Synthetech Reports First Quarter Fiscal 2009 Results

ALBANY, Ore., July 31 /PRNewswire-FirstCall/ -- Synthetech, Inc.
(OTC Bulletin Board: NZYM) today announced financial results for the first
quarter of fiscal 2009, which ended June 30, 2008. Revenue for the quarter
was $4.9 million, an 18% increase compared to revenue of $4.2 million in the
first quarter of fiscal 2008. Operating income for the current quarter was
$314,000, compared to operating income of $136,000 for the same period last
year. Net income for the current quarter was $295,000, or $0.02 per share,
compared to last year's first quarter net income of $119,000, or $0.01 per
share.
International sales, mainly to Europe, were $2.6 million and $2.0 million
in the first quarters of fiscal 2009 and 2008, respectively. International
sales, like all of Synthetech's revenues, are subject to significant quarterly
fluctuations.
Gross margins of 26% for the first quarter of fiscal 2009 were lower than
Synthetech normally would expect on revenue of $4.9 million. Gross margins
for the quarter were hindered by: lower than normal margins on certain
products which encountered production difficulties in prior quarters; higher
than average raw material costs on certain projects; and low margins on
material purchased for direct resell.
Synthetech's cash and cash equivalents were $217,000 at June 30, 2008,
compared to $1.1 million at March 31, 2008. Synthetech's working capital was
$4.9 million at June 30, 2008, compared to $4.4 million at March 31, 2008. In
May 2008, Synthetech borrowed $550,000 to expand its large-scale reactor
capacity and to install a distillation column, in order to meet increased
customer demand and permit the recycling of certain spent solvents for cost
and waste reduction. These capital improvements are expected to be
operational in September 2008.

Synthetech, Inc.
Condensed Statements of Operations
(unaudited)
First Quarter Ended June 30,
(in thousands, except per share data)
2008 2007

Revenue $4,917 $4,172
Cost of revenue 3,628 2,983

Gross income 1,289 1,189

Research and development 297 328
Selling, general and administrative 678 725
Total operating expense 975 1,053

Operating income 314 136

Interest income 5 9
Interest expense (24) (26)

Income before income taxes 295 119
Income taxes - -
Net income $295 $119

Basic and diluted income per share $0.02 $0.01

Commenting on the financial results, Dr. Gregory Hahn, President and CEO,
stated, "Our revenue line continues to be supported by a variety of promising
projects, providing $4.9 million of revenue in the first quarter of fiscal
2009. Synthetech's order backlog as of June 30, 2008 was approximately
$6.9 million. We expect that a majority of these customer orders will ship
during the second quarter of fiscal 2009, and substantially all of the
remainder is scheduled to ship during the second half of fiscal 2009."
Management anticipates that Synthetech's revenue will continue to be
volatile 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.
About Synthetech
Synthetech, Inc., based in Albany, Oregon, is a fine chemicals company
specializing in organic synthesis, biocatalysis and chiral technologies. We
develop and manufacture amino acid derivatives, specialty amino acids, peptide
fragments, 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. Our 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 pharmaceutical, contract drug
synthesis firms, emerging biotechnology (virtual pharmaceutical) and medical
device companies. We also supply catalog quantities of specialty amino acids
to research institutions, universities and drug discovery firms.
Forward-Looking Statements
This press release contains "forward looking" statements within the
meaning of the Private Securities Litigation Reform Act of 1995. All
statements, other than statements of historical fact, are forward-looking,
including, without limitation, statements regarding: future operating results;
market conditions and opportunities; and the timing and amount of shipments;
resolution of manufacturing process difficulties. Words such as "believe,"
"anticipate," "expect," "estimate," "project," "will be," "will continue,"
"will likely result," or words or phrases of similar meanings identify
forward-looking statements. Forward-looking statements reflect management's
current expectations, plans or projections and are inherently uncertain and
actual results could differ materially from such expectations, plans or
projections. Investors are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of this press
release. Risks and uncertainties that could cause actual results to differ
significantly from management's expectations include, but are not limited to,
the following: Synthetech's limited financial and other resources; the
uncertain market for Synthetech's products; potential loss of a significant
customer; customer concentration; potential termination or suspension by
customers of significant projects or orders; potential period-to-period
revenue or expense fluctuations; production factors and timely access to raw
materials; industry cost factors and conditions; competition; government
regulation; labor disputes; technological changes; and international business
risks. Investors are urged to read Synthetech's filings with the Securities
and Exchange Commission, including its Annual Report on Form 10-K for the
fiscal year ended March 31, 2008, for a further description of risks and
uncertainties related to forward-looking statements made by Synthetech as well
as to other aspects of Synthetech's business. Those reports describe, some,
but not all of the factors that could cause actual results to differ
significantly from management's expectations. Additional risks and
uncertainties not presently known to Synthetech or which Synthetech currently
deems immaterial also may impair its business or operations. Synthetech does
not intend to release publicly any revisions to any forward-looking statements
contained herein to reflect events or circumstances after the date hereof or
to reflect the occurrence of unanticipated events.
SOURCE Synthetech, Inc.

Gary Weber, CFO of Synthetech, Inc., +1-541-967-6575, investor@synthetech.com