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Cambrex Reports Third Quarter 2009 Results

EAST RUTHERFORD, N.J., Nov. 3 /PRNewswire-FirstCall/ --Cambrex Corporation (NYSE: CBM) reports third quarter results for the period ended September 30, 2009.


  • 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 lo --------- --------- 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 ========= =========

SOURCE Cambrex Corporation

ng-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.


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 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

                            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
SOURCE Cambrex Corporation
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