Third Quarter Highlights - Gross new authorizations of $570.6 million, a sequential increase of 20.6
percent, resulting in a net book-to-bill ratio of 1.4 - Cash flow from operations of $61.6 million, resulting in $146.3 million
cash flow from operations year-to-date
- EPS of $0.32 within guidance range
WILMINGTON, N.C., Oct. 23 /PRNewswire-FirstCall/ -- PPD, Inc. (Nasdaq: PPDI) today reported its financial and operating results for the third quarter ended September 30, 2007.
PPD recorded net revenue of $357.2 million for the third quarter of 2007, an increase of 14.1 percent over net revenue of $313.1 million for the third quarter of 2006. Net revenue for the third quarter 2007 included reimbursed out-of-pocket expenses of $28.7 million, compared to $23.3 million for the same period in 2006.
Income from operations for third quarter 2007 was $52.9 million, compared to income from operations of $52.0 million for the same period last year. Third quarter 2007 income from operations included $4.3 million of stock compensation expense, compared to stock compensation expense of $5.0 million for the third quarter 2006. Research and development expense for third quarter 2007 was $8.4 million, compared to $1.9 million for the same period last year. The increase in R&D expense was primarily related to costs incurred to conduct Phase I clinical studies for PPD's statin compound for the treatment of dyslipidemia.
Third quarter 2007 earnings per diluted share were $0.32, compared to earnings per diluted share of $0.31 for the third quarter of 2006.
Development segment net revenue for third quarter 2007, which does not include reimbursed out-of-pocket expenses, was $323.8 million, an increase of 13.5 percent over the same period in 2006. Development segment income from operations for third quarter 2007 was up 14.0 percent to $61.2 million from $53.6 million for the same period in 2006.
Discovery sciences segment net revenue, which does not include reimbursed out-of-pocket expenses, was $4.7 million for the third quarter of 2007, compared to $4.5 million in the same period last year. Discovery sciences segment third quarter 2007 loss from operations was $8.3 million, compared to a loss from operations of $1.7 million for the third quarter 2006. The third quarter 2007 loss from operations reflects the impact of increased R&D expense to further develop the statin compound.
Other Financial Information
Gross new business authorizations for the third quarter of 2007 totaled $570.6 million. The third quarter 2007 cancellation rate was 21.8 percent. Year-to-date net days sales outstanding (DSO) at September 30, 2007, were 49.1 days, compared to year-to-date DSO of 44.0 at December 31, 2006. Third quarter 2007 cash flow from operations was $61.6 million. At September 30, 2007, PPD had $444.2 million in cash, cash equivalents and short-term investments.
Cash Dividend Policy
PPD also announced its board of directors has amended the annual cash dividend policy to increase the annual dividend rate from $0.12 to $0.40 per year, payable quarterly at a rate of $0.10 per share. PPD expects the new dividend rate will be effective beginning in the fourth quarter 2007.
"Another period of strong proposal flow in the third quarter 2007 combined with an improved hit rate helped fuel a 21 percent sequential increase in gross authorizations for the quarter," said Fred Eshelman, chief executive officer of PPD. "We were pleased to announce the addition of three new members of our management team and the realignment of our regional clinical operations teams, and we plan to continue our focus on core business execution."
Eshelman added, "PPD's board of directors, management team and employees are pleased to be able to reward our shareholders through the substantial increase in our annual cash dividend rate, and we remain firmly committed to unlocking additional shareholder value through the delivery of high quality services and the advancement of our compound portfolio strategy."
PPD will conduct a live conference call and audio webcast tomorrow, October 24, 2007, at 9 a.m. ET to discuss its third quarter 2007 results. A Q&A session will follow. To access the webcast, please visit http://www.ppdi.com and follow the instructions under the Investor Presentations/Webcasts link in the Corporate section of the Web site. A replay of the webcast will be available shortly after the call. PPD has established a direct dial number, +877 644 0692 (Conference ID: 18887347), for telephone access.
PPD is a leading global contract research organization providing discovery, development and post-approval services as well as compound partnering programs. Our clients and partners include pharmaceutical, biotechnology, medical device, academic and government organizations. With offices in 30 countries and more than 10,000 professionals worldwide, PPD applies innovative technologies, therapeutic expertise and a commitment to quality to help its clients and partners maximize returns on their R&D investments and accelerate the delivery of safe and effective therapeutics to patients. For more information, visit our Web site at http://www.ppdi.com.
Except for historical information, all of the statements, expectations and assumptions contained in this news release, including expectations and assumptions about company growth, the prospects of the compound partnering business and the payment of future dividends under the annual cash dividend policy, 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 results to differ materially include the following: success in sales growth; loss of large contracts; increased cancellation rates; risks that we may not continue our annual cash dividend policy; the ability to attract and retain key personnel; economic conditions and outsourcing trends in the pharmaceutical, biotechnology, medical device, academic and government industry segments; competition within the outsourcing industry; risks associated with the development and commercialization of drugs, including earnings dilution and obtaining regulatory approval; risks associated with acquisitions and investments, such as impairments; rapid technological advances that make our products and services less competitive; 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.
Steve Smith (Investors)
+910 558 7585
Louise Caudle (Media)
+919 462 4467
Statement of Operations Data
(in thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
2007 2006 2007 2006
Development $323,769 $285,348 $940,452 $821,987
Discovery Sciences 4,694 4,456 13,577 27,955
Reimbursed out-of-pockets 28,732 23,344 85,388 71,528
Total net revenue 357,195 313,148 1,039,417 921,470
Development 163,221 144,121 472,651 412,560
Discovery Sciences 2,775 2,416 7,595 6,893
expenses 28,732 23,344 85,388 71,528
Total direct costs 194,728 169,881 565,634 490,981
Research and development 8,353 1,887 14,221 3,829
Selling, general and
administrative 87,129 77,289 245,016 229,906
Depreciation 14,057 12,008 40,330 34,317
Amortization 78 84 234 481
Income from operations 52,850 51,999 173,982 161,956
Other income, net 4,224 3,778 12,798 11,258
Income before income taxes 57,074 55,777 186,780 173,214
Income tax expense 18,834 18,964 63,906 58,141
Net income $38,240 $36,813 $122,874 $115,073
Net income per share:
Basic $0.32 $0.31 $1.04 $0.99
Diluted $0.32 $0.31 $1.03 $0.97
Weighted average number of
Basic 118,739 116,971 118,297 116,608
Diluted 120,065 118,791 119,759 118,399
Balance Sheet Data
September 30, December 31,
Cash, cash equivalents and short-term
investments $444,177 $435,671
Accounts receivable and unbilled
services, net $468,715 $408,917
Working capital $559,423 $412,711
Total assets $1,617,103 $1,481,565
Unearned income $191,072 $195,707
Current maturities of long-term debt $6 $75,159
Shareholders' equity $1,109,492 $952,900
|SOURCE PPD, Inc.|
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