(CAMBREX LOGO)
Date: July 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 SECOND QUARTER 2005 FINANCIAL RESULTS
EAST RUTHERFORD, NJ - July 28, 2005 - Cambrex Corporation (NYSE: CBM)
reported second quarter 2005 financial results for the period ended June 30,
2005. Net income for the second quarter 2005 was $7.1 million, or $0.27 per
diluted share, compared to $6.3 million, or $0.24 per diluted share in the
second quarter 2004. Second quarter 2005 results include a tax benefit of $3.2
million, or $0.12 per diluted share, principally due to a favorable Swedish
court decision.
Sales increased 6.6% to $116.2 million in the second quarter 2005,
including a 1.9% favorable impact from foreign currency, from $109.0 million in
the second quarter 2004 due to higher sales in all business segments.
BIOPRODUCTS
The Bioproducts segment includes products and services for research and
therapeutic applications. Bioproducts sales in the second quarter 2005 increased
12.7% to $38.0 million, including a 1.7% favorable impact from foreign currency,
from $33.7 million in the second quarter 2004. This represents the ninth
consecutive quarter of double-digit sales growth reflecting stronger demand and
higher pricing.
Second quarter 2005 Bioproducts gross margin decreased to 50.9% from 55.3%
in the second quarter 2004 primarily due to higher allowances for doubtful
accounts and higher production costs partially offset by better volumes and
pricing. Foreign currency favorably impacted Bioproducts gross margin by
approximately 0.3 percentage points in the second quarter 2005.
John R. Leone, Cambrex President and Chief Executive Officer commented on
the continued performance in Bioproducts, "Our new product investments continue
to gain momentum. The new European media facility, recently opened Australian
subsidiary, expansion of our efforts in India and acquisition of a rapid
microbial detection business in 2004 have all contributed to the strong sales of
our research products, media, rapid microbial detection products, and related
bioservices."
Cambrex Corporation | One Meadowlands Plaza | East Rutherford, NJ 07073
Phone 201.804.3000 | Fax 201.804.9852 | www.cambrex.com
(CAMBREX LOGO)
BIOPHARMA
The Biopharma segment consists of the Company's contract biopharmaceutical
process development and manufacturing business. Sales in the second quarter 2005
increased 3.6% to $11.7 million from $11.2 million in the second quarter 2004
due to higher reimbursements for labor and materials partially offset by lower
suite and process development fees.
Second quarter 2005 Biopharma gross margin decreased to -5.2% from 8.5% in
the second quarter 2004 principally due to the unfavorable mix of higher labor
and materials reimbursements and lower suite and process development fees.
Foreign currency had no impact on Biopharma sales or gross margin.
"We have continued to make progress generating new customers while the
regulatory process moves forward for three products awaiting approval,"
commented Mr. Leone. "We have added three projects that are in or will be
entering Phase III clinical trials. However, until we benefit from more
commercial scale production, sales growth is expected to be somewhat
unpredictable quarter to quarter."
For the three Phase III projects, tech transfer and process development
has either commenced or is expected to commence during 2005 and 2006 and cGMP
manufacturing is expected to commence in 2006 and 2007.
Mr. Leone continued, "It is critical that we reduce costs in the Biopharma
segment and we expect to achieve certain cost savings by leveraging the
synergies and infrastructure of the Biopharma and Bioproducts businesses."
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 second quarter 2005 increased 4.0%
to $66.5 million, including a 2.5% favorable impact due to foreign currency,
from $64.0 million in the second quarter 2004. The increased sales reflect
higher volumes of branded and generic APIs and advanced intermediates.
Second quarter 2005 Human Health gross margin decreased to 32.4% from
35.0% in the second quarter 2004 primarily due to product mix. Foreign currency
favorably impacted gross margin by approximately 0.3 percentage points in the
second quarter 2005.
Cambrex Corporation | One Meadowlands Plaza | East Rutherford, NJ 07073
Phone 201.804.3000 | Fax 201.804.9852 | www.cambrex.com
(CAMBREX LOGO)
"Custom development revenues doubled in the quarter; a very positive
indicator of future growth." commented Mr. Leone. "Our excellent regulatory
record, customer service and ability to solve our customers' complex development
issues have allowed us to expand our portfolio of late-stage projects."
SECOND QUARTER 2005 OPERATING, INTEREST AND TAX EXPENSE
Second quarter 2005 total operating expenses were essentially flat as a
percentage of sales, increasing to $31.2 million (26.9% of sales) from $29.1
million (26.8% of sales) in the second quarter 2004 due to increased sales and
marketing and R&D expenses. Sales and marketing expenses increased to $8.8
million from $8.0 million principally due to additional resources for
Bioproducts and approximately $0.1 million impact from foreign currency.
Second quarter 2005 research and development expenses increased to $5.9
million (5.1% of sales) from $4.7 million (4.3% of sales) in the second quarter
2004 primarily due to Bioproducts' new product development expenses and
additional headcount at the Cambrex Center of Technical Excellence and
approximately $0.1 million impact from foreign currency.
Second quarter 2005 administrative expenses decreased to $15.9 million
from $16.0 million in the second quarter 2004 primarily due to lower legal fees
that were partially offset by approximately $0.3 million impact from foreign
currency.
Second quarter 2005 net interest expense increased to $2.8 million from
$2.7 million in the second quarter 2004. The average interest rate decreased to
5.4% in the second quarter 2005 from 5.6% in the second quarter 2004.
The tax rate in the second quarter 2005 decreased to -10.4% compared to
37.8% in the second quarter of 2004 primarily due to a $3.2 million ($0.12 per
diluted share) reduction in tax reserves primarily related to a Swedish tax
matter that was decided favorably during the second quarter 2005.
Capital expenditures for the second quarter 2005 were $9.0 million and
depreciation was $9.3 million compared to $10.9 million and $9.6 million,
respectively, in the second quarter 2004.
Cambrex Corporation | One Meadowlands Plaza | East Rutherford, NJ 07073
Phone 201.804.3000 | Fax 201.804.9852 | www.cambrex.com
(CAMBREX LOGO)
AMERICAN JOBS CREATION ACT OF 2004
During the second quarter 2005, the Company repatriated approximately $50
million of earnings from its foreign subsidiaries pursuant to the American Jobs
Creation Act of 2004 and recorded the related additional tax expense of $0.2
million. The Company continues to evaluate the further repatriation of foreign
earnings.
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 August 5, 2005. The dividend is payable on August 19, 2005.
GUIDANCE
Year-to-date performance is consistent with management expectations. A
disproportionate amount of sales and operating profit had been expected to occur
in the second half of the year, primarily due to the expected timing of
development projects and the expected close of a certain number of new proposals
in the Biopharma segment. Based on the latest information related to the close
rate on our Biopharma sales pipeline, the timing of new projects and the timing
of revenues related to these projects, we are revising our full year 2005 sales
growth guidance to be in the range of 3% to 6% and earnings guidance for
continuing operations to be in the range of $0.85 to $0.95 per fully diluted
share including the Swedish tax matter discussed above.
Based on current customer delivery schedules and seasonal fluctuations in
Human Health, and the timing of expected new business in Biopharma and product
introductions in Bioproducts, it is currently anticipated that a
disproportionate share of the second half 2005 earnings will occur in the fourth
quarter of the year.
For the year 2005, capital expenditures, depreciation and amortization for
continuing operations are expected to be approximately $49 million, $39 million,
and $2 million respectively. The Company expects the full year 2005 effective
tax rate to be approximately 28-32%. The full year and quarterly effective tax
rates will continue to be highly sensitive to the geographic mix of income.
The financial information contained in this press release is unaudited,
subject to revision and should not be considered final until the second quarter
2005 Form 10-Q is filed with the US Securities and Exchange Commission.
Cambrex Corporation | One Meadowlands Plaza | East Rutherford, NJ 07073
Phone 201.804.3000 | Fax 201.804.9852 | www.cambrex.com
(CAMBREX LOGO)
CONFERENCE CALL AND WEBCAST
The Conference Call to discuss second quarter 2005 earnings will begin at
8:30 a.m. Eastern Time on Friday, July 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 7490192 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, August
5, 2005 by calling 1-800-642-1687 for Domestic, and +1-706-645-9291 for
International. Please use the conference ID 7490192 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
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.
Cambrex Corporation | One Meadowlands Plaza | East Rutherford, NJ 07073
Phone 201.804.3000 | Fax 201.804.9852 | www.cambrex.com
(CAMBREX LOGO)
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 1,900
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 June 30, 2005 and 2004
(in thousands, except earnings per share)
2005 2004
---- ----
Gross Sales ...................................... $116,171 $108,951
Operating Profit ................................. $ 9,071 $ 12,908
Income Before Tax ................................ $ 6,413 $ 10,199
Net Income ....................................... $ 7,080 $ 6,339
Earnings per share data (basic):
Net Income ....................................... $ 0.27 $ 0.24
Average Shares Outstanding ....................... 26,402 26,112
Earnings per share data (diluted):
Net Income ....................................... $ 0.27 $ 0.24
Average Shares Outstanding ....................... 26,510 26,383
Six Months Ended June 30, 2005 and 2004
(in thousands, except earnings per share)
2005 2004
---- ----
Gross Sales ...................................... $226,633 $222,500
Operating Profit ................................. $ 19,978 $ 28,062
Income Before Tax ................................ $ 14,400 $ 22,297
Income From Continuing Operations ................ $ 11,170 $ 14,098
Loss From Discontinued Operations ................ $ -- $ (742)
Net Income ....................................... $ 11,170 $ 13,356
Earnings per share data (basic):
Income From Continuing Operations ................ $ 0.42 $ 0.54
Loss From Discontinued Operations ................ $ -- $ (0.03)
-------- --------
Net Income ....................................... $ 0.42 $ 0.51
Average Shares Outstanding ....................... 26,373 26,057
Earnings per share data (diluted):
Income From Continuing Operations ................ $ 0.42 $ 0.53
Loss From Discontinued Operations ................ $ -- $ (0.02)
-------- --------
Net Income ....................................... $ 0.42 $ 0.51
Average Shares Outstanding ....................... 26,549 26,405
Note: All amounts in these financial statements and 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 June 30, 2005 and 2004
(in thousands)
Second Quarter 2005 Second Quarter 2004
------------------------------- -------------------------------
Gross Gross Gross Gross
Sales Profit GP% Sales Profit GP%
----- ------ --- ----- ------ ---
Bioproducts $ 37,990 $ 19,336 50.9% $ 33,711 $ 18,647 55.3%
Biopharma 11,655 (606) -5.2% 11,245 961 8.5%
Human Health 66,526 21,540 32.4% 63,995 22,398 35.0%
-------- -------- -------- --------
Total $116,171 $ 40,270 34.7% $108,951 $ 42,006 38.6%
======== ======== ======== ========
Gross Sales Comparison
--------------------------------------------
2005 2004
Gross Gross Change Change
Sales Sales $ %
--------------------------------------------
Bioproducts $ 37,990 $ 33,711 $ 4,279 12.7%
Biopharma 11,655 11,245 410 3.6%
Human Health 66,526 63,995 2,531 4.0%
-------- -------- --------
Total $116,171 $108,951 $ 7,220 6.6%
======== ======== ========
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 June 30, 2005 and 2004
(in thousands, except earnings per share)
2005 2004
------------------------ -----------------------
% of % of
Amount Sales Amount Sales
------------------------ -----------------------
Gross Sales $ 116,171 100.0% $ 108,951 100.0%
Commissions and Allowances 1,676 1.4% 699 0.6%
--------- ---------
Net Sales 114,495 98.6% 108,252 99.4%
Other Revenues 2,251 1.9% 1,797 1.7%
--------- ---------
Net Revenue 116,746 100.5% 110,049 101.1%
Cost of Sales 76,476 65.8% 68,043 62.5%
--------- ---------
Gross Profit 40,270 34.7% 42,006 38.6%
Operating Expenses
Marketing/Sales Expenses 8,757 7.5% 7,951 7.3%
Research & Development Expenses 5,881 5.1% 4,673 4.3%
Administrative Expenses 15,893 13.7% 16,029 14.8%
Amortization 668 0.6% 445 0.4%
--------- ---------
Total Operating Expenses 31,199 26.9% 29,098 26.8%
--------- ---------
Operating Profit 9,071 7.8% 12,908 11.8%
Other Expenses
Interest - Other 2,751 2.4% 2,688 2.5%
Other (Income)/Expenses (93) -0.1% 21 0.0%
--------- ---------
Total Other Expenses 2,658 2.3% 2,709 2.5%
--------- ---------
Income Before Taxes 6,413 5.5% 10,199 9.3%
Income Tax (Benefit)/Provision (667) -0.6% 3,860 3.5%
--------- ---------
Net Income $ 7,080 6.1% $ 6,339 5.8%
========= =========
Basic Earnings per Share
Net Income $ 0.27 $ 0.24
Diluted Earnings per Share
Net Income $ 0.27 $ 0.24
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
Six Months Ended June 30, 2005 and 2004
(in thousands)
Six Months 2005 Six Months 2004
------------------------------- -------------------------------
Gross Gross Gross Gross
Sales Profit GP% Sales Profit GP%
----- ------ --- ----- ------ ---
Bioproducts $ 77,909 $ 41,471 53.2% $ 68,232 $ 37,044 54.3%
Biopharma 19,362 (2,663) -13.8% 20,364 1,411 6.9%
Human Health 129,362 44,724 34.6% 133,904 49,022 36.6%
-------- -------- -------- --------
Total $226,633 $ 83,532 36.9% $222,500 $ 87,477 39.3%
======== ======== ======== ========
Gross Sales Comparison
--------------------------------------------
2005 2004
Gross Gross Change Change
Sales Sales $ %
--------------------------------------------
Bioproducts $ 77,909 $ 68,232 $ 9,677 14.2%
Biopharma 19,362 20,364 (1,002) -4.9%
Human Health 129,362 133,904 (4,542) -3.4%
------- ------- ------
Total $226,633 $222,500 $ 4,133 1.9%
======== ======== ========
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 Six Months Ended June 30, 2005 and 2004
(in thousands, except earnings per share)
2005 2004
-------------------------- ---------------------------
% of % of
Amount Sales Amount Sales
-------------------------- ---------------------------
Gross Sales $ 226,633 100.0% $ 222,500 100.0%
Commissions and Allowances 2,665 1.2% 1,658 0.7%
--------- ---------
Net Sales 223,968 98.8% 220,842 99.3%
Other Revenues 4,711 2.1% 4,839 2.1%
--------- ---------
Net Revenue 228,679 100.9% 225,681 101.4%
Cost of Sales 145,147 64.0% 138,204 62.1%
--------- ---------
Gross Profit 83,532 36.9% 87,477 39.3%
Operating Expenses
Marketing/Sales Expenses 16,765 7.4% 15,858 7.1%
Research & Development Expenses 11,739 5.2% 9,416 4.2%
Administrative Expenses 33,843 15.0% 35,087 15.8%
Other, net -- 0.0% (1,863) -0.8%
Amortization 1,207 0.5% 917 0.4%
--------- ---------
Total Operating Expenses 63,554 28.1% 59,415 26.7%
--------- ---------
Operating Profit 19,978 8.8% 28,062 12.6%
Other Expenses
Interest - Other 5,481 2.5% 5,617 2.5%
Other Expenses 97 0.0% 148 0.1%
--------- ---------
Total Other Expenses 5,578 2.5% 5,765 2.6%
--------- ---------
Income Before Taxes 14,400 6.3% 22,297 10.0%
Income Tax Provision 3,230 1.4% 8,199 3.7%
--------- ---------
Income from Continuing Operations $ 11,170 4.9% $ 14,098 6.3%
DISCONTINUED OPERATIONS
Loss From Discontinued Operations -- (742)
--------- ---------
Net Income $ 11,170 $ 13,356
========= =========
Basic Earnings per Share
Income From Continuing Operations $ 0.42 $ 0.54
Loss From Discontinued Operations $ -- $ (0.03)
--------- ---------
Net Income $ 0.42 $ 0.51
Diluted Earnings per Share
Income From Continuing Operations $ 0.42 $ 0.53
Loss From Discontinued Operations $ -- $ (0.02)
--------- ---------
Net Income $ 0.42 $ 0.51
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 June 30, 2005 and December 31, 2004
(in thousands)
Current Assets 2005 2004
- -------------- ---- ----
Cash and Cash Equivalents $ 45,606 $ 91,532
Trade Receivables, net 67,261 68,370
Inventories, net 97,688 91,039
Deferred Tax Asset 3,645 2,605
Other Current Assets 18,404 20,825
-------- --------
Total Current Assets 232,604 274,371
Property, Plant and Equipment, Net 259,458 280,790
Goodwill and Other Intangibles 225,853 230,656
Other Assets 5,240 6,168
-------- --------
Total Assets $723,155 $791,985
======== ========
Current Liabilities
- -------------------
Trade Accounts Payable $ 35,354 $ 38,552
Accrued Liabilities 45,310 52,181
Short-term Debt and Current Portion of Long-term Debt 1,608 1,400
-------- --------
Total Current Liabilities 82,272 92,133
Long-term Debt 199,632 226,187
Deferred Tax Liabilities 19,326 21,686
Other Liabilities 54,913 60,663
-------- --------
Total Liabilities $356,143 $400,669
Stockholders' Equity $367,012 $391,316
-------- --------
Total Liabilities and Stockholders' Equity $723,155 $791,985
======== ========
###
Cambrex Corporation | One Meadowlands Plaza | East Rutherford, NJ 07073
Phone 201.804.3000 | Fax 201.804.9852 | www.cambrex.com