- Adjusted earnings per share of $0.89,
up 34.8%; GAAP diluted earnings per share of $0.89, up 30.9%
- Adjusted operating margin of 13.3%;
GAAP operating margin of 13.2%
- Gross new business wins of $999
million; net book-to-bill ratio of 1.33; backlog at $5.7
billion
- Service revenue of $527.1 million, up
5.0%; constant currency revenue growth of 5.4%
PAREXEL International Corporation (NASDAQ: PRXL) today reported
financial results for the third quarter of Fiscal Year 2016, which
ended on March 31, 2016.
“I am pleased with PAREXEL's solid third quarter,” said Chairman
and Chief Executive Officer Josef H. von Rickenbach. “The Company
achieved revenue in line with its expectations, healthy growth in
new business awards and backlog, substantial profitability
improvement, and robust diluted EPS growth. Strong gross new
business wins of nearly $1 billion contributed to a net
book-to-bill of 1.33. Backlog grew 9.1% year-over-year to $5.7
billion. Profitability improvement across the Company reflected the
benefits of our Margin Acceleration Program (MAP).
“We believe the Company is poised for a successful finish to
Fiscal Year 2016, including realization of our MAP objectives,” Mr.
von Rickenbach continued. “Looking to Fiscal Year 2017 and beyond,
we intend to continue building our leadership position in our core
businesses and to invest in adjacent areas to serve the world’s
biopharmaceutical, medical device, and diagnostics companies more
broadly. We will also continue our efforts to increase our
profitability by offering our customers value-added services and
improving our operational efficiency.”
Third Quarter Fiscal Year 2016
Results
For the three months ended March 31, 2016, PAREXEL’s service
revenue increased 5.0% to $527.1 million, compared with $502.0
million in the prior year period. Income from operations as
reported under Generally Accepted Accounting Principles (GAAP)
totaled $69.7 million, or 13.2% of service revenue, in the third
quarter of Fiscal Year 2016, as compared with $54.2 million, or
10.8% of service revenue, in the comparable quarter of the prior
year. GAAP diluted net income for the quarter totaled $47.9
million, or $0.89 per diluted share, compared with $37.7 million,
or $0.68 per diluted share, for the quarter ended March 31, 2015.
GAAP diluted earnings per share in the quarter increased 30.9%
year-over-year.
The financial results of the March 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 5.4% on a
constant currency basis to $527.1 million, compared with the prior
year period. Excluding the acquisitions of Health Advances and QSI,
revenue increased by 2.9% on a constant currency basis, compared to
the prior year. Adjusted operating income in the third quarter of
Fiscal Year 2016 was $70.0 million, or 13.3% of service revenue.
Adjusted operating income in the third quarter of Fiscal Year 2015
was $54.1 million, or 10.8% of service revenue. Adjusted net income
was $47.9 million, or $0.89 per diluted share, in the quarter ended
March 31, 2016, and was $36.9 million, or $0.66 per diluted share,
in the quarter ended March 31, 2015. Adjusted diluted earnings per
share grew in the quarter 34.8% year-over-year.
On a segment basis, service revenue for the third quarter of
Fiscal Year 2016 was $402.8 million in Clinical Research Services
(CRS), $49.9 million in PAREXEL Consulting (PC), and $74.4 million
in PAREXEL Informatics (PI).
Nine Month Fiscal Year 2016
Results
For the nine months ended March 31, 2016, service revenue was
$1,557.7 million versus $1,493.0 million in the prior year period,
an increase of 4.3%. GAAP operating income for the current nine
month period was $159.8 million, or 10.3% of service revenue,
compared with $160.6 million, or 10.8% of service revenue, in the
prior year period. GAAP net income for the nine months ended March
31, 2016 was $112.2 million, or $2.06 per diluted share, compared
with $113.6 million, or $2.04 per diluted share, in the prior year
period.
The financial results of the first nine 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 5.9% on a
constant currency basis to $1,557.7 million for the nine months
ended on March 31, 2016 compared to the prior year period.
Excluding the acquisitions of Health Advances and QSI, revenue
increased by 4.0% on a constant currency basis, compared to the
prior year. Adjusted operating income was $193.7 million, or 12.4%
of service revenue, for the nine months ended March 31, 2016,
compared with $159.9 million, or 10.7% of service revenue, for the
nine months ended on March 31, 2015. Adjusted net income for the
nine months ended March 31, 2016 was $135.6 million, or $2.49 per
diluted share, compared with $111.6 million, or $2.00 per diluted
share, in the comparable prior-year nine-month period.
New Business and Backlog
Backlog as of March 31, 2016 was $5.7 billion, an increase of
9.1% year-over-year. The reported backlog included gross new
business wins in the third quarter of $999 million, cancellations
of $299 million, and a negative impact from foreign currency
exchange rates of $3 million. The net book-to-bill ratio was 1.33
in the quarter.
Forward-looking Guidance
The Company issued forward-looking guidance for the fourth
quarter of Fiscal Year 2016 (ending June 30, 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, and the Company’s updated overall outlook.
The Company’s guidance is:
Guidance Issued
4/27/16
Guidance Issued
1/27/16
Q4 FY 2016 Revenue $528 - $538 million N/A Q4 FY 2016 GAAP EPS
$0.87 - $0.95 N/A Q4 FY 2016 non-GAAP EPS* $0.89 - $0.97 N/A
FY 2016 Revenue $2.085 - $2.095 billion $2.085 - $2.115 billion FY
2016 GAAP EPS $2.93 - $3.01 $2.97 - $3.15 FY 2016 non-GAAP EPS*
$3.38 - $3.46 $3.40 -
$3.58
*Adjusted diluted EPS guidance for Fiscal Year 2016 excludes
various items, 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 third quarter Fiscal Year
2016 earnings, business, and financial outlook will begin at 10:00
a.m. ET on Thursday, April 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 third quarter Fiscal Year 2016 earnings conference
call.
A presentation of third 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 “Q3 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 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 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
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
Nine Months Ended (in millions, except per share data)
March 31, 2016 March 31, 2015 March 31, 2016
March 31, 2015 Service revenue $ 527.1 $ 502.0 $ 1,557.7 $
1,493.0 Reimbursement revenue 84.3 74.4 243.1
232.1 Total revenue 611.4 576.4 1,800.8 1,725.1 Costs and
expenses: Direct costs 337.8 338.0 1,013.5 984.1 Reimbursable
out-of-pocket expenses 84.3 74.4 243.1 232.1 Selling, general and
administrative 97.1 88.6 289.4 286.4 Depreciation 18.4 17.9 54.3
51.6 Amortization 5.9 3.4 17.3 10.5 Restructuring (benefit) charge
(1.8 ) (0.1 ) 23.4 (0.2 ) Total costs and expenses 541.7
522.2 1,641.0 1,564.5 Income from operations 69.7 54.2 159.8 160.6
Other (expense) income, net (2.6 ) (0.5 ) (4.6 ) 2.2 Income
before income taxes 67.1 53.7 155.2 162.8 Provision for income
taxes 19.2 16.0 43.0 49.2 Effective tax rate 28.6 % 29.7 % 27.7 %
30.2 % Net income $ 47.9 $ 37.7 $ 112.2 $
113.6
Earnings per common
share:
Basic $ 0.91 $ 0.69 $ 2.09 $ 2.07 Diluted $ 0.89 $ 0.68 $ 2.06 $
2.04
Shares used in
computing earnings per common share:
Basic 52.9 54.9 53.7 54.8 Diluted 53.6 55.8 54.5 55.8
Balance Sheet
Information
(in millions)
March 31, 2016 March 31, 2015 June
30, 2015 Billed accounts receivable, net $ 558.3 $ 447.3 $
460.6 Unbilled accounts receivable, net 304.7 258.4 262.2 Deferred
revenue (471.9 ) (423.0 ) (414.0 ) Net receivables $ 391.1 $
282.7 $ 308.8 Cash and cash equivalents $
209.7 $ 295.4 $ 207.4 Working capital $ 479.4 $ 447.1 $ 352.5 Total
assets $ 2,092.6 $ 1,798.8 $ 1,865.0 Short-term borrowings $ 12.8 $
5.0 $ 8.9 Long-term debt $ 557.9 $ 380.0 $ 348.2 Stockholders'
equity $ 601.1 $ 603.8 $ 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 March
31, 2016 March 31, 2015
GAAPMeasure
Adjustments
Non-GAAPMeasure
GAAPMeasure
Adjustments
Non-GAAPMeasure
Direct costs $ 337.8 $ (1.8 ) (a) $ 336.0 $ 338.0 $ — $ 338.0 Gross
profit $ 189.3 $ 1.8 $ 191.1 $ 164.0 $ — $ 164.0 Selling, general
and administrative $ 97.1 $ (0.3 ) (b) $ 96.8 $ 88.6 $ — $ 88.6
Restructuring (benefit) charge $ (1.8 ) $ 1.8 (c) $ — $ (0.1 ) $
0.1 (e) $ — Income from operations $ 69.7 $ 0.3 $ 70.0 $ 54.2 $
(0.1 ) $ 54.1 Other expense, net $ (2.6 ) $ — $ (2.6 ) $ (0.5 ) $ —
$ (0.5 ) Income before income taxes $ 67.1 $ 0.3 $ 67.4 $ 53.7 $
(0.1 ) $ 53.6 Provision for income taxes $ 19.2 $ 0.3 (d) $ 19.5 $
16.0 $ 0.7 (d) $ 16.7 Net income $ 47.9 $ — $ 47.9 $ 37.7 $ (0.8 )
$ 36.9 Diluted earnings per common share $ 0.89 $ — $ 0.89 $ 0.68 $
(0.02 ) $ 0.66 Effective tax rate
28.6
%
28.9
%
29.7
%
31.2
%
(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 liability 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
(e) Decrease in facility-related charges associated with
restructuring plans
PAREXEL International Corporation
Reconciliation of Non-GAAP Measures Certain Line
Items (Unaudited) (in millions, except per share
data)
Nine Months Ended Nine Months Ended March
31, 2016 March 31, 2015
GAAPMeasure
Adjustments
Non-GAAPMeasure
GAAPMeasure
Adjustments
Non-GAAPMeasure
Direct costs $ 1,013.5 $ (1.8 ) (a) $ 1,011.7 $ 984.1 $ — $ 984.1
Gross profit $ 544.2 $ 1.8 $ 546.0 $ 508.9 $ — $ 508.9 Selling,
general and administrative $ 289.4 $ (8.7 ) (b) $ 280.7 $ 286.4 $
0.5 (e) $ 286.9 Restructuring charge (benefit) $ 23.4 $ (23.4 ) (c)
$ — $ (0.2 ) $ 0.2 (f) $ — Income from operations $ 159.8 $ 33.9 $
193.7 $ 160.6 $ (0.7 ) $ 159.9 Other (expense) income, net $ (4.6 )
$ — $ (4.6 ) $ 2.2 $ 0.1 (g) $ 2.3 Income before income taxes $
155.2 $ 33.9 $ 189.1 $ 162.8 $ (0.6 ) $ 162.2 Provision for income
taxes $ 43.0 $ 10.5 (d) $ 53.5 $ 49.2 $ 1.4 (d) $ 50.6 Net income $
112.2 $ 23.4 $ 135.6 $ 113.6 $ (2.0 ) $ 111.6 Diluted earnings per
common share $ 2.06 $ 0.43 $ 2.49 $ 2.04 $ (0.04 ) $ 2.00 Effective
tax rate 27.7 % 28.3 % 30.2 % 31.2 %
(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 liability 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
(e) 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
(f) Decrease in facility-related charges associated with
restructuring plans
(g) 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)
March 31, 2016 March 31, 2015
CRS Service revenue $ 402.8 $ 401.3 (a) % of total service
revenue 76.4 % 79.9 % Gross profit $ 131.7 $ 116.5 (a) Gross margin
% of service revenue 32.7 % 29.0 %
PC Service revenue
$ 49.9 $ 33.5 (a) % of total service revenue 9.5 % 6.7 % Gross
profit $ 21.7 $ 15.5 (a) Gross margin % of service revenue 43.5 %
46.3 % Adjusted gross profit $ 23.5 (b) $ 15.5 Adjusted gross
margin % of service revenue 47.1 % 46.3 %
PI Service
revenue $ 74.4 $ 67.2 % of total service revenue 14.1 % 13.4 %
Gross profit $ 35.9 $ 32.0 Gross margin % of service revenue 48.3 %
47.5 %
Total service revenue $ 527.1 $ 502.0
Total
gross profit $ 189.3 $ 164.0
Gross margin % of service
revenue 35.9 % 32.7 %
Adjusted gross profit $ 191.1 (b)
$ 164.0
Adjusted gross margin % of service revenue 36.3 %
32.7 %
Quarterly
Supplemental Financial Data
Service revenue $ 527.1 $ 502.0 Reimbursement revenue 84.3 74.4
Investigator fees 89.1 101.2 Gross revenue $
700.5 $ 677.6 Days sales outstanding 51
38 Capital expenditures $ 23.5 $ 22.0
(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 March 31, 2016, we disclosed the
reportable segments 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)
Nine Months Ended Nine Months Ended (in
millions)
March 31, 2016 March 31, 2015 CRS
Service revenue $ 1,220.1 $ 1,179.9 (a) % of total service revenue
78.3 % 79.0 % Gross profit $ 387.1 $ 357.9 (a) Gross margin % of
service revenue 31.7 % 30.3 %
PC Service revenue $
130.6 $ 114.6 (a) % of total service revenue 8.4 % 7.7 % Gross
profit $ 61.4 $ 54.4 (a) Gross margin % of service revenue 47.0 %
47.5 % Adjusted gross profit $ 63.2 (b) $ 54.4 Adjusted gross
margin % of service revenue 48.4 % 47.5 %
PI Service
revenue $ 207.0 $ 198.5 % of total service revenue 13.3 % 13.3 %
Gross profit $ 95.7 $ 96.6 Gross margin % of service revenue 46.2 %
48.7 %
Total service revenue $ 1,557.7 $ 1,493.0
Total gross profit $ 544.2 $ 508.9
Gross margin % of
service revenue 34.9 % 34.1 %
Adjusted gross profit $
546.0 (b) $ 508.9
Adjusted gross margin % of service revenue
35.1 % 34.1 %
(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 nine months ended March 31, 2016, we disclosed the
reportable segments 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 April 27, 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
GAAPMeasure
Adjustments
Non-GAAPMeasure
GAAP Measure Adjustments
Non-GAAPMeasure
Direct costs $ (1.6 ) (a) $ (3.4 ) (a) Gross profit $ 1.6 $
3.4 Selling, general and administrative $ — $ (8.7 ) (b)
Restructuring expense $ — $ (23.4 ) (c) Income from operations $
1.6 $ 35.5 Other income (expense), net $ — $ — Income before income
taxes $ 1.6 $ 35.5 Provision for income taxes $ 0.6 (d) $ 11.1 (d)
Net income $ 1.0 $ 24.4 Diluted earnings per common share
$0.87-$0.95
$ 0.02
$0.89-$0.97
$2.93-$3.01
$ 0.45
$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 liability 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
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160427006617/en/
PAREXEL International CorporationIngo Bank, Senior Vice
President and Chief Financial OfficerInvestor Relations, +
1-781-434-4118IR@PAREXEL.comorPAREXEL International
CorporationRonald Aldridge, Senior Director of Investor
RelationsInvestor Relations, +
1-781-434-4753Ron.Aldridge@PAREXEL.com
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