16:45:58 EDT Thu 28 Mar 2024
Enter Symbol
or Name
USA
CA



Neptune Technologies & Bioressources Inc
Symbol NTB
Shares Issued 73,792,366
Close 2014-07-15 C$ 2.62
Market Cap C$ 193,335,999
Recent Sedar Documents

Neptune loses $4.36-million in Q1 fiscal 2015

2014-07-15 18:00 ET - News Release

Mr. Andre Godin reports

NEPTUNE ANNOUNCES FIRST QUARTER RESULTS

Neptune Technologies & Bioressources Inc. has released its consolidated financial results for the first quarter ended May 31, 2014.

"It was a very successful start to our fiscal year, with Neptune announcing the opening of its Sherbrooke plant, the launch later this year of three new condition-specific formulations (NKOBeat, NKOFlex and NKOFocus), the successful resolution of all outstanding litigation issues before the International Trade Commission, the grant of two new composition patents, and the election of a strong slate of directors at its recent annual and special meeting," highlighted Andre Godin, interim president and chief executive officer of Neptune. "Our subsidiary, Acasti, also recently announced the completion of two key clinical trials, marking another important milestone in our drug development program to secure regulatory approval to distribute and market CaPre. We continue to lay the foundation for growth, and we remain focused on strong leadership and performance."

Financial Results for the first quarter ended May 31, 2014

Nutraceutical business results:

  • Nutraceutical revenues were $3,635,000 for the three-month period ended May 31, 2014, compared with $6,084,000 for the three-month period ended May 31, 2013.
  • Gross profit as a per cent of revenue was 14 per cent for the current quarter, versus 10 per cent for the corresponding prior-year quarter.
  • Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was negative $3,766,000 for the current quarter, versus negative $2,697,000 in the prior year.
  • Net loss was $5,702,000 for the current quarter, compared with a net loss of $3,379,000 in the prior year.

Consolidated results:

  • Consolidated revenues totalled $3,691,000 for the three-month period ended May 31, 2014, down from $6.09-million for the quarter ended May 31, 2013.
  • Adjusted EBITDA was negative $5,772,000 for the current quarter, versus negative $3,983,000 in the prior year.
  • Net loss was $4,368,000 for the current quarter, versus a net loss of $5,415,000 in the prior year.

Nutraceutical revenues for the quarter ended May 31, 2014, were derived entirely from Neptune's third party manufacturing and supply agreement with Rimfrost. In the corresponding prior-year period, the corporation supplied the market with commodity krill obtained through short-term temporary supply arrangements. In June, 2014, Neptune announced that production at its Sherbrooke plant would commence gradually.

The gross profit margin as a percentage of revenues was 14% for the current quarter, up from 10% in the quarter ended May 31, 2013. The increase is primarily due to product cost reductions resulting from the manufacturing and supply agreement with Rimfrost.

The year-over-year decrease in adjusted EBITDA on both a nutraceutical and consolidated basis is largely due to higher general and administrative expenses, including salaries, training costs associated with the reopening of the Sherbrooke plant and a bad debt charge for one significant customer. As well, selling expenses grew due to enhanced marketing and advertising efforts in expectation of the resumption of krill oil production. The expense increase was partially offset by other income of $1.6-million, recorded in the current quarter, for royalty settlements as a result of negotiations with third parties to resolve infringement of Neptune's intellectual property. On a consolidated basis the current quarter also includes adjusted EBITDA of negative $2-million for Neptune's subsidiaries, Acasti and NeuroBioPharm, which are actively engaged in clinical studies and research and development. In the corresponding prior-year quarter, Neptune's subsidiaries recorded negative $1.3-million of adjusted EBITDA.

The higher year-over-year net loss for the nutraceutical business was due to the factors highlighted for adjusted EBITDA. In addition, the current quarter was negatively impacted by an increase in foreign exchange losses, while the corresponding prior-year quarter was positively impacted by the recognition of insurance recoveries relating to the plant incident. On a consolidated basis, the year-over-year quarterly net loss was lower due to a change in the fair value of Acasti's derivative warrant liability arising from its 2013 public offering. The warrants are derivative liabilities, for accounting purposes, due to the currency of the exercise price (U.S. dollars) being different from Acasti's functional currency (Canadian dollars).

Sherbrooke plant ramp-up

In June, 2014, Neptune announced the resumption of production at its Sherbrooke plant. Start-up of the facility has been completed and it is now entering a ramp-up period. The corporation anticipates a ramp-up period over three months, with each phase lasting one month. During this time, annual production capacity will grow from approximately 50,000 kilograms of krill oil at the end of phase 1 to 100,000 kilograms by the end of phase 2 and 150,000 kilograms at the end of phase 3. Neptune is focused on reaching full operational capacity as quickly as possible.

A number of customers have indicated their intent to delay purchases, preferring to wait until Neptune's premium product, NKO, is available. Revenues for the second quarter ending Aug. 31, 2014, are expected to be similar to those seen over the past two quarters ended May 31, 2014.

Other income from royalty settlements

To date Neptune has received royalty settlements totalling $7.1-million, including $1.6-million received during the quarter ended May 31, 2014. This represents all non-refundable settlement payments.

Going forward, Neptune is also eligible for additional payments through its royalty-bearing licence agreements. As previously announced, royalty levels for Aker and Enzymotec in the United States will be dependent on the outcome of the pending interpartes review proceedings before the U.S. Patent and Trademark Office regarding certain claims of Neptune's '351 composition of matter patent. The hearings are expected to take place in the first quarter of calendar 2015. Neptune believes it is well positioned to prevail.

Insurance coverage

Neptune has insurance in place covering, among other things, property damage, business interruption and general liability up to specified amounts, and subject to limited deductibles and certain exclusions. Since the plant incident in November, 2012, Neptune has received insurance recoveries totalling $17.5-million. No insurance recoveries were received during the quarter ended May 31, 2014.

Pierre Fitzgibbon appointed chairman of the board

At Neptune's annual and special meeting held on June 19, 2014, shareholders elected a strong slate of directors who bring deep industry experience in health, nutrition, finance, sales and marketing, and a solid record of value creation in their respective areas. Following a vote at a board meeting held on July 15, 2014, Pierre Fitzgibbon was appointed chairman of the board of Neptune, effective immediately.

Mr. Fitzgibbon formerly served as president and chief executive officer of Atrium Innovations Inc., a leader in the development, manufacturing and marketing of added-value products for the health and nutrition industry. Atrium was recently sold in a transaction valued at over $1.1-billion. Prior to joining Atrium, Mr. Fitzgibbon was vice-chairman of National Bank Financial, and senior vice-president of finance, technology and corporate affairs at National Bank of Canada.

"I am pleased to serve as chairman of Neptune at this important stage in the corporation's history," said Mr. Fitzgibbon. "Neptune has a bright future despite the challenges it currently faces, and I am looking forward to working with my fellow board members to support Neptune in its growth initiatives. On behalf of all board members and management, I would also like to thank outgoing chairman Ronald Denis for his leadership and guidance. Over the years he has made an important contribution to Neptune's success." Mr. Denis will remain a director of Neptune and Acasti's board, and chairman of NeuroBioPharm.

Plant incident

On Nov. 8, 2012, an explosion destroyed the corporation's sole production plant located in Sherbrooke, Que., Canada. While operations were being re-established, Neptune generated revenues from the sale of krill oil acquired by the corporation through short-term temporary arrangements, and through a non-exclusive manufacturing and supply agreement secured with Rimfrost USA LLC in October, 2013. These arrangements, along with margin concessions, allowed Neptune to maintain a large portion of its preincident revenues. Neptune announced the resumption of production at its Sherbrooke plant in June, 2014.

Conference call details

Neptune will be holding a conference call on Thursday, July 17 at 9 a.m. (ET) to present its results for the first quarter ended May 31, 2014. Please dial in 15 minutes before the call begins.

Date:  Thursday, July 17, 2014

Time:  9 a.m. (ET)

Conference ID:  70858706

Dial (within Canada and the U.S.):  1-877-380-5664

Dial (outside Canada and the U.S.):  1-631-813-4882

Webcast:  At the company's website

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

We seek Safe Harbor.

© 2024 Canjex Publishing Ltd. All rights reserved.