Albany Molecular Research, Inc. (AMRI)

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Albany Molecular Research, Inc. (AMRI)

Q4 2008 Earnings Call

February 09, 2009 10:00 AM ET


Thomas E. D'Ambra, Ph.D. - Chairman, Chief Executive Officer and President

Mark T. Frost - Chief Financial Officer


David Windley - Jefferies & Company

Greg Bolan - Wachovia

Eric Miller - Advisory Research, Inc.



Good day and welcome to the Albany Molecular Research Incorporated Fourth Quarter 2008 Earnings Release Conference Call. Today's conference is being recorded. At this time I would like to turn the conference over to Dr. Thomas D’Ambra, Ph.D., Chairman, President and Chief Executive Officer. Please go ahead, sir.

Thomas E. D'Ambra, Ph.D.

Thank you, Alan. Good morning ladies and gentlemen. Welcome to the conference call segment of AMRI's 2008 fourth quarter and 2008 full year earnings announcement. This call is a follow-up to our press release issued this morning on Business Wire. With me is Mark Frost, AMRI's Chief Financial Officer.

We are pleased to report a fourth consecutive quarter of strong results for AMRI and an outstanding full year financial performance for 2008. These results reflect a positive return on our recent investment in talent, technologies, geographic diversity and sales initiatives. Although, we like everyone else, are facing into a challenging headwind caused by broader economic factors outside our industry, AMRI is positioned well to build on our recent gains and execute on our business plan to create greater value for the long term.

Consistent with our practice in earnings call, I am going to turn the phone over to Mark for his comments. After which I will have some additional remarks. Mark?

Mark T. Frost

Thank you, John. Before we begin, I would like to note that much of our discussion today might be termed forward-looking. Other than historical facts, such statements may concern projections, estimates and other forward-looking statements and involve a number of risks and uncertainties, including those discussed in the company's Annual Report on Form 10-K for the year-ended December 31, 2007 as filed with the Securities and Exchange Commission on March 17, 2008 and the company's other SEC filings.

While these statements represent management's current judgment on the future direction of the company's business, such risks and uncertainties could cause actual results to differ materially from any future performance suggested herein. The Company undertakes no obligations to release publicly the results of any revisions to these forward-looking statements to reflect events or circumstances arising after the date here.

Now I am going to present financial results for the fourth quarter along with guidance for 2009. Further details are included in our press release issued earlier today on the Business Wire.

Key highlights for the quarter and the year and other recent events include; Contract revenue for the fourth quarter grew by 22% with growth in all three service areas. For the full year Contract revenue grew by 20%.

Full year adjusted operating income increased over 100% to 28 million from 11.6 million in 2007. Full year adjusted net income was 19.8 million for 2008, up from 9.1 million in 2007.

The settlement which we reached with Teva-Barr in the fourth quarter regarding the Allegra patent infringement has we believe removed a significant risk factor for our business and will result in increased royalties to AMRI.

Turning to financial results for the fourth quarter of 2008, all comparisons are on a year-over-year basis: Total revenue was 56.4 million, increase of 19% compared to 47.2 million in 2007. Total Contract revenue was 49.6 million, an increase of 22% compared to total Contract revenue of 40.6 million in 2007.

Our total contract revenue encompasses revenue for AMRI's Discovery Services, Development and Small Scale Manufacturing and Large Scale Manufacturing Business Components. Contract revenue from Development Small Scale manufacturing was 13.2 million, an increase of 16% compared to 11.4 million in 2007. The strong performance was driven by continued demand for Development Analytical Services for emerging pharma and biotech customers in the U.S, as well as strong growth from our Indian operations.

Contract revenue from Discovery Services was 13.1 million, an increase of 13% from 11.5 million in 2007. Although we had double digit growth in U.S and Singapore medicinal chemistry, this was partially offset by a difficult quarter in Europe and the end of the amortization of our BMS licensing fee where we had been amortizing the upfront $8 million license fee over three years.

Contract revenue for Large Scale Manufacturing was 23.3 million, an increase of 32% compared to 17.7 million in 2007, reflecting the benefit of pre-launch shipments on one potential commercial product and higher development revenue. Recurring royalties from Allegra was 6.8 million, an increase of 11% from 2007. This increase was due primarily to the continued strength of the product in overseas markets and does not reflect any impact from the settlement with Barr, with Teva-Barr.

Net income was 3.1 million or $0.10 per diluted share compared to a net loss of $0.9 million or $0.03 per diluted share in 2007. The improved performance over 2007 was primarily due to increased margins in our Large Scale business which improved to 21% from a negative 9% in 2010.

Now I am going to turn to year-to-date results for full year 2008. Total revenue was 229.3 million, an increase of 19% compared to a 192.5 million in 2007. Total Contract and milestone revenue was 201 million, an increase of 22% compared to the prior year.

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