Parexel's first quarter consolidated service revenue dipped 1.2% to $259.8 million, compared with $263 million in the prior year period. Net income also slipped to $12.4 million, or $0.21 per diluted share, compared with net income of $13.6 million, or $0.23 per diluted share, for the year ago quarter.
The contract research organization reported operating income of $18.5 million, or 7.1% of consolidated service revenue, in the first quarter of Fiscal Year 2010, compared with operating income of $22 million, or 8.4% of consolidated service revenue, in the comparable quarter of the prior year. Operating income in the prior year quarter would have been $17.2 million, or 6.7% of service revenue, when taking into account the $4.7 million net revenue and cost impact related to the previously described accounting adjustment.
In after hours trading Tuesday, Parexel's shares fell 4.6% to $13.
Josef H. von Rickenbach, Parexel's chairman and CEO, said, "Despite a difficult market environment for both our industry and our company, we were able to exceed our EPS expectations. Client mergers and portfolio reprioritizations have created some unevenness in the demand for our services as reflected in project proposal flow and time to award. At the same time, there appear to be promising signs of stabilization.”
On a segment basis, consolidated service revenue for its first quarter was $202.3 million in clinical research services, $28.8 million in consulting and medical communications services, and $28.7 million in its technology subsidiary Perceptive Informatics.
Backlog at the end of September was approximately $2.157 billion. The reported backlog included gross new business wins of $322.1 million, cancellations of $100.7 million, a positive impact from foreign exchange rates of $21.7 million, and a negative impact from other adjustments of $2.4 million. On a year-over-year basis, backlog at Sept. 30, 2009 was up 4.7%.
The company expects to take a restructuring charge in the second quarter of approximately $30 million (approximately $0.30 per share assuming a tax rate of approximately 41%) in conjunction with a realignment of its global resources. The charge is expected to benefit earnings per share by approximately $0.22 per share on an annual basis once fully implemented, and comprises severance and facility restructuring costs. Savings will begin to be realized during the third quarter of Fiscal Year 2010.
The company issued forward-looking guidance for the second quarter and provided updated guidance for Fiscal Year 2010, using recent exchange rates. For the second quarter, the company anticipates reporting consolidated service revenue in the range of $275 to $280 million, a GAAP loss per share in the range of $0.09 to $0.11, and adjusted earnings per diluted share of $0.19 to $0.21.
For Fiscal Year 2010,consolidated service revenue is expected to be in the range of $1.105 to $1.125 billion using recent exchange rates. Previously issued revenue guidance was $1.120 to $1.150 billion. GAAP earnings per diluted share for Fiscal Year 2010 are projected to be in the range of $0.57 and $0.67, and adjusted earnings per diluted share are expected to be in the range of $0.87 to $0.97. Previously issued diluted earnings per share guidance was $0.85 to $0.95.
