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ICON Reports Third Quarter 2024 Results

October 23, 2024

Highlights

  • Net business wins in the quarter of $2,328 million. Reflects a net book to bill in the quarter of 1.15, and a trailing twelve month net book to bill of 1.21.
  • Closing backlog of $24.3 billion, an increase of 2.1% on quarter two 2024 and 9.4% on quarter three 2023.
  • Quarter three revenue of $2,030.0 million. Quarter three adjusted EBITDA of $418.8 million or 20.6% of revenue.
  • GAAP net income for the quarter of $197.1 million or $2.36 per diluted share, an increase of 19.8% on quarter three 2023 diluted earnings per share.
  • Quarter three adjusted net income was $279.2 million or $3.35 per diluted share, an increase of 1.5% on quarter three 2023 adjusted diluted earnings per share.
  • Net debt balance of $2.7 billion at September 30, 2024 with net debt to adjusted EBITDA ratio of 1.6x.
  • Cash generated from operating activities for the quarter was $402.7 million, an increase of 17.9% on quarter three 2023.
  • $100.0 million worth of stock repurchased at an average price of $297.
  • Updating full-year 2024 financial revenue guidance in the range of $8,260 - $8,300 million, representing a year over year increase of 1.7% to 2.2%. Updating full-year 2024 adjusted earnings per share* guidance in the range of $13.90 - $14.10, representing a year over year increase of 8.7% to 10.2%. Adjusted earnings per share to exclude amortization, stock compensation, restructuring, foreign exchange and transaction-related / integrated-related adjustments.

DUBLIN--(BUSINESS WIRE)--Oct. 23, 2024-- ICON plc (NASDAQ: ICLR), a world-leading healthcare intelligence and clinical research organization, today reported its financial results for the third quarter ended September 30, 2024.

CEO, Dr. Steve Cutler commented, “ICON’s results for the third quarter did not meet the expectations we had previously provided due to specific customer and division-level impacts. Our revenue shortfall was attributable to more material headwinds from two large customers undergoing budget cuts and changes in their development model, lower than anticipated vaccine-related activity, and ongoing cautiousness from biotech customers resulting in award and study delays.

We expect these impacts to continue into quarter four, and as a result, we are taking decisive action to realign our resources to forecasted activity. With these actions, we are updating our full year adjusted earnings per share guidance to between $13.90 and $14.10, representing year over year growth of 8.7% to 10.2%.

The fundamentals of our business remain strong and we saw further success in the quarter with a new top 10 pharma strategic partnership win, which has already started contributing to our pipeline of awards. This win, coupled with other recently executed partnerships, supports our outlook for growth over the medium term.”

Third Quarter 2024 Results

Gross business wins in the third quarter were $2,832 million and cancellations were $504 million. This resulted in net business wins of $2,328 million and a book to bill of 1.15.

Revenue for the third quarter was $2,030 million. This represents a decrease of 1.2% on prior year revenue or 1.0% on a constant currency basis.

GAAP net income was $197.1 million resulting in $2.36 diluted earnings per share in quarter three 2024 compared to $1.97 diluted earnings per share in quarter three 2023, an increase of 19.8% year over year. Adjusted net income for the quarter was $279.2 million resulting in an adjusted diluted earnings per share of $3.35 compared to $3.30 per share for the third quarter 2023.

Adjusted EBITDA for the third quarter was $418.8 million or 20.6% of revenue, a year-on-year decrease of 3.2%.

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

Cash generated from operating activities for the quarter was $402.7 million. During the quarter $43.3 million was spent on capital expenditure. At September 30, 2024, the Group had cash and cash equivalents of $695.5 million, compared to cash and cash equivalents of $506.6 million at June 30, 2024 and $313.1 million at September 30, 2023$100.0 million worth of stock was repurchased at an average price of $297$50.0 million of the revolving credit facility was drawn down in the quarter and $50.0 million was repaid. Additionally, $7.4 million of Term Loan B payments were made during the quarter. Net indebtedness as at September 30, 2024 was $2.7 billion.

Year to date 2024 Results

Gross business wins year to date were $9,017 million and cancellations were $1,457 million. This resulted in net business wins of $7,560 million and a book to bill of 1.21.

Year to date revenue was $6,240.6 million. This represents a year on year increase of 3.1% or 3.2% on a constant currency basis.

GAAP net income year to date was $531.5 million resulting in $6.38 diluted earnings per share compared to $4.79 per share for the equivalent prior year period. This represents an increase of 33.2%. Adjusted net income was $880.3 million resulting in an adjusted diluted earnings per share of $10.57 compared to $9.31 per share for the equivalent prior year period. This represents an increase of 13.5%.

Adjusted EBITDA year to date was $1,313.2 million or 21.0% of revenue, a year on year increase of 5.4%.

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 October 24, 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 42,250 employees in 106 locations in 55 countries as at September 30, 2024. For further information about ICON, visit: www.iconplc.com.

ICON/ICLR-F

 

ICON plc

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND SEPTEMBER 30, 2023

(UNAUDITED)

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

September 30
2024

 

September 30
2023

 

September 30
2024

 

September 30
2023

 

(in thousands except share and per share data)

 

 

 

 

 

 

 

 

Revenue

$

2,030,030

 

 

$

2,055,099

 

 

$

6,240,575

 

 

$

6,053,928

 

 

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

 

 

Direct costs (excluding depreciation and amortization)

 

1,438,616

 

 

 

1,449,136

 

 

 

4,403,583

 

 

 

4,274,222

 

Selling, general and administrative

 

205,095

 

 

 

185,187

 

 

 

576,903

 

 

 

572,999

 

Depreciation and amortization

 

93,029

 

 

 

146,032

 

 

 

391,845

 

 

 

436,217

 

Transaction and integration related

 

7,856

 

 

 

10,433

 

 

 

21,667

 

 

 

34,516

 

Restructuring

 

 

 

 

 

 

 

45,789

 

 

 

45,390

 

Total costs and expenses

 

1,744,596

 

 

 

1,790,788

 

 

 

5,439,787

 

 

 

5,363,344

 

 

 

 

 

 

 

 

 

Income from operations

 

285,434

 

 

 

264,311

 

 

 

800,788

 

 

 

690,584

 

Interest income

 

2,434

 

 

 

1,273

 

 

 

5,601

 

 

 

3,294

 

Interest expense

 

(53,303

)

 

 

(83,908

)

 

 

(185,808

)

 

 

(255,665

)

 

 

 

 

 

 

 

 

Income before income tax expense

 

234,565

 

 

 

181,676

 

 

 

620,581

 

 

 

438,213

 

Income tax expense

 

(37,437

)

 

 

(18,011

)

 

 

(89,105

)

 

 

(41,913

)

 

 

 

 

 

 

 

 

Income before share of losses from equity method investments

 

197,128

 

 

 

163,665

 

 

 

531,476

 

 

 

396,300

 

Share of losses from equity method investments

 

 

 

 

 

 

 

 

 

 

(383

)

Net income

$

197,128

 

 

$

163,665

 

 

$

531,476

 

 

$

395,917

 

 

 

 

 

 

 

 

 

Net income per Ordinary Share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

2.38

 

 

$

1.99

 

 

$

6.43

 

 

$

4.83

 

Diluted

$

2.36

 

 

$

1.97

 

 

$

6.38

 

 

$

4.79

 

 

 

 

 

 

 

 

 

Weighted average number of Ordinary Shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

82,831,300

 

 

 

82,215,627

 

 

 

82,716,842

 

 

 

82,001,500

 

Diluted

 

83,445,827

 

 

 

82,972,888

 

 

 

83,305,441

 

 

 

82,737,073

 

                
    

ICON plc

CONDENSED CONSOLIDATED BALANCE SHEETS

AS AT SEPTEMBER 30, 2024 AND DECEMBER 31, 2023

(UNAUDITED)

    

 

September 30
2024

 

December 31
2023

ASSETS

(in thousands)

Current assets:

 

 

 

Cash and cash equivalents

$

695,507

 

 

$

378,102

 

Available for sale investments

 

 

 

 

1,954

 

Accounts receivable, net of allowance for credit losses

 

1,396,080

 

 

 

1,790,322

 

Unbilled revenue

 

1,361,198

 

 

 

951,936

 

Other receivables

 

82,760

 

 

 

65,797

 

Prepayments and other current assets

 

140,536

 

 

 

132,105

 

Income taxes receivable

 

102,931

 

 

 

91,254

 

Total current assets

$

3,779,012

 

 

$

3,411,470

 

 

 

 

 

Non-current assets:

 

 

 

Property, plant and equipment

 

365,726

 

 

 

361,184

 

Goodwill

 

9,085,447

 

 

 

9,022,075

 

Intangible assets

 

3,605,814

 

 

 

3,855,865

 

Operating right-of-use assets

 

156,955

 

 

 

140,333

 

Other receivables

 

88,445

 

 

 

78,470

 

Deferred tax asset

 

75,993

 

 

 

73,662

 

Investments in equity

 

53,720

 

 

 

46,804

 

Total Assets

$

17,211,112

 

 

$

16,989,863

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

106,172

 

 

$

131,584

 

Unearned revenue

 

1,585,257

 

 

 

1,654,507

 

Other liabilities

 

1,045,134

 

 

 

915,399

 

Income taxes payable

 

52,585

 

 

 

13,968

 

Current bank credit lines, loan facilities and notes

 

29,762

 

 

 

110,150

 

Total current liabilities

$

2,818,910

 

 

$

2,825,608

 

 

 

 

 

Non-current liabilities:

 

 

 

Non-current bank credit lines, loan facilities and notes

 

3,402,368

 

 

 

3,665,439

 

Lease liabilities

 

145,714

 

 

 

126,321

 

Non-current other liabilities

 

50,157

 

 

 

45,998

 

Non-current income taxes payable

 

201,135

 

 

 

186,654

 

Deferred tax liability

 

818,329

 

 

 

899,100

 

Commitments and contingencies

 

 

 

 

 

Total Liabilities

$

7,436,613

 

 

$

7,749,120

 

 

 

 

 

Shareholders' Equity:

 

 

 

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

 

 

 

82,559,366 shares issued and outstanding at September 30, 2024 and

 

 

 

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

 

6,703

 

 

 

6,699

 

Additional paid‑in capital

 

7,011,547

 

 

 

6,942,669

 

Other undenominated capital

 

1,184

 

 

 

1,162

 

Accumulated other comprehensive loss

 

(110,062

)

 

 

(143,506

)

Retained earnings

 

2,865,127

 

 

 

2,433,719

 

Total Shareholders' Equity

$

9,774,499

 

 

$

9,240,743

 

Total Liabilities and Shareholders' Equity

$

17,211,112

 

 

$

16,989,863

 

        
  

ICON plc

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024 AND SEPTEMBER 30, 2023

(UNAUDITED)

  

 

Nine Months Ended

 

September 30
2024

 

September 30
2023

 

(in thousands)

Cash flows provided by operating activities:

 

 

 

Net income

$

531,476

 

 

$

395,917

 

 

 

 

 

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

 

 

 

Depreciation and amortization expense

 

391,845

 

 

 

436,217

 

Impairment of operating right-of-use assets and related property, plant and equipment

 

12,559

 

 

 

8,845

 

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

 

29,820

 

 

 

33,979

 

Loss on equity method investments

 

 

 

 

383

 

Acquisition-related gain

 

 

 

 

(6,160

)

Amortization of financing costs and debt discount

 

22,066

 

 

 

12,485

 

Stock compensation expense

 

41,183

 

 

 

47,303

 

Deferred tax benefit

 

(86,579

)

 

 

(114,487

)

Unrealized foreign exchange movements

 

34,018

 

 

 

(7,670

)

Other non-cash items

 

26,828

 

 

 

21,966

 

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

 

352,795

 

 

 

(139,096

)

Unbilled revenue

 

(423,533

)

 

 

14,370

 

Unearned revenue

 

(72,930

)

 

 

158,269

 

Other net assets

 

88,790

 

 

 

(141,425

)

Net cash provided by operating activities

 

948,338

 

 

 

720,896

 

 

 

 

 

Cash flows used in investing activities:

 

 

 

Purchase of property, plant and equipment

 

(106,772

)

 

 

(87,980

)

Purchase of subsidiary undertakings (net of cash acquired)

 

(85,629

)

 

 

(5,100

)

Movement of available for sale investments

 

1,954

 

 

 

(241

)

Proceeds from investments in equity

 

2,671

 

 

 

 

Purchase of investments in equity

 

(10,131

)

 

 

(10,829

)

Net cash used in investing activities

 

(197,907

)

 

 

(104,150

)

 

 

 

 

Cash flows used in financing activities:

 

 

 

New Notes issue costs

 

(12,678

)

 

 

 

Drawdown of credit lines and loan facilities

 

2,242,480

 

 

 

305,000

 

Repayment of credit lines and loan facilities

 

(2,595,323

)

 

 

(930,000

)

Proceeds from exercise of equity compensation

 

32,379

 

 

 

36,517

 

Share issue costs

 

(17

)

 

 

(14

)

Repurchase of ordinary shares

 

(100,000

)

 

 

 

Share repurchase costs

 

(68

)

 

 

 

Net cash used in financing activities

 

(433,227

)

 

 

(588,497

)

 

 

 

 

Effect of exchange rate movements on cash

 

201

 

 

 

(3,952

)

Net increase in cash and cash equivalents

 

317,405

 

 

 

24,297

 

Cash and cash equivalents at beginning of period

 

378,102

 

 

 

288,768

 

Cash and cash equivalents at end of period

$

695,507

 

 

$

313,065

 

        
    

ICON plc

RECONCILIATION OF NON-GAAP MEASURES

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND SEPTEMBER 30, 2023

(UNAUDITED)

    

 

Three Months Ended

 

Nine Months Ended

 

September 30
2024

 

September 30
2023

 

September 30
2024

 

September 30
2023

 

(in thousands except share and per share data)

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

 

 

 

 

 

 

Net income

$

197,128

 

 

$

163,665

 

 

$

531,476

 

 

$

395,917

 

Share of losses from equity method investments

 

 

 

 

 

 

 

 

 

 

383

 

Income tax expense

 

37,437

 

 

 

18,011

 

 

 

89,105

 

 

 

41,913

 

Net interest expense

 

50,869

 

 

 

82,635

 

 

 

180,207

 

 

 

252,371

 

Depreciation and amortization

 

93,029

 

 

 

146,032

 

 

 

391,845

 

 

 

436,217

 

Stock-based compensation expense (a)

 

13,038

 

 

 

16,465

 

 

 

41,183

 

 

 

47,822

 

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

 

19,434

 

 

 

(4,706

)

 

 

11,960

 

 

 

(2,465

)

Oncacare (gain) (g)

 

 

 

 

 

 

 

 

 

 

(6,160

)

Restructuring (c)

 

 

 

 

 

 

 

45,789

 

 

 

45,390

 

Transaction and integration related costs (d)

 

7,856

 

 

 

10,433

 

 

 

21,667

 

 

 

34,516

 

Adjusted EBITDA

$

418,791

 

 

$

432,535

 

 

$

1,313,232

 

 

$

1,245,904

 

 

 

 

 

 

 

 

 

Adjusted net income and adjusted diluted net income per Ordinary Share

 

 

 

 

 

 

 

Net income

$

197,128

 

 

$

163,665

 

 

$

531,476

 

 

$

395,917

 

Income tax expense

 

37,437

 

 

 

18,011

 

 

 

89,105

 

 

 

41,913

 

Amortization

 

58,026

 

 

 

114,573

 

 

 

291,013

 

 

 

343,868

 

Stock-based compensation expense (a)

 

13,038

 

 

 

16,465

 

 

 

41,183

 

 

 

47,822

 

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

 

19,434

 

 

 

(4,706

)

 

 

11,960

 

 

 

(2,465

)

Restructuring (c)

 

 

 

 

 

 

 

45,789

 

 

 

45,390

 

Oncacare (gain) (g)

 

 

 

 

 

 

 

 

 

 

(6,160

)

Transaction and integration related costs (d)

 

7,856

 

 

 

10,433

 

 

 

21,667

 

 

 

34,516

 

Transaction-related financing costs (e)

 

1,462

 

 

 

4,587

 

 

 

22,066

 

 

 

12,486

 

Adjusted tax expense (f)

 

(55,173

)

 

 

(49,100

)

 

 

(173,953

)

 

 

(142,617

)

Adjusted net income

$

279,208

 

 

$

273,928

 

 

$

880,306

 

 

$

770,670

 

 

 

 

 

 

 

 

 

Diluted weighted average number of Ordinary Shares outstanding

 

83,445,827

 

 

 

82,972,888

 

 

 

83,305,441

 

 

 

82,737,073

 

 

 

 

 

 

 

 

 

Adjusted diluted net income per Ordinary Share

$

3.35

 

 

$

3.30

 

 

$

10.57

 

 

$

9.31

 

                

(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 losses/(gains), net relates to gains or losses that arise in connection with the revaluation, or settlement, 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 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.

(g)

On April 20, 2023, the Company completed the purchase of the majority investor’s 51% majority voting share capital of Oncacare Limited (“Oncacare”). This gave rise to an acquisition-related gain of $6.2 million. This gain was excluded from adjusted EBITDA and adjusted net income.

 

Investor Relations +1 888 381 7923 
Brendan Brennan Chief Financial Officer 
Kate Haven Vice President Investor Relations +1 888 381 7923 
http://www.iconplc.com

Source: ICON plc



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