-- Affirms Sales Projection and Narrows Earnings Guidance to Upper End of
Range for 2009 --
LAKE FOREST, Ill., April 28 /PRNewswire-FirstCall/ -- Hospira, Inc. (NYSE:
HSP), a leading global specialty pharmaceutical and medication delivery
company, today reported results for the first quarter ended March 31, 2009.
Net sales for the quarter were $860 million, and adjusted* diluted earnings
per share were $0.60. (Adjusted* measures exclude certain specified items as
described later in this press release and the attached schedules.)
"Hospira delivered on its commitments in the first quarter, generating
solid sales and earnings growth in a period marked by continued economic
uncertainty," said Christopher B. Begley, chairman and chief executive
officer. "Looking forward, we believe the results of our strategic investments
and our focus on execution position us well to deliver our financial
commitments for 2009. In addition, we are driving operational excellence
through our optimization initiatives under Project Fuel, which will create
long-term, sustainable growth and increased shareholder value."
First-Quarter 2009 Results
The following table highlights selected financial results for the first
quarter of 2009 compared to the same period in 2008:
In $ millions, GAAP Adjusted*
except per Three Months Ended Three Months Ended
share amounts March 31, March 31,
---------------- % ---------------- %
2009 2008 Change 2009 2008 Change
------ ------ ------ ------ ------ ------
Net Sales $859.7 $888.7 (3.3)% n/a n/a n/a
Gross Profit $319.6 $317.0 0.8 % $339.6 $337.5 0.6 %
Income from
Operations $114.7 $111.7 2.7 % $149.9 $145.2 3.2 %
Diluted EPS $1.03 $0.41 151.2 % $0.60 $0.55 9.1 %
Statistics (as a % of Net Sales)
--------------------------------
Gross Profit 37.2 % 35.7 % 39.5 % 38.0 %
Operating Income 13.3 % 12.6 % 17.4 % 16.3 %
Results under U.S. Generally Accepted Accounting Principles (GAAP) include
items as detailed in the schedules attached to this press release, including a
$0.57 benefit to first-quarter 2009 GAAP diluted earnings per share from the
settlement of a U.S. Internal Revenue Service audit.
Net sales decreased 3.3 percent to $860 million in the first quarter of
2009, compared to $889 million in the first quarter of 2008. Growth in Other
Pharma in the Americas segment and solid overall performance in Medication
Management Systems (MMS), mainly a function of continued penetration of
Symbiq(R), were offset by unfavorable foreign currency translation and
continued pricing pressure in Specialty Injectable Pharmaceuticals (SIP) in
the Europe, Middle East and Africa (EMEA) segment.
Adjusted* operating income increased 3.2 percent to $150 million in the
first quarter of 2009, compared to $145 million in the first quarter of 2008.
Driving the majority of the increase was improved manufacturing efficiency,
with a contribution from favorable volume/mix.
Cash Flow
Cash flow from operations for the first quarter of 2009 was $89 million,
compared to the $74 million generated in the same period in 2008.
Capital expenditures decreased to $34 million for the first quarter of
2009, compared to $43 million in the first quarter of 2008, due to the
continued impact of capital-spending controls the company put into effect 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.
Given the continued uncertainty surrounding the approval timing of
piperacillin tazobactam, a key generic injectable pharmaceutical projected to
launch during the year, Hospira has elected to remove sales of the drug from
its 2009 projections. Offsetting this impact, the company now expects to
receive a benefit from a lower estimated effective tax rate for 2009, as well
as anticipated savings from the company's optimization efforts under its
Project Fuel initiative. Hospira therefore projects adjusted* diluted earnings
per share for full-year 2009 to range between $2.67 to $2.72 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* $2.67 - $2.72
-------------
Estimated charges related to planned Project
Fuel initiatives (mid-point range of an estimated
$0.38 to $0.42 per diluted share for 2009) ($0.40)
Estimated charges related to planned facilities
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)
Benefit from the settlement of a U.S. income tax audit $0.57
-------------
Diluted earnings per share -- GAAP $2.50 - $2.55
=============
Projections for cash flow from operations, depreciation and amortization,
and capital expenditures remain unchanged. 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 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. For more information regarding these
non-GAAP financial measures, please see Hospira's Current Report on Form 8-K
filed with the Securities and Exchange Commission on the date of this press
release.
Webcast
Hospira will hold a conference call for investors and media at 8 a.m.
Central time on Tuesday, April 28, 2009. 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 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 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, filed with the Securities and Exchange Commission, which is 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
March 31,
-------------- %
2009 2008 Change
------ ------ ------
Net sales $859.7 $888.7 (3.3)%
------ ------
Cost of products sold 540.1 571.7 (5.5)%
Restructuring 9.4 3.0 213.3 %
Research and development 50.0 49.9 0.2 %
Selling, general and administrative 145.5 152.4 (4.5)%
------ ------
Total operating expenses 745.0 777.0 (4.1)%
------ ------
Income From Operations 114.7 111.7 2.7 %
Interest expense 26.9 31.4 (14.3)%
Other income, net (0.3) (4.1) (92.7)%
------ ------
Income Before Income Taxes 88.1 84.4 4.4 %
Income tax (benefit) expense (77.4) 19.0 (507.4)%
------ ------
Net Income $165.5 $65.4 153.1 %
====== ======
Earnings Per Common Share:
Basic $1.04 $0.41 153.7 %
====== ======
Diluted $1.03 $0.41 151.2 %
====== ======
Weighted Average Common Shares Outstanding:
Basic 159.5 158.7 0.5 %
====== ======
Diluted 160.6 161.0 (0.2)%
====== ======
Adjusted Gross Profit (1)(2) $339.6 $337.5 0.6 %
Adjusted Income From Operations (1) $149.9 $145.2 3.2 %
Adjusted Net Income (1) $96.8 $87.9 10.1 %
Adjusted Diluted Earnings Per Share (1) $0.60 $0.55 9.1 %
Statistics (as a % of net sales,
except for income tax rate):
Three Months Ended Three Months Ended
March 31, 2009 March 31, 2008
---------------------- ----------------------
GAAP Adjusted (1) GAAP Adjusted (1)
------ ------------ ------ ------------
Gross Profit (2) 37.2 % 39.5 % 35.7 % 38.0 %
Income From Operations 13.3 % 17.4 % 12.6 % 16.3 %
Net Income 19.3 % 11.3 % 7.4 % 9.9 %
Income Tax Rate (87.8)% 21.5 % 22.5 % 25.5 %
(1) The Non-GAAP financial measures contained in this press release
(gross profit, income from operations, net income, and diluted Earnings
Per Share) adjust for items that are unusual or nonrecurring. Unusual or
nonrecurring items can be highly variable, difficult to predict, and of
a size that may substantially impact Hospira's reported results for a
period. Management believes that Non-GAAP financial measures can
facilitate a complete analysis of Hospira's results of operations,
particularly in evaluating performance over time. Management uses these
Non-GAAP financial measures internally in financial planning, to monitor
business unit performance, and in evaluating management performance.
Refer to Hospira's filing on Form 8-K of today's date for additional
information.
(2) Net sales less Cost of products sold.
Hospira, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
(Unaudited)
(dollars in millions, except per share amounts)
Three months ended March 31, 2009 adjustments and Reconciliation of GAAP
to Non-GAAP Financial Measures:
Income
Gross From Net Diluted
Profit (2) Operations Income EPS
---------- ---------- ------ -------
GAAP $319.6 $114.7 $165.5 $1.03
Adjustments:
Project Fuel restructuring and
optimization charges (A) - 10.5 6.5 0.04
Facilities restructuring and
optimization charges (B) 7.0 11.7 7.7 0.05
Amortization of Mayne Pharma
intangible assets (C) 13.0 13.0 9.0 0.05
Resolution of IRS tax audit
benefit (D) - - (91.9) (0.57)
---------- ---------- ------ -------
Adjusted financial measures (1) $339.6 $149.9 $96.8 $0.60
========== ========== ====== =======
GAAP results for the three months ended March 31, 2009:
A -- Project Fuel restructuring and optimization charges include:
$4.7 million reported in Restructuring, $0.4 million reported in
Research and Development and $5.4 million reported in Selling,
general administrative.
B -- Facilities restructuring and optimization charges include:
$7.0 million reported in Cost of products sold and $4.7 million
reported in Restructuring.
C -- Amortization of Mayne Pharma intangible assets of $13.0 million
reported in Cost of products sold.
D -- Resolution of IRS tax audit benefit of $91.9 million reported in
Income tax (benefit) expense.
Three months ended March 31, 2008 adjustments and Reconciliation of GAAP
to Non-GAAP Financial Measures:
Income
Gross From Net Diluted
Profit (2) Operations Income EPS
----------- ---------- ------ -------
GAAP $317.0 $111.7 $65.4 $0.41
Adjustments:
Facilities restructuring and
optimization charges (A) 4.4 7.8 5.0 0.03
Amortization of Mayne Pharma
intangible assets (B) 15.7 15.7 10.6 0.07
Integration-related charges (C) 0.4 10.0 6.9 0.04
---------- ---------- ------ -------
Adjusted financial measures (1) $337.5 $145.2 $87.9 $0.55
========== ========== ====== =======
GAAP results for the three months ended March 31, 2008:
A -- Facilities restructuring and optimization charges include:
$4.4 million reported in Cost of products sold, $3.0 million
reported in Restructuring and $0.4 million reported in Research and
development.
B -- Amortization of Mayne Pharma intangible assets of $15.7 million
reported in Cost of products sold.
C -- Integration-related charges include: $0.4 million reported in Cost of
products sold, $0.4 million reported in Research and development and
$9.2 million reported in Selling, general and administrative.
(1) The Non-GAAP financial measures contained in this press release
(gross profit, income from operations, net income, and diluted Earnings
Per Share) adjust for items that are unusual or nonrecurring. Unusual or
nonrecurring items can be highly variable, difficult to predict, and of
a size that may substantially impact Hospira's reported results for a
period. Management believes that Non-GAAP financial measures can
facilitate a complete analysis of Hospira's results of operations,
particularly in evaluating performance over time. Management uses these
Non-GAAP financial measures internally in financial planning, to monitor
business unit performance, and in evaluating management performance.
Refer to Hospira's filing on Form 8-K of today's date for additional
information.
(2) Net sales less Cost of products sold.
Hospira, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(dollars in millions)
March 31, December 31,
Assets 2009 2008
-------- --------
Current Assets:
Cash and cash equivalents $529.4 $483.8
Trade receivables, less allowances of
$7.6 in 2009 and $6.7 in 2008 553.0 583.4
Inventories 834.8 830.5
Deferred income taxes 176.8 172.2
Prepaid expenses and other current assets 45.2 35.7
Other receivables 63.1 43.7
-------- --------
Total Current Assets 2,202.3 2,149.3
-------- --------
Property and equipment, net 1,177.1 1,192.1
Intangible assets, net 388.9 404.4
Goodwill 1,157.6 1,167.4
Deferred income taxes 68.4 70.1
Investments 38.2 37.6
Other assets 53.2 53.2
-------- --------
Total Assets $5,085.7 $5,074.1
======== ========
Liabilities and Shareholders' Equity
Current Liabilities:
Short-term borrowings $704.1 $338.3
Trade accounts payable 216.6 231.5
Salaries, wages and commissions 107.3 144.7
Deferred income taxes 1.4 1.5
Other accrued liabilities 342.6 331.5
-------- --------
Total Current Liabilities 1,372.0 1,047.5
-------- --------
Long-term debt 1,457.0 1,834.0
Deferred income taxes 23.8 25.2
Post-retirement obligations 194.9 195.5
Other long-term liabilities 96.1 195.5
Commitments and Contingencies
-------- --------
Total Shareholders' Equity 1,941.9 1,776.4
-------- --------
Total Liabilities and Shareholders' Equity $5,085.7 $5,074.1
======== ========
Hospira, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(dollars in millions)
Three Months Ended
March 31,
-----------------
2009 2008
------ ------
Cash Flow From Operating Activities:
Net income $165.5 $65.4
Adjustments to reconcile net income to net cash
from operating activities-
Depreciation 41.2 47.1
Amortization of intangible assets 14.7 16.9
Stock-based compensation expense 13.1 14.4
Deferred income tax and other tax adjustments (89.4) (11.5)
Changes in assets and liabilities-
Trade receivables 20.0 (13.6)
Inventories (11.5) (24.8)
Prepaid expenses and other assets (13.1) 11.4
Trade accounts payable (14.2) 6.1
Other liabilities (41.7) (47.8)
Other, net 4.7 9.9
------ ------
Net Cash Provided by Operating Activities 89.3 73.5
------ ------
Cash Flow From Investing Activities:
Capital expenditures (including instruments placed
with or leased to customers) (33.8) (42.9)
Payments for contingent consideration (7.1) -
Purchases of intangibles and other investments (3.0) (38.2)
------ ------
Net Cash Used in Investing Activities (43.9) (81.1)
------ ------
Cash Flow From Financing Activities:
Repayment of long-term debt (5.0) (25.0)
Other borrowings, net (0.7) 5.0
Excess tax benefit from stock-based compensation
arrangements - 0.8
Proceeds from stock options exercised 12.6 12.3
------ ------
Net Cash Provided by (Used in) Financing Activities 6.9 (6.9)
------ ------
Effect of exchange rate changes on cash and cash
equivalents (6.7) 5.5
------ ------
Net change in cash and cash equivalents 45.6 (9.0)
Cash and cash equivalents at beginning of period 483.8 241.1
------ ------
Cash and cash equivalents at end of period $529.4 $232.1
====== ======
Supplemental Cash Flow Information:
Cash paid during the period-
Interest $33.1 $38.7
Income taxes, net of refunds $9.9 $6.7
Hospira, Inc.
Net Sales by Product Line
(Unaudited)
(dollars in millions)
Three Months Ended March 31,
-----------------------------------
% Change % Change
at Actual at Constant
2009 2008 Rates Rates
------ ------ ----- -----
Americas--
Pharmaceuticals
Specialty Injectables $333.1 $340.7 (2.2)% (0.4)%
Other Pharma 137.8 121.9 13.0 % 15.7 %
------ ------
470.9 462.6 1.8 % 3.8 %
Devices
Medication Management Systems 121.4 118.1 2.8 % 5.9 %
Other Devices 92.4 93.5 (1.2)% 1.1 %
------ ------
213.8 211.6 1.0 % 3.8 %
Total Americas 684.7 674.2 1.6 % 3.9 %
Europe, Middle East & Africa--
Pharmaceuticals
Specialty Injectables 57.6 78.3 (26.4)% (12.1)%
Other Pharma 27.7 36.6 (24.3)% (8.5)%
------ ------
85.3 114.9 (25.8)% (11.0)%
Devices
Medication Management Systems 19.1 20.4 (6.4)% 9.0 %
Other Devices 16.8 17.5 (4.0)% 11.8 %
------ ------
35.9 37.9 (5.3)% 10.3 %
Total Europe, Middle East & Africa 121.2 152.8 (20.7)% (5.7)%
Asia Pacific--
Pharmaceuticals
Specialty Injectables 39.0 45.6 (14.5)% 7.7 %
Other Pharma 3.6 4.1 (12.2)% 17.1 %
------ ------
42.6 49.7 (14.3)% 8.5%
Devices
Medication Management Systems 4.7 5.7 (17.5)% (4.0)%
Other Devices 6.5 6.3 3.2% 13.9 %
------ ------
11.2 12.0 (6.7)% 5.3 %
Total Asia Pacific 53.8 61.7 (12.8)% 7.9 %
------ ------
Net Sales $859.7 $888.7 (3.3)% 2.4 %
====== ======
Global--
Pharmaceuticals
Specialty Injectables $429.7 $464.6 (7.5)% (1.6)%
Other Pharma 169.1 162.6 4.0 % 10.3 %
------ ------
598.8 627.2 (4.5)% 1.5 %
Devices
Medication Management Systems 145.2 144.2 0.7 % 6.0 %
Other Devices 115.7 117.3 (1.4)% 3.3 %
------ ------
260.9 261.5 (0.2)% 4.8 %
------ ------
Total Global $859.7 $888.7 (3.3)% 2.4 %
====== ======
Hospira, Inc.
Segment Information
(Unaudited)
(dollars in millions)
Three Months Ended March 31,
--------------------------------------------------------
Net Sales Income from Operations
-------------- % ----------------- %
2009 2008 Change 2009 2008 Change
------ ------ ------ ------ ------ ------
Americas $684.7 $674.2 1.6 % $141.6 A $136.3 A 3.9 %
Europe, Middle
East & Africa 121.2 152.8 (20.7)% 4.2 B 4.5 B (6.7)%
Asia Pacific 53.8 61.7 (12.8)% 2.7 C 2.1 C 28.6 %
------ ------ ------ ------
Total reportable
segments $859.7 $888.7 (3.3)% 148.5 142.9 3.9 %
====== ======
Corporate
functions (20.7) D (16.8) D 23.2 %
Stock-based
compensation (13.1) (14.4) (9.0)%
------ ------
Income from
operations 114.7 111.7 2.7 %
Interest expense
and other
income, net (26.6) (27.3) (2.6)%
------ ------
Income before
income taxes $88.1 $84.4 4.4 %
====== ======
Included in the reported Income before income
taxes above, are the following charges:
A -- Americas
Project Fuel restructuring and
optimization $7.6 $ -
Integration-related - 0.4
Amortization of Mayne Pharma
intangible assets 4.5 5.2
Facilities restructuring and
optimization 11.7 7.8
------ ------
Total Americas 23.8 13.4
B -- Europe, Middle East & Africa
Project Fuel restructuring and
optimization 0.2 -
Integration-related - 5.4
Amortization of Mayne Pharma
intangible assets 5.0 5.8
------ ------
Total Europe, Middle East & Africa 5.2 11.2
C -- Asia Pacific
Project Fuel restructuring and
optimization 0.5 -
Integration-related - 1.6
Amortization of Mayne Pharma
intangible assets 3.5 4.7
------ ------
Total Asia Pacific 4.0 6.3
D -- Corporate functions
Project Fuel restructuring and
optimization 2.2 -
Integration-related - 2.6
------ ------
Total Corporate functions 2.2 2.6
------ ------
Total $35.2 $33.5
====== ======
SOURCE Hospira, Inc.
CONTACT:
Media, Stacey Eisen, +1-224-212-2276,
or
Tareta Adams,
+1-224-212-2535, or
Financial Community,
Karen King, +1-224-212-2711,
all of
Hospira, Inc.
Web Site: http://www.hospira.com
(HSP)
