Third Quarter Net Revenues Up 98% and Adjusted EBITDA Up 70% Year-Over-Year
SHANGHAI, China, Nov. 12 /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 its unaudited financial results for the third quarter ended September 30, 2008. During the quarter, WuXi's net revenue increased 98% year-over-year to $67.5 million, and diluted earnings per ADS were $0.10.
(Logo: http://www.prnasia.com/xprn/sa/200809231435.jpg)
Commenting on the third quarter 2008 results, Dr. Ge Li, Chairman and Chief Executive Officer of WuXi PharmaTech, said, "WuXi continues to deliver strong revenue and profitability growth, as reflected in 98% year-over-year top-line revenue and 70% adjusted EBITDA growth. As we disclosed in the pre-announcement, the constricted biotech financing environment is impacting the CRO industry. However, we believe the need for outsourced development and manufacturing services will continue to be robust in the longer term. WuXi will continually work with WuXi's customers to bring their programs from bench to the market sooner and less costly.
"We are dedicated to maintaining and expanding WuXi's preferred provider status with our customers. In addition to delivering high-quality, IP-protected services efficiently, we will continue to position WuXi for the future to improve the success of discovery and shorten development time for our customers. This commitment requires us to expand WuXi's capacity and capabilities to meet our customers' expanding needs, from the bench to the market."
Third Quarter 2008 Financial Results
(Unaudited, U.S. Dollars in Millions)
GAAP Non-GAAP
The third quarter of The third quarter of
2008 2007 % Growth 2008 2007 % Growth
Net Revenue $67.5 $34.0 98% $67.5 $34.0 98%
Laboratory Services 47.0 26.7 76% 47.0 26.7 76%
Manufacturing Services 20.5 7.3 180% 20.5 7.3 180%
Gross Profit 22.8 16.0 43% 27.4 16.3 68%
Laboratory Services 19.4 12.9 51% 22.8 13.2 73%
Manufacturing Services 3.4 3.1 9% 4.6 3.1 48%
Operating Income 9.0 7.5 20% 16.1 9.0 79%
Net Income 7.3 8.6 (16%) 12.8 10.1 26%
EBITDA 16.8 10.2 64% 19.9 11.7 70%
Numbers presented on a non-GAAP basis exclude share-based compensation expenses, amortization of acquired intangible assets and deferred tax impact on acquired intangible assets. The non-GAAP measures are described below and reconciled to the corresponding GAAP measure in the section below titled "Use of Non-GAAP Financial Measures".
The Company's Laboratory Services include discovery chemistry, service biology, toxicology, pharmaceutical development, analytical services, biopharmaceutical and medical device testing. Net revenues from Laboratory Services increased 76% to $47.0 million in the third quarter 2008 from $26.7 million in the third quarter 2007. Gross profit increased 51% in the third quarter 2008 from $12.9 million in the third quarter 2007. Third quarter 2008 GAAP gross margin was 41%, and non-GAAP gross margin was 49%.
The Manufacturing Services segment focuses on advanced intermediates, active pharmaceutical ingredients (APIs), and biologics-based manufacturing, testing and related services. Net revenues from Manufacturing Services increased 180% to $20.5 million in the third quarter 2008 from $7.3 million in the third quarter 2007. Gross profit increased 9% in the third quarter 2008 from $3.1 million in the third quarter 2007. Third quarter 2008 GAAP gross margin was 16%, and non-GAAP gross margin was 23%.
Revised Full Year 2008 Guidance Confirmed
WuXi confirms its net revenue guidance of $260 to $265 million for the full year 2008, as announced in October 2008. This represents year-over-year revenue growth ranging from 92% to 96%.
WuXi also confirms full-year adjusted EBITDA is expected to be in the range of $70 to $75 million (The forecast excludes any potential future impairment charges and further mark-to-market adjustments on foreign currency forward contracts, if any).
Conference Call
WuXi PharmaTech senior management will host a conference call at 8:00 am (Eastern) / 5:00 am (Pacific) / 9:00 pm (Beijing/Hong Kong) on Thursday, November 13, 2008, to discuss its 2008 third quarter financial results and recent business activities. The conference call may be accessed by calling:
(US) 866-586-2813
(China, Northern Region) 10-800-611-0127
(China, Southern Region) 10-800-361-0079
(HK) 800-965-808
(UK) 0-800-056-9662
(International) +61-2-8524-6650.
Conference ID: 70474888.
A telephone replay will be available two hours after the call's completion until December 14, 2008, at:
(US) 866-214-5335
(HK) 800-901-596
(China) 10-800-140-0386
(UK) 0-800-731-7846
(International) +61-2-8235-5000.
Passcode: 70474888.
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 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 .
Use of Non-GAAP Financial Measures
We have provided the third quarter 2007 and 2008 gross profit, operating income, net income on a non-GAAP basis, which excludes share-based compensation expenses, amortization of acquired intangible assets and deferred tax impact on acquired intangible assets. Adjusted EBITDA refers to EBITDA excluding share-based compensation expenses. The Company believes both management and investors benefit from referring to these non-GAAP financial measures (including adjusted EBITDA) in assessing the Company's financial performance and liquidity and when planning and forecasting future periods. These non-GAAP operating measures (including adjusted EBITDA) are useful for understanding and assessing underlying business performance and operating trends. The Company expects to provide gross profit, operating income, net income on a non-GAAP basis using a consistent method on a quarterly basis going forward.
Readers are cautioned not to view non-GAAP results (including adjusted EBITDA) 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 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, expected net revenue and EBITDA levels for 2008; the global trends in outsourced R&D and manufacturing; and anticipated changes in the pharma business model and the opportunities presented to WuXi as a result of those changes.
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 other factors, uncertainty in the global economy may adversely impact our business and the trends for outsourced R&D and manufacturing; Pharma companies may not change their business models as expected or in a manner favorable to us; we may fail to capitalize on the opportunities presented; we may not maintain our preferred provider status with our clients; and 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 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.
WUXI PHARMATECH (CAYMAN) INC.
UNAUDITED CONSOLIDATED BALANCE SHEETS
(in thousands of US Dollars, except ordinary share, ADS and par value data)
September 30, December 31,
2008 2007
Assets:
Current assets:
Cash and cash equivalents 73,274 213,585
Restricted cash 5,070 5,526
Short-term investment 14,666 --
Accounts receivable, net 46,398 18,199
Inventories 12,821 13,352
Prepaid expenses and other current assets 13,229 11,215
Total current assets 165,458 261,877
Non-current assets:
Goodwill 102,255 --
Property, plant and equipment, net 153,681 73,634
Intangible assets, net 37,421 921
Land use rights, net 5,426 5,160
Other non-current assets 1,944 2,183
Total non-current assets 300,727 81,898
Total assets 466,185 343,775
Liabilities and shareholders' equity:
Current liabilities:
Short-term and current portion
of long-term debt 10,180 --
Accounts payable 15,211 7,216
Accrued expenses 12,113 12,279
Deferred revenue 11,452 19,706
Advanced subsidies 1,858 1,077
Other taxes payable 19,455 4,060
Other current liabilities 11,346 1,233
Total current liabilities 81,615 45,571
Non-current liabilities:
Long-term debt, excluding current portion 4,366 4,108
Advanced subsidies 2,144 1,529
Convertible notes 35,864 40,988
Deferred tax liabilities 15,743 181
Other non-current liabilities 3,058 --
Total non-current liabilities 61,175 46,806
Total liabilities 142,790 92,377
Shareholders' equity:
Ordinary shares (Note 1), ($0.02 par
value, 5,002,500,000 authorized
525,020,598 and 492,226,776 issued
and outstanding as of September 30,
2008 and December 31, 2007,
respectively) 10,500 9,845
Additional paid-in capital 320,982 291,020
Accumulated deficit (27,654) (57,302)
Accumulated other comprehensive income 19,567 7,835
Total shareholders' equity 323,395 251,398
Total liabilities and
shareholders' equity 466,185 343,775
Note 1: Eight (8) ordinary shares are equal to one (1) ADS
WUXI PHARMATECH (CAYMAN) INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007
(In thousands of U.S. dollars, except share data and per share data)
Three Months Ended
September 30,
2008 2007 %
Net revenues:
Laboratory services 46,990 26,744 76%
Manufacturing services 20,482 7,305 180%
Total net revenues 67,472 34,049 98%
Cost of revenues:
Laboratory services (27,556) (13,843)
Manufacturing services (17,105) (4,206)
Total cost of revenues (44,661) (18,049)
Gross Profit 22,811 16,000 43%
Operating expenses:
Selling and marketing expenses (2,068) (468) 342%
General and administrative expenses (11,731) (8,032) 46%
Total operating expenses (13,799) (8,500) 62%
Operating income 9,012 7,500 20%
Other income (expenses), net:
Other income (expenses), net (1,067) (9)
Interest income (expenses), net 148 1,334
Total other income (expenses), net (919) 1,325
Income before income taxes 8,093 8,825 (8%)
Income taxes (826) (178)
Net income 7,267 8,647 (16%)
Amount attributed to:
Deemed dividend on issuance and
repurchase of preference shares -- --
Amounts allocated to preference
shares for participating rights to
dividends -- (1,779)
Income attributable to holders of ADS
(Note 2):
Basic 7,267 6,868
Diluted 7,267 6,898
Basic earnings per ADS (Note 2) 0.11 0.15
Diluted earnings per ADS (Note 2) 0.10 0.12
Weighted average ADS outstanding -
basic (Note 2) 64,531,068 44,774,893
Weighted average ADS outstanding -
diluted (Note 2) 72,931,421 55,496,657
Note 2: One (1) ADS equals eight (8) ordinary shares
Nine Months Ended
September 30,
2008 2007 %
Net revenues:
Laboratory services 130,653 73,539 78%
Manufacturing services 64,715 24,572 163%
Total net revenues 195,368 98,111 99%
Cost of revenues:
Laboratory services (74,652) (36,499)
Manufacturing services (51,549) (14,666)
Total cost of revenues (126,201) (51,165)
Gross Profit 69,167 46,946 47%
Operating expenses:
Selling and marketing expenses (5,427) (1,683) 222%
General and administrative expenses (35,342) (24,415) 45%
Total operating expenses (40,769) (26,098) 56%
Operating income 28,398 20,848 36%
Other income (expenses), net:
Other income (expenses), net (541) 842
Interest income (expenses), net 644 589
Total other income (expenses), net 103 1,431
Income before income taxes 28,501 22,279 28%
Income taxes 1,147 (507)
Net income 29,648 21,772 36%
Amount attributed to:
Deemed dividend on issuance and
repurchase of preference shares -- (7,612)
Amounts allocated to preference
shares for participating rights to
dividends -- (5,729)
Income attributable to holders of ADS
(Note 2):
Basic 29,648 8,431
Diluted 29,648 8,431
Basic earnings per ADS (Note 2) 0.47 0.27
Diluted earnings per ADS (Note 2) 0.41 0.22
Weighted average ADS outstanding -
basic (Note 2) 63,010,497 30,860,969
Weighted average ADS outstanding -
diluted (Note 2) 72,859,672 37,772,585
Note 2: One (1) ADS equals eight (8) ordinary shares
WUXI PHARMATECH (CAYMAN) INC.
RECONCILIATION OF NON-GAAP TO GAAP
(in thousands of U.S. Dollars, except share data and par value data)
Three Months Ended Nine Months Ended
September 30, September 30,
2008 2007 % 2008 2007 %
Non-GAAP
Reconciliation
GAAP gross profit 22,811 16,000 43% 69,167 46,946 47%
GAAP gross margin 34% 47% 35% 48%
Adjustments：
Share-based
Compensation 672 310 2,016 1,720
Amortization
of acquired
intangible assets 3,950 -- 10,532 --
Non-GAAP gross
profit 27,433 16,310 68% 81,715 48,666 68%
Non-GAAP gross
margin 41% 48% 42% 50%
GAAP operating
income 9,012 7,500 20% 28,398 20,848 36%
GAAP operating
margin 13% 22% 15% 21%
Adjustments：
Share-based
compensation 3,128 1,475 9,526 6,261
Amortization
of acquired
intangible assets 3,950 -- 10,532 --
Non-GAAP
operating income 16,090 8,975 79% 48,456 27,109 79%
Non-GAAP
operating margin 24% 26% 25% 28%
GAAP net income 7,267 8,647 (16%) 29,648 21,772 36%
GAAP net margin 11% 25% 15% 22%
Adjustments：
Share-based
compensation 3,128 1,475 9,526 6,261
Amortization
of acquired
intangible assets 3,950 -- 10,532 --
Deferred tax
impact related
to acquired
intangible assets (1,548) -- (4,129) --
Non-GAAP net income 12,797 10,122 26% 45,577 28,033 63%
Non-GAAP net margin 19% 30% 23% 29%
GAAP net income 7,267 8,647 29,648 21,772
Add back:
Depreciation
and amortization 8,797 2,724 23,594 6,223
Interest income
(expenses), net (148) (1,334) (644) (589)
Income taxes 826 178 (1,147) 507
EBITDA 16,742 10,215 64% 51,451 27,913 84%
Adjustments：
Share-based
compensation 3,128 1,475 9,526 6,261
Adjusted EBITDA 19,870 11,690 70% 60,977 34,174 78%
Income
attributable
to holders of
ADS (Non- GAAP):
Basic 12,797 8,039 45,577 16,690
Diluted 12,797 8,069 45,577 16,690
Basic earnings
per ADS (Non-GAAP) 0.20 0.18 0.72 0.54
Diluted
earnings per
ADS (Non-GAAP) 0.18 0.15 0.63 0.44
Weighted
average ADS
outstanding -
basic 64,531,068 44,774,893 63,010,497 30,860,969
Weighted
average ADS
outstanding -
diluted 72,931,421 55,496,657 72,859,672 37,772,585
For more information, please contact:
Debra Yu, MD
Vice President Strategy
WuXi PharmaTech (Cayman) Inc.
Tel: +1-215-218-5559
Email: ir@wuxiapptec.com
Dr. Hai Mi
Executive Director of Investor Relations and Business Planning
WuXi PharmaTech (Cayman) Inc.
Tel: +86-21-5046-3726
Email: ir@wuxiapptec.com
Juliane Snowden
Vice President of Investor Relations
Burns McClellan
Tel: +1-212-213-0006
Email: Jsnowden@burnsmc.com
