Covance Inc. Reports Fourth Quarter Revenue of $492 Million, GAAP EPS of $0.45, and Pro Forma EPS of $0.56

PRINCETON, N.J., Jan. 26, 2011 /PRNewswire/ -- Covance Inc. (NYSE: CVD) today reported GAAP earnings for its fourth quarter ended December 31, 2010 of $0.45 per diluted share. Included in fourth quarter results is $0.22 per diluted share in costs from the previously-announced fourth quarter restructuring actions, partially offset by a gain of $0.11 per diluted share from favorable income tax resolutions in the quarter. Excluding these items, earnings per diluted share were $0.56 in the quarter. For the full-year, earnings per diluted share were $1.06 on a GAAP basis, inclusive of $1.15 per diluted share non-cash impairment charge incurred in the third quarter, $0.21 per diluted share in costs associated with restructuring charges incurred in the fourth quarter, partially offset by a gain of $0.27 per diluted share from favorable income tax resolutions during the year. Excluding these items, full-year earnings per diluted share were $2.15.

“During a challenging 2010, we made progress on a number of fronts, including entering into a comprehensive strategic alliance with sanofi-aventis (which helped drive annual backlog growth of 27%), significantly lowering our cost structure, and delivering full-year net revenue growth of 3.1%,” said Joe Herring, Chairman and Chief Executive Officer. “In the fourth quarter, on a sequential basis, revenue grew 3.0% to $492 million and operating margin (after excluding $18.4 million from the fourth quarter restructuring actions) expanded 70 basis points to 9.6%. Early Development’s revenue increased $14 million sequentially and pro forma operating margin grew 130 basis points sequentially to 12.0% reflecting two months of results from our new Porcheville, France and Alnwick, UK sites and modest improvement in toxicology from the depressed third quarter level. As expected, Late-Stage Development revenues and pro forma operating margins were essentially flat with the third quarter levels.

“On the commercial front, solid fourth quarter business awards in Late-Stage Development led to adjusted net orders of $603 million, representing an adjusted book-to-bill ratio of 1.23 to 1. Also signed in the fourth quarter, but not included in our adjusted net orders (consistent with our practice), was a $125 million expansion and extension of an existing dedicated space toxicology agreement from a top ten pharmaceutical client.

“In the first quarter of 2011, we expect a slight increase in net revenues from the fourth quarter level, largely from higher levels of business under our alliance with sanofi-aventis. First quarter pro forma earnings per share are expected to be in the range of $0.56 to $0.59, as incremental earnings from higher revenue levels, incremental sequential savings from the fourth quarter restructuring, and a full quarter impact of the share repurchase are expected to be offset by an expense increase of approximately $0.05 per share for incentive compensation accruals returning to normalized levels, and also by increased operating losses related to the transition of services from Vienna, Virginia to Greenfield, Indiana. Looking to the full-year 2011, Covance expects single digit percentage revenue growth and pro forma earnings per share to be in the range of $2.50 to $2.90 per diluted share, excluding costs associated with ongoing restructuring activities. This range assumes no new strategic alliances with clients and foreign exchange rates remain at year-end 2010 levels.”