PAREXEL INTERNATIONAL CORPORATION 
By BOSTON, Jan. 31, 2011 /PRNewswire/ -- 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, PAREXEL's 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 Company's 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 Company's 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 Company's 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, PAREXEL's 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."
"PAREXEL's 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 Company's 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 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 measures prepared in accordance with GAAP, 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 conference call to discuss PAREXEL's 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 Company's 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 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 and anticipated 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; 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 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 Company's estimates or views as of any date subsequent to the date of this press release.
James Winschel, Senior Vice President and Chief Financial
CONTACTS: Officer
Jill Baker, Corporate Vice President, Investor Relations
+1-781-434-4118
PAREXEL International Corporation
Consolidated Condensed Statement of Operations
Unaudited
Three Months Ended
(in thousands, except per
share data) December 31, 2010
-----------------
As
Reported Adjustments Non-GAAP
--------- ----------- --------
Service revenue $304,359 $304,359
Reimbursement revenue 59,691 59,691
------ ------
Total revenue 364,050 - 364,050
Costs and expenses:
Direct costs 196,475 196,475
Reimbursable out-of-pocket
expenses 59,691 59,691
Selling, general and
administrative 64,196 64,196
Depreciation 13,605 13,605
Amortization 2,451 2,451
Other benefit - -
Restructuring (benefit)
charge (572) 572 -
Total costs and expenses 335,846 572 336,418
Income from operations 28,204 (572) 27,632
Other expense (8,473) 1,166 (e) (7,307)
------ ----- ------
Income before income taxes 19,731 594 20,325
Provision for income taxes 2,899 199 (f) 3,098
Effective tax rate 14.7% 15.2%
Net income $16,832 $395 $17,227
======= ==== =======
Earnings per common share:
--------------------------
Basic $0.29 $0.29
Diluted $0.28 $0.29
Shares used in computing
earnings per common share:
---------------------------
Basic 58,516 58,516
Diluted 59,686 59,686
Three Months Ended
(in thousands, except per
share data) December 31, 2009
-----------------
As
Reported Adjustments Non-GAAP
--------- ----------- --------
Service revenue $284,731 $284,731
Reimbursement revenue 53,249 53,249
------ ------
Total revenue 337,980 337,980
Costs and expenses:
Direct costs 181,276 (a) 181,276
Reimbursable out-of-pocket
expenses 53,249 53,249
Selling, general and
administrative 61,459 (a) 61,459
Depreciation 13,151 (514) (b) 12,637
Amortization 2,447 2,447
Other benefit (1,144) 1,144 (c) -
Restructuring (benefit)
charge 8,831 (8,831) (d) -
Total costs and expenses 319,269 (8,201) 311,068
Income from operations 18,711 8,201 26,912
Other expense (9,944) 6,142 (e) (3,802)
------ ----- ------
Income before income taxes 8,767 14,343 23,110
Provision for income taxes 5,317 2,667 (f) 7,984
Effective tax rate 60.6% 34.5%
Net income $3,450 $11,676 $15,126
====== ======= =======
Earnings per common share:
--------------------------
Basic $0.06 $0.26
Diluted $0.06 $0.26
Shares used in computing
earnings per common share:
---------------------------
Basic 57,933 57,933
Diluted 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
Six Months Ended
(in thousands, except
per share data) December 31, 2010
-----------------
As Non-
Reported Adjustments GAAP
--------- ----------- -----
Service revenue $600,179 $600,179
Reimbursement revenue 106,128 106,128
------- -------
Total revenue 706,307 - 706,307
Costs and expenses:
Direct costs 383,457 383,457
Reimbursable out-of-
pocket expenses 106,128 106,128
Selling, general and
administrative 127,716 127,716
Depreciation 26,856 26,856
Amortization 4,908 4,908
Other benefit - -
Restructuring (benefit)
charge (962) 962 -
Total costs and expenses 648,103 962 649,065
Income from operations 58,204 (962) 57,242
Other expense (15,788) 1,166 (e) (14,622)
------- ----- -------
Income before income
taxes 42,416 204 42,620
Provision for income
taxes 7,793 89 (f) 7,882
Effective tax rate 18.4% 18.5%
Net income $34,623 $115 $34,738
======= ==== =======
Earnings per common
share:
-------------------
Basic $0.59 $0.59
Diluted $0.58 $0.58
Shares used in computing
earnings per common
share:
------------------------
Basic 58,483 58,483
Diluted 59,673 59,673
Six Months Ended
(in thousands, except
per share data) December 31, 2009
-----------------
As Non-
Reported Adjustments GAAP
--------- ----------- -----
Service revenue $544,494 $544,494
Reimbursement revenue 101,024 101,024
------- -------
Total revenue 645,518 645,518
Costs and expenses:
Direct costs 352,264 (a) 352,264
Reimbursable out-of-
pocket expenses 101,024 101,024
Selling, general and
administrative 117,653 (a) 117,653
Depreciation 24,720 (514) (b) 24,206
Amortization 4,983 4,983
Other benefit (1,144) 1,144 (c) -
Restructuring
(benefit) charge 8,831 (8,831) (d) -
Total costs and
expenses 608,331 (8,201) 600,130
Income from operations 37,187 8,201 45,388
Other expense (10,724) 6,142 (e) (4,582)
------- ----- ------
Income before income
taxes 26,463 14,343 40,806
Provision for income
taxes 10,572 2,667 (f) 13,239
Effective tax rate 40.0% 32.4%
Net income $15,891 $11,676 $27,567
======= ======= =======
Earnings per common
share:
-------------------
Basic $0.27 $0.48
Diluted $0.27 $0.47
Shares used in
computing earnings
per common share:
-------------------
Basic 57,874 57,874
Diluted 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
Three Months Three Months
Ended Ended
December 31, December 31,
(in thousands) 2010 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
Six Months Six Months
Ended Ended
December 31, December 31,
(in thousands) 2010 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.
SOURCE PAREXEL International Corporation
