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Cambrex Reports Fourth Quarter and Full Year 2009 Results
Date:2/10/2010

EAST RUTHERFORD, N.J., Feb. 10 /PRNewswire-FirstCall/ -- Cambrex Corporation (NYSE: CBM) reports fourth quarter results for the period ended December 31, 2009.

Highlights

  • Reported sales decreased by 9.9%, and excluding the impact of foreign currency, sales decreased 15.8% compared to fourth quarter 2008.  For the full year 2009, reported sales decreased 5.3%, and decreased 1.2% excluding the impact of foreign currency.
  • EBITDA was $9.4 million in the fourth quarter 2009 compared to Adjusted EBITDA of $10.5 million in the same quarter last year.  For the full year 2009, EBITDA was $47.1 million compared to Adjusted EBITDA of $47.7 million in 2008.  See the reconciling table at the end of this release.
  • Debt, net of cash was $68.5 million at the end of fourth quarter 2009, a reduction of $10.2 million during the quarter and a reduction of $22.9 million for the year.
  • Provision for Income Taxes includes a $5.3 million expense in the fourth quarter 2009 related to an ongoing audit of a European subsidiary.
  • Net Loss was $2.8 million in the fourth quarter 2009 compared with $1.0 million for the fourth quarter 2008.  Net Income was $10.4 million for the full year 2009 compared to $7.9 million in 2008.

Fourth Quarter 2009 Operating Results

Fourth quarter 2009 sales of $58.7 million were 9.9% lower than the fourth quarter 2008.  Excluding a 5.9% favorable impact of foreign exchange, reflecting a weaker U.S. dollar, sales decreased 15.8%.  The decrease is primarily due to lower volumes of an active pharmaceutical ingredient ("API") that utilizes the Company's polymeric drug delivery technology, lower sales of two APIs manufactured under long-term supply agreements and lower custom development revenues, all due to the timing of orders throughout 2009.  Volumes of a feed additive for which a contract expired earlier in 2009 were also lower.  Partially offsetting these decreases were increased generic revenues resulting from improved order patterns.

Fourth quarter 2009 Gross Margin increased to 24.7% of sales from 24.2% during the fourth quarter 2008, with foreign currency unfavorably impacting gross margin by 0.6% in the fourth quarter 2009.  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 lower volumes of an API manufactured under a long-term supply agreement.

Selling, General and Administrative Expenses in the fourth quarter 2009 were $8.8 million compared to $9.0 million in the same period last year.  The decrease is a result of lower personnel costs and professional fees at the corporate headquarters and the benefit of the termination of certain postretirement benefits partially offset by higher legal fees, higher expenses at the Company's manufacturing sites and an unfavorable impact of foreign currency.

Research and Development Expenses increased to $2.0 million in the fourth quarter 2009 from $1.6 million in the fourth quarter 2008 due to higher costs related to the development of new products and technologies.

Operating Profit increased to $3.7 million in the fourth quarter 2009 from $1.8 million in the fourth quarter 2008.  Excluding Restructuring Expenses and Strategic Alternative Costs of $3.3 million recorded in 2008, Operating Profit decreased $1.4 million quarter over quarter.  EBITDA was $9.4 million, or 16.0% of sales, compared to Adjusted EBITDA of $10.5 million, or 16.0% of sales last year.

The Provision for Income Taxes totaled $5.7 million in the fourth quarter 2009 compared to $1.1 million in the fourth quarter 2008.  Provision for Income Taxes includes a $5.3 million expense in the fourth quarter 2009 related to an ongoing audit of a European subsidiary.  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 Loss for the fourth quarter 2009 was $2.8 million or $0.09 per share compared to $1.0 million or $0.03 per share in the fourth quarter 2008.  

Capital expenditures and depreciation for the fourth quarter 2009 were $2.9 million and $5.7 million compared to $7.3 million and $4.9 million in the fourth quarter 2008, respectively.  The decrease in capital expenditures is largely due to fourth quarter 2008 spending on two large capital projects for which the majority of work has since been completed.  

Steven M. Klosk, President and Chief Executive Officer, said, "We are pleased to finish 2009 at the high end of our prior earnings guidance, with just over $47 million in EBITDA.  We successfully managed working capital and expense levels throughout the business and reduced net debt by nearly $23 million during the year.

"As we entered 2009 the macro-economy suggested a conservative approach that led us to focus on reducing costs and maximizing cash flow.  While the outlook for the economy appears to have stabilized as we start 2010, our smaller customers continue to face a difficult funding environment and pricing pressures continue to exist in most product categories.  The 2010 forecasts for certain of our larger products are lower than we expected, and in some cases lower than 2009, for a variety of reasons.  We renegotiated an extension of an important contract for certain drug delivery products during the fourth quarter, and made price and volume concessions in order to maintain the majority of the share of this business over the next three years.  These are key factors contributing to our guidance of flat to lower sales and profits for 2010.

"We have opportunities to grow revenues through the advancement of projects in our pipeline of late stage development products, within our controlled substances and drug delivery categories and through the launch of new generic APIs.  However, we are convinced that we need to invest more aggressively, both internally and externally, in niche markets, novel technologies, and new geographies that generate sustainable growth.  Of course, we will continue to identify ways to further reduce costs and increase cash flow as we focus on growing the business."

Guidance

The Company currently expects that sales for 2010, excluding the impact of foreign currency, will be between a decline of 5% and an increase of 1% versus 2009.  Full year 2010 EBITDA is currently expected to be between $41 and $47 million.

For 2010, capital expenditures are expected to be approximately $12 to $15 million and depreciation is expected to be $22 to $24 million.

The financial information contained in this press release is unaudited, subject to revision and should not be considered final until the 2009 Form 10-K 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 historical operating results for the periods presented due to the magnitude and nature of certain recorded expenses in prior years.

Conference Call and Webcast

The Conference Call to discuss fourth quarter 2009 results will begin at 8:30 a.m. Eastern Time on Thursday, February 11, 2010 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 54652678 and call approximately 10 minutes prior to start time.  A webcast is available from the Investors section on the Cambrex website located at 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 Thursday, February 18, 2010 by calling 1-800-642-1687 for domestic and +1-706-645-9291 for international.  Please use the pass code 54652678 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 September 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 www.cambrex.com.

    
    
                            CAMBREX CORPORATION                        
                        Statement of Profit and Loss                   
             For the Quarters Ended December 31, 2009 and 2008         
                               (in thousands)                          
                                                                       
                                              2009            2008 
                                         -------------   ------------- 
                                                  % of            % of 
                                         Amount  Sales   Amount  Sales 
                                         ------  -----   ------  ----- 
                                                                       
    Gross Sales                         $58,709  100.0% $65,178  100.0%
         Allowances and Rebates             779    1.3%     962    1.5%
                                         ------          ------       
    Net Sales                            57,930   98.7%  64,216   98.5%
                                                                       
         Other Revenues                     (63)  -0.1%     (83)  -0.1%
                                         ------          ------       
                                                                       
    Net Revenues                         57,867   98.6%  64,133   98.4%
                                                                       
         Cost of Goods Sold              43,353   73.9%  48,365   74.2%
                                         ------          ------        
                                                                       
    Gross Profit                         14,514   24.7%  15,768   24.2%
                                                                       
    Operating Expenses                                                 
         Selling, General and                                          
          Administrative Expenses         8,822   15.0%   9,010   13.9%
         Research and Development                                      
          Expenses                        2,005    3.4%   1,645    2.5%
         Restructuring Expenses               -    0.0%   3,226    4.9%
         Strategic Alternative Costs          -    0.0%     107    0.2%
                                         ------          ------       
    Total Operating Expenses             10,827   18.4%  13,988   21.5%
                                         ------          ------        
                                                                       
    Operating Profit                      3,687    6.3%   1,780    2.7%
                                                                       
    Other Expenses/(Income):                                           
         Interest Expense, net            1,224    2.1%   1,366    2.1%
         Other (Income)/Expense, net       (502)  -0.9%     295    0.5%
                                         ------          ------        
                                                                       
    Income Before Income Taxes            2,965    5.1%     119    0.1%
                                                                       
         Provision for Income Taxes       5,733    9.8%   1,069    1.6%
                                         ------          ------        
                                                                       
    Net Loss                            $(2,768)  -4.7%   $(950)  -1.5%
                                         ======          ======        
                                                                       
    Loss per Share of Common Stock                                     
         Basic                           $(0.09)         $(0.03)       
         Diluted                         $(0.09)         $(0.03)       
                                                                       
    Weighted Average Shares Outstanding                                
         Basic                           29,286          29,175        
         Diluted                         29,286          29,175        
    
    
    
                             CAMBREX CORPORATION                        
                        Statement of Profit and Loss                    
           For the Twelve Months Ended December 31, 2009 and 2008       
                               (in thousands)                           
                                                                        
                                              2009             2008
                                        ---------------   --------------
                                                   % of            % of 
                                         Amount   Sales    Amount  Sales 
                                        --------  -----   -------  ----- 
                                                                        
    Gross Sales                         $236,277  100.0% $249,618 100.0%
         Allowances and Rebates            1,402    0.6%    2,099   0.8%
                                         -------          -------       
    Net Sales                            234,875   99.4%  247,519  99.2%
                                                                        
         Other Revenues                     (325)  -0.1%    1,709   0.6%
                                         -------          -------       
                                                                        
    Net Revenues                         234,550   99.3%  249,228  99.8%
                                                                        
         Cost of Goods Sold              164,272   69.6%  175,485  70.3%
                                         -------          -------       
                                                                        
    Gross Profit                          70,278   29.7%   73,743  29.5%
                                                                        
    Operating Expenses                                                  
         Selling, General and                                           
          Administrative Expenses         35,711   15.0%   40,521  16.2%
         Research and Development                                       
          Expenses                         7,929    3.4%    7,590   3.0%
         Restructuring Expenses                -    0.0%    4,695   1.9%
         Strategic Alternative Costs           -    0.0%    1,515   0.6%
                                         -------          -------       
    Total Operating Expenses              43,640   18.4%   54,321  21.7%
                                         -------          -------       
                                                                        
    Operating Profit                      26,638   11.3%   19,422   7.8%
                                                                        
    Other Expenses/(Income):                                            
         Interest Expense, net             4,634    2.0%    3,668   1.5%
         Other (Income)/Expense, net        (641)  -0.3%      754   0.3%
                                         -------          -------       
                                                                        
    Income Before Income Taxes            22,645    9.6%   15,000   6.0%
                                                                        
         Provision for Income Taxes       12,253    5.2%    7,071   2.8%
                                         -------          -------       
                                                                        
    Net Income                           $10,392    4.4%   $7,929   3.2%
                                         =======          =======       
                                                                        
    Earnings per Share of Common Stock                                  
         Basic                             $0.36            $0.27       
         Diluted                           $0.36            $0.27       
                                                                        
    Weighted Average Shares Outstanding                                 
         Basic                            29,241           29,116       
         Diluted                          29,267           29,161       
    
    
    
                         CAMBREX CORPORATION              
             Reconciliation of GAAP to non-GAAP Results   
              For the Quarters and Twelve Months Ended    
                      December 31, 2009 and 2008          
                           (in thousands)                 
                                                    
                                 Fourth Quarter     Fourth Quarter 
                                      2009              2008 
                                 --------------     --------------
                                                    
    Operating Profit, as Reported        $3,687             $1,780
                                                    
    Depreciation and Amortization         5,731              4,940
                                                    
    Strat. Alt. & Restructuring                     
     Expenses*                                -              3,333
                                                    
    CEO Retirement**                          -                408
                                 --------------     --------------
                                                    
    Adjusted EBITDA                      $9,418            $10,461
                                 ==============     ==============
                                                    
                                                    
                                                    
                                                    
                                  Twelve Months      Twelve Months 
                                      2009                2008 
                                 --------------     --------------
                                                    
    Operating Profit, as Reported       $26,638            $19,422
                                                    
    Depreciation and Amortization        20,505             21,055
                                                    
    Strat. Alt. & Restructuring                     
     Expenses*                                -              6,210
                                                    
    CEO Retirement**                          -              1,040
                                 --------------     --------------
                                                    
    Adjusted EBITDA                     $47,143            $47,727
                                 ==============     ==============
                                                    
    *  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 retirement
    of 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 December 31, 2009 and 2008                   
                                 (in thousands)                             
                                                                            
                                                                            
                                                    December 31, December 31,
    Assets                                              2009         2008
    ------                                          -----------  -----------
                                                                            
    Cash and Cash Equivalents                           $52,365      $32,540
    Trade Receivables, net                               32,025       36,685
    Inventories, net                                     58,369       61,133
    Prepaid Expenses and Other Current Assets             6,654        8,798
                                                    -----------  -----------
      Total Current Assets                              149,413      139,156
                                                                            
    Property, Plant and Equipment, net                  161,149      161,500
    Goodwill                                             36,360       35,374
    Other Non-Current Assets                              4,593        5,042
                                                    -----------  -----------
                                                                            
      Total Assets                                     $351,515     $341,072
                                                    ===========  ===========
                                                                            
    Liabilities and Stockholders' Equity                                    
    ------------------------------------                                    
                                                                            
    Accounts Payable                                    $17,038      $19,700
    Accrued Expenses and Other Current Liabilities       38,013       45,080
                                                    -----------  -----------
      Total Current Liabilities                          55,051       64,780
                                                                            
    Long-term Debt                                      120,800      123,800
    Deferred Tax Liabilities                             17,305       16,138
    Accrued Pension and Postretirement Benefits          40,963       44,165
    Other Non-Current Liabilities                        14,126       17,403
                                                    -----------  -----------
                                                                            
      Total Liabilities                                $248,245     $266,286
                                                                            
      Stockholders' Equity                             $103,270      $74,786
                                                    -----------  -----------
                                                                            
      Total Liabilities and Stockholders' Equity       $351,515     $341,072
                                                    ===========  ===========

SOURCE Cambrex Corporation

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