Neptune Reports Progress in Rebuilding Nutraceutical Business

15 Oct 2014 --- Neptune Technologies & Bioressources Inc. has announced its consolidated financial results for the three and six months ended August 31, 2014. "Considerable progress continues to be made in rebuilding and strengthening our nutraceutical business," highlighted Mr. André Godin, Interim President and Chief Executive Officer of Neptune. "We are in the last stage of our production ramp-up and remain focused on driving profitable growth".

"We also remain active on the pharmaceutical side, with our subsidiary, Acasti, recently announcing positive results for two clinical trials evaluating the safety and efficacy of its investigational new drug candidate, CaPre. These encouraging results further indicate that CaPre may be an important treatment option to safely and effectively reduce triglycerides. Acasti is now moving one step closer to the commercialization of CaPre."

Financial Results: Three Months Ended August 31, 2014
Nutraceutical Business Results
•    Nutraceutical revenues were $2,615,000 for the three-month period ended August 31, 2014, compared to $5,080,000 for the three-month period ended August 31, 2013
•    Adjusted EBITDA was negative ($10,132,000) for the current quarter, versus negative ($4,078,000) in the prior year
•    Net loss was ($11,356,000) for the current quarter, compared to a net loss of ($1,779,000) in the prior year.

Consolidated Results
•    Consolidated revenues totalled $2,623,000 for the three-month period ended August 31, 2014, down from $5,346,000 for the quarter ended August 31, 2013
•    Adjusted gross margin[1][1] as a percent of revenue was 30% for the current quarter, versus 12% for the corresponding prior year quarter
•    Adjusted EBITDA was negative ($12,875,000) for the current quarter, versus negative ($6,055,000) in the prior year
•    Net loss was ($14,848,000) for the current quarter, versus a net loss of ($5,052,000) in the prior year.

Nutraceutical revenues for the quarter ending August 31, 2014 were derived from Neptune's third party manufacturing and supply agreement. Revenues were impacted by the decision of many customers to wait for Neptune manufactured krill oil.

The year over year decrease in adjusted EBITDA, on both a nutraceutical and consolidated basis, is largely due to incremental costs related to the plant ramp-up, an impairment on inventory resulting from the degradation of raw material, a bad debt charge for one significant customer, increased research and development (R&D) expenses along with higher marketing and advertising spending and training costs following the resumption of krill oil production. Partially offsetting this was a year-over-year reduction in legal fees.  

On a consolidated basis the current quarter includes adjusted EBITDA of negative $2.7 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 $2.0 million of adjusted EBITDA.

The higher year over year net loss on a nutraceutical and consolidated basis was due to the factors highlighted for adjusted EBITDA. In addition, the prior year quarter also included insurance recoveries of $5.0 million relating to the Sherbrooke plant incident.  Partially offsetting this was a year-over-year reduction in legal fees. On a consolidated basis Neptune's subsidiaries recorded net losses of $3.5 million and $3.3 million for the three month periods ending August 31, 2014 and 2013, respectively.

Nutraceutical Business Results
•    Nutraceutical revenues were $6,250,000 for the six-month period ended August 31, 2014, down from $11,165,000 for the six-month period ended August 31, 2013.
•    Adjusted EBITDA was negative ($13,897,000) for the six-month period ended August 31, 2014, versus negative ($6,776,000) for the corresponding prior-year period.
•    Net loss was ($17,058,000) for the six-month period ended August 31, 2014, compared to net loss of ($5,158,000) for the corresponding prior-year period.

Consolidated Results
•    Consolidated revenues totalled $6,314,000 for the six-month period ended August 31, 2014, compared to $11,438,000 for the corresponding prior-year period.
•    Adjusted EBITDA was negative ($18,647,000) for the six-month period ended August 31, 2014, versus negative ($10,038,000) for the corresponding prior-year period.
•    Net loss was ($19,217,000) for the six-month period ended August 31, 2014, versus a net loss of ($10,467,000) in the corresponding prior-year period.

In September 2014, Neptune announced that it had reached an annualized production capacity of 100 metric tons of krill oil annually and was entering the last stage in its ramp-up. The Corporation expects to be at full operational capacity of 150 metric tons annually by the end of the year.

Shipments of Neptune's premium krill oil, NKO has commenced. As well, the Corporation continues to offer customers its third party oil, which provides further opportunities in certain markets and creates additional revenues. "We remain focused on reaching full capacity as quickly as possible and reestablishing ourselves as a premier krill oil manufacturer," highlighted Mr. Godin. "By offering our customers industry leading products, while developing new offerings and further strengthening our intellectual property, we are well positioned to recapture market share and drive profitable growth. We expect sales momentum to continue to build, which should have a positive impact on future quarters.