BOSTON, Oct. 29, 2014 /PRNewswire/ -- PAREXEL
International Corporation (NASDAQ: PRXL) today reported financial
results for the first quarter of Fiscal Year 2015, which ended on
September 30, 2014.
In commenting on the results of the quarter, Mr. Josef H. von Rickenbach, PAREXEL's Chairman and
Chief Executive Officer, stated, "Revenue grew 9.4% year-over-year
in the quarter but came in lower than expected, partly due to
seasonality at the beginning of our new fiscal year. In
addition, first quarter revenue conversion from backlog was lower
as a result of a shift in our backlog to projects in the start-up
stages, and a few large trials achieving their study objectives
ahead of schedule. Foreign exchange rate movements also
contributed to the lower revenue. As is normal, new business
wins in the quarter had little impact on the current quarter's
revenue. Gross margin improved year-over-year across each of
our three business segments, enabling us to achieve an adjusted
operating margin of 10.7% in the quarter. In addition,
favorable results in Other Income/Expense related to foreign
exchange helped us to exceed our first quarter earnings per share
target, allowing us to deliver strong year-over-year growth in
diluted earnings per share of 48.9%."
Mr. von Rickenbach continued,
"New business wins in the quarter were less than anticipated
primarily as a result of lower new business flow from strategic
partnerships. We are also experiencing a somewhat longer
decision cycle with regard to pending proposals. New business
awards outside of the strategic partnership segment remained
solid."
With regard to the remainder of the Fiscal Year, Mr.
von Rickenbach noted, "Our updated
outlook for Fiscal Year 2015 reflects the factors discussed above,
as well as the new realities on the foreign exchange front.
Furthermore, we expect backlog conversion to accelerate in the
second half of the Fiscal Year, reflecting a maturing backlog mix
in the latter part of the Fiscal Year. We believe the outlook
for the year remains solid, with expected revenue growth in the 8%
range, operating margin improvement of between 100-120 basis
points, and growth in adjusted earnings per share higher than
20%."
First Quarter Fiscal Year 2015 Results
For the three months ended September 30,
2014 PAREXEL's consolidated service revenue increased by
9.4% to $491.7 million compared with
$449.2 million in the prior year
period. Operating income as reported under Generally Accepted
Accounting Principles (GAAP) totaled $53.6
million, or 10.9% of service revenue, in the first quarter
of Fiscal Year 2015, as compared with $41.9
million, or 9.3% of service revenue, in the comparable
quarter of the prior year. GAAP net income for the quarter
totaled $37.1 million, or
$0.67 per diluted share, compared
with GAAP net income of $26.0
million, or $0.45 per diluted
share for the quarter ended September
30, 2013. GAAP diluted earnings per share grew 48.9%
year-over-year.
The financial results of the September quarter in the current
and prior year period each included items outside of the Company's
normal operations, as detailed in the financial charts within this
press release. The numbers in this paragraph are adjusted and
exclude the impact of these items. Operating income in the
first quarter of Fiscal Year 2015 was $52.8
million, or 10.7% of service revenue. Operating income
in the first quarter of Fiscal Year 2014 was $42.0 million, or 9.3% of service revenue.
Net income was $36.3 million, or
$0.65 per diluted share in the
quarter ended September 30, 2014, and
was $25.8 million, or $0.45 per diluted share in the quarter ended
September 30, 2013. Diluted
earnings per share grew 44.4% year-over-year.
On a segment basis, service revenue for the first quarter of
Fiscal Year 2015 was $369.8 million
in Clinical Research Services (CRS), $56.4
million in PAREXEL Consulting (PC), and $65.5 million in PAREXEL Informatics (PI).
(Please see description later in this release regarding a
reclassification that has occurred between segments).
New Business and Backlog
Backlog at the end of September
2014 was $4.9 billion, an
increase of 5.3% year-over-year. The reported backlog
included gross new business wins in the first quarter of
$625.9 million, cancellations of
$193.7 million, and a negative impact
from foreign currency exchange rates of $67.5 million. The net book-to-bill ratio was
0.88 in the quarter, and the trailing twelve month book-to-bill
ratio was 1.14.
Forward-looking Guidance
The Company issued forward-looking guidance for the second
quarter (ending December 31, 2014)
and for Fiscal Year 2015 in its entirety as detailed in the chart
below. The guidance takes into account a number of factors,
including the results of the first quarter, recent foreign currency
exchange rates, tax rates, and the Company's updated overall
outlook.
|
Guidance Issued
10/29/14
|
Guidance Issued
8/06/14
|
Q2 FY 2015
Revenue
|
$495 - $508
million
|
N/A
|
Q2 FY 2015 GAAP
EPS
|
$0.56 -
$0.62
|
N/A
|
|
FY 2015
Revenue
|
$2.070 - $2.110
billion
|
$2.130 - $2.150
billion
|
FY 2015 GAAP
EPS
FY 2015 Non-GAAP
EPS
|
$2.58 -
$2.77
$2.56 -
$2.75
|
$2.57 -
$2.75
N/A
|
Reclassification between the PAREXEL Consulting and PAREXEL
Informatics segments
Effective with the September 2014
reporting period, certain components of the Company's strategic
business units were reorganized to better align services offered to
clients. Specifically, certain regulatory activities that
were included within PAREXEL Informatics through the acquisition of
LIQUENT, Inc. were transferred to the PAREXEL Consulting business
segment to create an end-to-end portfolio of regulatory services to
clients. These changes resulted in reclassifications to the
Company's historical financials, but had no impact on the Company's
total revenue, expenses, operating income, net income, or balance
sheet. The current and historical quarterly numbers shown in
the Segment Information financial table contained in this press
release reflect these changes. The financial results have
also been reclassified for prior periods and may be found in the
Investor Relations section of the Company's website under the
"Financial Information" section, in a report titled "Additional
Financials".
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 should not 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 First Quarter Fiscal Year
2015 earnings, business, and financial outlook will begin at
10:00 a.m. ET on Thursday, October 30, 2014 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 First Quarter
Fiscal Year 2015 earnings conference call.
A presentation of First Quarter Fiscal Year 2015 results, as
well as certain trended financial information, may be found in the
Investors section of the Company's website under the "Financial
Information" section, in a report titled "Additional
Financials".
About PAREXEL International
PAREXEL International Corporation is a leading global
biopharmaceutical services organization, providing a broad range of
knowledge-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 81 locations in 51 countries around the world, and has
approximately 15,980 employees. For more information about
PAREXEL International visit www.PAREXEL.com.
PAREXEL, PAREXEL Informatics, and Liquent 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; 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 recent acquisition of ClinIntel Limited, 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 for the fiscal year ended June 30, 2014 as filed with the Securities and
Exchange Commission on August 20,
2014, 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.
CONTACTS:
Ingo Bank, Senior Vice President
and Chief Financial Officer
Jill
Baker, Corporate Vice President of Investor
Relations
+1-781-434-4118
PAREXEL
International Corporation
|
Consolidated
Condensed Statement of Operations
|
(Unaudited)
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
(in thousands,
except per share data)
|
September 30,
2014
|
|
September 30,
2013
|
|
|
|
|
|
|
|
|
Service
revenue
|
$
491,696
|
|
$
449,245
|
|
|
Reimbursement
revenue
|
81,993
|
|
79,819
|
|
|
Total
revenue
|
573,689
|
|
529,064
|
|
|
|
|
|
|
|
|
Costs and
expenses:
|
|
|
|
|
|
Direct
costs
|
318,819
|
|
303,194
|
|
|
Reimbursable
out-of-pocket expenses
|
81,993
|
|
79,819
|
|
|
Selling, general and
administrative
|
98,913
|
|
84,912
|
|
|
Depreciation
|
16,898
|
|
15,462
|
|
|
Amortization
|
3,486
|
|
3,796
|
|
|
Total costs and
expenses
|
520,109
|
|
487,183
|
|
|
|
|
|
|
|
|
Income from
operations
|
53,580
|
|
41,881
|
|
|
|
|
|
|
|
|
Other income
(expense), net
|
1,641
|
|
(2,965)
|
|
|
|
|
|
|
|
|
Income before income
taxes
|
55,221
|
|
38,916
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
18,079
|
|
12,962
|
|
|
Effective tax
rate
|
32.7%
|
|
33.3%
|
|
|
|
|
|
|
|
|
Net income
|
$
37,142
|
|
$
25,954
|
|
|
|
|
|
|
|
|
Earnings per common
share:
|
|
|
|
|
|
Basic
|
$
0.68
|
|
$
0.46
|
|
|
Diluted
|
$
0.67
|
|
$
0.45
|
|
|
|
|
|
|
|
|
Shares used in
computing earnings per common share:
|
|
|
Basic
|
54,739
|
|
56,254
|
|
|
Diluted
|
55,762
|
|
57,395
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet
Information
|
Preliminary
|
|
|
|
|
|
September 30,
2014
|
|
September 30,
2013
|
|
June 30,
2014
|
Billed accounts
receivable, net
|
$
486,842
|
|
$
526,621
|
|
$
497,108
|
Unbilled accounts
receivable, net
|
233,131
|
|
224,606
|
|
225,514
|
Deferred
revenue
|
(476,690)
|
|
(418,039)
|
|
(466,964)
|
Net
receivables
|
$
243,283
|
|
$
333,188
|
|
$
255,658
|
|
|
|
|
|
|
Cash and marketable
securities
|
$
281,355
|
|
$
304,620
|
|
$
283,812
|
Working
capital
|
$
392,335
|
|
$
516,674
|
|
$
350,900
|
Total
assets
|
$
1,818,601
|
|
$
1,885,735
|
|
$
1,834,000
|
Short-term
borrowings
|
$
-
|
|
$
10,003
|
|
$
12,501
|
Long-term
debt
|
$
370,001
|
|
$
495,000
|
|
$
337,500
|
Stockholders'
equity
|
$
576,312
|
|
$
586,988
|
|
$
577,681
|
PAREXEL
International Corporation
|
Reconciliation of Non-GAAP Measures
|
Certain Line
Items
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Three Months
Ended
|
(in thousands,
except per share data)
|
September 30,
2014
|
|
September 30,
2013
|
|
GAAP
Measure
|
|
Adjustments
|
|
Non-GAAP
Measure
|
|
GAAP
Measure
|
|
Adjustments
|
|
Non-GAAP
Measure
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative
|
$ 98,913
|
|
$
773
|
(a)
|
$ 99,686
|
|
$ 84,912
|
|
$
(81)
|
(a)
|
$ 84,831
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
operations
|
$ 53,580
|
|
$
(773)
|
|
$ 52,807
|
|
$ 41,881
|
|
$
81
|
|
$ 41,962
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expense), net
|
$ 1,641
|
|
$
-
|
|
$ 1,641
|
|
$ (2,965)
|
|
$
-
|
|
$ (2,965)
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income
taxes
|
$ 55,221
|
|
$
(773)
|
|
$ 54,448
|
|
$ 38,916
|
|
$
81
|
|
$ 38,997
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
$ 18,079
|
|
$
46
|
(b)
|
$ 18,125
|
|
$ 12,962
|
|
$
205
|
(b)
|
$ 13,167
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$ 37,142
|
|
$
(819)
|
|
$ 36,323
|
|
$ 25,954
|
|
$
(124)
|
|
$ 25,830
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
common share
|
$ 0.67
|
|
$
(0.02)
|
|
$ 0.65
|
|
$ 0.45
|
|
$
-
|
|
$ 0.45
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax
rate
|
32.7%
|
|
|
|
33.3%
|
|
33.3%
|
|
|
|
33.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Adjustments
for legal settlements and acquisition and integration related
charges, including the revaluation of HERON earn-out contingent
consideration liability
|
(b) Tax effect on
non-GAAP adjustments
|
PAREXEL
International Corporation
|
|
Segment
Information
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Three Months
Ended
|
|
(in
thousands)
|
|
September 30,
2014
|
|
September 30,
2013
|
|
|
|
|
|
|
|
Clinical Research
Services (CRS)
|
|
|
|
|
|
Service
revenue
|
|
$
369,811
|
|
$
332,592
|
|
% of total service
revenue
|
|
75.2%
|
|
74.0%
|
|
Gross
profit
|
|
$
116,482
|
|
$
94,404
|
|
Gross margin % of
service revenue
|
|
31.5%
|
|
28.4%
|
|
|
|
|
|
|
|
PAREXEL Consulting
Services (PC)
|
|
|
|
|
|
Service
revenue
|
|
$
56,395
|
|
$
56,948
|
(a)
|
% of total service
revenue
|
|
11.5%
|
|
12.7%
|
|
Gross
profit
|
|
$
24,969
|
|
$
23,499
|
(a)
|
Gross margin % of
service revenue
|
|
44.3%
|
|
41.3%
|
|
|
|
|
|
|
|
PAREXEL
Informatics (PI)
|
|
|
|
|
|
Service
revenue
|
|
$
65,490
|
|
$
59,705
|
(a)
|
% of total service
revenue
|
|
13.3%
|
|
13.3%
|
|
Gross
profit
|
|
$
31,426
|
|
$
28,148
|
(a)
|
Gross margin % of
service revenue
|
|
48.0%
|
|
47.1%
|
|
|
|
|
|
|
|
Total service
revenue
|
|
$
491,696
|
|
$
449,245
|
|
Total gross
profit
|
|
$
172,877
|
|
$
146,051
|
|
Gross margin % of
service revenue
|
|
35.2%
|
|
32.5%
|
|
|
|
|
|
|
|
Quarterly
Supplemental Financial Data
|
|
|
|
|
|
Service
revenue
|
|
$
491,696
|
|
$
449,245
|
|
Reimbursement
revenue
|
|
81,993
|
|
79,819
|
|
Investigator
fees
|
|
126,796
|
|
135,842
|
|
Gross
revenue
|
|
$
700,485
|
|
$
664,906
|
|
|
|
|
|
|
|
Days sales
outstanding
|
|
32
|
|
46
|
|
|
|
|
|
|
|
Capital
expenditures
|
|
$
12,143
|
|
$
14,266
|
|
|
|
|
|
|
|
(a) Effective July
1, 2014, the operating results of PAREXEL Regulatory Outsourcing
Services are included in the PC segment. This service line offering
was previously reported within the PI segment. For three months
ended September 30, 2014 and 2013, we disclosed the reportable
segment on this new basis and the prior period was retroactively
restated to reflect this presentation change.
|
SOURCE PAREXEL International Corporation