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8-K - FORM 8-K - PAREXEL INTERNATIONAL CORP | b84641e8vk.htm |
Exhibit 99.1
FOR IMMEDIATE RELEASE
CONTACTS:
|
James Winschel, Senior Vice President and Chief Financial Officer | |
Jill Baker, Corporate Vice President, Investor Relations | ||
+1-781-434-4118 |
PAREXEL REPORTS SECOND QUARTER FISCAL YEAR 2011 FINANCIAL RESULTS
| Consolidated service revenue of $304.4 million grew 6.9% year-over-year | ||
| New business wins generated a net book-to-bill ratio of 1.30 | ||
| Backlog exceeds $3.0 billion, up 30.9% from one year ago |
Boston, MA, January 31, 2011 PAREXEL International Corporation (NASDAQ: PRXL) today announced
its financial results for the second quarter ended December 31, 2010.
For the three months ended December 31, 2010, PAREXELs consolidated service revenue increased by
6.9% to $304.4 million, compared with $284.7 million in the prior year period. Excluding the
negative impact from foreign exchange movements of $4.8 million, revenue increased 8.6%. As
reported under Generally Accepted Accounting Principles (GAAP), the Company generated operating
income of $28.2 million, or 9.3% of consolidated service revenue, in the second quarter of Fiscal
Year 2011, versus GAAP operating income of $18.7 million, or 6.6% of consolidated service revenue,
in the comparable quarter of the prior year. The financial results of the December quarter in the
current and prior periods each included special items, as detailed in the financial charts within
this press release. Excluding these items in the current period, operating income totaled $27.6
million, or 9.1% of consolidated service revenue. Excluding special items in the prior year
period, operating income totaled $26.9 million, or 9.5% of consolidated service revenue. On this
adjusted basis, operating income in the current quarter grew 2.7% year-over-year. GAAP net income
for the current quarter totaled $16.8 million, or $0.28 per diluted share, compared with GAAP net
income of $3.5 million, or $0.06 per diluted share, for the quarter ended December 31, 2009.
Adjusted net income in the current period (excluding special items) was $17.2 million, or $0.29 per
diluted share. Adjusted net income in the prior year quarter (excluding special items) was $15.1
million, or $0.26 per diluted share. Using adjusted numbers, net income in the current quarter grew
13.9%, and earnings per diluted share grew 11.5%.
On a segment basis, consolidated service revenue for the second quarter of Fiscal Year 2011 was
$231.4 million in Clinical Research Services (CRS), $32.0 million in PAREXEL Consulting and Medical
Communications Services (PCMS), and $41.0 million in Perceptive Informatics, Inc.
The Companys low current quarter tax rate benefited from a favorable mix of pre-tax profitability,
the extension of certain U.S. tax law provisions, and the ongoing benefit of the
Companys approach to transfer pricing. At the same time, the Company experienced higher than
anticipated foreign exchange losses on the Other Expense line, in part due to a short-term
disruption to cash flows caused by implementation of the Companys new billing system. The Company
substantially increased billing during the December quarter, reducing days sales outstanding
sequentially to 69 days, while increasing deferred revenue, and decreasing unbilled receivables.
For the six months ended December 31, 2010, consolidated service revenue was $600.2 million versus
$544.5 million in the prior year period, an increase of 10.2%. GAAP operating income for the
current six-month period was $58.2 million, or 9.7% of service revenue, compared with GAAP
operating income of $37.2 million, or 6.8% of service revenue in the prior year period. GAAP net
income for the six months ended December 31, 2010 was $34.6 million, or $0.58 per diluted share,
compared with GAAP net income of $15.9 million, or $0.27 per diluted share, in the prior year
period. Excluding the impact of certain items as detailed in the attached financial charts in both
six month periods, operating income was $57.2 million or 9.5% of consolidated service revenue for
the six months ended on December 31, 2010, compared with $45.4 million or 8.3% of consolidated
service revenue for the six months ended on December 31, 2009. On an adjusted basis, net income
for the six months ended December 31, 2010 was $34.7 million, or $0.58 per diluted share, compared
with $27.6 million or $0.47 per diluted share in the comparable prior year six month period.
Backlog at the end of December was approximately $3.0 billion, an increase of 30.9% year-over-year.
Backlog included gross new business wins in the quarter of $496.0 million, cancellations of $100.4
million (3.4% of beginning backlog), and a positive impact from foreign exchange rates of $3.7
million. The net book-to-bill ratio was 1.30 in the quarter.
Mr. Josef H. von Rickenbach, PAREXELs Chairman and Chief Executive Officer stated, During the
second quarter, PAREXEL delivered year-over-year revenue growth in all three business segments, and
earnings per share that were in line with our expectations. New business wins and moderate
cancellations culminated in record backlog of over $3 billion. We also experienced a notable
increase in proposals from small and emerging biopharma clients during the quarter.
PAREXELs global capabilities, expertise, and technology continue to enable us to win healthy new
business awards. At the same time, it has become apparent that the backlog conversion rates
inherent in global, complex, clinical development awards generated by strategic partnerships are
different from traditional awards. Our improved understanding of new business dynamics from these
partnerships has been reflected in our current forward-looking guidance.
As we enter Calendar Year 2011, we are confident in our strategy and that PAREXEL is positioned as
a leader in a changing marketplace. I believe that we have the foundation in place to achieve
long-term revenue and earnings growth, and that we will continue to create and deliver value to
clients and shareholders.
The Company issued forward-looking guidance for the third quarter of Fiscal Year 2011 (ending March
31, 2011), for Fiscal Year 2011 and for Calendar Year 2011 using recent exchange rates. For the
third quarter, the Company anticipates reporting consolidated service revenue in the range of $307
to $312 million, and diluted earnings per share in the range of $0.29 to $0.31. For
Fiscal Year 2011, consolidated service revenue is expected to be in the range of $1.22 to $1.24
billion (previously issued revenue guidance was $1.25 to $1.27 billion). GAAP earnings per diluted
share for Fiscal Year 2011 are projected to be in the range of $1.17 and $1.23 (previously issued
GAAP earnings per diluted share guidance was $1.23 to $1.31), and adjusted earnings per diluted
share (excluding the special items recorded in Q2 FY2011) are projected to be in the range of $1.18
and $1.24. For Calendar Year 2011, consolidated service revenue is expected to be in the range of
$1.260 to $1.295 billion, and GAAP earnings per diluted share are expected to be in the range of
$1.21 to $1.31.
Certain trended financial information may be found in the Investor Relations section of the
Companys website under the Additional Financials section.
In addition to the financial measures prepared in accordance with generally accepted accounting
principles (GAAP), the Company uses certain non-GAAP financial measures. The Company believes that
presenting the non-GAAP financial measures contained in this press release assists investors and
others in gaining a better understanding of its core operating results and future prospects,
especially when comparing such results to previous periods or forecasted guidance, because such
measures exclude items that are outside of the Companys normal operations and/or, in certain
cases, are difficult to forecast accurately for future periods. Management uses non-GAAP financial
measures, in addition to the measures prepared in accordance with GAAP, as the basis for measuring
the Companys core operating performance and comparing such performance to that of prior periods
and to the performance of its competitors for the same reasons stated above. Such measures are
also used by management in its financial and operating decision-making. Non-GAAP financial
measures are not meant to be considered superior to or a substitute for the Companys results of
operations prepared in accordance with GAAP.
A conference call to discuss PAREXELs second quarter earnings, business, and financial outlook
will begin at 10:00 a.m. ET on Tuesday, February 1, 2011 and will be broadcast live over the
internet via webcast. The webcast may be accessed in the Upcoming Events portion of the main
page of the Investor Relations section of the Companys website at www.parexel.com. Users should
follow the instructions provided to assure that the necessary audio applications are downloaded and
installed. A replay of this webcast will be archived on the website approximately two hours after
the call and will continue to be accessible for approximately one year following the live event.
To participate via telephone, dial +1 706-758-4950 and ask to join the PAREXEL quarterly conference
call.
About PAREXEL International
PAREXEL International Corporation is a leading global bio/pharmaceutical services organization,
providing a broad range of knowledge-based contract research, consulting, and medical
communications services to the worldwide pharmaceutical, biotechnology and medical device
industries. Committed to providing solutions that expedite time-to-market and peak-market
penetration, PAREXEL has developed significant expertise across the development and
commercialization continuum, from drug development and regulatory consulting to clinical
pharmacology, clinical trials management, medical education and reimbursement. Perceptive
Informatics, Inc., a subsidiary of PAREXEL, provides advanced technology solutions, including
medical imaging, to facilitate the clinical development process. Headquartered near Boston,
Massachusetts, PAREXEL operates in 71 locations throughout 52 countries around the world,
and has approximately 10,380 employees. For more information about PAREXEL International visit
www.PAREXEL.com.
PAREXEL is a registered trademark of PAREXEL International Corporation, and Perceptive Informatics
is a trademark of Perceptive Informatics, Inc. All other names or marks may be registered
trademarks or trademarks of PAREXEL International Corporation, Perceptive Informatics, Inc. or
their respective owners and are hereby acknowledged.
This release contains forward-looking statements regarding future results and events, including,
without limitation, statements regarding expected financial results, future growth and customer
demand. For this purpose, any statements contained herein that are not statements of historical
fact may be deemed forward-looking statements. Without limiting the foregoing, the words
believes, anticipates, plans, expects, intends, appears, estimates, projects,
will, would, could, targets, and similar expressions are also intended to identify
forward-looking statements. The forward-looking statements in this release involve a number of
risks and uncertainties. The Companys actual future results may differ significantly from the
results discussed in the forward-looking statements contained in this release. Important factors
that might cause such a difference include, but are not limited to, risks associated with: actual
operating performance; actual expense savings and other operating improvements resulting from
recent and anticipated restructurings, the loss, modification, or delay of contracts which would,
among other things, adversely impact the Companys recognition of revenue included in backlog; the
Companys dependence on certain industries and clients; the Companys ability to win new business,
manage growth and costs, and attract and retain employees; the Companys ability to complete
additional acquisitions and to integrate newly acquired businesses or enter into new lines of
business; the impact on the Companys business of government regulation of the drug, medical
device and biotechnology industry; consolidation within the pharmaceutical industry and competition
within the biopharmaceutical services industry; the potential for significant liability to clients
and third parties; the potential adverse impact of health care reform; and the effects of exchange
rate fluctuations and other international economic, political, and other risks. Such factors and
others are discussed more fully in the section entitled Risk Factors of the Companys Quarterly
Report on Form 10-Q for the quarter ended September 30, 2010 as filed with the SEC on November 9,
2010, which Risk Factors discussion is incorporated by reference in this press release. The
Company specifically disclaims any obligation to update these forward-looking statements in the
future. These forward-looking statements should not be relied upon as representing the Companys
estimates or views as of any date subsequent to the date of this press release.
PAREXEL International Corporation
Consolidated Condensed Statement of Operations
Unaudited
Consolidated Condensed Statement of Operations
Unaudited
Three Months Ended | Three Months Ended | |||||||||||||||||||||||
(in thousands, except per share data) | December 31, 2010 | December 31, 2009 | ||||||||||||||||||||||
As Reported | Adjustments | Non-GAAP | As Reported | Adjustments | Non-GAAP | |||||||||||||||||||
Service revenue |
$ | 304,359 | $ | 304,359 | $ | 284,731 | $ | 284,731 | ||||||||||||||||
Reimbursement revenue |
59,691 | 59,691 | 53,249 | 53,249 | ||||||||||||||||||||
Total revenue |
364,050 | | 364,050 | 337,980 | 337,980 | |||||||||||||||||||
Costs and expenses: |
||||||||||||||||||||||||
Direct costs |
196,475 | 196,475 | 181,276 | (a) | 181,276 | |||||||||||||||||||
Reimbursable out-of-pocket
expenses |
59,691 | 59,691 | 53,249 | 53,249 | ||||||||||||||||||||
Selling, general and
administrative |
64,196 | 64,196 | 61,459 | (a) | 61,459 | |||||||||||||||||||
Depreciation |
13,605 | 13,605 | 13,151 | (514 | )(b) | 12,637 | ||||||||||||||||||
Amortization |
2,451 | 2,451 | 2,447 | 2,447 | ||||||||||||||||||||
Other benefit |
| | (1,144 | ) | 1,144 | (c) | | |||||||||||||||||
Restructuring (benefit) charge |
(572 | ) | 572 | | 8,831 | (8,831 | )(d) | | ||||||||||||||||
Total costs and expenses |
335,846 | 572 | 336,418 | 319,269 | (8,201 | ) | 311,068 | |||||||||||||||||
Income from operations |
28,204 | (572 | ) | 27,632 | 18,711 | 8,201 | 26,912 | |||||||||||||||||
Other expense |
(8,473 | ) | 1,166 | (e) | (7,307 | ) | (9,944 | ) | 6,142 | (e) | (3,802 | ) | ||||||||||||
Income before income taxes |
19,731 | 594 | 20,325 | 8,767 | 14,343 | 23,110 | ||||||||||||||||||
Provision for income taxes |
2,899 | 199 | (f) | 3,098 | 5,317 | 2,667 | (f) | 7,984 | ||||||||||||||||
Effective tax rate |
14.7 | % | 15.2 | % | 60.6 | % | 34.5 | % | ||||||||||||||||
Net income |
$ | 16,832 | $ | 395 | $ | 17,227 | $ | 3,450 | $ | 11,676 | $ | 15,126 | ||||||||||||
Earnings per common share: |
||||||||||||||||||||||||
Basic |
$ | 0.29 | $ | 0.29 | $ | 0.06 | $ | 0.26 | ||||||||||||||||
Diluted |
$ | 0.28 | $ | 0.29 | $ | 0.06 | $ | 0.26 | ||||||||||||||||
Shares used in computing earnings per common share: |
||||||||||||||||||||||||
Basic |
58,516 | 58,516 | 57,933 | 57,933 | ||||||||||||||||||||
Diluted |
59,686 | 59,686 | 58,073 | 58,073 |
(a) | Prior year numbers have been reclassified to conform with the current year presentation. | |
(b) | Accelerated depreciation on abandoned facilities associated with the Q2 FY10 Restructuring Plan. | |
(c) | Release of certain reserves associated with a Q2 FY09 charge related to a client contract default. | |
(d) | Restructuring charges of $5.2 million related to facilities costs and $3.6 million related to compensation costs. | |
(e) | Impairment charges on an asset (FY11) and an investment (FY10). | |
(f) | Tax expense related to items above. |
Balance Sheet Information | Preliminary | |||||||||||
December 31, | June 30, | Dec. 31, | ||||||||||
2010 | 2010 | 2009 | ||||||||||
Billed accounts receivable, net |
$ | 311,377 | $ | 229,932 | $ | 250,378 | ||||||
Unbilled accounts receivable, net |
285,977 | 248,994 | 248,778 | |||||||||
Deferred revenue |
(285,576 | ) | (261,080 | ) | (287,930 | ) | ||||||
Net receivables |
$ | 311,778 | $ | 217,846 | $ | 211,226 | ||||||
Cash and marketable securities |
$ | 87,552 | $ | 107,413 | $ | 118,847 | ||||||
Working capital |
$ | 217,170 | $ | 158,624 | $ | 198,461 | ||||||
Total assets |
$ | 1,356,032 | $ | 1,220,710 | $ | 1,246,994 | ||||||
Short-term borrowings |
$ | 110,019 | $ | 32,082 | $ | 32,077 | ||||||
Long-term debt |
$ | 172,230 | $ | 183,707 | $ | 220,330 | ||||||
Stockholders equity |
$ | 516,714 | $ | 439,555 | $ | 441,229 |
PAREXEL International Corporation
Consolidated Condensed Statement of Operations
Unaudited
Consolidated Condensed Statement of Operations
Unaudited
Six Months Ended | Six Months Ended | |||||||||||||||||||||||
(in thousands, except per share data) | December 31, 2010 | December 31, 2009 | ||||||||||||||||||||||
As Reported | Adjustments | Non-GAAP | As Reported | Adjustments | Non-GAAP | |||||||||||||||||||
Service revenue |
$ | 600,179 | $ | 600,179 | $ | 544,494 | $ | 544,494 | ||||||||||||||||
Reimbursement revenue |
106,128 | 106,128 | 101,024 | 101,024 | ||||||||||||||||||||
Total revenue |
706,307 | | 706,307 | 645,518 | 645,518 | |||||||||||||||||||
Costs and expenses: |
||||||||||||||||||||||||
Direct costs |
383,457 | 383,457 | 352,264 | (a) | 352,264 | |||||||||||||||||||
Reimbursable out-of-pocket expenses |
106,128 | 106,128 | 101,024 | 101,024 | ||||||||||||||||||||
Selling, general and administrative |
127,716 | 127,716 | 117,653 | (a) | 117,653 | |||||||||||||||||||
Depreciation |
26,856 | 26,856 | 24,720 | (514 | )(b) | 24,206 | ||||||||||||||||||
Amortization |
4,908 | 4,908 | 4,983 | 4,983 | ||||||||||||||||||||
Other benefit |
| | (1,144 | ) | 1,144 | (c) | | |||||||||||||||||
Restructuring (benefit) charge |
(962 | ) | 962 | | 8,831 | (8,831 | )(d) | | ||||||||||||||||
Total costs and expenses |
648,103 | 962 | 649,065 | 608,331 | (8,201 | ) | 600,130 | |||||||||||||||||
Income from operations |
58,204 | (962 | ) | 57,242 | 37,187 | 8,201 | 45,388 | |||||||||||||||||
Other expense |
(15,788 | ) | 1,166 | (e) | (14,622 | ) | (10,724 | ) | 6,142 | (e) | (4,582 | ) | ||||||||||||
Income before income taxes |
42,416 | 204 | 42,620 | 26,463 | 14,343 | 40,806 | ||||||||||||||||||
Provision for income taxes |
7,793 | 89 | (f) | 7,882 | 10,572 | 2,667 | (f) | 13,239 | ||||||||||||||||
Effective tax rate |
18.4 | % | 18.5 | % | 40.0 | % | 32.4 | % | ||||||||||||||||
Net income |
$ | 34,623 | $ | 115 | $ | 34,738 | $ | 15,891 | $ | 11,676 | $ | 27,567 | ||||||||||||
Earnings per common share: |
||||||||||||||||||||||||
Basic |
$ | 0.59 | $ | 0.59 | $ | 0.27 | $ | 0.48 | ||||||||||||||||
Diluted |
$ | 0.58 | $ | 0.58 | $ | 0.27 | $ | 0.47 | ||||||||||||||||
Shares used in computing earnings
per common share: |
||||||||||||||||||||||||
Basic |
58,483 | 58,483 | 57,874 | 57,874 | ||||||||||||||||||||
Diluted |
59,673 | 59,673 | 58,104 | 58,104 |
(a) | Prior year numbers have been reclassified to conform with the current year presentation. | |
(b) | Accelerated depreciation on abandoned facilities associated with the Q2 FY10 Restructuring Plan. | |
(c) | Release of certain reserves associated with a Q2 FY09 charge related to a client contract default. | |
(d) | Restructuring charges of $5.2 million related to facilities costs and $3.6 million related to compensation costs. | |
(e) | Impairment charges on an asset (FY11) and an investment (FY10). | |
(f) | Tax expense related to items above. |
PAREXEL International Corporation
Segment Information
Unaudited
Segment Information
Unaudited
Three Months Ended | Three Months Ended | |||||||
(in thousands) | December 31, 2010 | December 31, 2009(a) | ||||||
Clinical Research Services (CRS) |
||||||||
Service revenue |
$ | 231,364 | $ | 221,570 | ||||
% of total service revenue |
76.0 | % | 77.8 | % | ||||
Gross profit |
$ | 76,856 | $ | 79,813 | ||||
Gross margin % of service revenue |
33.2 | % | 36.0 | % | ||||
PAREXEL Consulting & Medical
Communications |
||||||||
Services (PCMS) |
||||||||
Service revenue |
$ | 32,013 | $ | 29,731 | ||||
% of total service revenue |
10.5 | % | 10.4 | % | ||||
Gross profit |
$ | 12,864 | $ | 10,546 | ||||
Gross margin % of service revenue |
40.2 | % | 35.5 | % | ||||
Perceptive Informatics, Inc. (PII) |
||||||||
Service revenue |
$ | 40,982 | $ | 33,430 | ||||
% of total service revenue |
13.5 | % | 11.8 | % | ||||
Gross profit |
$ | 18,164 | $ | 13,096 | ||||
Gross margin % of service revenue |
44.3 | % | 39.2 | % | ||||
Total service revenue |
$ | 304,359 | $ | 284,731 | ||||
Total gross profit |
$ | 107,884 | $ | 103,455 | ||||
Gross margin % of service revenue |
35.4 | % | 36.3 | % | ||||
Revenue by Geography |
||||||||
The Americas |
$ | 127,194 | $ | 108,913 | ||||
Europe, Middle East & Africa |
136,201 | 142,459 | ||||||
Asia/Pacific |
40,964 | 33,359 | ||||||
Total service revenue |
$ | 304,359 | $ | 284,731 | ||||
Quarterly Supplemental
Financial Data |
||||||||
Total revenue |
$ | 364,050 | $ | 337,980 | ||||
Investigator fees |
50,003 | 50,672 | ||||||
Gross revenue |
$ | 414,053 | $ | 388,652 | ||||
Days sales outstanding |
69 | 50 | ||||||
Capital expenditures |
16,023 | 14,454 |
(a) | Prior year numbers have been reclassified to conform with the current year presentation. |
PAREXEL International Corporation
Segment Information
Unaudited
Segment Information
Unaudited
Six Months Ended | Six Months Ended | |||||||
(in thousands) | December 31, 2010 | December 31, 2009(a) | ||||||
Clinical Research Services (CRS) |
||||||||
Service revenue |
$ | 463,003 | $ | 423,894 | ||||
% of total service revenue |
77.1 | % | 77.9 | % | ||||
Gross profit |
$ | 160,174 | $ | 149,040 | ||||
Gross margin % of service revenue |
34.6 | % | 35.2 | % | ||||
PAREXEL Consulting & Medical
Communications
Services (PCMS) |
||||||||
Service revenue |
$ | 60,348 | $ | 58,552 | ||||
% of total service revenue |
10.1 | % | 10.8 | % | ||||
Gross profit |
$ | 23,977 | $ | 20,763 | ||||
Gross margin % of service revenue |
39.7 | % | 35.5 | % | ||||
Perceptive Informatics, Inc. (PII) |
||||||||
Service revenue |
$ | 76,828 | $ | 62,048 | ||||
% of total service revenue |
12.8 | % | 11.3 | % | ||||
Gross profit |
$ | 32,571 | $ | 22,427 | ||||
Gross margin % of service revenue |
42.4 | % | 36.1 | % | ||||
Total service revenue |
$ | 600,179 | $ | 544,494 | ||||
Total gross profit |
$ | 216,722 | $ | 192,230 | ||||
Gross margin % of service revenue |
36.1 | % | 35.3 | % | ||||
Revenue by Geography |
||||||||
The Americas |
$ | 260,085 | $ | 210,514 | ||||
Europe, Middle East & Africa |
261,730 | 271,999 | ||||||
Asia/Pacific |
78,364 | 61,981 | ||||||
Total service revenue |
$ | 600,179 | $ | 544,494 | ||||
(a) | Prior year numbers have been reclassified to conform with the current year presentation. |