LOS ANGELES, CA -- (Marketwire) -- 01/15/13 -- Neptune Technologies & Bioresources (NASDAQ: NEPT) finance.yahoo.com%2fnews%2fneptune-hold-conference-call-154434228.html">announced they will hold a conference call on Thursday, January 17th at 4:30 EST. The reason given for the call will be to discuss the third quarter ended November 30th and provide the company an "opportunity" to give investors an update on management post accident action plan to "resume operations and supply customers."
We note that management sees this call as an "opportunity," and we expect that we will find management is making progress on their action plan on most if not all fronts.
In our December 19th, 2012 article on Neptune, "Smart Investors Spot Profitable Upside in Neptune's Recovery Plan" we stated the Company has ongoing value as a reaction to the precipitous fall in the stock price, "The facts are simple; Neptune will have the Sherbrook up and running in about six months. The Company should be able to maintain supplies to customers and maintain revenues for a business segment that has been profitable for 3 years. Neptune has valuable assets; plenty of cash and the losses will be offset to some extent by insurance further preserving shareholder value. When the plant reopens, Neptune should be able to produce nearly as much in revenues as the September quarter. The Company will have new manufacturing partners, and there will be no constraints holding back Neptune from growing as much as their marketing efforts will allow. Acasti Pharma will be further along in its Phase II and preparing for its Phase III." This quote gives us subjects to focus upon in the upcoming call. We will go through each below.
The first thing we will be looking for is how the rebuilding process at the Sherbrooke plant is proceeding. We expect that the plant is proceeding on schedule, although construction during the Canadian Winter can be difficult. Along with the rebuilding update could be an insurance update. Management has stated that they have property insurance for around $20 million. Management also stated they have Business Interruption Insurance that could offset some of their losses due to the accident. One point that management probably will not touch upon regarding the facility are the rumors that they did not have proper permitting for the expansion as these rumors have been proven false.
More important will be an update regarding the Company's ability to fulfill its customers' orders of Neptune Krill Oil (NKO) and maintain revenue levels. We believe that there will be some falloff of revenues in the quarterly announcement, but not nearly a drastic as some might expect. The important fact to watch for is how the Company has been able to secure product manufacturing and maintain reliable delivery of product to customers without their own manufacturing facility. Management has spoken in the past about establishing new relationships with global manufacturing partners, and seeing them come to fruition should give investors comfort that the Company will be able to meet near-term product deliveries and grow long-term. As we stated in the previous article, we expect the gross margins to be well off in the quarter.
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