Cambrex Corp. (CBM) Tops Q4 EPS by 7c, Revenues Miss; Offers FY19 EPS Guidance

Cambrex Corp. (NYSE: CBM) reported Q4 EPS of $1.44, $0.07 better than the analyst estimate of $1.37. Revenue for the quarter came in at $212.3 million versus the consensus estimate of $214.76 million.

• 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.”

GUIDANCE:

Cambrex Corp. sees FY2019 EPS of $1.87-$2.09, versus the consensus of $2.97.

For earnings history and earnings-related data on Cambrex Corp. (CBM) click here.

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