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8-K - FORM 8-K - PHARMACEUTICAL PRODUCT DEVELOPMENT INCd8k.htm
EX-99.2 - BUSINESS SEGMENT PRESENTATION - PHARMACEUTICAL PRODUCT DEVELOPMENT INCdex992.htm
EX-99.3 - GAAP/NON-GAAP RECONCILIATION PRESENTATION - PHARMACEUTICAL PRODUCT DEVELOPMENT INCdex993.htm

 

EXHIBIT 99.1

 

      Contacts:   
      Dan Darazsdi   
      +1 910 558 7915   
      daniel.darazsdi@ppdi.com   
      Luke Heagle   
      +1 910 558 7585   
      luke.heagle@ppdi.com   

FOR IMMEDIATE RELEASE

PPD Reports Third Quarter 2010 Financial Results

Highlights:

 

 

Gross authorizations of $664 million

 

 

Net revenue growth of 7 percent over Q3 2009

 

 

Significant sequential operating margin expansion

 

 

Continued strong cash flow delivery

WILMINGTON, N.C. (October 26, 2010)—PPD, Inc. (Nasdaq: PPDI) today reported its financial and operating results for the third quarter ended September 30, 2010.

PPD recorded net revenue of $365.4 million for the third quarter of 2010, an increase of 7.3 percent over net revenue of $340.4 million for the third quarter of 2009. Third quarter 2010 operating income was $56.8 million, an increase of 10.1 percent compared to income from operations of $51.6 million for the same period in 2009. Diluted earnings per share for the third quarter of 2010 were $0.32, compared to $0.32 for the third quarter of 2009.

“We were pleased to deliver on our commitment to our shareholders during the third quarter,” said David Grange, chief executive officer of PPD. “Gross authorizations continued to be strong, and operating margin expanded significantly on a sequential basis due to improved performance in emerging markets and our focus on overall company spending. Our strong performance demonstrates our organizational focus and drive aimed at achieving our 2010 objectives and creating long-term value for our shareholders.”

As described in more detail below, beginning with the third quarter of 2010, PPD will report its financial and operating results in two segments: Clinical Development Services and Laboratory Services. These two business segments comprise what had previously been the company’s Development segment. A slide presentation related to these new business segments will be available on the Presentations and Events page in the Investors section of the PPD web site at www.ppdi.com.

Clinical Development Services

PPD’s Clinical Development Services segment includes global Phase II-IV clinical trial management services. Clinical Development Services segment net revenue for the third


quarter of 2010 was $260.3 million, compared to $250.0 million for the third quarter of 2009. Third quarter 2010 income from operations for this segment was $43.7 million, compared to $39.2 million for the third quarter of 2009.

Laboratory Services

PPD’s Laboratory Services segment includes Phase I clinic, cGMP, bioanalytical, central laboratory, vaccines and biologics, and BioDuro/discovery services. Laboratory Services segment net revenue for the third quarter of 2010 was $79.0 million, compared to $65.9 million for the third quarter of 2009. Third quarter 2010 income from operations for this segment was $13.2 million, compared to $12.8 million for the third quarter of 2009.

Other Financial Information

Gross authorizations for the third quarter of 2010 totaled $663.8 million. Backlog at September 30, 2010, was $3.4 billion. Contract cancellations and adjustments for the quarter were $220.9 million, including two large project cancellations that together totaled $92.8 million.

Cash flow from operations for the third quarter of 2010 was $47.9 million, benefiting from continued strong working capital management. At September 30, 2010, PPD had $613.0 million in cash and investments, after giving effect to the payment of the company’s third quarter dividend. The effective tax rate for continuing operations in the third quarter of 2010 was 28.5 percent.

“We continued to make great strides in positioning PPD for long-term growth, and we are pleased with our operational and sales execution during the third quarter,” said Fred Eshelman, executive chairman of PPD. “We believe the demand for PPD’s clinical development and laboratory services continues to be strong, and we will continue to focus on best-in-class quality and performance to create sustained shareholder value.”

PPD will conduct a live conference call and webcast tomorrow, October 27, 2010, at 9:00 a.m. ET to discuss its third quarter 2010 results. A Q&A session will follow. All interested parties can access the webcast through the Presentations & Events link in the Investors section of the PPD web site at www.ppdi.com. The webcast will be archived shortly after the call for on-demand replay. The conference call will be broadcast live over the internet, and the live call may be accessed via the following direct dial numbers:

 

Participant dial-in:    +1 877 644 0692 (U.S./Canada)
   +1 973 200 3387 (International)
Conference ID:    83838111

PPD is a leading global contract research organization, celebrating 25 years of providing drug discovery, development and lifecycle management services. Our clients and partners include pharmaceutical, biotechnology, medical device, academic and government organizations. With offices in 42 countries and more than 10,500 professionals worldwide, PPD applies innovative technologies, therapeutic expertise and a commitment to quality to help clients and partners accelerate the delivery of safe and effective therapeutics and maximize the returns on their R&D investments. For more information, visit www.ppdi.com.

Except for historical information, all of the statements, expectations and assumptions contained in this news release are forward-looking statements that involve a number of risks and


uncertainties. Although PPD attempts to be accurate in making these forward-looking statements, it is possible that future circumstances might differ from the assumptions on which such statements are based. In addition, other important factors which could cause actual results to differ materially include the following: success in sales growth; loss of or delay in large contracts; high cancellation rates; negative impact from accounting changes; competition within the outsourcing industry; reliance on economic conditions and outsourcing trends in the pharmaceutical, biotechnology and medical device industries and academic and government-sponsored research sectors; overall global economic conditions; rapid technological advances that make our products and services less competitive; risks associated with acquisitions and investments, such as integration and impairments; the ability to attract, integrate and retain key personnel; risks that we may not continue our dividend policy; and the other risk factors set forth from time to time in the SEC filings for PPD, copies of which are available free of charge upon request from the PPD investor relations department.


 

PPD, Inc.

Statement of Operations Data

(in thousands, except per share amounts)

(unaudited)

 

     Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
     2009     2010     2009      2010  

Net revenue:

         

Service revenue

   $ 316,283      $ 339,390      $ 987,140       $ 1,005,006   

Reimbursed revenue

     24,117        25,985        72,228         77,054   
                                 

Total net revenue

     340,400        365,375        1,059,368         1,082,060   

Direct costs

     174,597        189,979        545,803         564,948   

Research and development

     974        470        3,264         15,253   

Selling, general and administrative

     93,028        102,365        282,812         327,381   

Depreciation and amortization

     16,282        15,726        47,118         49,877   

Restructuring costs

     3,892        —          3,892         —     
                                 

Operating income

     51,627        56,835        176,479         124,601   

Loss from equity method investment

     —          (4,562     —           (8,351

Other income, net

     1,246        877        2,103         4,899   
                                 

Income from continuing operations before income taxes

     52,873        53,150        178,582         121,149   

Provision for income taxes

     12,773        15,148        51,897         41,303   
                                 

Income from continuing operations

     40,100        38,002        126,685         79,846   

Discontinued operations, net of taxes

     (2,426     —          13,618         (3,662
                                 

Net income

   $ 37,674      $ 38,002      $ 140,303       $ 76,184   
                                 

Basic and diluted income per share from continuing operations:

   $ 0.34      $ 0.32      $ 1.07       $ 0.67   
                                 

Income (loss) per share from discontinued operations:

         

Basic

   $ (0.02   $ —        $ 0.12       $ (0.03
                                 

Diluted

   $ (0.02   $ —        $ 0.11       $ (0.03
                                 

Net income per share:

         

Basic

   $ 0.32      $ 0.32      $ 1.19       $ 0.64   
                                 

Diluted

   $ 0.32      $ 0.32      $ 1.18       $ 0.64   
                                 

Dividends declared per common share

   $ 0.15      $ 0.15      $ 0.425       $ 0.45   
                                 

Weighted average number of shares outstanding:

         

Basic

     118,130        118,814        117,951         118,607   
                                 

Diluted

     118,577        119,805        118,721         119,571   
                                 


 

PPD, Inc.

Segment Information

(in thousands)

(unaudited)

 

     Three Months Ended
September 30,
     Nine Months Ended
September 30,
 
     2009     2010      2009      2010  

Net revenue:

          

Clinical Development Services

   $ 249,981      $ 260,345       $ 778,152       $ 765,075   

Laboratory Services

     65,860        79,045         203,222         231,921   
                                  

Subtotal (formerly Development segment)

     315,841        339,390         981,374         996,996   

Discovery Sciences

     442        —           5,766         8,010   

Reimbursed revenue

     24,117        25,985         72,228         77,054   
                                  

Total

   $ 340,400      $ 365,375       $ 1,059,368       $ 1,082,060   
                                  

Operating income (loss):

          

Clinical Development Services

   $ 39,202      $ 43,681       $ 130,941       $ 101,830   

Laboratory Services

     12,813        13,154         42,627         34,631   
                                  

Subtotal (formerly Development segment)

     52,015        56,835         173,568         136,461   

Discovery Sciences

     (388     —           2,911         (11,860
                                  

Total

   $ 51,627      $ 56,835       $ 176,479       $ 124,601   
                                  


 

PPD, Inc.

Balance Sheet Data

(in thousands)

(unaudited)

 

     December 31,
2009
     September 30,
2010
 

Cash, cash equivalents, short-term and long-term investments

   $ 642,106       $ 613,047   

Accounts receivable and unbilled services, net

     429,670         416,161   

Total assets

     2,030,203         1,905,467   

Unearned income

     297,844         291,686   

Shareholders’ equity

     1,346,127         1,240,563   

Additional information

(in thousands)

(unaudited)

Cash, cash equivalents, short-term and long-term investments categories

 

     December 31,
2009
     September 30,
2010
 

Cash and cash equivalents

   $ 408,903       $ 440,442   

Short-term investments

     144,645         89,988   

Long-term auction rate securities

     88,558         82,617   
                 
   $ 642,106       $ 613,047