December 12, 2019

WuXi PharmaTech Announces Fourth-Quarter and Full-Year 2013 Results

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Wuxi-pharmatech-200x150SHANGHAI, March 5, 2014 /PRNewswire/ — WuXi PharmaTech (Cayman) Inc. a leading research and development services company serving the pharmaceutical, biotechnology, and medical device industries, with operations in and the United States, today announced its financial results for the fourth quarter and full year of 2013.

Fourth-Quarter 2013 Highlights

Full-Year 2013 Highlights

Management Comment

“I am proud of WuXi’s accomplishments in the fourth quarter and throughout 2013,” said Dr. Ge Li, Chairman and Chief Executive Officer. “We are balancing present and future performance: both achieving strong current revenue and income growth and making the investments necessary to sustain growth for the long term. Through strong revenue growth and good cost control in the fourth quarter, we exceeded our revenue and diluted EPS guidance for the third consecutive quarter. All segments of the company contributed to our fourth-quarter revenue growth, with particularly good performances by small-molecule manufacturing, biologics, and integrated drug discovery services.  Effective management of our foreign-exchange exposure again led to significant realized and mark-to-market gains on foreign-exchange forward contracts in the fourth quarter.

“With the 2014 financial guidance that we provide today, we express our belief that many of the favorable trends of 2013 will continue in 2014,” Dr. Li continued. “We expect year-over-year revenue growth of 14-16% in 2014, driven by broad-based business growth in all our service segments. We expect 7-10% diluted EPS growth on a and non- basis in 2014, reflecting strong revenue growth and investment in talent, laboratories, and technologies, particularly in manufacturing, biologics, genomics, R&D, sales and marketing, and information technology.

“WuXi is transitioning from being an R&D service provider to becoming an R&D service and solution provider by creating an open-access technology and service platform that enables anyone and any company to discover, develop, and commercialize innovative healthcare products to benefit the world’s patients,” Dr. Li concluded. “With such a platform, the biopharmaceutical industry’s great minds can realize their dreams of introducing important new therapeutics for patients faster and more cost-effectively.”

Fourth-Quarter 2013 GAAP Results

Fourth-quarter 2013 net revenues increased 25.1% year over year to $157.2 million. Revenue growth in of 15.1% was driven by our comprehensive and integrated drug discovery and development services. Revenue growth of 72.5% in was caused by strong demand in both research manufacturing and commercial manufacturing compared to the fourth quarter of 2012.

Fourth-quarter 2013 GAAP gross profit increased 22.4% year over year to $59.7 million due to 25.1% revenue growth, offset by business mix, as stronger revenue growth was achieved in Manufacturing Services, which has a lower gross margin than Laboratory Services. Gross margin decreased year over year to 38.0% from 38.8%. Gross margin in Laboratory Services decreased year over year to 39.9% from 41.9% mainly due to the effects of increased 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 increased year over year to 32.0% from 24.2% due to business mix and increased capacity utilization.

Fourth-quarter 2013 GAAP operating income increased 24.7% year over year to $29.4 million due to the 22.4% increase in gross profit and a year-over-year decline in selling and marketing expenses, partially offset by increased general and administrative expenses and R&D expenses. Operating margin of 18.7% was the same as in the prior-year period.

Fourth-quarter 2013 GAAP net income increased 37.9% year over year to $32.9 million due to the 24.7% year-over-year increase in operating income, higher other income primarily due to $4.4 million of realized gains and $2.3 million of mark-to-market gains on foreign-exchange forward contracts, and higher interest income due to higher cash balances and higher interest rates, partially offset by $2.2 million of equity-method investment losses from our joint ventures with PRA and MedImmune and equity pick-up from one venture investment.

Fourth-quarter 2013 GAAP diluted earnings per ADS increased 34.5% to $0.45 due to the 37.9% increase in net income, partially offset by a higher number of outstanding ADSs as a result of vesting and exercise of shares under employee stock option and restricted stock programs. Fourth-quarter 2013 GAAP comprehensive income increased 25.1% year over year to $34.9 million due to the 37.9% increase in GAAP net income and a small increase in currency translation adjustments, offset by a reduction in unrealized gains on available-for-sale securities.

Fourth-Quarter 2013 Non-GAAP Results

Non-GAAP financial results exclude the impact of share-based compensation expenses, the amortization of acquired intangible assets and the associated deferred tax impact, revaluation of contingent consideration, and impairment charges for goodwill and intangible assets.

Fourth-quarter 2013 non-GAAP gross profit increased 23.3% year over year to $61.7 million due to the 25.1% 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 39.2% from 39.8% due to the faster growth of Manufacturing Services revenues carrying lower gross margin compared to the higher-margin Laboratory Services business, as well as 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.

Fourth-quarter 2013 non-GAAP operating income increased 29.9% year over year to $35.6 million due to the 23.3% increase in non-GAAP gross profit and a year-over-year reduction in selling and marketing expenses, partially offset by increased general and administrative expenses and R&D expenses. Operating margin increased to 22.6% from 21.8% due to the year-over-year reduction of selling and marketing expenses as a percentage of revenue.

Fourth-quarter 2013 non-GAAP net income grew 42.0% year over year to $39.1 million due to the 29.9% increase in non-GAAP operating income, higher other income due to $4.4 million of realized gains and $2.3 million of mark-to-market gains on foreign-exchange forward contracts, and higher interest income due to higher cash balances and higher interest rates, partially offset by $2.2 million of equity-method investment losses from our joint ventures with PRA and MedImmune and equity pick-up from one venture investment.

Fourth-quarter 2013 non-GAAP diluted earnings per ADS grew 38.4% year over year to $0.53 due to the 42.0% increase in non-GAAP net income, partially offset by a higher number of outstanding ADSs as a result ofvesting and exercise of shares under the employee stock option and restricted stock programs.

Full-Year 2013 GAAP Results

2013 net revenues increased 15.6% year over year to $578.1 million. Revenue growth in Laboratory Services of 12.5% was driven by our comprehensive and integrated discovery and development services. Revenue growth of 25.8% in Manufacturing Services was caused by strong growth in demand in research manufacturing compared to 2012.

2013 GAAP gross profit increased 15.5% year over year to $211.6 million due to 15.6% revenue growth, offset slightly 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 slightly year over year to 36.6% from 36.7%. Gross margin in Laboratory Services remained the same at 38.6%, as improved productivity and the ramp-up of biologics and preclinical services offset the effects of increasing labor costs in China and appreciation of the RMB versus the U.S. dollar. Gross margin in Manufacturing Services increased year over year to 30.6% from 30.3% due to increased capacity utilization. Total gross margin decreased slightly despite a slight increase in gross margin for Manufacturing Services and no change in gross margin for Laboratory Services due to the mathematical effect produced by greater growth in the lower-margin Manufacturing Services business.

2013 GAAP operating income increased 17.7% year over year to $105.2 million due to the 15.5% increase in gross profit and lower growth in general and administrative expenses compared to revenue growth. Operating margin increased to 18.2% from 17.9%, primarily due to this lower growth in general and administrative expenses.

2013 GAAP net income increased 32.3% year over year to $114.6 million due to the 17.7% year-over-year increase in operating income, higher other income primarily due to $10.2 million of realized gains and $9.1 million of mark-to-market gains on foreign-exchange forward contracts, and higher interest income due to higher cash balances and higher interest rates, partially offset by a slightly higher effective tax rate due to the mix of taxable income and $5.3 million of equity-method investment losses associated with our joint ventures with PRA and MedImmune and equity pick-up of one venture investment.

2013 GAAP diluted earnings per ADS increased 32.4% to $1.57 mainly due to the 32.3% increase in net income, as the number of outstanding ADSs changed little year over year. 2013 GAAP comprehensive income increased 53.3% year over year to $134.8 million due to the 32.3% increase in GAAP net income and year-over-year increases in currency translation adjustments and in unrealized gains on available-for-sale securities.

Full-Year 2013 Non-GAAP Results

Non-GAAP financial results exclude the impact of share-based compensation expenses, the amortization of acquired intangible assets and the associated deferred tax impact, revaluation of contingent consideration, and impairment charges for goodwill and intangible assets.

2013 non-GAAP gross profit increased 14.7% year over year to $217.0 million due to the 15.6% 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 37.5% from 37.8% due to revenue mix, as Manufacturing Services had higher revenue growth and lower gross margin than Laboratory Services, as well as 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.

2013 non-GAAP operating income increased 16.7% year over year to $123.4 million due to the 14.7% increase in non-GAAP gross profit and lower growth in selling and marketing expenses and general and administrative expenses compared to revenue growth. Operating margin increased slightly year over year to 21.3% from 21.2% due to this lower growth in selling and marketing expenses and general and administrative expenses.

2013 non-GAAP net income grew 29.8% year over year to $132.6 million due to the 16.7% increase in non-GAAP operating income, higher other income primarily due to $10.2 million of realized gains and $9.1 million of mark-to-market gains on foreign-exchange forward contracts, and higher interest income due to higher cash balances and higher interest rates, partially offset by $5.3 million of equity-method investment losses associated with our joint ventures with PRA and MedImmune and equity pick-up of one venture investment.

2013 non-GAAP diluted earnings per ADS grew 29.9% year over year to $1.82 due to the 29.8% increase in non-GAAP net income and a slight reduction in outstanding ADSs.

Full-Year 2014 Financial Guidance

WuXi PharmaTech provides the following full-year 2014 financial guidance:

First-Quarter 2014 Financial Guidance

WuXi PharmaTech provides the following first-quarter 2014 financial guidance:

* In light of recent depreciation of the RMB versus the U.S. dollar and potential related volatility, for purposes of providing our first-quarter 2014 guidance we have not considered the potential mark-to-market gain or loss on foreign-exchange forward contracts.

Conference Call

WuXi 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 March 6, 2014, to discuss its fourth-quarter and full-year 2013 financial results and future prospects.  The conference call may be accessed by calling:

China  4001 200 539

Hong Kong     800 905 927

Singapore       800 616 3222

United Kingdom        0800 015 9725

United States 1855 298 3404

United States – New York (toll)       +1 631 5142 526

Other countries (toll)           +65 6823 2299

Conference ID           1551765

A telephone replay will be available two hours after the call’s completion at:

 

China  4001 842 240

Hong Kong     800 966 697

Singapore       800 616 2127

United Kingdom        0800 169 7301

United States 1866 846 0868

Conference ID           1551765

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 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 Statements

This 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 first-quarter and full-year 2014 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 Financial Measures

We have provided the fourth-quarter and full-year 2012 and 2013 gross profit, gross margin, operating income, operating margin, net income, net margin, and diluted earnings per ADS, and estimated first-quarter and full-year 2014 diluted earnings per ADS on a non-GAAP basis, which excludes share-based compensation expenses, the amortization and deferred tax impact of acquired intangible assets, revaluation of contingent consideration, and impairment charges for goodwill and intangible assets.  The non-GAAP financial measures used in this press release are useful for understanding and assessing underlying business performance and operating trends, and we believe that 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.  We expect to continue to provide such non-GAAP financial measures on a quarterly basis using a consistent method.  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.

For more information, please contact:

Ronald Aldridge (for investors)Director of Investor Relations Tel:   +1-201-585-2048Email: [email protected]

Aaron Shi (for the media)Associate Director of Corporate CommunicationsTel:   +86-21-5046-4362Email: [email protected]

SOURCE WuXi PharmaTech

 

 

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