PAREXEL REPORTS FOURTH QUARTER AND FISCAL 2002 FINANCIAL RESULTS
BOSTON, MA, August 15, 2002 — PAREXEL International Corporation (Nasdaq: PRXL) today announced its financial results for the fourth quarter and fiscal year ended June 30, 2002.
For the three months ended June 30, 2002, PAREXEL’s consolidated service revenue was $123.6 million compared with $106.7 million in the prior year period. Quarter-over-quarter, revenue grew 15.8%. Operating income as a percent of service revenue in the 2002 fourth quarter was $9.2 million versus an “as reported” operating loss of $6.6 million in the prior year quarter and pro forma operating income in the prior year quarter of $2.3 million. The basis for the presentation of the Fiscal 2001 pro forma results is set forth in the attached financial statements. Operating margin was 7.5% in the 2002 fourth quarter versus an “as reported” negative operating margin of 6.2% in the fourth quarter of 2001 and a pro forma operating margin of 2.2%. Net income for the 2002 fourth quarter was $4.0 million, or $0.16 per diluted share, compared with an “as reported” net loss of $3.6 million, or a loss of $0.14 per diluted share for the quarter ended June 30, 2001. On a pro forma basis, the fourth quarter in 2001 had net income of $2.7 million, or $0.11 per diluted share. During the fourth quarter in 2002, there was a negative impact of $0.01 on earnings per diluted share from the Perceptive Informatics strategic business unit versus a negative “as reported” impact of $0.04 per diluted share in the fourth quarter of 2001 and a negative pro forma impact of $0.03 per diluted share for the quarter.
For the fiscal year ended June 30, 2002, PAREXEL’s consolidated service revenue was $444.3 million compared with $387.6 million in the prior year. Year-over-year, revenue increased 14.6%. Service-related operating income for Fiscal 2002 was $20.5 million versus an “as reported” operating loss of $6.9 million in the prior year and pro forma operating income of $2.1 million in the prior year, as detailed in the attached financial statements. Operating margin was 4.6% for Fiscal 2002 versus an “as reported” negative operating margin of 1.8% in Fiscal 2001 and a pro forma operating margin of 0.5% in Fiscal 2001. Net income for Fiscal 2002 was $13.2 million or $0.52 per diluted share, compared with an “as reported” net loss of $0.8 million, or a loss of $0.03 per diluted share, for the fiscal year ended June 30, 2001. On a pro forma basis, Fiscal 2001 net income was $5.4 million or $0.22 per diluted share. The Perceptive Informatics business unit had a negative impact on earnings of $0.06 per diluted share for the fiscal year ended June 30, 2002 contrasted with a negative “as reported” impact of $0.15 per diluted share for the fiscal year ended June 30, 2001 and a negative pro forma impact of $0.14 for the 2001 fiscal year.
On a segment basis, service revenue for the fourth quarter of 2002 grew both year-over-year and sequentially in each of the Company’s strategic business units. Service revenue for the fourth quarter of 2002 was $72.8 million in Clinical Research Services, $26.6 million in the PAREXEL Consulting Group, $18.6 million in Medical Marketing Services, and $5.6 million in Perceptive Informatics, Inc.
For the six-month period from January to June 2002, PAREXEL reported net new business (gross new business less cancellations) of $228.6 million. Net new business for this period decreased 8.9% compared with the six-month period from June to December of 2001. Backlog at June 30, 2002 was $540 million, a decrease of 1.3% from the December 31, 2001 backlog, but an increase of 7.1% over the backlog at the end of Fiscal 2001, which was $504.4 million.
Mr. Josef H. von Rickenbach, PAREXEL’s Chairman and Chief Executive Officer stated, “During Fiscal 2002, PAREXEL made substantial progress in achieving two key goals: increased revenue growth and improved profitability. During the year, our service revenue grew 14.6%, versus only 2.5% the previous year. Our gross margin grew 290 basis points from 28.2% for Fiscal Year 2001 to 31.1% for Fiscal Year 2002, and our operating margin grew 640 basis points from a negative 1.8% for Fiscal Year 2001 to a positive 4.6% for Fiscal Year 2002. We still have a lot of work ahead of us to further improve margins, but are pleased with the success of our strategic initiatives in improving the core operations of the Company.”
Mr. von Rickenbach continued, “As we move into Fiscal 2003 our focus remains on revenue growth and margin improvement. We believe that the overall increase in demand for outsourcing services, as demonstrated by this year’s 32% increase in average proposal values, bodes well for us. Although cancellations were high in this most recent reporting period, we are encouraged by the fact that we have had a very low level of cancellations so far this quarter. We anticipate that our more diversified business mix, decreased client concentration, and our ongoing strategic business initiatives will help us to overcome the impact of the recent cancellations and enable us to achieve our Fiscal 2003 revenue and earnings per share targets. This would result in an earnings per share growth rate of between 21% and 29%.”
The Company issued forward-looking guidance regarding revenue and earnings per share for the first quarter of Fiscal 2003 (ending September 30, 2002), and for Fiscal 2003. For the first quarter of Fiscal 2003, the Company anticipates reporting consolidated service revenue in the range of $115 to $120 million and earnings per diluted share in the range of $0.12 to $0.14. The anticipated sequential decline in service revenue and earnings from the 2002 fourth quarter is due to normal seasonality in the business and the impact of the cancellations noted above, partially offset by the positive impact of foreign exchange movements on revenue. For the 2002 calendar year, expectations are for consolidated service revenue in the range of $465 to $475 million, and earnings per diluted share in the range of $0.55 to $0.59. For Fiscal 2003, expectations are for consolidated service revenue in the range of $485 to $500 million and earnings per
diluted share ranging from $0.63 to $0.67.
PAREXEL’s Fourth Quarter and Fiscal 2002 Earnings Conference Call will begin at 10 a.m. EDT on Thursday, August 15th 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 one month following the live event. To participate via telephone, dial (212) 896-6106 and ask to join the PAREXEL quarterly conference call.
PAREXEL is one of the largest pharmaceutical outsourcing organizations in the world, providing a broad range of knowledge-based contract research, medical marketing and consulting services to the worldwide pharmaceutical, biotechnology and medical device industries. With a commitment to providing solutions that expedite time-to-market and peak market penetration, PAREXEL has developed significant expertise in clinical trials management, data management, biostatistical analysis, medical marketing, clinical pharmacology, regulatory and medical consulting, industry training and publishing and other drug development consulting services. Its information technology subsidiary, Perceptive Informatics, Inc., provides a variety of technology products and services, including web-based portal solutions and voice and data systems, which are designed to accelerate and enhance the clinical development and launch processes. The Company’s integrated services, therapeutic area depth and sophisticated information technology, along with its experience in global drug development and product launch services, represent key competitive strengths. Headquartered near Boston, MA, PAREXEL operates in 56 locations throughout 37 countries around the world, and has approximately 4,930 employees.
This release contains "forward-looking" statements regarding future results and events, including statements regarding expected financial results, future growth and customer demand that involve a number of risks and uncertainties. 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” and similar expressions are intended to identify forward-looking statements. 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 cancellation, revision, or delay of contracts, including those contracts in backlog; the Company's dependence on certain industries and clients; the Company's ability to win new business, manage growth, 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; government regulation of certain industries and clients; competition and consolidation within the pharmaceutical 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 and political risks. Such factors and others are discussed more fully in the section entitled "Risk Factors" of the Company's Form 10-Q for the period ended March 31, 2002, as filed with the Securities and Exchange Commission, which “Risk Factors” discussion is incorporated by reference in this press release. The Company disclaims any duty to update any of the forward-looking statements contained in this press release.