EAST RUTHERFORD, N.J., Nov. 1 /PRNewswire-FirstCall/ -- Cambrex
Corporation (NYSE: CBM) reports third quarter 2007 results for the period
ended September 30, 2007.
(Logo: http://www.newscom.com/cgi-bin/prnh/20000613/CAMBREXLOGO )
Summary
-- Third quarter 2007 Sales increased 2.3% (-1.8% excluding foreign
currency) compared to third quarter 2006. Year to date sales were up
7.1% (2.8% excluding foreign currency) over the first nine months of
last year.
-- Gross Margin for the quarter decreased to 33.8% of sales compared to
37.9% last year. Year to date Gross Margin increased to 36.6% compared
to 36.2% in 2006.
-- Operating Profit before corporate expenses was 16.1% of sales in the
third quarter of 2007 versus 21.5% last year.
-- Debt, net of cash, is $52.8 million at the end of the third quarter.
-- A preliminary settlement was agreed to regarding the 2003 class action
lawsuit for an amount within insurance policy limits. In a separate
matter, claims related to a former Biopharma site were dismissed in
their entirety; plaintiffs have filed a Notice of Appeal. There were no
cash outlays for settlement required by the Company for either issue.
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 (after
working capital adjustments) in February 2007 and 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 previously announced settlement of the Rutherford
litigation and environmental expenses related to a site of a divested
business. Discontinued Operations in the 2006 financial statements include
the results of operations of the Bio Businesses and the Cork and Landen
sites.
Third Quarter 2007 Operating Results - Continuing Operations
Third quarter 2007 Sales of $54.7 million were 2.3% higher than sales
in the third quarter 2006, and declined by 1.8% excluding the effect of
foreign currency. Comparing the current quarter to the same quarter last
year, excluding the currency impact, Cambrex experienced lower volumes of
certain generic APIs, for which sales were unusually high during the third
quarter 2006, and contractual price declines for a high-volume API. These
declines were partially offset by strong gains in sales of products based
on the Company's polymeric drug delivery technology.
Third quarter 2007 Gross Margin decreased to 33.8% of sales from 37.9%
of sales during the third quarter 2006 resulting primarily from unfavorable
product mix and the contractual price decline mentioned above related to a
high-volume API, partially offset by higher margins for proprietary
products. Foreign currency negatively impacted gross margin as a percentage
of sales by 1.4%.
Operating profit was $3.5 million in the third quarter of 2007 compared
to $2.7 million for the third quarter of 2006. Operating profit before
corporate expenses was $8.8 million, or 16.1% of sales, compared to $11.5
million, or 21.5% of sales, in the third quarter 2006 due to lower Gross
Margin and higher Operating Expenses. Foreign exchange decreased Operating
Profit by $0.4 million and Operating Margin (before corporate expenses) by
1.4% as a percentage of sales during the third quarter of 2007.
James A. Mack, Chairman, President, and Chief Executive Officer of
Cambrex Corporation, said "While certain core product lines were down more
than usual during our typically weaker third quarter, we experienced
continued momentum in products based on our polymeric drug delivery
technologies. We have added dedicated resources to expand the application
of our existing proprietary technologies and enhance our portfolio of
intellectual property. 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 put litigation related to the 2003
class action lawsuit and our former Baltimore site successfully behind us
with no cash outlays."
Third Quarter 2007 Operating, Interest and Tax Expenses - Continuing
Operations
Sales, General and Administrative ("SG&A") Expenses in the third
quarter 2007 were $10.7 million compared to $14.7 million in the same
period last year. The reduction is due to lower personnel-related expenses
at the corporate headquarters including salaries, pension and medical
benefits in addition to reductions in audit and legal fees compared to the
third quarter 2006. Within SG&A, corporate expenses in the third quarter of
2007 were $4.0 million compared to $8.6 million in the same period last
year. Strategic Alternative and Restructuring Costs were $1.3 million in
the third quarter 2007 and $0.2 million in the third quarter 2006.
Research and Development Expense for the third quarter 2007 was $3.1
million compared to $2.6 million in the third quarter 2006. Investment in
the growth and development of proprietary technology platforms, along with
higher depreciation costs of a new European R&D facility were the primary
factors for the increase.
Restructuring Expenses in the third quarter of 2007 of $0.5 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 third quarter of 2007 of $0.9 million
include change in control benefits, retention bonuses for continuing
employees, and costs for the modification of stock options related to the
special dividend paid on May 3, 2007. Strategic Alternative Costs for the
third quarter of 2006 were $0.2 million and consist of external advisor
costs related to divestitures.
Net Interest Expense in the third quarter of 2007 increased to $1.1
million from $0.1 million in the third quarter of 2006. The increase is
primarily due to the adjustment in 2006 results for GAAP-required
allocations of interest expense to Discontinued Operations.
Income taxes for the third quarter of 2007 include $1.5 million of
expense related to the recognition of certain tax attributes as a result of
the sale of the Bio Businesses. Additional tax impacts related to this
divestiture will be recognized within Continuing Operations during the
fourth quarter 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.
Third Quarter 2007 Capital Expenditures and Depreciation
Capital expenditures and depreciation for the third quarter 2007 were
$10.2 million and $4.9 million compared to $6.1 million and $5.0 million in
the third quarter 2006, respectively. The increase is largely due to
spending related to new API purification facility at the Milan facility and
capital improvements to existing facilities.
Guidance - Continuing Operations
Sales growth during 2007 and operating profit (excluding corporate
expenses) are both expected to fall within the lower end of our previously
communicated ranges of 5% to 10% and $50 to $55 million, respectively. The
Company has substantially completed its restructuring of the corporate cost
center and currently expects to achieve an annual corporate expense run
rate of between $16.0 and $17.0 million by the end of 2007.
For 2007, capital expenditures are currently expected to be
approximately $35 million, a $2 million increase versus prior guidance
driven by the impact of the Euro strengthening versus the US dollar, and
depreciation is expected to be approximately $21 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 third
quarter 2007 Form 10-Q is filed with the SEC.
Conference Call and Webcast
The Conference Call to discuss third quarter 2007 earnings will begin
at 8:30 a.m. Eastern Time on Friday, November 2, 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 19753206 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, November 9, 2007 by
calling 1-800-642-1687 for domestic and +1-706-645-9291 for international.
Please use the pass code 19753206 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 September 30, 2007 and 2006
(in thousands)
2007 2006
% of % of
Amount Sales Amount Sales
Gross Sales $54,742 100.0% $53,499 100.0%
Allowances and Rebates 227 0.4% 227 0.4%
Net Sales 54,515 99.6% 53,272 99.6%
Other Revenues 99 0.2% 218 0.4%
Net Revenues 54,614 99.8% 53,490 100.0%
Cost of Goods Sold 36,093 66.0% 33,238 62.1%
Gross Profit 18,521 33.8% 20,252 37.9%
Operating Expenses
Sales, General and
Administrative Expenses 10,669 19.5% 14,714 27.5%
Research and Development
Expenses 3,062 5.6% 2,623 4.9%
Restructuring Expenses 451 0.8% - 0.0%
Strategic Alternative Costs 866 1.6% 202 0.4%
Total Operating Expenses 15,048 27.5% 17,539 32.8%
Operating Profit 3,473 6.3% 2,713 5.1%
Other Expenses:
Interest Expense, net 1,069 2.0% 75 0.1%
Other Expenses, net 548 0.9% - 0.0%
Income Before Income Taxes 1,856 3.4% 2,638 5.0%
Provision for Income Taxes 4,592 8.4% 4,543 8.5%
Loss from Continuing Operations $(2,736) -5.0% $(1,905) -3.5%
Income/(Loss) from Discontinued
Operations, Net of Tax 4,229 7.7% (2,399) -4.5%
Net Income/(Loss) $1,493 2.7% $(4,304) -8.0%
Basic (Loss)/Earnings per Share
Loss from Continuing Operations $(0.09) $(0.07)
Income/(Loss) from Discontinued
Operations, Net of Tax $0.14 $(0.09)
Net Income/(Loss) $0.05 $(0.16)
Diluted (Loss)/Earnings per Share
Loss from Continuing Operations $(0.09) $(0.07)
Income/(Loss) from Discontinued
Operations, Net of Tax $0.14 $(0.09)
Net Income/(Loss) $0.05 $(0.16)
Weighted Average Shares Outstanding
Basic 28,934 26,752
Diluted 28,934 26,752
CAMBREX CORPORATION
Statement of Profit and Loss
For the Nine Months Ended September 30, 2007 and 2006
(in thousands)
2007 2006
% of % of
Amount Sales Amount Sales
Gross Sales $182,820 100.0% $170,650 100.0%
Commissions and Allowances 1,001 0.5% 897 0.5%
Net Sales 181,819 99.5% 169,753 99.5%
Other Revenues 864 0.4% (834) -0.5%
Net Revenue 182,683 99.9% 168,919 99.0%
Cost of Sales 115,829 63.3% 107,142 62.8%
Gross Profit 66,854 36.6% 61,777 36.2%
Operating Expenses
Sales, General and Administrative
Expenses 36,572 20.0% 42,202 24.7%
Research and Development Expenses 8,623 4.7% 8,062 4.7%
Restructuring Expenses 4,034 2.2% - 0.0%
Strategic Alternative Costs 28,560 15.7% 2,232 1.4%
Total Operating Expenses 77,789 42.6% 52,496 30.8%
Operating (Loss)/Profit (10,935) -6.0% 9,281 5.4%
Other (Income)/Expenses:
Interest (Income)/Expense, net (1,341) -0.7% 5,641 3.3%
Other Expenses, net 930 0.5% 130 0.1%
(Loss)/Income Before Income Taxes (10,524) -5.8% 3,510 2.0%
Provision for Income Taxes 4,200 2.3% 10,467 6.0%
Loss from Continuing Operations $(14,724) -8.1% $(6,957) -4.0%
Income from Discontinued
Operations, Net of Tax 223,707 122.4% 2,452 1.4%
Income/(Loss) Before Cumulative Effect
of a Change in Accounting Principle 208,983 114.3% (4,505) -2.6%
Cumulative Effect of a Change in
Accounting Principle - 0.0% (228) -0.2%
Net Income/(Loss) $208,983 114.3% $(4,733) -2.8%
Basic (Loss)/Earnings per Share
Loss from Continuing Operations $(0.52) $(0.26)
Income from Discontinued
Operations, Net of Tax $7.83 $0.09
Cumulative Effect of a Change in
Accounting Principle $- $(0.01)
Net Income/(Loss) $7.31 $(0.18)
Diluted (Loss)/Earnings per Share
Loss from Continuing Operations $(0.52) $(0.26)
Income from Discontinued
Operations, Net of Tax $7.83 $0.09
Cumulative Effect of a Change in
Accounting Principle $- $(0.01)
Net Income/(Loss) $7.31 $(0.18)
Weighted Average Shares Outstanding
Basic 28,575 26,718
Diluted 28,575 26,718
CAMBREX CORPORATION
Gross Sales, Gross Profit & Operating Profit by Segment
For the Quarters and Nine Months Ended September 30, 2007 and 2006
(in thousands)
Third Quarter 2007
Operating
Gross Gross Profit/
Sales Profit GP% (Loss) OP%
Pre-Corporate Operating
Results $54,742 $18,521 33.8% $8,792 16.1%
Corporate Operating Results - - (4,002)
Restructuring Expenses - - (451)
Strategic Alternative Costs - - (866)
Total Cambrex $54,742 $18,521 33.8% $3,473 6.3%
Third Quarter 2006
Operating
Gross Gross Profit/
Sales Profit GP% (Loss) OP%
Pre-Corporate Operating
Results $53,499 $20,252 37.9% $11,502 21.5%
Corporate Operating Results - - (8,587)
Strategic Alternative Costs - - (202)
Total Cambrex $53,499 $20,252 37.9% $2,713 5.1%
Nine Months 2007
Operating
Gross Gross Profit/
Sales Profit GP% (Loss) OP%
Pre-Corporate Operating
Results $182,820 $66,854 36.6% $37,708 20.6%
Corporate Operating Results - - (16,124)
Restructuring Expenses - - (4,034)
Strategic Alternative Costs* - - (28,485)
Total Cambrex $182,820 $66,854 36.6% $(10,935) -6.0%
Nine Months 2006
Operating
Gross Gross Profit/
Sales Profit GP% (Loss) OP%
Pre-Corporate Operating
Results $170,650 $61,777 36.2% $36,307 21.3%
Corporate Operating Results - - (24,794)
Strategic Alternative Costs - - (2,232)
Total Cambrex $170,650 $61,777 36.2% $9,281 5.4%
* Strategic Alternative Costs of $75 are included within the Pre-Corporate
Operating Results.
CAMBREX CORPORATION
Consolidated Balance Sheet
As of September 30, 2007 and December 31, 2006
(in thousands)
September 30, December 31,
Assets 2007 2006
Cash and Cash Equivalents $44,585 $33,746
Trade Receivables, net 30,598 38,552
Inventories, net 61,881 53,893
Assets of Discontinued Operations - 79,383
Prepaid Expenses and Other Current
Assets 19,969 19,176
Total Current Assets 157,033 224,750
Property, Plant and Equipment, Net 156,622 141,863
Goodwill 34,512 32,573
Assets of Discontinued Operations - 202,292
Other Non-Current Assets 7,484 4,898
Total Assets $355,651 $606,376
Liabilities and Stockholders' Equity
Accounts Payable $24,780 $28,592
Accrued Expenses and Other Current
Liabilities 64,499 45,141
Liabilities of Discontinued
Operations - 33,401
Total Current Liabilities 89,279 107,134
Long-term Debt 97,200 158,600
Deferred Income Tax 20,318 14,268
Liabilities of Discontinued
Operations - 24,208
Accrued Pension and Postretirement
Benefits 38,795 39,911
Other Non-Current Liabilities 19,406 15,609
Total Liabilities $264,998 $359,730
Stockholders' Equity $90,653 $246,646
Total Liabilities and Stockholders'
Equity $355,651 $606,376
SOURCE Cambrex Corporation
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Related links:
http://www.cambrex.com/
Photo Notes:
NewsCom: http://www.newscom.com/cgi-bin/prnh/20000613/CAMBREXLOGO
AP Archive: http://photoarchive.ap.org
PRN Photo Desk, photodesk@prnewswire.com
http://www.prnewswire.com/comp/134219.html/
CONTACT:
Gregory P. Sargen, Vice President & CFO of
Cambrex, +1-201-804-3055, or gregory.sargen@cambrex.com
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