EX-99.1 2 y11309exv99w1.txt PRESS RELEASE (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