PharmEng International Inc.
TSX VENTURE : PII

PharmEng International Inc.

May 30, 2006 10:15 ET

PharmEng Reports First Quarter Earnings For 2006

TORONTO, CANADA--(CCNMatthews - May 30, 2006) - PharmEng International Inc. (TSX VENTURE:PII), a full-service consulting and contract manufacturing company, today reported its results for the period ended March 31, 2006. There are no comparative first quarter results for the prior year as the Company became a reporting issuer on April 19, 2005.

The Company, while investing in the pharmaceutical manufacturing operations, continues its consulting revenue growth in Canada, the USA and internationally.

- For the three-month period ended March, 2006, the Company had revenues of $2,103,000 on a consolidated basis. Net loss for the quarter was $582,000.

- Consulting fee revenues for the first quarter 2006 were $1,735,000. Margins on consulting revenue in the first quarter of 2006 were 30%.

- Revenues from Keata, the Company's pharmaceutical manufacturing facility, for the three-month period ended March 31, 2006 was $368,000. Margins on the Keata business continue to be negative reflecting under utilization of the manufacturing capacity and gross margin recalculations to better reflect direct manufacturing costs.

- Net loss after taxes for the three months ended March 31, 2006 was $582,000. The loss was expected due to continued expenditures to build the manufacturing business.

"Although we continue to grow the consulting practice, the business development costs associated with our manufacturing operation are significant. These costs coupled with the build-out of the new Cape Breton facility are challenging our bottom line," commented Alan Kwong, CEO and Chairman of PharmEng. "We are filling the pipeline as is evident by the press releases in this first quarter, and are looking forward to balance of the year to deliver on these manufacturing contracts", concluded Mr. Kwong.

The following are financial highlights for the quarter ended March 31, 2006:



Intercompany
Consulting Manufacturing Elimination Total
(in thousands) $ $ $ $
2006:
Assets 2,131 4,149 (88) 6,192
Revenue 1,735 368 - 2,103
Amortization 12 53 - 65
Interest expense 13 14 - 27
Earnings (loss) before
taxes (290) (537) - (827)
Income tax expense
(benefit) (101) (193) - (294)


Business Highlights in the First Quarter

- Euro-Pharm selects PharmEng as private label supplier in a 3 year agreement estimated to exceed $1.0 m annually.

- Pirri Canada selects PharmEng as exclusive suppler in a 5 year supply agreement estimated to start at $1.0 m in the first year.

- Tanta Pharmaceuticals selects PharmEng as strategic supplier in a 3 year supply agreement estimated to be $5.0 m over the three year period.

About PharmEng International Inc.

PharmEng International Inc., headquartered in Toronto, Canada, is a full-service consulting and contract manufacturing company that serves the pharmaceutical and biotechnology industries in North America and internationally. Consulting services include project management, engineering, GMP, validation, calibration, regulatory compliance and certified training. Contract manufacturing includes pharmaceutical support, formulation development, laboratory testing, and finished solid dosage and liquid products. PharmEng's shares trade on the TSX Venture Exchange under the symbol PII. For more information about PharmEng, please visit the Company's website at www.pharmeng.com.

FORWARD LOOKING STATEMENTS

Certain statements in this press release may include "forward-looking" statements which involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements of PharmEng to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. When used in this press release, such statements use such words as "may", "will", "expect", "anticipate", "project", "believe", "plan", and other similar terminology. The risks and uncertainties are detailed from time to time in reports filed by PharmEng with the securities regulatory authorities in all of the provinces and territories of Canada. New risk factors may arise from time to time and it is not possible for management to predict all of those risk factors or the extent to which any factor or combination of factors may cause actual results, performance and achievements of PharmEng to be materially different from those contained in forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction actual results.

Contact Information

  • PharmEng International Inc.
    Charles Ivey
    Vice President
    (905) 415-3922 x 116