- 10–18% diluted EPS growth expected in
Fiscal Year 2017*, driven by continued revenue growth and margin
improvement
- Long-term target range for adjusted
operating margin increased to 14–16%
- Long-term target of double-digit
revenue and adjusted diluted EPS growth
- PAREXEL’s growth strategy built on
focus on its core business while capturing new growth from adjacent
markets
- Company believed to be well-positioned
to take advantage of paradigm shifts in its business
environment
PAREXEL International Corporation (Nasdaq: PRXL) today presents
its strategy for growth and its expectations for Fiscal Years 2016
and 2017 performance to investors and analysts at an Investor Day
in New York City.
Josef H. von Rickenbach, PAREXEL’s Chairman and Chief Executive
Officer, provides an overview of Company performance, industry
dynamics, and the Company’s strategy. Mr. von Rickenbach states
that PAREXEL’s strategy is to enhance its leadership in the
biopharmaceutical services industry by focusing on its core
business and capturing new growth from adjacent markets. The
Company reiterates its long-term financial goals, including:
- 10–12% annual revenue growth,
consisting of 7–8% growth from ongoing operations and 3–4% growth
from acquisitions
- 100–120 basis points of annual adjusted
operating margin improvement, with the long-term goal of an
adjusted operating margin range of 14–16%
- 15–20% annual adjusted diluted EPS
growth
In discussing industry trends, Mr. von Rickenbach says, “Several
paradigm shifts in the biopharmaceutical marketplace—changing
biopharmaceutical pipelines, the increasing importance of payers,
advances in information technology, and virtualization of
biopharmaceutical companies—provide us with major new market
opportunities. Our strategy extends our competencies into new
markets, including market access and commercialization, that are
large and growing faster than our traditional clinical
business.”
Mark A. Goldberg, President and Chief Operating Officer,
describes plans for executing the Company’s strategy. PAREXEL will
grow the core business by leveraging strategic partnerships and
enhancing service offerings to small and midsized companies.
Operations in Asia are expected to produce strong growth. Dr.
Goldberg describes the differentiated capabilities of PAREXEL
Informatics. He outlines continuing and new initiatives to improve
profitability. Joshua Schultz, Corporate Vice President, provides
an expanded discussion of the capabilities and strategy of the
Company’s recently launched PAREXEL Access, which offers an
integrated suite of post-approval clinical services, market access
consulting, medical communications, and pharmacovigilance.
Ingo Bank, Senior Vice President and Chief Financial Officer,
presents a financial overview. Mr. Bank discusses the drivers of
past and future revenue performance of the Company and its
segments. He describes the results of the Company’s margin
improvement initiatives, including the successful Margin
Acceleration Program (MAP), and details of future margin
improvement efforts.
Mr. Bank comments, “In recent years, we have seen strong growth
in new business and backlog but also a delay in converting backlog
into revenue. This has been caused by a trend toward smaller, more
complex clinical trials, particularly those in oncology, which take
longer to start and complete. We expect this trend to continue in
Fiscal Year 2017, when we project revenue growth of 4–5.5%, with
year-over-year growth rates likely to improve throughout the year.
We believe that during the latter part of Fiscal Year 2017, the
prolongation of trials will have reached steady state, at which
point revenue growth should start to align more closely with
backlog growth. The long-term driver of our revenue growth
expectations remains our encouraging new business performance.”
Mr. Bank’s presentation provides financial guidance for the
fourth quarter of Fiscal Year 2016 (ending June 30, 2016) and for
full Fiscal Years 2016 and 2017, as summarized below:
Guidance Issued 6/30/16 Guidance
Issued 4/27/16 Q4 FY 2016 Revenue $528–$538 million
$528–$538 million Q4 FY 2016 GAAP EPS $0.79–$0.87 $0.87–$0.95 Q4 FY
2016 Non-GAAP EPS** $0.89–$0.97 $0.89–$0.97 FY 2016 Revenue
$2.085–$2.095 billion $2.085–$2.095 billion FY 2016 GAAP EPS
$2.85–$2.93 $2.93–$3.01 FY 2016 Non-GAAP EPS** $3.38–$3.46
$3.38–$3.46 FY 2017 Revenue $2.175–$2.205 billion N/A FY
2017 GAAP EPS $3.68–$3.96 N/A FY 2017 Non-GAAP EPS* $3.75–$4.03 N/A
* Projected growth of 10–18% in adjusted diluted EPS for Fiscal
Year 2017 is based on the midpoint of guidance for adjusted diluted
EPS for Fiscal Year 2016. Please see the GAAP to Non-GAAP
reconciliation table later in this release.
**Adjusted diluted EPS guidance for Q4 FY 2016 excludes expected
Q4 Fiscal Year 2016 restructuring charges related to our Margin
Acceleration Program (MAP) as well as acquisition-related
charges. In addition, adjusted diluted EPS guidance for the
full Fiscal Year 2016 excludes the impact of certain items that
were recorded in the first nine months, as detailed in a chart
contained within this release. The MAP is now expected to
achieve the high end of its pretax savings targets of $20–$30
million in Fiscal Year 2016. Total charges relating to the MAP are
expected to be $47–$52 million, including $4-$9 million in the
fourth quarter of Fiscal Year 2016.
Those who wish to listen to the Company’s Investor Day
presentations today and to view the accompanying slides should log
onto the Company’s website at www.PAREXEL.com and click on the
PAREXEL International 2016 Investor Day link under the “Upcoming
Events” section at the bottom of the Investors homepage at least 15
minutes prior to the event’s broadcast, which will start at 9:00
a.m. ET. Users should follow the instructions provided to
assure that the necessary audio applications are downloaded and
installed. In addition, an archived version of the event’s
presentations may be found in the Investor Relations section of
PAREXEL’s website.
In addition to the financial measures prepared in accordance
with 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 should not be considered superior to nor a
substitute for the Company’s results of operations prepared in
accordance with GAAP.
About PAREXEL International
PAREXEL International Corporation is a leading global
biopharmaceutical services organization, providing a broad range of
expertise-based contract research, consulting, medical
communications, and technology solutions and 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. PAREXEL Informatics, Inc. provides
advanced technology solutions, including medical imaging, to
facilitate the clinical development process. Headquartered near
Boston, Massachusetts, PAREXEL operates in 82 locations in 51
countries around the world, and had approximately 18,450 employees
in the third quarter. For more information about PAREXEL
International visit www.PAREXEL.com.
PAREXEL and PAREXEL Informatics are trademarks or registered
trademarks of PAREXEL International Corporation or its
affiliates.
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
materially 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
restructurings, including the restructuring activities referenced
in this release; 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 including
the acquisition of Health Advances, 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 foreign
currency 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 most recent Annual Report on Form 10-K and subsequent
quarterly reports on Form 10-Q, as filed with the Securities and
Exchange Commission, 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 Reconciliation
of Non-GAAP Measures for Guidance Issued on June 30, 2016
Certain Line Items (Unaudited)
(in millions, except per share
data)
Guidance for the Three Months Ending Guidance for
the Twelve Months Ending June 30, 2016 June 30,
2016 GAAP Measure Adjustments Non-GAAP
Measure GAAP Measure Adjustments
Non-GAAP Measure Direct costs $ (1.6
)
(a) $ (3.4 ) (a) Gross profit $ 1.6 $ 3.4 Selling, general and
administrative $ — $ (8.7 ) (b) Restructuring charge $ (6.5
)
(c) $ (29.9 ) (c) Income from operations $ 8.1 $ 42.0 Income before
income taxes $ 8.1 $ 42.0 Provision for income taxes $ 2.4 (d) $
12.9 (d) Net income $ 5.7 $ 29.1 Diluted earnings per common share
$ 0.79–$0.87 $ 0.10 $ 0.89–$0.97 $ 2.85–$2.93 $ 0.53 $ 3.38–$3.46
(a) Impact of net adjustments for acquisition- and
integration-related charges in our PC segment (b) Impact of net
adjustments for acquisition- and integration-related charges,
including the revaluation of earn-out contingent consideration
liabilities associated with certain acquisitions (c) Severance,
facility costs and changes in estimates related to the Margin
Acceleration Program (d) Tax effect on non-GAAP adjustments
PAREXEL International Corporation Reconciliation of
Non-GAAP Measures for Guidance Issued on June 30, 2016
Certain Line Items (Unaudited)
(in millions, except per share data)
Guidance for the Twelve Months Ending June 30, 2017
GAAP Measure Adjustments Non-GAAP
Measure Direct costs $ (7.3 ) (a) Gross profit $ 7.3 Income
from operations $ 7.3 Income before income taxes $ 7.3 Provision
for income taxes $ 3.5 (b) Net income $ 3.8 Diluted earnings per
common share $3.68–$3.96 $ 0.07 $3.75–$4.03 (a) Impact of
net adjustments for acquisition and integration related charges in
our PC segment (b) Tax effect on non-GAAP adjustments
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160630005552/en/
Ingo Bank, Senior Vice President and Chief Financial
OfficerInvestor Relations, PAREXEL InternationalIR@PAREXEL.com+
1-781-434-4118orRonald Aldridge, Senior Director of Investor
RelationsInvestor Relations, PAREXEL
InternationalRon.Aldridge@PAREXEL.com+ 1-781-434-4753
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