ICLR ICON PLC

Highlights

• Net business wins in the quarter of $2,531 million; a net book to bill of 1.22. Full year net business wins of $9,946 million; a net book to bill of 1.22.

• Closing backlog of $22.8 billion, an increase of 2.4% on quarter three 2023 and an increase of 10.0% on quarter four 2022.

• Quarter four revenue of $2,066.2 million representing an increase of 5.3% on prior year revenue. Full year revenue of $8,120.2 million representing a year on year increase of 4.9%.

• Quarter four adjusted EBITDA of $448.2 million or 21.7% of revenue, an increase of 10.7% on quarter four 2022. Full year adjusted EBITDA of $1,694.1 million or 20.9% of revenue, representing a year on year increase of 14.5%.

• GAAP net income for the quarter of $216.4 million or $2.60 per diluted share. Full year GAAP net income of $612.3 million or $7.40 per diluted share.

• Quarter four adjusted net income was $287.5 million or $3.46 per diluted share, an increase of 10.5% on quarter four 2022 adjusted earnings per share. Full year adjusted net income of $1,058.2 million or $12.79 per diluted share, an increase of 8.9% on the prior year adjusted earnings per share.

• Days sales outstanding decreased from 49 days at September 30, 2023 to 47 days at December 31, 2023.

• $250.0 million repayment made on Term Loan B debt in quarter four bringing full year Term Loan B debt repayments to $950 million. Net debt balance of $3.4 billion at December 31, 2023 with net debt to adjusted EBITDA ratio of 2.0x.

• In quarter four 2023, S&P Global Ratings and Moody's both upgraded ICON's debt instruments to an investment grade credit rating, providing the opportunity to reduce full-year interest expense by circa $100 million year over year in 2024.

• Board of Directors authorized a share repurchase program up to $500 million to be opportunistically deployed.

• Re-affirming full-year 2024 financial guidance of revenue of $8,400 - $8,800 million, representing a year over year increase of 3.4% to 8.4%, and adjusted earnings per share* in the range of $14.50 - $15.30, representing a year over year increase of 13.4% to 19.6%. Adjusted earnings per share to exclude amortization, stock compensation, restructuring, foreign exchange and transaction-related / integrated-related adjustments.

ICON plc (NASDAQ:ICLR), a world-leading healthcare intelligence and clinical research organization, today reported its financial results for the fourth quarter and year ended December 31, 2023.

CEO, Dr. Steve Cutler commented, “With our focus on delivering innovative clinical development solutions, ICON’s solid performance in quarter four and the full year 2023 reflects continued market leadership across the customer segments we serve. Our team delivered strong financial results despite challenging macroeconomic conditions, resulting in full year adjusted EBITDA growth of 15% and adjusted EPS growth of 9% over full year 2022.

We remain encouraged by the positive demand environment as we enter this year, and as such, reaffirm our previously issued financial guidance for the full year 2024, with revenue in the range of $8,400 - $8,800 million, and adjusted earnings per share in the range of $14.50 - $15.30.”

Fourth Quarter 2023 Results

Gross business wins in the fourth quarter were $2,992 million and cancellations were $461 million. This resulted in net business wins of $2,531 million and a book to bill of 1.22.

Revenue for the fourth quarter was $2,066.2 million. This represents an increase of 5.3% on prior year revenue or 4.1% on a constant currency basis.

GAAP net income was $216.4 million resulting in $2.60 diluted earnings per share in quarter four 2023 compared to $1.42 diluted earnings per share in quarter four 2022. Adjusted net income for the quarter was $287.5 million resulting in an adjusted diluted earnings per share of $3.46 compared to $3.13 per share for the fourth quarter 2022.

Adjusted EBITDA for the fourth quarter was $448.2 million or 21.7% of revenue, a year-on-year increase of 10.7%.

The effective tax rate on adjusted net income in quarter four was 15.2%.

Cash generated from operating activities for the quarter was $440.1 million. During the quarter $52.7 million was spent on capital expenditure. At December 31, 2023, the Group had cash and cash equivalents of $378.1 million, compared to cash and cash equivalents of $313.1 million at September 30, 2023 and $288.8 million at December 31, 2022. $65 million of the revolving credit facility was drawn down in the quarter and $85 million was repaid. Additionally, $250.0 million of Term Loan B payments were made during the quarter resulting in a net indebtedness of $3.4 billion at December 31, 2023.

Full Year 2023 Results

Gross business wins were $11,765 million and cancellations were $1,819 million. This resulted in net business wins of $9,946 million and a book to bill of 1.22.

Full year revenue was $8,120.2 million. This represents a year on year increase of 4.9% on a reported basis and 4.6% on a constant currency basis.

GAAP net income was $612.3 million resulting in $7.40 diluted earnings per share for the full year 2023. Adjusted net income was $1,058.2 million resulting in an adjusted diluted earnings per share of $12.79 compared to $11.75 per share for the equivalent prior year period.

Adjusted EBITDA was $1,694.1 million or 20.9% of revenue, a year on year increase of 14.5%.

The effective tax rate on adjusted net income in 2023 was 15.5%.

Cash generated from operating activities in 2023 was $1,161.0 million. $140.7 million was spent on capital expenditure. $370 million of the revolving credit facility was drawn down and $315 million was repaid. Additionally, $950.0 million of Term Loan B payments were made in the year.

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 and adjusted diluted earnings per share. 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 February 22, 2024 at 08:00 EST [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, 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.

* Our full-year 2024 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 41,100 employees in 106 locations in 53 countries as at December 31, 2023. For further information about ICON, visit: www.iconplc.com.

ICON/ICLR-F

ICON plc

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2023 AND DECEMBER 31, 2022

(UNAUDITED)

 

 

Three Months Ended

 

Twelve Months Ended

 

December 31, 2023

 

December 31, 2022

 

December 31, 2023

 

December 31, 2022

 

(in thousands except share and per share data)

 

 

 

 

 

 

 

 

Revenue

$

2,066,248

 

 

$

1,962,002

 

 

$

8,120,176

 

 

$

7,741,386

 

 

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

 

 

Direct costs (excluding depreciation and amortization)

 

1,445,727

 

 

 

1,380,679

 

 

 

5,719,949

 

 

 

5,527,045

 

Selling, general and administrative

 

195,560

 

 

 

226,753

 

 

 

768,559

 

 

 

778,753

 

Depreciation and amortization

 

149,733

 

 

 

142,228

 

 

 

585,950

 

 

 

569,513

 

Transaction and integration related

 

9,660

 

 

 

10,725

 

 

 

44,176

 

 

 

39,695

 

Restructuring

 

—

 

 

 

(1,747

)

 

 

45,390

 

 

 

31,143

 

 

 

 

 

 

 

 

 

Total costs and expenses

 

1,800,680

 

 

 

1,758,638

 

 

 

7,164,024

 

 

 

6,946,149

 

 

 

 

 

 

 

 

 

Income from operations

 

265,568

 

 

 

203,364

 

 

 

956,152

 

 

 

795,237

 

Interest income

 

1,720

 

 

 

618

 

 

 

5,014

 

 

 

2,345

 

Interest expense

 

(81,034

)

 

 

(75,185

)

 

 

(336,699

)

 

 

(229,731

)

 

 

 

 

 

 

 

 

Income before income tax expense

 

186,254

 

 

 

128,797

 

 

 

624,467

 

 

 

567,851

 

Income tax expense

 

30,164

 

 

 

(10,859

)

 

 

(11,749

)

 

 

(59,411

)

 

 

 

 

 

 

 

 

Income before share of losses from equity method investments

 

216,418

 

 

 

117,938

 

 

 

612,718

 

 

 

508,440

 

Share of losses from equity method investments

 

—

 

 

 

(493

)

 

 

(383

)

 

 

(3,136

)

 

 

 

 

 

 

 

 

Net income

$

216,418

 

 

$

117,445

 

 

$

612,335

 

 

$

505,304

 

 

 

 

 

 

 

 

 

Net income per Ordinary Share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

2.63

 

 

$

1.44

 

 

$

7.46

 

 

$

6.20

 

Diluted

$

2.60

 

 

$

1.42

 

 

$

7.40

 

 

$

6.13

 

 

 

 

 

 

 

 

 

Weighted average number of Ordinary Shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

82,399,478

 

 

 

81,683,430

 

 

 

82,101,813

 

 

 

81,532,320

 

Diluted

 

83,112,757

 

 

 

82,452,097

 

 

 

82,717,640

 

 

 

82,468,363

 

ICON plc

CONDENSED CONSOLIDATED BALANCE SHEETS

AS AT DECEMBER 31, 2023 AND DECEMBER 31, 2022

(UNAUDITED)

 

 

December 31, 2023

 

December 31, 2022

ASSETS

(in thousands)

Current Assets:

 

 

 

Cash and cash equivalents

$

378,102

 

 

$

288,768

 

Available for sale investments

 

1,954

 

 

 

1,713

 

Accounts receivable, net of allowance for credit losses

 

1,790,322

 

 

 

1,731,388

 

Unbilled revenue

 

951,936

 

 

 

957,655

 

Other receivables

 

65,797

 

 

 

63,658

 

Prepayments and other current assets

 

132,105

 

 

 

137,094

 

Income taxes receivable

 

91,254

 

 

 

48,790

 

Total current assets

 

3,411,470

 

 

 

3,229,066

 

Non-current Assets:

 

 

 

Property, plant and equipment, net

 

361,184

 

 

 

350,320

 

Goodwill

 

9,022,075

 

 

 

8,971,670

 

Intangible assets, net

 

3,855,865

 

 

 

4,278,659

 

Operating right-of-use assets

 

140,333

 

 

 

153,832

 

Other receivables

 

78,470

 

 

 

70,790

 

Income taxes receivable

 

—

 

 

 

21,380

 

Deferred tax asset

 

73,662

 

 

 

76,930

 

Investments in equity- long term

 

46,804

 

 

 

32,631

 

Total Assets

$

16,989,863

 

 

$

17,185,278

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

Current Liabilities:

 

 

 

Accounts payable

$

131,584

 

 

$

81,194

 

Unearned revenue

 

1,654,507

 

 

 

1,507,449

 

Other liabilities

 

915,399

 

 

 

1,005,025

 

Income taxes payable

 

13,968

 

 

 

41,783

 

Current bank credit lines and loan facilities

 

110,150

 

 

 

55,150

 

Total current liabilities

 

2,825,608

 

 

 

2,690,601

 

Non-current Liabilities:

 

 

 

Non-current bank credit lines and loan facilities

 

3,665,439

 

 

 

4,599,037

 

Lease liabilities

 

126,321

 

 

 

131,644

 

Non-current other liabilities

 

45,998

 

 

 

38,260

 

Non-current income taxes payable

 

186,654

 

 

 

239,188

 

Deferred tax liability

 

899,100

 

 

 

988,585

 

Total Liabilities

 

7,749,120

 

 

 

8,687,315

 

 

 

 

 

Shareholders' Equity:

 

 

 

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

 

 

 

82,495,086 shares issued and outstanding at December 31, 2023 and

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

 

6,699

 

 

 

6,649

 

Additional paid‑in capital

 

6,942,669

 

 

 

6,840,306

 

Other undenominated capital

 

1,162

 

 

 

1,162

 

Accumulated other comprehensive loss

 

(143,506

)

 

 

(171,538

)

Retained earnings

 

2,433,719

 

 

 

1,821,384

 

Total Shareholders' Equity

 

9,240,743

 

 

 

8,497,963

 

Total Liabilities and Shareholders' Equity

$

16,989,863

 

 

$

17,185,278

 

ICON plc

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2023 AND DECEMBER 31, 2022

(UNAUDITED)

 

 

Twelve Months Ended

 

December 31, 2023

 

December 31, 2022

 

(in thousands)

Cash flows from operating activities:

 

 

 

Net income

$

612,335

 

 

$

505,304

 

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

 

 

 

Depreciation and amortization expense

 

585,950

 

 

 

569,513

 

Impairment of long lived assets

 

8,686

 

 

 

28,767

 

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

 

41,546

 

 

 

45,215

 

Loss on equity method investments

 

383

 

 

 

3,136

 

Acquisition related gain

 

(6,160

)

 

 

—

 

Charge on cash flow hedge

 

2,407

 

 

 

—

 

Amortization of financing costs and debt discount

 

16,402

 

 

 

17,749

 

Stock compensation expense

 

55,667

 

 

 

70,523

 

Deferred tax benefit

 

(85,403

)

 

 

(124,985

)

Unrealized foreign exchange movements

 

19,706

 

 

 

(13,009

)

Other non-cash items

 

24,332

 

 

 

11,324

 

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

 

(83,296

)

 

 

(420,695

)

Unbilled revenue

 

4,716

 

 

 

(332,592

)

Unearned revenue

 

134,566

 

 

 

192,944

 

Other net assets

 

(170,810

)

 

 

10,121

 

Net cash provided by operating activities

 

1,161,027

 

 

 

563,315

 

Cash flows from investing activities:

 

 

 

Purchase of property, plant and equipment

 

(140,692

)

 

 

(142,160

)

Purchase of subsidiary undertakings (net of cash acquired)

 

(71,766

)

 

 

—

 

Sale of available for sale investments

 

2,616

 

 

 

481

 

Purchase of available for sale investments

 

(2,857

)

 

 

(482

)

Proceeds from investments in equity - long term

 

—

 

 

 

1,906

 

Purchase of investments in equity - long term

 

(13,954

)

 

 

(5,612

)

Net cash used in investing activities

 

(226,653

)

 

 

(145,867

)

Cash flows from financing activities:

 

 

 

Drawdown of credit lines and facilities

 

370,000

 

 

 

75,000

 

Repayment of credit lines and facilities

 

(1,265,000

)

 

 

(875,000

)

Proceeds from exercise of equity compensation

 

50,973

 

 

 

35,844

 

Share issue costs

 

(16

)

 

 

(17

)

Repurchase of ordinary shares

 

—

 

 

 

(99,983

)

Share repurchase costs

 

—

 

 

 

(17

)

Net cash used in financing activities

 

(844,043

)

 

 

(864,173

)

Effect of exchange rate movements on cash

 

(997

)

 

 

(16,720

)

Net increase/(decrease) in cash and cash equivalents

 

89,334

 

 

 

(463,445

)

Cash and cash equivalents at beginning of year

 

288,768

 

 

 

752,213

 

Cash and cash equivalents at end of year

$

378,102

 

 

$

288,768

 

ICON plc

RECONCILIATION OF NON-GAAP MEASURES

FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2023 AND DECEMBER 31, 2022

(UNAUDITED)

 

 

Three Months Ended

 

Twelve Months Ended

 

December 31, 2023

 

December 31, 2022

 

December 31, 2023

 

December 31, 2022

 

(in thousands except share and per share data)

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

 

 

 

 

 

 

Net income

$

216,418

 

 

$

117,445

 

 

$

612,335

 

 

$

505,304

 

Share of losses from equity method investments

 

—

 

 

 

493

 

 

 

383

 

 

 

3,136

 

Income tax expense

 

(30,164

)

 

 

10,859

 

 

 

11,749

 

 

 

59,411

 

Net interest expense

 

79,314

 

 

 

74,567

 

 

 

331,685

 

 

 

227,386

 

Depreciation and amortization

 

149,733

 

 

 

142,228

 

 

 

585,950

 

 

 

569,513

 

Stock-based compensation expense (a)

 

7,845

 

 

 

15,047

 

 

 

55,667

 

 

 

69,889

 

Foreign currency losses/(gains), net (b)

 

15,381

 

 

 

35,399

 

 

 

12,916

 

 

 

(25,997

)

Oncacare (gain) (g)

 

—

 

 

 

—

 

 

 

(6,160

)

 

 

—

 

Restructuring (c)

 

—

 

 

 

(1,747

)

 

 

45,390

 

 

 

31,143

 

Transaction and integration related costs (d)

 

9,660

 

 

 

10,725

 

 

 

44,176

 

 

 

39,695

 

Adjusted EBITDA

$

448,187

 

 

$

405,016

 

 

$

1,694,091

 

 

$

1,479,480

 

 

 

 

 

 

 

 

 

Adjusted net income and adjusted diluted net income per Ordinary Share

 

 

 

 

 

 

 

Net income

$

216,418

 

 

$

117,445

 

 

$

612,335

 

 

$

505,304

 

Income tax expense

 

(30,164

)

 

 

10,859

 

 

 

11,749

 

 

 

59,411

 

Amortization

 

115,986

 

 

 

114,969

 

 

 

459,854

 

 

 

463,087

 

Stock-based compensation expense (a)

 

7,845

 

 

 

15,047

 

 

 

55,667

 

 

 

69,889

 

Foreign currency losses/(gains), net (b)

 

15,381

 

 

 

35,399

 

 

 

12,916

 

 

 

(25,997

)

Restructuring (c)

 

—

 

 

 

(1,747

)

 

 

45,390

 

 

 

31,143

 

Oncacare (gain) (g)

 

—

 

 

 

—

 

 

 

(6,160

)

 

 

—

 

Transaction and integration related costs (d)

 

9,660

 

 

 

10,725

 

 

 

44,176

 

 

 

39,695

 

Transaction-related financing costs (e)

 

3,916

 

 

 

4,205

 

 

 

16,402

 

 

 

17,814

 

Adjusted tax expense (f)

 

(51,535

)

 

 

(49,174

)

 

 

(194,152

)

 

 

(191,667

)

Adjusted net income

$

287,507

 

 

$

257,728

 

 

$

1,058,177

 

 

$

968,679

 

 

 

 

 

 

 

 

 

Diluted weighted average number of Ordinary Shares outstanding

 

83,112,757

 

 

 

82,452,097

 

 

 

82,717,640

 

 

 

82,468,363

 

 

 

 

 

 

 

 

 

Adjusted diluted net income per Ordinary Share

$

3.46

 

 

$

3.13

 

 

$

12.79

 

 

$

11.75

 

(a) Stock-based compensation expense represents the amount of recurring 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 relates to charges incurred in connection with the company's realignments of its workforce, with the elimination of redundant positions as well as reviewing its global office footprint and optimizing its locations to best fit the requirements of the company.

(d) Transaction and 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.

(g) On April 20, 2023, the Company completed the purchase of the majority investor’s 51% majority voting share capital of Oncacare Limited (“Oncacare”). This gave rise to an acquisition-related gain of $6.2 million. This gain was excluded from adjusted EBITDA and adjusted net income.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240221492475/en/

ICON plc Investor Relations +1 888 381 7923 or Brendan Brennan Chief Financial Officer +353 1 291 2000 Kate Haven Vice President Investor Relations +1 888 381 7923 http://www.iconplc.com All at ICON