LAKE FOREST, Ill., July 30, 2014 /PRNewswire/ -- Hospira, Inc. (NYSE: HSP), the world’s leading provider of injectable drugs and infusion technologies, today reported results for the second quarter ended June 30, 2014. Net sales for the quarter were $1.1 billion and adjusted* diluted earnings per share were $0.72. (Adjusted* measures exclude specified items as described later in this press release and the attached schedules.) On a U.S. Generally Accepted Accounting Principles (GAAP) basis, second-quarter 2014 diluted earnings per share were $0.42.
“Hospira delivered another strong quarter, driven by continued positive performance in our Specialty Injectable Pharmaceuticals products,” said F. Michael Ball, chief executive officer. “The investments we have been making to reinforce our foundation and drive growth are also contributing to our results, as are the diligent efforts of Hospira employees around the world. Given our favorable performance for the first half of 2014, we are raising our guidance for the full year, with a continued focus on serving our customers, driving profitable growth and delivering shareholder value.”
Second-Quarter 2014 Results
The following table highlights selected financial results for the second quarter of 2014 compared to the same period in 2013:
In $ millions, | GAAP Three Months Ended June 30, |
% | Adjusted* Three Months Ended June 30, |
% | ||
2014 | 2013 | 2014 | 2013 | |||
Net Sales | $1,135.8 | $1,026.2 | 10.7% | $1,135.8 | $1,026.2 | 10.7% |
Gross Profit (Net Sales less Cost of Products Sold) | $400.0 | $318.7 | 25.5% | $464.3 | $388.9 | 19.4% |
Income from Operations | $99.5 | $52.2 | 90.6% | $179.3 | $126.4 | 41.9% |
Diluted Earnings per Share | $0.42 | $0.20 | 110.0% | $0.72 | $0.55 | 30.9% |
Statistics (as a % of Net Sales) | ||||||
Gross Profit (Net Sales less Cost of Products Sold) | 35.2% | 31.1% | 40.9% | 37.9% | ||
Income from Operations | 8.8% | 5.1% | 15.8% | 12.3% | ||
Specified items are included in GAAP results and excluded from adjusted* non-GAAP measures; the specified items are detailed in the schedules attached to this press release.
Net sales were $1.1 billion in the second quarter of 2014, an increase of 10.7 percent compared to the second quarter of 2013. Net sales benefited from continued strong global sales of Specialty Injectable Pharmaceuticals (SIP) products, which were driven mainly by favorable pricing and our continued supply recovery in the United States.
Adjusted* income from operations increased 41.9 percent to $179 million in the second quarter of 2014, compared to $126 million in the second quarter of 2013. The increase primarily reflects the impact of improved pricing and increased volume in the company’s SIP products, partially offset by higher Selling, general and administrative expenses. On a GAAP basis, income from operations was $100 million, compared to $52 million in the second quarter of 2013. In addition to the factors impacting the adjusted* income from operations results, in second-quarter 2014, manufacturing spending related to the company’s quality- and product-related charges was lower, while capacity expansion-related charges were higher.
The effective tax rate on an adjusted basis* in the second quarter of 2014 was 28.2 percent, compared to 17.1 percent in the second quarter of 2013. The increase in the effective tax rate on an adjusted* basis reflects an increase and shift in the mix of earnings to higher tax-rate jurisdictions, as well as the revised earnings projections for full-year 2014. On a GAAP basis, the second-quarter 2014 effective tax rate was an expense of 23.3 percent, compared to a benefit of 27.9 percent for the same period in 2013.
Cash Flow
Cash flow from operations for the first six months of 2014 was $176 million, compared to $51 million in the first six months of 2013. The increase is primarily due to higher net income in the first six months of 2014.
Capital expenditures were $185 million for the first six months of 2014, compared to $153 million for the same period in 2013. The increase reflects capital spending primarily associated with the companys new facility in Vizag, India, as well as the company’s modernization initiatives.
2014 Projections
The projection ranges for full-year 2014 net sales and adjusted* diluted earnings per share include, among several factors, assumptions related to the timing of genericization of Precedex (dexmedetomidine HCl), the company’s proprietary pharmaceutical for sedation.
Based on favorable performance during the first half of 2014, Hospira now expects net sales growth for full-year 2014 to range between 6 to 9 percent on a constant-currency basis, with minimal impact from foreign currency.
The company is now projecting adjusted* diluted earnings per share for 2014 to range between $2.30 and $2.50.
The reconciliation between the projected 2014 adjusted* diluted earnings per share and projected GAAP diluted earnings per share follows:
Diluted earnings per share -- adjusted* | $2.30- $2.50 |
Estimated charges related to the company’s Device | $(0.16) |
Estimated amortization of intangible assets related to | $(0.26) |
Estimated charges for certain quality and product-related | $(0.28) |
Estimated charges related to capacity expansion | $(0.34) |
Estimated net acquisition and integration-related charges | $(0.12) |
Estimated charges related to facilities optimization, | $(0.05) |
Diluted earnings per share -- GAAP | $1.09- $1.29 |
The adjusting items are shown net of tax in aggregate of $94 million, which is calculated for the specified adjustments stated above, based on the statutory tax rates in the various tax jurisdictions in which the items are expected to occur.
The company is updating its guidance for full-year 2014 cash flow from operations, which it now expects to range between $275 million and $375 million. Capital expenditure projections remain in a range between $375 million and $425 million. The company continues to expect depreciation and amortization to range between $225 million and $275 million.
*Use of Non-GAAP Financial Measures
Adjusted* measures used in this press release are reconciled to the most comparable measures calculated in accordance with GAAP in the schedules attached to this release. For more information regarding these non-GAAP financial measures, please see Hospira’s Current Report on Form 8-K furnished to the Securities and Exchange Commission on the date of this press release.
Webcast/Complementary Material
Hospira will hold a conference call for investors and media at 8 a.m. Central time on Wednesday, July 30, 2014. A live webcast of the conference call will be available on Hospira’s website at www.hospirainvestor.com. Listeners should log on approximately 10 minutes in advance to ensure proper setup for receiving the webcast. In addition, complementary information will be available on the presentations page of the Investor Relations website at the beginning of the conference call. A replay will be available on the Hospira website for 30 days following the call.
About Hospira
Hospira, Inc. is the world’s leading provider of injectable drugs and infusion technologies, and a global leader in biosimilars. Through its broad, integrated portfolio, Hospira is uniquely positioned to Advance Wellness by improving patient and caregiver safety while reducing healthcare costs. The company is headquartered in Lake Forest, Ill., and has approximately 17,000 employees. Learn more at www.hospira.com.
Private Securities Litigation Reform Act of 1995 --
A Caution Concerning Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including projections of certain measures of Hospira’s results of operations; projections of certain charges, expenses, and cash flow; and other statements regarding Hospira’s goals, plans and strategy. Hospira cautions that these forward-looking statements are subject to risks and uncertainties, including adequate and sustained progress on the company’s quality initiatives, continuous improvement activities, and Device Strategy, that may cause actual results to differ materially from those indicated in the forward-looking statements. Economic, competitive, governmental, regulatory, legal, intellectual property, product development, technological, supply, quality, and other factors that may affect Hospira’s operations and may cause actual results to be materially different from expectations include the risks, uncertainties and factors discussed under the headings “Forward-Looking Statements,” “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Hospira’s latest Annual Report on Form 10-K and subsequent Forms 10-Q, filed with the Securities and Exchange Commission and incorporated by reference. Hospira undertakes no obligation to release publicly any revisions to forward-looking statements as the result of subsequent events or developments.
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