Neptune has announced its financial results for the first quarter ended May 31, 2015. “We are pleased with the progress being made at our Sherbrooke facility, with plant output currently surpassing 100 metric tons annually,” said Jim Hamilton, President and CEO of Neptune. “We are producing and selling our premium krill oil, NKO, and are […]
“We are pleased with the progress being made at our Sherbrooke facility, with plant output currently surpassing 100 metric tons annually,” said Jim Hamilton, President and CEO of Neptune. “We are producing and selling our premium krill oil, NKO, and are exceptionally proud of it. The oil meets all product specifications and handling characteristics are fully in line with both customers and Neptune’s expectations. We are very encouraged by a solid sales funnel for our second quarter and accordingly expect a significant revenue improvement.”
“Our focus on strong financial discipline throughout the business is also generating results, with the Corporation realizing significant operational savings during the current quarter. Although business conditions remain challenging, we are moving towards neutral cash flow by our fiscal year-end. At this time we see no financing needs to fund our normal course of business. We look forward to sharing additional insights into our progress going forward.”
Year over year revenues were lower largely due to the production slow-down, required in order to enhance product handling characteristics.
Adjusted EBITDA strengthened over the prior year, on both a nutraceutical and consolidated basis, largely as a result of lower general & administrative expenses, including salaries, professional fees, training costs and bad debt expenses. The improvement was partially offset by a year over year decrease in other income relating to the recognition of $1.6 million of one-time royalty settlements in the quarter ending May 31, 2014.
The lower net loss for the nutraceutical business was largely due to the factors outlined for adjusted EBITDA, along with lower stock-based compensation expenses. On a consolidated basis, the higher net loss is largely attributable to a decrease in finance income attributable to the revaluation of the warrant liabilities related to Acasti’s December 2013 public offering.
As previously announced, the manufacturing process at Neptune’s Sherbrooke plant has been improved to enhance product handling characteristics. The viscosity issues have now been resolved, all product specifications are being met and product handling characteristics are in-line with customers and Neptune expectations.
“Important progress has also been made to increase effective capacity and we expect notable improvements going forward,” said Hamilton. “We are actively working to optimize plant processes and increase output in order to produce high quality krill oil at an optimal cost. Moreover, as our effective capacity continues to grow, we are enhancing our business development efforts to ensure customer demand matches expected increases in supply.”
“We are very encouraged by the improvements we are seeing at the plant,” highlighted Mr. Hamilton. “Accordingly, we anticipate a significant strengthening of revenues for the second quarter, which are expected to come in above $4.0 million. Gross margins will remain under pressure, but are expected to strengthen as plant output grows and cost efficiencies continue to be implemented. Based on strong financial discipline and improving fundamentals, we are moving towards neutral cash flow by our fiscal year-end and there should be sufficient cash to fund operations over the next 12 months.”