Hi John, just in case you need a place to park some of those profits, it looks like ChiRex has turned the corner and is beyond those growing pain. Best Regards.
STAMFORD, Conn., Feb. 10 /PRNewswire/ -- ChiRex Inc. (Nasdaq: CHRX - news) announced
today fourth-quarter and full-year results for the periods ending December 31, 1998.
For the fourth quarter ended December 31, 1998, the Company reported a net profit before
non-recurring expenses of $4.0 million, or $0.34 per share, compared to a net profit before
non-recurring expenses of $0.3 million, or $0.03 per share, in the comparable period in 1997.
Results in the fourth quarter of 1998 were significantly better than results reported for the third
quarter of 1998 due to continuing improvement in performance at the Company's Dudley, England
facility and start-up of production of two new products at the Company's Annan, Scotland facility.
Since its acquisition in October of 1997, the Annan facility has been under construction to convert it
to a multi- product pharmaceutical fine chemical manufacturing facility.
Total revenues increased $9.9 million, or 38%, to $35.7 million in the fourth quarter of 1998, from
$25.8 million in the comparable period in 1997. Core revenues increased $13.6 million, or 62%,
from $22.0 million to $35.7 million due to the effect of the disposition of the Company's
acetaminophen business and other non-core revenues. Gross profit increased to $13.5 million in the
fourth quarter of 1998, or 38% of total revenues, from $5.5 million, or 21% of total revenues, in
1997. Gross profit improved due to the contribution from production at the Annan facility, and
improved performance at the Dudley facility reflecting higher sales volumes and lower expenses as
cost reduction initiatives taken earlier in the year began to show results.
''Fourth quarter results have been driven by several complementary factors,'' said Michael A.
Griffith, Chairman and Chief Executive Officer. ''During the fourth quarter we completed the first
phase of the $30 million Annan re-conditioning project and commenced production of two new
products under our five year $450 million supply agreement with Glaxo Wellcome. Since October
1997, the facility has been almost idle, which has had an adverse impact on our financial
performance. Additionally, we have gained better control of our costs following our mid-year
implementation of product management as the central organizational philosophy of the Company.
Finally, the effect of our previously announced cost reduction and operational efficiency programs is
beginning to be realized in the current operating results.''
For the full-year ended December 31, 1998, the Company reported net income before
non-recurring expenses of $4.8 million, or $0.41 per share, compared to a net profit before
non-recurring expenses of $4.8 million, or $0.42 per share, in the comparable period in 1997.
Excluding the impact of its Annan facility the Company earned $12.2 million or $1.04 per share.
Total revenues increased $25.6 million, or 27%, to $119.7 million in 1998 from $94.1 million in the
comparable period in 1997. Core revenues increased $49.2 million, or 72% from $68.1 million to
$117.4 million, during the period. Gross profit increased $9.1 million to $31.8 million in 1998, or
27% of total revenues, from $22.7 million, or 24% of total revenues, in 1997. Excluding the current
year impact of the Annan acquisition, gross profit was $34.4 million or 30% of revenues. As
previously announced, the Company recorded a net after-tax restructuring and other non-recurring
expense charge of $2.6 million in fiscal year 1998, of which $0.6 million was taken in the fourth
quarter.
''We made significant progress during the quarter towards the formation of the ChiRex Technology
Center which brings together the best available chemical process technologies with world-renowned
scientists to accelerate our proprietary research activities and to offer our customers full-service
contract research and development. We believe that the combined offerings of contract research and
development through the Technology Center, scale-up and clinical trial support through our
Development Center and contract manufacturing through our two FDA cGMP manufacturing
facilities, differentiates ChiRex from both the independent pharmaceutical laboratories and the
dedicated contract manufacturers.'' Located in Boston, Massachusetts and under the scientific
direction of Professor Eric Jacobsen of Harvard University, the Technology Center is a center of
excellence devoted to proprietary research, the development of proprietary building blocks and
contract process development. The Technology Center is expected to open during the late first
quarter of 1999, and is intended to build a royalty stream from ChiRex's proprietary process
chemistry technologies. Mr. Griffith continued, ''The reaction of our customers to the Technology
Center has been overwhelming and we are already implementing plans to expand our capacity at the
Center. We believe that our customers will reward the speed, cost and risk management advantages
of in-house technology transfer and the credibility of our integrated service offerings.''
ChiRex also announced the addition of two key marketing professionals to the organization effective
February 1, 1999. Stuart E. Needleman joined the Company as Vice President, Business
Development and Michael J. Nicholds, Ph.D., joined the Company as Vice President, Sales and
Marketing. Mr. Needleman formerly served as Vice President of Business Development, North
America, for Oxford Asymmetry International. Dr. Nicholds formerly served as Business Manager,
Pharmaceutical Intermediates at Zeneca LifeScience Molecules.
Mr. Griffith stated, ''These two professionals will work as partners to deliver the full service
offerings of ChiRex to our customers worldwide. Based in Boston, Mr. Needleman is primarily
responsible for building the business base of the Technology Center. Based in England, Dr. Nicholds
is primarily responsible for continuing the strong growth of full-scale manufacturing products. Both
these individuals have the training and experience to represent the full spectrum of ChiRex services
to customers, and together they demonstrate the commitment of the Company to deliver in-house
technology transfer from IND to active ingredient.''
ChiRex Inc. serves the outsourcing needs of some of the largest pharmaceutical and life science
companies in the world by providing contract process research and development and
pharmaceutical fine chemical manufacturing services and by offering its customers access to the
Company's extensive portfolio of proprietary technologies. The Company's contract manufacturing
services developed over the past thirty years, include process research and development, hazard
evaluation, analytical methods development, clinical quantity production and pilot-scale and
commercial-scale manufacturing at its world-class, current Good Manufacturing Practices
(''cGMP'') facilities in Dudley, England and Annan, Scotland. Beginning in the first quarter of 1999
the Company will operate the ChiRex Technology Center in Boston, Massachusetts to enable its
customers to better exploit its proprietary technologies. The Company's customers include Glaxo
Wellcome plc, Sanofi S.A., Pfizer Inc., Pharmacia & UpJohn Inc., Bristol Myers-Squibb, Eli Lilly
and Company, Astra, Rohm and Haas Company and SmithKline Beecham plc. 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. and Subsidiaries
Consolidated Statements of Operations
(in thousands, except per-share amounts)
Three-Months Ended Twelve-Months Ended
December 31 December 31
1997 1998 1997 1998
Revenues:
Sales $25,671 $35,610 $93,362 $119,210
License and royalty 161 126 738 453
Total revenues 25,832 35,736 94,100 119,663
Cost of Sales (20,343) (22,252) (71,440) (87,876)
Gross Profit 5,489 13,484 22,660 31,787
Gross margin percentage 21.2% 37.7% 24.1% 26.6%
Selling, general and
administrative (2,972) (3,501) (9,423) (12,965)
Research and development (944) (1,150) (3,937) (4,046)
Earnings before interest,
taxes, amortization and
non recurring expense 1,573 8,833 9,300 14,776
Interest expense, net (988) (1,946) (1,052) (5,829)
Amortization of goodwill (291) (291) (1,164) (1,164)
Income before income taxes and
non-recurring expenses 294 6,596 7,084 7,783
(Provision) benefit for
income taxes 50 (2,624) (2,237) (2,994)
Net income before
non-recurring expenses 344 3,972 4,847 4,789
Non-recurring expenses:
Disposition of acetaminophen
business and restructuring
costs, net (1,094) (572) (5,497) (2,621)
Net income (loss) $(750) $3,400 $(650) $2,168
Weighted average common shares
outstanding:
Basic 11,786 11,856 11,407 11,820
Diluted 11,786 12,307 11,407 12,330
Net income (loss) per common share before non-recurring expenses:
Basic $0.03 $0.34 $0.42 $0.41
Diluted $0.03 $0.32 $0.42 $0.39
Net income (loss) per common share
Basic $(0.06) $0.29 $(0.06) $0.18
Diluted $(0.06) $0.28 $(0.06) $0.18
EBITDA $3,850 $11,802 $18,198 $26,121
Selected Balance Sheet Information
(in thousands)
December 31, December 31,
1997 1998
Property, plant and equipment, net $120,755 $ 154,070
Total assets 203,067 236,453
Total debt, net of cash 71,639 91,172
Stockholders' equity 93,095 97,213
SOURCE: ChiRex Inc. |
