Cambrex first quarter sales increase 14.4% to $70.6 million

Cambrex Corporation (NYSE: CBM) reports first quarter results for the period ended March 31, 2012.

Highlights

• Reported sales increased by 14.4%, and excluding the impact of foreign currency, sales increased 16.7% compared to the first quarter of 2011. 
• EBITDA increased by 41% to $15.6 million in the quarter, compared to $11.0 million in the first quarter of 2011. 
• Debt, net of cash was $63.2 million at the end of the quarter, an improvement of $2.9 million during the quarter which includes a positive $0.6 million currency impact on foreign cash balances. 

First Quarter of 2012 Operating Results – Continuing Operations
The Company has provided a reconciliation from GAAP amounts to non-GAAP amounts at the end of this press release.

Sales in the first quarter of 2012 of $70.6 million were 14.4% higher than the first quarter of 2011.  Foreign exchange unfavorably impacted sales by 2.3%.  The increase is primarily due to higher volumes of controlled substances and generic active pharmaceutical ingredients ("APIs").            

Gross margins in the first quarter of 2012 increased to 31.8% from 28.3% in the first quarter of 2011.  Excluding a favorable impact from foreign currency, first quarter of 2012 margins increased to 30.7%.  The increase is due to higher production volumes, leading to increased plant efficiencies. 

Selling, General and Administrative Expenses in the first quarter of 2012 were $10.0 million compared to $9.1 million in the same period last year.  The increase is primarily the result of increased sales and marketing expenses, higher medical expenses and higher personnel related expenses.

Operating Profit increased to $10.1 million in the first quarter of 2012 from $5.3 million in the first quarter of 2011.  As described above, increased profits, primarily driven by higher sales volumes, were partially offset by lower pricing and slightly higher operating expenses.          

Net Interest Expense increased to $0.7 million in the first quarter of 2012 from $0.6 million in the same period last year.  This increase is primarily due to higher average interest rates partially offset by lower average debt in the first quarter of 2012.  The average interest rate on debt was 2.0% in the first quarter of 2012 versus 1.6% in the first quarter of 2011. 

Equity in Losses of Partially-Owned Affiliates includes $0.5 million and $0.4 million in the first quarters of 2012 and 2011, respectively, for the Company's share of losses in Zenara Pharma, a pharmaceutical company focused on the formulation of finished dosage form products.  Cambrex owns a 51% stake in Zenara.  The Company's share of Zenara's losses includes $0.3 million of amortization expense in both first quarters of 2012 and 2011.  Equity in Losses of Partially-Owned Affiliates for the first quarter of 2012 also includes income of $0.3 million related to an investment in a European joint venture.

The Provision for Income Taxes totaled $2.2 million and resulted in an effective tax rate of 23.9% in the first quarter of 2012.  The Company's effective tax rate has been and is 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.

Income from continuing operations for the first quarter of 2012 was $7.0 million or $0.24 per share compared to $2.9 million or $0.10 per share in the first quarter of 2011.

Capital expenditures and depreciation for the first quarter of 2012 were $2.6 million and $5.4 million, respectively, compared to $1.7 million and $5.6 million in the first quarter of 2011, respectively.

Steven M. Klosk, President and Chief Executive Officer, said, "We are very pleased with the strong sales and profit growth in the first quarter driven by most of our product categories.  The business generated significant volume increases in controlled substances and generic APIs and we continue to make progress with new product development programs to support future growth."

Guidance – Continuing OperationsThe Company continues to expect that full year 2012 sales, excluding the impact of foreign currency, will increase between 2% and 6% versus 2011, and that full year 2012 EBITDA, defined as operating profit plus depreciation and amortization expense, will be between $47 and $53 million.  EBITDA guidance is for continuing operations and excludes the impact of any M&A or restructuring activities.  The above guidance does not reflect Zenara, which is accounted for using the equity method, and as such is not consolidated into the Company's results.  Cambrex's income statement reflects 51% of Zenara's net results within Equity in Losses of Partially-Owned Affiliates.  For 2012, the Company currently expects Zenara to have revenues in the low single digit millions and a small EBITDA loss.

Capital expenditures are expected to be approximately $16 to $19 million and depreciation is expected to be $21 to $23 million in 2012.

SOURCE Cambrex Corporation