| Date: | February 6, 2012 |
| Contact: | Gregory P. Sargen |
| | Executive Vice President & CFO |
| Phone: | 201-804-3055 |
| Email: | gregory.sargen@cambrex.com |
| Release: | Immediate |
CAMBREX REPORTS FOURTH QUARTER AND FULL YEAR 2011 RESULTS
East Rutherford, NJ – February 6, 2012 – Cambrex Corporation (NYSE: CBM) reports fourth quarter and full year results for the period ended December 31, 2011.
Highlights
| | ● | Reported sales increased by 5.7%, and excluding the impact of foreign currency, sales increased 5.8% compared to the fourth quarter of 2010. Full year sales increased by 12.4% and increased 7.6% excluding the impact of foreign currency. |
| | ● | EBITDA was $11.6 million in the quarter, compared to Adjusted EBITDA of $14.5 million in the fourth quarter of 2010. Full year EBITDA was $46.9 million compared to Adjusted EBITDA of $44.4 million in 2010. |
| | ● | Debt, net of cash was $66.1 million at the end of the quarter, an improvement of $3.2 million during the quarter which includes a negative $0.6 million currency impact on foreign cash balances. Debt, net of cash, improved $20.2 million for the full year 2011. |
| | ● | 2012 sales are expected to increase 2% to 6%, excluding the impact of foreign currency, and EBITDA is expected to be $47 to $53 million (see Guidance section of this release). |
Basis of Reporting
The Company has provided a reconciliation from GAAP amounts to adjusted amounts at the end of this press release. Management believes that the adjusted amounts provide a more meaningful representation of the Company’s operating results for the periods presented due to the magnitude and nature of certain expenses recorded.
Fourth Quarter of 2011 Operating Results – Continuing Operations
Sales in the fourth quarter of 2011 of $67.1 million were 5.7% higher than the fourth quarter of 2010. Foreign exchange unfavorably impacted sales by 0.1%. The increase is primarily due to increased demand for an API manufactured under a long-term supply agreement, a recently approved innovator product, higher sales of generic APIs, and higher volumes of controlled substances and products utilizing the Company’s drug delivery technology. These increases were partially offset by lower sales of a product that was discontinued by a customer of the Company in December 2010, lower pricing across several product categories and lower revenue from clinical phase products.
Cambrex Corporation | One Meadowlands Plaza | East Rutherford, NJ 07073
Phone 201.804.3000 | Fax 201.804.9852 | www.cambrex.com
Gross margins in the fourth quarter of 2011 decreased to 29.4% from 32.0% in the fourth quarter of 2010. Excluding an unfavorable impact from foreign currency, fourth-quarter 2011 margins decreased to 30.0%. The decline in currency adjusted gross margins was a result of the benefits in the fourth quarter of 2010 for insurance proceeds related to a business interruption claim and fees related to the cancellation of a supply contract, and the impact in the fourth quarter of 2011 of lower pricing and unfavorable product mix partially offset by plant efficiencies gained from higher production volumes.
Selling, General and Administrative (“SG&A”) Expenses in the fourth quarter of 2011 were $11.1 million compared to $9.2 million in the same period last year. The increase is primarily due to increased personnel costs at several sites and within the Company’s sales and marketing group.
Operating Profit decreased to $5.8 million in the fourth quarter of 2011 from $8.4 million in the fourth quarter of 2010. Operating Profit in the fourth quarter of 2011 decreased $2.9 million compared to Adjusted Operating Profit for the same period in 2010.
Equity in Losses of Partially-Owned Affiliate of $0.5 million in the fourth quarter of 2011 represents the Company’s share of losses in Zenara Pharma, a pharmaceutical company focused on the formulation of finished dosage form products. Cambrex acquired a 51% stake in Zenara during the fourth quarter of 2010. The Company’s share of Zenara’s losses includes $0.3 million of amortization and depreciation expense.
Net Interest Expense decreased to $0.6 million in the fourth quarter of 2011 from $0.8 million in the fourth quarter of 2010. This decrease is primarily due to the maturing of the Company’s fixed interest rate swaps in October 2010.
The Provision for Income Taxes totaled $1.5 million and resulted in an effective tax rate of 33.8% in the fourth 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 fourth quarter of 2011 was $3.0 million or $0.10 per share compared to $5.2 million or $0.18 per share in the fourth quarter of 2010.
Capital expenditures and depreciation for the fourth quarter of 2011 were $5.6 million and $5.7 million compared to $4.1 million and $5.8 million in the fourth quarter of 2010, respectively.
Cambrex Corporation | One Meadowlands Plaza | East Rutherford, NJ 07073
Phone 201.804.3000 | Fax 201.804.9852 | www.cambrex.com
Steven M. Klosk, President and Chief Executive Officer, said, “We are pleased with our growth in revenues and operating profit in 2011. Increased revenues came from virtually all areas of the business including custom manufacturing, drug delivery, controlled substances and generic APIs. We generated cash flow during 2011 that allowed the Company to reduce net debt by just over $20 million which, combined with our new $250 million revolving credit facility, provides us ample capacity to invest strategically in the business. We continue to focus on developing new products as the key to our organic growth going forward.”
Guidance – Continuing Operations
The Company currently expects that full year 2012 sales, excluding the impact of foreign currency, will increase between 2% and 6% versus 2011, and that full year 2012 EBITDA, defined as operating profit plus depreciation and amortization expense, will be between $47 and $53 million. EBITDA guidance is for continuing operations and excludes the impact of any M&A or restructuring activities. The above guidance does not reflect 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 Zenara’s net results as Equity in Losses of Partially-Owned Affiliate. For 2012, the Company expects Zenara to have revenues in the mid single digit millions and a small EBITDA profit.
Capital expenditures are expected to be approximately $15 to $18 million and depreciation is expected to be $21 to $23 million in 2012.
The financial information contained in this press release is unaudited, subject to revision and should not be considered final until the Company’s 2011 Form 10-K is filed with the SEC.
Conference Call and Webcast
The Conference Call to discuss fourth quarter and full year 2011 results will begin at 8:30 a.m. Eastern Time on Tuesday, February 7, 2012 and last approximately 45 minutes. Those wishing to participate should call 1-866-719-0110 for domestic and +1-719-457-2697 for international. Please use the pass code 4461870 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 Tuesday, February 14, 2012 by calling 1-888-203-1112 for domestic and +1-719-457-0820 for international. Please use the pass code 4461870 to access the replay.
Cambrex Corporation | One Meadowlands Plaza | East Rutherford, NJ 07073
Phone 201.804.3000 | Fax 201.804.9852 | www.cambrex.com
Forward Looking Statements
This document contains “forward-looking statements,” including statements regarding expected performance, especially those set forth under the heading “Guidance – Continuing Operations,” including the Company’s expectation that full year 2012 sales, excluding the impact of foreign currency, will increase between 2% and 6% versus 2011, that full year 2012 EBITDA will be between $47 and $53 million, that Zenara will have revenues in the mid single digit millions and a small EBITDA profit, that capital expenditures will be approximately $15 to $18 million and that depreciation will be $21 to $23 million in 2012. 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.
For further details and a discussion of these and other risks and uncertainties, investors are encouraged to review the Cambrex Annual Report on Form 10-K for the fiscal year ended December 31, 2010 and, when it becomes available, for the fiscal year ended December 31, 2011, including the Forward-Looking Statement sections 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 | One Meadowlands Plaza | East Rutherford, NJ 07073
Phone 201.804.3000 | Fax 201.804.9852 | www.cambrex.com
CAMBREX CORPORATIONStatements of Profit and LossFor the Quarters Ended December 31, 2011 and 2010(in thousands, except per-share data)
| | | 2011 | | | 2010 | |
| | | Amount | | | | | | Amount | | | | |
| | | | | | | | | | | | | |
| Gross Sales | | $ | 67,134 | | | | | | $ | 63,522 | | | | |
| Commissions, Allowances and Rebates | | | 550 | | | | | | | 341 | | | | |
| Net Sales | | | 66,584 | | | | | | | 63,181 | | | | |
| | | | | | | | | | | | | | | |
| Other | | | 947 | | | | | | | 1,727 | | | | |
| | | | | | | | | | | | | | | |
| Net Revenues | | | 67,531 | | | | | | | 64,908 | | | | |
| | | | | | | | | | | | | | | |
| Cost of Goods Sold | | | 47,788 | | | | 71.2 | % | | | 44,578 | | | | 70.2 | % |
| | | | | | | | | | | | | | | | | |
| Gross Profit | | | 19,743 | | | | 29.4 | % | | | 20,330 | | | | 32.0 | % |
| | | | | | | | | | | | | | | | | |
| Operating Expenses | | | | | | | | | | | | | | | | |
| Selling, General and Administrative Expenses | | | 11,130 | | | | 16.6 | % | | | 9,240 | | | | 14.5 | % |
| Research and Development Expenses | | | 2,790 | | | | 4.2 | % | | | 2,399 | | | | 3.8 | % |
| Restructuring Expenses | | | - | | | | - | | | | 106 | | | | 0.2 | % |
| Merger and Acquisition Expenses | | | - | | | | - | | | | 211 | | | | 0.3 | % |
| Total Operating Expenses | | | 13,920 | | | | 20.7 | % | | | 11,956 | | | | 18.8 | % |
| | | | | | | | | | | | | | | | | |
| Operating Profit | | | 5,823 | | | | 8.7 | % | | | 8,374 | | | | 13.2 | % |
| | | | | | | | | | | | | | | | | |
| Other Expenses: | | | | | | | | | | | | | | | | |
| Interest Expense, net | | | 631 | | | | | | | | 789 | | | | | |
| Other Expenses, net | | | 160 | | | | | | | | 527 | | | | | |
| Equity in Losses of Partially-Owned Affiliate | | | 457 | | | | | | | | 286 | | | | | |
| | | | | | | | | | | | | | | | | |
| Income Before Income Taxes | | | 4,575 | | | | 6.8 | % | | | 6,772 | | | | 10.7 | % |
| | | | | | | | | | | | | | | | | |
| Provision for Income Taxes | | | 1,546 | | | | | | | | 1,528 | | | | | |
| | | | | | | | | | | | | | | | | |
| Income from Continuing Operations | | $ | 3,029 | | | | 4.5 | % | | $ | 5,244 | | | | 8.3 | % |
| | | | | | | | | | | | | | | | | |
| Loss from Discontinued Operations, Net of Tax | | | (2,288 | ) | | | | | | | (597 | ) | | | | |
| | | | | | | | | | | | | | | | | |
| Net Income | | $ | 741 | | | | 1.1 | % | | $ | 4,647 | | | | 7.3 | % |
| | | | | | | | | | | | | | | | | |
| Basic Earnings/(Loss) per Share of Common Stock: | | | | | | | | | | | | | | | | |
| Income from Continuing Operations | | $ | 0.10 | | | | | | | $ | 0.18 | | | | | |
| Loss from Discontinued Operations, Net of Tax | | $ | (0.07 | ) | | | | | | $ | (0.02 | ) | | | | |
| Net Income | | $ | 0.03 | | | | | | | $ | 0.16 | | | | | |
| | | | | | | | | | | | | | | | | |
| Diluted Earnings/(Loss) per Share of Common Stock: | | | | | | | | | | | | | | | | |
| Income from Continuing Operations | | $ | 0.10 | | | | | | | $ | 0.18 | | | | | |
| Loss from Discontinued Operations, Net of Tax | | $ | (0.08 | ) | | | | | | $ | (0.02 | ) | | | | |
| Net Income | | $ | 0.02 | | | | | | | $ | 0.16 | | | | | |
| | | | | | | | | | | | | | | | | |
| Weighted Average Shares Outstanding | | | | | | | | | | | | | | | | |
| Basic | | | 29,520 | | | | | | | | 29,420 | | | | | |
| Diluted | | | 29,711 | | | | | | | | 29,489 | | | | | |
Cambrex Corporation | One Meadowlands Plaza | East Rutherford, NJ 07073
Phone 201.804.3000 | Fax 201.804.9852 | www.cambrex.com
CAMBREX CORPORATIONStatements of Profit and LossFor the Twelve Months Ended December 31, 2011 and 2010(in thousands, except per-share data)
| | | 2011 | | | 2010 | |
| | | Amount | | | | | | Amount | | | | |
| | | | | | | | | | | | | |
| Gross Sales | | $ | 254,475 | | | | | | $ | 226,436 | | | | |
| Commissions, Allowances and Rebates | | | 1,776 | | | | | | | 1,545 | | | | |
| Net Sales | | | 252,699 | | | | | | | 224,891 | | | | |
| | | | | | | | | | | | | | | |
| Other | | | 2,954 | | | | | | | 2,101 | | | | |
| | | | | | | | | | | | | | | |
| Net Revenues | | | 255,653 | | | | | | | 226,992 | | | | |
| | | | | | | | | | | | | | | |
| Cost of Goods Sold | | | 181,569 | | | | 71.4 | % | | | 160,126 | | | | 70.7 | % |
| | | | | | | | | | | | | | | | | |
| Gross Profit | | | 74,084 | | | | 29.1 | % | | | 66,866 | | | | 29.5 | % |
| | | | | | | | | | | | | | | | | |
| Operating Expenses | | | | | | | | | | | | | | | | |
| Selling, General and Administrative Expenses | | | 39,227 | | | | 15.4 | % | | | 34,024 | | | | 15.0 | % |
| Research and Development Expenses | | | 11,037 | | | | 4.3 | % | | | 10,305 | | | | 4.6 | % |
| Restructuring Expenses | | | - | | | | - | | | | 1,293 | | | | 0.6 | % |
| Merger and Acquisition Expenses | | | - | | | | - | | | | 997 | | | | 0.4 | % |
| Total Operating Expenses | | | 50,264 | | | | 19.8 | % | | | 46,619 | | | | 20.6 | % |
| | | | | | | | | | | | | | | | | |
| Operating Profit | | | 23,820 | | | | 9.4 | % | | | 20,247 | | | | 8.9 | % |
| | | | | | | | | | | | | | | | | |
| Other Expenses/(Income): | | | | | | | | | | | | | | | | |
| Interest Expense, net | | | 2,373 | | | | | | | | 4,391 | | | | | |
| Other (Income)/Expenses, net | | | (111 | ) | | | | | | | 596 | | | | | |
| Equity in Losses of Partially-Owned Affiliate | | | 1,621 | | | | | | | | 286 | | | | | |
| | | | | | | | | | | | | | | | | |
| Income Before Income Taxes | | | 19,937 | | | | 7.8 | % | | | 14,974 | | | | 6.6 | % |
| | | | | | | | | | | | | | | | | |
| Provision for Income Taxes | | | 6,202 | | | | | | | | 5,665 | | | | | |
| | | | | | | | | | | | | | | | | |
| Income from Continuing Operations | | $ | 13,735 | | | | 5.4 | % | | $ | 9,309 | | | | 4.1 | % |
| | | | | | | | | | | | | | | | | |
| (Loss)/Income from Discontinued Operations, Net of Tax | | | (2,767 | ) | | | | | | | 338 | | | | | |
| | | | | | | | | | | | | | | | | |
| Net Income | | $ | 10,968 | | | | 4.3 | % | | $ | 9,647 | | | | 4.3 | % |
| | | | | | | | | | | | | | | | | |
| Basic Earnings/(Loss) per Share of Common Stock: | | | | | | | | | | | | | | | | |
| Income from Continuing Operations | | $ | 0.46 | | | | | | | $ | 0.32 | | | | | |
| (Loss)/Income from Discontinued Operations, Net of Tax | | $ | (0.09 | ) | | | | | | $ | 0.01 | | | | | |
| Net Income | | $ | 0.37 | | | | | | | $ | 0.33 | | | | | |
| | | | | | | | | | | | | | | | | |
| Diluted Earnings/(Loss) per Share of Common Stock: | | | | | | | | | | | | | | | | |
| Income from Continuing Operations | | $ | 0.46 | | | | | | | $ | 0.32 | | | | | |
| (Loss)/Income from Discontinued Operations, Net of Tax | | $ | (0.09 | ) | | | | | | $ | 0.01 | | | | | |
| Net Income | | $ | 0.37 | | | | | | | $ | 0.33 | | | | | |
| | | | | | | | | | | | | | | | | |
| Weighted Average Shares Outstanding | | | | | | | | | | | | | | | | |
| Basic | | | 29,468 | | | | | | | | 29,361 | | | | | |
| Diluted | | | 29,564 | | | | | | | | 29,468 | | | | | |
Cambrex Corporation | One Meadowlands Plaza | East Rutherford, NJ 07073
Phone 201.804.3000 | Fax 201.804.9852 | www.cambrex.com
CAMBREX CORPORATION
Consolidated Balance SheetsAs of December 31, 2011 and 2010(in thousands)
| Assets | | | | | | |
| | | | | | | |
| Cash and Cash Equivalents | | $ | 31,921 | | | $ | 29,614 | |
| Trade Receivables, net | | | 36,510 | | | | 39,025 | |
| Inventories, net | | | 62,095 | | | | 61,408 | |
| Prepaid Expenses and Other Current Assets | | | 6,083 | | | | 5,082 | |
| Total Current Assets | | | 136,609 | | | | 135,129 | |
| | | | | | | | | |
| Property, Plant and Equipment, net | | | 139,628 | | | | 150,483 | |
| Goodwill | | | 36,731 | | | | 37,694 | |
| Intangible Assets, net | | | 4,261 | | | | 4,687 | |
| Investment in Partially-Owned Affiliate | | | 15,090 | | | | 19,709 | |
| Other Non-Current Assets | | | 3,425 | | | | 4,049 | |
| | | | | | | | | |
| Total Assets | | $ | 335,744 | | | $ | 351,751 | |
| | | | | | | | | |
| Liabilities and Stockholders' Equity | | | | | | | | |
| | | | | | | | | |
| Accounts Payable | | $ | 21,200 | | | $ | 19,480 | |
| Accrued Expenses and Other Current Liabilities | | | 37,933 | | | | 33,503 | |
| Total Current Liabilities | | | 59,133 | | | | 52,983 | |
| | | | | | | | | |
| Long-term Debt | | | 98,000 | | | | 115,900 | |
| Deferred Income Taxes | | | 16,243 | | | | 17,893 | |
| Accrued Pension and Postretirement Benefits | | | 52,089 | | | | 43,921 | |
| Other Non-Current Liabilities | | | 9,938 | | | | 13,419 | |
| | | | | | | | | |
| Total Liabilities | | $ | 235,403 | | | $ | 244,116 | |
| | | | | | | | | |
| Stockholders’ Equity | | $ | 100,341 | | | $ | 107,635 | |
| | | | | | | | | |
| Total Liabilities and Stockholders’ Equity | | $ | 335,744 | | | $ | 351,751 | |
Cambrex Corporation | One Meadowlands Plaza | East Rutherford, NJ 07073
Phone 201.804.3000 | Fax 201.804.9852 | www.cambrex.com
CAMBREX CORPORATION
Reconciliation of GAAP to non-GAAP Results
For the Quarters and Twelve Months Ended December 30, 2011 and 2010
(in thousands)
| | | Fourth Quarter 2011 | | | Fourth Quarter 2010 | |
| | | | | | | |
| Operating Profit | | $ | 5,823 | | | $ | 8,374 | |
| | | | | | | | | |
| Restructuring Expenses | | | - | | | | 106 | |
| | | | | | | | | |
| Merger and Acquisition Expenses | | | - | | | | 211 | |
| | | | | | | | | |
| Adjusted Operating Profit | | | 5,823 | | | | 8,691 | |
| | | | | | | | | |
| Depreciation and Amortization | | | 5,799 | | | | 5,831 | |
| | | | | | | | | |
| Adjusted EBITDA | | $ | 11,622 | | | $ | 14,522 | |
| | | | | | | | | |
| | | | Twelve Months 2011 | | | | Twelve Months 2010 | |
| | | | | | | | | |
| Operating Profit | | $ | 23,820 | | | $ | 20,247 | |
| | | | | | | | | |
| Restructuring Expenses | | | - | | | | 1,293 | |
| | | | | | | | | |
| Merger and Acquisition Expenses | | | - | | | | 997 | |
| | | | | | | | | |
| Adjusted Operating Profit | | | 23,820 | | | | 22,537 | |
| | | | | | | | | |
| Depreciation and Amortization | | | 23,120 | | | | 21,828 | |
| | | | | | | | | |
| Adjusted EBITDA | | $ | 46,940 | | | $ | 44,365 | |
# # #
Cambrex Corporation | One Meadowlands Plaza | East Rutherford, NJ 07073
Phone 201.804.3000 | Fax 201.804.9852 | www.cambrex.com
8
