PRINCETON, N.J., July 29, 2014 /PRNewswire/ -- Covance Inc. (NYSE: CVD) today reported results for its second quarter ended June 30, 2014. Net revenue was $639 million, representing 8.0% growth from the second quarter of 2013. On a GAAP basis, the company reported earnings of $0.29 per diluted share in the second quarter. The company reported pro forma earnings per diluted share of $0.95, up 21.5% over the second quarter of 2013. Pro forma results exclude asset impairment charges totaling $52.6 million, or $0.61 per share, and charges associated with restructuring and other cost reduction actions totaling $4.2 million or $0.05 per share.
“In the second quarter, a stronger-than-expected performance in Early Development and continued strong growth in central laboratories more than offset lower-than-expected growth in clinical development, leading to year-on-year revenue growth of 8%, expanded pro forma operating margins of 11.9%, and a 21.5% year-on-year increase in pro forma EPS,” said Joe Herring, Chairman and Chief Executive Officer. “Commercial performance strengthened from the first quarter, with second quarter adjusted net orders of $773 million resulting in an adjusted net book-to-bill of 1.21 to 1.
“In Early Development, revenue of $231.2 million grew 7.7% year-on-year and 5.9% sequentially while pro forma operating margin increased 200 basis points year-on-year and 360 basis points sequentially to 13.3%. These better-than-expected results were driven by growth in demand for toxicology and pharmaceutical chemistry services, and continued strength in clinical pharmacology services.
“Late-Stage Development second quarter revenue grew 8.1% year-on-year to $408.3 million and pro forma operating margins were 22.1%, up 70 basis points from a year ago, but down 110 basis points from the strong first quarter margins on higher IT spending. Central laboratories and clinical development grew 11% and 4%, respectively, and market access services resumed year-on-year growth.
“Looking ahead, we expect increases of a few cents in earnings per share in both the third and fourth quarter. We now expect 2014 revenue growth of 6% to 8% and pro forma diluted earnings per share of $3.78 to $3.92 (excluding the gain on sale, costs associated with our restructuring activities, asset impairment charges and assuming foreign exchange rates remain at June 30, 2014 levels).”
Consolidated Results
($ in millions except EPS) | 2Q14 | 2Q13 | Change | YTD14 | YTD13 | Change |
Total Revenues | $687.1 | $644.0 | $1,353.4 | $1,278.3 | ||
Less: Reimbursable Out-of-Pockets | $47.6 | $51.7 | $93.9 | $105.8 | ||
Net Revenues | $639.5 | $592.3 | 8.0% | $1,259.5 | $1,172.5 | 7.4% |
Operating Income | $19.3 | $51.5 | (62.6%) | $86.2 | $99.8 | (13.6%) |
Operating Margin | 3.0% | 8.7% | 6.8% | 8.5% | ||
Net Income | $16.9 | $41.0 | (58.7%) | $67.8 | $89.2 | (24.0%) |
Diluted Earnings per Share | $0.29 | $0.72 | (59.2%) | $1.17 | $1.58 | (25.5%) |
Restructuring Costs | ($4.2) | ($6.0) | ($8.3) | ($12.2) | ||
Asset Impairments | ($52.6) | - | ($52.6) | - | ||
Operating Income, excluding items* | $76.0 | $57.5 | 32.2% | $147.1 | $ 111.9 |
