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WuXi PharmaTech Announces Second Quarter 2008 Results

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surf1944   Wednesday, 08/13/08 10:07:36 PM
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WuXi PharmaTech Announces Second Quarter 2008 Results
Wednesday August 13, 6:00 pm ET

SHANGHAI, China, Aug. 13 /Xinhua-PRNewswire/ -- WuXi PharmaTech (Cayman) Inc. (NYSE: WX - News), a leading pharmaceutical, biotechnology and medical device research and development outsourcing company with operations in China and the United States, today announced its selected unaudited financial results for the second quarter ended June 30, 2008.

(Logo: http://www.newscom.com/cgi-bin/prnh/20040705/CNM002LOGO )

Highlights for Second Quarter 2008:
-- Total net revenues increased 134% to $70.8 million in the second
quarter 2008 from $30.2 million in the second quarter 2007.
-- Non-GAAP operating income increased 90% to $17.0 million in the second
quarter 2008 from $8.9 million in the second quarter 2007; second
quarter 2008 GAAP operating income was $7.7 million.
-- Non-GAAP net income increased 81% to $15.5 million in the second
quarter 2008 from $8.6 million in the second quarter 2007; second
quarter 2008 GAAP net income was $8.5 million.
-- Second quarter 2008 non-GAAP diluted earnings per ADS were $0.21,
compared to $0.13 in the second quarter 2007; second quarter 2008 GAAP
diluted earnings per ADS were $0.12.


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."

Commenting on the second quarter 2008 results, Dr. Ge Li, Chairman and Chief Executive Officer of WuXi PharmaTech said, "Despite a softening global economy, the global trend in R&D outsourcing continues to fuel our business, enabling us to more than double our revenue from the second quarter 2007. We remain agile to meet and anticipate customer needs, expanding and evolving our services to enable integrated total solutions to a broader pharmaceutical, biotechnology and medical device customer base."

"During this quarter, WuXi continued to build on its strong base in lab services business while capturing growth from its research manufacturing business in China. In addition, our efforts to build a world class manufacturing operation are paying off, with this segment demonstrating 400% growth from second quarter one year ago," said Dr. Li. "We are confident that the thesis underlying our acquisition of AppTec remains intact as we are committed to our long-term vision of being the partner of choice to our customers, offering services along the continuum of drug discovery and product development to help our partners improve the success of discovery and shorten the time of development." Finally, Dr. Li shared that "We recently added a number of seasoned senior executives to complement the management team who will help further drive long-term growth on multiple fronts."

Benson Tsang, Chief Financial Officer of WuXi PharmaTech continued, "Underlying our revenue growth in the second quarter 2008 is the continued success of our core laboratory services. The lab services business maintains a 50% non-GAAP gross margin, which remains in line with past performance despite macro-economic challenges." Mr. Tsang also reported, "Our GAAP net income this quarter reflected $5.9 million non-cash expenses related to the amortization of acquired intangible assets from the AppTec acquisition."

Second Quarter 2008 Unaudited Financial Results

Net Revenues. Net revenues for the second quarter 2008 were $70.8 million, representing a year-over-year increase of 134% from $30.2 million in the second quarter 2007.

Net revenues from laboratory services increased 80% to $45.2 million in the second quarter 2008 from $25.1 million in the second quarter 2007. Net revenues from manufacturing services increased 400% to $25.6 million in the second quarter 2008 from $5.1 million in the second quarter 2007.

Gross Profit and Gross Margins. On a non-GAAP basis, gross profit for the second quarter 2008 was $28.6 million, up 84% from the second quarter 2007. Our overall non-GAAP gross margin was 40%, laboratory service non-GAAP gross margin was 50% and manufacturing non-GAAP gross margin was 24%. GAAP gross profit for the second quarter 2008 was $22.1 million and overall GAAP gross margin was 31%, laboratory service GAAP gross margin was 39% and manufacturing GAAP gross margin was 17%.

Operating Expenses. Non-GAAP operating expenses increased 75% to $11.6 million in the second quarter 2008 from $6.6 million in the second quarter 2007. Non-GAAP operating expenses as a percentage of total net revenues decreased to 16% in the second quarter 2008 from 22% over the same period last year. GAAP operating expenses increased 85% to $14.4 million in the second quarter 2008 from $7.8 million in the second quarter 2007. GAAP operating expenses as a percentage of total net revenues decreased to 20% in the second quarter 2008 from 26% over the same period last year.

Operating Income and Operating Margin. Non-GAAP operating income was $17.0 million in the second quarter 2008, a 90% increase from $8.9 million in the second quarter 2007. Non-GAAP operating margin was 24% in the second quarter 2008, down from 30% in the second quarter 2007. GAAP operating income for the second quarter 2008 was $7.7 million. GAAP operating margin was 11% in the second quarter 2008, down from 25% in the second quarter 2007 primarily due to amortization of acquired intangible assets.

Other Income (expenses), net. Other losses of $2.3 million were primarily caused by the unrealized mark-to-market accounting losses from our forward currency contracts.

Net Income. Non-GAAP net income for the second quarter 2008 grew 81% to $15.5 million, compared to the non-GAAP net income of $8.6 million in the second quarter 2007. Non-GAAP net profit margin was 22% in the second quarter 2008. GAAP net income for the second quarter 2008 increased 19% to $8.5 million from $7.1 million for the second quarter 2007. GAAP net profit margin was 12% in the second quarter 2008. Non-GAAP diluted earnings per ADS were $0.21 compared to $0.13 in the second quarter 2007. GAAP diluted earnings per ADS were $0.12 in the second quarter 2008 compared to $0.11 in the second quarter 2007.

2008 Guidance

We maintain our 2008 annual consolidated net revenues guidance in the range from $280 million to $300 million.

Conference Call

Following the earnings 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 Thursday, August 14, 2008 to discuss its 2008 second quarter financial results and recent business activities. The conference call may be accessed by calling (US) +1 913-981-5522 or +1 800-289-0528 / (HK) 800- 965-503 / (China, Northern Region) 10-800-714-0970/ (China, Southern Region) 10-800-140-0945 / (UK) 0-800-051-7166. A telephone replay will be available shortly after the call until September 14, 2008 at (US) 888-203-1112/ (HK) 800-901-108 / (China, Southern Region) 10-800-140-1178 / (China, Northern Region) +1-719-457-0820 / (UK) +0808-101-1153. Passcode: 2740550.

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 .


surf's up......crikey



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