PAREXEL first quarter revenue increases 13.9% to $295.8 million

PAREXEL International Corporation (Nasdaq: PRXL) today announced its financial results for the first quarter ended September 30, 2010.

For the three months ended September 30, 2010, PAREXEL's consolidated service revenue increased by 13.9% to $295.8 million, compared with $259.8 million in the prior year period.  Excluding the negative impact from foreign exchange movements of $7.7 million, revenue increased 16.8%.  The Company reported operating income of $30.0 million, or 10.1% of consolidated service revenue, in the first quarter of Fiscal Year 2011, versus operating income of $18.5 million, or 7.1% of consolidated service revenue, in the comparable quarter of the prior year.  Net income for the current quarter totaled $17.8 million, or $0.30 per diluted share, compared with net income of $12.4 million, or $0.21 per diluted share, for the quarter ended September 30, 2009.  

On a segment basis, consolidated service revenue for the first quarter of Fiscal Year 2011 was $231.6 million in Clinical Research Services (CRS), $28.3 million in PAREXEL Consulting and Medical Communications Services (PCMS), and $35.9 million in Perceptive Informatics, Inc.

Backlog at the end of September was approximately $2.9 billion, an increase of 35.7% year-over-year.  The reported backlog included gross new business wins in the quarter of $586.6 million, cancellations of $149.2 million, and a positive impact from foreign exchange rates of $105.4 million. The net book-to-bill ratio was 1.48 in the quarter.

Mr. Josef H. von Rickenbach, PAREXEL's Chairman and Chief Executive Officer stated, "The results of the first quarter were strong.  We exceeded our earnings per share target as a result of a continued focus on cost control and a lower tax rate, despite the fact that certain project delays and cancellations resulted in lower than anticipated revenue.  New business wins in the quarter were healthy, and we are pleased with the ongoing development of our strategic partnerships, and the sustained success of our product and service offering.  A notable highlight was our continued growth in the Asia/Pacific region, where we remain a market leader."

Mr. von Rickenbach continued, "A number of leading biopharmaceutical companies have made a fundamental shift in the way they work with us, and now more than ever, PAREXEL plays an important role in their success.  However, one of the characteristics of this new strategic partnership model appears to be that revenue runs off more slowly than has been typical with projects.  Additionally, in the first quarter we experienced an elevated level of project delays and cancellations, including two large projects which were cancelled by clients near the end of the quarter.  These factors have caused us to update our forward-looking financial guidance.  Given our recent new business wins, existing backlog, current proposal pipeline and prospects for additional partnership opportunities, however, we believe our outlook for the future remains very bright.  I feel that the foundation of our Company has never been stronger, and that we continue to be very well positioned to achieve future revenue and earnings per share growth in Fiscal Year 2011 and beyond."

During the first quarter of Fiscal Year 2011, the Company implemented a new project accounting and billing system, which caused delays in client billing.  As a consequence, the first quarter's days sales outstanding (DSO) increased to 82 days.  The issues with the new billing system have now been largely resolved, and the Company anticipates that DSO will be in the range of 55 days to 65 days at the end of December, with further decreases expected thereafter.

The Company issued forward-looking guidance for the second quarter of Fiscal Year 2011 (ending December 31, 2010), and provided updated guidance for Fiscal Year 2011, using recent exchange rates.   For the second quarter, the Company anticipates reporting consolidated service revenue in the range of $300 to $305 million, and diluted earnings per share in the range of $0.27 to $0.29.  For Fiscal Year 2011, consolidated service revenue is expected to be in the range of $1.250 to $1.270 billion using recent exchange rates (previously issued revenue guidance was $1.265 to $1.310 billion).  Earnings per diluted share for Fiscal Year 2011 are projected to be in the range of $1.23 and $1.31 (previously issued earnings per diluted share guidance was $1.22 to $1.32).  While forward-looking service revenue guidance reflects the benefit of strong Q1 new business and a weakened dollar, those positive developments have been more than offset by cancellations, client-driven project delays, and the slow ramp-up of revenue in certain strategic partnerships.  The Company has been able to essentially maintain earnings per share guidance through effective cost controls and a lower tax rate.

The Company notes that Fiscal Year 2010 numbers have been reclassified to conform to the current year's presentation.  A slide depicting the reclassified numbers for Fiscal Year 2010, 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.