ICON Public Limited Company (NASDAQ:ICLR) Q2 2017 Earnings Conference Call - Preliminary Transcript

Jul 27, 2017 • 09:00 am ET

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ICON Public Limited Company (NASDAQ:ICLR) Q2 2017 Earnings Conference Call - Preliminary Transcript

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Presentation
Operator
Operator

Good day. Welcome to the ICON PLC Quarter 2 2017 Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Jonathan Curtain. Please go ahead, sir.

Executive
Jonathan Curtain

Thank you, Lynn. Good day, ladies and gentlemen. Thank you for joining us on this call covering the quarter ended June 30, 2017. 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.

Certain statements in today's call will be forward-looking statements. Actual results may differ materially from those statements 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 guarantees of future performance.

The company's filings with the Securities and Exchange Commission discusses the risks and uncertainties associated with the company's business. 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 Headed Consolidated Income Statements unaudited US GAAP. While non-GAAP financial measures are not superior to or a substitute for the comparable GAAP measures, we believe certain non-GAAP information is more useful to investors for historical comparison purposes.

We'll be limiting the call today to 1 hour and would 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.

Executive
Brendan Brennan

Thank you, Jonathan. In quarter 2, we achieved gross business awards of $649 million and incurred $86 million of cancellations. As a result, net awards for the quarter were $563 million and net book-to-bill of 1.31. Net revenue in quarter 2 was $421 million. This represents year-on-year growth of 5% or 6% on a constant currency basis. On a constant dollar organic basis, year-on-year revenue growth was 2.6%. Our client concentration continued to improve in the quarter with our top client representing 19.9% of revenue compared to 28% last year. Our top 5 clients represented 42% compared to 46% last year. Our top 10 represented 54% compared to 59% last year, while our top 25 clients represented 72% compared to 77% last year.

This continued diversification of our cost investment that outside our top account revenue grew 17% year-on-year. Group gross margin for the quarter was 42% in line with quarter 1 and same quarter last year. We continue to leverage our global business support model and as a result, SG&A was 18.8% of revenue in the quarter, as compared to 18.8% last quarter and 19.5% in the comparable period last year.

Operating income for the quarter before nonrecurring charges was $85.8 million and operating margin of 19.9%. This compared to 19.8% last quarter and 19% in comparable quarter last year. The net interest expense for