NEW YORK CITY (dpa-AFX) - Contract research organization Icon plc (ICLR), Wednesday reported a drop in profit for the second quarter, as higher direct costs offset revenue growth of 4 percent. Earnings missed Street estimates, while revenues came in ahead of expectations.
During the quarter, the company was selected by Pfizer (PFE) to be one of its two partners for clinical development. The company expects significant cost increase as it gears up to execute the partnership, and cut its earnings guidance for the full year. Following the news, Icon shares lost over 5 percent on the Nasdaq.
For the second quarter, Icon's net income dropped to $13.1 million or $0.21 per share from $22.9 million or $0.38 per share in the year-ago period.
On average, 9 analysts polled by Thomson Reuters expected earnings of $0.22 per share for the quarter. Analysts' estimates typically exclude special items.
CEO Peter Gray, said,' Our second quarter was in line with our guidance, and new business bookings continued to strengthen, leading to our order backlog exceeding $2 billion for the first time.'
Revenues for the quarter grew 4.2 percent to $233.0 million from $223.8 million in the year-ago quarter. Seven Street analysts had a consensus revenue estimate of $229.9 million for the quarter.
Direct costs increased to $150.9 million from $130.9 million last year. Income from operations was $15.5 million or 6.7 percent of revenue, compared to $25.7 million or 11.5 percent of revenue for the same quarter last year.
Consequent to its pact with Pfizer, Dublin, Ireland-headquartered Icon said it is increasing hiring and expects to add significant cost in the next two quarters. Icon expects work to come through in the fourth quarter and throughout 2012.
The company lowered its adjusted earnings guidance for the full year 2011 to $0.50 - $0.70 per share, reflecting significant cost increase in the third quarter without compensating revenue, followed by further cost increase in the fourth quarter when revenues are expected to build. Revenue guidance for 2011 remains unchanged.
While reporting its results for fiscal 2010, Icon provided its guidance for 2011, expecting earnings in the range of $1.10 to $1.25 per share and revenue growth of 5 - 9% in the range of $945 - $980 million.
ICLR is currently trading at $22.40, down $1.23 or 5.21%, on a volume of 0.8 million shares, on the Nasdaq. Over the past year, the stock traded in a range of $18.93 - $28.03, with three-month average volume of 0.2 million shares.
Copyright RTT News/dpa-AFX
© 2011 AFX News
