Omega Protein Corp. (NYSE: OME), a nutritional product company and a leading integrated provider of specialty oils, essential fatty acids and specialty protein products, today reported financial results for the fourth quarter and year ended Dec. 31, 2014.

Fourth quarter and full year 2014 highlights

"The fourth quarter of 2014 concluded a successful year for Omega Protein, both in terms of consolidated financial results and progress towards achieving our strategic objectives. While we faced headwinds in certain aspects of our business, the Company managed to generate its second highest annual gross profit and adjusted EBITDA," commented Bret Scholtes, Omega Protein's president and chief executive officer. "As we enter 2015, we are focused on the integration of Bioriginal and making strategic investments to support the growth of our more diversified human nutrition platform. We believe that we are better positioned than ever before to capitalize on the positive fundamentals in the specialty protein and oil sectors of the animal and human nutrition markets to increase profitability and enhance shareholder value long-term."

Fourth quarter 2014 results
The Company's revenues increased 55 percent from $66.0 million in the same period last year to $102.5 million. This increase was due to growth in animal nutrition revenues of $11.5 million and human nutrition revenues of $25.0 million. The increase in animal nutrition revenues was primarily due to higher fish oil and fish meal volumes of 34 percent and 17 percent, respectively, as well as higher fish meal sales prices of 3 percent, partially offset by 9 percent lower fish oil sales prices. The increase in human nutrition revenues was primarily attributable to the acquisition of Bioriginal Food & Science Corp., which was acquired on Sept. 5, 2014. The composition of revenues by nutritional product line for the fourth quarter of 2014 was 45 percent fish meal, 21 percent fish oil, 33 percent dietary supplements and food, and 1 percent fish solubles and other. 

Fourth quarter of 2014 revenues increased 45 percent from $70.8 million in the third quarter of 2014 to $102.5 million. This increase was due to growth in animal nutrition revenues of $13.0 million and human nutrition revenues of $18.7 million. The increase in animal nutrition revenues was primarily due to higher fish meal and fish oil volumes of 31 percent and 6 percent, respectively, as well as higher fish meal and fish oil sales prices of 2 percent and 4 percent, respectively. The increase in human nutrition revenues was primarily due to the acquisition of Bioriginal.

The Company reported gross profit of $22.5 million, or 22.0 percent as a percentage of revenues, for the fourth quarter of 2014, versus $28.0 million, or 42.4 percent as a percentage of revenues, in the fourth quarter of 2013. The decrease in gross profit as a percentage of revenues was due to reductions in both the animal and human nutrition segments. Animal segment gross profit as a percentage of revenues declined from 47.1 percent to 28.7 percent, due primarily to a higher cost per unit for current season production and greater than anticipated fish catch in the fourth quarter of 2013, which resulted in additional profit related to prior period sales. Human nutrition gross profit as a percentage of revenues decreased from 13.6 percent to 8.6 percent due primarily to lower gross profit as a percentage of revenues for protein products.

Compared to the third quarter of 2014, fourth quarter gross profit increased from $14.2 million, or 20.0 percent as a percentage of revenues, to $22.5 million, or 22.0 percent as a percentage of revenues. Animal nutrition gross profit as a percentage of revenues increased from 25.8 percent to 28.7 percent as a result of increased fish oil and fish meal sales prices. Human nutrition segment gross profit as a percentage of revenues increased from a gross loss of 0.1 percent to a gross profit of 8.6 percent due primarily to the acquisition of Bioriginal.

Selling, general and administrative expenses for the fourth quarter increased $2.8 million to $8.7 million compared to the fourth quarter of 2013, primarily as a result of the Bioriginal acquisition. Selling, general and administrative expenses decreased $1.5 million from $10.2 million in the third quarter of 2014 due primarily to non-recurring professional expenses related to the third quarter acquisition of Bioriginal.

Impairment of goodwill and other intangible assets increased from $0.2 million in the fourth quarter of 2013 to $4.7 million in the fourth quarter of 2014 due to impairment expenses related to the InCon and Cyvex reporting unit within the human nutrition segment.

In the fourth quarter of 2013, the Company closed its menhaden fish processing plant located in Cameron, Louisiana and re-deployed certain vessels from that facility to the Company's other Gulf Coast facilities. In conjunction with the closure, the Company incurred charges of $1.6 million and $6.6 million in the fourth quarters of 2014 and 2013, respectively. 

The fourth quarter of 2014 effective tax rate was 46.5 percent compared to 31.9 percent in the fourth quarter of 2013 and 60.6 percent in the third quarter of 2014. The fourth quarter of 2014 effective tax rate reflected the impact of bonus depreciation rules enacted during the quarter, and the third quarter of 2014 effective tax rate reflected non-deductible expenses related to the acquisition of Bioriginal. 

Net income for the fourth quarter of 2014 was $3.2 million ($0.14 per diluted share) compared to $9.7 million ($0.45 per diluted share) in the same period last year and $0.7 million ($0.03 per diluted share) for the third quarter of 2014. Excluding plant closure charges, impairment expenses, acquisition related costs and net gain or loss on disposal of assets, net income for the fourth quarter of 2014 would have been $7.8 million ($0.35 per diluted share), compared to $14.3 million ($0.67 per diluted share) in the same period last year and $4.8 million ($0.22 per diluted share) for the third quarter of 2014.

Adjusted EBITDA totaled $19.7 million for the fourth quarter of 2014, compared to $26.7 million for the same period last year and$13.1 million for the third quarter of 2014.

Full year 2014 results
Revenues in the twelve months ended Dec. 31, 2014 increased 26 percent to $308.6 million compared to revenues of $244.3 millionfor the twelve months ended Dec. 31, 2013. The increase in revenues was due to a $30.6 million increase in animal nutrition revenues and a $33.8 million increase in human nutrition revenues. The increase in animal nutrition related revenues was primarily due to increased sales volumes of 46 percent and 1 percent for the Company's fish oil and fish meal, respectively, and increased sales prices of 2 percent for the Company's fish meal, partially offset by decreased sales prices of 4 percent for the Company's fish oil. The increase in human nutrition revenues was due primarily to the acquisition of Bioriginal.

The Company recorded gross profit of $77.6 million, or 25.1 percent as a percentage of revenues, in 2014, versus gross profit of $82.8 million, or 33.9 percent as a percentage of revenues, in 2013. The decrease in gross profit as a percentage of revenues was primarily due to a decrease in animal nutrition segment gross profit as a percentage of revenues from 36.2 percent to 29.8 percent, reflecting the impact of decreased fish oil yields and slower than anticipated early season fish catch on cost per unit of sales. In addition, human nutrition gross profit as a percentage of revenues decreased from 18.2 percent to 7.7 percent due primarily to lower gross profit as a percentage of revenues for protein products and the addition of Bioriginal including its one time acquisition-related inventory write-up to fair value.

The effective tax rate was 38.9 percent for the twelve months ended Dec. 31, 2014 compared to 33.6 percent for the twelve months ended Dec. 31, 2013. The effective tax rate in 2014 would have been approximately 36.2 percent were it not for non-deductible expenses related to the acquisition of Bioriginal.

Net income for the twelve months ended Dec. 31, 2014 was $18.5 million ($0.85 per diluted share) compared to $30.5 million ($1.45 per diluted share) last year. Excluding plant closure charges, impairment expenses, acquisition related costs and net gain or loss on disposal of assets, net income for the twelve months ended Dec. 31, 2014 would have been $29.9 million ($1.37 per diluted share) compared to $35.8 million ($1.70 per diluted share) for the year ended Dec. 31, 2013.

Adjusted EBITDA totaled $70.1 million for twelve months ended Dec. 31, 2014, a decrease from $76.6 million for the previous year.