3Q Net Income for Omega Protein
November 7/Karachi, Pakistan/Daily the Pak Banker -- Omega Protein Corporation reported net income of $7.0 million ($0.37 per share) for the third quarter of 2010, compared with net loss of $2.8 million ($0.15 per share) for the third quarter of the previous year.
Revenues for the quarter ended September 30, 2010, were $56.0 million compared with revenues of $49.9 million for the comparable quarter in 2009. Omega Protein recorded operating income of $11.9 million for the third quarter of 2010, versus operating loss of $2.2 million for the third quarter of 2009.
The company's 2010 third quarter results, in comparison to the third quarter of 2009, primarily reflect increased fish meal and fish oil sales pricing of 56% and 33%, respectively, offset by decreased fish meal and fish oil sales volumes of 27% and 17%, respectively. The increased fish meal sales pricing coincides with limited global availability of fish meal experienced during the majority of 2010. The decreased fish meal sales volume was the result of decreased production and inventory due to restricted fishing grounds from the Gulf of Mexico oil spill disaster.
For the nine months ended September 30, 2010, the company recognized revenues of $124.6 million, compared with $121.8 million in revenues for the first nine months of 2009. Omega Protein recorded operating income of $17.9 million for the nine months ended September 30, 2010, versus operating loss of $1.9 million for the comparable period a year earlier. The company had net income of $9.9 million ($0.53 per share) for the nine months ended September 30, 2010, compared with net loss of $4.0 million ($0.21 per share) for the nine months ended September 30, 2009.
For the three and nine months ended September 30, 2010, federal and state closures of fishing grounds resulting from the Deepwater Horizon oil spill affected the company's ability to operate its Gulf of Mexico fishing fleet resulting in decreased fish catch due to the closures and increased cost due to the repositioning and staging of its fleet at other locations. The decrease in fish catch reduced the company's volume of inventory available to sell which may reduce its sales volumes and revenues for the fourth quarter of 2010 and possibly into 2011. As a result of the decreased volume of inventory, the company may make purchases of additional tons of fish meal and fish oil based upon the company's available inventory, customer demand and prevailing market conditions. The decrease in fish catch and additional costs incurred also increased the company's cost per unit of production to record highs which will partially offset its gross profit percentage as 2010 inventory is sold.
During the three months ended September 30, 2010, the company received an emergency payment from the Gulf Coast Recovery Facility (GCCF) of $7.3 million, of which $0.6 million was included as proceeds resulting from the Deepwater Horizon oil spill disaster in its results of operations. The majority of the first emergency payment was credited to the unallocated inventory cost pool as of September 30, 2010. In October 2010, the company received a second emergency payment from the GCCF of $11.4 million, net of fees and expenses. The second emergency payment was included to project the company's 2010 cost per unit of production, along with projected production and costs for the remainder of the fishing season, as of September 30, 2010, but was not recognized as a receivable or in the unallocated inventory cost pool. Because both of these payments were included in the projected cost per unit of production calculation for the 2010 fishing season, cost of sales was partially reduced by 13%, or $7.2 million, for the quarter ended September 30, 2010 and will continue to be partially reduced through June 30, 2011. Despite the aforementioned partial reduction, cost per unit of production for the 2010 fishing season is the highest in the company's history due to the effect of the closure of its fishing grounds related to the Gulf of Mexico oil spill disaster.
During the nine months ended September 30, 2009, the company received a federal hurricane assistance grant of $2.7 million from the state of Mississippi, net of fees, related to the impact of Hurricane Katrina, which occurred during 2005. Excluding this grant from the results of operations, the company's net loss for the nine months ended September 30, 2009 would have been approximately $5.8 million ($0.31 a share).
From the November 8, 2010, Prepared Foods' Daily News
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