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eResearchTechnology Reports Revenue Growth of 29% in the Fourth
Quarter and 64% for the Full Year
Net Income Increased 30% in the Fourth Quarter and 106% for the Full Year,
Resulting in Diluted EPS of $0.13 and $0.54 for the Quarter and Full Year
PHILADELPHIA, Feb. 9 /PRNewswire-FirstCall/ -- eResearchTechnology, Inc.
(NASDAQ:ERES) ("eRT" or "the company"), a leading provider of technology and
services to the pharmaceutical, biotechnology and medical device industries,
announced today fourth quarter and full year results for the period ended
December 31, 2004.
The company reported revenues of $27.1 million for the fourth quarter, a 29%
increase compared to $21.0 million in revenue reported for the fourth quarter
of 2003. eRT reported net income for the fourth quarter of 2004 of $7.0
million, or $0.13 per diluted share, an increase of 30% compared with net
income of $5.4 million, or $0.10 per diluted share, for the fourth quarter of
2003. The company's tax rate for the fourth quarter of 2004 was 40.0% compared
to 42.8% in the third quarter of 2004 and 38.9% in the fourth quarter of 2003.
For the year ended December 31, 2004, the company reported revenues of $109.4
million, a 64% increase over revenues of $66.8 million for the year ended
December 31, 2003. Net income increased 106% to $29.7 million, or $0.54 per
diluted share, from $14.5 million, or $0.27 per diluted share, for the year
ended December 31, 2003. The company's tax rate was 40.8% for the year ended
December 31, 2004 versus 37.9% for the same period in 2003.
"The company delivered strong results in 2004," commented Joseph Esposito,
eRT's President and Chief Executive Officer. "I have great admiration and
appreciation for our employees who have dedicated themselves to safely
advancing clinical research. I want to recognize them for their outstanding
accomplishments, as well. In 2004, FORTUNE Magazine recognized the company as
the second fastest growing company in the United States over the past three
years. During this time our employees improved business processes, enhanced
our technology and advanced our global infrastructure to address the
requirements of a growing customer base. Through the efforts of our employees,
the company strengthened its market leadership position. The company is well
positioned to capitalize on the growth anticipated as a result of continued
regulatory reinforcement of vigorous drug safety testing in clinical trials."
Some of the highlights of the fourth quarter and full year included:
-- eRT signed more than $112 million in new contracts and work orders
for the full year 2004, the largest volume in the company's history.
-- During 2004, the company signed 39 new cardiac safety accounts and
contracted for work on new studies for 119 new compounds.
-- The company entered into new Thorough Phase I definitive ECG study
agreements valued at approximately $6.6 million for the quarter and
$38.0 million for the full year.
-- The company signed $6.0 million in program level awards in the fourth
quarter and $14.6 million for the full year.
-- eRT extended its EXPeRT(R) data handling capability by reintroducing
semi-automated machine based readings in response to the regulatory
guidance update in mid-September and received more than $3.5 million
in contracts related to this service in the fourth quarter and more
than $6.9 million for the full year.
-- The company signed $2.0 million in software and related services
agreements in the fourth quarter which included an agreement for an
end-to-end clinical research platform, electronic data capture and
web portal for PRACS Institute. eRT signed more than $8.4 million in
new software and related service agreements for the full year.
-- eRT completed the year with $68.7 million in cash and short-term
investments, an increase of $16.8 million from the end of 2003.
During the fourth quarter, the company repurchased 1.7 million shares
of its stock at a cost of $21.6 million. In the third quarter of
2004, eRT purchased 300,000 shares of its stock at a cost of $6.6
million.
-- The company's gross margin declined to 64.5% in the fourth quarter of
2004, from 66.2% in the fourth quarter of 2003. The decline in the
gross margin is due to continued investment in personnel and
technology to address future growth. The gross margin for the full
year increased to 66.8% from 63.0% in 2003.
-- The company's operating margins improved to 41.9% for the fourth
quarter and 45.3% for the full year from 41.4% and 34.4% for the
fourth quarter and full year 2003, respectively. The operating
margin was negatively affected by one-time expenses incurred in the
fourth quarter primarily for compliance with internal control
certification requirements.
2005 Guidance
The company issued the following guidance for 2005: It expects to report first
quarter of 2005 revenues of between $26.0 and $28.0 million and net income of
$0.12 to $0.14 per diluted share. The company reinforced guidance for 2005 and
continues to expect full year revenue between $130 and $140 million and diluted
earnings per share of $0.62 to $0.72 (excluding the impact of expensing stock
options under SFAS 123R).
Mr. Esposito and Bruce Johnson, the company's Chief Financial Officer, will
hold a conference call to discuss these results. The conference call will take
place at 4:45 p.m. EST on February 9, 2005. Interested participants should
call 888-874-9713 when calling within the United States or 973-935-8506 when
calling internationally. There will be a playback available until March 9,
2005. To listen to the playback, please call 877-519-4471 when calling within
the United States or 973-341-3080 when calling internationally. Please use
pass code 5606173 for the replay.
This call is being webcast by ViaVid Broadcasting and can be accessed at eRT's
web site at http://www.ert.com/. The webcast may also be accessed at ViaVid's
website at http://www.viavid.net/detailpage.aspx?sid=000021BA. The webcast can
be accessed until March 9, 2005 on either site.
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, 2005 guidance, involve a number
of risks and uncertainties such as competitive factors, technological
development, market demand, and the company's ability to obtain new contracts
and accurately estimate net revenues due to variability in size, scope and
duration of projects, and internal issues at the sponsoring client. 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.
eResearchTechnology, Inc. and Subsidiaries
Consolidated Statements of Operations
(in thousands, except per share amounts)
Three Months Ended Year Ended
December 31, December 31,
2003 2004 2003 2004
(unaudited) (unaudited)
Net revenues:
Licenses $882 $2,005 $5,738 $9,803
Services 15,192 18,176 46,791 76,340
Site support 4,945 6,952 14,313 23,250
Total net revenues 21,019 27,133 66,842 109,393
Costs of revenues:
Cost of licenses 141 148 658 664
Cost of services 4,943 6,004 17,473 24,124
Cost of site support 2,017 3,492 6,610 11,486
Total costs of revenues 7,101 9,644 24,741 36,274
Gross margin 13,918 17,489 42,101 73,119
Operating expenses:
Selling and marketing 2,146 2,040 7,763 9,391
General and
administrative 1,908 3,041 6,804 10,103
Research and development 1,164 1,044 4,564 4,090
Total operating expenses 5,218 6,125 19,131 23,584
Operating income 8,700 11,364 22,970 49,535
Other income, net 83 243 310 690
Income before income taxes 8,783 11,607 23,280 50,225
Income tax provision 3,417 4,643 8,817 20,501
Net income $5,366 $6,964 $14,463 $29,724
Basic net income per share $0.11 $0.14 $0.29 $0.58
Diluted net income
per share $0.10 $0.13 $0.27 $0.54
Shares used to calculate
basic net income
per share 50,517 51,038 49,461 51,375
Shares used to calculate
diluted net income
per share 55,198 54,084 54,033 55,133
eResearchTechnology, Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands, except share and per share amounts)
December 31, 2003 December 31, 2004
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $38,364 $45,806
Short-term investments 13,558 22,942
Accounts receivable, net 13,947 14,798
Prepaid expenses and other 2,219 3,522
Deferred income taxes 277 323
Total current assets 68,365 87,391
Property and equipment, net 16,416 24,499
Goodwill 1,212 1,212
Other assets 677 782
Deferred income taxes 5,308 1,936
Total assets $91,978 $115,820
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $3,513 $2,455
Accrued expenses 4,446 3,613
Income taxes payable 1,584 2,147
Current portion of capital lease
obligations 644 233
Deferred revenues 12,401 20,325
Total current liabilities 22,588 28,773
Capital lease obligations, excluding
current portion 131 193
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,
54,735,914 and 56,376,696
shares issued,
respectively 547 564
Additional paid-in capital 54,238 69,694
Accumulated other comprehensive
income 1,038 1,601
Retained earnings 16,826 46,550
Treasury stock, 4,062,519 and
6,067,519 shares at cost,
respectively (3,390) (31,555)
Total stockholders' equity 69,259 86,854
Total liabilities and
stockholders' equity $91,978 $115,820
eResearchTechnology, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands)
Year Ended December 31,
2003 2004
(unaudited)
Operating activities:
Net income $14,463 $29,724
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization 5,306 8,706
Cost of sale of equipment - 1,152
Provision for uncollectible accounts - 171
Stock option income tax benefits 9,895 12,173
Changes in operating assets
and liabilities:
Accounts receivable (6,731) (815)
Prepaid expenses and other 155 (1,541)
Accounts payable 1,484 (1,093)
Accrued expenses 720 (858)
Income taxes (2,258) 3,856
Deferred revenues 7,533 7,812
Net cash provided by
operating activities 30,567 59,287
Investing activities:
Purchases of property and equipment (8,887) (17,021)
Purchases of short-term investments (12,435) (23,351)
Proceeds from sales of short-term
investments 8,184 13,967
Net cash used in investing
activities (13,138) (26,405)
Financing activities:
Repayment of capital lease obligations (601) (720)
Proceeds from exercise of stock options 3,685 3,303
Repurchase of common stock for treasury - (28,165)
Net cash provided by (used in)
financing activities 3,084 (25,582)
Effect of exchange rate changes on cash 408 142
Net increase in cash and cash equivalents 20,921 7,442
Cash and cash equivalents, beginning
of period 17,443 38,364
Cash and cash equivalents, end of period $38,364 $45,806
DATASOURCE: eResearchTechnology, Inc.
CONTACT: Bruce Johnson of eResearchTechnology, Inc., +1-215-282-5580; or
Matt Hayden of Hayden Communications, +1-858-456-4533, for
eResearchTechnology
Web site: http://www.ert.com/