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Covance Inc. (CVD) Reports Fourth Quarter Pro Forma Net Revenue of $561 Million, Pro Forma EPS of $0.73 and Adjusted Net Orders of $769 Million


1/25/2013 6:47:24 AM

PRINCETON, N.J., Jan. 24, 2013 /PRNewswire/ -- Covance Inc. (NYSE: CVD) today reported results for its fourth quarter and year ended December 31, 2012. On a GAAP basis, net revenue was $562 million in the fourth quarter and $2,181 million for the full year. Excluding revenue from facilities that were closed in 2012, pro forma net revenue was $561 million in the fourth quarter and $2,172 million for the full year. On a GAAP basis, the company reported earnings of $0.61 per diluted share in the fourth quarter. Excluding losses from facilities that were closed in 2012, restructuring costs and other items during the quarter, the company reported earnings per diluted share of $0.73. For the full year, diluted earnings per share on a GAAP basis were $1.68. Excluding losses from facilities closed in 2012, restructuring costs and other charges and favorable income tax developments during the year, the company reported earnings per diluted share of $2.70.

"In 2012, Covance took several important actions which are expected to drive future EPS growth, including reducing our preclinical capacity and overhead cost structure, advancing our strategic IT initiatives, and repurchasing over 10% of our outstanding shares. In addition, our intensified selling efforts led to record adjusted net orders for the year of $2.87 billion, a year-on-year increase of 13.5%, resulting in an adjusted net book-to-bill of 1.32 to 1 for the year," said Joe Herring, Chairman and Chief Executive Officer. "For the fourth quarter, pro forma revenue of $561 million and pro forma earnings per share of $0.73 were better than expected primarily due to significantly higher kit volumes in central laboratories and continued strength in clinical development. Adjusted net orders in the fourth quarter were a record $769 million, representing an adjusted book-to-bill of 1.37 to 1.

"Late-Stage Development fourth quarter revenues grew 15.7% year-on-year to $345 million. This increase was led by 22% growth in clinical development and 16% growth in central laboratories, which more than offset a decline in our market access services. Late-Stage Development pro forma operating margins increased 130 basis points both year-on-year and sequentially to 21.3%. In Early Development, pro forma revenue of $216 million and pro forma operating margin of 12.0% declined modestly from the third quarter level on lower demand for discovery support services.

"Looking ahead to 2013, for the full year, we are forecasting mid- to high-single digit year-on-year revenue growth and pro forma diluted earnings per share, which exclude costs from ongoing restructuring activities, in the range of $2.85 to $3.15 (assuming foreign exchange rates remain at year-end 2012 levels). In the first quarter of 2013, we expect revenue to be up slightly from the fourth quarter level and pro forma earnings per share to be in the range of $0.71 to $0.73 as we forecast an increase in Late-Stage Development net revenues and earnings to be off-set by seasonally-lower first quarter Early Development results."

Consolidated Results

($ in millions except EPS)

4Q12

4Q11

Change

FY12

FY11

Change

Total Revenues

$609.1

$582.4


$2,365.7

$2,236.4


Less: Reimbursable Out-of-Pockets

$46.9

$49.9


$185.1

$140.5


Net Revenues

$562.2

$532.5

5.6%

$2,180.6

$2,095.9

4.0%

Operating Income

$43.1

$39.0

10.6%

$115.9

$180.6

(35.8%)

Operating Margin

7.7%

7.3%


5.3%

8.6%


Net Income

$33.9

$21.1

60.3%

$94.7

$132.2

(28.3%)

Diluted Earnings per Share

$0.61

$0.35

77.5%

$1.68

$2.16

(22.2%)

Revenue from facilities closed in 2012**

$1.5

-


$8.8

-


Net Revenue, continuing ops*

$560.7

$532.5

5.3%

$2,171.9

$2,236.4

3.6%

Restructuring costs and other items

($6.6)

($19.0)


($73.1)

($34.7)


Loss from facilities closed in 2012**

($2.9)

-


($9.3)

-


Operating Income, excluding items*

$52.5

$57.9

(9.3%)

$198.2

$215.3

(7.9%)

Operating Margin, excluding items*

9.4%

10.9%


9.1%

10.3%

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