Nice day for CHRX. Here's the 4Q report. Important points were the nice boost in margins they have achieved. Dissolved Innova JV and apparently have secured a far cheaper source of raw materials for their taxol generic. Nice report, stock is up nearly $2.
ChiRex Report Reports Fiscal 1996 Fourth Quarter and
Year End Results
Company Dissolves InNova Joint Venture and Continues Strategy to
Eliminate Low-Margin Business
WELLESLEY, Mass. and DUDLEY, Northumberland, England, Feb. 21 /PRNewswire/ -- Chirex
Inc announced today fourth quarter and year end results for the periods ending December 31, 1996.
For the year 1996, the Company reported total revenues of $89.8 million compared to $89.0 million
in 1995. Net income from operations in 1996 increased to $4.1 million, or $0.37 per share,
compared to a combined net loss from operations of the two pre-merger companies (Sterling
Organics and SepraChem) of $0.7 million in 1995. Net loss in 1996, including non-recurring
charges relating to the Company's initial public offering of $12.1 million, was $8.0 million, or $0.71
per share. Gross margin improved by over 34 percent to 25.1 percent in 1996 compared with 18.8
percent in 1995, as a result of the Company's strategy to eliminate low-margin non-core product
revenues and replace with higher-margin core-product revenues.
Revenues in 1996 from core products, which the Company believes offers superior long-term
growth, increased 35 percent to $50.1 million, from $37.0 million in 1995. This increase is primarily
a result of increased volume in 22 existing core products and the introduction of seven new core
products.
For the fourth quarter 1996, the Company reported total revenues of $24.5 million compared to
$21.5 million in the same period in 1995. Net income from operations in the last three months of
1996 increased to $1.5 million, or $0.13 per share, compared to a combined net loss from
operations of the two pre-merger companies (Sterling Organics and SepraChem) of $1.3 million in
the fourth quarter of 1995. Gross margin improved by over 40 percent to 27.2 percent in the fourth
quarter of 1996, compared with 19.4 percent in the same period in 1995.
"Our first year has been a momentous one, as we have completed a successful initial public offering,
unified our operations, and significantly increased profitability," stated Alan R. Clark, Chairman and
Chief Executive Officer of ChiRex, Inc. "We have dedicated ourselves to making ChiRex a leading
player in the pharmaceutical manufacturing community, and a provider of solutions for our partners."
Mr. Clark continued, "Our agenda for 1997 includes continuing our present efforts to maximize the
return from existing production facilities, expand our manufacturing capacity, maintain our technology
leadership position and identify opportunities to acquire complementary businesses. In addition, we
have reviewed our options regarding ChiRex's low-margin acetaminophen business and have
decided to accelerate the process of selling this business."
ChiRex also announced today that Dabur India Ltd. and the Company have agreed to dissolve their
joint venture, InNova Pharmaceuticals SRL ("InNova".) The impact of this change of 1996 earnings
is negligible. The Company originally sought to utilize InNova as a secure supply source of starting
material for semi-synthetic paclitaxel. Recently, however, new suppliers of this raw material have
emerged, mitigating InNova's competitive advantage. Moreover, the Company is committed to
focusing on its core business of developing, manufacturing and supplying pharmaceutical active
ingredients, whereas Dabur envisioned InNova as a multi-product generic drug business. The
Company expects to maintain commercial supply arrangements with Dabur. Management believes
that its proprietary non-patent-infringing process technology for producing semi-synthetic paclitaxel
will allow it to sell either exclusively to a major generic drug marketing company, or non- exclusively
to several market participants beginning in 1999. The Company is currently pursuing these options
with several major companies.
ChiRex Inc.
Consolidated Income Statements
(in thousands, except per share amounts)
For the Quarters Ended For the Years Ended
December 31, December 31,
1996 1995 1996 1995
Sales $24,142 $21,119 $88,652 $88,057
License and royalties 345 394 1,175 900
Total revenues 24,487 21,513 89,827 88,957
Cost of sales (17,821) (17,329) (67,280) (72,216)
Gross profit 6,666 4,184 22,547 16,741
Gross margin 27.2% 19.4% 25.1% 18.8%
Selling, general, and
administrative (2,711) (3,749) (9,252) (11,147)
Research and development (1,421) (762) (4,075) (3,142)
Operating profit 2,534 (327) 9,220 2,452
% of Revenue 10.3% -1.5% 10.3% 2.8%
Interest (167) (1,083) (1,445) (1,911)
Profit before tax 2,367 (1,410) 7,775 541
Tax (610) (610) (2,488) (976)
Profit after tax 1,757 (2,020) 5,287 (435)
Goodwill (288) --- (924) ---
Preferred dividends --- (149) (216) (243)
Net income $1,469 $(2,169) $4,147 $(678)
EBITDA 4,290 1,748 17,339 10,100
% of Revenue 17.5% 8.1% 19.3% 11.4%
Fully diluted shares
outstanding 11,296 11,296
Earnings per share $0.130 $0.367 |
