PHILADELPHIA, Feb. 21 /PRNewswire-FirstCall/ -- eResearchTechnology, Inc. (“eRT” or “the Company”), a leading provider of technology and services to the pharmaceutical, biotechnology and medical device industries, announced results today for the quarter and year ended December 31, 2006.
The Company reported revenues of $19.9 million for the fourth quarter of 2006, compared to $25.4 million in revenue reported for the fourth quarter of 2005. The Company reported net income for the fourth quarter of 2006 of $2.2 million, or $0.04 per diluted share, based upon 51.4 million shares, versus net income for the fourth quarter of 2005 of $5.3 million, or $0.10 per diluted share, based upon 52.2 million shares. Adjusting for expenses associated with management changes and stock option expense (the Company adopted SFAS No. 123R in 2006) the Company’s net income and earnings per diluted share would have been $2.7 million and $0.05 for the fourth quarter of 2006 (there were no similar costs in the same period of 2005). The Company’s tax rate for the fourth quarter of 2006 was 32.6% compared to 38.3% in the fourth quarter of 2005.
For the year ended December 31, 2006, the Company reported revenues of $86.4 million, compared to revenues for the year ended December 31, 2005 of $86.8 million. The Company reported net income for the year ended December 31, 2006 of $8.3 million, or $0.16 per diluted share based upon 51.5 million shares, compared to net income for the year ended December 31, 2005 of $15.4 million, or $0.29 per diluted share based upon 52.9 million diluted shares. After adjusting for expenses associated with management changes, the settlement of a contract dispute and stock option expense (the Company adopted SFAS No. 123R in 2006), the Company’s net income and earnings per share would have been $12.3 million and $0.24 for the same period in 2006 (there were no similar costs in the same period of 2005). The Company’s tax rate was 37.1% for the year ended December 31, 2006 versus 37.0% for the same period in 2005.
eRT ended the quarter with $57.8 million in cash, cash equivalents and investments, an increase from $53.3 million at the end of the third quarter of 2006. The increase was predominately due to net cash from operations. During the year ended December 31, 2006, the Company purchased 400,000 shares of the Company’s common stock for $5.8 million; the Company did not purchase any shares during the fourth quarter of 2006.
Some of the highlights of the fourth quarter included: * eRT signed $27.5 million and $121.1 million in new contracts and work orders for the fourth quarter and for the full year of 2006, respectively; * The Company entered into seven new Thorough ECG study agreements valued at approximately $4.4 million in the quarter and 32 new agreements valued at $28.5 million in the full year; * The Company reported a backlog of $96.4 million as of December 31, 2006, an increase of $4.3 million from the prior quarter; * The Company completed the programming and testing of EXPeRT v 2, our new state-of-the-art cardiac safety system; and * The Company will be making efficiency improvements in its Cardiac Safety Operations and General and Administrative cost structure. The effect on the current year will be minimal as severance and other transitional costs will largely offset efficiency savings; the overall effect on next year’s EPS should be approximately $0.05 for the full year in 2008.
“We will look back at 2006 as representing a favorable turning point for the Company; one that has allowed us to create a bridge to the future. We have had strong bookings, we have brought to production our state-of-the-art cardiac system, and we have transitioned to a new management team. We have accomplished all of this while still maintaining strong operating margins with attractive cash flows. The groundwork laid in 2006 combined with the outstanding work of our employees will lead to a successful and more profitable 2007,” commented Dr. Michael McKelvey, President and CEO of eRT.
2007 Guidance
The Company issued guidance for 2007. For the first quarter of 2007, the Company expects to report revenues of between $19.0 and $21.0 million and net income of $0.04 to $0.06 per diluted share. This does not include a charge of $0.01 to $0.02 per diluted share for the efficiency improvement in the first quarter of 2007. For the full year 2007, the Company expects revenue of between $95 million and $103 million and earnings per diluted share of $0.25 to $0.30. The effect of the efficiency improvements should be neutral for the last three quarters of 2007 as severance-related charges should be offset by the savings achieved.
Dr. McKelvey and Richard Baron, the Company’s Chief Financial Officer, will hold a conference call to discuss these results. The conference call will take place at 4:30 p.m. EST on February 21, 2007. Interested participants should call 888-694-4702 when calling within the United States or 973-582-2741 when calling internationally. There will be a playback available until February 28, 2007. 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 8419936 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://viavid.net/dce.aspx?sid=00003AE5. The webcast can be accessed until March 21, 2007 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, 2007 financial guidance, involve a number of risks and uncertainties such as the Company’s ability to obtain new contracts and accurately estimate net revenues due to uncertain regulatory guidance, variability in size, scope and duration of projects, and internal issues at the sponsoring client, competitive factors, technological development, and market demand. 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.
Contact: Richard Baron Brett Maas eResearchTechnology, Inc. Hayden Communications 215-282-5566 646-536-7331 eResearchTechnology, Inc. and Subsidiaries Consolidated Statements of Operations (in thousands, except per share amounts) (unaudited) Three Months Ended Year Ended December 31, December 31, 2005 2006 2005 2006 Net revenues: Licenses $1,645 $681 $6,063 $3,017 Services 17,528 13,269 59,712 55,309 Site support 6,257 5,975 21,072 28,042 Total net revenues 25,430 19,925 86,847 86,368 Costs of revenues: Cost of licenses 117 58 436 286 Cost of services 6,163 6,301 24,337 25,431 Cost of site support 4,179 4,329 13,965 18,821 Total costs of revenues 10,459 10,688 38,738 44,538 Gross margin 14,971 9,237 48,109 41,830 Operating expenses: Selling and marketing 2,469 2,364 9,122 11,051 General and administrative 3,238 2,910 11,458 14,668 Research and development 1,118 818 4,093 4,146 Total operating expenses 6,825 6,092 24,673 29,865 Operating income 8,146 3,145 23,436 11,965 Other income, net 450 183 936 1,250 Income before income taxes 8,596 3,328 24,372 13,215 Income tax provision 3,296 1,084 9,007 4,905 Net income $5,300 $2,244 $15,365 $8,310 Basic net income per share $0.11 $0.04 $0.31 $0.17 Diluted net income per share $0.10 $0.04 $0.29 $0.16 Shares used to calculate basic net income per share 49,541 49,988 50,114 49,474 Shares used to calculate diluted net income per share 52,183 51,364 52,905 51,485 eResearchTechnology, Inc. and Subsidiaries Consolidated Balance Sheets (in thousands, except share and per share amounts) December 31, 2005 December 31, 2006 ASSETS (unaudited) Current assets: Cash and cash equivalents $18,432 $15,497 Short-term investments 33,569 41,416 Accounts receivable, net 15,178 17,866 Prepaid income taxes 27 2,819 Prepaid expenses and other 2,501 2,761 Deferred income taxes 841 912 Total current assets 70,548 81,271 Property and equipment, net 28,670 31,129 Goodwill 1,212 1,212 Long-term investments 3,008 928 Deferred income taxes 335 -- Other assets 993 524 Total assets $104,766 $115,064 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $2,332 $4,360 Accrued expenses 5,155 3,445 Income taxes payable 1,041 781 Current portion of capital lease obligations 153 40 Deferred revenues 16,072 11,325 Total current liabilities 24,753 19,951 Capital lease obligations, excluding current portion 40 -- Deferred tax liabilities -- 1,491 Total liabilities 24,793 21,442 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, 56,871,010 and 58,356,546 shares issued, respectively 569 584 Additional paid-in capital 73,290 83,493 Accumulated other comprehensive income 586 1,510 Retained earnings 61,915 70,225 Treasury stock, 7,847,119 and 8,247,119 shares at cost, respectively (56,387) (62,190) Total stockholders’ equity 79,973 93,622 $104,766 $115,064 eResearchTechnology, Inc. and Subsidiaries Consolidated Statements of Cash Flows (in thousands) (unaudited) Year Ended December 31, 2005 2006 Operating activities: Net income $15,365 $8,310 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 10,741 11,253 Cost of sale of equipment 1,018 3,722 Provision for uncollectible accounts 87 111 Non-cash share-based compensation -- 2,975 Stock option income tax benefits 2,107 -- Investment impairment charge 284 226 Changes in operating assets and liabilities: Accounts receivable (696) (2,567) Prepaid expenses and other 671 132 Accounts payable (72) 950 Accrued expenses 806 (1,779) Income taxes (10) (2,104) Deferred revenues (4,109) (4,897) Net cash provided by operating activities 26,192 16,332 Investing activities: Purchases of property and equipment (16,145) (15,181) Purchases of investments (38,193) (46,425) Proceeds from sales of investments 24,558 40,658 Net cash used in investing activities (29,780) (20,948) Financing activities: Repayment of capital lease obligations (233) (153) Proceeds from exercise of stock options 1,495 3,851 Excess tax benefit related to stock options -- 3,400 Repurchase of common stock for treasury (24,832) (5,803) Net cash (used in) provided by financing activities (23,570) 1,295 Effect of exchange rate changes on cash (216) 386 Net decrease in cash and cash equivalents (27,374) (2,935) Cash and cash equivalents, beginning of period 45,806 18,432 Cash and cash equivalents, end of period $18,432 $15,497 eResearchTechnology, Inc. and Subsidiaries Reconciliation of GAAP to Non-GAAP Information For the Three and Twelve Months Ended December 31, 2005 and 2006 (in thousands) (unaudited) Three Months Ended Year Ended December 31, December 31, 2005 2006 2005 2006 Gross margin: GAAP gross margin $14,971 $9,237 $48,109 $41,830 Stock based employee compensation expense -- 182 -- 791 Non-GAAP income gross margin $14,971 $9,419 $48,109 $42,621 Reconciliation of GAAP to Non-GAAP operating income: GAAP operating income $8,146 $3,145 $23,436 $11,965 Stock based employee compensation expense -- 527 -- 2,841 CEO and CFO transition -- 138 -- 2,052 Settlement of contract dispute -- -- -- 646 Subtotal of reconciling items -- 665 -- 5,539 Non-GAAP operating income $8,146 $3,810 $23,436 $17,504 Reconciliation of GAAP to Non-GAAP net income and net income per diluted share: GAAP net income $5,300 $2,244 $15,365 $8,310 Stock based employee compensation expense -- 408 -- 2,320 CEO and CEO transition -- 80 -- 1,238 Settlement of contract dispute -- -- -- 390 Subtotal of reconciling items -- 488 -- 3,948 Non-GAAP net income $5,300 $2,732 $15,365 $12,258 GAAP net income per diluted share $0.10 $0.04 $0.29 $0.16 Non-GAAP net income per diluted share $0.10 $0.05 $0.29 $0.24
eResearchTechnology, Inc.
CONTACT: Richard Baron of eResearchTechnology, Inc., +1-215-282-5566; orBrett Maas of Hayden Communications, +1-646-536-7331, foreResearchTechnology, Inc.
