Omega Protein reports Q1 net earnings of US$8M, compared to year-ago earnings of US$2.8M, as revenues rise 29.9% to US$63.5M

HOUSTON , May 7, 2014 (press release) – Omega Protein Corporation (OME), a nutritional product company and a leading integrated producer of omega-3 fish oil and specialty protein products, today reported financial results for the first quarter ended March 31, 2014.

First Quarter Highlights

Revenues: $63.5 million for the quarter, compared to $48.9 million in the same period a year ago

Gross profit margin: 32.3% for the quarter, compared to 24.7% in the same period a year ago

Net income: $8.0 million, or $9.0 million excluding plant closure charges and loss on disposal of assets for the quarter, compared to $2.8 million, or $3.1 million excluding the loss on disposal of assets, in the same period a year ago

Earnings per diluted share: $0.37, or $0.42 excluding plant closure charges and loss on disposal of assets for the quarter, compared to $0.14, or $0.15 excluding the loss on disposal of assets, in the same period a year ago

Adjusted EBITDA: $19.1 million for the quarter, compared to $10.0 million in the same period a year ago

"We continue to see strong momentum in both our animal and human nutrition segments. These results helped us generate yet another quarter of year-over-year margin and earnings growth," commented Bret Scholtes, Omega Protein's President and Chief Executive Officer. "Our business continues to benefit from favorable animal nutrition supply and demand dynamics and we are increasingly pleased with our improved human nutrition results as we further execute on our strategic initiatives to expand our value-added product offerings for consumers."

First Quarter 2014 Results

The Company's revenues increased 30% from $48.9 million in the same period last year to $63.5 million. This increase was due to a $12.9 million increase in animal nutrition revenues and a $1.6 million increase in human nutrition revenues. The increase in animal nutrition revenues was primarily due to increased sales prices of 15% and 1% for the Company's fish meal and fish oil, respectively, and increased sales volumes for the Company's fish oil of 88%, partially offset by decreased sales volumes of 9% for the Company's fish meal. The increase in human nutrition revenues was primarily due to sales of protein products from Wisconsin Specialty Protein ("WSP"), a business acquired by the Company in the first quarter of 2013. The composition of revenue by nutritional product line for the first quarter of 2014 was 45% fish meal, 40% fish oil, 13% dietary supplements and food, and 2% fish solubles and other.

First quarter of 2014 revenues decreased 4% from $66.0 million in the fourth quarter of 2013 to $63.5 million. This decrease was due to a decrease in animal nutrition and human nutrition revenues of $1.4 million and $1.1 million, respectively. The decrease in animal nutrition revenues was primarily due to 29% lower fish meal sales volumes and 24% lower fish oil sales prices, partially offset by 4% higher fish meal sales prices and 94% higher fish oil sales volumes. The decrease in fish oil sales prices was due to a change in the product mix of higher priced refined and lower priced crude oils, and lower prices on those products. The decrease in human nutrition revenues was primarily due to lower revenues from other nutraceuticals and third party tolling.

The Company reported gross profit of $20.5 million, or 32.3% as a percentage of revenues, for the first quarter of 2014, versus $12.1 million, or 24.7% as a percentage of revenues, in the first quarter of 2013. The increase was primarily due to an increase in the animal nutrition segment gross profit as a percentage of revenues from 26.6% to 34.6% as a result of increased fish meal and fish oil sales prices. Human nutrition gross profit also increased as a percentage of revenues from 13.0% to 16.9%, due primarily to improved results from Omega-3 fish oil ingredients, partially offset by a decrease in gross profit as a percentage of revenue in the protein products business.

Compared to the fourth quarter of 2013, first quarter gross profit decreased from $28.0 million, or 42.4% as a percentage of revenues, to $20.5 million, or 32.3% as a percentage of revenues. The decrease in gross profit as a percentage of revenues was due to a decrease in animal nutrition gross profit as a percentage of revenues from 47.1% to 34.6%, primarily as a result of greater than anticipated fish catch in the fourth quarter, which resulted in additional profit related to prior period sales of 2013 inventory production, and the decreased fish oil sales prices in the first quarter. This decrease was partially offset by an increase in human nutrition segment gross profit as a percentage of revenues from 13.6% to 16.9% primarily due to improved gross profit as a percentage of revenues for other nutraceuticals.

Selling, general and administrative expenses for the first quarter decreased $0.4 million to $6.1 million compared to the first quarter of 2013, primarily as a result of lower acquisition-related professional expenses. Selling, general and administrative expenses increased $0.2 million from $5.9 million for the fourth quarter of 2013.

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, as previously announced. In conjunction with the closure, the Company incurred charges of $1.3 million in the first quarter of 2014 and $6.6 million in the fourth quarter of 2013.

The first quarter of 2014 effective tax rate was 33.9% compared to 33.2% in the first quarter of 2013 and 31.9% in the fourth quarter of 2013.

Net income for the first quarter of 2014 was $8.0 million ($0.37 per diluted share) compared to $2.8 million ($0.14 per diluted share) in the same period last year and $9.7 million ($0.45 per diluted share) for the fourth quarter of 2013. Excluding plant closure charges and gain/loss on disposal of assets, net income for the first quarter of 2014 would have been $9.0 million ($0.42 per diluted share), compared to $3.1 million ($0.15 per diluted share) in the same period last year and $14.2 million ($0.66 per diluted share) for the fourth quarter of 2013.

Adjusted EBITDA totaled $19.1 million for the first quarter of 2014, compared to $10.0 million for the same period last year and $26.7 million for the fourth quarter of 2013.

Balance Sheet

The Company's March 31, 2014 cash balance increased $7.1 million from December 31, 2013 to $41.2 million. Total debt decreased $1.2 million from December 31, 2013 to $23.0 million on March 31, 2014. Stockholders' equity increased $8.5 million to $255.7 million as of March 31, 2014 compared to $247.2 million as of December 31, 2013.

Conference Call Information

Omega Protein will host a conference call on its first quarter 2014 financial results at 8:30 a.m., Eastern Time, on Thursday, May 8, 2014. The Company's senior management team will be available to discuss recent financial results and current business trends as well as respond to questions.

Please dial (877) 407-3982 domestically or (201) 493-6780 internationally to join the call. Interested parties may also listen to the webcast live over the Internet at www.omegaprotein.com.

A webcast replay of the conference call will be available beginning shortly after the conclusion of the call at www.omegaprotein.com and will be available for 30 days. A telephonic replay of the conference call will be available through May 22, 2014. Domestic listeners can dial (877) 870-5176, and international listeners may dial (858) 384-5517. The replay access code is 13580483.

About Omega Protein

Omega Protein Corporation (OME) is a century old nutritional company that develops, produces and delivers healthy products throughout the world to improve the nutritional integrity of functional foods, dietary supplements and animal feeds. Omega Protein's mission is to help people lead healthier lives with better nutrition through sustainably sourced ingredients such as highly-refined omega-3 rich fish oil, specialty proteins and nutraceuticals.

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