HOUSTON, Nov. 8, 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 third quarter
and nine months ended September 30,
2017.
Third Quarter 2017 Highlights
- Revenues: $90.3 million,
compared to $108.8 million in the
same period a year ago
- Gross profit margin: 15.3%, compared to 30.4% in the
same period a year ago
- Net income: $0.9 million,
or $2.0 million on an adjusted basis,
compared to $14.6 million, or
$15.4 million on an adjusted basis,
in the same period a year ago
- Earnings per diluted share: $0.04, or $0.09 on
an adjusted basis, compared to $0.64,
or $0.68 on an adjusted basis, in the
same period a year ago
- Adjusted EBITDA: $9.7
million, compared to $29.4
million in the same period a year ago
Third Quarter 2017 Results
The Company's revenues decreased 17% from $108.8 million in the same period last year to
$90.3 million, due to a decrease of
$19.8 million in animal nutrition
revenues, partially offset by a $1.3
million increase in human nutrition revenues. The decrease
in animal nutrition revenues was primarily due to decreased sales
volumes of 21% and 20% for the Company's fish oil and fish meal,
respectively, and decreased sales prices of 5% and 8% for the
Company's fish oil and fish meal, respectively. The decreases in
fish oil and fish meal sales volumes were primarily due to
decreased production as a result of lower fish catch and total
yield, the decreased level of beginning inventory and the timing of
contracts compared to the prior year period. Total sales volumes
for the animal nutrition segment were approximately 43,900 tons in
the third quarter of 2017. The decreases in fish oil and fish
meal sales prices were 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 oils. The composition of revenues by
nutritional product line for the third quarter of 2017 was 46% fish
meal, 18% fish oil and 36% human nutrition.
Third quarter of 2017 revenues decreased 4% from $93.9 million in the second quarter of 2017 to
$90.3 million. This decrease was due
to lower human nutrition revenues of $4.4
million, partially offset by a $0.8
million increase in animal nutrition revenues. The increase
in animal nutrition revenues was due to a 50% increase in fish meal
sales volumes and a product-mix driven 20% increase in fish oil
sales prices, partially offset by a 51% decrease in fish oil sales
volumes and 6% decrease in fish meal sales prices. The
decrease in human nutrition revenues was primarily a result of
decreased specialty oil and protein product sales.
The Company reported gross profit of $13.8 million, or 15.3% as a percentage of
revenues, for the third quarter of 2017, versus $33.0 million, or 30.4% as a percentage of
revenues, in the third 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 37.5% to 16.0%, due primarily
to an increase in the cost per unit of sales, which included a
$0.5 million cost of sales adjustment
related to prior period sales of 2017 production, as a result of
lower anticipated fish catch and production volumes for the 2017
fishing season, and decreases in sales prices. Human nutrition
gross profit as a percentage of revenues increased from 12.6% to
14.1% primarily due to increased gross profit as a percentage of
revenues for protein products.
Compared to the second quarter of 2017, the third quarter of
2017 gross profit decreased from $22.5
million to $13.8 million, and
as a percentage of revenues, third quarter 2017 gross profit
decreased from 24.0% to 15.3%. The decrease in gross profit as a
percentage of revenues was due to decreases in the animal and human
nutrition segments. Animal nutrition gross profit as a percentage
of revenues decreased from 26.6% to 16.0%, 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 decreased from
19.8% to 14.1% primarily as a result of decreased gross profit as a
percentage of revenues for protein products, which was driven in
part by product mix, and specialty oils.
Selling, general and administrative expense ("SG&A"),
including research and development expense ("SG&A"), for the
third quarter of 2017 increased to $11.7
million compared to $10.0
million in the third quarter of 2016 and $10.3 million in the second quarter of 2017,
primarily due to increased professional fees related to various
legal matters and strategic reviews. In addition, in the
third quarter of 2017 the Company incurred $1.4 million of professional fees related to the
signing of the Merger Agreement with Cooke Inc., which are not
included in SG&A.
The Company recorded a gain on foreign currency of $1.0 million and $0.2
million for the third quarters of 2017 and 2016,
respectively, and a loss on foreign currency of $0.4 million for the second quarter of 2017
related to Bioriginal Food & Science.
Net income for the third quarter of 2017 was $0.9 million ($0.04
per diluted share) compared to $14.6
million ($0.64 per diluted
share) in the same period last year and $7.4
million ($0.32 per diluted
share) in the second quarter of 2017. Excluding adjustments for
certain items, adjusted net income for the third quarter of 2017
was $2.0 million ($0.09 per diluted share), compared to
$15.4 million ($0.68 per diluted share) in the same period last
year and $7.6 million ($0.34 per diluted share) for the second quarter
of 2017.
Adjusted EBITDA totaled $9.7
million for the third quarter of 2017, compared to
$29.4 million for the same period
last year and $18.5 million for the
second quarter of 2017.
Nine Month 2017 Results
Revenues in the first nine months of 2017 decreased 16% to
$257.8 million compared to
$306.2 million for the nine months
ended September 30, 2016. The
decrease in revenues was due to a $54.4
million decrease in animal nutrition revenues partially
offset by a $6.0 million increase in
human nutrition revenues. The decrease in animal nutrition revenues
was primarily due to decreased sales volumes of 26% and 21% for the
Company's fish oil and fish meal, respectively, and decreased sales
prices of 6% and 4% for the Company's fish oil and fish meal. The
decreases in fish oil and fish meal sales volumes were primarily
due to decreased production as a result of lower fish catch and
total yield, the decreased level of beginning inventory and the
timing of contracts compared to the prior year period. The
decreases in fish oil and fish meal sales prices were 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 increases in sales of
coconut and marine specialty oils.
The Company recorded gross profit of $56.5 million, or 21.9% as a percentage of
revenues, for the first nine months of 2017, versus gross profit of
$91.3 million, or 29.8% as a
percentage of revenues, for the first nine months of 2016. The
decrease in gross profit as a percentage of revenues was due to a
decrease in the animal nutrition segment from 38.2% to 24.9%,
partially offset by an increase in the human nutrition segment from
11.5% to 17.4%.
Net income for the nine months ended September 30, 2017 was $14.4 million ($0.63 per diluted share) compared to $28.6 million ($1.27 per diluted share) for the same period last
year. Excluding adjustments for certain items, adjusted net income
for the nine months ended September 30,
2017 would have been $15.6
million ($0.69 per diluted
share) compared to $38.6 million
($1.71 per diluted share).
Adjusted EBITDA totaled $43.4
million for nine months ended September 30, 2017, compared to $78.5 million for the same period last year.
Balance Sheet
Cash decreased $16.4 million from
$37.4 million on December 31, 2016 to $21.0
million on September 30,
2017. Total debt decreased $0.2
million from $1.1 million on
December 31, 2016 to $0.9 million on September
30, 2017. Stockholders' equity increased $14.1 million to $350.8
million as of September 30,
2017 compared to $336.7
million as of December 31,
2016.
Fourth Quarter Animal Nutrition Outlook
The animal nutrition segment ended the third quarter of 2017 with
approximately 65,000 tons of product in inventory. As of
September 30, 2017, the Company has
sold forward approximately 24,000 short tons of fish meal and
10,000 metric tons of fish oil with anticipated 2017 delivery, at
prices generally at, or modestly below, levels realized during the
third quarter of 2017. These forward contracts are expected
to account for virtually all of animal nutrition segment's sales in
the fourth quarter of 2017. Total 2017 animal nutrition
segment production is currently expected to be in or near the range
of 135,000 to 140,000 tons.
Definitive Merger Agreement
On October 6, 2017, Omega Protein and
Cooke Inc. ("Cooke"), a
New Brunswick company and parent
of Cooke Aquaculture Inc., announced that they have entered into a
definitive agreement under which Cooke will acquire all outstanding shares of
Omega Protein for $22.00 per share in
cash. The transaction - which is expected to close near the end of
2017 or early in 2018 - is subject to the approval of Omega Protein
stockholders, certain regulatory approvals and other customary
closing conditions.
As previously announced, in view of the merger agreement with
Cooke Inc. the Company will not be holding an earnings conference
call.
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: Forward-looking
statements in this press release are intended to be subject to the
safe harbor provisions of the Private Securities Litigation Reform
Act of 1995. Investors are cautioned that all forward-looking
statements involve risks and uncertainty. Omega Protein believes
that forward-looking statements made by it are based on reasonable
expectations; however, no assurances can be given that actual
results will not differ materially from those contained in such
forward-looking statements. Forward-looking statements involve
statements that are predictive in nature, that depend upon or refer
to future events or conditions, or that include the words
"estimate," "project," "anticipate," "expect," "predict," "assume,"
"believe," "could," "would," "hope," "may" or similar expressions.
The statements in this press release that are not historical
statements are forward-looking statements within the meaning of the
federal securities laws. These statements are subject to numerous
risks and uncertainties, many of which are beyond Omega Protein's
control, which could cause actual results to differ materially from
the results expressed or implied by the statements. These risks and
uncertainties include, but are not limited to: (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 pending class action and
derivative litigation on the Company's business, reputation,
results of operations and financial condition; and (16) the failure
to close the acquisition of the Company by Cooke Inc.
Additional information concerning factors that could cause
actual results to differ materially from those in the
forward-looking statements is contained from time to time in Omega
Protein's SEC filings. Omega Protein's filings may be obtained by
contacting Omega Protein or the SEC or through Omega Protein's web
site at www.omegaprotein.com or through the SEC's Electronic Data
Gathering and Analysis Retrieval System at http://www.sec.gov.
Omega Protein undertakes no obligation to publicly update or revise
any forward-looking statement.
OMEGA PROTEIN
CORPORATION
|
UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEET
|
(In thousands,
except par value amounts)
|
|
|
|
September
30,
2017
|
|
December
31,
2016
|
ASSETS
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
20,988
|
|
$
|
37,412
|
Receivables, net
|
|
|
47,888
|
|
|
38,796
|
Inventories, net
|
|
|
114,383
|
|
|
108,711
|
Prepaid expenses and other current assets
|
|
|
5,564
|
|
|
4,707
|
Total current assets
|
|
|
188,823
|
|
|
189,626
|
Property, plant and
equipment, net
|
|
|
206,274
|
|
|
188,624
|
Goodwill
|
|
|
26,900
|
|
|
26,347
|
Other intangible
assets, net
|
|
|
16,263
|
|
|
17,504
|
Other assets,
net
|
|
|
4,221
|
|
|
5,764
|
Total assets
|
|
$
|
442,481
|
|
$
|
427,865
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Current maturities of long-term debt
|
|
$
|
936
|
|
$
|
1,097
|
Accounts payable
|
|
|
12,567
|
|
|
17,099
|
Accrued liabilities
|
|
|
36,693
|
|
|
37,928
|
Total current liabilities
|
|
|
50,196
|
|
|
56,124
|
Deferred tax
liability, net
|
|
|
33,216
|
|
|
25,678
|
Pension liabilities,
net
|
|
|
5,406
|
|
|
5,659
|
Other long-term
liabilities
|
|
|
2,821
|
|
|
3,717
|
Total liabilities
|
|
|
91,639
|
|
|
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 22,464,028 and 22,411,695
shares outstanding at September 30, 2017 and December 31, 2016, respectively
|
|
|
225
|
|
|
223
|
Capital in
excess of par value
|
|
|
157,450
|
|
|
155,761
|
Retained
earnings
|
|
|
203,140
|
|
|
192,150
|
Treasury
stock, at cost – 188,642 and 167,931 shares at September
30, 2017 and December 31, 2016,
respectively
|
|
|
(3,390)
|
|
|
(2,894)
|
Accumulated other comprehensive loss
|
|
|
(6,583)
|
|
|
(8,553)
|
Total stockholders' equity
|
|
|
350,842
|
|
|
336,687
|
Total liabilities and stockholders' equity
|
|
$
|
442,481
|
|
$
|
427,865
|
|
|
|
|
|
|
|
OMEGA PROTEIN
CORPORATION
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
|
(In thousands,
except per share amounts)
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
September
30,
|
|
September
30,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Revenues
|
$
|
90,285
|
$
|
108,753
|
$
|
257,777
|
$
|
306,246
|
Cost of
sales
|
|
76,491
|
|
75,706
|
|
201,284
|
|
214,982
|
Gross
profit
|
|
13,794
|
|
33,047
|
|
56,493
|
|
91,264
|
|
|
|
|
|
|
|
|
|
Selling, general, and
administrative expense
|
|
11,262
|
|
9,435
|
|
31,294
|
|
29,474
|
Research and
development expense
|
|
393
|
|
605
|
|
1,422
|
|
1,954
|
Impairment of
goodwill and other intangible assets
|
|
—
|
|
—
|
|
—
|
|
11,614
|
Merger related
expenses
|
|
1,420
|
|
—
|
|
1,420
|
|
—
|
Loss related to plant
closures
|
|
—
|
|
663
|
|
—
|
|
2,328
|
Charges related to
U.S. Attorney investigation
|
|
—
|
|
358
|
|
—
|
|
358
|
Loss (gain) on
disposal of assets
|
|
28
|
|
(17)
|
|
(182)
|
|
(83)
|
Operating
income
|
|
691
|
|
22,003
|
|
22,539
|
|
45,619
|
Interest
expense
|
|
(49)
|
|
(108)
|
|
(202)
|
|
(387)
|
Gain (loss) on
foreign currency
|
|
998
|
|
159
|
|
(243)
|
|
(1,199)
|
Other income
(expense), net
|
|
(9)
|
|
(221)
|
|
(145)
|
|
(184)
|
Income before income
taxes
|
|
1,631
|
|
21,833
|
|
21,949
|
|
43,849
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
|
713
|
|
7,280
|
|
7,593
|
|
15,253
|
Net income
|
|
918
|
|
14,553
|
|
14,356
|
|
28,596
|
|
|
|
|
|
|
|
|
|
Other comprehensive
income (loss):
|
|
|
|
|
|
|
|
|
Foreign currency
translation adjustment net of tax (expense) benefit of ($355), $31, ($995) and
($553), respectively
|
|
659
|
|
(58)
|
|
1,847
|
|
1,027
|
Energy swap
adjustment, net of tax benefit (expense) of ($465), ($285), $257 and ($1,212),
respectively
|
|
864
|
|
530
|
|
(477)
|
|
2,251
|
Pension benefits
adjustment, net of tax expense of $108, $119, $323 and $358, respectively
|
|
200
|
|
221
|
|
600
|
|
665
|
Comprehensive
income
|
$
|
2,641
|
$
|
15,246
|
$
|
16,326
|
$
|
32,539
|
Basic earnings per
share
|
$
|
0.04
|
$
|
0.65
|
$
|
0.64
|
$
|
1.28
|
Weighted average
common shares outstanding
|
|
22,209
|
|
21,935
|
|
22,164
|
|
21,894
|
Diluted earnings per
share
|
$
|
0.04
|
$
|
0.64
|
$
|
0.63
|
$
|
1.27
|
Weighted average
common shares and potential common
share equivalents outstanding
|
|
22,449
|
|
22,232
|
|
22,438
|
|
22,194
|
Dividends declared
per common share outstanding
|
$
|
0.05
|
$
|
—
|
$
|
0.15
|
$
|
—
|
OMEGA PROTEIN
CORPORATION
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
|
(Dollars in
thousands)
|
|
|
Nine Months
Ended September 30,
|
|
|
2017
|
|
2016
|
Cash flows from
operating activities:
|
|
|
|
|
Net
income
|
$
|
14,356
|
$
|
28,596
|
Adjustments to
reconcile net income to net cash
provided by operating activities:
|
|
|
|
|
Depreciation and amortization
|
|
19,532
|
|
19,149
|
Loss
related to plant closures
|
|
―
|
|
2,131
|
Loss
(gain) on disposal of assets
|
|
(182)
|
|
(83)
|
Impairment
of goodwill and other intangible assets
|
|
―
|
|
11,614
|
Provisions
for losses on receivables
|
|
7
|
|
29
|
Share
based compensation
|
|
2,094
|
|
3,181
|
Deferred
income taxes
|
|
7,712
|
|
(624)
|
Unrealized
loss (gain) on foreign currency fluctuations, net
|
|
243
|
|
1,199
|
Changes in
assets and liabilities:
|
|
|
|
|
Receivables
|
|
(8,520)
|
|
(6,681)
|
Inventories
|
|
(5,140)
|
|
7,675
|
Prepaid expenses and other current assets
|
|
(1,628)
|
|
(85)
|
Other assets
|
|
194
|
|
(2,546)
|
Accounts payable
|
|
(4,616)
|
|
(4,680)
|
Accrued liabilities
|
|
(677)
|
|
19,770
|
Pension liability, net
|
|
347
|
|
323
|
Other long term liabilities
|
|
177
|
|
(1,853)
|
Net cash provided by operating activities
|
|
23,899
|
|
77,115
|
Cash flows from
investing activities:
|
|
|
|
|
Capital
expenditures
|
|
(37,130)
|
|
(26,383)
|
Proceeds
from disposition of assets
|
|
834
|
|
107
|
Net
cash used in investing activities
|
|
(36,296)
|
|
(26,276)
|
Cash flows from
financing activities:
|
|
|
|
|
Dividends
paid
|
|
(3,366)
|
|
―
|
Principal
payments of long-term debt
|
|
(280)
|
|
(25,485)
|
Proceeds
from long-term debt
|
|
―
|
|
6,376
|
Treasury
stock repurchase
|
|
(496)
|
|
(367)
|
Proceeds
from equity compensation transactions
|
|
79
|
|
1,342
|
Excess tax
benefit of equity compensation transactions
|
|
―
|
|
865
|
Net cash used in financing activities
|
|
(4,063)
|
|
(17,269)
|
Net (decrease)
increase in cash and cash equivalents
|
|
(16,460)
|
|
33,570
|
Translation effect on
cash
|
|
36
|
|
4
|
Cash and cash
equivalents at beginning of year
|
|
37,412
|
|
661
|
Cash and cash
equivalents at end of period
|
$
|
20,988
|
$
|
34,235
|
The tables below present information about reported segments for
three months ended September 30, 2017
and 2016 (in thousands):
2017
|
|
Animal
Nutrition
|
|
Human
Nutrition
|
|
Unallocated
|
|
Total
|
Revenue
(1)
|
|
$
57,931
|
|
$
32,354
|
|
$ ―
|
|
$
90,285
|
Cost of
sales
|
|
48,687
|
|
27,804
|
|
―
|
|
76,491
|
Gross
profit
|
|
9,244
|
|
4,550
|
|
―
|
|
13,794
|
Selling, general and
administrative expenses (including
research and development)
|
|
539
|
|
4,266
|
|
6,850
|
|
11,655
|
Merger related
expenses
|
|
―
|
|
―
|
|
1,420
|
|
1,420
|
Loss (gain) on
disposal of assets
|
|
28
|
|
―
|
|
―
|
|
28
|
Operating income
(loss)
|
|
$
8,677
|
|
$
284
|
|
$
(8,270)
|
|
$
691
|
Depreciation and
amortization
|
|
$
5,001
|
|
$
1,270
|
|
$
233
|
|
$
6,504
|
Identifiable
assets
|
|
$ 279,282
|
|
$135,669
|
|
$
27,530
|
|
$ 442,481
|
Capital
expenditures
|
|
$
9,730
|
|
$
―
|
|
$
―
|
|
$
9,730
|
|
|
|
|
|
|
|
|
|
2016
|
|
Animal
Nutrition
|
|
Human
Nutrition
|
|
Unallocated
|
|
Total
|
Revenue
(2)
|
|
$
77,658
|
|
$
31,095
|
|
$ ―
|
|
$ 108,753
|
Cost of
sales
|
|
48,532
|
|
27,174
|
|
―
|
|
75,706
|
Gross
profit
|
|
29,126
|
|
3,921
|
|
―
|
|
33,047
|
Selling, general and
administrative expenses (including
research and development)
|
|
559
|
|
3,719
|
|
5,762
|
|
10,040
|
Loss (gain) related
to plant closures
|
|
―
|
|
663
|
|
―
|
|
663
|
Charges related to
U.S. Attorney investigation
|
|
358
|
|
―
|
|
―
|
|
358
|
Loss (gain) on
disposal of assets
|
|
(17)
|
|
―
|
|
―
|
|
(17)
|
Operating income
(loss)
|
|
$
28,226
|
|
$
(461)
|
|
$
(5,762)
|
|
$
22,003
|
Depreciation and
amortization
|
|
$
4,978
|
|
$
1,383
|
|
$
189
|
|
$
6,550
|
Identifiable
assets
|
|
$ 257,009
|
|
$
139,709
|
|
$
38,435
|
|
$ 435,153
|
Capital
expenditures
|
|
$
6,798
|
|
$
95
|
|
$
1,218
|
|
$
8,111
|
|
(1) 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.
|
|
(2) Excludes
revenue from internal customers of $0.2 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 nine months ended September 30,
2017 and 2016 (in thousands):
2017
|
|
Animal
Nutrition
|
|
Human
Nutrition
|
|
Unallocated
|
|
Total
|
Revenue
(3)
|
|
$ 155,019
|
|
$ 102,758
|
|
$
―
|
|
$
257,777
|
Cost of
sales
|
|
116,429
|
|
84,855
|
|
―
|
|
201,284
|
Gross
profit
|
|
38,590
|
|
17,903
|
|
―
|
|
56,493
|
Selling, general and
administrative expenses (including
research and development)
|
|
1,662
|
|
11,948
|
|
19,106
|
|
32,716
|
Merger related
expenses
|
|
―
|
|
―
|
|
1,420
|
|
1,420
|
Loss (gain) on
disposal of assets
|
|
(193)
|
|
11
|
|
―
|
|
(182)
|
Operating income
(loss)
|
|
$
37,121
|
|
$
5,944
|
|
$ (20,526)
|
|
$
22,539
|
Depreciation and
amortization
|
|
$
15,030
|
|
$
3,798
|
|
$
704
|
|
$
19,532
|
Identifiable
assets
|
|
$ 279,282
|
|
$135,669
|
|
$
27,530
|
|
$ 442,481
|
Capital
expenditures
|
|
$
36,999
|
|
$
109
|
|
$
22
|
|
$
37,130
|
|
|
|
|
|
|
|
|
|
2016
|
|
Animal
Nutrition
|
|
Human
Nutrition
|
|
Unallocated
|
|
Total
|
Revenue
(4)
|
|
$ 209,455
|
|
$
96,791
|
|
$ ―
|
|
$ 306,246
|
Cost of
sales
|
|
129,355
|
|
85,627
|
|
―
|
|
214,982
|
Gross
profit
|
|
80,100
|
|
11,164
|
|
―
|
|
91,264
|
Selling, general and
administrative expenses (including
research and development)
|
|
1,707
|
|
12,328
|
|
17,393
|
|
31,428
|
Impairment of
goodwill and other intangible assets
|
|
―
|
|
11,614
|
|
―
|
|
11,614
|
Loss (gain) related
to plant closures
|
|
(313)
|
|
2,641
|
|
―
|
|
2,328
|
Charges related to
U.S. Attorney investigation
|
|
358
|
|
―
|
|
―
|
|
358
|
Loss (gain) on
disposal of assets
|
|
(83)
|
|
―
|
|
―
|
|
(83)
|
Operating income
(loss)
|
|
$
78,431
|
|
$(15,419)
|
|
$ (17,393)
|
|
$
45,619
|
Depreciation and
amortization
|
|
$
14,388
|
|
$
4,190
|
|
$
571
|
|
$
19,149
|
Identifiable
assets
|
|
$ 257,009
|
|
$139,709
|
|
$
38,435
|
|
$ 435,153
|
Capital
expenditures
|
|
$
22,702
|
|
$
1,599
|
|
$
2,082
|
|
$
26,383
|
|
(3) Excludes revenue
from internal customers of $1.6 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 $0.6 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 September 30, 2017, June
30, 2017 and September 30,
2016 and the nine months ended September 30, 2017 and
2016:
|
|
Three Months
Ended
|
|
|
September
30,
2017
|
|
June
30,
2017
|
|
September
30,
2016
|
|
Net
Income
|
$
|
918
|
$
|
7,358
|
$
|
14,553
|
|
Reconciling
items:
|
|
|
|
|
|
|
|
Interest
expense
|
|
(9)
|
|
15
|
|
43
|
|
Income
tax provision
|
|
713
|
|
4,177
|
|
7,280
|
|
Depreciation and amortization (1)
|
|
6,504
|
|
6,499
|
|
6,550
|
|
Merger
related expenses (1)
|
|
1,420
|
|
―
|
|
―
|
|
Loss
related to plant closures (1)
|
|
―
|
|
―
|
|
663
|
|
Charges
related to U.S. Attorney investigation (3)
|
|
―
|
|
―
|
|
358
|
|
Acquisition post-closing consideration (2)
|
|
152
|
|
228
|
|
(44)
|
|
Loss
(gain) on disposal of assets (1)
|
|
28
|
|
175
|
|
(17)
|
|
Adjusted
EBITDA
|
$
|
9,726
|
$
|
18,452
|
$
|
29,386
|
|
|
|
Nine
Months Ended
|
|
|
|
September
30,
2017
|
|
September
30,
2016
|
|
Net
Income
|
$
|
14,356
|
$
|
28,596
|
|
Reconciling
items:
|
|
|
|
|
|
Interest
expense
|
|
28
|
|
204
|
|
Income
tax provision
|
|
7,593
|
|
15,253
|
|
Depreciation and amortization (1)
|
|
19,532
|
|
19,149
|
|
Impairment of goodwill and other intangible assets
(2)
|
|
―
|
|
11,614
|
|
Merger
related expenses (1)
|
|
1,420
|
|
―
|
|
Loss
related to plant closures (1)
|
|
―
|
|
2,328
|
|
Charges
related to U.S. Attorney investigation (3)
|
|
―
|
|
358
|
|
Acquisition post-closing consideration (2)
|
|
608
|
|
1,058
|
|
Loss
(gain) on disposal of assets (1)
|
|
(182)
|
|
(83)
|
|
Adjusted
EBITDA
|
$
|
43,355
|
$
|
78,477
|
|
|
(1) See segment
disclosures for allocation among segments.
|
(2) Relates to human
nutrition segment.
|
(3) Relates to animal
nutrition segment.
|
Adjusted EBITDA represents net income before interest expense,
income tax, depreciation and amortization, impairment of goodwill
and other intangible assets, merger related expenses, loss related
to plant closures, charges related to U.S. Attorney investigation,
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 September 30, 2017, June
30, 2017 and September 30,
2016 and the nine months ended September 30, 2017 and
2016:
|
Three Months
Ended
|
|
|
|
September
30,
2017
|
|
June
30,
2017
|
|
September
30,
2016
|
|
Net
Income
|
$
|
918
|
$
|
7,358
|
$
|
14,553
|
|
Reconciling
items:
|
|
|
|
|
|
|
|
Income tax provision prior
to adjustments
|
|
713
|
|
4,177
|
|
7,280
|
|
Merger related
expenses
|
|
1,420
|
|
―
|
|
―
|
|
Loss related to plant
closures
|
|
―
|
|
―
|
|
663
|
|
Charges related to U.S.
Attorney investigation
|
|
―
|
|
―
|
|
358
|
|
Acquisition post-closing
consideration
|
|
152
|
|
228
|
|
(44)
|
|
Loss (gain) on disposal of
assets
|
|
28
|
|
175
|
|
(17)
|
|
Adjusted income
before income taxes
|
|
3,231
|
|
11,938
|
|
22,793
|
|
Provision for income taxes
after adjustments
|
|
1,267
|
|
4,309
|
|
7,399
|
|
Adjusted net
income
|
$
|
1,964
|
$
|
7,629
|
$
|
15,394
|
|
Diluted earnings
per share
|
$
|
0.04
|
$
|
0.32
|
$
|
0.64
|
|
Adjusted diluted
earnings per share
|
$
|
0.09
|
$
|
0.34
|
$
|
0.68
|
|
|
|
Nine Months
Ended
|
|
|
|
|
September
30,
2017
|
|
September
30,
2016
|
|
Net
Income
|
|
$
|
14,356
|
$
|
28,596
|
|
Reconciling
items:
|
|
|
|
|
|
|
Income tax provision prior
to adjustments
|
|
|
7,593
|
|
15,253
|
|
Impairment of goodwill and
other intangible assets
|
|
|
―
|
|
11,614
|
|
Merger related
expenses
|
|
|
1,420
|
|
―
|
|
Loss related to plant
closures
|
|
|
―
|
|
2,328
|
|
Charges related to U.S.
Attorney investigation
|
|
|
―
|
|
358
|
|
Acquisition post-closing
consideration
|
|
|
608
|
|
1,058
|
|
Loss (gain) on disposal of
assets
|
|
|
(182)
|
|
(83)
|
|
Adjusted income
before income taxes
|
|
|
23,795
|
|
59,124
|
|
Provision for income taxes
after adjustments
|
|
|
8,230
|
|
20,557
|
|
Adjusted net
income
|
|
$
|
15,565
|
$
|
38,567
|
|
Diluted earnings
per share
|
|
$
|
0.63
|
$
|
1.27
|
|
Adjusted diluted
earnings per share
|
|
$
|
0.69
|
$
|
1.71
|
|
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, merger related
expenses, loss related to plant closures, charges related to U.S.
Attorney investigation, 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 nine months ended
September 30, 2017:
Three Months Ended
September 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
|
|
$
32,354
|
|
$
80
|
|
$
32,274
|
|
$
4,003
|
|
$
28,271
|
Cost of
sales
|
|
27,804
|
|
69
|
|
27,735
|
|
4,075
|
|
23,660
|
Gross profit
(loss)
|
|
$
4,550
|
|
$
11
|
|
$
4,539
|
|
$
(72)
|
|
$
4,611
|
Gross profit (loss)
margin
|
|
14.1%
|
|
13.8%
|
|
14.1%
|
|
(1.8%)
|
|
16.3%
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 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
|
|
$
102,758
|
|
$
923
|
|
$
101,835
|
|
$
14,110
|
|
$
87,725
|
Cost of
sales
|
|
84,855
|
|
727
|
|
84,128
|
|
12,572
|
|
71,556
|
Gross
profit
|
|
$
17,903
|
|
$
196
|
|
$
17,707
|
|
$
1,538
|
|
$
16,169
|
Gross profit
margin
|
|
17.4%
|
|
21.2%
|
|
17.4%
|
|
10.9%
|
|
18.4%
|
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.
View original content with
multimedia:http://www.prnewswire.com/news-releases/omega-protein-announces-third-quarter-2017-financial-results-300552311.html
SOURCE Omega Protein Corporation