SHANGHAI, Nov. 12, 2013 /PRNewswire/ -- WuXi PharmaTech (Cayman) Inc. (NYSE: WX), a leading research and development outsourcing company serving the pharmaceutical, biotechnology, and medical device industries, with operations in China and the United States, today announced its unaudited financial results for the third quarter of 2013.
Management Comment"WuXi achieved solid, broad-based revenue growth and stable margins in the third quarter," said Dr. Ge Li, Chairman and Chief Executive Officer. "As a result, we again exceeded our financial guidance for the quarter. We expect this strong growth to continue throughout the remainder of 2013 and are increasing our full-year 2013 EPS guidance.
"While achieving current growth, we are also making the investments necessary to sustain growth," Dr. Li continued. "In small-molecule manufacturing, we are planning to construct new research manufacturing and commercial manufacturing facilities that will substantially increase our capacity. In August 2013, we successfully completed a general GMP and Pre-Approval Inspection from the U.S. Food and Drug Administration of our commercial manufacturing facility in Jinshan for the production of an advanced intermediate for a product with an NDA under FDA review, without the issuance of a Form 483.
"Biologics is another area of current investment that will drive future revenue growth. We believe we have built the premier biologics drug discovery, development, and manufacturing business in China, and we expect it will be one of our fastest-growing businesses.
"Genomics is another area where WuXi is demonstrating leadership in China. We recently received CLIA certification from the Centers for Medicare and Medicaid Services of the U.S. Department of Health and Human Services for our genomics clinical laboratory in Shanghai, the only laboratory in China to receive such certification. Receipt of a CLIA certificate allows WuXi's genomics laboratory to undertake certain clinical trial gene sequencing projects.
"These and other achievements demonstrate that we are succeeding in our mission of building an open-access technology and capability platform that enables anyone and any company to discover and develop therapeutic products to benefit patients," Dr. Li concluded.
Third-Quarter 2013 GAAP ResultsThird-quarter 2013 net revenues increased 16.6% year over year to $146.7 million. Revenue growth in Laboratory Services of 9.2% was driven by our comprehensive and integrated discovery and development services, primarily in China. Revenue growth of 43.6% in Manufacturing Services was caused by strong growth in demand in both research and commercial manufacturing compared to the third quarter of 2012.
Third-quarter 2013 GAAP gross profit increased 14.4% year over year to $52.7 million due to 16.6% revenue growth, offset by business mix, as the strongest revenue growth was achieved in Manufacturing Services, which has a lower gross margin than Laboratory Services. Gross margin decreased year over year to 35.9% from 36.6%. Gross margin in Laboratory Services decreased slightly year over year to 38.1% from 38.2% mainly due to the effects of increasing labor costs in China and appreciation of the RMB versus the U.S. dollar, partially offset by improved productivity and the ramp-up of biologics and preclinical services. Gross margin in Manufacturing Services decreased year over year to 30.0% from 30.7% due to project mix.
Third-quarter 2013 GAAP operating income increased 26.8% year over year to $27.2 million due to the 14.4% increase in gross profit and lower general and administrative expenses in the quarter. Operating margin increased to 18.5% from 17.0%, primarily due to lower general and administrative expenses.
Third-quarter 2013 GAAP net income increased 42.7% year over year to $30.4 million due to the 26.8% year-over-year increase in operating income, higher other income primarily due to $3.1 million of realized gains and $2.6 million of mark-to-market gains on foreign-exchange forward contracts, higher interest income due to higher cash balances and higher interest rates, and a reduction in the effective tax rate due to the mix of taxable income, partially offset by $1.4 million of equity-method investment losses associated with our joint ventures with PRA and MedImmune.
Third-quarter 2013 GAAP diluted earnings per ADS increased 40.7% to $0.42 due to the 42.7% increase in net income, partially offset by a higher number of outstanding ADSs as a result of the exercise of shares under employee stock option and restricted stock programs. Third-quarter 2013 GAAP comprehensive income increased 94.7% year over year to $39.3 million due to the 42.7% increase in GAAP net income, the increase in currency translation adjustments, and $6.6 million of unrealized gains from investments by our corporate venture fund in two U.S. biotech companies that had successful IPOs in the third quarter of 2013.
Third-Quarter 2013 Non-GAAP ResultsNon-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 2013 non-GAAP gross profit increased 13.1% year over year to $53.9 million, due to the 16.6% revenue growth, offset by business mix, as the strongest revenue growth was achieved in Manufacturing Services, which has a lower gross margin than Laboratory Services. Non-GAAP gross margin decreased year over year to 36.7% from 37.8%, mainly due to revenue mix of faster-growing Manufacturing Services revenues with relatively low gross margin and the effects of increasing labor costs in China and appreciation of the RMB versus the U.S. dollar, partially offset by improved productivity and the ramp-up of biologics and preclinical services.
Third-quarter 2013 non-GAAP operating income increased 17.5% year over year to $31.3 million, primarily due to the 13.1% increase in non-GAAP gross profit. Operating margin increased to 21.3% from 21.2% due to lower general and administrative expenses as a percentage of revenue, partially offset by lower gross margin.
Third-quarter 2013 non-GAAP net income grew 31.2% year over year to $34.5 million due to the 17.5% increase in non-GAAP operating income, higher other income primarily due to $3.1 million of realized gains and $2.6 million of mark-to-market gains on foreign-exchange forward contracts, higher interest income due to higher cash balances and higher interest rates, and a reduction in the effective tax rate due to the mix of taxable income, partially offset by $1.4 million of equity-method investment losses associated with our joint ventures with PRA and MedImmune.
Third-quarter 2013 non-GAAP diluted earnings per ADS grew 29.3% year over year to $0.47 due to the 31.2% increase in non-GAAP net income, partially offset by a higher number of outstanding ADSs as a result of the exercise of shares under the employee stock option and restricted stock programs.
Full-Year 2013 Financial GuidanceWuXi PharmaTech updates its full-year 2013 financial guidance as follows:
Fourth-Quarter 2013 Financial GuidanceWuXi PharmaTech provides the following fourth-quarter 2013 financial guidance:
175,245Accounts receivable, net119,384
47,774Prepaid expenses and other current assets34,341
18,807Total current assets524,333
32,561Property, plant and equipment, net264,363
14,015Intangible assets, net6,233
7,268Land use rights5,591
5,564Deferred tax assets2,545
3,037Other non-current assets4,946
19,749Total non-current assets338,742
742,535Liabilities and equity:Current liabilities:Short-term and current portion of long-term debt49,406
9,265Other taxes payable7
1,581Other current liabilities14,128
11,215Total current liabilities155,486
147,421Non-current liabilities:Long-term debt, excluding current portion5,534
732Other non-current liabilities7,149
7,799Total non-current liabilities14,585
164,312Equity:Ordinary shares ($0.02 par value, 5,002,550,000 authorized, 568,513,338 and 569,653,210 issued and outstanding as of December 31, 2012, and September 30, 2013, respectively) 11,393
11,222Additional paid-in capital346,383
188,604Accumulated other comprehensive income64,913
578,223Total liabilities and equity863,075
742,535 WUXI PHARMATECH (CAYMAN) INC.UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME(In thousands of U.S. dollars, except ADS data and per ADS data)Three Months Ended
September 30,Nine Months Ended
September 30,20132012% Change20132012% ChangeNet revenues:Laboratory Services108,060
15.1%Total net revenues146,719
12.5%Cost of revenues:Laboratory Services(66,929)
17.7%Total cost of revenues(93,982)
12.2%Gross profit:Laboratory Services41,131
9.3%Total gross profit52,737
13.0%Operating expenses:Selling and marketing expenses(3,859)
15.4%General and administrative expenses(18,656)
7.1%Research and development expenses(3,031)
36.7%Total operating expenses(25,546)
15.2%Other income (expenses), net:Loss from equity-method investments(1,404)
NAOther income (expenses), net8,084
246.7%Interest income (expenses), net2,500
34.7%Total other income (expenses), net9,180
118.8%Income before income taxes36,371
28.6%Income tax expense(5,992)
30.2%Other comprehensive income:Currency translation adjustments2,282
(527.9%)Unrealized gains on available-for-sale securities
66.4%Basic net earnings per ADS0.43
31.4%Diluted net earnings per ADS0.42
31.5%Weighted average ADS outstanding - basic71,142,534
(0.9%)Weighted average ADS outstanding - diluted73,057,785
(1.0%) WUXI PHARMATECH (CAYMAN) INC.RECONCILIATION OF GAAP TO NON-GAAP(in thousands of U.S. dollars, except ADS data and per ADS data)Three Months Ended
September 30,Nine Months Ended
September 30,20132012% Change20132012% ChangeGAAP gross profit52,737
13.0%GAAP gross margin35.9%
5.8%Amortization of acquired intangible assets48
(86.5%)Non-GAAP gross profit53,852
11.7%Non-GAAP gross margin36.7%
37.2%GAAP operating income27,191
15.2%GAAP operating margin18.5%
7.3%Amortization of acquired intangible assets48
(86.5%)Non-GAAP operating income31,291
12.1%Non-GAAP operating margin21.3%
20.9%GAAP net income30,379
30.2%GAAP net margin20.7%
7.3%Amortization of acquired intangible assets48
(86.5%)Deferred tax impact related to acquired
(88.7%)Non-GAAP net income34,462
25.3%Non-GAAP net margin23.5%
19.9%Income attributable to holders of ADS (Non-GAAP):Basic34,462
25.3%Basic earnings per ADS (Non-GAAP)0.48
26.4%Diluted earnings per ADS (Non-GAAP)0.47
26.6%Weighted average ADS outstanding
8211; basic (Non-GAAP)71,142,534
(0.9%)Weighted average ADS outstanding
– diluted (Non-GAAP)73,057,785
(1.0%) WUXI PHARMATECH (CAYMAN) INC.REVENUE BREAKDOWN(in thousands of U.S. dollars)Three Months Ended
September 30,Nine Months Ended
September 30,20132012% Change20132012% ChangeNet revenues:China-based Laboratory Services85,000
14.7%China-based Manufacturing Services38,659
14.8%U.S.-based Laboratory Services23,060
1.9%Total net revenues146,719
12.5%Conference CallWuXi PharmaTech senior management will host a conference call at 8:00 am (U.S. Eastern) / 5:00 am (U.S. Pacific) / 9:00 pm (Beijing/Shanghai/Hong Kong) on Wednesday, November 13, 2013, to discuss its third-quarter 2013 financial results and future prospects. The conference call may be accessed by calling:
4001 200 539Hong Kong
800 905 927Singapore
800 616 3222United Kingdom
0800 015 9725United States
1855 298 3404United States - New York (toll)
+1 631 5142 526Other countries (toll)
+65 6823 2299Conference ID
5522969A telephone replay will be available two hours after the call's completion at:
4001 842 240Hong Kong
800 966 697Singapore
800 616 2127United Kingdom
0800 169 7301United States
1866 846 0868Conference ID
5522969A 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 PharmaTechWuXi 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 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. WuXi PharmaTech's operating subsidiaries are known as WuXi AppTec. For more information, please visit: http://www.wuxiapptec.com .
Forward-Looking StatementsThis press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical facts, but instead are predictions about future events. Examples of forward-looking statements in this press release include statements about our fourth-quarter and full-year 2013 guidance and our goal of building an open-access technology platform. Although we believe that our predictions are reasonable, future events are inherently uncertain, and our forward-looking statements may turn out to be incorrect. Our forward-looking statements are subject to risks relating to, among other things, our ability to control our costs and sustain revenue growth, to realize the anticipated benefits of our investments, to protect our clients' intellectual property, and to compete effectively. Additional information about these and other relevant risks can be found in our Annual Report on Form 20-F for the year ended December 31, 2012. The forward-looking statements in this press release speak only as of the date on which they are made, and we assume no obligation to update any forward-looking statements except as required by law.
Use of Non-GAAP and Pro-Forma Financial Measures We have provided the third-quarter and nine-months 2012 and 2013 gross profit, gross margin, operating income, operating margin, net income, net margin, and earnings per ADS on a non-GAAP basis, which excludes share-based compensation expenses and the amortization and deferred tax impact of acquired intangible assets. We believe both management and investors benefit from referring to these non-GAAP financial measures in assessing our financial performance and liquidity and when planning and forecasting future periods. These non-GAAP operating measures are useful for understanding and assessing underlying business performance and operating trends. We expect to continue to provide net income and earnings per ADS on a non-GAAP basis using a consistent method on a quarterly basis. You should not view non-GAAP 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 you should refer to the reconciliation of GAAP measures to non-GAAP measures for the indicated periods in this press release.
Statement Regarding Unaudited Financial InformationThe financial information in this press release is unaudited and subject to adjustments. Adjustments to the financial statements may be identified when our annual financial statements are prepared and audit work is performed for the year-end audit, which could result in significant differences from this unaudited financial information.
For more information, please contact:Ronald Aldridge (for investors)
Director of Investor Relations
Email: email@example.com Aaron Shi (for the media)
Associate Director of Corporate Communications
|SOURCE WuXi PharmaTech|
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