Also appoints Pierre Fitzgibbon as Chairman of Board
Neptune Technologies & Bioressources (Nasdaq:NEPT), has announced its consolidated financial results for the first quarter ended May 31, 2014.
“It was a very successful start to our fiscal year, with Neptune announcing the opening of its Sherbrooke plant, the launch later this year of three new condition-specific formulations (NKO BEAT, NKO FLEX, and NKO FOCUS), the successful resolution of all outstanding litigation issues before the International Trade Commission, the grant of two new composition patents and the election of a strong slate of Directors at its recent Annual and Special Meeting,” highlighted Mr. AndrĂ© Godin, Interim President and Chief Executive Officer of Neptune.
“Our subsidiary, Acasti, also recently announced the completion of two key clinical trials, marking another important milestone in our drug development program to secure regulatory approval to distribute and market CaPre. We continue to lay the foundation for growth and we remain focused on strong leadership and performance.”
Financial Results: First Quarter Ended May 31, 2014
Nutraceutical Business Results:
– Nutraceutical revenues were $3,635,000 for the three-month period ended May 31, 2014, compared to $6,084,000 for the three-month period ended May 31, 2013
– Gross profit as a percent of revenue was 14% for the current quarter, versus 10% for the corresponding prior year quarter
– Adjusted EBITDA was negative ($3,766,000) for the current quarter, versus negative ($2,697,000) in the prior year
– Net loss was ($5,702,000) for the current quarter, compared to a net loss of ($3,379,000) in the prior year.
Consolidated Results:
– Consolidated revenues totalled $3,691,000 for the three-month period ended May 31, 2014, down from $6,090,000 for the quarter ended May 31, 2013
– Adjusted EBITDA was negative ($5,772,000) for the current quarter, versus negative ($3,983,000) in the prior year
– Net loss was ($4,368,000) for the current quarter, versus a net loss of ($5,415,000) in the prior year.
Nutraceutical revenues for the quarter ending May 31, 2014 were derived entirely from Neptune’s third party manufacturing and supply agreement with Rimfrost. In the corresponding prior year period, the Corporation supplied the market with commodity krill obtained through short-term temporary supply arrangements. In June 2014, Neptune announced that production at its Sherbrooke plant would commence gradually.
The gross profit margin as a percentage of revenues was 14% for the current quarter, up from 10% in the quarter ended May 31, 2013. The increase is primarily due to product cost reductions resulting from the manufacturing and supply agreement with Rimfrost.
The year over year decrease in adjusted EBITDA on both a nutraceutical and consolidated basis is largely due to higher general and administrative expenses, including salaries, training costs associated with the reopening of the Sherbrooke plant and a bad debt charge for one significant customer. As well, selling expenses grew due to enhanced marketing and advertising efforts in expectation of the resumption of krill oil production. The expense increase was partially offset by other income of $1.6 million, recorded in the current quarter, for royalty settlements as a result of negotiations with third parties to resolve infringement of Neptune’s intellectual property. On a consolidated basis the current quarter also includes adjusted EBITDA of negative $2.0 million for Neptune’s subsidiaries, Acasti and NeuroBioPharm, who are actively engaged in clinical studies and research and development. In the corresponding prior year quarter, Neptune’s subsidiaries recorded negative $1.3 million of adjusted EBITDA.
The higher year over year net loss for the nutraceutical business was due to the factors highlighted for adjusted EBITDA. In addition, the current quarter was negatively impacted by an increase in foreign exchange losses, while the corresponding prior year quarter was positively impacted by the recognition of insurance recoveries relating to the plant incident. On a consolidated basis, the year over year quarterly net loss was lower due to a change in the fair value of Acasti’s derivative warrant liability arising from its 2013 public offering. The warrants are derivative liabilities, for accounting purposes, due to the currency of the exercise price (US dollars) being different from Acasti’s functional currency (Canadian dollars).