EX-99.1 2 w73847exv99w1.htm EXHIBIT 99.1 exv99w1
Exhibit 99.1
ERT Reports First Quarter 2009 Results
PHILADELPHIA, April 30, 2009/PRNewswire-FirstCall/ — eResearchTechnology, Inc. (ERT), (Nasdaq: ERES — News), a leading provider of centralized ECG, eClinical technology, ePRO and other services to the biopharmaceutical, medical device, and related industries, announced today results for the first quarter of 2009. Unless otherwise noted, all comparative numbers refer to changes from the same period a year ago.
Highlights of the first quarter were:
    Quarterly net revenue was $23.8 million for the first quarter of 2009 compared to $33.7 million a year ago.
 
    Gross margin percentage was 50.4% in the first quarter of 2009 compared to 52.5% a year ago.
 
    Operating income margin percentage was 14.0% in the first quarter of 2009 compared to 25.2% a year ago.
 
    ERT’s tax rate was 40.1% in the first quarter of 2009 compared to 35.6% a year ago.
 
    Net income was $2.1 million for the first quarter of 2009 compared to $5.7 million a year ago.
 
    Diluted net income per share was $0.04 in the first quarter of 2009 compared to $0.11 a year ago.
 
    New bookings were $31.2 million in the first quarter of 2009 compared to $50.1 million a year ago.
 
    Total expenses were $20.4 million in the first quarter of 2009, compared to $25.2 million a year ago.
 
    Cash flow from operations in the first quarter of 2009 was $9.1 million, compared to $7.6 million a year ago.
 
    Cash, cash equivalents and investments totaled $65.6 million at March 31, 2009 compared to $66.4 million at December 31, 2008.
 
    ERT purchased 1,965,452 shares of its common stock at an average price of $5.05 under its approved stock repurchase program in the first quarter of 2009 at a total cost of $10.0 million.
 
    Backlog was $157.0 million as of March 31, 2009 compared to $151.4 million a year ago. The annualized cancellation rate was 22.4% in the first quarter of 2009 compared to 19.3% in the fourth quarter of 2008 and 15.6% in the first quarter of 2008.
“The results for this quarter were in line with our expectations, as given by our guidance in February,” commented Dr. Michael McKelvey, President and CEO of ERT. “The first quarter was marked by a significant decline in revenue, in large part due to a sharp reduction in Thorough QT revenue. This reflects the ability of companies to delay the running of Thorough QT trials until later in the drug development cycle, though current regulatory guidance ultimately requires that they be performed. Routine revenue (Phase I through Phase IV trials) was also impacted as a result of the larger percentage of our past business being booked in Phase III trials, which are longer-term trials and thus take longer to turn into revenue, as well as a slower rate of spending by our pharmaceutical and biotechnology clients. The latter reflects the current difficult economic environment and the uncertainty seen in pharmaceutical sponsors’ spending.

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Despite the revenue decline, our gross margin percentage remained above 50%. We continue to be pleased with our strong operational performance and with the results of our discussions with key pharmaceutical and biotechnology companies on strategic outsourcing relationships.”
“We made good progress on our strategic priorities in the first quarter,” continued Dr. McKelvey. “We continue to be successful in winning new and expanded exclusive or near-exclusive long-term enterprise partnerships with large clients, which should positively impact our future levels of new booking activity. We are launching two significant efforts aimed at expanding industry penetration of centralized ECGs by focusing on how centralization of ECGs can reduce our clients’ costs. We began to see the results of our new marketing programs in increased market awareness. Despite the difficult economic and financial environment we feel that the fundamentals of our industry remain strong and that we are successfully positioning ourselves for additional growth in the future.”
2009 Guidance
The Company issued guidance for the second quarter of 2009 and for the full year 2009. For the quarter ending June 30, 2009, management anticipates net revenues of between $23.0 million and $26.0 million and diluted net income per share of between $0.03 and $0.06. ERT expects full year 2009 net revenues of between $100.0 million and $115.0 million with diluted net income per share of between $0.20 and $0.35.
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 EDT on April 30, 2009. For the conference call, interested participants should dial 1-800-901-5241 when calling within the United States or 1-617-786-2963 when calling internationally. Please use pass code 33830510. There will be a playback available as well. To listen to the playback, please call 1-888-286-8010 when calling within the United States or 1-617-801-6888 when calling internationally. Please use pass code 52329119 for the replay.
This call is being webcast by Thomson Financial and can be accessed at ERT’s web site at www.ert.com. The webcast may also be accessed at Thomson’s Institutional Investor website at http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=119164&eventID=2132871. 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 provider of technology and services to the biopharmaceutical, medical device and related 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 also provides 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.
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,”

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“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 due to variability in size, scope and duration of projects and internal issues at the sponsoring client; integration of future acquisitions; competitive factors; 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

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eResearchTechnology, Inc. and Subsidiaries
Consolidated Statements of Operations

(in thousands, except per share amounts)
(unaudited)
                 
    Three Months Ended March 31,  
    2008     2009  
 
               
Net revenues:
               
Licenses
  $ 625     $ 709  
Services
    25,273       16,817  
Site support
    7,775       6,260  
 
           
 
               
Total net revenues
    33,673       23,786  
 
           
 
               
Costs of revenues:
               
Cost of licenses
    200       205  
Cost of services
    10,514       7,954  
Cost of site support
    5,268       3,635  
 
           
 
               
Total costs of revenues
    15,982       11,794  
 
           
 
               
Gross margin
    17,691       11,992  
 
           
 
               
Operating expenses:
               
Selling and marketing
    3,323       3,426  
General and administrative
    4,873       4,077  
Research and development
    999       1,149  
 
           
 
               
Total operating expenses
    9,195       8,652  
 
           
 
               
Operating income
    8,496       3,340  
Other income, net
    427       116  
 
           
 
               
Income before income taxes
    8,923       3,456  
Income tax provision
    3,177       1,386  
 
           
 
               
Net income
  $ 5,746     $ 2,070  
 
           
 
               
Basic net income per share
  $ 0.11     $ 0.04  
 
           
 
               
Diluted net income per share
  $ 0.11     $ 0.04  
 
           
 
               
Shares used to calculate basic net income per share
    50,638       50,879  
 
           
 
               
Shares used to calculate diluted net income per share
    51,894       51,164  
 
           

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eResearchTechnology, Inc. and Subsidiaries
Consolidated Balance Sheets

(in thousands, except share and per share amounts)
                 
    December 31, 2008     March 31, 2009  
            (unaudited)  
ASSETS
               
 
               
Current assets:
               
Cash and cash equivalents
  $ 66,376     $ 65,518  
Short-term investments
    50       50  
Accounts receivable, net
    29,177       21,676  
Prepaid income taxes
    1,892       1,818  
Prepaid expenses and other
    2,885       3,285  
Deferred income taxes
    1,831       1,703  
 
           
Total current assets
    102,211       94,050  
 
               
Property and equipment, net
    29,639       27,105  
Goodwill
    34,603       34,653  
Intangible assets
    2,149       2,012  
Other assets
    520       447  
 
           
 
               
Total assets
  $ 169,122     $ 158,267  
 
           
 
               
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
Current liabilities:
               
Accounts payable
  $ 3,971     $ 5,153  
Accrued expenses
    8,140       4,690  
Income taxes payable
    2,492       805  
Current portion of capital lease obligations
    43        
Deferred revenues
    12,276       12,608  
 
           
Total current liabilities
    26,922       23,256  
 
               
Deferred rent
    2,183       2,296  
Deferred income taxes
    1,332       1,326  
Other liabilities
    1,257       1,117  
 
           
 
               
Total liabilities
    31,694       27,995  
 
           
 
               
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 59,974,108 shares issued, respectively
    600       600  
Additional paid-in capital
    93,828       94,826  
Accumulated other comprehensive income
    (2,716 )     (2,948 )
Retained earnings
    110,479       112,549  
Treasury stock, 8,686,868 and 10,652,320 shares at cost, respectively
    (64,763 )     (74,755 )
 
           
Total stockholders’ equity
    137,428       130,272  
 
           
Total liabilities and stockholders’ equity
  $ 169,122     $ 158,267  
 
           

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eResearchTechnology, Inc. and Subsidiaries
Consolidated Statements of Cash Flows

(in thousands)
(unaudited)
                 
    Three Months Ended March 31,  
    2008     2009  
 
               
Operating activities:
               
Net income
  $ 5,746     $ 2,070  
Adjustments to reconcile net income to net cash provided by operating activities:
               
Depreciation and amortization
    4,344       3,404  
Cost of sales of equipment
    414       7  
Provision for uncollectible accounts
    30       105  
Share-based compensation
    470       901  
Deferred income taxes
    (362 )     111  
Changes in operating assets and liabilities:
               
Accounts receivable
    (222 )     7,331  
Prepaid expenses and other
    (11 )     (459 )
Accounts payable
    (984 )     143  
Accrued expenses
    (1,413 )     (3,436 )
Income taxes
    63       (1,601 )
Deferred revenues
    (344 )     384  
Deferred rent
    (135 )     107  
 
           
Net cash provided by operating activities
    7,596       9,067  
 
           
 
               
Investing activities:
               
Purchases of property and equipment
    (1,430 )     (1,613 )
Proceeds from sales of investments
    455        
Payments for acquisition
    (3,673 )      
 
           
Net cash used in investing activities
    (4,648 )     (1,613 )
 
           
 
               
Financing activities:
               
Repayment of capital lease obligations
    (751 )     (43 )
Proceeds from exercise of stock options
    189       59  
Stock option income tax benefit
    103       38  
Repurchase of common stock for treasury
          (8,190 )
 
           
Net cash used in financing activities
    (459 )     (8,136 )
 
           
 
               
Effect of exchange rate changes on cash
    (3 )     (176 )
 
           
 
               
Net increase (decrease) in cash and cash equivalents
    2,486       (858 )
Cash and cash equivalents, beginning of period
    38,082       66,376  
 
           
 
               
Cash and cash equivalents, end of period
  $ 40,568     $ 65,518  
 
           

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