Cambrex Reports Second Quarter of 2011 Results

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



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