ChiRex Reports Financial Results for
Second-Quarter and First-Half 1999
STAMFORD, Conn., July 14 /PRNewswire/ -- ChiRex Inc. (Nasdaq: CHRX - news) announced
today second-quarter and first-half results for the period ending June 30, 1999.
For the second quarter ended June 30, 1999, the Company reported a net profit before
non-recurring expenses of $3.9 million, or $0.25 per diluted share, compared to a net profit of $0.8
million, or $0.06 per diluted share, in the comparable period in 1998. Results in the second quarter
of 1999 were significantly better than results in the second quarter of 1998 due to the effect of
operating leverage from higher revenues and further cost reduction at the Dudley and Annan
manufacturing facilities. For the six months ended June 30, 1999, the Company reported a net profit
before non-recurring expenses of $6.8 million, or $0.48 per diluted share, compared to a net loss of
$0.3 million, or $(0.03) per share, in the comparable period in 1998.
Total revenues in the second quarter increased 28% to $36.6 million from $28.6 million in the
second quarter of 1998. Revenues from manufacturing services increased 14% to $29.1 million from
$25.5 million, while revenues from development services increased 142% to $7.5 million from $3.1
million in the comparable period in 1998. Gross profit increased to $12.8 million in the second
quarter of 1999, or 35% of total revenues, from $7.1 million, or 25% of total revenues in 1998.
Gross profit improved due to a greater mix of development revenues and better product pricing.
''Second quarter revenue, gross profit, cash flow and earnings are all better than expectation,'' said
Michael A. Griffith, Chairman and Chief Executive Officer. ''During the second quarter we
commenced production of the final product specified in the Glaxo supply agreement at Annan, we
consummated the acquisition of Cauldron Process Chemistry in Malvern, Pennsylvania, and we
booked the first projects into our newly-opened development business in Boston. Additionally, we
continue to gain better control of our costs through the application of product management and the
effect of our operational efficiency programs.''
Mr. Griffith added, ''This week we announced the addition of Mr. Bruce P. Shutts as Vice
President, Development Operations, who served most recently at Schering Plough Corporation as
Vice President of Chemical Development. Bruce will manage the worldwide process development
operation of ChiRex, which today employs 106 people with 62 chemists on the bench in three
locations: Boston, Massachusetts, Malvern, Pennsylvania and Dudley, England. During the next six
months we will expand our Malvern pilot plant, install a cGMP kilo lab in Boston and add a pilot
plant in Annan. These investments will more than double our small-scale FDA cGMP production
capacity, and further enhance our services to the pharmaceutical industry. To complement this
expansion, we can increase the number of chemists on-the-bench to over 100 within the facilities we
operate today. Importantly, the Annan pilot plant will serve the dual role of adding needed capacity
and enabling the introduction of large-scale products at Annan during the year.''
During the second quarter of 1999 the Company took two non-recurring charges. First, the
Company completed outsourcing agreements to take over the inventory warehouse operation at
Dudley and the management information systems departments at Dudley and Annan. As a result, 30
positions will be eliminated. As part of the outsourcing, the Company recorded an after-tax charge
for severance and pension benefits of $0.5 million or $(0.03) per diluted share. Second, the
Company recorded an after-tax charge of $0.7 million, or $(0.05) per diluted share to write-off
deferred financing costs required by the repayment of debt from the proceeds of the 2.875 million
share common stock offering in late March.
ChiRex Inc. is an integrated outsourcing company that provides an extensive range of services to
pharmaceutical and life science companies, primarily contract process research and development
and contract manufacturing of active pharmaceutical ingredients.
The Company's contract services, developed over the past thirty years, include:
discovery support, route design, route development and synthesis of molecules, including
process research and development,
hazard evaluation, analytical methods development, clinical quantity production and scale-up,
and
pilot-scale and commercial-scale manufacturing at its world-class, current Good
Manufacturing Practices facilities in Boston, Massachusetts; Malvern, Pennsylvania; Dudley,
England; and Annan, Scotland.
ChiRex is one of only a few outsourcing companies that offers all of these services in-house in
addition to offering an extensive portfolio of proprietary technologies. By offering integrated services,
ChiRex is able to minimize the risk, cost and time associated with its customers bringing new drugs
to market.
The Company's customers include Abbott Laboratories, AstraZeneca, Bristol Myers-Squibb,
Cephalon, Glaxo Wellcome, Eli Lilly and Company, Merck, Pfizer, Pharmacia & UpJohn, Johnson
& Johnson, Rohm and Haas, Sanofi and SmithKline Beecham. The Company's common stock is
publicly traded in the United States on the Nasdaq Stock Market's National Market (''NASDAQ'')
under the symbol ''CHRX''.
Any statements contained in this release that relate to future plans, events, or performance, are
forward-looking statements that involve risks and uncertainties, including, but not limited to, product
development and market acceptance risks, product manufacturing risks, the impact of competitive
products and pricing, the results of current and future licensing and other collaborative relationships,
the results of financing efforts, developments regarding intellectual property rights and litigation, risks
of product non- approval or delays or post-approval reviews by the FDA or foreign regulatory
authorities, and other risks identified in ChiRex Inc.'s Securities and Exchange Commission filings.
Actual results, events or performance may differ materially. Readers are cautioned not to place undo
reliance on these forward-looking statements, which speak only as the date hereof. ChiRex
undertakes no obligation to publicly release the results of any revisions to these forward-looking
statements that may be made to reflect events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events.
ChiRex Inc.
Consolidated Statements of Operations and Selected Balance Sheet Data
(in thousands, except per-share)
Three-Months Ended Six-Months Ended
June 30, June 30,
1998 1999 1998 1999
Revenues:
Product sales $28,359 $36,478 $51,960 $70,558
License fees and
royalty income 195 146 252 246
Total revenues 28,554 36,624 52,212 70,804
Cost of Sales (21,456) (23,872) (40,758) (46,671)
Gross Profit 7,098 12,752 11,454 24,133
Gross margin
percentage 24.9% 34.8% 21.9% 34.1%
Selling, general
and administrative 3,152 3,737 6,277 7,062
Research and development 1,085 1,642 2,286 2,963
Earnings before
interest, taxes
and amortization 2,861 7,373 2,891 14,108
Interest expense, net (1,425) (1,272) (2,829) (3,293)
Amortization of goodwill (291) (334) (582) (625)
Income before
income taxes 1,145 5,767 (520) 10,190
(Provision) for
income taxes (393) (1,867) 176 (3,383)
Net income (loss)
before non-recurring
expenses 752 3,900 (344) 6,807
Non-recurring
expenses, net
of tax benefit (143) (1,209) (143) (1,209)
Net income (loss) $609 $2,691 $(487) $5,598
Weighted average common shares outstanding:
Basic 11,809 14,795 11,803 13,451
Diluted 12,415 15,737 11,803 14,263
Net income (loss) per common share
before non-recurring expenses:
Basic $0.06 $0.26 $(0.03) $0.51
Diluted $0.06 $0.25 $(0.03) $0.48
Net income (loss) per common share:
Basic $0.05 $0.18 $(0.04) $0.42
Diluted $0.05 $0.17 $(0.04) $0.39
EBITDA $5,771 $10,981 $8,555 $21,219
Selected Balance Sheet Information
(in thousands)
December 31, June 30,
1998 1999
Property, plant and equipment, net $154,070 $154,151
Total assets 238,538 239,790
Total debt, net of cash 91,172 43,393
Stockholders' equity 97,213 149,593
SOURCE: ChiRex Inc. |
