Inveresk Research Reports Record First Quarter Revenues and
Increases 2004 Earnings Guidance * Continuing strength in the first
quarter of 2004: CARY, N.C., May 4 /PRNewswire-FirstCall/ --
Inveresk Research Group, Inc. today announced results for the first
quarter ended March 31, 2004. Net service revenue for the first
quarter was $76.7 million, an increase of 33% compared with the
first quarter of 2003. Income from operations in the quarter was
$12.8 million, or 16.7% of net service revenue, compared with
income from operations of $8.6 million for the same period in 2003.
Net income in the first quarter of 2004 was $12.3 million, or $0.31
per share on a diluted basis. This includes a $0.03 positive impact
to diluted EPS arising from the recognition of a deferred tax asset
on carried-forward tax losses in our US operations, net of share
offering expenses and residual restructuring costs for the
PharmaResearch acquisition. "Inveresk continues to benefit from its
acquisition strategy in recent years and the diversity of its
service offering," said Walter Nimmo, President and Chief Executive
Officer of Inveresk Research Group, Inc. "Strong enquiry levels in
the North American pre-clinical market in the last three quarters
have been converted into new business signings, resulting in
increasing revenues and an improved business mix at CTBR, our
Montreal-based pre-clinical operations. CTBR recorded excellent
results in the first quarter and we expect this to continue for the
remainder of the year. At the same time our European pre-clinical
operation maintained its strong performance of 2003, with demand
for its toxicology services in particular remaining buoyant. "The
Clinical business segment delivered profits in line with
expectations in the first quarter. Enquiry levels remain strong in
North America and Europe, although seasonal factors and some
project delays impacted revenues in the first quarter," added
Nimmo. Favorable Canadian dollar and sterling exchange rate
movements positively impacted results in the first quarter,
although this was offset partially by a $0.4 million negative
mark-to-market valuation adjustment with respect to interest rate
hedges. Net cash from operating activities totaled $11.1 million
for the three months ended March 31, 2004, compared with $4.8
million in the corresponding period in 2003. Capital expenditure
totaled $5.8 million during the same period ($4.3 million in 2003).
At March 31, 2004, the Company had gross financial debt of $56.9
million and cash and cash equivalents of $24.9 million. Net days
sales outstanding at March 31, 2004 totaled 21. For the twelve
months ended March 31, 2004, new business signings totaled $350
million, $87 million of which were signed in the first quarter of
2004. At March 31, 2004, backlog amounted to approximately $295
million. "The general environment for all of our businesses remains
robust," added Nimmo. "Our diverse service offering will allow
Inveresk to meet or exceed our overall growth and profitability
objectives for the full year. In light of these factors and our
first quarter results, we are increasing our full- year EPS
guidance to between $1.36 and $1.39 on a diluted basis." Conference
Call and Webcast Information Inveresk Research will host a live
conference call and webcast tomorrow, May 5, 2004 at 10:00 a.m. EDT
to discuss its first quarter performance. To access the webcast,
please visit http://www.inveresk.com/. A replay of the webcast will
be available shortly after the call until 5:00 p.m. EDT on Tuesday,
May 11, 2004. Information on Inveresk Research Inveresk Research is
a leading provider of drug development services to companies in the
pharmaceutical and biotechnology industries. Through its
Pre-clinical and Clinical business segments, the Company offers a
broad range of drug development services, including pre-clinical
safety and pharmacology evaluation services, laboratory sciences
services and clinical development services. Inveresk Research is
one of a small number of drug development services companies
currently providing a comprehensive range of pre-clinical and
clinical development services on a world-wide basis. The Company's
client base includes major pharmaceutical companies in North
America, Europe and Japan, as well as many biotechnology and
specialty pharmaceutical companies. For more information on
Inveresk Research, visit our Web site at http://www.inveresk.com/.
Statements contained in this press release that are forward-looking
are based on current expectations that are subject to a number of
uncertainties and risks, and actual results may differ materially.
Factors that might cause such a difference include, but are not
limited to, risks associated with: the reduction in research and
development activities by pharmaceutical and biotechnology clients,
changes in government regulations, the effects of interest rate and
foreign exchange rate fluctuations, our ability to attract and
retain employees, the loss or delay of contracts due to economic
uncertainty or other factors, our ability to efficiently manage
backlog, our ability to expand our business through strategic
acquisitions, competition within the industry and the potential
adverse impact of health care reform. Further information about
these risks and uncertainties can be found in the information
included in the company's recent filings with the Securities and
Exchange Commission, including the company's Registration Statement
on Form S-3 and Form 10-K. Inveresk Research Group, Inc. Condensed
Consolidated Statements of Operations ($ in thousands, except per
share and share data) (Unaudited) Quarter Quarter Ended Ended March
31, March 31, 2004 2003 Net service revenue $ 76,738 $ 57,684
Direct costs excluding depreciation (39,921) (29,278) 36,817 28,406
Selling, general and administrative expenses: Share offering
expenses (306) (658) Other selling, general and administrative
expenses (19,853) (16,228) Total selling, general and
administrative expenses (20,159) (16,886) Depreciation (3,465)
(2,949) Amortization of intangibles (348) -- Income from operations
12,845 8,571 Interest income 101 72 Interest expense (899) (971)
Income before income taxes 12,047 7,672 Provision for income taxes
250 (295) Net income $ 12,297 $ 7,377 Earnings per share: Basic $
0.32 $ 0.20 Diluted $ 0.31 $ 0.20 Number of common shares
outstanding: Basic 37,923,816 36,081,610 Diluted 39,160,749
37,366,463 Inveresk Research Group, Inc. Segment Analysis ($ in
thousands) (Unaudited) Quarter Quarter Ended Ended March 31, March
31, 2004 2003 Net service revenue: Pre-clinical $ 44,377 $ 36,329
Clinical 32,361 21,355 Total 76,738 57,684 Net service revenue less
direct costs excluding depreciation: Pre-clinical 23,213 19,505
Clinical 13,604 8,901 Total 36,817 28,406 Net service revenue less
direct costs excluding depreciation, as a percentage of net service
revenue: Pre-clinical 52.3 % 53.7 % Clinical 42.0 % 41.7 % Total
48.0 % 49.2 % Income from operations: Pre-clinical 11,744 8,782
Clinical 4,173 2,263 Corporate overhead (3,072) (2,474) Total
12,845 8,571 Income from operations as a percentage of net service
revenue: Pre-clinical 26.5 % 24.2 % Clinical 12.9 % 10.6 % Total
16.7 % 14.9 % Inveresk Research Group, Inc. Consolidated Balance
Sheet Data ($ in thousands) March 31, 2004 December (Unaudited) 31,
2003 Total current assets $ 119,335 $ 115,011 Total other assets
338,083 334,068 Total current liabilities (110,317) (116,393) Total
other liabilities (98,295) (98,511) Total shareholders' equity $
248,806 $ 234,175 Capital Employed March 31, 2004 December
(Unaudited) 31, 2003 Total shareholders' equity $ 248,806 $ 234,175
Current portion of long-term debt 7,634 7,857 Long-term debt 49,220
50,941 Cash and cash equivalents (24,928) (24,579) Total capital
employed $ 280,732 $ 268,394 DATASOURCE: Inveresk Research Group,
Inc. CONTACT: Paul Cowan, Chief Financial Officer of Inveresk
Research Group, Inc., +1-919-462-2354, ; or Matt Dallas of
Financial Dynamics, +1-212-850-5627, , for Inveresk Research Group,
Inc. Web site: http://www.inveresk.com/
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