(Source: PRNewswire-FirstCall)
LAKE FOREST, Ill., July 29 /PRNewswire-FirstCall/ -- Hospira, Inc. , a leading global specialty pharmaceutical and medication delivery company, today reported results for the second quarter ended June 30, 2009. Net sales for the quarter were $957 million, and adjusted* diluted earnings per share were $0.73. (Adjusted* measures exclude certain specified items as described later in this press release and the attached schedules.)
"Hospira delivered a very good second quarter, marked by strong sales and earnings, and significant progress toward our Project Fuel initiatives," said Christopher B. Begley, chairman and chief executive officer. "Based on our results for the first half of the year and our expectations for the remainder of 2009, we have increased our full-year adjusted earnings guidance. We remain committed to improving shareholder value through sustainable top- and bottom-line growth."
Second-Quarter 2009 Results
The following table highlights selected financial results for the second quarter of 2009 compared to the same period in 2008:
In $ millions, GAAP Adjusted* except per Three Months Ended Three Months Ended share amounts June 30, June 30, ---------------- % ---------------- % 2009 2008 Change 2009 2008 Change ------ ------ ------ ------ ------ ------ Net Sales $956.9 $901.6 6.1% n/a n/a n/a Gross Profit (Net Sales less Cost of Products Sold) $346.2 $335.2 3.3% $365.8 $357.1 2.4% Income from Operations $91.1 $117.7 (22.6%) $176.7 $152.2 16.1% Diluted EPS $0.16 $0.43 (62.8%) $0.73 $0.57 28.1% Statistics (as a % of Net Sales) ------------------------------- Gross Profit (Net Sales less Cost of Products Sold) 36.2% 37.2% 38.2% 39.6% Income from Operations 9.5% 13.1% 18.5% 16.9%
Results under U.S. Generally Accepted Accounting Principles (GAAP) include items detailed in the schedules attached to this press release, including impairment and other asset charges of $0.33 to second-quarter 2009 GAAP diluted earnings per share related to the company's Project Fuel initiatives.
Net sales increased 6.1 percent to $957 million in the second quarter of 2009, compared to $902 million in the second quarter of 2008. Driving the growth were the results for Specialty Injectable Pharmaceuticals (SIP) and Other Pharma. SIP results benefited in part from a favorable comparison to the second quarter of 2008, which was impacted by lower-than-average wholesaler buying patterns. Partially offsetting the favorable SIP and Other Pharma results was a decline in Medication Management Systems (MMS), due to a difficult comparison to the second quarter of 2008, in which MMS generated record quarterly results.
Adjusted* income from operations increased 16.1 percent to $177 million in the second quarter of 2009, compared to $152 million in the second quarter of 2008. Driving the majority of the increase were higher sales volumes; improvements in selling, general and administrative (SG&A) expenses as a result of Project Fuel initiatives; and lower research and development (R&D) spending related to the timing of expenditures. Partially offsetting these factors was the impact of foreign exchange.
Cash Flow
Cash flow from operations for the first six months of 2009 was $236 million, compared to the $183 million generated for the same period in 2008.
Capital expenditures decreased to $78 million for the first six months of 2009, compared to $87 million for the same period in 2008, due to the continued impact of the company's tighter capital-spending controls implemented in the second half of 2008.
2009 Projections
Hospira continues to expect net sales for the year to increase approximately 4 to 6 percent on a constant-currency basis. Including the impact of foreign exchange, the company expects net sales to be flat to slightly up.
The company now expects full-year 2009 adjusted* diluted earnings per share to range between $2.70 and $2.75 per share. The reconciliation between the projected 2009 adjusted* diluted earnings per share and GAAP diluted earnings per share follows:
Diluted earnings per share -- adjusted* $2.70 - $2.75 ------------- Estimated charges related to Project Fuel initiatives (mid-point range of an estimated $0.38 to $0.42 per diluted share in 2009 for non-impairment charges, plus incurred second-quarter impairment and other asset charges of $0.33 per diluted share) ($0.73) Estimated charges related to planned facilities optimization initiatives (mid-point of an estimated range of $0.10 to $0.12 per diluted share for 2009) ($0.11) Estimated $53 million for the amortization of intangibles related to the Mayne Pharma acquisition ($0.23) Impairment of marketable equity securities ($0.10) Benefit from the settlement of a U.S. income tax audit $0.57 ------------- Diluted earnings per share -- GAAP $2.10 - $2.15 =============
The company continues to project that cash flow from operations in 2009 will be in the $565 million to $615 million range. Depreciation and amortization is expected to be between $210 million and $220 million. Capital expenditures are projected to be between $155 million and $175 million.
*Use of Non-GAAP Adjusted Financial Measures
Non-GAAP financial measures used in this press release are reconciled to the most comparable measures calculated in accordance with GAAP in the schedules attached to this release.
Webcast
Hospira will hold a conference call for investors and media at 8 a.m. Central time on Wednesday, July 29, 2009. A live webcast of the conference call will be available on Hospira's Web site at http://www.hospirainvestor.com/. Listeners should log on approximately 10 minutes in advance to ensure proper computer setup for receiving the webcast. A replay will be available on the Hospira Web site for 30 days following the call.
About Hospira
Hospira, Inc. is a global specialty pharmaceutical and medication delivery company dedicated to Advancing Wellness(TM). As the world leader in specialty generic injectable pharmaceuticals, Hospira offers one of the broadest portfolios of generic acute-care and oncology injectables, as well as integrated infusion therapy and medication management solutions. Through its products, Hospira helps improve the safety, cost and productivity of patient care. The company is headquartered in Lake Forest, Ill., and has approximately 14,000 employees. Learn more at http://www.hospira.com/.
Private Securities Litigation Reform Act of 1995 -- A Caution Concerning Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including projections of certain measures of Hospira's results of operations, projections of certain charges and expenses, and other statements regarding Hospira's goals and strategy. Hospira cautions that these forward-looking statements are subject to risks, uncertainties and assumptions, many of which are beyond Hospira's control, that may cause actual results to differ materially from those indicated in the forward-looking statements. Economic, competitive, governmental, technological and other factors that may affect Hospira's operations and may cause actual results to be materially different from expectations include the risks, uncertainties and factors discussed under the headings "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Hospira's latest Annual Report on Form 10-K and subsequent Form 10-Qs, filed with the Securities and Exchange Commission, which are incorporated by reference. Hospira undertakes no obligation to release publicly any revisions to forward-looking statements as the result of subsequent events or developments.
Hospira, Inc. Condensed Consolidated Statements of Income (Unaudited) (dollars and shares in millions, except for per share amounts) Three Months Ended June 30, -------------- % 2009 2008 Change ------ ------ ------ Net sales $956.9 $901.6 6.1 % ------ ------ Cost of products sold 610.7 566.4 7.8 % Restructuring and impairment 55.9 6.3 787.3 % Research and development 52.9 58.0 (8.8)% Acquired in-process research and development - 0.5 (100.0)% Selling, general and administrative 146.3 152.7 (4.2)% ------ ------ Total operating expenses 865.8 783.9 10.4 % ------ ------ Income From Operations 91.1 117.7 (22.6)% Interest expense 28.2 28.2 - % Other expense (income), net 14.5 - nm ------ ------ Income Before Income Taxes 48.4 89.5 (45.9)% Income tax expense (benefit) 22.9 20.4 12.3 % ------ ------ Net Income $25.5 $69.1 (63.1)% ====== ====== Earnings Per Common Share: Basic $0.16 $0.43 (62.8)% ====== ====== Diluted $0.16 $0.43 (62.8)% ====== ====== Weighted Average Common Shares Outstanding: Basic 160.5 159.1 0.9 % ====== ====== Diluted 162.4 161.5 0.6 % ====== ====== Adjusted Gross Profit (1)(2) $365.8 $357.1 2.4 % Adjusted Income From Operations (1) $176.7 $152.2 16.1 % Adjusted Net Income (1) $118.2 $92.4 27.9 % Adjusted Diluted Earnings Per Share (1) $0.73 $0.57 28.1 % Statistics (as a % of net sales, except for income tax rate): GAAP Adjusted (1) Three Months Ended Three Months Ended June 30, June 30, ------------------ ------------------ 2009 2008 2009 2008 -------- -------- -------- -------- Gross Profit (2) 36.2 % 37.2 % 38.2 % 39.6 % Income From Operations 9.5 % 13.1 % 18.5 % 16.9 % Net Income 2.7 % 7.7 % 12.4 % 10.2 % Income Tax Rate 47.3 % 22.8 % 21.5 % 25.5 % (1) Adjusted financial measures exclude certain specified items as described and reconciled to comparable GAAP financial measures in the Reconciliation of GAAP to Non-GAAP Financial Measures schedule. (2) Gross profit is defined as Net sales less Cost of products sold. Adjusted gross profit excludes certain specified items, as indicated in the previous footnote. Hospira, Inc. Condensed Consolidated Statements of Income (Unaudited) (dollars and shares in millions, except for per share amounts) Six Months Ended June 30, ------------------ % 2009 2008 Change -------- -------- ------ Net sales $1,816.6 $1,790.3 1.5 % -------- -------- Cost of products sold 1,150.8 1,138.1 1.1 % Restructuring and impairment 65.3 9.3 602.2 % Research and development 102.9 107.9 (4.6)% Acquired in-process research and development - 0.5 (100.0)% Selling, general and administrative 291.8 305.1 (4.4)% -------- -------- Total operating expenses 1,610.8 1,560.9 3.2 % -------- -------- Income From Operations 205.8 229.4 (10.3)% Interest expense 55.1 59.6 (7.6)% Other expense (income), net 14.2 (4.1) (446.3)% -------- -------- Income Before Income Taxes 136.5 173.9 (21.5)% Income tax (benefit) expense (54.5) 39.4 (238.3)% -------- -------- Net Income $191.0 $134.5 42.0 % ======== ======== Earnings Per Common Share: Basic $1.19 $0.85 40.0 % ======== ======== Diluted $1.18 $0.83 42.2 % ======== ======== Weighted Average Common Shares Outstanding: Basic 160.0 158.9 0.7 % ======== ======== Diluted 161.5 161.2 0.2 % ======== ======== Adjusted Gross Profit (1)(2) $705.4 $694.6 1.6 % Adjusted Income From Operations (1) $326.6 $297.4 9.8 % Adjusted Net Income (1) $215.0 $180.3 19.2 % Adjusted Diluted Earnings Per Share (1) $1.33 $1.12 18.8 % Statistics (as a % of net sales, except for income tax rate): GAAP Adjusted (1) Six Months Ended Six Months Ended June 30, June 30, ------------------ ------------------ 2009 2008 2009 2008 -------- -------- -------- -------- Gross Profit (2) 36.7 % 36.4 % 38.8 % 38.8 % Income From Operations 11.3 % 12.8 % 18.0 % 16.6 % Net Income 10.5 % 7.5 % 11.8 % 10.1 % Income Tax Rate (39.9)% 22.7 % 21.5 % 25.5 % (1) Adjusted financial measures exclude certain specified items as described and reconciled to comparable GAAP financial measures in the Reconciliation of GAAP to Non-GAAP Financial Measures schedule. (2) Gross profit is defined as Net sales less Cost of products sold. Adjusted gross profit excludes certain specified items, as indicated in the previous footnote. Hospira, Inc. Reconciliation of GAAP to Non-GAAP Financial Measures (Unaudited) (dollars and shares in millions, except for per share amounts) The Non-GAAP financial measures contained in this press release (including adjusted gross profit, adjusted income from operations, adjusted net income, and adjusted diluted Earnings Per Share) adjust for certain specified items. Management believes that Non-GAAP financial measures can facilitate a more complete analysis and greater transparency into Hospira's ongoing results of operations, particularly in comparing underlying results from period to period.
