Cambrex Reports First Quarter 2008 Results
Discontinued Operations and Basis of Reporting
As previously reported, Cambrex sold its Bioproducts and Biopharmabusinesses (the "Bio Businesses") to Lonza for $463.9 million in February2007. Discontinued Operations in the first quarter of 2007 financialstatements include the results of operations of the Bio Businesses through thedate of sale as well as the corresponding gain on sale.
The Company has provided a reconciliation from adjusted amounts to GAAPamounts at the end of this press release. Management believes that theadjusted amounts provide a more meaningful representation of the Company'soperating results for the periods presented due to the magnitude and nature ofcertain expenses recorded.
First Quarter 2008 Operating Results -- Continuing Operations
First quarter 2008 sales of $61.7 million were 5.1% lower than sales inthe first quarter 2007 and 11.3% lower excluding the effect of foreigncurrency. Comparing the current quarter to the same quarter last year,excluding the currency impact, Cambrex experienced lower sales of agastrointestinal active pharmaceutical ingredient ("API"), lower customdevelopment revenues and lower volumes of fine chemicals and feed additives,partially offset by higher demand for controlled substances.
First quarter 2008 Gross Margin decreased to 35.5% of sales from 37.5%during the first quarter 2007, with foreign currency unfavorably impactinggross margin as a percentage of sales by 1.3%. Lower pricing and costsassociated with the validation of the new API finishing facility at the Milan,Italy site during first quarter of 2008 were partially offset by favorableproduct mix.
Operating Profit was $7.5 million in the first quarter 2008 compared to anOperating Loss of $18.4 million for the first quarter 2007. AdjustedOperating Profit was $8.3 million, or 13.5% of sales, compared to $6.4million, or 9.9% of sales for the first quarter last year. Adjusted EBITDAwas $13.5 million, or 21.9% of sales, compared to $11.3 million, or 17.5% ofsales last year. The increases in both Adjusted Operating Profit and AdjustedEBITDA were driven primarily by the decline in corporate expenses offset bylower profits from reduced sales volumes.
James A. Mack, Chairman, President, and Chief Executive Officer of CambrexCorporation, said "First quarter Adjusted EBITDA was up $2.1 million comparedto the same quarter last year, driven by over $4 million in reduced corporateexpenses for the quarter. Sales volumes were down compared to 2007, largelydue to order patterns, however we continue to expect that we will achieve ourpreviously announced 2008 sales and earnings guidance. The timing ofshipments will continue to vary quarter to quarter due to manufacturing cycletimes and customer demand schedules.
On the operations side, we are progressing on key initiatives that bodewell for the future. We've fully integrated our recently acquiredEstonia-based R&D laboratories, allowing us to manage technical resources moreefficiently in order to both compete more effectively on early-stage clinicalprojects and free up resources to work on larger scale projects. The drugdelivery programs remain on track to add new products and expand into newgeographic markets. Our custom development pipeline remains strong withseveral Phase III projects that have good revenue potential when the productsare approved, possibly in late 2008 or 2009."
Mr. Mack concluded, "Key capital projects continue to progress on schedulewith new laboratories in our Iowa facility expected to be ready for occupancyduring the second quarter. The new state-of-the-art finishing facility inItaly is in the middle of its validation process and we expect our newmid-scale API manufacturing fa
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