Martek Up in 2Q10

COLUMBIA, Md. Martek Biosciences Corp. (NASDAQ: MATK) released the financial results for the second quarter of fiscal 2010 (2Q10), ended April 30, 2010. Revenues for 2Q10 hit $124 million, a 34 percent increase from 2Q09; net income reached $12.5 million, or $0.37 per diluted share, for the quarter, compared to $11.0 million in the similar 2009 period. The revenues and earnings include the results of Amerifit Brands; Martek closed the acquisition of Amerifit on Feb. 12, 2010.

The improving economy, new launches of products with Marteks lifesDHA, growing international markets for Marteks products and sales of Amerifits branded consumer health products all contributed to Marteks record quarterly results, said Steve Dubin, CEO. This year as a whole is looking strong from a revenue perspective, although revenues for the balance of 2010 are projected to be somewhat uneven on a quarter-to-quarter basis due to customer plant shutdowns for maintenance and other timing matters.

Product sales increased significantly in 2Q10, rising $30.9 million to hit $119.1 million, partially due to sales of Amerifit products, which totaled $18 million from Feb. 12 through April 30. The remaining increase was attributed to growing sales of Marteks nutritional ingredients in the infant and non-infant formula markets, particularly in Asia. Contract manufacturing also added to the coffers, bringing in $4.9 million in 2Q10, compared with $4.3 million in 2Q09.

Gross margin for 2Q10 was 46 percent compared to 42 percent in 2Q09, an improvement primarily attributed to cost reductions in production of arachidonic acid (ARA). The gross margin includes a negative effect of one-time inventory step-up costs from the Amerifit acquisition; without those costs, gross margin would have been 48 percent. Martek also saw increases in R&D expenses, due to expanded clinical and pre-clinical research activities and higher personnel costs.

Martek is projecting FY10 revenue to hit between $440 million and $445 million, which would represent year-over-year growth in total revenues of 27 percent to 29 percent. It also expects to see meaningful gains in all nutritional ingredient markets.