SHANGHAI, China, Oct. 14 /Xinhua-PRNewswire/ -- WuXi PharmaTech (Cayman) Inc. (NYSE: WX), a leading pharmaceutical, biotechnology and medical device research and development outsourcing company with operations in China and the United States, today announced preliminary selected unaudited financial results for the third quarter ended September 30, 2008, and updated its guidance for the full year 2008.
Third Quarter 2008 Preliminary Unaudited Financial Results
For the third quarter ended September 30, 2008, WuXi reports the
following preliminary unaudited financial results. These results are
subject to change as a result of finalization of share-based compensation
expenses, closing adjustments and completion of the review process for the
Preliminary Third Quarter 2008 Financial Results
(Unaudited, U.S. Dollars in Millions)
The third quarter of The third quarter of
2008 2007 % 2008 2007 %
Net Revenue $66.0 - 67.5 $34.0 96% $66.0 - 67.5 $34.0 96%
Services 46.0 - 47.0 26.7 74% 46.0 - 47.0 26.7 74%
Services 20.0 - 20.5 7.3 177% 20.0 - 20.5 7.3 177%
Gross Profit 21.4 - 22.9 16.0 38% 25.9 - 27.4 16.3 63%
Services 18.7 - 19.7 12.9 49% 22.0 - 23.0 13.2 70%
Services 2.7 - 3.2 3.1 (5%) 3.9 - 4.4 3.1 34%
Operating Income 6.7 - 8.2 7.5 (1%) 13.7 - 15.2 9.0 61%
EBITDA 13.9 - 15.4 10.2 44% 17.0 - 18.5 11.7 52%
* Growth rate calculated based on mid-point range
Financial data presented on a non-GAAP basis exclude share-based compensation expenses and amortization of acquired intangible assets. The non-GAAP measures are reconciled to the corresponding GAAP measures in the section below titled "Use of Non-GAAP Financial Measures".
Commenting on the third quarter 2008 preliminary results, Dr. Ge Li, Chairman and Chief Executive Officer of WuXi PharmaTech, said, "WuXi continues its historical trend of delivering strong revenue and profitability growth, as reflected in the 96% top-line revenue and 52% non-GAAP EBITDA growth (each using the mid-point of current estimates). As we enter the fourth quarter, we expect lower than anticipated full-year 2008 revenues, due to cancelled or delayed projects from small biotechnology customers. However, our China-based laboratory services business remains strong and is expected to grow over 40%, year-over-year.
"Even with the financial market unrest, we believe the need for outsourced services remains robust. WuXi has an outstanding reputation for providing high-quality, IP-protected services in a cost-effective and efficient manner. In all environments, we are positioned to meet and anticipate our customer needs, by expanding and evolving our services, while maintaining our focus on revenue growth and profitability."
Expected third quarter 2008 operating income reflects expected sales, general and administrative expenses (excluding share-based compensation) generally consistent with the second quarter of 2008.
On November 12, 2008, WuXi expects to announce finalized operating results (including net income and earnings per ADS) for the third quarter 2008. In the interim, WuXi is evaluating and/or finalizing the following items, which impact net income and earnings per ADS: its goodwill balances from the AppTec acquisition for impairment and income tax provisions.
Revised Full Year 2008 Guidance
In light of the current economic environment and its impact on the anticipated research and development spending of its smaller customers, WuXi is revising its net revenue guidance for the full year 2008 to $260 to $265 million from $280 to $300 million. This represents year-over-year revenue growth ranging from 92% to 96%. Full year non-GAAP EBITDA will be in the range of $70 to $75 million (excluding share-based compensation charges, potential impact from goodwill impairment charges, and further mark-to-market adjustment on foreign currency forward contracts).
Termination of Rule 10b5-1 Trading Plans; Company Trading Window
At this time, each of our four founders (including Dr. Li) and other management members are terminating their existing 10b5-1 plans.
A number of our executive officers, other management team members and employees, including each of our four founders (who are also WuXi executive officers and directors), previously (i) established pre-arranged stock trading plans in accordance with the provisions of Rule10b5-1 of the Securities Exchange Act of 1934, and (ii) sold ADSs pursuant to those plans.
Although those 10b5-1 plans were terminated, we expect up to 350,000 ADSs may be sold by other management members and employees prior to year-end for 409A purposes. Prior to 2008, a number of our management members and employees who were U.S. taxpayers were granted options with an exercise price potentially below fair market value on the date of grant, as determined under Section 409A of the U.S. Tax Code. To avoid the adverse tax consequences imposed under Section 409A to these U.S. taxpayers, the options were amended previously to require that they be exercised, if at all, on or prior to December 31, 2008 (no other changes were made). If unexercised by year-end those options will expire, and those individuals may need to sell ADSs to pay related taxes and the purchase price payable upon exercise.
Following the release of this announcement and the related conference call, WuXi intends to open its trading window under WuXi's Insider Trading Policy.
Following this announcement, WuXi PharmaTech senior management will host a conference call at 8:00 am (Eastern) / 5:00 am (Pacific) / 8:00 pm (Beijing/Hong Kong) on October 14, 2008 to discuss the preliminary 2008 third quarter financial results. The conference call may be accessed by calling (US) +1 866-239-0753 or +1 718-354-1157 / (HK) +852-3002-1615 or 800-933-519 / (UK) 0800-559-3272. Passcode: 5190406.
A live webcast of the conference call and replay will be available on the investor relations page of WuXi PharmaTech's website at http://www.wuxiapptec.com .
About WuXi PharmaTech
WuXi PharmaTech is a leading pharmaceutical, biotechnology and medical device R&D outsourcing company, with operations in China and the United States. As a research-driven and customer-focused company, WuXi PharmaTech provides pharmaceutical, biotechnology and medical device companies a broad and integrated portfolio of laboratory and manufacturing services throughout the drug and medical device R&D process. WuXi PharmaTech's services are designed to assist its global partners in shortening the cycle and lowering the cost of drug and medical device R&D. The operating subsidiaries of WuXi PharmaTech are known as WuXi AppTec. For more information, please visit: http://www.wuxiapptec.com .
Use of Non-GAAP Financial Measures
We have provided the preliminary unaudited third quarter 2008 and third
quarter 2007 financial data and EBITDA on a non-GAAP basis, which excludes
share-based compensation expenses and amortization of acquired intangible
assets. We believe both management and investors benefit from referring to
EBITDA and these non-GAAP financial measures in assessing our financial
performance and liquidity and when planning and forecasting future periods.
EBITDA and these non-GAAP operating measures are useful for understanding
and assessing underlying business performance and operating trends. You
should not view non-GAAP (including EBITDA) results on a stand-alone basis
or as a substitute for results under GAAP, or as being comparable to
results reported or forecasted by other companies, and should refer to the
reconciliation of non-GAAP measures to GAAP measures for the indicated
periods attached hereto.
RECONCILIATION OF NON-GAAP TO GAAP
(Unaudited, U.S. Dollars in Millions)
The third quarter of 2008
Share-based of acquired
GAAP expenses assets Non-GAAP
Net Revenue $66.0 - 67.5 $ -- $ -- $66.0 - 67.5
Services 46.0 - 47.0 46.0 - 47.0
Services 20.0 - 20.5 20.0 - 20.5
Gross Profit 21.4 - 22.9 0.6 3.9 25.9 - 27.4
Services 18.7 - 19.7 0.6 2.7 22.0 - 23.0
Services 2.7 - 3.2 -- 1.2 3.9 - 4.4
Income 6.7 - 8.2 3.1 3.9 13.7 - 15.2
EBITDA $13.9 - 15.4 $3.1 $ -- $17.0 - 18.5
The third quarter of 2007
Share-based of acquired
GAAP expenses assets Non-GAAP
Net Revenue $34.0 $ -- $ -- $34.0
Services 26.7 -- -- 26.7
Services 7.3 -- -- 7.3
Gross Profit 16.0 0.3 16.3
Services 12.9 0.3 -- 13.2
Services 3.1 -- -- 3.1
Income 7.5 1.5 -- 9.0
EBITDA $10.2 $1.5 $ -- $11.7
Cautionary Note Regarding Forward-Looking Statements
Statements in this release contain "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the Private Securities Litigation Reform Act of 1995, including, among others, our preliminary financial unaudited results for the third quarter 2008; expected net revenue levels for 2008 and expected revenue trends related to our smaller biotech customers and the impact of current market turmoil; the global trend in R&D outsourcing; and our expected ability to grow revenue and profitability in 2008 and beyond and meet and anticipate customer needs in all environments while maintaining our ability to adjust our internal capacity.
These forward-looking statements are not historical facts but instead
represent only our belief regarding future events, many of which, by their
nature, are inherently uncertain and outside of our control. Our actual
results and financial condition and other circumstances may differ,
possibly materially, from the anticipated results and financial condition
indicated in these forward-looking statements. Our preliminary Q3 2008
operating results may change as a result of final management review, review
by outside auditors, finalization of share-based compensation expenses and
closing adjustments for the quarter. Also the uncertainty in the global
economy may adversely impact our business and R&D outsourcing trends; and
our smaller biotech customers may continue to face funding and other
spending difficulties for longer than anticipated. We may be unable to
successfully expand our capabilities to meet client needs. In addition
other factors that could cause our actual results to differ from what we
currently anticipate include our limited operating history; failure to
generate sufficient future cash flows or secure any required future
financing on acceptable terms or at all; failure to retain key personnel;
effective integration of products and services from AppTec; our reliance on
a limited number of customers to continue to account for a high percentage
of our revenues; risk of payment failure by any of our large customers,
which could significantly harm our cash flows and profitability; dependency
upon the continued service of our senior management and key scientific
personnel and ability to retain our existing customers or expand our
customer base. The financial information contained in this release should
be read in conjunction with the consolidated and pro forma financial
statements and notes thereto included in our 2007 Annual Report on Form
20-F filed with available on the Securities and Exchange Commission's
website at http://www.sec.gov . For additional information on these and
other important factors that could adversely affect our business, financial
condition, results of operations and prospects, see "Risk Factors"
beginning on page 10 of our 2007 Annual Report on Form 20-F. Our
preliminary results of operations for the third quarter 2008 are not
necessarily indicative of our operating results for any future periods. Any
projections in this release are based on limited information currently
available to us, which is subject to change. Although these projections and
the factors influencing them will likely change, we undertake no obligation
to update or revise these forward- looking statements, whether as a result
of new information, future events or otherwise, after the date of this
press release. Such information speaks only as of the date of this release.
For more information, please contact:
Debra Yu, MD
Vice President Strategy
WuXi PharmaTech (Cayman) Inc.
Dr. Hai Mi
Executive Director of Investor Relations and Business Planning
WuXi PharmaTech (Cayman) Inc.
Vice President of Investor Relations
|SOURCE WuXi PharmaTech (Cayman) Inc.|
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