Mylan Fourth Quarter 2013 Adjusted Diluted EPS Increases 20% to $0.78 and Full Year Adjusted Diluted EPS Increases 12% to $2.89
Provides 2014 Adjusted Diluted EPS Guidance Range of $3.25 - $3.60 and 2014 Revenue Guidance of $7.8 billion - $8.2 billion, Representing Year-Over-Year Growth of 19% and 16%, Respectively
PITTSBURGH, Feb. 27, 2014 /PRNewswire/ -- Mylan Inc. (Nasdaq: MYL) today announced its financial results for the three months and year ended December 31, 2013.
Financial Highlights
Adjusted diluted EPS of $0.78 for the three months ended December 31, 2013 compared to $0.65 for the same prior year period, an increase of 20%
Total revenues of $1.81 billion for the three months ended December 31, 2013 compared to $1.72 billion for the same prior year period, an increase of 5%
On a GAAP basis, diluted EPS of $0.45 for the three months ended December 31, 2013 compared to $0.39 for the same prior year period, an increase of 15%
Adjusted diluted EPS of $2.89 for the year ended December 31, 2013 compared to $2.59 for the same prior year period, an increase of 12%
Total revenues of $6.91 billion for the year ended December 31, 2013 compared to $6.80 billion for the same prior year period, an increase of 2%, despite 2013 new product revenues being 69% lower than 2012
On a GAAP basis, diluted EPS of $1.58 for the year ended December 31, 2013 compared to $1.52 for the same prior year period, an increase of 4%
Adjusted operating cash flow of $1.20 billion for the year ended December 31, 2013. On a GAAP basis, cash flow from operating activities of $1.11 billion for the year ended December 31, 2013
Mylan CEO Heather Bresch commented: "2013 demonstrated the strength of our diverse, global platform and showcased our ability to effectively execute on our business to deliver on the key financial metrics we set, including double-digit bottom-line growth. 2013 also saw us hit meaningful milestones in our key growth drivers, including our injectables, respiratory, infectious disease, complex products and biologics programs. Our ability to deliver continued strong growth was particularly noteworthy given the unprecedented year we had in 2012 in terms of new product launches, as compared to 2013 during which we saw several key product approvals delayed. These delays will add to the many opportunities we have ahead in 2014, which combined with our continued commitment to strong execution, gives us great confidence in our expectations of 16% growth in revenues and 19% growth in adjusted diluted EPS for the year. Finally, in addition to executing on our existing business drivers in 2014, we currently expect to be in a position to execute on another substantial transaction this year."
John Sheehan, Mylan's CFO, added: "Our focus on executing in 2013 enabled us to once again produce solid financial results for our shareholders. Mylan's ability to generate strong cash flow provided us with the flexibility to return another $1 billion to shareholders in 2013, bringing our total share repurchases to approximately $2.4 billion throughout the past three years. As we move into 2014, we expect that our financial flexibility will provide further opportunities to expand our business in strategic areas and create additional value for our shareholders. We look forward to continuing to leverage our unique global operating and commercial platform and identifying additional opportunities for growth as we progress towards our long-term financial targets, including our target of adjusted diluted earnings per share of at least $6.00 by the end of 2018."
Financial Results Summary
Three Months Ended December 31, 2013
For the three months ended December 31, 2013, Mylan reported total revenues of $1.81 billion compared to $1.72 billion in the comparable prior year period, an increase of$85.6 million, or 5.0%. The effect of foreign currency translation had an unfavorable impact of approximately 2% on total revenues primarily reflecting a stronger U.S. Dollar in comparison to the currencies of the other major markets that Mylan operates in, particularly India, Australia and Japan. Translating total revenues for the current quarter at prior year comparative period exchange rates would have resulted as an increase in total revenues of approximately $126 million, or 7%. The contribution from new product launches in the current period was approximately $126 million as compared to approximately $229 million in the comparable prior year period, a decline of approximately 45%. The North American generics business accounted for the majority of the decline in new product revenues as a result of the significant level of new products launched during 2012. Offsetting the decline in new product revenues was double digit revenue growth in the Specialty segment and double digit constant currency revenue growth in the region of the Generics segment which includes India, Australia, Japan, New Zealand and Brazil (collectively, the "Rest of World"). The operating results of the Agila Specialties business ("Agila") have been included in Mylan's consolidated financial statements since the acquisition date, December 4, 2013, and were not material.
A tabular summary of Mylan's revenues for the three months and years ended December 31, 2013 and 2012 is included at the end of this release. Also included at the end of this release are the reconciliations of Non-GAAP adjusted financial results to the most directly comparable GAAP financial result.
Third party net revenues from Mylan's Generics segment, which are derived from sales in North America, Europe, the Middle East and Africa (collectively, "EMEA") and Rest of World were $1.62 billion in the quarter ended December 31, 2013, compared to $1.55 billion in the comparable prior year period, representing an increase of $64.2 million. Excluding the unfavorable effect of foreign currency translation, Generics third party net revenues would have increased 7% versus the comparable prior year period.
Third party net revenues from North America were $853.9 million for the current quarter, compared to $800.4 million for the comparable prior year period, representing an increase of $53.5 million, or 6.7%. Revenues from new products totaled approximately $77 million during the current quarter, a decrease of approximately 57% from the comparable prior year period. The decline in pricing on existing products was partially offset by volume growth throughout the region. The effect of foreign currency translation was insignificant within North America.
Third party net revenues from EMEA were $392.5 million for the current quarter, compared to $368.3 million for the comparable prior year period, representing an increase of$24.2 million, or 6.6%. Foreign currency translation had a favorable impact on sales for the current quarter, as translating current quarter third party net revenues from EMEA at prior year comparative period exchange rates would have resulted in an increase in third party net revenues of approximately $9 million, or 3%. This increase was principally the result of a double-digit increase in revenues in Italy as a result of favorable volume combined with new product introductions throughout EMEA. Partially offsetting these increases was unfavorable pricing in a number of European markets in which Mylan operates, as a result of government-imposed pricing reductions and competitive market conditions.
Third party net revenues from the Rest of World were $371.4 million for the current quarter, compared to $384.8 million for the comparable prior year period, a decrease of$13.4 million, or 3.5%. Foreign currency translation had an unfavorable impact on sales for the current quarter, principally reflecting the significant strengthening of the U.S. Dollar versus the Indian Rupee, Australian Dollar and Japanese Yen. Excluding the effect of foreign currency translation, calculated as described above, third party net revenues would have increased by approximately $41 million, or 11%. This increase was primarily driven by higher revenues from Mylan India, as a result of increased sales of antiretroviral finished dosage form generic products, which are used in the treatment of HIV/AIDS, as well as constant currency revenue growth in Japan attributable to new product launches. Third party net revenues in Australia declined due to government-imposed pricing reform.
For the current quarter, Mylan's Specialty segment reported third party net revenues of $176.1 million, an increase of $20.2 million, or 13.0%, from the comparable prior year period of $155.9 million. The most significant contributor to Specialty segment revenues continues to be the EpiPen® Auto-Injector, sales of which increased as a result of favorable pricing and volume. The EpiPen® Auto-Injector is the number one dispensed epinephrine auto-injector.
Gross profit for the three months ended December 31, 2013 was $796.0 million, and gross margins were 44%. For the three months ended December 31, 2012, gross profit was $742.3 million, and gross margins were 43%. Adjusted gross profit, as further defined below, for the three months ended December 31, 2013 was $930.2 million and adjusted gross margins were 51% as compared to adjusted gross profit of $845.4 million and adjusted gross margins of 49% in the comparable prior year period. Adjusted gross margins were favorably impacted in the current quarter as a result of higher margins on new product introductions and favorable pricing and volume on the EpiPen® Auto-Injector. These increases were partially offset by lower gross margins on existing products primarily as a result of unfavorable pricing within the Generics segment as discussed above.
Earnings from operations were $273.2 million for the three months ended December 31, 2013, compared to $262.7 million for the comparable prior year period. Adjusted earnings from operations, as further defined below, for the three months ended December 31, 2013 were $453.5 million as compared to adjusted earnings from operations of $409.3 million in the comparable prior year period. This increase was driven by higher gross profit in the current year, as discussed above, and was partially offset by higher research and development costs ("R&D") and selling, general and administrative costs ("SG&A"). R&D increased primarily due to expenditures related to the development of Mylan's respiratory and biologics programs and up front development licensing payments. The increase in SG&A in the current quarter is principally due to the continued growth of the Company which increased certain payroll and related employee benefit costs. Additionally, during the current quarter, the Company recorded a$13.2 million gain, net, for litigation settlements principally related to recoveries of lost profits in patent-infringement matters and favorable settlements for existing litigation matters.
Interest expense for the three months ended December 31, 2013 totaled $79.6 million, compared to $74.6 million for the comparable prior year period. Adjusted interest expense, as further defined below, for the three months ended December 31, 2013 was $59.3 million, essentially unchanged when compared to the prior year period.
Other (expense) income, net, was expense of $0.5 million in the current quarter compared to income of $2.8 million in the comparable prior year period. The change from the comparable prior year period is the result of increased losses from equity affiliates. Also included in other (expense) income, net, are foreign exchange gains and losses and interest and dividend income.
Net earnings attributable to Mylan Inc. increased by $18.3 million, or 11.3%, to $180.2 million for the three months ended December 31, 2013 as compared to $162.0 millionfor the prior year comparable period. Adjusted net earnings increased $41.2 million, or 15.5%, to $308.1 million for the three months ended December 31, 2013 as compared to adjusted net earnings of $266.9 million for the prior year comparable period.
EBITDA, which is defined as net income (excluding the non-controlling interest and income from equity method investees) plus income taxes, interest expense, depreciation and amortization, was $436.5 million for the quarter ended December 31, 2013, and $398.5 million for the comparable prior year period. After adjusting for certain items as further detailed in the reconciliation below, adjusted EBITDA was $516.7 million for the current three-month period and $462.4 million for the comparable prior year period.
Year Ended December 31, 2013
For the year ended December 31, 2013, Mylan reported total revenues of $6.91 billion compared to $6.80 billion in the comparable prior year period, an increase of $113.0 million or 1.7%. The effect of foreign currency translation had an unfavorable impact of approximately 2% on total revenues primarily reflecting a stronger U.S. Dollar in comparison to the currencies of the other major markets that Mylan operates in, specifically in India, Japan and Australia. Translating total revenues for the current year at prior year comparative period exchange rates would have resulted in year-over-year growth of approximately $238 million, or 4%. The contribution from new product launches in the current period was approximately $285 million as compared to approximately $922 million in the comparable prior period, a decline of approximately 69%. The North American generics business accounted for the majority of the decline in new product revenues. Offsetting this decline in new product revenues was double digit revenue growth in the Specialty segment and double digit constant currency revenue growth in the Rest of World region of the Generics segment.
Third party net revenues from Mylan's Generics segment were $5.87 billion in the year ended December 31, 2013, compared to $5.91 billion in the comparable prior year period, representing a decrease of $40.0 million, or 1%. Foreign currency had an unfavorable impact on third party net revenues for the current year. When excluding the unfavorable effect of foreign currency translation, Generics third party net revenues for the current year would have increased by approximately $83 million, or 1% when compared to the prior year period.
Third party net revenues from North America were $3.01 billion for the year ended December 31, 2013, compared to $3.23 billion for the comparable prior year period, representing a decrease of $217.7 million, or 6.7%. The decrease in third party net revenues was due to a greater amount of revenue from new product launches in the prior year, which totaled $784 million and included the launches of Escitalopram, Valsartan and Hydrochlorothiazide Tablets, USP and Pioglitazone. Revenues from new product launches in the current year totaled $198 million, which is a decrease of approximately 75% from the prior year. The effect of foreign currency translation was insignificant within the Americas.
Third party net revenues from EMEA were $1.50 billion for the year ended December 31, 2013, compared to $1.36 billion for the comparable prior year period, representing an increase of $143.3 million, or 10.6%. Foreign currency translation had a favorable impact on sales for the year ended December 31, 2013, as translating current third party net revenues from EMEA at prior year comparative period exchange rates resulted in an increase in third party net revenues of approximately 8%. This increase was principally the result of double-digit increases in revenues in France and Italy as a result of new product revenue and favorable volumes. Partially offsetting these increases was unfavorable pricing in a number of European markets in which Mylan operates, as a result of government-imposed pricing reductions and competitive market conditions.
Third party net revenues from the Rest of World were $1.36 billion for the year ended December 31, 2013, compared to $1.33 billion for the comparable prior year period, an increase of $34.4 million, or 2.6%. Foreign currency translation had a negative impact on sales, principally reflecting the significant strengthening of the U.S. Dollar versus the Indian Rupee, Australian Dollar and Japanese Yen. Excluding the effect of foreign currency translation, calculated as described above, third party net revenues would have increased by approximately $190 million, or 14%. This increase is primarily driven by higher revenues from Mylan India, as a result of increased sales in the antiretroviral franchise, which manufactures products used in the treatment of HIV/AIDS and an increase in sales of active pharmaceutical ingredients. In addition, the increase was attributable to double digit constant currency growth in Japan as a result of increased volumes and new product introductions. Third party net revenues inAustralia declined due to government-imposed pricing reform.
For the year ended December 31, 2013, Mylan's Specialty segment reported third party net sales of $981.7 million, an increase of $146.3 million, or 17.6%, from the comparable prior year period of $835.4 million. The most significant contributor to Specialty segment revenues continues to be the EpiPen® Auto-Injector, sales of which increased as a result of favorable pricing and volume. The EpiPen® Auto-Injector is the number one epinephrine auto-injector. In addition, Perforomist® Inhalation Solution sales increased by double digits from the comparable prior year period as a result of favorable pricing.
Gross profit for the year ended December 31, 2013, was $3.04 billion and gross margins were 44%. For the year ended December 31, 2012, gross profit was $2.91 billion, and gross margins were 43%. Adjusted gross profit, as further defined below, for the year ended December 31, 2013 was $3.46 billion and adjusted gross margins were 50% as compared to adjusted gross profit of $3.37 billion and adjusted gross margins of 50% in the comparable prior year period. Adjusted gross margins were positively impacted in the current year as a result of the increase in sales of the EpiPen® Auto-Injector and margins on 2013 new product introductions. These increases were almost entirely offset by lower gross margins on existing projects principally due to unfavorable pricing in the Generics segment.
Earnings from operations were $1.14 billion for the year ended December 31, 2013, compared to $1.11 billion for the comparable prior year period. Adjusted earnings from operations, as further defined below, for the year ended December 31, 2013 were $1.71 billion as compared to adjusted earnings from operations of $1.69 billion in the comparable prior year period. This increase was driven by favorable gross margins, as discussed above. Partially offsetting higher gross margins was increased investment in R&D and higher SG&A. The increase in SG&A in the current year is principally due to growth in the Company resulting in an increase in certain payroll and related employee benefit costs. R&D increased primarily due to expenditures related to the development of Mylan's respiratory and biologics programs and up front development licensing payments.
Interest expense for the year ended December 31, 2013, totaled $313.3 million, compared to $308.7 million for the comparable prior year period. The increase in the current year is principally due to higher interest expense related to clean energy investments and non-cash accretion of contingent consideration liabilities. Adjusted interest expense, as further defined below, for the year ended December 31, 2013 was $243.0 million as compared to adjusted interest expense of $242.4 million in the comparable prior year period. Lower average borrowing rates, primarily due to retiring high-coupon senior notes served to offset the increase in interest expense from higher long-term debt related to current year acquisitions.
Other (expense) income, net, was expense of $74.9 million for the year ended December 31, 2013 compared to income of $3.4 million for the comparable prior year period. Other (expense) income, net for 2013 includes charges of approximately $63.9 million related to the redemption of the 2017 Senior Notes, comprised of the redemption premium and the write-off of deferred financing fees. In addition, the Company incurred charges of approximately $8.7 million related to the Senior Credit Agreement refinancing transaction for the write-off of deferred financing fees. Also included in other (expense) income, net, are losses from equity affiliates, foreign exchange gains and losses and interest and dividend income.
Net earnings attributable to Mylan Inc. decreased by $17.1 million, or 2.7%, to $623.7 million for the year ended December 31, 2013 as compared to $640.9 million for the prior year comparable period. Adjusted net earnings increased $53.2 million, or 4.9%, to $1.14 billion for the year ended December 31, 2013 as compared to adjusted net earnings of $1.09 billion for the prior year comparable period.
EBITDA, which is defined as net income (excluding the non-controlling interest and income from equity method investees) plus income taxes, interest expense, depreciation and amortization, was $1.61 billion for the year ended December 31, 2013 and $1.68 billion for the comparable prior year period. After adjusting for certain items as further detailed in the reconciliation below, adjusted EBITDA was $1.96 billion for the year ended December 31, 2013 and $1.89 billion for the comparable prior year period.
Cash Flow
Adjusted cash provided by operating activities was $1.2 billion for the year ended December 31, 2013, compared to $1.1 billion for the comparable prior year period. On a GAAP basis, cash provided by operating activities was $1.1 billion for the year ended December 31, 2013, compared to $949 million for the comparable prior year period. Capital expenditures were approximately $335 million in the current year as compared to approximately $305 million in 2012. The increase in capital expenditures as compared to 2012 is the result of expenditures to expand our global operating platform, including capital investments in our strategic growth drivers.
During 2013 and 2012, the Company completed share repurchase programs totaling approximately 28.5 million shares of common stock in 2013 and approximately 41.4 million shares of common stock in 2012. The aggregate costs of the share repurchase programs in each year was approximately $1.0 billion.
2014 Guidance Metrics
The Company provided the following financial guidance for 2014 on an adjusted basis, with the exception of total revenues, capital expenditures and average diluted shares outstanding, along with the significant exchange rates used in preparing the guidance, which are shown below:
(in millions, except EPS and %'s)
Total Revenue
$7,800 - $8,200
Gross Profit Margin*
51% - 53%
SG&A as % of Total Revenue*
18% - 20%
R&D as % of Total Revenue*
7% - 8%
EBITDA*
$2,200 - $2,400
Net Income*
$1,265 - $1,460
Diluted EPS*
$3.25 - $3.60
Operating Cash Flow*
$1,200 - $1,400
Capital Expenditures
$350 - $450
Tax Rate*
24% - 26%
Average Diluted Shares Outstanding
389 - 405
* Adjusted metrics
Key Exchange Rates Used for 2014 Guidance:
Australian Dollar ($ / AUD)
0.95
British Pound ($ / GBP)
1.61
Canadian Dollar (CAD / $)
1.04
Euro ($ / EUR)
1.36
Indian Rupee (INR / $)
56.00
Japanese Yen (JPY / $)
97.83
Non-GAAP Financial Measures
This press release includes the presentation and discussion of certain financial information that differs from what is reported under accounting principles generally accepted in the United States ("GAAP"). These non-GAAP financial measures, including, but not limited to, adjusted diluted EPS, adjusted cash provided by operating activities, adjusted gross profit, adjusted gross margins, adjusted earnings from operations, adjusted interest expense, adjusted net earnings, EBITDA and adjusted EBITDA, are presented in order to supplement investors' and other readers' understanding and assessment of the Company's financial performance. Management uses these measures internally for forecasting, budgeting and measuring its operating performance. In addition, primarily due to acquisitions, Mylan believes that an evaluation of its ongoing operations (and comparisons of its current operations with historical and future operations) would be difficult if the disclosure of its financial results were limited to financial measures prepared only in accordance with GAAP. In addition, the Company believes that including EBITDA and supplemental adjustments applied in presenting adjusted EBITDA pursuant to our credit agreement is appropriate to provide additional information to investors to demonstrate the Company's ability to comply with financial debt covenants (which are calculated using a measure similar to adjusted EBITDA) and assess the Company's ability to incur additional indebtedness. Set forth below, Mylan has provided reconciliations of such non-GAAP financial measures to the most closely applicable GAAP financial measure. Investors and other readers are encouraged to review the related GAAP financial measures and the reconciliations of the non-GAAP measures to their most comparable GAAP measures set forth below, and investors and other readers should consider non-GAAP measures only as supplements to, not as substitutes for or as a superior measures to, the measures of financial performance prepared in accordance with GAAP.
SOURCE Mylan Inc.