WILMINGTON, N.C., Dec. 11 /PRNewswire-FirstCall/ -- PPD, Inc. today updated its existing 2006 guidance and reported its projected financial guidance for 2007.
PPD anticipates that net revenue, excluding reimbursed out-of-pockets, for the full year 2006 will be slightly higher than its existing guidance and will be in the range of $1.145 to $1.150 billion. Earnings per diluted share, including non-cash stock option expense, for the fourth quarter 2006 is expected to be in the range of $0.33 to $0.34, resulting in full year 2006 earnings per diluted share of $1.30 to $1.31.
For 2007, net revenue, excluding reimbursed out-of-pockets, is expected to be in the range of $1.340 to $1.390 billion, an increase of approximately 19.0 percent over the revised 2006 net revenue forecast. First quarter 2006 discovery sciences net revenue included a $15.0 million milestone payment from Takeda Pharmaceutical Company Limited triggered by the start of the on-going Phase III clinical trial for Takeda's DPP4 program. Projected net revenue for the full year 2007 does not include any milestone payments or royalties from our compound partnering programs.
Earnings per diluted share, including non-cash stock option expense, for the full year 2007 are expected to be in the range of $1.46 to $1.54. Stock option expense for 2007, net of tax, is expected to be in the range of $0.10 to $0.12 per diluted share. The quarterly 2007 earnings per diluted share are expected to be in the following ranges: Q1 - $0.34 to $0.35; Q2 - $0.35 to $0.36; Q3 - $0.37 to $0.40; Q4 - $0.40 to $0.43. The following table shows the full year net revenue and earnings per diluted share guidance for each segment and the total company for 2006 and 2007:
2006 2007 Net revenue(1) Development $1,113 - $1,116 $1,322 - $1,369 Discovery 32 - 34 18 - 21 Total company $1,145 - $1,150 $1,340 - $1,390 EPS Development(2) $1.25 - $1.26 $1.48 - $1.56 Discovery(2) 0.05 (0.02) Total company(2) $1.30 - $1.31 $1.46 - $1.54 (1) Net revenue in millions, excluded reimbursed out-of-pockets. (2) These amounts include non-cash stock option expense, which is estimated to be $0.10 to $0.11 for 2006 and $0.10 to 0.12 for 2007 in total for both segments.
The full year 2007 earnings per diluted share for the development segment are forecasted to be in the range of $1.48 to $1.56. Total company full year 2007 earnings per diluted share guidance reflects a dilutive earnings contribution from the discovery sciences segment of ($0.02) per diluted share. Discovery sciences earnings guidance includes projected results from PPD's preclinical drug discovery services, biomarker operations and existing compound partnering programs. The effective tax rate for 2007 is expected to be 34.5 percent, compared to an expected rate of 33.7 percent for 2006.
Capital spending for 2007 is expected to be in the range of $105.0 to $110.0 million. Projected capital spending includes approximately $30.0 million in remaining construction costs for PPD's new headquarters building in Wilmington, North Carolina, which is expected to be completed in early 2007. Projected capital expenditures also include approximately $29.5 million for global facility expansions and improvements, including facilities in Europe, Latin America and Asia. The balance of 2007 projected capital spending includes investments in information technology related projects and the purchase of lab equipment.
Additional information concerning expected operating segment performance, compound partnering programs and other information regarding PPD's financial guidance will be provided during the guidance conference call.
"For 2007, we expect to see solid, steady growth in the core development business, and we plan to focus our efforts on disciplined execution throughout the coming year," said Fred Eshelman, chief executive officer of PPD. Commenting further on the discovery sciences segment, Eshelman said, "We anticipate that the Phase III trials for the Takeda DPP4 program will continue to advance in 2007 and we plan to continue evaluating new opportunities in this arena that will leverage our clinical development expertise, fit our compound partnering strategy and drive long-term shareholder value."
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 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 net revenue that will be generated by PPD's services, and because it provides information for period- to-period comparisons.
PPD will conduct a live conference call and audio Webcast tomorrow, December 12, 2006, at 9:00 a.m. EST to discuss 2007 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 broadcast live over the Internet, and the live call may be accessed via the following direct dial numbers:
Participant toll free dial in: +877 644 0692 International/toll dial in: +706 634 1372 Conference ID: 1846560
PPD is a leading global contract research organization providing discovery, development and post-approval services as well as compound partnering programs. Our clients and partners include pharmaceutical, biotechnology, medical device, academic and government organizations. With offices in 27 countries and more than 9,100 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 projected net revenue, earnings and capital spending guidance for 2006 and 2007, 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 and academic and government-sponsored research sectors; risks associated with and dependence on collaborative relationships; the ability to attract and retain key personnel; competition within the outsourcing industry; risks associated with the development and commercialization of drugs, including obtaining regulatory approvals; rapid technological advances that make our products and services less competitive; risks associated with acquisitions and investments, such as impairments; 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//
