WILMINGTON, N.C., Dec. 7 /PRNewswire-FirstCall/ -- PPD, Inc. today reported its financial guidance for 2006.
Net revenue for 2006, excluding reimbursed out-of-pockets, is expected to be in the range of $1.125 to $1.140 billion, an increase of approximately 18.0 percent compared to a revised forecast for 2005 net revenue, excluding reimbursed out-of-pockets, of $955 to $960 million. Earnings per diluted share before non-cash stock option expense for the full year 2006 are expected to be in the range of $2.67 to $2.75. The quarterly 2006 earnings per diluted share before non-cash stock option expense are expected to be in the following ranges: Q1 - $0.72 to $0.74; Q2 - $0.59 to $0.61; Q3 - $0.65 to $0.67; and Q4 - $0.71 to $0.73.
Net income per diluted share for the development segment is forecasted to be in the range of $2.67 to $2.75. The full year 2006 earnings per diluted share guidance reflects a neutral earnings contribution from the discovery sciences segment for the full year. Discovery sciences earnings guidance includes revenue from PPD’s preclinical drug discovery and biomarker operations, the anticipated $15.0 million milestone payment associated with the Phase III trial for the DPP4 program with Takeda in the first quarter 2006, and research and development expenses for drug candidates associated with existing and potential new compound partnering programs.
Net revenue is the most directly comparable GAAP financial measure to net revenue excluding reimbursed out-of-pockets. Although net revenue excluding reimbursed out-of-pockets is not superior to or a substitute for GAAP net revenue, PPD excludes reimbursed out-of-pockets from its forecasted 2006 net revenue because they are difficult to accurately predict and are immaterial because they do not affect operating income, net income or earnings per share. PPD further believes this non-GAAP financial information is useful to investors because it more accurately reflects the revenue that will be generated by the services PPD expects to provide in 2006, and because it provides information for period-to-period comparisons.
Beginning in January 2006, PPD will be required by GAAP to include stock compensation expense for stock options in computing net income. At that time, earnings per share will be the most directly comparable GAAP financial measure to earnings per share excluding stock option expense, which is not superior to or a substitute for the GAAP earnings per share. Stock option expense will depend on, among other things, the volatility and market price of PPD’s common stock. PPD’s earnings per diluted share forecast excludes non-cash stock option expense because it is difficult to accurately forecast prospective stock prices, which have in the past and could again fluctuate in ways unrelated to the operating performance of PPD’s business. In addition, because stock option expense is a non-cash item, PPD analyzes its anticipated operating performance in this manner and believes that guidance in this form provides useful information to investors regarding anticipated results of operations and financial condition, and will allow for more accurate period- to-period comparisons.
Capital spending for 2006 is expected to be in the range of $175 to $180 million. Capital spending includes approximately $82 million in ongoing construction costs for PPD’s new headquarters building in Wilmington, North Carolina and $19.0 million for the related parking facilities, both of which are expected to be completed in early 2007. The balance of 2006 capital spending includes approximately $9 million for the ongoing facility expansion in Scotland that is expected to be completed by third quarter 2006, information technology related projects, improvements to existing facilities and the purchase of lab equipment. We expect to finance these projected capital expenditures from existing cash resources, cash flow from operations and borrowings under existing or new credit facilities.
Additional information concerning expected operating segment performance, compound partnering programs and other information regarding PPD’s 2006 financial guidance will be provided during the guidance conference call.
“Based on PPD’s robust backlog growth and solid execution in the core development business, we are pleased to announce the increase to our revenue guidance for 2005. PPD will continue to set the bar high in 2006, and we believe our recent performance has positioned us for another year of steady growth,” stated Fred Eshelman, chief executive officer of PPD.
Commenting further on the discovery sciences segment, Eshelman stated, “Despite the recent dapoxetine news, we have a risk sharing portfolio which includes two late stage compounds. We remain committed to the compound partnering strategy as a way to leverage our considerable clinical development expertise and drive long-term shareholder value.”
PPD will conduct a live conference call and audio Webcast tomorrow, December 8, 2005, at 9:00 a.m. EST to discuss 2006 financial guidance. A Q&A session will follow. To access the Webcast, please visit http://www.ppdi.com and follow the directions under the Investor Presentations/Webcasts link on the Corporate section of the PPD Web site. A replay of the Webcast will be available shortly after the call. The conference call will be available via a direct dial number, +888 214 0355, and will be broadcast live over the Internet.
PPD is a leading global contract research organization providing discovery and development services, market development expertise and compound partnering programs. Our clients and partners include pharmaceutical, biotechnology, medical device, academic and government organizations. With offices in 28 countries and more than 7,800 professionals worldwide, PPD applies innovative technologies, therapeutic expertise and a commitment to quality to help its clients and partners maximize returns on their R&D investments and accelerate the delivery of safe and effective therapeutics to patients. For more information, visit our Web site at http://www.ppdi.com.
Except for historical information, all of the statements, expectations and assumptions contained in this news release, including the revenue, earnings, capital spending and cash flow guidance for 2006, are forward-looking statements that involve a number of risks and uncertainties. Although PPD attempts to be accurate in making these forward-looking statements, it is possible that future circumstances might differ from the assumptions on which such statements are based. In addition, other important factors which could cause actual results to differ materially include the following: continued success in sales growth; loss of large contracts; increased cancellation rates; economic conditions and outsourcing trends in the pharmaceutical, biotechnology and medical device industries; competition within the outsourcing industry; risks associated with the development and commercialization of drugs; risks associated with and dependence on collaborative relationships; rapid technological advances that make our products and services less competitive; risks associated with acquisitions and investments, such as impairments; the ability to attract and retain key personnel; and the other risk factors set forth from time to time in the SEC filings for PPD, copies of which are available free of charge upon request from the PPD investor relations department.
Contacts: Linda Baddour +910 772 6999 linda.baddour@wilm.ppdi.com Steve Smith +910 772 7585 stephen.smith@wilm.ppdi.com
PPD, Inc.
CONTACT: Linda Baddour, +1-910-772-6999, or linda.baddour@wilm.ppdi.com,or Steve Smith, +1-910-772-7585, or stephen.smith@wilm.ppdi.com, both ofPPD, Inc.
Web site: http://www.ppdi.com/
