PharmEng International Inc.
TSX VENTURE : PII

PharmEng International Inc.

August 30, 2007 12:51 ET

PharmEng Reports Second Quarter Earnings for 2007

TORONTO, ONTARIO--(Marketwire - Aug. 30, 2007) - PharmEng International Inc. (TSX VENTURE:PII), a full-service consulting and contract manufacturing company, today reported its results for the period ended June 30, 2007. The Company continues to pursue its vision to be a leader and preferred supplier to the pharmaceutical sector, offering a fully integrated suite of high-quality consulting services and commercial pharmaceutical manufacturing. Consulting revenues in Canada, the US and internationally continue to grow with manufacturing showing steady improvement.

- For the three-month period ended June 30, 2007, the Company had revenues of $3,413K on a consolidated basis representing a 44% increase compared to the second quarter of 2006 of $2,371K.

- Consulting revenues for the three-month period ended June 30, 2007 increased 35% to $2.7M from $2.0M in the second quarter of 2006.

- Manufacturing revenues for the three-month period ended June 30, 2007 increased 83% to $0.739M from $.403M for the second quarter of 2006. Although the increase was significant, our manufacturing operation continues to operate with negative margins reflecting the under utilization of the Perth manufacturing facility.

Net losses after taxes for the three months ended June 30, 2007 was $444K ($0.01 per share) compared to a loss of $502K ($0.01 per share) for the second quarter of 2006.

Rationalization of administration costs commenced in the first quarter and continued in the second quarter with the objective of reducing overhead costs by 20%, the full cost savings of this rationalization to be achieved in the third quarter. Cost reduction measures already implemented include the closing of the Halifax office, senior management salary reductions by up to 50% and staffing lay offs.

"In the second quarter we secured $4,260,000 of equity financing. This financing permits us to complete our goal to achieve profitability in the later part of fiscal 2007. With our cost rationalization efforts now impacting our second quarter results, we are significantly improving margins for our consulting operations while continuing to build our manufacturing operations.," commented Alan Kwong, CEO and Chairman of PharmEng. "We have integrated our Rootlink and Pharmlink acquisitions, closed our China acquisition and expect the accretive value to impact earnings in the balance of the year," concluded Mr. Kwong.

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



Selected Financial Highlights:

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Q2 Q1 Q4 Q3
06/30/07 03/31/07 12/31/06 09/30/06
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(thousands of dollars)
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Revenue Consulting 2,674 2,178 3,084 2,043
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Manufacturing 739 622 662 549
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Direct Cost Consulting 1,529 1,452 2,125 1,045
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Manufacturing 962 772 922 880
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Gross Margin Consulting 1,145 726 959 998
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Manufacturing (223) (150) (260) (331)
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Selling, Admin & Overhead 1,163 1,245 1,001 984
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EBITDA (241) (669) (302) (317)
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Amortization 350 345 307 189
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Interest Expense 99 80 79 136
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Income tax expense
(benefit) (246) (394) (299) (177)
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Net Income (Loss) (444) (700) (389) (465)
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Assets 17,678 14,235 12,727 10,420
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Liabilities 12,005 10,682 10,224 5,548
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Q2 Q1 Q4 Q3
06/30/06 03/31/06 12/31/05 09/30/05
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(thousands of dollars)
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Revenue Consulting 1,968 1,736 1,361 1,528
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Manufacturing 403 367 261 515
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Direct Cost Consulting 1,015 1,286 748 637
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Manufacturing 638 525 324 567
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Gross Margin Consulting 953 450 613 891
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Manufacturing (235) (158) (63) (52)
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Selling, Admin & Overhead 1,287 1,078 1,145 1,045
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EBITDA (569) (786) (595) (206)
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Amortization 115 65 105 54
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Interest Expense 53 27 51 17
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Income tax expense
(benefit) (235) (299) (164) (69)
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Net Income (Loss) (502) (579) (587) (208)
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Assets 7,892 6,197 5,307 4,372
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Liabilities 6,302 4,870 3,518 1,634
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Second Quarter and Year-to-date results by operating units


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Consolidated
Consulting Manufacturing Operations
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Q2 YTD Q2 YTD Q2 YTD Q2 YTD -
2007 2007 2007 2007 2007 2007 2006 2006
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(in thousands) $ $ $ $ $ $ $ $
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Revenue 2,674 4,851 739 1,361 3,413 6,212 2,371 4,475
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Direct
Expenses 1,529 2,966 962 1,734 2,491 4,700 1,653 3,464
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Selling &
Admin 846 1,751 317 659 1,163 2,410 1,287 2,364
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299 134 (540) (1,032) (241) (898) (569) (1,353)
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Amortization 39 69 311 626 350 695 115 180
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Interest
expense 13 34 86 158 99 192 53 80
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Income tax
benefit 100 12 (346) (653) (246) (641) (235) (534)
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Net earnings
(Loss) 147 19 (591) (1,163) (444) (1,144) (502) (1,079)
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Business Highlights in the Second Quarter

- subsequent to June 30, 2007, management secured additional financing through the exercising of 10,000,000 warrants from a major shareholder resulting in $3,500,000 of proceeds.

- gross margin on consulting operations improved significantly from 29% in the first quarter to 42.8% in the second quarter of 2007. The Company's objective is to achieve a 45% to 50% gross margin.

- construction of the new 46,400 sq. ft. state of the art facility in Cape Breton, NS is nearing completion with the grand opening scheduled for October 2007.

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