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ICON Reports Second Quarter 2017 Results

Highlights

DUBLIN--(BUSINESS WIRE)-- ICON plc (NASDAQ:ICLR), a global provider of drug development solutions and services to the pharmaceutical, biotechnology and medical device industries, today reported its financial results for the second quarter ended June 30, 2017.

Gross business wins in the second quarter were $649 million and cancellations in the quarter were $86 million, resulting in net business wins of $563 million, a net book to bill of 1.31.

In the second quarter net revenue grew 5.0% year on year to $431.0 million from $410.6 million in the same quarter last year. This represented 6.0% constant currency growth and 2.6% constant dollar organic growth year on year. Revenue outside of ICON's top customer grew 17% year over year.

Income from operations, before non-recurring charges, in the quarter increased by 9.9% to $85.8 million, or 19.9% of revenue, compared to $78.0 million or 19.0% for the same quarter last year.

The effective tax rate in quarter 2 was 14% and the company now expects the full year 2017 effective tax rate to be 12%.

Net income, before non-recurring charges, in the quarter increased by 10.7% to $71.6 million compared with $64.7 million in the same quarter last year.

Earnings per share, before non-recurring charges, increased to $1.31 per share on a diluted basis, from $1.14 per share for the same quarter last year, an increase of 14.9%.

Day's sales outstanding, comprising accounts receivable and unbilled revenue less payments on account, were 53 days at June 30, 2017, compared with 47 days at the end of March 31, 2017 and 46 days at the end of June 2016.

Cash generated from operating activities for the quarter was $9.1 million. Capital expenditure for the quarter was $6.9 million. Additionally, as part of ICON's share buy-back program, $11.7 million was spent on share repurchases in quarter two. As a result, at June 30, 2017, the company had net debt of $34 million, compared to net debt of $30 million at March 31, 2017 and net debt of $97 million at end of June 2016.

During the quarter the company recorded a charge of $7.8 million in relation to restructuring costs. US GAAP income from operations after these items amounted to $78.0 million or 18.1% of revenue. US GAAP net income for the quarter was $64.8 million or $1.19 per diluted share.

CEO Dr. Steve Cutler commented, "During the quarter we delivered a record $563 million of new business, representing a book to bill of 1.31. Supported by a strong trailing twelve month book to bill excluding our top customer of 1.42x, our backlog grew to over $4.4 billion, an increase of 10% year over year. In Quarter 2 revenues grew 5% over the same period in 2016, with our top customer concentration reducing to less than 20% from 28% last year and revenue growth excluding this customer increasing by nearly 17%. In addition, we expanded our market leading service offering in the fast growing late phase market by completing the acquisition of Mapi Group. This acquisition, along with our revised tax rate, means we are increasing both our full year EPS guidance to a range of $5.18 - $5.38 and our revenue guidance to a range of $1.740 billion - $1.770 billion."

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 non-GAAP operating and net income and non-GAAP diluted earnings per share. 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 its second quarter conference call today, July 27, 2017 at 9:00 EDT [14:00 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. 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 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, S-8 and F-3, which are available on the SEC's website at http://www.sec.gov.

ICON plc is a global provider of drug development solutions and services to the pharmaceutical, biotechnology and medical device industries. The company specialises in the strategic development, management and analysis of programs that support clinical development - from compound selection to Phase I-IV clinical studies. With headquarters in Dublin, Ireland, ICON currently, operates from 84 locations in 38 countries and has approximately 12,300 employees. Further information is available at www.iconplc.com.

ICON plc
Consolidated Income Statements (Unaudited)
(Before restructuring and other items)

Three Months ended June 30, 2017 and June 30, 2016
(Dollars, in thousands, except share and per share data)

   
Three Months Ended Six Months Ended

June 30,

 

June 30,

June 30,

 

June 30,

2017

2016

2017

2016

Revenue:
Gross revenue 591,781 589,647 1,169,847 1,132,230
Reimbursable expenses   (160,758)   (179,017)   (306,870)   (321,078)
 
Net revenue 431,023 410,630 862,977 811,152
 
Costs and expenses:
Direct costs 250,044 237,984 500,503 466,587
Selling, general and administrative expense 80,833 80,168 162,222 160,957
Depreciation and amortization   14,395   14,457   28,843   29,577
 
Total costs and expenses   345,272   332,609   691,568   657,121
 
Income from operations 85,751 78,021 171,409 154,031
 
Net interest expense   (2,600)   (2,839)   (5,224)   (5,720)
 
Income before provision for income taxes 83,151 75,182 166,185 148,311
 
Provision for income taxes   (11,550)   (10,525)   (23,175)   (20,690)
 
Net income   71,601   64,657   143,010   127,621
 
Net income per Ordinary Share:
 
Basic   $1.33   $1.17   $2.64   $2.31
 
Diluted   $1.31   $1.14   $2.60   $2.26
 
Weighted average number of Ordinary Shares outstanding:
 
Basic   53,846,544   55,318,923   54,109,800   55,164,971
 
Diluted   54,530,805   56,580,799   54,923,019   56,427,516

Consolidated Income Statements (Unaudited)
(US GAAP)

Three Months ended June 30, 2017 and June 30, 2016
(Dollars, in thousands, except share and per share data)

   
Three Months Ended Six Months Ended

June 30,

 

June 30,

June 30,

 

June 30,

2017

2016

2017

2016

Revenue:
Gross revenue 591,781 589,647 1,169,847 1,132,230
Reimbursable expenses   (160,758)   (179,017)   (306,870)   (321,078)
 
Net revenue 431,023 410,630 862,977 811,152
 
Costs and expenses:
Direct costs 250,044 237,984 500,503 466,587
Selling, general and administrative expense 80,833 80,168 162,222 160,957
Depreciation and amortization 14,395 14,457 28,843 29,577
Restructuring costs   7,753   4,094   7,753   4,094
 
Total costs and expenses   353,025   336,703   699,321   661,215
 
Income from operations 77,998 73,927 163,656 149,937
 
Net interest expense   (2,600)   (2,839)   (5,224)   (5,720)
 
Income before provision for income taxes 75,398 71,088 158,432 144,217

Provision for income taxes

 

(10,581)

 

(10,014)

 

(22,206)

 

(20,179)

 
Net income   64,817   61,074   136,226   124,038
 
Net income per Ordinary Share:
 
Basic   $1.20   $1.10   $2.52   $2.25
 
Diluted   $1.19   $1.08   $2.48   $2.20
 
Weighted average number of Ordinary Shares outstanding:
 
Basic   53,846,544   55,318,923   54,109,800   55,164,971
 
Diluted   54,530,805   56,580,799   54,923,019   56,427,516

ICON plc
Summary Balance Sheet Data
June 30, 2017 and March 31, 2017
(Dollars, in thousands)

   
June 30, March 31,
2017 2017
(Unaudited) (Unaudited)
 
 
Cash and short-term investments 314,918 318,966
Debt (348,698) (348,604)
Net (debt)/cash (33,780) (29,638)
 
Accounts receivable 359,899 340,540
Unbilled revenue 249,234 226,152
Payments on account (261,484) (266,704)
Total 347,649 299,988
 
Working Capital 538,473 466,662
 
Total Assets 1,904,310 1,855,215
 
Shareholder's Equity 1,029,592 944,509

ICON/ICLR-F

ICON plc
Investor Relations, 1-888-381-7923
or
Brendan Brennan, + 353 1 291 2000
Chief Financial Officer
or
Jonathan Curtain, +1-215-616-3000
Vice President Corporate Finance & Investor Relations
http://www.iconplc.com

Source: ICON plc

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