Cambrex Reports Second Quarter of 2011 Results

02 Aug, 2011, 16:20 ET from Cambrex Corporation

EAST RUTHERFORD, N.J., Aug. 2, 2011 /PRNewswire/ -- Cambrex Corporation (NYSE: CBM) reports second quarter results for the period ended June 30, 2011.

Highlights

  • Reported sales increased by 17.6%, and excluding the impact of foreign currency, sales increased 6.9% compared to the second quarter of 2010.
  • EBITDA was $13.2 million in the second quarter of 2011, an increase of 8.6% compared to $12.1 million in the second quarter of 2010.
  • Debt, net of cash was $75.5 million at the end of the second quarter of 2011, an improvement of $7.1 million during the quarter which includes a positive $0.4 million currency impact on foreign cash balances.

Second Quarter of 2011 Operating Results – Continuing Operations

Sales in the second quarter of 2011 of $67.5 million were 17.6% higher than the second quarter of 2010. Excluding a 10.7% favorable impact of foreign exchange, reflecting a weaker U.S. dollar, sales increased 6.9%.  The increase is primarily due to higher sales of certain larger custom manufacturing products and higher volumes of generic APIs.  These increases were partially offset by the timing of orders for certain products, lower custom development revenues and lower pricing across several product categories.  

Second quarter of 2011 Gross Margin decreased to 28.2% from 31.2% during the second quarter of 2010, with foreign currency unfavorably impacting gross margin by 2.3% in the second quarter of 2011.  Gross margins were negatively impacted by lower pricing partially offset by higher sales and production volumes and lower production costs.  

Selling, General and Administrative Expenses in the second quarter of 2011 were $9.2 million compared to $8.2 million in the same period last year.  The increase is primarily due to unfavorable foreign exchange.

Research and Development ("R&D") Expenses decreased to $2.6 million in the second quarter of 2011 from $2.8 million in the second quarter of 2010.

Operating Profit increased to $7.3 million in the second quarter of 2011 from $6.9 million in the second quarter of 2010.  The increase in Operating Profit was driven primarily by higher sales volumes and lower production costs partially offset by lower pricing and unfavorable foreign exchange.

Net Interest Expense decreased to $0.6 million in the second quarter of 2011 from $1.2 million in the second quarter of 2010.  This decrease is primarily due to the maturing of the Company's higher fixed interest rate swaps in October 2010.

The Provision for Income Taxes totaled $1.9 million in the second quarter of 2011.  The Company's effective tax rate has been and is expected to remain highly sensitive to the geographic mix of income due to the Company's inability to recognize tax benefits where there has been a recent history of losses, primarily in the U.S.

Income from continuing operations for the second quarter of 2011 was $4.8 million or $0.16 per share compared to $3.7 million or $0.12 per share in the second quarter of 2010.

Capital expenditures and depreciation for the second quarter of 2011 were $3.0 million and $5.8 million compared to $2.4 million and $5.2 million in the second quarter of 2010, respectively.

Steven M. Klosk, President and Chief Executive Officer, said, "We are pleased with our second quarter and year to date performance with sales volumes significantly higher year over year.  Similar to the first quarter, we saw increases in revenues for some of our larger custom manufacturing products and continued strong orders for our generic APIs.  Although profit margins were negatively impacted by foreign exchange, tiered pricing arrangements and production inefficiencies at one of our plants, a continued focus on cost reductions helped mitigate those impacts and contributed to our strong cash flow in the quarter."

Guidance – Continuing Operations

The Company continues to expect that sales for 2011, excluding the impact of foreign currency, will increase between 3% and 7% versus 2010, and that full year 2011 EBITDA will be between $43 and $49 million.  EBITDA guidance is for continuing operations and excludes the impact of any M&A or restructuring activities.  The above guidance does not reflect Cambrex Zenara, which is accounted for using the equity method, and as such is not consolidated into the Company's results.  Cambrex's income statement reflects 51% of Cambrex Zenara's net results as Equity in Losses of Partially-Owned Affiliate.  For 2011, the Company continues to expect Cambrex Zenara to have revenues in the low to mid single digit millions and a small EBITDA loss.

Capital expenditures are expected to be approximately $14 to $17 million and depreciation is now expected to be $22 to $24 million in 2011, a $1 million increase over prior guidance due to foreign exchange.

The financial information contained in this press release is unaudited, subject to revision and should not be considered final until the Company's second quarter 2011 Form 10-Q is filed with the SEC.

Conference Call and Webcast

The Conference Call to discuss second quarter of 2011 results will begin at 8:30 a.m. Eastern Time on Wednesday, August 3, 2011 and last approximately 45 minutes.  Those wishing to participate should call 1-888-471-3840 for domestic and +1-719-457-2647 for international.  Please use the pass code 1438939 and call approximately 10 minutes prior to start time.  A webcast is available from the Investors section on the Cambrex website located at www.cambrex.com and can be accessed for 30 days following the conference call.  A telephone replay of the conference call will be available through Wednesday, August 10, 2011 by calling 1-888-203-1112 for domestic and +1-719-457-0820 for international.  Please use the pass code 1438939 to access the replay.  

Forward Looking Statements

This document may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding expected performance, especially expectations with respect to sales, gross margins, operating expenses, earnings per share, cash flows, capital expenditures, acquisitions, divestitures, collaborations, or other expansion opportunities.  These statements may be identified by the fact that they use words such as "expects," "anticipates," "intends," "estimates," "believes" or similar expressions.  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.  The factors described in Item 1A of Part I of the Company's Annual Report on Form 10-K for the period ended December 31, 2010, captioned "Risk Factors," or otherwise described in the Company's filings with the Securities and Exchange Commission, as well as any cautionary language in the Company's Annual Report on Form 10-K for the period ended December 31, 2010, provide examples of such risks and uncertainties that may cause the Company's actual results to differ materially from the expectations the Company describes in its forward-looking statements, including but not limited to, pharmaceutical outsourcing trends, competitive pricing or product developments, government legislation and 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, uncollectable receivables, loss on disposition of assets, cancellation or delays in renewal of contracts, lack of suitable raw materials or packaging materials, and the Company's ability to receive regulatory approvals for its products.

For further details and a discussion of these and other risks and uncertainties, investors are cautioned to review the Cambrex 2010 Annual Report on Form 10-K, including the Forward-Looking Statement section therein, and other filings with the U.S. Securities and Exchange Commission.  

About Cambrex

Cambrex Corporation is an innovative life sciences company that provides products, services and technologies to accelerate the development and commercialization of small molecule therapeutics.  We offer Active Pharmaceutical Ingredients ("APIs"), advanced intermediates and enhanced drug delivery products for branded and generic pharmaceuticals. Our development and manufacturing capabilities include enzymatic biotransformations, high potency APIs, high energy chemical synthesis, controlled substances and formulation of finished dosage form products.  For more information, please visit www.cambrex.com.  

CAMBREX CORPORATION

Statements of Profit and Loss

For the Quarters Ended June 30, 2011 and 2010

(in thousands)

2011

2010

% of

% of

Amount

Sales

Amount

Sales

Gross Sales

$

67,484

$

57,403

    Commissions, Allowances and Rebates

523

376

Net Sales

66,961

57,027

    Other

1,421

1,190

Net Revenues

68,382

58,217

    Cost of Goods Sold

49,325

73.1%

40,284

70.2%

Gross Profit

19,057

28.2%

17,933

31.2%

Operating Expenses

    Selling, General and Administrative Expenses

9,191

13.6%

8,184

14.3%

    Research and Development Expenses

2,572

3.8%

2,841

4.9%

Total Operating Expenses

11,763

17.4%

11,025

19.2%

Operating Profit

7,294

10.8%

6,908

12.0%

Other Expenses/(Income):

    Interest Expense, net

605

1,171

    Other (Income)/Expenses, net

(282)

14

    Equity in Losses of Partially-Owned Affiliate

303

-

Income Before Income Taxes

6,668

9.9%

5,723

10.0%

    Provision for Income Taxes

1,911

2,057

Income from Continuing Operations

$

4,757

7.0%

$

3,666

6.4%

Income  from Discontinued Operations, Net of Tax

-

1,105

Net Income

$

4,757

7.0%

$

4,771

8.3%

Basic Earnings per Share of Common Stock:

  Income from Continuing Operations

$

0.16

$

0.12

  Income from Discontinued Operations, Net of Tax

$

-

$

0.04

  Net Income

$

0.16

$

0.16

Diluted Earnings per Share of Common Stock:

  Income from Continuing Operations

$

0.16

$

0.12

  Income from Discontinued Operations, Net of Tax

$

-

$

0.04

  Net Income

$

0.16

$

0.16

Weighted Average Shares Outstanding

    Basic

29,419

29,333

    Diluted

29,493

29,404

CAMBREX CORPORATION

Statements of Profit and Loss

For the Six Months Ended June 30, 2011 and 2010

(in thousands)

2011

2010

% of

% of

Amount

Sales

Amount

Sales

Gross Sales

$

129,138

$

113,558

    Commissions, Allowances and Rebates

814

712

Net Sales

128,324

112,846

    Other

643

1,464

Net Revenues

128,967

114,310

    Cost of Goods Sold

92,455

71.6%

81,884

72.1%

Gross Profit

36,512

28.3%

32,426

28.6%

Operating Expenses

    Selling, General and Administrative Expenses

18,279

14.1%

16,980

15.0%

    Research and Development Expenses

5,632

4.4%

4,826

4.2%

Total Operating Expenses

23,911

18.5%

21,806

19.2%

Operating Profit

12,601

9.8%

10,620

9.4%

Other Expenses/(Income):

    Interest Expense, net

1,178

2,369

    Other (Income)/Expenses, net

(285)

17

    Equity in Losses of Partially-Owned Affiliate

667

-

Income Before Income Taxes

11,041

8.5%

8,234

7.3%

    Provision for Income Taxes

3,429

2,885

Income from Continuing Operations

$

7,612

5.9%

$

5,349

4.7%

(Loss)/Income  from Discontinued Operations, Net of Tax

(146)

1,105

Net Income

$

7,466

5.8%

$

6,454

5.7%

Basic Earnings/(Loss) per Share of Common Stock:

  Income from Continuing Operations

$

    0.26

$

    0.18

  (Loss)/Income from Discontinued Operations, Net of Tax

$

  (0.01)

$

    0.04

  Net Income

$

    0.25

$

    0.22

Diluted Earnings/(Loss) per Share of Common Stock:

  Income from Continuing Operations

$

    0.26

$

    0.18

  (Loss)/Income from Discontinued Operations, Net of Tax

$

  (0.01)

$

    0.04

  Net Income

$

    0.25

$

    0.22

Weighted Average Shares Outstanding

    Basic

29,433

29,324

    Diluted

29,490

29,402

CAMBREX CORPORATION

Consolidated Balance Sheets

As of June 30, 2011 and December 31, 2010

(in thousands)

June 30,

December 31,

Assets

2011

2010

Cash and Cash Equivalents

$

40,911

$

29,614

Trade Receivables, net

38,273

39,025

Inventories, net

67,961

61,408

Prepaid Expenses and Other Current Assets

7,891

5,082

 Total Current Assets

155,036

135,129

Property, Plant and Equipment, net

152,057

150,483

Goodwill

40,177

37,694

Intangible Assets, net

4,898

4,687

Investment in Partially-Owned Affiliate

18,878

19,709

Other Non-Current Assets

2,994

4,049

 Total Assets

$

374,040

$

351,751

Liabilities and Stockholders' Equity

Accounts Payable

$

19,619

$

19,480

Accrued Expenses and Other Current Liabilities

36,926

33,503

Current Portion of Long-term Debt

116,400

-

 Total Current Liabilities

172,945

52,983

Long-term Debt

-

115,900

Deferred Income Taxes

18,790

17,893

Accrued Pension and Postretirement Benefits

40,206

43,921

Other Non-Current Liabilities

13,332

13,419

 Total Liabilities

$

245,273

$

244,116

 Stockholders’ Equity

$

128,767

$

107,635

 Total Liabilities and Stockholders’ Equity

$

374,040

$

351,751

CAMBREX CORPORATION

Reconciliation of EBITDA

For the Quarters and Six Months Ended June 30, 2011 and 2010

(in thousands)

Second Quarter 2011

Second Quarter 2010

Operating Profit

$

7,294

$

6,908

Depreciation and Amortization

5,878

5,226

EBITDA

$

13,172

$

12,134

Six Months 2011

Six Months 2010

Operating Profit

$

12,601

$

10,620

Depreciation and Amortization

11,603

10,610

EBITDA

$

24,204

$

21,230

SOURCE Cambrex Corporation



RELATED LINKS

http://www.cambrex.com