Fourth Quarter Non-GAAP Net Income* of
$0.07 per Diluted Share Inclusive of $0.05 for Accelerated Growth
Initiative Spend
Enzymotec Ltd. (NASDAQ:ENZY), a developer, manufacturer and
marketer of innovative bio-active lipid ingredients and medical
foods, today reported financial results for the fourth quarter and
full year ended December 31, 2015.
Fourth Quarter Financial Highlights
- Fourth quarter net revenues (equity method) increased 23.1% to
$13.3 million, compared to the fourth quarter of 2014.
- Fourth quarter net revenues (proportionate consolidation
method) increased 18.0% to $16.8 million, compared to the fourth
quarter of 2014.
- Fourth quarter selling and marketing expenses increased 106.3%
and 37.9% to $3.7 million, compared to the fourth quarter of 2014
and the third quarter of 2015, respectively.
- Fourth quarter adjusted EBITDA increased 19.2% to $2.4
million*, compared to the fourth quarter of 2014.
- Fourth quarter GAAP net income increased 0.4% to $1.1 million,
or $0.05 per diluted share, compared to the fourth quarter of
2014.
- Fourth quarter non-GAAP net income increased 7.0% to $1.6
million, or $0.07 per diluted share*, compared to the fourth
quarter of 2014.
- Continued to enhance the VAYA Pharma sales force, sales
infrastructure and research and development to allow for continued
growth and expansion of the business. This accelerated build-up
cost, compared to the third quarter of 2015, amounted to $1.1
million or $0.05 per diluted share in the fourth quarter.
- Fourth quarter cash flows from operating activities amounted to
$1.4 million.
* A reconciliation of non-GAAP financial measures to GAAP
financial measures is set forth below.
Recent Business Highlights:
Nutrition Segment:
- The Company’s joint venture agreement with AAK was
automatically extended to December 31, 2019 pursuant to its
terms.
- The International Chamber of Commerce tribunal ("ICC")
rejected, in their entirety, AAK's requests for declaratory relief
in connection with alleged breaches by the Company of the joint
venture agreement's non-disclosure obligations. Additionally, the
ICC found, consistent with the Company’s position, that the joint
venture agreement may be terminated only through a buy-sell
procedure.
- The nutrition division strengthened its market presence in
Europe (Germany) and South East Asia (Singapore) with the
recruitment of regional sales managers.
- Enzymotec's proprietary line of PS products reached record
sales in the fourth quarter as its Sharp-PS ingredient was
incorporated in sport nutrition applications.
- Granted Mexican Patent for InFat® uses related to promoting
intestinal health.
- InCog™, an innovative lipid composition for cognitive
functioning, approved as a novel food in Europe. The approval is
also relevant for Vayacog®.
- Published results from a pre-clinical study on the toxicity of
fish source PS in rats in the peer-reviewed journal "Food and
Chemical Toxicology." The study results support the safety of
InCog™.
- A recent study utilizing a gastric model found that Enzymotec’s
K•REAL® brand of krill oil presents a superior profile with regard
to stability, safety and efficacy in contrast to the other tested
commercial brands of krill oil.
- Expanded the Company’s manufacturing facility in Israel
that will result in an approximately 50% increase in
production capacity.
VAYA Pharma Segment
- Generated record VAYA Pharma sales in the fourth quarter and in
the full year.
- VAYA Pharma sales-out in the U.S., which includes IMS data and
the Company’s on-line sales channels, increased 46% in the fourth
quarter of 2015, compared to the fourth quarter of 2014 and
increased 15%, compared to the third quarter of 2015.
- VAYA Pharma's sales force, infrastructure and related marketing
activities in the U.S. and in Singapore continued to expand. VAYA
now has 45 sales representatives in 23 states in the U.S.
- Increased traffic to VAYA Pharma's online pharmacy which
results in higher refill rates and patient compliance than retail
pharmacies.
- VAYA Pharma completed retrospective analyses showing positive
effects of Vayarin® for the management of ADHD in epileptic
patients and for emotional dysregulation and sleep disturbances in
ADHD patients.
- Granted a U.S. Patent for Vayacog® use in pre-Alzheimer's
disease and pre-dementia syndrome.
“Enzymotec enters 2016 strategically and financially
well-positioned to execute on its key initiatives to advance up the
value chain. The Company’s industry leading lipids technology
paired with its fully integrated and comprehensive platform remain
the fundamental drivers of our success. The market is ripe for the
value proposition that we can offer customers. Our strong financial
standing with $76.4 million in cash, deposits and marketable
securities on the balance sheet and strong cash flow generation
allows us flexibility to continue to make investments across all of
our businesses, especially in research and development and the
commercial expansion of VAYA Pharma,” stated Dr. Ariel Katz,
Enzymotec’s President and Chief Executive Officer.
“VAYA Pharma reported another record quarter with $2.3 million
in revenue. We are encouraged by the strength we continue to see in
the business and the growing demand for our product offering by
both healthcare providers and their patients. We
believe that these are positive signals for our commercial growth
strategy and serve as a justification for the additional $1.1
million in operating expenses we incurred during the fourth
quarter, compared to the third quarter, with the majority of that
dedicated to our selling and marketing initiatives,” Dr. Katz
continued.
“Our investment in research and development serves as the crux
of our ability to move up the value chain, while also being able to
maintain a strong margin profile and reasonable cost structure. We
are developing new innovations that we believe will serve the needs
of our infant nutrition customers as they navigate the newly
emerged ecommerce platforms in China, as well as in the rest of the
Far East, where we see tremendous opportunity. We are also looking
forward to building additional value in Advanced Lipids with the
arbitration now behind us. Our guidance for 2016 reflects our
investment in innovation and the ultimate value proposition we can
offer to our customers that we believe will support the longer term
growth profile of the Company,” concluded Dr. Katz.
Fourth Quarter 2015 Results
For the fourth quarter of 2015, based on the proportionate
consolidation method, net revenues increased 18.0% to $16.8
million, from $14.2 million for the fourth quarter of 2014. Based
on the equity method of accounting, net revenues increased 23.1% to
$13.3 million, from $10.8 million for the fourth quarter last year.
The increase was primarily attributable to an increase of $1.2
million in InFat sales (proportionate consolidation method), an
increase of $0.9 million in sales of VAYA Pharma products and an
increase of $0.8 million in sales of PS products, all partially
offset by a decrease of $0.3 million of krill oil
sales.
Gross margin (equity method) for the fourth quarter of 2015
increased 299 basis points to 61.4%, from 58.5% for the fourth
quarter of 2014 primarily due to a change in product mix.
Research and development expenses for the fourth quarter of 2015
increased 21.3% to $1.8 million, from $1.5 million for the fourth
quarter of 2014, primarily as a result of an increase of $0.2
million related to expenses in respect of VAYA Pharma clinical
trials.
Selling and marketing expenses for the fourth quarter of 2015
increased 106.3% to $3.7 million, from $1.8 million for the fourth
quarter of 2014, primarily as a result of an increase of $1.5
million related to an expansion in VAYA Pharma's sales force,
infrastructure and related marketing activities in the U.S. and in
Singapore.
General and administrative expenses for the fourth quarter of
2015 decreased 21.4% to $1.6 million, from $2.0 million for the
fourth quarter of 2014, primarily due to a decrease of $0.4 million
in legal expenses and a decrease of $0.2 million in allowance for
doubtful accounts, partially offset by an increase in headcount and
share-based compensation expenses of $0.2 million.
Net income for the fourth quarter of 2015 amounted to $1.1
million, or $0.05 per diluted share, similar to the fourth quarter
last year.
Non-GAAP net income increased to $1.6 million, or $0.07 per
diluted share, from $1.5 million, or $0.06 per diluted share for
the fourth quarter of 2014. A reconciliation of non-GAAP net income
to GAAP net income is set forth below.
Adjusted EBITDA for the fourth quarter of 2015 increased 19.2%
to $2.4 million, from $2.0 million for the fourth quarter of 2014.
A reconciliation of adjusted EBITDA to GAAP net income is set forth
below.
Below is segment information for the three months ended December
31, 2015 and 2014 (unaudited):
|
Three Months Ended December 31, 2015 |
|
Nutrition Segment |
VAYA Pharma Segment |
Total Segment Results of
Operations |
Elimination(1) |
Consolidated Results of
Operations |
|
U.S. dollars in thousands |
|
|
|
|
|
|
Net revenues |
$ |
14,453 |
|
$ |
2,297 |
|
$ |
16,750 |
|
$ |
(3,481 |
) |
$ |
13,269 |
|
Cost of revenues(2) |
|
7,974 |
|
|
380 |
|
|
8,354 |
|
|
(3,262 |
) |
|
5,092 |
|
Gross profit(2) |
|
6,479 |
|
|
1,917 |
|
|
8,396 |
|
|
(219 |
) |
|
8,177 |
|
Operating expenses(2) |
|
3,166 |
|
|
3,461 |
|
|
6,627 |
|
|
|
6,627 |
|
Depreciation and amortization |
|
589 |
|
|
58 |
|
|
647 |
|
|
|
Adjusted EBITDA(3) |
$ |
3,902 |
|
$ |
(1,486 |
) |
$ |
2,416 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31, 2014 |
|
Nutrition Segment |
VAYA Pharma Segment |
Total Segment Results of
Operations |
Elimination(1) |
Consolidated Results of
Operations |
|
U.S. dollars in thousands |
|
|
|
|
|
|
Net revenues |
$ |
12,833 |
|
$ |
1,360 |
|
$ |
14,193 |
|
$ |
(3,410 |
) |
$ |
10,783 |
|
Cost of revenues(2) |
|
7,389 |
|
|
351 |
|
|
7,740 |
|
|
(3,286 |
) |
|
4,454 |
|
Gross profit(2) |
|
5,444 |
|
|
1,009 |
|
|
6,453 |
|
|
(124 |
) |
|
6,329 |
|
Operating expenses(2) |
|
3,209 |
|
|
1,745 |
|
|
4,954 |
|
|
(3 |
) |
|
4,951 |
|
Depreciation and amortization |
|
483 |
|
|
44 |
|
|
527 |
|
|
|
Adjusted EBITDA(3) |
$ |
2,718 |
|
$ |
(692 |
) |
$ |
2,026 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Represents the change
from proportionate consolidation to the equity method of
accounting. |
(2) Includes depreciation
and amortization, but excludes share-based compensation
expense. |
(3) Adjusted EBITDA is a
non-GAAP financial measure. For a definition and a
reconciliation of adjusted EBITDA to our GAAP net income, see
“Non-GAAP Financial Measures” below. |
|
Twelve Month Results
For the year ended December 31, 2015, based on the proportionate
consolidation method, net revenues increased 1.9% to $62.6 million
from $61.5 million for the year ended December 31, 2014. For the
year ended December 31, 2015, based on the equity method of
accounting, net revenues increased 7.0% to $50.4 million from $47.1
million for the year ended December 31, 2014. The increase in net
revenues based on the proportionate consolidation method was
primarily due to an increase of $2.8 million of VAYA Pharma
products and increased sales of PS products of $1.3 million,
partially offset by a decrease of $1.5 million of InFat sales
(proportionate consolidation method) and a decrease of $1.5 million
in krill oil sales.
For the year ended December 31, 2015, gross margin (equity
method) decreased 8 basis points to 61.0% from 61.1% for the year
ended December 31, 2014.
For the year ended December 31, 2015, research and development
expenses increased 2.7% to $6.1 million, from $6.0 million for the
year ended December 31, 2014, primarily as a result of an increase
of $0.6 million related to expenses in respect of VAYA Pharma
clinical trials, partially offset by a decrease of $0.4 million in
regulation activities.
For the year ended December 31, 2015, selling and marketing
expenses increased 42.2% to $11.4 million, from $8.0 million for
the year ended December 31, 2014, primarily as a result of an
increase of $3.0 million related to expanding VAYA Pharma's sales
force and infrastructure and related marketing activities in the
U.S. and in Singapore and an increase $0.4 million in selling and
marketing activities of the Nutrition segment.
For the year ended December 31, 2015, general and administrative
expenses decreased 6.2% to $7.0 million, from $7.5 million for the
year ended December 31, 2014, primarily due to a decrease of $0.5
million in legal expenses, a decrease of $0.2 million in public
company related expenses (mainly due to the secondary offering in
the first quarter of 2014) and a decrease of $0.2 million in
allowance for doubtful accounts, partially offset by an increase in
headcount and share-based compensation expenses of $0.4
million.
For the year ended December 31, 2015, net income decreased 14.7%
to $6.7 million, or $0.29 per diluted share, from $7.8 million (or
$0.34 per diluted share) for the year ended December 31, 2014.
For the year ended December 31, 2015, non-GAAP net income
decreased 8.4% to $8.3 million, or $0.36 per diluted share, from
$9.1 million, or $0.39 per diluted share for the year ended
December 31, 2014. A reconciliation of non-GAAP net income to GAAP
net income is set forth below.
For the year ended December 31, 2015, adjusted EBITDA decreased
6.2% to $10.7 million, from $11.4 million for the year ended
December 31, 2014. A reconciliation of adjusted EBITDA to GAAP net
income is set forth below.
For the year ended December 31, 2015, cash flow from operating
activities increased by $9.2 million to $11.2 million, from $2.0
million for the year ended December 31, 2014.
Set forth below is segment information for the year ended
December 31, 2015 and 2014 (unaudited):
|
Year Ended December 31, 2015 |
|
Nutrition Segment |
VAYA Pharma Segment |
Total Segment Results of
Operations |
Elimination(1) |
Consolidated Results of
Operations |
|
U.S. dollars in thousands |
|
|
|
|
|
|
Net revenues |
$ |
54,163 |
|
$ |
8,471 |
|
$ |
62,634 |
|
$ |
(12,243 |
) |
$ |
50,391 |
|
Cost of revenues(2) |
|
29,686 |
|
|
1,506 |
|
|
31,192 |
|
|
(11,665 |
) |
|
19,527 |
|
Gross profit(2) |
|
24,477 |
|
|
6,965 |
|
|
31,442 |
|
|
(578 |
) |
|
30,864 |
|
Operating expenses(2) |
|
12,704 |
|
|
10,356 |
|
|
23,060 |
|
|
(3 |
) |
|
23,057 |
|
Depreciation and amortization |
|
2,127 |
|
|
200 |
|
|
2,327 |
|
|
|
Adjusted EBITDA(4) |
$ |
13,900 |
|
$ |
(3,191 |
) |
$ |
10,709 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2014 |
|
Nutrition Segment |
VAYA Pharma Segment |
Total Segment Results of
Operations |
Elimination(1) |
Consolidated Results of
Operations |
|
U.S. dollars in thousands |
|
|
|
|
|
|
Net revenues |
$ |
55,815 |
|
$ |
5,641 |
|
$ |
61,456 |
|
$ |
(14,353 |
) |
$ |
47,103 |
|
Cost of revenues(2) |
|
30,605 |
|
|
1,435 |
|
|
32,040 |
|
|
(13,775 |
) |
|
18,265 |
|
Gross profit(2) |
|
25,210 |
|
|
4,206 |
|
|
29,416 |
|
|
(578 |
) |
|
28,838 |
|
Operating expenses(3) |
|
13,347 |
|
|
6,957 |
|
|
20,304 |
|
|
(3 |
) |
|
20,301 |
|
Depreciation and amortization |
|
2,112 |
|
|
196 |
|
|
2,308 |
|
|
|
Adjusted EBITDA(4) |
$ |
13,975 |
|
$ |
(2,555 |
) |
$ |
11,420 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Represents the
change from proportionate consolidation to the equity method of
accounting. |
(2) Includes
depreciation and amortization, but excludes share-based
compensation expense. |
(3) Includes
depreciation and amortization, but excludes share-based
compensation expense and secondary offering related expenses. |
(4) Adjusted EBITDA
is a non-GAAP financial measure. For a definition and a
reconciliation of adjusted EBITDA to our net income, see “Non-GAAP
Financial Measures” below. |
|
Joint Venture Accounting
Under U.S. GAAP, the Company is required to
account for the results of operation of Advanced Lipids AB
(Advanced Lipids), the Company's 50%-owned joint venture, using the
equity method of accounting, meaning that the Company recognizes
its share in the net results of Advanced Lipids as a share of
profits of an equity investee. Accordingly, the revenues recognized
from the arrangement are the amounts the Company charges to its
joint venture partner, or the Company's direct costs of production
plus its share of the joint venture's profits. For the three-month
periods ended December 31, 2015 and 2014, sales of the Company
through this joint collaboration amounted to $3.8 million and $2.7
million, respectively. For the year ended December 31, 2015 and
2014, sales of the Company through this joint collaboration
amounted to $14.0 million and $13.3 million, respectively.
To provide investors with a better understanding
of the Company's performance and for purposes of segment reporting
under U.S. GAAP, which requires presentation on the same basis
provided to and utilized by management to analyse the relevant
segment's results of operations, the Company accounts for the
results of operations of Advanced Lipids using the proportionate
consolidation method. The financial information included in the
tables above under the heading "Nutrition segment" includes, inter
alia, the results of operations of Advanced Lipids, using the
proportionate consolidation method. Under the proportionate
consolidation method, the Company recognizes its proportionate
share of the gross revenues of Advanced Lipids and records its
proportionate share of the joint venture's costs of production in
its statement of operations.
Balance Sheet and Liquidity
Data
As of December 31, 2015, we had $76.4 million in
cash and cash equivalents, short-term bank deposits and short-term
and long-term marketable securities, $28.2 million in other working
capital items and no debt.
Other Information
On September 5, 2014 and September 30, 2014, two
stockholders filed class action complaints in the United States
District Court for the District of New Jersey purportedly on behalf
of all persons who acquired the Company's ordinary shares in its
IPO or between September 27, 2013 and August 4, 2014. The
lawsuits assert claims under the United States federal securities
laws by claiming that the Company made false and misleading
statements concerning its infant formula business in China and
krill oil business. The Company, its directors and certain of its
officers are named as defendants. On February 11, 2015, the
Court consolidated the cases as In re Enzymotec Ltd. Securities
Litigation, Master File No. 14-CV-05556 and appointed a lead
plaintiff. Lead plaintiff filed an amended complaint on May 18,
2015 asserting essentially the same claims as the claims asserted
in the initial class action complaints. Defendants moved to dismiss
the amended complaint which the Court granted in part and denied in
part. The Court dismissed the claims related to the Company’s
krill oil business but did not dismiss the claims related to the
infant formula business in China. The Defendants’ response to the
amended complaint is due on February 19, 2016. The Company believes
that the lawsuit is without merit and intends to defend itself
vigorously.
Outlook for 2016
For the full fiscal year 2016, the Company
provides the following guidance ranges:
- Net revenues, based on the equity method of accounting, of
between $68 million and $78 million
- Net revenues, based on the proportionate consolidation method,
of between $56 million and $64 million
- Non-GAAP net income of between $6 million and $7 million
- Non-GAAP diluted earnings per share (EPS) of between $0.25 and
$0.30
2016 projected non-GAAP net income and diluted
EPS include an operating loss of approximately $7 million (or $0.30
per share) in the VAYA Pharma segment, as the Company intends to
invest further in expanding VAYA Pharma's operations,
infrastructure and marketing activities as well as conduct clinical
trials to reinforce the science and develop additional indications
for VAYA Pharma’s products. The Company believes that achievements
in VAYA Pharma in 2015 that contributed to the 50% growth in VAYA
Pharma's revenues justify these additional investments which the
Company believes will continue to increase VAYA Pharma’s revenues
in 2016 and beyond. The guidance also reflects the expectation that
Nutrition segment revenues and operating profit will continue to
increase in 2016. Additionally, net revenues, non-GAAP net income
and non-GAAP diluted EPS are expected to expand on a sequential
basis throughout the year.
Non-GAAP net income represents net income
excluding (i) share-based compensation expense and (ii) other
unusual income or expenses. Non-GAAP diluted EPS is diluted EPS
based on Non-GAAP net income.
Conference Call Details
Enzymotec will host a conference call today,
February 17, 2016, at 8:30 a.m. ET to discuss the financial results
for the fourth quarter and full year 2015. Listeners in North
America may dial +1-877-359-9508 and international listeners may
dial +1-224-357-2393 along with confirmation code 42574817 to
access the live call. The call will also be broadcast live over the
Internet, hosted in the Investors section of Enzymotec's website at
http://edge.media-server.com/m/p/8pq5hbsy and will be archived
online within one hour of its completion through February 24,
2016.
Forward Looking Statements
This release contains forward-looking
statements, which express the current beliefs and expectations of
Company management. Such statements involve a number of known and
unknown risks and uncertainties that could cause our future
results, performance or achievements to differ significantly from
the results, performance or achievements expressed or implied by
such forward-looking statements. Important factors that could cause
or contribute to such differences include the following risks: a
high proportion of the sales of the InFat product is sold to end
users in China and to a single company; growth in the Chinese
economy has moderated and this slowdown and related volatility
could adversely impact demand in China for our products; the demand
for products based on Omega-3 and in particular, premium products,
such as krill oil, has declined and may continue to decline
following a significant increase in manufacturing capacity by
manufacturers of these products, resulting in intense competition
and price pressure; our offering of products as "medical foods" in
the United States may be challenged by regulatory authorities; we
rely on our Swedish joint venture partner to manufacture InFat and
certain matters related to the joint venture are the subject of
disagreement in an arbitration proceeding; we are subject to a
degree of customer concentration and our customers do not enter
into long-term purchase commitments with us; we depend on third
parties to obtain raw materials, in particular krill, necessary for
the production of our products; we are dependent on a single
facility that houses the majority of our operations; we may have to
pay royalties with respect to sales of our krill oil products in
the United States or Australia and any infringement of intellectual
property of others could also require us to pay royalties;
potential future acquisitions of companies or technologies may
distract our management, may disrupt our business and may not yield
the returns expected; we anticipate that the markets in which we
participate will become more competitive and we may be unable to
compete effectively; we may not be able to successfully expand our
production or processing capabilities; our ability to obtain krill
may be affected by conservation regulation or initiatives; our
product development cycle is lengthy and uncertain, and our
development or commercialization efforts for our products may be
unsuccessful; and other factors discussed under the heading "Risk
Factors" in the Company's Form 20-F filed with the Securities and
Exchange Commission on March 2, 2015. Forward-looking statements in
this release are made pursuant to the safe harbor provisions
contained in the Private Securities Litigation Reform Act of 1995.
These forward-looking statements are made only as of the date
hereof, and the Company undertakes no obligation to update or
revise the forward-looking statements, whether as a result of new
information, future events or otherwise.
About Enzymotec Ltd.
Enzymotec is a leading global supplier of
specialty lipid-based products and solutions. The Company develops,
manufactures and markets innovative bio-active lipid ingredients,
as well as final products, based on sophisticated processes and
technologies.
Non-GAAP Financial Measures
Adjusted EBITDA and non-GAAP net income are
metrics used by management to measure operating performance.
Adjusted EBITDA represents net income excluding (i) financial
expenses, net, (ii) taxes on income, (ii) depreciation and
amortization, (iv) share-based compensation expense, and (v) other
unusual income or expenses, and after giving effect to the change
from the equity method of accounting for our joint venture to the
proportionate consolidation method. Non-GAAP net income
represents net income, excluding (i) share-based compensation
expense, and (ii) other unusual income or expenses.
The Company presents adjusted EBITDA as a
supplemental performance measure because it believes it facilitates
operating performance comparisons from period to period and company
to company by backing out potential differences caused by
variations in capital structures (affecting interest expenses,
net), changes in foreign exchange rates that impact financial asset
and liabilities denominated in currencies other than our functional
currency (affecting financial expenses, net), tax positions (such
as the impact on periods or companies of changes in effective tax
rates) and the age and book depreciation of fixed assets (affecting
relative depreciation expense). In addition, both adjusted
EBITDA and non-GAAP net income exclude the non-cash impact of
share-based compensation and a number of unusual items that the
Company does not believe reflect the underlying performance of our
business. Because adjusted EBITDA and Non-GAAP net income
facilitate internal comparisons of operating performance on a more
consistent basis, the Company also uses adjusted EBITDA and
non-GAAP net income in measuring our performance relative to that
of our competitors. Adjusted EBITDA and non-GAAP net income
are not measures of our financial performance under GAAP and should
not be considered as alternatives to net income, operating income
or any other performance measures derived in accordance with GAAP
or as alternatives to cash flow from operating activities as
measures of the Company's profitability or liquidity.
Adjusted EBITDA and non-GAAP net income have
limitations as an analytical tool, and you should not consider it
in isolation or as a substitute for analysis of the Company's
results as reported under U.S. GAAP as the excluded items may have
significant effects on the Company's operating results and
financial condition. When evaluating the Company's performance, you
should consider adjusted EBITDA alongside other financial
performance measures, including cash flow metrics, operating
income, net income, and the Company's other U.S. GAAP results.
The following table presents a reconciliation of
adjusted EBITDA to net income for each of the periods indicated
(unaudited):
|
Three Months Ended December 31, |
Year Ended December 31, |
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
U.S. dollars in thousands |
Reconciliation of adjusted EBITDA to net
income: |
|
|
|
|
Adjusted
EBITDA |
$ |
2,416 |
|
$ |
2,026 |
|
$ |
10,709 |
|
$ |
11,420 |
|
Accounting for joint venture |
|
(219 |
) |
|
(121 |
) |
|
(575 |
) |
|
(575 |
) |
Depreciation and amortization |
|
(647 |
) |
|
(527 |
) |
|
(2,327 |
) |
|
(2,308 |
) |
Secondary offering related expenses |
|
- |
|
|
|
- |
|
|
(393 |
) |
Share-based compensation expenses |
|
(415 |
) |
|
(318 |
) |
|
(1,633 |
) |
|
(852 |
) |
Operating income |
|
1,135 |
|
|
1,060 |
|
|
6,174 |
|
|
7,292 |
|
Financial expenses (income) - net |
|
48 |
|
|
51 |
|
|
(471 |
) |
|
(499 |
) |
Income
before taxes on income |
|
1,087 |
|
|
1,111 |
|
|
6,645 |
|
|
7,791 |
|
Taxes on
income |
|
(122 |
) |
|
(74 |
) |
|
(407 |
) |
|
(406 |
) |
Share in
profits of equity investee |
|
170 |
|
|
93 |
|
|
445 |
|
|
453 |
|
GAAP net
income |
$ |
1,135 |
|
$ |
1,130 |
|
$ |
6,683 |
|
$ |
7,838 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31, |
Year Ended December 31, |
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
U.S. dollars in thousands |
Reconciliation of Non-GAAP net income to GAAP net
income: |
|
|
|
|
Non-GAAP net income |
$ |
1,550 |
|
$ |
1,448 |
|
$ |
8,316 |
|
$ |
9,083 |
|
Secondary offering related
expenses |
|
- |
|
|
- |
|
|
- |
|
|
(393 |
) |
Share-based compensation
expenses |
|
(415 |
) |
|
(318 |
) |
|
(1,633 |
) |
|
(852 |
) |
GAAP net income |
$ |
1,135 |
|
$ |
1,130 |
|
$ |
6,683 |
|
$ |
7,838 |
|
ENZYMOTEC LTD. |
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS AND COMPREHENSIVE INCOME |
(Unaudited) |
|
|
Three Months Ended December
31, |
Year Ended December
31, |
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
U.S. dollars in thousands (except
per share data) |
NET REVENUES |
$ |
13,269 |
|
$ |
10,783 |
|
$ |
50,391 |
|
$ |
47,103 |
|
COST OF REVENUES * |
|
5,116 |
|
|
4,480 |
|
|
19,635 |
|
|
18,316 |
|
GROSS PROFIT |
|
8,153 |
|
|
6,303 |
|
|
30,756 |
|
|
28,787 |
|
OPERATING EXPENSES: |
|
|
|
|
|
|
|
|
|
|
|
|
Research and development – net
* |
|
1,797 |
|
|
1,482 |
|
|
6,149 |
|
|
5,986 |
|
Selling and marketing * |
|
3,660 |
|
|
1,774 |
|
|
11,425 |
|
|
8,034 |
|
General and administrative * |
|
1,561 |
|
|
1,987 |
|
|
7,008 |
|
|
7,475 |
|
Total operating expenses |
|
7,018 |
|
|
5,243 |
|
|
24,582 |
|
|
21,495 |
|
OPERATING INCOME |
|
1,135 |
|
|
1,060 |
|
|
6,174 |
|
|
7,292 |
|
FINANCIAL EXPENSES (INCOME) – net |
|
48 |
|
|
51 |
|
|
(471 |
) |
|
(499 |
) |
INCOME BEFORE TAXES ON INCOME |
|
1,087 |
|
|
1,111 |
|
|
6,645 |
|
|
7,791 |
|
TAXES ON INCOME |
|
(122 |
) |
|
(74 |
) |
|
(407 |
) |
|
(406 |
) |
SHARE IN PROFITS OF EQUITY INVESTEE |
|
170 |
|
|
93 |
|
|
445 |
|
|
453 |
|
NET INCOME |
$ |
1,135 |
|
$ |
1,130 |
|
$ |
6,683 |
|
$ |
7,838 |
|
OTHER COMPREHENSIVE INCOME (LOSS): |
|
|
|
|
|
|
|
|
|
|
|
|
Currency translation
adjustments |
$ |
(11 |
) |
$ |
(69 |
) |
$ |
(98 |
) |
$ |
(202 |
) |
Unrealized gain (loss) on
marketable securities |
|
(180 |
) |
|
33 |
|
|
(159 |
) |
|
(125 |
) |
Cash flow hedge |
|
(138 |
) |
|
(9 |
) |
|
(150 |
) |
|
328 |
|
Total comprehensive income |
$ |
806 |
|
$ |
1,085 |
|
$ |
6,276 |
|
$ |
7,839 |
|
EARNINGS PER SHARE: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.05 |
|
$ |
0.05 |
|
$ |
0.30 |
|
$ |
0.36 |
|
Diluted |
$ |
0.05 |
|
$ |
0.05 |
|
$ |
0.29 |
|
$ |
0.34 |
|
WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
22,640,192 |
|
|
22,203,808 |
|
|
22,506,955 |
|
|
21,902,057 |
|
Diluted |
|
23,406,151 |
|
|
22,994,892 |
|
|
23,282,865 |
|
|
23,210,573 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* The above items are inclusive of the following |
|
|
|
|
share-based compensation
expense: |
|
|
|
|
Cost of revenues |
$ |
24 |
|
$ |
26 |
|
$ |
108 |
|
$ |
51 |
|
Research and development - net |
|
63 |
|
|
57 |
|
|
255 |
|
|
103 |
|
Selling and marketing |
|
88 |
|
|
79 |
|
|
362 |
|
|
146 |
|
General and administrative |
|
240 |
|
|
156 |
|
|
908 |
|
|
552 |
|
|
$ |
415 |
|
$ |
318 |
|
$ |
1,633 |
|
$ |
852 |
|
ENZYMOTEC LTD. |
CONDENSED CONSOLIDATED BALANCE SHEETS |
(Unaudited) |
|
|
December 31, |
December 31, |
|
|
2015 |
|
|
|
2014 |
|
|
U.S. dollars in thousands |
A s s e t s |
|
|
CURRENT ASSETS: |
|
|
Cash and cash equivalents |
$ |
21,987 |
|
|
$ |
10,315 |
|
Short-term bank deposits and
marketable securities |
|
23,051 |
|
|
|
21,913 |
|
Accounts receivable: |
|
|
Trade |
|
14,956 |
|
|
|
13,433 |
|
Other |
|
2,358 |
|
|
|
3,110 |
|
Inventories |
|
21,815 |
|
|
|
21,572 |
|
Total current assets |
|
84,167 |
|
|
|
70,343 |
|
NON-CURRENT ASSETS: |
|
|
|
|
|
|
|
Investment in equity investee |
|
1,499 |
|
|
|
1,152 |
|
Marketable securities |
|
31,360 |
|
|
|
35,287 |
|
Intangibles, long-term deposits and
other |
|
1,116 |
|
|
|
1,200 |
|
Funds in respect of retirement
benefits obligation |
|
1,076 |
|
|
|
994 |
|
Total non-current assets |
|
35,051 |
|
|
|
38,633 |
|
PROPERTY, PLANT AND EQUIPMENT: |
|
|
|
|
|
|
|
Cost |
|
40,796 |
|
|
|
38,237 |
|
Less - accumulated depreciation and
amortization |
|
11,088 |
|
|
|
8,963 |
|
|
|
29,708 |
|
|
|
29,274 |
|
Total assets |
$ |
148,926 |
|
|
$ |
138,250 |
|
|
|
|
|
|
|
|
|
Liabilities and shareholders' equity |
|
|
CURRENT LIABILITIES: |
|
|
Accounts payable and accruals: |
|
|
Trade |
$ |
5,529 |
|
|
$ |
5,259 |
|
Other |
|
5,427 |
|
|
|
3,569 |
|
Total current liabilities |
|
10,956 |
|
|
|
8,828 |
|
LONG-TERM LIABILITY - |
|
|
Retirement benefits obligation |
|
1,253 |
|
|
|
1,150 |
|
Total liabilities |
|
12,209 |
|
|
|
9,978 |
|
SHAREHOLDERS' EQUITY: |
|
|
|
|
|
|
|
Ordinary shares |
|
58 |
|
|
|
57 |
|
Additional paid-in capital |
|
124,243 |
|
|
|
122,075 |
|
Accumulated other comprehensive
loss |
|
(471 |
) |
|
|
(64 |
) |
Retained earnings |
|
12,887 |
|
|
|
6,204 |
|
Total shareholders' equity |
|
136,717 |
|
|
|
128,272 |
|
Total liabilities and shareholders'
equity |
$ |
148,926 |
|
|
$ |
138,250 |
|
ENZYMOTEC LTD. |
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
(Unaudited) |
|
|
Year Ended December 31, |
|
|
2015 |
|
|
2014 |
|
|
U.S. dollars in thousands |
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
Net income |
$ |
6,683 |
|
$ |
7,838 |
|
Adjustments required to reflect
cash flows from operations: |
|
|
Depreciation and amortization |
|
2,327 |
|
|
2,308 |
|
Change in inventories |
|
(243 |
) |
|
(9,629 |
) |
Change in accounts receivable |
|
(881 |
) |
|
5,304 |
|
Change in accounts payable and
accruals |
|
2,300 |
|
|
(3,868 |
) |
Share in profits of equity
investee |
|
(445 |
) |
|
(453 |
) |
Share-based compensation
expense |
|
1,633 |
|
|
852 |
|
Change in other non-current
assets |
|
(304 |
) |
|
(141 |
) |
Change in retirement benefits
obligation |
|
91 |
|
|
(246 |
) |
Loss on sale of property, plant and
equipment |
|
37 |
|
|
|
|
Net cash provided by operating
activities |
|
11,198 |
|
|
1,965 |
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
Purchase of property, plant and
equipment and intangible asset |
|
(2,869 |
) |
|
(6,361 |
) |
Change in bank deposits, net |
|
2,995 |
|
|
(20,009 |
) |
Investment in marketable
securities |
|
(9,428 |
) |
|
(42,499 |
) |
Investment in equity investee |
|
|
(92 |
) |
Proceeds from sale of marketable
securities |
|
9,299 |
|
|
5,285 |
|
Proceeds from sale of property,
plant and equipment |
|
11 |
|
|
Change in funds in respect of
retirement benefits obligation |
|
(70 |
) |
|
118 |
|
Net cash used in investing
activities |
|
(62 |
) |
|
(63,558 |
) |
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
Repayment of long-term bank
loan |
|
|
(4,200 |
) |
Exercise of stock option by
employees |
|
536 |
|
|
1,756 |
|
Issuance costs |
|
|
|
|
(78 |
) |
Net cash provided by (used in)
financing activities |
|
536 |
|
|
(2,522 |
) |
NET
CHANGE IN CASH AND CASH EQUIVALENTS |
|
11,672 |
|
|
(64,115 |
) |
BALANCE OF CASH
AND CASH EQUIVALENTS |
|
|
AT BEGINNING OF PERIOD |
|
10,315 |
|
|
74,430 |
|
BALANCE OF CASH
AND CASH EQUIVALENTS |
|
|
|
|
|
|
AT END OF PERIOD |
$ |
21,987 |
|
$ |
10,315 |
|
Company Contact
Enzymotec Ltd.
Oren Bryan
Chief Financial Officer
Phone: +972747177177
ir@enzymotec.com
Investor Relations Contact (U.S.)
The Ruth Group
Tram Bui / Lee Roth
Phone: 646-536-7035 / 7012
tbui@theruthgroup.com
lroth@theruthgroup.com
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