Inveresk (NASDAQ:IRGI)
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Inveresk Research Reports Record First Quarter Revenues and
Increases 2004 Earnings Guidance
* Continuing strength in the first quarter of 2004:
CARY, N.C., May 4 /PRNewswire-FirstCall/ -- Inveresk Research Group, Inc.
today announced results for the first quarter ended March 31, 2004. Net
service revenue for the first quarter was $76.7 million, an increase of 33%
compared with the first quarter of 2003. Income from operations in the quarter
was $12.8 million, or 16.7% of net service revenue, compared with income from
operations of $8.6 million for the same period in 2003.
Net income in the first quarter of 2004 was $12.3 million, or $0.31 per share
on a diluted basis. This includes a $0.03 positive impact to diluted EPS
arising from the recognition of a deferred tax asset on carried-forward tax
losses in our US operations, net of share offering expenses and residual
restructuring costs for the PharmaResearch acquisition.
"Inveresk continues to benefit from its acquisition strategy in recent years
and the diversity of its service offering," said Walter Nimmo, President and
Chief Executive Officer of Inveresk Research Group, Inc. "Strong enquiry
levels in the North American pre-clinical market in the last three quarters
have been converted into new business signings, resulting in increasing
revenues and an improved business mix at CTBR, our Montreal-based pre-clinical
operations. CTBR recorded excellent results in the first quarter and we expect
this to continue for the remainder of the year. At the same time our European
pre-clinical operation maintained its strong performance of 2003, with demand
for its toxicology services in particular remaining buoyant.
"The Clinical business segment delivered profits in line with expectations in
the first quarter. Enquiry levels remain strong in North America and Europe,
although seasonal factors and some project delays impacted revenues in the
first quarter," added Nimmo.
Favorable Canadian dollar and sterling exchange rate movements positively
impacted results in the first quarter, although this was offset partially by a
$0.4 million negative mark-to-market valuation adjustment with respect to
interest rate hedges.
Net cash from operating activities totaled $11.1 million for the three months
ended March 31, 2004, compared with $4.8 million in the corresponding period in
2003. Capital expenditure totaled $5.8 million during the same period ($4.3
million in 2003). At March 31, 2004, the Company had gross financial debt of
$56.9 million and cash and cash equivalents of $24.9 million. Net days sales
outstanding at March 31, 2004 totaled 21.
For the twelve months ended March 31, 2004, new business signings totaled $350
million, $87 million of which were signed in the first quarter of 2004. At
March 31, 2004, backlog amounted to approximately $295 million.
"The general environment for all of our businesses remains robust," added
Nimmo. "Our diverse service offering will allow Inveresk to meet or exceed our
overall growth and profitability objectives for the full year. In light of
these factors and our first quarter results, we are increasing our full- year
EPS guidance to between $1.36 and $1.39 on a diluted basis."
Conference Call and Webcast Information
Inveresk Research will host a live conference call and webcast tomorrow, May 5,
2004 at 10:00 a.m. EDT to discuss its first quarter performance. To access the
webcast, please visit http://www.inveresk.com/. A replay of the webcast will
be available shortly after the call until 5:00 p.m. EDT on Tuesday, May 11,
2004.
Information on Inveresk Research
Inveresk Research is a leading provider of drug development services to
companies in the pharmaceutical and biotechnology industries. Through its
Pre-clinical and Clinical business segments, the Company offers a broad range
of drug development services, including pre-clinical safety and pharmacology
evaluation services, laboratory sciences services and clinical development
services. Inveresk Research is one of a small number of drug development
services companies currently providing a comprehensive range of pre-clinical
and clinical development services on a world-wide basis. The Company's client
base includes major pharmaceutical companies in North America, Europe and
Japan, as well as many biotechnology and specialty pharmaceutical companies.
For more information on Inveresk Research, visit our Web site at
http://www.inveresk.com/.
Statements contained in this press release that are forward-looking are based
on current expectations that are subject to a number of uncertainties and
risks, and actual results may differ materially. Factors that might cause such
a difference include, but are not limited to, risks associated with: the
reduction in research and development activities by pharmaceutical and
biotechnology clients, changes in government regulations, the effects of
interest rate and foreign exchange rate fluctuations, our ability to attract
and retain employees, the loss or delay of contracts due to economic
uncertainty or other factors, our ability to efficiently manage backlog, our
ability to expand our business through strategic acquisitions, competition
within the industry and the potential adverse impact of health care reform.
Further information about these risks and uncertainties can be found in the
information included in the company's recent filings with the Securities and
Exchange Commission, including the company's Registration Statement on Form S-3
and Form 10-K.
Inveresk Research Group, Inc.
Condensed Consolidated Statements of Operations
($ in thousands, except per share and share data)
(Unaudited)
Quarter Quarter
Ended Ended
March 31, March 31,
2004 2003
Net service revenue $ 76,738 $ 57,684
Direct costs excluding depreciation (39,921) (29,278)
36,817 28,406
Selling, general and administrative expenses:
Share offering expenses (306) (658)
Other selling, general and administrative
expenses (19,853) (16,228)
Total selling, general and administrative
expenses (20,159) (16,886)
Depreciation (3,465) (2,949)
Amortization of intangibles (348) --
Income from operations 12,845 8,571
Interest income 101 72
Interest expense (899) (971)
Income before income taxes 12,047 7,672
Provision for income taxes 250 (295)
Net income $ 12,297 $ 7,377
Earnings per share:
Basic $ 0.32 $ 0.20
Diluted $ 0.31 $ 0.20
Number of common shares outstanding:
Basic 37,923,816 36,081,610
Diluted 39,160,749 37,366,463
Inveresk Research Group, Inc.
Segment Analysis
($ in thousands)
(Unaudited)
Quarter Quarter
Ended Ended
March 31, March 31,
2004 2003
Net service revenue:
Pre-clinical $ 44,377 $ 36,329
Clinical 32,361 21,355
Total 76,738 57,684
Net service revenue less direct costs
excluding depreciation:
Pre-clinical 23,213 19,505
Clinical 13,604 8,901
Total 36,817 28,406
Net service revenue less direct costs excluding
depreciation, as a percentage of net service
revenue:
Pre-clinical 52.3 % 53.7 %
Clinical 42.0 % 41.7 %
Total 48.0 % 49.2 %
Income from operations:
Pre-clinical 11,744 8,782
Clinical 4,173 2,263
Corporate overhead (3,072) (2,474)
Total 12,845 8,571
Income from operations as a percentage of net
service revenue:
Pre-clinical 26.5 % 24.2 %
Clinical 12.9 % 10.6 %
Total 16.7 % 14.9 %
Inveresk Research Group, Inc.
Consolidated Balance Sheet Data
($ in thousands)
March 31,
2004 December
(Unaudited) 31, 2003
Total current assets $ 119,335 $ 115,011
Total other assets 338,083 334,068
Total current liabilities (110,317) (116,393)
Total other liabilities (98,295) (98,511)
Total shareholders' equity $ 248,806 $ 234,175
Capital Employed
March 31,
2004 December
(Unaudited) 31, 2003
Total shareholders' equity $ 248,806 $ 234,175
Current portion of long-term debt 7,634 7,857
Long-term debt 49,220 50,941
Cash and cash equivalents (24,928) (24,579)
Total capital employed $ 280,732 $ 268,394
DATASOURCE: Inveresk Research Group, Inc.
CONTACT: Paul Cowan, Chief Financial Officer of Inveresk Research Group,
Inc., +1-919-462-2354, ; or Matt Dallas of Financial
Dynamics, +1-212-850-5627, , for Inveresk Research Group,
Inc.
Web site: http://www.inveresk.com/