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 quarter.
Preliminary Third Quarter 2008 Financial Results
(Unaudited, U.S. Dollars in Millions)
GAAP Non-GAAP
The third quarter of The third quarter of
2008 2007 % 2008 2007 %
Growth* Growth*
Net Revenue $66.0 - 67.5 $34.0 96% $66.0 - 67.5 $34.0 96%
Laboratory
Services 46.0 - 47.0 26.7 74% 46.0 - 47.0 26.7 74%
Manufacturing
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%
Laboratory
Services 18.7 - 19.7 12.9 49% 22.0 - 23.0 13.2 70%
Manufacturing
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.
Conference Call
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.
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.
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
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