ALBANY, N.Y., Aug. 5, 2014 /PRNewswire/ -- AMRI (NASDAQ:
AMRI) today reported financial and operating results for the second
quarter ended June 30, 2014.
Highlights:
- Second quarter contract revenue of $61.5 million, up 21% from 2013
- Second quarter adjusted diluted EPS of $0.22 vs. $0.11 in
2013
- Expanded second quarter contract margins to 27% from 16% in
2013
- Acquired Oso Biopharmaceuticals Manufacturing in
July 2014, expanding contract
manufacturing capabilities to include commercial scale, complex
injectable drug product
Updated Financial Guidance 2014:
- Full year contract revenue guidance increased to between
$275 and $283 million, an increase of
33% at the midpoint
- Royalty revenue guidance of $25
million
- Adjusted EBITDA between $59 and $63
million, up 24% at the midpoint
- Adjusted diluted EPS range between $0.87 and $0.92, compared to $0.70 in 2013, an increase of 28% at the
midpoint, despite a $10 to $12
million decrease in estimated royalties from
Allegra
- Operating cash flow of $27 to $30
million
Adjusted diluted EPS and adjusted EBITDA are non-GAAP measures,
which exclude certain items detailed later in this press release
under the heading "Non-GAAP Adjustment Items."
Reconciliations of these non-GAAP measures to GAAP measures are
included in Tables 1 and 2 at the end of this press release.
"We are very pleased with our results this quarter, highlighted
by a 34% growth in our large scale manufacturing business and the
addition of Cedarburg Pharmaceuticals," said William S. Marth, AMRI's president and chief
executive officer. "Importantly, contract margins improved across
our entire operations as a result of increased capacity utilization
and the addition of the higher margin Cedarburg Pharmaceuticals
business."
"We continue to see growth in our pipeline of discovery and
development programs, notably the expansion of our innovative
Insourcing chemistry program, together with the addition of new
development and supply programs in our API and Drug Product
divisions," continued Mr. Marth. "Based on anticipated continued
growth of our business and the recent addition of OsoBio, we are
raising our outlook for 2014 with contract revenue growth of 33%
and adjusted diluted EPS growth of 29% at the midpoint."
Second Quarter 2014 Results
Total revenue for the second quarter of 2014 was $68.2 million, an increase of 15% compared to
total revenue of $59.3 million
reported in the second quarter of 2013.
Total contract revenue for the second quarter of 2014 was
$61.5 million, an increase of 21%
compared to contract revenue of $50.8
million reported in the second quarter of 2013. Contract
margins were 26.7% for the second quarter of 2014, compared with
16.4% for the second quarter of 2013, driven by increased capacity
utilization and the addition of Cedarburg Pharmaceuticals.
Royalty revenue in the second quarter of 2014 was $6.7 million, a decrease of 21% from $8.5 million in the second quarter of 2013.
Royalty revenue for the second quarter of 2014 includes royalties
from the Allegra® products as well as $2.5
million from the net sales of certain amphetamine salts sold
by Actavis.
Net income under U.S. GAAP was $3.7
million, or $0.11 per diluted
share, in the second quarter of 2014, compared to a U.S. GAAP net
loss of $(2.5) million, or
$(0.08) per basic and diluted share
for the second quarter of 2013. Net income on an adjusted basis in
the second quarter of 2014 was $7.1
million or $0.22 per diluted
share, compared to adjusted net income of $3.6 million or $0.11 per diluted share. Net income on an
adjusted basis excludes the following items that are included under
U.S. GAAP: the impact of restructuring charges, executive
transition costs, convertible debt interest and amortization
charges, business acquisition costs, litigation settlement charges,
write-offs of deferred financing costs, non-cash long-lived
asset impairment charges, losses on disposals of assets related to
restructuring activities, insurance demutualization gains,
depreciation and amortization of purchase accounting adjustments,
non-recurring income tax adjustments, and postretirement benefit
plan settlement gains.
Year to Date
Total revenue for the six-month period ended June 30, 2014 was $127.5
million, an increase of 7% compared to total revenue of
$118.7 million for the same period in
2013.
Total contract revenue for the first six months of 2014 was
$112.5 million, an increase of 16%
compared to contract revenue of $97.3
million for the same period in 2013.
Royalty revenue for the first six months of 2014 was
$15.0 million, a decrease of 30% from
$21.4 million in 2013. Royalty
revenue for the six-month period ended June
30, 2014 includes royalties from the Allegra® products as
well as $4.8 million from the net
sales of certain amphetamine salts sold by Actavis.
Net income under U.S. GAAP for the first half of 2014 was
$7.2 million, or $0.22 per diluted share, compared to U.S. GAAP
net income of $3.8 million, or
$0.12 per diluted share for the first
half of 2013. Net income on an adjusted basis in the first half of
2014 was $12.2 million or
$0.37 per diluted share, compared to
adjusted net income of $10.6 million
or $0.34 per share in 2013. For a
reconciliation of U.S. GAAP net income (loss) and earnings (loss)
per diluted share as reported to adjusted net income (loss) and
earnings (loss) per diluted share for the 2014 and 2013 reporting
periods, please see Table 1 at the end of this press release.
During the second quarter of 2014 we identified certain tax
liabilities that should have been recorded as tax expense in
various immaterial amounts during the periods from 2007 through
2013. Financial results for the three and six months ended
June 30, 2013 have been updated from
previously reported amounts to reflect the immaterial prior period
income tax adjustments.
Segment Results
Discovery Services and Development/Small Scale
Manufacturing
Discovery Services and Development/Small Scale Manufacturing
(DDS) contract revenue for the second quarter of 2014 was
$19.5 million, consistent with the
second quarter of 2013 as decreases in Discovery Services were
offset by increases in Development/Small Scale Manufacturing. DDS
contract margins were 19.1% for the second quarter of 2014,
compared with 13.1% for the second quarter of 2013, driven by a
stronger mix of business and the benefit of cost reduction
initiatives in both Discovery Services and Development/ Small Scale
Manufacturing.
DDS contract revenue for the first half of 2014 was $39.0 million, a decrease of 2% from the first
half of 2013 as decreases in Discovery Services were largely offset
by increases in Development/Small Scale Manufacturing. DDS contract
margins were 17.8% for the first half of 2014, compared with 14.9%
for the first half of 2013.
Large Scale Manufacturing
Large Scale Manufacturing
(LSM) contract revenue for the second quarter of 2014 was
$42.0 million, an increase of 34%
from $31.3 million in 2013. LSM
contract revenue for the second quarter of 2014 includes
$5.5 million of revenues from the
Cedarburg Pharmaceuticals business that was acquired in
April 2014. LSM adjusted contract
margins were 30.5% in the second quarter of 2014, compared with
18.4% for the second quarter of 2013, driven by increased capacity
utilization and improved mix including the Cedarburg business.
LSM contract revenue for the first half of 2014 was $73.5 million, an increase of 27% from
$57.7 million in 2013. LSM
adjusted contract margins were 25.9% in the first half of 2014,
compared with 19.2% for the first half of 2013.
Liquidity and Capital Resources
At June 30, 2014, AMRI had cash,
cash equivalents and restricted cash of $136.9 million, compared to $171.0 million at March
31, 2014. The decrease in cash and cash equivalents for the
quarter ended June 30, 2014 was
primarily due to the use of $38.7
million to acquire Cedarburg Pharmaceuticals, $4.8 million in debt payments, and $3.5 million of capital expenditures, offset by
cash flow from operations of $12.4
million. Total common shares outstanding, net of treasury
shares, were 32,419,424 at June 30,
2014. Since the close of the second quarter we subsequently
used $109.3 million of cash to
acquire the Oso Biopharmaceuticals Manufacturing business.
Second Quarter Results Conference Call
The conference call can be accessed by dialing 888-438-5525
(domestic calls) or 719-325-2354 (international calls) at
9:50 a.m. ET and entering passcode
9752010. The audio webcast will be available live via the Internet
and can be accessed on the company's website at
www.amriglobal.com.
Replay of the conference call can be accessed by dialing
888-203-1112 (domestic calls) or 719-457-0820 (international calls)
and entering passcode 9752010 from Tuesday,
August 5, 2014 at 2:00 p.m. ET
to Wednesday, August 6, 2014 at
2:00 p.m. ET. Replay of the
audio webcast can also be accessed for up to 90 days after the call
via the investor area of the company's website at
www.amriglobal.com/investor_relations/.
About AMRI
Albany Molecular Research Inc. (AMRI) is a global contract
research and manufacturing organization that has been working with
the Life Sciences industry to improve patient outcomes and the
quality of life for more than two decades. With locations in
North America, Europe and Asia, our key business segments include Large
Scale Manufacturing (LSM) and Discovery and Development Solutions
(DDS). The LSM segment includes Active Pharmaceutical Ingredients
(API) and Drug Product Manufacturing, which supports the commercial
cGMP manufacturing of complex APIs, starting materials, clinical
formulation development and aseptic fill and finish. Our DDS
segment provides comprehensive services from hit identification to
IND, including expertise with diverse chemistry, library design and
synthesis, in vitro biology and pharmacology, drug
metabolism and pharmacokinetics, as well as natural products. For
more information about AMRI, please visit our website at
www.amriglobal.com or follow us on Twitter (@amriglobal).
Forward-looking Statements
This press release includes forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995
that involve risks and uncertainties. These statements include, but
are not limited to, statements regarding the company's estimates of
revenue, contract revenue, adjusted EBITDA adjusted diluted
earnings per share for the full year 2014, statements made by the
company's Chief Executive Officer, including statements under the
caption "Updated Financial Guidance," statements regarding the
strength of the company's business and prospects, statements
regarding the impact of recent acquisition activity, and statements
concerning the company's momentum and long-term growth, including
expected results for 2014. Readers should not place undue reliance
on our forward-looking statements. The company's actual results may
differ materially from such forward-looking statements as a result
of numerous factors, some of which the company may not be able to
predict and may not be within the company's control. Factors that
could cause such differences include, but are not limited to,
trends in pharmaceutical and biotechnology companies' outsourcing
of chemical research and development, including softness in these
markets; sales of Allegra® and the impact of the "at-risk" launch
of generic Allegra®, the OTC conversion of Allegra® and the generic
and OTC sales of Allegra in Japan
on the company's receipt of significant royalties under the
Allegra® license agreement; the success of the sales of other
products for which the company receives royalties; the risk that
the company will not be able to replicate either in the short or
long term the revenue stream that has been derived from the
royalties payable under the Allegra® license agreements; the risk
that clients may terminate or reduce demand under any strategic or
multi-year deal; the company's ability to enforce its intellectual
property and technology rights; the company's ability to obtain
financing sufficient to meet its business needs; the company's
ability to successfully comply with heightened FDA scrutiny on
aseptic fill/finish operations; the results of further FDA
inspections; the company's ability to effectively maintain
compliance with applicable FDA and DEA regulations; the company's
ability to integrate past or future acquisitions, including
Cedarburg Pharmaceuticals and Oso Biopharmaceuticals Manufacturing
, and make such acquisitions accretive to the company's business
model, the company's ability to take advantage of proprietary
technology and expand the scientific tools available to it, the
ability of the company's strategic investments and acquisitions to
perform as expected, as well as those risks discussed in the
company's Annual Report on Form 10-K for the year ended
December 31, 2013 as filed with the
Securities and Exchange Commission on March
17, 2014, and the company's other SEC filings. Revenue,
contract revenue, adjusted diluted EPS, adjusted EBITDA and other
financial guidance offered by senior management today represent a
point-in-time estimate and are based on information as of the date
of this press release. Senior management has made numerous
assumptions in providing this guidance which, while believed to be
reasonable, may not prove to be accurate. Numerous factors,
including those noted above, may cause actual results to differ
materially from the guidance provided. The company expressly
disclaims any current intention or obligation to update the
guidance provided or any other forward-looking statement in this
press release to reflect future events or changes in facts assumed
for purposes of providing this guidance or otherwise affecting the
forward-looking statements contained in this press release.
Non-GAAP Adjustment Items
To supplement our financial results prepared in accordance with
U.S. GAAP, we have presented non-GAAP measures of income (loss)
from operations, net income (loss) and income (loss) per diluted
share, as adjusted to exclude certain restructuring charges,
executive transition costs, convertible debt interest and
amortization charges, business acquisition costs, litigation
settlement charges, write-offs of deferred financing costs,
non-cash long-lived asset impairment charges, losses on disposals
of assets related to restructuring activities, insurance
demutualization gains, depreciation and amortization of purchase
accounting adjustments, non-recurring income tax adjustments, and
postretirement benefit plan settlement gains in the 2014 and 2013
periods. We have also presented non-GAAP measures of adjusted
EBITDA, which in addition to the items excluded above, further
excluded the impact of interest income and expense, depreciation
and amortization expense, and income tax expense or benefit.
Exclusion of these non-recurring items allow comparisons of
operating results that are consistent over time. We believe
presentation of these non-GAAP measures enhances an overall
understanding of our historical financial performance because we
believe they are an indication of the performance of our base
business. Management uses these non-GAAP measures as a basis for
evaluating our financial performance as well as for budgeting and
forecasting of future periods. For these reasons, we believe they
can be useful to investors. The presentation of this additional
information should not be considered in isolation or as a
substitute for income (loss) from operations, net income (loss) or
income (loss) per diluted share prepared in accordance with U.S.
GAAP. Reconciliations of these non-GAAP measures to the most
directly comparable GAAP financial measures are set forth in Tables
1 and 2. Our projected 2014 adjusted EPS and EBITDA, however,
are only provided on an adjusted basis. It is not feasible to
provide GAAP EPS guidance because the items excluded are difficult
to predict and estimate and are primarily dependent on future
events.
Albany Molecular
Research, Inc.
Condensed Consolidated Statements of Operations
(unaudited)
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
(Dollars in
thousands, except for per share data)
|
|
June 30,
2014
|
|
June 30,
2013
|
|
June 30,
2014
|
|
June 30,
2013
|
|
Contract
revenue
|
|
$ 61,474
|
|
$ 50,764
|
|
$ 112,512
|
|
$ 97,257
|
Recurring
royalties
|
|
6,705
|
|
8,528
|
|
14,988
|
|
21,441
|
Total
revenue
|
|
68,179
|
|
59,292
|
|
127,500
|
|
118,698
|
|
|
|
|
|
|
|
|
|
Cost of contract
revenue
|
|
45,038
|
|
42,450
|
|
86,648
|
|
80,272
|
Technology incentive
award
|
|
424
|
|
569
|
|
1,017
|
|
1,683
|
Research and
development
|
|
128
|
|
171
|
|
207
|
|
276
|
Selling, general and
administrative
|
|
12,747
|
|
12,454
|
|
23,376
|
|
22,003
|
Postretirement
benefit plan settlement gain
|
|
−
|
|
−
|
|
(1,285)
|
|
−
|
Restructuring
charges
|
|
1,042
|
|
4,953
|
|
1,272
|
|
5,832
|
Property and
equipment impairment charges
|
|
3,718
|
|
906
|
|
3,718
|
|
1,440
|
Total operating
expenses
|
|
63,097
|
|
61,503
|
|
114,953
|
|
111,506
|
|
|
|
|
|
|
|
|
|
Income (loss) from
operations
|
|
5,082
|
|
(2,211)
|
|
12,547
|
|
7,192
|
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
|
(3,065)
|
|
(137)
|
|
(5,681)
|
|
(274)
|
Other (expense)
income, net
|
|
(192)
|
|
377
|
|
(232)
|
|
884
|
|
|
|
|
|
|
|
|
|
Income (loss) before
income taxes
|
|
1,825
|
|
(1,971)
|
|
6,634
|
|
7,802
|
|
|
|
|
|
|
|
|
|
Income tax (benefit)
expense
|
|
(1,899)
|
|
504
|
|
(590)
|
|
4,000
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$ 3,724
|
|
$ ( 2,475)
|
|
$ 7,224
|
|
$ 3,802
|
|
|
|
|
|
|
|
|
|
Basic income (loss)
per share
|
|
$ 0.12
|
|
$ (0.08)
|
|
$ 0.23
|
|
$ 0.12
|
Diluted income (loss)
per share
|
|
$ 0.11
|
|
$ (0.08)
|
|
$ 0.22
|
|
$ 0.12
|
Albany Molecular
Research, Inc. Selected Consolidated Balance Sheet
Data (unaudited)
|
|
|
|
|
|
(Dollars in
thousands)
|
|
June
30,
2014
|
December
31,
2013
|
|
|
|
|
Cash and cash
equivalents..........................
|
|
$
130,417
|
$
175,928
|
Restricted
cash...................................
|
|
6,467
|
714
|
Accounts receivable,
net. .........................
|
|
58,480
|
52,216
|
Royalty income
receivable.........................
|
|
6,541
|
7,523
|
Inventory........................................
|
|
44,277
|
31,991
|
Total current
assets...............................
|
|
260,818
|
279,019
|
Restricted
cash…………………………………………
|
|
−
|
3,810
|
Property and
equipment, net.......................
|
|
131,619
|
127,775
|
Total
assets......................................
|
|
520,150
|
445,268
|
|
|
|
|
Total current
liabilities............................
|
|
50,168
|
48,849
|
Long‑term debt,
excluding current installments, net of unamortized
discount.......
|
|
122,154
|
123,135
|
Total
liabilities...................................
|
|
266,877
|
204,511
|
Total stockholders'
equity.........................
|
|
253,273
|
240,757
|
Total liabilities and
stockholders' equity.............
|
|
520,150
|
445,268
|
Table 1: Reconciliation of three and six months ended
June 30, 2014 and 2013 reported
income (loss) from operations, net income (loss) and earnings
(loss) per diluted share to adjusted income from operations,
adjusted net income and adjusted earnings per share:
(Dollars in
thousands, except for per share data) Non-GAAP
Measures
|
|
|
|
|
|
|
|
Second
Quarter
|
|
Second
Quarter
|
|
YTD
|
|
YTD
|
|
|
2014
|
|
2013
|
|
June 30,
2014
|
|
June 30,
2013
|
Income (loss) from
operations, as reported
|
|
$
5,082
|
|
$
(2,211)
|
|
$
12,547
|
|
$
7,192
|
Impairment
charges
|
|
3,718
|
|
906
|
|
3,718
|
|
1,440
|
Restructuring
charges
|
|
1,042
|
|
4,953
|
|
1,272
|
|
5,832
|
Executive transition
costs
|
|
(14)
|
|
386
|
|
626
|
|
386
|
Business acquisition
costs
|
|
1,346
|
|
-
|
|
1,668
|
|
-
|
Purchase accounting
depreciation and amortization
|
|
275
|
|
-
|
|
275
|
|
-
|
Postretirement
benefit plan settlement gain
|
|
-
|
|
-
|
|
(1,285)
|
|
-
|
Litigation
settlement
|
|
-
|
|
1,920
|
|
-
|
|
1,920
|
Income from
operations, as adjusted
|
|
$
11,449
|
|
$
5,954
|
|
$
18,821
|
|
$
16,770
|
|
|
|
|
|
|
|
|
|
Net income (loss), as
reported
|
|
$
3,724
|
|
$
(2,475)
|
|
$ 7,224
|
|
$ 3,802
|
Adjustments, net of
tax:
|
|
|
|
|
|
|
|
|
Impairment
charges
|
|
2,417
|
|
906
|
|
2,417
|
|
1,253
|
Restructuring
charges
|
|
653
|
|
3,553
|
|
850
|
|
4,182
|
Executive transition
costs
|
|
(9)
|
|
251
|
|
407
|
|
251
|
Business acquisition
costs
|
|
875
|
|
-
|
|
1,084
|
|
-
|
Purchase accounting
depreciation and amortization
|
|
179
|
|
-
|
|
179
|
|
-
|
Postretirement
benefit plan settlement gain
|
|
-
|
|
-
|
|
(835)
|
|
-
|
Convertible debt
interest and amortization charges
|
|
1,641
|
|
-
|
|
3,257
|
|
-
|
Write-off of deferred
financing costs
|
|
286
|
|
-
|
|
286
|
|
-
|
Non-recurring income
tax adjustments
|
|
(2,715)
|
|
46
|
|
(2,715)
|
|
92
|
Litigation
settlement
|
|
-
|
|
1,248
|
|
-
|
|
1,248
|
Insurance
demutualization gain
|
|
-
|
|
-
|
|
-
|
|
(252)
|
Loss on disposal of
assets
|
|
-
|
|
63
|
|
-
|
|
63
|
Net income (loss), as
adjusted
|
|
$
7,051
|
|
$
3,592
|
|
$
12,154
|
|
$
10,639
|
|
|
|
|
|
|
|
|
|
Income (loss) per
diluted share, as reported
|
|
$
0.11
|
|
$
(0.08)
|
|
$
0.22
|
|
$
0.12
|
Adjustments, net of
tax:
|
|
|
|
|
|
|
|
|
Impairment
charges
|
|
0.07
|
|
0.03
|
|
0.07
|
|
0.04
|
Restructuring
charges
|
|
0.02
|
|
0.11
|
|
0.03
|
|
0.14
|
Executive transition
costs
|
|
-
|
|
0.01
|
|
0.01
|
|
0.01
|
Business acquisition
costs
|
|
0.03
|
|
-
|
|
0.03
|
|
-
|
Purchase accounting
depreciation and amortization
|
|
0.01
|
|
-
|
|
0.01
|
|
-
|
Postretirement
benefit plan settlement gain
|
|
-
|
|
-
|
|
(0.03)
|
|
-
|
Convertible debt
interest and amortization charges
|
|
0.05
|
|
-
|
|
0.10
|
|
-
|
Write-off of deferred
financing costs
|
|
0.01
|
|
-
|
|
0.01
|
|
-
|
Non-recurring income
tax adjustments
|
|
(0.08)
|
|
-
|
|
(0.08)
|
|
-
|
Litigation
settlement
|
|
-
|
|
0.04
|
|
-
|
|
0.04
|
Insurance
demutualization gain
|
|
-
|
|
-
|
|
-
|
|
(0.01)
|
Loss on disposal of
assets
|
|
-
|
|
-
|
|
-
|
|
-
|
Earnings per diluted
share, as adjusted
|
|
$
0.22
|
|
$
0.11
|
|
$
0.37
|
|
$
0.34
|
Table 2: Reconciliation of three and six months ended
June 30, 2014 and 2013 reported
income (loss) from operations to adjusted EBITDA:
|
|
QTD
|
|
QTD
|
|
YTD
|
|
YTD
|
|
|
June 30,
2014
|
|
June
30,
2013
|
|
June 30,
2014
|
|
June 30,
2013
|
Income (loss) from
operations, as reported
|
|
$ 5,082
|
|
$ (2,211)
|
|
$
12,547
|
|
$ 7,192
|
Impairment
charges
|
|
3,718
|
|
906
|
|
3,718
|
|
1,440
|
Restructuring
charges
|
|
1,042
|
|
4,953
|
|
1,272
|
|
5,832
|
Executive transition
costs
|
|
(14)
|
|
386
|
|
626
|
|
386
|
Business acquisition
costs
|
|
1,346
|
|
-
|
|
1,668
|
|
-
|
Postretirement
benefit plan settlement gain
|
|
-
|
|
-
|
|
(1,285)
|
|
-
|
Litigation
settlement
|
|
-
|
|
1,920
|
|
-
|
|
1,920
|
Income from
operations, as adjusted
|
|
11,174
|
|
5,954
|
|
18,546
|
|
16,770
|
Add: Non-operating
(expense) income net, as reported
|
|
(192)
|
|
377
|
|
(232)
|
|
844
|
Deduct: insurance
demutualization gain
|
|
-
|
|
-
|
|
-
|
|
(388)
|
Add: Loss on disposal
of assets
|
|
-
|
|
97
|
|
-
|
|
97
|
Add: Depreciation and
amortization
|
|
4,263
|
|
3,949
|
|
8,024
|
|
8,012
|
Adjusted
EBITDA
|
|
15,245
|
|
10,377
|
|
26,338
|
|
25,335
|
SOURCE AMRI