- Earnings call transcript Q3 2022

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Kate Haven

Good day and thank you for joining us on this call covering the quarter ended September 30, 2022. Also on the call today, we have our CEO, Dr. Steve Cutler; and our CFO, Mr. Brendan Brennan. I would like to note that this call is webcast and that there are slides available to download on our website to accompany today's call. call forward-looking today's in statements will statements. be Certain management's and and information statements conditions. are available, expectations on based economic These currently current including industry current Actual are the company's implied and stated listeners to results that from of business, and forward-looking forward-looking future cautioned statements risks with statements due guarantees may or associated uncertainties are materially not differ by those performance.

either includes these not forward-looking publicly are they which Steve non-GAAP new events are we Brendan risks statements, do to date any Form of SEC as update including financial made, will found and in to the and the their in undertake a be of reports presentation filed XX-F only filed obligation information, Forward-looking relating or statements X, prepared information selected may the any result otherwise. uncertainties as forward-looking March about and future remarks. company, statements measures, by More on referencing be This XXXX. the

the GAAP For section statements operations. presentation the financial of titled condensed directly release to refer of press a please consolidated measures, most comparable

are slides, benefits. EBITDA purposes. losses, earnings amortization tax transaction-related superior press financial more will measures excludes non-GAAP to is for the and historical we believe not costs, GAAP respective the non-GAAP to certain information you of currency Adjusted substitute reconciliation or and gains and useful and for investors stock the Included While note in restructuring comparable non-GAAP comparison measures. a foreign compensation expense, a costs their measures, release

to the CFO, over to keep to each to be would follow-up would hour call ask Brennan. We with ask Mr. participants call and hand question. related one limiting like I to one our questions one now the to Brendan will an opportunity today their therefore

Brendan Brennan

On net in a business quarter X.XXx. a gross billion $X.XX of Thanks, our basis, net cancellations. resulted billion, recorded trailing X.XXx. This worth of book-to-bill achieved $X.XXX In quarter three, book-to-bill awards and net in $XXX was ICON million wins of of Kate. XX-month the

in $X.XXX three, our the addition below increase This With the two. of of X.X% in of million record a adjusted headwind a $XX three. a to in Revenue currency our of year-on-year basis. the X.X% on billion, in slightly represented The quarter quarter resulted X% or XXXX results was an quarter year-on-year or foreign of grew revenue a from $XX.X backlog three was billion. burn on quarter, backlog of X.X% impact increase organic two X.X% quarter in quarter awards an increase year-over-year, new on revenue exchange constant changes approximately in representing

XX customers top concentration top two Our revenue. quarter from of customer our increased represented X.X% as slightly

customers five top of revenue. Our represented XX.X%

quarter utilization three million Total revenue. expense three. comparable resource in SG&A a of XX.X%. last SG&A top by expense quarter was or million to represented represented in was the In or improved driven Gross X.X% period in XX XX.X%, margin direct continued XX.X% gross while two. XX Adjusted our XX.X% was was compared quarter the Our total revenue strength margin $XXX.X of revenue. XX.X% fee for year, top $XXX.X and growth quarter

of a $XXX.X three. adjusted increase million $XXX.X The was expense XX.X%. revenue. Adjusted three. XX.X% a margin or three the XX.X% million for million for We for or at was in quarter million, saw to EBITDA of SG&A of expect period similar interest we quarter in comparable total as representing level four expense quarter XX.X%. EBITDA year, income last Adjusted be $XXX.X the was operating quarter quarter absolute revenue, was adjusted a year-on-year net $XX.X of In

from was an this year, tax adjusted anticipating for to in $XXX in assumptions was through rate $XX increase duration increasing total of for rate The guidance interest This when full-year interest this interest million issued expected effective the quarter. represents XXXX. expense approximately January. the XX% As previously full-year initial communicated, due are our the million of expense we approximately to environment

accounts at the debt net debt the to a debt diluted to debt recorded We amounted billion. net income from This was of compared debt increase for million U.S. year-over-year. equating was million. position continue margin of to continue collection at Cash and quarter a million. billion quarter in and share group per rate the strong quarter three. to net XXXX, attributable with billion, transaction to million days XX $X.XXX of from earnings quarter a XX, expect in on $XXX.X income quarter, to the $XXX.X In attributable group generation equivalent share third the $XXX to diluted per September GAAP XX.X% September at up XXXX, efforts Adjusted of of U.S. Cash share DSO compares quarter, XX, $X.XX from Capital EBITDA a of of GAAP the a $X, with accounts income the $X.XXX billion At comparable $X.XXX Net of balance operating cash XX a XX.X% a approximately costs. and this company to [XXth] an the million activities XXXX. comparable XX.X%. adjusted $XXX.X million, up quarter million receivable on compared $XXX operations the loss days basis XXXX. and $XXX three the a $X of We XX, expenditure days was of XXXX. of million June be integration-related effective and full-year period ratio year. million of or revenue at of to June net was company net the the balance of was during quarter XXXX, $XX.X to XXXX tax with or X.Xx. XX XX, the basis XX-month June XX.X%, last be net from per of during for adjusted September receivable from $XXX.X had in $X.XX leaving ended XXXX $X.XXX net trailing September at XXth a XX,

priorities B quarter, the And deployment a year-to-date. debt our bringing of pay repayments down. our we made total to payment million in continue Term capital $XXX facility such, be to on $XXX million as Our Loan

We X.Xx. to our EBITDA expect which of us exit in repayment debt and July ratio in a XX-month of the with leverage This adjusted well approximately last target expectations net similar year of year. size a is in trailing the year previously quarter four, to with set with exiting will make below Xx initial a to communicated allow ahead line our

rate exposure facility. the a hedge we to floating portion our have Term Loan rising With in rate B interest decided interest environment, of

conditions resulting work of as this Steve. XXXX that providing more certainty end of finalize rate around call effectively expense will all we interest for of continue hand the agreement full-year strategy With I'd fluctuate. this exposure, rate we hedge to anticipate anticipated the year, interest to While the our now to by significant like will proportion a and said, of floating market over hedging our to

Steve Cutler

Thanks, this the operations our lockdowns employees the war environment. have good and continued year pandemic, Brendan, continue the that rolling our globe, performance a focus and also remain in well of team to day The for solid the to our in degree, for been regions. a our to the across policy of continuity Ukraine, quarter prioritize delivered COVID lingering and ICON we as trial very to macroeconomic operational the of in customers. the these effects zero and execute safety impacted the our including lesser China is in Across the third macroeconomic challenging majority business pressures patients impacting in amidst while everyone. our have maintaining segments

the in we Russia, expectation operate in Ukraine factors particular. Our the to in of have and for million million any in XXXX impact full remains $XX range seen notable from improvement in revenue $XX not ability to the these our as

In in to the COVID-related RFP further and in mid the full-year encouraged strengthening in dollar activity quarter rate development conflict development services. for companies, led impact quarter our and the issues, has in for of environment in third rising business demand and to biopharma addition U.S. both large environment in results China, our been in clinical remain we positive issues outlook XXXX. the continued Notwithstanding demand of terms the three. by Strength underlying the and interest and these the performance by Europe

clinical the the is development challenged, of cash biotech a highlighted translating generally as lower earnings average this to sector look conserve as previous from the on and in a call, emerging designs environment in companies This customers biotech to in opportunity remains the segment continuation they we trend study which to segment. uncertain value approach broader biotech spending their deliberate cautious environment. an in more are in are seeing optimize we funding As more is

patient-centric us existing customer that initiating is we the development. technology diversified trailing delays Bad evidenced projects, footprint integrated union our and segment, in customers with development clinical levels. this to seen remain services in large low deliver. resonating While Overall of the insights a ICON's find portfolio time. strategic also progress model at at business in that demand new by expanding to single well clinical digits not this and solutions evolving XX-month and We key made as ongoing capabilities clinical ICON caused to with unique terms partnerships, slight deliver well cancellations for an partnerships. in dynamic RFP pharma has of needs also growth headwind Sciences. rationale only brings the disruption this require continue across to and required that continued trials increasingly new necessary discussions a approach positions has their was we have CROs flexibility increase in in a to wins historical partnership Health expertise, debts success and can trials complex as good global high We've grow believe have which or PRA

full clinical Our functional solutions strategic us and and customers. dedicated functions the biopharma as in lead utilized focus unique trial customized to provision such aspects to models on where and all elements has services service to providing of are deliver of market service enabled blended development

innovation In addition investigator see customers' our Through identification, to recruitment, over creating commitment improvements patients industry development, of XX,XXX potential with opportunities the patient in remain significant partnership, the a increasing engagement. patients successfully to to for continue we is we pilot supporting have XX,XXX our Veradigm, site physicians in the lower where models to integrated largest while trials. we network performance research. to EHR in In access for completed participation and the and partnership for in physicians near-term quarter invest our that the the of aim to of site that steadfast three, overall potential million with company clinical and of burden we access XX number new sites,

to appropriate clinical with and physicians patients encouraged the more are and rapidly and results the trial by We pilot the of predictably opportunities. connect opportunity

best industry the One for our sites a trial Additionally, identify Search by leading uses of and One publication business speed tangibly and improved algorithms tool a site sources proprietary data which in helping metric, which trade customers. analytics recognized recently major our as Search recruiting site platform, is times and a drives intelligence. efficiency data variety our the clinical to was and for improve start-up to

results pleased third strong performance. approximately and or X% organic XXXX. financial I'm backlog our with to Turning quarter X% with basis our third of growth of growth X.X% in currency on over year-over-year the of the revenue quarter, constant a

quarter. approximately work, improved over cost growth performance EBITDA goal revenue on management revenue margin through quarter alongside in meet helped strong resulting XX% EBITDA track Operational with and full-year on adjusted performance was medium-term the adjusted same fee remain And growth of us SG&A This margin in year-over-year, EBITDA in XXXX. growth to XXXX. the resource XX% strong of track leaves the Direct to XX.X%. our COVID-related utilization target we growth on a drive for adjusted in Excluding of mid-teens our our basis. year-over-year meet well XX% was the particularly well

three. per In at quarter addition, year-over-year grew share earnings in XX.X% strongly

rate We adjusted million floating to variable debt net by interest our EBITDA rate Term $XXX a forward. quarter on resulting debt in Furthermore, our our three strategy quarter. continued and costs the our progress we making mentioned, in exposure ratio in majority to reducing are facility payment in Loan order B our X.Xx greater of the going the certainty on provide debt as of our for finalizing at end Brendan hedging a

Health the has terms We year. of the cost to synergies expect the our debt the we with integration of made end variable PRA our completing rate even us XX Sciences, after which union to on months this pay progress of excellent to the have announce expectations. by agreement of organization, and execution be this Only down faster than initial able allowed

alongside will and focus further capital approach offering. we assets our repurchase of we M&A adjusted add potential As capabilities activity target share deployment our as we EBITDA, increasingly to service anticipate enhance that X.Xx include our look

our quarter we per three billion guidance financial to $XX.XX. are billion performance to healthy in environment, of and of underlying the business $X.XX XXXX of our reaffirming revenue $X.XX and the range in Given earnings $XX.XX share full-year

XXXX management, Forbes is for our development on one World's two communicated, industry believe our programs a expectation and of Best a our about the of remains this employees. the received the with past ICON's and was previously overall the the in as talent We choice Employers along to with result full-year has Additionally, margin I made recognition of be quarter, in recognition particularly CROs. XX% recognized employer unchanged. of EBITDA ambitious spoken I've of highlight direct focus as list career in award as investment only a proud and ICON goal we other training industry have

in the XXXX we and competitive stakeholders. impact we talent. employee labor the XXXX pleased to governance we to industry and social for three ICON first month retention I'm positive materiality in additional a highlight a number despite XXXX. can each areas in where was featuring in continue our commitments. seen steady progressed in release environmental, deliver our the And report that identified of ESG through ESG operate An of highly assessment of greatest our as quarter tightness market, We for improvements report performed continued priorities believe we have our have

our advancing and on a We our thoughts continue initial employee challenge we minimizing to outlook health, macroeconomic and In XXXX. light to across environmental including global wanted are initiatives, deeply footprint. experience business is our goals of improving our of broader public our for committed expected stated to objectives to provide number results, impact

in Given continue of levels. of flat revenue few XXXX, rates the U.S. be levels a significant of half assuming to over is below slightly exchange the XXXX, the at a we headwind due to first strengthening the anticipate to Backlog course conversion factors. foreign continuing QX expected current notable dollar

to proportion in in disease lengthening Based unchanged We growth million in decline the work of strong we increasing environment, EBITDA of due trial X.Xx in of of our drive full-service our target. a direct full seeing fee to areas are X.Xx growth of basis and quarterly book-to-bill oncology XXXX as remain management synergy therapeutic like XXX duration backlog. to solid as the in current target our in rare in expect on along by demand continue and revenue realization We the XXXX. a vaccine-related goal study ambitious points $XXX overall programs a dynamics driven range in complexity remains margin cost cost to expansion with including initiatives, the overall

to inputs necessary the in the for in latest order range plan of year. our $XX a detailed growth Healthcare with the XXXX achieving provide allows debt aspiration JPMorgan and unchanged. issue timing in guidance outlook financial This to billion longer-term revenue strategy We macroeconomic usual in accordance our of guidance timing Our in at hedging for remains four the quarter Conference. January results, specific

I significant and thank Before continued efforts to their Q&A, the contributions and this quarter recognize our we across our performance want employees the globe move in to to year-to-date. for and

operator, are we ready So questions. now for

Operator

Thank Baird. you. ask of line first from question. from Please your question [Operator Your Eric comes the Instructions] Coldwell

Eric Coldwell

conference back goals, about about like made turnover higher sound but might your thought Thank it it the month-to-month, were but the improving has. EBITDA expense frankly, I labor start overall there some hear that into you XXXX, comments some staffing going expansion environment. and today did I at very with expecting pull doesn't September inflation going to comments today maybe I'm much. labor and

would much. you on be that very share could Thank you start? good a anything So

Steve Cutler

Eric. Sure. some that various the environment. LIBOR help Yes, organization counter expect in we rates line in ongoing do see bottom believe is the to Thanks, given inflation we with can we to have initiatives inflationary But the us. the we

We continue costs. reduce SG&A our to

we that can operational initiatives in various believe place. We have we put

of we're believe, than pressure be sort we not more initiatives have rates, to of the in naive some can we going by that on LIBOR those the some going So expecting be organization. offset there's while increases on and

Eric Coldwell

have One, these of if could helpful. Thank more quick. That's for on you XXXX. I real just one thoughts some initial

the a names think seeing probably the the biggest street, year? outlook a to the same across of our wide been give some variance uncertainty maybe on I get expense. number up. maybe next But interest possible ballpark is for – you we're I everybody you're models to variance maybe you're biggest we've expense there's hedging range – across what at of set it when to bit thinking on the with looking a is for setting in program interest prompt level just and know a

Brendan Brennan

that it's I'll Hi, here. Brendan Eric, one. take

the quite reasons at of the like rates moment because suppose, One underlying else, dramatically LIBOR is as everything the JPM and I talked about giving SOFR guidance well. we fluctuating are at

So ball the to we probably you more end the I it's the of bit at said, top do for That or I moving should point. in rate, a this would guide high-XXXs say, interest full-year be that towards moving of I'd expect say, a range. goalposts,

that's at the out we'll than as please months. couple So you to take back and is of a our we current to a expectation. guidance that when little And and come obviously, our over that the see more get do specific we'll JPM. with playing how January next something market But draft

Eric Coldwell

helpful. guys. on very Congrats good That's Thanks, Great. results.

Operator

Thank you.

of question. Max comes the line question. William Please And We Smock Blair. from question our from will next the your take ask

Christine Rains

Smock. Christine question. Rains for Max on Thanks Hi. the for It’s

on didn't I we a long-term pointed prospects given Just ICON by exposure cohort, risk. I makes sense growth in think funding this from out interested about call, you but to last of call, but is us took hear it its on given what you kind that as excellent biotech. quarter's surprise this see that question talk small increasing near-term

strategy you you hoping time your your optimal line give expect that was I could to of So detail small on this target like this mix? and biotech some kind pursue

Steve Cutler

to Okay. we increase remains think it not of challenges has area around the something half it. that, know, we're of to not as an our necessarily But a increase it's at But recollection, business at then That's some I to that's our it. funding looking Christine. important exposure We're but small And recognize. not looking part moment. very all we our

we've what very has and the really moved we've up – seen XX large trend fact, then probably business months In the as significantly in discussions last is certainly, pharma and has pharma midsized development And our come probably quarter that continued three. in together. last

anything, and we will pharma of increasing in have in to more segment if business large large that these we discussions in we've market continue the in be success our strategic the that had given in pharma both exposure So winning space. the some

of part biotechs emerging mean I space. but as I've looking important exposure remain So dramatically increase to necessarily and business, mentioned, our small our we're an that not in

Christine Rains

Thanks. And That me. makes for just follow-up sense. one

revenue on you hear still you're for million quarter, the you I Is that goal? the to that didn't last your year. front, track mention noted meet on $XXX target cross-sell the time Just this around.

Steve Cutler

end goal. for is a still that that. be as we We've We said track much XXXX. That would very on remain

on year. for suppose, year $XXX run I on million track synergies, So lag, think for synergies. there's a rate The outlined, and I cost million of in from a this as expected. faster have We're we come than next I longer-term revenue $XXX

with those be end on little and through very and we're We're slower they've Revenue talking getting will to XXXX we're a feel come are working those. of synergies forward. bit but how that pleased for. gone we awards, So selling

Christine Rains

Great. Thank you so much.

Operator

you. Thank

David question. And question. the We Please of from ask next your will comes from Windley Jefferies. our question your take line

David Windley

challenges my front. start duration longer prepared and also trials sites a that for heard some you taking topic. your at and backlog Steve, talked on in I Thank things Hi. wanted some and you remarks, attrition with that. like as commentary some general conversion to question. about about of labor factors We've

those in affecting the studies backlog shorter-term do duration more I little that be issues near So, alleviated And term? there are that some your can guess, probably duration? Are of in secular. also is the think you a

Steve Cutler

Yes. Dave. Thanks,

larger the to little we end As bit, slightly has I of outlined, lower it's of flat we're down we've think maybe go a the really conversion because as And backlog dropped is sort the a to anticipating a of year. cadence study. and return fast-burning of oncology vaccine COVID our – is the moving stuff of backlog. proportion away longer-term trials, normal of The more sort as a becoming

our more and backlog, the So in like, that doing. the if makeup it's relation to studies shift of we're in you the

there's Sites. a of site we one, terms one more factors number the push Sites But there's obviously, how to expand Accellacare seen view resource our ongoing, In Accellacare of opportunity there is we from a of it, haven't that. our do of mitigate to we the point at an sort trials operationally. through disruption and interesting believe an And

We the probably They people in have research. of standard are are all a to – sort of clinical and fact dedicated more the most of dedicated on good don't in have people other work. pull us Accellacare a to Sites our

And we advantage, sites Accellacare a performance our that's leading above of and that's rate, see improved above continued XX%, those sites. ad those Sites. hoc recruitment well sort XX%, to our and on an XX% We're more in are so

push trials backlog believe further playing there's on us. to And We pressure nicely more the so and opportunity there through burn. for that's any mitigate

David Windley

Very Thank you for helpful. that.

a around second on decent your at sounds my on flows comments the are bookings. of clip. RFP So reported pretty then versus It still progressing RFP numbers question kind the is like

single high X%. year-over-year bookings by said You down were digits, about

and Or rate bridge awards if hit down award? single-digit so RFPs I to the going slightly decisions, kind be would issued, And delta not RFP just the more being of growth bookings? between not or what wondered high there is

Steve Cutler

come then are ballpark more like, through for you the a is always X%. RFPs, out But but completely costing slightly blue. Dave I if exact marker, this, bookings are them and slightly come said exercises, on some than of rather pretty We do it about that in flat there, up I've figures think bookings. was of more these were somewhat quarter-to-quarter that get The some down RFPs

a as We're it's space been That's So activity the muted. exact match And that's biotech space, space. seeing an say, it's RFP for little a on gone I in more up. on the not area of certainly lot bookings. an pharma the large

– – overall, high So but trailing are a as we're single-digit the sorry, mid basis. XX-month solid, say, on numbers seeing I

I to So get together. as too and flattish, hesitate development. RFPs. the the movement market it midsize large on putting focused business reflects, say, on I all that and It's pharma, biotech within some been We've

is what it So it is.

David Windley

Thank you very much. Good luck with you. the rest of the year. Thank

Steve Cutler

Thanks.

Operator

Thank you.

will the question. We our of the next Guggenheim And from take ask question. Please Draper line comes Sandy question from Partners. your

Sandy Draper

Thanks.

First quarter. question billion you $X good you the XXX flow. of I the have I And on flow, in cash cash have of mean, – think slides, target free still

Just would that a so, from still assume up pretty that wanted imply if come I target? if would step that's Brendan, the to would really And nice and see, capital. working

just comments that? I wanted So to on get any

Brendan Brennan

guidance, kind of original – They as were Yes. targets. be of those in put forecast through There shouldn't implied kind the just those We Sandy. read elements. we probably

So kind of at they year. of were the the we set beginning out the objectives

quarter I in an We cash think improve billing in flow had certainly we'll QX. excellent in QX. of

expect mark We'll back probably basis quarterly that we've not I'd would We're of just close good that see flow little over So to that bit gap aim I the probably but into on that. We're won't $X total. do been in to in more cash QX. like billion get probably generation the see a so in this $XXX for year. certainly the on still level far doing us quite a [indiscernible]. flow free to to around million cash

like don't close So that $XXX to that quite even push we're maybe is maybe mark, – certainly see but we'll million I Sandy. gap, XXX-plus up our the I'd to certainly think expectation.

Sandy Draper

Okay. That's unrelated follow-up. then really helpful. my And

four margin mentioned, obviously, about it maybe there's if pass-throughs. the about the On high to side, it on or think I in number. gross a that's to there's pass-through it a if service trend. was really your of focus I towards bookings mix or heavily mean, that doesn't bookings, versus think other I showing quarters weighted really service meet if And bookings of know certainly versus because whole three of And know on didn't gross Steve, good I thoughts quality is on revenue around – more of a I hedges? it general, just quarter there's say fair been up bulk fair try and there. – in stuff but revenue lot. past Any is that's the it's because the over have margin lot But you sort of focus the to pass-through or going big

Brendan Brennan

Yes, want I'll might maybe Steve to on in. that and off Sandy, one, start chime

this we fee of from high has business vaccine, mix see pass-through as of included through revenue Steve continuing margin. prior good to with to And still the in think the course solid it. direct this gross backlog And kind certainly, our a ex-COVID just solid year, double-digit of on good those the I of normalization cadence replacing really listen, quantum which your with a coming pass-through down. – is year. pass-through and called point, out of normal called out of a we numbers, saw that, wind COVID growth very obviously, was what We in factor years, drag

down significantly that Obviously, fees. actual about in revenue than it often with of could – much full-service kind bigger COVID probably the on gross have bigger than much, you're to historically where back – I to we, the direct that. So pass-through was pass-through coming you're I was the it somewhere higher – was suppose, work. been And being told XX% think in XX% actually work, of

terms may said, And So well. of we that that points as that yes, I talk I some also think as we adds seeing an continuing. conversion backlog the of of element to about are in

Steve, want So it's business of wins you direct did story from good to fee helping mix revenue that? gross terms of good margin. answer certainly, in a perspective a

Steve Cutler

Sandy. Sorry,

it's trials said lower certainly make right. We're proportion that with proportion of Brendan what if seeing sense. think pass-throughs, a greater I a of

direct sort high the you digits, look are that of at single fee revenue if growth, in sort of So we our number.

fuel as helping a tailwind So margin our forward. through going nicely gross in it's playing for

Sandy Draper

much. it. Thanks so Got

Operator

Thank you.

from We will Please And ISI. Anderson is our Elizabeth from next your question ask take the question. question. Evercore

Elizabeth Anderson

or morning Good Hi. good afternoon guys.

One talking in quarter, about of I was sort demand third wondering as of the environment that as concern the very just helpful. you're was

win As or on so that the you how seeing far, or any in either of you customer segments has think sort are the about your out negative of any that been worth either changes side sort nature anything calling positive fourth quarter major RFP in or flow of be would in side? trending rates the

Steve Cutler

We're I'd this month in quarter. either point. positive the trends, on not at week-to-week call out in. negative basis. still fourth or a Elizabeth, early We're this any We that it's a pretty seeing track

Elizabeth Anderson

very that said That's to on by XXXX. $XXX you just million of realization of then cost the updates year? you terms Okay. total be Where end the expect mentioned. do the for of And of I sort you point appreciate in helpful. the at synergy this

Steve Cutler

Well, we million by have will in the but in confident will We've a and a the that, that there months bit to year, us do and – that we'll the – the little place, get run got the in work $XXX XXXX. very million already initiatives at in few XXXX. of quarter be those last to we'll rate be end of of give will $XXX there, we feel the

And going our little to EBITDA question confident So LIBOR bit around is pretty Eric's LIBOR think place. forward to our because impacts – so of point inflation, et ahead And an There back helping well move accelerated well cetera. were margin. from also a where in some going we EBITDA efficiencies, that's gross view. synergies, we've on forward, respect of us those we but that our cost et cetera, EPS and we're well and we some cost about we've growth synergies, of there can thought overall with are headwinds we be be to driven

Elizabeth Anderson

Got super helpful. it. That’s you. Thank

Operator

Thank you.

will the ask And question Bowers We our is Please question. Bank. from take next your from question. Justin Deutsche

Justin Bowers

everyone. Good Hi. afternoon

Just continuing margin the on question.

you help piece a the levers us but additional that are the to buzzle, synergies point think through XXXX? help of that So clearly you expansion are for big going other drive basis XXX the can

Steve Cutler

have where and planning in integrate This wanting we come being come is we a to of the customers' as can as a We've about some got mean number around efficiencies we considered operational forward of We're opportunities functions around we together having we I there as long-term years. we Justin. said Sure, initiatives together. very are process. how some locate careful projects. continue we go that, not But that gain. we to really operational there's couple over resource believe disrupt that next

of margin bringing there our can around initiatives that some year. we some our routine can machine to the artificial quarter, have in there the aspects to medium number more term are we of expand over that we the we over learning believe and more so do We Well, probably a areas we're next do us, drive, and XXX that above opportunities to and believe by headwinds, any that going think give that's again, we bps intelligence

Justin Bowers

the just one large on pharma more commentary. maybe And

terms been of are You And XX-month pharma that? there? do the there ICON of factors seeing, are the growth. then trailing seeing key momentum in seeing you're that some that think you're talked you that bizdev, the –what that what large increased about there Is in out might anything

Steve Cutler

Is there a pharma organizations, We see who bend thing. pharma with number But it's – bend, large or of two of of one and midsized that a always customers. across there this anything things us. can not a out we guess, matter, just that different see sort number for to I engage trend there's want could different that

But things course, probably the of it's challenges could not the at driving seeing And macro, the we're anything. track. are more moment, so even off of it. that us with And there knock around

opportunity seeing outsourcing competence an I those partners. they're for their more in strategies with think good around place getting importance strategy more and of

of sort confident we'll progress. I'm that continue very of The side development positive, continues business in that be that that segment. things segment, particularly in So to particularly

about for doing very optimistic think we're we're scale because so And an significant And the main it is I we're of that. organization way reason the now.

PRA seeing be part And and to We're and PRA. As lot talk labs, be ICON to our about of We're with full-service We're and can one key union with player whether and expertise customers the of brought for that competence a a have technology, I resource huge want to spending said, the to in significant them, it FSP was rationale bring clinical the want development very platform. the now. to what us. us our that want of we our discussion bringing decentralized forward. opportunities of space, effort a that. decentralized to in they those trials, space, They us. lot have around it

and – about – that feel So we it's constructive of those positive very discussions. sorts

Justin Bowers

the Appreciate questions. Thank you.

Operator

Thank you.

Sergott next comes your Please question question. from ask Barclays. from our Luke the take question. And will We

Luke Sergott

ex-COVID to Can us Thanks, housecleaning what Hey. some stuff? think Do – give idea an burn like? that of growth your you what was see guys. just looks you

Brendan Brennan

Yes, we can.

to just find here I'm trying the Sorry, number that script... in

Steve Cutler

Mid-teens.

comments. think called in I the XX%, we out Luke,

Kate Haven

would currency. that been have And constant

Steve Cutler

constant number. currency yes, the basis, a was On XX%

Luke Sergott

Awesome. Thanks.

to back run and gave this and the a thinking ago. and COVID just a customer, So here forward rate out largest normalized everything, you getting guys so annualized was while past for

remember that as should at let's Dublin your and around approaching we I you're think if Day, like it this to Analyst How going that correctly. path was I say, was forward, guide? your XXX, about long-term think

Steve Cutler

with question? I'm Not What's question, sorry. quite the the clear Luke.

Luke Sergott

then It's of basically in your largest is. just couple burns right that – I'm outside is off. last where step of as out the It out And rest quickly grow years. figure the trying continues to ups how that book trying customer $XXX your the million. massive taking to looks XX here offset now to about figure like your top because

out So going two just parts forward? really trying to moving figure those

Steve Cutler

is that. one for back XX%. more certainly, the no rationales again, to one We've Yes. – our with concentration. mean, – No union one PRA the is was I I think than to the done more of than customer reduce

backlog and our percent I X-ish think revenue-wise. it's around large about

at the and see that continuing So We to results what that's we're pleased about with that probably union of done would us. that rate.

have a we're feel We in doing. what customer, obviously, relationship our good largest confident with I

don't going to And that fall. know so dramatically that's I

are top you no outside business we XX. of as doubt have growing the However, our seen,

single sort top which outside and XX more an sort of the around as quarter, like base of high we had this in group. expanding think customer customers our digits and I organization the something midsized going smaller of signals working we're where

going dramatic I'm So I see changes forward. sure not that

XX of be that strategic will course. and our be of top of really a will to our Our continue lot business part significant customers focused, five, partnerships where very are a

be there dramatic maybe as we would expand. overall, So concentration about I drop longer rate, that anticipate a would not differences. that, little continue – would that at bit the term But in

Luke Sergott

right. All Thanks.

Operator

you. Thank

question. We question. from Donnelly the ask will your the from of take line Patrick Citi. our is question next Please And

Patrick Donnelly

there. mid-single enable to on the above XXXX guess it taking mean about I X.X. shift start diving of growth kind single-digit the of That down in would previously high for helpful Steve, little towards into color below. I potential talked questions. book-to-bill to a kind Thanks XXXX goes bit more. that of you being if kind

now. that we've right been think I at for number two quarters

that Are You can half, you being I conversion trial a is it's there, how the would single? the helpful. XQ guess maybe, talked leave then headwind? evident quantify for bit slightly that duration. and just next the bit to color just Brendan, And little know surprise talked the that big about if we I about want no flat high thinking below does where be maybe a or below first with us but – lengthening FX there. get little in sliding year? Just you

Steve Cutler

currency that remains part our We're take our target, high question, Maybe about first talking singles on your and Yes. the I'll Patrick. of basis, a constant plan.

high inputs, rates at various on to composition guidance aspire the I of going to the to is point sort wins, at the the to really months rates, from in of to provide We're a And this see strong call. not burn we're look sorts be of win we're single inputs, important. we're digits. next and going think guidance view. to two, indicated We which I where very indication of going as those and all three look any the essentially, the ready

As few on into focused of sort we're on basis, wins to year, vaccine what look we remain these months all of you of we January on look have the and at moving we material a the But in things. the said past. – can another to going We'll studies on of come with respect the at towards get sorts currency of where final impact those a constant back things to in in we guidance. the be couple

Patrick Donnelly

and Yes, FX...

Brendan Brennan

sure. Yes,

the on course, saying we our that. at of time $XXX color revenue piece, in QX, point. this On were account year-to-date $XXX topline I guidance think of kind of to – the million topline FX having adjusted we from range now that of and at it perspective, to million In the our is impact an we the take of was And

that but seen half the most first year. was certainly have QX, in that the the dramatic We increase in part of of

where little of So just rates are They're about $XXX going. to million a of certainly the eye September. a north We'll end close still to keep bit. FX wobbling

of over hanging I but dropped parity parity, of think couple on number little we've got last a has the on euro a to more occasions weeks. certainly, the below

QX, still might But end the point, it's at think we this as a that about be of So factor QX. $XXX just to north million. of

Patrick Donnelly

of any FX kind of And rates XXXX, for initial number as today? Brendan, then

Brendan Brennan

excellent Yes, an question. it's

average in year, could that look year, this apply terms. constant was year this and change spot we in next – is a and year exchange we we out we're now if rights Steve's work of the again. as headwind there foreign we rates from where guidance what currency of But there's certainly think to next expect our something point, moment. X% I a of there is call To to like would lot about versus that think from do between no deliver at to indicative

Patrick Donnelly

interest. capital rid debt, of just sheet, then to some hear of deployment, on some encouraging paying that balance getting And variable guys you the quickly Okay. down

just mentioned still piece? assume the is do you. repurchases as talk near about that think M&A. through maybe bolt-on term? I of I You think debt the well, share there but How balance Steve, we in priority, Thank the kind

Steve Cutler

Yes. Patrick, priority. that is a pay still down is

the another a said, million know, of $XXX loan anticipate bit our paying M&A little in takes But we as all I of fourth time. quarter. you As

not – planning EBITDA we're around And balance debt. so sheet we're the about for to our to the actively starting because actively right back market go looking adjusted certainly to or X.Xx number we in zero look is believe

we balance our want significant got a that's We've use generating to flow. business strong So sheet. cash

we option But what as – next into like. we've moved do our you we if be. be next capital well get at with rate around keep we'll – and we we year, to going remain we're as again, out share got certainly, as M&A it – buybacks we as an to we looking will – our at so we've X.Xx. And be where leverage the Once, priority, to want contemplate the as

– will acquire. depend some of upon of will market that we're that will to in what pricing be be more seeing So the around that assets the looking we're opportunistic sort bit it what's available and a little and

probably So but months. a that we we – number next of are XX to factors actively plan. there, in going did that to in XX over space there's signal over That's going certainly want to our be the

Operator

you. Thank

We The from question. to Nephron will the of our Jack Meehan question. move Please question next comes from ask your line Research.

Jack Meehan

just a to and the backlog next much going dig maybe And shift mix wanted little how today is Is just follow-up what that's question, of changing? on mix possible to your Patrick's portion the oncology I rare disease conversion conversely, into is vaccine more everyone. year? Hello, dynamic. you. what Thank initial say bit just to it and

Steve Cutler

rare XX-ish percent take Brendan part to probably it's Jack, I'll might [indiscernible]. up And we going start this mean down. It's a going and oncology disease about significant that rather of of our what on one, than and then do. is I follow-up.

you If probably pretty look close at XX%. to vaccines, that CNS, oncology, us gets

of of kind mean, sort disease do rare of they trials looking course, trials as us But I for. be every a those long-term burn of type give oncology, study. tailwind on trial we're vaccines, tend burn. because Our a is And they in, And these days the to large, do patients quicker. oncology almost come

But Brendan, do a if of there we're part are little be of increasing headwind want you as our long-term on – do as a backlog you a do I on add? burn put and very significant drag, a bit they our they to are, or it it. work. they So like, their say,

Brendan Brennan

of the there mean, Yes. in anti-infectives. No, anything Steve, think I – proportionality terms of you're I on, spot and oncology both

of out the And lower as So into talked we've thing as in call one about down we moving still revenue in expect, the the mid a contribution probably kind from of part of backlog mid-singles that I next probably around year level. would maybe our terms the that single-digit this COVID is singles year. is into that

conversion So drop in of that certainly well. that is still factor some as a off contributing

Jack Meehan

you Got the access just about feel then related just to labor been? is curious, can trial have it. and site regional starts And in any conversion of Europe talk you just expecting backlog access? you're and the how Also, moderation dynamics, about rate China, notably which at

Steve Cutler

of a rate we internal – see at labor Yes, in terms our backlog access limiter least don't being access, labor for conversion.

with We of are in fairly that. seeing States sites at lockdowns on some particularly we've [indiscernible], United clear been there, nonAccellacare at our the impact and, course, some of

sites think space. drive in network aren't expand in by that other But network – that hoc and Accellacare we that hoping into some is have our our resources there of network have. that impact Accellacare as more challenges because more ad we're and of or can our more some of impacted the trials previously, So some I said, I out of that we dedicated weakened, expecting

the recruiting supporting makes Accellacare some So mitigate we key of our in can ad site if site sites, sites. particularly we to and as hoc that are sense network think through some addition that that burn, that sites supporting through of

say, sort in of to easier, on various but hasn't it of risk don't So a to market think I all thing. either. the it's any and worse – labor don't that's side of terms got see doing challenging got we're site We us the of access, things. that help mitigate any significantly there's things

medium not labor internally work to a so in who do going And see and term. the we us access the access to hurt can people being to to that's as factor short

Operator

you. Thank

move our your JPMorgan. Woodring comes question. question Casey from The We will from next question. Please ask to

Casey Woodring

me squeezing Hi, in. for Thanks guys.

question XX% asked Just looks cash piggybacking revenue earlier, unbilled of flow year-over-year. off it grew the like

and big any there are such from as Thank a what jump number? So drove you. just curious to in read-throughs if that the quarter

Brendan Brennan

and focusing I QX, I very in a you're we're a quarter that they that. take But a in do the bit around are that correct. of what significantly in of a I'll the more in we've the doing that obviously, on [indiscernible] piece unbilled I well, balance now been ICON of through some QX, systems seeing process that course of the revenue work Certainly, we we huge recognition to on good issues I kind obviously go NPRA see And on we we've had think process fact We've when is seeing, that we – that of naturally future balance have we has of had one lower Thanks, which revenue I driving We're think couple all a reference harmonizing been QX. through first, did us is what position one. brought point. we over where as is solid organization. returning our went this mean, so at huge, made and to a very, little had billing will platform of elements higher help as had year. we a forward. would had the Casey. going think,

of level as at certainly there makeup we're we down of look a we So be forward. normal But unbilled and there looking that pushing ideas. as go always balance will our the

area XX to days of we'd bad the longer So to in a region term. XX like probably not in the be somewhere where is

at down that billing, I and really the into how looking see numbers in play So we'll certainly a hopefully of we balance good as said, quarter pushing be will QX.

Operator

Thank you.

to line question. move Credit Please We The question. Suisse. Leonard ask from the comes question our will from next your of Dan

Dan Leonard

for taking question. you the Thank

if us comment wondering And revenue to of in XXXX? single-digit can progression, quarter. I in can the a Or response then dollar Brendan, you revenue amount was trial low you Jack? said give I backlog the of clarify, proportion So was that the COVID-related in

Brendan Brennan

X% in moment. single backlog it our expectation mid-single or at off XXXX was question Second digits low is terms first, a this maybe there is of was point the in coming at of about revenue

if the have on number? that quarter. percentage – have a we know I On – in Kate, do don't even you the the

Kate Haven

of digit revenue. mid-single terms it Yes, in was

Steve Cutler

Yes, mid-single, yes.

Dan Leonard

works. That Thank you.

Operator

Thank you.

take will from Bruin next The your from We question question. ask of Please line America. question. Bank of our comes the Derik De

Derik De Bruin

with rate Hi. of little just pullback any Can bit number is seeing your think talk Good do And like changing thinking about to and color cancellation and go-forward just morning. that? now, like there Just about X% how you're unusual of expectations in you Thank in a seeing that? a sort good anything general forward? you people some to plans, respect on about what you're cancellations you. going sort

Steve Cutler

Yes.

comment on overall more same. of the that, is mean, I – the the think of it's I sort Dan,

of changes our the you what either contract saw haven't Gross seen we're dollar backlog. terms significant put any into we in of cancellation, backlog with that the in fairly X% who wise, we've rate, opening number We the careful with.

money move public get private the to we But are my in their sort so the comments, are whether and said we and to terms in in, our we getting might studies more And follow-ons. of of be They seeing need. deliberate ever in they're matter logical. it of But funding that's of from or terms and signs be be the thing. an what companies don't projects that overall, forward customers, put funding doing, getting they in and in seeing ability in studies good there I some markets stuff for the smaller what markets good they're to doesn't it terms able as seem that happen

in cancellation question where the directed. we're space, your So seeing the certainly around not these that's rate not clinical in increase is an smaller –

as I same. overall, so of And said, the more

Derik De Bruin

Thank Great. you.

Operator

you. Thank

question our UBS. The Sourbeer take final the will your John ask from question. line from We Please question. of comes

John Sourbeer

Hi. the the Thanks at question end. for taking

at to ability XXXX synergies, there on you're of is you were But look that synergies and some year? mentioned next earlier synergies. accelerate those to revenue exiting partially the demand and things offset of if looking if as out On these we to maybe the revenue on here an environment change,

Steve Cutler

service other depends if we're is pretty providing upon won it not together. to we are studies one two our the wouldn't of we're These and we John, have always just track legacy They're accelerate tracked carefully. we this trying that thought we really one very in have separate haven't provided the revenue we carefully been might – organization, a mean, if but in I organizations. synergies, terms this remain organization Well, come or

$XXX So as are the the on we us we're time burn and that tracking a those and really that. expect we as of we XXXX. on basis. little And track we things exit million, – synergies actually to revenue expect to awards annual awards And for through, come take bit an these hit

So with what what moment, synergies provide opposed trying of track always them. the going where said that we to, on we'd or to at do. course, we're doing accelerate the is we're cost But indication said of we're as ahead we well we're

John Sourbeer

Thanks.

Steve Cutler

Okay.

the environment here everyone. So to and ICON remain and prosecute our very business doing to to confident customers We thanks execute about we're projects. at what

faster much, extend We're broader ICON call landscape our evolving the everyone, the to to you, workforce joining for again for across to thank in with continue our our market we navigate development Thank environment, on pleased we we as you clinical remain partnering and patients. the So dedicated very quarter focused today. results, third thanks and everyone.

ICON Public Limited (ICLR) 6 Nov 222022 Q3 Earnings call transcript