PAREXEL REPORTS THIRD QUARTER FISCAL YEAR 2010 FINANCIAL RESULTS
- Strong new business wins generated 1.60 net book-to-bill ratio
- Backlog at approximately $2.4 billion, up 16.9% year-over-year
- Consolidated service revenue of $291.2 million grew 10.1% year-over-year
Boston, MA, April 27, 2010 – PAREXEL International Corporation (NASDAQ: PRXL) today announced its financial results for the third quarter ended March 31, 2010.
For the three months ended March 31, 2010, PAREXEL’s consolidated service revenue increased 10.1% to $291.2 million compared with $264.5 million in the prior year period. Excluding the positive impact of foreign exchange of $14.9 million dollars in the quarter, revenue increased approximately 4.5% from the prior year. Operating income as reported under Generally Accepted Accounting Principles (GAAP) totaled $25.8 million, or 8.9% of consolidated service revenue in the third quarter of Fiscal Year 2010, as compared with $26.4 million, or 10.0% of consolidated service revenue in the same period one year ago. Excluding the impact of restructuring-related items in the quarter, as detailed in the attached financial tables, operating income was $29.9 million, or 10.3% of consolidated service revenue, in the third quarter of Fiscal Year 2010. GAAP net income for the quarter totaled $12.8 million, or $0.22 per diluted share, compared with net income of $14.2 million, or $0.25 per diluted share, for the quarter ended March 31, 2009. On a non-GAAP basis, excluding the impact of restructuring-related items in the quarter, net income for the third quarter was $16.8 million, or $0.28 per diluted share.
On a segment basis, consolidated service revenue for the third quarter of Fiscal Year 2010 was $221.4 million in Clinical Research Services (CRS), $31.5 million in PAREXEL Consulting and Medical Communications Services (PCMS), and $38.3 million in Perceptive Informatics, Inc.
For the nine months ended March 31, 2010, consolidated service revenue was $835.7 million versus $803.3 million in the prior year period, an increase of 4.0%. Excluding the positive impact of foreign exchange of $11.1 million dollars in the nine-month period, revenue increased 2.7%. GAAP operating income for the current nine-month period was $63.0 million, or 7.5% of service revenue, compared with GAAP operating income of $56.1 million, or 7.0% of service revenue in the prior year nine-month period. Excluding the impact of restructuring-related items in the second and third quarters, operating income was $75.3 million, or 9.0% of consolidated service revenue, for the nine months ended March 31, 2010. Excluding certain items in the year ago nine-month period, operating income was $71.1 million, or 8.9% of consolidated service revenue. Net income on a GAAP basis for the nine months ended March 31, 2010 was $28.7 million, or $0.49 per diluted share, compared with GAAP net income of $33.0 million, or $0.57 per diluted share, in the prior year period. On a non-GAAP basis, excluding certain items in both periods that are detailed in the attached financial tables, net income for the nine months ended March 31, 2010 was $44.4 million, or $0.76 per diluted share, compared with $40.9 million, or $0.71 per diluted share, in the comparable nine-month period of the prior year.
PAREXEL’s backlog was $2.38 billion at the end of the March quarter, an increase of 16.9% year-over-year. The reported backlog included record gross new business wins of $606.9 million, cancellations of $140.3 million, and a negative impact from changes in foreign exchange rates of $103.7 million. The net book-to-bill ratio was 1.60 in the quarter (defined as gross new business less cancellations, divided by service revenue).
Mr. Josef H. von Rickenbach, PAREXEL’s Chairman and Chief Executive Officer stated, “Our performance in the third quarter clearly demonstrates a return to growth, and we are now looking more confidently into the future given our strong new business wins and growth in backlog. We also generated healthy cash flow, allowing us to further strengthen our balance sheet. I would like to thank our employees around the globe for their hard work and dedication, which have enabled us to report this strong operational and financial performance.”
Mr. von Rickenbach continued, “As we move into our fourth fiscal quarter and gain better perspective on calendar year 2010, we believe that the market for our services is continuing to recover. In this regard, we have seen a significant increase in the volume and value of pending requests for proposals from our clients. We anticipate a solid finish to our fiscal year, and will work to maintain our momentum during Fiscal Year 2011, as the benefits of our strategic investments in our global footprint, technology capabilities, and process enhancements further take hold.”
The Company issued forward-looking guidance for the fourth quarter of Fiscal Year 2010 (ending June 30, 2010), for Fiscal Year 2010 and for Calendar Year 2010 using recent exchange rates. Adjusted diluted earnings per share guidance numbers exclude restructuring-related charges. The Company expects to record approximately $5.0 million in additional restructuring charges during the fourth quarter of Fiscal Year 2010, equating to approximately $0.05 per diluted share. This expenditure will then complete the restructuring activities that were first announced in October 2009. For the fourth quarter, the Company anticipates reporting consolidated service revenue in the range of $294 to $304 million, GAAP earnings per diluted share in the range of $0.24 to $0.26, and adjusted earnings per share of $0.29 to $0.31. For Fiscal Year 2010, consolidated service revenue is expected to be in the range of $1.130 to $1.140 billion, GAAP earnings per diluted share to be in the range of $0.73 to $0.75, and adjusted diluted earnings per share to be in the range of $1.04 to $1.06. (Previously issued guidance for Fiscal Year 2010 was for service revenue of $1.125 to $1.145 billion, GAAP diluted earnings per share of $0.66 to $0.72, and adjusted earnings per diluted share of $1.00 to $1.06). For Calendar Year 2010, consolidated service revenue is expected to be in the range of $1.180 to $1.215 billion, GAAP earnings per diluted share are projected to be in the range of $0.99 to $1.09, and adjusted earnings per share are projected to be in the range of $1.10 to $1.20. (Previously issued guidance for Calendar Year 2010 was for service revenue of $1.175 to $1.215 billion, GAAP earnings per diluted share of $0.91 to $1.05, and adjusted earnings per diluted share of $1.05 to $1.19).
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 Wednesday, April 28, 2010 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 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 +1 706-758-4950 and ask to join the PAREXEL quarterly conference call.
Certain 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, medical communications and consulting 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 54 countries around the world, and has approximately 9,500 employees. For more information about PAREXEL International visit www.PAREXEL.com.
This release contains “forward-looking” statements regarding future results and events, including, without limitation, statements regarding expected financial results, future growth and customer demand, such as the guidance provided by the Company with respect to the fourth quarter of Fiscal Year 2010, Fiscal Year 2010, and Calendar Year 2010. 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,” “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, including the anticipated restructuring charge of approximately $24 million over the second, third, and fourth quarters of Fiscal Year 2010; 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, 2009 as filed with the SEC on February 5, 2010 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.