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PAREXEL International Reports Second Quarter Fiscal Year 2014 Results

-- Increases midpoints of previous revenue and adjusted EPS guidance for FY 2014

BOSTON, Jan. 29, 2014 /PRNewswire/ -- PAREXEL International Corporation (NASDAQ: PRXL) today reported financial results for the second quarter of Fiscal Year 2014, which ended on December 31, 2013. 

In commenting on the results of the quarter, Mr. Josef H. von Rickenbach, PAREXEL's Chairman and Chief Executive Officer, stated, "In the second quarter we met our goals and made progress on our key initiatives.  We delivered strong revenue growth, healthy operating margin expansion, and solid cash flow from operations.  We were also particularly pleased with our new business performance.  Wins were broad-based across our businesses, and came from a variety of client segments."

Mr. von Rickenbach continued, "I believe the market for our products and services continues to be strong.  We remain focused on successfully competing in the marketplace, executing projects with high quality, and driving efficiency initiatives throughout our businesses.  We expect these activities to propel profitable growth and increase shareholder value.  Our financial and operational performance in the second quarter, together with solid demand for our services, gives us the confidence that we will achieve our financial goals for Fiscal Year 2014."

For the three months ended December 31, 2013 consolidated service revenue increased by 15.4% to $487.1 million compared with $422.1 million in the prior year period.   The impact from foreign exchange movements in the quarter was nominal.  Recent acquisitions contributed approximately $14 million to revenue in the quarter.  On a constant currency, same store basis, revenue growth was 12.2% year-over-year.  Operating income as reported under Generally Accepted Accounting Principles (GAAP) totaled $46.7 million, or 9.6% of service revenue, in the second quarter of Fiscal Year 2014, as compared with $31.4 million, or 7.4% of service revenue, in the comparable quarter of the prior year.  GAAP net income for the quarter totaled $28.3 million, or $0.49 per diluted share, compared with GAAP net income of $21.3 million, or $0.36 per diluted share for the quarter ended December 31, 2012.  GAAP diluted earnings per share grew 36.1% year-over-year.

The financial results of the December quarter in the current and prior year period each included special items, as detailed in the financial charts within this press release.  Excluding the impact of special items, adjusted operating income in the second quarter of Fiscal Year 2014 was $47.7 million, or 9.8% of service revenue.  Excluding the impact of special items, adjusted operating income in the second quarter of Fiscal Year 2013 was $32.1 million, or 7.6% of service revenue.  Excluding the impact of special items, adjusted net income was $29.1 million, or $0.51 per diluted share in the quarter ended December 31, 2013, and was $24.5 million, or $0.41 per diluted share in the quarter ended December 31, 2012.  Adjusted earnings per share grew 24.4% year-over-year.

On a segment basis, service revenue for the second quarter of Fiscal Year 2014 was $363.9 million in Clinical Research Services (CRS), $55.5 million in PAREXEL Consulting and Medical Communications Services (PCMS), and $67.7 million in Perceptive Informatics, Inc.

For the six months ended December 31, 2013, consolidated service revenue was $936.4 million versus $816.8 million in the prior year period, an increase of 14.6%.  GAAP operating income for the current six-month period was $88.5 million, or 9.5% of service revenue, compared with GAAP operating income of $61.2 million, or 7.5% of service revenue in the prior year period.  GAAP net income for the six months ended December 31, 2013 was $54.3 million, or $0.95 per diluted share, compared with GAAP net income of $36.4 million, or $0.60 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 $89.7 million or 9.6% of consolidated service revenue for the six months ended on December 31, 2013, compared with $61.9 million or 7.6% of consolidated service revenue for the six months ended on December 31, 2012.  On an adjusted basis, net income for the six months ended December 31, 2013 was $55.0 million, or $0.96 per diluted share, compared with $42.0 million or $0.69 per diluted share in the comparable prior year six month period.

Backlog at the end of December 2013 was $4.81 billion, an increase of 5.9% year-over-year.  The reported backlog included gross new business wins in the quarter of $836.1 million, cancellations of $181.4 million, and a positive impact from foreign exchange rates of $11.1 million. The net book-to-bill ratio was 1.34 in the quarter. 

The Company issued forward-looking guidance for the third quarter of Fiscal Year 2014 (ending March 31, 2014) and updated guidance for Fiscal Year 2014 as described in the text and chart below.  The guidance takes into account a number of factors, including recent exchange rates, tax rates, and the Company's updated overall outlook.  

The Company's guidance is:





Guidance Issued 1/29/14

Guidance Issued 1/13/14

Q3 FY 2014 Revenue

$490 - $495 million

N/A

Q3 FY 2014 GAAP EPS     

$0.52 - $0.54

N/A


FY 2014 Revenue

$1.920 - $1.930 billion

$1.895 - $1.925 billion

FY 2014 GAAP EPS

$1.99 - $2.09

$1.97 - $2.11

FY 2014 Non-GAAP EPS

$2.01 - $2.11

$1.97 - $2.11




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 or 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 2014 earnings, business, and financial outlook will begin at 10:00 a.m. ET on Thursday, January 30, 2014 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 International Second Quarter Fiscal Year 2014 earnings conference call.

The company has enhanced the supplemental financial information that it provides on its website in conjunction with earnings.  A presentation of Second Quarter Fiscal Year 2014 results, as well as certain trended financial information, may be found in the Investor Relations section of the Company's website under the "Additional Financials" section.   

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. 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 76 locations in 50 countries around the world, and has approximately 15,100 employees.  For more information about PAREXEL International visit www.PAREXEL.com.

PAREXEL, Perceptive Informatics, LIQUENT, and HERON are 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 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; 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 acquisitions of LIQUENT, Inc. and HERON, Inc., 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, 2013 as filed with the SEC on November 4, 2013, 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 thousands, except per share data)


December 31, 2013


December 31, 2012


December 31, 2013


December 31, 2012











Service revenue



$                  487,145


$                  422,068


$                  936,390


$                  816,821

Reimbursement revenue



87,091


61,069


166,910


128,836

  Total revenue



574,236


483,137


1,103,300


945,657











Costs and expenses:










Direct costs



324,507


301,325


627,701


580,729

Reimbursable out-of-pocket expenses


87,091


61,069


166,910


128,836

Selling, general and administrative 


95,528


71,909


180,440


141,937

Depreciation



16,584


15,462


32,046


30,257

Amortization



3,862


2,043


7,658


3,127

Restructuring benefit



-


(108)


-


(418)

 Total costs and expenses



527,572


451,700


1,014,755


884,468











Income from operations



46,664


31,437


88,545


61,189











Other expense, net



(3,707)


(209)


(6,672)


(2,597)











Income before income taxes



42,957


31,228


81,873


58,592











Provision for income taxes



14,628


9,885


27,590


22,185

Effective tax rate



34.1%


31.7%


33.7%


37.9%











Net income



$                     28,329


$                     21,343


$                     54,283


$                     36,407











Earnings per common share:










  Basic



$0.50


$0.36


$0.96


$0.61

  Diluted



$0.49


$0.36


$0.95


$0.60











Shares used in computing earnings per common share:







  Basic



56,517


58,671


56,386


59,391

  Diluted



57,395


59,639


57,395


60,412





















Balance Sheet Information



Preliminary










December 31, 2013


December 31, 2012


June 30, 2013



Billed accounts receivable, net



$                  503,578


$                  411,310


$                  457,155



Unbilled accounts receivable, net



234,740


234,483


248,219



Deferred revenue



(461,029)


(390,705)


(408,336)



Net receivables



$                  277,289


$                  255,088


$                  297,038













Cash and marketable securities



$                  314,294


$                  296,545


$                  274,164



Working capital



$                  433,461


$                  325,685


$                  403,229



Total assets



$               1,877,789


$               1,697,650


$               1,779,624



Short-term borrowings



$                    13,968


$                  107,403


$                    20,399



Long-term debt



$                  372,500


$                  277,600


$                  427,500



Stockholders' equity



$                  627,874


$                  580,750


$                  538,946













 















PAREXEL International Corporation

  Reconciliation of Non-GAAP Measures

Certain Line Items

(Unaudited)
































Three Months Ended


Three Months Ended

(in thousands, except per share data)

December 31, 2013


December 31, 2012




GAAP

Measure


Adjustments


Non-GAAP

Measure


GAAP

Measure


Adjustments


Non-GAAP

Measure















Selling, general and administrative 



$           95,528


$       (1,071)

(a)

$        94,457


$        71,909


$            (807)

(c)

$        71,102















Restructuring benefit



$                     -


$                 -


$                  -


$            (108)


$              108

(d)

$                  -















Income from operations



$           46,664


$         1,071


$        47,735


$        31,437


$              699


$         32,136















Other expense, net



$           (3,707)


$                 -


$         (3,707)


$            (209)


$                   -


$            (209)















Income before income taxes



$           42,957


$         1,071


$         44,028


$        31,228


$              699


$        31,927















Provision for income taxes



$           14,628


$            270

(b)

$        14,898


$          9,885


$         (2,458)

(e)

$          7,427















Net income



$           28,329


$            801


$        29,130


$        21,343


$          3,157


$        24,500















Diluted earnings per common share


$               0.49


$           0.02


$            0.51


$            0.36


$            0.05


$            0.41















Effective tax rate



34.1%




33.8%


31.7%




23.3%





























(a) Adjustment includes $1.1 million of legal settlements and acquisition & integration related charges





(b) Tax associated with item (a)














(c) Adjustment includes $0.8 million of legal settlements and acquisition & integration related charges

(d) Adjustment to facility-related charges of $0.1 million related to restructuring plans

(e) Tax associated with items (c) and (d), and a net $2.7 million expense due to changes in interest, penalties and a valuation allowance in a foreign jurisdiction






 















PAREXEL International Corporation

  Reconciliation of Non-GAAP Measures

Certain Line Items

(Unaudited)
































Six Months Ended


Six Months Ended

(in thousands, except per share data)

December 31, 2013


December 31, 2012




GAAP

Measure


Adjustments


Non-GAAP

Measure


GAAP

Measure


Adjustments


Non-GAAP

Measure















Selling, general and administrative 



$   180,440


$       (1,151)

(a)

$      179,289


$      141,937


$         (1,157)

(c)

$      140,780















Restructuring benefit



$               -


$                 -


$                 -


$           (418)


$              418

(d)

$                  -















Income from operations



$     88,545


$         1,151


$        89,696


$        61,189


$              739


$        61,928















Other expense, net



$      (6,672)


$                 -


$         (6,672)


$         (2,597)


$            (395)

(e)

$         (2,992)















Income before income taxes



$     81,873


$         1,151


$        83,024


$        58,592


$              344


$        58,936















Provision for income taxes



$     27,590


$            474

(b)

$        28,064


$        22,185


$         (5,232)

(f)

$        16,953















Net income



$     54,283


$            677


$        54,960


$        36,407


$          5,576


$        41,983















Diluted earnings per common share


$         0.95


$           0.01


$            0.96


$            0.60


$            0.09


$            0.69















Effective tax rate



33.7%




33.8%


37.9%




28.8%











































(a) Adjustments include $1.5 million of legal settlements and acquisition & integration related charges, partially offset by $0.3 million gain related to the revaluation of HERON earn-out contingent consideration liability

(b) Tax associated with item (a)

(c)  Adjustment includes $1.2 million of legal settlements and acquisition & integration related charges

(d) Adjustment to facility-related charges of $0.4 million related to restructuring plans

(e)  Gain on facility sale previously impaired

(f) Tax associated with items (c) through (e), a tax expense for one-time adjustments to deferred tax assets in Q1 FY13, and a net $2.7 million expense due to changes in interest, penalties and a valuation allowance in a foreign jurisdiction in Q2 FY13






 






PAREXEL International Corporation

Segment Information

(Unaudited)













Three Months Ended


Three Months Ended

(in thousands)


December 31, 2013


December 31, 2012






Clinical Research Services (CRS)










Service revenue 


$                           363,867


$                           320,580

% of total service revenue


74.7%


76.0%

Gross profit


$                           108,636


$                             78,165

Gross margin % of service revenue


29.9%


24.4%






PAREXEL Consulting & Medical Communications





  Services (PCMS)










Service revenue


$                             55,532


$                             49,274

% of total service revenue


11.4%


11.7%

Gross profit


$                             22,309


$                             20,820

Gross margin % of service revenue


40.2%


42.3%











Perceptive Informatics (PI)










Service revenue


$                             67,746


$                             52,214

% of total service revenue


13.9%


12.3%

Gross profit


$                             31,693


$                             21,758

Gross margin % of service revenue


46.8%


41.7%











Total service revenue


$                           487,145


$                           422,068

Total gross profit


$                           162,638


$                           120,743

Gross margin % of service revenue


33.4%


28.6%











Revenue by Geography










The Americas


$                           240,888


$                           210,065

Europe, Middle East & Africa


180,705


150,109

Asia/Pacific


65,552


61,894

Total service revenue


$                           487,145


$                           422,068











Quarterly Supplemental Financial Data










Service revenue


$                           487,145


$                           422,068

Reimbursement revenue


87,091


61,069

Investigator fees


133,212


96,307

Gross revenue


$                           707,448


$                           579,444






Days sales outstanding


36


41






Capital expenditures


$                             19,828


$                             19,849






 






PAREXEL International Corporation

Segment Information

(Unaudited)









Six Months Ended


Six Months Ended

(in thousands)


December 31, 2013


December 31, 2012






Clinical Research Services (CRS)










Service revenue 


$                           696,459


$                           617,747

% of total service revenue


74.4%


75.6%

Gross profit


$                           203,040


$                           155,166

Gross margin % of service revenue


29.2%


25.1%






PAREXEL Consulting & Medical Communications





  Services (PCMS)










Service revenue


$                           109,069


$                             97,625

% of total service revenue


11.6%


12.0%

Gross profit


$                             44,580


$                             39,486

Gross margin % of service revenue


40.9%


40.4%











Perceptive Informatics (PI)










Service revenue


$                           130,862


$                           101,449

% of total service revenue


14.0%


12.4%

Gross profit


$                             61,069


$                             41,440

Gross margin % of service revenue


46.7%


40.8%











Total service revenue


$                           936,390


$                           816,821

Total gross profit


$                           308,689


$                           236,092

Gross margin % of service revenue


33.0%


28.9%











Revenue by Geography










The Americas


$                           465,298


$                           407,479

Europe, Middle East & Africa


339,219


288,378

Asia/Pacific


131,873


120,964

Total service revenue


$                           936,390


$                           816,821






 



CONTACTS:

Ingo Bank, Senior Vice President and Chief Financial Officer


Jill Baker, Corporate Vice President of Investor Relations


+1-781-434-4118



SOURCE PAREXEL International Corporation

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As DevOps methodologies expand their reach across the enterprise, organizations face the daunting challenge of adapting related cloud strategies to ensure optimal alignment, from managing complexity to ensuring proper governance. How can culture, automation, legacy apps and even budget be reexamined to enable this ongoing shift within the modern software factory? In her Day 2 Keynote at @DevOpsSummit at 21st Cloud Expo, Aruna Ravichandran, VP, DevOps Solutions Marketing, CA Technologies, was jo...
As Marc Andreessen says software is eating the world. Everything is rapidly moving toward being software-defined – from our phones and cars through our washing machines to the datacenter. However, there are larger challenges when implementing software defined on a larger scale - when building software defined infrastructure. In his session at 16th Cloud Expo, Boyan Ivanov, CEO of StorPool, provided some practical insights on what, how and why when implementing "software-defined" in the datacent...
Blockchain. A day doesn’t seem to go by without seeing articles and discussions about the technology. According to PwC executive Seamus Cushley, approximately $1.4B has been invested in blockchain just last year. In Gartner’s recent hype cycle for emerging technologies, blockchain is approaching the peak. It is considered by Gartner as one of the ‘Key platform-enabling technologies to track.’ While there is a lot of ‘hype vs reality’ discussions going on, there is no arguing that blockchain is b...
Blockchain is a shared, secure record of exchange that establishes trust, accountability and transparency across business networks. Supported by the Linux Foundation's open source, open-standards based Hyperledger Project, Blockchain has the potential to improve regulatory compliance, reduce cost as well as advance trade. Are you curious about how Blockchain is built for business? In her session at 21st Cloud Expo, René Bostic, Technical VP of the IBM Cloud Unit in North America, discussed the b...
You know you need the cloud, but you’re hesitant to simply dump everything at Amazon since you know that not all workloads are suitable for cloud. You know that you want the kind of ease of use and scalability that you get with public cloud, but your applications are architected in a way that makes the public cloud a non-starter. You’re looking at private cloud solutions based on hyperconverged infrastructure, but you’re concerned with the limits inherent in those technologies.
Is advanced scheduling in Kubernetes achievable?Yes, however, how do you properly accommodate every real-life scenario that a Kubernetes user might encounter? How do you leverage advanced scheduling techniques to shape and describe each scenario in easy-to-use rules and configurations? In his session at @DevOpsSummit at 21st Cloud Expo, Oleg Chunikhin, CTO at Kublr, answered these questions and demonstrated techniques for implementing advanced scheduling. For example, using spot instances and co...
The cloud era has reached the stage where it is no longer a question of whether a company should migrate, but when. Enterprises have embraced the outsourcing of where their various applications are stored and who manages them, saving significant investment along the way. Plus, the cloud has become a defining competitive edge. Companies that fail to successfully adapt risk failure. The media, of course, continues to extol the virtues of the cloud, including how easy it is to get there. Migrating...
The use of containers by developers -- and now increasingly IT operators -- has grown from infatuation to deep and abiding love. But as with any long-term affair, the honeymoon soon leads to needing to live well together ... and maybe even getting some relationship help along the way. And so it goes with container orchestration and automation solutions, which are rapidly emerging as the means to maintain the bliss between rapid container adoption and broad container use among multiple cloud host...
Imagine if you will, a retail floor so densely packed with sensors that they can pick up the movements of insects scurrying across a store aisle. Or a component of a piece of factory equipment so well-instrumented that its digital twin provides resolution down to the micrometer.