HOUSTON, Aug. 2, 2017 /PRNewswire/ -- Omega Protein
Corporation (NYSE:OME), a nutritional product company and a leading
integrated provider of specialty oils and specialty protein
products, today reported financial results for the second quarter
and six months ended June 30,
2017.
Second Quarter 2017 Highlights
- Revenues: $93.9 million, compared to $112.7 million in the same period a year ago
- Gross profit margin: 24.0%, compared to 29.6% in
the same period a year ago
- Net income: $7.4 million,
or $7.6 million on an adjusted basis,
compared to $5.7 million, or
$14.1 million on an adjusted basis,
in the same period a year ago
- Earnings per diluted share: $0.32, or $0.34 on
an adjusted basis, compared to $0.25,
or $0.62 on an adjusted basis, in the
same period a year ago
- Adjusted EBITDA: $18.5
million, compared to $28.6
million in the same period a year ago
"Results for our human nutrition segment continued to improve in
the second quarter, although softer pricing and a slower than
average start to the fishing season impacted animal nutrition
segment results," commented Bret
Scholtes, Omega Protein's President and Chief Executive
Officer. "As of June 30 we were less
than halfway through our fishing season, and given recent
improvements in weather we are looking forward to the balance of
the season. In addition, while global quotas have pressured
fish meal and fish oil prices, we believe these near-term
volatilities are transitory in nature, and the macro-economic and
industry trends that continue to drive positive demand for our
products give us confidence in our long-term opportunities."
Mr. Scholtes concluded, "Our management team and board of
directors remain focused on strategically aligning our human
nutrition segment to best generate financial results and create
value for shareholders. We continue to make progress on our
previously announced strategic review of the human nutrition
business segment and will provide you with further updates as
appropriate on this ongoing effort."
Second Quarter 2017 Results
The Company's revenues decreased 17% from $112.7 million in the same period last year to
$93.9 million, due to a decrease of
$24.5 million in animal nutrition
revenues, partially offset by a $5.7
million increase in human nutrition revenues. The decrease
in animal nutrition revenues was primarily due to decreased sales
volumes of 18% and 30% for the Company's fish oil and fish meal,
respectively, and decreased sales prices of 12% and 1% for the
Company's fish oil and fish meal, respectively. The decreases in
fish oil and fish meal sales volumes were primarily due to the
timing of contracts, a lower level of beginning inventory and a
decreased level of production as a result of lower fish catch
compared to the prior year period. The decrease in fish oil sales
prices was primarily due to prevailing market conditions, including
global supply and demand, at the time sales contracts were entered
into. The increase in human nutrition revenues was primarily a
result of increased specialty oil sales, most notably coconut
oil. The composition of revenues by nutritional product line
for the second quarter of 2017 was 32% fish meal, 29% fish oil and
39% human nutrition.
Second quarter of 2017 revenues increased 28% from $73.6 million in the first quarter of 2017 to
$93.9 million. This increase was due
to $17.2 million and $3.1 million increases in animal nutrition and
human nutrition revenues, respectively. The increase in animal
nutrition revenues was due to seasonally increased sales volumes of
415% for fish oil, partially offset by a predominately product
mix-driven 41% decrease in fish oil sales prices and a 4% decrease
in fish meal prices. The increase in human nutrition revenues was
primarily a result of increased specialty oil and protein product
sales.
The Company reported gross profit of $22.5 million, or 24.0% as a percentage of
revenues, for the second quarter of 2017, versus $33.4 million, or 29.6% as a percentage of
revenues, in the second quarter of 2016. The decrease in gross
profit as a percentage of revenues was due to a decrease in the
animal nutrition segment, partially offset by an increase in the
human nutrition segment. Animal nutrition gross profit as a
percentage of revenues decreased from 37.4% to 26.6%, due primarily
to a decrease in sales prices and an increase in the cost per unit
of sales as a result of lower anticipated fish catch and production
volumes for the 2017 fishing season. Human nutrition gross profit
as a percentage of revenues increased from 9.2% to 19.8% primarily
due to increased gross profit as a percentage of revenues for
specialty oils.
Compared to the first quarter of 2017, the second quarter of
2017 gross profit increased from $20.2
million to $22.5 million, and
as a percentage of revenues, second quarter 2017 gross profit
decreased from 27.4% to 24.0%. The decrease in gross profit as a
percentage of revenues was due to a decrease in the animal
nutrition segment, partially offset by an increase in the human
nutrition segment. Animal nutrition gross profit as a
percentage of revenues decreased from 35.4% to 26.6%, due to a
decrease in sales prices and an increase in the cost per unit of
sales. Human nutrition gross profit as a percentage of revenues
increased from 18.0% to 19.8% primarily as a result of increased
gross profit as a percentage of revenues for protein products.
Selling, general and administrative expense, including research
and development expense ("SG&A"), for the second quarter of
2017 decreased to $10.3 million
compared to $11.8 million in the
second quarter of 2016, primarily due to lower professional and
labor expenses. SG&A decreased from $10.8 million in the first quarter of 2017, due
primarily to lower professional expenses.
The Company recorded a $0.4
million loss on foreign currency for the second quarter of
2017 compared to a $0.1 million gain
on foreign currency in the second quarter of 2016 and a loss on
foreign currency of $0.9 million for
the first quarter of 2017 related to Bioriginal Food &
Science.
The Company recorded goodwill impairment expenses in the second
quarter of 2016 of $11.6 million
related to the Wisconsin Specialty Protein business in the human
nutrition segment. There were no impairment charges
recognized in the second or first quarters of 2017.
Net income for the second quarter of 2017 was $7.4 million ($0.32
per diluted share) compared to $5.7
million ($0.25 per diluted
share) in the same period last year and $6.1
million ($0.27 per diluted
share) in the first quarter of 2017. Excluding adjustments for
certain items, adjusted net income for the second quarter of 2017
was $7.6 million ($0.34 per diluted share), compared to
$14.1 million ($0.62 per diluted share) in the same period last
year and $6.0 million ($0.26 per diluted share) for the first quarter of
2017.
Adjusted EBITDA totaled $18.5
million for the second quarter of 2017, compared to
$28.6 million for the same period
last year and $15.2 million for the
first quarter of 2017.
Six Month 2017 Results
Revenues in the first six months of 2017 decreased 15% to
$167.5 million compared to
$197.5 million for the six months
ended June 30, 2016. The decrease in
revenues was due to a $34.7 million
decrease in animal nutrition revenues partially offset by a
$4.7 million increase in human
nutrition revenues. The decrease in animal nutrition revenues was
primarily due to decreased sales volumes of 28% and 21% for the
Company's fish oil and fish meal, respectively, and decreased sales
prices of 6% for the Company's fish oil; fish meal prices did not
change significantly. The decrease in fish oil and fish meal sales
volumes was primarily due to the timing of contracts and a lower
level of beginning inventory and production as a result of lower
fish catch compared to the prior year period. The decrease in fish
oil sales prices was primarily due to prevailing market conditions
such as global supply and demand at the time sales contracts were
entered into. The increase in human nutrition revenues was
primarily due to an increase in sales of specialty oils.
The Company recorded gross profit of $42.7 million, or 25.5% as a percentage of
revenues, for the first six months of 2017, versus gross profit of
$58.2 million, or 29.5% as a
percentage of revenues, for the first six months of 2016. The
decrease in gross profit as a percentage of revenues was due to a
decrease in the animal nutrition segment from 38.7% to 30.2%,
partially offset by an increase in the human nutrition segment from
11.0% to 19.0%.
Net income for the six months ended June
30, 2017 was $13.4 million
($0.59 per diluted share) compared to
$14.0 million ($0.62 per diluted share) for the same period last
year. Excluding adjustments for certain items, adjusted net income
for the six months ended June 30,
2017 would have been $13.6
million ($0.60 per diluted
share) compared to $23.2 million
($1.03 per diluted share).
Adjusted EBITDA totaled $33.6
million for six months ended June 30,
2017, compared to $49.1
million for the same period last year.
Balance Sheet
Cash decreased $27.4 million from
$37.4 million on December 31, 2016 to $10.0
million on June 30,
2017. Total debt increased $0.8
million from $1.1 million on
December 31, 2016 to $1.9 million on June
30, 2017. Stockholders' equity increased $12.0 million to $348.7
million as of June 30, 2017
compared to $336.7 million as of
December 31, 2016.
Conference Call Information
Omega Protein will host a conference call on its second quarter
financial 2017 results at 8:30 a.m. Eastern
Time on Thursday, August 3,
2017. 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 in North
America or (201) 493-6780 internationally to join the
call. Interested parties may also listen to the webcast live
over the Internet under the "Investor Relations" section 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 playback will be available from 11:30 a.m. ET, August 3,
2017, through August 17, 2017.
Participants can dial (844) 512-2921 in North America, and international listeners may
dial (412) 317-6671. The password is 13666543.
About Omega Protein Corporation
Omega Protein Corporation (NYSE: OME) is a century old
nutritional product company that develops, produces and delivers
healthy products throughout the world to improve the nutritional
integrity of 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 specialty oils, specialty protein products and
nutraceuticals.
The Company operates seven manufacturing facilities located in
the United States, Canada and Europe. The Company also operates more than 30
vessels to harvest menhaden, a fish abundantly found in the
Atlantic Ocean and Gulf of
Mexico.
For More Information
Visit Omega Protein at www.omegaprotein.com, follow us on
Twitter at https://twitter.com/omegaprotein, or find us on LinkedIn
at https://www.linkedin.com/company/omega-protein-inc.
Forward-Looking Statements
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS: The
statements contained in this press release that are not historical
facts are forward-looking statements that involve a number of risks
and uncertainties. Forward-looking information may be based on
projections, predictions and estimates. Some statements in this
press release may be forward-looking and use words like "may," "may
not," "believes," "do not believe," "expects," "do not expect,"
"anticipates," "do not anticipate," "see," "do not see," "should,"
or other similar expressions. The actual results of future events
described in any of these forward-looking statements could differ
materially from those stated in the forward-looking statements.
Important factors that could cause actual results to be materially
different from those forward-looking statements include, among
others: (1) the Company's ability to meet its raw material
requirements through its annual menhaden harvest, which is subject
to fluctuations due to natural conditions over which the Company
has no control, such as varying fish population, fish oil yields,
adverse weather conditions, natural and other disasters and
disease; (2) the impact of laws and regulations that may be enacted
that may restrict the Company's operations or the sale of the
Company's products or increase the cost of compliance; (3) the
impact of worldwide supply and demand relationships on prices for
the Company's products; (4) the Company's expectations regarding
demand and pricing for its products proving to be incorrect, and
the effect of forward sales of products on the Company's financial
results; (5) fluctuations in the Company's quarterly operating
results due to the seasonality of the Company's business, estimates
of standard cost for inventory and subsequent adjustments to such
costs, and the Company's deferral of inventory sales based on
worldwide prices for competing products; (6) the Company's ability
to realize the anticipated benefits from its acquisitions in the
human nutrition business, and specifically, to integrate
successfully its acquisitions in the human nutrition segment; (7)
the Company's expectations regarding its human nutrition segment,
its future prospects and the dietary supplement market or the human
health and wellness segment generally; (8) increase in the price
and shortage of key raw materials that could adversely affect the
Company's human nutrition business segment; (9) the cost of
compliance or potential restrictions on sales caused by laws and
regulations regarding fish meal or oil importation into foreign
jurisdictions; (10) the impact of any resolution of a Department of
Justice False Claims Act inquiry and two Securities and Exchange
Commission subpoenas on the Company's business, reputation, results
of operations and financial condition; (11) the Company's
expectations regarding the suspension of its previously announced
stock repurchase program and the duration of that suspension, on
the ability of the Company to purchase shares of its common stock
under that repurchase program, if it is resumed; (12) the Company's
expectations regarding the ASMFC's 2017 harvest quota decision,
including timing and allocations among ASMFC member states and user
groups; (13) the ability or willingness of the Company to make
further dividend payments under its previously announced quarterly
dividend program, and the anticipated level of those payments; (14)
the impact of the Company's previous announcement of the Company's
review of strategic alternatives of its human nutrition segment, as
well as any strategic transaction that may be pursued as a result
of such review, including on its financial and operating results,
or its employees, suppliers and customers, as well as the
uncertainty associated with being able to identify, evaluate and
complete any strategic alternative; (15) the impact of the
Company's inability to utilize any H2B visa workers on the
Company's 2017 Gulf of Mexico fishing season; and (16) the impact
of pending class action litigation filed against the Company on the
Company's business, reputation, results of operations and financial
condition. Other factors are described in further detail in
the Company's filings with the Securities and Exchange Commission,
including its reports on Form 10-K, Form 10-Q and Form 8-K.
Except as required by law, the Company expressly disclaims any
intention or obligation to revise or update any forward-looking
information whether as a result of new information, future events
or otherwise.
OMEGA PROTEIN
CORPORATION
|
UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEET
|
(In thousands,
except par value amounts)
|
|
|
|
June
30,
2017
|
|
December
31,
2016
|
ASSETS
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
9,967
|
|
$
|
37,412
|
Receivables, net
|
|
|
55,187
|
|
|
38,796
|
Inventories, net
|
|
|
110,708
|
|
|
108,711
|
Prepaid expenses and other current assets
|
|
|
6,359
|
|
|
4,707
|
Total current assets
|
|
|
182,221
|
|
|
189,626
|
Property, plant and
equipment, net
|
|
|
202,278
|
|
|
188,624
|
Goodwill
|
|
|
26,733
|
|
|
26,347
|
Other intangible
assets, net
|
|
|
16,697
|
|
|
17,504
|
Other assets,
net
|
|
|
4,248
|
|
|
5,764
|
Total assets
|
|
$
|
432,177
|
|
$
|
427,865
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Current maturities of long-term debt
|
|
$
|
1,884
|
|
$
|
1,097
|
Accounts payable
|
|
|
12,817
|
|
|
17,099
|
Accrued liabilities
|
|
|
29,758
|
|
|
37,928
|
Total current liabilities
|
|
|
44,459
|
|
|
56,124
|
Deferred tax
liability, net
|
|
|
30,399
|
|
|
25,678
|
Pension liabilities,
net
|
|
|
5,524
|
|
|
5,659
|
Other long-term
liabilities
|
|
|
3,070
|
|
|
3,717
|
Total liabilities
|
|
|
83,452
|
|
|
91,178
|
|
|
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
|
Preferred
stock, $0.01 par value; 10,000,000 authorized shares;
none issued
|
|
|
—
|
|
|
—
|
Common
Stock, $0.01 par value; 80,000,000 authorized shares;
22,652,670 and 22,579,626 shares issued
and 22,464,351 and 22,411,695
shares outstanding at June 30, 2017 and December 31, 2016, respectively
|
|
|
223
|
|
|
223
|
Capital in
excess of par value
|
|
|
156,848
|
|
|
155,761
|
Retained
earnings
|
|
|
203,345
|
|
|
192,150
|
Treasury
stock, at cost – 188,319 and 167,931 shares at June 30,
2017 and December 31, 2016,
respectively
|
|
|
(3,385)
|
|
|
(2,894)
|
Accumulated other comprehensive loss
|
|
|
(8,306)
|
|
|
(8,553)
|
Total stockholders' equity
|
|
|
348,725
|
|
|
336,687
|
Total liabilities and stockholders' equity
|
|
$
|
432,177
|
|
$
|
427,865
|
|
|
|
|
|
|
|
|
|
|
OMEGA PROTEIN
CORPORATION
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
|
(In thousands,
except per share amounts)
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
June
30,
|
|
June
30,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Revenues
|
$
|
93,923
|
$
|
112,650
|
$
|
167,492
|
$
|
197,493
|
Cost of
sales
|
|
71,415
|
|
79,252
|
|
124,793
|
|
139,276
|
Gross
profit
|
|
22,508
|
|
33,398
|
|
42,699
|
|
58,217
|
|
|
|
|
|
|
|
|
|
Selling, general, and
administrative expense
|
|
9,781
|
|
11,106
|
|
20,032
|
|
20,039
|
Research and
development expense
|
|
506
|
|
713
|
|
1,029
|
|
1,349
|
Impairment of
goodwill and other intangible assets
|
|
—
|
|
11,614
|
|
—
|
|
11,614
|
Loss related to plant
closures
|
|
—
|
|
1,023
|
|
—
|
|
1,665
|
Loss (gain) on
disposal of assets
|
|
175
|
|
(31)
|
|
(210)
|
|
(66)
|
Operating
income
|
|
12,046
|
|
8,973
|
|
21,848
|
|
23,616
|
Interest
expense
|
|
(72)
|
|
(134)
|
|
(153)
|
|
(279)
|
Gain (loss) on
foreign currency
|
|
(353)
|
|
73
|
|
(1,241)
|
|
(1,358)
|
Other income
(expense), net
|
|
(86)
|
|
116
|
|
(136)
|
|
37
|
Income before income
taxes
|
|
11,535
|
|
9,028
|
|
20,318
|
|
22,016
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
|
4,177
|
|
3,365
|
|
6,880
|
|
7,973
|
Net income
|
|
7,358
|
|
5,663
|
|
13,438
|
|
14,043
|
|
|
|
|
|
|
|
|
|
Other comprehensive
income (loss):
|
|
|
|
|
|
|
|
|
Foreign currency
translation adjustment net of tax expense of $598, $194, $640 and $584,
respectively
|
|
1,111
|
|
360
|
|
1,188
|
|
1,085
|
Energy swap
adjustment, net of tax benefit (expense) of $319, ($863), $722 and ($927),
respectively
|
|
(593)
|
|
1,603
|
|
(1,341)
|
|
1,721
|
Pension benefits
adjustment, net of tax expense of $108, $120, $215 and $239, respectively
|
|
200
|
|
222
|
|
400
|
|
444
|
Comprehensive
income
|
$
|
8,076
|
$
|
7,848
|
$
|
13,685
|
$
|
17,293
|
|
|
|
Basic earnings per
share
|
$
|
0.33
|
$
|
0.25
|
$
|
0.60
|
$
|
0.63
|
|
|
|
Weighted average
common shares outstanding
|
|
22,157
|
|
21,885
|
|
22,140
|
|
21,873
|
|
|
|
Diluted earnings per
share
|
$
|
0.32
|
$
|
0.25
|
$
|
0.59
|
$
|
0.62
|
|
|
|
Weighted average
common shares and potential common
share equivalents outstanding
|
|
22,423
|
|
22,180
|
|
22,427
|
|
22,174
|
|
|
|
Dividends declared
per common share outstanding
|
$
|
0.05
|
$
|
—
|
$
|
0.10
|
$
|
—
|
OMEGA PROTEIN
CORPORATION
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
|
(Dollars in
thousands)
|
|
|
|
Six Months
Ended
|
|
|
June
30,
|
|
|
2017
|
|
2016
|
Cash flows from
operating activities:
|
|
|
|
|
Net
income
|
$
|
13,438
|
$
|
14,043
|
Adjustments to
reconcile net income to net cash
provided by operating activities:
|
|
|
|
|
Depreciation and amortization
|
|
13,028
|
|
12,599
|
Loss
related to plant closures
|
|
―
|
|
1,986
|
Loss
(gain) on disposal of assets
|
|
(210)
|
|
(66)
|
Impairment
of goodwill and other intangible assets
|
|
―
|
|
11,614
|
Provisions
for losses on receivables
|
|
7
|
|
29
|
Share
based compensation
|
|
1,383
|
|
1,855
|
Deferred
income taxes
|
|
5,384
|
|
(1,747)
|
Unrealized
loss (gain) on foreign currency fluctuations, net
|
|
1,241
|
|
1,358
|
Changes in
assets and liabilities:
|
|
|
|
|
Receivables
|
|
(16,594)
|
|
(14,930)
|
Inventories
|
|
(1,615)
|
|
13,091
|
Prepaid expenses and other current assets
|
|
(2,944)
|
|
(1,596)
|
Other assets
|
|
339
|
|
(2,117)
|
Accounts payable
|
|
(4,983)
|
|
(5,271)
|
Accrued liabilities
|
|
(7,591)
|
|
10,821
|
Pension liability, net
|
|
265
|
|
241
|
Other long term liabilities
|
|
18
|
|
(6)
|
Net cash provided by operating activities
|
|
1,166
|
|
41,904
|
Cash flows from
investing activities:
|
|
|
|
|
Capital
expenditures
|
|
(27,400)
|
|
(18,272)
|
Proceeds
from disposition of assets
|
|
773
|
|
85
|
Net
cash used in investing activities
|
|
(26,627)
|
|
(18,187)
|
Cash flows from
financing activities:
|
|
|
|
|
Dividends
paid
|
|
(2,243)
|
|
―
|
Principal
payments of long-term debt
|
|
―
|
|
(24,500)
|
Proceeds
from long-term debt
|
|
656
|
|
6,392
|
Treasury
stock repurchase
|
|
(491)
|
|
(358)
|
Proceeds
from equity compensation transactions
|
|
79
|
|
283
|
Excess tax
benefit of equity compensation transactions
|
|
―
|
|
211
|
Net cash used in financing activities
|
|
(1,999)
|
|
(17,972)
|
Net (decrease)
increase in cash and cash equivalents
|
|
(27,460)
|
|
5,745
|
Translation effect on
cash
|
|
15
|
|
(2)
|
Cash and cash
equivalents at beginning of year
|
|
37,412
|
|
661
|
Cash and cash
equivalents at end of period
|
$
|
9,967
|
$
|
6,404
|
|
|
|
The tables below present information about reported segments for
three months ended June 30, 2017 and
2016 (in thousands):
2017
|
|
Animal
Nutrition
|
|
Human
Nutrition
|
|
Unallocated
|
|
Total
|
Revenue
(1)
|
|
$
57,147
|
|
$
36,776
|
|
$ ―
|
|
$
93,923
|
Cost of
sales
|
|
41,939
|
|
29,476
|
|
―
|
|
71,415
|
Gross
profit
|
|
15,208
|
|
7,300
|
|
―
|
|
22,508
|
Selling, general and
administrative expenses (including
research and development)
|
|
568
|
|
4,026
|
|
5,693
|
|
10,287
|
Loss (gain) on
disposal of assets
|
|
175
|
|
―
|
|
―
|
|
175
|
Operating income
(loss)
|
|
$
14,465
|
|
$
3,274
|
|
$
(5,693)
|
|
$
12,046
|
Depreciation and
amortization
|
|
$
4,973
|
|
$
1,292
|
|
$
234
|
|
$
6,499
|
Identifiable
assets
|
|
$ 277,140
|
|
$138,253
|
|
$
16,784
|
|
$ 432,177
|
Capital
expenditures
|
|
$
13,449
|
|
$
74
|
|
$
22
|
|
$
13,545
|
|
|
|
|
|
|
|
|
|
2016
|
|
Animal
Nutrition
|
|
Human
Nutrition
|
|
Unallocated
|
|
Total
|
Revenue
(2)
|
|
$
81,602
|
|
$
31,048
|
|
$ ―
|
|
$ 112,650
|
Cost of
sales
|
|
51,074
|
|
28,178
|
|
―
|
|
79,252
|
Gross
profit
|
|
30,528
|
|
2,870
|
|
―
|
|
33,398
|
Selling, general and
administrative expenses (including
research and development)
|
|
662
|
|
4,473
|
|
6,684
|
|
11,819
|
Impairment of
goodwill and other intangible assets
|
|
―
|
|
11,614
|
|
―
|
|
11,614
|
Loss (gain) related
to plant closures
|
|
(350)
|
|
1,373
|
|
―
|
|
1,023
|
Loss (gain) on
disposal of assets
|
|
(31)
|
|
―
|
|
―
|
|
(31)
|
Operating income
(loss)
|
|
$
30,247
|
|
$(14,590)
|
|
$
(6,684)
|
|
$
8,973
|
Depreciation and
amortization
|
|
$
4,740
|
|
$
1,453
|
|
$
190
|
|
$
6,383
|
Identifiable
assets
|
|
$ 256,755
|
|
$140,937
|
|
$
10,794
|
|
$ 408,486
|
Capital
expenditures
|
|
$
7,442
|
|
$
429
|
|
$
697
|
|
$
8,568
|
|
(1) Excludes
revenue from internal customers of $0.4 million for fish oil that
was transferred from the animal nutrition segment to the human
nutrition segment at cost.
|
|
(2) Excludes
revenue from internal customers of $0.4 million for fish oil that
was transferred from the animal nutrition segment to the human
nutrition segment at cost.
|
The tables below present information about reported segments for
the six months ended June 30, 2017
and 2016 (in thousands):
2017
|
|
Animal
Nutrition
|
|
Human
Nutrition
|
|
Unallocated
|
|
Total
|
Revenue
(3)
|
|
$
97,088
|
|
$
70,404
|
|
$
―
|
|
$
167,492
|
Cost of
sales
|
|
67,742
|
|
57,051
|
|
―
|
|
124,793
|
Gross
profit
|
|
29,346
|
|
13,353
|
|
―
|
|
42,699
|
Selling, general and
administrative expenses (including
research and development)
|
|
1,123
|
|
7,682
|
|
12,256
|
|
21,061
|
Loss (gain) on
disposal of assets
|
|
(221)
|
|
11
|
|
―
|
|
(210)
|
Operating income
(loss)
|
|
$
28,444
|
|
$
5,660
|
|
$ (12,256)
|
|
$
21,848
|
Depreciation and
amortization
|
|
$
10,029
|
|
$
2,528
|
|
$
471
|
|
$
13,028
|
Identifiable
assets
|
|
$ 277,140
|
|
$138,253
|
|
$
16,784
|
|
$ 432,177
|
Capital
expenditures
|
|
$
27,269
|
|
$
109
|
|
$
22
|
|
$
27,400
|
|
|
|
|
|
|
|
|
|
2016
|
|
Animal
Nutrition
|
|
Human
Nutrition
|
|
Unallocated
|
|
Total
|
Revenue
(4)
|
|
$ 131,797
|
|
$
65,696
|
|
$ ―
|
|
$ 197,493
|
Cost of
sales
|
|
80,823
|
|
58,453
|
|
―
|
|
139,276
|
Gross
profit
|
|
50,974
|
|
7,243
|
|
―
|
|
58,217
|
Selling, general and
administrative expenses (including
research and development)
|
|
1,148
|
|
8,609
|
|
11,631
|
|
21,388
|
Impairment of
goodwill and other intangible assets
|
|
―
|
|
11,614
|
|
―
|
|
11,614
|
Loss (gain) related
to plant closures
|
|
(313)
|
|
1,978
|
|
―
|
|
1,665
|
Loss (gain) on
disposal of assets
|
|
(66)
|
|
―
|
|
―
|
|
(66)
|
Operating income
(loss)
|
|
$
50,205
|
|
$(14,958)
|
|
$ (11,631)
|
|
$
23,616
|
Depreciation and
amortization
|
|
$
9,410
|
|
$
2,807
|
|
$
382
|
|
$
12,599
|
Identifiable
assets
|
|
$ 256,755
|
|
$140,937
|
|
$
10,794
|
|
$ 408,486
|
Capital
expenditures
|
|
$
15,904
|
|
$
1,504
|
|
$
864
|
|
$
18,272
|
|
(3) Excludes revenue
from internal customers of $0.8 million for fish oil that was
transferred from the animal nutrition segment to the human
nutrition segment at cost.
|
|
(4) Excludes revenue
from internal customers of $0.5 million for fish oil that was
transferred from the animal nutrition segment to the human
nutrition segment at cost.
|
Net Income to Adjusted EBITDA Reconciliation
The following table (in thousands) provides a reconciliation of
net income, the most directly comparable financial measure
calculated and presented in accordance with GAAP, to Adjusted
EBITDA, a non-GAAP (Generally Accepted Accounting Principles)
financial measure, for the three months ended June 30, 2017, March 31,
2017 and June 30, 2016 and the
six months ended June 30, 2017 and
2016:
|
|
Three Months
Ended
|
|
|
|
June
30,
2017
|
|
March
31,
2017
|
|
June
30,
2016
|
|
Net
Income
|
$
|
7,358
|
$
|
6,080
|
$
|
5,663
|
|
Reconciling
items:
|
|
|
|
|
|
|
|
Interest
expense
|
|
15
|
|
22
|
|
75
|
|
Income
tax provision
|
|
4,177
|
|
2,703
|
|
3,365
|
|
Depreciation and amortization (1)
|
|
6,499
|
|
6,529
|
|
6,383
|
|
Impairment of goodwill and other intangible assets
(2)
|
|
―
|
|
―
|
|
11,614
|
|
Loss
related to plant closures (1)
|
|
―
|
|
―
|
|
1,023
|
|
Acquisition post-closing consideration (2)
|
|
228
|
|
228
|
|
556
|
|
Loss
(gain) on disposal of assets (1)
|
|
175
|
|
(385)
|
|
(31)
|
|
Adjusted
EBITDA
|
$
|
18,452
|
$
|
15,177
|
$
|
28,648
|
|
|
|
Six Months
Ended
|
|
|
|
June
30,
2017
|
|
June
30,
2016
|
|
Net
Income
|
$
|
13,438
|
$
|
14,043
|
|
Reconciling
items:
|
|
|
|
|
|
Interest expense
|
|
37
|
|
161
|
|
Income
tax provision
|
|
6,880
|
|
7,973
|
|
Depreciation and amortization (1)
|
|
13,028
|
|
12,599
|
|
Impairment of goodwill and other intangible assets
(2)
|
|
―
|
|
11,614
|
|
Loss
related to plant closures (1)
|
|
―
|
|
1,665
|
|
Acquisition post-closing consideration (2)
|
|
456
|
|
1,102
|
|
Loss
(gain) on disposal of assets (1)
|
|
(210)
|
|
(66)
|
|
Adjusted
EBITDA
|
$
|
33,629
|
$
|
49,091
|
|
|
(1) See segment
disclosures for allocation among segments.
|
(2) Relates to human
nutrition segment.
|
Adjusted EBITDA represents net income before interest expense,
income tax, depreciation and amortization, impairment of goodwill
and other intangible assets, loss related to plant closures,
acquisition post-closing consideration and loss (gain) on disposal
of assets. The Company has reported Adjusted EBITDA because it
believes Adjusted EBITDA is a measure commonly reported and widely
used by investors as an indicator of a Company's performance of its
ongoing operations. The Company believes Adjusted EBITDA assists
such investors in comparing a company's performance of its ongoing
operations on a consistent basis. Adjusted EBITDA is not a
calculation based on GAAP and should not be considered an
alternative to net income in measuring our performance or used as
an exclusive measure of cash flow because it does not consider the
impact of working capital changes, capital expenditures, debt
principal reductions and other sources and uses of cash which are
disclosed in our consolidated statements of cash flows. Investors
should carefully consider the specific items included in our
computation of Adjusted EBITDA. While Adjusted EBITDA has been
disclosed herein to permit a more complete comparative analysis of
our operating performance relative to other companies, investors
should be cautioned that Adjusted EBITDA as reported by us may not
be comparable in all instances to Adjusted EBITDA as reported by us
or by other companies. Adjusted EBITDA amounts may not be fully
available for management's discretionary use, due to certain
requirements to conserve funds for capital expenditures, debt
service and other commitments, and therefore management relies
primarily on our GAAP results. Adjusted EBITDA is not intended to
represent net income as defined by GAAP and such information should
not be considered as an alternative to net income, cash flow from
operations or any other measure of performance prescribed by GAAP
in the United States.
Net Income to Adjusted Net Income and Diluted Earnings Per
Share Reconciliation
The following table (in thousands, except per share amounts)
provides a reconciliation of net income, the most directly
comparable financial measure calculated and presented in accordance
with GAAP, to Adjusted Net Income and Diluted Earnings Per Share,
non-GAAP (Generally Accepted Accounting Principles) financial
measures, for the three months ended June
30, 2017, March 31, 2017 and
June 30, 2016 and the six months
ended June 30, 2017 and
2016:
|
|
Three Months
Ended
|
|
|
|
June
30,
2017
|
|
March
31,
2017
|
|
June
30,
2016
|
|
Net
Income
|
$
|
7,358
|
$
|
6,080
|
$
|
5,663
|
|
Reconciling
items:
|
|
|
|
|
|
|
|
Income tax provision prior
to adjustments
|
|
4,177
|
|
2,703
|
|
3,365
|
|
Impairment of goodwill and
other intangible assets
|
|
―
|
|
―
|
|
11,614
|
|
Loss related to plant
closures
|
|
―
|
|
―
|
|
1,023
|
|
Acquisition post-closing
consideration
|
|
228
|
|
228
|
|
556
|
|
Loss (gain) on disposal of
assets
|
|
175
|
|
(385)
|
|
(31)
|
|
Adjusted income
before income taxes
|
|
11,938
|
|
8,626
|
|
22,190
|
|
Provision for income taxes
after adjustments
|
|
4,309
|
|
2,655
|
|
8,138
|
|
Adjusted net
income
|
$
|
7,629
|
$
|
5,971
|
$
|
14,052
|
|
Diluted earnings
per share
|
$
|
0.32
|
$
|
0.27
|
$
|
0.25
|
|
Adjusted diluted
earnings per share
|
$
|
0.34
|
$
|
0.26
|
$
|
0.62
|
|
|
|
|
Six Months
Ended
|
|
|
|
|
June
30,
2017
|
|
June
30,
2016
|
|
Net
Income
|
|
$
|
13,438
|
$
|
14,043
|
|
Reconciling
items:
|
|
|
|
|
|
|
Income tax provision prior
to adjustments
|
|
|
6,880
|
|
7,973
|
|
Impairment of goodwill and
other intangible assets
|
|
|
―
|
|
11,614
|
|
Loss related to plant
closures
|
|
|
―
|
|
1,665
|
|
Acquisition post-closing
consideration
|
|
|
456
|
|
1,102
|
|
Loss (gain) on disposal of
assets
|
|
|
(210)
|
|
(66)
|
|
Adjusted income
before income taxes
|
|
|
20,564
|
|
36,331
|
|
Provision for income taxes
after adjustments
|
|
|
6,963
|
|
13,158
|
|
Adjusted net
income
|
|
$
|
13,601
|
$
|
23,173
|
|
Diluted earnings
per share
|
|
$
|
0.59
|
$
|
0.62
|
|
Adjusted diluted
earnings per share
|
|
$
|
0.60
|
$
|
1.03
|
|
Adjusted net income and Adjusted diluted earnings per share
represent net income and diluted earnings per share without
impairment of goodwill and other intangible assets, loss related to
plant closures, acquisition post-closing consideration and loss
(gain) on disposal of assets. Income tax expense associated
with these items is adjusted on a year-to-date basis, as
applicable. The Company has reported Adjusted net income and
Adjusted diluted earnings per share because it believes these
measures are widely used by investors as an indicator of a
Company's performance of its ongoing operations. The Company
believes Adjusted net income and Adjusted diluted earnings per
share assist investors in comparing a company's performance of its
ongoing operations on a consistent basis. Adjusted net income
and Adjusted diluted earnings per share are not calculations based
on GAAP and should not be considered alternatives to net income or
diluted earnings per share in measuring our performance. Investors
should carefully consider the specific items included in our
computation of Adjusted net income and Adjusted diluted earnings
per share. While Adjusted net income and Adjusted diluted earnings
per share have been disclosed herein to permit a more complete
comparative analysis of our operating performance across time
periods and relative to other companies, investors should be
cautioned that these measures as reported by us may not be
comparable in all instances to Adjusted net income and Adjusted
diluted earnings per share as reported by us or by other companies.
Adjusted net income and Adjusted diluted earnings per share are not
intended to represent net income or diluted earnings per share as
defined by GAAP and such information should not be considered as an
alternative to net income, diluted earnings per share or any other
measure of performance prescribed by GAAP in the United States.
Human Nutrition Segment Financial Information
Reconciliation
The following table (in thousands) provides a breakdown of the
total Human Nutrition Segment revenue, cost of sales and gross
profit among concentrated menhaden oil products, dairy protein
products and other products for the three and six months ended
June 30, 2017:
Three Months Ended
June 30, 2017
|
|
Total Human
Nutrition
Segment
|
|
Concentrated
Menhaden
Oil Products
|
|
Segment Less
Concentrated Menhaden
Oil Products
|
|
Dairy Protein
Products
|
|
Other Products
from Human
Nutrition
Segment
|
Revenue
|
|
$
36,776
|
|
$
196
|
|
$
36,580
|
|
$
5,616
|
|
$
30,964
|
Cost of
sales
|
|
29,476
|
|
162
|
|
29,314
|
|
4,233
|
|
25,081
|
Gross
profit
|
|
$
7,300
|
|
$
34
|
|
$
7,266
|
|
$
1,383
|
|
$
5,883
|
Gross profit
margin
|
|
19.8%
|
|
17.3%
|
|
19.9%
|
|
24.6%
|
|
19.0%
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
June 30, 2017
|
|
Total Human
Nutrition
Segment
|
|
Concentrated
Menhaden
Oil Products
|
|
Segment Less
Concentrated Menhaden
Oil Products
|
|
Dairy Protein
Products
|
|
Other Products
from Human
Nutrition
Segment
|
Revenue
|
|
$
70,404
|
|
$
843
|
|
$
69,561
|
|
$
10,107
|
|
$
59,454
|
Cost of
sales
|
|
57,051
|
|
658
|
|
56,393
|
|
8,497
|
|
47,896
|
Gross
profit
|
|
$
13,353
|
|
$
185
|
|
$
13,168
|
|
$
1,610
|
|
$
11,558
|
Gross profit
margin
|
|
19.0%
|
|
21.9%
|
|
18.9%
|
|
15.9%
|
|
19.4%
|
The Company has provided a breakdown of total Human Nutrition
Segment revenue, cost of sales and gross profit among concentrated
menhaden oil products, dairy protein products and other human
nutrition products because it believes such a breakdown will
provide investors with additional useful detail on the performance
of the Human Nutrition Segment.
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SOURCE Omega Protein Corporation