EXHIBIT 99.1
NEWS RELEASE FOR RELEASE OCT. 27, 2005
CONTACTS: 6 a.m. Eastern Time
Patty Frank, Investors, (513) 763-1992
Lori Dorer, Media, (513) 345-1685
KENDLE DELIVERS DOUBLE-DIGIT OPERATING MARGINS; REPORTS RECORD
NET SERVICE REVENUES AND NEW BUSINESS AWARDS FOR THIRD QUARTER 2005
o Operating margin of 10.7% up from 7.3% in second quarter 2005 and 4.5%
in the same quarter a year ago
o Third quarter EPS grows to $0.24
o Third quarter net service revenues of $51.6 million represent a 20%
increase over third quarter 2004
o Operating income of approximately $5.5 million up from $3.7 million in
previous quarter and $1.9 million in same quarter a year ago
o Record new business awards of $85 million represent a 21.4%
improvement from the same quarter a year ago
o Total business authorizations of $300 million are an all-time Company
high, up 33% from third quarter 2004
CINCINNATI, Oct. 27, 2005 -- Kendle (Nasdaq: KNDL), a leading, global
full-service clinical research organization, today reported third quarter 2005
financial results.
Net service revenues for third quarter 2005 were $51.6 million, an increase of
20 percent over net service revenues of $42.9 million for third quarter 2004.
Earnings per diluted share of $0.24 for the third quarter of 2005 represents a
substantial increase over the $0.04 per share reported for the third quarter
2004.
Net service revenues by geographic region for the third quarter were 58 percent
in North America, 39 percent in Europe and 3 percent in the Asia-Pacific region.
The top five customers based on net service revenues accounted for 34 percent of
net service revenues for third quarter 2005 compared to 39 percent of net
service revenues for third quarter 2004.
Reimbursable out-of-pocket revenues and expenses were $12.9 million for third
quarter 2005 compared to $8.8 million in the same quarter a year ago.
Income from operations for third quarter 2005 was approximately $5.5 million, or
10.7 percent of net service revenues, compared to income from operations of $1.9
million in third quarter 2004. Net income for the quarter was approximately $3.4
million, or $0.24 per diluted share, compared to net income of approximately
$600,000, or $0.04 per diluted share, in third quarter 2004.
New business awards were a record $85 million for third quarter 2005. Contract
cancellations for the quarter were $6 million. Total business authorizations,
which consist of signed backlog and verbally awarded business, totaled an
all-time Company high of $300 million at Sept. 30, 2005, up 33 percent from $225
million at Sept. 30, 2004.
"Kendle's continued strong performance and return to double-digit operating
margins in the third quarter demonstrate the growing global strength and
improved operational efficiency of our organization," said Candace Kendle,
PharmD, Chairman and CEO. "We will continue to drive future operating margin
improvement through our Working Smarter process improvement initiative, and
believe that we are strongly positioned to meet our strategic business and
financial objectives."
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Cash flow from operations for the quarter was a positive $3.9 million. Cash and
marketable securities totaled $36.3 million, including $213,000 of restricted
cash, and bank borrowings totaled $4.6 million at Sept. 30, 2005. Days sales
outstanding in accounts receivable were 49 and capital expenditures for third
quarter 2005 totaled $1.1 million.
Net service revenues for the nine months ended Sept. 30, 2005, were $149.2
million compared to net service revenues of $124.9 million for the nine months
ended Sept. 30, 2004. Net service revenues by geographic region were 57 percent
in North America, 40 percent in Europe and 3 percent in the Asia-Pacific region.
The top five customers based on net service revenues accounted for 35 percent of
net service revenues for the nine months ended Sept. 30, 2005.
Reimbursable out-of-pocket revenues and expenses were $34.9 million for the nine
months ended Sept. 30, 2005, compared to $31.8 million in the same period a year
ago.
Income from operations for the nine months ended Sept. 30, 2005, was
approximately $12.0 million, or 8 percent of net service revenues, compared to
$2.9 million or 2 percent of net service revenues, in the nine months ended
Sept. 30, 2004. Net income for the first nine months of 2005 was approximately
$7.0 million, or $0.50 per diluted share, compared to net income of $1.5 million
or $0.11 per diluted share, in the first nine months of 2004.
Cash flow from operations for the nine months ended Sept. 30, 2005, was a
positive $11.2 million. Capital expenditures for the nine-month period in 2005
totaled $3.7 million.
Kendle will host its third quarter 2005 conference call Oct. 27, 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 Nov. 25, 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
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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 Oct. 27, 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 Nine Months Ended
September 30, September 30,
----------------------------- -----------------------------
2005 2004 2005 2004
--------- --------- --------- ---------
Net service revenues $ 51,581 $ 42,920 $ 149,233 $ 124,923
Reimbursable out-of-pocket revenues 12,865 8,776 34,936 31,774
--------- --------- --------- ---------
Total revenues 64,446 51,696 184,169 156,697
--------- --------- --------- ---------
Costs and expenses:
Direct costs 27,451 23,794 80,329 71,276
Reimbursable out-of-pocket costs 12,865 8,776 34,936 31,774
Selling, general and administrative expenses 16,738 14,973 50,634 43,640
Depreciation and amortization 1,851 2,237 6,228 6,806
Severance and office consolidation costs -- -- -- 302
--------- --------- --------- ---------
Total costs and expenses 58,905 49,780 172,127 153,798
--------- --------- --------- ---------
Income from operations 5,541 1,916 12,042 2,899
Other income (expense):
Interest expense (92) (158) (380) (573)
Interest income 234 101 674 265
Other (370) (509) (77) (224)
Gain on debt extinguishment -- -- 300 597
--------- --------- --------- ---------
Income before income taxes 5,313 1,350 12,559 2,964
Income taxes 1,919 750 5,578 1,480
--------- --------- --------- ---------
Net income $ 3,394 $ 600 $ 6,981 $ 1,484
========= ========= ========= =========
Income per share data:
Basic:
Net income per share $ 0.25 $ 0.05 $ 0.52 $ 0.11
========= ========= ========= =========
Weighted average shares outstanding 13,633 13,231 13,413 13,141
Diluted:
Net income per share $ 0.24 $ 0.04 $ 0.50 $ 0.11
========= ========= ========= =========
Weighted average shares outstanding 14,258 13,413 13,926 13,373
Kendle International Inc.
Selected Balance Sheet Information
(In thousands)
(Unaudited)
September 30, 2005 December 31, 2004
------------------ -----------------
Cash, cash equivalents and
marketable securities (including
restricted cash) $ 36,344 $ 28,907
Net Receivables 35,411 31,100
Total assets 164,720 162,680
Bank borrowings 4,553 7,203
Shareholders' equity 115,885 102,775