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WuXi PharmaTech Co., Ltd. Announces Second-Quarter 2012 Results


8/14/2012 11:36:15 AM

SHANGHAI, Aug. 13, 2012 /PRNewswire-Asia/ -- WuXi PharmaTech (Cayman) Inc. (NYSE: WX), a leading research and development outsourcing company serving the pharmaceutical, biotechnology, and medical device industries, with operations in China and the United States, today announced its financial results for the second quarter of 2012.

Highlights

  • Net Revenues Increased 28.9% Year Over Year to $130.4 Million
  • Laboratory Services Net Revenues Grew 24.7% Year Over Year to $93.6 Million
  • China-Based Laboratory Services Net Revenues Increased 27.2% Year Over Year to $70.3 Million
  • U.S.-Based Laboratory Services Net Revenues Increased 17.7% Year Over Year to $23.3 Million
  • Manufacturing Services Net Revenues Grew 41.2% Year Over Year to $36.8 Million
  • Net Revenues from China Operations Exceeded $100 Million for the First Time on a Quarterly Basis
  • Share Repurchases Totaled $10.2 Million
  • GAAP Diluted Earnings Per ADS Grew 13.4% Year Over Year to $0.28
  • Non-GAAP Diluted Earnings Per ADS Increased 12.3% Year Over Year to $0.33
  • Company Increases Full-Year 2012 Revenue Guidance to $488-$498 Million

Management Comment

"WuXi's strong operational performance continued in the second quarter," said Dr. Ge Li, Chairman and Chief Executive Officer. "Year-over-year revenue growth accelerated to 28.9%, driven by solid demand for our broad, integrated platform of services. This revenue growth was broad-based, with each of our businesses achieving double-digit growth. I'm especially proud that this was the first quarter in which our China-based operations generated more than $100 million in net revenues. I'm also pleased that WuXi's GAAP diluted earnings per ADS increased 13.4% year over year. With these results, we met or exceeded all of our guidance for revenues and margins for the second quarter. While we produced these strong results, we continued to invest in new facilities and talented employees to drive future growth. We also returned capital to shareholders by repurchasing $10.2 million of our ADSs in the second quarter. We expect the remainder of 2012 to be successful, and we are pleased to raise our full-year net revenue guidance to the range of $488 to $498 million.

"WuXi continues to build a comprehensive and integrated technology platform and service offerings that will enable anyone and any company to discover and develop new products efficiently and cost-effectively," Dr. Li concluded. "By building high-quality operations to better serve our customers, WuXi has become the leader in the Chinese pharmaceutical R&D services industry. We are well-positioned to take advantage of the trend of increasing pharmaceutical research and development outsourcing."

Second-Quarter GAAP Results

Second-quarter 2012 net revenues increased 28.9% year over year to $130.4 million due to strong growth in both Manufacturing Services and Laboratory Services. Manufacturing Services revenue growth was driven by robust demand for clinical-trial materials from our research manufacturing business and for advanced intermediates in our commercial manufacturing business. Revenue growth in Laboratory Services was driven by our comprehensive and integrated discovery and development services, with particularly strong growth in analytical development services, DMPK/ADME, biology, formulation, toxicology, and bioanalytical services in China and increased demand for testing services in the United States for both biologics and medical devices.

Second-quarter 2012 GAAP gross profit increased 20.4% year over year to $46.5 million mainly due to 28.9% revenue growth. Second-quarter 2012 GAAP gross margin decreased year over year to 35.7% from 38.2%. Gross margin in Laboratory Services decreased year over year to 36.7% from 40.6% mainly due to the effects of appreciation of the RMB against the U.S. dollar and increasing labor costs in China, partially offset by improved productivity. Gross margin in Manufacturing Services improved year over year to 33.1% from 31.2% due to improved capacity utilization and project mix.

Second-quarter 2012 GAAP operating income grew 10.5% year over year to $23.8 million due to the 20.4% increase in gross profit, offset by increased operating expenses related to the hiring of new senior staff and sales and marketing personnel and R&D investment in developing capabilities in biology, biologics, genomics, and other areas. Operating margin decreased to 18.2% from 21.3% due to the lower gross margin and the increased operating expenses.

Second-quarter 2012 GAAP net income increased 9.9% year over year to $20.5 million due to the 10.5% increase in operating income, higher interest income on short-term investments that carried higher interest rates, and lower income tax expense due to income mix and a tax benefit from the deductibility of 150% of last year's R&D expenses, offset by a loss on foreign-exchange forward contracts of $0.9 million.

Second-quarter 2012 GAAP diluted earnings per ADS increased 13.4% to $0.28, mainly due to the 9.9% increase in net income and a lower ADS count caused by the repurchase of 722,431 ADSs, at an average price of $14.14 per ADS.

Second-quarter 2012 GAAP comprehensive income decreased 21.2% year over year to $18.4 million due to the decrease in currency translation adjustments, partially offset by the 9.9% increase in GAAP net income.

Second-Quarter Non-GAAP Results

Non-GAAP financial results exclude the impact of share-based compensation expenses and the amortization of acquired intangible assets and the associated deferred tax impact.

Second-quarter 2012 non-GAAP gross profit increased 20.1% year over year to $48.0 million mainly due to broad-based revenue growth. Non-GAAP gross margin decreased to 36.8% from 39.5%. Non-GAAP gross margin in Laboratory Services decreased year over year to 38.2% from 41.3% due to the appreciation of the RMB against the U.S. dollar and increased labor costs, partially offset by improved productivity. Non-GAAP gross margin in Manufacturing Services slightly improved year over year to 33.5% from 33.0% due to strong revenue growth, increased capacity utilization, and project mix.

Second-quarter 2012 non-GAAP operating income increased 9.7% year over year to $27.4 million, primarily due to the 20.1% increase in non-GAAP gross profit, partially offset by the increase in non-GAAP operating expenses driven by the hiring of new senior staff and sales and marketing personnel and R&D investment in developing capabilities in biology, biologics, genomics, and other areas. Operating margin decreased to 21.0% from 24.7% due to the lower gross margin and increased operating expenses.

Second-quarter 2012 non-GAAP net income grew 8.8% year over year to $23.9 million due to the 9.7% increase in non-GAAP operating income, higher interest income on short-term investments that carried higher interest rates, and lower income tax expense due to income mix and a tax benefit from deductibility of 150% of last year's R&D expenses, offset by a loss on foreign-exchange forward contracts of $0.9 million.

Second-quarter 2012 non-GAAP diluted earnings per ADS grew 12.3% year over year to $0.33, mainly due to the 8.8% increase in non-GAAP net income and a lower ADS count caused by the repurchase of 722,431 ADSs, at an average price of $14.14.

Full-Year 2012 Financial Guidance

The company provides the following full-year 2012 financial guidance:

  • Total net revenues of $488-498 million, or 20-22% year-over-year growth, compared to $468-$488 million, or 15-20% growth, previously
  • Growth in net revenues of China-based Laboratory Services of 23-26% year over year, compared to 18-24% previously, on a pro-forma basis reflecting the classification of Process Chemistry in Manufacturing Services for both years
  • Growth in net revenues of U.S.-based Laboratory Services of 12-13% year over year, compared to 6-9% previously
  • Growth in net revenues of Manufacturing Services of 18-21% year over year, compared to 13-18% previously, on a pro-forma basis reflecting the classification of Process Chemistry in Manufacturing Services for both years
  • Operating income margin of 17.0-18.0% on a GAAP basis, 20.0-21.0% on a non-GAAP basis, compared to 17.5-19.0% on a GAAP basis, 20.0-21.5% on a non-GAAP basis previously
  • Capital expenditures of about $70 million, the same as previous guidance
  • GAAP effective tax rate of about 17.5%, the same as previous guidance

Third-Quarter 2012 Financial Guidance

The company provides the following third-quarter 2012 financial guidance:

  • Total net revenues of $121-$124 million, up 16-19% year over year
  • Laboratory Services net revenues (not including Process Chemistry) of $97-$98 million
  • Manufacturing Services net revenues (including Process Chemistry) of $24-$26 million
  • Operating margin of 16.5-17.0% GAAP, 20.0-20.5% non-GAAP
  • Effective tax rate of about 19.5-20.0%


Read at BioSpace.com


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