Omega Protein Announces Fourth Quarter and Full Year 2015 Financial Results

Mar 09, 2016, 16:05 ET from Omega Protein Corporation

HOUSTON, March 9, 2016 /PRNewswire/ -- Omega Protein Corporation (NYSE: OME), a nutritional product company and a leading integrated provider of specialty oils and specialty protein products, today reported financial results for the fourth quarter and year ended December 31, 2015.

Fourth Quarter and Full Year 2015 Highlights

  • Revenues:  $82.3 million for the quarter and $359.3 million for the year
  • Gross profit margin:  28.0% for the quarter and 27.5% for the year
  • Net income: $2.9 million, or $6.5 million on an adjusted basis, for the quarter and $24.0 million, or $33.4 million on an adjusted basis, for the year
  • Earnings per diluted share: $0.13, or $0.29 on an adjusted basis, for the quarter and $1.07, or $1.50 on an adjusted basis, for the year
  • Adjusted EBITDA:  $18.9 million for the quarter and $79.6 million for the year

"2015 was a transformational year for Omega Protein as our financial results, including a record Adjusted EBITDA, reflect contributions from a robust fish harvest, continued strong demand for our products, efficient operational performance and the Bioriginal acquisition," commented Bret Scholtes, Omega Protein's President and Chief Executive Officer.  "We continue to take strategic actions to build on these accomplishments and better position our business for future growth.  These efforts include our plan to invest an additional $18 million of growth capital to further improve the efficiency of our animal nutrition business, and our decision to refocus our human fish oil business by exiting concentrated oils manufacturing.  We remain confident about our opportunities to generate improved volumes and profitability, and in turn increase shareholder value in 2016."

Fourth Quarter 2015 Results The Company's revenues decreased 20% from $102.5 million in the same period last year to $82.3 million.  This decrease was due to decreases in animal nutrition and human nutrition revenues of $14.9 million and $5.3 million, respectively. The decrease in animal nutrition revenues was primarily due to decreased sales volumes of 74% and 2% for the Company's fish oil and fish meal, respectively, and decreased fish meal sales prices of 3%, partially offset by 36% higher 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, as well as higher prices on each.  The decrease in human nutrition revenues was largely due to decreased sales of specialty oils.  The composition of revenues by nutritional product line for the fourth quarter of 2015 was 54% fish meal, 35% dietary supplements, 9% fish oil, and 2% fish solubles and other. 

Fourth quarter of 2015 revenues decreased 27% from $112.2 million in the third quarter of 2015 to $82.3 million. This decrease was due to a $19.9 million decrease in animal nutrition revenues and a $10.0 million decrease in human nutrition revenues.  The decrease in animal nutrition revenues was primarily due to lower fish oil and fish meal volumes of 76% and 6%, respectively, and lower fish meal sales prices of 3%, partially offset by 40% higher fish oil sales prices.  The decrease in human nutrition revenues was largely due to decreased sales of specialty oils. 

The Company reported gross profit of $23.1 million, or 28.0% as a percentage of revenues, for the fourth quarter of 2015, versus $22.5 million, or 22.0% as a percentage of revenues, in the fourth quarter of 2014. The increase in gross profit as a percentage of revenues was due to an improvement in the animal nutrition segment, partially offset by lower human nutrition results. Animal nutrition gross profit as a percentage of revenues increased from 28.7% to 39.4%, due primarily to higher fish catch and production in 2015, which led to a decrease in the cost per unit of sales. Human nutrition gross profit as a percentage of revenues decreased from 8.6% to 7.2% due primarily to decreased gross profit as a percentage of revenues for menhaden omega-3 concentrates and tolling.   

Compared to the third quarter of 2015, fourth quarter gross profit decreased from $35.2 million, or 31.4% as a percentage of revenues, to $23.1 million, or 28.0% as a percentage of revenues, due to a reduction in the human nutrition segment.  Animal nutrition gross profit as a percentage of revenues increased slightly from 39.3% to 39.4%.  Human nutrition gross profit as a percentage of revenues decreased from 16.6% to 7.2% due largely to decreased gross profit as a percentage of revenues for specialty oils, including menhaden omega-3 concentrates and tolling, and protein products.

Selling, general and administrative expense, including research and development expense ("SG&A"), for the fourth quarter increased $1.5 million to $10.8 million compared to the fourth quarter of 2014, primarily due to increases in labor and professional services expenses. SG&A decreased $1.6 million from $12.4 million in the third quarter of 2015, due to decreases in expenses related to labor and the human nutrition segment.

The Company recorded impairment and plant closure expenses of $5.3 million and $6.3 million in the fourth quarters of 2015 and 2014, respectively.  The fourth quarter of 2015 expense is primarily due to the Company's decision to focus its omega-3 oils manufacturing operations on non-concentrated oils and dispose of its oil concentration facility.

Gain on foreign currency related to Bioriginal Food & Science ("Bioriginal") was $0.1 million for the fourth quarter of 2015 compared to loss on foreign currency of $0.8 million in the third quarter of 2015.

The fourth quarter of 2015 effective tax rate was 52.0% compared to 46.5% in the fourth quarter of 2014 and 33.6% in the third quarter of 2015.  The increase from the third to fourth quarters of 2015 is due largely to the impact of a 2.7% increase in the year-to-date effective tax rate on earnings, as the tax expense impact of the higher rate on earnings from the first nine months of 2015 was recognized in the fourth quarter.

Net income for the fourth quarter of 2015 was $2.9 million ($0.13 per diluted share) compared to $3.2 million ($0.14 per diluted share) in the same period last year and $10.6 million ($0.47 per diluted share) in the third quarter of 2015. Excluding adjustments for certain items, adjusted net income for the fourth quarter of 2015 would have been $6.5 million ($0.29 per diluted share), compared to $7.8 million ($0.35 per diluted share) in the same period last year and $14.8 million ($0.66 per diluted share) for the third quarter of 2015. 

Adjusted EBITDA totaled $18.9 million for the fourth quarter of 2015, compared to $19.7 million for the same period last year and $28.7 million for the third quarter of 2015.

Full Year 2015 Results Revenues for the year ended December 31, 2015 increased 16% to $359.3 million compared to revenues of $308.6 million for the year ended December 31, 2014. The increase in revenues was due to a $74.3 million increase in human nutrition revenues partially offset by a $23.7 million decrease in animal nutrition revenues. The increase in human nutrition revenues was primarily due to the acquisition of Bioriginal in September 2014. The decrease in animal nutrition revenues was primarily due to decreased sales volumes of 45% for the Company's fish oil, partially offset by increased sales prices of 24% and 3% for the Company's fish oil and fish meal, respectively.

The Company recorded gross profit of $98.9 million, or 27.5% as a percentage of revenues, for the year ended December 31 2015, versus gross profit of $77.6 million, or 25.1% as a percentage of revenues, for the prior year. The increase in gross profit as a percentage of revenues was due to improved results from both the animal and human nutrition segments, partially offset by a decrease in the proportion of revenues attributable to the animal nutrition segment.  Animal segment gross profit as a percentage of revenues increased from 29.8% to 36.8%, and human nutrition gross profit as a percentage of revenues increased from 7.7% to 12.8%.

SG&A for the year ended December 31, 2015 increased $10.3 million to $44.1 million compared to the prior year, largely as a result of the Bioriginal acquisition.

The effective tax rate was 37.9% for the year ended December 31, 2015 compared to 38.9% in the prior year.

Net income for the year ended December 31, 2015 was $24.0 million ($1.07 per diluted share) compared to $18.5 million ($0.85 per diluted share) for the prior year.  Excluding adjustments for certain items, adjusted net income for the year ended December 31, 2015 would have been $33.4 million ($1.50 per diluted share) compared to $29.9 million ($1.37 per diluted share) for the prior year.

Adjusted EBITDA totaled $79.6 million for the year ended December 31, 2015, an increase from $70.1 million for last year.

Balance Sheet Total debt decreased $11.1 million from $35.2 million on December 31, 2014 to $24.1 million on December 31, 2015.  Stockholders' equity increased $29.3 million to $295.2 million as of December 31, 2015 compared to $265.9 million as of December 31, 2014. 

Conference Call Information Omega Protein will host a conference call on its fourth quarter and full year 2015 financial results at 8:30 a.m., Eastern Time, on Thursday, March 10, 2016. The Company's senior management team will be available to discuss recent financial results and current business trends as well as respond to questions.

Please dial (877) 407-3982 domestically or (201) 493-6780 internationally to join the call. Interested parties may also listen to the webcast live over the Internet at www.omegaprotein.com.

A webcast replay of the conference call and the prepared remarks will be available beginning shortly after the conclusion of the call at www.omegaprotein.com and will be available for 30 days. A telephonic playback will be available from 11:30 a.m. ET, March 10, 2016, through March 24, 2016. Participants can dial (877) 870-5176 in North America, and international listeners may dial (858) 384-5517. The password is 13630606.

About Omega Protein Corporation Omega Protein Corporation (NYSE: OME) is a century old nutritional product company that develops, produces and delivers healthy products throughout the world to improve the nutritional integrity of foods, dietary supplements and animal feeds. Omega Protein's mission is to help people lead healthier lives with better nutrition through sustainably sourced ingredients such as highly-refined specialty oils, specialty protein products and nutraceuticals.

The Company operates eight manufacturing facilities located in the United States, Canada and Europe. The Company also operates more than 30 vessels to harvest menhaden, a fish abundantly found in the Atlantic Ocean and Gulf of Mexico.

For More Information Visit Omega Protein at www.omegaprotein.com, follow us on Twitter at https://twitter.com/omegaprotein, or find us on LinkedIn at https://www.linkedin.com/company/omega-protein-inc.

Forward Looking Statements SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS: The statements contained in this press release that are not historical facts are forward-looking statements that involve a number of risks and uncertainties. Forward-looking information may be based on projections, predictions and estimates. Some statements in this press release may be forward-looking and use words like "may," "may not," "believes," "do not believe," "expects," "do not expect," "anticipates," "do not anticipate," "see," "do not see," "should," or other similar expressions. The actual results of future events described in any of these forward-looking statements could differ materially from those stated in the forward-looking statements. Important factors that could cause actual results to be materially different from those forward-looking statements include, among others: (1) the Company's ability to meet its raw material requirements through its annual menhaden harvest, which is subject to fluctuations due to natural conditions over which the Company has no control, such as varying fish population, fish oil yields, adverse weather conditions, natural and other disasters and disease; (2) the impact of laws and regulations that may be enacted that may restrict the Company's operations or the sale of the Company's products or increase the cost of compliance; (3) the impact of worldwide supply and demand relationships on prices for the Company's products; (4) the Company's expectations regarding demand and pricing for its products proving to be incorrect, and the effect of forward sales of products on the Company's financial results; (5) fluctuations in the Company's quarterly operating results due to the seasonality of the Company's business, estimates of standard cost for inventory and subsequent adjustments to such costs, and the Company's deferral of inventory sales based on worldwide prices for competing products; (6) the Company's ability to realize the anticipated benefits from its acquisitions in the human nutrition business, and specifically, to integrate successfully its acquisitions in the human nutrition segment; (7) the Company's expectations regarding Bioriginal, its future prospects and the dietary supplement market or the human health and wellness segment generally, proving to be incorrect; (8) increase in the price and shortage of key raw materials that could adversely affect Bioriginal's businesses; and (9) the cost of compliance or potential restrictions on sales caused by laws and regulations regarding fish meal or oil importation into foreign jurisdictions; (10) business disruptions, costs and future events related to any proxy contests initiated by any activist stockholders; (11) the impact of the announcement of the Board's review of strategic alternatives, as well as any strategic alternatives that may be pursued, on the Company's business, including its financial and operating results, or its employees, suppliers and customers; (12) the impact of the Company's decision to exit the concentrated oils manufacturing business and dispose of its oil concentration facility on the Company's business, financial condition or results of operation, including the amount of any losses that may be incurred in connection therewith and (13) the ability of the Company to identify, evaluate and complete any strategic alternative.  Other factors are described in further detail in the Company's filings with the Securities and Exchange Commission, including its reports on Form 10-K, Form 10-Q and Form 8-K.  Except as required by law, the Company expressly disclaims any intention or obligation to revise or update any forward-looking information whether as a result of new information, future events or otherwise.

 

OMEGA PROTEIN CORPORATION

CONSOLIDATED BALANCE SHEET

(In thousands, except par value amounts)

December 31,

2015

December 31,

2014

(in thousands)

ASSETS

 Current assets:

          Cash and cash equivalents

$

661

$

1,430

          Receivables, net

40,489

36,621

          Inventories

119,994

97,513

          Deferred tax asset, net

3,422

1,871

          Prepaid expenses and other current assets

4,496

4,936

                Total current assets

169,062

142,371

Property, plant and equipment, net

176,089

169,932

Goodwill

38,127

42,501

Other intangible assets, net

20,107

23,002

Other assets, net

3,818

2,309

                Total assets

$

407,203

$

380,115

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

         Current maturities of long-term debt

$

1,214

$

14,741

         Accounts payable

15,876

21,443

         Accrued liabilities

33,254

23,216

              Total current liabilities

50,344

59,400

Long-term debt, net of current maturities

22,882

20,486

Deferred tax liability, net

27,844

25,949

Pension liabilities, net

6,048

5,375

Other long-term liabilities

4,915

3,023

                Total liabilities

112,033

114,233

Commitments and contingencies

Stockholders' equity:

        Preferred stock, $0.01 par value; 10,000,000 authorized shares; none issued

 

 

        Common Stock, $0.01 par value; 80,000,000 authorized shares;

22,371,179 and 21,587,751 shares issued and 22,221,027 and 21,527,319 shares outstanding at December 31, 2015 and 2014,

respectively

 

 

220

 

 

210

        Capital in excess of par value

151,250

141,855

        Retained earnings

159,243

135,268

        Treasury stock, at cost – 150,152 and 60,432 shares at December 31, 2015 and 2014, respectively

(2,505)

(595)

        Accumulated other comprehensive loss

(13,038)

(10,856)

                Total stockholders' equity

295,170

265,882

                    Total liabilities and stockholders' equity

$

407,203

$

380,115

 

OMEGA PROTEIN CORPORATION

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(In thousands, except per share amounts)

Three Months Ended

Years Months Ended

December 31,

December 31,

2015

2014

2015

2014

Revenues

$

82,296

$

102,458

$

359,311

$

308,635

Cost of sales

59,212

79,936

260,408

231,018

Gross profit

23,084

22,522

98,903

77,617

Selling, general, and administrative expense

9,787

8,681

40,859

31,516

Research and development expense

988

641

3,283

2,277

Impairment of goodwill and intangible assets

535

4,718

4,495

4,718

Loss related to plant closure

4,733

1,576

6,650

7,058

Loss on disposal of assets

544

217

1,827

462

Operating income

6,497

6,689

41,789

31,586

Interest expense

(306)

(601)

(1,498)

(1,331)

Gain (loss) on foreign currency

53

(10)

(1,217)

262

Other expense, net

(138)

(97)

(479)

(310)

Income before income taxes

6,106

5,981

38,595

30,207

Provision for income taxes

3,178

2,783

14,620

11,746

Net income

2,928

3,198

23,975

18,461

Other comprehensive income (loss):

Foreign currency translation adjustment net of tax benefit of $286, $251, $956 and $493, respectively

(531)

(466)

(1,776)

(915)

Energy swap adjustment, net of tax (expense) benefit of $207, $1,023, ($67) and $1,247, respectively

(384)

(1,900)

125

(2,316)

Pension benefits adjustment, net of tax benefit of $601, $1,003, $286 and $763, respectively

(1,116)

(1,863)

(531)

(1,417)

Comprehensive income (loss)

$

897

$

(1,031)

$

21,793

$

13,813

Basic earnings per share

$

0.13

$

0.15

$

1.10

$

0.87

Weighted average common shares outstanding

21,705

20,824

21,307

20,562

Diluted earnings per share

$

0.13

$

0.14

$

1.07

$

0.85

Weighted average common shares and potential common share equivalents outstanding

 

22,024

 

21,303

 

21,732

 

21,168

 

OMEGA PROTEIN CORPORATION

CONSOLIDATED STATEMENT OF CASH FLOWS

(In thousands)

Years Ended December 31,

2015

2014

(in thousands)

Cash flows from operating activities:

       Net income

$

23,975

$

18,461

       Adjustments to reconcile net income to net

         cash provided by operating activities:

        Depreciation and amortization

24,529

22,017

        Loss on disposal of assets, plant closure

4,533

2,029

        Loss on disposal of assets

1,827

462

        Impairment of goodwill and other intangible assets

4,495

4,718

        Provisions for losses on receivables

206

48

        Share based compensation

2,353

2,378

        Deferred income taxes

1,399

2,195

        Unrealized loss (gain) on foreign currency fluctuations, net

1,217

(262)

        Changes in assets and liabilities:

                 Receivables

(4,457)

(696)

                 Inventories

(22,957)

16,531

                 Prepaid expenses and other current assets

58

493

                 Other assets

(2,041)

1,464

                 Accounts payable

(6,934)

4,943

                 Accrued liabilities

10,276

(9,498)

                 Pension liability, net

142

(159)

                 Other long-term liabilities

2,007

(202)

                         Net cash provided by operating activities

40,628

64,922

Cash flows from investing activities:

        Capital expenditures

(34,888)

(44,123)

        Proceeds from disposition of assets

235

290

        Acquisition of Bioriginal Food & Science, net of cash acquired

 ―

(46,388)

                         Net cash used in investing activities

(34,653)

(90,221)

Cash flows from financing activities:

        Principal payments of long-term debt

(67,611)

(35,080)

        Proceeds from long-term debt

56,709

24,950

        Debt issuance costs

(980)

          ―

        Treasury stock repurchase

(1,910)

(595)

        Proceeds from stock options exercised

4,983

2,245

        Excess tax benefit of stock options exercised

2,069

1,150

                        Net cash used in financing activities

(6,740)

(7,330)

Net decrease in cash and cash equivalents

(765)

(32,629)

Translation effect on cash

(4)

          ―

Cash and cash equivalents at beginning of year

1,430

34,059

Cash and cash equivalents at end of year

$

661

$

1,430

         

The tables below present information about reported segments for the three months ended December 31, 2015 and 2014 (in thousands).  All cash and cash equivalent balances have been included in the identifiable assets of the unallocated segment.

 

 

2015

Animal Nutrition

Human Nutrition

 

Unallocated

 

Total

Revenue (1)

$  53,276

$  29,020

$         ―

$   82,296

Cost of sales

32,284

26,928

            ―

59,212

Gross profit

20,992

2,092

            ―

23,084

Selling, general and administrative expense (including research and development)

652

4,473

5,650

10,775

Impairment of goodwill and intangible assets

             ―

535

            ―

535

Loss related to plant closure

200

4,533

            ―

4,733

Loss on disposal of assets

540

4

            ―

544

Operating income (loss)

$    19,600

$    (7,453)

$   (5,650)

$     6,497

Depreciation and amortization

$     4,656

$     1,511

$        237

$     6,404

Identifiable assets

$ 239,936

$ 161,878

$     5,389

$ 407,203

Capital expenditures

$     4,661

$        849

$        292

$     5,802

(1)

Excludes revenue from internal customers of $0.7 million for fish oil that was transferred from the animal nutrition segment to the human nutrition segment at cost.

 

 

2014

Animal Nutrition

Human Nutrition

 

Unallocated

 

Total

Revenue (2)

$  68,140

$   34,318

$          ―

$  102,458

Cost of sales

48,558

31,378

            ―

79,936

Gross profit

19,582

2,940

            ―

22,522

Selling, general and administrative expense (including research and development)

520

4,175

4,627

9,322

Impairment of goodwill and intangible assets

          ―

4,718

            ―

4,718

Loss related to plant closure

1,576

          ―

            ―

1,576

Loss on disposal of assets

211

6

            ―

217

Operating income (loss)

$  17,275

$   (5,959)

$   (4,627)

$     6,689

Depreciation and amortization

$     4,264

$     1,534

$         147

$     5,945

Identifiable assets

$ 211,283

$ 166,619

$      2,213

$ 380,115

Capital expenditures

$     4,588

$     2,164

$      1,117

$     7,869

(2)

Excludes revenue from internal customers of $0.3 million for fish oil that was transferred from the animal nutrition segment to the human nutrition segment at cost.

 

The tables below present information about reported segments for 2015 and 2014 (in thousands).  All cash and cash equivalent balances have been included in the identifiable assets of the unallocated segment.

 

 

2015

Animal Nutrition

Human Nutrition

 

Unallocated

 

Total

Revenue (3)

$  220,145

$  139,166

  $        ―

$ 359,311

Cost of sales

139,023

121,385

            ―

260,408

Gross profit

81,122

17,781

            ―

98,903

Selling, general and administrative expense (including research and development)

2,512

19,759

21,871

44,142

Impairment of goodwill and intangible assets

              ―

4,495

                ―

4,495

Loss related to plant closure

2,117

4,533

              ―

6,650

Loss on disposal of assets

855

972

              ―

1,827

Operating income (loss)

$   75,638

$ (11,978)

$  (21,871)

$   41,789

Depreciation and amortization

$   17,880

$     6,048

$        601

$   24,529

Identifiable assets

$ 239,936

$ 161,878

$     5,389

$ 407,203

Capital expenditures

$   27,996

$     4,400

$     2,492

$   34,888

(3)

Excludes revenue from internal customers of $2.5 million for fish oil that was transferred from the animal nutrition segment to the human nutrition segment at cost.

 

 

2014

Animal Nutrition

Human Nutrition(4)

 

Unallocated

 

Total

Revenue (5)

$   243,797

$   64,838

  $        ―

$  308,635

Cost of sales

171,146

59,872

            ―

231,018

Gross profit

72,651

4,966

            ―

77,617

Selling, general and administrative expense (including research and development)

2,249

11,148

20,396

33,793

Impairment of goodwill and intangible assets

              ―

4,718

               ―

4,718

Loss related to plant closure

7,058

            ―

            ―

7,058

Loss on disposal of assets

265

197

            ―

462

Operating income (loss)

$     63,079

$ (11,097)

$  (20,396)

$    31,586

Depreciation and amortization

$    17,338

$     4,070

$        609

$   22,017

Identifiable assets

$  211,283

$ 166,619

$     2,213

$ 380,115

Capital expenditures

$    19,125

$   22,949

$     2,049

$   44,123

(4)

Includes revenues and related expenses for Bioriginal Food & Science from September 5, 2014 through December 31, 2014.

(5)

Excludes revenue from internal customers of $2.1 million for fish oil that was transferred from the animal nutrition segment to the human nutrition segment at cost.

Adjusted EBITDA to Net Income Reconciliation The following tables (in thousands) provides a reconciliation of Adjusted EBITDA, a non-GAAP (Generally Accepted Accounting Principles) financial measure, to net income, the most directly comparable financial measure calculated and presented in accordance with GAAP, for the three months ended December 31, 2015, September 30, 2015 and December 31, 2014 and the years ended December 31, 2015 and 2014:

                                                                                                                                                  

Three Months Ended

December 31,

 2015

September 30,

 2015

December 31,

 2014

Net Income

$

2,928

$

10,574

$

3,198

Reconciling items:

   Interest expense

194

265

574

   Income tax provision

3,178

5,356

2,783

   Depreciation and amortization (1)

6,404

6,214

5,945

   Impairment of goodwill and intangible assets (2)

535

3,960

4,718

   Loss related to plant closure (1)

4,733

630

1,576

   Acquisition post-closing consideration (2)

355

759

600

   Acquisition costs and inventory adjustment (2)

            ―

            ―

72

   Loss on disposal of assets (1)

544

949

217

Adjusted EBITDA

$

18,871

$

28,707

$

19,683

                                                                                                                                     

Years Ended

December 31,

 2015

December 31,

 2014

Net Income

$

23,975

$

18,461

Reconciling items:

   Interest expense

1,225

1,229

   Income tax provision

14,620

11,746

   Depreciation and amortization (1)

24,529

22,017

   Impairment of goodwill and intangible assets (2)

4,495

4,718

   Loss related to plant closure (1)

6,650

7,058

   Acquisition post-closing consideration (2)

2,265

803

   Acquisition costs and inventory adjustment (3)

            ―

3,630

   Loss on disposal of assets (1)

1,827

462

Adjusted EBITDA

$

79,586

$

70,124

(1)

See segment disclosures for allocation among segments.

(2)

Relates to human nutrition segment.

(3)

$830 relates to human nutrition segment and $2,800 relates to unallocated.

Adjusted EBITDA represents net income before interest expense, income tax, depreciation and amortization, impairment of goodwill and intangible assets, loss related to plant closure, acquisition post-closing consideration, acquisition costs and inventory adjustment and loss on disposal of assets. The Company has reported Adjusted EBITDA because it believes Adjusted EBITDA is a measure commonly reported and widely used by investors as an indicator of a Company's operating performance. The Company believes Adjusted EBITDA assists such investors in comparing a company's performance on a consistent basis. Adjusted EBITDA is not a calculation based on GAAP and should not be considered an alternative to net income in measuring our performance or used as an exclusive measure of cash flow because it does not consider the impact of working capital changes, capital expenditures, debt principal reductions and other sources and uses of cash which are disclosed in our consolidated statements of cash flows. Investors should carefully consider the specific items included in our computation of Adjusted EBITDA. While Adjusted EBITDA has been disclosed herein to permit a more complete comparative analysis of our operating performance relative to other companies, investors should be cautioned that Adjusted EBITDA as reported by us may not be comparable in all instances to Adjusted EBITDA as reported by us or by other companies. Adjusted EBITDA amounts may not be fully available for management's discretionary use, due to certain requirements to conserve funds for capital expenditures, debt service and other commitments, and therefore management relies primarily on our GAAP results. Adjusted EBITDA is not intended to represent net income as defined by GAAP and such information should not be considered as an alternative to net income, cash flow from operations or any other measure of performance prescribed by GAAP in the United States.

Adjusted Net Income and Diluted Earnings Per Share to Net Income Reconciliation The following tables (in thousands, except per share amounts) provides a reconciliation of Adjusted Net Income and Diluted Earnings Per Share, non-GAAP (Generally Accepted Accounting Principles) financial measures, to net income, the most directly comparable financial measure calculated and presented in accordance with GAAP, for the three months ended December 31, 2015 September 30, 2015 and December 31, 2014 and the years ended December 31, 2015 and 2014:

                                                                                                                                                  

Three Months Ended

December 31,

 2015

September 30,

 2015

December 31,

 2014

Net Income

$

2,928

$

10,574

$

3,198

Reconciling items:

     Income tax provision prior to adjustments

3,178

5,356

2,783

     Impairment of goodwill and intangible assets

535

3,960

4,718

     Loss related to plant closure

4,733

630

1,576

     Acquisition post-closing consideration

355

759

600

     Acquisition costs and inventory adjustment

              ―

              ―

72

     Loss on disposal of assets

544

949

217

Adjusted income before income taxes

12,273

 

22,228

 

13,164

     Provision for income taxes after adjustments

5,817

7,474

5,372

 

Adjusted net income

$

6,456

$

14,754

$

7,792

Adjusted diluted earnings per share

$

0.29

$

0.66

$

0.35

                                                                                                                                       

Years Ended

December 31,

 2015

December 31,

 2014

Net Income

$

23,975

$

18,461

Reconciling items:

     Income tax provision prior to adjustments

14,620

11,746

     Impairment of goodwill and intangible assets

4,495

4,718

     Loss related to plant closure

6,650

7,058

     Acquisition post-closing consideration

2,265

803

     Acquisition costs and inventory adjustment

               ―

3,630

     Loss on disposal of assets

1,827

462

Adjusted income before income taxes

53,832

46,878

     Provision for income taxes after adjustments

20,398

16,970

Adjusted net income

$

33,434

$

29,908

Adjusted diluted earnings per share

$

1.50

$

1.37

 

Adjusted net income and Adjusted diluted earnings per share represent net income and diluted earnings per share without impairment of goodwill and intangible assets, loss related to plant closure, acquisition post-closing consideration, acquisition costs and inventory adjustment and loss on disposal of assets and taxes associated with these items. The Company has reported Adjusted net income and Adjusted diluted earnings per share because it believes these measures are widely used by investors as an indicator of a Company's operating performance. The Company believes Adjusted net income and Adjusted diluted earnings per share assist investors in comparing a company's performance on a consistent basis.  Adjusted net income and Adjusted diluted earnings per share are not calculations based on GAAP and should not be considered alternatives to net income or diluted earnings per share in measuring our performance. Investors should carefully consider the specific items included in our computation of Adjusted net income and Adjusted diluted earnings per share. While Adjusted net income and Adjusted diluted earnings per share have been disclosed herein to permit a more complete comparative analysis of our operating performance across time periods and relative to other companies, investors should be cautioned that these measures as reported by us may not be comparable in all instances to Adjusted net income and Adjusted diluted earnings per share as reported by us or by other companies. Adjusted net income and Adjusted diluted earnings per share are not intended to represent net income or diluted earnings per share as defined by GAAP and such information should not be considered as an alternative to net income, diluted earnings per share or any other measure of performance prescribed by GAAP in the United States.

Human Nutrition Segment Financial Information Reconciliation The following table (in thousands) provides a breakdown of the total Human Nutrition Segment revenue, cost of sales and gross profit among concentrated menhaden oil products and tolling, dairy protein products and other products for the three months ended December 31, 2015 and the year ended December 31, 2015.

 

 

Three Months Ended December 31, 2015

Total Human Nutrition

Segment

Concentrated Menhaden Oil Products and Tolling

 

Dairy Protein Products

 

Other Products from Human Nutrition Segment

Revenue

$  29,020

$     674

$    2,993

$   25,353

Cost of sales

26,928

1,630

3,830

21,468

Gross profit (loss)

$    2,092

$   (956)

$     (837)

$     3,885

 

Year Ended December 31, 2015

Total Human Nutrition

Segment

Concentrated Menhaden Oil Products and Tolling

 

Dairy Protein Products

Other Products from Human Nutrition Segment

Revenue

$  139,166

$  4,854

$  12,931

$ 121,381

Cost of sales

121,385

7,900

13,876

99,609

Gross profit (loss)

$    17,781

$ (3,046)

$     (945)

$   21,772

 

The Company has provided a breakdown of total Human Nutrition Segment revenue, cost of sales and gross profit among concentrated menhaden oil products, dairy protein products and other human nutrition products because it believes such a breakdown will provide investors with additional useful detail on the performance of the Human Nutrition Segment. 

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SOURCE Omega Protein Corporation



RELATED LINKS

http://www.omegaprotein.com