CBM Cleantech Building Materials

EAST RUTHERFORD, N.J., Nov. 3 /PRNewswire-FirstCall/ -- Cambrex Corporation (NYSE:CBM) reports third quarter results for the period ended September 30, 2009. Highlights -- Sales increased 6.1% compared to third quarter 2008 excluding the impact of foreign currency. Reported sales increased by 2.3% for the quarter. -- EBITDA was $11.0 million in the third quarter 2009 compared to Adjusted EBITDA of $11.4 million in the same quarter last year (see following table). -- Debt, net of cash was $78.7 million at the end of third quarter 2009, a $4.3 million improvement during the quarter. -- Net income was $3.0 million compared with Net income of $2.8 million for the third quarter of 2008. Third Quarter 2009 Operating Results Third quarter 2009 sales of $57.8 million were 2.3% higher than the third quarter 2008. Excluding a 3.8% unfavorable impact of foreign exchange, reflecting a stronger U.S. dollar, sales increased 6.1%. The increase is primarily due to higher volumes of an active pharmaceutical ingredient ("API") that utilizes the Company's polymeric drug delivery technology, increased generic revenues resulting from the timing of orders and higher controlled substances and custom development revenues. Partially offsetting these increases were lower sales of two APIs manufactured under long-term supply agreements and a feed additive for which a contract expired earlier in 2009. Third quarter 2009 Gross Margin increased to 29.3% of sales from 28.7% during the third quarter 2008, with foreign currency unfavorably impacting gross margin by 2.7%. Cost reductions, and to a lesser extent, positive product mix, were the main drivers of the higher margins. This was partially offset by lower pricing of generic APIs and an API manufactured under a long-term supply agreement. Selling, General and Administrative Expenses in the third quarter 2009 were $9.3 million compared to $8.8 million in the same period last year. The increase is a result of higher legal fees and personnel costs partially offset by a favorable impact of foreign currency. Research and Development ("R&D") Expenses were $2.0 million in the third quarter 2009 compared to $1.8 million in the third quarter 2008. The increase is primarily due to higher costs related to the development of new products and technology platforms. Operating Profit increased to $5.6 million in the third quarter 2009 from $4.5 million in the third quarter 2008. Excluding Restructuring Expenses and Strategic Alternative Costs of $1.2 million recorded in 2008, Operating Profit decreased $0.1 million quarter over quarter. EBITDA was $11.0 million, or 19.0% of sales, compared to Adjusted EBITDA of $11.4 million, or 20.2% of sales last year. This decrease is due primarily to an unfavorable impact of foreign currency and higher administrative expenses mostly offset by higher gross margins as discussed above. The Provision for Income Taxes totaled $1.6 million in the third quarter 2009. The effective tax rate was 34.8% in the third quarter 2009 compared to 9.8% in the third quarter 2008. The increase is due to changes in the geographic mix of pre-tax earnings, the enactment of reduced tax rates in Sweden and tax benefits related to the favorable resolution of certain tax matters in the three months ended September 30, 2008. The Company's effective tax rates have been and are 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. Net Income for the third quarter 2009 was $3.0 million or $0.10 per share compared to $2.8 million or $0.10 per share in the third quarter 2008. Steven M. Klosk, President and Chief Executive Officer, said, "We continue to be pleased with our year to date performance in this economically challenging environment. Aggressive cost cutting and working capital management have helped to generate positive cash flow throughout the year, improving our net debt position by almost $13 million year to date. "While third quarter sales increased versus prior year, we expect lower sales volumes in the fourth quarter. Much of the expected decline in the fourth quarter is due to volatility in the timing of orders, and we continue to see weakness in pre-clinical and clinical phase projects due to a variety of market factors, and price and volume pressure on our generic APIs. We are on track to introduce new generic APIs beginning in 2010 and we continue to develop new products in support of our controlled substances and drug delivery initiatives." Capital expenditures and depreciation for the third quarter 2009 were $3.3 million and $5.4 million compared to $5.0 million and $5.7 million in the third quarter 2008, respectively. The decrease in capital expenditures is largely due to third quarter 2008 spending on two large capital projects for which the majority of work has since been completed. Guidance The Company currently expects that sales for 2009, excluding the impact of foreign currency, will be between a decline of 2% and an increase of 2% versus 2008. EBITDA is currently expected to be between $43 and $47 million compared to a prior range of $43 to $48 million. For 2009, capital expenditures are expected to be approximately $12 to $14 million and depreciation is expected to be $20 to $22 million. The Company currently expects restructuring and strategic alternatives expenses for 2009 to be minimal. The financial information contained in this press release is unaudited, subject to revision and should not be considered final until the third quarter 2009 Form 10-Q is filed with the SEC. Basis of Reporting The Company has provided a reconciliation from adjusted and other non-GAAP amounts to GAAP amounts at the end of this press release. Management believes that this basis of reporting provides a more meaningful representation of the Company's operating results for the periods presented due to the magnitude and nature of certain recorded expenses. Conference Call and Webcast The Conference Call to discuss third quarter 2009 results will begin at 8:30 a.m. Eastern Time on Wednesday, November 4, 2009 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 pass code 37211896 and call approximately 10 minutes prior to start time. A webcast is available from the Investors section on the Cambrex website located at http://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, November 11, 2009 by calling 1-800-642-1687 for domestic and +1-706-645-9291 for international. Please use the pass code 37211896 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 and Rule 3b-6 under The Securities Exchange Act of 1934, as amended, 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 they use words such as "expects," "anticipates," "intends," "estimates," "believes" or similar expressions in connection with any discussion of future financial and operating performance. Any forward-looking statements are qualified in their entirety by reference to the factors discussed throughout the Company's public filings. 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 including, but not limited to, global economic trends, 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, the Company's ability to satisfy the continued listing standards of the New York Stock Exchange, changes in foreign exchange rates, uncollectible receivables, loss on disposition of assets, cancellation or delays in renewal of contracts, lack of suitable raw materials or packaging materials, the Company's ability to receive regulatory approvals for its products and other factors described under the caption "Risk Factors That May Affect Future Results" in the Company's Quarterly Report on Form 10-Q for the period ending June 30, 2009. Any forward-looking statement speaks only as of the date on which it is made, and the Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. New factors emerge from time to time and it is not possible for the Company to predict which will arise. In addition, the Company cannot assess the impact of each factor on its business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. For further details and a discussion of these and other risks and uncertainties, investors are cautioned to review the Cambrex 2008 Annual Report on Form 10-K, including the Forward-Looking Statement section therein, and other filings with the U.S. 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 provides products and services to accelerate the development and commercialization of small molecule therapeutics including APIs, advanced intermediates, enhanced drug delivery, and other products for branded and generic pharmaceuticals. The Company currently employs approximately 850 people worldwide. For more information, please visit http://www.cambrex.com/. CAMBREX CORPORATION Statement of Profit and Loss For the Quarters Ended September 30, 2009 and 2008 (in thousands) 2009 2008 ------------- ------------ % of % of Amount Sales Amount Sales ------------- ------------ Gross Sales $57,802 100.0% $56,508 100.0% Allowances and Rebates 285 0.5% 193 0.3% ------- ------- Net Sales 57,517 99.5% 56,315 99.7% Other Revenues (1,147) -2.0% 1,977 3.5% ------- ------- Net Revenues 56,370 97.5% 58,292 103.2% Cost of Goods Sold 39,422 68.2% 42,057 74.5% ------- ------- Gross Profit 16,948 29.3% 16,235 28.7% Operating Expenses Selling, General and Administrative Expenses 9,295 16.1% 8,767 15.5% Research and Development Expenses 2,026 3.5% 1,772 3.1% Restructuring Expenses - 0.0% 321 0.6% Strategic Alternative Costs - 0.0% 833 1.5% ------- ------- Total Operating Expenses 11,321 19.6% 11,693 20.7% ------- ------- Operating Profit 5,627 9.7% 4,542 8.0% Other Expenses/(Income): Interest Expense, net 1,111 1.9% 956 1.7% Other (Income)/Expense, net (31) -0.1% 485 0.8% ------- ------- Income Before Income Taxes 4,547 7.9% 3,101 5.5% Provision for Income Taxes 1,584 2.8% 304 0.6% ------- ------- Net Income $2,963 5.1% $2,797 4.9% ======= ======= Earnings per Share of Common Stock Basic $0.10 $0.10 Diluted $0.10 $0.10 Weighted Average Shares Outstanding Basic 29,253 29,163 Diluted 29,303 29,178 CAMBREX CORPORATION Statement of Profit and Loss For the Nine Months Ended September 30, 2009 and 2008 (in thousands) 2009 2008 -------------- ------------- % of % of Amount Sales Amount Sales -------------- ------------- Gross Sales $177,568 100.0% $184,440 100.0% Allowances and Rebates 623 0.4% 1,137 0.6% -------- ------- Net Sales 176,945 99.6% 183,303 99.4% Other Revenues (262) -0.1% 1,792 1.0% -------- ------- Net Revenues 176,683 99.5% 185,095 100.4% Cost of Goods Sold 120,919 68.1% 127,120 69.0% -------- ------- Gross Profit 55,764 31.4% 57,975 31.4% Operating Expenses Selling, General and Administrative Expenses 26,889 15.2% 31,511 17.0% Research and Development Expenses 5,924 3.3% 5,945 3.2% Restructuring Expenses - 0.0% 1,469 0.8% Strategic Alternative Costs - 0.0% 1,408 0.8% -------- ------- Total Operating Expenses 32,813 18.5% 40,333 21.8% -------- ------- Operating Profit 22,951 12.9% 17,642 9.6% Other Expenses/(Income): Interest Expense, net 3,410 1.9% 2,302 1.3% Other (Income)/Expense, net (139) -0.1% 459 0.2% -------- ------- Income Before Income Taxes 19,680 11.1% 14,881 8.1% Provision for Income Taxes 6,520 3.7% 6,002 3.3% -------- ------- Net Income $13,160 7.4% $8,879 4.8% ======== ======= Earnings per Share of Common Stock Basic $0.45 $0.31 Diluted $0.45 $0.31 Weighted Average Shares Outstanding Basic 29,225 29,096 Diluted 29,249 29,101 CAMBREX CORPORATION Reconciliation of GAAP to non-GAAP Results For the Quarters and Nine Months Ended September 30, 2009 and 2008 (in thousands) Third Third Quarter 2009 Quarter 2008 --------- --------- Operating Profit, as Reported $5,627 $4,542 Depreciation and Amortization 5,359 5,683 Strat. Alt. & Restructuring Expenses* - 1,154 CEO Retirement** - 35 --------- --------- Adjusted EBITDA $10,986 $11,414 ========= ========= Nine Nine Months 2009 Months 2008 --------- --------- Operating Profit, as Reported $22,951 $17,642 Depreciation and Amortization 14,774 16,115 Strat. Alt. & Restructuring Expenses* - 2,877 CEO Retirement** - 632 --------- --------- Adjusted EBITDA $37,725 $37,266 ========= ========= * During 2008, the Company incurred expenses related to restructuring activities and strategic alternative expenses pursuant to the sale of its Bioproducts and Biopharma businesses in February 2007 and for the consolidation of the New Jersey R&D facility. These costs are identified within the 2008 income statement and have been excluded from the calculation of certain profit measurements, including Adjusted EBITDA for 2008. ** During 2008, the Company incurred expenses related to the acceleration of equity awards to its former CEO. These costs are included within Selling, General and Administrative Expenses and have been excluded from the calculation of certain profit measurements, including Adjusted EBITDA for 2008. CAMBREX CORPORATION Consolidated Balance Sheet As of September 30, 2009 and December 31, 2008 (in thousands) September 30, December 31, Assets 2009 2008 --------- --------- Cash and Cash Equivalents $45,345 $32,540 Trade Receivables, net 37,466 36,685 Inventories, net 61,341 61,133 Prepaid Expenses and Other Current Assets 9,193 8,798 --------- --------- Total Current Assets 153,345 139,156 Property, Plant and Equipment, net 166,303 161,500 Goodwill 36,838 35,374 Other Non-Current Assets 4,661 5,042 --------- --------- Total Assets $361,147 $341,072 ========= ========= Liabilities and Stockholders' Equity Accounts Payable $16,167 $19,700 Accrued Expenses and Other Current Liabilities 35,566 45,080 --------- --------- Total Current Liabilities 51,733 64,780 Long-term Debt 124,000 123,800 Deferred Tax Liabilities 17,774 16,138 Accrued Pension and Postretirement Benefits 45,707 44,165 Other Non-Current Liabilities 16,537 17,403 --------- --------- Total Liabilities $255,751 $266,286 Stockholders' Equity $105,396 $74,786 --------- --------- Total Liabilities and Stockholders' Equity $361,147 $341,072 ========= ========= DATASOURCE: Cambrex Corporation CONTACT: Gregory P. Sargen, Vice President & CFO, +1-201-804-3055, Web Site: http://www.cambrex.com/

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