ALBANY, N.Y., Nov. 5, 2014 /PRNewswire/ -- AMRI (NASDAQ: AMRI) today reported financial and operating results for the third quarter ended September 30, 2014.
Total revenue for the third quarter of 2014 was $62.5 million, an increase of 3% compared to total revenue of $60.8 million reported in the third quarter of 2013.
Total contract revenue for the third quarter of 2014 was $57.5 million, an increase of 8% compared to contract revenue of $53.0 million reported in the third quarter of 2013. Adjusted contract margins were 8% for the third quarter of 2014, compared with 16% for the third quarter of 2013, driven by lower capacity utilization, including the impact of a business interruption event at the company’s Albuquerque manufacturing facility. For a reconciliation of U.S. GAAP contract margins as reported to adjusted contract margins for the 2014 and 2013 reporting periods, please see Table 1 at the end of press release.
Royalty revenue in the third quarter of 2014 was $5.0 million, a decrease of 35% from $7.7 million in the third quarter of 2013. Royalty revenue for the third quarter of 2014 includes royalties from the Allegra® products as well as $2.4 million from the net sales of certain amphetamine salts sold by Actavis.
Net loss under U.S. GAAP was $(8.6) million, or $(0.27) per share, in the third quarter of 2014, compared to U.S. GAAP net income of $3.7 million, or $0.12 per diluted share for the third quarter of 2013. Net loss on an adjusted basis in the third quarter of 2014 was $(0.7) million or $(0.02) per share, compared to adjusted net income of $4.1 million or $0.13 per diluted share. Net loss on an adjusted basis excludes the following items that are included under U.S. GAAP: business interruption charges, restructuring and impairment charges, convertible debt interest and amortization charges, business acquisition costs, executive transition costs, postretirement benefit plan settlement gains, write-offs of deferred financing costs, non-recurring income tax adjustments, litigation settlements, insurance demutualization gains, losses on disposals of fixed assets related to restructuring activities, and depreciation and amortization of purchase accounting adjustments. For a reconciliation of U.S. GAAP net income (loss) and earnings (loss) per diluted share as reported to adjusted net income (loss) and earnings (loss) per diluted share for the 2014 and 2013 reporting periods, please see Table 2 at the end of this press release.
“The confluence of a business interruption event at our OsoBio facility, together with lower Discovery and API revenue has resulted in a weak third quarter,” said William S. Marth, AMRI’s President and Chief Executive Officer. “In our Discovery business, we saw lower fee-for-service work, while in our API business, timing of shipments impacted our results this quarter. Additionally, a weather-related power interruption at our OsoBio facility in Albuquerque took the facility offline for a period of time, contributing to the loss of finished product and the need to remediate one of the suites at the facility. Costs associated with this activity together with facility downtime increased our operating costs and contributed to the quarterly earnings loss. We have been working closely with our customers to not only provide a continued supply of product during this disruption, but have also taken steps to upgrade the facility to ensure we can supply our customers’ growing needs longer term. We anticipate the affected suite at our Albuquerque facility to be back online in mid-November.
“While we did not produce the results we expected this quarter, we remain confident in our outlook for the fourth quarter and 2015,” continued Mr. Marth. “We have taken significant actions this year to enhance our operations and align our resources with our customers’ needs. Our DDS insourcing programs continue to generate significant interest and we continue to see high demand for our development services. In addition, demand for complex API and Drug Product manufacturing continues to significantly expand.”
Year-to-Date Results
Total revenue for the nine-month period ended September 30, 2014 was $190.0 million, an increase of 6% compared to total revenue of $179.5 million for the same period in 2013.
Total contract revenue for the first nine months of 2014 was $170.0 million, an increase of 13% compared to contract revenue of $150.3 million for the same period in 2013. Adjusted contract margins were 18% for the nine months of 2014, consistent with the same period in 2013.
Royalty revenue for the first nine months of 2014 was $20.0 million, a decrease of 32% from $29.2 million in 2013, in line with expectations. Royalty revenue for the nine-month period ended September 30, 2014 includes royalties from the Allegra® products as well as $7.2 million from the net sales of certain amphetamine salts sold by Actavis.
Net loss under U.S. GAAP for the first nine months of 2014 was $(1.4) million, or $(0.05) per diluted share, compared to U.S. GAAP net income of $7.5 million, or $0.24 per diluted share for the first nine months of 2013. Net income on an adjusted basis in the first nine months of 2014 was $11.5 million or $0.35 per diluted share, compared to adjusted net income of $14.7 million or $0.46 per share in 2013.
For a reconciliation of U.S. GAAP net income and earnings per diluted share as reported to adjusted net income and earnings per diluted share for the 2014 and 2013 reporting periods, please see Table 2 at the end of this press release. Financial results for the three and nine months ended September 30, 2013 have been updated from previously reported amounts to reflect prior period income tax adjustments identified during the second quarter of 2014. The company considers the adjustments to be immaterial to the impacted periods.
Segment Results
In conjunction with the acquisition of OsoBio and resulting growth of its Drug Product business, AMRI is presenting its operating results in three segments: Discovery and Development Services (DDS), Active Pharmaceutical Ingredients (API) and Drug Product.
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