Full Year Net Revenues up 93.3%; Full Year Net Income up 283.0%
SHANGHAI, China, March 13 /Xinhua-PRNewswire-FirstCall/ -- WuXi PharmaTech (Cayman) Inc. (NYSE: WX), the leading global pharmaceutical, biotechnology and medical device R&D outsourcing company headquartered in Shanghai, China, today announced its unaudited financial results for the fourth quarter and full year ended December 31, 2007.
(Photo: http://www.prnasia.com/sa/200708281726.jpg )
Fourth Quarter 2007 Highlights:
Compared to the fourth quarter 2006 results,
-- Total net revenues increased 62.4% to $37.1 million.
-- Net income increased 205.7% to $12.1 million.
-- Non-GAAP net income increased 156.7% to $16.6 million.
-- Diluted earnings per American Depositary Share (“ADS”) were $0.17.
Diluted earnings per ADS excluding share-based compensation expenses
(non-GAAP) were $0.23.
Full Year 2007 Highlights:
Compared to full year 2006 results,
-- Total net revenues increased 93.3% to $135.2 million.
-- Net income increased 283.0% to $33.9 million.
-- Non-GAAP net income increased 158.5% to $44.6 million.
-- Diluted earnings per ADS were $0.42. Diluted earnings per ADS
excluding share-based compensation expenses (non-GAAP) were $0.59.
Commenting on the fourth quarter and full year results, Dr. Ge Li, Chairman and Chief Executive Officer of WuXi PharmaTech said, “2007 was an historic year for WuXi, marked by a number of key strategic and tactical milestones. Riding on the rising wave of demand for pharmaceutical and biotechnology R&D outsourcing services, our business experienced phenomenal growth, with revenues for the year at $135 million, up 93% from 2006, attributable to a strong performance across both our laboratory services and research manufacturing segments. We continued to expand our customer base from 70 in 2006 to 80 in 2007, a testimony to our operational excellence and service creed ‘We Are Determined to Serve You Better.’
“We remain focused on our goal to transform the drug R&D model globally. An important milestone towards reaching that goal was our recent acquisition of US-based AppTec Laboratory Services Inc., providing us with new capabilities in biologics and medical device testing and manufacturing as well as an expanded geographic footprint. Our integration efforts are ongoing, and by offering a broader range of complementary capabilities across the globe, we are well positioned to drive long-term growth and create value for our customers and shareholders.”
Fourth Quarter and Full Year 2007 Unaudited Financial Results
Net Revenues. Net revenues increased 62.4% to $37.1 million in the fourth quarter 2007 from $22.8 million for the fourth quarter 2006. Net revenues from laboratory services increased 33.1% to $28.8 million in the fourth quarter 2007 from $21.7 million in the fourth quarter 2006. The increase was primarily driven by continued strong growth across our core services including discovery chemistry, process research and bioanalytical services. Net revenues from research manufacturing increased by 603.9% to $8.3 million in the fourth quarter 2007 from $1.1 million in the fourth quarter 2006, primarily attributable to an increase in the number and scope of projects.
Net revenues for the full year 2007 increased 93.3% to $135.2 million from $69.9 million in 2006. Laboratory services revenues grew 71.3% to $102.4 million while research manufacturing revenues increased 222.9% to $32.8 million. The growth in net revenues for the full year 2007 is attributable to an increase in business volume for both laboratory services and research manufacturing. Our ongoing commitment to high quality customer service resulted in a doubling of revenues from our top ten customers over the full year 2006.
Gross margins. Overall gross margin was 42.9% in the fourth quarter 2007, down from 56.0% in the fourth quarter 2006 mainly due to the appreciation of RMB across our cost lines and higher bonus incentive payments to our scientific staff over the same period last year.
Gross margins for the full year 2007 were 46.5%, compared to 49.1% for 2006. The decrease is primarily due to the appreciation of RMB across our cost lines and investment in new services such as formulation and toxicology during the year, offset by increased gross margins for our research manufacturing from achieved economies of scale and increased number and scope of research manufacturing projects.
Operating Expenses. Operating expenses decreased 23.7% to $6.6 million in the fourth quarter 2007 from $8.6 million in the fourth quarter 2006 due to bonuses allocated to scientists. Operating expenses as a percentage of total net revenues decreased to 17.7% in the fourth quarter 2007 from 37.7% over the same period last year.
For the full year 2007, operating expenses grew 35.1% to $32.7 million from $24.2 million in 2006. Operating expenses as a percentage of total net revenues in 2007 declined to 24.2% in 2007 from 34.6% in 2006 due to economies of scale.
Net Income. Net income increased by 205.7% to $12.1 million for the fourth quarter 2007 from $4.0 million for the fourth quarter 2006. Net profit margin increased to 32.7% in the fourth quarter 2007 from 17.4% in the fourth quarter 2006. Non-GAAP net income, excluding share-based compensation expenses for the fourth quarter 2007, grew by 156.7% to $16.6 million, compared to the non-GAAP net income of $6.5 million from the fourth quarter 2006. Diluted earnings per ADS were $0.17 and diluted earnings per ADS excluding share-based compensation expenses (non-GAAP) were $0.23 for the fourth quarter 2007.
Net income for the full year 2007 increased by 283.0% to $33.9 million, compared to $8.9 million in 2006. Net profit margin for the year increased to 25.1% from 12.7% in 2006. Non-GAAP net income excluding share-based compensation expenses for the full year 2007 grew by 158.5% to $44.6 million, compared to the non-GAAP net income of $17.3 million from the full year 2006. Diluted earnings per ADS for 2007 were $0.42 and diluted earnings per ADS excluding share-based compensation expenses (non-GAAP) were $0.59 for 2007.
2007 Business Updates
Laboratory services -- Our new offerings in toxicology and formulation services since late 2007 have been well received by our customers. We have already received contracts and anticipate seeing gradual revenue growth from these services.
R&D Facilities -- Total square footage of our laboratory facilities increased 326,200 square feet in 2007.
Jinshan Facility -- Construction of the Jinshan expanded facility is on schedule. We anticipate the facility will be ready for production in the second half of 2008.
Suzhou Facility -- Construction on our GLP (Good Laboratory Practice) facility based in Suzhou, China, which began in the third quarter 2007, remains on track. We continue to expect the facility to come on line in 2009.
Progress on AppTec Integration
The acquisition of AppTec Laboratory Services is focused on driving revenue synergies and complementing our existing chemistry-based services with manufacturing and testing services for biologics and medical device clients, along with providing us with a significant US operational footprint.
The acquisition was completed on January 31, 2008. We continue to make progress on integration activities.
Management -- Retaining key AppTec management is one of our primary goals. All of the key senior management members identified prior to the completion of the acquisition have decided to stay and signed employment agreements. The retention of key executives provides continuity of operations and services to AppTec’s existing client base and will help expedite the integration of our complementary service lines.
2008 Guidance
We estimate that our 2008 consolidated revenues will range from $280 million to $300 million.
Conference Call
Following the earnings announcement, WuXi PharmaTech’s senior management will host a conference call at 9:00 am (Eastern) / 6:00 am (Pacific) / 9:00 pm (Beijing/Hong Kong) on Thursday, March 13, 2008 to discuss its fourth quarter and full year 2007 financial results and recent business activities. The conference call may be accessed by calling (US) +1-888-596-2633/ (UK)
+0808-101-1402 / (HK) +800-965-503/ (China, Northern Region) +10-800-714-0970/ (China, Southern Region) +10-800-140-0945. A telephone replay will be available shortly after the call until April 12, 2008 at (US) +1-888-203-1112/ (UK) +0808-101-1153 / (HK) +800-901-108 / (China, Northern Region) +1-719-457-0820/ (China, Southern Region) +10-800-140-1178, Passcode: 2224172.
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.wuxipharmatech.com .
About WuXi PharmaTech
WuXi PharmaTech, headquartered in Shanghai, China, is the leading global pharmaceutical, biotechnology and medical device R&D outsourcing company. As a research-driven and customer-focused company, WuXi PharmaTech provides pharmaceutical, biotechnology and medical device companies a broad and integrated portfolio of laboratory, research manufacturing, biologics testing and manufacturing services throughout the drug and medical device research and development 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 research and development by providing cost-effective and efficient outsourcing solutions that save its customers both time and money. For more information, please visit: http://www.wuxipharmatech.com .
Use of Non-GAAP Financial Measures
We have provided the fourth quarter and full year of 2006 and 2007 net income and earnings per ADS on a non-GAAP basis, which excludes share-based compensation expenses. We believe that 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 provide net income and earnings per ADS on a non-GAAP basis using a consistent method on a quarterly basis going forward.
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 should refer to the reconciliation of non-GAAP measures to GAAP measures for the indicated periods attached hereto.
Cautionary Note Regarding Forward-Looking Statements
Statements in this release contains “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, the acceptance of and revenues generating from new toxicology and formulation services, the timing of opening facilities in Jinshan and Suzhou, and our integration of AppTec Laboratory Services, including creating a unified global operation, retaining key AppTec management, organizing our sales and marketing teams, reorganizing our service lines, and realizing benefits from the acquisition generally. 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. Among the factors that could cause our actual results to differ from what we currently anticipate may include our limited operating history; 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 financial statements and notes thereto included in our prospectus filed with the Securities and Exchange Commission on August 9, 2007, and is 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 11 of our prospectus. Our actual results of operations for the fourth quarter and full year of 2007 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.
WUXI PHARMATECH (CAYMAN) INC.
UNAUDITED CONSOLIDATED BALANCE SHEETS
(in thousands of US Dollars, except ordinary share,
ADS and par value data)
December 31, December 31,
2007 2006
Assets:
Current assets:
Cash and cash equivalents 213,585 9,683
Restricted cash 5,526 2,067
Accounts receivables, net 18,199 12,589
Inventories 13,352 9,617
Prepaid expenses and other current assets 11,215 2,696
Total current assets 261,877 36,652
Non-current assets:
Property, plant and equipment, net 73,635 42,776
Intangible assets, net 921 628
Land use rights, net 5,160 4,643
Other non-current assets 2,182 992
Total non-current assets 81,898 49,039
Total assets 343,775 85,691
Liabilities, mezzanine equity and
shareholders’ equity (deficit):
Current liabilities:
Short-term bank borrowings, current -- 9,604
Accounts payable 7,217 9,259
Accrued expenses 12,279 5,012
Deferred revenue 19,706 2,619
Advanced subsidies 1,077 329
Other taxes payable 4,060 2,343
Other current liabilities 1,233 1,428
Total current liabilities 45,572 30,594
Non-current liabilities:
Long-term debt, excluding current portion 4,107 5,763
Advanced subsidies 1,529 1,027
Convertible notes 40,988 --
Deferred tax liabilities 181 129
Total non-current liabilities 46,805 6,919
Total liabilities 92,377 37,513
Mezzanine equity: -- 49,106
Shareholders’ equity (deficit):
Ordinary shares (Note 1), ($0.02 par
value, 5,002,550,000 authorized
249,060,000 and 492,226,776 issued
and outstanding as of December 31,
2006 and 2007, respectively) 9,845 4,981
Additional paid-in capital 291,020 33,075
Accumulated deficit (57,302) (40,173)
Accumulated other comprehensive income 7,835 1,549
Treasury stock -- (360)
Total shareholders’ equity (deficit) 251,398 (928)
Total liabilities, mezzanine equity and
shareholders’ equity (deficit) 343,775 85,691
Note 1: Eight (8) ordinary shares are equal to one (1) ADS
WUXI PHARMATECH (CAYMAN) INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands of US dollars, except ADS and per ADS data)
Three Months Ended Year Ended
December 31, December 31,
2007 2006 2007 2006
Net revenues:
Laboratory services 28,845 21,674 102,384 59,776
Research Manufacturing 8,250 1,172 32,821 10,165
Total net revenues 37,095 22,846 135,205 69,941
Cost of revenues:
Laboratory services (15,918) (9,191) (52,416) (26,520)
Research Manufacturing (5,265) (852) (19,931) (9,109)
Total cost of revenues (21,183) (10,043) (72,347) (35,629)
Gross Profit 15,912 12,803 62,858 34,312
Operating expenses:
Selling and marketing expenses (650) (643) (2,333) (1,841)
General and administrative
expenses (5,915) (7,961) (30,330) (22,344)
Total operating expenses (6,565) (8,604) (32,663) (24,185)
Operating income 9,347 4,199 30,195 10,127
Other income (expenses), net:
Other income (expenses), net 1,593 (73) 2,435 35
Interest income (expenses), net 2,182 (92) 2,771 (912)
Total other income (expenses), net 3,775 (165) 5,206 (877)
Income before income taxes 13,122 4,034 35,401 9,250
Income taxes (991) (66) (1,498) (397)
Net income 12,131 3,968 33,903 8,853
Income (loss) attributable to
holders of ADS:
Basic 12,131 2,313 21,655 (35,148)
Diluted 12,131 2,313 27,279 (35,148)
Basic earnings (loss) per ADS 0.20 0.08 0.56 (1.18)
Diluted earnings (loss) per ADS 0.17 0.07 0.42 (1.18)
Number of shares used in
calculation (Note 2):
Weighted average ADS
outstanding - basic 61,528,350 28,882,500 38,506,277 29,813,325
Weighted average ADS
outstanding - diluted 72,544,322 35,022,194 64,393,436 29,813,325
Note 2: One (1) ADS equals eight (8) ordinary shares
WUXI PHARMATECH (CAYMAN) INC.
RECONCILIATION OF NON-GAAP TO GAAP
(in thousands of US Dollars, except per ADS data)
(Unaudited)
Three Months Ended Year Ended
December 31, December 31,
2007 2006 2007 2006
GAAP net income 12,131 3,968 33,903 8,853
Add: Share-based compensation
expenses 4,454 2,493 10,715 8,409
Non-GAAP net income 16,585 6,461 44,618 17,262
Income (loss) attributable
to holders of ADS
(Non-GAAP):
Basic 16,585 3,766 31,477 (26,739)
Diluted 16,585 3,766 37,994 (26,739)
Basic earnings (loss) per
ADS (Non-GAAP) 0.27 0.13 0.82 (0.90)
Diluted earnings (loss) per
ADS (Non-GAAP) 0.23 0.11 0.59 (0.90)
Weighted average ADS
outstanding - basic 61,528,350 28,882,500 38,506,277 29,813,325
Weighted average ADS
outstanding - diluted 72,544,322 35,022,194 64,393,436 29,813,325
For more information, please contact:
Investor Contact:
Dr. Hai Mi, Vice President,
Corporate Communications
WuXi PharmaTech (Cayman) Inc.
Tel: +86-21-5046-3726
Email: ir@pharmatechs.com
Web: http://www.wuxipharmatech.com
Investor Relations (US):
Mahmoud Siddig, Director
Taylor Rafferty
Tel: +1-212-889-4350
Email: pharmatechs@taylor-rafferty.com
Web: http://www.taylor-rafferty.com
Investor Relations (HK):
Ruby Yim, Managing Director
Taylor Rafferty
Tel: +852-3196-3712
Email: pharmatechs@taylor-rafferty.com
Web: http://www.taylor-rafferty.com
Media Contact:
John Dooley
Taylor Rafferty
Tel: +1-212-889-4350
Email: pharmatechs@taylor-rafferty.com
Web: http://www.taylor-rafferty.com
