EAST RUTHERFORD, N.J., Aug. 6 /PRNewswire-FirstCall/ -- Cambrex
Corporation (NYSE: CBM) reports second quarter 2007 results for the period
ended June 30, 2007.
(Logo: http://www.newscom.com/cgi-bin/prnh/20000613/CAMBREXLOGO )
Highlights
-- Second quarter 2007 sales were flat (-3.5% excluding foreign currency)
compared to second quarter 2006. Year to date sales were up 9.3% (4.9%
excluding foreign currency) over the first six months of last year.
-- Gross Margin for the quarter increased to 37.9% of sales compared to
35.6% last year
-- Operating Profit before corporate expenses was 22.4% of sales in the
second quarter of 2007 versus 21.8% last year
-- Debt, net of cash, is $44.5 million at the end of the second quarter
-- Agreement reached on Rutherford Litigation resulting in release of all
claims for net cash payments of $4.2 million
-- Settlement finalized with SEC regarding inter-company matter resulting
in no fine or penalties
Discontinued Operations and Basis of Reporting
As previously reported, Cambrex sold its Bioproducts and Biopharma
businesses (the "Bio Businesses") to Lonza for approximately $464 million
(after working capital adjustments) in February 2007 and Human Health sites
in Cork, Ireland and Landen, Belgium to ICIG during the fourth quarter of
2006. 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. Discontinued Operations for 2007
also include charges related to the settlement of the Rutherford litigation
discussed later in this release. Discontinued Operations in the 2006
financial statements include the results of operations of the Bio
Businesses and the Cork and Landen sites.
Second Quarter 2007 Operating Results - Continuing Operations
Cambrex provides products and services to accelerate the development
and commercialization of small molecule active pharmaceutical ingredients
("APIs"), advanced intermediates and other products for branded and generic
pharmaceuticals.
Second quarter 2007 Sales of $63.1 million equaled sales in the second
quarter 2006, and declined by 3.5% excluding the effect of foreign
currency. After adjusting for foreign currency, volume increases in several
APIs, along with certain products utilizing Cambrex's proprietary
technology, were more than offset by price declines (the majority of which
were contractual) and lower custom development sales due partially to
project lifecycle ordering patterns and comparisons to strong custom
development sales in second quarter 2006.
Second quarter 2007 Gross Margin increased to 37.9% of sales from 35.6%
of sales during the second quarter 2006 resulting primarily from favorable
mix and higher volumes of certain APIs, partially offset by lower pricing
on certain products. Foreign currency had no impact on Gross Margin
percentage.
Operating Profit for the Human Health business segment was $14.2
million, or 22.4% of sales, compared to $13.7 million, or 21.8% of sales,
in the second quarter 2006 due to higher Gross Margin offset by higher
Operating Expenses. Foreign exchange increased Operating Profit by $0.4
million, but had a negligible impact on Operating Margin percentage during
the second quarter of 2007.
James A. Mack, Chairman, President, and Chief Executive Officer of
Cambrex Corporation, said "Coming off of a very strong first quarter, we
expected the middle part of the year to be a bit soft. We believe the
long-term prospects for our business remain positive and will continue to
focus on cost reduction, growing our proprietary products and technologies,
implementation of key capital investments, and the evaluation of strategic
M&A opportunities. Additionally, we are pleased to have recently reached
important agreements concluding the Rutherford litigation and the SEC
investigation."
Second Quarter 2007 Operating, Interest and Tax Expenses - Continuing
Operations
Second quarter 2007 consolidated Operating Expenses were $20.0 million
versus $19.1 million in the second quarter 2006 with the increase primarily
due to Restructuring Expenses and higher Strategic Alternative Costs,
offset by lower administrative expenses.
Sales, General and Administrative Expenses in the second quarter 2007
were $10.6 million compared to $15.0 million in the same period last year.
The reduction is due to lower personnel-related expenses including
salaries, bonus, pension and medical benefits in addition to reductions in
audit fees, depreciation, and environmental remediation expenses compared
to the second quarter 2006. Research and Development Expense for the second
quarter 2007 was $3.0 million, or 4.7% of sales, effectively flat compared
to $3.1 million, or 4.9% of sales, in the second quarter 2006.
Restructuring Expenses in the second quarter of 2007 of $1.9 million
consist primarily of severance costs incurred as part of downsizing the
corporate headquarters following the divestiture of the Bio Businesses.
Strategic Alternative Costs for the second quarter of 2007 of $4.6 million
include costs for change in control benefits, retention bonuses for
continuing employees, and a non-cash charge for modifications to stock
options related to the special dividend paid on May 3, 2007. Strategic
Alternative Costs for the second quarter of 2006 consist of external
advisor costs related to divestitures. Administrative Expenses also include
expenses for salaries, benefits and professional services, a portion of
which will be reduced or eliminated over the balance of 2007 as part of the
corporate restructuring.
Net Interest Income in the second quarter of 2007 was $0.9 million,
reflecting the income generated from the net proceeds of the Bio Businesses
sale through May 3, 2007 (the date of the special dividend payment) offset
by interest expense related to outstanding debt under our revolving credit
facility for the remainder of the second quarter. During the second quarter
of 2006, Net Interest Expense after adjustment for the effect of
Discontinued Operations (which removed much of the interest expense from
Continuing Operations) was $0.1 million.
Income taxes for the second quarter of 2007 include $1.5 million of
benefits related to the recognition of certain tax attributes as a result
of the sale of the Bio Businesses. Additional tax benefits related to this
divestiture will be recognized within Continuing Operations during the
second half of 2007 based on the level of losses within the U.S., where the
Company otherwise does not record a tax benefit related to these losses.
Second Quarter 2007 Capital Expenditures and Depreciation
Capital expenditures and depreciation for the second quarter 2007 were
$6.3 million and $4.7 million compared to $5.3 million and $4.9 million in
the second quarter 2006, respectively. The increase is largely due to
spending related to new manufacturing and R&D facilities at our Milan
facility.
Rutherford Legal Settlement
On July 30, Cambrex entered into a Settlement Agreement and Release and
a related Environmental Escrow Agreement settling litigation commenced in
April 2006 by Rutherford as purchaser of Cambrex's former Rutherford
Chemicals businesses. In summary, both parties released each other from all
claims and counterclaims asserted in the litigation and both parties waived
and extinguished all rights under the Purchase Agreement signed between
Cambrex and Rutherford in November of 2003, with certain exceptions that
are outlined in a Form 8-K that was filed with the SEC on July 30.
Cambrex's second quarter 2007 results include a $4.0 million charge within
Discontinued Operations related to this matter.
SEC Inter-company Matter
The SEC recently concluded its investigation related to the Company's
inter-company accounting during the period from 1997 through 2001. The
settlement resulted in no fines or penalties and requires the Company to
certify to the Commission that it continues to perform certain activities
to ensure appropriate inter-company accounting.
Guidance - Continuing Operations
Sales growth during 2007 is expected to be within the range of 5% to
10% and operating profit (excluding Corporate operations) is expected to be
in the range of $50 to $55 million. The Company expects its third quarter
results may be weaker than normal due to current order patterns, and
expects its fourth quarter results may be stronger than usual. Due to
uncertainties related to product mix and the outcome of certain of our
customers' drug approval processes, operating profit for the year may be at
the lower end of the range. The Company will monitor the expected timing
and mix of order deliveries over the coming months and update its
expectations with respect to full year performance accordingly.
The Company remains on target to complete its corporate restructuring
by the end of 2007 and will continue to report progress on this initiative
as the year progresses.
For 2007, capital expenditures and depreciation are currently expected
to be approximately $30 to $33 million and $21 to $23 million,
respectively.
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 second
quarter 2007 Form 10-Q is filed with the SEC.
Conference Call and Webcast
The Conference Call to discuss second quarter 2007 earnings will begin
at 8:30 a.m. Eastern Time on Tuesday, August 7, 2007 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
1373759 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 Tuesday, August 14, 2007 by calling 1-800-642-1687 for
domestic and +1-706- 645-9291 for international. Please use the pass code
1373759 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 estimate 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 2006 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 active pharmaceutical ingredients
("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, 2007 and 2006
(in thousands)
2007 2006
% of % of
Amount Sales Amount Sales
Gross Sales $63,081 100.0% $63,031 100.0%
Allowances and Rebates 184 0.3% 284 0.5%
Net Sales 62,897 99.7% 62,747 99.5%
Other Revenues (42) -0.1% (405) -0.6%
Net Revenues 62,855 99.6% 62,342 98.9%
Cost of Goods Sold 38,917 61.7% 39,902 63.3%
Gross Profit 23,938 37.9% 22,440 35.6%
Operating Expenses
Sales, General and
Administrative Expenses 10,556 16.7% 14,998 23.8%
Research and Development Expenses 2,961 4.7% 3,077 4.9%
Restructuring Expenses 1,901 3.0% - 0.0%
Strategic Alternative Costs 4,564 7.2% 1,042 1.6%
Total Operating Expenses 19,982 31.6% 19,117 30.3%
Operating Profit 3,956 6.3% 3,323 5.3%
Other (Income)/Expenses:
Interest (Income)/Expense, net (871) -1.4% 122 0.2%
Other Expenses, net 401 0.7% 125 0.2%
Income Before Income Taxes 4,426 7.0% 3,076 4.9%
Provision for Income Taxes 1,971 3.1% 3,424 5.5%
Income/(loss) from Continuing
Operations $2,455 3.9% $(348) -0.6%
(Loss)/Income from Discontinued
Operations, Net of Tax (181) -0.3% 1,324 2.1%
Net Income $2,274 3.6% $976 1.5%
Basic (Loss)/Earnings per Share
Income/(Loss) from Continuing
Operations $0.09 $(0.01)
(Loss)/Income from Discontinued
Operations, Net of Tax $(0.01) $0.05
Net Income $0.08 $0.04
Diluted (Loss)/Earnings per Share
Income/(Loss) from Continuing
Operations $0.08 $(0.01)
Income from Discontinued
Operations, Net of Tax $0.00 $0.05
Net Income $0.08 $0.04
Weighted Average Shares Outstanding
Basic 28,711 26,741
Diluted 28,949 26,741
CAMBREX CORPORATION
Statement of Profit and Loss
For the Six Months Ended June 30, 2007 and 2006
(in thousands)
2007 2006
% of % of
Amount Sales Amount Sales
Gross Sales $128,078 100.0% $117,151 100.0%
Commissions and Allowances 774 0.6% 670 0.6%
Net Sales 127,304 99.4% 116,481 99.4%
Other Revenues 765 0.6% (1,052) -0.9%
Net Revenue 128,069 100.0% 115,429 98.5%
Cost of Sales 79,736 62.3% 73,904 63.1%
Gross Profit 48,333 37.7% 41,525 35.4%
Operating Expenses
Sales, General and Administrative
Expenses 25,903 20.2% 27,488 23.5%
Research and Development Expenses 5,561 4.3% 5,439 4.6%
Restructuring Expenses 3,583 2.8% - 0.0%
Strategic Alternative Costs 27,694 21.6% 2,030 1.7%
Total Operating Expenses 62,741 48.9% 34,957 29.8%
Operating (Loss)/Profit (14,408) -11.2% 6,568 5.6%
Other (Income)/Expenses:
Interest (Income)/Expense, net (2,410) -1.9% 5,566 4.8%
Other Expenses, net 382 0.4% 130 0.1%
(Loss)/Income Before Income Taxes (12,380) -9.7% 872 0.7%
(Benefit)/Provision for Income
Taxes (392) -0.3% 5,924 5.0%
Loss from Continuing Operations $(11,988) -9.4% $(5,052) -4.3%
Income from Discontinued
Operations, Net of Tax 219,478 171.4% 4,851 4.1%
Income/(Loss) Before Cumulative Effect
of a Change in
Accounting Principle 207,490 162.0% (201) -0.2%
Cumulative Effect of a Change in
Accounting Principle - 0.0% (228) -0.2%
Net Income/(Loss) $207,490 162.0% $(429) -0.4%
Basic (Loss)/Earnings per Share
Loss from Continuing Operations $(0.42) $(0.19)
Income from Discontinued
Operations, Net of Tax $7.73 $0.18
Cumulative Effect of a Change in
Accounting Principle $- $(0.01)
Net Income/(Loss) $7.31 $(0.02)
Diluted (Loss)/Earnings per Share
Loss from Continuing Operations $(0.42) $(0.19)
Income from Discontinued
Operations, Net of Tax $7.73 $0.18
Cumulative Effect of a Change in
Accounting Principle $- $(0.01)
Net Income/(Loss) $7.31 $(0.02)
Weighted Average Shares Outstanding
Basic 28,393 26,701
Diluted 28,393 26,701
CAMBREX CORPORATION
Consolidated Balance Sheet
As of June 30, 2007 and December 31, 2006
(in thousands)
June 30, December 31,
Assets 2007 2006
Cash and Cash Equivalents $41,233 $33,746
Trade Receivables, net 29,959 38,552
Inventories, net 60,125 53,893
Assets of Discontinued Operations - 79,383
Prepaid Expenses and Other Current Assets 19,306 19,176
Total Current Assets 150,623 224,750
Property, Plant and Equipment, Net 145,425 141,863
Goodwill 33,219 32,573
Assets of Discontinued Operations - 202,292
Other Non-Current Assets 7,368 4,898
Total Assets $336,635 $606,376
Liabilities and Stockholders' Equity
Accounts Payable $22,048 $28,592
Accrued Expenses and Other Current Liabilities 70,780 45,141
Liabilities of Discontinued Operations - 33,401
Total Current Liabilities 92,828 107,134
Long-term Debt 85,700 158,600
Deferred Income Tax 21,374 14,268
Liabilities of Discontinued Operations - 24,208
Accrued Pension and Postretirement Benefits 38,863 39,911
Other Non-Current Liabilities 18,515 15,609
Total Liabilities $257,280 $359,730
Stockholders' Equity $79,355 $246,646
Total Liabilities and Stockholders' Equity $336,635 $606,376
SOURCE Cambrex Corporation
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Related links:
http://www.cambrex.com
Photo Notes:
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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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