Watson Pharmaceuticals (WPI)
Q2 2012 Earnings Call
July 26, 2012 8:30 am ET
Lisa M. Defrancesco - Former Vice President of Global Investor Relations
Paul M. Bisaro - Chief Executive Officer, President and Director
R. Todd Joyce - Chief Financial Officer -Global
George Frederick Wilkinson - President of Global Brands and Biosimilars
Sigurdur Oli Olafsson - President of Global Generics
Gregory B. Gilbert - BofA Merrill Lynch, Research Division
David Amsellem - Piper Jaffray Companies, Research Division
Marc Goodman - UBS Investment Bank, Research Division
David G. Buck - The Buckingham Research Group Incorporated
Timothy Chiang - CRT Capital Group LLC, Research Division
Christopher Schott - JP Morgan Chase & Co, Research Division
Jami Rubin - Goldman Sachs Group Inc., Research Division
Aaron Gal - Sanford C. Bernstein & Co., LLC., Research Division
Elliot Wilbur - Needham & Company, LLC, Research Division
Michael Faerm - Crédit Suisse AG, Research Division
Ken Cacciatore - Cowen and Company, LLC, Research Division
Gary Nachman - Susquehanna Financial Group, LLLP, Research Division
Michael Kallai Tong - Wells Fargo Securities, LLC, Research Division
David Risinger - Morgan Stanley, Research Division
Randall Stanicky - Canaccord Genuity, Research Division
Douglas D. Tsao - Barclays Capital, Research Division
Shibani Malhotra - RBC Capital Markets, LLC, Research Division
Previous Statements by WPI
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Good morning. My name is Cassandra, and I will be your conference operator today. At this time, I would like to welcome everyone to the Watson second quarter earnings call. [Operator Instructions]
And now, I would like to turn the call over to Lisa DeFrancesco, Vice President of Global Investor Relations.
Lisa M. Defrancesco
Thank you, Cassandra, and good morning, everyone. I'd like to welcome you to the Watson's Second Quarter 2012 Earnings Conference Call. Earlier this morning, Watson issued a press release reporting its earnings for the second quarter ended June 30, 2012. The press release will be available on our website at www.watson.com. Additionally, we are conducting a live webcast of this call, which will also be available on our website after its conclusion.
With us on today's call are Paul Bisaro, our President and CEO, who will provide an overview of the second quarter results; Todd Joyce, our Global Chief Financial Officer, who will then provide additional details on the performance of our business segments, as well as our consolidated financial results for the quarter. Paul will conclude our presentation with our updated outlook for 2012. We'll then open up the call for questions and answers.
Also on the call and available during the Q&A are Siggi Olafsson, President of Global Generics; Fred Wilkinson, President of Global Brands and Biosimilars; Bob Stewart, President of Global Operations; Al Paonessa, President our Anda Distribution Division; and David Buchen, our Global Chief Legal Officer.
Please note that today’s call is copyrighted material of Watson Pharmaceuticals, Inc. and cannot be rebroadcast without the company’s expressed written consent.
I’d also like to remind you that during the course of this call, management will make projections or other forward-looking remarks regarding future events or the future financial performance of the company. It's important to note that such statements about estimated or anticipated Watson results, prospects or other non-historical facts are forward-looking statements and reflect our current perspective of existing trends and information as of today’s date. Watson disclaims any intent or obligation to update these forward-looking statements, except as expressly required by law. Actual results may differ materially from current expectations and projections, depending on a number of factors affecting the Watson business. These factors are detailed in our periodic public filings with the Securities and Exchange Commission, including but not limited to, the Watson Form 10-K for the period ending December 31, 2011 and the Watson Form 10-Q for the period ending March 31, 2012.
With that, I'll turn the call over to Paul.
Paul M. Bisaro
Thank you, Lisa, and good morning, everyone, and thank you for joining us. We are pleased to report another quarter of solid revenue and double-digit earnings growth. Net revenues increased 25% to over $1.3 billion. Non-GAAP earnings were up 41% to $1.42 per share. Excluding the $0.21 per share contribution from our sales of generic LIPITOR, non-GAAP earnings per share were up 20% from last year. Adjusted EBITDA increased 37% to $330 million in the quarter. We also generated strong cash flow from operations during the quarter of approximately $200 million.
We had a number of highlights in each business segment. In our Global Generics business, we announced an agreement with Endo Pharmaceuticals to settle patent litigation related to Watson's generation version of Lidoderm. The agreement provides the date of certain launch of September 13 -- I'm sorry, September 15, 2013 pending FDA approval and eliminates any risk involving current, pending or future patent litigations surrounding the product.
We also launched 5 new products in the second quarter in the U.S., including generic VANCOCIN, and in third quarter, received approval for generic ARTHROTEC earlier than expected. We expect to launch this product in the fourth quarter.
Our International Generics business experienced the strongest quarter thus far, generating over $210 million in revenue as a result of the acquisitions of Ascent and Specifar and organic growth driven by new product launches in key markets.
In our Global Brands business, we launched Gelnique 3% and had continued strong sales of key promoted products, including RAPAFLO, Generess Fe and CRINONE.
The Phase III U.S. trial for Esmya is ongoing, and we expect the trial to be completed by late 2013. We also submitted the NDS for Esmya for the treatment of anemia associated with uterine fibroids in Canada.
We licensed Herceptin from Synthon and contributed the product our Amgen collaboration. This transaction demonstrates the flexibility of this partnership to make changes and to capitalize on opportunities to develop quality assets for introduction and market formation.