Mr. Andre Godin reports

NEPTUNE ANNOUNCES SECOND QUARTER RESULTS

Neptune Technologies & Bioressources Inc. has provided its consolidated financial results for the three and six months ended Aug. 31, 2014.

"Considerable progress continues to be made in rebuilding and strengthening our nutraceutical business," highlighted Andre Godin, interim president and chief executive officer of Neptune. "We are in the last stage of our production ramp-up and remain focused on driving profitable growth.

"We also remain active on the pharmaceutical side, with our subsidiary, Acasti, recently announcing positive results for two clinical trials evaluating the safety and efficacy of its investigational new drug candidate, CaPre. These encouraging results further indicate that CaPre may be an important treatment option to safely and effectively reduce triglycerides. Acasti is now moving one step closer to the commercialization of CaPre."

Financial results: three months ended Aug. 31, 2014

Nutraceutical business results

• Nutraceutical revenues were $2,615,000 for the three-month period ended Aug. 31, 2014, compared with $5.08-million for the three-month period ended Aug. 31, 2013.
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was negative $10,132,000 for the current quarter, versus negative $4,078,000 in the prior year.
• Net loss was $11,356,000 for the current quarter, compared with a net loss of $1,779,000 in the prior year.

Consolidated results

• Consolidated revenues totalled $2,623,000 for the three-month period ended Aug. 31, 2014, down from $5,346,000 for the quarter ended Aug. 31, 2013.
• Adjusted gross margin (1) as a per cent of revenue was 30 per cent for the current quarter, versus 12 per cent for the corresponding prior-year quarter.
• Adjusted EBITDA was negative $12,875,000 for the current quarter, versus negative $6,055,000 in the prior year.
• Net loss was $14,848,000 for the current quarter, versus a net loss of $5,052,000 in the prior year.

(1) The adjusted gross margin excludes non-recurring costs included in the cost of sales, namely incremental costs related to the plant ramp-up, as well as impairment of inventory.

Nutraceutical revenues for the quarter ending Aug. 31, 2014, were derived from Neptune's third party manufacturing and supply agreement. Revenues were impacted by the decision of many customers to wait for Neptune manufactured krill oil.

The year-over-year decrease in adjusted EBITDA, on both a nutraceutical and consolidated basis, is largely due to incremental costs related to the plant ramp-up, an impairment on inventory resulting from the degradation of raw material, a bad debt charge for one significant customer, increased research and development (R&D) expenses along with higher marketing and advertising spending, and training costs following the resumption of krill oil production. Partially offsetting this was a year-over-year reduction in legal fees.

On a consolidated basis the current quarter includes adjusted EBITDA of negative $2.7-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 $2.0-million of adjusted EBITDA.

The higher year-over-year net loss on a nutraceutical and consolidated basis was due to the factors highlighted for adjusted EBITDA. In addition, the prior-year quarter also included insurance recoveries of $5.0-million relating to the Sherbrooke plant incident. Partially offsetting this was a year-over-year reduction in legal fees. On a consolidated basis Neptune's subsidiaries recorded net losses of $3.5-million and $3.3-million for the three-month periods ending Aug. 31, 2014, and 2013, respectively.

Financial results: six months ended Aug. 31, 2014

Nutraceutical business results

• Nutraceutical revenues were $6.25-million for the six-month period ended Aug. 31, 2014, down from $11,165,000 for the six-month period ended Aug. 31, 2013.
• Adjusted EBITDA was negative $13,897,000 for the six-month period ended Aug. 31, 2014, versus negative $6,776,000 for the corresponding prior-year period.
• Net loss was $17,058,000 for the six-month period ended Aug. 31, 2014, compared with a net loss of $5,158,000 for the corresponding prior-year period.

Consolidated results

• Consolidated revenues totalled $6,314,000 for the six-month period ended Aug. 31, 2014, compared with $11,438,000 for the corresponding prior-year period.
• Adjusted EBITDA was negative $18,647,000 for the six-month period ended Aug. 31, 2014, versus negative $10,038,000 for the corresponding prior-year period.
• Net loss was $19,217,000 for the six-month period ended Aug. 31, 2014, versus a net loss of $10,467,000 in the corresponding prior-year period.

Sherbrooke plant ramp-up

In September, 2014, Neptune announced that it had reached an annualized production capacity of 100 metric tons of krill oil annually and was entering the last stage in its ramp-up. The corporation expects to be at full operational capacity of 150 metric tons annually by the end of the year.

Shipments of Neptune's premium krill oil, NKO, has commenced. As well, the corporation continues to offer customers its third party oil, which provides further opportunities in certain markets and creates additional revenues.

"We remain focused on reaching full capacity as quickly as possible and re-establishing ourselves as a premier krill oil manufacturer," highlighted Mr. Godin. "By offering our customers industry-leading products, while developing new offerings and further strengthening our intellectual property, we are well positioned to recapture market share and drive profitable growth. We expect sales momentum to continue to build, which should have a positive impact on future quarters."

Conference call details

Neptune will be holding a conference call on Wednesday, Oct. 15, at 9 a.m. (ET) to present its results for the second quarter ended Aug. 31, 2014.

Date:  Wednesday, Oct. 15, 2014

Time:  9 a.m. Eastern Time

Conference ID:  14760800

Call:  1-877-380-5664 (within Canada and the United States) or 1-631-813-4882 (outside Canada and the U.S.). Please dial in 15 minutes before the call begins.

Webcast:  A live audio webcast can be accessed at the company's website.

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

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