PAREXEL International Corporation |
Massachusetts | 0-21244 | 04-2776269 |
(State or other juris- diction of incorporation | (Commission File Number) | (IRS Employer Identification No.) |
195 West Street, Waltham, Massachusetts | 02451 |
(Address of principal executive offices) | (Zip Code) |
Not applicable. |
(Former name or former address, if changed since last report) |
Exhibit No. | Description |
99.1 | Press release dated January 27, 2016. |
Date: January 27, 2016 | PAREXEL International Corporation | |
By: | /s/ Ingo Bank | |
Ingo Bank | ||
Senior Vice President and Chief Financial Officer |
• | Adjusted earnings per share of $0.90, up 30.4%; GAAP diluted earnings per share of $0.73 |
• | Adjusted operating margin of 13.2%; GAAP operating margin of 10.5% |
• | Gross new business wins of $867 million; net book-to-bill ratio of 1.24; backlog at $5.5 billion |
• | Service revenue of $518.5 million, up 3.8%; constant currency revenue growth of 5.6% |
• | Restructuring charge of $10.4 million related to Margin Acceleration Program |
Guidance Issued 1/27/16 | Guidance Issued 10/28/15 | |
Q3 FY 2016 Revenue | $517 - $527 million | N/A |
Q3 FY 2016 GAAP EPS | $0.84 - $0.92 | N/A |
Q3 FY 2016 non-GAAP EPS | $0.84 - $0.92 | N/A |
FY 2016 Revenue | $2.085 - $2.115 billion | $2.120 - $2.160 billion |
FY 2016 GAAP EPS | $2.97 - $3.15 | $2.86 - $3.06 |
FY 2016 non-GAAP EPS* | $3.40 - $3.58 | $3.19 - $3.39 |
PAREXEL International Corporation | |||||||||||||||
Consolidated Condensed Statement of Operations | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
(in millions, except per share data) | December 31, 2015 | December 31, 2014 | December 31, 2015 | December 31, 2014 | |||||||||||
Service revenue | $ | 518.5 | $ | 499.3 | $ | 1,030.6 | $ | 991.0 | |||||||
Reimbursement revenue | 85.7 | 75.7 | 158.8 | 157.7 | |||||||||||
Total revenue | 604.2 | 575.0 | 1,189.4 | 1,148.7 | |||||||||||
Costs and expenses: | |||||||||||||||
Direct costs | 332.5 | 327.3 | 675.7 | 646.1 | |||||||||||
Reimbursable out-of-pocket expenses | 85.7 | 75.7 | 158.8 | 157.7 | |||||||||||
Selling, general and administrative | 97.4 | 98.8 | 192.3 | 197.8 | |||||||||||
Depreciation | 17.9 | 16.8 | 35.9 | 33.7 | |||||||||||
Amortization | 5.7 | 3.6 | 11.4 | 7.1 | |||||||||||
Restructuring charge (benefit) | 10.4 | — | 25.2 | (0.1 | ) | ||||||||||
Total costs and expenses | 549.6 | 522.2 | 1,099.3 | 1,042.3 | |||||||||||
Income from operations | 54.6 | 52.8 | 90.1 | 106.4 | |||||||||||
Other (expense) income, net | (2.2 | ) | 1.1 | (2.0 | ) | 2.7 | |||||||||
Income before income taxes | 52.4 | 53.9 | 88.1 | 109.1 | |||||||||||
Provision for income taxes | 13.0 | 15.1 | 23.8 | 33.2 | |||||||||||
Effective tax rate | 24.8 | % | 28.0 | % | 27.0 | % | 30.4 | % | |||||||
Net income | $ | 39.4 | $ | 38.8 | $ | 64.3 | $ | 75.9 | |||||||
Earnings per common share: | |||||||||||||||
Basic | $ | 0.74 | $ | 0.71 | $ | 1.19 | $ | 1.39 | |||||||
Diluted | $ | 0.73 | $ | 0.70 | $ | 1.17 | $ | 1.36 | |||||||
Shares used in computing earnings per common share: | |||||||||||||||
Basic | 53.3 | 54.8 | 54.1 | 54.8 | |||||||||||
Diluted | 54.0 | 55.7 | 54.9 | 55.7 | |||||||||||
Balance Sheet Information | |||||||||||||||
(in millions) | December 31, 2015 | December 31, 2014 | June 30, 2015 | ||||||||||||
Billed accounts receivable, net | $ | 488.8 | $ | 435.0 | $ | 460.6 | |||||||||
Unbilled accounts receivable, net | 283.6 | 214.3 | 262.2 | ||||||||||||
Deferred revenue | (436.5 | ) | (448.8 | ) | (414.0 | ) | |||||||||
Net receivables | $ | 335.9 | $ | 200.5 | $ | 308.8 | |||||||||
Cash and cash equivalents | $ | 154.0 | $ | 301.9 | $ | 207.4 | |||||||||
Working capital | $ | 326.8 | $ | 391.4 | $ | 352.5 | |||||||||
Total assets | $ | 1,845.5 | $ | 1,769.2 | $ | 1,865.0 | |||||||||
Short-term borrowings | $ | 12.8 | $ | 2.5 | $ | 8.9 | |||||||||
Long-term debt | $ | 460.4 | $ | 347.5 | $ | 348.2 | |||||||||
Stockholders' equity | $ | 519.4 | $ | 589.2 | $ | 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 | ||||||||||||||||||||||
December 31, 2015 | December 31, 2014 | |||||||||||||||||||||||
GAAP Measure | Adjustments | Non-GAAP Measure | GAAP Measure | Adjustments | Non-GAAP Measure | |||||||||||||||||||
Selling, general and administrative | $ | 97.4 | $ | (3.4 | ) | (a) | $ | 94.0 | $ | 98.8 | $ | (0.2 | ) | (d) | $ | 98.6 | ||||||||
Restructuring charge | $ | 10.4 | $ | (10.4 | ) | (b) | $ | — | $ | — | $ | — | $ | — | ||||||||||
Income from operations | $ | 54.6 | $ | 13.8 | $ | 68.4 | $ | 52.8 | $ | 0.2 | $ | 53.0 | ||||||||||||
Other (expense) income, net | $ | (2.2 | ) | $ | — | $ | (2.2 | ) | $ | 1.1 | $ | 0.1 | (e) | $ | 1.2 | |||||||||
Income before income taxes | $ | 52.4 | $ | 13.8 | $ | 66.2 | $ | 53.9 | $ | 0.3 | $ | 54.2 | ||||||||||||
Provision for income taxes | $ | 13.0 | $ | 4.5 | (c) | $ | 17.5 | $ | 15.1 | $ | 0.7 | (c) | $ | 15.8 | ||||||||||
Net income | $ | 39.4 | $ | 9.3 | $ | 48.7 | $ | 38.8 | $ | (0.4 | ) | $ | 38.4 | |||||||||||
Diluted earnings per common share | $ | 0.73 | $ | 0.17 | $ | 0.90 | $ | 0.70 | $ | (0.01 | ) | $ | 0.69 | |||||||||||
Effective tax rate | 24.8 | % | 26.4 | % | 28.0 | % | 29.2 | % | ||||||||||||||||
(a) Impact of net adjustments for 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) 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 | ||||||||||||||||||||||||
(e) Accelerated amortization of deferred financing fees related to credit facility modification |
PAREXEL International Corporation | ||||||||||||||||||||||||
Reconciliation of Non-GAAP Measures | ||||||||||||||||||||||||
Certain Line Items | ||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||
(in millions, except per share data) | Six Months Ended | Six Months Ended | ||||||||||||||||||||||
December 31, 2015 | December 31, 2014 | |||||||||||||||||||||||
GAAP Measure | Adjustments | Non-GAAP Measure | GAAP Measure | Adjustments | Non-GAAP Measure | |||||||||||||||||||
Selling, general and administrative | $ | 192.3 | $ | (8.4 | ) | (a) | $ | 183.9 | $ | 197.8 | $ | 0.5 | (d) | $ | 198.3 | |||||||||
Restructuring charge (benefit) | $ | 25.2 | $ | (25.2 | ) | (b) | $ | — | $ | (0.1 | ) | $ | 0.1 | (e) | $ | — | ||||||||
Income from operations | $ | 90.1 | $ | 33.6 | $ | 123.7 | $ | 106.4 | $ | (0.6 | ) | $ | 105.8 | |||||||||||
Other (expense) income, net | $ | (2.0 | ) | $ | — | $ | (2.0 | ) | $ | 2.7 | $ | 0.1 | (f) | $ | 2.8 | |||||||||
Income before income taxes | $ | 88.1 | $ | 33.6 | $ | 121.7 | $ | 109.1 | $ | (0.5 | ) | $ | 108.6 | |||||||||||
Provision for income taxes | $ | 23.8 | $ | 10.2 | (c) | $ | 34.0 | $ | 33.2 | $ | 0.7 | (c) | $ | 33.9 | ||||||||||
Net income | $ | 64.3 | $ | 23.4 | $ | 87.7 | $ | 75.9 | $ | (1.2 | ) | $ | 74.7 | |||||||||||
Diluted earnings per common share | $ | 1.17 | $ | 0.43 | $ | 1.60 | $ | 1.36 | $ | (0.02 | ) | $ | 1.34 | |||||||||||
Effective tax rate | 27.0 | % | 27.9 | % | 30.4 | % | 31.3 | % | ||||||||||||||||
(a) Impact of net adjustments for 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) 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 | ||||||||||||||||||||||||
(e) Decrease in facility-related charges associated with restructuring plans | ||||||||||||||||||||||||
(f) Accelerated amortization of deferred financing fees related to credit facility modification |
PAREXEL International Corporation | |||||||||
Segment Information | |||||||||
(Unaudited) | |||||||||
Three Months Ended | Three Months Ended | ||||||||
(in millions) | December 31, 2015 | December 31, 2014 | |||||||
CRS | |||||||||
Service revenue | $ | 407.1 | $ | 393.7 | (a) | ||||
% of total service revenue | 78.5 | % | 78.8 | % | |||||
Gross profit | $ | 132.7 | $ | 119.6 | (a) | ||||
Gross margin % of service revenue | 32.6 | % | 30.4 | % | |||||
PC | |||||||||
Service revenue | $ | 41.4 | $ | 39.8 | (a) | ||||
% of total service revenue | 8.0 | % | 8.0 | % | |||||
Gross profit | $ | 20.6 | $ | 19.2 | (a) | ||||
Gross margin % of service revenue | 49.8 | % | 48.2 | % | |||||
PI | |||||||||
Service revenue | $ | 70.0 | $ | 65.8 | |||||
% of total service revenue | 13.5 | % | 13.2 | % | |||||
Gross profit | $ | 32.7 | $ | 33.2 | |||||
Gross margin % of service revenue | 46.7 | % | 50.5 | % | |||||
Total service revenue | $ | 518.5 | $ | 499.3 | |||||
Total gross profit | $ | 186.0 | $ | 172.0 | |||||
Gross margin % of service revenue | 35.9 | % | 34.4 | % | |||||
Quarterly Supplemental Financial Data | |||||||||
Service revenue | $ | 518.5 | $ | 499.3 | |||||
Reimbursement revenue | 85.7 | 75.7 | |||||||
Investigator fees | 105.2 | 121.1 | |||||||
Gross revenue | $ | 709.4 | $ | 696.1 | |||||
Days sales outstanding | 44 | 26 | |||||||
Capital expenditures | $ | 22.4 | $ | 11.5 | |||||
(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 December 31, 2015, we disclosed the reportable segments on this basis and the prior period was retroactively revised to reflect this presentation change. | |||||||||
PAREXEL International Corporation | |||||||||
Segment Information | |||||||||
(Unaudited) | |||||||||
Six Months Ended | Six Months Ended | ||||||||
(in millions) | December 31, 2015 | December 31, 2014 | |||||||
CRS | |||||||||
Service revenue | $ | 817.3 | $ | 778.6 | (a) | ||||
% of total service revenue | 79.3 | % | 78.5 | % | |||||
Gross profit | $ | 255.4 | $ | 241.4 | (a) | ||||
Gross margin % of service revenue | 31.2 | % | 31.0 | % | |||||
PC | |||||||||
Service revenue | $ | 80.7 | $ | 81.1 | (a) | ||||
% of total service revenue | 7.8 | % | 8.2 | % | |||||
Gross profit | $ | 39.7 | $ | 38.9 | (a) | ||||
Gross margin % of service revenue | 49.2 | % | 48.0 | % | |||||
PI | |||||||||
Service revenue | $ | 132.6 | $ | 131.3 | |||||
% of total service revenue | 12.9 | % | 13.3 | % | |||||
Gross profit | $ | 59.8 | $ | 64.6 | |||||
Gross margin % of service revenue | 45.1 | % | 49.2 | % | |||||
Total service revenue | $ | 1,030.6 | $ | 991.0 | |||||
Total gross profit | $ | 354.9 | $ | 344.9 | |||||
Gross margin % of service revenue | 34.4 | % | 34.8 | % | |||||
(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 December 31, 2015, we disclosed the reportable segments 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 January 27, 2016 | ||||||||||
Certain Line Items | ||||||||||
(Unaudited) | ||||||||||
(in millions, except per share data) | Guidance for the Twelve Months Ending | |||||||||
June 30, 2016 | ||||||||||
GAAP Measure | Adjustments | Non-GAAP Measure | ||||||||
Selling, general and administrative | $ | (8.4 | ) | (b) | ||||||
Restructuring expense | $ | (25.2 | ) | (c) | ||||||
Income from operations | $ | 33.6 | ||||||||
Other income (expense), net | $ | — | ||||||||
Income before income taxes | $ | 33.6 | ||||||||
Provision for income taxes | $ | 10.2 | (d) | |||||||
Net income | $ | 23.4 | ||||||||
Diluted earnings per common share | $2.97-$3.15 | (a) | $ | 0.43 | $3.40-$3.58 | |||||
(a) These amounts do not include the impact of purchase accounting from the anticipated closing of the Health Advances acquisition. | ||||||||||
(b) Impact of net adjustments for acquisition and integration related charges, including the revaluation of earn-out contingent consideration liability associated with certain acquisitions | ||||||||||
(c) Severance and facility costs related to the Margin Acceleration Program | ||||||||||
(d) Tax effect on non-GAAP adjustments |
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