ICON Public Limited Company (NASDAQ:ICLR) Q3 2018 Earnings Conference Call Transcript

Oct 25, 2018 • 10:00 am ET

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ICON Public Limited Company (NASDAQ:ICLR) Q3 2018 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good day, and welcome to the ICON PLC Quarter Three 2018 Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Jonathan Curtain. Please go ahead, sir.

Executive
Jonathan Curtain

Thank you, Molly. Good day, ladies and gentlemen. Thank you for joining us on this call covering the quarter ended September 30th, 2018. 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.

(Forward-Looking Cautionary Statements)

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 will be limiting the call today to one hour. (Operator Instructions) I would now like to hand over the call to our CFO, Mr. Brendan Brennan.

Executive
Brendan Brennan

Thank you, Jonathan. As a reminder, from January 1st, 2018, the new revenue recognition standard ASC-606 became effective for ICON. Having adopted cumulative effects transition method, prior comparatives have not been restated under this new standard. Instead, we feel that providing comparable Q3 '18 financial results under the previous revenue recognition standard is the best way to evaluate our performance during this transition phase. Whilst my comments may incorporate the impact of ASC-606, Steve will focus his comments in our performance excluding the impact of ASC-606.

In quarter three, we achieved strong gross business wins, excluding the impact of ASC-606, with $716 million with cancellations of $111 million. As a result, net awards in the quarter were new record $605 million, resulting in a net book-to-bill of 1.27 times. This means our trading 12-month book-to-bill is a very healthy 1.28 times.

With the addition of these new awards, our quarter three 2018 backlog, excluding the impact of ASC-606, grew to $5.3 billion, representing a year-over-year increase of 10.5%. Our top customer represents 9.8% of this backlog, down from 11.4% at the end of quarter three last year. Reported revenue in quarter three was $655 million, excluding the impact of ASC-606, revenue was $476.4 million, this represents year-on-year growth of 8.2% or 8.3% on a constant-currency basis and 6.6% on a constant-dollar organic basis.

Excluding the impact of ASC-606, our customer concentration with our top customer in the quarter represented 13.1% of revenue compared to 16.6% of revenue last year. Our top five customers represented 38.3% of revenue compared to 38.2% of revenue last year. Our top 10, represented 52.9% of revenue compared to 54.2% of revenue last year, while our top 25 customers represented 69.2% of revenue compared to 72.2% of revenue last year.

In quarter three, reported gross margin was 29.9% compared to 30% in