EAST RUTHERFORD, N.J., May 1 /PRNewswire-FirstCall/ -- Cambrex
Corporation (NYSE: CBM) reports first quarter 2008 results for the period
ended March 31, 2008.
Summary
-- First quarter 2008 sales decreased 5.1% (-11.3% excluding foreign
currency) compared to first quarter 2007.
-- Gross Margin for the quarter decreased to 35.5% of sales compared to
37.5% last year, a 2.0% decline, of which 1.3% was attributable to
foreign currency.
-- Adjusted EBITDA was $13.5 million during the first quarter of 2008
versus $11.3 million last year.
-- Debt, net of cash, was $79.7 million at the end of first quarter 2008.
(Logo: http://www.newscom.com/cgi-bin/prnh/20000613/CAMBREXLOGO )
Discontinued Operations and Basis of Reporting
As previously reported, Cambrex sold its Bioproducts and Biopharma
businesses (the "Bio Businesses") to Lonza for $463.9 million in February
2007. Discontinued Operations in the first quarter of 2007 financial
statements include the results of operations of the Bio Businesses through
the date of sale as well as the corresponding gain on sale.
The Company has provided a reconciliation from adjusted amounts to GAAP
amounts at the end of this press release. Management believes that the
adjusted amounts provide a more meaningful representation of the Company's
operating results for the periods presented due to the magnitude and nature
of certain expenses recorded.
First Quarter 2008 Operating Results -- Continuing Operations
First quarter 2008 sales of $61.7 million were 5.1% lower than sales in
the first quarter 2007 and 11.3% lower excluding the effect of foreign
currency. Comparing the current quarter to the same quarter last year,
excluding the currency impact, Cambrex experienced lower sales of a
gastrointestinal active pharmaceutical ingredient ("API"), lower custom
development revenues and lower volumes of fine chemicals and feed
additives, partially offset by higher demand for controlled substances.
First quarter 2008 Gross Margin decreased to 35.5% of sales from 37.5%
during the first quarter 2007, with foreign currency unfavorably impacting
gross margin as a percentage of sales by 1.3%. Lower pricing and costs
associated with the validation of the new API finishing facility at the
Milan, Italy site during first quarter of 2008 were partially offset by
favorable product mix.
Operating Profit was $7.5 million in the first quarter 2008 compared to
an Operating Loss of $18.4 million for the first quarter 2007. Adjusted
Operating Profit was $8.3 million, or 13.5% of sales, compared to $6.4
million, or 9.9% of sales for the first quarter last year. Adjusted EBITDA
was $13.5 million, or 21.9% of sales, compared to $11.3 million, or 17.5%
of sales last year. The increases in both Adjusted Operating Profit and
Adjusted EBITDA were driven primarily by the decline in corporate expenses
offset by lower profits from reduced sales volumes.
James A. Mack, Chairman, President, and Chief Executive Officer of
Cambrex Corporation, said "First quarter Adjusted EBITDA was up $2.1
million compared to the same quarter last year, driven by over $4 million
in reduced corporate expenses for the quarter. Sales volumes were down
compared to 2007, largely due to order patterns, however we continue to
expect that we will achieve our previously announced 2008 sales and
earnings guidance. The timing of shipments will continue to vary quarter to
quarter due to manufacturing cycle times and customer demand schedules.
On the operations side, we are progressing on key initiatives that bode
well for the future. We've fully integrated our recently acquired
Estonia-based R&D laboratories, allowing us to manage technical resources
more efficiently in order to both compete more effectively on early-stage
clinical projects and free up resources to work on larger scale projects.
The drug delivery programs remain on track to add new products and expand
into new geographic markets. Our custom development pipeline remains strong
with several Phase III projects that have good revenue potential when the
products are approved, possibly in late 2008 or 2009."
Mr. Mack concluded, "Key capital projects continue to progress on
schedule with new laboratories in our Iowa facility expected to be ready
for occupancy during the second quarter. The new state-of-the-art finishing
facility in Italy is in the middle of its validation process and we expect
our new mid-scale API manufacturing facility at our Swedish operation to be
on line in early 2009."
First Quarter 2008 Operating, Interest and Tax Expenses -- Continuing
Operations
Sales, General and Administrative ("SG&A") Expenses in the first
quarter 2008 were $11.3 million compared to $15.3 million in the same
period last year. The reduction is primarily due to significantly lower
expenses at the corporate headquarters partially offset by the effect of
foreign currency within the European operations. Within SG&A, corporate
expenses in the first quarter of 2008 decreased to $3.9 million compared to
$8.4 million in the same period last year due to restructuring activities
completed throughout 2007 and lower legal fees due to the elimination of
legal contingencies during 2007.
Research and Development Expense for the first quarter 2008 was $2.3
million compared to $2.6 million in the first quarter 2007. The decrease is
primarily due to the recent closing of the New Jersey technical center,
whereby certain operations were consolidated into the Iowa facility.
Strategic Alternative and Restructuring Costs totaling $0.8 million in
the first quarter 2008 include $0.6 million of costs related to the
previously announced consolidation of operations at the New Jersey
technical center into the Charles City facility resulting in the shutdown
of the New Jersey facility, and $0.2 million of expense related to
change-in-control liabilities, severance and the continuation of a project
to streamline our legal entity structure in order to lower operating costs
and increase tax efficiency.
Net Interest Expense in the first quarter 2008 increased to $0.7
million from $1.5 million of income in the first quarter 2007. The Company
capitalized interest of $0.6 million on long-term projects in the first
quarter of 2008. The Company's interest income in the first quarter of 2007
resulted from cash proceeds from the sale of the Bio Businesses that were
held from the February sale date through the special dividend payment in
May 2007.
The effective tax rate for the first quarter 2008 was 38.9%. The
Provision for Income Taxes in the first quarter of 2008 was $2.7 million
compared to a benefit of $2.4 million in the first quarter 2007. Income
taxes for the first quarter of 2007 include $6.8 million of benefits
related to the recognition of certain tax attributes triggered by the sale
of the Bio Businesses. Excluding these benefits, the first quarter 2007
Provision for Income Taxes would have been $4.4 million. The Company's
effective tax rates have been and are expected to remain highly sensitive
to the geographic mix of income due to the Company's inability to recognize
tax benefits for GAAP purposes in certain jurisdictions where there has
been a recent history of losses, primarily the U.S.
First Quarter 2008 Capital Expenditures and Depreciation
Capital expenditures and depreciation for the first quarter 2008 were
$10.3 million and $5.1 million compared to $5.5 million and $4.8 million in
the first quarter 2007, respectively. The increase in capital spending is
largely due to higher spending on a mid-scale pharma manufacturing facility
in Sweden that is expected to be validated in early 2009.
Guidance -- Continuing Operations
The Company continues to expect that Sales growth during 2008 will be
between 5% and 10% and Adjusted EBITDA will be $53 to $57 million. Please
see the Other Matter section for commentary pertaining to a previously
announced item that may have a material impact on 2008 results.
Restructuring and strategic alternatives costs are expected to be
approximately $1.5 million, primarily related to finalizing the closure of
the New Jersey technical center, completing the project to improve our
legal entity structure and exiting a feed additive business.
For 2008, capital expenditures are expected to be approximately $32 to
$34 million and depreciation is expected to be $21 to $23 million.
Full year and quarterly effective tax rates will continue to be highly
sensitive due to the geographic mix of income or losses. Cambrex may not be
able to recognize tax benefits in certain jurisdictions.
The financial information contained in this press release is unaudited,
subject to revision and should not be considered final until the first
quarter 2008 Form 10-Q is filed with the SEC.
Other Matter
In late March, the Company announced that one of its customers had
recalled one of their products for which Cambrex currently supplies the
API. Cambrex continues to work with the customer to confirm the API
production plan for the remainder of 2008 and will provide updates as
appropriate.
Conference Call and Webcast
The Conference Call to discuss first quarter 2008 earnings will begin
at 5 p.m. Eastern Time on Thursday, May 1, 2008 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
44524695 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 Thursday, May 8, 2008 by calling 1-800-642-1687 for
domestic and +1-706-645-9291 for international. Please use the pass code
44524695 to access the replay.
Forward Looking Statements
This news release may contain "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, as amended, 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 or operating
performance. Any forward-looking statements are qualified in their entirety
by reference to the risk factors discussed in the Company's periodic
reports filed with the U.S. Securities and Exchange Commission. Any
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 or regulations (particularly environmental issues), tax rate,
interest rate, technology, manufacturing and legal issues, including the
outcome of outstanding litigation disclosed in the Company's public
filings, changes in foreign exchange rates, uncollectible receivables, loss
on disposition of assets, cancellation or delays in renewal of contracts,
lack of suitable raw materials or packaging materials, the Company's
ability to receive regulatory approvals for its products and the accuracy
of the Company's current estimates with respect to its earnings and profits
for tax purposes in 2007. Any forward-looking statement speaks only as of
the date on which it is made, and the Company undertakes no obligation to
publicly update any forward-looking statement, whether as a result of new
information, future events or otherwise. New factors emerge from time to
time and it is not possible for the Company to predict which new factors
will arise. In addition, we cannot assess the impact of each factor on the
Company's business or the extent to which any factor, or combination of
factors, may cause actual results to differ materially from those contained
in any forward-looking statements.
For further details and a discussion of these and other risks and
uncertainties, investors and security holders are cautioned to review the
Cambrex 2007 Annual Report on Form 10-K, including the Forward-Looking
Statement section therein, and other subsequent filings with the U.S.
Securities and Exchange Commission, including Current Reports on Form 8-K.
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 provides products and services to accelerate the development
and commercialization of small molecule APIs, advanced intermediates and
other products for branded and generic pharmaceuticals. The Company
currently employs approximately 850 people worldwide. For more information,
please visit http://www.cambrex.com.
CAMBREX CORPORATION
Statement of Profit and Loss
For the Quarters Ended March 31, 2008 and 2007
(in thousands)
2008 2007
% of % of
Amount Sales Amount Sales
Gross Sales $ 61,706 100.0% $64,997 100.0%
Allowances and Rebates 391 0.6% 590 0.9%
Net Sales 61,315 99.4% 64,407 99.1%
Other Revenues (325) -0.6% 807 1.2%
Net Revenues 60,990 98.8% 65,214 100.3%
Cost of Goods Sold 39,061 63.3% 40,819 62.8%
Gross Profit 21,929 35.5% 24,395 37.5%
Operating Expenses
Selling, General and
Administrative Expenses 11,334 18.3% 15,347 23.6%
Research and Development
Expenses 2,256 3.7% 2,600 4.0%
Restructuring Expenses 634 1.0% 1,682 2.6%
Strategic Alternative Costs 177 0.3% 23,130 35.6%
Total Operating Expenses 14,401 23.3% 42,759 65.8%
Operating Profit/(Loss) 7,528 12.2% (18,364) -28.3%
Other Expenses/(Income):
Interest Expense/(Income), net 706 1.1% (1,539) -2.4%
Other Income, net (125) -0.2% (19) 0.0%
Income/(Loss) Before Income
Taxes 6,947 11.3% (16,806) -25.9%
Provision/(Benefit) for
Income Taxes 2,701 4.4% (2,363) -3.6%
Income/(Loss) from
Continuing Operations $4,246 6.9% $(14,443) -22.3%
Income from Discontinued
Operations, Net of Tax - 0.0% 219,659 338.0%
Net Income $4,246 6.9% $205,216 315.7%
Basic Earnings/(Loss) per Share
Income/(Loss) from
Continuing Operations $0.15 $(0.51)
Income from Discontinued
Operations, Net of Tax $- $7.82
Net Income $0.15 $7.31
Diluted Earnings/(Loss) per Share
Income/(Loss) from
Continuing Operations $0.15 $(0.51)
Income from Discontinued
Operations, Net of Tax $- $7.82
Net Income $0.15 $7.31
Weighted Average Shares
Outstanding
Basic 29,035 28,071
Diluted 29,093 28,071
CAMBREX CORPORATION
Reconciliation of Gross Sales, Gross Profit & Operating Profit
For the Quarters Ended March 31, 2008 and 2007
(in thousands)
First Quarter 2008
Operating
Gross Gross Profit/
Sales Profit GP% (Loss) OP%
Pre-Corporate Results
Before Strat. Alt. &
Restructuring Expenses $ 61,706 $ 21,929 35.5% $ 12,264 19.9%
Corporate Results - - (3,925)
Adjusted Operating Profit 8,339 13.5%
Strat. Alt. & Restructuring
Expenses - - (811)
As Reported $ 61,706 $ 21,929 35.5% $ 7,528 12.2%
First Quarter 2007
Operating
Gross Gross Profit/
Sales Profit GP% (Loss) OP%
Pre-Corporate Results
Before Strat. Alt. &
Restructuring
Expenses $ 64,997 $ 24,395 37.5% $ 14,831 22.8%
Corporate Results - - (8,383)
Adjusted Operating Profit 6,448 9.9%
Strat. Alt. & Restructuring
Expenses - - (24,812)
As Reported $ 64,997 $ 24,395 37.5% $ (18,364) -28.3%
First Quarter 2008 First Quarter 2007
Pre-Corporate Operating
Profit Before Strat. Alt.
& Restructuring Expenses $ 12,264 $ 14,831
Corporate Results (3,925) (8,383)
Depreciation and
Amortization 5,149 4,894
Adjusted EBITDA $ 13,488 $ 11,342
CAMBREX CORPORATION
Consolidated Balance Sheet
As of March 31, 2008 and December 31, 2007
(in thousands)
March 31, December 31,
Assets 2008 2007
Cash and Cash Equivalents $40,001 $38,488
Trade Receivables, net 41,654 45,003
Inventories, net 75,442 61,440
Prepaid Expenses and Other Current Assets 21,598 20,104
Total Current Assets 178,695 165,035
Property, Plant and Equipment, Net 181,140 165,657
Goodwill 39,131 35,552
Other Non-Current Assets 6,374 7,218
Total Assets $405,340 $373,462
Liabilities and Stockholders' Equity
Accounts Payable $31,746 $26,185
Accrued Expenses and Other Current Liabilities 60,890 69,702
Total Current Liabilities 92,636 95,887
Long-term Debt 119,600 101,600
Deferred Tax Liabilities 20,681 19,086
Accrued Pension and Postretirement Benefits 31,884 32,104
Other Non-Current Liabilities 21,529 22,728
Total Liabilities $286,330 $271,405
Stockholders' Equity $119,010 $102,057
Total Liabilities and Stockholders' Equity $405,340 $373,462
SOURCE Cambrex Corporation
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http://www.cambrex.com
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CONTACT:
Gregory P. Sargen, Vice President & CFO of
Cambrex Corporation, +1-201-804-3055, gregory.sargen@cambrex.com
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