Omega Protein revenues drop in Q2

Omega Protein revenues drop in Q2

Revenue decrease stemmed from a $7.9 million decrease in animal nutrition revenues, which reflected lower sales volumes for fish meal and fish oil.

Omega Protein Corp. (NYSE:OME), a nutritional product company and a leading integrated producer of omega-3 fish oil and specialty protein products, announced results for the second quarter ended June 30, 2013.

Second quarter 2013 highlights

  • Revenues:$41.8 million for the quarter, compared to $48.9 million in the first quarter and $47.5 million in the 2012 second quarter
  • Gross profit margin: 31.8 percent for the quarter, an increase from 24.7 percent in the first quarter and 14.4 percent in the 2012 second quarter
  • Net income: Net income of $4.0 million for the quarter, compared to $2.8 million in the first quarter and $2.5 million in the 2012 second quarter
  • Earnings:Earnings per diluted share of $0.19 for the quarter, compared to $0.14 in the first quarter and $0.13 in the 2012 second quarter
  • Adjusted EBITDA: $11.8 million for the quarter, compared to $10.0 million in the first quarter and $5.2 million in the 2012 second quarter
  • Growth:Announced plans to double capacity of the Company's dairy protein business

"We are pleased with the Company's increased earnings in the second quarter as we continued to benefit from better animal nutrition sales prices which helped drive higher revenue per ton and consolidated gross margin expansion versus the comparable period last year," commented Bret Scholtes, Omega Protein president and CEO. "While 2013 fish catch to date has been below average, we are pleased to see fish oil yields rebound sharply from last year and return to more normal year-to-date levels."

Mr. Scholtes continued, "We believe we are still in the early stages of capitalizing on our human nutrition growth opportunities with second quarter segment revenue 47 percent higher than the second quarter last year. Our investments in human nutrition over the last three years provide us with more control over the manufacturing process, create avenues for organic growth, and allow us to better develop additional value-added products to expand consolidated margins in the long-term. To this point, today we announced an expansion of our dairy protein production facility, which is expected to double its capacity and expand our dairy product offerings."

Second quarter 2013 results
The Company's revenues decreased 15 percent from $48.9 million in the first quarter of 2013 to $41.8 million in the second quarter. The decrease in revenues was due to a $7.9 million decrease in animal nutrition revenues, which reflected lower sales volumes of 14 percent for fish meal and 66 percent for fish oil, partially offset by higher sales prices of 10 percent for fish meal and 64 percent for fish oil. Second quarter 2013 sales volumes were negatively impacted by normal seasonal demand and the timing of contracts. The increase in fish meal sales prices was primarily due to sales made pursuant to contracts entered into at higher prices, and the increase in fish oil sales prices reflected a significant change in product mix. Human nutrition revenues increased $0.7 million to $7.3 million in the second quarter compared to $6.6 million in the first quarter. The increase in human nutrition revenues reflects revenues from Wisconsin Specialty Protein (WSP) for a full quarter, partially offset by lower nutraceutical and tolling revenues. The composition of revenue by nutritional product line for the second quarter of 2013 was 62 percent fish meal, 18 percent fish oil, 16 percent specialty food and nutraceutical ingredients, and 4 percent fish solubles and other.

Second quarter of 2013 revenues decreased 12 percent from $47.5 million in the same period last year. The decrease in revenues was due to an $8.0 million decrease in animal nutrition revenues, partially offset by a $2.3 million, or 47 percent, increase in human nutrition revenues. The decrease in animal nutrition revenues was primarily due to a decrease in sales volume of 25 percent and 77 percent for the Company's fish meal and fish oil, respectively, partially offset by increased sales prices of 30 percent and 127 percent for the Company's fish meal and fish oil, respectively. The increase in human nutrition revenues was primarily due to the Company's acquisition of WSP on February 27, 2013.

The Company reported gross profit of $13.3 million, or 31.8 percent as a percentage of revenues, for the second quarter of 2013, versus gross profit of $12.1 million, or 24.7 percent as a percentage of revenues, for the first quarter of 2013. The increase in gross profit as a percentage of revenues was primarily due to an increase in gross profit as a percentage of revenues from 26.6 percent to 33.9 percent in the animal nutrition segment as a result of higher fish oil and fish meal sales prices. The human nutrition segment reported gross profit as a percentage of revenues of 22.1 percent in the second quarter of 2013, an increase from 13.0 percent in the first quarter. The increase reflects the February 27, 2013 acquisition of WSP and lower transition costs related to the Company's Chicago-area production facility.

Second quarter gross profit increased from $6.8 million, or 14.4 percent as a percentage of revenues, in the second quarter of 2012. The increase was primarily due to an increase in the animal nutrition segment gross profit as a percentage of revenues from 13.4 percent to 33.9 percent as a result of increased fish oil and fish meal sales prices. The human nutrition segment gross profit decreased slightly from 23.3 percent to 22.1 percent, as a percentage of revenues, in the second quarter of 2013.

Selling, general and administrative expenses for the second quarter decreased $0.4 million to $6.0 million compared to the first quarter of 2013 due primarily to reduced professional expenses related to the acquisition of WSP. Selling, general and administrative expenses increased from $5.4 million for the second quarter of 2012, primarily as a result of the acquisition of WSP.

The second quarter of 2013 effective tax rate was 34.7 percent compared to 33.2 percent in the first quarter of 2013 and 34.0 percent in the second quarter of 2012.

Net income for the second quarter of 2013 was $4.0 million ($0.19 per diluted share) compared to net income of $2.8 million ($0.14 per diluted share) for the first quarter of 2013 and net income of $2.5 million ($0.13 per diluted share) for the same period last year. Excluding the impact of the net gain or loss on disposal of certain assets, net income for the first quarter of 2013 would have been $3.1 million ($0.15 per diluted share), and net income for the second quarter of 2012 would have been $0.3 million ($0.01 per diluted share).

Adjusted EBITDA totaled $11.8 million for the second quarter of 2013, compared to $10.0 million for the first quarter of 2013 and $5.2 million for the same period last year.

Six month 2013 results
Revenues in the current period increased 2 percent to $90.7 million compared to revenue of $88.5 million for the six months ended June 30, 2012. The increase in revenues for 2013 was due to a $2.1 million increase in human nutrition revenues and a $0.1 million increase in animal nutrition revenues. The increase in human nutrition revenues was due primarily to the acquisition of WSP on February 27, 2013, which contributed $3.3 million of revenue for the six months ended June 30, 2013. The increase in animal nutrition revenues was primarily due to increased sales prices of 22 percent and 57 percent for the Company's fish meal and fish oil, respectively, partially offset by decreased sales volumes of 9 percent and 47 percent for the Company's fish meal and fish oil, respectively.

The Company recorded gross profit of $25.4 million, or 28.0 percent as a percentage of revenues, for the first six months of 2013, versus gross profit of $15.7 million, or 17.8 percent as a percentage of revenues, for the first six months of 2012. The increase in gross profit as a percentage of revenues was primarily due to the increase in sales prices.

Net income for the six months ended June 30, 2013 was $6.8 million ($0.33 per diluted share) compared to $4.3 million ($0.22 per diluted share) for the same period last year. Excluding the impact of net gain on disposal of assets, net income for the six months ended June 30, 2012 would have been $1.8 million ($0.09 per diluted share).

Adjusted EBITDA, totaled $21.8 million for six months ended June 30, 2013, an increase from $12.4 million for the same period last year.

 

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