Neptune Wellness Solutions Inc (NEPT)

[FUNMAN]

Neptune Reports First Quarter Fiscal 2021 Results

Tue August 11, 2020 4:05 PM

To see the charts read this release at this link:

https://seekingalpha.com/pr/17968196-neptune-reports-first-quarter-fiscal-2021-results

2021/QTR1 revenue + 390% YOY and +124% over 2020/QTR4, driven by significant new Health and Wellness Innovations consumer products and growth of Cannabis revenue

Sets Q2 revenue guidance of $28 to $32 million, representing estimate year-over-year growth of 330% to 391%

LAVAL, QC, Aug. 11, 2020 /CNW Telbec/ - Neptune Wellness Solutions Inc. ("Neptune" or the "Company") (NASDAQ: NEPT) (TSX: NEPT), a diversified and fully integrated health and wellness company focused on plant-based, sustainable and purpose-driven lifestyle brands, today announced its financial and operating results for the three-month period ended June 30, 2020. All amounts are in thousands of Canadian dollars except if specified otherwise.

First Quarter 2021 Financial Highlights:

• Total revenues for the three-month period ended June 30, 2020 amounted to $21,363, representing a sequential increase of $11,833, or 124%, over the fourth quarter ended March 31, 2020 and an increase of $17,002, or 390%, compared to $4,361 for the three-month period ended June 30, 2019.
• Gross profit for the three-month period ended June 30, 2020 amounted to $3,256, representing a sequential increase of $4,353 over the fourth quarter ended March 31, 2020 and an increase of $3,969 over the three-month period ended June 30, 2019. Gross margin improved to 15.2% compared to negative gross margins in both of the comparative periods, reflecting improved margins as a result of volume growth in cannabis.
• Net loss for the three-month period ended June 30, 2020 amounted to $11,427 compared to a net loss of $6,452 for the three-month period ended June 30, 2019.
• Adjusted EBITDA1 improved by $227 for the three-month period ended June 30, 2020 to a loss of $3,356 compared to the three-month period ended June 30, 2019. The increase in Adjusted EBITDA1 is mainly attributable to the increase in gross profit, partially offset by an increase in SG&A expenses.
• Neptune establishes second quarter fiscal 2021 revenue guidance of between $28,000 and $32,000, representing a sequential growth of approximately 31% to 50% compared to the previous quarter or approximately 330% to 391% growth over the prior year period.
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1 See "Caution Regarding Non-IFRS Financial Measures" and "Reconciliation of Segment income (loss) before corporate expenses to Adjusted Segment EBITDA and net loss to Adjusted EBITDA" which follow.
Recent Corporate Highlights:
• June 15, 2020, Neptune announced the launch of Neptune Halo, an electronic pulse oximeter device that is a key tool in the battle against COVID-19 and an expansion of its Health and Wellness Innovations portfolio.
• June 22, 2020, Neptune announced a new line of plant-based hand sanitizers to launch in club store channel. Developed by Neptune Health & Wellness Innovations, in partnership with International Flavors & Fragrances (NYSE: IFF), the expanded product line consists of six new scented varieties.
• June 29, 2020, Neptune announced it has been authorized by Health Canada to sell cannabis products to provinces and territories. This sales license includes edibles, extracts and topicals, to name a few. This authorization adds to previously held processing license and will expand Neptune's cannabis operations to include proprietary branded products. Additionally, the authorization enhances the capabilities of the Company's white label offerings, providing incremental value and service offerings to its B2B customers.
• July 15, 2020, Neptune announced the appointment of Eric Gharakhanian, Ph.D. as Director of Product Development, Health & Wellness Innovations. Dr. Gharakhanian joins Neptune from The Clorox Company where he served as Product Development Specialist, responsible for developing and maintaining cleaning products and brands within the Company's homecare portfolio.
• July 21, 2020, Neptune announced the nominations of Jane Pemberton and Frank Rochon for election to the Company's Board of Directors by the Company's shareholders at its Annual General Meeting to be held on August 12, 2020.
Management Commentary
Michael Cammarata, Chief Executive Officer of Neptune, stated: "Our transformation to a diversified and fully integrated health and wellness company has yielded significant results. We have built the team, the partnerships and developed a pipeline of innovation across the health and wellness landscape to drive further growth over the coming quarters and years. Our pace of new product and category development has accelerated, and we are fully leveraging our assets to drive profit accretive growth with limited incremental capital investment. Each of our new product launches are designed to drive higher margins and higher returns on investment to maximize returns and support incremental growth opportunities. We are seeing improved gross margins while accelerating growth, and as volumes continue to build, we expect further enhancements to our profit profile. During the first quarter, both our Health and Wellness Innovations and Cannabis activities delivered significant growth, driven by strong partnerships and our ability to quickly execute on emerging opportunities. We are anticipating strong growth in the second quarter and expect the accelerated growth to continue."
Dr. Toni Rinow, Chief Financial Officer of Neptune, commented: "We have made significant investments over the last year, including expanding capacity and building a world-class team. We are now leveraging these investments, resulting in accelerated growth and improving margins. We anticipate both to continue and our guidance for second quarter revenue to nearly quadruple once again on a year-over-year basis. In addition to being focused on innovation to drive revenue, it is part of our core financial strategy of closely monitoring the profitability of our new business development to enhance margins and capitalize on asset-light innovations. We have improved our cash position to support growth and are working on additional, non-dilutive, sources of capital to support continued growth. We are seeing strong momentum with our recent hand sanitizer introduction into the club channel, which began early in the second quarter, but are also seeing continued growth in cannabis with existing key partners and new business."
First Quarter 2021 Financial Results
Total revenues for the three-month period ended June 30, 2020 increased 390% to $21,363 compared $4,361 in the prior year period. The increase in revenue was primarily a result of new health & wellness products, namely the initial launch of hand sanitizers and the Neptune Air contact-less thermometers, and cannabis related products reflecting the completion of the Company's Phase 2 expansion that became operational early the quarter.
Consolidated gross profit for the three-month period ended June 30, 2020 amounted $3,256 compared to $(712) for the three-month period ended June 30, 2019, an increase of $3,968. The increase in gross profit for the three-month period ended June 30, 2020 compared to the three-month period ended June 30, 2019 was directly related to the increase in sales volumes. The consolidated gross margin increased from (16%) for the three-month period ended June 30, 2019 to 15% for the three-month ended June 30, 2020.
Neptune reported a net loss of $11,427 for the three-month period ended June 30, 2020, compared to a net loss of $6,452 in the prior year period. The increase in the net loss for the three-month period ended June 30, 2020 is attributable to the increases in selling, general and administrative expenses and net finance costs to support future growth, partly offset by the increase in gross profit.
For the three-month period ended June 30, 2020, adjusted EBITDA1 was a loss of $3,356 compared with a loss of $3,583 in the prior year period.
Outlook
For the second quarter of fiscal 2021, the Company anticipates revenue of between $28,000 and $32,000, reflecting accelerated growth across several of the Company's activities.
Operational and COVID-19 Update
During the first quarter of fiscal 2021, Neptune's Phase 2 expansion at its Sherbrooke facility became operational, significantly expanding capacity and allowing for increased sales volumes. The Company is now shipping to all of its key B2B cannabis extraction clients, as well as recent new business wins. In June, Neptune was authorized by Health Canada to sell cannabis products to provinces and territories, including edibles, vapes, extracts, topicals and beverage products. The Company also received authorization for additional cold storage capacity at the Sherbrooke facility. Additionally, Neptune completed the conversion of its extraction operations to a cold ethanol process, which reduced processing time and provides for greater efficiency.
Relating to COVID-19, Neptune's operations continue to be deemed essential and thus its facility in both Canada and the United States continued to operate without any material disruption, reflecting existing high operating standards and a rapid response to the pandemic. While the global health crisis had negative impacts on certain aspects of the business, including the pace of retailers accepting new products and other disruptions, the Company remains able to continue to service its customers.