Cambrex Reports Second Quarter 2015 Financial Results

– Sales increased 9% (15% excluding foreign exchange) and EBITDA increased 63% vs. prior year quarter –

– Sales and profit guidance increased significantly for the full year 2015 –

– Conference call at 8:00 a.m. ET on July 30, 2015 –

East Rutherford, NJ – Cambrex Corporation (NYSE: CBM, “Cambrex”) reports results for the second quarter ended June 30, 2015.

Download PDF: Second Quarter 2015 Financial Results

Highlights
Sales increased 9% compared to the second quarter of 2014, and increased 15% excluding foreign exchange impact.
EBITDA increased 63% to $34.6 million compared to the second quarter of last year.
GAAP diluted EPS from continuing operations was $0.60 versus $0.63 in the second quarter last year and Adjusted diluted EPS was $0.63 compared to $0.35 in the same quarter last year.
Net cash was $2.6 million compared to debt, net of cash, of $14.5 million at December 31, 2014.
The Company increased guidance for full year 2015 sales, excluding foreign exchange, to increase between 20% and 24% compared to 2014. Adjusted EBITDA expectations were increased to $117 – $123 million, a 43% to 50% increase over 2014. Adjusted diluted EPS from continuing operations is now expected to be $1.97 – $2.09 per share, a 48% to 57% increase over 2014 (see Financial Expectations section below).
“We continued our strong positive momentum in the second quarter and we are positioned to achieve even better results in the second half of 2015. Profit margins were very strong in the second quarter and while a few shipments moved from the second quarter to the third quarter, we are very pleased with our overall results,” commented Steven M. Klosk, President and Chief Executive Officer of Cambrex. “We continue to see strong demand for certain larger products within our Innovator product category and now expect full year sales of Controlled Substances to increase in the high single digit percentage range compared to our previous expectations for flat sales. Although the timing of shipments resulted in flat currency adjusted revenues for generic APIs, orders are on track to support our mid to high single digit percentage growth expectations in that category. These trends, along with our visibility into the rest of the year, continue to give us a high level of confidence for the remainder of 2015 and provide the basis for our increased financial guidance.

“The expansion project at our Charles City, Iowa facility remains on schedule and should bring significant additional capacity on line towards the end of the first quarter of 2016. We are also making additional facility upgrades and capacity expansions at our Swedish and Italian sites to meet anticipated demand for 2016 and beyond.”

Basis of Reporting
The Company has provided a reconciliation of GAAP amounts to adjusted (i.e. Non-GAAP) amounts at the end of this press release. Cambrex management believes that the adjusted amounts provide useful information to investors due to the magnitude and nature of certain expenses recorded in the GAAP amounts.

Second Quarter 2015 Operating Results – Continuing Operations
Sales were $106.4 million, compared to $98.0 million in the same period last year, representing a 9% increase. Foreign exchange unfavorably impacted reported sales growth by 6%. The sales increase primarily reflects higher volumes of certain branded active pharmaceutical ingredients (APIs) and to a lesser extent, higher pricing on certain products.

Gross margins increased to 43% from 34% compared to the same period last year. This increase was primarily due to higher plant utilization, higher pricing on certain products and the favorable impact of foreign exchange.

Selling, general and administrative expenses were $14.1 million compared to $14.6 million in the same period last year. The decrease was mainly due to a favorable impact from foreign exchange and lower due diligence costs, partially offset by higher costs related to the implementation of a new ERP system, sales and marketing expenses, recruiting, and pension expense.

Operating profit increased to $29.2 million from $15.2 million in the same period last year. The increase in operating profit was primarily the result of higher gross profit and lower operating expenses. EBITDA was $34.6 million compared to $21.2 million in the same period last year.

The current period effective tax rate was 33% resulting in a provision for income taxes of $9.5 million compared to a benefit of $9.4 million in the same period last year. The tax provision for the same period last year included a benefit related to the reversal of a deferred tax valuation allowance and the impact of a loss on the acquisition of Zenara shares. Excluding these items, the effective tax rate was flat compared to the same period last year.

Income from continuing operations was $19.5 million or $0.60 per share compared to $19.8 million or $0.63 per share in the same period last year. Last year’s second quarter results included a loss related to the purchase of the remaining stake in Zenara and the tax benefit described above. Adjusted income from continuing operations was $20.5 million or $0.63 per share, compared to $11.0 million or $0.35 per share, respectively, in the same period last year (see table at the end of this release).

Capital expenditures and depreciation were $14.5 million and $5.2 million, respectively, compared to $6.0 million and $5.9 million, respectively, in the same period last year.

Financial Expectations – Continuing Operations
The following table shows the Company’s current expectations for its full year 2015 financial performance versus its expectations from the previous quarter:

Current Previous
Expectations Expectations

Gross sales increase 20% – 24% 16% – 20%

Adjusted EBITDA $117 – $123 $101 – $107
million million

Adjusted income from continuing $1.97 – $2.09 $1.62 – $1.75
operations per share

Reduction of debt, net of cash $10 – 15 million $5 – 10 million

Capital expenditures $80 – $85 million $80 – $85 million

Depreciation $22 – $24 million $22 – $24 million

Effective tax rate 33% – 36% 33% – 36%

Consistent with prior guidance for the full year 2015, these financial expectations are for continuing operations and exclude the impact of any potential acquisitions, restructuring activities and outcomes of tax disputes. Sales expectations exclude the impact of foreign exchange. EBITDA and Adjusted income from continuing operations per share are computed on a basis consistent with the reconciliation of the second quarter 2015 results in the tables at the end of this release. The tax rate and amount of cash taxes paid will be sensitive to the Company’s 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 Company’s second quarter 2015 Form 10-Q is filed with the SEC.

Conference Call and Webcast
A conference call to discuss the Company’s second quarter 2015 results will begin at 8:00 a.m. Eastern Time on July 30, 2015 and can be accessed by calling 1-888-556-4997 for domestic and +1-719-325-2144 for international. Please use the passcode 9067005 and call approximately 10 minutes prior to the start time. A webcast will be available in the Investors section on the Cambrex website. A telephone replay of the conference call will be available through August 6, 2015 by calling 1-888-203-1112 for domestic and +1-719-457-0820 for international. Please use the passcode 9067005 to access the replay.

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. The Company offers Active Pharmaceutical Ingredients (“APIs”), advanced intermediates and enhanced drug delivery products for branded and generic pharmaceuticals. 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.

Forward Looking Statements
This document contains “forward-looking statements,” including statements or tables regarding expected performance, especially those set forth under the heading “Financial Expectations – Continuing Operations,” “Highlights” and those attributed to our President and Chief Executive Officer in this document. These and other forward looking statements may be identified by the fact that they use words such as “guidance,” “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, 2014, captioned “Risk Factors,” or otherwise described in the Company’s filings with the SEC 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, including, but not limited to, pharmaceutical outsourcing trends, competitive pricing or product developments, market acceptance and adoption rate of our customers’ products, government legislation and regulations (including those pertaining to environmental issues), tax rate, interest rate, technology, manufacturing and legal issues, including the outcome of outstanding litigation, environmental matters, changes in foreign exchange rates, uncollectible receivables, the timing of orders or shipments and the Company’s ability to meet its production plan and its customer delivery schedules, loss on disposition of assets, cancellations or delays in renewal of contracts, lack of suitable raw materials, the Company’s ability to receive regulatory approvals for its products and continued demand in the U.S. for late stage clinical products or the successful outcome of the Company’s investment in new products.

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, 2014, including the Forward-Looking Statement sections therein, and other filings with the SEC. The Company cautions investors and potential investors not to place significant reliance on the forward-looking statements contained in this press release and to give careful consideration to the risks and uncertainties listed above and contained in our SEC filings. The forward-looking statements in this press release speak only as of the date of this document, and the Company undertakes no obligation to update or revise any of these statements.

Use of Non-GAAP Financial Measures
EBITDA and Adjusted Income from Continuing Operations are non-GAAP financial measures. The Company defines EBITDA as operating profit plus depreciation and amortization expense and Adjusted Income from Continuing Operations is calculated in a manner consistent with that shown in the table at the end of this release. Other companies may have different definitions of EBITDA and Adjusted Income from Continuing Operations, therefore, these measures may not be comparable with non-GAAP financial measures provided by other companies. EBITDA and Adjusted Income from Continuing Operations should not be considered alternatives to measurements required by U.S. GAAP, such as net income or operating profit, and should not be considered a measure of Cambrex’s liquidity. Cambrex uses EBITDA and Adjusted Income from Continuing Operations among several other metrics to assess and analyze its operational results and trends. Cambrex also believes EBITDA and Adjusted Income from Continuing Operations are useful to investors because they are common operating performance metrics as well as metrics routinely used to assess potential enterprise value. Cambrex has provided a reconciliation of U.S. GAAP amounts to non-GAAP amounts at the end of this press release.

Cambrex Icon
Posted by Cambrex
Tags