Business Wire - Fitch: Wyeth’s Increased Share Repurchase Program Supported within Current Rating
CHICAGO — Fitch Ratings does not expect Wyeth’s $5 billion share repurchase program to have a material impact on the company’s credit profile. Today, Wyeth announced that its Board of Directors approved an increase to the company’s prior share repurchase program which now authorizes Wyeth to repurchase up to $5 billion share of common stock, inclusive of $1.2 billion already repurchased in 2007. The share repurchase program has no time limit and may be suspended or discontinued at any period. Additionally, the Board approved a 7.7% increase to the dividend to $1.12 per share annually from $1.04 per share. The shareholder-friendly actions are offset by solid liquidity and strong operational performance.
Most Popular
3 Questions No Job Seeker Ever Wants To Be Asked?
10 Jobs That Pay $30 An Hour
Public Speaking: 7 Secrets Of Great Public Speakers
5 Regular Mistakes In Public Speaking
Five Questions for Michael Eisner
Wyeth maintains solid liquidity provided by its large cash and marketable securities balances, credit facilities and improving free cash flow generation. On June 30, 2007, the company had cash and short-term investments totaling $12.19 billion. Additionally, Wyeth entered into a new $3 billion 5-year credit facility on Aug. 2, 2007, which matures in August 2012. Free cash flow for the latest 12-month (LTM) period ending June 30, 2007 was $1.63 billion (cash flow from operations of $4.28 billion less capital spending of $1.26 billion and dividends of $1.39 billion) increasing from $605.8 million at the end of 2006. Fitch anticipates substantial improvement in free cash flow as the diet drug litigation payments wind down.
Wyeth’s rating reflects the company’s strong operational performance led by revenue growth of its human pharmaceutical business that exceeds the market average. Steady sales growth of the animal health and consumer health businesses provide a stable source of cash flow generation. Total revenue growth was 9.8% for the LTM period at the end of the second quarter of 2007 driven by above-industry sales growth of the human pharmaceutical business, which represents approximately 83% of total revenues. Successful commercialization of the late-stage R&D portfolio and a solid intellectual property position (excluding a possible near-term generic Protonix launch) offer assurance that strong revenue growth may be sustained into the long-term. Additionally, Wyeth’s EBITDA margin has consistently improved since 2004 and was 32% for the LTM period ending June 30, 2007. Restructuring actions, undertaken since 2005, may support further EBITDA margin expansion in the intermediate-term.
Leverage (total debt to EBITDA) increased to 1.7 times (x) for the LTM period ending June 30, 2007 from 1.5x at the end of 2006 in conjunction with an issuance of $2.5 billion of debt in the first quarter. Total debt rose to $11.61 billion at the end of the second quarter from $9.22 at the end of 2006. The company has a light long-term debt maturity schedule without a significant maturity until March of 2011 ($1.5 billion).
Fitch’s rating definitions and the terms of use of such ratings are available on the agency’s public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch’s code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the ‘Code of Conduct’ section of this site.
COPYRIGHT 2007 Business Wire
COPYRIGHT 2008 Gale, Cengage Learning
