Parexel International, a global contract research organization (CRO), reported an 8% increase in service revenue for its third quarter, flat quarterly profits, but raised its profit outlook for 2009. The CRO’s shares jumped 17.7% in after hours trading to $9.51 a share after closing Monday at $8.08.
The Waltham, Mass., company recorded service revenue of $264.5 million for the third quarter ended March 31, up from $245.3 million a year ago. Excluding the negative impact of foreign exchange and the net positive impact of acquisitions and divestitures of $17 million from the third quarter of fiscal year 2009, and $900,000 in divestitures from the third quarter of fiscal year 2008, revenue grew 15.8% year-over-year.
Parexel recorded flat net income of $14.2 million, or 25 cents a share for the quarter. The CRO increased its 2009 profit forecast to 97 cents to 99 cents per share, up from 94 cents to 98 cents.
“The company’s positive quarterly results were a clear reflection of the determined focus by our employees to control costs and achieve both our financial and operational targets," stated Josef H. von Rickenbach, Parexel’s Chairman and CEO. "I am proud of our staff’s ability to grow service revenue and expand operating margins in today’s challenging environment. In addition, we were able to generate a very respectable level of new business wins in the quarter, despite some market headwinds.”
Parexel’s backlog was $2.04 billion at the end of the March quarter, an increase of 6.8% year-over-year. The reported backlog included gross new business wins of $427.3 million, cancellations of $95.8 million and a negative impact from foreign exchange rates of $37.4 million. Other CROs have been hurt recently by large cancellations.
“I remain confident regarding Parexel’s prospects for the future, and believe that our global footprint, and a diverse service offering have positioned us well for the current environment. Revenue growth has been quite healthy, especially on a same-store, constant currency basis. The steps that we have taken over the past year to better leverage our global presence in managing our own costs have been paying off,” von Rickenbach said.
For fiscal year 2009, consolidated service revenue is expected to be in the range of $1.075 to $1.080 billion, down from previous guidance of $1.095 to $1.115 billion.