Market Overview

ICON Reports Second Quarter 2017 Results

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Highlights

  • Record net business wins of $563 million; net book to bill of 1.31.
    Backlog of business grew 10% year on year to $4.44 billion.
  • Net revenue increased 5.0% to $431 million compared to the same
    quarter last year, 6.0% on a constant currency basis.
  • Top customer revenue concentration reduced from 28% of revenue in Q2
    2016 to 19.9% in Q2 2017.
  • Income from operations, before non-recurring charges, increased 10% to
    19.9% of revenue compared to the same quarter last year.
  • Earnings per share, before non-recurring charges, increased 15% to
    $1.31 year on year.
  • Guidance increased to reflect the acquisition of Mapi Group and
    revised tax rate for the second half of 2017. Earnings guidance
    increased from a range of $5.06 - $5.26 to $5.18 - $5.38. Revenue
    guidance increased from a range of $1.70 - $1.75 billion to $1.74 -
    $1.77 billion.

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

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