NZYM (0.68) posts a Q4 loss of (0.04) versus 0.04 y/y - a weak quarter was expected, but maybe not this weak. Stock has been in a downtrend since hitting $1.29 ahead of the Q3 report.
ALBANY, Ore., Feb. 11 /PRNewswire-FirstCall/ -- Synthetech, Inc. (OTC Bulletin Board: NZYM) today announced financial results for the third quarter of fiscal 2010, which ended December 31, 2009. Revenue for the quarter was $2.4 million, a 52% decrease compared to revenue of $5.0 million in the third quarter of fiscal 2009. Operating loss for the current quarter was $555,000, compared to operating income of $623,000 for the same period last year. Net loss for the current quarter was $650,000, or $0.04 per share, compared to last year's third quarter net income of $566,000, or $0.04 per share.
For the first nine months of fiscal 2010, revenue of $11.1 million resulted in operating income of $1.1 million and net income of $958,000, or $0.06 per diluted share. For the comparable period last year, revenue of $13.2 million resulted in operating income of $604,000 and net income of $494,000, or $0.03 per share.
International sales, mainly to Europe, were $772,000 and $5.8 million in the third quarter and first nine months of fiscal 2010, respectively, compared to $2.5 million and $6.5 million in the comparable periods of fiscal 2009. International sales, like all of Synthetech's revenues, may be subject to significant quarterly fluctuations.
The net loss for the three months ended December 31, 2009 compared to the net income for the prior year's corresponding period is primarily attributable to the decrease in revenue of $2.6 million between the two periods. The improvement in gross income for the nine months ended December 31, 2009 compared to the corresponding period for the prior fiscal year is attributable primarily to: more favorable product mix; raw material and other cost reductions; and improved throughput and efficiencies.
Synthetech's cash and cash equivalents were $1.3 million at December 31, 2009, compared to $588,000 at March 31, 2009. Working capital increased $1.1 million to $7.0 million as of December 31, 2009, compared to $5.9 million at March 31, 2009. Synthetech had no outstanding balance on its credit facility at both December 31, 2009 and March 31, 2009.
Synthetech, Inc.
Condensed Statements of Operations
(unaudited)
Three Months Ended Nine Months Ended
------------------ -----------------
December 31, December 31,
------------ ------------
(in thousands, except
per share data) 2009 2008 2009 2008
---- ---- ---- ----
Revenue $2,402 $5,037 $11,067 $13,245
Cost of revenue 2,079 3,416 7,093 9,693
----- ----- ----- -----
Gross income 323 1,621 3,974 3,552
Research and development 220 318 762 950
Selling, general and
administrative 658 680 2,093 1,998
--- --- ----- -----
Total operating expenses 878 998 2,855 2,948
Operating income (loss) (555) 623 1,119 604
Interest income 2 1 7 6
Interest expense (32) (58) (103) (116)
--- --- ---- ----
Income (loss) before income
taxes (585) 566 1,023 494
Income taxes 65 - 65 -
--- --- --- ---
Net income (loss) $(650) $566 $958 $494
===== ==== ==== ====
Basic income (loss)
per share $(0.04) $0.04 $0.07 $0.03
======= ===== ===== =====
Diluted income (loss)
per share $(0.04) $0.04 $0.06 $0.03
======= ===== ===== =====
Referring to Synthetech's results, President and Chief Executive Officer Dr. Gregory Hahn stated, "Our pharmaceutical and biotech markets have faced significant pressure from the difficult economy this fiscal year. However, plant efficiencies and reasonable sales have driven our improved profitability for the first nine months of fiscal 2010 compared to the prior year." Dr. Hahn also noted that "Synthetech believes reduced revenue for the quarter ended December 31, 2009 reflects in large part order deferrals by certain customers in light of difficult economic conditions and the uncertainty created by the initiative to reform health care." Looking forward, Dr. Hahn continued, "Our backlog of $1.9 million at the end of second quarter improved to $2.7 million by the end of third quarter. Due to our significant improvements in costs and production efficiencies, we anticipate fiscal 2010 profitability to be similar to that of fiscal 2009 in spite of lower revenue." Remarking on developments related to Synthetech's growth strategy, Dr. Hahn said, "We recently added new R&D capabilities in San Diego, California to take advantage of virtual pharmaceutical opportunities in pre-clinical phases and to seek to even out our quarterly revenues."
About Synthetech
Synthetech, Inc., based in Albany, Oregon, is a fine chemicals company specializing in organic synthesis, biocatalysis and chiral technologies. Synthetech develops and manufactures amino acid derivatives, specialty amino acids, peptide fragments and proprietary custom chiral intermediates and specialty resins, primarily for the pharmaceutical industry. Synthetech produces advanced pharmaceutical intermediates in accordance with Current Good Manufacturing Practices (cGMP) in compliance with U.S. Food and Drug Administration (FDA) regulations. Synthetech's products support the development and manufacture of therapeutic peptides and peptidomimetic (peptide-like) small molecule drugs from early stages of a customer's clinical development through market launch and into commercial production. Synthetech's products also support the production of chemically-based medical devices. Synthetech's domestic and international customer base includes major and mid-size pharmaceutical, contract drug synthesis, emerging and established biotechnology and medical device companies. Synthetech also supplies catalog quantities of specialty amino acids to research institutions, universities and drug discovery firms.
Period to Period Fluctuations
Management anticipates that Synthetech's revenue will continue to fluctuate significantly from period to period. Variability in Synthetech's level of revenue is based primarily on its participation in large-scale customer projects and the timing of shipments arising from these projects. Synthetech operates in a challenging business environment, characterized by the unpredictable dynamics and life cycle of pharmaceutical projects, which can lead to rapid fluctuations in the mix of projects and revenues. As the uncertainties inherent in drug development projects remain outside of Synthetech's control, it is difficult to predict the progress, timing and revenue potential of these projects.
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