2008-08-06 15:03:00
PAREXEL Reports Fourth Quarter and Fiscal Year 2008 Financial Results
- Record quarterly and Fiscal Year service revenue grows approximately 33%
and 30%, respectively
- Operating margin of 9.9% for the quarter
- Record backlog of over $2 billion; net book-to-burn ratio of 1.56 for the
quarter
BOSTON, Aug. 6 /EMWNews/ -- PAREXEL International
Corporation (Nasdaq: PRXL) today announced its financial results for the
fourth quarter and Fiscal Year ended June 30, 2008.
For the three months ended June 30, 2008, PAREXEL's consolidated
service revenue increased 32.6% to a record $272.2 million compared with
$205.2 million in the prior year period. The Company reported operating
income of $26.9 million, or 9.9% of consolidated service revenue, in the
fourth quarter of Fiscal Year 2008, versus operating income of $16.9
million, or 8.2% of consolidated service revenue, in the comparable quarter
of the prior year. Including the positive net impact from certain tax
items, net income for the quarter totaled $25.0 million, or $0.43 per
diluted share, compared with net income of $10.4 million, or $0.18 per
diluted share, for the quarter ended June 30, 2007.
On an adjusted basis, excluding the favorable impact of $8.7 million in
net tax adjustments related, in part, to the reversal of certain U.S. tax
valuation reserves, fourth quarter Fiscal Year 2008 net income would have
been $16.3 million (up 56.5% from the quarter ended June 30, 2007) and
diluted earnings per share would have been $0.28 (up 55.6% from the quarter
ended June 30, 2007).
On a segment basis, consolidated service revenue for the fourth quarter
of Fiscal Year 2008 was $212.0 million in Clinical Research Services (CRS),
$33.3 million in PAREXEL Consulting and Medical Communications Services
(PCMS), and $26.9 million in Perceptive Informatics, Inc.
For the full fiscal year ended June 30, 2008, consolidated service
revenue was $964.3 million versus $742.0 million in the prior year, a
year-over-year increase of 30.0%. For Fiscal Year 2008, operating income
was $86.7 million, or 9.0% of consolidated service revenue, compared with
operating income of $57.6 million in Fiscal Year 2007, or 7.8% of
consolidated service revenue. Net income for Fiscal Year 2008 was $64.6
million, or $1.12 per diluted share, compared with net income of $37.3
million, or $0.66 per diluted share, in Fiscal Year 2007.
On an adjusted basis, excluding a Q1 Fiscal Year 2008 non-U.S. net tax
benefit of $4.0 million, related in part to a reduction in German tax
rates; a Q3 Fiscal Year 2008 favorable pre-tax restructuring benefit of
$860,000; and the Q4 Fiscal Year 2008 net tax adjustments described above
of $8.7 million, operating income for the full Fiscal Year would have been
$85.8 million, or 8.9% of consolidated service revenue (up 49.1% compared
to the prior year), pretax income would have been $84.7 million, income
taxes would have been $32.4 million (or 38.3% of pretax income), net income
would have been $51.4 million (up 37.8% from one year ago), and diluted
earnings per share would have been $0.89 (up 34.8% from the prior year).
The Company has posted a spreadsheet of quarterly and full Fiscal Year 2008
results detailing these adjustments in the "Additional Financials" portion
of the Investor Relations section at http://www.PAREXEL.com.
On a segment basis, consolidated service revenue for Fiscal Year 2008
was $745.7 million in CRS, $129.8 million in PCMS, and $88.8 million in
Perceptive Informatics, Inc.
New business wins and backlog growth were strong in the fourth quarter.
The Company reported a Fiscal Year 2008 ending backlog of $2.059 billion,
an increase of 36.6% over the ending backlog reported for Fiscal Year 2007.
Backlog at the beginning of the fourth quarter was $1.907 billion. Adding
the June quarter's record gross new business wins of $545.0 million to that
amount, and then subtracting $272.2 million in current quarter service
revenue and $120.7 million in cancellations, resulted in a backlog of
$2.059 billion as of June 30, 2008. The foreign exchange impact on backlog
was insignificant in the quarter. The net book-to-burn ratio was 1.56 for
the quarter, and was 1.57 for Fiscal Year 2008.
Mr. Josef H. von Rickenbach, PAREXEL's Chairman and Chief Executive
Officer stated, "The fourth quarter's financial results capped a strong
fiscal year for PAREXEL. We posted record service revenue in the fourth
quarter, and achieved full year service revenue growth of 30.0%, or
approximately 19% on a same-store constant currency adjusted basis. All
business segments contributed to the positive full-year results. We also
delivered on our commitment to improve profitability, increasing operating
margin to 9.9% in the quarter, and by 120 basis points to 9% for the full
fiscal year, while concurrently making strategic investments to help meet
our longer term goals. Notable improvements in the Perceptive Informatics
and Medical Communications businesses, as well as significant leveraging of
SG&A as a result of very strong service revenue growth in CRS, were the
primary contributors to solid operating margin expansion during the Fiscal
Year."
Mr. von Rickenbach continued, "We have clearly benefited from the
successful execution of our strategy to become a leading global provider of
complex clinical development services and technologies. Demand has been
driven by both large and small clients, an improving industry pipeline in
late stage development, and an increase in outsourcing penetration rates.
We move into the new fiscal year with good momentum, a strong and
diversified backlog, and a healthy business development pipeline. Our
priorities for Fiscal Year 2009 include solid revenue growth, as well as
improved operating profitability and increased earnings per share. We
expect to achieve these objectives while also making investments in our
businesses in an effort to continuously improve the products and services
that we offer to our clients, positioning us for sustained growth."
The Company issued forward-looking guidance for the first quarter of
Fiscal Year 2009 (ending September 30, 2008), and updated guidance for
Fiscal Year 2009, using recent exchange rates. Without taking into account
the impact from the anticipated acquisition of ClinPhone (as announced on
June 13, 2008), the Company expects to report consolidated service revenue
for the first quarter in the range of $260 to $270 million, and earnings
per diluted share in the range of $0.23 to $0.25. For Fiscal Year 2009,
consolidated service revenue is expected to be in the range of $1.125 to
$1.155 billion and earnings per diluted share are projected to be in the
range of $1.15 to $1.25 (versus previously issued revenue guidance for
Fiscal Year 2009 of $1.110 to $1.140 billion, and earnings per diluted
share of $1.10 to $1.20).
The Company currently anticipates that the acquisition of ClinPhone
will be completed in the course of the first quarter of Fiscal Year 2009.
When taking into account the impact from the anticipated acquisition, the
Company expects that there will be a dilutive impact to earnings per share
in Fiscal Year 2009 in the range of $0.04 to $0.06, including the
amortization of intangibles and other costs. Upon closing of the
transaction, PAREXEL will also be taking a one-time charge to write off
costs associated with unamortized loan fees in connection with its existing
line of credit and costs related to unwinding of interest rate hedges. The
Company anticipates these costs will have a dilutive impact to earnings per
share in Fiscal Year 2009 of approximately $0.02. Due to U.K. regulations,
the Company cannot provide more specific revenue or earnings per share
guidance at this time. The Company expects to update guidance in more
detail after the completion of the transaction.
In addition to the financial measures prepared in accordance with
generally accepted accounting principles (GAAP), the Company uses certain
non-GAAP financial measures, including operating income, pretax income,
income taxes, net income, and diluted earnings per share. The Company
believes that presenting the non-GAAP financial measures contained in the
financial tables and 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 they exclude items that are outside of the
Company's 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 GAAP information, as the basis for measuring
the Company's 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 Company's
results of operations prepared in accordance with GAAP. A reconciliation of
GAAP results with non-GAAP financial measures may be found in the attached
financial tables.
A conference call to discuss PAREXEL's fourth quarter and year-end
earnings, business, and financial outlook will begin at 10:00 a.m. EDT
Thursday, August 7, 2008 and will be broadcast live over the internet via
webcast. The webcast may be accessed in the "Webcasts" portion of the
Investor Relations section of the Company's website at
http://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 (612)
332-0228 and ask to join the PAREXEL quarterly conference call.
About the Company
PAREXEL International Corporation is a leading global
bio/pharmaceutical services organization, providing a broad range of
knowledge-based contract research, medical communications and consulting
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 63 locations throughout 52 countries around the world, and has
over 8,050 employees. For more information about PAREXEL International
visit http://www.PAREXEL.com.
This release contains "forward-looking" statements regarding future
results and events, including, without limitation, statements regarding
expected financial results, future growth and customer demand, such as the
guidance provided by the Company with respect to the first quarter of
Fiscal Year 2009 and Fiscal Year 2009. 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," "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
Company's 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
restructurings; the loss, modification, or delay of contracts which would,
among other things, adversely impact the Company's recognition of revenue
included in backlog; the Company's dependence on certain industries and
clients; the Company's ability to win new business, manage growth and
costs, and attract and retain employees; the Company's ability to complete
additional acquisitions and to integrate newly acquired businesses or enter
into new lines of business, including, but not limited to, the successful
completion, business integration and anticipated synergy achievements in
connection with the ClinPhone acquisition; the impact on the Company's
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 Company's Quarterly Report on Form 10-Q for
the period ended March 31, 2008 as filed with the SEC on May 9, 2008, which
"Risk Factors" discussion is incorporated by reference in this press
release. The forward-looking statements included in this press release
represent the Company's estimates as of the date of this 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 Company's estimates or views
as of any date subsequent to the date of this press release.
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
their respective business and are hereby acknowledged.
PAREXEL International Corporation
Consolidated Condensed Statement of Income
(In thousands, except per share data)
Unaudited
Three Months Ended
June 30, 2008 June 30, 2007
As As
Reported Adjustments Adjusted Reported(a)
Service revenue $272,169 $272,169 $205,209
Reimbursement revenue 59,758 59,758 48,773
Total revenue 331,927 331,927 253,982
Costs and expenses:
Direct costs 175,083 175,083 131,481
Reimbursable out-of-
pocket expenses 59,758 59,758 48,773
Selling, general and
administrative 60,027 60,027 48,256
Depreciation 8,955 8,955 7,093
Amortization 1,169 1,169 1,436
Restructuring benefit - - 40
Total costs and expenses 304,992 304,992 237,079
Income from operations 26,935 26,935 16,903
Other income (expense) (726) (726) 370
Income before income taxes 26,209 26,209 17,273
Provision for income taxes 877 8,706 (b) 9,583 6,908
Effective tax rate 3.3% 36.6% 40.0%
Minority interest expense
(benefit) 294 294 (70)
Net income $25,038 $(8,706) $16,332 $10,435
Earnings per common share:
Basic $0.44 $0.29 $0.19
Diluted $0.43 $0.28 $0.18
Shares used in computing
earnings per common share:
Basic 56,602 56,602 55,081
Diluted 57,711 57,711 56,851
Balance Sheet Information Preliminary
June 30, March 31, June 30,
2008 2008 2007
Billed accounts receivable, net $253,256 $216,060 $189,843
Unbilled accounts receivable, net 222,560 197,627 135,178
Deferred revenue (213,126) (199,121) (170,718)
Net receivables $262,690 $214,566 $154,303
Cash and marketable securities $51,918 $53,313 $96,677
Working capital $172,315 $165,437 $118,746
Total assets $941,757 $859,638 $680,013
Short-term borrowings $31,474 $13,656 $30,463
Long-term debt $38,465 $38,443 $277
Stockholders' equity $428,091 $397,266 $316,616
(a) Fiscal Year 2007 numbers have been adjusted to reflect Fiscal Year
2008 presentation. Certain direct costs have been moved to selling,
general and administrative to ensure consistency among all business
segments.
(b) Represents an $11.1 million reversal of certain U.S. tax valuation
reserves, which were offset by $2.4 million in adjustments to the
Netherlands tax reserves.
PAREXEL International Corporation
Consolidated Condensed Statement of Income
(In thousands, except per share data)
Unaudited
Twelve Months Ended
June 30, 2008 June 30, 2007
As As
Reported Adjustments Adjusted Reported(a)
Service revenue $964,283 $964,283 $741,955
Reimbursement revenue 198,687 198,687 176,149
Total revenue 1,162,970 1,162,970 918,104
Costs and expenses:
Direct costs 629,399 629,399 483,887
Reimbursable out-of-
pocket expenses 198,687 198,687 176,149
Selling, general and
administrative 211,392 211,392 169,681
Depreciation 33,005 33,005 26,546
Amortization 4,681 4,681 4,309
Restructuring benefit (860) 860 (b) - (34)
Total costs and expenses 1,076,304 860 1,077,164 860,538
Income from operations 86,666 (860) 85,806 57,566
Other income (expense) (1,129) (1,129) 1,968
Income before income taxes 85,537 (860) 84,677 59,534
Provision for income taxes 20,026 12,383 ( c ) 32,409 22,277
Effective tax rate 23.4% 38.3% 37.4%
Minority interest expense
(benefit) 871 871 (32)
Net income $64,640 $(13,243) $51,397 $37,289
Earnings per common share:
Basic $1.16 $0.92 $0.68
Diluted $1.12 $0.89 $0.66
Shares used in computing
earnings per common share:
Basic 55,896 55,896 54,633
Diluted 57,461 57,461 56,216
(a) Fiscal Year 2007 numbers have been adjusted to reflect Fiscal Year
2008 presentation. Certain direct costs have been moved to selling,
general and administrative to ensure consistency among all business
segments.
(b) Represents a change in assumptions in restructuring reserves mainly
related to facilities in the U.K.
( c ) Represents a non-U.S. net tax benefit of $4 million, related in part
to a reduction in German tax rates, and an $11.1 million reversal of
certain U.S. tax valuation reserves, which were offset by $2.4
million in adjustments to the Netherlands tax reserves, and a $0.3
million tax adjustment related to the restructuring benefit.
PAREXEL International Corporation
Segment Information
($ in thousands)
Three months ended
June 30,
2008 2007 (a)
Clinical Research Services (CRS)
Service revenue $212,035 $152,677
% of total service revenue 77.9% 74.4%
Gross profit $71,530 $54,642
Gross margin % of service revenue 33.7% 35.8%
PAREXEL Consulting & Medical Communications
Services (PCMS)
Service revenue $33,263 $33,310
% of total service revenue 12.2% 16.2%
Gross profit $11,823 $10,534
Gross margin % of service revenue 35.5% 31.6%
Perceptive Informatics, Inc. (PII)
Service revenue $26,871 $19,222
% of total service revenue 9.9% 9.4%
Gross profit $13,733 $8,552
Gross margin % of service revenue 51.1% 44.5%
Total service revenue $272,169 $205,209
Total gross profit $97,086 $73,728
Gross margin % of service revenue 35.7% 35.9%
Revenue by Geography
The Americas $105,198 $78,350
Europe, Middle East & Africa 145,453 114,148
Asia/Pacific 21,518 12,711
Total service revenue $272,169 $205,209
Quarterly Supplemental Financial Data
Total revenue $331,927 $253,982
Investigator fees 48,180 32,689
Gross revenue $380,107 $286,671
DSO 63 49
Capital expenditures $21,955 $14,014
(a) Fiscal Year 2007 numbers have been adjusted to reflect Fiscal Year
2008 presentation. Certain direct costs have been moved to selling,
general and administrative to ensure consistency among all business
segments.
PAREXEL International Corporation
Segment Information
($ in thousands)
Twelve months ended
June 30,
2008 2007 (a)
Clinical Research Services (CRS)
Service revenue $745,641 $548,838
% of total service revenue 77.3% 74.0%
Gross profit $251,762 $190,283
Gross margin % of service revenue 33.8% 34.7%
PAREXEL Consulting & Medical Communications
Services (PCMS)
Service revenue $129,804 $120,636
% of total service revenue 13.5% 16.3%
Gross profit $43,874 $36,161
Gross margin % of service revenue 33.8% 30.0%
Perceptive Informatics, Inc. (PII)
Service revenue $88,838 $72,481
% of total service revenue 9.2% 9.8%
Gross profit $39,248 $31,624
Gross margin % of service revenue 44.2% 43.6%
Total service revenue $964,283 $741,955
Total gross profit $334,884 $258,068
Gross margin % of service revenue 34.7% 34.8%
Revenue by Geography
The Americas $377,857 $290,651
Europe, Middle East & Africa 515,445 411,483
Asia/Pacific 70,981 39,821
Total service revenue $964,283 $741,955
(a) Fiscal Year 2007 numbers have been adjusted to reflect Fiscal Year
2008 presentation. Certain direct costs have been moved to selling,
general and administrative to ensure consistency among all business
segments.
CONTACTS: James Winschel, Senior Vice President and Chief Financial
Officer
Jill Baker, Vice President of Investor Relations
+1-781-434-4118
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