PHILADELPHIA, Feb. 25 /PRNewswire-FirstCall/ -- eResearchTechnology, Inc. (ERT), (Nasdaq: ERES), a leading provider of centralized ECG, ePRO, and other services to the bio/pharmaceutical, medical device and related industries, announced today results for the fourth quarter and twelve-month period ended December 31, 2009. Unless otherwise noted, all comparative numbers refer to changes from the same period a year ago.
Financial highlights for the fourth quarter of 2009:
- Net income was $3.3 million, or $0.07 per diluted share, in the fourth quarter of 2009 compared to $2.8 million, or $0.06 per diluted share, in the third quarter of 2009 and $5.7 million, or $0.11 per diluted share, a year ago.
- Net revenues were $23.1 million for the fourth quarter of 2009 compared to $22.7 million for the third quarter of 2009 and $30.1 million a year ago (which included EDC revenue of $1.5 million; these operations were sold on June 23, 2009).
- Gross margin percentage was 56.9% in the fourth quarter of 2009 compared to 51.6% for the third quarter of 2009 and 57.3% a year ago.
- Operating income margin percentage was 21.7% in the fourth quarter of 2009 compared to 20.7% for the third quarter of 2009 and 28.6% a year ago.
- Cash flow from operations was $9.2 million in the fourth quarter, up from $5.6 million in the third quarter of 2009 but down from $13.2 million a year ago.
- Cash and investments totaled $78.8 million at December 31, 2009 compared to $72.1 million on September 30, 2009 and $66.4 million at December 31, 2008.
- New bookings were $44.0 million in the fourth quarter of 2009 compared to $42.3 million for the third quarter of 2009 and $43.4 million a year ago (excluding EDC bookings of $1.6 million).
- The gross book-to-bill ratio was 1.9 in the fourth quarter of 2009, compared to 1.9 in the third quarter of 2009 and 1.5 a year ago.
- Backlog was $170.4 million as of December 31, 2009 compared to $165.6 million as of September 30, 2009 and $161.0 million (excluding EDC) a year ago. The annualized cancellation rate was 16.1% in the fourth quarter of 2009 compared to 20.0% in the third quarter of 2009 and 19.3% a year ago.
Financial highlights for the full year 2009:
- Net income was $10.7 million, or $0.22 per diluted share, for the year ended. December 31, 2009 compared to $25.0 million, or $0.48 per diluted share, for the year ended December 31, 2008.
- Net revenues were $93.8 million for the year ended December 31, 2009 compared to $133.1 million for the year ended December 31, 2008. Included in net revenues was EDC revenues of $2.5 million for the year ended December 31, 2009 and $5.9 million in the year ended December 31, 2008.
- Gross margin percentage for the year ended December 31, 2009 was 52.8% compared to 55.8% for the year ended December 31, 2008.
- Operating income margin percentage for the year ended December 31, 2009 was 19.1% compared to 28.8% for the year ended December 31, 2008.
- Cash flow from operations was $33.9 million for the year ended December 31, 2009 compared to $39.9 million for the year ended December 31, 2008.
- New bookings for the year ended December 31, 2009 were $153.6 million compared to $187.2 million for the year ended December 31, 2008.
"The fourth quarter saw our second consecutive quarter of strong bookings of over $40 million, which demonstrated the desire of our clients to increase their spending on cardiac safety," commented Dr. Michael McKelvey, President and CEO of ERT. "In the third quarter of 2009, bookings were primarily derived from large bio/pharmaceutical companies; in the fourth quarter of 2009, bookings from mid-sized bio/pharmaceutical companies started to pick up. The strength of our business model was again demonstrated as margins continued to increase sequentially as did our ability to generate strong cash flows even in a relatively flat revenue environment."
"In 2009, we saw a significant shift in the distribution of our revenues from Thorough QT trials to routine trials, which have always been the largest part of our revenue stream," continued Dr. McKelvey. "While Thorough QT trials can have a much quicker short-term revenue impact, due to their size and relative short duration, routine trials form a stronger basis, with higher visibility, for long-term revenue growth. We entered 2010 with the largest backlog of routine revenue in ERT's history. Routine trials offer a significantly larger growth potential for core ECG labs, because we estimate that only one out of four routine trials is centralized today as compared to Thorough QT trials where we estimate that nine out of ten trials are centralized today. We believe our message on the advantages of centralization of ECG testing is resonating well with sponsors as they focus on the quality, timeliness, and cost advantages of centralization."
2010 Guidance
The Company issued guidance for the full year of 2010. For 2010, management anticipates net revenues of between $98 and $105 million and diluted net income per share of between $0.28 and $0.34. ERT anticipates a significant growth in routine revenue in 2010, offset by continued weak Thorough QT revenues.
The impact of the low level of Thorough QT bookings in 2009 and the slower ramp up of newly booked business will continue to have a negative impact in the first half of the year. Due to these factors, ERT anticipates net revenues in the first quarter of 2010 above $20 million but below that reported in the fourth quarter of 2009, resulting in lower diluted net income per share compared to that reported in the fourth quarter of 2009. We anticipate revenue growth in the second half of 2010 as the newly booked business converts into revenue.
Conference Call
Dr. McKelvey and Keith Schneck, the Company's Chief Financial Officer, will hold a conference call to discuss these results. The conference call will take place at 5:00 PM EST on February 25, 2010. For the conference call, interested participants should dial 1-800-860-2442 when calling within the United States or 1-412-858-4600 when calling internationally. There will be a playback available as well. To listen to the playback, please call 1-877-344-7529 when calling within the United States or 1-412-317-0088 when calling internationally. The conference code for playback is 437708.
This call is being webcast by MultiVu and can be accessed at ERT's website at www.ert.com. The webcast may also be accessed via the direct link at http://www.videonewswire.com/event.asp?id=66042. The webcast can be accessed for up to one year on either site.
About eResearchTechnology, Inc.
Based in Philadelphia, PA, eResearchTechnology, Inc. (http://www.ert.com) is a global provider of technology and services to the pharmaceutical, biotechnology, and, medical device industries. The Company is the market leader in providing centralized core-diagnostic electrocardiographic (ECG) technology and services to evaluate cardiac safety in clinical development. The Company also provides technology and services to streamline the clinical trials process by enabling its customers to automate the collection, analysis, and distribution of ePRO clinical data in all phases of clinical development.
This release may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect our current views as to future events and financial performance with respect to our operations. These statements can be identified by the fact that they do not relate strictly to historical or current facts. They use words such as "aim," "anticipate," "are confident," "estimate," "expect," "will be," "will continue," "will likely result," "project," "intend," "plan," "believe," "look to" and other words and terms of similar meaning in conjunction with a discussion of future operating or financial performance.
These statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward-looking statements. Factors that might cause such a difference include: unfavorable economic conditions; our ability to obtain new contracts and accurately estimate net revenues, our positive outlook for future bookings, variability in size, scope and duration of projects and internal issues at the sponsoring client; our ability to successfully integrate acquisitions; competitive factors in the market for centralized Cardiac Safety services; changes in the pharmaceutical, biotechnology and medical device industries to which we sell our solutions; technological development; and market demand. There is no guarantee that the amounts in our backlog will ever convert to revenue. Should the current economic conditions continue or deteriorate further, the cancellation rates that we have historically experienced could increase. 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. Guidance is based on management's good faith expectations given current market conditions but that continued or further deterioration of general economic conditions, in addition to other factors cited elsewhere, could result in the company not achieving the revenue and earnings per diluted share guidance provided.
Forward-looking statements speak only as of the date made. We undertake no obligation to update any forward-looking statements, including prior forward-looking statements, to reflect the events or circumstances arising after the date as of which they were made. As a result of these risks and uncertainties, readers are cautioned not to place undue reliance on any forward-looking statements included in this release or that may be made in our filings with the Securities and Exchange Commission or elsewhere from time to time by, or on behalf of, us.
eResearchTechnology, Inc. and Subsidiaries
Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
Three Months Ended Year Ended
December 31, December 31,
2008 2009 2008 2009
---- ---- ---- ----
Net revenues:
EDC licenses and services $1,540 $- $5,894 $2,501
Services 21,025 16,363 96,567 64,655
Site support 7,500 6,772 30,679 26,667
----- ----- ------ ------
Total net revenues 30,065 23,135 133,140 93,823
------ ------ ------- ------
Costs of revenues:
Cost of EDC licenses
and services 472 - 1,843 863
Cost of services 8,483 6,945 38,609 29,886
Cost of site support 3,880 3,021 18,445 13,544
----- ----- ------ ------
Total costs of revenues 12,835 9,966 58,897 44,293
------ ----- ------ ------
Gross margin 17,230 13,169 74,243 49,530
------ ------ ------ ------
Operating expenses:
Selling and marketing 3,014 3,149 13,273 12,905
General and administrative 4,453 4,278 18,181 14,859
Research and development 1,171 722 4,394 3,853
----- --- ----- -----
Total operating expenses 8,638 8,149 35,848 31,617
----- ----- ------ ------
Operating income 8,592 5,020 38,395 17,913
Other income (expense), net 808 (60) 1,730 (435)
--- --- ----- ----
Income before income taxes 9,400 4,960 40,125 17,478
Income tax provision 3,734 1,710 15,123 6,791
----- ----- ------ -----
Net income $5,666 $3,250 $25,002 $10,687
====== ====== ======= =======
Basic net income per share $0.11 $0.07 $0.49 $0.22
===== ===== ===== =====
Diluted net income per share $0.11 $0.07 $0.48 $0.22
===== ===== ===== =====
Shares used to calculate
basic net income per share 51,251 48,497 50,870 49,173
====== ====== ====== ======
Shares used to calculate
diluted net income per
share 51,804 48,777 52,015 49,468
====== ====== ====== ======
Certain prior period amounts have been reclassified to conform to
current reporting format
eResearchTechnology, Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands, except share and per share amounts)
(unaudited)
December 31, 2008 December 31, 2009
----------------- -----------------
ASSETS
Current assets:
Cash and cash equivalents $66,376 $68,979
Short-term investments 50 9,782
Investment in marketable
securities - 1,026
Accounts receivable less
allowance for doubtful
accounts of $695 and $548,
respectively 29,177 16,579
Prepaid income taxes 1,892 2,698
Prepaid expenses and other 2,885 3,308
Deferred income taxes 1,831 1,649
----- -----
Total current assets 102,211 104,021
Property and equipment, net 29,639 24,205
Goodwill 34,603 34,676
Intangible assets 2,149 1,607
Other assets 520 352
--- ---
Total assets $169,122 $164,861
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $3,971 $3,007
Accrued expenses 9,382 5,990
Income taxes payable 2,492 346
Current portion of capital
lease obligations 43 -
Deferred revenues 11,034 11,728
------ ------
Total current liabilities 26,922 21,071
Deferred rent 2,183 2,357
Deferred income taxes 1,332 2,502
Other liabilities 1,257 1,259
----- -----
Total liabilities 31,694 27,189
------ ------
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,
59,950,257 and 60,189,235
shares issued, respectively 600 602
Additional paid-in capital 93,828 97,367
Accumulated other
comprehensive loss (2,716) (1,580)
Retained earnings 110,479 121,166
Treasury stock, 8,686,868
and 11,589,603 shares at
cost, respectively (64,763) (79,883)
------- -------
Total stockholders'
equity 137,428 137,672
------- -------
Total liabilities and
stockholders' equity $169,122 $164,861
======== ========
Certain prior period amounts have been reclassified to conform
to current reporting format
eResearchTechnology, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Year Ended December 31,
2008 2009
---- ----
Operating activities:
Net income $25,002 $10,687
Adjustments to reconcile net
income to net cash provided
by operating activities:
Gain on sale of EDC operations - (530)
Depreciation and amortization 16,038 12,583
Cost of sales of equipment 743 96
Provision for uncollectible
accounts 189 210
Share-based compensation 2,604 2,790
Deferred income taxes 1,098 1,680
Changes in operating
assets and liabilities:
Accounts receivable (3,840) 12,726
Prepaid expenses and other 41 (293)
Accounts payable 175 (767)
Accrued expenses 1,162 (3,490)
Income taxes (1,290) (3,286)
Deferred revenues (1,909) 1,379
Deferred rent (64) 148
--- ---
Net cash provided by
operating activities 39,949 33,933
------ ------
Investing activities:
Purchases of property and equipment (10,969) (6,207)
Purchases of investments - (9,732)
Proceeds from sales of investments 8,747 -
Payments related to sale of EDC
operations - (1,150)
Payments for acquisition (6,042) (655)
------ ----
Net cash used in
investing activities (8,264) (17,744)
------ -------
Financing activities:
Repayment of capital
lease obligations (1,102) (43)
Proceeds from exercise of
stock options 2,369 523
Stock option income tax benefit 849 152
Repurchase of common stock
for treasury (2,573) (15,120)
------ -------
Net cash used in
financing activities (457) (14,488)
---- -------
Effect of exchange rate changes on cash (2,934) 902
------ ---
Net increase in cash and
cash equivalents 28,294 2,603
Cash and cash equivalents,
beginning of period 38,082 66,376
------ ------
Cash and cash equivalents,
end of period $66,376 $68,979
======= =======
Certain prior period amounts have been reclassified to conform
to current reporting format
SOURCE ERT
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