Full Press Release Details
ICON Reports First Quarter 2023 Results
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)--April 26, 2023--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.
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
(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.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND MARCH 31, 2022
| 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 |
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 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND MARCH 31, 2022
| 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 |
RECONCILIATION OF NON-GAAP MEASURES
FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND MARCH 31, 2022
| 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.
Contacts
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Vice President Investor Relations