AMRI (NASDAQ: AMRI) today reported financial and operating results for
the fourth quarter and full year ending December 31, 2009.
“In the first
quarter, we expect contract revenue to range from $34 million to $38
million. For the full year 2010, we expect contract revenue to range
from $165 million to $175 million, an increase of up to 12% versus 2009.”
Financial and other highlights for the fourth quarter and year include:
-
Quarter over quarter increase in contract revenue in our Discovery
business segment
-
Received $0.8 million milestone payment resulting from AMRI’s
collaboration with Bristol-Myers Squibb for the nomination of a third
compound for preclinical development
-
Recurring royalties of $7.6 million, an increase of 13% from the
fourth quarter of 2008
-
Full year cash flow from operations of $39.1 million, a 48% increase
from full year 2008 levels
-
Full year free cash flow of $23.9 million, representing a $21.3
million increase over full year 2008 levels
-
Recording of a non-cash goodwill impairment charge of $22.9 million in
the Large Scale Manufacturing segment and a non-cash write-down of a
deferred tax asset of $2.0 million
Fourth Quarter 2009 Results
Total revenue for the fourth quarter of 2009 was $43.4 million, a
decrease of 23% compared to total revenue of $56.4 million reported in
the fourth quarter of 2008.
Total contract revenue for the fourth quarter of 2009 was $35.0 million,
a decrease of 29% compared to total contract revenue of $49.6 million
reported in the fourth quarter of 2008. Total contract revenue
encompasses revenue from AMRI’s Discovery Services, Development and
Small Scale Manufacturing, and Large Scale Manufacturing business
components.
-
Discovery Services contract revenue for the fourth quarter was $12.7
million, a decrease of 3% from $13.1 million in 2008.
-
Development/Small Scale Manufacturing contract revenue for the fourth
quarter was $9.4 million, a decrease of 29% from $13.2 million in 2008.
-
Large Scale Manufacturing contract revenue for the fourth quarter was
$12.9 million, a decrease of 45% from $23.3 million in 2008.
Recurring royalties in the fourth quarter of 2009 were $7.6 million, an
increase of 13% compared to recurring royalties of $6.8 million reported
in 2008. AMRI earns royalties from worldwide sales of the non-sedating
antihistamine Allegra® (Telfast® outside the
United States), as well as certain generic forms of Allegra®,
for patents relating to the active ingredient in Allegra®.
Net loss under U.S. GAAP of $19.2 million, or $0.62, in the fourth
quarter of 2009 includes the impact of a $22.9 million non-cash goodwill
impairment charge, or $0.48 per diluted share, a $2.0 million non-cash
write-down of a deferred tax asset, or $0.07 per diluted share, and a
$0.4 million restructuring charge, or $0.01 per share. Excluding these
items, net loss on an adjusted basis in the fourth quarter of 2009 was
$1.9 million, or $0.06 per diluted share.
The non-cash goodwill impairment charge was the result of our annual
goodwill impairment testing which determined a decline in fair value to
below our carrying value of the Large Scale Manufacturing segment. The
non-cash write-down of a deferred tax asset relates to foreign net
operating loss carryforwards and resulted from an analysis of the
projected future taxable income of certain of our foreign operations.
The restructuring charge of $0.4 million related to the consolidation of
India operations. The purpose of the consolidation was to decrease the
cost of administrative operations by moving all administrative
activities from Mumbai to the company’s Hyderabad Research Centre.
Full Year 2009 Results
Total revenue for the full year ended December 31, 2009 was $196.4
million, a decrease of $32.9 million or 14% compared to $229.3 million
in 2008.
Total contract revenue for the full year was $156.8 million, a decrease
of $38.7 million or 20% from 2008.
-
Contract revenue for Discovery Services in the year ended December 31,
2009 was $47.7 million, a decrease of 17% from $57.7 million in 2008.
-
Contract revenue for Development/Small Scale Manufacturing in the year
ended December 31, 2009 was $38.1 million, a decrease of 32% from
$56.2 million in 2008.
-
Contract revenue for Large Scale Manufacturing was $71.0 million, a
decrease of 13% compared to $81.5 million in the year ended December
31, 2008.
Milestone revenue resulting from the company's 2005 licensing agreement
with BMS for the year ended December 31, 2009 was $4.8 million, compared
to total milestone revenue of $5.5 million in 2008.
Recurring royalties from Allegra® for the full year were
$34.9 million, an increase of 23% compared to royalty revenue of $28.3
million in 2008.
Net loss under U.S. GAAP in the year ended December 31, 2009 was $16.7
million or $0.54 per basic and diluted share, compared to net income of
$20.6 million or $0.66 per basic and $0.65 per diluted share in 2008.
Net loss for the year ended December 31, 2009 includes a $0.8 million,
or $0.03 per diluted share, adjustment to decrease income tax expense
due to the reassessment of previously uncertain tax positions, a $22.9
million, or $0.48 per diluted share, goodwill impairment charge, a $2.0
million, or $0.07 per diluted share, write-down of a deferred tax asset,
and a $0.4 million, or $0.01 per diluted share, restructuring charge.
Excluding these items, net loss on an adjusted basis for the year ended
December 31, 2009 was $0.3 million, or $0.01 per diluted share.
For a reconciliation of net income and earnings per diluted share as
reported to adjusted net income and earnings per diluted share for the
2009 and 2008 reporting period, please see Table 1 at the end of this
press release.
AMRI Chairman, President and CEO Thomas E. D’Ambra said, “In spite of a
difficult business climate, AMRI improved its net cash position by
almost $24 million from a year ago. Even as we tightened our belts
regarding short term expenditures, AMRI continued to invest in its
future, completing the build out and relocation into new facilities in
Bothell, Washington and Budapest, Hungary and developing new
technologies to enhance our contract services. In addition, we continued
to strengthen our leadership team and the AMRI brand through strong
project execution and improved procedures, while continuing to pursue
strategic opportunities to broaden our global services.”
Dr. D’Ambra continued, “Although the broad economic collapse that began
in late 2008 and accelerated into the first part of last year had its
roots outside of the healthcare sector, virtually every industry and
company was negatively affected, AMRI included. The goodwill impairment
and deferred tax asset write-down, announced today, are additional
non-cash consequences which reflect the decreased valuation multiples in
our industry as well as the effect of the delays in FDA approvals of our
customers new products and the impact on our forecast.”
Dr. D’Ambra concluded, “We realize that the economic and political
disruptions of 2009, as well as evolving industry dynamics, are changing
the outsourcing market. As we enter 2010, we are cautiously optimistic.
In response to growing visibility, we have recently resumed hiring at
all non-US operations. With our broad technology services platform and
global footprint, AMRI is well positioned to capitalize on a growing
outsourcing market, delivering Western standards of highest quality,
productivity and added value in a globally competitive environment.”
Liquidity and Capital Resources
At December 31, 2009, AMRI had cash, cash equivalents and marketable
securities of $111.1 million, compared to $87.5 million at December 31,
2008.
Total debt at December 31, 2009 was $13.5 million, down from $13.7
million at December 31, 2008. Cash, cash equivalents, and marketable
securities, net of debt, were $97.6 million at December 31, 2009,
compared to $73.8 million at December 31, 2008. The increase in cash and
equivalents net of debt is due to cash provided by operations of $39.0
million in 2009, partially offset by capital expenditures of $15.2
million. Cash provided by operations in 2009 includes the receipt of a
$10 million sub-license fee from sanofi-aventis. Total common shares
outstanding, net of treasury shares, were 31,642,263 at December 31,
2009.
2010 Financial Guidance Update
AMRI Chief Financial Officer Mark T. Frost provided contract revenue and
EPS guidance for the first quarter and full year 2010. “In the first
quarter, we expect contract revenue to range from $34 million to $38
million. For the full year 2010, we expect contract revenue to range
from $165 million to $175 million, an increase of up to 12% versus 2009.”
Mr. Frost continued, “With regard to our royalty revenues from worldwide
sales of Allegra® and certain generic forms of Allegra®,
we expect first quarter royalties of approximately $11 to $12 million
and full year 2010 royalties of approximately $29 to $31 million. For
the first quarter we expect EPS to range from $0.01 to $0.05. For the
full year we expect EPS to range from $0.04 to $0.08.”
Full Year Highlights
During 2009, AMRI made several noteworthy announcements including the
following:
R&D Activities: