Inveresk (NASDAQ:IRGI)
Historical Stock Chart
From Jul 2019 to Jul 2024
![Click Here for more Inveresk Charts. Click Here for more Inveresk Charts.](/p.php?pid=staticchart&s=N%5EIRGI&p=8&t=15)
Inveresk Research Reports Third Quarter 2003 Earnings Results
Third Quarter Revenues Increase 26.2% to $70.6 Million
CARY, N.C., Oct. 28 /PRNewswire-FirstCall/ -- Inveresk Research Group, Inc.
today announced results for the quarterly period ended September 30, 2003. Net
service revenue for the third quarter was $70.6 million, an increase of 26.2%
compared with the same period in 2002. Income from operations in the quarter
was $11.9 million, compared with income from operations of $11.7 million for the
same period in 2002. Net income in the third quarter of 2003 was $10.0 million,
or $0.25 per share on a diluted basis.
On a pro forma basis, income from operations totaled $12.7 million in the third
quarter or 17.9% of net service revenue. Pro forma net income in the third
quarter of 2003 was $10.8 million, equivalent to $0.29 per share on a diluted
basis.
"Inveresk Research recorded another strong quarter's results in terms of profits
and cash flows. Year-on-year growth in our European pre-clinical and Phase I
operations has been highly creditable, although offset partially by the
challenging environment relative to 2002 faced by our North American
pre-clinical operations" said Walter Nimmo, President and Chief Executive
Officer of Inveresk Research Group, Inc. "As anticipated, the quarter also saw
a positive contribution to both revenues and earnings from the recently acquired
PharmaResearch business."
Net cash provided by operating activities totaled $32.8 million in the nine
months ended September 30, 2003 ($17.4 million in the first nine months of
2002). Capital expenditure totaled $18.1 million during the same period.
During the third quarter new business signings totaled $67 million, $213 million
for the first nine months of 2003. "Enquiry levels remain strong across the
whole of Inveresk. During the third quarter, new business signings in our
pre-clinical business segment exceeded management's targets but signings in our
clinical business were impacted in the short-term by the PharmaResearch
acquisition. However, significant new business awards in the clinical business
soon after the quarter-end gives us confidence that clinical signings are
recovering and will achieve our target by the end of the next quarter" said
Walter Nimmo.
At September 30, 2003 backlog amounted to approximately $259 million. Net days
sales outstanding were 31 days.
Specific factors influencing third quarter 2003 results included: (i) continued
strength in the European pre-clinical business offset by difficult trading
conditions for CTBR, our North American pre-clinical business, (ii) accelerated
growth in our Phase I clinical business, together with a first time contribution
by PharmaResearch, (iii) beneficial exchange rate movements positively impacting
US dollar equivalent revenues and profits of our European and Canadian
operations, (iv) a foreign exchange translation gain of $0.3 million (compared
with a gain of $0.6 million in Q3, 2002), (v) a charge of $0.8 million relating
to the restructuring and integration of the PharmaResearch acquisition, and (vi)
a gain of $0.4 million on the mark-to-market valuation at September 30, 2003 of
swaps entered into to limit our exposure to interest rate fluctuations.
Walter Nimmo said: "the integration of the PharmaResearch acquisition is
progressing to plan. We have also now completed Stage I of the current
expansion at our Edinburgh pre-clinical facility and are pleased to say that the
new toxicology suites are now fully occupied." Nimmo added: "Demand for the
services of our European pre-clinical operations remains very strong. The
situation is now much stronger in the North American pre-clinical market,
although our fourth quarter results will be impacted by sub-optimal business
mix. Current enquiry levels and strong new business signings give us confidence
that we will see a rebound in growth and profitability at CTBR in 2004." Nimmo
concluded: "For 2003 we would forecast diluted EPS, on a pro forma basis, of
$1.07 to $1.08."
Conference Call and Webcast Information
Inveresk Research will host a live conference call and webcast tomorrow, October
29, 2003 at 10.00 a.m. EST to discuss its second 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. EST on Wednesday,
November 5, 2003.
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 speciality 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 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.
This press release includes supplemental financial information which may contain
references to non-GAAP financial measures as defined in Regulation G of SEC
rules. Consistent with Regulation G, a reconciliation of this supplemental
financial information to our generally accepted accounting principles (GAAP)
information follows. We present this non-GAAP supplemental financial
information because we believe it is of interest to the investment community and
provides additional meaningful methods of evaluating certain aspects of the
Company's operating performance from period to period on a basis that may not be
otherwise apparent on a GAAP basis. This supplemental financial information
should be viewed in addition to, not in lieu of, the Company's consolidated
statements of operations for the three and nine month periods ended September
30, 2003 and 2002.
Inveresk Research Group, Inc.
Condensed Consolidated Statements of Operations
($ in thousands, except per share and share data)
(Unaudited)
Nine Nine
Quarter Quarter months months
ended ended ended ended
September September September September
30, 30, 30, 30,
2003 2002 2003 2002
Net service revenue $70,571 $55,923 $195,290 $164,635
Direct costs excluding
depreciation (37,372) (27,780) (100,729) (81,977)
33,199 28,143 94,561 82,658
Selling, general and
administrative expenses:
Compensation expense in respect of
stock options and - - - (53,020)
management equity incentives
Stamp duty arising on change of
ultimate parent company. - - - (1,545)
Share offering expenses - - (658) -
Restructuring and integration
costs arising from business
acquisitions (798) - (798) -
Other selling, general and
administrative expenses (17,260) (13,759) (50,414) (41,533)
Depreciation (3,045) (2,689) (9,083) (7,510)
Amortization of intangibles (232) - (232) -
Income (loss) from operations 11,864 11,695 33,376 (20,950)
Interest income 126 83 292 283
Write off of deferred debt issue
and other costs related to (671) (2,031) (671) (2,031)
our former bank facilities
Interest expense (528) (989) (2,509) (10,206)
Income (loss) before income
taxes 10,791 8,758 30,488 (32,904)
Provision for income taxes (1,227) (1,419) (3,388) (4,508)
Net income (loss) $ 9,564 $ 7,339 $ 27,100 $ (37,412)
Earnings (loss) per share:
Basic $ 0.26 $ 0.21 $ 0.75 $ (1.30)
Diluted $ 0.25 $ 0.20 $ 0.72 $ (1.30)
Number of shares and common stock
equivalents used in
computing loss per share:
Basic 36,505,169 35,570,449 36,314,648 27,637,956
Diluted 37,720,565 37,385,219 37,530,044 27,637,956
Inveresk Research Group, Inc.
Pro Forma Consolidated Statements of Operations (Note)
($ in thousands, except per share and share data)
(Unaudited)
Pro Forma
Nine Nine
Quarter Quarter months months
ended ended ended ended
September September September September
30, 30, 30, 30,
2003 2002 2003 2002
Net service revenue $70,571 $55,923 $195,290 $164,635
Direct costs excluding
depreciation (37,372) (27,780) (100,729) (81,977)
33,199 28,143 94,561 82,658
Selling, general and
administrative expenses (17,260) (13,759) (50,414) (41,533)
Depreciation (3,045) (2,689) (9,083) (7,510)
Amortization of intangibles (232) - (232) -
Income from operations 12,662 11,695 34,832 33,615
Interest expense, net (402) (565) (2,217) (2,353)
Income before income taxes 12,260 11,130 32,615 31,262
Provision for income taxes (1,428) (1,971) (3,589) (7,229)
Net income 10,832 9,159 29,026 24,033
Earnings per share:
Basic $0.30 $0.26 $0.80 $0.67
Diluted $0.29 $0.24 $0.77 $0.64
Number of shares and common stock
equivalents used in
computing earnings per share:
Basic 36,505,169 35,831,318 36,314,648 35,696,350
Diluted 37,720,565 37,646,089 37,530,044 37,511,121
Note:
Inveresk Research Group, Inc. believes this non-GAAP pro forma financial
data more clearly reflects its underlying financial and operational
performance and provides a more appropriate basis for comparison (i) to
historical and future performance, and (ii) to the reported results of
comparable businesses. Our method of calculating these measures may
differ from those used by other companies and therefore comparability may
be limited.
A detailed explanation and reconciliation of actual and pro forma income
financial measures is set out on page 8 and 9.
Inveresk Research Group, Inc.
Pro Forma Segment Analysis
($ in thousands)
(Unaudited)
Nine Nine
Quarter Quarter months months
Ended ended ended ended
September September September September
30, 30, 30, 30,
2003 2002 2003 2002
Net service revenue:
Pre-clinical $41,590 $35,236 $120,150 $106,082
Clinical 28,981 20,687 75,140 58,553
Total 70,571 55,923 195,290 164,635
Net service revenue less direct
costs excluding
depreciation:
Pre-clinical 21,807 19,330 64,267 58,755
Clinical 11,392 8,813 30,294 23,903
Total 33,199 28,143 94,561 82,658
Net service revenue less direct
costs, excluding
depreciation, as a percentage of
net service revenue:
Pre-clinical 52.4% 54.9% 53.5% 55.4%
Clinical 39.3% 42.6% 40.3% 40.8%
Total 47.0% 50.3% 48.4% 50.2%
Pro forma income from operations
(Note):
Pre-clinical 11,668 10,839 32,656 32,577
Clinical 2,980 2,786 8,040 5,937
Pro forma corporate
overhead (1,986) (1,930) (5,864) (4,899)
Total 12,662 11,695 34,832 33,615
Pro forma income from operations
as a percentage of net
service revenue (Note):
Pre-clinical 28.1% 30.8% 27.2% 30.7%
Clinical 10.3% 13.5% 10.7% 10.1%
Total 17.9% 20.9% 17.8% 20.4%
Note:
Inveresk Research Group, Inc. believes this non-GAAP pro forma financial
data more clearly reflects its underlying financial and operational
performance and provides a more appropriate basis for comparison (i) to
historical and future performance, and (ii) to the reported results of
comparable businesses. Our method of calculating these measures may
differ from those used by other companies and therefore comparability may
be limited.
A detailed explanation and reconciliation of actual and pro forma income
financial measures is set out on page 8 and 9.
Inveresk Research Group, Inc.
Consolidated Balance Sheet Data
($ in thousands)
September December
30, 2003 31, 2002
(Unaudited)
Total current assets $112,812 $ 88,327
Total other assets 309,122 244,140
Total current liabilities (103,801) (76,898)
Total other liabilities (120,433) (103,166)
Total shareholders' equity $197,700 $152,403
Capital Employed
September December
30, 2003 31, 2002
(Unaudited)
Total shareholders' equity $197,700 $152,403
Current portion of long-term debt 7,684 217
Long-term debt 80,808 67,768
Cash and cash equivalents (22,698) (19,909)
Total capital employed $263,494 $200,479
Inveresk Research Group, Inc.
Reconciliation of Actual and Pro Forma Results
($ in thousands)
(Unaudited)
(i) Income (loss) from operations
Nine Nine
Quarter Quarter months months
ended ended ended Ended
September September September September
30, 2003 30, 2002 30, 2003 30, 2002
Income (loss) from operations -
reported 11,864 11,695 33,376 (20,950)
Pro forma adjustments (Note):
Compensation expense in respect of
amendment and exercise of
stock options - - - 4,545
Compensation expense in respect of
stock options and
management equity incentive - - - 48,475
Stamp duty taxes arising on change
of ultimate parent company - - - 1,545
Share offering expenses - - 658 -
Restructuring and integration costs
arising from business 798 - 798 -
acquisitions
Pro forma income from operations 12,662 11,695 34,832 33,615
(ii) Interest expense, net
Nine Nine
Quarter Quarter months months
ended ended ended ended
September September September September
30, 2003 30, 2002 30, 2003 30, 2002
Interest expense, net - reported (402) (906) (2,217) (9,923)
Pro forma adjustments (Note):
Interest saving from IPO proceeds - 341 - 7,570
Pro forma interest expense, net (402) (565) (2,217) (2,353)
(iii) Income (loss) before income taxes
Nine Nine
Quarter Quarter months months
ended ended ended ended
September September September September
30, 2003 30, 2002 30, 2003 30, 2002
Income (loss) before
income taxes - reported 10,791 8,758 30,488 (32,904)
Pro forma adjustments (Note):
Compensation expense
in respect of amendment
and exercise of stock options - - - 4,545
Compensation expense
in respect of stock options
and management equity
incentive - - - 48,475
Stamp duty taxes arising
on change of ultimate
parent company - - - 1,545
Interest saving on IPO proceeds - 341 - 7,570
Share offering expenses - - 658 -
Restructuring and integration
costs arising from business
acquisitions 798 - 798 -
Write off of deferred debt
issue and other costs related
to our former bank credit
facilities 671 2,031 671 2,031
Pro forma income before
income taxes 12,260 11,130 32,615 31,262
Inveresk Research Group, Inc.
Reconciliation of Actual and Pro Forma Results (cont)
($ in thousands)
(Unaudited)
(iv) Net income (loss)
Nine Nine
Quarter Quarter months months
ended ended ended ended
September September September September
30, 2003 30, 2002 30, 2003 30, 2002
Net income (loss) - actual 9,564 7,339 27,100 (37,412)
Pro forma adjustments,
after tax (Note):
Compensation expense in respect
of amendment and exercise
of stock options - - - 4,545
Compensation expense in respect
of stock options and management
equity incentive - - - 48,475
Stamp duty taxes arising on
change of ultimate parent
company - - - 1,545
Interest saving on IPO proceeds - 239 - 5,299
Share offering expenses - - 658 -
Restructuring and integration costs
arising from business acquisitions 798 - 798 -
Write off of deferred debt
issue and other costs related
to our former bank facilities 470 1,581 470 1,581
Pro forma net income 10,832 9,159 29,026 24,033
(v) Forecast earnings per share
Forecast pro forma diluted EPS of $1.07 to $1.08 for the year to December
31, 2003 is before deducting (i) expenses of our withdrawn share
offering,(ii) expenses relating to the restructuring and integration of
the PharmaResearch acquisition, and (iii) expenses relating to the write
off of deferred debt costs related to the repayment of our former bank
credit facilities, together totaling $1.5 million after tax or
approximately $0.04 per share on a fully-diluted basis.
Note:
Inveresk Research Group, Inc. believes this non-GAAP pro forma financial
data more clearly reflects its underlying financial and operational
performance and provides a more appropriate basis for comparison (i) to
historical and future performance, and (ii) to the reported results of
comparable businesses. Our method of calculating these measures may
differ from those used by other companies and therefore comparability may
be limited.
In the current year, the pro forma measures exclude the effect of (i)
expenses relating to the restructuring and integration of the
PharmaResearch acquisition, and (ii) expenses related to the write off of
deferred debt issue costs related to the repayment and cancellation of
bank facilities during the quarter ended September 30, 2003. For the
nine months ended September 30, 2003, the pro forma measures exclude the
effect of (i) expenses relating to our withdrawn share offering in
March 2003, (ii) expenses related to the restructuring and integration of
PharmaResearch acquisition, and (iii) expenses related to the write off
of deferred debt issue costs related to the repayment of bank facilities
during the period.
For the quarter and nine months ended September 30, 2002, the pro forma
measures:
(i) adjust interest expense to remove the interest cost arising on our
10% unsecured subordinated loan stock due 2008 and on our pre-IPO
bank debt (both of which were full repaid following our IPO in June
2002). It replaces these costs with interest on the $70 million
drawn down after our IPO on the bank credit facilities put in place
at the time, calculated at 5.0% per annum; and
(ii) exclude expenses relating to the write off of deferred debt issue
costs related to the repayment and cancellation of our pre-IPO bank
credit facilities during the period.
In addition to the above, for the nine months ended September 30, 2002,
the pro forma measures exclude:
(i) the effect of compensation expense in respect of the amendment and
exercise of stock options;
(ii) compensation expense in respect of stock options and management
equity incentives recognized in connection with our IPO; and
(iii) stamp duty taxes arising on the change of our ultimate parent
company in connection with our IPO.
DATASOURCE: Inveresk Research
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/