10-QPeriod: Q2 FY2016

PFIZER INC Quarterly Report for Q2 Ended Apr 3, 2016

Filed May 12, 2016For Securities:PFE

Summary

Pfizer Inc. reported strong revenue growth of 20% to $13.0 billion for the first quarter of 2016 compared to the prior year. This growth was driven by the inclusion of Hospira operations and continued strong performance from key innovative products like Ibrance and Eliquis, as well as Prevnar/Prevenar 13. The company also saw significant increases in operating income, largely due to these revenue drivers and improved operational efficiencies, although cost of sales saw a substantial increase, partly due to the Hospira acquisition. Financially, Pfizer demonstrated robust operating cash flow and maintained a strong balance sheet. The company repurchased $5 billion of its common stock in the quarter and declared a cash dividend, signaling a continued commitment to returning capital to shareholders. Despite some challenges like foreign exchange headwinds and increased restructuring costs, the company reaffirmed its full-year financial guidance, indicating confidence in its business outlook and strategic execution.

Financial Highlights

54 data points
Beta

Revenue

$13.01B

78.1% Gross Margin

Net Income

$3.04B

23.4% Net Margin

EPS (Diluted)

$0.49

Total Assets

$162.93B

Cash & Equivalents

$2.56B

Free Cash Flow

$1.51B

Financial Statements
Beta
Revenue$13.01B
Cost of Revenue$2.85B
Gross Profit$10.15B
SG&A Expenses$3.38B
Operating Income$3.04B
Interest Expense$306.00M
Net Income$3.04B
EPS (Basic)$0.49
EPS (Diluted)$0.49
Shares Outstanding (Basic)6.15B
Shares Outstanding (Diluted)6.22B

Key Highlights

  • 1Revenues increased by 20% to $13.0 billion, driven by the Hospira acquisition and strong performance of key innovative products.
  • 2Income from continuing operations before taxes grew by 16% to $3.6 billion.
  • 3Net income attributable to Pfizer Inc. rose by 27% to $3.0 billion.
  • 4Diluted earnings per share (EPS) increased by 29% to $0.49.
  • 5The company repurchased $5 billion of its common stock in the quarter.
  • 6Cash dividends paid per common share increased by 7% to $0.30.
  • 7The effective tax rate decreased to 15.0% from 22.9% in the prior year quarter.

Frequently Asked Questions

Pfizer reported a 20% increase in revenues, reaching $13.0 billion for the first quarter of 2016, compared to $10.9 billion in the same period of 2015. This growth was significantly boosted by the inclusion of Hospira's operations and strong sales from key innovative products such as Ibrance, Eliquis, and Prevnar/Prevenar 13.

The acquisition of Hospira, completed in September 2015, contributed $1.2 billion in revenues during the first quarter of 2016. It also led to an increase in cost of sales and selling, informational and administrative expenses, as well as amortization of intangible assets, reflecting the integration and fair value accounting for the acquired assets.

Pfizer reaffirmed its full-year financial guidance. Reported revenues were projected to be between $51.0 billion and $53.0 billion, and reported diluted EPS were expected to be in the range of $1.72 to $1.85. This guidance reflects strong operational performance and favorable foreign exchange movements.

Pfizer is involved in various legal proceedings, including patent litigation and product liability claims. While the company believes its defenses are substantial, litigation is inherently unpredictable. The company has accrued for probable and reasonably estimable losses but cannot estimate the range of reasonably possible losses in excess of amounts accrued for many of these matters.