Hospira Reports Third-Quarter 2008 Results
-- Reaffirms 2008 adjusted* earnings projection --
LAKE FOREST, Ill., Nov. 5, 2008 -- Hospira, Inc. (NYSE: HSP), a leading global specialty pharmaceutical and medication delivery company, today reported results for the third quarter of 2008.
- Net sales increased 10.4 percent to $925.5 million during the third quarter of 2008, compared to $838.0 million during the third quarter of 2007.
- Adjusted* diluted earnings per share increased 28.6 percent in the third quarter to $0.63 compared to $0.49 during the third quarter last year. GAAP third-quarter 2008 diluted earnings per share were $0.51 versus $0.37 for the same period last year. (Adjusted* measures exclude certain specified items as described later in this press release and attached schedules.)
"We are pleased by the strong growth we achieved during the quarter in our primary areas of strategic focus," said Christopher B. Begley, chairman and chief executive officer. "Both Specialty Injectable Pharmaceuticals and Medication Management Systems posted double-digit sales increases, and each area saw favorable developments that will drive future growth. We remain on track to achieve our 2008 earnings projections and continue to position Hospira for future success."
Third-quarter Financial Highlights
The following table summarizes selected financial results for the quarters ended Sept. 30:
| In $ millions | GAAP | Adjusted* | |||||
| Three Months Ended | Three Months Ended | ||||||
| Sept. 30, | % | Sept. 30, | % | ||||
| 2008 | 2007 | Change | 2008 | 2007 | Change | ||
| Net Sales | $925.5 | $838.0 | 10.4% | $925.5 | $838.0 | 10.4% | |
| Gross Profit | $330.0 | $294.5 | 12.1% | $355.5 | $316.5 | 12.3% | |
| R&D | $51.7 | $51.4 | 0.6% | $50.8 | $50.8 | 0.0% | |
| SG&A | $145.6 | $136.5 | 6.7% | $143.2 | $129.4 | 10.7% | |
| Income from Operations | $132.7 | $106.6 | 24.5% | $161.5 | $136.3 | 18.5% | |
| Statistics (as a % of Net Sales) | |||||||
| Gross Profit | 35.7% | 35.1% | 38.4% | 37.8% | |||
| R&D | 5.6% | 6.1% | 5.5% | 6.1% | |||
| SG&A | 15.7% | 16.3% | 15.5% | 15.4% | |||
| Income from Operations | 14.3% | 12.7% | 17.5% | 16.3% | |||
Net sales for the third quarter of 2008 increased 10.4 percent compared to the third quarter of 2007. The primary contributors were strong sales in Specialty Injectable Pharmaceuticals coupled with increased demand for the company's Medication Management Systems product lines. Net sales for the third quarter of 2008 increased in all segments compared to the third quarter of 2007: the Americas; Europe, Middle East and Africa (EMEA); and Asia Pacific (APAC) increased 9.5 percent, 9.6 percent and 23.0 percent, respectively.
Adjusted* income from operations for the third quarter of 2008 was $161.5 million, up 18.5 percent compared to the third quarter of 2007. The increase was driven by improved adjusted* gross profit performance, partially offset by an increase in adjusted* Selling, General and Administrative (SG&A) expenses. Adjusted* SG&A grew due to increased sales and marketing support within the Americas and new product launches outside of the Americas.
Cash Flow
Cash flow from operations for the first nine months of 2008 was $328.6 million compared to $354.5 million for the same period in 2007. The decrease reflects increased inventory levels for new product launches and new contract awards with group purchasing organizations, as well as higher trade receivables, which were primarily due to the increased level of sales in the third quarter of 2008 compared to the same period in 2007.
Capital expenditures were $126.9 million for the first nine months of 2008, compared with $128.7 million for the same period in 2007.
2008 Projections
The company has revised its net sales projections for the full year to reflect growth on a constant-currency basis. Full-year net sales are expected to increase in a range of 6 to 7 percent, excluding the impact of foreign exchange.
Projections for full-year 2008 adjusted* diluted earnings per share remain unchanged, and are expected to be between $2.50 and $2.55.
The reconciliation between the projected adjusted* diluted earnings per share and GAAP diluted earnings per share follows:
| Diluted earnings per share -- adjusted* | $2.50 - $2.55 | ||
Estimated charges related to planned facilities optimization initiatives (mid-point of an estimated range of $0.12 to $0.14 per diluted share for 2008) |
|||
| ($0.13) | |||
Estimated integration and other acquisition-related expenses (high end of an estimated range of $0.10 to $0.12 per diluted share for 2008) |
|||
| ($0.12) | |||
Estimated $62 million for the amortization of intangibles related to the Mayne Pharma acquisition |
|||
| ($0.26) | |||
Diluted earnings per share -- GAAP basis |
|||
| $1.99 - $2.04 |
*Use of Non-GAAP Financial Measures
Non-GAAP financial measures used in this press release are referred to as "adjusted" and are reconciled to the most comparable measures calculated in accordance with GAAP in the schedules attached to this release. For more information regarding these non-GAAP financial measures, please see Hospira's Current Report on Form 8-K furnished to the Securities and Exchange Commission on the date of this press release.
Webcast
A conference call for investors and media will be held at 8 a.m. Central time on Wednesday, Nov. 5, 2008. A live webcast of the conference call will be available at 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 WellnessTM. 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 more than 14,000 employees. Learn more at 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, statements regarding the financial impact of the acquisition of Mayne Pharma, and other statements regarding Hospira's goals, strategy, expectations and commitments. Hospira cautions that these forward-looking statements are subject to risks and uncertainties 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 Hospira's subsequent Quarterly Reports on Form 10-Q, which are filed with the Securities and Exchange Commission, and incorporated by reference. Hospira undertakes no obligation to release publicly any revisions to forward-looking statements as the result of subsequent events or developments.