Market Overview

ICON Reports Third Quarter 2018 Results

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Highlights

  • Excluding the impact of ASC 606, record net business wins in the
    quarter of $605 million, a book to bill of 1.27.
  • Excluding the impact of ASC 606, closing backlog of $5.3 billion, an
    increase of 10.5% year on year.
  • Quarter 3 reported revenue of $655.0 million. Excluding the impact of
    ASC 606, quarter 3 revenue was $476.4 million, representing an 8.2%
    increase year on year.
  • Reported income from operations was $97.9 million, or 15.0% of
    revenue. Excluding the impact of ASC 606, income from operations was
    $98.8 million, a 16.4% increase year on year.
  • Reported earnings per share of $1.54. Year to date earnings per share
    before non-recurring charges of $4.47. Excluding the impact of ASC
    606, earnings per share was $1.55, a 14.8% increase year on year.

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, 2018.

CEO Dr. Steve Cutler commented, "Quarter 3 was another strong quarter
for ICON.
Net business wins were a record $605 million,
representing a book to bill of 1.27 and our backlog grew by 11% over
last year to $5.3 billion. As a result, revenue grew over 8% to $476
million compared to the same quarter last year and earnings per share
increased by 15% to $1.55. I am very pleased with our continued ability
to execute our strategic plans which position us well for sustainable
revenue and EPS growth."

Third Quarter 2018 Results

Excluding the impact of ASC 606, gross business wins in the third
quarter were $716 million and cancellations were $111 million. This
resulted in net business wins of $605 million, a book to bill of 1.27.

Reported revenue for quarter 3 was $655.0 million. Excluding the impact
of ASC 606, quarter 3 revenue increased to $476.4 million from $440.3
million in the same quarter last year, an increase of 8.2%.

Reported income from operations in the quarter was $97.9 million or
15.0% of revenue. Excluding the impact of ASC 606, income from
operations increased by 16.4% to $98.8 million, or 20.7% of revenue,
compared to $84.9 million or 19.3% for the same quarter last year.

Reported net income for the quarter was $84.5 million or 12.9% of
revenue. Excluding the impact of ASC 606, net income increased by 15.1%
to $85.3 million, compared with $74.2 million in the same quarter last
year.

Reported earnings per share on a diluted basis was $1.54. Excluding the
impact of ASC 606, diluted earnings per share increased by 14.8% to
$1.55, compared to $1.35 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
$2,139 million and cancellations were $344 million. This resulted in net
business wins of $1,795 million, a book to bill of 1.27.

Year to date reported revenue was $1,916.8 million. Excluding the impact
of ASC 606, year to date revenue increased to $1,412.9 million from
$1,303.3 million in the same quarter last year, an increase of 8.4%.

Reported income from operations year to date, before non-recurring
charges was $284.1 million or 14.8% of revenue. Excluding the impact of
ASC 606, income from operations before non-recurring charges increased
by 12.2% to $287.6 million, or 20.4% of revenue, compared to $256.3
million or 19.7% for the same quarter last year.

Reported net income year to date, before non-recurring charges was
$245.5 million or 12.8% of revenue. Excluding the impact of ASC 606, net
income before non-recurring charges increased by 14.5% to $248.7
million, compared with $217.2 million in the same quarter last year.

Reported earnings per share year to date on a diluted basis before
non-recurring charges was $4.47. Excluding the impact of ASC 606,
diluted earnings per share before non-recurring charges increased by
14.4% to $4.53, compared to $3.96 per share for the same quarter last
year.

Days sales outstanding, comprising accounts receivable and unbilled
revenue less payments on account, were 49 days at September 30, 2018,
compared with 49 days at the end of June 2018 and 50 days at the end of
September 2017.

Cash generated from operating activities for the quarter was $128.1
million. Capital expenditure for the quarter was $11.2 million. As a
result, at September 30, 2018, the company had net cash of $142.3
million, compared to net cash of $23.9 million at June 30, 2018 and net
debt of $56.3 million at the end of September 2017.

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 nine months ended September 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 third quarter conference call tomorrow, October 25th,
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 13,620 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 Nine Months ended September 30, 2018 and September 30, 2017

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

(Unaudited)

  Three Months Ended   Nine Months Ended
   
September September September September
30, 2018 30, 2017 30, 2018 30, 2017
Revenue:
Revenue 655,017 596,169 1,916,752 1,766,016
Reimbursable expenses   (155,846)   (462,716)
 
440,323 1,303,300
 
Costs and expenses:
Direct costs

- Reimbursable expenses

(179,642) - (507,708) -

- Other direct costs

(279,554) (259,672) (831,306) (760,175)
Selling, general and administrative expense (80,819) (79,433) (242,670) (241,655)
Depreciation and amortization (17,062) (16,280) (51,006) (45,123)
 
Total costs and expenses (557,077) (355,385) (1,632,690) (1,046,953)
 
Income from operations 97,940 84,938 284,062 256,347
 
Net interest expense (1,887) (2,545) (7,144) (7,769)
 
Income before provision for income taxes 96,053 82,393 276,918 248,578
 
Provision for income taxes (11,526) (8,239) (31,388) (31,414)
 
Net income 84,527 74,154 245,530 217,164
 
Net income per Ordinary Share:
 
Basic $1.55 $1.37 $4.54 $4.01
 
Diluted $1.54 $1.35 $4.47 $3.96
 
Weighted average number of Ordinary Shares outstanding:
 
Basic 54,368,656 54,109,566 54,134,639 54,110,022
 
Diluted 54,901,404 54,756,184 54,888,151 54,840,112

ICON plc

Condensed Consolidated Statements of Operations

(US GAAP)

Three and Nine Months ended September 30, 2018 and September 30, 2017

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

(Unaudited)

  Three Months Ended   Nine Months Ended
   
September September September September
30, 2018 30, 2017 30, 2018 30, 2017
Revenue:
Revenue 655,017 596,169 1,916,752 1,766,016
Reimbursable expenses   (155,846)   (462,716)
 
440,323 1,303,300
 
Costs and expenses:
Direct costs

- Reimbursable expenses

(179,642) - (507,708) -

- Other direct costs

(279,554) (259,672) (831,306) (760,175)
Selling, general and administrative expense (80,819) (79,433) (242,670) (241,655)
Depreciation and amortization (17,062) (16,280) (51,006) (45,123)
Restructuring costs - - (12,490) (7,753)
 
Total costs and expenses (557,077) (355,385) (1,645,180) (1,054,706)
 
Income from operations 97,940 84,938 271,572 248,594
 
Net interest expense (1,887) (2,545) (7,144) (7,769)
 
Income before provision for income taxes 96,053 82,393 264,428 240,825
 
Provision for income taxes (11,526) (8,239) (29,935) (30,445)
 
Net income 84,527 74,154 234,493 210,380
 
Net income per Ordinary Share:
 
Basic $1.55 $1.37 $4.33 $3.89
 
Diluted $1.54 $1.35 $4.27 $3.84
 
Weighted average number of Ordinary Shares outstanding:
 
Basic 54,368,656 54,109,566 54,134,639 54,110,022
 
Diluted 54,901,404 54,756,184 54,888,151 54,840,112

ICON plc

Impact of the adoption of ASC 606 on revenue

Three and Nine Months ended September 30, 2018 and September 30, 2017

(Dollars, in thousands)

(Unaudited)

    Three Months Ended September 30, 2018  

 

 

 

Three Months, Ended September 30, 2017

   
As Reported ASC 606 Adjustments Balances without adoption of ASC 606

 

 

As Reported

Revenue:
Revenue 655,017 1,022 656,039 596,169
Reimbursable expenses   (179,642) (179,642) (155,846)
655,017 (178,620) 476,397 440,323
    Nine Months Ended September 30, 2018  

 

 

 

Nine Months, Ended September 30, 2017

   
As Reported ASC 606 Adjustments Balances without adoption of ASC 606

 

 

As Reported

Revenue:
Revenue 1,916,752 3,867 1,920,619 1,766,016
Reimbursable expenses   (507,708) (507,708) (462,716)
1,916,752 (503,841) 1,412,911 1,303,300

ICON plc

Summary Balance Sheet Data

September 30, 2018 and June 30, 2018

(Dollars, in thousands)

  September 30,   June 30,
2018 2018
(Unaudited) (Unaudited)
 
 
Cash and short-term investments 491,482 372,996
Debt (349,169) (349,074)
Net cash/(debt) 142,313 23,922
 
Net Accounts Receivable 358,151 352,332
 
Working Capital 703,401 600,398
 
Total Assets 2,325,728 2,174,496
 
Shareholder's Equity 1,334,484 1,238,748

ICON/ICLR-F

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