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In addition, RPS announces that it has today filed a Form 10-Q for the period ended September 30, 2009, as required by the Securities and Exchange Commission ("SEC"). A copy of the Form 10-Q is available on our website (www.rpsweb.com).
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The following discussion of financial and operational highlights for the three and nine month periods ended September 30, 2009 is qualified by reference to the unaudited financial results included in this press release and the Company's Form 10-Q, as filed with the SEC.
Financial highlights for the three months ended September 30, 2009
Financial highlights for the nine months ended September 30, 2009
Operational highlights for the nine months ended September 30, 2009
A description of each non-GAAP financial measure and the related reconciliation to the comparable GAAP measure are located at the end of this press release.
Commenting on the third quarter results, Daniel M. Perlman, Chairman and CEO of RPS, said:
"In the third quarter, RPS continued the implementation of its global expansion strategy with the acquisition of the China-based CRO, Paramax. We believe this acquisition will serve as the platform for our growing operations in the Asia-Pacific region and complements our existing operations in the Americas, Europe and Africa. RPS intends to continue to expand its global capabilities in response to the growing needs of our clients for global drug development services."
Background on RPS
Headquartered in Ft. Washington, Pennsylvania, with subsidiary offices across Latin America, Europe and Asia, RPS is a next generation CRO and a leading provider of integrated clinical development and enhanced full-service outsourcing solutions to the bio-pharmaceutical industry. RPS provides services in connection with the design, initiation and management of clinical trials programs that are required to obtain regulatory approval to market bio-pharmaceutical products. Our innovative business model combines the expertise of a traditional CRO with the ability to provide flexible outsourcing solutions that are fully integrated within our clients' clinical drug development infrastructure. This approach was designed to meet the varied needs of small, medium and large bio-pharmaceutical companies.
Supplemental non-GAAP financial information
EBITDA is defined as net income before interest expense, income taxes and depreciation and amortization. The Company believes that net income is the most directly comparable GAAP measurement to EBITDA. EBITDA is presented because the Company believes it is useful to investors as widely accepted financial indicators of a company's ability to service and/or incur indebtedness and because such disclosure provides investors with additional criteria used by the Company to evaluate our operating performance and the performance-based compensation of certain of our employees. EBITDA is not defined under GAAP, should not be considered in isolation or as a substitute for a measure of our liquidity or performance prepared in accordance with GAAP and is not indicative of income from operations as determined under GAAP. EBITDA and other non-GAAP financial measures have limitations which should be considered before using these measures to evaluate the Company's liquidity or financial performance. EBITDA does not include interest expense, income tax expense or depreciation and amortization expense, which may be necessary in evaluating the Company's operating results and liquidity requirements or those of businesses we may acquire. The Company's management compensates for these limitations by using EBITDA as a supplement to GAAP results to provide a more comprehensive understanding of the factors and trends affecting our business or any business we may acquire. Our computation of EBITDA may not be comparable to other similarly titled measures provided by other companies, because not all companies calculate this measure in the same fashion.
The following table and related notes reconciles net income to EBITDA:
Financial Data
NOTES
The functional currency of RPS is US dollars because that is the currency of the primary economic environment in which the company operates. These financial statements are presented in US dollars.
The financial statements are presented in conformity with accounting principles generally accepted in the United States and have been prepared using the same accounting policies as set forth in the financial statements for the year ended December 31, 2008 which will be included in the Company's Annual Report on Form 10-K to be filed with the SEC.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This press release contains "forward-looking statements" that are made pursuant to the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as "anticipates," "intends," "plans," "seeks," "believes," "estimates," "expects" and similar references to future periods, or by the inclusion of forecasts or projections. Forward-looking statements are based on the Company's current expectations and assumptions regarding its business, financial condition, the economy and other future conditions. Because forward-looking statements relate to the future, by their nature, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict, including those described under the heading "Risk Factors" in the Company's Form 10-K filed with the SEC on March 31, 2009 and Forms 10-Q for the first, second, and third quarters of 2009. The Company's actual results may differ materially from those contemplated by the forward-looking statements. The Company cautions you therefore that you should not rely on any of these forward-looking statements as statements of historical fact or as guarantees or assurances of future performance. Important factors that could cause actual results to differ materially from those in the forward-looking statements include regional, national or global political, economic, business, competitive, market and regulatory conditions including: our ability to identify liabilities associated with the Company; our ability to manage pricing and operational risks; our ability to manage foreign operations and integrate new operations into our existing operations; changes in technology; and our ability to acquire or renew contracts. Any forward-looking statement made in this document speaks only as of the date on which it is made. Factors or events that could cause the Company's actual results to differ may emerge from time to time, and it is not possible for the Company to predict all of them. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, unless otherwise required to do so by law or regulation.
-- Service revenues for the third quarter of 2009 of $51.7 million grew $12.6 million or 32.1% as compared to the same period in 2008. -- Direct costs increased 25.8% to $37.2 million for the third quarter of 2009, but decreased as a percentage of service revenue, from 75.6% to 71.9%, from the third quarter of 2008. -- Selling, general, and administrative expenses increased 43.8% to $11.3 million for the third quarter of 2009 from $7.8 million for the third quarter of 2008. -- EBITDA for the third quarter of 2009 of $3.2 million or 6.2% of service revenues, increased from $1.7 million or 4.4% of service revenues for the third quarter of 2008. -- Net income before provision for income taxes for the third quarter of 2009 of $2.2 million increased $0.9 million from $1.3 million for the third quarter of 2008. Net income for the third quarter of 2009 increased to $1.0 million, from net income for the third quarter in 2008 of $0.7 million.
SOURCE ReSearch Pharmaceutical Services, Inc.
