PAREXEL INTERNATIONAL CORPORATION 
By BOSTON, Jan. 30, 2012 /PRNewswire/ -- PAREXEL International Corporation (NASDAQ: PRXL) today announced its financial results for the second quarter ended December 31, 2011.
For the three months ended December 31, 2011, PAREXEL's consolidated service revenue increased by 9.5% to $333.2 million compared with $304.4 million in the prior year period. On a same store basis, excluding $1.4 million of service revenue in the prior year quarter related to subsequently divested Early Phase units, revenue increased 10.0%. On a year-over-year basis, foreign exchange had a de minimus impact on service revenue in the current quarter. The Company reported operating income under Generally Accepted Accounting Principles (GAAP) of $22.6 million, or 6.8% of consolidated service revenue, in the second quarter of Fiscal Year 2012, versus GAAP operating income of $28.2 million, or 9.3% of consolidated service revenue, in the same quarter of the prior fiscal year. GAAP net income for the quarter ended December 31, 2011 totaled $12.9 million, or $0.21 per diluted share, compared with GAAP net income of $16.8 million, or $0.28 per diluted share, for the quarter ended December 31, 2010. GAAP net income in the quarter decreased by 23.1% year-over-year, and earnings per diluted share decreased by 25.0%.
In Fiscal Years 2012 and 2011, the financial results for the respective December quarters each included special items, as detailed in the financial charts within this press release. Excluding the impact of these special items, adjusted operating income in the second quarter of Fiscal Year 2012 was $23.8 million, or 7.1% of consolidated service revenue. Excluding these special items in the prior year period, adjusted operating income was $27.6 million, or 9.1% of consolidated service revenue. On this adjusted basis, operating income in the quarter ended December 31, 2011 declined 14.0% year-over-year. Adjusted net income in the current and prior periods (which excludes the special items referenced above) was $13.9 million, or $0.23 per diluted share in the quarter ended December 31, 2011, and was $17.2 million, or $0.29 per diluted share in the quarter ended December 31, 2010. Using adjusted numbers in both periods, net income in the current quarter declined by 19.5% year-over-year, and adjusted earnings per diluted share declined by 20.7%.
The Company reported significant progress with regard to its initiative to reduce Days Sales Outstanding (DSO), which declined 10 days on a sequential basis to 57 days.
On a segment basis, consolidated service revenue for the second quarter of Fiscal Year 2012 was $247.9 million in Clinical Research Services (CRS), $38.5 million in PAREXEL Consulting and Medical Communications Services (PCMS), and $46.8 million in Perceptive Informatics.
For the six months ended December 31, 2011, consolidated service revenue was $647.9 million versus $600.2 million in the prior year period, an increase of 8.0%. GAAP operating income for the current six-month period was $35.0 million, or 5.4% of service revenue, compared with GAAP operating income of $58.2 million, or 9.7% of service revenue in the prior year period. GAAP net income for the six months ended December 31, 2011 was $22.5 million, or $0.37 per diluted share, compared with GAAP net income of $34.6 million, or $0.58 per diluted share, in the prior year period. Excluding the impact of special items as detailed in the attached financial charts in both six month periods, operating income was $38.9 million or 6.0% of consolidated service revenue for the six months ended on December 31, 2011, compared with $57.2 million or 9.5% of consolidated service revenue for the six months ended on December 31, 2010. On an adjusted basis, net income for the six months ended December 31, 2011 was $25.6 million, or $0.43 per diluted share, compared with $34.7 million or $0.58 per diluted share in the comparable prior year six month period.
Backlog at the end of December was approximately $3.74 billion, an increase of 23.8% year-over-year. The reported backlog included gross new business wins in the quarter of $622.2 million, cancellations of $121.7 million, a negative impact from foreign exchange rates of $29.7 million, and a downward backlog adjustment of $3.8 million related to dispositions in the Early Phase business. The net book-to-bill ratio was 1.50 in the quarter.
Mr. Josef H. von Rickenbach, PAREXEL's Chairman and Chief Executive Officer stated, "In the second quarter, we continued our positive momentum, demonstrating solid achievements in a number of key financial and operational areas. On a sequential basis, highlights included accelerated revenue growth for the Company overall, an improved operating margin, and earnings per share that were in line with our projections. Our progress was broad-based, with each of our three reporting segments delivering higher gross margins on a sequential basis. This was the result of improved operating leverage, further benefits of productivity and efficiency initiatives, and the impact of recent restructuring activities. We also generated healthy cash flow from operations, related in part to a substantial reduction in net receivables and a corresponding decrease in DSO."
Mr. von Rickenbach continued, "We are starting to hit our stride with recently-awarded strategic accounts, and with another quarter of strong new business wins in our backlog, I believe that we are well-positioned to deliver on our goals for Fiscal Year 2012. Operationally, we are committed to meeting the challenges of accelerating revenue growth, and we will continue to put into place the necessary resources to meet client and shareholder expectations for Fiscal Year 2012 and beyond."
The Company issued forward-looking guidance for the third quarter of Fiscal Year 2012 (ending March 31, 2012), for Fiscal Year 2012, and for Calendar Year 2012. The Company expects to report consolidated service revenue for the third quarter (ending March 31, 2012) in the range of $350 to $358 million, GAAP earnings per diluted share in the range of $0.28 to $0.30, and adjusted earnings per diluted share in the range of $0.30 to $0.32 (which exclude the impact of restructuring and related charges). For Fiscal Year 2012, consolidated service revenue is expected to be in the range of $1.360 to $1.375 billion, GAAP earnings per diluted share in the range of $1.01 to $1.09, and adjusted earnings per diluted share in the range of $1.09 to $1.17 (which exclude the impact of restructuring and related charges). Previously issued guidance for Fiscal Year 2012 was for service revenue in the range of $1.355 to $1.385 billion, GAAP earnings per diluted share in the range of $0.99 - $1.14, and adjusted earnings per diluted share in the range of $1.07 to $1.22 (which exclude the impact of restructuring and related charges). For Calendar Year 2012, consolidated service revenue is expected to be in the range of $1.445 to $1.480 billion, GAAP earnings per share are expected to be in the range of $1.31 to $1.47, and adjusted earnings per diluted share are expected to be in the range of $1.33 to $1.47 (excluding the impact of restructuring and related charges).
In addition to the financial measures prepared in accordance with generally accepted accounting principles (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 or a substitute for the Company's results of operations prepared in accordance with GAAP.
A conference call to discuss PAREXEL's second quarter earnings, business, and financial outlook will begin at 10:00 a.m. ET on Tuesday, January 31, 2012 and will be broadcast live over the internet via webcast. The webcast may be accessed in the "Upcoming Events" portion of the main page of the Investor Relations 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 quarterly conference call.
The Company notes that Fiscal Year 2011 numbers have been reclassified to conform to the current year's presentation. A slide depicting the reclassified numbers for Fiscal Year 2011, in addition to other trended financial information, may be found in the Investor Relations section of the Company's website under the "Additional Financials" section.
About the Company
PAREXEL International Corporation is a leading global bio/pharmaceutical services organization, providing a broad range of knowledge-based contract research, consulting, and medical communications 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. Perceptive Informatics, Inc., a subsidiary of PAREXEL, provides advanced technology solutions, including medical imaging, to facilitate the clinical development process. Headquartered near Boston, Massachusetts, PAREXEL operates in 71 locations throughout 52 countries around the world, and has approximately 11,300 employees. For more information about PAREXEL International visit www.PAREXEL.com.
PAREXEL is a registered trademark of PAREXEL International Corporation, and Perceptive Informatics is a trademark of Perceptive Informatics, Inc. All other names or marks may be registered trademarks or trademarks of PAREXEL International Corporation, Perceptive Informatics, Inc. or their respective owners and are hereby acknowledged.
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 significantly 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 recent and anticipated restructurings, including the anticipated additional restructuring charges of approximately $2.0 million in the third quarter of Fiscal Year 2012; 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 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 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 Quarterly Report on Form 10-Q for the quarter ended September 30, 2011 as filed with the SEC on November 9, 2011, 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 Three Months Ended
(in thousands,
except per share
data) December 31, 2011 December 31, 2010
----------------- -----------------
As Non- As Non-
Reported Adjustments GAAP Reported Adjustments GAAP
--------- ----------- ----- --------- ----------- -----
Service revenue $333,170 $- $333,170 $304,359 $- $304,359
Reimbursement
revenue 54,641 54,641 59,691 59,691
------ ------ ------ ------
Total revenue 387,811 - 387,811 364,050 - 364,050
Costs and
expenses:
Direct costs 228,099 228,099 199,489 (a) 199,489
Reimbursable
out-of-
pocket
expenses 54,641 54,641 59,691 59,691
Selling,
general and
administrative 64,358 64,358 61,182 (a) 61,182
Depreciation 14,752 14,752 13,605 13,605
Amortization 2,203 2,203 2,451 2,451
Restructuring
charge
(benefit) 1,162 (1,162) (b) - (572) 572 (c) -
----- ------ --- ---- --- ---
Total costs and
expenses 365,215 (1,162) 364,053 335,846 572 336,418
Income from
operations 22,596 1,162 23,758 28,204 (572) 27,632
Other expense (3,794) - (3,794) (8,473) 1,166 (d) (7,307)
Income before
income taxes 18,802 1,162 19,964 19,731 594 20,325
Provision for
income tax
expense 5,862 233 (e) 6,095 2,899 199 (e) 3,098
Effective tax
rate 31.2% 30.5% 14.7% 15.2%
Net income $12,940 $929 $13,869 $16,832 $395 $17,227
======= ==== ======= ======= ==== =======
Earnings per
common share:
--------------
Basic $0.22 $0.23 $0.29 $0.29
Diluted $0.21 $0.23 $0.28 $0.29
Shares used in
computing
earnings per
common share:
--------------
Basic 59,265 59,265 58,516 58,516
Diluted 60,249 60,249 59,686 59,686
(a) Prior year numbers have been reclassified to conform with the current year
presentation.
(b) Restructuring charges include $1.7 million in severance costs and $0.5 million of
facility-related costs, offset by a $1.0 million decrease in severance costs from an
adjustment to the FY 2010 restructuring plan.
(c) Restructuring adjustments include $0.6 million in severance reductions.
(d) Impairment charge on an asset.
(e) Tax associated with items (b), (c), and (d), respectively.
Balance Sheet
Information Preliminary
-------------
December December
31, 31, June 30,
2011 2010 2011
---- ---- ----
Billed accounts
receivable, net $304,741 $311,377 $341,279
Unbilled accounts
receivable, net 340,969 285,977 308,364
Deferred revenue (373,952) (285,576) (332,662)
Net receivables $271,758 $311,778 $316,981
======== ======== ========
Cash and marketable
securities $153,102 $87,552 $89,056
Working capital $324,748 $217,170 $317,298
Total assets $1,469,864 $1,356,032 $1,429,483
Short-term
borrowings $5,278 $110,019 $5,867
Long-term debt $237,485 $172,230 $240,102
Stockholders' equity $550,642 $516,714 $566,004
PAREXEL International Corporation
Consolidated Condensed Statement of Operations
Unaudited
Six Months Ended Six Months Ended
(in thousands,
except per share
data) December 31, 2011 December 31, 2010
----------------- -----------------
As As
Reported Adjustments Non-GAAP Reported Adjustments Non-GAAP
--------- ----------- -------- --------- ----------- --------
Service revenue $647,905 $- $647,905 $600,179 $- $600,179
Reimbursement
revenue 100,555 - 100,555 106,128 - 106,128
------- --- ------- ------- --- -------
Total revenue 748,460 - 748,460 706,307 - 706,307
Costs and
expenses:
Direct costs 450,273 - 450,273 389,133 (a) - 389,133
Reimbursable out-
of-pocket
expenses 100,555 - 100,555 106,128 - 106,128
Selling, general
and
administrative 125,347 - 125,347 122,040 (a) - 122,040
Depreciation 29,033 - 29,033 26,856 - 26,856
Amortization 4,344 - 4,344 4,908 - 4,908
Restructuring
charge (benefit) 3,862 (3,862) (b) - (962) 962 (c) -
Total costs and
expenses 713,414 (3,862) 709,552 648,103 962 649,065
Income from
operations 35,046 3,862 38,908 58,204 (962) 57,242
Other expense (2,170) - (2,170) (15,788) 1,166 (d) (14,622)
------ --- ------ ------- ----- -------
Income before
income taxes 32,876 3,862 36,738 42,416 204 42,620
Provision for
income taxes 10,375 766 (e) 11,141 7,793 89 (e) 7,882
Effective tax
rate 31.6% 30.3% 18.4% 18.5%
Net income $22,501 $3,096 $25,597 $34,623 $115 $34,738
======= ====== ======= ======= ==== =======
Earnings per
common
share:
------------
Basic $0.38 $0.43 $0.59 $0.59
Diluted $0.37 $0.43 $0.58 $0.58
Shares used
in
computing
earnings
per common
share:
-----------
Basic 59,154 59,154 58,483 58,483
Diluted 60,164 60,164 59,673 59,673
(a) Prior year numbers have been reclassified to conform with the current
year presentation.
(b) Restructuring charges include $2.5 million in severance costs (net of a
$1.0 million reduction in the FY10 Plan) and $1.4 million of facility-
related costs.
(c) Restructuring adjustments include $0.8 million in severance reductions
and $0.2 million in reductions of facility-related costs.
(d) Impairment charge on an asset.
(e) Tax associated with items (b), (c), and (d), respectively.
PAREXEL International Corporation
Segment Information
Unaudited
Three Months Ended Three Months Ended
December 31, 2010
(in thousands) December 31, 2011 (a)
----------------- ------------------
Clinical Research Services (CRS)
Service revenue $247,871 $231,364
% of total service
revenue 74.4% 76.0%
Gross profit $70,030 $73,842
Gross margin % of service
revenue 28.3% 31.9%
PAREXEL Consulting & Medical Communications
Services (PCMS)
Service revenue $38,455 $32,013
% of total service
revenue 11.5% 10.5%
Gross profit $15,871 $12,864
Gross margin % of service
revenue 41.3% 40.2%
Perceptive Informatics (PI)
Service revenue $46,844 $40,982
% of total service
revenue 14.1% 13.5%
Gross profit $19,170 $18,164
Gross margin % of service
revenue 40.9% 44.3%
Total service revenue $333,170 $304,359
Total gross profit $105,071 $104,870
Gross margin % of service
revenue 31.5% 34.5%
Revenue by Geography (b)
------------------------
The Americas $138,215 $127,194
Europe, Middle East &
Africa 144,832 136,201
Asia/Pacific 50,123 40,964
Total service revenue $333,170 $304,359
======== ========
Quarterly Supplemental Financial Data
-------------------------------------
Service revenue $333,170 $304,359
Reimbursement revenue 54,641 59,691
Investigator fees 54,609 50,003
Gross revenue $442,420 $414,053
======== ========
Days sales outstanding 57 69
Capital expenditures $15,893 $16,023
(a) Prior year numbers have been reclassified to conform with the
current year presentation.
(b) See footnote (b) on six months ended December 31st Segment
Information table.
PAREXEL International Corporation
Segment Information
Unaudited
Six Months Ended Six Months Ended
December 31, 2010
(in thousands) December 31, 2011 (a)
----------------- ------------------
Clinical Research Services (CRS)
Service revenue $483,280 $463,003
% of total service
revenue 74.6% 77.1%
Gross profit $132,689 $154,498
Gross margin % of
service revenue 27.5% 33.4%
PAREXEL Consulting & Medical
Communications
Services (PCMS)
Service revenue $74,103 $60,348
% of total service
revenue 11.4% 10.1%
Gross profit $30,541 $23,977
Gross margin % of
service revenue 41.2% 39.7%
Perceptive Informatics (PI)
Service revenue $90,522 $76,828
% of total service
revenue 14.0% 12.8%
Gross profit $34,402 $32,571
Gross margin % of
service revenue 38.0% 42.4%
Total service revenue $647,905 $600,179
Total gross profit $197,632 $211,046
Gross margin % of
service revenue 30.5% 35.2%
Revenue by Geography (b)
------------------------
The Americas $278,255 $260,085
Europe, Middle East &
Africa 267,991 261,730
Asia/Pacific 101,659 78,364
Total service revenue $647,905 $600,179
======== ========
(a) Prior year numbers have been reclassified to conform with
the current year presentation.
(b) As reflected in the six month totals, the regional
breakout of revenue for Q1 FY12 has been adjusted: The
Americas revenue was $140,040; EMEA revenue was $123,159;
and Asia/Pacific revenue was $51,536.
James Winschel, Senior Vice President and Chief Financial
CONTACTS: Officer
Jill Baker, Corporate Vice President, Investor Relations
+1-781-434-4118
SOURCE PAREXEL International Corporation
