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PAREXEL International Corp. Reports Operating Results (10-Q)

November 09, 2010 | About:
10qk

10qk

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PAREXEL International Corp. (PRXL) filed Quarterly Report for the period ended 2010-09-30.

Parexel International Corp. has a market cap of $1.28 billion; its shares were traded at around $21.95 with a P/E ratio of 18.9 and P/S ratio of 1.1. Parexel International Corp. had an annual average earning growth of 18.6% over the past 10 years. GuruFocus rated Parexel International Corp. the business predictability rank of 5-star.PRXL is in the portfolios of Edward Owens of Vanguard Health Care Fund, Chuck Royce of Royce& Associates, Bruce Kovner of Caxton Associates, Pioneer Investments, Jim Simons of Renaissance Technologies LLC, George Soros of Soros Fund Management LLC, Kenneth Fisher of Fisher Asset Management, LLC.

Highlight of Business Operations:

On a segment basis, CRS service revenue increased by $29.3 million, or 14.5%, to $231.6 million for the three months ended September 30, 2010 from $202.3 million for the three months ended September 30, 2009. The increase was attributable to strong performance in all of our CRS business lines, including a $5.4 million increase in our Early Phase business and a $29.6 million increase in Phase II-III/PACE; partly offset by approximately $5.7 million related to the negative impact of foreign currency fluctuations. The growth is a result of successful sales efforts over the past twelve months and the continued positive impact of strategic partnerships.

Perceptive service revenue increased by $7.2 million, or 25.3%, to $35.8 million for the three months ended September 30, 2010 from $28.6 million for the three months ended September 30, 2009. The increase was due primarily to a $5.7 million increase in our RTSM business and a $2.6 million increase in our other service offerings; partly offset by the $1.1 million negative impact of foreign currency fluctuations. The growth in Perceptive is due to increasing usage of technology in conjunction with clinical trials.

PCMS direct costs decreased by $1.4 million, or 7.4%, to $17.2 million for the three months ended September 30, 2010 from $18.6 million for the three months ended September 30, 2009. This $1.4 million decline was due primarily to lower business activity in Medical Communications ($0.9 million), partially offset by $0.5 million related to the positive impact of foreign currency fluctuations. As a percentage of service revenue, PCMS direct costs decreased to 60.8% from 64.6% for the respective periods, as a result of improved productivity and efficiency.

Selling, general and administrative (SG&A) expense increased by $7.3 million, or 13.0%, to $63.5 million for the three months ended September 30, 2010 from $56.2 million for the three months ended September 30, 2009. This increase was due primarily to a $5.0 million increase in labor costs, a $1.5 million increase in facilities expenses, a $1.2 million increase in travel costs, and a $1.7 million increase in other areas, such as insurance and professional fees; partly offset by the $2.0 million positive impact of foreign exchange fluctuations. As a percentage of service revenue, SG&A remained essentially flat at 21.5% for the three months ended September 30, 2010 compared with 21.6% for the three months ended September 30, 2009.

Net cash used in operating activities during the three months ended September 30, 2010 totaled $103.6 million and consisted of a $113.2 million increase in accounts receivable (net of allowance for doubtful accounts and deferred revenue), a $12.9 million decrease in accounts payable and other current liabilities (including the payment of Fiscal Year 2010 bonuses), a $8.1 million increase in prepaid expenses and other current assets and $5.8 million related to deferred taxes and other tax accounts. These uses of cash were partially offset by $17.8 million of net income, $15.7 million for non-cash depreciation and amortization expense, $2.2 million related to non-cash charges for stock-based compensation, and a $0.7 million decrease in other assets. The large increase in the cash used in operating activities is due primarily to the short-term disruptions caused by the implementation of our new project accounting and billing system.

Net cash provided by operating activities for the three months ended September 30, 2009 totaled $14.4 million and was generated by net income of $12.4 million, non-cash charges for depreciation and amortization expense in the amount of $14.1 million, and $1.5 million related to non-cash charges for stock-based compensation. These sources of cash were offset by $13.6 million related to changes in operating assets and liabilities composed of a $9.2 million increase in accounts receivable (net of allowance for doubtful accounts and deferred revenue), a $6.9 million increase in prepaid expenses and other current assets, and a $5.2 million increase in other assets; offset by a $7.7 million increase in taxes payable and other long-term liabilities.

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