Cannabis Production Licencing Process in
Final Stages - Phase II Capacity Expansion On
Track
Q2 Financial and Operational Highlights for the 3-month
period ended September 30, 2018
compared to the 3-month period ended September 30, 20171
- Confirmation of Readiness Letter received from Health Canada on
September 17, 2018.
- Submission of Evidence Package to Health Canada on September 19, 2018, which is the final step of
the application process prior to the issuance of a Producers
Licence.
- Completion of Phase 1 Investment announced on August 14, 2018 making the facility ready and
compliant for the extraction and production of cannabis oil.
- Filing of two patent applications for innovative cannabis
extraction processes on August 9,
2018.
- Comparable nutraceutical revenues increased 18% to $7.1 million in the current quarter versus
revenues of $6.0 million for the
three-month period ended September 30,
2017 (excluding krill oil manufacturing business).
- Net loss of $3.1 million versus a
net income of $20.0 million in the
prior year reflecting investment in cannabis business development
in the current quarter, and a gain of $23.9
million realized from the sale of the krill oil business in
the comparative quarter.
- Non-IFRS operating loss2 was $1.2 million compared to $0.2 million in the prior year reflecting
investment in cannabis business development.
- Cash balance of $20.5 million as
at September 30, 2018.
LAVAL, QC, Nov. 13, 2018 /CNW Telbec/ - Neptune
Wellness Solutions Inc. ("Neptune" or the "Corporation") (NASDAQ:
NEPT) (TSX: NEPT), today announced its financial and operating
results for the 3-month period ended September 30, 2018. All amounts are in Canadian
dollars.
"We are progressing through the cannabis licensing process with
Health Canada, having submitted our Evidence Package. We are at the
final stages of this process, and our Sherbrooke facility will begin operations
shortly following the receipt of our Producers Licence pursuant to
Cannabis Regulation (CR)," stated Jim
Hamilton, President and Chief Executive Officer. "Our Phase
II capacity expansion is moving ahead on time and is expected to be
completed by March 2019,
significantly raising our production capability to 200,000 kg of
dried cannabis using advanced extraction techniques."
"In the nutraceutical business, we continued to deliver revenue
growth during the second quarter, while advancing toward our goal
of commercializing our B2B cannabis extraction operations. We
remain in a solid financial position with over $20 million in cash and, with supply agreements
booked and projected opportunities, our plan remains for our
cannabis operations to achieve positive EBITDA within our first
year of production," concluded Mr. Hamilton.
|
_____________________
|
|
1
|
Excluding
cardiovascular segment.
|
|
2
|
See "Caution
Regarding Non-IFRS Financial Measures" and "Reconciliation of
Segment income (loss) from operating activities before corporate
expenses to Adjusted Segment EBITDA (non-IFRS operating segment
loss) and net loss to non-IFRS operating loss" which
follow.
|
Financial Results Highlights
Cannabis investments were initiated during the three-month
period ended December 31, 2017. Therefore, no cannabis
results are included in the comparative results indicated
below.
Second Quarter Financial Results
- Revenues increased at $7.1
million for the three-month period ended September 30, 2018, versus adjusted revenues of
$6.0 million for the three-month
period ended September 30, 2017.
Quarterly revenues for 2017 were adjusted to take into account the
sale of the krill manufacturing business on August 7, 2017.
- Net loss was $3.1 million for the
current quarter, versus a net income of $20.0 million for the three-month period ended
September 30, 2017.
- Non-IFRS operating loss1 was $1.2 million for the current quarter, compared to
$0.2 million for the three-month
period ended September 30, 2017. The
variation of $1.0 million is mostly
coming from the investment into the Cannabis business.
Year-to-Date Financial Results
- Revenues increased at $12.2
million for the six-month period ended September 30, 2018, versus adjusted revenues of
$11.2 million for the six-month
period ended September 30, 2017.
Revenues for the six-month period ended September 30, 2017 were adjusted to take into
account the sale of the krill manufacturing business on
August 7, 2017.
- Net loss was $7.2 million for the
six-month period ended September 30,
2018, versus a net income of $18.8
million for the six-month period ended September 30, 2017.
- Non-IFRS operating loss1 was $3.5 million for the six-month period ended
September 30, 2018, compared to an
Adjusted EBITDA1 of $0.5
million for the six-month period ended September 30, 2017. The variation of $3.0 million is mostly coming from the investment
into the Cannabis business.
Consolidated Results
On a consolidated basis, until the loss of control on
December 27, 2017, the three-month
period ended September 30, 2017 includes a Non-IFRS
operating loss1 of $3.4
million and a net loss of $4.4
million for Neptune's subsidiary, Acasti, which is actively
engaged in clinical studies and research and development. The
six-month period ended September 30,
2017 includes a Non-IFRS operating loss1 of
$5.5 million and a net loss of
$7.2 million for Acasti.
Cash and cash equivalents, including $2.4
million of short-term investments, were $20.5 million as at
September 30, 2018.
|
_____________________
|
|
1
|
See "Caution
Regarding Non-IFRS Financial Measures" and "Reconciliation of
Segment income (loss) from operating activities before corporate
expenses to Adjusted Segment EBITDA (non-IFRS operating segment
loss) and net loss to non-IFRS operating loss" which
follow.
|
Caution Regarding Non-IFRS Financial Measures
The Corporation uses two adjusted financial measures, Adjusted
Segment Earnings Before Interest, Taxes, Depreciation and
Amortization (EBITDA) called non-IFRS operating segment loss when a
segment is in a loss position, and Adjusted Earnings Before
Interest, Taxes, Depreciation and Amortization (EBITDA) called
non-IFRS operating loss when the Corporation is in a loss position,
to assess its operating performance. These non-IFRS financial
measures are directly derived from the Corporation's financial
statements and are presented in a consistent manner. The
Corporation uses these measures for the purposes of evaluating its
historical and prospective financial performance, as well as its
performance relative to competitors. These measures also help the
Corporation to plan and forecast for future periods as well as to
make operational and strategic decisions. The Corporation believes
that providing this information to investors, in addition to IFRS
measures, allows them to see the Corporation's results through the
eyes of management, and to better understand its historical and
future financial performance.
Securities regulations require that companies caution readers
that earnings and other measures adjusted to a basis other than
IFRS do not have standardized meanings and are unlikely to be
comparable to similar measures used by other companies.
Accordingly, they should not be considered in isolation. The
Corporation uses Adjusted Segment EBITDA (or non-IFRS operating
segment loss when in a loss position) and Adjusted EBITDA (or
non-IFRS operating loss when in a loss position) to measure its
performance from one period to the next without the variation
caused by certain adjustments that could potentially distort the
analysis of trends in our operating performance, and because the
Corporation believes it provides meaningful information on the
Corporation's financial condition and operating results. Neptune's
method for calculating Adjusted Segment EBITDA (or non-IFRS
operating segment loss) and Adjusted EBITDA (or non-IFRS operating
loss) may differ from that used by other corporations.
Neptune obtains its Adjusted Segment EBITDA (or non-IFRS
operating segment loss) measurement by adding depreciation and
amortization and stock-based compensation to segment income (loss)
from operating activities before corporate expenses. Neptune
obtains its Adjusted EBITDA (or non-IFRS operating loss)
measurement by adding to net income (loss), net finance costs,
depreciation and amortization, income tax expense and by
subtracting income tax recovery. Other items such as stock-based
compensation, impairment loss on inventories, other income – net
gain on sale of assets and legal fees related to royalty
settlements that do not impact core operating performance of the
Corporation are excluded from the calculation as they may vary
significantly from one period to another. Excluding these items
does not imply they are non-recurring.
Conference Call Details
Neptune will be holding a
conference call on November 13, 2018,
at 5:00 PM (EST) to discuss its
second quarter results for the three months period ended
September 30, 2018.
|
Date:
|
Tuesday, November 13,
2018
|
|
|
|
Time:
|
5:00 PM Eastern
Standard Time
|
|
|
|
Call:
|
1-888-231-8191
|
|
|
|
Conference
ID:
|
5897581
|
|
|
|
Webcast:
|
A live webcast and
presentation of the results can be accessed at:
http://neptunecorp.com/en/investors/events-and-presentations/
|
A replay of the call will be available for replay shortly after
the call's completion, until December 13,
2018. The replay can be accessed online in the Investors
section of Neptune's website under Investor Events and
Presentations. It is also under this section that you will find the
archive of the webcast, along with its accompanying
presentation.
About Neptune Wellness Solutions Inc.
Neptune is a
health and wellness products company, with more than 50 years of
combined experience in extraction, purification and formulation of
value-added differentiated science-based products. Currently, the
Company develops turnkey nutrition product solutions available in
various unique delivery forms, offers specialty ingredients such as
MaxSimil®, a patented ingredient that enhances the
absorption of lipid-based nutraceuticals, and a variety of other
marine and seed oils. Leveraging its scientific, technological and
innovative expertise, Neptune is preparing to commence production
of products for legal cannabis markets.
The Company's head office is located in Laval, Quebec.
Forward Looking Statements
Statements in this press
release that are not statements of historical or current fact
constitute "forward-looking statements" within the meaning of the
U.S. securities laws and Canadian securities laws. Such
forward-looking statements involve known and unknown risks,
uncertainties, and other unknown factors that could cause the
actual results of Neptune to be materially different from
historical results or from any future results expressed or implied
by such forward-looking statements. In addition to statements which
explicitly describe such risks and uncertainties, readers are urged
to consider statements labeled with the terms "believes," "belief,"
"expects," "intends," "anticipates," "will," "should," or "plans"
to be uncertain and forward-looking. Readers are cautioned not to
place undue reliance on these forward-looking statements, which
speak only as of the date of this press release. Forward-looking
information in this press release includes, but is not limited to,
information or statements about our ability to successfully
develop, produce, supply, promote or generate any revenue from the
sale of any cannabis-based products in the legal cannabis
market.
The forward-looking statements contained in this press
release are expressly qualified in their entirety by this
cautionary statement and the "Cautionary Note Regarding
Forward-Looking Information" section contained in Neptune's latest
Annual Information Form (the "AIF"), which also forms part of
Neptune's latest annual report on Form 40-F, and which is available
on SEDAR at www.sedar.com, on EDGAR at
www.sec.gov/edgar.shtml and on the investor section of
Neptune's website at www.neptunecorp.com. All forward-looking
statements in this press release are made as of the date of this
press release. Neptune does not undertake to update any such
forward-looking statements whether as a result of new information,
future events or otherwise, except as required by law. The
forward-looking statements contained herein are also subject
generally to other risks and uncertainties that are described from
time to time in Neptune public securities filings with the
Securities and Exchange Commission and the Canadian securities
commissions. Additional information about these assumptions and
risks and uncertainties is contained in the AIF under "Risk
Factors".
Neither NASDAQ nor the Toronto Stock Exchange accepts
responsibility for the adequacy or accuracy of this
release.
|
Reconciliation of
Segment income (loss) from operating activities before corporate
expenses to Adjusted Segment EBITDA1 (non-IFRS
operating segment loss)1 and net loss to non-IFRS
operating loss1
|
|
(Expressed in
thousands of dollars)
|
|
|
Three-month period
ended September 30, 2018
|
|
Nutraceutical
|
Cannabis
|
Corporate
|
Total
|
|
$
|
$
|
$
|
$
|
|
Total
revenues
|
7,071
|
–
|
|
7,071
|
|
Gross
margin
|
2,357
|
–
|
|
2,357
|
|
|
|
|
|
|
R&D expenses, net
of tax credits and grants
|
(99)
|
(1,590)
|
|
(1,689)
|
|
SG&A
expenses
|
(1,095)
|
(479)
|
|
(1,574)
|
|
Segment income (loss)
from operating activities before corporate expenses
|
1,163
|
(2,069)
|
|
(906)
|
|
|
|
|
|
|
Unallocated
costs:
|
|
|
|
|
|
Corporate general and
administrative expenses
|
|
|
(1,915)
|
(1,915)
|
|
Net finance
costs
|
|
|
(54)
|
(54)
|
|
Income tax
expense
|
|
|
(175)
|
(175)
|
|
Net loss
|
|
|
|
(3,050)
|
|
|
|
|
|
|
Adjusted Segment
EBITDA1 (non-IFRS operating segment
loss)1 calculation
|
|
|
|
|
|
Segment income (loss)
from operating activities before corporate expenses
|
1,163
|
(2,069)
|
|
|
|
Add:
|
|
|
|
|
|
Depreciation and
amortization
|
188
|
495
|
|
|
|
Stock-based
compensation
|
114
|
256
|
|
|
|
Adjusted Segment
EBITDA1 (non-IFRS operating segment
loss)1
|
1,465
|
(1,318)
|
|
|
|
|
|
|
|
|
Non-IFRS operating
loss1 calculation
|
|
|
|
|
|
Net loss
|
|
|
|
(3,050)
|
|
Add
(deduct):
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
|
734
|
|
Net finance
costs
|
|
|
|
54
|
|
Stock-based
compensation
|
|
|
|
859
|
|
Income tax
expense
|
|
|
|
175
|
|
Non-IFRS operating
loss1
|
|
|
|
(1,228)
|
|
_____________________
|
|
1
|
See "Caution
Regarding Non-IFRS Financial Measures".
|
|
Reconciliation of
Segment income (loss) from operating activities before corporate
expenses to Adjusted Segment EBITDA1 (non-IFRS
operating segment loss)1 and net income to non-IFRS
operating loss1
|
|
(Expressed in
thousands of dollars)
|
|
|
Three-month period
ended September 30, 2017
|
|
Nutraceutical
|
Cardiovascular
|
Corporate
|
Inter-
segment
eliminations
|
Total
|
|
$
|
$
|
$
|
$
|
$
|
|
Total
revenues
|
6,795
|
–
|
|
–
|
6,795
|
|
Gross
margin
|
408
|
–
|
|
–
|
408
|
|
|
|
|
|
|
|
R&D expenses, net
of tax credits and grants
|
(345)
|
(3,349)
|
|
581
|
(3,113)
|
|
SG&A
expenses
|
(1,580)
|
(1,037)
|
|
–
|
(2,617)
|
|
Other income - net
gain on sale of assets
|
23,871
|
–
|
|
–
|
23,871
|
|
Segment income (loss)
from operating activities before corporate expenses
|
22,354
|
(4,386)
|
|
581
|
18,549
|
|
|
|
|
|
|
|
Unallocated
costs:
|
|
|
|
|
|
|
Corporate general and
administrative expenses
|
|
|
(1,396)
|
|
(1,396)
|
|
Net finance
costs
|
|
|
(1,029)
|
|
(1,029)
|
|
Income tax
expense
|
|
|
(7)
|
|
(7)
|
|
Net income
|
|
|
|
|
16,117
|
|
|
|
|
|
|
|
Adjusted Segment
EBITDA1 (non-IFRS operating segment
loss)1 calculation
|
|
|
|
|
|
|
Segment income (loss)
from operating activities before corporate expenses
|
22,354
|
(4,386)
|
|
581
|
|
|
Add:
|
|
|
|
|
|
|
Depreciation and
amortization
|
711
|
667
|
|
(581)
|
|
|
Stock-based
compensation
|
85
|
295
|
|
–
|
|
|
Impairment loss on
inventories
|
1,719
|
–
|
|
–
|
|
|
Other income - net
gain on sale of assets
|
(23,871)
|
–
|
|
–
|
|
|
Adjusted Segment
EBITDA1 (non-IFRS operating segment
loss)1
|
998
|
(3,424)
|
|
–
|
|
|
|
|
|
|
|
|
Non-IFRS operating
loss1 calculation
|
|
|
|
|
|
|
Net income
|
|
|
|
|
16,117
|
|
Add
(deduct):
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
|
|
895
|
|
Net finance
costs
|
|
|
|
|
1,029
|
|
Stock-based
compensation
|
|
|
|
|
516
|
|
Impairment loss on
inventories
|
|
|
|
|
1,719
|
|
Other income - net
gain on sale of assets
|
|
|
|
|
(23,871)
|
|
Income tax
expense
|
|
|
|
|
7
|
|
Non-IFRS operating
loss1
|
|
|
|
|
(3,588)
|
|
_____________________
|
|
1
|
See "Caution
Regarding Non-IFRS Financial Measures".
|
|
Reconciliation of
Segment income (loss) from operating activities before corporate
expenses to Adjusted Segment EBITDA1 (non-IFRS
operating segment loss)1 and net loss to non-IFRS
operating loss1
|
|
(Expressed in
thousands of dollars)
|
|
|
Six-month period
ended September 30, 2018
|
|
Nutraceutical
|
Cannabis
|
Corporate
|
Total
|
|
$
|
$
|
$
|
$
|
|
Total
revenues
|
12,240
|
–
|
|
12,240
|
|
Gross
margin
|
3,851
|
–
|
|
3,851
|
|
|
|
|
|
|
R&D expenses, net
of tax credits and grants
|
(186)
|
(3,179)
|
|
(3,365)
|
|
SG&A
expenses
|
(2,183)
|
(976)
|
|
(3,159)
|
|
Segment income (loss)
from operating activities before corporate expenses
|
1,482
|
(4,155)
|
|
(2,673)
|
|
|
|
|
|
|
Unallocated
costs:
|
|
|
|
|
|
Corporate general and
administrative expenses
|
|
|
(4,183)
|
(4,183)
|
|
Net finance
costs
|
|
|
(202)
|
(202)
|
|
Income tax
expense
|
|
|
(92)
|
(92)
|
|
Net loss
|
|
|
|
(7,150)
|
|
|
|
|
|
|
Adjusted Segment
EBITDA1 (non-IFRS operating segment loss)1
calculation
|
|
|
|
|
|
Segment income (loss)
from operating activities before corporate expenses
|
1,482
|
(4,155)
|
|
|
|
Add:
|
|
|
|
|
|
Depreciation and
amortization
|
374
|
1,011
|
|
|
|
Stock-based
compensation
|
244
|
524
|
|
|
|
Adjusted Segment
EBITDA1 (non-IFRS operating segment loss)1
|
2,100
|
(2,620)
|
|
|
|
|
|
|
|
|
Non-IFRS operating
loss1 calculation
|
|
|
|
|
|
Net loss
|
|
|
|
(7,150)
|
|
Add
(deduct):
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
|
1,488
|
|
Net finance
costs
|
|
|
|
202
|
|
Stock-based
compensation
|
|
|
|
1,884
|
|
Income tax
expense
|
|
|
|
92
|
|
Non-IFRS operating
loss1
|
|
|
|
(3,484)
|
|
|
|
|
|
|
Total
assets3
|
24,206
|
45,797
|
28,338
|
98,341
|
|
Cash, cash
equivalents, short-term investment and restricted short-term investment
|
2,394
|
–
|
18,070
|
20,464
|
|
Working
capital2
|
3,172
|
(1,093)
|
17,126
|
19,205
|
|
________________
|
|
1
|
See "Caution
Regarding Non-IFRS Financial Measures".
|
|
2
|
The working capital
is presented for information purposes only and represents a
measurement of the Corporation's short-term financial health mostly
used in financial circles. The working capital is calculated by
subtracting current liabilities from current assets. Because there
is no standard method endorsed by IFRS, the results may not be
comparable to similar measurements presented by other public
companies.
|
|
3
|
The corporate
reportable segment assets include the investment in
Acasti.
|
|
Reconciliation of
Segment income (loss) from operating activities before corporate
expenses to Adjusted Segment EBITDA1 (non-IFRS
operating segment loss)1 and net income to non-IFRS
operating loss1
|
|
(Expressed in
thousands of dollars)
|
|
|
Six-month period
ended September 30, 2017
|
|
Nutraceutical
|
Cardiovascular
|
Corporate
|
Inter-
segment
eliminations
|
Total
|
|
$
|
$
|
$
|
$
|
$
|
|
Total
revenues
|
13,326
|
–
|
|
–
|
13,326
|
|
Gross
margin
|
2,851
|
–
|
|
–
|
2,851
|
|
|
|
|
|
|
|
R&D expenses, net
of tax credits and grants
|
(737)
|
(5,331)
|
|
1,161
|
(4,907)
|
|
SG&A
expenses
|
(2,837)
|
(1,853)
|
|
–
|
(4,690)
|
|
Other income - net
gain on sale of assets
|
23,871
|
–
|
|
–
|
23,871
|
|
Segment income (loss)
from operating activities before corporate expenses
|
23,148
|
(7,184)
|
|
1,161
|
17,125
|
|
|
|
|
|
|
|
Unallocated
costs:
|
|
|
|
|
|
|
Corporate general and
administrative expenses
|
|
|
(2,960)
|
|
(2,960)
|
|
Net finance
costs
|
|
|
(1,428)
|
|
(1,428)
|
|
Income tax
recovery
|
|
|
13
|
|
13
|
|
Net income
|
|
|
|
|
12,750
|
|
|
|
|
|
|
|
Adjusted Segment
EBITDA1 (non-IFRS operating segment loss)1
calculation
|
|
|
|
|
|
|
Segment income (loss)
from operating activities before corporate expenses
|
23,148
|
(7,184)
|
|
1,161
|
|
|
Add:
|
|
|
|
|
|
|
Depreciation and
amortization
|
1,444
|
1,335
|
|
(1,161)
|
|
|
Stock-based
compensation
|
154
|
331
|
|
–
|
|
|
Impairment loss on
inventories
|
1,719
|
–
|
|
–
|
|
|
Other income - net
gain on sale of assets
|
(23,871)
|
–
|
|
–
|
|
|
Adjusted Segment
EBITDA1 (non-IFRS operating segment loss)1
|
2,594
|
(5,518)
|
|
–
|
|
|
|
|
|
|
|
|
Non-IFRS operating
loss1 calculation
|
|
|
|
|
|
|
Net income
|
|
|
|
|
12,750
|
|
Add
(deduct):
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
|
|
1,922
|
|
Net finance
costs
|
|
|
|
|
1,428
|
|
Stock-based
compensation
|
|
|
|
|
913
|
|
Impairment loss on
inventories
|
|
|
|
|
1,719
|
|
Other income - net
gain on sale of assets
|
|
|
|
|
(23,871)
|
|
Legal fees related to
royalty settlements
|
|
|
|
|
91
|
|
Income tax
recovery
|
|
|
|
|
(13)
|
|
Non-IFRS operating
loss1
|
|
|
|
|
(5,061)
|
|
|
|
|
|
|
|
Total
assets
|
66,118
|
19,758
|
33,290
|
(11,294)
|
107,872
|
|
Cash, cash
equivalents and restricted short-term investments
|
2,475
|
5,329
|
31,796
|
–
|
39,600
|
|
Working
capital2
|
2,068
|
2,461
|
30,817
|
1
|
35,347
|
|
_____________________
|
|
1
|
See "Caution
Regarding Non-IFRS Financial Measures".
|
|
2
|
The working capital
is presented for information purposes only and represents a
measurement of the Corporation's short-term financial health mostly
used in financial circles. The working capital is calculated by
subtracting current liabilities from current assets. Because there
is no standard method endorsed by IFRS, the results may not be
comparable to similar measurements presented by other public
companies.
|
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SOURCE Neptune Wellness Solutions Inc.