Omega Protein Corporation, a nutritional ingredient company and the nation's leading vertically integrated producer of omega-3 fish oil and specialty fish meal products, reported net income of $1.8 million, or $0.09 per diluted share, and Adjusted EBITDA of $7.0 million for the first quarter ended March 31, 2012.
First Quarter 2012 Highlights:
- Revenues: $39.7 million for the quarter, a 37 percent decrease over the 2011 fourth quarter
- Gross profit margin: 22.4 percent for the quarter, compared to 17.2 percent in the 2011 fourth quarter
- Net income: $1.8 million ($0.09 per diluted share) for the quarter, compared to $0.6 million ($0.03 per diluted share) in the 2011 fourth quarter
- Adjusted EBITDA: $7.0 million for the quarter, compared to $6.4 million in the 2011 fourth quarter
- Growth: Recorded the first sales of OmegaActiv, a fish oil for the human supplement market
"Despite lower-than-normal sales volumes, financial results in the first quarter improved over the fourth quarter of 2011. Our fishing business has had a busy and productive 'off-season', as we diligently invested labor and capital to prepare for the start of the 2012 fishing season," commented Bret Scholtes, Omega Protein's President and Chief Executive Officer. "At the same time, we continued to make significant progress in our human nutrition business, generating strong supplement ingredient sales growth and recording our first sales of OmegaActiv fish oil to the human supplement market."
Mr. Scholtes continued, "While fish meal pricing remained under pressure in the first quarter, we are beginning to see some positive developments, including improved pricing for competing proteins such as soybean meal and encouraging supply/demand fundamentals. The fish oil market remains robust, and we are excited about the upcoming fishing season."
First quarter 2012 results
Omega Protein recorded revenues of $39.7 million in the first quarter of 2012, a 37 percent decrease from the fourth quarter of 2011 and a 30 percent decrease from $56.4 million in the same period last year. The decrease in revenues compared to the same period last year was primarily due to a 44 percent reduction in fish meal sales volumes and a 25 percent reduction in fish oil sales volumes, as well as a 7 percent reduction in sales prices for fish meal, partially offset by a 7 percent increase in the sales prices for fish oil. The composition of revenue by nutritional product line was 53 percent fish meal, 26 percent fish oil, 15 percent specialty nutraceutical ingredients, and 6 percent fish solubles and other.
The decrease in fish meal and fish oil sales volumes in the first quarter of 2012 is primarily due to a lower quantity of inventory available for sale and other timing issues related to export sales that resulted in a lower proportion of available inventory sold in the first quarter. The decrease in fish meal sales prices in the first quarter of 2012 is primarily due to an increased global supply of fish meal available for sale, particularly from South America. The increase in fish oil sales prices is due to increased export demand primarily from the aquaculture industry as well as a general increase in global commodity pricing for fats and oils.
Cyvex, the Company's human nutritional ingredient subsidiary, contributed $6.0 million of revenues to the first quarter of 2012 compared to $3.0 million for the same period last year. While not material to sales, Cyvex did record its first sales of OmegaActiv fish oil to the human supplement market.
The Company reported gross profit of $8.9 million, or 22.4 percent as a percentage of revenues, for the first quarter of 2012, versus gross profit of $10.8 million, or 17.2 percent as a percentage of revenues, for the fourth quarter of 2011. Compared to the same period a year ago, gross profit decreased from $15.7 million, or 27.8 percent as a percentage of revenues, primarily due to the decrease in fish meal sales prices as well as a 6 percent increase in cost per unit of sales. The first quarter of 2012 results also include $2.3 million of gross profit from Cyvex, or 39.4 percent as a percentage of Cyvex's revenues.
Selling, general and administrative expenses for the first quarter of 2012 decreased $2.9 million to $5.5 million versus $8.4 million in the fourth quarter of 2011. This decrease is primarily due to reduced employee compensation related costs, as well as lower professional fees, impairments and other non-recurring charges. Compared to the same period a year ago, selling, general and administrative expenses increased $0.6 million from $4.9 million, primarily due to the addition of InCon's related expenses of $0.2 million and increased employee compensation related costs including stock option and restricted stock compensation expense.
Net income for the first quarter of 2012 was $1.8 million ($0.09 per diluted share) compared to $0.6 million ($0.03 per diluted share) for the fourth quarter of 2011 and $6.0 million ($0.30 per diluted share) for the same period last year. The decrease in net income from the first quarter of 2011 was a result of the factors previously described, most notably the decreased sales volumes, partially offset by a lower effective tax rate.
Adjusted EBITDA totaled $7.0 million for the first quarter of 2012, an increase from $6.4 million for the fourth quarter of 2011 and a decrease from $14.2 million for the same period a year ago.
The Company's balance sheet continues to strengthen with stockholders equity of $200.4 million as of March 31, 2012. The Company's first quarter of 2012 cash balance decreased $4.7 million to $46.7 million from December 31, 2011. This decrease is primarily due to expenditures made in preparation for the upcoming 2012 fishing season, capital spending and debt payments, and was partially offset by the sale of inventory.