Thursday, 13 October 2011

Neptune Conference Call Summary – Q2 Results, Chinese JV, Bayer, and more

Neptune Technologies & Bioressources
TSXV: NTB - NASDAQ: NEPT
Basic Shares: 48.2 million
Fully diluted: 53.9 million


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At 4:30pm ET today (Oct. 13th), Neptune Technologies hosted an investor conference call to discuss Q2/F12 quarterly results and to discuss a number to items on the minds of investors.

Here’s a summary of the call.

Q2 Results: For the six months ending August 31, 2011 revenue was up slightly (4%), and the company had a net loss of just over $3 million.
  • Andre Godin, CFO for Neptune explained that this was mainly a result of Acasti’s R&D activities.
  • If that were removed, Neptune alone would be profitable.
  • He also stated that next quarter revenue should be $5+ million but R&D expenses will remain for the next few quarters.
  • The company increased product volume by 50% with EKO, the economic lower margin krill product versus NKO, accounting for 31%. According to Mr. Godin, the lack of increase in revenue is attributed to weak margins and the aggressive push to grab market share and expand in the US.
U.S. product push: The company said its deal with a new major US distributer is leading to NTB products now hitting the shelves of major retailers like WalMart and Walgreens.

Expansion: The company is expecting to increase capacity from 150Kg/yr to 300Kg/yr in the next year.
  • An announcement should be coming soon for its new plant, which will support 200Kg-300Kg/yr. It will be paid for with a bank loan and government grants.
Chinese JV Partne – SKFC: The company said that is will give them access to the entire Asian market.
  • SKFC is the largest krill fisher in the world.
  • A plant will be built and financed by Chinese banks and Chinese partners.
  • Neptune is to receive an upfront payment that “just about covers’ its financial commitment to the JV.

Nestle/Bayer: According to management the halt of sale through Bayer’s website was a result of Bayer wishing to reformulate and provide a new look to the product.
  • The relationship with Bayer is strong. The halt was not a result of quality or inability to supply the product.
  • The results of the Nestle clinical trial should be released by the end of this year.

NeuroBioPharm spinoff: According to management, it is taking time because it is more complicated than expected.

TSX: The company is expecting to migrate to the TSX from the Venture exchange within a month.

Capre Clinical Trials: Expected to have results within 12-18 months.

Patent: The company said at the end of the call that Neptune believes that the recently granted US patent is strong and valid. The company stands by it and are prepared to enforce it.

To hear an encore version of the Neptune conference call visit www.neptunebiotech.com by 6pm Eastern Time.