Fourth Quarter Fiscal Year 2016 Results
(compared to Fourth Quarter Fiscal Year 2015)
- GAAP diluted earnings per share of
$0.83, up 36.1%; adjusted earnings per share of $0.94, up
19.0%
- GAAP operating margin of 12.3%;
adjusted operating margin of 13.7%
- Service revenue of $538.6 million, up
3.0%; constant currency revenue growth of 2.6%
Fiscal Year 2016 (compared to Fiscal Year
2015)
- GAAP diluted earnings per share of
$2.89, up 9.1%; adjusted diluted earnings per share of $3.43, up
22.9%
- GAAP operating margin of 10.8%;
adjusted operating margin of 12.8%, reflecting 210 basis point
year-over-year improvement
- Service revenue of $2,096.3 million, up
4.0%; constant currency revenue growth of 5.1%
PAREXEL International Corporation (NASDAQ: PRXL) today reported
financial results for the fourth quarter and Fiscal Year 2016,
which ended on June 30, 2016.
“PAREXEL had a successful fourth quarter,” said Chairman and
Chief Executive Officer Josef H. von Rickenbach. “We achieved
strong year-over-year diluted EPS growth, driven by revenue growth
and substantial year-over-year margin improvement in the quarter.
Solid new business wins drove a net book-to-bill ratio of 1.20 in
the quarter and speak to the potential for future revenue
growth.
“This fourth quarter performance capped a productive Fiscal Year
2016. Diluted EPS in Fiscal Year 2016 grew 9.1% and 22.9% on a GAAP
and adjusted basis, respectively. Adjusted operating margin
improved 210 basis points during Fiscal Year 2016 to 12.8%. Record
new business wins contributed to a Fiscal Year 2016 net
book-to-bill of 1.24 and full-year backlog growth of 7.4%. We
successfully completed our Margin Acceleration Program (MAP),
exceeding our savings targets.
“Looking ahead, we expect continued success in Fiscal Year 2017
and beyond,” Mr. von Rickenbach continued. “We believe that the
environment for new business continues to be encouraging, as the
market for biopharmaceutical services continues to grow. We also
remain fully committed to continuing our margin improvement
efforts. Based on our solid prospects, we confirm our previous
revenue guidance and increase our adjusted diluted EPS guidance for
Fiscal Year 2017.”
Fourth Quarter Fiscal Year 2016
Results
For the three months ended June 30, 2016, PAREXEL’s service
revenue increased 3.0% to $538.6 million, compared with $523.0
million in the prior year period. Income from operations as
reported under Generally Accepted Accounting Principles (GAAP)
totaled $66.0 million, or 12.3% of service revenue, in the fourth
quarter of Fiscal Year 2016, as compared with $39.3 million, or
7.5% of service revenue, in the comparable quarter of the prior
year. GAAP net income for the quarter totaled $44.3 million, or
$0.83 per diluted share, compared with $34.2 million, or $0.61 per
diluted share, for the quarter ended June 30, 2015. GAAP diluted
earnings per share in the quarter increased 36.1% year over
year.
The financial results of the June quarter in the current and
prior year period each included items outside of the Company’s
normal operations, as detailed in the financial tables within this
press release. PAREXEL’s service revenue increased by 2.6%, on a
constant currency basis to $538.6 million, compared with the prior
year period. Excluding revenue of $7.8 million arising from the
acquisition of Health Advances, revenue increased by 1.2% on a
constant currency basis, compared to the prior year. Adjusted
operating income in the fourth quarter of Fiscal Year 2016 was
$73.9 million, or 13.7% of service revenue. Adjusted operating
income in the fourth quarter of Fiscal Year 2015 was $56.5 million,
or 10.8% of service revenue. Adjusted net income was $50.3 million,
or $0.94 per diluted share, in the quarter ended June 30, 2016, and
was $44.3 million, or $0.79 per diluted share, in the quarter ended
June 30, 2015. Adjusted diluted earnings per share in the quarter
grew 19.0% year over year.
On a segment basis, service revenue for the fourth quarter of
Fiscal Year 2016 was $407.9 million in Clinical Research Services
(CRS), $59.8 million in PAREXEL Consulting (PC), and $70.9 million
in PAREXEL Informatics (PI).
Twelve Month Fiscal Year 2016
Results
For the twelve months ended June 30, 2016, service revenue was
$2,096.3 million versus $2,016.0 million in the prior year period,
an increase of 4.0%. GAAP operating income for the current twelve
month period was $225.8 million, or 10.8% of service revenue,
compared with $199.9 million, or 9.9% of service revenue in the
prior year period. GAAP net income for the twelve months ended June
30, 2016 was $156.5 million, or $2.89 per diluted share, compared
with $147.8 million, or $2.65 per diluted share, in the prior year
period.
The financial results of the current and prior Fiscal Year each
included items outside of the Company’s normal operations, as
detailed in the financial tables within this press release.
PAREXEL’s service revenue increased by 5.1% on a constant currency
basis to $2,096.3 million for the twelve months ended June 30, 2016
compared to the prior year period. Excluding revenue of $37 million
arising from the acquisitions of Health Advances and QSI, revenue
increased by 3.2% on a constant currency basis, compared to the
prior year. Adjusted operating income was $267.6 million, or 12.8%
of service revenue, for the twelve months ended June 30, 2016,
compared with $216.4 million, or 10.7% of service revenue, for the
twelve months ended June 30, 2015. Adjusted net income for the
twelve months ended June 30, 2016 was $185.9 million, or $3.43 per
diluted share, compared with $155.9 million, or $2.79 per diluted
share, in the comparable prior year twelve month period.
New Business and Backlog
Backlog as of June 30, 2016 was $5.7 billion, an increase of
$400 million year over year. The reported backlog included gross
new business wins in the fourth quarter of $967 million,
cancellations of $322 million, and a negative impact from foreign
currency exchange rates of $37 million. The net book-to-bill ratio
was 1.20 in the quarter.
Forward-Looking Guidance
The Company issued forward-looking guidance for the first
quarter of Fiscal Year 2017 (ending September 30, 2016) and updated
its guidance for revenue and EPS for Fiscal Year 2017, as detailed
in the chart below. The guidance takes into account a number of
factors, including recent foreign currency exchange rates, tax
rates, and the Company’s updated overall outlook.
The Company’s guidance is:
Guidance Issued
8/3/16
Guidance Issued
6/30/16
Q1 FY 2017 Revenue $520-$530 million NA Q1 FY 2017 GAAP EPS
$0.80-$0.88 NA Q1 FY 2017 Non-GAAP EPS* $0.82-$0.90 NA FY
2017 Revenue $2.175-$2.205 billion $2.175-$2.205 billion FY 2017
GAAP EPS $3.72-$3.98 $3.68-$3.96 FY 2017 Non-GAAP EPS*
$3.79-$4.05 $3.75-$4.03
*Adjusted numbers excludes various items, as detailed in a table
contained within this release.
Additional Information
The financial results in this release are preliminary and
unaudited.
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 are not meant to be considered superior to, nor a
substitute for, the Company’s results of operations prepared in
accordance with GAAP.
A conference call to discuss PAREXEL’s fourth quarter and full
year Fiscal Year 2016 earnings, business, and financial outlook
will begin at 10:00 a.m. ET on Thursday, August 4, 2016 and will be
broadcast live over the internet via webcast. The webcast may be
accessed in the “IR Calendar” portion of the main page of the
Investors 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 International fourth
quarter Fiscal Year 2016 earnings conference call.
A presentation of fourth quarter and full year Fiscal Year 2016
results, as well as certain trended financial information, may be
found on the home page of the Investors portion of the Company’s
website in a document titled “Q4 Financial Results and Trended
Information.”
About PAREXEL International
PAREXEL International Corporation is a leading global
biopharmaceutical services company, providing a broad range of
expertise-based clinical 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, and
reimbursement. PAREXEL Informatics provides advanced technology
solutions, including medical imaging, to facilitate the clinical
development process. Headquartered near Boston, Massachusetts,
PAREXEL has offices in 84 locations in 51 countries around the
world, and had approximately 18,600 employees in the fourth
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 from the
restructuring; 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, LLC, 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 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 Consolidated
Condensed Statement of Operations (Unaudited)
Three Months Ended Twelve Months
Ended (in millions, except per share data)
June 30,
2016* June 30, 2015 June 30, 2016
June 30, 2015 Service revenue $ 538.6 $ 523.0 $ 2,096.3 $
2,016.0 Reimbursement revenue 89.2 82.2 332.3
314.3 Total revenue 627.8 605.2 2,428.6 2,330.3 Costs and
expenses: Direct costs 348.0 360.1 1,361.5 1,344.2 Reimbursable
out-of-pocket expenses 89.2 82.2 332.3 314.3 Selling, general and
administrative 94.9 80.8 384.3 367.2 Depreciation 20.3 17.7 74.6
69.3 Amortization 5.0 5.1 22.3 15.6 Restructuring charge 4.4
20.0 27.8 19.8 Total costs and expenses 561.8
565.9 2,202.8 2,130.4 Income from operations 66.0 39.3 225.8 199.9
Other (expense) income, net (3.8 ) (1.9 ) (8.4 ) 0.3 Income
before income taxes 62.2 37.4 217.4 200.2 Provision for income
taxes 17.9 3.2 60.9 52.4 Effective tax rate 28.8 % 8.7 % 28.0 %
26.2 % Net income $ 44.3 $ 34.2 $ 156.5 $
147.8
Earnings per common
share:
Basic $ 0.84 $ 0.62 $ 2.93 $ 2.69 Diluted $ 0.83 $ 0.61 $ 2.89 $
2.65
Shares used in
computing earnings per commonshare:
Basic 52.7 55.2 53.5 54.9 Diluted 53.3 56.0 54.2 55.8 * The
results of the fourth quarter include certain non-material
adjustments that relate to earlier reporting periods.
Balance Sheet
Information
(Unaudited) (in millions)
June 30, 2016
June 30, 2015 Billed accounts receivable, net $ 506.1 $
460.6 Unbilled accounts receivable, net 329.2 262.2 Deferred
revenue (457.8 ) (414.0 ) Net receivables $ 377.5 $ 308.8
Cash and cash equivalents $ 248.6 $ 207.4 Working
capital $ 409.1 $ 352.5 Total assets $ 2,027.2 $ 1,865.0 Short-term
borrowings $ 16.6 $ 8.9 Long-term debt $ 487.9 $ 348.2
Stockholders' equity $ 635.0 $ 665.3
PAREXEL
International Corporation Reconciliation of Non-GAAP
Measures Certain Line Items (Unaudited)
(in millions, except per share data)
Three Months Ended Three Months Ended June 30,
2016 June 30, 2015 GAAP Measure
Adjustments Non-GAAP Measure GAAP Measure
Adjustments Non-GAAP Measure Direct costs $
348.0 $ (1.6 ) (a) $ 346.4 $ 360.1 $ — $ 360.1 Gross profit $ 190.6
$ 1.6 $ 192.2 $ 162.9 $ — $ 162.9 Selling, general and
administrative $ 94.9 $ (1.9 ) (b) $ 93.0 $ 80.8 $ 2.8 (b) $ 83.6
Restructuring charge $ 4.4 $ (4.4 ) (c) $ — $ 20.0 $ (20.0 ) (c) $
— Income from operations $ 66.0 $ 7.9 $ 73.9 $ 39.3 $ 17.2 $ 56.5
Other expense, net $ (3.8 ) $ 0.2 (d) $ (3.6 ) $ (1.9 ) $ — $ (1.9
) Income before income taxes $ 62.2 $ 8.1 $ 70.3 $ 37.4 $ 17.2 $
54.6 Provision for income taxes $ 17.9 $ 2.1 (e) $ 20.0 $ 3.2 $ 7.1
(f) $ 10.3 Net income $ 44.3 $ 6.0 $ 50.3 $ 34.2 $ 10.1 $ 44.3
Diluted earnings per common share $ 0.83 $ 0.11 $ 0.94 $ 0.61 $
0.18 $ 0.79 Effective tax rate 28.8 % 28.4 % 8.7 % 18.9 %
(a) Impact of net adjustments for acquisition and integration
related charges in our PC segment
(b) Impact of net adjustments for legal settlements and
acquisition and integration related charges, including the
revaluation of earn-out contingent consideration liability
associated with certain acquisitions
(c) Severance, facility costs and changes in estimates related
to the Margin Acceleration Program
(d) Interest on legal settlements
(e) Tax effect on non-GAAP adjustments
(f) Tax effect on non-GAAP adjustments, and a $1.7 million
adjustment due to reserve release
PAREXEL International Corporation Reconciliation
of Non-GAAP Measures Certain Line Items (Unaudited)
(in millions, except per
share data)
Twelve Months Ended Twelve Months Ended
June 30, 2016 June 30, 2015 GAAP Measure
Adjustments Non-GAAP Measure GAAP
Measure Adjustments Non-GAAP Measure
Direct costs $ 1,361.5 $ (3.4 ) (a) $ 1,358.1 $ 1,344.2 $ — $
1,344.2 Gross profit $ 734.8 $ 3.4 $ 738.2 $ 671.8 $ — $ 671.8
Selling, general and administrative $ 384.3 $ (10.6 ) (b) $ 373.7 $
367.2 $ 3.3 (b) $ 370.5 Restructuring charge $ 27.8 $ (27.8 ) (c) $
— $ 19.8 $ (19.8 ) (c) $ — Income from operations $ 225.8 $ 41.8 $
267.6 $ 199.9 $ 16.5 $ 216.4 Other (expense) income, net $ (8.4 ) $
0.2 (d) $ (8.2 ) $ 0.3 $ 0.1 (f) $ 0.4 Income before income taxes $
217.4 $ 42.0 $ 259.4 $ 200.2 $ 16.6 $ 216.8 Provision for income
taxes $ 60.9 $ 12.6 (e) $ 73.5 $ 52.4 $ 8.5 (g) $ 60.9 Net income $
156.5 $ 29.4 $ 185.9 $ 147.8 $ 8.1 $ 155.9 Diluted earnings per
common share $ 2.89 $ 0.54 $ 3.43 $ 2.65 $ 0.14 $ 2.79 Effective
tax rate 28.0 % 28.3 % 26.2 % 28.1 %
(a) Impact of net adjustments for acquisition and integration
related charges in our PC segment
(b) Impact of net adjustments for legal settlements and
acquisition and integration related charges, including the
revaluation of earn-out contingent consideration liability
associated with certain acquisitions
(c) Severance, facility costs and changes in estimates related
to the Margin Acceleration Program
(d) Interest on legal settlements
(e) Tax effect on non-GAAP adjustments
(f) Accelerated amortization of deferred financing fees related
to credit facility modification
(g) Tax effect on non-GAAP adjustments, and a $1.7 million
adjustment due to reserve release
PAREXEL International Corporation Segment
Information (Unaudited)
Three Months Ended Three Months Ended (dollar amounts
in millions)
June 30, 2016 June 30, 2015 CRS
Service revenue $ 407.9 $ 419.2
(a)
% of total service revenue 75.7 % 80.1 % Gross profit $ 128.8 $
114.7 (a) Gross margin % of service revenue 31.6 % 27.4 %
PC Service revenue $ 59.8 $ 37.6 (a) % of total service
revenue 11.1 % 7.2 % Gross profit $ 26.8 $ 17.3 (a) Gross margin %
of service revenue 44.8 % 46.0 % Adjusted gross profit $ 28.4 (b) $
17.3 (a) Adjusted gross margin % of service revenue 47.5 % 46.0 %
PI Service revenue $ 70.9 $ 66.2 % of total service
revenue 13.2 % 12.7 % Gross profit $ 35.0 $ 30.9 Gross margin % of
service revenue 49.4 % 46.7 %
Total service revenue $
538.6 $ 523.0
Total gross profit $ 190.6 $ 162.9
Gross
margin % of service revenue 35.4 % 31.2 %
Adjusted gross
profit $ 192.2 (b) $ 162.9
Adjusted gross margin % of
service revenue 35.7 % 31.2 %
Quarterly
Supplemental Financial Data
Service revenue $ 538.6 $ 523.0 Reimbursement revenue 89.2 82.2
Investigator fees 92.3 111.9 Gross revenue $
720.1 $ 717.1 Days sales outstanding 48
39 Capital expenditures $ 18.7 $ 34.6
(a) Effective July 1, 2015, the operating results of HERON™ and
PAREXEL Medical Communications are included in the CRS segment.
These service lines were previously reported within the PC segment.
For the three months ended June 30, 2016, we disclosed the
reportable segment on this basis and the prior period was
retroactively revised to reflect this presentation change.
(b) See the direct costs Non-GAAP reconciliation for the nature
of the adjustments from GAAP.
PAREXEL International Corporation Segment Information
(Unaudited)
Twelve Months Ended
Twelve Months Ended (dollar amounts in millions)
June 30,
2016 June 30, 2015 CRS Service revenue $ 1,628.0
$ 1,599.1 (a) % of total service revenue 77.7 % 79.4 % Gross profit
$ 515.9 $ 472.6 (a) Gross margin % of service revenue 31.7 % 29.6 %
PC Service revenue $ 190.4 $ 152.2 (a) % of total
service revenue 9.1 % 7.5 % Gross profit $ 88.2 $ 71.7 (a) Gross
margin % of service revenue 46.3 % 47.1 % Adjusted gross profit $
91.6 (b) $ 71.7 Adjusted gross margin % of service revenue 48.1 %
47.1 %
PI Service revenue $ 277.9 $ 264.7 % of total
service revenue 13.2 % 13.1 % Gross profit $ 130.7 $ 127.5 Gross
margin % of service revenue 47.0 % 48.2 %
Total service
revenue $ 2,096.3 $ 2,016.0
Total gross profit $ 734.8 $
671.8
Gross margin % of service revenue 35.1 % 33.3 %
Adjusted gross profit $ 738.2 (b) $ 671.8
Adjusted gross
margin % of service revenue 35.2 % 33.3 %
(a) Effective July 1, 2015, the operating results of HERON™ and
PAREXEL Medical Communications are included in the CRS segment.
These service lines were previously reported within the PC segment.
For the twelve months ended June 30, 2016, we disclosed the
reportable segment on this basis and the prior period was
retroactively revised to reflect this presentation change.
(b) See the direct costs Non-GAAP reconciliation for the nature
of the adjustments from GAAP.
PAREXEL International Corporation Reconciliation
of Non-GAAP Measures for Guidance Issued on August 3, 2016
Certain Line Items (Unaudited)
(in millions, except per share data)
Guidance for
the Three Months Ending Guidance for the Twelve Months
Ending September 30, 2017 June 30, 2017 GAAP
Measure Adjustments Non-GAAP Measure
GAAP Measure Adjustments Non-GAAP
Measure Direct costs $ (2.0 ) (a) $ (7.3 ) (a) Gross profit $
2.0 $ 7.3 Selling, general and administrative $ — $ — Restructuring
expense $ — $ — Income from operations $ 2.0 $ 7.3 Income before
income taxes $ 2.0 $ 7.3 Provision for income taxes $ 0.9 (b) $ 3.5
(b) Net income $ 1.1 $ 3.8
Diluted earnings per commonshare
$0.80-$0.88 $0.02 $0.82-$0.90 $3.72-$3.98 $0.07 $3.79-$4.05
(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/20160803006685/en/
PAREXEL International CorporationEmma Reeve, +
1-781-434-4118Corporate Vice President and Interim Chief Financial
OfficerIR@PAREXEL.comorPAREXEL International CorporationRonald
Aldridge, + 1-781-434-4753 or +1-781-434-8465Senior Director of
Investor RelationsRon.Aldridge@PAREXEL.com
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