Market Overview

ICON Reports Second Quarter 2018 Results

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Highlights

  • Excluding the impact of ASC 606, record net business wins in the
    quarter of $600 million; a book to bill of 1.27.
  • Excluding the impact of ASC 606, closing backlog of $5.2 billion, an
    increase of 16% year on year.
  • Quarter 2 reported revenue of $641.6 million. Excluding the impact of
    ASC 606, quarter 2 revenue was $473.9 million, representing a 10%
    increase year on year.
  • Reported income from operations before non-recurring charges was $94.4
    million, or 14.7% of revenue. Excluding the impact of ASC 606 income
    from operations before non-recurring charges was $96.0 million or
    20.2% of revenue, a 12% increase year on year.
  • Reported earnings per share before non-recurring charges of $1.51.
    Year to date earnings per share before non-recurring charges of $2.93,
    an increase of 13% on 2017. Excluding the impact of ASC 606, earnings
    per share before non-recurring items was $1.54, an 18% increase year
    on year.
  • Revenue guidance increased from a range of $2,520 - $2,640 million to
    a range of $2,560 - $2,640 million. Earnings guidance increased from a
    range of $5.91 - $6.11 to a range of $5.98 - $6.12.

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, 2018.

CEO Dr. Steve Cutler commented, "During the quarter we delivered a
new record $600 million of net business wins, representing a quarterly
book to bill of 1.27. Market demand fundamentals continue to remain
positive and supported by a strong trailing twelve month book to bill of
1.29, our backlog grew to $5.2 billion, an increase of 16% year over
year. In quarter 2 revenues grew 10% over the same period in 2017 and
along with continued efficient cost management and a quarterly effective
tax rate of 10%, we delivered further value to our shareholders with
earnings per share increasing by 18%. We are increasing our revenue
guidance to a range of $2,560 - $2,640 million and our earnings guidance
to a range of $5.98 - $6.12."

Second Quarter 2018 Results

Excluding the impact of ASC 606, gross business wins in the second
quarter were $720 million and cancellations were $120 million. This
resulted in net business wins of $600 million, a book to bill of 1.27.

Reported revenue for quarter 2 was $641.6 million. Excluding the impact
of ASC 606, quarter 2 revenue increased to $473.9 million from $431.0
million in the same quarter last year, an increase of 10.0%.

Reported income from operations in the quarter before non-recurring
charges was $94.4 million or 14.7% of revenue. Excluding the impact of
ASC 606, income from operations before non-recurring charges increased
by 11.9% to $96.0 million, or 20.2% of revenue, compared to $85.8
million or 19.9% for the same quarter last year.

Reported net income for the quarter before non-recurring charges was
$82.9 million or 12.9% of revenue. Excluding the impact of ASC 606, net
income before non-recurring charges increased by 17.7% to $84.3 million,
compared with $71.6 million in the same quarter last year.

Reported earnings per share on a diluted basis before non-recurring
charges was $1.51. Excluding the impact of ASC 606, diluted earnings per
share before non-recurring charges increased by 17.6% to $1.54, compared
to $1.31 per share for the same quarter last year.

Year to date 2018 Results

Excluding the impact of ASC 606, gross business wins year to date were
$1,423 million and cancellations were $233 million. This resulted in net
business wins of $1,190 million, a book to bill of 1.27.

Year to date reported revenue was $1,261.7 million. Excluding the impact
of ASC 606, year to date revenue increased to $936.5 million from $863.0
million in the same quarter last year, an increase of 8.5%.

Reported income from operations year to date, before non-recurring
charges was $186.1 million or 14.7% of revenue. Excluding the impact of
ASC 606, income from operations before non-recurring charges increased
by 10.1% to $188.7 million, or 20.2% of revenue, compared to $171.4
million or 19.9% for the same quarter last year.

Reported net income year to date, before non-recurring charges was
$161.0 million or 12.8% of revenue. Excluding the impact of ASC 606, net
income before non-recurring charges increased by 14.2% to $163.3
million, compared with $143.0 million in the same quarter last year.

Reported earnings per share on a diluted basis before non-recurring
charges was $2.93. Excluding the impact of ASC 606, diluted earnings per
share before non-recurring charges increased by 14.6% to $2.98, compared
to $2.60 per share for the same quarter last year.

We continued our share repurchase program in the quarter, buying $16.0
million worth of stock at an average price of $134.22 per share.

Days sales outstanding, comprising accounts receivable and unbilled
revenue less payments on account, were 49 days at June 30, 2018,
compared with 51 days at the end of March 2018 and 53 days at the end of
June 2017.

Cash generated from operating activities for the quarter was $39.2
million. Capital expenditure for the quarter was $8.9 million. As a
result, at June 30, 2018, the company had net cash of $23.9 million,
compared to net cash of $4.6 million at March 31, 2018 and net debt of
$33.8 million at the end of June 2017.

During the quarter the company recorded a charge of $12.5 million in
relation to restructuring costs. US GAAP income from operations after
these items amounted to $81.9 million or 12.8% of revenue. US GAAP net
income for the quarter was $71.9 million or $1.31 per diluted share.

The new revenue recognition standard (ASU No. 2014-09) ‘Revenue from
Contracts with Customers' was effective for ICON plc from January 1,
2018. ICON has elected to adopt the new standard under the cumulative
effect transition method. Under this transition method, the new standard
is applied from January 1, 2018 without restatement of comparative
period amounts. The cumulative effect of initially applying the new
standard is reflected as an adjustment to opening equity at the date of
application. Results for the three and six months ended June 2017 are
therefore presented under the previous revenue recognition accounting
principles.

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 tomorrow, July 26,
2018 at 09:00 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 93 locations in 37 countries and
has approximately 13,650 employees. Further information is available at www.iconplc.com.

Source: ICON plc
Contact: Investor Relations +1888 381 7923 or
Brendan
Brennan Chief Financial Officer +353 1 291 2000
Jonathan Curtain
Vice President Corporate Finance and Investor Relations +1 215 616 3000

All at ICON.

ICON plc
Condensed Consolidated Statements of Operations
(Before
restructuring and other items)

Three and Six Months ended
June 30, 2018 and June 30, 2017

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

(Unaudited)

  Three Months Ended   Six Months Ended

June 30,

 

June 30,

June 30,

 

June 30,

2018

2017

2018

2017

Revenue:
Revenue 641,610 591,781 1,261,735 1,169,847
Reimbursable expenses       (160,758)   (306,870)
 
431,023 862,977
 
Costs and expenses:
Direct costs

- Reimbursable expenses

(169,313) - (328,066) -

- Other direct costs

(279,913) (250,044) (551,752) (500,503)
Selling, general and administrative expense (80,936) (80,833) (161,851) (162,222)
Depreciation and amortization   (17,046)   (14,395) (33,944) (28,843)
 
Total costs and expenses   (547,208)   (345,272) (1,075,613) (691,568)
 
Income from operations 94,402 85,751 186,122 171,409
 
Net interest expense   (2,285)   (2,600) (5,257) (5,224)
 
Income before provision for income taxes 92,117 83,151 180,865 166,185
 
Provision for income taxes   (9,212)   (11,550) (19,862) (23,175)
 
Net income   82,905   71,601 161,003 143,010
 
Net income per Ordinary Share:
 
Basic   $1.53   $1.33 $2.98 $2.64
 
Diluted   $1.51   $1.31 $2.93 $2.60
 
Weighted average number of Ordinary Shares outstanding:
 
Basic   54,109,702   53,846,544 54,017,631 54,109,800
 
Diluted   54,852,453   54,530,805 54,875,451 54,923,019

ICON plc
Condensed Consolidated Statements of Operations
(US
GAAP)

Three and Six Months ended June 30, 2018 and June 30,
2017

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

(Unaudited)

  Three Months Ended   Six Months Ended

June 30,

 

June 30,

June 30,

 

June 30,

2018

2017

2018

2017

Revenue:
Revenue 641,610 591,781 1,261,735 1,169,847
Reimbursable expenses       (160,758)   (306,870)
 
431,023 862,977
 
Costs and expenses:
Direct costs

- Reimbursable expenses

(169,313) - (328,066) -

- Other direct costs

(279,913) (250,044) (551,752) (500,503)
Selling, general and administrative expense (80,936) (80,833) (161,851) (162,222)
Depreciation and amortization (17,046) (14,395) (33,944) (28,843)
Restructuring costs   (12,490)   (7,753) (12,490) (7,753)
 
Total costs and expenses   (559,698)   (353,025) (1,088,103) (699,321)
 
Income from operations 81,912 77,998 173,632 163,656
 
Net interest expense   (2,285)   (2,600) (5,257) (5,224)
 
Income before provision for income taxes 79,627 75,398 168,375 158,432
 
Provision for income taxes   (7,759)   (10,581) (18,409) (22,206)
 
Net income   71,868   64,817 149,966 136,226
 
Net income per Ordinary Share:
 
Basic   $1.33   $1.20 $2.78 $2.52
 
Diluted   $1.31   $1.19 $2.73 $2.48
 
Weighted average number of Ordinary Shares outstanding:
 
Basic   54,109,702   53,846,544 54,017,631 54,109,800
 
Diluted   54,852,453   54,530,805 54,875,451 54,923,019

ICON plc
Impact of the adoption of ASC 606 on revenue
Three
and Six Months ended June 30, 2018 and June 30, 2017

(Dollars,
in thousands)

(Unaudited)

    Three Months Ended June 30, 2018  

 

 

 

Three Months, Ended June 30, 2017

As Reported   ASC 606 Adjustments   Balances without adoption of ASC 606

 

 

As Reported

Revenue:
Revenue 641,610 1,614 643,224 591,781
Reimbursable expenses   (169,313) (169,313) (160,758)
641,610 (167,699) 473,911 431,023

    Six Months Ended June 30, 2018  

 

 

 

Six Months, Ended June 30, 2017

As Reported   ASC 606 Adjustments   Balances without adoption of ASC 606

 

 

As Reported

Revenue:
Revenue 1,261,735 2,845 1,264,580 1,169,847
Reimbursable expenses   (328,066) (328,066) (306,870)
1,261,735 (325,221) 936,514 862,977

ICON plc
Summary Balance Sheet Data
June
30, 2018 and March 31, 2018

(Dollars, in thousands)

  June 30,   March 31,
2018 2018
(Unaudited) (Unaudited)
 
 
Cash and short-term investments 372,996 353,542
Debt (349,074) (348,980)
Net cash/(debt) 23,922 4,562
 
Net Accounts Receivable 352,332 354,275
 
Working Capital 600,398 535,340
 
Total Assets 2,215,512 2,219,445
 
Shareholder's Equity 1,238,748 1,204,995

ICON/ICLR-F

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