EX-99.1 2 c96955exv99w1.htm EXHIBIT 99.1 Exhibit 99.1
Exhibit 99.1
ERT Reports Fourth Quarter and Full Year 2009 Results
PHILADELPHIA, February 25, 2010/PRNewswire-FirstCall/ — eResearchTechnology, Inc. (ERT), (Nasdaq: ERES — News), a leading provider of centralized ECG, ePRO, and other services to the bio/pharmaceutical, medical device and related industries, announced today results for the fourth quarter and twelve-month period ended December 31, 2009. Unless otherwise noted, all comparative numbers refer to changes from the same period a year ago.
Financial highlights for the fourth quarter of 2009:
    Net income was $3.3 million, or $0.07 per diluted share, in the fourth quarter of 2009 compared to $2.8 million, or $0.06 per diluted share, in the third quarter of 2009 and $5.7 million, or $0.11 per diluted share, a year ago.
    Net revenues were $23.1 million for the fourth quarter of 2009 compared to $22.7 million for the third quarter of 2009 and $30.1 million a year ago (which included EDC revenue of $1.5 million; these operations were sold on June 23, 2009).
    Gross margin percentage was 56.9% in the fourth quarter of 2009 compared to 51.6% for the third quarter of 2009 and 57.3% a year ago.
    Operating income margin percentage was 21.7% in the fourth quarter of 2009 compared to 20.7% for the third quarter of 2009 and 28.6% a year ago.
    Cash flow from operations was $9.2 million in the fourth quarter, up from $5.6 million in the third quarter of 2009 but down from $13.2 million a year ago.
    Cash and investments totaled $78.8 million at December 31, 2009 compared to $72.1 million on September 30, 2009 and $66.4 million at December 31, 2008.
    New bookings were $44.0 million in the fourth quarter of 2009 compared to $42.3 million for the third quarter of 2009 and $43.4 million a year ago (excluding EDC bookings of $1.6 million).
    The gross book-to-bill ratio was 1.9 in the fourth quarter of 2009, compared to 1.9 in the third quarter of 2009 and 1.5 a year ago.
    Backlog was $170.4 million as of December 31, 2009 compared to $165.6 million as of September 30, 2009 and $161.0 million (excluding EDC) a year ago. The annualized cancellation rate was 16.1% in the fourth quarter of 2009 compared to 20.0% in the third quarter of 2009 and 19.3% a year ago.
Financial highlights for the full year 2009:
    Net income was $10.7 million, or $0.22 per diluted share, for the year ended. December 31, 2009 compared to $25.0 million, or $0.48 per diluted share, for the year ended December 31, 2008.
    Net revenues were $93.8 million for the year ended December 31, 2009 compared to $133.1 million for the year ended December 31, 2008. Included in net revenues was EDC revenues of $2.5 million for the year ended December 31, 2009 and $5.9 million in the year ended December 31, 2008.
    Gross margin percentage for the year ended December 31, 2009 was 52.8% compared to 55.8% for the year ended December 31, 2008.

 

 


 

    Operating income margin percentage for the year ended December 31, 2009 was 19.1% compared to 28.8% for the year ended December 31, 2008.
    Cash flow from operations was $33.9 million for the year ended December 31, 2009 compared to $39.9 million for the year ended December 31, 2008.
    New bookings for the year ended December 31, 2009 were $153.6 million compared to $187.2 million for the year ended December 31, 2008.
“The fourth quarter saw our second consecutive quarter of strong bookings of over $40 million, which demonstrated the desire of our clients to increase their spending on cardiac safety,” commented Dr. Michael McKelvey, President and CEO of ERT. “In the third quarter of 2009, bookings were primarily derived from large bio/pharmaceutical companies; in the fourth quarter of 2009, bookings from mid-sized bio/pharmaceutical companies started to pick up. The strength of our business model was again demonstrated as margins continued to increase sequentially as did our ability to generate strong cash flows even in a relatively flat revenue environment.”
“In 2009, we saw a significant shift in the distribution of our revenues from Thorough QT trials to routine trials, which have always been the largest part of our revenue stream,” continued Dr. McKelvey. “While Thorough QT trials can have a much quicker short-term revenue impact, due to their size and relative short duration, routine trials form a stronger basis, with higher visibility, for long-term revenue growth. We entered 2010 with the largest backlog of routine revenue in ERT’s history. Routine trials offer a significantly larger growth potential for core ECG labs, because we estimate that only one out of four routine trials is centralized today as compared to Thorough QT trials where we estimate that nine out of ten trials are centralized today. We believe our message on the advantages of centralization of ECG testing is resonating well with sponsors as they focus on the quality, timeliness, and cost advantages of centralization.”
2010 Guidance
The Company issued guidance for the full year of 2010. For 2010, management anticipates net revenues of between $98 and $105 million and diluted net income per share of between $0.28 and $0.34. ERT anticipates a significant growth in routine revenue in 2010, offset by continued weak Thorough QT revenues.
The impact of the low level of Thorough QT bookings in 2009 and the slower ramp up of newly booked business will continue to have a negative impact in the first half of the year. Due to these factors, ERT anticipates net revenues in the first quarter of 2010 above $20 million but below that reported in the fourth quarter of 2009, resulting in lower diluted net income per share compared to that reported in the fourth quarter of 2009. We anticipate revenue growth in the second half of 2010 as the newly booked business converts into revenue.

 

 


 

Conference Call
Dr. McKelvey and Keith Schneck, the Company’s Chief Financial Officer, will hold a conference call to discuss these results. The conference call will take place at 5:00 PM EST on February 25, 2010. For the conference call, interested participants should dial 1-800-860-2442 when calling within the United States or 1-412-858-4600 when calling internationally. There will be a playback available as well. To listen to the playback, please call 1-877-344-7529 when calling within the United States or 1-412-317-0088 when calling internationally. The conference code for playback is 437708.
This call is being webcast by MultiVu and can be accessed at ERT’s website at www.ert.com. The webcast may also be accessed via the direct link at http://www.videonewswire.com/event.asp?id=66042. The webcast can be accessed for up to one year on either site.
About eResearchTechnology, Inc.
Based in Philadelphia, PA, eResearchTechnology, Inc. (http://www.ert.com) is a global provider of technology and services to the pharmaceutical, biotechnology, and, medical device industries. The Company is the market leader in providing centralized core-diagnostic electrocardiographic (ECG) technology and services to evaluate cardiac safety in clinical development. The Company also provides technology and services to streamline the clinical trials process by enabling its customers to automate the collection, analysis, and distribution of ePRO clinical data in all phases of clinical development.
This release may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect our current views as to future events and financial performance with respect to our operations. These statements can be identified by the fact that they do not relate strictly to historical or current facts. They use words such as “aim,” “anticipate,” “are confident,” “estimate,” “expect,” “will be,” “will continue,” “will likely result,” “project,” “intend,” “plan,” “believe,” “look to” and other words and terms of similar meaning in conjunction with a discussion of future operating or financial performance.
These statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward-looking statements. Factors that might cause such a difference include: unfavorable economic conditions; our ability to obtain new contracts and accurately estimate net revenues, our positive outlook for future bookings, variability in size, scope and duration of projects and internal issues at the sponsoring client; our ability to successfully integrate acquisitions; competitive factors in the market for centralized Cardiac Safety services; changes in the pharmaceutical, biotechnology and medical device industries to which we sell our solutions; technological development; and market demand. There is no guarantee that the amounts in our backlog will ever convert to revenue. Should the current economic conditions continue or deteriorate further, the cancellation rates that we have historically experienced could increase. 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. Guidance is based on management’s good faith expectations given current market conditions but that continued or further deterioration of general economic conditions, in addition to other factors cited elsewhere, could result in the company not achieving the revenue and earnings per diluted share guidance provided.

 

 


 

Forward-looking statements speak only as of the date made. We undertake no obligation to update any forward-looking statements, including prior forward-looking statements, to reflect the events or circumstances arising after the date as of which they were made. As a result of these risks and uncertainties, readers are cautioned not to place undue reliance on any forward-looking statements included in this release or that may be made in our filings with the Securities and Exchange Commission or elsewhere from time to time by, or on behalf of, us.
     
Contact:
   
Keith Schneck
  Robert East
eResearchTechnology, Inc.
  Westwicke Partners, LLC
215-282-5566
  410-321-9652

 

 


 

eResearchTechnology, Inc. and Subsidiaries
Consolidated Statements of Operations

(in thousands, except per share amounts)
(unaudited)
                                 
    Three Months Ended December 31,     Year Ended December 31,  
    2008     2009     2008     2009  
 
                               
Net revenues:
                               
EDC licenses and services
  $ 1,540     $     $ 5,894     $ 2,501  
Services
    21,025       16,363       96,567       64,655  
Site support
    7,500       6,772       30,679       26,667  
 
                       
 
                               
Total net revenues
    30,065       23,135       133,140       93,823  
 
                       
 
                               
Costs of revenues:
                               
Cost of EDC licenses and services
    472             1,843       863  
Cost of services
    8,483       6,945       38,609       29,886  
Cost of site support
    3,880       3,021       18,445       13,544  
 
                       
 
                               
Total costs of revenues
    12,835       9,966       58,897       44,293  
 
                       
 
                               
Gross margin
    17,230       13,169       74,243       49,530  
 
                       
 
                               
Operating expenses:
                               
Selling and marketing
    3,014       3,149       13,273       12,905  
General and administrative
    4,453       4,278       18,181       14,859  
Research and development
    1,171       722       4,394       3,853  
 
                       
 
                               
Total operating expenses
    8,638       8,149       35,848       31,617  
 
                       
 
                               
Operating income
    8,592       5,020       38,395       17,913  
Other income (expense), net
    808       (60 )     1,730       (435 )
 
                       
 
                               
Income before income taxes
    9,400       4,960       40,125       17,478  
Income tax provision
    3,734       1,710       15,123       6,791  
 
                       
 
                               
Net income
  $ 5,666     $ 3,250     $ 25,002     $ 10,687  
 
                       
 
                               
Basic net income per share
  $ 0.11     $ 0.07     $ 0.49     $ 0.22  
 
                       
 
                               
Diluted net income per share
  $ 0.11     $ 0.07     $ 0.48     $ 0.22  
 
                       
 
                               
Shares used to calculate basic net income per share
    51,251       48,497       50,870       49,173  
 
                       
 
                               
Shares used to calculate diluted net income per share
    51,804       48,777       52,015       49,468  
 
                       
Certain prior period amounts have been reclassified to conform to current reporting format

 

 


 

eResearchTechnology, Inc. and Subsidiaries
Consolidated Balance Sheets

(in thousands, except share and per share amounts)
(unaudited)
                 
    December 31, 2008     December 31, 2009  
ASSETS
               
 
               
Current assets:
               
Cash and cash equivalents
  $ 66,376     $ 68,979  
Short-term investments
    50       9,782  
Investment in marketable securities
          1,026  
Accounts receivable less allowance for doubtful accounts of $695 and $548, respectively
    29,177       16,579  
Prepaid income taxes
    1,892       2,698  
Prepaid expenses and other
    2,885       3,308  
Deferred income taxes
    1,831       1,649  
 
           
Total current assets
    102,211       104,021  
 
               
Property and equipment, net
    29,639       24,205  
Goodwill
    34,603       34,676  
Intangible assets
    2,149       1,607  
Other assets
    520       352  
 
           
 
               
Total assets
  $ 169,122     $ 164,861  
 
           
 
               
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
 
               
Current liabilities:
               
Accounts payable
  $ 3,971     $ 3,007  
Accrued expenses
    9,382       5,990  
Income taxes payable
    2,492       346  
Current portion of capital lease obligations
    43        
Deferred revenues
    11,034       11,728  
 
           
Total current liabilities
    26,922       21,071  
 
               
Deferred rent
    2,183       2,357  
Deferred income taxes
    1,332       2,502  
Other liabilities
    1,257       1,259  
 
           
 
               
Total liabilities
    31,694       27,189  
 
           
 
               
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, 59,950,257 and 60,189,235 shares issued, respectively
    600       602  
Additional paid-in capital
    93,828       97,367  
Accumulated other comprehensive loss
    (2,716 )     (1,580 )
Retained earnings
    110,479       121,166  
Treasury stock, 8,686,868 and 11,589,603 shares at cost, respectively
    (64,763 )     (79,883 )
 
           
 
               
Total stockholders’ equity
    137,428       137,672  
 
           
 
               
Total liabilities and stockholders’ equity
  $ 169,122     $ 164,861  
 
           
Certain prior period amounts have been reclassified to conform to current reporting format

 

 


 

eResearchTechnology, Inc. and Subsidiaries
Consolidated Statements of Cash Flows

(in thousands)
(unaudited)
                 
    Year Ended December 31,  
    2008     2009  
Operating activities:
               
Net income
  $ 25,002     $ 10,687  
Adjustments to reconcile net income to net cash provided by operating activities:
               
Gain on sale of EDC operations
          (530 )
Depreciation and amortization
    16,038       12,583  
Cost of sales of equipment
    743       96  
Provision for uncollectible accounts
    189       210  
Share-based compensation
    2,604       2,790  
Deferred income taxes
    1,098       1,680  
Changes in operating assets and liabilities:
               
Accounts receivable
    (3,840 )     12,726  
Prepaid expenses and other
    41       (293 )
Accounts payable
    175       (767 )
Accrued expenses
    1,162       (3,490 )
Income taxes
    (1,290 )     (3,286 )
Deferred revenues
    (1,909 )     1,379  
Deferred rent
    (64 )     148  
 
           
Net cash provided by operating activities
    39,949       33,933  
 
           
 
               
Investing activities:
               
Purchases of property and equipment
    (10,969 )     (6,207 )
Purchases of investments
          (9,732 )
Proceeds from sales of investments
    8,747        
Payments related to sale of EDC operations
          (1,150 )
Payments for acquisition
    (6,042 )     (655 )
 
           
Net cash used in investing activities
    (8,264 )     (17,744 )
 
           
 
               
Financing activities:
               
Repayment of capital lease obligations
    (1,102 )     (43 )
Proceeds from exercise of stock options
    2,369       523  
Stock option income tax benefit
    849       152  
Repurchase of common stock for treasury
    (2,573 )     (15,120 )
 
           
Net cash used in financing activities
    (457 )     (14,488 )
 
           
 
               
Effect of exchange rate changes on cash
    (2,934 )     902  
 
           
 
               
Net increase in cash and cash equivalents
    28,294       2,603  
Cash and cash equivalents, beginning of period
    38,082       66,376  
 
           
 
               
Cash and cash equivalents, end of period
  $ 66,376     $ 68,979  
 
           
Certain prior period amounts have been reclassified to conform to current reporting format