WuXi PharmaTech Q1 Adj Profit Misses View, Trims 2014 EPS Outlook

(RTTNews) - Chinese contract research company WuXi PharmaTech (Cayman), Inc. (WX) reported Wednesday a profit for the first quarter that decreased 18 percent from last year, despite double-digit revenue growth, reflecting lower margins. Adjusted earnings per share missed analysts' expectation, while quarterly revenues topped their estimates by a whisker. The company also lowered its earnings guidance for the full-year 2014, while reaffirming annual revenue forecast.

"WuXi started the year with a good first quarter. Through strong revenue growth and good cost control, we exceeded our revenue and diluted EPS guidance for the quarter. We also made strong investment to sustain our growth," Chairman and CEO Dr. Ge Li said in a statement.

The Shanghai, China-based company reported net income of $17.82 million or $0.24 per ADS for the first quarter, lower than $21.71 million or $0.30 per ADS in the prior-year quarter.

Excluding items, adjusted net income for the quarter was $22.3 million or $0.30 per ADS, compared to $25.38 million or $0.35 per ADS in the year-ago quarter.

On average, six analysts polled by Thomson Reuters expected the company to report earnings of $0.39 per ADS for the quarter. Analysts estimates typically exclude special items.

Total net revenues for the quarter increased 11.3 percent to $146.72 million from $131.87 million in same quarter last year, and topped five Wall Street analysts' consensus estimate of $145.0 million by a whisker.

Laboratory services net revenues grew 8.3 percent to $105.55 million, with China-based revenues growing 10.3 percent and U.S.-based revenues increasing 1.7 percent. Manufacturing services net revenues rose 19.7 percent to $41.16 million from last year.

Operating margin for the quarter contracted 140 basis points to 16.0 percent, despite a 60 basis points improvement in gross margin, reflecting a 24 percent increase in operating expenses, primarily general and administrative as well as R&D expenses.

Looking ahead to the second quarter, the company expects adjusted earnings in a range of $0.46 to $0.48 per ADS, on projected revenues between $160 million and 162 million. Analysts currently expect the company to report earnings of $0.49 per ADS for the quarter, on quarterly revenues of $164.45 million.

For fiscal 2014, the company lowered its adjusted earnings guidance to a range of $1.80 to 1.85 per ADS from the prior forecast in the $1.95 to $2.00 per ADS range, while continuing to expect total net revenues between $660 million and 670 million. Street currently looking for full-year earnings of $1.96 per ADS, on annual revenues of $669.18 million.

"We expect year-over-year revenue growth to accelerate in the coming quarters as new projects start to generate revenues across the board," Li added.

WX closed Wednesday's regular trading session at $36.40, up $0.98 or 2.77% on a volume of 0.50 million shares. However, the stock lost $2.30 or 6.32% in after-hours trading.