EAST RUTHERFORD, N.J., Oct. 28 /PRNewswire-FirstCall/ -- Cambrex
Corporation (NYSE: CBM) reported today third quarter 2004 pro forma net income
from continuing operations of $4.5 million or $0.17 per share, excluding a
goodwill impairment charge of $48.7 million (or $1.86 per share) related to
the Biopharma segment. Including the impairment charge (discussed further in
the Impairment section below), the Company recorded a third quarter 2004 GAAP
loss from continuing operations of $44.2 million or $1.69 per share.
In the third quarter 2003, the Company reported pro forma net income from
continuing operations of $4.9 million or $0.19 per share, excluding $19.8
million (or $0.77 per share) of special tax related charges. Including the
special tax related charges, the Company recorded a third quarter 2003 GAAP
loss from continuing operations of $14.9 million or $0.58 per share.
A reconciliation of GAAP and pro forma results for continuing operations
in the periods reported is presented at the end of this release. All amounts
that follow in the attached financial statements and tables are pro forma
results from continuing operations unless otherwise noted.
In the third quarter 2004, the Company generated $17.5 million cash from
operations that was used to decrease debt, net of cash-on-hand, by $8.6
million with $9.6 million invested in capital expenditures.
Worldwide sales from continuing operations for the third quarter 2004 grew
4.3% to $99.3 million from $95.2 million in the third quarter 2003 reflecting
increased sales in both the Bioproducts and Biopharma segments but partially
offset by lower sales in the Human Health segment. Third quarter 2004 sales
from continuing operations were favorably impacted by 3.7% due to foreign
currency versus the third quarter 2003.
Gross margins for the third quarter 2004 increased to 40.2% from 38.9% in
the third quarter 2003 due to higher margins in Biopharma and Bioproducts
segments partially offset by lower margins in the Human Health segment.
Foreign currency unfavorably impacted third quarter 2004 gross margin by
approximately 1.0 percentage point.
Prior to the goodwill impairment, the third quarter 2004 tax rate was
approximately 36% which is higher than the first six months of 2004 due to the
geographic mix of income in the current quarter. See the Guidance section
below for further discussion on taxes.
As previously reported on November 10, 2003, the Company closed on the
sale of its Rutherford Chemicals business. This business has been treated as
a discontinued operation for all periods presented. During the third quarter
2004, approximately $0.2 million (or $0.01 per share) was recorded primarily
for certain environmental expenses arising from Rutherford Chemicals sites.
Bioproducts
The Bioproducts segment includes Cells and Media, Endotoxin Detection and
Electrophoresis, Chromatography and Other product categories. Bioproducts
sales in the third quarter 2004 increased 14.7% to $34.0 million, including a
3.4% favorable impact from foreign currency, from $29.6 million in the third
quarter 2003. The increased sales for the quarter reflect stronger demand for
endotoxin detection and cell culture products and new cell therapy projects.
Third quarter 2004 gross margin increased to 56.1% from 48.7% in the third
quarter 2003 primarily due to favorable volume and pricing and lower bad debt
reserves. Foreign currency favorably impacted gross margin by approximately
0.6 percentage points in the third quarter 2004.
Biopharma
The Biopharma segment consists of the Company's contract biopharmaceutical
process development and manufacturing business. The favorable impact of the
recent reorganization of our selling efforts contributed to Biopharma sales in
the third quarter 2004 increasing 31.0% to $11.4 million from $8.7 million in
the third quarter 2003. This increase reflects expanding volumes from newly
acquired projects. Third quarter 2004 gross margin increased to 18.1% from
9.6% in the third quarter 2003 due to higher volumes and a favorable mix of
projects. Foreign currency had no impact on Biopharma sales or gross margin
in the third quarter 2004.
Human Health
The Human Health segment consists of small molecule Active Pharmaceutical
Ingredients (APIs), Advanced Intermediates, Imaging Chemicals, and Fine Custom
Chemicals derived from organic chemistry. Human Health sales in the third
quarter 2004 decreased 5.2% to $53.9 million, including 4.4% favorable impact
due to foreign currency, from $56.9 million in the third quarter 2003. Gross
sales of generic APIs, pharmaceutical advanced intermediates, and fine custom
chemicals were lower, partially offset by increased sales of certain branded
APIs. New products, such as Memantine and certain other cardiovascular and
central nervous system APIs, showed continued growth in the third quarter.
Third quarter 2004 gross margin declined to 34.8% from 38.2% in the third
quarter 2003 primarily due to lower pricing and the negative impact of foreign
currency partially offset by favorable product mix. Foreign currency
negatively impacted gross margin by approximately 2.3 percentage points in the
third quarter 2004.
"We are pleased with the double-digit revenue growth in the Bioproducts
and Biopharma segments which resulted from our expanded commercial development
efforts," commented John R. Leone, President and CEO. "In addition, the
recently announced Epoch and Johns Hopkins licenses, Genolife acquisition and
Ortec marketing agreement will allow us to use our technology and expertise to
develop and integrate products and services that help get therapeutics to
market faster."
Third Quarter 2004 Operating and Interest Expenses for Continuing
Operations
Third quarter 2004 marketing, sales, administrative and amortization
expenses increased to $25.6 million (25.8% of sales) from $23.0 million (24.1%
of sales) in the third quarter 2003, primarily due to increased Bioproducts
and Human Health sales and marketing expenses and approximately $0.6 million
impact from foreign currency.
Third quarter 2004 research and development expenses increased to $4.5
million (4.5% of sales) from $4.1 million (4.3% of sales) in the third quarter
2003 primarily due to increases in new product development spending and
approximately $0.1 million impact from foreign currency.
Third quarter 2004 net interest expense declined to $2.9 million compared
to $3.3 million in the third quarter 2003. The average interest rate increased
to 5.5% in the third quarter 2004 from 5.4% in the third quarter 2003 but was
offset by lower outstanding borrowings.
Impairment
As discussed in the September 28, 2004 conference call, the recent sales
and earnings weakness in the Biopharma segment required that the Company
reassess the goodwill related to the segment. The Company has completed the
reassessment. John Leone, President and CEO, explained, "Although sales of
the Biopharma segment are showing improvement, the sales attributed to the
Baltimore site have been unable to offset the volume reduction resulting from
the loss of the TKT business. This required us to reduce the goodwill
associated with the Baltimore facility to reflect the more conservative
assessment of its long-term profitability versus prior projections." The
result is a $48.7 million goodwill impairment for the Baltimore site.
"Looking to the future," John Leone continued, "The contract
biopharmaceutical development and manufacturing market is expected to show
continuing growth with over 300 biotech drugs in development. As a result of
favorable market conditions and the Company's reputation for expertise,
service and regulatory compliance, we believe that the Biopharmaceutical
market which we service from both the Hopkinton, Massachusetts and Baltimore,
Maryland locations will continue to offer opportunities for future revenue and
gross profit growth."
Guidance
The Company continues to expect full year 2004 diluted earnings per share
for continuing operations to be in the range of $0.90 to $1.00, excluding the
impairment charge described above. The Company targets sales growth of 10-15%
in the Bioproducts segment, 4-8% in the Human Health segment, and 6-10% in the
Biopharma segment.
For the year 2004, capital expenditures, depreciation and amortization for
continuing operations are expected to be approximately $46.0 million, $38.0
million, and $1.8 million respectively. The Company expects the full year 2004
effective tax rate to be approximately 35% prior to the goodwill impairment;
however, the full year and quarterly effective tax rates will continue to be
highly sensitive to changes in the geographic mix of income.
Conference Call and Webcast
The Conference Call to discuss third quarter 2004 earnings will begin at
8:30 a.m. Eastern Time on Friday, October 29, 2004 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 conference ID
1133658 and call approximately 10 minutes before the start time. The
Conference Call will also be webcast in the Investor Relations section of the
Cambrex website located at http://www.cambrex.com. The webcast will be
available for approximately thirty (30) days following the call.
A replay of the Conference Call will be available approximately two hours
after the completion of the call through the end of business day, Friday,
November 5, 2004 by calling 1-800-642-1687 for Domestic, and +1-706-645-9291
for International. Please use the conference ID 1133658 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 Exchange Act, 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, technology,
manufacturing and legal issues, changes in foreign exchange rates, performance
of minority investments, un-collectable receivables, loss on disposition of
assets, cancellation or delays in renewal of contracts, and lack of suitable
raw materials or packaging materials. For further details and a discussion of
these and other risks and uncertainties, investors are cautioned to review the
Cambrex Annual Report on Form 10-K, including the Forward-Looking Statement
section therein, and other filings with the 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.
CAMBREX CORPORATION
Gross Sales & Gross Profit by Segment
Quarters Ended September 30, 2004 and 2003
(in thousands)
Third Quarter 2004 Third Quarter 2003
Gross Gross Gross Gross
Sales Profit GP% Sales Profit GP%
Bioproducts $33,958 $19,040 56.1% $29,607 $14,419 48.7%
Biopharma 11,375 2,060 18.1% 8,680 837 9.6%
Human Health $53,917 $18,782 34.8% $56,892 $21,742 38.2%
Total $99,250 $39,882 40.2% $95,179 $36,998 38.9%
Gross Sales Comparison
2004 2003
Gross Gross Change Change
Sales Sales $ %
Bioproducts $33,958 $29,607 $4,351 14.7%
Biopharma 11,375 8,680 2,695 31.0%
Human Health 53,917 56,892 (2,975) -5.2%
Total $99,250 $95,179 $4,071 4.3%
CAMBREX CORPORATION
Financial Summary - Proforma *
Quarters Ended September 30, 2004 and 2003
(in thousands, except earnings per share)
2004 2003
Gross Sales $99,250 $95,179
Operating Profit $9,725 $9,979
Income Before Tax $7,080 $6,808
Income From Continuing Operations $4,525 $4,879
Loss From Discontinued Operations $(236) $(54,611)
Net Income / (Loss) $4,289 $(49,732)
Earnings per share data (basic):
Income From Continuing
Operations $0.17 $0.19
Loss From Discontinued
Operations $(0.01) $(2.12)
Net Income/ (Loss) $0.16 $(1.93)
Average Shares Outstanding 26,109 25,721
Earnings per share data (diluted):
Income From Continuing
Operations $0.17 $0.19
Loss From Discontinued
Operations $(0.01) $(2.10)
Net Income/ (Loss) $0.16 $(1.91)
Average Shares Outstanding 26,352 25,999
Financial Summary - GAAP
Quarters Ended September 30, 2004 and 2003
(in thousands, except earnings per share)
2004 2003
Gross Sales $99,250 $95,179
Operating (Loss) /Profit $(38,995) $9,979
(Loss) /Income Before Tax $(41,640) $6,808
Loss From Continuing Operations $(44,195) $(14,901)
Loss From Discontinued Operations $(236) $(54,611)
Net Loss $(44,431) $(69,512)
Earnings per share data (basic):
Loss From Continuing Operations $(1.69) $(0.58)
Loss From Discontinued
Operations $(0.01) $(2.12)
Net Loss $(1.70) $(2.70)
Average Shares Outstanding 26,109 25,721
Earnings per share data (diluted):
Loss From Continuing Operations $(1.69) $(0.58)
Loss From Discontinued
Operations $(0.01) $(2.12)
Net Loss $(1.70) $(2.70)
Average Shares Outstanding 26,109 25,721
* Refer to the Proforma to GAAP Reconciliation.
Note: All amounts in these financial statements and tables are for
continuing operations unless otherwise indicated.
Cambrex Corporation
Proforma to GAAP Reconciliation
For the Three Months ended September 30, 2004 and 2003
Three Months ended
2004 2003
Net (Loss) Net (Loss)
Income EPS Income EPS
Loss From Continuing Operations - As
Reported $(44,195) $(1.69) $(14,901) $(0.58)
Goodwill Impairment 48,720 1.86 - -
Tax Valuation Allowance - - 19,780 0.77
Income from Continuing Operations -
Proforma $4,525 $0.17 $4,879 $0.19
CAMBREX CORPORATION
Statement of Profit and Loss - Proforma *
For the Quarters Ended September 30, 2004 and 2003
(in thousands)
2004 2003
% of % of
Amount Sales Amount Sales
Gross Sales $99,250 100.0% $95,179 100.0%
Commissions and Allowances 620 0.6% 691 0.7%
Net Sales 98,630 99.4% 94,488 99.3%
Other Revenues 1,706 1.7% 1,891 2.0%
Net Revenue 100,336 101.1% 96,379 101.3%
Cost of Sales 60,454 60.9% 59,381 62.4%
Gross Profit 39,882 40.2% 36,998 38.9%
Operating Expenses
Marketing/Sales Expenses 7,555 7.6% 6,153 6.5%
Research & Development Expenses 4,512 4.5% 4,061 4.3%
Administrative Expenses 17,632 17.8% 16,406 17.2%
Amortization 458 0.5% 399 0.4%
Total Operating Expenses 30,157 30.4% 27,019 28.4%
Operating Profit 9,725 9.8% 9,979 10.5%
Other Expenses
Interest - Other 2,854 2.8% 3,251 3.4%
Other Expenses, net (209) -0.2% (80) -0.1%
Total Other Expenses 2,645 2.6% 3,171 3.3%
Income Before Taxes 7,080 7.2% 6,808 7.2%
Provision for Income Taxes 2,555 2.6% 1,929 2.0%
Income from Continuing Operations $4,525 4.6% $4,879 5.2%
Discontinued Operations
Loss From Discontinued Operations (236) (1,777)
Loss on Disposal of Discontinued
Operations - (53,098)
Income Tax Benefit - (264)
Loss From Discontinued Operations (236) (54,611)
Net Income /(Loss) $4,289 $(49,732)
Basic Earnings per Share
Income From Continuing Operations $0.17 $0.19
Loss From Discontinued Operations $(0.01) $(2.12)
Net Income /(Loss) $0.16 $(1.93)
Diluted Earnings per Share
Income From Continuing Operations $0.17 $0.19
Loss From Discontinued Operations $(0.01) $(2.10)
Net Income /(Loss) $0.16 $(1.91)
* Refer to the Proforma to GAAP Reconciliation.
CAMBREX CORPORATION
Statement of Profit and Loss - GAAP
For the Quarters Ended September 30, 2004 and 2003
(in thousands)
2004 2003
% of % of
Amount Sales Amount Sales
Gross Sales $99,250 100.0% $95,179 100.0%
Commissions and Allowances 620 0.6% 691 0.7%
Net Sales 98,630 99.4% 94,488 99.3%
Other Revenues 1,706 1.7% 1,891 2.0%
Net Revenue 100,336 101.1% 96,379 101.3%
Cost of Sales 60,454 60.9% 59,381 62.4%
Gross Profit 39,882 40.2% 36,998 38.9%
Operating Expenses
Marketing/Sales Expenses 7,555 7.6% 6,153 6.5%
Research & Development Expenses 4,512 4.5% 4,061 4.3%
Administrative Expenses 17,632 17.8% 16,406 17.2%
Goodwill Impairment 48,720 49.1% - 0.0%
Amortization 458 0.5% 399 0.4%
Total Operating Expenses 78,877 79.5% 27,019 28.4%
Operating (Loss) /Profit (38,995) -39.3% 9,979 10.5%
Other Expenses
Interest - Other 2,854 2.8% 3,251 3.4%
Other Expenses, net (209) -0.2% (80) -0.1%
Total Other Expenses 2,645 2.6% 3,171 3.3%
(Loss) /Income Before Taxes (41,640) -41.9% 6,808 7.2%
Provision for Income Taxes 2,555 2.6% 21,709 22.8%
Loss from Continuing Operations $(44,195) -44.5% $(14,901) -15.6%
Discontinued Operations
Loss From Discontinued Operations (236) (1,777)
Loss on Disposal of Discontinued
Operations - (53,098)
Income Tax Benefit - (264)
Loss From Discontinued Operations (236) (54,611)
Net Loss $(44,431) $(69,512)
Basic Earnings per Share
Loss From Continuing Operations $(1.69) $(0.58)
Loss From Discontinued Operations $(0.01) $(2.12)
Net Loss $(1.70) $(2.70)
Diluted Earnings per Share
Loss From Continuing Operations $(1.69) $(0.58)
Loss From Discontinued Operations $(0.01) $(2.12)
Net Loss $(1.70) $(2.70)
CAMBREX CORPORATION
Gross Sales & Gross Profit by Segment
Nine Months Ended September 30, 2004 and 2003
(in thousands)
Nine Months 2004 Nine Months 2003
Gross Gross Gross Gross
Sales Profit GP% Sales Profit GP%
Bioproducts $102,190 $55,624 54.4% $89,383 $45,007 50.4%
Biopharma 31,739 4,326 13.6% 31,497 8,158 25.9%
Human Health 187,864 67,170 35.8% 182,646 69,296 37.9%
Total $321,793 $127,120 39.5% $303,526 $122,461 40.3%
Gross Sales Comparison
2004 2003
Gross Gross Change Change
Sales Sales $ %
Bioproducts $102,190 89,383 $12,807 14.3%
Biopharma 31,739 31,497 242 0.8%
Human Health $187,864 $182,646 $5,218 2.9%
Total $321,793 $303,526 $18,267 6.0%
CAMBREX CORPORATION
Statement of Profit and Loss - GAAP
For the Nine Months Ended September 30, 2004 and 2003
(in thousands)
2004 2003
% of % of
Amount Sales Amount Sales
Gross Sales $321,793 100.0% $303,526 100.0%
Commissions and Allowances 2,278 0.7% 2,891 1.0%
Net Sales 319,515 99.3% 300,635 99.0%
Other Revenues 6,545 2.0% 6,899 2.3%
Net Revenue 326,060 101.3% 307,534 101.3%
Cost of Sales 198,940 61.8% 185,073 61.0%
Gross Profit 127,120 39.5% 122,461 40.3%
Operating Expenses
Marketing/Sales Expenses 23,413 7.3% 19,058 6.3%
Research & Development Expenses 13,899 4.3% 12,576 4.1%
Administrative Expenses 53,070 16.5% 50,832 16.7%
Goodwill Impairment 48,720 15.1% - 0.0%
Legal Settlement - 0.0% 11,342 3.7%
Other, net (1,863) -0.5% - 0.0%
Amortization 1,380 0.4% 1,143 0.4%
Total Operating Expenses 138,619 43.1% 94,951 31.2%
Operating (Loss) /Profit (11,499) -3.6% 27,510 9.1%
Other Expenses
Interest - Other 8,471 2.6% 8,301 2.7%
Other Expenses, net (61) 0.0% (207) 0.0%
Total Other Expenses 8,410 2.6% 8,094 2.7%
(Loss) /Income Before Taxes (19,909) -6.2% 19,416 6.4%
Provision for Income Taxes 9,978 3.1% 25,241 8.3%
Loss From Continuing Operations $(29,887) -9.3% $(5,825) -1.9%
Discontinued Operations
Loss From Discontinued Operations (978) (317)
Loss on Disposal of Discontinued
Operations - (53,098)
Income Tax Benefit - (138)
Loss From Discontinued Operations (978) (53,277)
Net Loss $(30,865) $(59,102)
Basic Earnings per Share
Loss From Continuing Operations $(1.15) $(0.23)
Loss From Discontinued Operations $(0.03) $(2.06)
Net Loss $(1.18) $(2.29)
Diluted Earnings per Share
Loss From Continuing Operations $(1.15) $(0.23)
Loss From Discontinued Operations $(0.03) $(2.06)
Net Loss $(1.18) $(2.29)
CAMBREX CORPORATION
Consolidated Balance Sheet
As of September 30, 2004 and December 31, 2003
(in thousands)
Current Assets 2004 2003
Cash and Cash Equivalents $83,761 $64,294
Trade Receivables, net 56,276 58,324
Inventories, net 88,222 82,013
Deferred Tax Asset 8,757 8,757
Other Current Assets 21,184 16,294
Total Current Assets 258,200 229,682
Property, Plant and Equipment, Net 265,261 269,147
Goodwill and Other Intangibles 222,344 272,133
Other Assets 6,714 7,541
Total Assets $752,519 $778,503
Current Liabilities
Trade Accounts Payable $31,416 $35,326
Accrued Liabilities 59,176 54,522
Short-term Debt and Current Portion
of Long-term Debt 1,518 1,376
Total Current Liabilities 92,110 91,224
Long-term Debt 220,338 212,369
Deferred Tax Liabilities 28,998 29,196
Other Liabilities 45,410 49,084
Total Liabilities $386,856 $381,873
Stockholders' Equity $365,663 $396,630
Total Liabilities and Stockholders'
Equity $752,519 $778,503
SOURCE Cambrex Corporation
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Related links:
http://www.cambrex.com
Company News On-Call:
http://www.prnewswire.com/comp/134219.html
CONTACT:
Luke M. Beshar, Executive Vice President &
CFO, +1-201-804-3010, luke.beshar@cambrex.com, or Anne-Marie
Hess, Director, Investor Relations, +1-201-804-3062,
annemarie.hess@cambrex.com, both of Cambrex Corporation
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