ICLR ICON PLC

Highlights

• Net business wins in the quarter of $2,654 million; a net book to bill of 1.27, an increase of 9.9% on quarter one 2023.

• Closing backlog of $23.4 billion, an increase of 2.5% on quarter four 2023 and 10.1% on quarter one 2023.

• Quarter one revenue of $2,090.4 million representing an increase of 5.7% on prior year revenue and 5.4% on a constant currency basis.

• Quarter one adjusted EBITDA of $444.0 million or 21.2% of revenue, an increase of 11.3% on quarter one 2023.

• GAAP net income for the quarter of $187.4 million or $2.25 per diluted share, an increase of 59.6% on quarter one 2023 diluted earnings per share.

• Quarter one adjusted net income was $288.5 million or $3.47 per diluted share, an increase of 19.7% on quarter one 2023 adjusted diluted earnings per share.

• Days sales outstanding of 49 days at March 31, 2024, a decrease from 54 days at March 31, 2023, and an increase from 47 days at December 31, 2023.

• $275.0 million repayment made on Term Loan B debt in quarter one. Net debt balance of $3.1 billion at March 31, 2024 with net debt to adjusted EBITDA ratio of 1.8x.

• Updating full-year 2024 financial guidance with revenue in the range of $8,480 - $8,720 million, representing a year over year increase of 4.4% to 7.4%, and adjusted earnings per share* in the range of $14.65 - $15.15, representing a year over year increase of 14.5% to 18.5%. Adjusted earnings per share to exclude amortization, stock compensation, restructuring, foreign exchange and transaction-related / integrated-related adjustments.

ICON plc (NASDAQ: ICLR), a world-leading healthcare intelligence and clinical research organization, today reported its financial results for the first quarter ended March 31, 2024.

CEO, Dr. Steve Cutler commented, “ICON reported a strong start to the year in quarter one, with revenue growth of 6% year over year, and net bookings up 10% over quarter one 2023, resulting in a net book to bill ratio of 1.27 times. Adjusted earnings per share grew a robust 20% on a year over year basis, reflecting our efficient service delivery and strong cost control. Our performance is reflective of the current favorable demand trends across our industry, as well as the further development of strategic customer partnerships.

With the positive results in quarter one and consistent outlook for the year, we are updating our full-year financial guidance range for 2024, with revenue in the range of $8,480 - $8,720 million, representing growth of 6% year over year at the midpoint, and adjusted earnings per share of $14.65 - $15.15, an increase of 16% year over year at the midpoint of the range.”

First Quarter 2024 Results

Gross business wins in the first quarter were $3,114 million and cancellations were $460 million. This resulted in net business wins of $2,654 million and a book to bill of 1.27.

Revenue for the first quarter was $2,090.4 million. This represents an increase of 5.7% on prior year revenue or 5.4% on a constant currency basis.

GAAP net income was $187.4 million resulting in $2.25 diluted earnings per share in quarter one 2024 compared to $1.41 diluted earnings per share in quarter one 2023. Adjusted net income for the quarter was $288.5 million resulting in an adjusted diluted earnings per share of $3.47 compared to $2.90 per share for the first quarter 2023.

Adjusted EBITDA for the first quarter was $444.0 million or 21.2% of revenue, a year-on-year increase of 11.3%.

The effective tax rate on adjusted net income in quarter one 2024 was 16.5%.

Cash generated from operating activities for the quarter was $327.1 million. During the quarter $27.2 million was spent on capital expenditure. At March 31, 2024, the Group had cash and cash equivalents of $396.1 million, compared to cash and cash equivalents of $378.1 million at December 31, 2023 and $279.9 million at March 31, 2023. $50 million of the revolving credit facility was drawn down in the quarter and $55 million was repaid. Additionally, a $275.0 million Term Loan B payment was made during the quarter resulting in a net indebtedness of $3.1 billion at March 31, 2024.

Other Information

In addition to the financial measures prepared in accordance with generally accepted accounting principles (GAAP), this press release contains certain non-GAAP financial measures, including adjusted EBITDA, adjusted net income and adjusted diluted earnings per share. Adjusted EBITDA, adjusted net income and adjusted diluted earnings per share exclude amortization, stock compensation, foreign exchange gains and losses, restructuring and transaction-related / integration-related adjustments. While non-GAAP financial measures are not superior to or a substitute for the comparable GAAP measures, ICON believes certain non-GAAP information is useful to investors for historical comparison purposes.

ICON will hold a conference call on April 25, 2024 at 08:00 EDT [13:00 Ireland & UK]. This call and linked slide presentation can be accessed live from our website at http://investor.iconplc.com. A recording will also be available on the website for 90 days following the call. In addition, a calendar of company events, including upcoming conference presentations, is available on our website, under “Investors”. This calendar will be updated regularly.

This press release contains forward-looking statements, including statements about our financial guidance. These statements are based on management's current expectations and information currently available, including current economic and industry conditions. These statements are not guarantees of future performance or actual results, and actual results, developments and business decisions may differ from those stated in this press release. The forward-looking statements are subject to future events, risks, uncertainties and other factors that could cause actual results to differ materially from those projected in the statements, including, but not limited to, the ability to enter into new contracts, maintain client relationships, manage the opening of new offices and offering of new services, the integration of new business mergers and acquisitions, as well as other economic and global market conditions and other risks and uncertainties detailed from time to time in SEC reports filed by ICON, all of which are difficult to predict and some of which are beyond our control. For these reasons, you should not place undue reliance on these forward-looking statements when making investment decisions. The word "expected" and variations of such words and similar expressions are intended to identify forward-looking statements. Forward-looking statements are only as of the date they are made and we do not undertake any obligation to update publicly any forward-looking statement, either as a result of new information, future events or otherwise. More information about the risks and uncertainties relating to these forward-looking statements may be found in SEC reports filed by ICON, including its Form 20-F, F-1, F-4, S-8, F-3 and certain other reports, which are available on the SEC's website at http://www.sec.gov.

* Our full-year 2024 guidance adjusted earnings per share measures are provided on a non-GAAP basis because the company is unable to predict with a reasonable degree of certainty certain items contained in the GAAP measures without unreasonable efforts. For the same reasons, the company is unable to address the probable significance of the unavailable information.

ICON plc is a world-leading healthcare intelligence and clinical research organization. From molecule to medicine, we advance clinical research providing outsourced services to pharmaceutical, biotechnology, medical device and government and public health organizations. We develop new innovations, drive emerging therapies forward and improve patient lives. With headquarters in Dublin, Ireland, ICON employed approximately 41,150 employees in 102 locations in 54 countries as at March 31, 2024. For further information about ICON, visit: www.iconplc.com.

ICON/ICLR-F

ICON plc

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND MARCH 31, 2023

(UNAUDITED)

 

 

Three Months Ended

 

March 31, 2024

 

March 31, 2023

 

(in thousands except share and per share data)

 

 

 

 

Revenue

$

2,090,386

 

 

$

1,978,578

 

 

 

 

 

Costs and expenses:

 

 

 

Direct costs (excluding depreciation and amortization)

 

1,471,367

 

 

 

1,395,546

 

Selling, general and administrative

 

177,350

 

 

 

200,006

 

Depreciation and amortization

 

149,181

 

 

 

145,126

 

Transaction and integration related

 

6,991

 

 

 

11,382

 

Restructuring

 

—

 

 

 

9,729

 

Total costs and expenses

 

1,804,889

 

 

 

1,761,789

 

 

 

 

 

Income from operations

 

285,497

 

 

 

216,789

 

Interest income

 

1,930

 

 

 

1,072

 

Interest expense

 

(71,665

)

 

 

(86,551

)

 

 

 

 

Income before income tax expense

 

215,762

 

 

 

131,310

 

Income tax expense

 

(28,324

)

 

 

(14,273

)

 

 

 

 

Income before share of losses from equity method investments

 

187,438

 

 

 

117,037

 

Share of losses from equity method investments

 

—

 

 

 

(383

)

Net income

$

187,438

 

 

$

116,654

 

 

 

 

 

Net income per Ordinary Share:

 

 

 

 

 

 

 

Basic

$

2.27

 

 

$

1.43

 

Diluted

$

2.25

 

 

$

1.41

 

 

 

 

 

Weighted average number of Ordinary Shares outstanding:

 

 

 

 

 

 

 

Basic

 

82,579,203

 

 

 

81,784,389

 

Diluted

 

83,249,303

 

 

 

82,605,659

 

ICON plc

CONDENSED CONSOLIDATED BALANCE SHEETS

AS AT MARCH 31, 2024 AND DECEMBER 31, 2023

(UNAUDITED)

 

March 31, 2024

 

December 31, 2023

ASSETS

(in thousands)

Current assets:

 

 

 

Cash and cash equivalents

$

396,082

 

 

$

378,102

 

Available for sale investments

 

1,955

 

 

 

1,954

 

Accounts receivable, net of allowance for credit losses

 

1,862,468

 

 

 

1,790,322

 

Unbilled revenue

 

993,141

 

 

 

951,936

 

Other receivables

 

76,638

 

 

 

65,797

 

Prepayments and other current assets

 

149,127

 

 

 

132,105

 

Income taxes receivable

 

75,544

 

 

 

91,254

 

Total current assets

$

3,554,955

 

 

$

3,411,470

 

Non-current assets:

 

 

 

Property, plant and equipment

 

353,302

 

 

 

361,184

 

Goodwill

 

9,018,301

 

 

 

9,022,075

 

Intangible assets

 

3,748,939

 

 

 

3,855,865

 

Operating right-of-use assets

 

159,620

 

 

 

140,333

 

Other receivables

 

87,193

 

 

 

78,470

 

Deferred tax asset

 

74,777

 

 

 

73,662

 

Investments in equity- long term

 

51,164

 

 

 

46,804

 

Total Assets

$

17,048,251

 

 

$

16,989,863

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

113,579

 

 

$

131,584

 

Unearned revenue

 

1,709,938

 

 

 

1,654,507

 

Other liabilities

 

1,000,760

 

 

 

915,399

 

Income taxes payable

 

41,905

 

 

 

13,968

 

Current bank credit lines and loan facilities

 

79,762

 

 

 

110,150

 

Total current liabilities

$

2,945,944

 

 

$

2,825,608

 

Non-current liabilities:

 

 

 

Non-current bank credit lines and loan facilities

 

3,419,734

 

 

 

3,665,439

 

Lease liabilities

 

145,542

 

 

 

126,321

 

Non-current other liabilities

 

45,988

 

 

 

45,998

 

Non-current income taxes payable

 

188,876

 

 

 

186,654

 

Deferred tax liability

 

869,520

 

 

 

899,100

 

Commitments and contingencies

 

—

 

 

 

—

 

Total Liabilities

$

7,615,604

 

 

$

7,749,120

 

 

 

 

 

Shareholders' Equity:

 

 

 

Ordinary shares, par value 6 euro cents per share; 100,000,000 shares authorized,

 

 

 

82,683,805 shares issued and outstanding at March 31, 2024 and

 

 

 

82,495,086 shares issued and outstanding at December 31, 2023

 

6,711

 

 

 

6,699

 

Additional paid-in capital

 

6,970,079

 

 

 

6,942,669

 

Other undenominated capital

 

1,162

 

 

 

1,162

 

Accumulated other comprehensive loss

 

(166,462

)

 

 

(143,506

)

Retained earnings

 

2,621,157

 

 

 

2,433,719

 

Total Shareholders' Equity

$

9,432,647

 

 

$

9,240,743

 

Total Liabilities and Shareholders' Equity

$

17,048,251

 

 

$

16,989,863

 

 

 

 

 

 

 

 

 

ICON plc

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND MARCH 31, 2023

(UNAUDITED)

 

 

Three Months Ended

 

March 31, 2024

 

March 31, 2023

 

(in thousands)

Cash flows from operating activities:

 

 

 

Net income

$

187,438

 

 

$

116,654

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

Depreciation and amortization expense

 

149,181

 

 

 

145,126

 

Impairment of long lived assets

 

—

 

 

 

6,933

 

Reduction in carrying value of operating right-of-use assets

 

11,472

 

 

 

11,304

 

Loss on equity method investments

 

—

 

 

 

383

 

Amortization of financing costs and debt discount

 

3,907

 

 

 

4,497

 

Stock compensation expense

 

13,181

 

 

 

14,759

 

Deferred tax benefit

 

(35,145

)

 

 

(43,823

)

Unrealized foreign exchange movements

 

(1,027

)

 

 

(1,319

)

Other non-cash items

 

4,629

 

 

 

17,534

 

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

 

(80,431

)

 

 

(93,259

)

Unbilled revenue

 

(42,546

)

 

 

(18,346

)

Unearned revenue

 

56,485

 

 

 

80,990

 

Other net assets

 

59,932

 

 

 

(65,933

)

Net cash provided by operating activities

 

327,076

 

 

 

175,500

 

Cash flows from investing activities:

 

 

 

Purchase of property, plant and equipment

 

(27,152

)

 

 

(26,744

)

Purchase of subsidiary undertakings (net of cash acquired)

 

(7,831

)

 

 

—

 

Sale of available for sale investments

 

1,005

 

 

 

482

 

Purchase of available for sale investments

 

(1,006

)

 

 

(422

)

Purchase of investments in equity - long term

 

(4,381

)

 

 

(1,358

)

Net cash used in investing activities

 

(39,365

)

 

 

(28,042

)

Cash flows from financing activities:

 

 

 

Drawdown of credit lines and loan facilities

 

50,000

 

 

 

180,000

 

Repayment of credit lines and loan facilities

 

(330,000

)

 

 

(350,000

)

Proceeds from exercise of equity compensation

 

16,305

 

 

 

12,940

 

Share issue costs

 

(4

)

 

 

(4

)

Net cash used in by financing activities

 

(263,699

)

 

 

(157,064

)

Effect of exchange rate movements on cash

 

(6,032

)

 

 

718

 

Net increase / (decrease) in cash and cash equivalents

 

17,980

 

 

 

(8,888

)

Cash and cash equivalents at beginning of period

 

378,102

 

 

 

288,768

 

Cash and cash equivalents at end of period

$

396,082

 

 

$

279,880

 

ICON plc

RECONCILIATION OF NON-GAAP MEASURES

FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND MARCH 31, 2023

(UNAUDITED)

 

Three Months Ended

 

March 31, 2024

 

March 31, 2023

 

(in thousands except share and per share data)

 

 

 

 

Adjusted EBITDA

 

 

 

Net income

$

187,438

 

 

$

116,654

 

Share of losses from equity method investments

 

—

 

 

 

383

 

Income tax expense

 

28,324

 

 

 

14,273

 

Net interest expense

 

69,735

 

 

 

85,479

 

Depreciation and amortization

 

149,181

 

 

 

145,126

 

Stock-based compensation expense (a)

 

13,181

 

 

 

14,759

 

Foreign currency (gains)/losses, net (b)

 

(10,814

)

 

 

1,338

 

Restructuring (c)

 

—

 

 

 

9,729

 

Transaction and integration related costs (d)

 

6,991

 

 

 

11,382

 

Adjusted EBITDA

$

444,036

 

 

$

399,123

 

 

 

 

 

Adjusted net income and adjusted diluted net income per Ordinary Share

 

 

 

Net income

$

187,438

 

 

$

116,654

 

Income tax expense

 

28,324

 

 

 

14,273

 

Amortization

 

116,498

 

 

 

114,678

 

Stock-based compensation expense (a)

 

13,181

 

 

 

14,759

 

Foreign currency (gains)/losses, net (b)

 

(10,814

)

 

 

1,338

 

Restructuring (c)

 

—

 

 

 

9,729

 

Transaction and integration related costs (d)

 

6,991

 

 

 

11,382

 

Transaction-related financing costs (e)

 

3,907

 

 

 

4,498

 

Adjusted tax expense (f)

 

(57,012

)

 

 

(47,469

)

Adjusted net income

$

288,513

 

 

$

239,842

 

 

 

 

 

Diluted weighted average number of Ordinary Shares outstanding

 

83,249,303

 

 

 

82,605,659

 

 

 

 

 

Adjusted diluted net income per Ordinary Share

$

3.47

 

 

$

2.90

 

 

 

 

 

(a)

Stock-based compensation expense represents the amount of recurring expense related to the company’s equity compensation programs (inclusive of employer related taxes).

(b)

Foreign currency (gains)/losses, net relates to gains or losses that arise in connection with the revaluation of non-US dollar denominated assets and liabilities. We exclude these gains and losses from adjusted EBITDA and adjusted net income because fluctuations from period- to- period do not necessarily correspond to changes in our operating results.

(c)

Restructuring relates to charges incurred in connection with the company's realignments of its workforce, with the elimination of redundant positions as well as reviewing its global office footprint and optimizing its locations to best fit the requirements of the company.

(d)

Transaction and integration related costs include expenses/credits associated with our acquisitions and any other costs incurred directly related to the integration of these acquisitions.

(e)

Transaction-related financing costs includes costs incurred in connection with changes to our long-term debt and amortization of financing fees. We exclude these costs from adjusted EBITDA and adjusted net income because they result from financing decisions rather than from decisions made related to our ongoing operations.

(f)

Represents the tax effect of adjusted pre-tax income at our estimated effective tax rate.

Source: ICON plc

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Investor Relations +1 888 381 7923 or Brendan Brennan Chief Financial Officer +353 1 291 2000 Kate Haven Vice President Investor Relations +1888 381 7923 http://www.iconplc.com All at ICON