- Adjusted earnings per share of $0.90,
up 30.4%; GAAP diluted earnings per share of $0.73
- Adjusted operating margin of 13.2%;
GAAP operating margin of 10.5%
- Gross new business wins of $867
million; net book-to-bill ratio of 1.24; backlog at $5.5
billion
- Service revenue of $518.5 million, up
3.8%; constant currency revenue growth of 5.6%
- Restructuring charge of $10.4 million
related to Margin Acceleration Program
PAREXEL International Corporation (NASDAQ: PRXL) today reported
financial results for the second quarter of Fiscal Year 2016, which
ended on December 31, 2015.
“PAREXEL’s earnings per share and operating margin exceeded our
expectations in the second quarter, and we were pleased with our
strong performance on new business,” said Chairman and Chief
Executive Officer Josef H. von Rickenbach.“This was a quarter of
solid operational improvement for PAREXEL. Our Margin Acceleration
Program remained on track, and our labor mix and geographic
footprint leverage both improved. Demand for outsourced
biopharmaceutical R&D services remained robust, and we believe
that PAREXEL’s expertise, service offerings and footprint are
well-aligned with client requirements. Our book-to-bill ratio was
1.24 in the quarter, driven by new business wins across the
Company.”
Mr. von Rickenbach continued, “We also made solid progress in
advancing our strategy with the anticipated acquisition of Health
Advances and the formation of a strategic data alliance with Optum,
a leading information and technology-enabled health services
business, part of UnitedHealth Group.”
Mr. von Rickenbach added, “Looking forward, we expect continued
success in new business wins reflecting favorable underlying
industry dynamics and PAREXEL’s strong market presence. Most
importantly, we expect to make further progress on our margin
improvement initiatives, and we believe that PAREXEL is on track
towards meeting our profitability targets for the Fiscal Year.”
Second Quarter Fiscal Year 2016
Results
For the three months ended December 31, 2015, PAREXEL’s service
revenue increased 3.8% to $518.5 million, compared with $499.3
million in the prior year period. A restructuring charge of $10.4
million was recorded in the quarter related to PAREXEL’s ongoing
Margin Acceleration Program. Operating income as reported under
Generally Accepted Accounting Principles (GAAP) totaled $54.6
million, or 10.5% of service revenue, in the second quarter of
Fiscal Year 2016, as compared with $52.8 million, or 10.6% of
service revenue, in the comparable quarter of the prior year. GAAP
net income for the quarter totaled $39.4 million, or $0.73 per
diluted share, compared with $38.8 million, or $0.70 per diluted
share, for the quarter ended December 31, 2014. GAAP diluted
earnings per share increased 4.3% year-over-year.
The financial results of the December 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 5.6% on a
constant currency basis to $518.5 million, compared with the prior
year period. Adjusted operating income in the second quarter of
Fiscal Year 2016 was $68.4 million, or 13.2% of service revenue.
Adjusted operating income in the second quarter of Fiscal Year 2015
was $53.0 million, or 10.6% of service revenue. Adjusted net income
was $48.7 million, or $0.90 per diluted share in the quarter ended
December 31, 2015, and was $38.4 million, or $0.69 per diluted
share in the quarter ended December 31, 2014. Adjusted diluted
earnings per share grew 30.4% year-over-year.
On a segment basis, service revenue for the second quarter of
Fiscal Year 2016 was $407.1 million in Clinical Research Services
(CRS), $41.4 million in PAREXEL Consulting (PC), and $70.0 million
in PAREXEL Informatics (PI).
Six Month Fiscal Year 2016
Results
For the six months ended December 31, 2015, service revenue was
$1,030.6 million versus $991.0 million in the prior year period, an
increase of 4.0%. GAAP operating income for the current six-month
period was $90.1 million, or 8.7% of service revenue, compared with
$106.4 million, or 10.7% of service revenue in the prior year
period. GAAP net income for the six months ended December 31, 2015
was $64.3 million, or $1.17 per diluted share, compared with $75.9
million, or $1.36 per diluted share, in the prior year period.
The financial results of the first six months in 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 6.2% on a
constant currency basis to $1,030.6 million for the six months
ended on December 31, 2015 compared to the prior year period.
Adjusted operating income was $123.7 million or 12% of service
revenue for the six months ended December 31, 2015, compared with
$105.8 million or 10.7% of service revenue for the six months ended
on December 31, 2014. Adjusted net income for the six months ended
December 31, 2015 was $87.7 million, or $1.60 per diluted share,
compared with $74.7 million, or $1.34 per diluted share in the
comparable prior year six month period.
New Business and Backlog
Backlog at the end of December 2015 was $5.5 billion, an
increase of 7.5% year-over-year. The reported backlog included
gross new business wins in the second quarter of $867 million,
cancellations of $224 million, and a negative impact from foreign
currency exchange rates of $73 million. The net book-to-bill ratio
was 1.24 in the quarter.
Forward-looking Guidance
The Company issued forward-looking guidance for the third
quarter of Fiscal Year 2016 (ending March 31, 2016) and updated its
guidance for revenue and EPS for Fiscal Year 2016 as detailed in
the chart below. The guidance takes into account a number of
factors, including recent foreign currency exchange rates, tax
rates, the anticipated Health Advances acquisition (excluding the
impact of purchase accounting) and the Company’s updated overall
outlook.
The Company’s guidance is:
Guidance Issued
1/27/16
Guidance Issued
10/28/15
Q3 FY 2016 Revenue
$517 - $527 million
N/A Q3 FY 2016 GAAP EPS $0.84 - $0.92 N/A Q3 FY 2016 non-GAAP EPS
$0.84 - $0.92 N/A FY 2016 Revenue $2.085 - $2.115 billion
$2.120 - $2.160 billion FY 2016 GAAP EPS $2.97 - $3.15 $2.86 -
$3.06 FY 2016 non-GAAP EPS* $3.40 - $3.58
$3.19 - $3.39
*Adjusted diluted EPS guidance for Fiscal Year 2016 excludes
anticipated charges related to the Company’s ongoing restructuring
program ("Margin Acceleration Program"), as detailed in a table
contained within this release.
Additional Information
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 second quarter Fiscal
Year 2016 earnings, business, and financial outlook will begin at
10:00 a.m. ET on Thursday, January 28, 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 second
quarter Fiscal Year 2016 earnings conference call.
A presentation of second quarter 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 “Q2 Financial Results and Trended Information.”
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 provides advanced
technology solutions, including medical imaging, to facilitate the
clinical development process. Headquartered near Boston,
Massachusetts, PAREXEL has offices in 77 locations in 51 countries
around the world, and had approximately 18,200 employees in the
second 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 charge disclosed in the press release dated June 23,
2015; 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
Quantum Solutions India and the anticipated 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 Six Months
Ended (in millions, except per share data)
December 31,
2015 December 31, 2014 December 31,
2015 December 31, 2014 Service revenue $
518.5 $ 499.3 $ 1,030.6 $ 991.0 Reimbursement revenue 85.7
75.7 158.8 157.7 Total revenue 604.2 575.0
1,189.4 1,148.7 Costs and expenses: Direct costs 332.5 327.3 675.7
646.1 Reimbursable out-of-pocket expenses 85.7 75.7 158.8 157.7
Selling, general and administrative 97.4 98.8 192.3 197.8
Depreciation 17.9 16.8 35.9 33.7 Amortization 5.7 3.6 11.4 7.1
Restructuring charge (benefit) 10.4 — 25.2
(0.1 ) Total costs and expenses 549.6 522.2 1,099.3 1,042.3 Income
from operations 54.6 52.8 90.1 106.4 Other (expense) income, net
(2.2 ) 1.1 (2.0 ) 2.7 Income before income taxes 52.4
53.9 88.1 109.1 Provision for income taxes 13.0 15.1 23.8 33.2
Effective tax rate 24.8 % 28.0 % 27.0 % 30.4 % Net income $ 39.4
$ 38.8 $ 64.3 $ 75.9
Earnings per common
share:
Basic $ 0.74 $ 0.71 $ 1.19 $ 1.39 Diluted $ 0.73 $ 0.70 $ 1.17 $
1.36
Shares used in
computing earnings per common share:
Basic 53.3 54.8 54.1 54.8 Diluted 54.0 55.7 54.9 55.7
Balance Sheet
Information
(in millions)
December 31, 2015 December 31, 2014
June 30, 2015 Billed accounts receivable, net $ 488.8 $
435.0 $ 460.6 Unbilled accounts receivable, net 283.6 214.3 262.2
Deferred revenue (436.5 ) (448.8 ) (414.0 ) Net receivables $ 335.9
$ 200.5 $ 308.8 Cash and cash
equivalents $ 154.0 $ 301.9 $ 207.4 Working capital $ 326.8 $ 391.4
$ 352.5 Total assets $ 1,845.5 $ 1,769.2 $ 1,865.0 Short-term
borrowings $ 12.8 $ 2.5 $ 8.9 Long-term debt $ 460.4 $ 347.5 $
348.2 Stockholders' equity $ 519.4 $ 589.2 $ 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
December 31, 2015 December 31, 2014
GAAPMeasure
Adjustments
Non-GAAPMeasure
GAAPMeasure
Adjustments
Non-GAAPMeasure
Selling, general and administrative $ 97.4 $ (3.4 ) (a) $ 94.0 $
98.8 $ (0.2 ) (d) $ 98.6 Restructuring charge $ 10.4 $ (10.4 ) (b)
$ — $ — $ — $ — Income from operations $ 54.6 $ 13.8 $ 68.4 $ 52.8
$ 0.2 $ 53.0 Other (expense) income, net $ (2.2 ) $ — $ (2.2 ) $
1.1 $ 0.1 (e) $ 1.2 Income before income taxes $ 52.4 $ 13.8 $ 66.2
$ 53.9 $ 0.3 $ 54.2 Provision for income taxes $ 13.0 $ 4.5 (c) $
17.5 $ 15.1 $ 0.7 (c) $ 15.8 Net income $ 39.4 $ 9.3 $ 48.7 $ 38.8
$ (0.4 ) $ 38.4 Diluted earnings per common share $ 0.73 $ 0.17 $
0.90 $ 0.70 $ (0.01 ) $ 0.69 Effective tax rate 24.8 % 26.4 % 28.0
% 29.2 % (a) Impact of net adjustments for acquisition and
integration related charges, including the revaluation of earn-out
contingent consideration liability associated with certain
acquisitions (b) Severance and facility costs related to the Margin
Acceleration Program (c) Tax effect on non-GAAP adjustments (d)
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 (e) Accelerated amortization of deferred financing
fees related to credit facility modification
PAREXEL
International Corporation Reconciliation of Non-GAAP
Measures Certain Line Items (Unaudited)
(in millions, except per share data)
Six Months Ended Six Months Ended December 31,
2015 December 31, 2014
GAAPMeasure
Adjustments
Non-GAAPMeasure
GAAPMeasure
Adjustments
Non-GAAPMeasure
Selling, general and administrative $ 192.3 $ (8.4 ) (a) $ 183.9 $
197.8 $ 0.5 (d) $ 198.3 Restructuring charge (benefit) $ 25.2 $
(25.2 ) (b) $ — $ (0.1 ) $ 0.1 (e) $ — Income from operations $
90.1 $ 33.6 $ 123.7 $ 106.4 $ (0.6 ) $ 105.8 Other (expense)
income, net $ (2.0 ) $ — $ (2.0 ) $ 2.7 $ 0.1 (f) $ 2.8 Income
before income taxes $ 88.1 $ 33.6 $ 121.7 $ 109.1 $ (0.5 ) $ 108.6
Provision for income taxes $ 23.8 $ 10.2 (c) $ 34.0 $ 33.2 $ 0.7
(c) $ 33.9 Net income $ 64.3 $ 23.4 $ 87.7 $ 75.9 $ (1.2 ) $ 74.7
Diluted earnings per common share $ 1.17 $ 0.43 $ 1.60 $ 1.36 $
(0.02 ) $ 1.34 Effective tax rate 27.0 % 27.9 % 30.4 % 31.3 %
(a) Impact of net adjustments for acquisition and
integration related charges, including the revaluation of earn-out
contingent consideration liability associated with certain
acquisitions (b) Severance and facility costs related to the Margin
Acceleration Program (c) Tax effect on non-GAAP adjustments (d)
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 (e) Decrease in facility-related charges associated
with restructuring plans (f) Accelerated amortization of deferred
financing fees related to credit facility modification
PAREXEL International Corporation Segment Information
(Unaudited)
Three Months Ended Three Months Ended (in millions)
December 31, 2015 December 31, 2014 CRS
Service revenue $ 407.1 $ 393.7 (a) % of total service revenue 78.5
% 78.8 % Gross profit $ 132.7 $ 119.6 (a) Gross margin % of service
revenue 32.6 % 30.4 %
PC Service revenue $ 41.4 $
39.8 (a) % of total service revenue 8.0 % 8.0 % Gross profit $ 20.6
$ 19.2 (a) Gross margin % of service revenue 49.8 % 48.2 %
PI Service revenue $ 70.0 $ 65.8 % of total service revenue
13.5 % 13.2 % Gross profit $ 32.7 $ 33.2 Gross margin % of service
revenue 46.7 % 50.5 %
Total service revenue $ 518.5 $
499.3
Total gross profit $ 186.0 $ 172.0
Gross margin %
of service revenue 35.9 % 34.4 %
Quarterly
Supplemental Financial Data
Service revenue $ 518.5 $ 499.3 Reimbursement revenue 85.7 75.7
Investigator fees 105.2 121.1 Gross revenue $
709.4 $ 696.1 Days sales outstanding 44
26 Capital expenditures $ 22.4 $ 11.5 (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 December 31, 2015, we disclosed the reportable
segments on this basis and the prior period was retroactively
revised to reflect this presentation change.
PAREXEL
International Corporation Segment Information
(Unaudited)
Six
Months Ended Six Months Ended (in millions)
December
31, 2015 December 31, 2014 CRS Service revenue $
817.3 $ 778.6 (a) % of total service revenue 79.3 % 78.5 % Gross
profit $ 255.4 $ 241.4 (a) Gross margin % of service revenue 31.2 %
31.0 %
PC Service revenue $ 80.7 $ 81.1 (a) % of
total service revenue 7.8 % 8.2 % Gross profit $ 39.7 $ 38.9 (a)
Gross margin % of service revenue 49.2 % 48.0 %
PI
Service revenue $ 132.6 $ 131.3 % of total service revenue 12.9 %
13.3 % Gross profit $ 59.8 $ 64.6 Gross margin % of service revenue
45.1 % 49.2 %
Total service revenue $ 1,030.6 $ 991.0
Total gross profit $ 354.9 $ 344.9
Gross margin % of
service revenue 34.4 % 34.8 % (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 December 31, 2015, we disclosed the reportable
segments on this basis and the prior period was retroactively
revised to reflect this presentation change.
PAREXEL
International Corporation Reconciliation of Non-GAAP
Measures for Guidance Issued on January 27, 2016 Certain
Line Items (Unaudited) (in
millions, except per share data)
Guidance for the Twelve Months
Ending June 30, 2016 GAAP Measure (a)
Adjustments Non-GAAP Measure Selling, general
and administrative $ (8.4 ) (b) Restructuring expense
$ (25.2 ) (c) Income from operations $ 33.6 Other income (expense),
net $ — Income before income taxes $ 33.6 Provision for income
taxes $ 10.2 (d) Net income $ 23.4 Diluted earnings per
common share $2.97-$3.15 $ 0.43 $3.40-$3.58 (a) These
amounts do not include the impact of purchase accounting from the
anticipated Health Advances acquisition. (b) Impact of net
adjustments for acquisition and integration related charges,
including the revaluation of earn-out contingent consideration
liability associated with certain acquisitions (c) Severance and
facility costs related to the Margin Acceleration Program (d) Tax
effect on non-GAAP adjustments
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160127006358/en/
PAREXEL International CorporationIngo Bank, Senior Vice
President and Chief Financial OfficerInvestor Relations, +
1-781-434-4118IR@PAREXEL.com
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