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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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Enterprises are moving to the cloud faster than most of us in security expected. CIOs are going from 0 to 100 in cloud adoption and leaving security teams in the dust. Once cloud is part of an enterprise stack, it’s unclear who has responsibility for the protection of applications, services, and data. When cloud breaches occur, whether active compromise or a publicly accessible database, the blame must fall on both service providers and users. In his session at 21st Cloud Expo, Ben Johnson, C...
"We're developing a software that is based on the cloud environment and we are providing those services to corporations and the general public," explained Seungmin Kim, CEO/CTO of SM Systems Inc., in this SYS-CON.tv interview at 21st Cloud Expo, held Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA.
Enterprises are adopting Kubernetes to accelerate the development and the delivery of cloud-native applications. However, sharing a Kubernetes cluster between members of the same team can be challenging. And, sharing clusters across multiple teams is even harder. Kubernetes offers several constructs to help implement segmentation and isolation. However, these primitives can be complex to understand and apply. As a result, it’s becoming common for enterprises to end up with several clusters. Thi...
"MobiDev is a software development company and we do complex, custom software development for everybody from entrepreneurs to large enterprises," explained Alan Winters, U.S. Head of Business Development at MobiDev, in this SYS-CON.tv interview at 21st Cloud Expo, held Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA.
SYS-CON Events announced today that Telecom Reseller has been named “Media Sponsor” of SYS-CON's 22nd International Cloud Expo, which will take place on June 5-7, 2018, at the Javits Center in New York, NY. Telecom Reseller reports on Unified Communications, UCaaS, BPaaS for enterprise and SMBs. They report extensively on both customer premises based solutions such as IP-PBX as well as cloud based and hosted platforms.
Data scientists must access high-performance computing resources across a wide-area network. To achieve cloud-based HPC visualization, researchers must transfer datasets and visualization results efficiently. HPC clusters now compute GPU-accelerated visualization in the cloud cluster. To efficiently display results remotely, a high-performance, low-latency protocol transfers the display from the cluster to a remote desktop. Further, tools to easily mount remote datasets and efficiently transfer...
"Codigm is based on the cloud and we are here to explore marketing opportunities in America. Our mission is to make an ecosystem of the SW environment that anyone can understand, learn, teach, and develop the SW on the cloud," explained Sung Tae Ryu, CEO of Codigm, in this SYS-CON.tv interview at 21st Cloud Expo, held Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA.
"CA has been doing a lot of things in the area of DevOps. Now we have a complete set of tool sets in order to enable customers to go all the way from planning to development to testing down to release into the operations," explained Aruna Ravichandran, Vice President of Global Marketing and Strategy at CA Technologies, in this SYS-CON.tv interview at DevOps Summit at 21st Cloud Expo, held Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA.
WebRTC is great technology to build your own communication tools. It will be even more exciting experience it with advanced devices, such as a 360 Camera, 360 microphone, and a depth sensor camera. In his session at @ThingsExpo, Masashi Ganeko, a manager at INFOCOM Corporation, introduced two experimental projects from his team and what they learned from them. "Shotoku Tamago" uses the robot audition software HARK to track speakers in 360 video of a remote party. "Virtual Teleport" uses a multip...
In his session at 21st Cloud Expo, James Henry, Co-CEO/CTO of Calgary Scientific Inc., introduced you to the challenges, solutions and benefits of training AI systems to solve visual problems with an emphasis on improving AIs with continuous training in the field. He explored applications in several industries and discussed technologies that allow the deployment of advanced visualization solutions to the cloud.