ICON Reports First Quarter 2023 Results

Highlights

Net business wins in the quarter of $2,415 million; a net book to bill of 1.22.

Closing backlog of $21.2 billion, an increase of 2.4% on quarter four 2022 or an increase of 8.4% on quarter one 2022.

First quarter revenue of $1,978.6 million representing an increase of 4.0% on prior year revenue and 5.3% on a constant currency organic basis.

Quarter one adjusted EBITDA of $399.1 million or 20.2% of revenue, an increase of 17.2% on quarter one 2022.

GAAP net income attributable to the Group for quarter one of $116.7 million or $1.41 per diluted share.

Quarter one adjusted net income attributable to the Group was $239.8 million or $2.90 per diluted share, an increase of 5.1% on quarter one 2022 adjusted earnings per share.

$250 million repayment made on Term Loan B debt. Net debt balance of $4.2 billion with Net debt to adjusted EBITDA ratio of 2.8x.

Full year 2023 revenue guidance reaffirmed in the range of $7,940 – $8,340 million, representing a year-on-year increase of 2.6% to 7.7%, and full year 2023 adjusted earnings per share1 guidance in the range of $12.40 – $13.05, representing a year-on-year increase of 5.5% to 11.1%. Adjusted earnings per share to exclude amortization, stock compensation, foreign exchange restructuring and transaction-related / integration-related adjustments.

DUBLIN–(BUSINESS WIRE)–ICON plc (NASDAQ: ICLR), a world-leading healthcare intelligence and clinical research organization, today reported its financial results for the first quarter ended March 31, 2023.

CEO, Dr. Steve Cutler commented, “ICON’s first quarter results reflect continued demand for our broad portfolio of services despite the challenging macroeconomic environment. Our unique position in providing scaled full-service, functional and hybrid solutions is resonating well across customer segments, resulting in 8.4% backlog growth on quarter one 2022. Financial performance was solid with year-over-year revenue growth of 5.3% on a constant currency organic basis, along with another strong quarter of adjusted EBITDA growth, increasing 17.2% over quarter one 2022. Adjusted earnings per share increased 5.1% on a year-over-year basis, despite the anticipated substantial increase in interest expense. We are reaffirming our financial outlook for the full year 2023, with revenue guidance of $7,940 – $8,340 million and adjusted earnings per share of $12.40 – $13.05.”

First Quarter 2023 Results

Gross business wins in the quarter were $2,858 million and cancellations were $443 million. This resulted in net business wins of $2,415 million and a book to bill of 1.22.

Revenue for the first quarter was $1,978.6 million. This represents an increase of 4.0% on prior year revenue or 5.3% on a constant currency organic basis.

GAAP net income attributable to the Group was $116.7 million resulting in $1.41 diluted earnings per share in quarter one 2023 compared to $1.36 diluted earnings per share in quarter one 2022. Adjusted net income attributable to the Group for the quarter was $239.8 million resulting in an adjusted diluted earnings per share of $2.90 compared to $2.76 per share for the first quarter 2022.

Adjusted EBITDA for the first quarter was $399.1 million or 20.2% of revenue, a year-on-year increase of 17.2%.

Cash generated from operating activities for the quarter was $175.5 million. During the quarter $26.7 million was spent on capital expenditure. At March 31, 2023, the Group had cash and cash equivalents of $279.9 million, compared to cash and cash equivalents of $288.8 million at December 31, 2022 and $559.1 million at March 31, 2022. $80 million of the revolving credit facility was drawn down at March 31, 2023. Additionally, $250 million of Term Loan B payments were made during the quarter resulting in a net indebtedness of $4.2 billion at March 31, 2023.

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 attributable to the Group and adjusted diluted earnings per share attributable to the Group. 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 April 27, 2023 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, the impact of COVID-19 on our business, 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.

(1) Our full-year 2023 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 41,150 employees in 109 locations in 53 countries as at March 31, 2023. For further information about ICON, visit: www.iconplc.com.

ICON/ICLR-F

ICON plc

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND MARCH 31, 2022

(UNAUDITED)

 

Three Months Ended

 

March 31, 2023

March 31, 2022

 

(in thousands except share and per share data)

 

 

 

Revenue

$ 1,978,578

$ 1,901,764

 

 

 

Costs and expenses:

 

 

Direct costs (excluding depreciation and amortization)

1,395,546

1,378,467

Selling, general and administrative expense

200,006

195,261

Depreciation and amortization

145,126

141,405

Transaction and integration-related expenses

11,382

12,085

Restructuring

9,729

4,207

 

 

 

Total costs and expenses

1,761,789

1,731,425

 

 

 

Income from operations

216,789

170,339

Interest income

1,072

127

Interest expense

(86,551)

(44,425)

 

 

 

Income before provision for income taxes

131,310

126,041

Provision for income taxes

(14,273)

(13,286)

 

 

 

Income before share of earnings from equity method investments

117,037

112,755

Share of equity method investments

(383)

(785)

 

 

 

Net income attributable to the Group

$ 116,654

$ 111,970

 

 

 

Net income per Ordinary Share attributable to the Group:

 

 

 

 

 

Basic

$ 1.43

$ 1.37

Diluted

$ 1.41

$ 1.36

 

 

 

Weighted average number of Ordinary Shares outstanding:

 

 

 

 

 

Basic

81,784,389

81,463,303

Diluted

82,605,659

82,613,098

ICON plc

CONDENSED CONSOLIDATED BALANCE SHEETS

AS AT MARCH 31, 2023 AND DECEMBER 31, 2022

 

(Unaudited)

 

(Audited)

 

March 31, 2023

 

December 31, 2022

ASSETS

(in thousands)

Current Assets:

 

 

 

Cash and cash equivalents

$ 279,880

 

$ 288,768

Available for sale investments

1,653

 

1,713

Accounts receivable, net of allowance for credit losses

1,802,726

 

1,731,388

Unbilled revenue

974,260

 

957,655

Other receivables

143,727

 

63,658

Prepayments and other current assets

170,167

 

137,094

Income taxes receivable

56,820

 

48,790

Total current assets

3,429,233

 

3,229,066

 

 

 

 

Non-current Assets:

 

 

 

Property, plant and equipment, net

348,106

 

350,320

Goodwill

8,979,134

 

8,971,670

Intangible assets

4,164,410

 

4,278,659

Operating right-of-use assets

150,495

 

153,832

Other receivables

71,612

 

70,790

Income taxes receivable

22,076

 

21,380

Deferred tax asset

89,406

 

76,930

Investments in equity- long term

32,052

 

32,631

Total Assets

$ 17,286,524

 

$ 17,185,278

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

Current Liabilities:

 

 

 

Accounts payable

$ 85,126

 

$ 81,194

Unearned revenue

1,580,235

 

1,507,449

Other liabilities

1,029,893

 

1,005,025

Income taxes payable

68,676

 

41,783

Current bank credit lines and loan facilities

135,150

 

55,150

Total current liabilities

2,899,080

 

2,690,601

Non-current Liabilities:

 

 

 

Non-current bank credit lines and loan facilities

4,353,534

 

4,599,037

Lease liabilities

133,048

 

131,644

Non-current other liabilities

46,177

 

38,260

Non-current income taxes payable

243,813

 

239,188

Deferred tax liability

957,019

 

988,585

Total Liabilities

8,632,671

 

8,687,315

 

 

 

 

Shareholders’ Equity:

 

 

 

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

 

 

 

81,928,422 shares issued and outstanding at March 31, 2023 and

81,723,555 shares issued and outstanding at December 31, 2022.

6,662

 

6,649

Additional paid‑in capital

6,867,887

 

6,840,306

Other undenominated capital

1,162

 

1,162

Accumulated other comprehensive income

(159,896)

 

(171,538)

Retained earnings

1,938,038

 

1,821,384

Total Shareholders’ Equity

8,653,853

 

8,497,963

Total Liabilities and Equity

$ 17,286,524

 

$ 17,185,278

 

 

 

 

 

 

 

 

ICON plc

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND MARCH 31, 2022

(UNAUDITED)

 

Three Months Ended

 

March 31, 2023

 

March 31, 2022

 

(in thousands)

Cash flows from operating activities:

 

 

 

Net income

$ 116,654

 

$ 111,970

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

 

 

 

Depreciation and amortization expense

145,126

 

141,405

Impairment of long lived assets

6,933

 

3,574

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

11,304

 

13,077

Loss on equity method investments

383

 

785

Charge on cash flow hedge

2,253

 

Amortization of financing costs and debt discount

4,497

 

5,781

Stock compensation expense

14,759

 

18,903

Deferred taxes

(43,823)

 

(34,702)

Foreign exchange movements

(1,319)

 

(7,323)

Other non-cash items

17,534

 

(2,895)

Changes in assets and liabilities:

 

 

 

Accounts receivable

(93,259)

 

(35,461)

Unbilled revenue

(18,346)

 

(55,427)

Unearned revenue

80,990

 

(16,812)

Other net assets

(68,186)

 

84,041

Net cash provided by operating activities

175,500

 

226,916

Cash flows from investing activities:

 

 

 

Purchase of property, plant and equipment

(26,744)

 

(19,632)

Sale of available for sale investments

482

 

Purchase of available for sale investments

(422)

 

Sale of investments in equity – long term

 

96

Purchase of investments in equity – long term

(1,358)

 

 

Net cash used in investing activities

(28,042)

 

(19,536)

Cash flows from financing activities:

 

 

 

Drawdown of bank credit lines and loan facilities

180,000

 

Repayment of bank credit lines and loan facilities

(350,000)

 

(300,000)

Proceeds from exercise of equity compensation

12,940

 

7,491

Share issue costs

(4)

 

(3)

Repurchase of ordinary shares

 

(99,983)

Share repurchase costs

 

(17)

Net cash used in financing activities

(157,064)

 

(392,512)

Effect of exchange rate movements on cash

718

 

(7,983)

Net (decrease)/ increase in cash and cash equivalents

(8,888)

 

(193,115)

Cash and cash equivalents at beginning of period

288,768

 

752,213

Cash and cash equivalents at end of period

$ 279,880

 

$ 559,098

ICON plc

RECONCILIATION OF NON-GAAP MEASURES

FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND MARCH 31, 2022

(UNAUDITED)

 

Three Months Ended

 

 

March 31, 2023

 

March 31, 2022

 

 

(in thousands except share and per share data)

 

 

 

 

 

Adjusted EBITDA

 

 

 

 

Net income attributable to the Group

$ 116,654

 

$ 111,970

 

Share of equity method investments

383

 

785

 

Provision for income taxes

14,273

 

13,286

 

Net interest expense

85,479

 

44,298

 

Depreciation and amortization

145,126

 

141,405

 

Stock-based compensation expense (a)

14,759

 

19,220

 

Foreign currency losses (gains), net (b)

1,338

 

(6,646)

 

Restructuring (c)

9,729

 

4,207

 

Transaction-related / integration-related costs (d)

11,382

 

12,085

 

Adjusted EBITDA

$ 399,123

 

$ 340,610

 

 

 

 

 

 

Adjusted net income attributable to the Group and adjusted diluted net income per Ordinary Share attributable to the Group

 

 

 

 

Net income attributable to the Group

$ 116,654

 

$ 111,970

 

Provision for income taxes

14,273

 

13,286

 

Amortization

114,678

 

114,802

 

Stock-based compensation expense (a)

14,759

 

19,220

 

Foreign currency losses (gains), net (b)

1,338

 

(6,646)

 

Restructuring (c)

9,729

 

4,207

 

Transaction-related / integration-related costs (d)

11,382

 

12,085

 

Transaction-related financing costs (e)

4,498

 

5,781

 

Adjusted tax expense (f)

(47,469)

 

(46,744)

 

Adjusted net income attributable to the Group

$ 239,842

 

$ 227,961

 

 

 

 

 

 

Diluted weighted average number of Ordinary Shares outstanding

82,605,659

 

82,613,098

 

 

 

 

 

 

Adjusted diluted net income per Ordinary Share attributable to the Group

$ 2.90

 

$ 2.76

 

 

 

 

 

 

(a) Stock-based compensation expense represents the amount of recurring non-cash 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 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 charges incurred relate to charges incurred in connection with the termination of leases at locations that are no longer being used and amounts incurred in connection with the elimination of redundant positions within the organization.

(d) Transaction-related / integration-related costs include expenses/credits 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.

http://www.iconplc.com

Contacts

Investor Relations

+1 888 381 7923

Brendan Brennan

Chief Financial Officer

+353 1 291 2000

Kate Haven

Vice President Investor Relations

+1 888 381 7923

All at ICON

Subscribe on LinkedIn

Get the free newsletter

Subscribe to MedicaEx for top news, trends & analysis

We're committed to your privacy. MedicaEx uses the information you provide to us to contact you about our relevant content, products, and services. You may unsubscribe from these communications at any time. For more information, check out our Privacy Policy.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Businesswire is solely responsible for the content of the above news submissions. If there are any violations of laws, violations of the membership terms of this website, or the risk of infringing on the rights of third parties, businesswire will be solely responsible for legal and damage compensation. Responsibility has nothing to do with MedicaEx.

Are you in?

Subscribe to receive exclusive content and notifications to your inbox

We're committed to your privacy. MedicaEx uses the information you provide to us to contact you about our relevant content, products, and services. You may unsubscribe from these communications at any time. For more information, check out our Privacy Policy.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.