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