ICON plc

Good day and thank you for standing by. Welcome to the ICON PLC Q1 Results 2021. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star and 1 on your telephone keypad. Please be advised that today's conference is being recorded today. If you require any further assistance, please press star 0. And I would now like to hand the conference over to our first speaker today, Mr. Jonathan Curtin. Thank you. Please go ahead.

Thank you. Good day, ladies and gentlemen. Thank you for joining us on this call covering the quarter ended March 31st, 2021. Also on the call today, we have our CEO, Dr. Steve Cuddler, 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. Certain statements in today's call will be forward-looking statements. These statements are based on management's current expectations and information currently available. including current economic and industry conditions. Actual results may differ materially from those stated or implied by forward-looking statements due to risks and uncertainties associated with the company's business, and listeners are cautioned that forward-looking statements are not guaranteed their future performance. Forward-looking statements are only as of the date they are made, and we do not undertake any obligation to update publicly any forward-looking statement either as a result of new information, future events, or otherwise. More information about the risks and uncertainties relating to these forward-looking statements may be found in SEC reports filed by the company. In addition, as announced in February, ICON and PRA Health Sciences have entered into a definitive merger agreement. This call will touch on the transaction. Please note, this call does not constitute an offer to sell or buy or the solicitation of any offer to buy or sell any securities nor shall there be any sale of securities in a jurisdiction in which such offer, solicitation, or sale will be unlawful prior to registration or qualification under the securities law of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting regulatory requirements of Section 10 of the Securities Act of 1933. In connection with the proposed transaction, ICANN has filed a registration statement on Form F4 with the SEC containing a prospectus prospectus of ICON that also constitutes a proxy statement of each of ICON and PRA. ICON and PRA will file other documents regarding the proposed transaction with the SEC. Before making any voting or investment decisions, investors and security holders of ICON and PRA stock are encouraged to carefully read the entire registration statement and joint proxy statement, prospectus, and other documents filed with the SEC made available on each of our websites and at sec.gov. This presentation includes selected non-GAAP financial measures. For a presentation of the most directly comparable GAAP financial measures, please refer to the press release statement had a condensed consolidated statement of operations U.S. GAAP unaudited. While non-GAAP financial measures are not superior to or substitute for the comparable GAAP measures, we believe certain non-GAAP information is more useful to investors for historical comparison purposes. We will be limiting this call today to one hour. We therefore ask participants to keep their questions to one each with an opportunity to ask one related follow-up question. I would now like to hand over the call to our CFO, Mr. Brendan Brennan. Thank you, Jonathan.

In quarter one, ICON achieved gross business wins of $1,295,000,000 and recorded $195,000,000 worth of cancellations. Consequently, net awards in the quarter were a record $1.1 billion, resulting in a net book to bill of 1.28 times and a trailing 12-month net book to bill of 1.39 times. With the addition of these new awards, our backlog grew to a record $10 billion. This represents a year-on-year increase of 14%. Revenue in quarter one was $858.2 million. This represents a year-on-year increase of 20%, 17.9% on a constant currency basis, or 17.8% on a constant dollar organic basis. It also represents a sequential revenue increase of 12.9% from Q4 2020. Our top customer represented 19.1% of revenue for the quarter, compared with 11.4% in Q1 2020. The increase in our concentration is in relation to COVID vaccine trials we were running during the quarter. As you can see from our updated guidance, the COVID dynamic will continue to act as a tailwind over the course of 2021. Our top five customers represented 45.9% of quarter one revenue compared to 39.9% last year. Our top 10 represented 60.4% compared to 52.2% last year, while our top 25 represented 76.8% compared to 69.6% last year. Influenced by the revenues generated by COVID vaccine work, gross margin for the quarter was 27%. compared to 29.6% last quarter and 29.3% in the comparable quarter last year. And our adjusted SG&A was 10% of revenue in quarter one, which compared to 11.6% last quarter and 12.2% in the comparable period last year. Adjusted operating income for the quarter was $128.5 million, a margin of 15%. This compared to 15.8% last quarter and 14.9% in the comparable quarter last year. The adjusted net interest expense was $2.1 million for the quarter, and the adjusted effective tax rate was 13% for the quarter. Adjusted net income attributable to the group for the quarter was $109.7 million, a margin of 12.8%, equating to diluted earnings per share of $2.06. This compares to earnings per share of $1.90 in Q4 2020 and $1.70 in the comparable quarter last year. During the quarter, the company recorded $12.9 million of transaction-related costs. As a consequence, U.S. GAAP income from operations amounted to $116 million, or 13.5% of revenue. U.S. GAAP net income attributable to the group was $97.1 million, or $1.82 per diluted share, compared to $1.62 per share for the equivalent period in the prior year. Net accounts receivable was $465.6 million at 31 March 2021. This compares with a net accounts receivable balance of $483.1 million at 31 December 2020. On a comparable basis, day sales and standings were 39 days at March 31st, 2021. This compares with 41 days at the end of December 2020 and 55 days at the end of March 2020. Cash generated from operating activities in the quarter was $111.9 million. At March 31st, 2021, the company had a gross cash balance of $944.2 million in debt of $348.6 million, leaving a net cash balance of $595.6 million. This compares to net cash of $493.6 million at December 31, 2020, and net cash of $134.4 million at March 31, 2020. Capital expenditure during the quarter was $8.7 million. And with all of that said, I'd now like to hand over the call to Steve.