[CAMBREX LOGO]
Date: April 28, 2005
Contact: Luke M. Beshar Anne-Marie Hess
Executive Vice President & CFO Director, Investor Relations
Phone: 201-804-3010 201-804-3062
Email: luke.beshar@cambrex.com annemarie.hess@cambrex.com
Release: Immediate
CAMBREX ANNOUNCES FIRST QUARTER 2005 FINANCIAL RESULTS
EAST RUTHERFORD, NJ - April 28, 2005 - Cambrex Corporation (NYSE: CBM)
reported today first quarter 2005 financial results for the period ended March
31, 2005. Net income from continuing operations for the first quarter 2005 was
$4.1 million, or $0.15 per diluted share, compared to $7.8 million, or $0.29 per
diluted share in the first quarter 2004. Sales were $110.5 million in the first
quarter 2005 compared to $113.5 million in the first quarter 2004 primarily due
to lower volumes anticipated in the Human Health and Biopharma segments,
partially offset by a 2.3% favorable impact from foreign currency and higher
sales in the Bioproducts segment.
"We are encouraged by the continued strong growth in the Bioproducts
segment and the positive impact of cost reductions in selected areas that
enabled us to exceed our first quarter guidance," commented John R. Leone,
Cambrex President and Chief Executive Officer. "In order to improve the results
of the Human Health and Biopharma segments during the second half of the year,
we are aggressively adding new customer opportunities, implementing further cost
reductions and making the appropriate changes to management and business
processes."
Gross margin for the first quarter 2005 was 39.2% versus 40.0% in the
first quarter 2004 due to unfavorable currency exchange (0.4 percentage points)
as well as lower margins in both the Biopharma and Human Health segments. These
decreases were partially offset by higher gross margins in the Bioproducts
segment.
Cambrex Corporation | One Meadowlands Plaza | East Rutherford, NJ 07073
Phone 201.804.3000 | Fax 201.804.9852 | www.cambrex.com
[CAMBREX LOGO]
BIOPRODUCTS
The Bioproducts segment includes products and services for research and
therapeutic applications. Bioproducts sales in the first quarter 2005 increased
15.6% to $39.9 million, including a 1.9% favorable impact from foreign currency,
from $34.5 million in the first quarter 2004. This represents the eighth
consecutive quarter of double-digit sales growth reflecting the continuing
strong demand and higher pricing within the research and therapeutic product
categories. John Leone, President and CEO, remarked on Bioproducts performance,
"In addition to excellent performance in the quarter, we have created the
momentum to sustain growth with a pipeline of new products and services
resulting from a combination of recent acquisitions, licensing and internal
development."
First quarter 2005 Bioproducts gross margin increased to 55.4% from 53.3%
in the first quarter 2004 primarily due to favorable volume, mix, pricing, and
foreign currency. Foreign currency favorably impacted gross margin by
approximately 0.2 percentage points in the first quarter 2005.
BIOPHARMA
The Biopharma segment consists of the Company's contract biopharmaceutical
process development and manufacturing business. Sales in the first quarter 2005
decreased 15.5% to $7.7 million from $9.1 million in the first quarter 2004 due
to lower volumes resulting from the timing and completion of certain projects.
Four new client projects were added in the quarter.
First quarter 2005 Biopharma gross margin decreased to (26.7%) from 4.9%
in the first quarter 2004 due to lower volumes, unfavorable mix, costs
associated with the new 2800 liter bioreactor suite and the under absorption of
fixed overheads. Foreign currency had no impact on Biopharma sales or gross
margin.
"The Company is actively pursuing new commercial development and cost
reduction opportunities to continue to build project pipelines and drive
improvements in Biopharma performance," commented John Leone, "Additionally, the
2800 liter suite has been fully validated for cGMP production and the first
manufacturing run was completed in the quarter."
Cambrex Corporation | One Meadowlands Plaza | East Rutherford, NJ 07073
Phone 201.804.3000 | Fax 201.804.9852 | www.cambrex.com
[CAMBREX LOGO]
HUMAN HEALTH
The Human Health segment consists of small molecule active pharmaceutical
ingredients (APIs), advanced intermediates and other products derived from
organic chemistry. Human Health sales in the first quarter 2005 decreased 10.1%
to $62.8 million, including 2.8% favorable impact due to foreign currency, from
$69.9 million in the first quarter 2004. The decreased sales reflect lower
volumes and pricing in comparison to the particularly strong first quarter of
2004.
First quarter 2005 Human Health gross margin declined to 36.9% from 38.1%
in the first quarter 2004 primarily due to the lower volumes and pricing and the
adverse impact of foreign currency. While sales were favorably impacted by
foreign currency, the relative proportion of Euro denominated revenue versus
Euro denominated expenses negatively impacted gross margin by approximately 1.1
percentage points in the first quarter 2005.
"Following the best quarter for Human Health sales ever, the sequentially
softer first quarter of 2005 compared negatively to prior year, exhibiting the
inherent quarterly lumpiness in this segment," commented John R. Leone.
"However, we continue to build momentum with controlled substances, projects
requiring high containment and proprietary drug delivery technology."
FIRST QUARTER 2005 OPERATING EXPENSES FOR CONTINUING OPERATIONS
Excluding "Other, net" items recorded in the first quarter 2004, first
quarter 2005 total operating expenses are essentially flat compared to the prior
year. It should be noted that the first quarter 2004 includes a $1.9 million
reduction to total operating expenses recorded in "Other, net" consisting of
$2.9 million of income from the early termination of a Bioproducts customer
contract and an unrelated $1.0 million charge associated with workforce
reductions at a European facility.
First quarter 2005 marketing, sales, administrative and amortization
expenses decreased to $26.5 million (24.0% sales) from $27.4 million (24.2% of
sales) in the first quarter 2004 primarily due to a reduction of corporate
administrative expenses in the first quarter of 2005 partially offset by $0.4
million impact from foreign currency.
Cambrex Corporation | One Meadowlands Plaza | East Rutherford, NJ 07073
Phone 201.804.3000 | Fax 201.804.9852 | www.cambrex.com
[CAMBREX LOGO]
First quarter 2005 research and development expenses increased to $5.9
million (5.3% of sales) from $4.7 million (4.2% of sales) in the first quarter
2004 primarily due to increased new product development spending in the
Bioproducts segment and approximately $0.1 million impact from foreign currency.
First quarter 2005 net interest expense decreased to $2.7 million from
$2.9 million in the first quarter 2004. The average interest rate decreased to
5.3% in the first quarter 2005 from 5.8% in the first quarter 2004. The tax rate
in the first quarter 2005 increased to 48.8% compared to 35.9% in the first
quarter of 2004 due to the geographic mix of income.
Capital expenditures for the first quarter 2005 were $9.0 million and
depreciation was $9.4 million.
CAMBREX DECLARES QUARTERLY DIVIDEND
The Cambrex Board of Directors declared the Company's regular quarterly
cash dividend on its common stock of $0.03 per share for its shareholders of
record as of May 6, 2005. The dividend is payable on May 20, 2005.
GUIDANCE
The Company's annual earnings guidance is unchanged. Management expects
full year 2005 diluted earnings per share for continuing operations to be in the
range of $0.90 to $1.10 and sales growth to be in the range of 6% to 10%.
The stronger than expected results for the first quarter 2005 primarily
resulted from certain second quarter business moving into the first quarter. As
a result, second quarter expectations should reflect this quarterly shift
forward of earnings from the second quarter 2005 to the first quarter while
maintaining full year guidance. This is consistent with the Company's plan for
strong earnings results anticipated in the second half of the year.
For the year 2005, capital expenditures, depreciation and amortization for
continuing operations are expected to be approximately $50 million, $38 million,
and $2 million respectively. The Company expects the full year 2005 effective
tax rate to be approximately 30 - 35%. However, the full year and quarterly
effective tax rates will continue to be highly sensitive to the geographic mix
of income.
Guidance for the full year 2005 does not include the effect of any
potential future decision to repatriate foreign earnings for purposes consistent
with the American Jobs Creation Act of 2004. The
Cambrex Corporation | One Meadowlands Plaza | East Rutherford, NJ 07073
Phone 201.804.3000 | Fax 201.804.9852 | www.cambrex.com
[CAMBREX LOGO]
Financial Accounting Standards Board (FASB) recently reissued FASB Statement
No.123R - "Share-Based Payment" which covers share-based compensation, including
stock options. This month, the SEC revised the implementation date for which
companies are required to expense options. As a result, Cambrex plans to begin
expensing stock options effective January 1, 2006.
The financial information contained in this press release is unaudited,
subject to revision and should not be considered final until the first quarter
2005 Form 10-Q is filed with the US Securities and Exchange Commission.
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.
CONFERENCE CALL AND WEBCAST
The Conference Call to discuss first quarter 2005 earnings will begin at
8:30 a.m. Eastern Time on Friday, April 29, 2005 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 5413783 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 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, May 6,
2005 by calling 1-800-642-1687 for Domestic, and +1-706-645-9291 for
International. Please use the conference ID 5413783 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
Securities Exchange Act of 1934, 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
Cambrex Corporation | One Meadowlands Plaza | East Rutherford, NJ 07073
Phone 201.804.3000 | Fax 201.804.9852 | www.cambrex.com
[CAMBREX LOGO]
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.
ABOUT CAMBREX
Cambrex is a global, diversified life sciences company dedicated to
providing products and services to accelerate and improve the discovery and
commercialization of human therapeutics. The Company employs approximately 1900
worldwide. For more information, please visit http://www.cambrex.com.
Cambrex Corporation | One Meadowlands Plaza | East Rutherford, NJ 07073
Phone 201.804.3000 | Fax 201.804.9852 | www.cambrex.com
[CAMBREX LOGO]
CAMBREX CORPORATION
Financial Summary
For the Quarters Ended March 31, 2005 and 2004
(in thousands, except earnings per share)
2005 2004
------------ -----------
Gross Sales $ 110,462 $ 113,549
Operating Profit $ 10,907 $ 15,154
Income Before Tax $ 7,987 $ 12,098
Income From Continuing Operations $ 4,090 $ 7,759
Loss From Discontinued Operations $ - $ (742)
Net Income $ 4,090 $ 7,017
Earnings per share data (basic):
Income From Continuing Operations $ 0.16 $ 0.30
Loss From Discontinued Operations $ - $ (0.03)
------------ -----------
Net Income $ 0.16 $ 0.27
Average Shares Outstanding 26,346 26,001
Earnings per share data (diluted):
Income From Continuing Operations $ 0.15 $ 0.29
Loss From Discontinued Operations $ - $ (0.03)
------------ -----------
Net Income $ 0.15 $ 0.26
Average Shares Outstanding 26,630 26,605
Note: All amounts in these financial tables are for continuing operations unless
otherwise indicated.
Cambrex Corporation | One Meadowlands Plaza | East Rutherford, NJ 07073 Phone
201.804.3000 | Fax 201.804.9852 | www.cambrex.com
[CAMBREX LOGO]
CAMBREX CORPORATION
Gross Sales & Gross Profit by Segment
For the Quarters Ended
March 31, 2005 and 2004
(in thousands)
First Quarter 2005 First Quarter 2004
-------------------------------- -------------------------------
Gross Gross Gross Gross
Sales Profit GP% Sales Profit GP%
----------- -------- ------- --------- --------- -------
Bioproducts $ 39,919 $ 22,135 55.4% $ 34,521 $ 18,397 53.3%
Biopharma 7,707 (2,057) -26.7% 9,119 450 4.9%
Human Health 62,836 23,184 36.9% 69,909 26,624 38.1%
----------- -------- --------- ---------
Total $ 110,462 $ 43,262 39.2% $ 113,549 $ 45,471 40.0%
=========== ======== ========= =========
Gross Sales Comparison
------------------------------------------
2005 2004
Gross Gross Change Change
Sales Sales $ %
----------- --------- -------- --------
Bioproducts $ 39,919 $ 34,521 $ 5,398 15.6%
Biopharma 7,707 9,119 (1,412) -15.5%
Human Health 62,836 69,909 (7,073) -10.1%
----------- --------- --------
Total $ 110,462 $ 113,549 $ (3,087) -2.7%
=========== ========= ========
Cambrex Corporation | One Meadowlands Plaza | East Rutherford, NJ 07073 Phone
201.804.3000 | Fax 201.804.9852 | www.cambrex.com
[CAMBREX LOGO]
CAMBREX CORPORATION
Statement of Profit and Loss
For the Quarters Ended March 31, 2005 and 2004 (in thousands,
except earnings per share)
2005 2004
---------------------- --------------------
% of % of
Amount Sales Amount Sales
------------ ------- --------- --------
Gross Sales $ 110,462 100.0% $ 113,549 100.0%
Commissions and Allowances 989 0.9% 959 0.8%
------------ ---------
Net Sales 109,473 99.1% 112,590 99.2%
Other Revenues 2,460 2.2% 3,042 2.6%
------------ ---------
Net Revenue 111,933 101.3% 115,632 101.8%
Cost of Sales 68,671 62.1% 70,161 61.8%
------------ ---------
Gross Profit 43,262 39.2% 45,471 40.0%
Operating Expenses
Marketing/Sales Expenses 8,007 7.2% 7,907 7.0%
Research & Development Expenses 5,858 5.3% 4,743 4.2%
Administrative Expenses 17,951 16.3% 19,058 16.7%
Other, net - 0.0% (1,863) -1.6%
Amortization 539 0.5% 472 0.4%
------------ ---------
Total Operating Expenses 32,355 29.3% 30,317 26.7%
------------ ---------
Operating Profit 10,907 9.9% 15,154 13.3%
Other Expenses
Interest - Other 2,730 2.5% 2,929 2.6%
Other Expenses 190 0.2% 127 0.1%
------------ ---------
Total Other Expenses 2,920 2.7% 3,056 2.7%
------------ ---------
Income Before Taxes 7,987 7.2% 12,098 10.6%
Provision for Income Taxes 3,897 3.5% 4,339 3.8%
------------ ---------
Income from Continuing Operations $ 4,090 3.7% $ 7,759 6.8%
DISCONTINUED OPERATIONS
Loss From Discontinued Operations - (742)
------------ ---------
Loss From Discontinued Operations - (742)
------------ ---------
Net Income $ 4,090 $ 7,017
============ =========
Basic Earnings per Share
Income From Continuing Operations $ 0.16 $ 0.30
Loss From Discontinued Operations $ - $ (0.03)
------------ ---------
Net Income $ 0.16 $ 0.27
Diluted Earnings per Share
Income From Continuing Operations $ 0.15 $ 0.29
Loss From Discontinued Operations $ - $ (0.03)
------------ ---------
Net Income $ 0.15 $ 0.26
Cambrex Corporation | One Meadowlands Plaza |East Rutherford, NJ 07073 Phone
201.804.3000 |Fax 201.804.9852 |www.cambrex.com
[CAMBREX LOGO]
CAMBREX CORPORATION
Consolidated Balance Sheet
As of March 31, 2005 and December 31, 2004
(in thousands)
Current Assets 2005 2004
- ------------------------------------------------ ----------- ----------
Cash and Cash Equivalents $ 91,375 $ 91,532
Trade Receivables, net 67,076 68,370
Inventories, net 96,875 91,039
Deferred Tax Asset 4,291 2,605
Other Current Assets 16,937 20,825
----------- ----------
Total Current Assets 276,554 274,371
Property, Plant and Equipment, Net 272,148 280,790
Goodwill and Other Intangibles 229,998 230,656
Other Assets 5,226 6,168
----------- ----------
Total Assets $ 783,926 $ 791,985
=========== ==========
Current Liabilities
Trade Accounts Payable $ 35,894 $ 38,552
Accrued Liabilities 49,516 52,181
Short-term Debt and Current Portion of Long-term
Debt 1,400 1,400
----------- ----------
Total Current Liabilities 86,810 92,133
Long-term Debt 234,602 226,187
Deferred Tax Liabilities 21,887 21,686
Other Liabilities 60,139 60,663
----------- ----------
Total Liabilities $ 403,438 $ 400,669
Stockholders' Equity $ 380,488 $ 391,316
----------- ----------
Total Liabilities and Stockholders' Equity $ 783,926 $ 791,985
=========== ==========
Cambrex Corporation | One Meadowlands Plaza | East Rutherford, NJ 07073 Phone
201.804.3000 | Fax 201.804.9852 | www.cambrex.com