First Quarter Fiscal Year 2016 Results
(compared with First Quarter Fiscal Year 2015)
- Adjusted earnings per share of $0.70,
up 7.7%; GAAP diluted earnings per share of $0.45
- Adjusted operating margin of 10.8%;
GAAP operating margin of 6.9%
- Gross new business wins of $914
million; net book-to-bill ratio of 1.19; backlog at $5.4
billion
- Service revenue of $512.1 million, up
4.1%; constant currency revenue growth of 6.9%
- Restructuring charge of $14.8 million
related to Margin Acceleration Program, with majority of benefits
expected to accrue in the second half of Fiscal Year 2016
PAREXEL International Corporation (NASDAQ: PRXL) today reported
financial results for the first quarter of Fiscal Year 2016, which
ended on September 30, 2015.
“PAREXEL’s results for the first quarter were in line with our
expectations, and we believe we are on track toward meeting our
profitability targets for the Fiscal Year,” said Chairman and Chief
Executive Officer Josef H. von Rickenbach. “Our new business wins
were strong, and we advanced our Margin Acceleration Program as
planned. We made solid progress executing on our financial
strategy, including launching a $200 million accelerated share
repurchase program in the quarter.”
“In addition to enhancing productivity, we anticipate continued
improvement in our labor mix and geographic footprint leverage,”
Mr. von Rickenbach said. “Our recent acquisition, QSI, is
performing well, and we are committed to completing the Margin
Acceleration Program on schedule. We believe the market for our
services continues to be attractive, and that PAREXEL is
well-positioned to deliver increasingly profitable growth in the
quarters ahead.”
First Quarter Fiscal Year 2016
Results
For the three months ended September 30, 2015, PAREXEL’s
consolidated service revenue increased by 4.1% to $512.1 million,
compared with $491.7 million in the prior year period. A
restructuring charge of $14.8 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 $35.5 million, or 6.9% of service revenue, in the
first quarter of Fiscal Year 2016, as compared with $53.6 million,
or 10.9% of service revenue, in the comparable quarter of the prior
year. GAAP net income for the quarter totaled $24.9 million, or
$0.45 per diluted share, compared with $37.1 million, or $0.67 per
diluted share, for the quarter ended September 30, 2014. GAAP
diluted earnings per share declined 32.8% 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 tables within this
press release. Adjusted operating income in the first quarter of
Fiscal Year 2016 was $55.3 million, or 10.8% of service revenue.
Adjusted operating income in the first quarter of Fiscal Year 2015
was $52.8 million, or 10.7% of service revenue. Adjusted net income
was $39.0 million, or $0.70 per diluted share in the quarter ended
September 30, 2015, and was $36.3 million, or $0.65 per diluted
share in the quarter ended September 30, 2014. Adjusted diluted
earnings per share grew 7.7% year-over-year.
On a segment basis, service revenue for the first quarter of
Fiscal Year 2016 was $410.2 million in Clinical Research Services
(CRS), $39.3 million in PAREXEL Consulting (PC), and $62.6 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 2015 was $5.4 billion, an
increase of 11.3% year-over-year. The reported backlog included
gross new business wins in the first quarter of $914 million,
cancellations of $305 million, and a negative impact from foreign
currency exchange rates of $0.8 million. The net book-to-bill ratio
was 1.19 in the quarter.
Forward-looking Guidance
The Company issued forward-looking guidance for the second
quarter of Fiscal Year 2016 (ending December 31, 2015) 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 10/28/15 Guidance
Issued 8/05/15 Q2 FY 2016 Revenue $518 - $528 million NA Q2
FY 2016 GAAP EPS $0.58 - $0.66 NA Q2 FY 2016 non-GAAP EPS* $0.66 -
$0.74 NA FY 2016 Revenue $2.120 - $2.160 billion $2.160 -
$2.210 billion FY 2016 GAAP EPS $2.86 - $3.06 $2.79 - $3.15 FY 2016
non-GAAP EPS* $3.19 - $3.39 $3.02 -
$3.38
*Adjusted diluted EPS guidance for second quarter Fiscal Year
2016 and 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.
Reclassification between the PC and CRS
segments
Effective July 1, 2015, certain components of the Company’s
business segments were reorganized to better align services offered
to clients. Specifically, HERON™ and PAREXEL Medical Communications
were transferred to the CRS segment to broaden the range of fully
integrated services to help clients position their products for
market access and ongoing commercial success. 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 retroactively
revised for prior periods and may be found on the home page of the
Investors section of the Company’s website under the “Q1 2016
Quarterly Results” banner. The document is titled “Q1 Financial
Results and Trended Information.”
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 first quarter Fiscal Year
2016 earnings, business, and financial outlook will begin at 10:00
a.m. ET on Thursday, October 29, 2015 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 2016 earnings conference call.
A presentation of first 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 “Q1 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 80 locations in 51 countries
around the world, and had approximately 18,620 employees in the
first 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 expense
savings from the $30 - $45 million 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 acquisitions of ClinIntel Limited and Quantum
Solutions India, 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, 2015
as filed with the Securities and Exchange Commission on August 25,
2015, 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 (in millions,
except per share data)
September 30, 2015
September 30, 2014 Service revenue $ 512.1 $ 491.7
Reimbursement revenue 73.1 82.0
Total revenue
585.2 573.7 Costs and expenses: Direct costs 343.2 318.8
Reimbursable out-of-pocket expenses 73.1 82.0 Selling, general and
administrative 94.9 99.0 Depreciation 18.0 16.9 Amortization 5.7
3.5 Restructuring charge (benefit) 14.8 (0.1 ) Total costs
and expenses 549.7 520.1 Income from operations 35.5 53.6 Other
income, net 0.2 1.6 Income before income taxes 35.7 55.2 Provision
for income taxes 10.8 18.1 Effective tax rate 30.3 % 32.7 % Net
income $ 24.9 $ 37.1
Earnings per common
share:
Basic $ 0.45 $ 0.68 Diluted $ 0.45 $ 0.67
Shares used in
computing earnings per common share:
Basic 55.0 54.7 Diluted 55.9 55.8
Balance Sheet
Information
(in millions)
September 30, 2015 September 30, 2014
June 30, 2015 Billed accounts receivable, net $ 428.1 $
486.9 $ 460.6 Unbilled accounts receivable, net 284.0 233.1 262.2
Deferred revenue (411.5 ) (476.7 ) (414.0 ) Net receivables $ 300.6
$ 243.3 $ 308.8 Cash and cash
equivalents $ 157.9 $ 281.4 $ 207.4 Working capital $ 301.7 $ 392.4
$ 352.5 Total assets $ 1,800.1 $ 1,818.6 $ 1,865.0 Short-term
borrowings $ 12.8 $ — $ 8.9 Long-term debt $ 472.8 $ 370.0 $ 348.2
Stockholders' equity $ 479.6 $ 576.3 $ 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 September
30, 2015 September 30, 2014
GAAPMeasure
Adjustments
Non-GAAPMeasure
GAAPMeasure
Adjustments
Non-GAAPMeasure
Selling, general and administrative $ 94.9 $ (5.0 ) (a) $ 89.9 $
99.0 $ 0.7 (a) $ 99.7 Restructuring charge (benefit) $ 14.8 $ (14.8
) (b) $ — $ (0.1 ) $ 0.1 (d) $ — Income from operations $ 35.5 $
19.8 $ 55.3 $ 53.6 $ (0.8 ) $ 52.8 Income before income taxes $
35.7 $ 19.8 $ 55.5 $ 55.2 $ (0.8 ) $ 54.4 Provision for income
taxes $ 10.8 $ 5.7 (c) $ 16.5 $ 18.1 $ — $ 18.1 Net income $ 24.9 $
14.1 $ 39.0 $ 37.1 $ (0.8 ) $ 36.3 Diluted earnings per common
share $ 0.45 $ 0.25 $ 0.70 $ 0.67 $ (0.02 ) $ 0.65 Effective tax
rate 30.3 % 29.7 % 32.7 % 33.3 % (a) 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 (b)
Severance and facility costs related to the Margin Acceleration
Program (c) Tax effect on non-GAAP adjustments (d) Decrease in
facility-related charges associated with restructuring plans
PAREXEL International Corporation Segment Information
(Unaudited)
Three Months Ended Three Months Ended (in millions)
September 30, 2015 September 30, 2014 Clinical
Research Services (CRS) Service revenue $ 410.2 $ 384.9 (a) %
of total service revenue 80.1 % 78.3 % Gross profit $ 122.7 $ 121.8
(a) Gross margin % of service revenue 29.9 % 31.6 %
PAREXEL Consulting Services (PC) Service revenue $ 39.3 $
41.3 (a) % of total service revenue 7.7 % 8.4 % Gross profit $ 19.1
$ 19.7 (a) Gross margin % of service revenue 48.6 % 47.7 %
PAREXEL Informatics (PI) Service revenue $ 62.6 $ 65.5 % of
total service revenue 12.2 % 13.3 % Gross profit $ 27.1 $ 31.4
Gross margin % of service revenue 43.3 % 48.0 %
Total
service revenue $ 512.1 $ 491.7
Total gross profit $
168.9 $ 172.9
Gross margin % of service revenue 33.0 % 35.2
%
Quarterly
Supplemental Financial Data
Service revenue $ 512.1 $ 491.7 Reimbursement revenue 73.1 82.0
Investigator fees 110.5 126.8 Gross revenue $
695.7 $ 700.5 Days sales outstanding 40
32 Capital expenditures $ 30.9 $ 12.1 (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 three
months ended September 30, 2015, we disclosed the reportable
segment 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 October 28, 2015 Certain
Line Items (Unaudited)
(in millions, except per share data)
Guidance for
the Three Months Ending Guidance for the Twelve Months
Ending December 31, 2015 June 30, 2016
GAAPMeasure
Adjustments
Non-GAAPMeasure
GAAPMeasure
Adjustments
Non-GAAPMeasure
Selling, general and administrative $ — $ 5.0 (c) Restructuring
expense $ 6.0 (a) $ 20.8 (a) Income from operations $ 6.0 $ 25.8
Income before income taxes $ 6.0 $ 25.8 Provision for income taxes
$ 2.0 (b) $ 7.7 (b) Net income $ 4.0 $ 18.1 Diluted earnings per
common share $0.58-$0.66 $ 0.08 $0.66-$0.74 $2.86-$3.06 $ 0.33
$3.19-$3.39 (a) Charges related to the Margin Acceleration
Program (b) Tax effect on non-GAAP adjustments (c) Impact of
adjustment for the revaluation of earn-out contingent consideration
liability associated with certain acquisitions
View source
version on businesswire.com: http://www.businesswire.com/news/home/20151028006558/en/
PAREXEL International CorporationIngo Bank, Senior Vice
President and Chief Financial OfficerInvestor Relations,
+1-781-434-4118IR@PAREXEL.com
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