Exhibit 99.1
NEWS RELEASE FOR RELEASE JULY 28, 2005
CONTACTS: 6 a.m. Eastern Time
Patty Frank, Investors, (513) 763-1992
Lori Dorer, Media, (513) 345-1685
KENDLE REPORTS RECORD NET SERVICE REVENUES AND NEW BUSINESS AWARDS FOR
SECOND QUARTER 2005
o Second quarter net service revenues of $50.0 million represent a 21%
increase over second quarter 2004
o Operating income of approximately $3.7 million significantly improved
from less than $300,000 in second quarter 2004
o Record new business awards of $80 million represent a 38% improvement
from the same quarter a year ago
o Total business authorizations of $273 million are an all-time Company
high, up 33% from second quarter 2004
o Operating margin of 7.3% up from 6.0% in first quarter 2005
CINCINNATI, July 28, 2005 -- Kendle (Nasdaq: KNDL), a leading, global
full-service clinical research organization, today reported second quarter 2005
financial results.
Net service revenues for second quarter 2005 were a record $50.0 million, an
increase of 21 percent over net service revenues of $41.2 million for second
quarter 2004. Earnings per diluted share of $0.10 for the second quarter of 2005
(including a one-time, non-cash charge to reflect the write-off of deferred
state income tax assets) represents a 400 percent increase over the $0.02 per
share reported for the second quarter 2004. Excluding the non-cash charge,
earnings per diluted share for the second quarter totals $0.19.
Net service revenues by geographic region for the second quarter were 56 percent
in North America, 40 percent in Europe and 4 percent in the Asia-Pacific region.
The top five customers based on net service revenues accounted for 34 percent of
net service revenues for second quarter 2005 compared to 39 percent of net
service revenues for second quarter 2004.
Reimbursable out-of-pocket revenues and expenses were $11.2 million for second
quarter 2005 compared to $12.0 million in the same quarter a year ago.
Income from operations for second quarter 2005 was approximately $3.7 million,
or 7.3 percent of net service revenues, compared to income from operations of
less than $300,000 in second quarter 2004. Net income for the quarter was
approximately $1.4 million, or $0.10 per diluted share, compared to net income
of $211,000, or $0.02 per share, in second quarter 2004. Excluding the one-time,
non-cash charge noted previously, net income for the quarter was $2.6 million,
or $0.19 per diluted share.
The one-time charge results from adoption of a comprehensive change in Ohio
corporate tax laws, effective June 30, 2005, which provides for the phase-in of
a Commercial Activities Tax ("CAT") on gross receipts. Concurrent with the
phase-in of the CAT, the Ohio income tax, net worth tax, and personal property
tax will be phased out. The non-cash charge primarily consists of net operating
loss carry-forwards and totals approximately $1.2 million or $0.09 per share.
However, the Company anticipates that the net effect of this tax law change will
benefit the Company's earnings in future years.
New business awards were a record $80 million for second quarter 2005. Contract
cancellations for the quarter were $10 million. Total business authorizations,
which consist of signed backlog and verbally awarded business, totaled an
all-time Company high of $273 million at June 30, 2005, up 33 percent from $206
million at June 30, 2004.
"Kendle again delivered strong financial results highlighted by record new
business authorizations, solid revenue growth and improved operating margins,"
said Candace Kendle, PharmD, Chairman and CEO. "These results underscore our
strong customer focus and commitment to improved operational efficiency to drive
continued growth and profitability in the second half of 2005 and beyond."
Cash flow from operations for the quarter was a positive $3.1 million. Cash and
marketable securities totaled $29.9 million, including $400,000 of restricted
cash, and bank borrowings totaled $5.5 million at June 30, 2005. Days sales
outstanding in accounts receivable were 47 and capital expenditures for second
quarter 2005 totaled $1.0 million.
Net service revenues for the six months ended June 30, 2005, were $97.7 million
compared to net service revenues of $82.0 million for the six months ended June
30, 2004. Net service revenues by geographic region were 56 percent in North
America, 40 percent in Europe and 4 percent in the Asia-Pacific region. The top
five customers based on net service revenues accounted for 36 percent of net
service revenues for the six months ended June 30, 2005.
Reimbursable out-of-pocket revenues and expenses were $22.1 million for the six
months ended June 30, 2005, compared to $23.0 million in the same period a year
ago.
Income from operations for the six months ended June 30, 2005, was approximately
$6.5 million, or 7 percent of net service revenues, compared to $983,000 or 1
percent of net service revenues, in the six months ended June 30, 2004. Net
income for the first six months of 2005 was approximately $3.6 million, or $0.26
per diluted share, compared to net income of $884,000, or $0.07 per diluted
share, in the first six months of 2004. Excluding the write-off of deferred
state tax benefits, earnings per diluted share for the first six months of 2005
was $0.35.
Cash flow from operations for the six months ended June 30, 2005, was a positive
$7.2 million. Capital expenditures for the six-month period in 2005 totaled $2.6
million.
Kendle will host its second quarter 2005 conference call July 28, 2005, at 8:30
a.m. Eastern Time. The call will be broadcast live over the Internet and can be
accessed at www.kendle.com. A replay of the Webcast will be available at
www.kendle.com shortly after the call for on-demand replay through 5 p.m.
Eastern Time on Aug. 28, 2005.
ABOUT KENDLE
Kendle International Inc. (Nasdaq: KNDL) is among the world's leading global
clinical research organizations. We deliver innovative and robust clinical
development solutions -- from first-in-human studies through market launch and
surveillance -- to help the world's biopharmaceutical companies maximize product
life cycles and grow market share. With the expertise of our more than 1,800
associates worldwide, Kendle has conducted clinical trials or provided
regulatory, pharmacovigilance and validation services in 70 countries.
Additional information and investor
kits are available upon request from Kendle, 1200 Carew Tower, 441 Vine Street,
Cincinnati, OH 45202 or from the Company's Web site at www.kendle.com.
Information provided herein, which is not historical information, such as
statements about prospective earnings, revenue and earnings growth, are
forward-looking statements pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. All such forward-looking statements,
including the statements contained herein regarding anticipated trends in the
Company's business, are based largely on management's expectations and are
subject to and qualified by risks and uncertainties that could cause actual
results to differ materially from those expressed or implied by such statements.
These risks and uncertainties include, without limitation, competitive factors
and industry consolidation, outsourcing trends in the pharmaceutical and
biotechnology industries, the Company's ability to manage growth and to continue
to attract and retain qualified personnel, the Company's ability to complete
additional acquisitions and to integrate newly acquired businesses, the
Company's ability to penetrate new markets, the fixed price nature of contracts
or the loss of large contracts, cancellation or delay of contracts, the progress
of ongoing contracts, the ability to maintain existing customer relationships or
enter into new ones, cost overruns, the Company's sales cycle, the effects of
exchange rate fluctuations, and other factors described in the Company's filings
with the Securities and Exchange Commission including Quarterly Reports on Form
10-Q and the Annual Report on Form 10-K. No assurance can be given that the
Company will be able to realize the net service revenues included in backlog and
verbal awards. Kendle believes that its aggregate backlog and verbal awards are
not necessarily a meaningful indicator of future results. All information in
this release is current as of July 28, 2005. The Company undertakes no duty to
update any forward-looking statement to conform the statement to actual results
or changes in the Company's expectations.
###
Kendle International Inc.
Condensed Consolidated Statement of Income
(In thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------- ---------------------------
2005 2004 2005 2004
--------- --------- --------- ---------
Net service revenues $ 49,965 $ 41,217 $ 97,652 $ 82,003
Reimbursable out-of-pocket revenues 11,153 11,998 22,071 22,998
--------- --------- --------- ---------
Total revenues 61,118 53,215 119,723 105,001
--------- --------- --------- ---------
Costs and expenses:
Direct costs 27,152 24,221 52,878 47,482
Reimbursable out-of-pocket costs 11,153 11,998 22,071 22,998
Selling, general and administrative expenses 17,042 14,391 33,896 28,667
Depreciation and amortization 2,119 2,270 4,377 4,569
Severance and office consolidation costs -- 48 -- 302
--------- --------- --------- ---------
Total costs and expenses 57,466 52,928 113,222 104,018
--------- --------- --------- ---------
Income from operations 3,652 287 6,501 983
Other income (expense):
Interest expense (141) (201) (288) (415)
Interest income 258 84 440 164
Other 92 (178) 293 285
Gain on debt extinguishment -- 343 300 597
--------- --------- --------- ---------
Income before income taxes 3,861 335 7,246 1,614
Income taxes 2,419 124 3,659 730
--------- --------- --------- ---------
Net income $ 1,442 $ 211 $ 3,587 $ 884
========= ========= ========= =========
Income per share data:
Basic:
Net income per share $ 0.11 $ 0.02 $ 0.27 $ 0.07
========= ========= ========= =========
Weighted average shares outstanding 13,329 13,120 13,301 13,096
Diluted:
Net income per share $ 0.10 $ 0.02 $ 0.26 $ 0.07
========= ========= ========= =========
Weighted average shares outstanding 13,783 13,349 13,713 13,351
Kendle International Inc.
Selected Balance Sheet Information
(In thousands)
(Unaudited)
June 30, 2005 December 31, 2004
------------- -----------------
Cash, cash equivalents and
marketable securities (including
restricted cash) $ 29,851 $28,907
Net Receivables 31,592 31,100
Total assets 156,047 162,680
Bank borrowings 5,459 7,203
Shareholders' equity 104,778 102,775