Fine chemicals company Synthetech Inc. today announced its second quarter of fiscal 2010 results, which ended September 30, 2009, posting improvements across the board, fueled by pipeline projects, operational efficiencies and other growth initiatives.
Revenue for the quarter was $4.0 million, up 22 percent from revenue of $3.3 million in the second quarter of fiscal 2009. Operating income for the current quarter was $668,000, compared to an operating loss of $333,000 for the same period last year. Net income for the current quarter was $639,000, or $0.04 per share, compared to last year’s second quarter net loss of $367,000, or $0.03 per share.
The company also posted six-month results for fiscal 2010, reporting revenue of $8.7 million, which resulted in operating income of $1.7 million and net income of $1.6 million, or $0.11 per share. For the comparable period last year, revenue of $8.2 million resulted in an operating loss of $19,000 and a net loss of $72,000, or $0.00 per share.
“Synthetech has benefited from a favorable string of new and existing pipeline projects beginning in mid-fiscal 2009 and continuing into fiscal 2010. While our franchise business is in a temporary quiet cycle typical of projects in late developmental phases, other new and existing pipeline projects have progressed resulting in reasonable revenues and profitability in the second quarter. Favorable product mix, operational efficiencies, and cost reduction initiatives have led to a nicely profitable first half of the year,” Dr. Gregory Hahn, president and CEO of Synthetech stated in the press release.
While orders for the company’s products have slowed due to the economic environment, the company said it is looking for ways to extend its product pipeline.
“Synthetech’s order backlog as of September 30, 2009, was approximately $1.9 million, with substantially all of this expected to ship during the second half of fiscal 2010. Customer inquiries remain active and there are multiple large projects where Synthetech is pursuing orders. Over the past two quarters, customers have increasingly appeared more cautious in placing orders and we believe that some order decisions are being deferred as a result of customers’ economic and regulatory considerations as well as uncertainty related to healthcare reform. Given this environment, we continue to focus on expanding our project pipeline and further developing a culture of improving operational efficiencies and cost reductions,” Dr. Hahn stated.
The company also stated that frequent and common fluctuations in the industry might be balanced by strategic acquisitions.
“A reasonable amount of our annual revenues continue to be derived from multiple customers’ developmental projects all targeting a common indication, which we call our franchise business. We believe that future revenues from these projects have strong growth potential but will continue to fluctuate on a quarterly basis,” Dr. Hahn stated. “With quarter-to-quarter revenue fluctuations common in our industry, year-over-year results are more indicative of our performance. In addition to our organic growth initiatives, we are evaluating potential acquisition opportunities aimed at smoothing quarterly revenues, expanding market sources of revenue, and accelerating growth.”
Synthetech said its cash and cash equivalents were $2.4 million at September 30, 2009, compared to $588,000 at March 31, 2009. Working capital increased $1.7 million to $7.6 million as of September 30, 2009, compared to $5.9 million at March 31, 2009. The company has no outstanding balance on its credit facility at both September 30, 2009 and March 31, 2009.