Martek Tops Zacks Consensus

Martek Biosciences Corporation’s (MATK) fourth-quarter fiscal 2010 earnings (excluding special items) of 41 cents per share surpassed the Zacks Consensus Estimate by 4 cents and the year-ago earnings by 8 cents.

The higher earnings in the reported quarter were driven by a surge in sales. Sales in the quarter benefited from the purchase of Amerifit Brands in February this year, coupled with a rise in nutritional ingredient sales.

On a reported basis (including special items), the company lost 18 cents per share in the reported quarter as against earnings of 33 cents a year ago. Results were inclusive of a restructuring charge of $30.7 million pertaining to the sale of assets and transfer of manufacturing process at its Winchester facility.

Revenues at Martek climbed 36% year over year to $119.1 million in the reported quarter. Strong performance was witnessed across all segments. Revenues topped the Zacks Consensus Estimate of $111.0 million.

Nutritional ingredient sales climbed 16% to $94.5 million. Branded consumer health product sales of Amerifit came in at $23.1 million in the reported quarter. Others accounted for the balance. Contract manufacturing and services revenue accounted for the balance.

Gross margin in the quarter climbed to 50% in the reported quarter from 44% in the year-ago period.  Research and development (R&D) expenses in the reported quarter climbed 32.2% to $9.2 million. The rise was primarily attributable to the company's efforts to bring new offerings to the market.

Selling, general and administrative (SG&A) expenses in the reported quarter climbed 79% to $21.6 million. Expenses associated with advertising and promotion climbed to $4.2 million in the reported quarter as against $0.6 million in the year-ago quarter.

For fiscal 2010, Martek earned $1.55 per share (excluding special items), up 27% from the year-ago earnings. Revenues for the fiscal year climbed 30.4% to $450 million. The Zacks Consensus Estimate for fiscal 2010 hinted at earnings of $1.39 on revenues of $442 million. Martek exited the fiscal year with a cash balance of $63.7 million and no debt.

Outlook

Martek provided guidance for the first quarter of fiscal 2011. The company expects earnings per share (excluding special items) in the range of 38 cents to 40 cents. The Zacks Consensus Estimate for the quarter hints at earnings of 40 cents per share.

Revenues for the first quarter of fiscal 2011 are expected in the range of $106 million - $110 million. The Zacks Consensus Estimate for the first quarter of fiscal 2011 currently stands at $106 million.

Currently, we have a long-term Neutral stance on Martek Biosciences.

Read the full analyst report on MATK