Exhibit 99.1
NEWS RELEASE FOR RELEASE FEB 14, 2006
CONTACTS: 6 a.m. Eastern Time
Patty Frank, Investors, (513) 763-1992
Lori Dorer, Media, (513) 345-1685
KENDLE REPORTS 17% INCREASE IN NET SERVICE REVENUES AND RECORD
BUSINESS AUTHORIZATIONS FOR FULL YEAR 2005
- - New business awards reach all-time Company high of $328 million, up 31%
over 2004 and double the market growth rate for Phase I-IV services
- - Fourth Quarter and Full Year 2005 EPS of $0.25 and $0.76 represent
increases of 56% and 181%, respectively, over prior period
- - Net service revenues for 2005 up 17% to $202.0 million
- - 2005 operating margin of 8.5% significantly improved over 3.9% margin for
previous year
- - Cash flow from operations for 2005 of $23.0 million, up from $7.9 million
in 2004
- - Total business authorizations of $323 million are an all-time Company high,
up 35% from year end 2004
CINCINNATI, Feb. 14, 2006 -- Kendle (Nasdaq: KNDL), a leading, global
full-service clinical research organization, today reported fourth quarter and
full year 2005 financial results.
Net service revenues for fourth quarter 2005 were $52.8 million, an increase of
10 percent over net service revenues of $48.0 million for fourth quarter 2004.
Earnings per diluted share of $0.25 for fourth quarter 2005 represents a
substantial increase over the $0.16 per share reported for fourth quarter 2004.
Included in 2005 fourth quarter earnings is a $1.7 million accounts receivable
allowance ($1.6 million after tax) associated with one study being conducted in
Europe and a reversal of the valuation allowance for future tax benefits in the
Netherlands totaling $820,000.
Net service revenues by geographic region for the fourth 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 31 percent of
net service revenues for fourth quarter 2005 compared to 41 percent of net
service revenues for fourth quarter 2004.
Reimbursable out-of-pocket revenues and expenses were $13.7 million for fourth
quarter 2005 compared to $11.2 million in the same quarter a year ago.
Income from operations for fourth quarter 2005 was approximately $5.2 million,
or 9.8 percent of net service revenues, compared to income from operations of
$3.8 million in fourth quarter 2004. Net income for the quarter was
approximately $3.7 million, or $0.25 per diluted share, compared to net income
of approximately $2.1 million, or $0.16 per diluted share, in fourth quarter
2004. Excluding the receivables allowance and the reversal of the tax valuation
allowance noted previously, net income for the quarter was $4.5 million, or
$0.31 per diluted share.
New business awards were a record $90 million for fourth quarter 2005. Contract
cancellations for the quarter were $13 million. Total business authorizations,
which consist of signed backlog and verbally awarded business, totaled an
all-time Company high of $323 million at Dec. 31, 2005, up 35 percent from $240
million at Dec 31, 2004.
"Kendle's continued focus on project delivery and operational excellence
delivered strong results for our customers and shareholders in 2005," said
Candace Kendle, PharmD, Chairman and Chief Executive Officer. "Over the year we
achieved four consecutive quarters of strong revenue growth and record new
business awards and we
were recognized as one of the 20 best-performing stocks in the United States for
the year. These results demonstrate our significant progress in building a
stronger organization to deliver improved value for our customers in 2006 and
beyond."
Cash flow from operations for the quarter was a positive $12.5 million. Cash and
marketable securities totaled $48.8 million, including $592,000 of restricted
cash, and bank borrowings totaled $3.8 million at Dec. 31, 2005. Days sales
outstanding in accounts receivable were 45 and capital expenditures for fourth
quarter 2005 totaled $1.2 million.
Net service revenues for the year ended Dec. 31, 2005, were $202.0 million
compared to net service revenues of $172.9 million for the year ended Dec. 31,
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 34 percent of net
service revenues for the 12 months ended Dec. 31, 2005.
Reimbursable out-of-pocket revenues and expenses were $48.6 million for the 12
months ended Dec. 31, 2005, compared to $43.0 million in the same period a year
ago.
Income from operations for the 12 months ended Dec. 31, 2005, was approximately
$17.2 million, or 8.5 percent of net service revenues, compared to $6.7 million,
or 3.9 percent of net service revenues in the 12 months ended Dec. 31, 2004. Net
income for the year 2005 was approximately $10.7 million, or $0.76 per diluted
share, compared to net income of $3.6 million or $0.27 per diluted share, in the
year 2004. Excluding the receivables allowance and the reversal of the tax
valuation allowance from the fourth quarter, the write-off of deferred state tax
benefits in the second quarter and the gain on early debt retirement in the
first quarter, pro forma net income for 2005 was $12.5 million, or $0.88 per
diluted share.
Cash flow from operations for the 12 months ended Dec. 31, 2005, was a positive
$23.0 million. Capital expenditures for the year 2005 totaled $5.0 million.
"As we mark our 25th year in providing clinical development solutions for
biopharmaceutical customers worldwide, the demand for Phase I-IV services
globally remains strong, with the market estimated at $15.4 billion for 2006,"
added Dr. Kendle. "Kendle's focus will be on the following three initiatives to
strengthen our position as a global drug development partner: driving strategic
business expansion and diversification in high-growth markets, delivering
internal process improvements to achieve greater quality and improved
profitability, and recruiting and retaining a highly-skilled workforce to meet
the diverse therapeutic and drug development needs of our customers."
Kendle will host its fourth quarter 2005 conference call Feb. 14, 2006, 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 March 14, 2006.
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 nearly 2,000
associates worldwide, Kendle has conducted clinical trials or provided
regulatory, pharmacovigilance and validation
services in 70 countries. The company was named one of the 20 best-performing
stocks in the United States for 2005. 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 Feb. 14, 2006. 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 Twelve Months Ended
December 31, December 31,
------------------ -------------------
2005 2004 2005 2004
------- ------- -------- --------
Net service revenues $52,799 $47,965 $202,032 $172,888
Reimbursable out-of-pocket revenues 13,671 11,206 48,607 42,980
------- ------- -------- --------
Total revenues 66,470 59,171 250,639 215,868
------- ------- -------- --------
Costs and expenses:
Direct costs 28,253 25,633 108,582 96,909
Reimbursable out-of-pocket costs 13,671 11,206 48,607 42,980
Selling, general and administrative expenses 17,582 16,157 68,216 59,797
Depreciation and amortization 1,763 2,369 7,991 9,175
Severance and office consolidation costs -- -- -- 302
------- ------- -------- --------
Total costs and expenses 61,269 55,365 233,396 209,163
------- ------- -------- --------
Income from operations 5,201 3,806 17,243 6,705
Other income (expense):
Interest expense (80) (203) (460) (776)
Interest income 345 135 1,019 400
Other (210) (649) (287) (873)
Gain on debt extinguishment -- -- 300 597
------- ------- -------- --------
Income before income taxes 5,256 3,089 17,815 6,053
Income taxes 1,563 1,001 7,141 2,481
------- ------- -------- --------
Net income $ 3,693 $ 2,088 $ 10,674 $ 3,572
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Income per share data:
Basic:
Net income per share $ 0.26 $ 0.16 $ 0.79 $ 0.27
======= ======= ======== ========
Weighted average shares outstanding 14,046 13,240 13,572 13,166
Diluted:
Net income per share $ 0.25 $ 0.16 $ 0.76 $ 0.27
======= ======= ======== ========
Weighted average shares outstanding 14,611 13,522 14,120 13,391
Kendle International Inc.
Selected Balance Sheet Information
(In thousands)
(Unaudited)
December 31, 2005 December 31, 2004
----------------- -----------------
Cash, cash equivalents and marketable
securities (including restricted cash) $ 48,755 $ 28,907
Net Receivables 33,154 31,100
Total assets 184,759 162,680
Bank borrowings 3,839 7,203
Shareholders' equity 122,504 102,775
Kendle International Inc.
Reconciliation of GAAP EPS to Pro forma EPS
(Unaudited)
Three Months Ended Tweleve Months Ended
December 31, December 31
------------------ --------------------
2005 2004 2005 2004
------- ----- ------- ------
GAAP net income per share $ 0.25 $0.16 $ 0.76 $ 0.27
Accounts receivable allowance $ 0.11 -- $ 0.11 --
Reversal of valuation allowance ($0.05) -- ($0.06) --
Severance costs -- -- -- 0.01
Write-off of deferred state income taxes -- -- 0.08 --
Gain on debt extinguishment -- -- (0.01) (0.03)
------- ----- ------- ------
Pro forma net income (loss) per diluted share $ 0.31 $0.16 $ 0.88 $ 0.25
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