Martek Revenues Up 5% in Q1
Product sales in the first quarter of fiscal 2009 increased 7% year-over-year to $84.0 million, reflecting higher revenues from Martek's infant formula customers, particularly outside of the United States.
05/03/09 Martek Biosciences Corporation has announced its financial results for the first quarter of fiscal 2009. Revenues for the first quarter were $87.4 million, up 5% from $82.9 million in the first quarter of fiscal 2008. Net income was $9.6 million, or $0.29 per diluted share, for the first quarter of fiscal 2009 compared with $8.7 million, or $0.26 per diluted share, in last year's first quarter.
Commenting on the quarter, Chief Executive Officer Steve Dubin said, "Despite the troubling economy, Martek's first quarter results showed both revenue and bottom line growth reflecting the strength of our core infant formula business, growing consumer awareness of the health benefits of DHA beyond infant formula markets and the continued execution of our business plan. Net profits increased faster than revenue due to additional gross margin growth resulting from manufacturing improvements and increased plant utilization. While the current economy continues to present challenges for Martek as well as other businesses, I believe Martek continues to be well-positioned to deliver both revenue and profit growth in 2009."
Product sales in the first quarter of fiscal 2009 increased 7% year-over-year to $84.0 million, reflecting higher revenues from Martek's infant formula customers, particularly outside of the United States. In addition, sales of life'sDHA to non-infant formula nutritional markets grew more than 12% over the prior year's first quarter.
The following is a breakdown of product sales by market for the first quarter (in thousands):
Contract manufacturing sales in the first quarter totaled $3.3 million, compared with $4.3 million a year ago. During fiscal 2009, the Company anticipates continuing to reduce the scope of its contract manufacturing activities in order to focus more of its resources on the Company's higher margin nutritional oils business.
Overall gross margin for the first quarter of fiscal 2009 was 42.4%, an increase over the 41.1% gross margin realized in the first quarter of fiscal 2008. The improvement resulted largely from improved productivity yields and increased capacity utilization at Martek's manufacturing facilities.
Research and development expenses in the first quarter of fiscal 2009 were $6.7 million, an increase of 13% over the corresponding quarter of last year. Research and development as a percentage of revenue increased to 7.7% from 7.2% in the prior year's first quarter. The Company continues to dedicate considerable resources to its research and development efforts in order to broaden Martek's product offerings, to improve production efficiencies and versatility of our oils, and to further establish the scientific support for the health benefits of life'sDHA(TM). We believe our work in these areas will yield both short- and long-term financial benefits. The Company expects to continue to experience quarter-to-quarter fluctuations in research and development expenses primarily due to the timing of outside services, including third-party clinical trial services.
During the first quarter of fiscal 2009, selling, general and administrative expenses ("SG&A") were $13.1 million, or 15.0% of revenue, a slight decrease, on a percentage of revenue basis, from last year's first quarter. For fiscal 2009, SG&A, on a percentage of revenue basis, is expected to remain near fiscal 2008 levels as the Company continues to closely manage SG&A spending levels.
For the first quarter of fiscal 2009, the Company generated $8.6 million of cash from operating activities, a $6.5 million decrease from the cash generated in the first quarter of fiscal 2008. Consistent with the Company's projections noted last quarter, the first quarter's operating cash flow also decreased as compared to the fourth quarter of fiscal 2008. Both decreases were due, in part, to the timing of ARA purchases from DSM and a higher accounts receivable balance caused by an unevenness in customer ordering patterns. These ordering patterns resulted in customer sales being more heavily weighted towards the end of the first quarter of fiscal 2009 as compared to other quarters. These factors contributed to lower cash flow in first quarter of fiscal 2009.
As of the end of the first quarter, Martek had $107.3 million in cash and cash equivalents, a minimal amount of debt and the entire balance of its long-term revolving credit facility ($135 million) available for future borrowing.
