Omega Protein Corporation (NYSE symbol: OME), a nutritional ingredient company and the nation's leading producer of omega-3 fish oil and specialty fish meal products, reported financial results of the second quarter ended June 30, 2011.
Second Quarter Results
Omega Protein reported that revenues increased 22% to $44.2 million from $36.3 million for the same period last year. Gross profit and gross margins also increased compared to the 2010 second quarter. These improvements primarily reflected a 30% increase in fish meal sales volumes and a 47% increase in fish oil sales prices. A strong export demand for quality proteins and oil and an increase in pricing of competitive fats and oils were influential factors.
The composition of revenue disaggregated by nutritional product line was 67% fish meal, 21% fish oil, 9% specialty nutraceutical ingredients, and 3% fish solubles.
Revenue composition by geography was approximately 50% domestic and 50% export for the second quarter of 2011.
The Company recorded operating income of $36.0 million (which includes the impact of two settlements discussed below), an 81.3% operating margin, for the second quarter of 2011, versus operating income of $3.8 million, a 10.5% operating margin, for the second quarter of 2010. Excluding the settlements, operating margin for the quarter would have been approximately 20.4%.
Net income for the three months ended June 30, 2011 was $22.9 million ($1.14 per diluted share) compared to $2.0 million ($0.11 per diluted share) for the same period last year. Excluding the impact of two settlements described below, net income would have been approximately $5.5 million ($0.27 per diluted share).
Six-Month Results of 2011
Revenue in the current period increased 47% to $100.6 million compared to revenue of $68.6 million for the six months ended June 30, 2010. The composition of the 2011 revenue disaggregated by nutritional product line was 69% fish meal, 23% fish oil, 6% specialty nutraceutical ingredients, and 2% fish solubles.
Operating income for the six months of 2011 increased to $46.3 million (including the impact of the two settlements described below for $27.0 million) with an operating margin of 46.1% compared to $6.1 million and an operating margin of 8.8% in the same period of 2010. Excluding the settlements, operating margin for the six-month period would have been approximately 19.3%.
Net income for the six months ended June 30, 2011 was $28.9 million ($1.45 per diluted share) compared to $3.0 million ($0.16 per diluted share) for the same period last year. Excluding the impact of two settlements described below, the Company's net income for the six months ended June 30, 2011 would have been approximately $11.6 million ($0.58 per diluted share).
Final Claim Settlements
As previously disclosed, the Company agreed to a final settlement of all of its claims and damages incurred as a result of the oil spill caused by the Deepwater Horizon explosion on April 20, 2010. As a result of the final settlement, the Company received, in addition to the $18.7 million previously received in 2010, a final payment of $26.2 million, net of fees and expenses but before taxes, from the Gulf Coast Claims Facility on April 18, 2011. This payment was fully recognized during the second quarter of 2011.
In addition, the Company settled an outstanding claim against its former insurance broker in June 2011. As a result, the Company received a final payment of $0.8 million which was fully recognized during the second quarter of 2011.
The Company's balance sheet continues to strengthen with stockholders equity of $193.9 million and working capital of $117.0 million. The cash balance of $47.3 million was increased by the two legal settlements and operating cash flow, largely offset by fishing season and capital expenditures.
About Omega Protein Corporation
Omega Protein Corporation is a nutritional ingredient company and the nation's largest producer of omega-3 fish oil and specialty fish meal products. Omega Protein's marine product lines are sourced from menhaden, an Omega-3 rich fish harvested along the Atlantic and Gulf coasts.