SFBC International, Inc. (NASDAQ: SFCC), a provider of drug
development services to branded pharmaceutical, biotechnology,
generic drug and medical device companies, today reported its
financial results for the first quarter ended March 31, 2006. In
addition, the Company announced that it intends to file Form
12b-25, which will provide an extension of the deadline for filing
the Company's Form 10-Q to May 15, 2006, with the SEC. "SFBC
continues to make significant progress on the issues facing the
Company," commented Jeffrey P. McMullen, president and chief
executive officer of SFBC International. "We are taking and will
continue to take the necessary steps to address these issues,
including the implementation of a new structure for the early
clinical development segment that better aligns SFBC's leadership
team with our strategic, operational and financial goals. The time
and resources necessary to fully address these issues have
significantly exceeded our original expectations. In addition, we
experienced weaker than expected performance in our early clinical
development segment in the first quarter of 2006. However, as
indicated by the continued improvement in our cash position and
working capital in the quarter, we remain focused on strengthening
our liquidity position and internal procedures to ensure we have
the flexibility to maximize the long-term opportunity for the
Company." First Quarter Financial Results Direct revenue for the
first quarter of 2006 was approximately $80.1 million, an increase
of 4% compared to direct revenue for the first quarter of 2005 of
approximately $77.3 million. Total net revenue for the first
quarter of 2006 was approximately $110.1 million, which included
reimbursed out-of-pocket expenses of approximately $30.0 million, a
14% increase over the reported total net revenue of approximately
$96.4 million, which included reimbursed out-of-pocket expenses of
approximately $19.1 million, in the first quarter of 2005. As a
result of weak revenues, operating results and outlook for its
Miami and Ft Myers facilities, the Company recorded pre-tax,
non-cash goodwill and long-lived asset impairment charges in the
first quarter of 2006 of approximately $7.1 million. The goodwill
impairment charges of approximately $4.1 million includes
approximately $3.5 million for the remaining goodwill related to
the Company's Miami operations and approximately $0.6 million for
the goodwill related to the Company's Fort Myers operations. The
long-lived asset impairment charge of approximately $3.0 million
reduces the carrying value of the Miami property on the Company's
balance sheet to reflect the estimated fair market value of the
property based on a recent appraisal. All financial results and
comparisons in this release include the impact of the impairment
charges to be recognized for the first quarter of 2006. The loss
from operations for the first quarter of 2006 was approximately
$3.3 million compared to earnings from operations of approximately
$11.7 million for the first quarter of 2005. The net loss for the
first quarter of 2006 was approximately $4.1 million compared to
net earnings for the first quarter of 2005 of approximately $5.0
million. The net loss for the first quarter of 2006 was $0.23 per
basic and diluted share compared to net earnings for the first
quarter of 2005 of $0.32 per basic share and $0.30 per fully
diluted share. These first quarter 2006 results include the
impairment charges of $7.1 million described above as well as
additional legal and other professional fees related to recent
events of approximately $1.2 million pre-tax, or approximately
$0.06 per fully diluted share net of tax effect, as well as the
non-cash amortization of acquisition-related intangible expenses
provided below. Net loss in the first quarter of 2006 includes
non-cash stock option expense of approximately $0.5 million in
accordance with SFAS No. 123(R), Share-Based Payment, which the
Company adopted as of January 1, 2006. Non-cash stock option
expense is not included in net earnings for the first quarter of
2005. Because the Company had a loss for the first quarter of 2006,
368,525 dilutive equivalents have been excluded from the
calculation of diluted earnings per common share, since they were
antidilutive. On a non-GAAP basis, net earnings for the first
quarter of 2006 decreased by 69% to approximately $2.4 million, or
$0.13 per fully diluted share, compared to net earnings of
approximately $7.9 million, or $0.48 per fully diluted share, in
the first quarter of 2005. For the first quarter of 2006, non-GAAP
net earnings and non-GAAP earnings per share ("EPS") exclude
non-cash amortization of intangible expenses of approximately
$814,000 and the impairment charges of approximately $7.1 million.
For the first quarter of 2005, non-GAAP net earnings and non-GAAP
EPS exclude amortization of intangible expenses of approximately
$1.2 million and a non-cash charge of approximately $2.2 million
pre-tax related to the write-off of deferred financing costs. -0-
*T Reconciliation of GAAP (Loss)/Earnings to Non-GAAP Net Earnings
----------------------------------------------------------------------
Three Months Ended March 31,
----------------------------------------------------------------------
2006 2005 ---------------------------------------------------------
----------- GAAP net (loss)/earnings $(4,134,380) $5,024,903
---------------------------------------------------------
----------- Add back: Amortization of acquisition- related
intangible assets $813,680 $1,176,458
---------------------------------------------------------
----------- Add back: Non-recurring charges related to financing -
$2,214,135
---------------------------------------------------------
----------- Add back: Non-cash impairment charges $7,098,941 -
---------------------------------------------------------
----------- Less: Tax effect of non-GAAP adjustments $(1,354,148)
$(505,782)
---------------------------------------------------------
----------- Non-GAAP net earnings $2,424,093 $7,909,714
---------------------------------------------------------
----------- Non-GAAP EPS $0.13 $0.48
---------------------------------------------------------
----------- Shares used in computing non-GAAP net earnings per
fully diluted share 18,316,002 16,507,924
---------------------------------------------------------
----------- *T Segment Performance SFBC's Early-Phase Clinical
Development and Laboratory Services segment ("Early Clinical
Development") primarily include the areas of Phase I clinical
trials and support services, bioanalytical laboratory services, and
clinical laboratory services. SFBC's Late-Phase Development
Services segment ("Late Clinical Development") consists of
PharmaNet, which primarily conducts Phase II through IV clinical
trials, data management and biostatistics, medical and scientific
affairs, regulatory affairs and submissions, and provides software
tools and services for use in clinical trials. For the financial
results provided below for the Early Clinical Development and Late
Clinical Development segments, SFBC has excluded an allocation of
corporate expenses related to certain selling, general and
administrative ("S,G&A") expenses of $5.1 million for the first
quarter of 2006 and $2.0 million for the first quarter of 2005. For
the Early Clinical Development segment, SFBC recorded direct
revenue, which does not include reimbursed out-of-pocket expenses,
of approximately $33.0 million, or 41% of total direct revenue, in
the first quarter 2006 compared to approximately $41.3 million, or
53%, in the first quarter 2005. The loss from operations for Early
Clinical Development was approximately $5.6 million, representing a
(17.0)% operating margin on direct revenue and a non-GAAP operating
margin of (16.3)%, for the first quarter 2006 compared to earnings
from operations of approximately $10.3 million, representing a
25.0% operating margin on direct revenue and a non-GAAP operating
margin of 25.8%, for the first quarter 2005. For the Late Clinical
Development segment, SFBC recorded direct revenue, which does not
include reimbursed out-of-pocket expenses, of approximately $47.1
million, or 59% of total direct revenue, in the first quarter 2006
compared to approximately $36.0 million, or 47%, in the first
quarter 2005. Earnings from operations for Late Clinical
Development were approximately $7.5 million, representing a 15.9%
operating margin on direct revenue and a non-GAAP operating margin
of 17.1%, for the first quarter 2006 compared to approximately $3.7
million, representing a 10.3% operating margin on direct revenue
and a non-GAAP operating margin of 12.6%, for the first quarter
2005. SFBC has provided the following summary of Early Clinical
Development and Late Clinical Development segments, excluding the
allocation of corporate expenses related to S,G&A expenses of
$5,139,928 for the first quarter of 2006 and $2,044,855 for the
first quarter of 2005. For SFBC's Early Clinical Development and
Late Clinical Development segments, the non-GAAP operating income
and margins exclude the impact of amortization of intangibles. -0-
*T Early Clinical Development Summary Quarter ended March 31,
----------------------------------------------------------------------
2006 2005 --------------------------------------------------------
------------ Direct Revenues $33,025,685 $41,332,490
--------------------------------------------------------
------------ GAAP operating (loss)/income $(5,610,747) $10,312,474
--------------------------------------------------------
------------ Amortization of intangibles $238,682 $350,806
--------------------------------------------------------
------------ Non-GAAP operating (loss)/income $(5,372,065)
$10,663,280
--------------------------------------------------------
------------ GAAP Operating Margin (17.0)% 25.0%
--------------------------------------------------------
------------ Non-GAAP Operating Margin (16.3)% 25.8%
--------------------------------------------------------
------------ Late Clinical Development Summary Quarter ended March
31,
----------------------------------------------------------------------
2006 2005 --------------------------------------------------------
------------ Direct Revenues $47,093,439 $35,974,086
--------------------------------------------------------
------------ GAAP Operating Income $7,488,388 $3,691,157
--------------------------------------------------------
------------ Amortization of intangibles $575,000 $825,652
--------------------------------------------------------
------------ Non-GAAP Operating Income $8,063,388 $4,516,809
--------------------------------------------------------
------------ GAAP Operating Margin 15.9% 10.3%
--------------------------------------------------------
------------ Non-GAAP Operating Margin 17.1% 12.6%
--------------------------------------------------------
------------ *T Other Financial Information At March 31, 2006,
backlog for SFBC was approximately $336.3 million, which was a
decrease of approximately 7%, from approximately $360.9 million at
December 31, 2005 and a decrease of approximately 6%, from
approximately $358.5 million at March 31, 2005. Backlog consists of
anticipated direct revenue from contracts and letters of intent
that either have not started but are anticipated to begin in the
near future or are in process and have not been completed. Net days
sales outstanding ("DSOs"), which includes accounts receivable and
unbilled services less current and long-term advanced billings, was
32 days at March 31, 2006 compared to 37 days at December 31, 2005
and 47 days at March 31, 2005. SFBC reported an increase of
approximately $15.1 million in cash, cash equivalents, and
investments in marketable securities in the first quarter to
approximately $53.9 million at March 31, 2006 from approximately
$38.8 million at December 31, 2005. Working capital, which includes
current assets less current liabilities, was $56.0 million at March
31, 2006 and $51.6 million at December 31, 2005. As of March 31,
2006, SFBC had approximately $143.8 million in convertible notes
outstanding and $17.0 million drawn on its $90 million Senior
Secured Credit Facility ("Credit Facility"). To facilitate the
filing of the Company's Form 10-Q for the period ended March 31,
2006 within the extended deadline of May 15, 2006, the Company has
obtained waivers through June 30, 2006 for all of the Company's
defaults related to covenants and certain other terms under its
existing Credit Facility. In addition, the Company and its lenders
have agreed to reduce the Credit Facility from $90 million to $45
million. As a result of the reduction in the size of the Credit
Facility, the Company expects to record a non-cash write-off of
deferred finance charges of approximately $1.2 million in the
second quarter of 2006. SFBC's effective tax rate in the first
quarter of 2006 was 26.7% compared to 24.4% in the first quarter of
2005. Full Year 2006 Guidance SFBC is updating its 2006 guidance
based upon SFBC's current business outlook, greater than previously
anticipated decrease in revenues at its Miami facility, greater
than previously anticipated legal and related expenses pertaining
to recent issues and a lower than previously anticipated outlook
for Anapharm. The Company now anticipates its direct revenue in
2006 will be approximately $308 million - $324 million. SFBC now
anticipates that its Early Clinical Development segment will be
significantly lower than previously expected and that the Late
Clinical Development segment will be consistent with the Company's
previous expectations. Further, the Company anticipates that EPS
will be weighted significantly to the second-half of 2006. SFBC has
provided the following summary of its updated 2006 EPS guidance,
which includes the estimated impact of expensing stock options
under SFAS 123(R) of approximately $0.07. -0- *T Summary of 2006
EPS Guidance (a)
----------------------------------------------------------------------
2006E EPS
----------------------------------------------------------------------
Low High
--------------------------------------------------------------
------ GAAP EPS $0.21 $0.33
--------------------------------------------------------------
------ Impact of non-cash expense of approximately $3.0 million
related to acquisition-related amortization of intangibles $0.16
$0.16
--------------------------------------------------------------
------ Impact of non-cash impairment charges of approximately $7.1
million $0.30 $0.30
--------------------------------------------------------------
------ Impact of non-recurring finance charge of approximately $1.2
million in the second quarter of 2006 $0.06 $0.06
--------------------------------------------------------------
------ NON-GAAP EPS (including stock option expense) $0.73 $0.85
--------------------------------------------------------------
------ a) All line items are represented per fully diluted share
and individual line items are each net of projected tax effect *T
Conference Call and Webcast Information SFBC plans to host a
conference call and Webcast to review its first quarter 2006
results at 10:00 a.m. Eastern Daylight Time on Wednesday, May 10,
2006. To access the conference call, please dial the following
teleconference number 877-672-2663 (U.S.) or 973-582-2882
(International), or visit the "investor relations" section of the
Company's Website at www.sfbci.com to listen to the simultaneous
Webcast. For those unable to access the live conference, there will
be an audio replay available from May 10, 2006 at approximately
1:00 p.m. EDT through May 24, 2006 at 11:59 p.m. EDT. To listen to
the audio replay, please dial 877-519-4471 (U.S.) or 973-341-3080
(International) and use the following replay pin code: 7338097. A
replay of the live Webcast will also be available in the "investor
relations" section of the Company's Website at www.sfbci.com
approximately two hours after the live call ends through June 9,
2006 at 11:59 p.m. EDT. About SFBC International, Inc. SFBC
International, Inc. is an international drug development services
company offering a comprehensive range of clinical development,
clinical and bioanalytical laboratory, and consulting services to
the branded pharmaceutical, biotechnology, generic drug and medical
device industries. SFBC has more than 35 offices, facilities and
laboratories with approximately 2,500 employees strategically
located throughout the world. For more information, visit SFBC's
website at www.sfbci.com. Non-GAAP Financial Measures This press
release contains non-GAAP financial measures, which exclude, among
other items, amortization of acquisition-related intangible assets,
non-recurring charges related to financing, and non-cash impairment
charges. SFBC excludes these items from the non-GAAP financial
measures because they are outside of its operations and are a
useful indicator, which allows management to monitor SFBC's
underlying business performance. Non-GAAP results also allow
investors to compare the reported GAAP results and the non-GAAP
First Call consensus estimate and to compare the Company's
operations against the financial results of other companies in the
industry. The non-GAAP financial measures included in this press
release should not be considered superior to or a substitute for
results of operations prepared in accordance with GAAP.
Reconciliations of the non-GAAP financial measures used in this
press release to the most directly comparable GAAP financial
measures are set forth in the text of, and the accompanying tables
to, this press release, and can also be found on the Company's
website at www.sfbci.com. Forward-Looking Statements The statements
made in this press release relating to the leveraging the strong
reputation of the Company's subsidiaries, the estimated impairment
charge, estimated stock option expense, and 2006 guidance are
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995 (the "Act"). Additionally
words such as "seek," "intend," "believe," "plan," "estimate,"
"expect," "anticipate" and other similar expressions are
forward-looking statements within the meaning of the Act. Some or
all of the results anticipated by these forward-looking statements
may not occur. Factors that could cause or contribute to such
differences include, but are not limited to, whether adverse
publicity relating to SFBC's Miami operations causes clients to
select competitors, not only for early stage branded clinical
trials but also for other aspects of SFBC's business; SFBC's
ability to resolve open issues relating to its Miami property
including whether it can change the hospital-type classification,
whether a building permit will be issued, whether it can complete
its remediation plan on a timely basis and within reasonable cost
parameters, whether SFBC will prevail in the pending land lease
litigation and whether, depending on the outcome of these issues,
it will relocate or close its Miami facility; continued adverse
publicity related to actions of the United States Senate Finance
Committee; developments with respect to the SEC's inquiry and
securities class action lawsuits and derivative lawsuits; SFBC's
assessment of its current FDA inspections; SFBC's ability to
successfully achieve and manage the technical requirements of
specialized clinical trial services, while complying with
applicable rules and regulations; the Miami subsidiary's continued
ability to recruit participants for clinical trials; regulatory
changes; changes affecting the clinical research industry; a
reduction of outsourcing by pharmaceutical and biotechnology
companies; SFBC's ability to compete internationally in attracting
clients in order to develop additional business; cancellation of
contracts; SFBC's ability to retain and recruit new employees;
SFBC's clients' ability to provide the drugs and medical devices
used in its clinical trials; SFBC's future stock price; and the
national and international economic climate as it affects drug
development operations. Further information can be found in SFBC's
risk factors contained in its Form 10-K filed with the SEC in 2006
and other filings with the Securities and Exchange Commission. -0-
*T SFBC INTERNATIONAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED
STATEMENTS OF EARNINGS (UNAUDITED) FOR THE THREE MONTHS ENDED MARCH
31, 2006 AND 2005
======================================================================
Three Months Ended March 31, 2006 2005 ------------ ------------
Net revenue Direct revenue $80,119,124 $77,306,576 Reimbursed
out-of-pockets 30,011,702 19,136,369 ------------ ------------
Total net revenue 110,130,826 96,442,945 Costs and expenses Direct
costs 49,259,051 43,894,723 Reimbursable out-of-pocket expenses
30,011,702 19,136,369 Selling, general and administrative expenses
27,023,419 21,703,089 Impairment of goodwill 4,051,082 - Impairment
of long-lived assets 3,047,859 - ------------ ------------ Total
costs and expenses 113,393,113 84,734,181 Earnings from operations
(3,262,287) 11,708,764 Other income (expense) Interest income
184,365 397,556 Interest expense (1,776,241) (5,511,083) Foreign
exchange transaction gain (loss), net (526,568) 125,006
------------ ------------ Total other income (expense) (2,118,444)
(4,988,521) ------------ ------------ Earnings before income taxes
(5,380,731) 6,720,243 Income tax expense (1,435,137) 1,637,658
------------ ------------ Earnings before minority interest in
joint venture (3,945,594) 5,082,585 Minority interest in joint
venture 188,786 57,682 ------------ ------------ Net earnings
$(4,134,380) $5,024,903 ============ ============ Earnings per
share: Basic $(0.23) $0.32 ============ ============ Diluted
$(0.23) $0.30 ============ ============ Shares used in computing
earnings per share: Basic 17,947,477 15,784,111 ============
============ Diluted 17,947,477 16,507,924 ============
============ SFBC INTERNATIONAL, INC. AND SUBSIDIARIES SELECTED
CONSOLIDATED BALANCE SHEET INFORMATION FOR THE PERIODS ENDED MARCH
31, 2006 AND DECEMBER 31, 2005
======================================================================
(Unaudited) March 31, December 31, 2006 2005 ------------
------------ ASSETS Cash, equivalents, and investments in
marketable securities 53,944,695 38,834,702 Accounts receivable
115,302,350 117,871,669 Total current assets 187,835,846
178,027,709 Fixed assets 71,091,317 73,265,112 Total assets
574,839,171 572,537,096 LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities 130,482,285 126,434,061 Total liabilities
293,144,965 290,255,497 Stockholders' equity 281,694,206
282,281,599 Total liabilities and stockholders' equity 574,839,171
572,537,096 *T
Sfbc (NASDAQ:SFCC)
Graphique Historique de l'Action
De Mai 2024 à Juin 2024
Sfbc (NASDAQ:SFCC)
Graphique Historique de l'Action
De Juin 2023 à Juin 2024