net loss of
    $2.6 million in the prior year. 
--  Non-IFRS operating loss(1) was $857,000 for the current quarter, versus
    $3.1 million in the prior year.

On a consolidated basis, the current quarter includes a Non-IFRS operating loss(1) of $1.6 million and a net loss of $2.3 million for Neptune's subsidiary, Acasti, which is actively engaged in clinical studies and research and development. In the corresponding prior year quarter ending August 31, 2015, Acasti recorded a Non-IFRS operating loss(1) of $1.5 million and a net loss of $1.2 million.

(1) See "Caution Regarding Non-IFRS Financial Measures" and "Reconciliation of net loss to Adjusted EBITDA or non-IFRS operating loss" which follow.

Year-to-Date Financial Results

Nutraceutical Business Results


--  Nutraceutical revenues were $22.8 million for the six-month period ended
    August 31, 2016, versus $7.4 million for the six-month period ended
    August 31, 2015. 
--  Net loss was $1.9 million for the six-month period ended August 31,
    2016, versus a net loss of $6.4 million in the prior year. 
--  Adjusted EBITDA(1) was $1.9 million for the six-month period ended
    August 31, 2016, compared to a Non-IFRS operating loss(1) of $4.8
    million in the prior year. 

The reduction of the net loss reflects improvement of the EBITDA. The prior year net loss also included unallocated production overhead costs. The Nutraceutical segment year-to-date Adjusted EBITDA improvement was mainly driven by higher revenues and a stronger gross margin, in percentage and in dollars, related to cost reduction initiatives, including plant efficiencies and the Biodroga acquisition contribution.

Consolidated Results (including Acasti Pharma)


--  Consolidated revenues totalled $22.8 million for the six-month period
    ended August 31, 2016, up from $7.1 million for the six-month period
    ended August 31, 2015. 
--  Net loss was $6.2 million for the six-month period ended August 31,
    2016, versus a net loss of $7.5 million in the prior year. 
--  Non-IFRS operating loss(1) of $2.0 million for the six-month period
    ended August 31, 2016, versus $8.3 million in the prior year.

On a consolidated basis, the six-month period ended August 31, 2016 includes a Non-IFRS operating loss(1) of $3.9 million and a net loss of $5.5 million for Acasti. In the corresponding prior year period ending August 31, 2015, Acasti recorded a Non-IFRS operating loss(1) of $3.4 million and a net loss of $2.2 million.

Cash Flows

Consolidated cash and short term investments, including $3 million of restricted short term investments, were $15.2 million as at August 31, 2016, with $7.1 million for the Nutraceutical segment and $8.1 million for Acasti. If Acasti does not raise additional funds, there exists a material uncertainty that casts substantial doubt about Acasti's ability to continue as a going concern and, therefore, realize its assets and discharge its liabilities in the normal course of business. Acasti's Management has reasonable expectations that they will be able to raise additional funds.

(1) See "Caution Regarding Non-IFRS Financial Measures" and "Reconciliation of net loss to Adjusted EBITDA or non-IFRS operating loss" which follow.

Caution Regarding Non-IFRS Financial Measures

The Corporation uses adjusted financial measures, including Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) and non-IFRS operating loss (Operating loss before depreciation and amortization), to assess its operating performance. These non-IFRS financial measures are directly derived from the Company's financial statements and are presented in a consistent manner. The Company uses these measures for the purposes of evaluating its historical and prospective financial performance, as well as its performance relative to competitors. These measures also help the Company to plan and forecast for future periods as well as to make operational and strategic decisions. The Company believes that providing this information to investors, in addition to IFRS measures, allows them to see the Company's results through the eyes of management, and to better understand its historical and future financial performance.

Securities regulations require that companies caution readers that earnings and other measures adjusted to a basis other than IFRS do not have standardized meanings and are unlikely to be comparable to similar measures used by other companies. Accordingly, they should not be considered in isolation. The Corporation uses Adjusted EBITDA and non-IFRS operating loss to measure its performance from one period to the next without the variation caused by certain adjustments that could potentially distort the analysis of trends in our operating performance, and because the Corporation believes it provides meaningful information on the Corporation financial condition and operating results. Neptune's method for calculating Adjusted EBITDA or non-IFRS operating loss may differ from that used by other corporations.

Neptune obtains its Consolidated Adjusted EBITDA and non-IFRS operating loss measurement by adding to net income (loss), finance costs, depreciation and amortization and income taxes and by subtracting finance income. Other items such as insurance recoveries from plant explosion and acquisition costs that do not impact core operating performance of the Corporation are excluded from the calculation as they may vary significantly from one period to another. Finance income/costs include foreign exchange gain (loss) and change in fair value of derivatives. Neptune also excludes the effects of certain non-monetary transactions recorded, such as stock-based compensation, acquisition costs and insurance recoveries, from its Adjusted EBITDA and non-IFRS operating loss calculation. The Corporation believes it is useful to exclude this item as it is a non-cash expense. Excluding this item does not imply it is necessarily non-recurring.

Conference Call Details

Neptune will be holding a conference call on October 12, 2016, at 5:00 PM (ET) to present its results for the second quarter ended August 31, 2016.


Date:           Wednesday, October 12, 2016                                 
                                                                            
Time:           5:00 PM Eastern Time                                        
                                                                            
Conference ID:  86779865                                                    
                                                                            
Call:           1-877-223-4471 (within Canada & the U.S.)                   
                1-647-788-4922 (Outside Canada and the U.S.)                
                (Please dial in 15 minutes before the call begins)          
                                                                            
Webcast:        A live audio webcast can be accessed at:                    
                http://neptunekrilloil.com/investors/investor-events-and-   
                presentations/                                              

An archived recording of the conference call will also be available on Neptune's website shortly after the call.

About Neptune Technologies & Bioressources Inc.

Neptune is a nutrition products company focused on the business of customized unique nutrition solutions, specialty ingredients and consumer brands. The company develops turnkey solutions available in various unique delivery forms. Neptune also offers a variety of specialty ingredients, including premium krill oil manufactured in our state-of-the art facility and a variety of other marine oils, seed oils and specialty ingredients. Neptune also offers its premium krill oil under the OCEANO3® brand directly to consumers in Canada and the United States through web sales at www.oceano3.com. Oceano3 brand is also sold in bulk to unbranded distributors. The Company's head office is located in Laval, Quebec.

Neptune is also pursuing opportunities in the prescription drug markets, through its approximately 48% owned subsidiary Acasti Pharma Inc. ("Acasti"). Acasti focuses on the research, development and commercialization of new krill oil-based forms of omega-3 phospholipid therapies for the treatment of severe hypertriglyceridemia.

Forward Looking Statements

Statements in this press release that are not statements of historical or current fact constitute "forward-looking statements" within the meaning of the U.S. securities laws and Canadian securities laws. Such forward-looking statements involve known and unknown risks, uncertainties, and other unknown factors that could cause the actual results of Neptune to be materially different from historical results or from any future results expressed or implied by such forward-looking statements. In addition to statements which explicitly describe such risks and uncertainties, readers are urged to consider statements labeled with the terms "believes," "belief," "expects," "intends," "anticipates," "will," or "plans" to be uncertain and forward-looking. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release.

The forward-looking statements contained in this press release are expressly qualified in their entirety by this cautionary statement and the "Cautionary Note Regarding Forward-Looking Information" section contained in Neptune's latest Annual Information Form (the "AIF"), which also forms part of Neptune's latest annual report on Form 40-F, and which is available on SEDAR at www.sedar.com, on EDGAR at www.sec.gov/edgar.shtml and on the investor section of Neptune's website at www.neptunebiotech.com. All forward-looking statements in this press release are made as of the date of this press release. Neptune does not undertake to update any such forward-looking statements whether as a result of new information, future events or otherwise, except as required by law. The forward-looking statements contained herein are also subject generally to other risks and uncertainties that are described from time to time in Neptune public securities filings with the Securities and Exchange Commission and the Canadian securities commissions. Additional information about these assumptions and risks and uncertainties is contained in the AIF under "Risk Factors".

Neither NASDAQ nor the Toronto Stock Exchange accepts responsibility for the adequacy or accuracy of this release.

Reconciliation of net loss to Adjusted EBITDA(1) or non-IFRS operating loss(1)

(Expressed in thousands of dollars)


Three-month period ended August 31, 2016                                    
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                               Inter-segment                
                 Nutraceutical Cardiovascular   eliminations          Total 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                             $              $              $              $ 
----------------------------------------------------------------------------
Total revenues          11,587              4              -         11,591 
Gross margin             2,587              4              -          2,591 
R&D                       (356)        (1,598)           581         (1,373)
SG&A                    (2,496)          (856)             -         (3,352)
Loss from                                                                   
 operating                                                                  
 activities               (265)        (2,450)           581         (2,134)
Net finance                                                                 
 (cost) income            (395)           120             (2)          (277)
Income taxes                (8)             -              -             (8)
Net loss                  (668)        (2,330)           579         (2,419)
                                                                            
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Adjusted EBITDA                                                             
 (non-IFRS                                                                  
 operating                                                                  
 loss)(1)                                                                   
 calculation                                                                
Net loss                  (668)        (2,330)           579         (2,419)
Add (deduct):                                                               
  Depreciation                                                              
   and                                                                      
   amortization            767            614           (581)           800 
  Finance costs            683              2            (38)           647 
  Finance income          (320)           (57)            38           (339)
  Change in fair                                                            
   value of                                                                 
   derivative                                                               
   assets and                                                               
   liabilities              32            (65)             2            (31)
  Stock-based                                                               
   compensation            253            210              -            463 
  Income taxes               8              -              -              8 
  Acquisitions                                                              
   costs                    14              -              -             14 
----------------------------------------------------------------------------
Adjusted EBITDA                                                             
 (non-IFRS                                                                  
 operating                                                                  
 loss)(1)                  769         (1,626)             -           (857)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
                                                                            
Three-month period ended August 31, 2015                                    
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                               Inter-segment                
                 Nutraceutical Cardiovascular   eliminations          Total 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                             $              $              $              $ 
----------------------------------------------------------------------------
Total revenues           4,371              7              -          4,378 
Gross margin               690              5              -            695 
R&D                       (458)        (1,662)           581         (1,539)
SG&A                    (2,795)          (503)             -         (3,298)
Insurance                                                                   
 recoveries                724              -              -            724 
Loss from                                                                   
 operating                                                                  
 activities             (1,839)        (2,160)           581         (3,418)
Net finance                                                                 
 (cost) income             (57)           919             (1)           861 
Net loss                (1,896)        (1,241)           580         (2,557)
                                                                            
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Non-IFRS                                                                    
 operating                                                                  
 loss(1)                                                                    
 calculation                                                                
Net loss                (1,896)        (1,241)           580         (2,557)
Add (deduct):                                                               
  Depreciation                                                              
   and                                                                      
   amortization            598            595           (581)           612 
  Finance costs            333              1              -            334 
  Finance income          (335)          (896)             -         (1,231)
  Change in fair                                                            
   value of                                                                 
   derivative                                                               
   assets and                                                               
   liabilities              59            (24)             1             36 
  Stock-based                                                               
   compensation            345             81              -            426 
  Insurance                                                                 
   recoveries             (724)             -              -           (724)
----------------------------------------------------------------------------
Non-IFRS                                                                    
 operating                                                                  
 loss(1)                (1,620)        (1,484)             -         (3,104)
----------------------------------------------------------------------------
----------------------------------------------------------------------------


(1) See "Caution Regarding Non-IFRS Financial Measures".                    

Reconciliation of net loss to Adjusted EBITDA(1) or non-IFRS operating loss(1)

(Expressed in thousands of dollars)


Six-month period ended August 31, 2016                                      
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                               Inter-segment                
                 Nutraceutical Cardiovascular   eliminations          Total 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                             $              $              $              $ 
----------------------------------------------------------------------------
Total revenues          22,841              7              -         22,848 
Gross margin             6,104              7              -          6,111 
R&D                       (751)        (3,993)         1,161         (3,583)
SG&A                    (5,686)        (1,423)             -         (7,109)
Loss from                                                                   
 operating                                                                  
 activities               (333)        (5,409)         1,161         (4,581)
Net finance                                                                 
 (cost) income          (1,285)           (75)            (3)        (1,363)
Income taxes              (300)             -              -           (300)
Net loss                (1,918)        (5,484)         1,158         (6,244)
Total assets           119,591         23,552        (45,775)        97,368 
Cash and short-                                                             
 term                                                                       
 investments             7,125          8,124              -         15,249 
Working                                                                     
 capital(2)             14,074          6,047              -         20,121 
                                                                            
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Adjusted EBITDA                                                             
 (non-IFRS                                                                  
 operating                                                                  
 loss)(1)                                                                   
 calculation                                                                
Net loss                (1,918)        (5,484)         1,158         (6,244)
Add (deduct):                                                               
  Depreciation                                                              
   and                                                                      
   amortization          1,532          1,223         (1,161)         1,594 
  Finance costs          1,251            279            (83)         1,447 
  Finance income            (1)          (106)            83            (24)
  Change in fair                                                            
   value of                                                                 
   derivative                                                               
   assets and                                                               
   liabilities              35            (98)             3            (60)
  Stock-based                                                               
   compensation            670            275              -            945 
  Income taxes             300              -              -            300 
  Acquisitions                                                              
   costs                    38              -              -             38 
----------------------------------------------------------------------------
Adjusted EBITDA                                                             
 (non-IFRS                                                                  
 operating                                                                  
 loss)(1)                1,907         (3,911)             -         (2,004)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) See "Caution Regarding Non-IFRS Financial Measures".                    
                                                                            
(2) The working capital is presented for information purposes only and      
represents a measurement of the Corporation's short-term financial health   
mostly used in financial circles. The working capital is calculated by      
subtracting current liabilities from current assets. Because there is no    
standard method endorsed by IFRS, the results may not be comparable to      
similar measurements presented by other public companies.                   

Reconciliation of net loss to Adjusted EBITDA(1) or non-IFRS operating loss(1)

(Expressed in thousands of dollars)


Six-month period ended August 31, 2015                                      
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                              Inter-segment                 
                Nutraceutical Cardiovascular   eliminations           Total 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                            $              $              $               $ 
----------------------------------------------------------------------------
Total revenues          7,412             12           (342)          7,082 
Gross margin              (69)             7            (85)           (147)
R&D                      (864)        (3,642)         1,246          (3,260)
SG&A                   (5,786)        (1,134)             -          (6,920)
Insurance                                                                   
 recoveries               724              -              -             724 
Loss from                                                                   
 operating                                                                  
 activities            (5,995)        (4,769)         1,161          (9,603)
Net finance                                                                 
 (cost) income           (427)         2,562            (55)          2,080 
Net loss               (6,422)        (2,207)         1,106          (7,523)
Total assets          102,664         33,027        (46,805)         88,886 
Cash and short-                                                             
 term                                                                       
 investments            3,430         15,766              -          19,196 
Working                                                                     
 capital(2)            16,207         15,195              -          31,402 
                                                                            
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Non-IFRS                                                                    
 operating                                                                  
 loss(1)                                                                    
 calculation                                                                
Net loss               (6,422)        (2,207)         1,106          (7,523)
Add (deduct):                                                               
  Depreciation                                                              
   and                                                                      
   amortization         1,190          1,183         (1,161)          1,212 
  Finance costs           663              2              -             665 
  Finance                                                                   
   income                (296)          (832)             -          (1,128)
  Change in                                                                 
   fair value                                                               
   of                                                                       
   derivative                                                               
   assets and                                                               
   liabilities             60         (1,732)            55          (1,617)
  Stock-based                                                               
   compensation           686            157              -             843 
  Insurance                                                                 
   recoveries            (724)             -              -            (724)
----------------------------------------------------------------------------
Non-IFRS                                                                    
 operating                                                                  
 loss(1)               (4,843)        (3,429)             -          (8,272)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) See "Caution Regarding Non-IFRS Financial Measures".                    
                                                                            
(2) The working capital is presented for information purposes only and      
represents a measurement of the Corporation's short-term financial health   
mostly used in financial circles. The working capital is calculated by      
subtracting current liabilities from current assets. Because there is no    
standard method endorsed by IFRS, the results may not be comparable to      
similar measurements presented by other public companies.                   

Contacts:
Neptune Contact:
Mario Paradis
VP & CFO
1.450.687.2262
m.paradis@neptunecorp.com
www.neptunecorp.com

James Carbonara
Hayden IR
1.646.755.4712
james@haydenir.com

Pierre Boucher
MaisonBrison
1.514.731.0000
pierre@maisonbrison.com

© 2024 Canjex Publishing Ltd. All rights reserved.