SHANGHAI, Nov. 12, 2014 /PRNewswire/ -- WuXi PharmaTech (Cayman) Inc. (NYSE: WX), a leading open-access R&D capability and technology platform company serving the pharmaceutical, biotechnology, and medical device industries, with operations in China and the United States, today announced its financial results for the third quarter of 2014.
Third-Quarter 2014 Highlights
- Net Revenues Increased 18.3% Year Over Year to $173.6 Million
- Laboratory Services Net Revenues Grew 16.6% Year Over Year to $126.0 Million
- China-Based Laboratory Services Net Revenues Increased 18.2% Year Over Year to $100.5 Million
- U.S.-Based Laboratory Services Net Revenues Grew 10.8% Year Over Year to $25.5 Million
- Manufacturing Services Net Revenues Increased 22.9% Year Over Year to $47.6 Million
- GAAP Diluted Earnings Per ADS Grew 8.2% Year Over Year to $0.45
- Non-GAAP Diluted Earnings Per ADS Increased 13.8% Year Over Year to $0.54
Management Comment
“WuXi’s strong momentum continued in the third quarter,” said Dr. Ge Li, Chairman and CEO of WuXi PharmaTech. “We achieved 18% year-over-year revenue growth, led by small-molecule manufacturing and biologics. Manufacturing Services, China Lab Services, and U.S. Lab Services each achieved record quarterly revenues. The revenue growth was broad-based, with 23%, 18%, and 11% year-over-year growth in Manufacturing Services, China Lab Services, and U.S. Lab Services, respectively. We exceeded our third-quarter guidance in revenues, and we expect strong year-over-year revenue growth to continue in the fourth quarter.
“Our GAAP and non-GAAP diluted EPS grew 8% and 14%, respectively, both exceeding our third-quarter guidance,” Dr. Li continued. “GAAP gross profit increased 26%, driven by strong revenue growth and productivity improvement. We achieved realized and unrealized gains from our hedging program and an appreciating RMB, as well as a gain from the sale of an investment by our venture fund.
“While achieving this solid revenue and diluted EPS growth, we continued to invest in new capabilities, including talent, laboratories, and technologies, particularly in manufacturing, biologics, genomics, R&D, sales and marketing, and information technology, to drive future revenue growth. Our largest current investment is a two-year, $100 million expansion of our manufacturing facilities in Changzhou that will double our current capacity and meet growing demand in both research manufacturing and commercial manufacturing. We are on track to have the new facilities come on line by the end of 2015.
“At the end of September, we acquired XenoBiotic Laboratories, Inc., a contract research organization located in Plainsboro, New Jersey, and Nanjing, China. The acquisition bolsters WuXi’s Laboratory Testing Division in bioanalytical and DMPK/ADME services, particularly in studies of radio-labeled compounds, provides greater flexibility in service and support options for our North American customers, and gains access to new generic, agricultural, and animal health customers. WuXi will begin to reflect results of operations for XenoBiotic in the fourth quarter. The transaction is expected to be neutral to WuXi’s 2014 diluted EPS and accretive to our 2015 diluted EPS on a non-GAAP basis. Reflecting the contribution of this acquisition, we are increasing our full-year revenue guidance to $670-$672 million.
“We continue to believe that our future is bright,” Dr. Li concluded. “We expect particularly strong growth in small-molecule manufacturing and biologics for the next several years, as we capitalize on the growing late-stage and commercial product pipeline in small-molecule manufacturing and the ramp-up of our biologics manufacturing business. We remain focused on our mission to build the premier open-access R&D platform that enables anyone and any company to discover and develop innovative medicines to benefit the world’s patients.”
Third-Quarter 2014 GAAP Results
Third-quarter 2014 net revenues increased 18.3% year over year to $173.6 million. Revenue growth in Laboratory Services of 16.6% was driven by our comprehensive and integrated drug discovery and development services. Revenue growth of 22.9% in Manufacturing Services was caused by strong demand in both research manufacturing and commercial manufacturing compared to the third quarter of 2013.
Third-quarter 2014 GAAP gross profit increased 25.5% year over year to $66.2 million due to 18.3% revenue growth and productivity improvements. Gross margin increased year over year to 38.1% from 35.9% mainly due to improved productivity and the ramp-up of biologics services, partially offset by increased labor costs in China. Gross margin in Manufacturing Services increased year over year to 35.9% from 30.0%. Gross margin in Laboratory Services increased year over year to 39.0% from 38.1%.
Third-quarter 2014 GAAP operating income increased 2.1% year over year to $27.8 million due to the 25.5% increase in gross profit, partially offset by increased selling and marketing expenses, general and administrative expenses including hiring of senior management, and research and development expenses in biologics, discovery biology, genomics, and other areas. Operating margin declined to 16.0% from 18.5% due to these increased selling and marketing, general and administrative, and research and development expenses.
Third-quarter 2014 GAAP net income increased 5.3% year over year to $32.0 million due to the 2.1% year-over-year increase in operating income, a $2.6 million gain on the sale of an investment by the corporate venture fund, smaller equity-method investment losses from our joint ventures with PRA and MedImmune and other equity-method investments, and higher interest income due to higher cash balances and higher interest rates, partially offset by lower mark-to-market gains on foreign-exchange forward contracts ($2.1 million in the third quarter of 2014 compared to $2.6 million in the third quarter of 2013), lower realized gains on settled foreign-exchange forward contracts ($1.5 million in the third quarter of 2014 compared to $3.1 million in the third quarter of 2013), and a higher effective tax rate compared to the third quarter of 2013 due to the mix of taxable income and certain non-recurring tax benefits we received in 2013.
Third-quarter 2014 GAAP diluted earnings per ADS increased 8.2% to $0.45 due to the 5.3% increase in net income and a lower number of outstanding ADSs as a result of share purchases earlier in the year. Third-quarter 2014 GAAP comprehensive income increased 4.4% year over year to $41.0 million due to the 5.3% increase in GAAP net income and favorable currency translation adjustments, offset by lower unrealized gains on available-for-sale securities, and a cash flow hedge.
Third-Quarter 2014 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.
Third-quarter 2014 non-GAAP gross profit increased 26.0% year over year to $67.8 million due to the 18.3% revenue growth and productivity improvements. Non-GAAP gross margin increased year over year to 39.1% from 36.7% due to improved productivity and the ramp-up of biologics services, offset by increased labor costs in China.
Third-quarter 2014 non-GAAP operating income increased 8.4% year over year to $33.9 million due to the 26.0% increase in non-GAAP gross profit, partially offset by increased selling and marketing expenses, general and administrative expenses including hiring of senior management, and research and development expenses in biologics, discovery biology, genomics, and other areas. Non-GAAP operating margin decreased to 19.5% from 21.3% due to increased selling and marketing, general and administrative, and research and development expenses.
Third-quarter 2014 non-GAAP net income increased 10.7% year over year to $38.2 million due to the 8.4% year-over-year increase in operating income, a $2.6 million gain on the sale of an investment by the corporate venture fund, smaller equity-method investment losses from our joint ventures with PRA and MedImmune and other equity-method investments, and higher interest income due to higher cash balances and higher interest rates, partially offset by lower mark-to-market gains on foreign-exchange forward contracts ($2.1 million in the third quarter of 2014 compared to $2.6 million in the third quarter of 2013), lower realized gains on settled foreign-exchange forward contracts ($1.5 million in the third quarter of 2014 compared to $3.1 million in the third quarter of 2013), and a higher effective tax rate compared to the third quarter of 2013 due to the mix of taxable income and certain non-recurring tax benefits we received in 2013.
Third-quarter 2014 non-GAAP diluted earnings per ADS increased 13.8% year over year to $0.54 due to the 10.7% increase in net income and a lower number of outstanding ADSs as a result of share purchases earlier in the year.
Nine-Month 2014 GAAP Results
Nine-month 2014 net revenues increased 14.9% year over year to $483.6 million. Revenue growth in Laboratory Services of 12.9% was driven by our comprehensive and integrated drug discovery and development services. Revenue growth of 20.7% in Manufacturing Services was caused by strong demand in both research manufacturing and commercial manufacturing compared to the first nine months of 2013.
Nine-month 2014 GAAP gross profit increased 19.4% year over year to $181.4 million due to 14.9% revenue growth and productivity improvements. Gross margin increased year over year to 37.5% from 36.1% mainly due to improved productivity, the ramp-up of biologics services, and a depreciating RMB relative to the U.S. dollar in the first half of 2014, partially offset by increased labor costs in China. Gross margin in Manufacturing Services increased year over year to 32.7% from 30.2%. Gross margin in Laboratory Services increased year over year to 39.3% from 38.2%.
Nine-month 2014 GAAP operating income increased 4.3% year over year to $79.2 million due to the 19.4% increase in gross profit, partially offset by increased selling and marketing expenses, general and administrative expenses including hiring of senior management, and research and development expenses in biologics, discovery biology, genomics, and other areas. Operating margin declined to 16.4% from 18.0% due to these increased selling and marketing, general and administrative, and research and development expenses.
Nine-month 2014 GAAP net income decreased 3.1% year over year to $79.2 million due to mark-to-market losses on foreign-exchange forward contracts of $14.3 million in the first nine months of 2014 compared to mark-to-market gains of $6.8 million in the first nine months of 2013, lower realized gains on settled foreign-exchange forward contracts ($4.9 million in the first nine months of 2014 compared to $5.8 million in the first nine months of 2013), and a higher effective tax rate compared to the first nine months of 2013 due to the mix of taxable income and certain non-recurring tax benefits we received in 2013, partially offset by the 4.3% year-over-year increase in operating income, $9.7 million of gains on the sale of investments by the corporate venture fund, smaller equity-method investment losses from our joint ventures with PRA and MedImmune and other equity-method investments, and higher interest income due to higher cash balances and higher interest rates.
To read full press release, please click here.
Help employers find you! Check out all the jobs and post your resume.
