BOSTON, April 30, 2012 /PRNewswire/ -- PAREXEL International Corporation (NASDAQ: PRXL) today announced its financial results for the third quarter ended March 31, 2012.
For the three months ended March 31, 2012, PAREXEL's consolidated service revenue increased by 18.1% to $356.0 million compared with $301.4 million in the prior year period. Excluding a $3.8 million negative impact from foreign exchange on consolidated service revenue in the current quarter, and excluding $1.5 million of consolidated service revenue in the prior year quarter related to subsequently divested Early Phase units, revenue increased 20.0% in the quarter. The Company reported operating income under Generally Accepted Accounting Principles (GAAP) of $28.2 million, or 7.9% of consolidated service revenue, in the third quarter of Fiscal Year 2012, versus GAAP operating income of $21.9 million, or 7.3% of consolidated service revenue, in the same quarter of the prior fiscal year. GAAP net income for the quarter ended March 31, 2012 totaled $22.9 million, or $0.38 per diluted share, compared with GAAP net income of $15.7 million, or $0.26 per diluted share, for the quarter ended March 31, 2011. GAAP net income in the quarter increased by 45.3% year-over-year, and earnings per diluted share increased by 46.2%.
The Company had a current quarter tax benefit which resulted primarily from the resolution of uncertain tax positions including the reversal of interest previously accrued on these items. Approximately $4.2 million of tax benefit recorded in the quarter was due to the favorable conclusion of a tax examination along with the expiration of statutory periods primarily in European jurisdictions.
In Fiscal Years 2012 and 2011, the financial results for the respective March quarters each included special items, as detailed in the financial charts within this press release. Excluding the impact of these special items, adjusted operating income in the third quarter of Fiscal Year 2012 was $30.0 million, or 8.4% of consolidated service revenue. Excluding these special items in the prior year period, adjusted operating income was $22.4 million, or 7.4% of consolidated service revenue. On this adjusted basis, operating income in the quarter ended March 31, 2012 increased 34.1% year-over-year. Adjusted net income in the current and prior periods (which excludes the special items referenced above) was $19.9 million, or $0.33 per diluted share in the quarter ended March 31, 2012, and was $16.1 million, or $0.27 per diluted share in the quarter ended March 31, 2011. Using adjusted numbers in both periods, net income in the current quarter increased by 23.6% year-over-year, and adjusted earnings per diluted share increased by 22.2%.
On a segment basis, consolidated service revenue for the third quarter of Fiscal Year 2012 was $263.4 million in Clinical Research Services (CRS), $43.3 million in PAREXEL Consulting and Medical Communications Services (PCMS), and $49.3 million in Perceptive Informatics.
For the nine months ended March 31, 2012, consolidated service revenue was $1.0 billion versus $901.6 million in the prior year period, an increase of 11.3%. GAAP operating income for the current nine-month period was $63.3 million, or 6.3% of consolidated service revenue, compared with GAAP operating income of $80.1 million, or 8.9% of consolidated service revenue in the prior year period. GAAP net income for the nine months ended March 31, 2012 was $45.4 million, or $0.75 per diluted share, compared with GAAP net income of $50.4 million, or $0.84 per diluted share, in the prior year period. Excluding the impact of special items as detailed in the attached financial charts in both nine-month periods, operating income was $68.9 million or 6.9% of consolidated service revenue for the nine months ended on March 31, 2012, compared with $79.6 million or 8.8% of consolidated service revenue for the nine months ended on March 31, 2011. On an adjusted basis, net income for the nine months ended March 31, 2012 was $45.5 million, or $0.75 per diluted share, compared with $50.8 million or $0.85 per diluted share in the comparable prior year nine-month period.
Backlog at the end of March was approximately $4.224 billion, an increase of 32.5% year-over-year. The reported backlog included gross new business wins in the quarter of $1.057 billion, cancellations of $263.3 million, and a positive impact from foreign exchange rates, and other small adjustments of $44.3 million. The net book-to-bill ratio was 2.23 in the quarter.
Mr. Josef H. von Rickenbach, PAREXEL's Chairman and Chief Executive Officer stated, "The Company's strong performance in the third quarter reflected the progress that we've made on many fronts. I believe that system enhancements and operational improvement initiatives in the Clinical Research Services segment, focused on improving margins and further increasing client satisfaction, are taking root. With respect to new business, we achieved record-breaking results in the quarter. We achieved strong wins in all market segments, including those outside of strategic partnerships, as well as small and emerging companies."
Mr. von Rickenbach continued, "Looking forward, we continue to focus intensely on execution to service the substantial book of new business that we have in backlog. In the coming quarters, we expect to continue to achieve healthy revenue growth for the Company, while at the same time we make further investments in delivery capacity to service client projects. These investments are expected to have a negative impact on operating margins in the near term, while they enable revenue and margin growth over the longer term. Looking ahead, I believe that our future is full of promise, as we further solidify our position as a leader in our industry."
The Company issued forward-looking guidance for the fourth quarter of Fiscal Year 2012 (ending June 30, 2012), for Fiscal Year 2012, and for Calendar Year 2012. The Company expects to report consolidated service revenue for the fourth quarter in the range of $376.0 to $381.0 million, and GAAP earnings per diluted share in the range of $0.28 to $0.30.
For Fiscal Year 2012, consolidated service revenue is expected to be in the range of $1.380 to $1.385 billion, GAAP earnings per diluted share in the range of $1.03 to $1.05, and adjusted earnings per diluted share in the range of $1.04 to $1.06 (which exclude the impact of restructuring and related charges and certain Q3 FY12 tax benefits). Previously issued guidance for Fiscal Year 2012 was for consolidated service revenue in the range of $1.360 to $1.375 billion, GAAP earnings per diluted share in the range of $1.01 - $1.09, and adjusted earnings per diluted share in the range of $1.09 to $1.17 (excluding the impact of restructuring and related charges). For Calendar Year 2012, consolidated service revenue is expected to be in the range of $1.515 to $1.535 billion, GAAP earnings per share are expected to be in the range of $1.20 to $1.30, and adjusted earnings per diluted share are expected to be in the range of $1.15 to $1.25 (excluding the impact of restructuring and related charges and certain Q3 FY12 tax benefits). Previously issued guidance for Calendar Year 2012 was for consolidated service revenue in the range of $1.445 to $1.480 billion, GAAP earnings per diluted share in the range of $1.31 to $1.47, and adjusted earnings per diluted share in the range of $1.33 to $1.47 (excluding the impact of restructuring and related charges).
Continuing strong new business wins have been driving accelerated revenue growth. At the same time, this has required the Company to increase resourcing above previously assumed levels, with a projected corresponding decrease in operating margin in the short term. The Company anticipates operating margin to be in the range of 7.5% to 8.0% in the fourth quarter of Fiscal Year 2012, and expects it to expand in the second half of Fiscal Year 2013.
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 third quarter earnings, business, and financial outlook will begin at 10:00 a.m. ET on Tuesday, May 1, 2012 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 +1 408-940-3886 and ask to join the PAREXEL quarterly conference call.
The Company notes that Fiscal Year 2011 numbers have been reclassified to conform to the current year's presentation. A slide depicting the reclassified numbers for Fiscal Year 2011, in addition to other trended financial information, may be found in the Investor Relations section of the Company's website under the "Additional Financials" section.
About the Company
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 50 countries around the world, and has approximately 11,920 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," "should," "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 December 31, 2011 as filed with the SEC on February 9, 2012, 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.PAREXEL International Corporation Consolidated Condensed Statement of OperationsUnauditedThree Months EndedThree Months Ended(in thousands, except per share data)March 31, 2012March 31, 2011As ReportedAdjustmentsNon-GAAPAs ReportedAdjustmentsNon-GAAPService revenue$
-$ 301,396Reimbursement revenue56,03756,03751,56551,565 Total revenue412,029-412,029352,961-352,961Costs and expenses:
Reimbursable out-of-pocket expenses56,03756,03751,56551,565
Selling, general and administrative 67,15967,15967,700
Restructuring charge 1,807(1,807)
- Total costs and expenses383,812(1,807)382,005331,096(519)330,577Income from operations28,2171,80730,02421,86551922,384Other expense(6,275)-(6,275)(7,003)(7,003)Income before income taxes21,9421,80723,74914,86251915,381Provision for income tax expense(927)4,814
(691)Effective tax rate-4.2%16.4%-5.9%-4.5%Net income$
338$ 16,072Earnings per common share: Basic$0.38$0.33$0.27$0.27 Diluted$0.38$0.33$0.26$0.27Shares used in computing earnings per common share: Basic59,65259,65258,67358,673 Diluted60,49460,49459,80859,808(a) Prior year numbers have been reclassified to conform with the current year presentation.(b) Severance associated with FY11 Restructuring Plan.(c) Restructuring charges include $2.0 million in severance costs, offset by a $0.2 million decrease in facilities costs. (d) Restructuring charges include $0.1 million in severance costs.
(e) Tax associated with items (b), (c) and (d), respectively, and a $4.2 million benefit in Q3 FY12 due to the favorable conclusion of a tax examination
and expiration of statutory periods, primarily in European jurisdictions. Balance Sheet InformationPreliminaryMarch 31,March 31,June 30,201220112011Billed accounts receivable, net
341,279Unbilled accounts receivable, net
316,981Cash and marketable securities
$ 1,490,137$ 1,443,834$ 1,429,483Short-term borrowings
566,004 PAREXEL International Corporation Consolidated Condensed Statement of OperationsUnauditedNine Months EndedNine Months Ended(in thousands, except per share data)March 31, 2012March 31, 2011As ReportedAdjustmentsNon-GAAPAs ReportedAdjustmentsNon-GAAPService revenue$ 1,003,897$
-$ 901,575Reimbursement revenue156,592-156,592157,693-157,693 Total revenue1,160,489-1,160,4891,059,268-1,059,268Costs and expenses:
Reimbursable out-of-pocket expenses156,592-156,592157,693-157,693
Selling, general and administrative 192,506-192,506189,740
Restructuring charge (benefit)5,669(5,669)
- Total costs and expenses1,097,226(5,669)1,091,557979,199443979,642Income from operations63,2635,66968,93280,069(443)79,626Other expense(8,445)-(8,445)(22,791)1,166
(21,625)Income before income taxes54,8185,66960,48757,27872358,001Provision for income taxes9,4485,580
7,191Effective tax rate17.2%24.8%12.1%12.4%Net income$
50,810Earnings per common share: Basic$
.85Shares used in computing earnings per common share: Basic59,31959,31958,54558,545 Diluted60,27260,27259,71759,717(a) Prior year numbers have been reclassified to conform with the current year presentation.(b) Severance associated with FY11 Restructuring Plan.(c) Restructuring charges include $4.5 million in severance costs (net of a $1.0 million reduction in the FY10 Plan) and $1.2 million of facility-related costs.
(d) Restructuring adjustments include $0.6 million in severance reductions and $0.2 million in reductions of facility-related costs.
(e) Impairment charge on an asset.(f) Tax associated with items (b) through (e), respectively, and a $4.2 million benefit in Q3 FY12 due to the favorable conclusion of a tax examination
and expiration of statutory periods, primarily in European jurisdictions. PAREXEL International CorporationSegment InformationUnauditedThree Months EndedThree Months Ended(in thousands)March 31, 2012March 31, 2011 (a)As ReportedAs ReportedAdjustmentsNon-GAAPClinical Research Services (CRS)Service revenue $ 263,372$ 227,006$ 227,006% of total service revenue74.0%75.3%75.3%Gross profit$
75,058Gross margin % of service revenue28.4%33.0%33.1%PAREXEL Consulting & Medical CommunicationsServices (PCMS)Service revenue$
34,136% of total service revenue12.2%11.3%11.3%Gross profit$
3,720Gross margin % of service revenue42.0%40.0%40.2%Perceptive Informatics (PI)Service revenue$
40,254% of total service revenue13.8%13.4%13.4%Gross profit$
7,381Gross margin % of service revenue43.6%42.9%43.2%Total service revenue$ 355,992$ 301,396$ 301,396Total gross profit$ 114,547$ 105,791$
368$ 106,159Gross margin % of service revenue32.2%35.1%35.2%Revenue by GeographyThe Americas$ 165,672$ 106,996Europe, Middle East & Africa140,315146,008Asia/Pacific50,00548,392Total service revenue$ 355,992$ 301,396Quarterly Supplemental Financial DataService revenue$ 355,992$ 301,396Reimbursement revenue$
51,565Investigator fees64,96938,557Gross revenue$ 476,998$ 391,518Days sales outstanding5672Capital expenditures$
,063(a) Prior year numbers have been reclassified to conform with the current year presentation.(b) Severance associated with FY11 restructuring activities.PAREXEL International CorporationSegment InformationUnauditedNine Months EndedNine Months Ended(in thousands)March 31, 2012March 31, 2011 (a)As ReportedAs ReportedAdjustmentsNon-GAAPClinical Research Services (CRS)Service revenue $
-$ 690,009% of total service revenue74.4%76.5%76.5%Gross profit$
$ 229,556Gross margin % of service revenue27.8%33.2%33.3%PAREXEL Consulting & Medical Communications Services (PCMS)Service revenue$
-$ 94,484% of total service revenue11.7%10.5%10.5%Gross profit$
$ 37,697Gross margin % of service revenue41.5%39.8%39.9%Perceptive Informatics (PI)Service revenue$
-$ 117,082% of total service revenue13.9%13.0%13.0%Gross profit$
$ 49,952Gross margin % of service revenue40.0%42.6%42.7%Total service revenue$ 1,003,897$
-$ 901,575Total gross profit$
368$ 317,205Gross margin % of service revenue31.1%35.1%35.2%Revenue by GeographyThe Americas$
367,081Europe, Middle East & Africa408,306407,738Asia/Pacific151,664126,756Total service revenue$ 1,003,897$
901,575(a) Prior year numbers have been reclassified to conform with the current year presentation.(b) Severance associated with FY11 restructuring activities.
CONTACTS: James Winschel, Senior Vice President and Chief Financial Officer
Jill Baker, Corporate Vice President, Investor Relations
|SOURCE PAREXEL International Corporation|
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