US-based contract research organisation (CRO) Kendle continued to see its revenues and operating income decline year on year during the third quarter, although earnings per share (EPS) were considerably higher than analysts’ estimates.
The company’s financial statement for the three months ended 30 September largely focused on more favourable quarter-to-quarter comparisons, or on constant-currency versions of the 2009 versus 2008 figures. New business awards improved slightly from the second quarter of 2009 but the net book-to-bill ratio stayed below 1.
Net revenues for the third quarter came to US$104.6 million, 16.2% lower than in the same quarter of 2008 but slightly ahead of the revenue forecast of US$103.6 million from analysts polled by Thomson Reuters. On a constant currency basis, net revenues slipped 10.3% to US$111.9 million, Kendle reported.
Operating income was US$15.5 million, down by 2.1% against last year’s quarter. It was an improvement on the second quarter of 2009, which Kendle attributed mainly to cost control initiatives and the resolution of a previously discussed insurance claim.
The insurance recovery reduced direct costs by US$5.0 million in the quarter, a benefit partly offset by US$1.6 million in extra expenses to adjust a related liability. The net effect of these two items was to raise operating income by US$3.4 million in the third quarter. On a constant currency basis, operating income was US$17.8 million compared with US$15.9 million in the third quarter of 2008.
Diluted EPS for the latest quarter were US$0.59 against US$0.62 for the same period last year. On a pro forma basis, excluding additional interest of US$1.54 million related to convertible debt and a net restructuring charge of US$234,000, diluted EPS were US$0.71 compared with US$0.73 in the third quarter of 2008.
The analyst consensus, which usually excludes special items, had been for earnings per share of US$0.38 in Q3 2009.
New business awards for the three months to 30 September were US$137.2 million, up from US$132 million in the second quarter. Contract cancellations amounted to US$53.8 million or 6.1% of backlog at 30 June 2009, giving a net book-to-bill ratio of 0.8 to 1.0. Total business authorisations as of 30 September 2009 were worth US$846.0 million.
Kendle announced in August, when the CRO reported its second-quarter results, that it was suspending financial guidance for the rest of the year.
