icon plc 27 th september 2006
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ICON plc 27 th September 2006. Forward Looking Statements. - PowerPoint PPT PresentationTRANSCRIPT
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ICON plc
27th September 2006
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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.
Forward Looking StatementsForward Looking Statements
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Investment HighlightsInvestment Highlights
Top global CRO
Strong market fundamentals
Outstanding record of organic growth
Strong balance sheet
Growth accelerating
Margins expanding
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Company OverviewCompany Overview
Approx. $430 million in annualized net revenues
6 Year Net Revenue CAGR = 30%
4th Largest CRO in Phase II – IV
Global coverage - 45 locations in 30 countries
Unique operating model with focus on quality and flexibility
> 3,700 staff worldwide
Note Change of Year End to 31 December
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Global Reach: EU – 16 Offices
www.iconclinical.comwww.iconclinical.com
Riga
Amsterdam
Frankfurt
MarlowStockholm
Dublin
Manchester
Eastleigh
ParisTel Aviv
Moscow
Barcelona
Budapest
Milan
Warsaw
Vilnius
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Global Reach – USA – 15 Offices
www.iconclinical.comwww.iconclinical.com
Chicago
Houston
Nashville
Tampa
San Francisco
Irvine
Baltimore
Raleigh-Durham
New York City
Long Island
Philadelphia
Delaware
Doylestown
San Diego
Salt Lake City
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Offices: ROW – 15 Offices
www.iconclinical.comwww.iconclinical.com
Sydney
Buenos Aires
Johannesburg
Taiwan
Seoul
Bangkok
Singapore
Chennai
Tokyo
Hong Kong
Montreal
Sao Paulo
Santiago
Mexico City
Beijing
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Global Full Service Clinical Development
Pre-clinical Phase I Phase II Phase III Launch Phase IV
5% Drug Development and Regulatory Support
4% Phase I
13% Data Management & Statistical Consulting
2% Contract Staffing
3% Central Imaging Lab
5% Interactive Technologies
10% Central Laboratory
58% Trial Management, Monitoring & Pharmacovigilence
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Market Environment
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Strong Market Environment with...
Fundamental R&D Spending Growth Trend ~ 6%- 8% p.a.
Phase II / III pipelines strengthening
Increased Outsourcing
Growth c.15% p.a. since 2001*
Being accelerated by activity & funding in Biotech / Speciality
Evidence emerging that projects where CROs are engaged complete faster than “internal only” studies*
Regulatory Environment
Globalisation favouring large CROs *Source: Tufts Centre for Study of Drug Development
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…US Biotech Funding Environment continuing to grow, leading to...
$16.4
$38.9
$19.5$17.9
$25.3
$30.8
$34.5
$15.6
$0.0
$5.0
$10.0
$15.0
$20.0
$25.0
$30.0
$35.0
$40.0
$45.0
1999 2000 2001 2002 2003 2004 2005 Q12006
Source: Burrill and Company
$Bil
lio
n
Biotech fund raising ($billions)
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…strong RFP growth at ICON RFP Volume / Value Trends – Global Clinical
13%
100%
0%
20%
40%
60%
80%
100%
120%
No. Value
H1 2006 Growth
40%
75%
0%
20%
40%
60%
80%
100%
120%
No. Value
2005 Growth
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ICON Gross Business Wins - Last 8 Quarters ($ millions)
$93
$122$115
$106
$127
$165
$186 $189
Aug-04 Nov-04 Feb-05 May-05 Aug-05 Nov-05 Mar-06 Jun-06
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ICON’s Net New Business Wins growing strongly…
$166m$171m
$140m
$122m
$101m$106m
$120m
$46m
$91m
Q2 2004 Q3 2004 Q4 2004 Q1 2005 Q2 2005 Q3 2005 Q4 2005 Q1 2006 Q2 2006
1.2
1.3
1.4
1.6 1.6
1.2
1.7
1.5
0.6
Net Business Wins
Book to Bill Ratio
15
…leading to record total backlog levels ($ millions)
$707
$772
$633
$568$528
$509$488
$453$464
Q2 04 Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Q2 06
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…and strong forecast coverage of next 4 quarters revenues.
$238
$224
$248 $252$262
$279
$296$307
$360
$200
$250
$300
$350
$400
Q2 '04 Q3 '04 Q4 '04 Q1 '05 Q2 '05 Q3 '05 Q4 '05 Q1 '06 Q2 '06
66%67%
70% 70%
76%76%
71%
76%
71%
Value of backlog forecast to be earned in next 4 quarters
% coverage of next 4 quarters forecast revenues
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Improving Client Concentration
42.6%
37.0%
62.7%
53.0%
81.4%
72.9%
9.9%12.3%
FY To May 2005 H1 2006
Largest Client
Top 5
Top 10
Top 25
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Strategy
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ICON’s Broad Strategy
Capitalise on market fundamentals to drive organic growth.
Expand geographic footprint
Pursue acquisitions to enhance depth and scale of current operations and to add additional complementary services
Cross-sell services to grow sales and margin
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Cross-sell to leverage client relationships and capture more of the project spend.
Strategic ProductDevelopment /
Consulting 5%
Strategic ProductDevelopment /
Consulting 5%
Clinical Trial ManagementPhase II – IV
58%
Clinical Trial ManagementPhase II – IV
58%
Phase I4%
Phase I4%
Central Laboratory
10%
Central Laboratory
10%
IVRS5%
IVRS5%
Contract Staff2%
Contract Staff2%
Central Imaging Lab3%
Central Imaging Lab3%
Data Management &
Biostatistics13%
Data Management &
Biostatistics13%
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Examples of some detailed strategic initiatives
Creating Therapeutic Specialist Groups (TAGs) in key therapeutic areas to leverage our experience and build further scale e.g. Oncology
Investing in Operations in Japan – significant opportunity for growth over next 10 years
Creation of Data Management Operation in India – circa 100 people and growing
Partnership with Medidata Solutions in EDC – gaining traction
Developing specialised Phase IV Division and acquisition of Ovation
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Financial Performance
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Recent Financial Performance ($ millions, except EPS)
Q2 ’06 Q2 ’PY % Increase
Net Revenue 107.4 86.0 25.0
Direct Costs 59.4 47.5 24.9
SG & A 31.9 27.5 15.9
D & A 3.7 3.6 4.0_____ _____ _____
Operating Income 12.4 7.4 68.3
Net Income 10.3 5.9 73.7_____ _____ _____
EPS (ex FAS123R) 71c 42c 69.0
Weighted Average no. of Shares
14.5 14.1 2.8
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Recent Financial Performance ($ millions, except EPS)
H1 ’06 H1 ’PY* % Increase
Net Revenue 205.9 168.8 22.0
Direct Costs 113.6 93.5 22.6
SG & A 61.8 54.9 12.5
D & A 7.1 7.0 2.3_____ _____ _____
Operating Income 23.4 13.4 74.5
Net Income 18.8 10.9 71.4_____ _____ _____
EPS (ex FAS123R) 130c 78c 66.6
Weighted Average no. of Shares*Excluding One-time charge of $11.5m
14.5 14.1 2.8
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$116
$157
$226
$297
$327
$430
$0
$50
$100
$150
$200
$250
$300
$350
$400
$450
FY2001 FY2002 FY2003 FY2004 FY2005 2006(E)
Mil
lio
ns
Net Revenue CAGR of 30% over last 6 Years, and strong growth forecast for 2006
CAGR 30%
** Mid point calendar year guidance issued July 26, 2006
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32.2%
24.4%22.8%
13.3%11.0% 10.1%
7.6%
ICON PRA PPD CRO Ind KNDL CVD PRXL
Revenue Growth v Peers: Net Revenue CAGR between 2000 and 2005
* Source SEC Filings
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$360m
$307m$296m
$279m
$262m$252m$248m
$224m
$238m
Q2 2004 Q3 2004 Q4 2004 Q1 2005 Q2 2005 Q3 2005 Q4 2005 Q1 2006 Q2 2006
2006 forecast growth is underpinned by strong forecast coverage of next 12 months revenues. (US$, & % of Forecasts)
76%76%76%
71%70%71%
70%
66%67%
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$0.92
$1.16
$1.50
$1.88$1.70
$2.75
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
FY2001 FY2002 FY2003 FY2004 FY2005 2006 (E)
Earnings Per Share Growth
(E)
** Mid point guidance issued July 26, 2006 before FAS123R Stock Compensation
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Summary Balance Sheet and Cash Flow ($ millions)
May 31, 05(Year)
Dec 31, 05(7 mths)
Jun 30, 06(H1)
Net Cash $78.4 $82.3 $101.0
Total assets $347.6 $349.1 $392.6
Total debt $0.0 $4.8 $0.0
Shareholder’s equity $233.1 $241.6 $269.3
Cashflow from operations $23.8 $11.7 $30.4
Capital expenditures $15.6 $7.8 $10.8
Fully diluted shares outstanding
14.2 14.3 14.5
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Improving Margins
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7.3%
8.6%
9.7%10.2%
11.2%11.5%
Q1 2005 Q2 2005 Q3 2005 Q4 2005 Q1 2006 Q2 2006
Quarterly Operating margins have been improving….
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10.2%
11.7%
12.7% 12.8% 13.0%12.5%
Q1 2005 Q2 2005 Q3 2005 Q4 2005 Q1 2006 Q2 2006
… driven by expanding Clinical margins as revenue growth has accelerated, and…….
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…..Lab returning to profit in Q2….
$0.5$0.6
$0.4
-$0.6
-$1.2
-$1.6
-$2.1
-$1.8-$1.9($2)
($1)
($0)
$1
Q4 04 Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Q2 06 Q3 06(E) Q4 06(E)
$ m
illio
ns
Lab Results
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…As Lab revenues grew strongly (at last!) …. $ millions
$11.5
$9.3
$8.1
$7.2
$6.1$6.4
$6.5
Q4 04 Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Q2 06
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…driven by strong Lab net new business wins
Net Business Wins Book to Bill Ratio
$12.0
$4.9
$11.3
$6.9
$9.3
$11.8
$21.6
$18.6
$12.9 $12.5
21.7
Q4 03 Q1 04 Q2 04 Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Q2 06
1.8
1.1
1.9
3.5
1.61.4
2.6
1.3
1.5
0.7
1.9
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Investment HighlightsInvestment Highlights
Top global CRO
Strong market fundamentals
Outstanding record of organic growth
Strong balance sheet
Growth accelerating
Margins expanding