Restructuring costs cut deeply into second-quarter profits at Parexel International Corp. (NSDQ:PRXL) during the three months ended Dec. 31, with severance and related expenses costing the clinical research organization $14.3 million during the quarter.
The Waltham, Mass.-based clinical research organization recorded net income of $3.5 million, or 6 cents per share, on $284.7 million in revenues during its fiscal second period. That compares with a $5.2 million profit, or 9 cents per share, and $275.8 million in revenues during the year-ago quarter. In addition to severance payments, the bottom line was affected negatively by a client default, lease penalties associated with facility closings and a $6.1 investment impairment charge.
On the positive side, conversion of foreign currencies into U.S. dollars added about $14 million to reported revenues during the quarter. Company officials said Parexel had about $2.3 million in business queued up at the end of December, a 15.1 percent increase in orders backlog compared with 2008 year-end levels.
CEO Josef von Rickenbach said the company is seeing signs of recovery across all geographic regions for its late-stage clinical research business, as well as its Perceptive Informatics segment, which provides telecommunications and web-based technologies for clinical research activities.
Von Rickenbach also said he expects continued improvement in operating margins “as the benefits of restructuring activities and other productivity and efficiency initiatives begin to take hold.”
The restructuring plan, announced in October 2009, is scheduled to be largely complete by mid-year. The plan is expected to eventually result in pre-tax savings of about $20 million a year.