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News Release

Cambrex Reports Fourth Quarter and Full Year 2018 Financial Results

- Acquired Avista Pharma Solutions, broadening capabilities, enhancing revenue growth and expanding customer base -

- Conference call at 8:30 a.m. ET on February 13, 2019 -

EAST RUTHERFORD, N.J., Feb. 13, 2019 (GLOBE NEWSWIRE) -- Cambrex Corporation (NYSE: CBM), a leading provider of development, manufacturing, testing and technology services for small molecules, reports results for the fourth quarter and full year ended December 31, 2018.

Fourth Quarter 2018 Highlights

  • - Announced the acquisition of Avista Pharma Solutions (“Avista”), an early clinical phase Contract Development, Manufacturing and Testing Organization, for approximately $252 million in total cash consideration.  This transaction closed on January 2, 2019.
     
  • - Net revenue was $134.3 million under current U.S. GAAP, ASC 606 (“ASC 606”).  Under ASC 605, the previous revenue recognition standard, and the only standard under which fourth quarter 2017 results were reported, Net revenue increased 16% compared to the same quarter last year. 
     
  • - Under current U.S. GAAP, Income from continuing operations was $1.3 million and Diluted EPS was $0.04 per share.  This reflects the impacts of the timing of certain tax charges related to tax reform in New Jersey.  Under previous U.S. GAAP utilizing ASC 605, Income from continuing operations would have been $32.3 million and Diluted EPS from continuing operations would have been $0.96 per share compared to Income from continuing operations of $40.2 million and Diluted EPS of $1.20 in the same quarter last year.  Adjusted Income from continuing operations was $48.7 million and Diluted EPS was $1.44, compared to $42.3 million and $1.26, respectively, for the same quarter last year (see table at the end of this press release).
     
  • - Under ASC 606, EBITDA was $33.5 million.  Adjusted EBITDA, which excludes the impact of adopting ASC 606, Halo’s results and Acquisition and Integration costs, was $70.7 million compared to $65.1 million in the same quarter last year (see table at the end of this press release).
     
  • - Net debt was $204.1 million at the end of the quarter, a decrease of $23.7 million during the quarter primarily driven by cash flows from operations.
     
  • - The Company expects full year 2019 Net revenue, which excludes the impact of foreign currency, to be between 21% and 25% higher than 2018 Net revenue as recorded under ASC 606 for both years.  Adjusted EBITDA is expected to be between $150 and $160 million (see Financial Expectations – Continuing Operations section below for related explanations and additional financial guidance).


“We’re very excited to add the early stage development and testing capabilities of Avista Pharma, which when added to the drug product capabilities of Halo Pharma, which we acquired a few months ago, and Cambrex’s legacy drug substance capabilities, makes us a leading global provider of end to end integrated services for small molecules.  Combining Cambrex, Halo and Avista will allow us to follow a small molecule from pre-clinical through commercialization and leverage hundreds of new customers and molecule opportunities across a much broader services and manufacturing platform.  Integration efforts are well under way with the goal of building a best-in-class fully integrated contract development and manufacturing organization,” commented Steven M. Klosk, President and Chief Executive Officer of Cambrex.

“Looking forward, we continue to see strong market conditions in the sectors that we serve.  This is especially true in early stage development and testing, where we expect continued strong growth, creating the potential for a large funnel of molecules for which we hope to deliver a broad range of services all the way through commercial approval.”

Basis of Reporting
The Company has provided a reconciliation of GAAP to adjusted (i.e. Non-GAAP) amounts at the end of this press release.  Cambrex management believes that the adjustments provide useful information to investors due to the magnitude and nature of certain amounts recorded under GAAP.

Fourth Quarter 2018 Operating Results – Consolidated, Continuing Operations
Net revenue under ASC 606 was $134.3 million. Under ASC 605, the revenue recognition standard for which 2017 results were reported, Net revenue increased to $212.3 million, or 16%, from $182.3 million in the same quarter last year.  Results under ASC 605 include a 2% unfavorable impact of foreign exchange compared to the fourth quarter of 2017.  Net revenue during the fourth quarter of 2018 includes the acquisition of Halo, now our finished dosage form segment, which contributed revenue of $23.4 million under ASC 606 and $23.2 million under ASC 605.  Excluding finished dosage form Net revenues, higher sales of controlled substances was the primary driver of the increase under ASC 605 compared to the same quarter last year.

Gross margin under ASC 606 was 36% for the fourth quarter of 2018.  Under ASC 605, Gross margin was 41% compared to 43% in the same quarter last year. Excluding the finished dosage form segment and the unfavorable impact of foreign exchange, ASC 605 Gross margin during the quarter was 42%.

Selling, general and administrative expenses were $21.5 million, compared to $18.3 million in the same quarter last year.  The increase was mainly due to higher amortization expense related to purchased intangible assets of $3.0 million within the finished dosage form segment.

Research and development expenses were $3.6 million, compared to $4.3 million in the same quarter last year. The decrease is primarily due to lower expenses related to the development of generic drug products.

Acquisition and Integration expenses of $3.4 million for the fourth quarter of 2018 represent costs associated with the acquisitions of Halo and Avista.  The acquisition of Avista closed on January 2, 2019.

Operating profit under ASC 606 was $19.8 million for the fourth quarter of 2018.  Under ASC 605, Operating profit was $58.8 million compared to $56.3 million in the same quarter last year.  The increase was primarily the result of higher gross profit partially offset by higher operating expenses as described above.  Adjusted EBITDA was $70.7 million compared to $65.1 million in the same quarter last year (see table at the end of this press release). 

Income tax expense under ASC 606 was $17.5 million resulting in an effective tax rate of 93% compared to $15.6 million and an effective tax rate of 28% in the same quarter last year. Income tax expense during the quarter reflects $11.4 million of expense primarily for a state valuation allowance due to New Jersey tax reform enacted during the fourth quarter of 2018. The fourth quarter of 2018 also includes the immediate recognition of certain effects of share-based compensation, acquisition and integration expenses, amortization of purchased intangibles, unrealized gain on investment in equity securities and the finalization of the U.S. tax reform toll charge on undistributed foreign earnings. Under ASC 605 and excluding these items, the effective tax rate would have been approximately 22% during the quarter.

Income from continuing operations under ASC 606 was $1.3 million. Under ASC 605, Income from continuing operations was $32.3 million, or $0.96 per diluted share, compared to $40.2 million, or $1.20 per diluted share, in the same quarter last year.

Adjusted Income from continuing operations, calculated under ASC 605, to be comparable to the prior year results, and including other adjustments described in the table at the end of this press release, was $48.7 million or $1.44 per share, compared to $42.3 million or $1.26 per share in the same quarter last year.

Capital expenditures were $19.1 million and depreciation and amortization was $13.7 million compared to $13.9 million and $8.8 million, respectively, in the same quarter last year. 

Net debt was $204.1 million at the end of the quarter, a decrease of $23.7 million during the quarter primarily driven by cash flows from operations.

As a result of the Halo acquisition in September 2018, and to be in alignment with how the business is managed, the Company’s operating segments were aggregated to form two reportable segments, Active Pharmaceutical Ingredients (“APIs”) and Finished Dosage Form (“FDF”). The API segment consists of four operating segments which manufactures APIs. The FDF segment consists of one operating segment which manufactures and develops finished dosage form products.

Fourth Quarter 2018 Operating Results – Active Pharmaceutical Ingredients (“API”) segment
Net revenue was $110.9 million under ASC 606. Under ASC 605, net revenue was $189.1 million compared to $182.3 in the same quarter last year, a 3.7% increase. Results under ASC 605 include a 2% unfavorable impact of foreign exchange compared to the fourth quarter of 2017.  Higher sales of controlled substances was the primary driver of the increase under ASC 605 compared to the same quarter last year.

Gross profit in the fourth quarter of 2018 was $42.6 million. Under ASC 605, Gross profit would have been $81.8 million compared to $78.9 million in the same quarter last year.  Gross margins decreased to 38% from 43% in the same quarter last year.  Excluding the impact of the new revenue recognition standard, gross margins would have been 43%. 

Selling, general and administrative (“SG&A”) expenses were $10.2 million in the fourth quarter 2018, compared to $14.0 million in the same quarter last year.  The decrease was mainly due to lower personnel related costs and consulting expenses.

Operating profit was $29.3 million under ASC 606 in the fourth quarter 2018.  Under ASC 605, operating profit was $68.6 million compared to $61.9 in the fourth quarter 2017. The increase in operating profit under ASC 605 was due to higher gross profit and lower operating expenses.

Fourth Quarter 2018 Operating Results – Finished Dosage Form (“FDF”) segment
Results on an ASC 605 basis were not materially different than the reported results under ASC 606.

FDF Net revenue in the fourth quarter of 2018 was $23.4 million under ASC 606.

Gross profit was $5.7 million and gross margin was 24% under ASC 606 in the fourth quarter of 2018.

Selling, general and administrative expenses were $5.4 million in the fourth quarter of 2018 including amortization of purchased intangibles of $3.0 million.

Acquisition and Integration expenses of $1.1 million for the fourth quarter of 2018 represent costs associated with the acquisitions of Halo and Avista. 

Operating loss under ASC 606 was $0.7 million. Operating loss includes $1.1 million in integration costs and approximately $3.3 million of increased depreciation and amortization expense resulting from the application of purchase accounting.

Fourth Quarter 2018 Operating Results – Corporate Headquarters
Selling, general and administrative expenses were $5.9 million in the fourth quarter of 2018 compared to $4.3 million in the same quarter last year. The increase is primarily related to higher personnel related expenses.

Acquisition and Integration expenses of $2.3 million for the fourth quarter of 2018 represent costs associated with the acquisitions of Halo and Avista. 

Operating loss in the fourth quarter 2018 was $8.8 million compared to $5.6 million in the same quarter last year.

Financial Expectations – Continuing Operations
The following table shows the Company’s current expectations for its full year 2019 financial performance.  The expectations in the table below reflect expected results from the business including the recent acquisitions of Halo and Avista.  All expectations for 2019, including growth relative to 2018, are based on actual and expected ASC 606 results for both years. 

  Expectations
Net revenue growth 21% to 25%
Adjusted EBITDA $150 - $160 million
Adjusted income from continuing operations per share $1.87 - $2.09
Free cash flow $60 - $70 million
Capital expenditures $60 - $70 million
Depreciation  $46 - $50 million
Adjusted effective tax rate 25% - 27%


Consistent with the Company’s usual guidance practices, these financial expectations are for continuing operations and exclude the impact of any potential future acquisitions and related transaction and integration expenses, including those related to the recent acquisitions of Halo Pharma and Avista Pharma Solutions, divestitures, restructuring activities, certain tax items discussed below, and the impact of foreign currency on Net revenue. 

EBITDA, Adjusted EBITDA and Adjusted Income from continuing operations per share for 2019 will be computed on a basis consistent with the reconciliation of the current quarter financial results in the tables at the end of this press release, except that all 2019 results will be on an ASC 606 basis.  Free cash flow is defined as the change in debt, net of cash during the year.  Adjusted effective tax rate excludes the immediate recognition of certain benefits of share-based compensation and certain other items adjusted for in the non-GAAP reconciliation tables at the end of this release. 

The tax rate will be sensitive to the Company’s geographic mix of income, changes in the tax laws or rates within the countries in which the Company operates and the effects of certain share-based payments.  Reconciliations of these measures to measures calculated in accordance with GAAP are not available without unreasonable effort due to the unavailability of certain information needed to calculate certain reconciling items, including interest expense and income tax expense.

We expect M&A and related integration expenses for 2019 to be between $9 and $11 million.  These amounts are excluded from our consolidated Adjusted EBITDA and Adjusted income from continuing operations per share guidance included above.  These expenses consist of approximately $4.5 million of transaction expenses paid in conjunction with our acquisition of Avista in early January and the remainder will consist of integration expenses incurred across most functional areas throughout 2019. This estimate also includes certain immediate and one-time expenses related to IT systems, but does not include costs to upgrade the two newly acquired businesses to SAP, our ERP software, which will likely happen over the course of 2019 and 2020.

Expectations above include preliminary estimates for Depreciation expense associated with purchase accounting for the Avista acquisition.  We expect to finalize the purchase accounting for Avista during the first half of 2019.  As a result, expected Depreciation expense and its impact on expected Adjusted Income from continuing operations per share in the table below will likely change when purchase accounting is finalized. 

Refer to the tables at the end of this press release which includes items typically adjusted to arrive at the Company’s non-GAAP results.

The financial information contained in this press release is unaudited, subject to revision and should not be considered final until the Company’s 2018 Form 10-K is filed with the SEC.

Conference Call and Webcast
A conference call to discuss the Company’s fourth quarter and full year 2018 results will begin at 8:30 a.m. Eastern Time on February 13, 2019 and can be accessed by calling 1-877-260-1479 for domestic and +1-334-323-0522 for international.  Please use the passcode 2955208 and call approximately 10 minutes prior to the start time.  A webcast will be available in the Investors section on the Cambrex website located at www.cambrex.com.  A telephone replay of the conference call will be available through February 20, 2019 by calling 1-888-203-1112 for domestic and +1-719-457-0820 for international. Please use the passcode 2955208 to access the replay.

About Cambrex
Cambrex Corporation is an innovative life sciences company that provides products, services and technologies to accelerate the development and commercialization of small molecule therapeutics. The Company offers Active Pharmaceutical Ingredients (APIs), finished dosage forms (FDF), advanced intermediates and enhanced drug delivery products for branded and generic pharmaceuticals. Development and manufacturing capabilities include enzymatic biotransformations, high potency APIs, high energy chemical synthesis, controlled substances and continuous processing. For more information, please visit www.cambrex.com.

Forward-Looking Statements
This document contains “forward-looking statements,” including statements or tables regarding expected performance, especially those set forth under the heading “Financial Expectations – Continuing Operations,” “Highlights” and those attributed to the President and Chief Executive Officer in this document.  These and other forward-looking statements may be identified by the fact that they use words such as “guidance,” “expects,” “anticipates,” “intends,” “estimates,” “believes” or similar expressions.  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.  The factors described in Item 1A of Part I of the Company’s Annual Report on Form 10-K for the period ended December 31, 2017, and the Company’s Annual Report on Form 10-K for the period ended December 31, 2018, once filed with the SEC, captioned “Risk Factors,” or otherwise described in the Company’s filings with the SEC provide examples of such risks and uncertainties that may cause the Company’s actual results to differ materially from the expectations the Company describes in its forward-looking statements, including, but not limited to, customer and product concentration, the Company’s ability to secure new customer contracts and renew existing contracts on favorable terms, significant declines in sales of products to our customers, pharmaceutical outsourcing trends, competitive pricing or product developments, market acceptance and adoption rate of its customers’ products, government legislation and regulations (including those pertaining to environmental issues), the possibility that the benefits from the acquisitions of Halo Pharma and Avista Pharma Solutions may not be as anticipated, the ability to successfully integrate acquisitions, tax rate, interest rate, technology, manufacturing and legal issues, including the outcome of outstanding litigation, environmental matters, changes in foreign exchange rates, uncollectible receivables, the timing and/or volume of orders or shipments and the Company’s ability to meet its production plan and customer delivery schedules, expected timing of completion of capacity expansions, cancellations or delays in renewal of contracts, lack of suitable raw materials, the Company’s ability to receive regulatory approvals for its products, continued demand in the U.S. for late stage clinical products and the successful outcome of the Company’s investment in new products.

For further details and a discussion of these and other risks and uncertainties, investors are encouraged to review the Cambrex Annual Report on Form 10-K for the fiscal year ended December 31, 2017, and the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018, once filed with the SEC, including the Forward-Looking Statement and Risk Factors sections therein, and other filings with the SEC.  The Company cautions investors and potential investors not to place undue reliance on the forward-looking statements contained in this press release and to give careful consideration to the risks and uncertainties listed above and contained in the Company’s SEC filings.  The forward-looking statements in this press release speak only as of the date of this document, and the Company undertakes no obligation to update or revise any of these statements.

Use of Non-GAAP Financial Measures
EBITDA, Adjusted EBITDA, Adjusted effective tax rate and Adjusted Income from continuing operations are non-GAAP financial measures (“non-GAAP financial measures”). Other companies may have different definitions of these non-GAAP financial measures, and as a result they may not be comparable with non-GAAP financial measures provided by other companies. 

EBITDA, Adjusted EBITDA, Adjusted effective tax rate and Adjusted Income from continuing operations are calculated in a manner consistent with that shown in the table at the end of this press release. 

EBITDA, Adjusted EBITDA, Adjusted effective tax rate and Adjusted Income from continuing operations should not be considered alternatives to measurements required by U.S. GAAP, such as Operating profit or Net income, and should not be considered a measure of Cambrex’s liquidity. 

Cambrex uses these non-GAAP financial measures, among several other metrics, to assess and analyze its operational results and trends.  Cambrex also believes these measures are useful to investors because they are common operating performance metrics as well as metrics routinely used to assess potential enterprise value.  Cambrex has provided a reconciliation of U.S. GAAP amounts to non-GAAP amounts at the end of this press release.

CAMBREX CORPORATION
Statements of Profit and Loss
For the Quarters Ended December 31, 2018 and 2017
(in thousands, except per share data)
                   
    2018      2017 
        % of         % of
    Amount   Net Revenue     Amount   Net Revenue
                   
Gross Sales $   124,422         $   175,505    
  Commissions, Allowances and Rebates   377             527    
Net Sales     124,045             174,978    
                   
  Other Revenues, Net   10,287             7,299    
                   
Net Revenue   134,332             182,277    
                   
  Cost of Goods Sold   86,016     64.0 %       103,351   56.7 %
                   
Gross Profit   48,316     36.0 %       78,926   43.3 %
                   
Operating Expenses:                
  Selling, General and Administrative Expenses   21,469     16.0 %       18,306   10.0 %
  Research and Development Expenses   3,604     2.7 %       4,311   2.4 %
  Acquisition and Integration Expenses   3,412     2.5 %       -    
Total Operating Expenses   28,485     21.2 %       22,617   12.4 %
                   
Operating Profit   19,831     14.8 %       56,309   30.9 %
                   
Other Expenses/(Income):              
  Interest Expense, Net   3,143             262    
  Unrealized Gain on Investment in Equity Securities   (2,266 )           -    
  Other Expenses, Net   193             221    
                   
Income Before Income Taxes   18,761     14.0 %       55,826   30.6 %
                   
  Provision for Income Taxes   17,468             15,577    
                   
Income from Continuing Operations $   1,293     1.0 %   $   40,249   22.1 %
                   
(Loss)/Income from Discontinued Operations, Net of Tax   (81 )           10    
                   
Net Income $   1,212     0.9 %   $   40,259   22.1 %
                   
Basic Earnings/(Loss) per Share of Common Stock:          
  Income from Continuing Operations $   0.04         $   1.23    
  (Loss)/Income from Discontinued Operations, Net of Tax $   (0.00 )       $   0.00    
  Net Income $   0.04         $   1.23    
                   
Diluted Earnings/(Loss) per Share of Common Stock:          
  Income from Continuing Operations $   0.04         $   1.20    
  (Loss)/Income from Discontinued Operations, Net of Tax $   (0.00 )       $   0.00    
  Net Income $   0.04         $   1.20    
                   
Weighted Average Shares Outstanding            
  Basic     33,577             32,810    
  Diluted     33,815             33,532    

 

CAMBREX CORPORATION
Statements of Profit and Loss
For the Twelve Months Ended December 31, 2018 and 2017
(in thousands, except per share data)
                   
    2018      2017 
        % of         % of
    Amount   Net Revenue     Amount   Net Revenue
                   
Gross Sales $   514,997          $    525,936      
  Commissions, Allowances and Rebates   1,018             1,995      
Net Sales     513,979             523,941      
                   
  Other Revenues, Net   18,114             10,515      
                   
Net Revenue   532,093             534,456      
                   
  Cost of Goods Sold   335,405     63.0 %       304,153     56.9 %
                   
Gross Profit   196,688     37.0 %       230,303     43.1 %
                   
Operating Expenses:                
  Selling, General and Administrative Expenses   68,506     12.9 %       68,984     12.9 %
  Research and Development Expenses   15,547     2.9 %       16,901     3.2 %
  Acquisition and Integration Expenses   11,139     2.1 %       -      
Total Operating Expenses   95,192     17.9 %       85,885     16.1 %
                   
Operating Profit   101,496     19.1 %       144,418     27.0 %
                   
Other Expenses/(Income):              
  Interest Expense, Net   3,967             1,253      
  Unrealized Gain on Investment in Equity Securities   (13,023 )           -       
  Other Expenses, Net   747             1,340      
                   
Income Before Income Taxes   109,805     20.6 %       141,825     26.5 %
                   
  Provision for Income Taxes   16,596             38,061      
                   
Income from Continuing Operations $   93,209     17.5 %   $   103,764     19.4 %
                   
Loss from Discontinued Operations, Net of Tax   (791 )           (1,314 )    
                   
Net Income $   92,418     17.4 %   $   102,450     19.2 %
                   
Basic Earnings/(Loss) per Share of Common Stock:          
  Income from Continuing Operations $   2.80         $   3.18      
  Loss from Discontinued Operations, Net of Tax $   (0.02 )       $   (0.04 )    
  Net Income $   2.78         $   3.14      
                   
Diluted Earnings/(Loss) per Share of Common Stock:          
  Income from Continuing Operations $   2.77         $   3.10      
  Loss from Discontinued Operations, Net of Tax $   (0.02 )       $   (0.04 )    
  Net Income $   2.75         $   3.06      
                   
Weighted Average Shares Outstanding            
  Basic     33,243             32,662      
  Diluted     33,665             33,486      

 

CAMBREX CORPORATION
Consolidated Balance Sheets
As of December 31, 2018 and December 31, 2017
(in thousands)
           
           
    December 31,     December 31,
Assets   2018     2017
           
Cash and Cash Equivalents $   95,852    $    183,284
Trade Receivables, Net     146,330       75,144
Contract Assets     33,490       -
Other Receivables     5,198       20,891
Inventories, Net     111,062       138,542
Prepaid Expenses and Other Current Assets     18,160       4,217
  Total Current Assets     410,092       422,078
           
Property, Plant and Equipment, Net     360,528       254,299
Goodwill     261,095       43,626
Intangible Assets, Net     187,205       13,868
Deferred Income Taxes     1,409       3,198
Other Non-Current Assets     3,099       3,496
           
  Total Assets $   1,223,428    $    740,565
           
Liabilities and Stockholders' Equity          
           
Accounts Payable $   47,012    $    35,017
Contract Liabilities, Current     11,713       4,707
Taxes Payable     1,651       43
Accrued Expenses and Other Current Liabilities     44,036       42,774
  Total Current Liabilities     104,412       82,541
           
Long-Term Debt     300,000       -
Contract Liabilities, Non-Current     42,701       39,000
Deferred Income Taxes     57,276       7,806
Accrued Pension Benefits     42,218       41,141
Other Non-Current Liabilities     23,094       25,213
           
  Total Liabilities $   569,701    $    195,701
           
  Stockholders’ Equity $   653,727    $    544,864
           
  Total Liabilities and Stockholders’ Equity $   1,223,428    $    740,565

 

CAMBREX CORPORATION  
Impact of Adopting ASC 606 
For the Three and Twelve Months Ended December 31, 2018 and 2017 
(in thousands) 
 
  Fourth Quarter 2018   Fourth Quarter 2017
  As Reported   Effect of Change     Amount Without
Adoption of ASC 606
  As Reported
 
Gross Sales   $   124,422   $   (77,963 )   $   202,385   $   175,505
Net Revenue       134,332       (77,963 )       212,295       182,277
Cost of Goods Sold       86,016       (38,947 )       124,963       103,351
Gross Profit       48,316       (39,016 )       87,332       78,926
Operating Profit       19,831       (39,016 )       58,847       56,309
Provision for Income Taxes     17,468       (8,004 )       25,472       15,577
Income from Continuing Operations     1,293       (31,012 )       32,305       40,249
Net Income       1,212       (31,012 )       32,224       40,259
Diluted Earnings per Share     0.04       (0.92 )       0.96       1.20
               
 
  Twelve Months 2018   Twelve Months 2017
  As Reported   Effect of Change     Amount Without
Adoption of ASC 606
  As Reported
 
Gross Sales   $   514,997   $   (19,781 )   $   534,778   $   525,936
Net Revenue       532,093       (19,781 )       551,874       534,456
Cost of Goods Sold       335,405       (5,753 )       341,158       304,153
Gross Profit       196,688       (14,028 )       210,716       230,303
Operating Profit       101,496       (14,028 )       115,524       144,418
Provision for Income Taxes     16,596       (2,928 )       19,524       38,061
Income from Continuing Operations     93,209       (11,100 )       104,309       103,764
Net Income       92,418       (11,100 )       103,518       102,450
Diluted Earnings per Share     2.77       (0.33 )       3.10       3.10

 

CAMBREX CORPORATION
Reconciliation of GAAP to non-GAAP Results
For the Quarters and Twelve Months Ended December 31, 2018 and 2017
(in thousands)
             
  Fourth Quarter 2018     Fourth Quarter 2017
             
Operating Profit $ 19,831       $ 56,309  
             
Depreciation and Amortization     13,654           8,825  
             
EBITDA     33,485           65,134  
             
Acquisition and Integration Expenses   3,412           -  
             
Impact of Adopting ASC 606     39,016           -  
             
FDF Acquisition Adjusted EBITDA 1.   (5,184 )         -  
             
Adjusted EBITDA $   70,729       $   65,134  
             
             
             
             
  Twelve Months 2018     Twelve Months 2017
             
Operating Profit $ 101,496       $ 144,418  
             
Depreciation and Amortization     37,857           31,848  
             
EBITDA     139,353           176,266  
             
Acquisition and Integration Expenses   11,139           -  
             
Impact of Adopting ASC 606     14,028           -  
             
FDF Acquisition Adjusted EBITDA 1.   (6,869 )         -  
             
Adjusted EBITDA $   157,651       $   176,266  
 
 
1.  The FDF business was acquired in 2018 and to be consistent with prior guidance is excluded. Please see below for the reconciliation to Adjusted EBITDA.
 
  Fourth Quarter 2018       Since Acquisition
 
FDF Operating Profit $   (719 )   $   (605 )
       
Depreciation and Amortization     5,017       6,081  
 
FDF EBITDA     4,298       5,476  
 
Acquisition and Integration Expenses   1,077       1,471  
       
Impact of Adopting ASC 606     (191 )     (78 )
       
 
FDF Adjusted EBITDA $   5,184     $   6,869  
 

 

CAMBREX CORPORATION  
Reconciliation of GAAP to non-GAAP Results 
For the Quarter and Twelve Months Ended December 31, 2018 and 2017 
(in thousands) 
 
  Fourth Quarter 2018   Fourth Quarter 2017
          Diluted
EPS
          Diluted
EPS
Income from Continuing Operations $   1,293   $   0.04     $   40,249   $   1.20  
                         
Impact of Adopting ASC 606     39,016       1.15         -       -  
Impact of Adopting ASC 606 Tax     (8,004 )     (0.24 )       -       -  
Stock-Based Compensation     (12 )     (0.00 )       2,593       0.08  
Stock-Based Compensation Tax 1.     202       0.01         (1,030 )     (0.03 )
Acquisition and Integration Expenses     3,412       0.10         -       -  
Acquisition and Integration Expenses Tax     580       0.02         -       -  
Amortization of Purchased Intangibles     3,505       0.10         503       0.02  
Amortization of Purchased Intangibles, Tax     (722 )     (0.02 )       (171 )     (0.01 )
Unrealized Gain on Investment in Equity Securities     (2,266 )     (0.07 )       -       -  
Unrealized Gain on Investment in Equity Securities, Tax     171       0.01         -       -  
United States Tax Reform Toll Charge     -       -         117       0.00  
New Jersey Tax Reform     11,453       0.34         -       -  
Net Interest Expense - Halo Acquisition     3,543       0.10         -       -  
Net Interest Expense - Halo Acquisition Tax     (744 )     (0.02 )       -       -  
Halo's Adjusted Income from Continuing Operations     (3,510 )     (0.10 )       -       -  
Halo's Adjusted Income from Continuing Operations, Tax     761       0.02         -        -  
Adjusted Income from Continuing Operations 2. $   48,678   $   1.44     $   42,261   $   1.26  
                 
 
  Twelve Months 2018   Twelve Months 2017
          Diluted
EPS
          Diluted
EPS
Income from Continuing Operations $   93,209   $   2.77     $   103,764   $   3.10  
                       
Impact of Adopting ASC 606     14,028       0.42         -       -  
Impact of Adopting ASC 606 Tax     (2,928 )     (0.09 )       -       -  
Stock-Based Compensation     4,094       0.12         8,914       0.27  
Stock-Based Compensation Tax 1.     (4,581 )     (0.14 )       (8,356 )     (0.25 )
Acquisition and Integration Expenses     11,139       0.33         -       -  
Acquisition and Integration Expenses Tax     (1,043 )     (0.03 )       -       -  
Amortization of Purchased Intangibles     5,662       0.17         1,878       0.06  
Amortization of Purchased Intangibles, Tax     (1,175 )     (0.03 )       (637 )     (0.02 )
Unrealized Gain on Investment in Equity Securities     (13,023 )     (0.39 )       -       -  
Unrealized Gain on Investment in Equity Securities, Tax     982       0.03         -       -  
United States Tax Reform Toll Charge     (2,105 )     (0.06 )       117       0.00  
New Jersey Tax Reform     (736 )     (0.02 )       -       -  
Net Interest Expense - Halo Acquisition     4,330       0.13         -       -  
Net Interest Expense - Halo Acquisition Tax     (909 )     (0.03 )       -       -  
Halo's Adjusted Income from Continuing Operations     (4,434 )     (0.13 )       -       -  
Halo's Adjusted Income from Continuing Operations, Tax     961       0.03         -       -  
Adjusted Income from Continuing Operations 2. $   103,471   $   3.07     $   105,680   $   3.16  
 
1.  Amount represents the tax effect for non-cash stock-based compensation expense and the immediate recognition of certain benefits of share-based compensation.
 
2.  Diluted earnings per share for adjusted income from continuing operations is based on the weighted number of diluted shares outstanding for the quarter and year. As such, the sum of the quarters may not necessarily equal the full year. In addition, the sum of the line items may not equal due to rounding.


Contact:        
Gregory Sargen                                                                                 
Executive Vice President & CFO                                                                  
Tel: +201.804.3055                                                    
Email: gregory.sargen@cambrex.com  

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Source: Cambrex Corporation