News Release Detail
Mylan Reports Record EPS, Revenues and Net Earnings for the Third Quarter of Fiscal 2004; Mylan Announces Earnings Guidance for Fiscal 2005
-- Quarterly Financial Highlights
-- Record Third Quarter Diluted Earnings Per Share of $0.31,
an Increase of 29%.
-- Net Revenues Increased 9% to a Third Quarter Record $349.8
Million.
-- Net Earnings Increased 24% to a Third Quarter Record $84.6
Million.
-- Mylan Announces Its 2005 Earnings Guidance of $1.30 to
$1.40 Per Diluted Share.
Mylan Laboratories Inc. (NYSE: MYL) today announced its fiscal 2005 earnings guidance of $1.30 to $1.40 per diluted share. "We are pleased to once again deliver guidance which projects continued earnings growth as we continue to invest heavily in our business for our future," stated Robert J. Coury, Vice Chairman and CEO. "Our guidance demonstrates our continued commitment to effectively manage our business while delivering growth to our shareholders."
Mylan today also announced its financial results for the three and nine-month periods ended December 31, 2003, which included third quarter diluted earnings per share of $0.31, net revenues of $349.8 million and net earnings of $84.6 million, all third quarter records.
For the three months ended December 31, 2003, net revenues increased 9% to a third quarter record $349.8 million, with increases realized by both the Generic Segment and the Brand Segment. Net revenues for the Generic Segment increased 9% or $23.6 million to $277.4 million, while Brand Segment net revenues were $72.3 million, an increase of 9% or $5.7 million from the same prior year period. For the nine months ended December 31, 2003, net revenues increased 14% or $125.7 million to $1.04 billion from $915.5 million for the nine months ended December 31, 2002. Generic Segment net revenues were $832.2 million, an increase of 9% over the same prior year period, while Brand Segment net revenues increased 38% to $209.1 million.
Diluted earnings per share for the third quarter were $0.31 compared to $0.24 for the third quarter of fiscal 2003, an increase of 29%. For the nine months ended December 31, 2003, diluted earnings per share were $0.94 compared to $0.70 in the same prior year period, an increase of 34%. Net earnings increased 24% to a third quarter record $84.6 million from $68.4 million in the same prior year period. For the nine months, net earnings increased 31% to $259.8 million in fiscal 2004, compared to $198.5 million in fiscal 2003.
Fiscal 2005 Earnings Guidance
Mylan's fiscal 2005 earnings guidance reflects a continuation of the success achieved to date in fiscal 2004. Financial performance in the pharmaceutical industry is difficult to predict given its regulatory environment, competition within the industry at market formation and throughout a product's life cycle, the increasingly litigious nature of the research and development and product approval process, and other risks associated with Mylan's business. Therefore, when developing Mylan's fiscal 2005 financial guidance, management probability weighs factors which it believes could influence results of operations. For risk factors associated with the Company's business, including future financial performance, please read carefully the Company's most recently filed quarterly report on Form 10-Q and other periodic SEC filings.
Based upon this approach and analysis, the Company projects its fiscal 2005 earnings per diluted share to be $1.30 to $1.40, with the following expectations of its key business drivers:
---------------------------------------------------------------------- Net Revenues Growth of 15% - 20% ---------------------------------------------------------------------- Gross Margins 58% - 62% of net revenues ---------------------------------------------------------------------- Research & Development Expense 6% - 8% of net revenues ---------------------------------------------------------------------- Selling & Marketing Expense 6% - 8% of net revenues ---------------------------------------------------------------------- General & Administrative Expense 9% - 11% of net revenues ---------------------------------------------------------------------- Operating Margins 37% - 40% of net revenues ---------------------------------------------------------------------- Tax Rate 36% - 38% ----------------------------------------------------------------------
Segment Information
----------------------------------------------------------------------
Three Months Ended Nine Months Ended
December 31, December 31,
------------------------ --------------------------
2003 2002 Increase 2003 2002 Increase
Net Revenues (in
millions):
Generic Segment $277.4 $253.9 9% $832.2 $763.8 9%
Brand Segment 72.3 66.6 9% 209.1 151.7 38%
------- ------- --------- -------
Total $349.8 $320.5 9% $1,041.3 $915.5 14%
----------------------------------------------------------------------
Generic Segment
Net revenues for the quarter increased 9% or $23.6 million to $277.4 million from $253.9 million for the same prior year period. This increase is the result of $29.5 million from products launched subsequent to December 31, 2002, largely due to omeprazole, partially offset in part by changes in the portfolio mix.
Gross profit for the quarter increased 17% or $21.9 million to $153.6 million, and gross margins increased from 52% to 55% of net revenues. Earnings from operations increased 16% or $17.8 million to $130.4 million from the same prior year period. The increase in earnings from operations was driven primarily by higher gross profit which was partially offset by increased research and development expense from the continued expansion of the development platform.
For the nine months ended December 31, 2003, net revenues increased $68.3 million or 9% to $832.2 million from $763.8 million. New products launched subsequent to December 31, 2002, contributed net revenues of $102.5 million, largely due to omeprazole.
Gross profit for the nine months ended December 31, 2003, increased 16% or $65.2 million to $461.2 million from fiscal 2003, and gross margins increased from 52% to 55% of net revenues. Operating income for the nine-month period increased by 16% or $55.4 million to $395.1 million from $339.7 million. The increase in operating income was driven by higher gross profit, partially offset by higher research and development expenses.
Brand Segment
For the third quarter, the Brand Segment reported net revenues of $72.3 million, an increase of 9% or $5.7 million from $66.6 million in the same prior year period. Included in third quarter net revenue is $13.2 million related to the sale of the U.S. and Canadian rights to sertaconazole nitrate 2% cream. Gross profit for the third quarter increased $7.8 million or 20% to $45.6 million, which included this sale.
Earnings from operations were $17.1 million compared to $10.7 million in the same quarter of the prior year. The increase was primarily attributable to higher gross profit, partially offset by increased selling and marketing costs due to pre-marketing activities related to apomorphine.
For the nine months ended December 31, 2003, net revenues increased 38% or $57.4 million to $209.1 million from $151.7 million. This increase was primarily the result of sales of Amnesteem which was launched in the third quarter of fiscal 2003, as well as the sertaconazole sale.
Gross profit for the first nine months of fiscal 2004 was $123.1 million, an increase of $35.2 million or 40% from $87.8 million in fiscal 2003. Earnings from operations were $38.5 million compared to $11.5 million. The improvement in earnings from operations was the result of increased gross profit partially offset by higher research and development expenses related to nebivolol, and increased selling and marketing costs related to apomorphine pre-marketing activities.
Corporate/Other
General and administrative expenses for the third quarter of fiscal 2004 were $24.7 million, an increase of $4.0 million from the same prior year period. For the nine months ended December 31, 2003, general and administrative expenses were $71.4 million, an increase of $22.5 million from the same prior year period. The increases for both the three and nine month periods were due primarily to increased legal costs.
Other income for the third quarter and nine-month period was $4.2 million and $14.7 million, respectively. Included in other income for the nine months are interest income and a gain of $5.0 million on the sale of an office building, partially offset by losses realized by Somerset Pharmaceuticals, Inc., a company in which Mylan maintains an equity investment.
Fiscal 2004 Earnings Guidance
Mylan reaffirms its fiscal 2004 earnings guidance of $1.11 to $1.18 per diluted share.
Conference Call and Live Webcast
Mylan will host a conference call and live Webcast to discuss its third quarter earnings on Thursday, January 29, 2004, at 10:00 am ET. The dial-in number to access the live call is (913) 981-4900. In addition to the live call, a replay will be available from approximately 12:00 pm ET on January 29, through 12:00 pm ET on February 5, and can be accessed by dialing (719) 457-0820 with access pass code 512105.
To access the live Webcast, go to Mylan's website at www.mylan.com and click on the Webcast icon at least 15 minutes before the call is to begin to register and download or install any necessary audio software. If you are unable to listen to the live Webcast, please access www.mylan.com at any time within seven days to listen to a replay of the Webcast.
Forward-Looking Statements
This press release includes statements that constitute "forward-looking statements", including with regard to the Company's opportunities, future growth and continued success; the Company's commitment to deliver growth to its shareholders; and the Company's fiscal 2004 and fiscal 2005 earnings guidance. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Because such statements inherently involve risks and uncertainties, actual future results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to:
-- the Company's ability to successfully develop, license or
otherwise acquire and introduce new products on a timely basis
in relation to competing product introductions;
-- the Company's ability to obtain required FDA approvals for new
products on a timely basis;
-- uncertainties regarding continued market acceptance of and
demand for the Company's products;
-- the Company's periodic dependence on a relatively small group
of products as a significant source of its net revenue or net
income;
-- the effects of vigorous competition on commercial acceptance
of the Company's products and their pricing;
-- the high cost and uncertainty associated with compliance with
extensive regulation of the pharmaceutical industry;
-- the significant research and development expenditures the
Company makes to develop products, the commercial success of
which is uncertain;
-- the possible loss of business from the Company's concentrated
customer base;
-- the potential costs and product introduction delays that may
result from use of legal, regulatory and legislative
strategies by the Company's competitors;
-- the Company's dependence on third party suppliers and
distributors for the raw materials, particularly the chemical
compound(s) which produces the desired therapeutic effect, the
active ingredient the Company uses to manufacture its
products;
-- the possible negative effects of any interruption of
manufacturing of the Company's generic products at its
principal facility;
-- the effects of consolidation of the Company's customer base;
-- uncertainties regarding patent, intellectual and other
proprietary property protections;
-- the expending of substantial resources associated with
litigation involving patent or other intellectual property
protection of products;
-- possible reductions in reimbursement rates for pharmaceutical
products;
-- possible negative effects on product pricing of current or
future legislative or regulatory programs;
-- the Company's exposure to lawsuits and contingencies
associated with its business;
-- uncertainties regarding the Company's performance under
indemnification clauses in certain material agreements;
-- the Company's exposure to risks inherent in acquisitions or
joint ventures;
-- the Company's ability to attract and retain key personnel;
-- possible adverse effects resulting from any significant
decline in the value of securities that the Company holds or
from uninsured losses of funds;
-- uncertainties and matters beyond the control of management,
which could affect the Company's earnings guidance, as well as
the subjectivity inherent in any probability weighted analysis
underlying the Company's assumptions and estimates with
respect to the future; and
-- inherent uncertainties involved in the estimates and judgments
used in the preparation of financial statements in accordance
with GAAP and related standards.
The cautionary statements referred to above should be considered in connection with any subsequent written or oral forward-looking statements that may be made by the Company or by persons acting on its behalf and in conjunction with its periodic SEC filings. In addition, please refer to the cautionary statements and risk factors in Item I of the Company's Form 10-K for the year ended March 31, 2003, as well as those contained in the Company's Form 10-Q for the period ended June 30, 2003 and for the period ended September 30, 2003. The Company undertakes no duty to update its forward-looking statements, even though its situation may change in the future.
Mylan Laboratories Inc. is a leading pharmaceutical company with four subsidiaries, Mylan Pharmaceuticals Inc., Mylan Technologies Inc., UDL Laboratories, Inc. and Bertek Pharmaceuticals Inc., that develop, manufacture and market an extensive line of generic and proprietary products. For more information about Mylan, visit www.mylan.com.
MYLAN LABORATORIES INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Earnings
(unaudited; in thousands, except per share amounts)
----------------------------------------------------------------------
Three Months Ended Nine Months Ended
December December December December
31, 2003 31, 2002 31, 2003 31, 2002
--------- --------- ----------- ---------
Net revenues $349,786 $320,494 $1,041,254 $915,506
Cost of sales 150,602 150,918 456,933 431,596
--------- --------- ----------- ---------
Gross profit 199,184 169,576 584,321 483,910
Operating expenses:
Research and development 25,248 22,941 73,933 59,953
Selling and marketing 18,027 15,173 53,137 48,598
General and administrative 33,096 28,769 95,016 73,020
Litigation settlements (2,676) - (24,345) -
--------- --------- ----------- ---------
Total operating expenses 73,695 66,883 197,741 181,571
--------- --------- ----------- ---------
Earnings from operations 125,489 102,693 386,580 302,339
Other income, net 4,194 3,734 14,727 7,335
--------- --------- ----------- ---------
Earnings before income taxes 129,683 106,427 401,307 309,674
Provision for income taxes 45,065 37,995 141,548 111,164
--------- --------- ----------- ---------
Net earnings $84,618 $68,432 $259,759 $198,510
========= ========= =========== =========
Earnings per common share:
Basic $0.32 $0.25 $0.97 $0.71
========= ========= =========== =========
Diluted $0.31 $0.24 $0.94 $0.70
========= ========= =========== =========
Weighted average common
shares:
Basic 268,560 276,522 269,141 280,661
========= ========= =========== =========
Diluted 276,881 279,891 276,478 283,596
========= ========= =========== =========
----------------------------------------------------------------------
MYLAN LABORATORIES INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(unaudited; in thousands)
----------------------------------------------------------------------
December March
31, 2003 31, 2003
----------- -----------
Assets:
Current assets:
Cash and cash equivalents $130,632 $258,902
Marketable securities 569,790 427,904
Accounts receivable, net 208,647 187,587
Inventories 311,605 237,777
Other current assets 115,058 116,041
----------- -----------
Total current assets 1,335,732 1,228,211
Non-current assets 545,240 517,012
----------- -----------
Total assets $1,880,972 $1,745,223
=========== ===========
Liabilities:
Current liabilities $247,833 $265,771
Non-current liabilities 42,754 33,120
----------- -----------
Total liabilities 290,587 298,891
Total shareholders' equity 1,590,385 1,446,332
----------- -----------
Total liabilities and shareholders' equity $1,880,972 $1,745,223
=========== ===========
----------------------------------------------------------------------
MYLAN LABORATORIES INC. AND SUBSIDIARIES
Segment Results
(unaudited; in thousands)
----------------------------------------------------------------------
Three Months Ended Nine Months Ended
December December December December
31, 2003 31, 2002 31, 2003 31, 2002
--------- --------- ----------- ---------
Consolidated:
Net revenues $349,786 $320,494 $1,041,254 $915,506
Cost of sales 150,602 150,918 456,933 431,596
--------- --------- ----------- ---------
Gross profit 199,184 169,576 584,321 483,910
Research and development 25,248 22,941 73,933 59,953
Selling and marketing 18,027 15,173 53,137 48,598
General and administrative 33,096 28,769 95,016 73,020
Litigation settlements (2,676) - (24,345) -
--------- --------- ----------- ---------
Earnings from operations $125,489 $102,693 $386,580 $302,339
========= ========= =========== =========
Generic Segment:
Net revenues $277,446 $253,888 $832,157 $763,814
Cost of sales 123,864 122,164 370,908 367,735
--------- --------- ----------- ---------
Gross profit 153,582 131,724 461,249 396,079
Research and development 14,436 11,073 42,077 31,960
Selling and marketing 2,743 2,779 8,260 8,078
General and administrative 5,954 5,223 15,809 16,322
--------- --------- ----------- ---------
Earnings from operations $130,449 $112,649 $395,103 $339,719
========= ========= =========== =========
Brand Segment:
Net revenues $72,340 $66,606 $209,097 $151,692
Cost of sales 26,738 28,754 86,025 63,861
--------- --------- ----------- ---------
Gross profit 45,602 37,852 123,072 87,831
Research and development 10,812 11,868 31,856 27,993
Selling and marketing 15,284 12,394 44,877 40,520
General and administrative 2,454 2,848 7,825 7,863
--------- --------- ----------- ---------
Earnings from operations $17,052 $10,742 $38,514 $11,455
========= ========= =========== =========
Corporate/Other:
General and administrative $24,688 $20,698 $71,382 $48,835
Litigation settlements (2,676) - (24,345) -
--------- --------- ----------- ---------
Loss from operations $(22,012) $(20,698) $(47,037) $(48,835)
========= ========= =========== =========
----------------------------------------------------------------------
CONTACT: Investor Relations
Kris King, 724-514-1800
SOURCE: Mylan Laboratories Inc.