Albany Molecular Research, Inc. Posts Solid Second Quarter Results; Robust Development Contract Revenue Trend Continues, Allegra Royalties Beat Expectations; Company Raises Full Year Earnings Guidance.ALBANY, N.Y. -- Albany Molecular Research, Inc. (Nasdaq: AMRI AMRI Albany Molecular Research (stock symbol) AMRI Advanced Magnetic Research Institute (Mocksville, NC) AMRI Advanced Materials Research Institute AMRI Adult Movie Review Index ) today reported financial results for the quarter and six-month period ending June 30, 2005. Highlights from the second quarter include: --Diluted EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. of $0.23, exceeding the company's estimate of $0.18 to $0.20. --Total contract revenue of $35.9 million, exceeding the company's estimate of $32 to $35 million. --A 34% year-over-year quarterly increase in development and small scale manufacturing contract revenue. Year to date, development contract revenue is up 35% over the comparable 2004 period. --A 44% year-over-year quarterly increase in large scale manufacturing revenue. Excluding the impact of a request for accelerated delivery of one product from GE Healthcare GE Healthcare is a $18 billion (USD) unit of General Electric (GE). It employs more than 46,000 people worldwide and is headquartered in Chalfont St. Giles, Buckinghamshire, United Kingdom. GE Healthcare is the first GE business segment headquartered outside the United States. , the company's largest manufacturing customer, the increase was 22%. Second Quarter Results Total revenue for the second quarter of 2005 was $51.8 million, an increase of 23% compared to total revenue of $42.0 million in the second quarter of 2004. Total contract revenue for the second quarter of 2005 was $35.9 million, an increase of 28% compared to total contract revenue of $28.1 million during the second quarter of 2004. Total contract revenue encompasses revenue from AMRI's large scale manufacturing, development and small scale manufacturing, and discovery services See service discovery. . Contract revenue for large scale manufacturing in the second quarter of 2005 was $22.6 million, an increase of 44% compared to $15.7 million in 2004. Contract revenue from development and small scale manufacturing services in the second quarter of 2005 was $7.0 million, an increase of 34% from $5.2 million in 2004. Contract revenue for discovery services in the second quarter of 2005 was $6.3 million, a decrease of 12% from $7.1 million during 2004. Contract revenue for large scale manufacturing services in the second quarter of 2005 was favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. impacted by $2.7 million as a result of a request for accelerated delivery of one product to GE Healthcare. As previously disclosed, GE has requested accelerated delivery of this product, resulting in a shift of all contract revenue for this product for the full year to the first half of the year. Recurring re·cur intr.v. re·curred, re·cur·ring, re·curs 1. To happen, come up, or show up again or repeatedly. 2. To return to one's attention or memory. 3. To return in thought or discourse. royalties from Allegra Al·leg·ra A trademark for the drug fexofenadine hydrochloride. fexofenadine hydrochloride Allegra, Telfast (UK) Pharmacologic class: Peripherally selective piperidine, selective histamine in the second quarter of 2005 were $15.9 million, a 14% increase from $13.9 million in the second quarter of 2004. AMRI earns royalties from worldwide sales of the non-sedating antihistamine antihistamine (ăn'tĭhĭs`təmēn), any one of a group of compounds having various chemical structures and characterized by the ability to antagonize the effects of histamine. Allegra(R) (Telfast(R) outside the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. ) for patents relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the active ingredient An active ingredient, also active pharmaceutical ingredient (or API), is the substance in a drug that is pharmaceutically active. Some medications may contain more than one active ingredient. in Allegra. Net income in the second quarter of 2005 was $7.3 million, or $0.23 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared to a net loss of $20.8 million, or ($0.65) per diluted share, in the second quarter of 2004. Included in net income for the second quarter of 2004 was $3.5 million in pre-tax charges, or ($0.09) per diluted share, related to the restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). of the company's Mount Prospect Research Center, and $25.9 million in non-cash pre-tax charges, or ($0.74) per diluted share, to reduce the carrying value Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. of certain assets. AMRI Chairman, President and Chief Executive Officer Thomas (language) Thomas - A language compatible with the language Dylan(TM). Thomas is NOT Dylan(TM). The first public release of a translator to Scheme by Matt Birkholz, Jim Miller, and Ron Weiss, written at Digital Equipment Corporation's Cambridge Research Laboratory runs E. D'Ambra, Ph.D. said, "AMRI turned in another solid performance in the second quarter, marking the second consecutive quarter of year-over-year growth in contract revenue. Our performance in the second quarter was boosted by the continuing trend of escalating contract revenue in our development and small scale manufacturing business, along with another strong quarter from Allegra and the additional contract revenue associated with the accelerated delivery schedule to GE Healthcare. When leveling revenue for the impact of the accelerated delivery schedule of this product, large scale manufacturing revenue in the second quarter of 2005 still increased by 22% over the same period in 2004. We are seeing strong growth in the manufacturing of clinical trial materials at Organichem, and are actively taking steps to capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. this trend. We remain optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op going forward and, as discussed in our earnings guidance, we are projecting full year increases in total contract revenue--including revenue from large scale manufacturing--over 2004 levels." Year-to-Date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. Total revenue for the six-month period ending June 30, 2005 was $100.5 million, an increase of $17.7 million, or 21%, compared to total revenue of $82.8 million during the same period in 2004. Total contract revenue for the first six months of 2005 increased 23% to $72.6 million, compared to total contract revenue of $58.9 million for the comparable period in 2004. Contract revenue for large scale manufacturing in the six-month period ending June 30, 2005 was $45.6 million, an increase of 40% compared to $32.5 million in 2004. Contract revenue from development and small scale manufacturing services for the six-month period ending June 30, 2005 was $13.8 million, an increase of 35% from $10.2 million in 2004. Contract revenue for discovery services in the period ending June 30, 2005 was $13.2 million, a decrease of 19% from $16.3 million in 2004. Contract revenue for large scale manufacturing services in the first half of 2005 was favorably impacted by $8.4 million as a result of GE Healthcare's delivery schedule. Recurring royalty revenue for the first half of 2005 increased by 17% to $27.9 million, compared to $23.9 million during the first six months of 2004. Net income for the six month period ending June 30, 2005 was $12.9 million, or $0.40 per diluted share, compared to a net loss of $18.0 million, or ($0.57) per diluted share, for the six-month period ending June 30, 2004. Included in net income for the second half of 2004 were the second quarter pre-tax charges of $3.5 million, or ($0.09) per diluted share relating to the Mount Prospect restructuring and the non-cash $25.9 million, or ($0.74) per diluted share, pre-tax charge to reduce the carrying value of certain assets, as well as a first quarter charge of $3.1 million, or ($0.06) per diluted share, related to the issuance of warrants to Bristol Myers Squibb. Liquidity and Capital Resources At June 30, 2005, AMRI had cash, cash equivalents and investments of $143.3 million, compared to $138.4 million at March 31, 2005. The net increase of $4.9 million in cash, cash equivalents and investments in the second quarter of 2005 was due primarily to cash generated from operations of $10.4 million, partially offset by $4.9 million in purchases of property plant and equipment and $1.3 million in principal repayments on outstanding debt. Total debt at June 30, 2005 was $50.8 million, compared to $52.1 million at March 31, 2005. Total common shares outstanding, net of treasury shares, at June 30, 2005 were 32,320,449. On June 30, 2005, the company amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. its credit facility to extend the maturity date on its revolving line of credit Revolving line of credit A bank line of credit on which the customer pays a commitment fee and can take and repay funds at will. Normally a revolving LOC involves a firm commitment from the bank for a period of several years. from February 2006 to June 2010. Earnings Guidance Chief Financial Officer Mark T. Frost provided earnings guidance for the third quarter of 2005 and updated guidance for the full year 2005. Mr. Frost "Mr. Frost" is episode 136 of The West Wing. Plot Margaret appears before the Senate Select Committee on Intelligence as subpoenas continue to be served to members of the White House. said, "In the third quarter, we project diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of to range from $0.09 to $0.12. As previously discussed, we expect contract revenue at our large scale manufacturing subsidiary to decrease significantly in the second half, compared to 2004 levels, due to GE Healthcare's accelerated delivery schedule for one of its products. Even without sales of this large scale product in the third quarter, we project total contract revenue to range from $29 million to $32 million, an increase of up to 11% from 2004 levels. Conversely con·verse 1 intr.v. con·versed, con·vers·ing, con·vers·es 1. To engage in a spoken exchange of thoughts, ideas, or feelings; talk. See Synonyms at speak. 2. , however, the acceleration of these shipments accounted for an additional $8.4 million in large scale manufacturing contract revenue in the first half of 2005. GE Healthcare is not expected to make any further purchases of this product. Going forward, we expect that the loss of revenue from this product will be at least partially offset by increased revenue from the manufacturing of clinical trial materials." Mr. Frost continued, "Turning to Allegra, we estimate that third quarter 2005 royalties from sales of Allegra will be flat to 5% higher than in the third quarter of 2004. To date, we are not aware of any guidance provided by Sanofi-Aventis on Allegra. Should Sanofi-Aventis provide guidance in the future, we would expect to revise our royalty estimates accordingly." Mr. Frost noted, "We are raising guidance for the full year from a range of $0.51 to $0.56 per diluted share to a range of $0.57 to $0.62 per diluted share. The increase reflects projected increases in contract revenue, the increase in Allegra royalties during the second quarter, and our projected increase in Allegra royalties for the full year. We are tightening the range of contract revenue guidance, and revising our full year 2005 total contract revenue projections from a range of $126 million to $132 million to a range of $128 million to $132 million, a 5% to 9% increase from full year 2004 levels. For the full year, we are projecting royalties from sales of Allegra to range from $50 million to $52 million, an increase of 4% to 8% compared to the full year 2004." Proprietary R&D Update During the second quarter, the company remained on course to move forward with pharmacokinetic, toxicology toxicology, study of poisons, or toxins, from the standpoint of detection, isolation, identification, and determination of their effects on the human body. Toxicology may be considered the branch of pharmacology devoted to the study of the poisonous effects of drugs. and genotoxicity Genotoxic substances are a type of carcinogen, specifically those capable of causing genetic mutation and of contributing to the development of tumors. This includes both certain chemical compounds and certain types of radiation. studies on two potential drug candidates from its proprietary drug discovery platform. One candidate has been prioritized; initial toxicology protocols have been designed and studies are on course to start in early August. Pending favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. results in these studies, the company remains on track to file an Investigational New Drug submission with the U.S. Food and Drug Administration during the first quarter of 2006. At the same time, the company continues to actively seek a licensee licensee n. a person given a license by government or under private agreement. (See: license, licensor) LICENSEE. One to whom a license has been given. 1 M. Q. & S. 699 n. to develop this technology. Recent Highlights Recent noteworthy announcements or milestones at AMRI include the following: --The initiation of a two-year research collaboration Working together on a project. See collaborative software. with the National Institute of Neurological Disorders and Stroke The National Institute of Neurological Disorders and Stroke is a part of the U.S. National Institutes of Health. The NINDS conducts and supports research on brain and nervous system disorders. Created by the U.S. aimed at developing novel treatments for spinal muscular atrophy Spinal Muscular Atrophy (SMA) is a term applied to a number of different disorders, all having in common a genetic cause and the manifestation of weakness due to loss of the motor neurons of the spinal cord and brainstem. in which AMRI will provide fee-for-service fee-for-ser·vice adj. Charging a fee for each service performed. medicinal chemistry Medicinal or pharmaceutical chemistry is a scientific discipline at the intersection of chemistry and pharmacology involved with designing, synthesizing and developing pharmaceutical drugs. lead optimization optimization Field of applied mathematics whose principles and methods are used to solve quantitative problems in disciplines including physics, biology, engineering, and economics. . --Completion of two separate FDA FDA abbr. Food and Drug Administration FDA, n.pr See Food and Drug Administration. FDA, n.pr the abbreviation for the Food and Drug Administration. inspections at AMRI's 21 Corporate Circle facility and at Organichem; both completed with no FDA Form 483 being issued. --The opening of a new 3,500 square foot Quality Control laboratory at the company's large scale manufacturing subsidiary, Organichem Corporation. --The signing of an MOU (Minutes Of Usage) A metric used to compute billing and/or statistics for telephone calls or other network use. at the company's Singapore Research Centre with the Institute of Chemical and Engineering Sciences (ICES), setting the stage for collaborations on training and R&D projects. --The appointment of KPMG KPMG Klynveld Peat Marwick Goerdeler (accounting firm) KPMG Kaiser Permanente Medical Group KPMG Keiner Prüft Mehr Genau (German) KPMG Kommen Prüfen Meckern Gehen LLP LLP - Lower Layer Protocol as the company's independent registered public accounting firm for the fiscal year 2005. Second Quarter Conference Call The company will hold a conference call at 10:00 a.m. Eastern Time on August 4, 2005 to discuss its quarterly results and business highlights and prospects. During the conference call, the company may discuss information not previously disclosed to the public. Individuals interested in listening to the conference call should dial 800-510-9834 (for domestic calls) or 617-614-3669 (for international calls) at 9:45 a.m. and reference the AMRI Second Quarter 2005 Earnings Release conference call. Replays of the call will be available for seven days following the call beginning at 12:00 p.m. on August 4, 2005. To access the replay by telephone, please call 888-286-8010 (for domestic calls) or 617-801-6888 (for international calls) and use access code 62029345. In addition, replays of the call will be available for twelve months on the company's website at www.albmolecular.com/investor/investcc.html About Albany Molecular Research, Inc. Albany Molecular Research, Inc. is a leading research, drug discovery, development and manufacturing company built on a chemistry platform of comprehensive and integrated technologies, resources and capabilities. The company conducts research and development with many leading pharmaceutical and biotechnology companies Top 100 Biotechnology Companies The following is a list of the top 100 biotechnology companies ranked by revenue. The first nine companies qualify for the list of the top 50 pharmaceutical companies. and for its own internal discovery programs, and provides cGMP cGMP 3'5' cyclic guanosine monophosphate; essential in regulation of sodium channels of the retina. Decrease in cGMP concentration leads to hyperpolarization of the retinal membrane. manufacturing of active pharmaceutical ingredients through its wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. , Organichem Corporation. This press release includes forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995 that involve risks and uncertainties. These statements include, but are not limited to, statements regarding the company's estimates of earnings for the third quarter of 2005 and for the full year 2005, statements made by the company's chief executive officer and chief financial officer, trends in pharmaceutical and biotech bi·o·tech n. Informal Biotechnology. biotech Noun short for biotechnology Noun 1. outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. and demand for the company's development and manufacturing services, the expected level of contract revenues for AMRI for the third quarter of 2005 and for the full year 2005, expected future sales of Allegra and AMRI's Allegra-related royalties for the third quarter of 2005 and the full year 2005, the expected submission of an IND application and commencement of Phase I trials, and management's initiatives to sustain the company's momentum and long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. growth. 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, the existence of deficiencies and/or material weaknesses in the company's internal controls over financial reporting, the company's ability to attract and retain experienced scientists, trends in pharmaceutical and biotechnology companies outsourcing chemical research and development, including continued softness in these markets, sales of Allegra (including any deviations in estimates provided by Sanofi-Aventis) and the company's receipt of significant royalties from the Allegra license agreement, the risk that Allegra may be approved for over-the-counter use, the over-the-counter sale of Claritin Clar·i·tin A trademark for the drug loratadine. loratadine Alavert, Claritin, Claritin RediTabs, Clarityn (UK) Pharmacologic class: Histamine1-receptor antagonist (second-generation) , the over-the-counter sale of generic alternatives for the treatment of allergies Allergies Definition Allergies are abnormal reactions of the immune system that occur in response to otherwise harmless substances. Description Allergies are among the most common of medical disorders. and the risk of new product introductions for the treatment of allergies, the company's ability to enforce its intellectual property and technology rights, the company's ability to successfully develop novel compounds and lead candidates in its collaborative arrangements, 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 and any goodwill impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. related to such investments and acquisitions, the risks posed by international operations Internal Operations (I.O., IO or I/O) is a fictional American Intelligence Agency in Wildstorm comics. It was originally called International Operations. I.O. first appeared in WildC.A.T.S. volume 1 #1 (August, 1992) and was created by Brandon Choi and Jim Lee. to the company, and the company's ability to effectively manage its growth, as well as those discussed in the company's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December 31, 2004 as filed with the Securities and Exchange Commission on March 16, 2005, and the company's other SEC filings. Earnings guidance offered by senior management today represents a point-in-time estimate and is 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.
Albany Molecular Research, Inc.
Condensed Consolidated Statements of Operations
(unaudited)
(Dollars in thousands, except for per share data)
Three Months Ended Six Months Ended
------------------ ------------------
June 30, June 30, June 30, June 30,
2005 2004 2005 2004
-------- --------- -------- ---------
Contract revenue $35,948 $ 28,118 $72,574 $ 58,932
Recurring royalties 15,892 13,878 27,900 23,870
-------- --------- -------- ---------
Total revenue 51,840 41,996 100,474 82,802
-------- --------- -------- ---------
Cost of contract revenue 29,327 22,853 58,463 46,715
Write-down of library
inventories -- 5,974 -- 5,974
-------- --------- -------- ---------
Total cost of contract revenue 29,327 28,827 58,463 52,689
Technology incentive award 1,594 1,387 2,795 2,385
Research and development 3,480 5,368 6,969 13,248
Selling, general and
administrative 6,394 5,811 12,846 9,732
Property and equipment
impairment -- 4,728 -- 4,728
Goodwill impairment -- 14,494 -- 14,494
Intangible asset impairment -- 3,541 -- 3,541
Restructuring charge -- 426 -- 426
-------- --------- -------- ---------
Total costs and expenses 40,795 64,582 81,073 101,243
-------- --------- -------- ---------
Income (loss) from operations 11,045 (22,586) 19,401 (18,441)
Equity in loss of unconsolidated
affiliates -- -- -- (65)
Interest income, net 320 142 520 302
Other income, net 67 1 70 9
-------- --------- -------- ---------
Income (loss) before income tax
expense 11,432 (22,443) 19,991 (18,195)
Income tax expense (benefit) 4,138 (1,670) 7,101 (183)
-------- --------- -------- ---------
Net income (loss) $ 7,294 $(20,773) $12,890 $(18,012)
======== ========= ======== =========
Basic earnings (loss) per share $ 0.23 $ (0.65) $ 0.40 $ (0.57)
======== ========= ======== =========
Diluted earnings (loss) per
share $ 0.23 $ (0.65) $ 0.40 $ (0.57)
======== ========= ======== =========
Albany Molecular Research, Inc.
Condensed Consolidated Balance Sheets
(unaudited)
(Dollars and share amounts in thousands)
June 30, December 31,
2005 2004
------------- -------------
Assets
Current assets:
Cash and cash equivalents $ 46,065 $ 41,171
Investment securities, available-for-sale 97,276 92,578
Accounts receivable, net 20,503 14,263
Royalty income receivable 15,873 12,178
Inventories 30,660 32,415
Prepaid expenses and other current assets 3,370 3,914
Property and equipment held for sale 5,627 5,627
------------- -------------
Total current assets 219,374 202,146
------------- -------------
Property, plant and equipment, net 145,389 145,753
Other assets:
Goodwill 25,747 25,747
Intangible assets and patents, net 1,250 1,201
Equity investments in unconsolidated
affiliates 956 956
Other assets 1,588 1,089
------------- -------------
Total other assets 29,541 28,993
------------- -------------
------------- -------------
Total assets $ 394,304 $ 376,892
============= =============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses $ 11,634 $ 14,289
Deferred revenue 3,965 2,089
Accrued pension benefits 631 631
Income taxes payable 6,964 846
Current installments of long-term debt 4,536 4,526
------------- -------------
Total current liabilities 27,730 22,381
------------- -------------
Long-term liabilities:
Long-term debt, excluding current
installments 46,215 48,603
Deferred income taxes 7,334 6,997
Pension and postretirement benefits 2,737 3,139
Other long term liabilities 491 296
------------- -------------
Total liabilities 84,507 81,416
------------- -------------
Commitments and contingencies
Stockholders' equity:
Common stock, $0.01 par value, 50,000
shares authorized, 34,397 shares issued
at June 30, 2005, and 33,942 shares
issued at December 31, 2004 344 340
Additional paid-in capital 193,071 189,608
Unearned compensation - restricted stock (2,003) --
Accumulated other comprehensive loss (150) (117)
Retained earnings 155,706 142,816
------------- -------------
346,968 332,647
Less, treasury shares at cost, 2,077
shares (37,171) (37,171)
------------- -------------
Total stockholders' equity 309,797 295,476
------------- -------------
Total liabilities and stockholders' equity $ 394,304 $ 376,892
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