| Press
Release
SOURCE: eResearchTechnology,
Inc.
eResearchTechnology Reports Third Quarter 2007 Results
Net Income Increasing by 50% with EPS of $0.07 vs. $0.05 in Q3 2006
Q3 Revenues Increase to $24.0 Million and New Bookings Increase to $35.5 Million
PHILADELPHIA, Nov. 1/PRNewswire-FirstCall/
-- eResearchTechnology, Inc. (eRT), (Nasdaq: ERES
- News),
a leading provider of centralized ECG, eClinical technology,
ePRO and other services to the pharmaceutical, biotechnology,
medical device and related industries, announced today
results for the third quarter of 2007 and nine-month
period ended September 30, 2007.
Highlights of the Third Quarter were:
-- ECG volume was up 40% in the third quarter of 2007 compared to the same
quarter a year ago;
-- $35.5 million in new bookings of contracts and work orders, an increase
of 40.3% from the same quarter a year ago;
-- Seven new Thorough ECG study agreements were signed, valued at
approximately $7.2 million, translating into an average Thorough ECG
study size of more than $1 million.
-- Backlog increased to $115.0 million as of September 30, 2007. An
increase of 23.4% from the same quarter a year ago. The annualized
cancellation rate for the quarter was 13.4%.
-- The book-to-bill ratio for the third quarter was 1.5, an increase from
the previous quarter's book-to-bill ratio of 1.4 and from the book to
bill ratio of 1.1 for the third quarter of 2006.
-- The newly-formed Consulting Practice recorded significant new sales and
bookings; and ePro, which was initiated in June of this year, recorded
its first sales bookings.
The Company reported revenues of $24.0 million for the third quarter of 2007, a 7.9% increase from $22.2 million in the third quarter of 2006, which included $1.2 million for the ending of a franchise agreement during the same period in 2006. The Company reported net income of $3.7 million for the third quarter of 2007, a 50.3% increase from $2.5 million in the third quarter of 2006. This resulted in net income per diluted share of $0.07 in the third quarter of 2007, compared to $0.05 in the third quarter of 2006.
The Company's gross margin percentage in the third quarter of 2007 was 48.0% compared to 49.2% in the third quarter of 2006. As previously noted, the third-quarter of 2006 included revenue of $1.2 million for the ending of a franchise agreement; without which the third quarter of 2006 gross margin would have been 46.3%. Pre-tax income margin in the third quarter of 2007 was 24.8% compared to 17.4% in the third quarter of 2006. The Company's tax rate for the third quarter of 2007 was 37.7% compared to 36.3% in the third quarter of 2006.
For the nine months ended September 30, 2007, the Company reported revenues of $69.8 million compared to $66.4 million for the nine months ended September 30, 2006. The Company reported net income of $10.1 million, or $0.20 per diluted share, for the nine months ended September 30, 2007 compared to net income of $6.1 million, or $0.12 per diluted share, for the nine months ended September 30, 2006.
The Company's gross margin percentage for the nine months ended September 30, 2007 was 49.9% compared to 49.1% for the nine months ended September 30, 2006. Pre-tax income margin for the nine months ended September 30, 2007 was 23.5% compared to 14.9% for the nine months ended September 30, 2006. The Company's tax rate was 38.5% for the nine months ended September 30, 2007 compared to 38.6% for the nine months ended September 30, 2006.
eRT ended the quarter with $71.0 million in cash, cash equivalents and investments, an increase of $7.6 million from $63.4 million at the end of the second quarter of 2007.
"We are pleased with our third quarter results." said Dr. Michael McKelvey, President and CEO of eRT. "Our Company demonstrated strong growth during the quarter, led by our core cardiac safety business. Both our volume and new bookings growth of 40% in the quarter were impressive. The third quarter is a seasonally slow period due to vacations and the tendency of sponsors to not initiate Thorough ECG trials in the summer months. We were able to leverage our SG&A structure to produce net income growth of 50.3% compared to the same quarter a year ago; year to date our net income is up 66.4% from the previous year. Our earnings per diluted share have already exceeded that attained in all of 2006."
Dr. McKelvey continued, "The 23.4% growth in our backlog to $115.0 million from a year ago, combined with a continued robust sales environment and stabilizing prices shows a solid market demand for our services. We were particularly pleased with the strong showing of our bookings, which showed the fourth quarter in a row of growth quarter over quarter, and the growth of our newly-formed consulting business. In addition, we are working more closely with some of our key CRO partners in a number of different areas. Our operations team is executing very well and we continue to make good progress on the expense line; while we continue to invest in eClinical, Consulting and ePRO. The net effect of this is our achievement of pre-tax margins of 24.8% for the third quarter of 2007."
2007 Guidance
The Company issued guidance for the fourth quarter of 2007. eRT anticipates revenues of between $27 million and $28.5 million and net income per diluted share of $0.09 to $0.11 for the fourth quarter ending December 31, 2007. For the full year ending December 31, 2007, management anticipates revenues will be around the midpoint of the previously issued guidance of $95 million and $103 million. Management raised its anticipated net income per diluted share to $0.29 to $0.31 from the previously issued guidance of the high end of the range of $0.25 to $0.30.
Conference Call
Dr. McKelvey and Richard Baron, the Company's Chief Financial Officer, will hold a conference call to discuss these results. The conference call will take place at 5:00 p.m. EDT on November 1, 2007. For the conference call interested participants should dial 866-700-7173 when calling within the United States or 617-213-8838 when calling internationally along with the pass code 33801742. There will be a playback available through 11:59 p.m. (Eastern) on November 8, 2007. To listen to the playback, please call 888-286-8010 when calling within the United States or 617-801-6888 when calling internationally. Please use pass code 94063678 for the replay.
This call is being webcast by Thomson Financial and can be accessed at eRT's web site at http://www.eRT.com. The webcast may also be accessed at http://www.streetevents.com. The webcast can be accessed until November 1, 2008 on either site.
About eResearchTechnology, Inc.
Based in Philadelphia, PA, eResearchTechnology, Inc. (http://www.eRT.com) is a provider of technology and services to the pharmaceutical, biotechnology and medical device industries on a global basis. The Company is a market leader in providing centralized core-diagnostic electrocardiographic (ECG) technology and services to evaluate cardiac safety in clinical development. The Company is also a leader in providing technology and services to streamline the clinical trials process by enabling its customers to automate the collection, analysis, and distribution of clinical data in all phases of clinical development.
Statements included in this release may constitute
forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Such
statements, including, but not limited to, 2007 financial
guidance, involve a number of risks and uncertainties
such as the Company's ability to obtain new contracts
and accurately estimate net revenues due to uncertain
regulatory guidance, variability in size, scope and
duration of projects, and internal issues at the sponsoring
client, competitive factors, technological development,
and market demand. As a result, actual results may differ
materially from any financial outlooks stated herein.
Further information on potential factors that could
affect the Company's financial results can be found
in the Company's Reports on Form 10-K and 10-Q filed
with the Securities and Exchange Commission. The Company
undertakes no obligation to publicly update any forward-looking
statement, whether as a result of new information, future
events, or otherwise.
Contact:
Richard Baron Robert East
eResearchTechnology, Inc. Westwicke Partners, LLC
215-282-5566 410-321-9652
eResearchTechnology, Inc. and Subsidiaries
Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2006 2007 2006 2007
Net revenues:
Licenses $602 $651 $2,336 $2,013
Services 14,493 16,453 42,040 47,982
Site support 7,131 6,867 22,067 19,794
Total net revenues 22,226 23,971 66,443 69,789
Costs of revenues:
Cost of licenses 75 70 228 199
Cost of services 6,674 7,567 19,130 21,590
Cost of site support 4,548 4,831 14,492 13,143
Total costs of revenues 11,297 12,468 33,850 34,932
Gross margin 10,929 11,503 32,593 34,857
Operating expenses:
Selling and marketing 2,471 2,487 8,687 8,079
General and administrative 3,945 2,527 11,758 8,915
Research and development 980 1,128 3,328 3,155
Total operating expenses 7,396 6,142 23,773 20,149
Operating income 3,533 5,361 8,820 14,708
Other income, net 339 584 1,067 1,703
Income before income taxes 3,872 5,945 9,887 16,411
Income tax provision 1,407 2,239 3,821 6,318
Net income $2,465 $3,706 $6,066 $10,093
Basic net income per share $0.05 $0.07 $0.12 $0.20
Diluted net income per share $0.05 $0.07 $0.12 $0.20
Shares used to calculate basic net
income per share 49,540 50,594 49,302 50,430
Shares used to calculate diluted
net income per share 51,376 51,829 51,525 51,681
eResearchTechnology, Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands, except share and per share amounts)
December 31, September 30,
2006 2007
ASSETS (unaudited)
Current assets:
Cash and cash equivalents $15,497 $27,198
Short-term investments 41,416 43,591
Accounts receivable, net 17,866 21,790
Prepaid income taxes 2,819 754
Prepaid expenses and other 2,761 3,613
Deferred income taxes 912 913
Total current assets 81,271 97,859
Property and equipment, net 31,129 33,127
Goodwill 1,212 1,212
Long-term investments 928 244
Other assets 524 311
Total assets $115,064 $132,753
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $4,360 $2,505
Accrued expenses 3,445 4,968
Income taxes payable 781 966
Current portion of capital lease
obligations 40 1,621
Deferred revenues 11,325 12,415
Total current liabilities 19,951 22,475
Capital lease obligations, excluding
current portion - 66
Deferred tax liabilities 1,491 2,203
Total liabilities 21,442 24,744
Stockholders' equity:
Preferred stock-$10.00 par value,
500,000 shares authorized, none
issued and outstanding - -
Common stock-$.01 par value,
175,000,000 shares authorized,
58,356,546 and 58,854,254
shares issued, respectively 584 589
Additional paid-in capital 83,493 87,331
Accumulated other comprehensive
income 1,510 1,961
Retained earnings 70,225 80,318
Treasury stock, 8,247,119 shares
at cost (62,190) (62,190)
Total stockholders' equity 93,622 108,009
Total liabilities and
stockholders' equity $115,064 $132,753
eResearchTechnology, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Nine Months Ended
September 30,
2006 2007
Operating activities:
Net income $6,066 $10,093
Adjustments to reconcile net
income to net cash
provided by operating
activities:
Depreciation and
amortization 8,537 11,066
Cost of sales of equipment 3,483 1,004
Non-cash share-based
compensation 2,319 1,576
Changes in operating
assets and liabilities:
Accounts receivable 44 (3,777)
Prepaid expenses and
other (452) (595)
Accounts payable 1,966 (1,888)
Accrued expenses (1,156) 1,500
Income taxes (3,062) 2,749
Deferred revenues (8,744) 995
Net cash provided
by operating
activities 9,001 22,723
Investing activities:
Purchases of property and
equipment (12,269) (10,066)
Purchases of investments (24,516) (50,108)
Proceeds from sales of investments 21,040 48,617
Net cash used in
investing
activities (15,745) (11,557)
Financing activities:
Repayment of capital lease
obligations (114) (1,962)
Proceeds from exercise of stock
options 3,548 1,600
Stock option income tax benefit 3,702 628
Repurchase of common stock for
treasury (5,803) -
Net cash provided
by financing
activities 1,333 266
Effect of exchange rate changes on
cash 244 269
Net (decrease) increase in cash and
cash equivalents (5,167) 11,701
Cash and cash equivalents, beginning
of period 18,432 15,497
Cash and cash equivalents, end of
period $13,265 $27,198
eResearchTechnology, Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Information
For the Three and Nine Months Ended September 30, 2006 and 2007
(in thousands)
(unaudited)
Three Months Nine Months
Ended September 30 Ended September 30
2006 2007 2006 2007
Gross margin:
GAAP gross margin $10,929 $11,503 $32,593 $34,857
- - - -
Non-GAAP income gross margin $10,929 $11,503 $32,593 $34,857
Reconciliation of GAAP to Non-GAAP
operating income:
GAAP operating income $3,533 $5,361 $8,820 $14,708
Cost of efficiency improvements - - - 676
CEO and CFO transition 714 - 1,914 -
Settlement of contract dispute - - 646 -
Subtotal of reconciling items 714 - 2,560 676
Non-GAAP operating income $4,247 $5,361 $11,380 $15,384
Reconciliation of GAAP to Non-GAAP
net income and net income per
diluted share:
GAAP net income $2,465 $3,706 $6,066 $10,093
Cost of efficiency improvements - - - 412
CEO and CEO transition 440 - 1,158 -
Settlement of contract dispute - - 391 -
Subtotal of reconciling items 440 - 1,549 412
Non-GAAP net income $2,905 $3,706 $7,615 $10,505
GAAP net income per diluted share $0.05 $0.07 $0.12 $0.20
Non-GAAP net income per diluted share $0.06 $0.07 $0.15 $0.20
SOURCE: eResearchTechnology, Inc.
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