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ICON Reports Third Quarter 2017 Results

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Highlights

  • Record gross and net business wins of $691 million and $581 million
    respectively; gross book to bill of 1.57 and net book to bill of 1.32.
    Backlog of business grew 13% year on year to $4.78 billion.
  • Net revenue increased 4.8% to $440 million compared to the same
    quarter last year, 3.2% on a constant currency basis.
  • Top customer revenue concentration reduced from 25.2% of revenue in Q3
    2016 to 16.6% in Q3 2017. Outside our top customer revenue growth over
    the last twelve months increased by 17%.
  • Income from operations in the quarter increased by 4.6% to $84.9
    million, or 19.3% of revenue, compared to $81.2 million or 19.3% for
    the same quarter last year.
  • Earnings per share increased by 13.4% to $1.35 per share on a diluted
    basis compared to a pro-forma $1.19 per diluted share for the same
    quarter last year.
  • Earnings guidance for 2017 increased from a range of $5.18 - $5.38 to
    $5.30 - $5.40 and revenue guidance re-affirmed in the range of $1,740
    – 1,770 million.

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 third quarter ended September 30, 2017.

Gross business wins in the third quarter were $691 million and
cancellations in the quarter were $110 million, resulting in net
business wins of $581 million, a net book to bill of 1.32.

In the third quarter net revenue grew 4.8% year on year to $440 million
from $420 million in the same quarter last year. This represented 3.2%
constant currency growth with revenue outside of our top customer
growing 17% year over year.

Income from operations in the quarter increased by 4.6% to $84.9
million, or 19.3% of revenue, compared to $81.2 million or 19.3% on a
non GAAP basis for the same quarter last year.

Net income in the quarter increased by 10% to $74.2 million compared
with $67.4 million on a non GAAP basis in the same quarter last year.

Earnings per share increased to $1.35 per share on a diluted basis, from
$1.19 per share on a non GAAP basis for the same quarter last year, an
increase of 13.4%.

Year to date revenue for 2017 increased by 5.8% to $1,303.3 million from
$1,231.4 million in 2016.

Year to date income from operations for 2017, before non-recurring
charges, increased by 9.0% to $256.3 million or 19.7% of revenue
compared with $235.2 million or 19.1% of revenue in the previous year.

Year to date net income for 2017, before non-recurring charges,
increased by 11.3% to $217.2 million compared with $195.1 million last
year.

Year to date earnings per share, before non-recurring charges, increased
to $3.96 per share on a diluted basis from $3.45 per diluted share last
year, an increase of 14.8%.

Day's sales outstanding, comprising accounts receivable and unbilled
revenue less payments on account, were 50 days at September 30, 2017,
compared with 53 days at the end of June 2017 and 50 days at the end of
September 2016.

Cash generated from operating activities for the quarter was $108.8
million. Capital expenditure for the quarter was $8.5 million and the
acquisition of Mapi Group was completed for an initial cash
consideration of $144.1 million. As a result, at September 30, 2017, the
company had net debt of $56 million, compared to net debt of $34 million
at June 30, 2017 and net debt of $98 million at the end of September
2016.

CEO Dr. Steve Cutler commented, "We continue to execute well on our
strategic plans, and quarter three represented another very strong
quarter for ICON. We achieved record gross and net business wins of $691
million and $581 million respectively, resulting in a gross book to bill
of 1.57 and a net book to bill of 1.32. We grew our backlog by 13% year
on year to nearly $5 billion, revenues grew 4.8% to $440 million and our
top customer concentration reduced further to 16.6% from 25.2% last
year. Revenue growth outside our top customer was 17% year over year. In
addition, earnings per share grew 13.4% year over year to $1.35. Levels
of business opportunity continue to be strong and we remain optimistic
for the future as we continue to strive to be the CRO partner of choice
for the biopharma industry. We are therefore increasing our 2017
earnings guidance from a range of $5.18 - $5.38 to $5.30 - $5.40 and
reaffirming our revenue guidance to be in the range of $1,740 - $1,770
million."

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 third quarter conference call today, October 26, 2017
at 10:00 EDT [15:00 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 97 locations in 38 countries and
has approximately 13,100 employees. Further information is available at www.iconplc.com.

 

ICON plc

Consolidated Income Statements (Unaudited)

(Before restructuring and other items)



Three and Nine Months ended September 30, 2017 and September
30, 2016

(Dollars, in thousands, except share and per share data)

   
Three Months Ended Nine Months Ended

September
30,

 

September
30,

September
30,

 

September
30,

2017

2016

2017

2016

Revenue:
Gross revenue 596,169 622,261 1,766,016 1,754,491
Reimbursable expenses   (155,846)   (202,060)   (462,716)   (523,138)
 
Net revenue 440,323 420,201 1,303,300 1,231,353
 
Costs and expenses:
Direct costs (259,672) (243,244) (760,175) (709,831)
Selling, general and administrative expense (79,433) (81,235) (241,655) (242,192)
Depreciation and amortization   (16,280)   (14,543)   (45,123)   (44,120)
 
Total costs and expenses   (355,385)   (339,022)   (1,046,953)   (996,143)
 
Income from operations 84,938 81,179 256,347 235,210
 
Net interest expense   (2,545)   (2,765)   (7,769)   (8,485)
 
Income before provision for income taxes 82,393 78,414 248,578 226,725
 
Provision for income taxes   (8,239)   (10,979)   (31,414)   (31,669)
 
Net income   74,154   67,435   217,164   195,056
 
Net income per Ordinary Share:
 
Basic   $1.37   $1.21   $4.01   $3.52
 
Diluted   $1.35   $1.19   $3.96   $3.45
 
Weighted average number of Ordinary Shares outstanding:
 
Basic   54,109,566   55,734,773   54,110,022   55,355,020
 
Diluted   54,756,184   56,645,239   54,840,112   56,475,319
 
   

Consolidated Income Statements (Unaudited)

(US GAAP)



Three and Nine Months ended September 30, 2017 and September
30, 2016

(Dollars, in thousands, except share and per share data)

 
Three Months Ended Nine Months Ended

September
30,

 

September
30,

September
30,

 

September
30,

2017

2016

2017

2016

Revenue:
Gross revenue 596,169 622,261 1,766,016 1,754,491
Reimbursable expenses   (155,846)   (202,060)   (462,716)   (523,138)
 
Net revenue 440,323 420,201 1,303,300 1,231,353
 
Costs and expenses:
Direct costs 259,672 243,244 760,175 709,831
Selling, general and administrative expense 79,433 81,235 241,655 242,192
Depreciation and amortization 16,280 14,543 45,123 44,120
Restructuring costs   -   4,065   7,753   8,159
 
Total costs and expenses   355,385   343,087   1,054,706   1,004,302
 
Income from operations 84,938 77,114 248,594 227,051
 
Net interest expense   (2,545)   (2,765)   (7,769)   (8,485)
 
Income before provision for income taxes 82,393 74,349 240,825 218,566

Provision for income taxes

 

(8,239)

 

(10,470)

 

(30,445)

 

(30,649)

 
Net income   74,154   63,879   210,380   187,917
 
Net income per Ordinary Share:
 
Basic   $1.37   $1.15   $3.89   $3.39
 
Diluted   $1.35   $1.13   $3.84   $3.33
 
Weighted average number of Ordinary Shares outstanding:
 
Basic   54,109,566   55,734,773   54,110,022   55,355,020
 
Diluted   54,756,184   56,645,239   54,840,112   56,475,319
 
       

ICON plc

Summary Balance Sheet Data

September 30, 2017 and June 30, 2017

(Dollars, in thousands)

 
September 30, June 30,
2017 2017
(Unaudited) (Unaudited)
 
 
Cash and short-term investments 292,478 314,918
Debt (348,793) (348,698)
Net (debt)/cash (56,315) (33,780)
 
Accounts receivable 344,898 359,899
Unbilled revenue 255,349 249,234
Payments on account (261,503) (261,484)
Total 338,744 347,649
 
Working Capital 474,761 538,473
 
Total Assets 2,053,349 1,904,310
 
Shareholder's Equity 1,127,554 1,029,592
 

ICON/ICLR-F

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