EAST RUTHERFORD, N.J., Aug. 5 /PRNewswire-FirstCall/ -- Cambrex
Corporation (NYSE: CBM) reports second quarter 2008 results for the period
ended June 30, 2008.
(Logo: http://www.newscom.com/cgi-bin/prnh/20000613/CAMBREXLOGO )
Summary
-- Cambrex appointed Steven M. Klosk as President and CEO. -- Second quarter 2008 sales increased 5.0% (-2.6% excluding foreign
currency) compared to second quarter 2007.
-- Adjusted EBITDA was $12.4 million for the second quarter of 2008
versus $15.2 million last year.
-- Company maintains sales and profit guidance for the full year. See
Guidance and Other Matter sections.
-- High potency laboratories commissioned in Iowa and key expansion
projects in Italy and Sweden remain on schedule.
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 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.
Second Quarter 2008 Operating Results -- Continuing Operations
Second quarter 2008 sales of $66.2 million were 5.0% higher than sales
in the second quarter 2007, and 2.6% 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 generic
active pharmaceutical ingredients ("APIs") partially offset by higher
custom manufacturing revenues, including higher revenues from controlled
substances. Custom development revenues were flat compared to the prior
year.
Second quarter 2008 Gross Margin decreased to 29.9% of sales from 37.9%
during the second quarter 2007, with foreign currency negatively impacting
gross margin by 1.2%. Unfavorable product mix, lower pricing on our largest
API, and higher costs associated with the validation of the new API
finishing facility at the Milan, Italy site during the second quarter of
2008 were the main drivers of the lower margins.
Operating Profit was $5.6 million in the second quarter 2008 compared
to $4.0 million for the second quarter 2007. Adjusted Operating Profit was
$7.1 million, or 10.7% of sales, compared to $10.4 million, or 16.5% of
sales for the second quarter last year. Adjusted EBITDA was $12.4 million,
or 18.7% of sales, compared to $15.2 million, or 24.1% of sales last year.
The decreases in both Adjusted Operating Profit and Adjusted EBITDA were
driven primarily by lower gross profits described above, partially offset
by lower corporate headquarters expenses due to a restructuring in 2007.
Steven M. Klosk, President and Chief Executive Officer, said, "The
trends in our underlying markets remain favorable. Sales of controlled
substances, one of our key growth initiatives, were stronger during the
quarter and are up about $5 million year to date versus the prior year. Our
custom development pipeline of new clinical projects was very active during
the quarter as we responded to a significant number of customer requests
for proposals. Our portfolio of late stage Phase III projects remains
promising for driving sales growth in 2009 and beyond."
Mr. Klosk added, "New laboratories in our Iowa facility were
commissioned during the second quarter to support growing demand for highly
potent compounds. The new state-of-the-art finishing facility in Italy is
undergoing its validation process, which should be fully completed by the
end of 2008, and we expect our new mid-scale API manufacturing facility at
our Swedish operation to be on line in early 2009."
Mr. Klosk concluded, "Despite these positive developments, lower sales
of generic APIs and unfavorable product mix resulted in lower profitability
compared to the same quarter last year. While we maintain our previously
announced 2008 sales and earnings guidance, we anticipate being at the low
end of the profitability range due to lower volumes for a key API."
Second Quarter 2008 Operating, Interest and Tax Expenses -- Continuing
Operations
Sales, General and Administrative ("SG&A") Expenses in the second
quarter 2008 were $11.4 million compared to $10.6 million in the same
period last year. Excluding the effect of foreign currency and an
acceleration of equity awards to our former CEO, SG&A declined by $0.6
million due to headquarters restructuring activities completed throughout
2007 and lower legal fees.
Research and Development (R&D) Expense for the second quarter 2008 was
$1.9 million compared to $3.0 million in the second quarter 2007. The
decrease is primarily due to the Company's decision in 2007 to consolidate
its New Jersey technical center with its R&D operations in Iowa to create
increased operating efficiencies. The Company also utilized certain R&D
personnel on custom development projects resulting in these costs being
classified as Cost of Goods Sold.
Strategic Alternative and Restructuring Costs totaling $0.9 million in
the second quarter 2008 include $0.3 million of costs related to the
consolidation of operations at the New Jersey technical center into the
Iowa facility, and $0.6 million of expense related to change-in-control
liabilities, severance and the ongoing project to streamline the Company's
legal entity structure in order to lower operating costs and increase tax
efficiency.
Net Interest Expense in the second quarter 2008 was $0.6 million
compared to income of $0.9 million in the second quarter 2007. The Company
capitalized interest of $0.7 million on long-term projects in the second
quarter of 2008. The Company's interest income in the second 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 second quarter 2008 was 62.0%. The
Provision for Income Taxes in the second quarter of 2008 was $3.0 million
compared to $2.0 million in the second quarter 2007. Income taxes for the
second quarter of 2007 include $1.5 million of benefits related to the
recognition of certain tax attributes triggered by the sale of the Bio
Businesses. 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 U.S. GAAP purposes in
certain jurisdictions where there has been a recent history of losses,
primarily the U.S.
Second Quarter 2008 Capital Expenditures and Depreciation
Capital expenditures and depreciation for the second quarter 2008 were
$10.1 million and $5.3 million compared to $6.3 million and $4.7 million in
the second 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
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. It is
anticipated that sales, net of the currency impact will be approximately
flat compared to 2007. The Company currently believes it will finish the
year at the low end of its Adjusted EBITDA range, primarily due to lower
revenues of a key product (see Other Matter section below) and slightly
lower sales of generic APIs.
Restructuring and Strategic Alternatives Costs are expected to be
approximately $2.5 million, which is $1.0 million higher than previously
estimated. The increase is primarily related to estimated delays in
sub-leasing the recently closed New Jersey technical center.
For 2008, capital expenditures are expected to be approximately $33 to
$35 million and depreciation is expected to be $21 to $23 million.
Other Matter
One of the Company's customers recalled a product in the US in March of
2008 and has had certain limitations placed on the product within Europe.
The customer is in the process of implementing various procedures related
to this product and has a variation under review by regulatory authorities.
The customer has placed orders with Cambrex for the remainder of 2008
and the current anticipated shipment schedule would result in a reduction
of approximately $6.0 million in revenue compared to original 2008
guidance. The expected shipments will likely be concentrated in the last
four months of the year and are contingent upon our customer's success in
obtaining timely approval for the variation under review. We will provide
updates on this matter as appropriate.
The financial information contained in this press release is unaudited,
subject to revision and should not be considered final until the second
quarter 2008 Form 10-Q is filed with the SEC.
Conference Call and Webcast
The Conference Call to discuss second quarter 2008 earnings will begin
at 8:30 a.m. Eastern Time on Wednesday, August 6, 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 56338629 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 Wednesday, August 13, 2008 by
calling 1-800-642-1687 for domestic and +1-706-645-9291 for international.
Please use the pass code 56338629 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 June 30, 2008 and 2007
(in thousands)
2008 2007
% of % of
Amount Sales Amount Sales
Gross Sales $66,226 100.0% $63,081 100.0%
Allowances and Rebates 553 0.8% 184 0.3%
Net Sales 65,673 99.2% 62,897 99.7%
Other Revenues 140 0.2% (42) -0.1%
Net Revenues 65,813 99.4% 62,855 99.6%
Cost of Goods Sold 46,002 69.5% 38,917 61.7%
Gross Profit 19,811 29.9% 23,938 37.9%
Operating Expenses
Selling, General and
Administrative Expenses 11,410 17.2% 10,556 16.7%
Research and Development
Expenses 1,917 2.9% 2,961 4.7%
Restructuring Expenses 514 0.8% 1,901 3.0%
Strategic Alternative Costs 398 0.6% 4,564 7.2%
Total Operating Expenses 14,239 21.5% 19,982 31.6%
Operating Profit 5,572 8.4% 3,956 6.3%
Other Expenses/(Income):
Interest Expense/(Income), net 640 1.0% (871) -1.4%
Other Expense, net 99 0.1% 401 0.7%
Income Before Income Taxes 4,833 7.3% 4,426 7.0%
Provision for Income Taxes 2,997 4.5% 1,971 3.1%
Income from Continuing Operations $1,836 2.8% $2,455 3.9%
Loss from Discontinued
Operations, Net of Tax - 0.0% (181) -0.3%
Net Income $1,836 2.8% $2,274 3.6%
Basic Earnings/(Loss) per Share
Income from Continuing
Operations $0.06 $0.09
Loss from Discontinued
Operations, Net of Tax $ - $(0.01)
Net Income $0.06 $0.08
Diluted Earnings/(Loss) per Share
Income from Continuing
Operations $0.06 $0.08
Loss from Discontinued
Operations, Net of Tax $ - $0.00
Net Income $0.06 $0.08
Weighted Average Shares Outstanding
Basic 29,090 28,711
Diluted 29,101 28,949
CAMBREX CORPORATION
Statement of Profit and Loss
For the Six Months Ended June 30, 2008 and 2007
(in thousands)
2008 2007
% of % of
Amount Sales Amount Sales
Gross Sales $127,932 100.0% $128,078 100.0%
Allowances and Rebates 944 0.7% 774 0.6%
Net Sales 126,988 99.3% 127,304 99.4%
Other Revenues (185) -0.2% 765 0.6%
Net Revenue 126,803 99.1% 128,069 100.0%
Cost of Sales 85,063 66.5% 79,736 62.3%
Gross Profit 41,740 32.6% 48,333 37.7%
Operating Expenses
Selling, General and
Administrative Expenses 22,744 17.8% 25,903 20.2%
Research and Development Expenses 4,173 3.3% 5,561 4.3%
Restructuring Expenses 1,148 0.9% 3,583 2.8%
Strategic Alternative Costs 575 0.4% 27,694 21.6%
Total Operating Expenses 28,640 22.4% 62,741 48.9%
Operating Profit/(Loss) 13,100 10.2% (14,408) -11.2%
Other (Income)/Expenses:
Interest Expense/(Income), net 1,346 1.0% (2,410) -1.9%
Other (Income)/Expenses, net (26) -0.1% 382 0.4%
Income/(Loss) Before Income Taxes 11,780 9.3% (12,380) -9.7%
Provision/(Benefit) for Income
Taxes 5,698 4.5% (392) -0.3%
Income/(Loss) from Continuing
Operations $6,082 4.8% $(11,988) -9.4%
Income from Discontinued
Operations, Net of Tax - 0.0% 219,478 171.4%
Net Income $6,082 4.8% $207,490 162.0%
Basic Earnings/(Loss) per Share
Income/(Loss) from Continuing
Operations $0.21 $(0.42)
Income from Discontinued
Operations, Net of Tax $ - $7.73
Net Income $0.21 $7.31
Diluted Earnings/(Loss) per Share
Income/(Loss) from Continuing
Operations $0.21 $(0.42)
Income from Discontinued
Operations, Net of Tax $ - $7.73
Net Income $0.21 $7.31
Weighted Average Shares Outstanding
Basic 29,063 28,393
Diluted 29,112 28,393
CAMBREX CORPORATION
Reconciliation of Gross Sales, Gross Profit & Operating Profit
For the Quarters and Six Months Ended June 30, 2008 and 2007
(in thousands)
Second Quarter 2008
Operating
Gross Gross Profit/
Sales Profit GP% (Loss) OP%
Pre-Corporate Results Before
Strat. Alt. & Restructuring
Expenses $66,226 $19,811 29.9% $10,346 15.6%
Corporate Results - - (3,265)
Adjusted Operating Profit 7,081 10.7%
Strat. Alt. & Restructuring
Expenses (912)
Equity Acceleration for Former
CEO (597)
As Reported $66,226 $19,811 29.9% $5,572 8.4%
Second Quarter 2007
Operating
Gross Gross Profit/
Sales Profit GP% (Loss) OP%
Pre-Corporate Results Before
Strat. Alt. & Restructuring
Expenses $63,081 $23,938 37.9% $14,160 22.4%
Corporate Results - - (3,739)
Adjusted Operating Profit 10,421 16.5%
Strat. Alt. & Restructuring
Expenses (6,465)
As Reported $63,081 $23,938 37.9% $3,956 6.3%
Six Months 2008
Operating
Gross Gross Profit/
Sales Profit GP% (Loss) OP%
Pre-Corporate Results Before
Strat. Alt. & Restructuring
Expenses $127,932 $41,740 32.6% $22,610 17.7%
Corporate Results - - (7,190)
Adjusted Operating Profit 15,420 12.1%
Strat. Alt. & Restructuring
Expenses (1,723)
Equity Acceleration for
Former CEO (597)
As Reported $127,932 $41,740 32.6% $13,100 10.2%
Six Months 2007
Operating
Gross Gross Profit/
Sales Profit GP% (Loss) OP%
Pre-Corporate Results
Before Strat. Alt. &
Restructuring Expenses $128,078 $48,333 37.7% $28,991 22.6%
Corporate Results - - (12,122)
Adjusted Operating Profit 16,869 13.2%
Strat. Alt. & Restructuring
Expenses (31,277)
As Reported $128,078 $48,333 37.7% $(14,408) -11.2%
Second Second Six Six
Quarter Quarter Months Months
2008 2007 2008 2007
Pre-Corporate Operating
Profit Before Strat. Alt.
& Restructuring Expenses $10,346 $14,160 $22,610 $28,991
Corporate Results (3,265) (3,739) (7,190) (12,122)
Depreciation and
Amortization 5,283 4,751 10,432 9,645
Adjusted EBITDA $12,364 $15,172 $25,852 $26,514
CAMBREX CORPORATION
Consolidated Balance Sheet
As of June 30, 2008 and December 31, 2007
(in thousands)
June 30, Dec. 31,
Assets 2008 2007
Cash and Cash Equivalents $24,336 $38,488
Trade Receivables, net 37,854 45,003
Inventories, net 76,526 61,440
Prepaid Expenses and Other Current Assets 19,930 20,104
Total Current Assets 158,646 165,035
Property, Plant and Equipment, Net 184,982 165,657
Goodwill 39,036 35,552
Other Non-Current Assets 6,308 7,218
Total Assets $388,972 $373,462
Liabilities and Stockholders' Equity
Accounts Payable $24,309 $26,185
Accrued Expenses and Other Current
Liabilities 53,374 69,702
Total Current Liabilities 77,683 95,887
Long-term Debt 115,700 101,600
Deferred Tax Liabilities 20,737 19,086
Accrued Pension and Postretirement Benefits 31,613 32,104
Other Non-Current Liabilities 20,295 22,728
Total Liabilities $266,028 $271,405
Stockholders' Equity $122,944 $102,057
Total Liabilities and Stockholders' Equity $388,972 $373,462
SOURCE Cambrex Corporation
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Related links:
http://www.cambrex.com
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PRN Photo Desk, photodesk@prnewswire.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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