Kendle reports record sales in Q1

By Kirsty Barnes

- Last updated on GMT

Related tags: Cent, Quarter, United states, North america

Kendle has continued to perform well in its first quarter of 2008,
reporting record sales and new business gains, although its profit
was clouded by expenses.

The contract research organisation (CRO) recorded a slightly higher operating profit of $14.0m compared to the $12.5m generated for the same period of the prior year. Pre-tax profit for the quarter was somewhat lower, at only $8.7m but again, it was up on the $6.5m recorded for the first quarter of 2007. In terms of profitability, Kendle was helped by "record service revenues​" of $114.1m, an increase of 20 per cent over the service revenues earnt in the year ago period, along with "record new business awards​" of $180m, also a 20 per cent increase over the same quarter last year. Although, during the quarter, the CRO did increase its reliance on a few key customers, with the top five customers based service revenues accounting for 31 per cent of the total for the first quarter, compared to 26 per cent of the total for the first quarter of 2007. However, no single customer accounted for more than 10 per cent of service revenues, Kendle pointed out. Meanwhile, despite the financial gains made by the firm in terms of sales, the firm was also hindered by the incurrence of a number of expenses which ate into its pre-tax profit. "Significant one-time expense items affecting selling, general and administrative expense in the first quarter of 2008 include costs related to an internal global leadership meeting, stock-based compensation expense related to the issuance of various equity-related awards to certain retirement-eligible Kendle associates and an increase in the bad debt reserve related to potential collection issues with a specific customer, as well as higher than normal recruiting costs associated with the hiring of key executives and additional costs associated with building the company's infrastructure​," the firm explained. In terms of geographic region, Kendle reaped in 46 per cent of its revenues in North America, 42 per cent in Europe, 7 per cent in Latin America and 5 per cent in the Asia-Pacific region. This compares with the first quarter of 2007, where 50 per cent of revenues were generated in North America, 43 per cent in Europe, 4 per cent in Latin America and 3 per cent in the Asia-Pacific region. Kendle has been keeping focused on expanding its global presence of late, making key hires to grow the business further beyond the US into emerging market regions and the effort is beginning to become evident in the slight geographic movement in revenues seen during the quarter, compared with a year ago. Candace Kendle, chairman and CEO of the company said: "During the quarter we saw a continued shift in our revenue distribution outside North America, marking the ongoing success of our globalisation efforts and enhanced competitive position. We remain on target to meet the financial goals we have established for 2008​." "In support of our growth plans and our customers' needs, we made several significant leadership additions and promotions during the quarter to more strongly position Kendle for the future. As we progress through the year we look forward to executing on our market and business expansion initiatives​."

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