Martek Biosciences Corp. (MATK) filed Quarterly Report for the period ended 2010-04-30. Martek Biosciences Corp. has a market cap of $732.5 million; its shares were traded at around $21.99 with a P/E ratio of 16.1 and P/S ratio of 2.2.
MATK is in the portfolios of John Hussman of Hussman Economtrics Advisors, Inc., Jim Simons of Renaissance Technologies LLC, Bruce Kovner of Caxton Associates, Kenneth Fisher of Fisher Asset Management, LLC.
Highlight of Business Operations:
We are supplying over 35 infant formula customers with our nutritional ingredients. These companies collectively represent approximately 75% of the estimated $15 billion worldwide retail market for infant formula and nearly 100% of the estimated $4.5 billion U.S. retail market for infant formula, including the retail value of Women, Infants and Children program (“WIC”) rebates. WIC is a federal grant program administered by the states for the benefit of low-income, nutritionally at-risk women, infants and children. Our customers include infant formula market leaders Mead Johnson Nutritionals, Nestle, Abbott Nutrition, Pfizer and Danone, each of whom is selling infant formula supplemented with our nutritional ingredients. Our customers are now selling infant formula products containing our nutritional ingredients collectively in over 75 countries. Supplemented infant formulas from Mead Johnson Nutritionals, Abbott Nutrition, Perrigo Company (formerly PBM Products), Nestle, Hain Celestial and Nutricia North America are currently being sold in the United States. In addition, certain infant formula customers are selling products in the United States and abroad that contain our nutritional ingredients and target the markets for children ages nine months to seven years and older.
Over 90% of our ARA oils are purchased from DSM. Because DSM is a third-party manufacturer, we have only limited control over the timing and level of its production volumes. The balance of our ARA requirements is produced at our Kingstree facility. In July 2009, we entered into the First Amended and Restated ARA Alliance, Purchase, and Production Agreement (the “Restated Agreement”) with DSM. The Restated Agreement, which extends the original supply term through December 31, 2023, amended, consolidated and restated all existing agreements between the two parties governing the cross-licensing, purchase, supply and production of ARA. While, subject to certain limited exceptions, Martek is committed to purchasing all of its ARA requirements from DSM through the term of the Restated Agreement, the Restated Agreement also set minimum ARA purchase quantities for Martek in calendar years 2010 and 2011. As of April 30, 2010, the value of the remaining calendar year 2010 and full calendar year 2011 minimum purchase requirements are approximately $58.4 million and $87.1 million, respectively. These minimum purchase quantities approximate the amounts expected to be procured by us in the normal course of business.
Product sales increased $30.9 million or 35% in the three months ended April 30, 2010 as compared to the three months ended April 30, 2009 and increased $31.0 million or 18% in the six months ended April 30, 2010 as compared to the six months ended April 30, 2009. This increase was partially attributable to the branded consumer health product sales of our newly-acquired Amerifit subsidiary, which totaled $18 million for the period from the acquisition date (February 12, 2010) through April 30, 2010. The remainder of the increase, or $12.9 million, was the result of growth in demand for our nutritional ingredients in both the infant formula and non-infant formula markets. Demand increases outside the United States, particularly in Asia, were a key driver of this growth. We believe that a portion of the nutritional ingredient revenue increase, estimated to be in the range of $4 million to $8 million, was associated with inventory stocking in the ordinary course by our customers following depletion of inventories in 2009 as well as their production timing and related product ordering patterns.