PAREXEL REPORTS SECOND QUARTER FISCAL 2003 FINANCIAL RESULTS
BOSTON, MA, January 22, 2003 — PAREXEL International Corporation (Nasdaq: PRXL) today announced its financial results for the second quarter ended December 31, 2002.
For the three months ended December 31, 2002, PAREXEL’s consolidated service revenue was $122.3 million compared with $106.9 million in the prior year period, an increase of 14.5% year-over-year. Including the effect of a $5.9 million facilities-related restructuring charge, which is detailed below, operating income in the second quarter was $1.7 million versus $4.2 million in the prior year quarter. Operating income as a percentage of service revenue was 1.4% for the second quarter of Fiscal Year 2003 versus 3.9% for the second quarter of Fiscal Year 2002. Net income for the second quarter ended December 31, 2002 was $142,000, or $0.01 per diluted share, compared with net income of $3.1 million, or $0.12 per diluted share in the comparable prior year period.
In the December 2002 quarter, the Company recorded a facilities-related restructuring charge totaling $5.9 million, as a result of changes in prior assumptions regarding certain leased facilities which were previously abandoned as part of the June 2001 restructuring charge. The changes in prior assumptions were caused by challenging real estate market conditions which have made it difficult to sub-lease the abandoned facilities, especially at previously estimated rental rates. The current period restructuring charge had no beneficial impact on pro forma second quarter operating results, as described below, but will mitigate the expected negative impact of these difficult market conditions from future reporting periods.
In addition to the results presented in accordance with Generally Accepted Accounting Principles (GAAP), the Company believes it is appropriate to provide “pro forma” information which adjusts results to exclude unusual items such as non-operational, non-cash charges and benefits and one-time charges. Management uses such pro forma information internally to evaluate the Company’s performance and manage its operations. Non-GAAP measures are not a substitute for GAAP. The attached financial charts contain a detailed presentation of both GAAP and pro forma results for the second quarter and six-month period ended December 31, 2002.
Excluding the restructuring charge, pro forma operating income in the second quarter was $7.6 million. Pro forma operating income as a percentage of service revenue was 6.2%, up from 3.9% in the second quarter of the prior year. Pro forma net income in the second quarter was $3.9 million (an increase of 27.4% over the comparable prior year period), while pro forma diluted earnings per share were $0.15, an increase of 25% compared with last year.
On a segmented basis, service revenue for the second quarter of Fiscal 2003 was $75.1 million in Clinical Research Services, $25.1 million in the PAREXEL Consulting Group, $17.3 million in Medical Marketing Services, and $4.8 million in Perceptive Informatics, Inc.
For the six months ended December 31, 2002, consolidated service revenue was $241.7 million versus $208.7 million in the prior year period, an increase of 15.8%. Operating income for the current six-month period was $8.7 million (or 3.6% of service revenue) compared with operating income of $6.7 million (or 3.2%) in the prior year period. Net income for the six months ended December 31, 2002 was $3.4 million or $0.13 per diluted share, compared with net income of $5.5 million, or $0.22 per diluted share in the prior year period. On a pro forma basis, operating income for the six months ended December 31, 2002 was $14.6 million, or 6.0% of service revenue, (compared with 3.2% in the prior year period), net income was $7.2 million (up 29.8%), and earnings per diluted share were $0.28 (an increase of 27.3%).
For the six-month period from July to December 2002, PAREXEL reported net new business (gross new business less cancellations) of $294.8 million, versus $228.6 million for the six-month period ended June 2002. Net new business increased 29% sequentially compared with the six-month period ended in June 2002, and increased 17.4% when compared with the July to December period one year ago. Backlog at December 31, 2002 was $593 million, an increase of approximately 10% over the backlog reported for the period ended June 30, 2002, and an increase of approximately 8% over the backlog reported for the period ended December 31, 2001.
Mr. Josef H. von Rickenbach, PAREXEL’s Chairman and Chief Executive Officer stated, “In addition to this quarter’s year-over-year revenue growth of 14.5%, we also saw strong improvement in the Company’s gross margin and pro forma operating margin. We are especially pleased with the progress demonstrated by the Clinical Research Services business, which has achieved substantial revenue growth and improved gross margin during the first half of this fiscal year. We are also encouraged by the increase in net new business and the low cancellation rate which we experienced during this reporting period. These factors support our belief that the core operating environment for our products and services remains healthy.”
The Company issued forward-looking guidance regarding revenue and earnings per share for the third quarter of Fiscal 2003 (ending March 31, 2003), for Fiscal 2003, and for Calendar 2003. For the third quarter of Fiscal 2003, the Company anticipates reporting consolidated service revenue in the range of $130 to $135 million and earnings per diluted share in the range of $0.17 to $0.18. For Fiscal 2003, expectations are for consolidated service revenue in the range of $505 to $515 million and pro forma earnings per diluted share ranging from $0.64 to $0.67 (versus previously issued revenue guidance of $490 to $500 million, and earnings per diluted share guidance of between $0.63 to $0.67). For Calendar 2003, expectations are for consolidated service revenue in the range of $530 to $550 million and earnings per diluted share of between $0.76 to $0.80.
PAREXEL’s Second Quarter Fiscal 2003 Earnings Conference Call will begin at 10 a.m. EST on Wednesday, January 22nd 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) 896-6133 and ask to join the PAREXEL quarterly conference call.
PAREXEL is one of the largest biopharmaceutical 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, and the use and interpretation of medical images as clinical trial endpoints, 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 58 locations throughout 35 countries around the world, and has approximately 4,970 employees.
This release contains "forward-looking" statements regarding future results and events, including statements regarding the Company’s existing capital resources and future cash flows from operations, and 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 quarter ended September 30, 2002, as filed with the Securities and Exchange Commission, which “Risk Factors” discussion is incorporated by reference in this press release. The forward-looking statements included in this press release represent the Company’s estimates as of the date of this 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.