Omega Protein Corp. (NYSE: OME), a nutritional product company and a leading integrated producer of omega-3 fish oil and specialty protein products, reported financial results for the second quarter ended June 30, 2014.

Second quarter highlights:

"We are pleased with our solid performance in the second quarter. Positive supply and demand fundamentals in our animal nutrition segment fueled our strong revenue and earnings performance," commented Bret Scholtes, Omega Protein's president and chief executive officer. "Even though we experienced short-term challenges in our human nutrition segment in the quarter, we believe our diversified nutritional business continues to evolve and provide us with the opportunity to take advantage of growing demand for quality health and wellness products."

Second quarter 2014 results
The Company's revenues increased 72 percent from $41.8 million in the same period last year to $71.9 million. This increase was due to a $30.8 million increase in animal nutrition revenues, partially offset by a $0.7 million decrease in human nutrition revenues. The increase in animal nutrition revenues was primarily due to increased sales volumes of 43 percent and 482 percent for the Company's fish meal and fish oil, respectively, and increased sales prices for the Company's fish meal of 1 percent, partially offset by decreased sales prices of 37 percent for the Company's fish oil. The decrease in fish oil sales prices was primarily due to a change in the product mix of higher priced refined and lower priced crude oils. The decrease in human nutrition revenues was primarily due to lower Omega-3 tolling and other nutraceutical sales, partially offset by an increase in sales of protein products. The composition of revenue by nutritional product line for the second quarter of 2014 was 52 percent fish meal, 38 percent fish oil, 9 percent dietary supplements and food, and 1 percent fish solubles and other. 

Second quarter of 2014 revenues increased 13 percent from $63.5 million in the first quarter of 2014 to $71.9 million. This increase was due to an increase in animal nutrition revenues of $10.0 million, partially offset by a $1.6 million decrease in human nutrition revenues. The increase in animal nutrition revenues was primarily due increased sales volumes of 36 percent and 4 percent for the Company's fish meal and fish oil, respectively, and increased sales prices for the Company's fish oil of 2 percent, partially offset by decreased sales prices of 4 percent for the Company's fish meal. The decrease in human nutrition revenues was primarily due to lower Omega-3 and other nutraceutical sales.

The Company reported gross profit of $20.4 million, or 28.4 percent as a percentage of revenues, for the second quarter of 2014, versus $13.3 million, or 31.8 percent as a percentage of revenues, in the second 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 33.9 percent to 30.3 percent, due in part to a higher cost per unit for current season production. Human nutrition gross profit as a percentage of revenues decreased to 9.9 percent from 22.1 percent due primarily to higher raw material and other protein product costs and lower tolling revenues.

Compared to the first quarter of 2014, second quarter gross profit decreased from $20.5 million, or 32.3 percent as a percentage of revenues, to $20.4 million, or 28.4 percent as a percentage of revenues. Animal nutrition gross profit as a percentage of revenues decreased from 34.6 percent to 30.3 percent, primarily reflecting a higher cost per unit for current season production. Human nutrition segment gross profit as a percentage of revenues decreased from 16.9 percent to 9.9 percent due largely to Omega-3 fish oil ingredients and tolling results.

Selling, general and administrative expenses for the second quarter increased $0.5 million to $6.5 million compared to the second quarter of 2013, primarily as a result of higher employee related and professional services expenses. Selling, general and administrative expenses increased $0.4 million from $6.1 million in the first quarter of 2014.

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 located in Abbeville, Louisiana and Moss Point, Mississippi. In conjunction with the closure, the Company incurred charges of $2.6 millionin the second quarter of 2014 and $1.3 million in the first quarter of 2014.

The second quarter of 2014 effective tax rate was 36.9 percent compared to 34.7 percent in the second quarter of 2013 and 33.9 percent in the first quarter of 2014.

Net income for the second quarter of 2014 was $6.6 million ($0.31 per diluted share) compared to $4.0 million ($0.19 per diluted share) in the same period last year and $8.0 million ($0.37 per diluted share) for the first quarter of 2014. Excluding plant closure charges and gain or loss on disposal of assets, net income for the second quarter of 2014 would have been $8.3 million ($0.38 per diluted share), compared to $4.0 million ($0.19 per diluted share) in the same period last year and $9.0 million ($0.42 per diluted share) for the first quarter of 2014.

Adjusted EBITDA totaled $18.3 million for the second quarter of 2014, compared to $11.8 million for the same period last year and $19.1 million for the first quarter of 2014.

Six month 2014 results
Revenues in the first six months of 2014 increased 49 percent to $135.4 million compared to revenue of $90.7 million for the six months ended June 30, 2013. The increase in revenues was due to a $43.7 million increase in animal nutrition revenues and a $1.0 million increase in human nutrition revenues. The increase in animal nutrition revenues was primarily due to increased sales volumes of 15 percent and 187 percent for the Company's fish meal and fish oil, respectively, and increased sales prices for the Company's fish meal of 8 percent, partially offset by decreased sales prices of 12 percent for the Company's fish oil. The increase in human nutrition revenues was due primarily to sales of protein products from Wisconsin Specialty Protein, a business acquired by the Company in the first quarter of 2013.

The Company recorded gross profit of $40.9 million, or 30.2 percent as a percentage of revenues, for the first six months of 2014, versus gross profit of $25.4 million, or 28.0 percent as a percentage of revenues, for the first six months of 2013. The increase in gross profit as a percentage of revenues was primarily due to the increase in animal segment sales prices, partially offset by a decrease in human nutrition gross profit as a percentage of revenues.

The effective tax rate was 35.3 percent for the six months ended June 30, 2014 compared to 34.1 percent for the six months ended June 30, 2013.

Net income for the six months ended June 30, 2014 was $14.6 million ($0.68 per diluted share) compared to $6.8 million ($0.33 per diluted share) for the same period last year. Excluding the impact of the plant closure and loss on disposal of assets, net income for the six months ended June 30, 2014 would have been $17.3 million ($0.80 per diluted share) compared to $7.1 million ($0.34 per diluted share).

Adjusted EBITDA totaled $37.4 million for six months ended June 30, 2014, an increase from $21.8 million for the same period last year.