CAMBREX CORPORATION EAST RUTHERFORD, N.J., May 1, 2015 /PRNewswire/ -- Cambrex Corporation (NYSE: CBM) reports results for the first quarter ended March 31, 2015.
Highlights
-- Sales increased 18% compared to the first quarter of 2014, and increased
27% excluding foreign currency impact, driven by Innovator products and
Controlled Substances.
-- EBITDA increased to $18.0 million from $8.4 million in the first quarter
of 2014.
-- GAAP Diluted EPS from continuing operations was $0.26 versus $0.04 in
the first quarter last year and Adjusted Diluted EPS was $0.29 compared
to $0.07 in the same quarter last year.
-- Net Cash improved $22.4 million to $7.9 million compared to Debt, net of
cash, of $14.5 million at December 31, 2014.
-- The Company continues to expect full year 2015 sales, excluding currency
impact, to increase between 16% and 20% compared to 2014. Adjusted
EBITDA is also still expected to be between $101 and $107 million, a 23%
to 30% increase over 2014. Adjusted Diluted EPS from continuing
operations continues to be expected to be between $1.62 and $1.75 per
share, a 22% to 32% increase over 2014 (see Financial Expectations
section below).
"The first quarter was a great start to the year and keeps us on track for significant growth in 2015," commented Steven M. Klosk, President and Chief Executive Officer of Cambrex. "We saw strong demand in certain larger products within our Innovator product category and our Controlled Substances category also performed well against the first quarter last year. Although the timing of shipments resulted in flat revenues in the first quarter compared to the same quarter last year, orders remain strong in our Generics product category. These trends, along with our visibility into the rest of the year, give us a high level of confidence for the remainder of 2015.
"As we announced earlier this year, we have been and will continue to invest aggressively in our plants. We recently broke ground on a significant capacity expansion at our Charles City, Iowa facility, and additional facility upgrades and capacity expansions are underway 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.
First Quarter 2015 Operating Results - Continuing Operations
Sales were $78.2 million, compared to $66.2 million in the same period last year, representing an 18% increase. Foreign exchange unfavorably impacted reported sales growth by 9%. The sales increase primarily reflects higher volumes, partially offset by slightly lower pricing. Certain branded active pharmaceutical ingredients (APIs) and controlled substances drove most of the growth.
Gross margins increased to 37% from 25% compared to the same period last year. This increase was primarily due to higher plant utilization and favorable product mix.
Selling, general and administrative expenses were $13.8 million compared to $11.6 million in the same period last year. The increase was mainly due to higher personnel costs, sales and marketing expenses, recruiting, and pension expense, partially offset by a favorable impact from foreign exchange.
Operating profit increased to $12.7 million from $2.5 million in the same period last year. The increase in operating profit was primarily the result of higher gross profit, partially offset by higher operating expenses. EBITDA was $18.0 million compared to $8.4 million in the same period last year.
The provision for income taxes was $3.8 million and resulted in an effective tax rate of 31% compared to an effective tax rate of 28% in the same period last year. The increase in the rate is primarily attributable to a benefit recorded during the first quarter of 2014 for a partial reversal of a valuation allowance.
Income from continuing operations was $8.4 million or $0.26 per share compared to $1.2 million or $0.04 per share in the same period last year. Adjusted income from continuing operations was $9.2 million or $0.29 per share, compared to $2.2 million or $0.07 per share, respectively, in the same period last year (see table at the end of this release).
Capital expenditures and depreciation were $12.0 million and $5.1 million, respectively, compared to $4.1 million and $5.8 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.
Expectations
------------
Gross sales increase 16% - 20%
Adjusted EBITDA $101 - $107 million
Adjusted income from continuing
operations per share $1.62 - $1.75
Reduction of debt, net of cash $5 - 10 million
Capital expenditures $80 - $85 million
Depreciation $22 - $24 million
Effective tax rate 33% - 36%
Consistent with prior years, 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 currency. Adjusted EBITDA and Adjusted income from continuing operations per share are computed on a basis consistent with the reconciliation of the first 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 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 first quarter 2015 Form 10-Q is filed with the SEC.
Conference Call and Webcast
A conference call to discuss the Company's first quarter 2015 results will begin at 8:30 a.m. Eastern Time on Friday, May 1, 2015 and can be accessed by calling 1-888-468-2440 for domestic and +1-719-325-2454 for international. Please use the passcode 7993632 and call approximately 10 minutes prior to the start time. A webcast will be available in the Investors section on the Cambrex website located at www.cambrex.com. A telephone replay of the conference call will be available through Friday, May 8, 2015 by calling 1-888-203-1112 for domestic and +1-719-457-0820 for international. Please use the passcode 7993632 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 http://www.cambrex.com/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, Adjusted 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 and Adjusted EBITDA are calculated in a manner consistent with that shown in the tables at the end of this release. Other companies may have different definitions of EBITDA, Adjusted EBITDA and Adjusted Income from Continuing Operations, therefore, these measures may not be comparable with non-GAAP financial measures provided by other companies. EBITDA, Adjusted 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, Adjusted EBITDA and Adjusted Income from Continuing Operations among several other metrics to assess and analyze its operational results and trends. Cambrex also believes EBITDA, Adjusted 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 CORPORATION
Statements of Profit and Loss
For the Quarters Ended March 31, 2015 and 2014
(in thousands, except per-share data)
2015 2014
---- ----
% of % of
Amount Sales Amount Sales
------ ----- ------ -----
Gross Sales $78,184 $66,192
Commissions, Allowances and Rebates 451 549
--- ---
Net Sales 77,733 65,643
Other (208) 462
---- ---
Net Revenues 77,525 66,105
Cost of Goods Sold 48,446 62.0% 49,527 74.8%
------ ------
Gross Profit 29,079 37.2% 16,578 25.0%
Operating Expenses
Selling, General and Administrative Expenses 13,751 17.6% 11,633 17.6%
Research and Development Expenses 2,655 3.4% 2,475 3.7%
Total Operating Expenses 16,406 21.0% 14,108 21.3%
------ ------
Operating Profit 12,673 16.2% 2,470 3.7%
Other Expenses:
Interest Expense, Net 476 522
Other Expenses, Net 62 328
--- ---
Income Before Income Taxes 12,135 15.5% 1,620 2.4%
Provision for Income Taxes 3,767 454
----- ---
Income from Continuing Operations $8,368 10.7% $1,166 1.8%
Loss from Discontinued Operations, Net of Tax (375) (184)
---- ----
Net Income $7,993 10.2% $982 1.5%
Basic Earnings/(Loss) per Share of Common Stock:
Income from Continuing Operations $0.27 $0.04
Loss from Discontinued Operations, Net of Tax $(0.01) $(0.01)
Net Income $0.26 $0.03
Diluted Earnings/(Loss) per Share of Common Stock:
Income from Continuing Operations $0.26 $0.04
Loss from Discontinued Operations, Net of Tax $(0.01) $(0.01)
Net Income $0.25 $0.03
Weighted Average Shares Outstanding
Basic 31,198 30,546
Diluted 32,158 31,408
CAMBREX CORPORATION
Consolidated Balance Sheets
As of March 31, 2015 and December 31, 2014
(in thousands)
March 31, December 31,
Assets 2015 2014
------ ---- ----
Cash and Cash
Equivalents $67,910 $45,518
Trade Receivables, Net 41,475 77,124
Other Receivables 6,744 10,610
Inventories, Net 107,721 85,630
Prepaid Expenses and Other
Current Assets 9,319 8,688
----- -----
Total Current Assets 233,169 227,570
Property, Plant and
Equipment, Net 158,994 163,567
Goodwill 40,863 43,912
Intangible Assets, Net 9,301 8,902
Deferred Income Taxes 35,318 38,424
Other Non-Current Assets 3,438 4,697
----- -----
Total Assets $481,083 $487,072
Liabilities and
Stockholders' Equity
---------------------
Accounts Payable $43,435 $43,670
Deferred Revenue 29,684 14,095
Accrued Expenses and Other
Current Liabilities 33,049 41,014
------ ------
Total Current Liabilities 106,168 98,779
Long-Term Debt 60,000 60,000
Deferred Income Taxes 8,863 10,545
Accrued Pension Benefits 47,330 50,949
Other Non-Current
Liabilities 14,523 15,573
------ ------
Total Liabilities $236,884 $235,846
Stockholders'
Equity $244,199 $251,226
Total Liabilities
and Stockholders'
Equity $481,083 $487,072
CAMBREX CORPORATION
Reconciliation of GAAP to non-GAAP Results
For the Quarters Ended March 31, 2015 and 2014
(in thousands)
First First
Quarter Quarter
2015 2014
-------- --------
Operating Profit $12,673 $2,470
Depreciation and
Amortization 5,297 5,883
----- -----
EBITDA $17,970 $8,353
CAMBREX CORPORATION
Reconciliation of GAAP to non-GAAP Results
For the Quarters Ended March 31, 2015 and 2014
(in thousands)
First Quarter 2015 First Quarter 2014
------------------ ------------------
Diluted EPS Diluted EPS
Income from Continuing Operations $8,368 $0.26 $1,166 $0.04
Stock-Based Compensation, Net of Tax(1) 700 0.02 720 0.02
Amortization of Purchased Intangibles 169 0.01 274 0.01
Adjusted Income from Continuing Operations $9,237 $0.29 $2,160 $0.07
1 Tax rate estimated at 35% for stock-based compensation.
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SOURCE Cambrex Corporation
