EAST RUTHERFORD, N.J., April 27 /PRNewswire-FirstCall/ -- Cambrex
Corporation (NYSE: CBM) reports first quarter 2006 results for the period
ended March 31, 2006. First quarter 2006 sales increased 8.3% to $119.6
million, including a 4.9% unfavorable impact from foreign currency, from
$110.5 million in the first quarter 2005. First quarter 2006 Adjusted
diluted earnings per share increased 73.3% to $0.26 from $0.15 per diluted
share in the first quarter 2005.
(Logo: http://www.newscom.com/cgi-bin/prnh/20000613/CAMBREXLOGO )
The Company reported first quarter 2006 GAAP diluted earnings per share
of ($0.02), before the cumulative effect of a change in accounting
principle (adoption of FAS 123(R)). Adjusted results in the first quarter
2006 exclude: (i) a charge of $0.20 per diluted share resulting from the
previously announced pre-payment of a portion of the Company's long-term
debt, (ii) a payment of $0.05 per diluted share recorded as in-process R&D
related to the previously announced acquisition of Cutanogen, and (iii) an
expense of $0.04 per diluted share for costs related to the evaluation of
strategic alternatives to enhance shareholder value. A reconciliation of
GAAP results to Adjusted (non-GAAP) results can be found in the un-audited
financial tables included in this press release. Management believes that
Adjusted results provide a more meaningful representation of the Company's
operating results for the periods presented.
First quarter 2006 gross margins decreased to 37.6% from 39.2% in the
first quarter 2005 due to lower margins in Human Health partially offset by
improved gross margins in the Biopharma segment. Foreign currency
unfavorably impacted consolidated gross margin by 0.6 percentage points in
the first quarter 2006.
Strategic Alternatives
On February 2, 2006, Cambrex announced that it had retained Bear
Stearns as investment bankers to assist the Board of Directors in
identifying and assessing strategic alternatives to increase shareholder
value. There has been significant progress over the last several months,
the process is ongoing and the effort continues to be a top priority of the
Cambrex Board of Directors and executive management.
Business Segment Results
Bioproducts
The Bioproducts segment includes products and services for research and
therapeutic applications. Bioproducts sales in the first quarter 2006
increased 3.6% to $41.3 million from $39.9 million in the first quarter
2005 primarily due to higher sales of research products, cell therapy
manufacturing, testing and process development services, and therapeutic
media, partially offset by a 3.7% unfavorable impact from foreign currency.
First quarter 2006 Bioproducts gross margin of 55.4% is the same as the
gross margin in the first quarter 2005. Foreign currency favorably impacted
Bioproducts gross margin by 0.7 percentage point in the first quarter 2006.
First quarter 2006 Bioproducts Adjusted operating profit margin
decreased to 20.2% from 24.2% in the first quarter 2005 primarily due to
investments in additional personnel and higher promotional spending to
support global sales efforts. Foreign currency favorably impacted
Bioproducts operating profit margin by 0.5 percentage point in the first
quarter 2006.
Biopharma
The Biopharma segment consists of the Company's contract
biopharmaceutical process development and manufacturing business. Sales in
the first quarter 2006 increased 79.1% to $13.8 million from $7.7 million
in the first quarter 2005 due to higher suite and material reimbursement
revenues, partially offset by lower process development and labor
reimbursement revenues. Approximately $5.2 million of first quarter 2006
Biopharma revenues resulted from the shipment of all remaining product
inventories to a client that cancelled their project when the product
failed to meet its primary endpoint in the client's confirmatory Phase III
clinical trial in the fourth quarter 2005.
First quarter 2006 Biopharma gross margin increased to 7.3% from -26.7%
in the first quarter 2005 due to higher sales volume, partially offset by
the cost of additional production personnel, higher utilities and adverse
product mix.
The first quarter 2006 Biopharma operating loss was $1.5 million versus
an operating loss of $4.9 million in the first quarter 2005 due to higher
gross profit, partially offset by adverse product mix. Foreign currency had
no impact on Biopharma sales, gross margin or operating profit margin.
Human Health
The Human Health segment consists of small molecule active
pharmaceutical ingredients (APIs), advanced intermediates and other
products derived from organic chemistry. Human Health sales in the first
quarter 2006 increased 2.6% to $64.5 million, including a 6.3% unfavorable
impact due to foreign currency, from $62.8 million in the first quarter
2005. Higher net sales volumes were partially offset by lower pricing and
the unfavorable impact of foreign currency. Higher sales resulted from
strong demand for a gastrointestinal API, x-ray contrast media and nicotine
polacrilex used in smoking cessation products, partially offset by lower
volume and pricing for two generic central nervous system APIs.
First quarter 2006 Human Health gross margin decreased to 32.6% from
36.9% in the first quarter 2005 primarily due to lower pricing and the
unfavorable impact of foreign currency by 1.4 percentage points, partially
offset by favorable product mix and lower manufacturing expenses.
First quarter 2006 Human Health operating profit margin decreased to
18.0% from 19.6% in the first quarter 2005 primarily due to lower gross
profit and the unfavorable impact of foreign currency by 1.3 percentage
points, partially offset by lower operating expenses.
First Quarter 2006 Adjusted Consolidated Operating, Interest and Tax
Expenses
First quarter 2006 Adjusted consolidated operating expenses decreased
$1.1 million to $31.3 million, or 26.2% of sales, from $32.4 million, or
29.3% of sales, in the first quarter 2005 primarily due to lower corporate
spending, partially offset by additional investments in personnel,
marketing and advertising in the Bioproducts segment.
Sales and marketing expense in the first quarter 2006 increased to $9.2
million, or 7.7% of sales, from $8.0 million, or 7.2% of sales in the first
quarter 2005, principally due to additional personnel and marketing and
advertising spending in the Bioproducts segment, partially offset by the
favorable impact of foreign currency.
Adjusted research and development expense for the first quarter 2006
decreased to $4.5 million, or 3.8% of sales compared to $5.9 million, or
5.3% of sales, in the first quarter 2005 due to the reduction of corporate
personnel and related costs and the favorable impact of foreign currency.
Adjusted administrative expense in the first quarter 2006 decreased to
$17.1 million, or 14.3% of sales, from $18.0 million, or 16.3% of sales, in
the first quarter 2005 due to lower personnel expenses and the favorable
impact of foreign currency.
Adjusted net interest expense in the first quarter 2006 decreased to
$2.1 million from $2.7 million in the first quarter 2005. The average
interest rate in the first quarter 2006 and first quarter 2005 is 5.2% and
5.3%, respectively.
Capital expenditures and depreciation for the first quarter 2006 were
$8.5 million and $8.1 million compared to $9.0 million and $9.4 million in
the first quarter 2005, respectively.
Cumulative Effect of a Change in Accounting Principle: FAS 123(R)
Under FAS 123(R), the Company is now required to measure stock
appreciation rights (SARs) at fair market value. As a result, the Company
recorded $0.2 million in compensation expense as a cumulative effect of an
accounting principle change in accordance with FAS 123(R).
Guidance
The Company is providing full year 2006 guidance for sales growth to be
within the range of 4% to 8% and Adjusted (non-GAAP) net earnings to be in
the range of $0.75 to $0.95 per fully diluted share. The full year 2006
earnings guidance excludes the costs associated with the previously
announced pre-payment of a portion of the Company's long-term debt ($0.20
per diluted share), milestone payments for the acquisition of Cutanogen
($0.15 per diluted share) and costs related to the evaluation of strategic
alternatives to enhance shareholder value.
For the year 2006, guidance for capital expenditures, depreciation and
amortization for continuing operations is currently expected to be
approximately $40 - $45 million, $36 million, and $2.0 million,
respectively. The Company expects the full year 2006 effective tax rate to
be approximately 40 - 45%. The full year and quarterly effective tax rates
will continue to be highly sensitive to the geographic mix of income or
losses.
As previously announced, it was determined during the 2005 year-end
closing procedures that certain of the Company's tax balance sheet accounts
had not been properly reconciled in the past. The Company continues to
diligently complete the appropriate analyses. However, until the analyses
of the tax accounts are complete, it cannot be determined whether these
matters will result in material adjustments to previously reported
financial statements. The Company expects to file its 2005 Form 10-K with
the US Securities and Exchange Commission as soon as it completes the above
referenced work.
The financial information contained in this press release is unaudited,
subject to revision and should not be considered final until the 2005 Form
10-K and the first quarter 2006 Form 10-Q are filed with the US Securities
and Exchange Commission.
Cambrex Declares Quarterly Dividend
The Cambrex Board of Directors declared the Company's regular quarterly
cash dividend on its common stock of $0.03 per share for its shareholders
of record as of May 5, 2006. The dividend is payable on May 19, 2006.
Conference Call and Webcast
The Conference Call to discuss first quarter 2006 earnings will begin
at 8:30 a.m. Eastern Time on Friday, April 28, 2006 and last approximately
45 minutes. Those wishing to participate should call 1-888-634-4003 for
domestic and +1-706-634-6653 for international. Please use the pass code
6956169 and call approximately 10 minutes prior to start time. A webcast is
available from the Investor Relations section on the Cambrex website
located at http://www.cambrex.com and can be accessed for approximately a
month following the call. A telephone replay of the conference call will be
available through Friday, May 5, 2006 by calling 1-800-642-1687 for
domestic and +1-706-645-9291 for international. Please use the pass code
6956169 to access the replay.
Forward Looking Statements
This news release contains "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995 and Rule
3b-6 under The Securities Exchange Act of 1934, including, without
limitation, statements regarding expected performance, especially
expectations with respect to sales, research and development expenditures,
earnings per share, capital expenditures, acquisitions, divestitures,
collaborations, or other expansion opportunities. These statements may be
identified by the fact that words such as "expects", "anticipates",
"intends", "estimates", "believes" or similar expressions are used in
connection with any discussion of future financial and operating
performance. The forward-looking statements contained herein are based on
current plans and expectations and involve risks and uncertainties that
could cause actual outcomes and results to differ materially from current
expectations including but not limited to, global economic trends,
pharmaceutical outsourcing trends, competitive pricing or product
developments, government legislation and/or regulations (particularly
environmental issues), tax rate, interest rate, technology, manufacturing
and legal issues, changes in foreign exchange rates, performance of
minority investments, uncollectible receivables, loss on disposition of
assets, cancellation or delays in renewal of contracts, and lack of
suitable raw materials or packaging materials, the possibility that the
value of the acquisition of PermaDerm(TM) cultured skin may not be realized
or that our plans to obtain a Humanitarian Device Exemption, completion of
clinical trials and commercialization of PermaDerm cultured skin in the
United States may not be successful, the Company may not receive regulatory
approval for its products, and the outcome of the evaluation of strategic
alternatives.
For further details and a discussion of these and other risks and
uncertainties, investors are cautioned to review the Cambrex 2004 Annual
Report on Form 10-K, including the Forward-Looking Statement section
therein, and other filings with the US Securities and Exchange Commission.
The Company undertakes no obligation to publicly update any forward-looking
statement, whether as a result of new information, future events or
otherwise.
About Cambrex
Cambrex is a global, diversified life sciences company dedicated to
providing products and services to accelerate and improve the discovery and
commercialization of human therapeutics. The Company employs approximately
2,000 worldwide. For more information, please visit http://www.cambrex.com.
CAMBREX CORPORATION
Adjusted Statement of Profit and Loss - Non-GAAP*
For the Quarters Ended March 31, 2006 and 2005
(in thousands)
2006 2005
% of % of
Amount Sales Amount Sales
Gross Sales $119,607 100.0% $110,462 100.0%
Commissions and Allowances 862 0.7% 989 0.9%
Net Sales 118,745 99.3% 109,473 99.1%
Other Revenues 1,080 0.9% 2,460 2.2%
Net Revenue 119,825 100.2% 111,933 101.3%
Cost of Sales 74,868 62.6% 68,671 62.1%
Gross Profit 44,957 37.6% 43,262 39.2%
Operating Expenses
Sales and Marketing Expense 9,172 7.7% 8,007 7.2%
Research and Development Expense 4,543 3.8% 5,858 5.3%
Administrative Expense 17,088 14.3% 17,951 16.3%
Amortization 488 0.4% 539 0.5%
Total Operating Expenses 31,291 26.2% 32,355 29.3%
Operating Profit 13,666 11.4% 10,907 9.9%
Other Expenses
Interest - Other 2,081 1.7% 2,730 2.5%
Other Expense, net 22 0.0% 190 0.2%
Total Other Expenses 2,103 1.7% 2,920 2.7%
Income Before Taxes 11,563 9.7% 7,987 7.2%
Income Tax Provision 4,529 3.8% 3,897 3.5%
Net Income $7,034 5.9% $4,090 3.7%
Basic Earnings per Share
Net Income $0.26 $0.16
Diluted Earnings per Share
Net Income $0.26 $0.15
Weighted Average Shares Outstanding
Basic 26,660 26,346
Diluted 26,759 26,630
* Refer to the GAAP to Adjusted (Non-GAAP) Reconciliation.
CAMBREX CORPORATION
Statement of Profit and Loss - GAAP
For the Quarters Ended March 31, 2006 and 2005
(in thousands)
2006 2005
% of % of
Amount Sales Amount Sales
Gross Sales $119,607 100.0% $110,462 100.0%
Commissions and Allowances 862 0.7% 989 0.9%
Net Sales 118,745 99.3% 109,473 99.1%
Other Revenues 1,080 0.9% 2,460 2.2%
Net Revenue 119,825 100.2% 111,933 101.3%
Cost of Sales 74,868 62.6% 68,671 62.1%
Gross Profit 44,957 37.6% 43,262 39.2%
Operating Expenses
Sales and Marketing Expense 9,172 7.7% 8,007 7.2%
Research and Development Expense 5,881 4.9% 5,858 5.3%
Administrative Expense 18,108 15.1% 17,951 16.3%
Amortization 488 0.4% 539 0.5%
Total Operating Expenses 33,649 28.1% 32,355 29.3%
Operating Profit 11,308 9.5% 10,907 9.9%
Other Expenses
Interest - Other 7,353 6.2% 2,730 2.5%
Other Expense, net 22 0.0% 190 0.2%
Total Other Expenses 7,375 6.2% 2,920 2.7%
Income Before Taxes 3,933 3.3% 7,987 7.2%
Income Tax Provision 4,529 3.8% 3,897 3.5%
(Loss)/Earnings before Cumulative
Effect of a
Change in Accounting Principle $(596) -0.5% $4,090 3.7%
Cumulative Effect of a Change in
Accounting Principle (228) -0.2% -- 0.0%
Net (Loss)/Income $(824) -0.7% $4,090 3.7%
Basic Earnings per Share
(Loss)/Earnings before Cumulative
Effect of a Change in Accounting
Principle $(0.02) $0.16
Cumulative Effect of a Change in
Accounting Principle $(0.01) $--
Net (Loss)/Income $(0.03) $0.16
Diluted Earnings per Share
(Loss)/Earnings before Cumulative
Effect of a Change in Accounting
Principle $(0.02) $0.15
Cumulative Effect of a Change in
Accounting Principle $(0.01) $--
Net (Loss)/Income $(0.03) $0.15
Weighted Average Shares Outstanding
Basic 26,660 26,346
Diluted 26,660 26,630
CAMBREX CORPORATION
Gross Sales, Gross Profit & Operating Profit by Segment
For the Quarters Ended March 31, 2006 and 2005
(in thousands)
First Quarter 2006
Adjusted
Operating Operating
Profit/ Profit/ Adjusted
Gross Gross (loss) OP% (loss) OP%-
Sales Profit GP% -GAAP GAAP -Non-GAAP* Non-GAAP*
Bioproducts $41,341 $22,904 55.4% $7,012 17.0% $8,350 20.2%
Biopharma 13,804 1,013 7.3% (1,462) -10.6% (1,462) -10.6%
Human Health 64,462 21,040 32.6% 11,593 18.0% 11,593 18.0%
Corporate -- -- (5,835) (4,815)
Total $119,607 $44,957 37.6% $11,308 9.5% $13,666 11.4%
First Quarter 2005
Adjusted
Operating Operating
Profit/ Profit/ Adjusted
Gross Gross (loss) OP% (loss) OP%-
Sales Profit GP% -GAAP GAAP -Non-GAAP* Non-GAAP*
Bioproducts $39,919 $22,135 55.4% $9,646 24.2% $9,646 24.2%
Biopharma 7,707 (2,057) -26.7% (4,912) -63.7% (4,912) -63.7%
Human Health 62,836 23,184 36.9% 12,309 19.6% 12,309 19.6%
Corporate -- -- (6,136) (6,136)
Total $110,462 $43,262 39.2% $10,907 9.9% $10,907 9.9%
Gross Sales Comparison
1Q06 1Q05
Gross Gross Change Change
Sales Sales $ %
Bioproducts $41,341 $39,919 $1,422 3.6%
Biopharma 13,804 7,707 6,097 79.1%
Human Health 64,462 62,836 1,626 2.6%
Total $119,607 $110,462 $9,145 8.3%
* Refer to the GAAP to Adjusted (Non-GAAP) Reconciliation.
CAMBREX CORPORATION
GAAP to Adjusted (Non-GAAP) Reconciliation - Net Income
For the Quarters ended March 31, 2006 and 2005
First Quarter First Quarter
2006 2005
Net
(Loss)/ Diluted Net Diluted
Income EPS Income EPS
(Loss)/Earnings before Cumulative
Effect of a change in
Accounting Principle $(596) $(0.02) $4,090 $0.15
Cutanogen milestone payment 1,338 0.05 -- --
Evaluation of strategic alternatives 1,020 0.04 -- --
Costs associated with the prepayment
of Senior Notes 5,272 0.20 -- --
Adjusted Net Income - Non-GAAP $7,034 $0.26 $4,090 $0.15
CAMBREX CORPORATION
GAAP to Adjusted (Non-GAAP) Reconciliation - Operating Profit by Segment
For the Quarters ended March 31, 2006 and 2005
First Quarter 2006
Human
Bioproducts Biopharma Health Corporate Total
Operating Profit/(Loss)
- As Reported $7,012 $(1,462) $11,593 $(5,835) $11,308
Cutanogen milestone payment 1,338 -- -- -- 1,338
Evaluation of strategic
alternatives -- -- -- 1,020 1,020
Adjusted Operating Profit
- Non-GAAP $8,350 $(1,462) $11,593 $(4,815) $13,666
First Quarter 2005
Human
Bioproducts Biopharma Health Corporate Total
Operating Profit/(Loss)
- As Reported $9,646 $(4,912) $12,309 $(6,136) $10,907
Adjusted Operating Profit
- Non-GAAP $9,646 $(4,912) $12,309 $(6,136) $10,907
CAMBREX CORPORATION
Consolidated Balance Sheet
As of March 31, 2006 and December 31, 2005
(in thousands)
March 31, December 31,
Assets 2006 2005
Cash and Cash Equivalents $23,681 $45,932
Trade Receivables, net 70,334 74,425
Inventories, net 105,785 93,617
Other Current Assets 14,056 17,589
Total Current Assets 213,856 231,563
Property, Plant and Equipment, Net 232,504 229,410
Goodwill and Other Intangibles 147,233 146,708
Other Non-Current Assets 5,337 5,985
Total Assets $598,930 $613,666
Liabilities and Stockholders' Equity
Trade Accounts Payable $39,804 $38,813
Accrued Expenses and Other Current
Liabilities 48,374 52,064
Short-term Debt and Current Portion
of Long-term Debt 1,622 1,514
Total Current Liabilities 89,800 92,391
Long-term Debt 168,136 186,819
Deferred Tax Liabilities 31,683 31,600
Other Non-Current Liabilities 62,909 61,641
Total Liabilities $352,528 $372,451
Stockholders' Equity $246,402 $241,215
Total Liabilities and Stockholders'
Equity $598,930 $613,666
Note: This balance sheet is unaudited, subject to revision, and should
not be considered final until the 2005 Form 10-K and the first
quarter 2006 Form 10-Q are filed with the U.S. Securities and
Exchange Commission.
SOURCE Cambrex Corporation
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Related links:
http://www.cambrex.com
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CONTACT:
Luke M. Beshar, Executive Vice President &
CFO, +1-201-804-3010, luke.beshar@cambrex.com, or Anne-Marie
Hess, Senior Director, Investor Relations, +1-201-804-3062,
annemarie.hess@cambrex.com, both of Cambrex Corporation
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