Earnings call transcript Q4 2022

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Operator

Good day and thank you for standing by. Welcome to the ICON Q4 and Full Year 2022 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Kate Haven. Please go ahead.

Kate Haven

you. Thank thank and us XX, full and covering this XXXX. for quarter the year you day on joining call Good ended December Also our today, call Dr. on we the CEO, have Mr. CFO, our and Cutler; Steve Brendan Brennan. call I to are available today's download would to accompany and our to note this slides website like on call. that is that there webcast

materially on current in and differ statements information expectations company's are today's not forward-looking those economic cautioned Certain results are current industry from will statements Actual statements. that of These with and business, implied statements available, including or management's be call statements and conditions. forward-looking listeners and the are by based to due stated currently uncertainties may forward-looking performance. associated guarantees risks future

as information may we Form to on risks the made. future More to only including are as statements obligation the X, any and information, XX-F of do undertake otherwise. in publicly result the they by And any company, update forward-looking events a relating either filed XXXX. found date reports Forward-looking statements be March uncertainties new about the not of or statements filed forward-looking these SEC are

selected their Brendan Steve measures financial be referencing will in This which includes prepared presentation non-GAAP remarks. and

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

more non-GAAP is or to purposes. the While information measures, to historical superior believe measures a substitute for non-GAAP certain not are financial comparable GAAP investors we comparison useful for

income diluted per compensation costs, losses, you financial transaction-related gains Adjusted reconciliation foreign non-GAAP amortization stock press tax the measures. adjusted expense, integration-related will earnings and release earnings net note adjusted currency benefits. in costs and their a exclude and restructuring and slides, respective Included the and share EBITDA, of and

today hour. call one Instructions] will to the [Operator limiting be We

Brendan like hand the Mr. Brennan. I call to CFO, would now over our to

Brendan Brennan

Thank you, Kate.

Full in million wins This $X.XX And were worth billion. four, quarter business of $XXX net quarter of wins $X.XX book-to-bill and $X.X net recorded billion, year and X.Xx. resulted ICON of net of the In of X.XXx. in awards $X.XX a wins a billion XXXX were resulting cancellations. achieved business net in of billion gross cancellations billion, gross business $XX.XX book-to-bill

addition in a $XX.X X.X% of billion, awards backlog X.X% of XXXX increase the of the an an quarter With increase new to X record grew representing on or of year-over-year.

burn the backlog quarter, quarter line levels. in was X.X% in with X Our

Revenue year-over-year The a rates a or in adjusted quarter quarter approximately changes was million of from a in revenue, on year-on-year X.X% headwind This four. foreign revenue represented impact in country X.X% basis. $XX of organic four currency $X.XXX on in exchange billion. increase constant resulted

of revenue Full a a year-on-year on represented from range consisting sizes, $X.XXX our XX.X% was and increased year top revenue. currency from a This XX XX.X% of X.X% customers, Revenue customer in XX.X%, of basis. X represented of three. customers of quarter constant customer Concentration represents top our increase top billion. or our revenue,

XX XX XX.X%, top while XX.X%. top Our our represented represented

XX.X% represented top XXXX, our customers In customer the revenue represented of top revenue. of year and our X.X% X full

Our while top represented XX.X%, XX XX represented XX.X%. top our

compared by driven quarter resource strength margin growth in and continued Gross direct quarter three. revenue gross the improved to was four. XX.X% XX.X%. year for quarter margin Gross Full was was XX.X% fee margin in utilization

period four $XXX Total of revenue. X.X% million In last was million total XX.X% or of quarter or in SG&A expense revenue. was comparable SG&A expense year, $XXX.X the

was million. Adjusted absolute We expense EBITDA was to expect $XXX similar year XX.X% total quarter the be SG&A in quarter Full or for million $XXX.X one. of expense SG&A revenue. level

representing XX.X%. billion or a was XXXX period or XX.X% year-on-year increase of In adjusted of year, $X.XXXX was XX.X%. adjusted EBITDA million the comparable year last Full revenue, $XXX.X EBITDA

$XX.X was was margin guidance issued approximately $XX income of XXXX. was interest of This interest four back million for increase year expense an initial year quarter totaled million Full for a our expense XXXX. million million, $XXX.X $XXX represented in The four. in when operating January quarter from Adjusted expense assumptions XX.X%. interest net full net for

rate The full XX.X%. rate XX.X%, income to for effective quarter. year share group XX% an per margin adjusted to to $XXX.X a earnings group year-over-year. the was was for $X.XX, The adjusted XXXX was the tax quarter million, tax was $XXX.X the the attributable net net effective earnings equating Adjusted Full an year equating XX% of income increase XX.X% share year-over-year. of per increase attributable to of of $XX.XX, million, adjusted of

and GAAP of during income or revenue transaction-and quarter Full the $XX.X quarter, operations from costs transaction fourth company $XX.X the year amounted were recorded XX.X% of integration-related four. costs. In to million integration-related U.S. million million. $XXX.X

year per amounted in from U.S. the million full XXXX. quarter, the $XXX.X net $XXX.X $X.XX per attributable $XXX.X GAAP income operations was the U.S. GAAP to GAAP share income share to or $X.XX for to to $X.XX diluted $X.XX Full year year attributable the to compared year million. share million prior four, per or net Full quarter diluted $XXX.X U.S. income million group the in for compared share equivalent group diluted or period. per was

the X.X% the expected The in foreign impact additional a the the the a programs call third discussed year, dynamics year half expected we and to in contribution revenue remain with in exchange largest of full-service in our year, with quarter longer-duration from studies. see from shift for conversion mixed continuing of continue place Backlog on towards average the lower overall quarter. first is backlog the as for to first vaccine-related the expectation a headwind full we

total are bps our approximately we sequential of XXX XXXX in the programs will see a for in approximately million quarter expense quarterly expected increase from down X% our year, levels. one. of the approximately full Separately, COVID-related $XX interest revenue to Additionally, represent

the compares in quarter, days $X.XXX days basis XXth at at $XXX December comparable XX and from a September billion from on basis XX Cash XXXX. a in up receivable the XX, of activities net DSO $XX was was million. comparable from operating for at days a receivable million December up XX outflow of This on accounts accounts XXXX. was XX, quarter balance XXXX, Net XXXX. with XX the September

saw an DSO align increase continued processes. payments to We we our as collection and in billing

encouraged billing in within three XXXX, the quarters had increase quarter first half in however, total XXXX. the an due quarters four record are, in accounts We coming by and we resulting in billed of receivable

circa proceed Our target is we and see to positive as still DSO XXXX. XX we expect days, through movement

cash XXXX, At billion debt XXXX. billion, at billion debt position December $X.XXX December XX, to $XXX.X at was of compared a balance and of million the billion. a net $X.XXX $X.XXX debt expenditure $X.XXX million. debt during company net net the leaving This Capital XX, of of XXXX, had and $XX September quarter XX, of

X.Xx, We ended X.Xx down XX-month from leverage the adjusted ratio of ratio substantially of EBITDA debt-to-trailing quarter EBITDA with of our adjusted at the net a net XXXX. end

of paydown Loan the to made in debt, the $XXX total such, million repayments year XXXX. payments bringing of our Our capital Term continue as deployment and million B full facility for to of priorities we $XXX on be the quarter, our

fixed-rate solution XXXX the in to at more finalized circa resulted amounting our total communicated around previously interest our rate XX% The proportion As hedging of debt. quarter expense of January, environment. interest volatile strategy total certainty our we to debt in the fourth the of due in our the provide to hedging end

the on $XXX total full of to the year, be end will current range. expense Our for the movements the that rate of interest throughout full anticipate be this projections Based year million. range year assumes we higher interest current expense in million XXXX full $XXX to on our year at guidance

I'd like said, that the now of all With Steve. hand to call to over

Steve Cutler

you, Thank day, Brendan. And good everyone.

ICON for headwinds and war leading we investors in was ICON to from year year operations Against challenges, impacted another comprehensive and financial macroeconomic Ukraine, the continued pandemic-related through several rigorous health focus our intelligence management. the marked of success this our results. clinical to as and predictable services, of and certainly deployment our become ongoing customer organization. consistent results our the journey as its deliver strong continued cost without XXXX not effects backdrop, issues care The world's for

two-year a the recognize of announcement processes ICON Health approach mark employee the important made our on through with milestone and union unified for of as harmonization organization. this Sciences. week We systems, the progress of across the another facilities creating significant experience we We PRA

utilizing both our we in of effectively teams our how can we benefited position and as as most deliver every and expanded has best approach customers importantly our companies optimally the to one lens Our ourselves the through of evaluate efficiently ICON. capabilities decision

full initial target Progress towards as ahead synergies time targets synergy to the one million communicated, continued, the $XXX line. realize cost of in with year our our of achieving XXXX, expectation previously has

for XXXX. continued the Our track million success XXXX revenue exiting of synergy $XXX which in on exceeded remains year full million after securing cross-sell awards, $XXX

patient-centric efficient for segments. fundamentals our continues of as biopharma services demand industry across customer healthy remain development The clinical

large activity regard to consistent We as customers business performance, well as mid these RFP have with out-resulting seen across and have show development biopharma areas. strength trends continued overall to as

In impacts environment spending the continue their biotech decision-making. segment, development broader funding manage and have emerging overall sponsors levels to closely as seen strategies we the optimize

has in expect that in encouraged biotech the not year. as RFP half bad project are this XXXX. in seen to current We debt And activity we but of segment have cancellations, been we material delays uptick a the environment, an of second continue the this muted or result

supporting will implications for find as customers our emerge macroeconomic assess they believe their biopharma strategies. the of potential as navigate we customers outsourcing uncertain Nevertheless, environment ways and opportunities portfolios, to evaluate new their

to Our with positioned their securing our share. and customers Further our success diversified appeals across segments. we segments, I XXXX and the am partnerships business this gain we offering in are pleased as to uniquely specific had strategic well-balanced point, in needs customize to additional across for market portfolio

that a provide sole was functional ICON mid-sized to a optimal including of with customized development pharma several an highlight ICON services, we and executed years, and we a number provider constructed sponsor a recent closely leveraging delivering service worked partnership be portfolio execution for outcomes. end-to-end strategic full model solution with integrated and of customer offerings. efficient their will this together, has One

customers' drawing we innovative a of patients faster achieve treatments broad service unique through ICON's this to expertise of and By development bringing wealth believe can model. scalable partnership offering, upon our goals

In operational customers' truly our therapeutic plans. including on This with insights is medical, we to regulatory customers our needs early gain with and are our program our valuable biotech bring solutions understand traction consultation development to predicated their alongside utilizing continuing engagement to team, and experts, customer-centric business, wins, approach.

recent lung area have a to novel and we accelerated experience ICON's target leading technology, adapt mid-sized customer's on experience success expertise broader this trend in the models. development. select are outsourcing requires seeing These which further leveraging and to wins industry of delivery innovation, are offers, we of instance, examples their CROs a in utilizing customize drug, recent of collaborating evolve complex to approval and plan a program with For in expertise development cancer, therapeutic

committed to practice. customer of remain operational development size of We focused that or preferred regardless distinct outsourcing positions This that customer to provide serve and flexible ICON segments models. units address our structure uniquely solutions needs

Our opportunities excited about in with lie significantly along of scale, capabilities approach, discussions we potential allowed and new are our engage us partners; number with a to increased has and ahead. the that

Innovation market. we most are towards to success and position us becoming and leading a our that that and intelligence as outcomes technologies build our develop value we world's critical element in we the initiatives is ICON executing matter of on strategy for investing further focused healthcare our advanced our ICON As at on customers. are proposition to in important analytics vision organization, of across integrated

activity and streamline across digital over enabled had setup a of learning and the tools hours we simplify process service AI, XXXX, in automation. RPA customers machine as launched impactful throughout efficiency like solar processes to tool through a year and million the ICON development to our processed study recently improve of by automation. clinical continue our platform, labs utilized application Separately, in for process. X robotic We offering, very

This sites manual to sophisticated technology reduce a interface rework, with reduce data errors. features platform entry and minimize provides

management automate long-term activities strategy component Solar of capabilities. driving towards enhanced and is one in sample mobile of site to our applications greater use

of EcoVadis, from Additionally, XXXX awarded of in program our provider score companies was XX% report, our program XXXX participating and trusted a quartile XXXX an release improvement world's achieving silver overall of most this following sustainability in the ratings, worldwide. the from placing medal the ICON of ESG top through

opportunities important ESG commitment for We aim progress patients. have employees; like a where and and our ICON areas demonstrates further Cares, also we our initiative company-wide this monitors that in and to goals our on to and launched ongoing inclusion impact We engage partners, our in across belonging diversity, area. people, a can make communities positive advancements identify

X.X% with constant in very solid performance ICON financial growth organic our quarter basis to quarter delivered a in growth XXXX. over or revenue on four results revenue Turning four, X.X% currency

were growth dollar basis. the impacted revenue increased the Net and strengthening a COVID-related foreign same comparative flat on by on year-over-year of basis. the year-over-year Excluding continued and bookings be sequentially XX% to over currency work, U.S.

X.X% Backlog end strong particularly of XXXX, large was our service of mid- backlog grew the and our December pharma customer as segments. at from for demand the

strong increased year-over-year fee also our growth We saw improvement. and gross revenue of as expansion sequential utilization drive direct and margins helped

XXX management best-in-class global to of focused resulted our XX.X%, adjusted support our basis Further, and sequentially quarter cost and EBITDA four initiatives XXX from bps an margin an leverage model quarter in XXXX. increase of in business points of four

expectations resulting increase share in full in met XX% XX% an respectively. per and earnings quarter year, adjusted our of Finally, the both and four year-over-year,

million on floating-rate in by four, to end total bringing $XXX the Term the debt reducing in repayments our making a for quarter $XXX payment million resulted in of net facility a progress ratio X.X our full debt-to-adjusted times We of continued and at year EBITDA exposure B Loan our quarter.

to averaging to expect $XXX our million our in Term facility, B million quarter, payments $XXX per XXXX. We Loan continue on

see debt focused further our our building our existing enhance strategy currently near our paydown pipeline. M&A On opportunities activity interesting to a deployment remains that note, capital term, on in the offering. differentiate while of and capabilities Our number service increasing in we

in well and growth for XXXX year. performance quarter strong Our positions four this continued us in

the representing a for growth EBITDA with the We X.X% to year-over-year adjusted of to to full that X.X% range reported billion a financial adjusted billion, year-over-year guidance $XX.XX year earnings in basis; growth year revenue our XX.X% This X.X% growth are guidance $X.XX reaffirming with full per a issued of was $XX.XX, of share in $X.XX very XXXX on and to representing on XXXX. basis. January, strong continuing assumes range

set by the clinical to the outsourced for focused demand we fundamental development. have as an drivers growth of longer-term XXXX We remain on navigate targets we successfully continue environment, supported uncertain for

in revenue ambition $XX billion M&A we and XXXX. contribution remains back of of envision half the returning revenue Our place, in as this year into to

the well our over already EBITDA toward growth rates We've progress target made XX% in of despite significant strong per past share the margin as earnings adjusted excellent movement as year. interest

the ICON. of turn through To organization find at to regularly meet do customers' for employees ways the during needs and the towards and the moment, continued team, we forefront a our we And are patients our at [ph] support our year, to sites of what commitment across shown as globe.

to We the our are be employer constantly industry. of challenging ourselves in choice

making areas are environment an success we investments ensure as in and and will work talent end, and retaining training, where people feel in challenged career recruiting this well our in compensation and supported proud This talent acquisition. To roles. to as focused such people in leadership our maintaining as are their development,

in employee the labor retention, industry. market our contributed has XXXX trends competitive seen We sequentially throughout in month every believe despite this to the which have very we positive improved

America's In was with recognized XXXX. XXXX. List was industry awards Employers the recognized throughout full-service addition, for CRO. since we being number our Scripps best I Furthermore, as Large were of team proud ICON the awards the Best at of named fourth time a particularly to XXXX And Forbes

ICON. In and before move across strong we want Q&A, performance the colleagues closing our recognize and of to engagement resilience, to I

and our patients. We and efforts are excellence ongoing to sites your for grateful customers, for commitment

now we're Operator, ready for questions.

Operator

your Draper And first of ahead. line from Guggenheim. comes Sandy question the Instructions] go [Operator Please of

Your line is open.

Sandy Draper

I'll the What related very customers? caused just the expect sounds change flow. year like is what in of you and you over to billion back over keep question, DSOs the can current again by I think just billing change guess, And much. flow think should macro you're come to cash dictated on, remind that? terms trying that me the but free still down. to targeting It it terms. that first cash of Thanks the you just Brendan, to happened course environment? understand short, And how Great. improvement in we then the the I $X and Was of about try if the there to

Brendan Brennan

prepared We The a Sandy, that were first as the billing was year, a have little probably saw I XXXX. impact it be complex, of work levels the of cash if this really know that some QX liked year. a half the but said would than levels significant Certainly don't particularly. lower in a I of lot having we in in during to comments, I of positive course integration us. our that And honest. did earlier do flow billing my we and QX improvement in see in distracted

was more say that. of it I would So

our billing, relatively contractual are terms or I think terms our commercial consistent.

and business a significantly, good said, -- billing of large we that and we customers but of in lot much us have really HX; then, with. mix think have very I changed get of QX hoping hasn't and Our story be small and seen, you'll mid, we have And of is back cash as it mix will consequence terms QX. of terms have in strong I on I'm a a as so what that through positive go we familiar conversion impact a that, in as very track very that

Sandy Draper

Got it.

think I that's follow-up. a And is helpful. Okay, this then related

like, paydown. really In it's focused debt it you Steve, terms capital of on deployment, commented sounds

My assumption and given a repurchases the of that reading I that is I'm right You stock bought paying right. just debt. pretty if environment it's or the that's on want down fair three in focus haven't interest sure share just any to probability back low to last hearing the quarters. a one, rate make see

Steve Cutler

a would yes. assumption, accurate be Sandy, very That

you at our while agenda. out, point, We are will not rule buybacks but focus And point, really share paydown. on this never on at high this debt them

Sandy Draper

Thanks. leave Okay. the I'll floor.

Operator

you. Thank

And Bowers Please Justin your of comes next question from Deutsche line We will the from question. go now go ahead. next to our Bank.

Your is open. line

Justin Bowers

good everyone. Hi, afternoon,

entered for say, mix Just are has increased as endemic can business; that let's the your shifted state? backlog. enter or the pharma over sorry, say, the on policy months us you you a as solutions remind so? few the on And requesting, -- how FSP Could we backlog and and the background. whether the or that Could XX you let's large we characterize decreased then XXXX last,

Steve Cutler

models. a pharma, backlog number talking I'll -- take And large models. of various have we of about Maybe them on mix. we pharma different that component have full think I question pure about it to the it very talk sometimes whether Most companies the Brendan it functional, whether see of a offer, can us think Sure. be you when shift. sort We that service, see of be some the Justin. large services whether be

do of hybrid about the continuing larger mid-sized models service, are more are some we talking the And as about to full probably down the There service, or more, certainly biotechs. so most more functional. them pharmas pharmas are that. Others the the a of are full down the

see solutions. We And functional stage. positioned the -- us I or in because at this don't push leading way a major think well that those those can so other of of those the feel purveyor offer sort any of one being fine a suits we we also with we in combination group of market well solutions services the or in positioned the and either

others they're want if any of probably the and but as there's functional areas, And certain model that for of suppose, that trend, full very where cognizant service they more well. hybrid benefits towards I so it's for combination

sorts have of if anything, large already. models of towards probably pharmas -- it's moving towards hybrid, really so more but perhaps those particular a place those And of bit combination in a all a

trends the so minimal. And are

that want you talk Do to one?

Brendan Brennan

Yes.

heads months functional of have we a annual don't around got at actual conservative We In an terms out we've those, into that. go front on in period. very contracts that contracts, we'll terms, much in of it XX in on us the XX-month how sure we'll of kind those make Justin, And backlog. for staffing we're so look billings backlog book basis, fairly based They're how we beyond renewals, of FSP that. many period then on always

anything over go of that obviously, front more We four XX years. or MSAs, three in generally have can't wouldn't directly than months us. take They

in say to say I we've In end of of movement seen terms year in outsourcing. proportional to year year-over-year, of the end wouldn't full the let's that the mix FSP 'XX, increase the backlog service a 'XX significant of

full XXXX. In had fact, strong outsourcing in service very a year

certainly Steve's but blend. it's in always to straightforward the massive impact that the shifts point, on a terms backlog mix. never It's would So of no

Justin Bowers

and some a it. then top reflect the Does Got commentary. that And to be quick guide line the just then guidance? Or the one on would M&A? range incremental Steve's

Steve Cutler

that Justin. the was is there M&A guidance assumption with in no The given it,

be year, would seen. there to potentially end we're to be but some the back So upside the remains of able if in that execute

Justin Bowers

Understood. Appreciate it.

Justin Bowers

Okay. Thank you.

Operator

Thank you.

go the now your of line will And to Please from Donnelly our from Patrick question ahead. We go Citi. question. next next comes

open. is line Your

Patrick Donnelly

morning. you're mid here half Good kind in mid that one you curious questions. visibility It conversations you're of the of the be RFPs that, biotech sounds conversations of into of that pharma. there. on talk up? you strong And biotech terms on Can just near with the for taking offset customers remaining term. softer. a Steven, hearing expecting large the then were to from to maybe bit. I continue like a large guess, of level to my the enough for different versus to little little that kind Thank the about, just to for ticking going back kind the like hear in confidence on just the back just Would second sounds the maybe It customers,

Steve Cutler

Yes, Patrick.

more and careful down having deliberate as With ago. biotech more has RFPs certainly received, that XX indicated Interestingly, the I flat. with my think, their in than but better slightly we're being and in a the been the their environment it They comments, than more months I in was, uptick of -- are muted, we've of say, certainly is their capital. reasonable value the conversations seen we've allocation or in spending number

perhaps smaller answering they development So or asking where their to and get a specific questions focusing point that questions capital. sort projects can again, specific further on indicate them raise programs in would of

more So it's biotech space. deliberate cautious the on more and

pretty hand, part other we've large of their focused being about -- the conversations being more about pharma, a their some more positive some spend, that's pretty On in a seen around greater the partnerships, spend. part and of mid strategic;

savings discussions saving control but major larger and partners of player as the talk to generate greater have if we're or a the and if capability. we can portion their our go cost we we money around greater about are of there, a a And spend. sort in able have receive proportion of industry, pharma to there can because Certainly the we're able we cover back to spend the

a it's pharma. large of So conversation with different tone our

sort these normal two a opportunities said we've particularly sort overall position the in And of downturn the It more of or average, I and upwards. the times term, midsize of look large a biotech but on with back to long perhaps hasn't to at longer-term on biotech, we're year long as had in back We coming rate. down more quite some I've as the that a term line of the in the number run ago that's push calls. coming a of countered on seen and a -- the we're

the the I and segment. XX but kind months and the much she as Biotech I'm be in pretty be do forward. expect -- six much same we'll and think I we'll moving goes up that to optimistic, we going of will next on steady

Patrick Donnelly

Brendan the to to nice get the of one Okay, the forward on pulled guys lever the to for trying pulled piece, the maybe little and just no feel a pull then bit obviously synergies, margin pieces you some in I inflation pressures And there? see you, being on helpful. obviously talk guess, you offsets and Can a the synergies. be the just about, wage of forward that's able Just then terms pricing? a moving for maybe big synergies, this year you

and again forward? left What's just this terms moving but the expansion then continued as about not kind 'XX, 'XX of the you, think necessarily comfort the guys. of pieces after synergies that the beyond you in model this beyond in pulling Thank there's

Brendan Brennan

Yes, - I of - of we that the hadn't that from CNS changed we said the think fundamentally deal I commencements one spots. think our was things the

So always managers. careful very we're cost

think been obviously, completed I the it we as been before. since transaction that's apparent, had

of at one and as indeed the think I that things progress. out and through look XXXX, go we XXXX margin into we

the good to very, good very 'XX, sustained the as 'XX, go want obviously that in end made in and 'XX. We back we progress see progress, of the developed we through

So that I start it's and It's call for during I of quarter the to similar slow the four. think that prepared development example, remarks story. my in what but level had about of in of SG&A, we on more the the mentioned dollar year. course in one, quarter saw we

as base happy while very, solid. again well. thematically very about that line. QX controlling So gross top cost leveraging it's in Very with the margin It's obviously, progress,

ahead can about sure staying obviously, those establish to well levels made goal that through making of I those target. levels progress we're see XXXX, mean we're more considering of and is walk towards we our and we XX%. as mid-term So me, and at the XXXX stabilizing you with of getting for kind as

leverage on we point, in in never think, left put about we beyond really think that that's our further honesty, organization when all the I ambition. a the ceiling

So to we at this ambitious us say year. see would where for course continue move and think to going about towards XX%. during be the the We're certainly will another have then organization it the that And to beyond further of this would point in expansion that I go predestine point. we but there. be at won't I about margin time, we can that from look

Patrick Donnelly

Great, thank you guys.

Operator

you. Thank

question. ahead. question Baird. Please comes from from next the your go And go to next Eric now line will Coldwell We the of

Your line is open.

Eric Coldwell

you revenue If later believe, front. towards start exit I Thank last some there you. were your this I I in remarks maybe larger conceptually the bias higher know revenue this year, provider it just activity not year, the or the I'm end a the - on year? mistaken, comments prepared of comments early preferred I'll there guidance. of emerged, was in have opportunities were as mention the of with the on some pipeline the two. could that range there that, if

just on? how do I'm what at the deals, preferred in updates or there some And larger on those perhaps Are materialize? curious. negotiations of if kind many any you're might pipeline available timing be looking for of

Steve Cutler

they the Yes, too towards ourselves we've these get range preferred I'd of into customers. typically far - expect be ahead take They while. preferred you deliver of a they in and point. Eric, work the a for We're sort provider hesitant number fall terms some These full end upper that award mode to this a the pushing with sort thanks of mode. in a always partnership you of at of of sort said before well discussions questions. of to it

will the say been a partnership of with that had have on discussions to engage significant we players wouldn't pharma not happened union PRA. able formed number we've large I with

the for So of but of we things deal to as be in are, to was bit rationales we come one those a time key the little feel the these that conversations through. - always, take

of we'll next of stage. towards necessarily revenue our to on these or So calls two, in change case. guide may That be update if you quarter but us look this certainly the that's if high push the of the range I the end ready wouldn't at we one

Eric Coldwell

question consideration if a like, so or thoughts perhaps on opportunities old this or of a in then valuation just around, of very approach is been point. string-of-pearls commentary Thank in that's that something what ICON additional what with confirmation seller on current your and interest, the comments versus could my the meatier then the undertook fair. a pipeline curious here? you sponsor us the areas on I'm the much. larger bit thinking at looks or And is Yes, And around pipeline share M&A. you

Steve Cutler

Sure.

the string sort you out, you pearls. operational seen so That don't - of sort really if deals type is that mentioned back We see of sort to in on any real pipeline. big M&A. modus the So we're of transformational operandi, like, of

track happy that We're we've I with very progress anytime to we're down but done in that think going I think making area, the go don't again soon. that. we're

We it's usual are looking - areas. the

real the seen some There's world evidence We've group. There great real-world in are evidence. some plays. progress technology

group significant there. months. very late-phase Our over We've done made progress well last has the XX

space. continue so, feel opportunity there's to we in And the growth some that

labs, Our be lab we're in ultimately opportunity. we'd where like an still that's a we so behind little the believe space, to

the of There areas. sort of some around areas - Mapi some and and on are some some did acquisitions those sorts of around previous the there of we building are

So there's, we and areas a number well. contribute of that we line tuck-ins particularly the our to of line and as top bottom can course, feel meaningfully

pricing, terms say. to think In it's of don't fair I

of We a haven't much seen decline.

going the still still sensible fairly in careful to how pricing frothy we is continue and Obviously, paydown. be so space, is on that to and The allocate. with fairly market can we the we're still and frothy focus debt

we've there, very continue so, progress in the all the - can but of look so apply context to of I'm opportunities the we of the at where have. good best And made think cognizant capital wanting I we'll that we

but cost looking [ph]. doing it's crazy or have be we'll a multiple to from probably an nine from won't believe come next, months in opportunities at that something six or the point view, we of actively pricing of view And well, overall some through and anything from we're a point

Eric Coldwell

thank you great, very That's much.

Operator

Thank you.

go will question. next We your now line to Please from your next Barclays. the Sergott comes And of Luke from ahead. go question

Your line is open.

Unidentified Analyst

question. is and thanks on for This Luke for [Salem] the

some lighter So of the just your the to XQ and on XQ guiding the remainder to compared pacing one a year. peers for year of are

else wondering color and if Thanks. anything out billing seeing there trend, other the so cash the XQ, Just any to appreciated story process? flow a you're there would free similar on call be in than

Brendan Brennan

Yes, I might take those ones.

the made contracts probably story comp contract is quarter. we go as QX working the incremental ones on And so all is into pretty we're XQ, on that in of things the same in long-term are side the I think it I fact currency toughest much the so you're foreign we terms businesses, the obviously, the to reference the of of think growth the moral working QX, you're about In

significantly obviously very comp FX where it's of summertime But there's during the XXXX. moved obviously the a hard with dollar, very,

it's So QX. of I QX, think that's - probably true

higher perspective. So looking that, QX the obviously, nothing outside I comps way QX, in improve. be I a should will QX, suppose, think QX, in totally, of it, they QX, we'd definitely at the That's but be

QX. well, free vast it yes, in cash that disappointing. majority The was the flow the On related as DSO to of

making my on on were comments said to that I of think billing. really we do As back I top Sandy, sure more that around was

it then in a a I collections. and think the the us caught slipped behind that year consequence as little year end of in of earlier kind of the back cash in terms

looking. we're So

of to quarters. good that obviously we're whole going said, first important are in on are said other our very that of in different very, on sure couple make was obviously to there the And of path QX, of in capitalize of our we're to billing investigators research some the terms the making. of we we process. to I and QX That payments which clinical additional critical payments certainly elements top And all very quarters look had and that

getting haven't So expectations, as those of certainly, into still we flow. the that had of course as all top flow, factors cash year, conversion the the negative of outlook I through our go free our of flow the go cycle in good changed on combination quarters Again and we of think cash of we about that cash 'XX. back so on the forecast terms seeing ambitious

Unidentified Analyst

from it thanks. that's Great, me,

Operator

Thank you.

your the next line go question. now question of the will ahead. Please comes JPMorgan. to go next Woodring And We from Casey from

Your open. line is

Casey Woodring

you. thank Great,

notable few of of a peers in ahead a So One through are is going team spin-off. the your putting some reorganizations new here. place

development Have your can increased at in same to looks decreased your rates win maybe SMID their all team. the from reshuffled last And months? several biotech? attrition then sort as or has of business point, landscape, on particularly perspective. what over on the Another employee competitive like the Curious you touch

Steve Cutler

Casey. Sure,

actually actually with - retention mentioned have - improved been comments, rates I I'm in attrition we've as 'XX. them. - we delighted Our I my through think, We've month-on-month went as

to we've pre-pandemic So now. it right levels got where was retention our back

that's of having. that the have been our think of may we That trends challenges don't I -- there. know. see because maybe partly of some competitors be improvement continued I

[ph] allude that in to have job for with have that improving. been employees been delivering You'll doing space. retention one has pleased our customers. heavily the overall to our very a terrific We've in been them, And way but investing our we're

terms competitive pretty win our it's the it space. remains nature and well. of - up there, In biotech And always held a the space rates competitive have

if feel challenges engagement these and about they anything, We been some on the much - bid of - in haven't the we'll space. the think, these has term, we share to been in customers sales terms our and because longer some I opportunity good have our as market what of side, this to And the opportunity do win gain rates really on. strong. but quite of it's feel with in

some some of there have -- challenges. competitors As are our you noted,

And the of well close we up that most tend the been be to with relationship works don't, they the we're always ready feel of with They and come feel solid. a customers good of course, a overall the rates and market. win but make to We but sorts down. that a with larger of we to do opportunities, we they smaller little And have have able ones. and have little be those volatile going that course, we go model bit,

and in focused the that and in and them some and they with the they is put us what we willing customers services need that results the need, effort that in they get resources which large they and they focused ultimately outcomes, feel And that they biotech get they're the deserve. we gives people able work company trust focused that about really and we lost feel the - and organization. biotech feel have ICON attention and reassurance that space, a We to companies the the the biotech and is entirely X,XXX not

Casey Woodring

some there's Act in, large pharma Inflation I impact to potential the can R&D around just And spend. if That's then Reduction its maybe noise helpful. and squeeze one been more

of out up that many impacted be conversations just be coming you. pharma companies at but your Just to of a to get that spend IRA conference, are thoughts has and the wanted all? increase sounded expecting would could come if risk if Thank pharma like R&D on your it with our year, those this in

Steve Cutler

to the hasn't large with with regards large much we're respect generally The conversations in - as that come and IRA calls indicated, there up And our puts some that. is seeing, pharma I've pharma the markets, - uptick, is biotech some muted more large is counteracting very for mid-sized in mid-market the approach is little market space. a on the of sorry, positive us, bit pharma the

challenges. there mean, are I some IRA, So

us, three, the years is on at that customers. understanding And that our four our overall, having stage, down impact at track. be impact hit this it's but those before years impact they there may are going several the My track really with down point, some talking no We're business. really

Operator

Thank you.

to your Please Windley now go from comes will next David question. And next go We the ahead. of line the from Jefferies. question

Your line is open.

David Windley

pretty have From And talked to has Hi, first kind thanks about in the been some stepped similarly, quarter margin cadence for you commonly thinking Brendan, fourth follow-ups SG&A. a of weave upon. out into questions. taking my quarter about that wanted touched the kind of of I if topics already better? operating expenses, and standpoint not

positive a significant Your margin. ended very fourth on spike in quarter in 'XX

if you're expect where just wondered to as to EBITDA look how 'XX? the can about more SG&A, ending enter margin 'XX you beyond you you I overall talk the so, relative And if - precisely picture

Brendan Brennan

start it health comments with will off where - subject the that, suppose is the dollar - usual warning that euro at my consistent remaining rate moment. Yes, I the to by pretty

So in we've crystal engage your the that work I ball pleased our of with we're one, but for XXXX. during course - the of cost control terms done

in that of allow us particularly a and I doing pieces the the think were one the 'XX and we SG&A some of during made of was infrastructure projects the large-scale some of would take we points terms step of costs. to course things the

saw as trended. in how that's we I and went You terms of you - XXXX QX saw through QX particularly specifically think that from into

very of I XXXX. the nominally in course the are, for We through we go suppose, terms much remain dollar that to level same in planning as

advantage, So year-over-year certainly you if of is profile. in a margin terms that like, significant

course sequential nature I was into throughout good point of think the 'XX. the it and about that QX your in saw to then the progress it's we of maintaining QX

in may 'XX we QX 'XX, maybe of nicely from quite not as have during margin smaller go the delivered in through back and a then more kind expansion year-over-year building to you the up done spectacular sustained the four, be we still So profile a QX 'XX. - during built 'XX, saw way, the quarter while will work I full in and of XXXX think as of margin quarter-over-quarter on off as stepped - in but

David Windley

finance the legal, those to accounting, I the core I those PRA strategy offshoring kind finance some ICON's U.S. billing to, one over activities of presume, infrastructure function that moving and activity you're of Is is know making, your of dismantling that cost points India? the of domestic HR, that what functions. In essentially kind management disrupted you're things that is

Brendan Brennan

any on Well, you're doing it that. happened a significant time bit be no, that always even I around there to there's would I Dave, of mean no, that, an all. at mean, an of integration say, me nothing element so work, front issue was

We've achieve. organization well think suited However, to I structure place the place great and now. we now do what we've is in a we need in that a have systems to got got

the of So we lot 'XX. during an course awful did

the project of the organization. staffs were. at across our where the We Oracle at looked looked We implementation

things half were in the awful to the of lot is taken the cash first bite sure door. in the make obviously the off we together two those and think we chew to delighted year. get probably in We're got course getting there. the I now an And focus

David Windley

highest fourth maybe follow-up dollar/euro. but the in quarter wouldn't to have thinking is the but just this quarter 'XX topic worse the any I'm you slightly Okay. on second be me, in front the don't at differently the And math for of revenue come a headwind the I hear than faced. the then so front, first on

I'll right? one of And two is that it ways ask so

down the for X.X% number steps that thinking burn the from about you're that consistently hanging that with we And/or year? at is should that pretty a or be kind rate quarter of toward rate in full looking burn standpoint, the fourth something

Brendan Brennan

comments, your think, I FX on yes.

I into quarter think, fourth shouldn't materially different. be QX, it

the of month shouldn't say. be about consistent, QX got in currency or was least. It's materially too the that's this we talked at around and at in Again quarter, between that constant much move point don't assuming different the we uptick end so end so should haven't in quarters it of be -- rates fairly the quarter We that those I one. - at average shouldn't the the now

to On reference think the COVID, at We continue rates, vaccine I year. we're into I there. year. two go of made to still parts lesser a course a there's play a There's we probably that being back obviously the that, work expect obviously over coming last about bit this seeing talked conversion part, bit as the we

back around, So traditional to mix business going rolling of that it. it's still model, more I'll call

see one probably I think, something to step full the QX. yes, step on we've Dave, a you that's from of And will a down. bit So down year, expect QX would I thinking guided little a X.X%, that, we're that about so

go as do As absolute quarter-by-quarter. our to best we maximize it to try we'll through always,

David Windley

Okay, the that's great, thanks for perspective.

Operator

Thank you.

your will from the line Elizabeth question. from go Please next ahead. question comes Anderson to of go And We the Evercore. now next

is line Your open.

Elizabeth Anderson

is a now cross-sells? transaction? so -- predominant bit sort could XX for on question. in of guys. the Like are sort months just see there was What much about cross-selling? which a plus you of do I wondering the cross-sell. where Thanks sort you the you Hi, directionality million more little talk $XXX the that opportunity And if of post

Steve Cutler

the selling comes essentially they in that that door. the have not It's we're organization have. just group we we legacy to in monitor really at pretty in It's the -- the biotech ICON Elizabeth, carefully. cross-sell, didn't legacy the or organization cross-sell our anything services what particularly looking PRA to that

is of the a the sold lab best of the it -- lot predominantly. We've So example business. in that's

is sold all just positive. the have IRT a sold in being lab $XXX because sold predominant Again group sort being in Then that's we their imaging not ICON Lab year. biotech there. imaging being there. but in is FIRECREST things a our so business last didn't legacy labs, and selling proposing of we're million the sold into there's PRA the like It's projects, is is now group. our there. which lab,

Network sold. is Site Accellacare Our being

into sort coming And other said, wouldn't that organization being the solid. group a results biotech are the into lab the of of or I as biggest, that services have but in So number done measured now coming past. fairly there's And varied we've the more are carefully. that our

track a feel to of and exit selling on to we take happening. we're at and Now for that 'XX, is anticipate don't allocate in it's course, revenue that burn. until little come but progress. then the well And work we to while, going make that being And we synergy

Elizabeth Anderson

the total the hard think go-forward be last expect some one I forward basis? COVID Got -- mean of just sort of point? X% it. And I of helpful. cleaning at say, do Do up that on very kind before. sort question, commentary you revenue like to rate this That's of or sort that or you year? of end ongoing of it discrete to before but other kind it's projects know it's And more amount on is half some going an a

Steve Cutler

you the Elizabeth. more it's Yes, that painted, latter scenario

treatment There COVID whatever, from last]. work, be forward. decline a the always going but So for it's would X% the I so the be going are in we work, don't COVID declining -- moment. think, win certainly level to of lot time what year, will be it I a of our a X% long part several work is of component portfolio, follow-ups, where will say second didn't years last of [was We long-term we from half probably

Elizabeth Anderson

it. Got Super Thank you. helpful.

Operator

Thank you.

from the go Suisse. go of question. question And next Credit your comes to now Please ahead. Dan will line We our next Leonard from

Your line is open.

Dan Leonard

you taking question. Thank for my

clarification. currency RFP And part foreign The business know of aggregate of large these been has overcompensate the year-on-year. mid-to do net I were is but quarters for are caution? think you enough strength last couple industry Or to a small pharma down in trends the bookings a reflection your Just biotech driver, of value? a

Steve Cutler

levels. that's the has still downtick focus our large Overall going forward on think when And midsize rates. it basis, believe some And we they're our strength improve if going We've on see seen the a space. pretty have can and bit forward. on that we're of allows we us RFPs in I probably them way. it -- do pharma, and both, Dan, flat counteracted the a biotech about healthy I been we -- win can XX-month win that, we rates certainly and that trailing put solid and the and we on can at strong even but we

the of even very So the certainly more the we're of I business pharma. has fast that been seeing months. XX, pleased the a well. but doing as segment, XX full biotech muted quite is last and in think, with opportunities and say, over very said, And those; I we're changing market dynamically quite we're we the large I as And XX, taking and see, midsized advantage advantage, part changing,

Dan Leonard

that in clarification seems currency And half Brendan. the back discussed had Is for just X% quick a Because think, the before, guide. tailwind in like of currency, currency a foreign 'XX I it be a Brendan, Understood. foreign on year. headwind you still the could the case?

Brendan Brennan

on predicting one. this rate on a FX best I wager X%. Well coming X%, but thinking into suppose, the from year. were the part done is the little X% has probably a the probably Dan, still Yes, put might what where we should it's of It softened do. we bit

I say materially but, different at know than probably So enough the materially. said, X%, it's don't out so under better it's a as if little not really X% I I'd point call moved this to a perspective,

Dan Leonard

you. Got it. Thank

Operator

you. Thank

next Meehan We will ahead. question from Please to from go of Jack Research. Nephron question. next our comes line And now your go the

is line Your open.

Jack Meehan

everyone. Hello,

related. are my First margin -- question both questions sort of

on on an on you've through. us wondering environment, price card; update if The inflationary success was I more any first and the in rate putting is pricing. you had if could the give just

Steve Cutler

one, certainly a that although it's what inflation the above I ago. take in success We've it had would think more I'll with a year our pushing probably Jack. is, of I forward than it's say, rate was, -- rate customers we've now -- normal a increases, had negotiation say

above-inflation but are I'd moves inflation in bit cards, bit on those maybe rate probably And a That's years that, three to get happy. coming understand more back above you're do say so challenging. if row customers an discussions of a They a little two, -- of happy with overstatement. sort see

of a Shall that that it so stuff. pricing XX bit -- I the our put some we And of course, discussions that's environment their salary challenges we well, have customers with benefit, becoming it on as competitive and So is the -- particularly ago, as of but are that want always competitive employees to do say, our good more probably do competitors all those, understand way? basis constructive, keep a months than we say, to having. are the some was, I our

So I an watch area we as but it's we carefully, challenging. little more -- a it's discussions probably but feel constructive say,

Jack Meehan

then on thinking Brendan, attrition And growth margin And throughout on can you just XXXX? how wage year? you trended for for progression what are provide some color gross the and

Brendan Brennan

we I'll where said be on progression. keep we happy ended for Jack, XX%, of can now, long I And I've with mean, QX the we a ballpark that time in I'm super if can up happy. margin in

made of of anything in I that maintenance Steve elements suppose see competing there in really year through coming margin our kind a gross XXXX again pencils of about as is of sharper still There the so sorry, the for is XXXX, bit much -- of course as pricing. -- As line, a reference story terms Jack. we inflation salary that the on to

was.... The second question part your of

Steve Cutler

Attrition.

Brendan Brennan

manageable it 'XX. was during -- No so Sorry.

growth. perspective. of kind then parts which attrition every couple saw as we times, a hidden retention you seen, two was if said, of increase. commented wage piece, the underlying a Steve there's we the is always month As like. And from We've there's -- There's the merit increase, better to

work cost as well base can at higher that staff efficiently certainly the manage obviously because coming you If can you new are a price. in your down,

those still the of is than and certainly last for it workable no 'XX things that profile. think certainly blend margin I still So worse the within year was

retention should 'XX, from 'XX. the on it be inflationary the well, you And worked some 'XX. as but terms we can looking impact think course that margin profile the I as in see, salaries improved during we'll offset of through rates that So at of go of

Jack Meehan

Thank you, Brendan.

Operator

you. Thank

the for last question Bruin Derik comes And today. from ahead. We will America. take our from go Bank De of line your Please of question last

Your line open. is

Derik De Bruin

good Thank fitting me you for Hi, morning. in.

been have lot asked, I'll since something of things So to come up with try a here.

the of asked like mean I lot a rates. ex-COVID of in they're the a CROs some XX% and lot some about -- So investors companies from you've saying get numbers we growth this. report differently got

XQ. growth outlook, is core of ex-COVID sort like rate in organic a What growth out called of for? ex-COVID your sort XX% outlook, You

Just in. that trying headwind some to get impact the on comes

Steve Cutler

So you're essentially for -- looking guidance on our

Derik De Bruin

yes, Yes, guidance yes, ex-COVID, be basically yes, growth, underlying what's yes. your your yes, core would

Steve Cutler

What our guidance would be --

Kate Haven

Yes.

a what 'XX. in XX% ex-COVID XXX -- sort basis 'XX, you can, think, that between looks Derik, called So we of was was point out revenue year The so headwind those like I full get growth a about constant from it's 'XX. to for currency year-over-year about two

Derik De Bruin

late-stage that's impact your the early a obviously stage. there to Great. And to in sort had do going have think stage That's and I've you. the what I asking don't fall had wanted. Thank [NHPs]. of like we've the investors some a of issues like sort through market see -- there's I been players on the with some but which the ICON, early late delays number asking stage to the flowing investors study of future you in a potential thoughts in

Steve Cutler

on, of really Derik, I focused to express the in CRO. any that our concerns The think, outsourcing any of we customers the us. projects are had preclinical on haven't about in they're terms

that they're think that. I with got one deal to the

we're at impact So seeing really something And this in it's it point. our our discussions business that's will certainly late-stage not impact I anticipate any early-stage customers. even our with not business but up come don't

Derik De Bruin

you Okay. much. very Thank

Operator

to back Steve closing the now will for call Thank you. I hand remarks. Cutler

Steve Cutler

on you, drug performance today. continued as recognize We day. forward we call Thank ICON for important good to advancing you, a through look you and this our updating progress and and continued joining all our development. Operator. Thank year you employees dedication to in their the Thank our everyone, have for again mission

Operator

Thank call. you concludes conference participating. Thank This for you. today's

You may now disconnect.

ICON Public Limited (ICLR) 23 Feb 232022 Q4 Earnings call transcript