PharmEng International Inc.
TSX VENTURE : PII

PharmEng International Inc.

November 29, 2007 09:00 ET

PharmEng Reports Third Quarter Earnings for 2007

TORONTO, ONTARIO--(Marketwire - Nov. 29, 2007) - PharmEng International Inc. (TSX VENTURE:PII), a full-service consulting and contract manufacturing company, today reported its results for the period ended September 30, 2007. During the quarter, the Company continued development and expansion of its established core consulting business and officially opened its new pharmaceutical manufacturing facility in Nova Scotia.

The Company's focus in fiscal 2007 continues to be the strengthening of the financial position of the company. In the third quarter ended September 30, 2007, the Company secured another $3,500,000 of equity financing, bringing the total to $7,760,000 for the first three quarters of the year. Consulting revenues in Canada, the US and internationally continue to grow with manufacturing showing steady improvement.

- For the quarter ended September 30, 2007, the Company had revenues of $3,119K on a consolidated basis, representing a 20% increase compared to the third quarter of 2006 of $2,592K.

- Consulting revenues increased 40% to $2.8M in the quarter ended September 30, 2007 compared to $2.0M in the same period in 2006. The increase in revenues was due to both organic growth and acquisitions completed in 2006.

- Revenues from the Company's manufacturing facility decreased 47% to $0.29M for the quarter ended September 30, 2007 compared to $0.55M in the same quarter in 2006. This significant reduction was a one time occurrence resulting from delays in the receipt of active pharmaceutical ingredients resulting in a direct impact on the corresponding production.

- Consulting from all geographic divisions had a consolidated positive EBITDA of $513K for the third quarter, while the manufacturing division had a negative EBITDA of $890K for the third quarter.

- Net losses after taxes for the three months ended September 30, 2007 was $578K ($0.01 per share) compared to a loss of $392K ($0.01) for the same period in 2006.

"In the third quarter we secured $3,500,000 of equity financing. This financing is to support our building of the manufacturing operation which we are committed to in our business strategy. Every quarter we are significantly improving margins for our consulting operations.

Our manufacturing operations will turn around, we are confident that our strategy will be successful," commented Alan Kwong, CEO of PharmEng. "Our Rootlink and Pharmlink acquisitions in 2006 and our China acquisition are beginning to impact earnings as anticipated," concluded Mr. Kwong.

The following are financial highlights for the quarter ending September 30, 2007.



Selected Financial Highlights:

Selected Quarterly Financial Results

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Q3 Q2 Q1 Q4
09/30/07 06/30/07 03/31/07 12/31/06
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(thousands of dollars)
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Revenue - Consulting 2,830 2,674 2,178 3,084
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Revenue - Manufacture 289 739 621 662
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Direct Cost - Consulting 1,454 1,529 1,437 2,125
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Manufacture 717 962 772 922
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Gross Margin
Consulting 1,376 1,145 741 959
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Manufacturing (428) (223) (151) (260)
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Selling, Admin & Overhead 1,325 1,163 1,247 1,001
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EBITDA (377) (241) (657) (302)
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Amortization 396 350 346 307
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Interest Expense 122 99 93 79
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Income tax expense
(benefit) (317) (246) (396) (272)
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Net Income (Loss) (578) (444) (700) (416)
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Assets 20,436 17,678 14,235 12,727
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Liabilities 11,849 12,005 10,682 10,224
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Q3 Q2 Q1 Q4
09/30/06 06/30/06 03/31/06 12/31/05
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(thousands of dollars)
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Revenue - Consulting 2,043 1,968 1,736 1,361
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Revenue - Manufacture 549 403 367 261
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Direct Cost - Consulting 1,045 1,015 1,286 748
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Manufacture 880 638 525 324
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Gross Margin
Consulting 998 953 450 613
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Manufacturing (331) (235) (158) (63)
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Selling, Admin & Overhead 984 1,287 1,078 1,145
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EBITDA (317) (569) (786) (595)
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Amortization 190 115 65 105
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Interest Expense 140 53 27 51
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Income tax expense(benefit) (255) (235) (299) (164)
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Net Income (Loss) (392) (502) (579) (587)
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Assets 10,420 7,892 6,197 5,307
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Liabilities 5,548 6,302 4,870 3,518
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Third Quarter and Year-to-date results by operating units

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PharmEng
Technology Keata Pharma
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(thousands of dollars) Q3 YTD Q3 YTD
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Revenue 2,087 5,804 289 1,650
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Direct Expenses 1,028 3,222 717 2,451
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Gross Profit 1,059 2,582 (428) (801)
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Margins 51% 44% (148%) (49%)
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Selling ,Admin & Overhead 764 2,017 462 1,121
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EBITDA 295 565 (890) (1,922)
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Amortization 28 93 367 993
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Interest Expense 29 54 77 235
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Income tax expense (benefit) 91 156 (480) (1,134)
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Net Income (loss) 147 262 (854) (2,016)
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PharmEng USA Consolidated
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(thousands of dollars) Q3 YTD Q3 YTD
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Revenue 743 1,877 3,119 9,331
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Direct Expenses 426 1,198 2,171 6,871
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Gross Profit 317 679 948 2,460
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Margins 43% 36% 30% 26%
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Selling ,Admin & Overhead 99 597 1,325 3,735
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EBITDA 218 82 (377) (1,275)
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Amortization 1 6 396 1,092
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Interest Expense 16 25 122 314
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Income tax expense (benefit) 72 19 (317) (959)
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Net Income (loss) 129 32 (578) (1,722)
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Business Highlights in the Third Quarter

- management secured additional equity financing from a major shareholder resulting in $3,500,000 of proceeds.

- the official grand opening of the Company's state-of-the-art pharmaceutical manufacturing facility in Nova Scotia occurred on November 9, 2007. Presiding at the ribbon cutting ceremony was the Honourable Cecil Clarke, Minister of Justice, Province of Nova Scotia, Senator Gerald Comeau on behalf of the Honourable Peter MacKay, Minister of National Defence and Minister of the Atlantic Canada Opportunities Agency (ACOA).

- David Leonard was appointed the Keata Pharma President for the Sydney and Perth manufacturing sites. David has held key operations and business development positions with another contract manufacturing company. David obtained his undergraduate engineering degree from Lakehead University, an MBA from Queen's School of Business and is a member in good standing with the Professional Engineers of Ontario and the Certified Management Accountants of Ontario.

- gross margins on our consulting business were 49% for the third quarter of 2007, compared to 43% in the preceding quarter. The Company was able to achieve its goal of gross margins between 45% and 50% in Q3 and will continue to monitor and maintain adequate margins.

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.
    Bert Loveless
    Chief Financial Officer
    (905) 415-3922 x 107
    Website: www.pharmeng.com