Boston, MA 05/14/2014 (wallstreetpr) – Ingredients and medical food company, Enzymotec Ltd (NASDAQ: ENZY), is plummeting in the market by a high of 28.57% after the company reported its first quarter unaudited financial results. During the quarter, the company signed a settlement and license agreement with Neptune Technologies & Bio resources. It also completed the repayment of its long-term loan subject to financial and other covenants.
Enzymotec Expecting a Challenging Q2
Enzymotec Ltd (NASDAQ:ENZY) through its chief executive officer maintains it is focusing on executing a strategic growth initiative that leverages its core strengths in nutrition health and wellness. The company also expects to face a challenging quarter after reducing its full year outlook although improved supply/demand dynamics across business segments are expected to offset the decline.
Enzymotec now expects its second quarter revenues and earnings to be in line with levels reported in the second quarter of 2013. The company is currently trying to install new equipment’s into its production facilities as a way of increasing its manufacturing capacity. The move might lead to a temporary shutdown of the plant as upgrades kick in. Enzymotec does not expect its second quarter earnings to be affected by the recently passed production chain regulations, by the Chinese authorities.
Emerging Markets to Spearhead Growth
Weakness in Omega 3 market had a massive negative impact on the company’s sales in the quarter with the situation being made worse by harsh weather conditions which delayed renewal of orders from some customers in the U.S markets. These challenges are expected, on the other hand, to be offset by resurgence of demand in emerging markets of Europe and Far East. Expenses related to an offering in February 2014 saw General and administrative expenses increased by $2.2 million from $1.1 million a year ago.
Based on consolidation method, net revenues of Enzymotec Ltd (NASDAQ:ENZY) for the quarter increased by 43.5% to $23.7 million up from $16.5 million reported for the same period in 2013. Based on an equity method, revenues should come in at $17.9 million from $13.8 million a year ago, representing a 29.1% increase. Increase in volume sales and higher margin products, as well as the operation, of a new extraction facility enabled the first quarter gross margin improve by 1400 basis points to 61.6%, up from 47.3% a year ago.
