Q4 2008 Net Revenues - $30.1 million vs. $28.9 million in Q4 2007 - a 4.0% increase
Q4 2008 Diluted Net Income per Share - $0.11 vs. $0.10 in Q4 2007 - a 10.0% increase
Q4 2008 New Bookings of $45.1 million vs. $39.2 million in Q4 2007 - a 15.1% increase
2008 Net Revenues -- $133.1 million vs. $98.7 million in 2007 - a 34.9% increase
2008 Diluted Net Income per Share of $0.48 vs. $0.29 in 2007 - a 65.5% increase
2008 New Bookings of $187.2 million vs. $138.6 million in 2007 - a 35.1% increase.
PHILADELPHIA, Feb. 26 /PRNewswire-FirstCall/ -- eResearchTechnology, Inc. (ERT) (Nasdaq: ERES), a leading provider of centralized ECG, eClinical technology, ePRO and other services to the pharmaceutical, biotechnology, medical device, and related industries, announced today results for the fourth quarter of 2008 and the twelve-month period ended December 31, 2008. Unless otherwise noted, all growth numbers refer to changes from the same period a year ago.
Highlights of the fourth quarter and the year were:
Cash flow from operations for 2008 was $39.9 million, compared to $36.0 million in 2007. ERT ended the year with $66.4 million in cash, cash equivalents, and investments, up from $46.9 million at the end of 2007. The Company bought 439,749 shares of stock under its approved stock repurchase program in the fourth quarter at a total cost of $2.6 million.
"This quarter we began to feel the impact of the cautious and delayed decision-making that has marked our economy in general, and our industry in particular, in the past few months. This was most evident in our Thorough QT business, which accounted for the majority of the quarter's sequential revenue decline from the $33.9 million we reported in our September 2008 quarter," commented Dr. Michael McKelvey, President and CEO of ERT. "Despite this, we were very pleased that we could increase our gross margin to 57.3%. We were also pleased with the $45.1 million in new bookings and our gross book-to-bill ratio of 1.5, both up from the third quarter. As a whole, 2008 was very strong. We recorded record revenues, bookings and backlog. Our 2008 operating income margin of 28.8% was 630 basis points higher than our operating income margin for 2007, despite the costs that we incurred in the transfer of the acquired CCSS operations to our facility in Philadelphia. We grew net revenues by 34.9%, operating income by 72.6% (on top of the 86.0% increase in 2007), and backlog by 18.8%."
"In 2009 we anticipate lower revenues due mostly to delays in Thorough QT bookings and trial starts and also as a result of a higher proportion of our bookings being in longer-to-recognize Phase III studies," continued Dr. McKelvey. "Although the timing of when Thorough QT trials are performed is within the discretion of the sponsor, regulatory guidance ultimately requires that they be performed. Despite the challenges of the anticipated reduced revenues, our priorities are straightforward. First, we see opportunities to increase market share by continuing to win new and expanded exclusive or near-exclusive long-term enterprise contracts with large clients - including some with which we had very little business in the past. Second, we will focus on increasing the industry penetration of centralized ECGs by focusing on how centralization of ECGs can reduce our clients' costs as we believe the benefits of centralization of higher quality and more timely access are apparent. Third, we plan to continue to position ERT for the future by expanding our sales and marketing organization and our internal systems infrastructure. We believe that in difficult economic and financial times innovative market leaders can prosper and position themselves for increased growth in the future. Our strong, debt-free balance sheet, market leading position, enhanced reputation for project management quality and continued thought leadership in our industry position us well to take advantage of the current regulatory and development climate that seeks to enhance safety determination for new drugs."
The Company issued guidance for the first quarter and full year of 2009. This guidance reflects the anticipated delays in starts and awards of new Thorough QT studies, the cautious spending decisions of many of our clients, and a slight return to growth of the economy in the second half of 2009. ERT anticipates net revenues of between $21.0 million and $24.0 million and net income per diluted share of $0.01 to $0.04 for the quarter ending March 31, 2009. For the full year ending December 31, 2009, ERT anticipates net revenues of between $105 million and $125 million with earnings per diluted share of between $0.25 and $0.43.
Dr. McKelvey and Keith Schneck, the Company's Chief Financial Officer, will hold a conference call to discuss these results. The conference call will take place at 5:00 PM EST on February 26, 2009. For the conference call, interested participants should dial 1-866-730-5766 when calling within the United States or 1-857-350-1590 when calling internationally. Please use pass code 56911587. There will be a playback available as well. To listen to the playback, please call 1-888-286-8010 when calling within the United States or 1-617-801-6888 when calling internationally. Please use pass code 39831591 for the replay.
This call is being webcast by Thomson Financial and can be accessed at ERT's web site at www.ert.com. The webcast may also be accessed at Thomson's Institutional Investor website at http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=119164&eventID=2103084. The webcast can be accessed for up to one year on either site.
About eResearchTechnology, Inc.
Based in Philadelphia, PA, eResearchTechnology, Inc. (www.ert.com) is a provider of technology and services to the pharmaceutical, biotechnology and medical device industries on a global basis. The Company is a market leader in providing centralized core-diagnostic electrocardiographic (ECG) technology and services to evaluate cardiac safety in clinical development. The Company is also a leader in providing technology and services to streamline the clinical trials process by enabling its customers to automate the collection, analysis, and distribution of clinical data in all phases of clinical development.
This release may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect our current views as to future events and financial performance with respect to our operations. These statements can be identified by the fact that they do not relate strictly to historical or current facts. They use words such as "aim," "anticipate," "are confident," "estimate," "expect," "will be," "will continue," "will likely result," "project," "intend," "plan," "believe," "look to" and other words and terms of similar meaning in conjunction with a discussion of future operating or financial performance. Specifically, statements include, but are not limited to, our 2009 financial guidance.
These statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward-looking statements. Factors that might cause such a difference include: unfavorable economic conditions; our ability to obtain new contracts and accurately estimate net revenues due to uncertain regulatory guidance, variability in size, scope and duration of projects and internal issues at the sponsoring client; integration of acquisitions; competitive factors; technological development; and market demand. There is no guarantee that the amounts in our backlog will ever convert to revenue. Should the current economic conditions continue or deteriorate further, the cancellation rates that we have historically experienced could increase. Further information on potential factors that could affect the Company's financial results can be found in the Company's Reports on Form 10-K and 10-Q filed with the Securities and Exchange Commission. Guidance is based on management's good faith expectations given current market conditions but that continued or further deterioration of general economic conditions, in addition to other factors cited elsewhere, could result in the company not achieving the revenue and earnings per diluted share guidance provided.
Forward-looking statements speak only as of the date made. We undertake no obligation to update any forward-looking statements, including prior forward-looking statements, to reflect the events or circumstances arising after the date as of which they were made. As a result of these risks and uncertainties, readers are cautioned not to place undue reliance on any forward-looking statements included in this release or that may be made in our filings with the Securities and Exchange Commission or elsewhere from time to time by, or on behalf of, us.
eResearchTechnology, Inc. and Subsidiaries Consolidated Statements of Operations (in thousands, except per share amounts) Three Months Ended Year Ended December 31, December 31, 2007 2008 2007 2008 (unaudited) (unaudited) (unaudited) Net revenues: Licenses $687 $817 $2,700 $3,203 Services 21,565 21,748 69,547 99,258 Site support 6,657 7,500 26,451 30,679 Total net revenues 29 30 99 133 Costs of revenues: Cost of licenses 105 206 304 755 Cost of services 8,932 8,749 30,522 39,697 Cost of site support 4,665 3,880 17,808 18,445 Total costs of revenues 14 13 49 59 Gross margin 15 17 50 74 Operating expenses: Selling and marketing 3,143 3,014 11,222 13,273 General and administrative 3,343 4,453 12,258 18,181 Research and development 1,178 1,171 4,333 4,394 Total operating expenses 8 9 28 36 Operating income 8 9 22 38 Other income, net 503 808 2,206 1,730 Income before income taxes 8 9 24 40 Income tax provision 2,887 3,734 9,205 15,123 Net income $5 $6 $15 $25 Basic net income per share $0.10 $0.11 $0.30 $0.49 Diluted net income per share $0.10 $0.11 $0.29 $0.48 Shares used to calculate basic net income per share 50,618 51,251 50,476 50,870 Shares used to calculate diluted net income per share 51,929 51,804 51,743 52,015 eResearchTechnology, Inc. and Subsidiaries Consolidated Balance Sheets (in thousands, except share and per share amounts) December 31, 2007 December 31, 2008 ASSETS (unaudited) Current assets: Cash and cash equivalents $38,082 $66,376 Short-term investments 8,797 50 Accounts receivable, net 26,718 29,177 Prepaid income taxes 743 1,892 Prepaid expenses and other 3,087 2,885 Deferred income taxes 901 1,831 Total current assets 78,328 102,211 Property and equipment, net 33,347 29,639 Goodwill 30,908 34,603 Intangible assets 3,849 2,149 Deferred income taxes 1,011 - Other assets 253 520 Total assets $147,696 $169,122 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $3,505 $3,971 Accrued expenses 11,875 8,140 Income taxes payable 2,352 2,492 Current portion of capital lease obligations 1,097 43 Deferred revenues 13,905 12,276 Total current liabilities 32,734 26,922 Capital lease obligations, excluding current portion 48 - Deferred rent 228 2,183 Deferred income taxes - 1,332 Other liabilities 1,174 1,257 Total liabilities 34,184 31,694 Stockholders' equity: Preferred stock-$10.00 par value, 500,000 shares authorized, none issued and outstanding - - Common stock-$.01 par value, 175,000,000 shares authorized, 58,870,291 and 59,950,257 shares issued, respectively 589 600 Additional paid-in capital 87,957 93,828 Accumulated other comprehensive income 1,679 (2,716) Retained earnings 85,477 110,479 Treasury stock, 8,247,119 and 8,686,868 shares at cost, respectively (62,190) (64,763) Total stockholders' equity 113,512 137,428 Total liabilities and stockholders' equity $147,696 $169,122 eResearchTechnology, Inc. and Subsidiaries Consolidated Statements of Cash Flows (in thousands) Year Ended December 31, 2007 2008 (unaudited) Operating activities: Net income $15,252 $25,002 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 15,129 16,038 Cost of sales of equipment 1,143 743 Provision for uncollectible accounts 30 189 Share-based compensation 2,004 2,604 Deferred income taxes (521) 1,098 Changes in operating assets and liabilities excluding CCSS acquisition: Accounts receivable (4,192) (3,840) Prepaid expenses and other 352 41 Accounts payable (2,147) 175 Accrued expenses 2,928 (80) Income taxes 3,658 (1,290) Deferred revenues 2,487 (667) Deferred rent (122) (64) Net cash provided by operating activities 36,001 39,949 Investing activities: Purchases of property and equipment (11,073) (10,969) Purchases of investments (58,008) - Proceeds from sales of investments 91,555 8,747 Payments for acquisition (35,800) (6,042) Net cash used in investing activities (13,326) (8,264) Financing activities: Repayment of capital lease obligations (2,504) (1,102) Proceeds from exercise of stock options 1,655 2,369 Stock option income tax benefit 760 849 Repurchase of common stock for treasury - (2,573) Net cash used in financing activities (89) (457) Effect of exchange rate changes on cash (1) (2,934) Net increase in cash and cash equivalents 22,585 28,294 Cash and cash equivalents, beginning of period 15,497 38,082 Cash and cash equivalents, end of period $38,082 $66,376
|SOURCE eResearchTechnology, Inc.|
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