- Product sales of $84.0 million, a 7% increase over last year's first
- Total revenue of $87.4 million, up 5% year-over-year
- Record pre-tax income of $15.4 million
- Earnings per share of $0.29, an increase of 12% over last year's
- New products launched containing life'sDHA(TM) in a variety of
- Improvements in gross margin continue to demonstrate the strong
leverage in our business
COLUMBIA, Md., March 4 /PRNewswire-FirstCall/ -- Martek Biosciences Corporation (Nasdaq: MATK) today 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,t cash provided by operating activities 8,601 15,116 Investing activities: Purchase of investments and marketable securities, net - (11,150) Expenditures for property, plant and equipment (2,531) (1,866) Capitalization of intangible assets (1,309) (799) Net cash used in investing activities (3,840) (13,815) Financing activities: Repayments of notes payable and other long-term obligations, net (29) (252) Proceeds from stock option exercises and other, net 82 4,123 Net cash provided by financing activities 53 3,871 Net change in cash and cash equivalents 4,814 5,172 Cash and cash equivalents, beginning of period 102,495 16,973 Cash and cash equivalents, end of period $107,309 $22,145
CONTACT: Kyle Stults Investor Relations (410) 740-0081 email@example.com higher revenues from Martek's infant formula customers, particularly outside of the United States. In addition, sales of life'sDHA(TM) 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):
Three months ended January 31, % 2009 2008 increase Infant formula market $74,591 $70,278 6% Food and beverage market 2,618 2,095 25% Pregnancy and nursing, nutritional supplements and animal feeds 5,664 5,292 7% Non-nutritional products 1,149 944 22% Total product sales $84,022 $78,609 7%
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.
Gross Margin and Operating Expenses
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.
Significant Recent Events
Martek expects total revenues for the second quarter of fiscal 2009 to be between $87 million and $92 million with second quarter infant formula revenue projected to be between $76 million and $80 million and second quarter non-infant formula nutritional revenue projected to be between $7 million and $9 million. Second quarter gross margin is expected to be approximately 42.5%. Net income for the second quarter is projected to be between $8.9 million and $10.3 million, and diluted earnings per share are projected to be between $0.27 and $0.31.
For the full fiscal year 2009, consistent with previous guidance, the Company continues to expect moderate growth of both revenues and profitability over fiscal 2008 with profitability continuing to grow at a higher rate than revenues primarily due to improvements in gross profit margins. However, if the current worldwide economic recession remains deep and prolonged, there is greater uncertainty with respect to the Company's ability to attain its forecasted operating results.
Investor Conference Call Webcast
Martek will host a conference call and Webcast for investors to review its first quarter results and fiscal 2009 outlook at 4:45 p.m. Eastern Time on Wednesday, March 4, 2009. Access to the live audio Webcast is available through Martek's website at http://investors.martek.com. The webcast will be available for replay through the close of business on April 4, 2009.
Sections of this release contain forward-looking statements concerning, among other things: (1) Martek's expectations regarding future revenue growth in and customer demand from the infant formula, pregnancy and nursing, nutritional supplements, animal feeds and food and beverage markets; (2) its expectations regarding revenue, gross margin, operating expenses and income for the second quarter of and full fiscal year 2009; and (3) its expectations regarding launches by customers of products containing Martek's life'sDHA(TM) and its contract manufacturing business. Furthermore, Martek's operating results are subject to quarter-to-quarter fluctuations, some of which may be significant. The forward-looking statements noted above are based upon numerous assumptions which Martek cannot control and involve risks and uncertainties that could cause actual results to differ. These statements should be understood in light of the risk factors and cautionary statements set forth herein and in the Company's filings with the Securities and Exchange Commission, including, but not limited to, Part I, Item 1A of the Company's Form 10-K for the fiscal year ended October 31, 2008 and other filed reports on Form 10-K, Form 10-Q and Form 8-K.
Martek Biosciences Corporation (Nasdaq: MATK) is a leader in the innovation and development of omega-3 DHA products that promote health and wellness through every stage of life. The Company produces life'sDHA(TM), a vegetarian source of the omega-3 fatty acid DHA (docosahexaenoic acid), for use in foods, infant formula and supplements, and life'sARA(TM) (arachidonic acid), an omega-6 fatty acid, for use in infant formula. For more information on Martek Biosciences, visit www.martek.com.
MARTEK BIOSCIENCES CORPORATION
Summary Consolidated Financial Information
(Unaudited - $ in thousands, except per share data)
Unaudited Condensed Consolidated Statements of Income Data
Three months ended January 31, 2009 2008 Revenues: Product sales $84,022 $78,609 Contract manufacturing sales 3,341 4,272 Total revenues 87,363 82,881 Cost of revenues: Cost of product sales 46,909 45,097 Cost of contract manufacturing sales 3,409 3,688 Total cost of revenues 50,318 48,785 Gross margin 37,045 34,096 Operating expenses: Research and development 6,749 5,981 Selling, general and administrative 13,097 12,981 Amortization of intangible assets 1,781 1,679 Other operating expenses 153 153 Total operating expenses 21,780 20,794 Income from operations 15,265 13,302 Interest income (expense) and other, net 160 217 Income before income tax provision 15,425 13,519 Income tax provision 5,819 4,850 Net income $9,606 $8,669 Basic earnings per share $0.29 $0.26 Diluted earnings per share $0.29 $0.26 Shares used in computing basic earnings per share 33,150 32,745 Shares used in computing diluted earnings per share 33,399 33,130
Unaudited Condensed Consolidated Balance Sheets Data
January 31, October 31, 2009 2008 Assets: Cash and cash equivalents $107,309 $102,495 Accounts receivable, net 49,593 40,438 Inventories, net 103,440 99,553 Other current assets 5,174 4,866 Property, plant and equipment, net 262,631 265,900 Deferred tax asset 32,961 38,356 Long-term investments 11,310 11,336 Goodwill and other, net 82,867 83,037 Total assets $655,285 $645,981 Liabilities and stockholders' equity: Current liabilities $45,635 $47,342 Non-current liabilities 9,544 10,056 Stockholders' equity 600,106 588,583 Total liabilities and stockholders' equity $655,285 $645,981
Unaudited Condensed Consolidated Cash Flow Data
Three months ended January 31, 2009 2008 Operating activities: Net income $9,606 $8,669 Non-cash items 12,960 11,905 Changes in operating assets and liabilities, Net (13,965) (5,458) Ne
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