Transcript Document

ICON
Davy Irish Equity Forum
Mr. Brendan Brennan – VP Investor Relations
September 23rd 2009
Forward Looking Statements
Certain statements contained herein including, without limitation, statements containing
the words “believes,” “anticipates,” “intends,” “expects” and words of similar import,
constitute forward-looking statements concerning the Company's operations,
performance, financial condition and prospects. Because such statements involve
known and unknown risks and uncertainties, actual results may differ materially from
those expressed or implied by such forward-looking statements. Given these
uncertainties, prospective investors are cautioned not to place undue reliance on such
forward-looking statements. The Company undertakes no obligation to publicly update
or revise any forward-looking statements, whether as a result of new information, future
events or otherwise.
This presentation includes selected non-GAAP financial measures. For a presentation
of the most directly comparable GAAP financial measures, please refer to the Quarter 2
2009 press release consolidated income statement headed Consolidated Income
Statements (Unaudited) (US GAAP)
Global Full Service Clinical Development
ICONs Global Footprint
ICON Plc Staff Growth 1990 - Today
Market
Environment
Market Fundamentals Still Intact
• Outsourcing Penetration expected to increase
– More Strategic approach to outsourcing
– Cost containment
– Globalisation of clinical research
• Continued R&D Spending Growth.
– Pipelines remain solid
– Scientific innovation continues to expand
• Increasing Regulation
– More patients/ more studies
– Post marketing surveillance
Increased Outsourcing
• Clients are increasingly focused on their core competencies of
– Discovery
– Strategic Development
– Marketing
• Clients are engaging CROs at a more strategic level
– Level of management engagement (Executive to executive)
– Level of co-operative engagement i.e. sharing drug pipeline intentions
– Deeper reliance on CRO scientific and therapeutic expertise
• Reduced internal capacity in the companies of strategic
partners e.g. staff or asset transfers/reductions
• Clients likely to move their % outsourced from ≈ 30% to >50%
over the next 5+ years
Market Fundamentals Still Intact
• Outsourcing Penetration expected to increase
– More Strategic approach to outsourcing
– Cost containment
– Globalisation of clinical research
• Continued R&D Spending Growth.
– Pipelines remain solid
– Scientific innovation continues to expand
• Increasing Regulation
– More patients/ more studies
– Post marketing surveillance
Clinical Compounds in Development
R&D Spending Growth
CRO Market Size 1996 – 2012 (E)
Total Biotech Funding ($ Millions)
Market Fundamentals Still Intact
• Outsourcing Penetration expected to increase
– More Strategic approach to outsourcing
– Cost containment
– Globalisation of clinical research
• Continued R&D Spending Growth.
– Pipelines remain solid
– Scientific innovation continues to expand
• Increasing Regulation
– More patients/ more studies
– Post marketing surveillance
Opportunities…. but also Risks
ICON in this Market
Environment
Net Volume of RFPs
2003 to Q2 2009
Net volume represents only those opportunities which were ultimately outsourced
Net New Business Wins and Book to Bill Ratio
Book to Bill Ratio
Net Business Wins
Analysis of Business Wins
Q2 09 Net Wins
H1 09 Net Wins
Analysis of Backlog by client Q2 09
Total Backlog Level ($ Millions)
14%
Coverage of next 4 quarters from Backlog
Value of backlog forecast to be earned in next 4 quarters
% coverage of next 4 quarters forecast revenues
Projects of Longer duration lead
to slower backlog burn
Strategy
ICON’s Core Strategy is Organic Growth,
with acquisitions made to add new services or scale
•
Capitalise on market fundamentals to drive organic growth in all
business units.
•
Cross-sell services to grow sales and margin
•
Build Deep Strategic Relationships
•
Create Stronger differentiation across our services
•
Retain a flexible business model to respond to differing client
outsourcing strategies
•
Pursue acquisitions to enhance depth and scale of current operations
and to add additional complementary services e.g.
– Phase I
– Bioanalytical / Biomarkers
– Therapeutic specialists
– Safety/Late Phase
– Imaging
– Japan
Acquisitions to date – 13
•Revenues acquired $130m
•Staff acquired – 1,200
•=> Organic growth >80%
Market Feedback
ICON in recent Surveys
“ICON is one of three CRO’s cited most frequently as sponsor’s favourite CRO
vendors”
“Our confidence goes up that ICON is the right name to own in this environment,
given their consistent quality”
““ ICON is a darling of the industry, the company's stunning growth in 2006 and
2007 surprised its peers. Now, the Dublin-based company is still outpacing just
about everybody, but at a less accelerated clip.”
Financial Performance
Net Revenue CAGR of 28% since 2005
(E)
* Mid point of Guidance July 22nd
Earnings Per Share Growth
(E)
* Mid point of Guidance July 22nd
Cash Flow from Operations / Free Cash Flow
FCF Per Share
* Estimate assumes DSO of approx 60 days. Historic periods FCF exclude Head-office construction costs
Return on Equity
Recent Financial Performance
($ millions) Quarter 2 2009
30 June 09
30 June 08
% Increase
Net Revenue
220
218
1%
Direct Costs
125
123
1.8%
58
37
64
31
(7.1%)
19%
D&A
8
7
13%
EBIT
29
24
20%
Net Income
23
19
21%
38c
31c
23%
59.7m
60.3m
(1.1%)
SG & A
EBITDA
EPS (Inc SFAS 123R)
Weighted Average no. of
Shares (Inc SFAS123R)
Recent Financial Performance
($ millions) H1 2009
30 June 09 30 June 08
% Increase
Net Revenue
440
420
5%
Direct Costs
249
236
6%
SG & A
EBITDA
119
71
125
59
5%
21%
D&A
15
13
18%
EBIT
56
46
23%
Net Income
44
36
22%
73c
59c
24%
59.7m
60.2m
(0.7%)
EPS (Inc SFAS 123R)
Weighted Average no. of
Shares (Inc SFAS123R)
Summary Balance Sheet and Cash Flow
($ millions)
H1 ended
Jun 30, 09
Full Year
ended
Dec 31, 08
Full Year
ended
Dec 31, 07
Full Year
ended
Dec 31, 06
Cash
$147.3
$101.1
$118.6
$102.9
Debt
$64.1
$105.4
$94.8
$5
Net Cash/Debt
$83.2
($4.3)
$23.8
$97.9
Total assets
$897.5
$867.3
$693.1
$476.3
Total Liabilities
$389.5
$410.9
$304.9
$173.6
Shareholder’s equity
$507.9
$456.4
$388.4
$302.7
Cashflow from
operations
$128
$81.3
$42.9
$50.4
Capital expenditures
$16.4
$67.9
$75.4
$31.5
ICON Key Financial Metrics
($ millions)
Qtr ended
Jun 30, 09
Full Year
ended
Dec 31, 08
Full Year
ended
Dec 31, 07
Full Year
ended
Dec 31, 06
Sales Growth
5%
37%
38%
39%
EPS Growth
24%
38%
41%
177%
EBITDA Margin
16.2%
14.7%
14%
13.8%
EBIT Margin
12.8%
11.5%
11.0%
10.5%
ROE
17.7%
17%
14%
13%
ICON Plc Historic Share Price Performane
ICON
S&P 500
Nasdaq Composite
Investment Case Summary
• Top Global Clinical CRO - #4
• Deep customer relationships
• Quality of staff
• Experienced Management team
• Excellent Reputation
• Solid market fundamentals
• Outstanding record of growth
• Strong balance sheet