Omega Protein Corporation (NYSE: OME), a nutritional product company and a leading integrated producer of omega-3 fish oil and specialty protein products, today reported financial results for the fourth quarter and full year ended December 31, 2013.
Fourth Quarter and Full Year 2013 Highlights
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Revenues: $66.0 million for the quarter and $244.3 million for the year
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Gross profit margin: 42.4% for the quarter and 33.9% for the year
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Net income: $9.7 million, or $14.2 million excluding plant closure charges and net gain on disposal of assets, for the quarter, and $30.5 million, or $35.0 million excluding plant closure charges and net loss on disposal of assets, for the year
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Earnings: Earnings per diluted share of $0.45, or $0.66 excluding plant closure charges and net gain on disposal, for the quarter, and $1.45, or $1.66 excluding plant closure charges and net loss on disposal, for the year
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Adjusted EBITDA: $26.7 million for the quarter and $75.6 million for the year
"We are pleased with the progress made on our strategic objectives in 2013, as we continued to build a more balanced nutrition company focused on value-added products that allow families to live healthier lives through nutrition. Our strong financial performance during the year included increased revenues, as well as record gross profit and gross margin," commented Bret Scholtes, Omega Protein's President and Chief Executive Officer. "In the quarter, our financial results benefited from record human nutrition revenue, attractive animal nutrition forward contract pricing, and a productive end to the 2013 fishing season."
Mr. Scholtes concluded, "We are excited to build on this progress in 2014 as we introduce additional capacity and capabilities to capitalize on our market opportunities."
Fourth Quarter 2013 Results
The Company's revenues increased 4% from $63.1 million in the same period last year to $66.0 million. This increase was due to a $4.4 million increase in human nutrition revenue, partially offset by a $1.6 million decrease in animal nutrition revenues. The increase in human nutrition revenues was primarily due to sales of protein products from Wisconsin Specialty Protein ("WSP"), a business acquired by the Company in the first quarter of 2013. The decrease in animal nutrition revenues was primarily due to a 33% decrease in the Company's fish meal sales volumes, partially offset by a 109% increase in fish oil sales volumes and increased sales prices of 19% and 15% for the Company's fish meal and fish oil, respectively. The composition of revenue by nutritional product line for the fourth quarter of 2013 was 59% fish meal, 26% fish oil, 14% specialty nutraceutical and food ingredients and products, and 1% fish solubles and other.
Fourth quarter of 2013 revenues decreased 25% from $87.6 million in the third quarter of 2013 to $66.0 million. This decrease was due to a $23.2 million decrease in animal nutrition revenues, which reflected decreased sales volumes of 19% and 53% for fish meal and fish oil, respectively, and a 5% decrease in fish meal sales prices, partially offset by a 30% increase in fish oil sales prices. The increase in fish oil sales prices was primarily due to a change in the product mix of higher priced refined and lower priced crude oils, and higher prices on those crude oil volumes. Human nutrition revenues increased $1.6 million to $9.4 million in the fourth quarter compared to $7.8 million in the third quarter. The increase in human nutrition revenues primarily reflects higher sales of OmegaActiv fish oil and other nutraceutical ingredients.
The Company reported gross profit of $28.0 million, or 42.4% as a percentage of revenues, for the fourth quarter of 2013, versus $12.9 million, or 20.5% as a percentage of revenues, in the fourth quarter of 2012. The increase was due to an increase in the animal nutrition segment gross profit as a percentage of revenues from 20.1% to 47.1% as a result of increased fish oil and fish meal sales prices and greater than anticipated fish catch in the fourth quarter. As a result of this greater fish catch and production, standard cost for 2013 inventory, for which sales commenced largely in the third quarter of 2013, was decreased and all previous sales of 2013 inventory production were adjusted during the fourth quarter ended December 31, 2013. This increase in gross profit as a percentage of revenues was partially offset by a decrease in the human nutrition segment gross profit as a percentage of revenues from 24.9% to 13.6%, due primarily to lower gross profit as a percentage of revenues for other nutraceuticals and the addition of the protein products business.
Compared to the third quarter of 2013, fourth quarter gross profit decreased from $29.4 million to $28.0 million; however, gross profit as a percentage of revenues increased from 33.6% to 42.4%. The increase in gross profit as a percentage of revenues was due to an increase in animal nutrition gross profit as a percentage of revenues from 34.5% to 47.1% primarily as a result of the lower inventory cost associated with greater than anticipated fish catch after September 30, 2013, as discussed above. The human nutrition segment gross profit as a percentage of revenues decreased from 24.6% to 13.6% primarily due to lower gross profit as a percentage of revenues for protein products and changes in product mix.
Selling, general and administrative expenses for the fourth quarter increased $0.5 million to $5.9 million compared to the fourth quarter of 2012, primarily as a result of the WSP acquisition. Selling, general and administrative expenses decreased from $6.9 million for the third quarter of 2013, primarily as a result of decreased employee compensation related costs.
In the fourth quarter of 2013, the Company closed its menhaden fish processing plant located in Cameron, Louisiana and re-deployed certain vessels from that facility to the Company's other Gulf Coast facilities located in Abbeville, Louisiana and Moss Point, Mississippi, as previously announced. In conjunction with the closure, the Company incurred charges of $6.6 million in the fourth quarter of 2013.
The fourth quarter of 2013 effective tax rate was 31.9% compared to 126.2% in the fourth quarter of 2012 and 34.6% in the third quarter of 2013. The higher effective tax rate in the fourth quarter of 2012 was primarily the result of charges relating to a U.S. Attorney investigation that were non-deductible for tax purposes.
Net income for the fourth quarter of 2013 was $9.7 million ($0.45 per diluted share) compared to a net loss of $0.5 million ($0.03 loss per diluted share) for the same period last year and net income of $14.0 million ($0.66 per diluted share) for the third quarter of 2013. Excluding plant closure charges and net gain on disposal of assets, net income for the fourth quarter of 2013 would have been $14.2 million ($0.66 per diluted share) and excluding the impact of the charges related to the U.S. Attorney investigation and net loss on disposal of certain assets, net income for the fourth quarter of 2012 would have been $4.0 million ($0.20 per diluted share).
Adjusted EBITDA totaled $26.7 million for the fourth quarter of 2013, compared to $11.6 million for the same period last year and $27.1 million for the third quarter of 2013.
Full Year 2013 Results
Revenues for the year ended December 31, 2013 increased 4% to $244.3 million compared to revenues of $235.6 million for the year ended December 31, 2012. The increase in revenues for 2013 was due to a $9.1 million increase in human nutrition revenues partially offset by a $0.4 million decrease in animal nutrition revenues. The increase in human nutrition revenues was due primarily to the acquisition of WSP in the first quarter of 2013. The decrease in animal nutrition revenues was primarily due to decreased sales volumes of 28% for the Company's fish meal, partially offset by increased sales prices of 23% for the Company's fish meal and increased sales volumes and prices of 2% and 43%, respectively, for the Company's fish oil.
The Company reported record gross profit of $82.8 million, or 33.9% as a percentage of revenues, for the year ended December 31, 2013, versus gross profit of $42.1 million, or 17.8% as a percentage of revenues, for the year ended December 31, 2012. The increase in gross profit as a percentage of revenues was primarily due to an increase in animal nutrition segment gross profit as a percentage of revenues from 17.3% to 36.2%, reflecting an increase in animal segment revenues per unit as a result of higher fish meal and fish oil sales prices, partially offset by a decrease in human nutrition gross profit as a percentage of revenues from 22.8% to 18.2%.
Net income for the year ended December 31, 2013 was $30.5 million ($1.45 per diluted share) compared to $4.1 million ($0.20 per diluted share) for the same period last year. Excluding plant closure charges and net loss on disposal of assets, net income for 2013 would have been $35.0 million ($1.66 per diluted share) and excluding the impact of U.S. Attorney investigation charges and net gain on disposal of assets, net income for the year ended December 31, 2012 would have been $10.4 million ($0.52 per diluted share).
Adjusted EBITDA totaled $75.6 million for the year ended December 31, 2013, an increase from $35.6 million for the previous year.
Balance Sheet
The Company's balance sheet remains strong, and stockholders' equity increased $41.6 million to $247.2 million as of December 31, 2013 as compared to $205.6 million at December 31, 2012. Total debt decreased $3.1 million from December 31, 2012 to $24.2 million on December 31, 2013. The Company's December 31, 2013 cash balance decreased $21.9 million from December 31, 2012 to $34.1 million. This decrease was primarily due to the acquisition of WSP in the first quarter of 2013, as well as expenditures related to 2013 fishing season, capital spending and debt payments, and was partially offset by the sale of inventory.
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