Q1 2024 Icon PLC Earnings Call
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Operator: Hello, and welcome to the Icon PLC Q1 2024 results. At this time, all participants are in a listen-only mode.
Speaker Change: Hello, and welcome to the icon plc Q1 2024 without school at this time all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session.
Speaker Change: The telephone question. Please press star one on your keypad to join the queue to be.
Speaker Change: Joel Your question Press Star one again.
Speaker Change: Please be advised that today's conference is being recorded.
I would now like to hand over to Kate Haven VP of Investor Relations. Please go ahead.
Kate Haven: Thank you.
Operator: After the speaker's presentation, there will be a question and answer session. To ask a telephone question, please press star 1 1 on your keypad to join the conversation. To withdraw your question, press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand over to Kate Haven, VP of Investor Relations. Please go ahead.
Kate Haven: Good day and thank you for joining us on this call covering the quarter ended March 31, 2024 also on the call today, we have our CEO, Dr. Steve Cutler, our CFO, Brendan Brennan and senior Vice President of corporate and commercial finance lines I would like to note that this call webcast and that there are slides available to download on our website to accompany.
Today's call.
Kate Haven: Certain statements in today's call will be forward looking statements.
Kate Haven: These statements are based on management's current expectations and information currently available.
Kate Haven: The 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 guarantees of 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.
Kate Haven: 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 our SEC reports filed by the company, including its form 20-F filed on February 23 2024.
Kate Haven: This presentation includes selected non-GAAP financial measures with Steve and Brendan will be referencing in their prepared remarks.
Kate Haven: Good day, and thank you for joining us on this call covering the quarter ended March 31, 2024. Also on the call today, we have our CEO, Dr. Steve Cutler, our CFO, Brendan Brennan, and Senior Vice President of Corporate and Commercial Finance, Emer Lyons. 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 webinar. Furthermore, 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. However, actual results may differ materially from those stated or implied by forward-looking statements.
Kate Haven: For a presentation of the most directly comparable GAAP financial measures. Please refer to the press release section titled condensed consolidated statements of operations.
Kate Haven: 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.
Kate Haven: Included in the press release and the earnings Slide you will note a reconciliation of non-GAAP measures adjusted EBITDA adjusted net income and adjusted diluted earnings per share excludes stock compensation expense restructuring costs foreign currency gains and losses amortization and transaction related and integration related costs and the respective tax.
Benefits.
Kate Haven: We will be limiting the call today to one hour and would therefore ask participants to keep their questions to one each with an opportunity for a brief follow up.
Kate Haven: I would now like to hand, the call over to our CEO Dr. Steve Cutler.
Steven A. Cutler: Thank you Kate and good day everyone.
Speaker Change: Icons performance in quarter, one marked a strong start to the year, combining solid financial results and impressive uptick in business Awards and excellent adjusted earnings growth.
Speaker Change: Net business wins were recorded in the quarter exceeding $265 billion.
Speaker Change: Our comprehensive scaled offering continues to fuel our leadership position in clinical development.
Speaker Change: The market trends, we saw early in quarter, one continued throughout the balance of the quarter characterized by stabilizing demand within the biotech customer base as well as a continuation of the robust demand we have consistently seen from large pharma customers.
Speaker Change: Underlying demand drivers are incrementally more positive three quarter, one with biotech funding increasing over 50% on a year over year basis in quarter, one according to buy a century.
Speaker Change: And large pharma R&D spend figures, indicating low single digit growth for the full year in line with previous expectations.
Speaker Change: Proposal volumes are at healthy levels with overall RFP volume, increasing low double digits on a trailing 12 month basis.
Kate Haven: And listeners are cautioned that forward-looking statements are not guarantees of 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 other. More information about the risks and uncertainties relating to these forward-looking statements may be found in SEC reports filed by the company, including the Form 20-F filed on February 23, 2024.
Speaker Change: In quarter, one net bookings grew 10% on a year over year basis, resulting in a book to bill of one two spot two seven tons in the quarter and increasing our trailing 12 month book to Bill ratio to one two full.
Speaker Change: We had a robust business development performance across all operational segments with notable strength in our large pharma full service solutions segment as well as in our laboratory business.
While it's early in quarter two to date, we have seen a continuation of these trends across customer segments, and we remain positive on the outlook for the full year.
We expect book to Bill to be in the range of one two to one three times on a quarterly basis, maintaining our previous target range and expectation for an average book to Bill of 125 times for the full year 2024.
One of our important strategic initiatives as we came into 2024 was the focused rebranding of our dedicated biotech solutions business icon biotech.
We saw an opportunity to enhance our market position within the biotech segment with customers that historically associated icon with a large pharma focus.
Icon biotech is the worlds largest dedicated biotech CRO with approximately 8000 staff that are exclusively committed to that segment.
Speaker Change: I understand the unique needs of the biotech customers we support.
Speaker Change: We are committed to optimally serving this key customer group and believe we can best do so through our current dedicated structure.
Kate Haven: This presentation includes selected non-GAAP financial measures that Steven Brennan will be referencing in their prepared for a presentation of the most directly comparable GATT financial measures. Please refer to the press release section titled Condensed Consolidated Statements of Opportunity. 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 you, included in the press release and the earnings slides. You will note a reconciliation of non-GAAP measures. Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted Earnings Per Share exclude stock compensation.
Speaker Change: Following the rebrand activity in quarter four last year I am pleased to report that we are already seeing positive momentum in terms of customer receptivity and an increased win rate in this segment.
Speaker Change: In addition to our focused efforts within the biotech segment, we continue to drive forward our leadership in large pharma.
Speaker Change: Growing strategic partnerships is a critical element to this strategy, which not only includes the execution of new strategic partnerships, but renewing and expanding existing customer relationships.
Speaker Change: In quarter, one we were successful in renewing our longstanding top 20 pharma partnerships, primarily utilizing full service solutions.
Speaker Change: The renewal reinforces our strong delivery history of execution for this important customer and our collective teams collaboration to drive efficiency across the development portfolio.
Speaker Change: Another important factor in <unk> ability to secure and grow our customer partnerships is through the development of innovative solutions across our portfolio.
Speaker Change: We are excited about the future potential of our comprehensive and cost effective offering in clinical trial <unk>.
Speaker Change: This end to end approach follows patients longitudinally through the health care journey beyond the participation in a clinical trial.
Speaker Change: The surge in drug development in areas like diabetes, and obesity has increased the need to collect and analyze long term follow up safety efficacy and health expenditure data.
We are anticipating greater market regulatory and reimbursement requirements in the future, hence the need to deliver a broader more comprehensive insights that ultimately drive increased value for our customers.
Kate Haven: The following are the cost of the structuring, foreign currency gains and losses, amortization, transaction-related and integration-related costs, and the respective tax benefits. We will be limiting the call today to one hour, and would therefore ask that you please leave the room, limit their questions to one each with an opportunity for a brief follow-up. I would now like to hand the call over to our CEO. Thank you, Kate, and good day, everyone.
Speaker Change: Turning to our financial performance in quarter, one our team delivered another period of strong results across a number of measures.
Total revenue increased 6% on a year over year basis gross margin of.
Speaker Change: A 29, 9% increased 10 basis points over quarter, one 2023, and total SG&A expense decreased 90 basis points on a year over year basis to eight 7% total revenue driving a very strong adjusted EBITDA growth of 11, 3%.
Speaker Change: Over quarter, one 2023.
Speaker Change: This resulted in an adjusted EBITDA margin of 21, 2% in the quarter up 100 basis points year on year.
Speaker Change: Given the performance on adjusted EBITDA growth and the continued paydown of our term loan b debt, we saw excellent year over year growth and adjusted earnings per share of 20%.
Speaker Change: The execution of our capital deployment strategy continued as planned in the first quarter.
Speaker Change: We closed the previously announced acquisition of humans first in January a leader in the field digital health technology selection.
Steven A. Cutler: Icon's performance in Quarter 1 marked a strong start to the year, combining solid financial results, an impressive uptick in business awards, and excellent adjusted earnings growth. Net business wins were a record in the quarter, exceeding $2.65 billion, as our comprehensive scaled offering continues to fuel our leadership position in clinical development. The market trends we saw early in Q1 continued throughout the balance of the quarter, characterizing stabilizing demand within the biotech customer base, as well as a continuation of the robust demand we have consistently seen from large farmers.
Speaker Change: This important capability is strategically aligned with our approach to providing an enhanced integrated offering.
Speaker Change: Combination of our leading clinical outcome assessment capabilities and digital health technology selection offers the ability for customers to optimize clinical trial design and enhanced data collection quality.
Speaker Change: As we've previously noted our capital deployment priority remains M&A and we continue to actively evaluate assets that will strategically and operationally enhance the current areas of our service portfolio.
Speaker Change: After a positive rating changes from S&P and Moody's in the back half of 2023, moving icon back to investment grade status. We began the execution of the planned refinancing of our variable rate debt in quarter one.
Speaker Change: This included the successful repricing of our existing term loan b the quarter, reducing our interest rate by 25 basis points as well as the removal of our credit adjustments spread.
Speaker Change: In parallel we improve the terms of our revolver facility and we are working closely with our banking partners to progress refunding refinancing of our debt.
Speaker Change: This will allow us to better utilize our balance sheet and provide more certainty on our annual interest expense.
Speaker Change: We continue to expect our full year interest expense will be in the range of $200 million to $230 million.
Steven A. Cutler: Underlying demand drivers are incrementally more positive through Q1, with biotech funding increasing over 50% on a year-over-year basis in Q1 according to Biocentury, and Large Pharma R&D spend figures indicating low single-digit growth for the full year, in line with previous expectations. The proposal volumes are at healthy levels, overall RFP volume increasing low double digits on a trailing 12-month basis. In Quarter 1, net bookings grew 10% on a year-over-year basis, resulting in a book-to-bill of 1.2527 times in the quarter and increasing our trailing 12-month book-to-bill ratio to 1.24.
Speaker Change: We are updating our full year 2024 guidance range to account for our financial performance in quarter, one and the positive market environment. We've seen so far this season.
Speaker Change: We expect revenue to be in the range of $8 four eight to $8 $72 billion, an increase of four four to seven 4% of our full year 2023.
Speaker Change: Additionally, we expect adjusted earnings per share to be in the range of $14 65.
Speaker Change: To $15.15, an increase of $14 five to 18, 5% on a year over year basis.
Speaker Change: The new range is maintained the midpoint of our previous guidance range, reflecting an outlook that is consistent in terms of overall market activity and outperformance year to date.
Speaker Change: Before I hand, it over to Brendan for further detail on our financial performance I want to provide a brief update on our previously announced CFO transition.
As we indicated earlier this month Brendan has decided to depart icon after a long and very successful tenure.
Brendan Brennan: Finance organization of the company and importantly, as our CFO for the past 12 years.
Brendan Brennan: Well, we're sorry to see Britain go we understand his desire to take on new challenges is Korea moving to a different industry.
Brendan Brennan: Im very grateful for his significant contributions to our organization over the past 18 years.
Brendan Brennan: As previously noted we have commenced a process with a large global recruitment.
To identify our next Chief Financial Officer, which includes both external and internal candidates for the role.
Brendan Brennan: We plan to provide additional updates on this process and transition period as we progress in.
Brendan Brennan: And the main Todd.
Brendan Brennan: Brendan is firmly in his role as the CFO and we have not made any changes to our broader finance organization as a result of this announced.
Brendan Brennan: Yes.
Brendan Brennan: Finally, we're looking forward to our upcoming Investor day, which will take place on May the 30th in New York City.
Brendan Brennan: The leadership team of icon will be present at this important event and further details will be made available on our website in the coming week.
Brendan Brennan: In closing I want to thank all of our colleagues at icon for their data credit that's equal to one you continuing to support our mission and bringing new therapies to patients around the world.
Steven A. Cutler: We had a robust business development performance across all operational segments, with notable strength in our large pharma full-service solutions segment, as well as in our laboratory. While it's early in Quarter 2, to date, we have seen a continuation of these trends across customer segments, and we remain positive on the outlook for the full year. We expect Book to Bill to be in the range of 1.2 to 1.3 times on a quarterly basis, maintaining our previous target range and expectation for an average book-to-bill of 1.25 times for the full year 2020. One of our important strategic initiatives as we entered 2024 was the focused rebranding of our dedicated biotech solutions. I can't buy it,
Brendan Brennan: Brendan I'll now turn it over to you.
Brendan Brennan: Thanks, David I appreciate the kind words once I reiterate my commitment to ensuring a smooth transition with plans to work closely with Steve and our broader management team to accomplish this.
Brendan Brennan: Turning to our financial results in quarter, one and quarter, one eikon achieved gross business wins of $3 1 billion and recorded $460 million worth of cancellations. This resulted in a solid level of net awards in the quarter of $2 65 billion.
Brendan Brennan: And that book to Bill of 127.
Brendan Brennan: But the addition of new awards in quarter, one our backlog grew to a record $23 4 billion.
Presenting an increase of two 5% on quarter four 2023, an increase of 10, 1% year over year.
Brendan Brennan: Our backlog burn was nine 2% in the quarter slightly down from the port four levels and we anticipate similar levels through the remainder of the year.
Brendan Brennan: Revenue in quarter, one was 2 billion a $19 million. This represents a year on year increase of five 7% or five 4% on a constant currency basis.
Brendan Brennan: Overall customer concentration in our top 25 customers decreased from quarter four two exchange rate our top five customers represented 26% of revenue in quarter. One our top 10 represented 41, 4%, while our top 25 represented 62%.
Brendan Brennan: Gross margin for the quarter was 29, 9% compared to 35, 4% in quarter. Four 2000, <unk> gross margin increased 10 basis points of gross margin of 29, 8% in quarter one of 2023.
Brendan Brennan: Total SG&A expense was $191 $7 million in quarter, one or eight 7% of revenue.
Brendan Brennan: In line with prior quarter on total percent of revenue in.
Brendan Brennan: In the comparable period last year total SG&A expense was $199 6 million or nine 6% of revenue.
Brendan Brennan: Adjusted EBITDA was $444 million for the quarter or 21, 2% of revenue in the comparable period last year, adjusted EBITDA was $399 1 million or 22% of revenue representing a very strong year on year increase of 11, 3% an expansion of 100 basis points in margin.
Adjusted operating income for quarter, one was $411 4 million a margin of 19, 7%. This is an increase of 11, 6% adjusted operating income of $368 7 million a margin of 18, 6% in quarter one of 2023.
Steven A. Cutler: We saw an opportunity to enhance our market position within the biotech segment with customers that historically associated ICOM with a large farmer focus. Icon Biotech is the world's largest dedicated biotech CRO with approximately 8,000 staff that are exclusively committed to that segment and understand the unique needs of the biotech customers we serve. We are committed to optimally serving this key customer group and believe we can best do so through our current dedicated structure.
Brendan Brennan: Net interest expense was $65 8 million for quarter. One we continue to expect the full year interest expense.
Brendan Brennan: Approximately 200 $230 million in 2024.
Brendan Brennan: The effective tax rate was 16, 5% for the quarter. We continued to expect the full year 2024, adjusted effective tax rate to be approximately 65%.
Net income attributable to the group for the quarter with $288 5 million.
Brendan Brennan: A margin of 13, 8% equating to adjusted earnings per share of $3 47.
Brendan Brennan: An increase of 19, 7% year over year.
Brendan Brennan: In the first quarter, the company recorded $7 million of transaction and integration related costs.
Brendan Brennan: U S. GAAP income from operations amounted to $285 5 million or 13, 7% of revenue during quarter one.
U S. GAAP net income in quarter, one was $187 4 million or $2.25 per diluted share compared to $1 41 per share for the equivalent prior year period, an increase of 60%.
Steven A. Cutler: Following the rebrand activity in Q4 last year, I am pleased to report that we are already seeing positive momentum in terms of customer receptivity and an increased win rate in this. In addition to our focused efforts within the biotech segment, we continue to drive forward our leadership in large farming. Growing strategic partnerships is a critical element to this strategy, which not only includes The execution of new strategic partners but renewing and expanding existing customer relationships.
Brendan Brennan: Net accounts receivable was $1.146 billion at 31 March 2024. This compares with a net accounts receivable balance of $1.088 billion at the end of quarter four 2023.
Brendan Brennan: <unk> was 49 days at March 31, 2023, a decrease of five days from quarter, one 2007 to treat <unk>.
Brendan Brennan: Operating activities in the quarter was $327 1 million and free cash flow with $300 million in the quarter, an increase of 102% on a year over year basis.
Brendan Brennan: While DSO increased sequentially, we continue to target mid <unk> in terms of DSO on a full year basis, albeit we can have fluctuations on the timing of payments that kind of influence total DSO in any particular quarter.
Brendan Brennan: At March 31, 2024, cash totaled $398 million and net debt totaled $3 5 billion.
Brendan Brennan: Leaving a net debt position of $3 1 billion.
Brendan Brennan: This compared to net debt of $3 4 billion at December 31st tried to try to shrink and net debt of $4 2 billion at March 31st trades.
Brendan Brennan: <unk> capital expenditure during the quarter was $27 2 million.
Brendan Brennan: From a capital deployment perspective, we made a payment of $275 million on term loan b facility in quarter, one and ended the quarter, where leverage ratio of one eight times net debt to adjusted EBITDA.
Brendan Brennan: Given the successful repricing of our term loan b and our intention to refinance our existing debt, we do not anticipate making discretionary payments in quarter two at this time.
Brendan Brennan: After successfully deleveraging over the past few years as well as a return to investment grade rated company. We feel we are well positioned from a balance sheet perspective to deploy more capital Opportunistically for M&A as.
Steven A. Cutler: In Quarter One, we were successful in renewing a long-standing top 20 farmer partnership primarily utilizing full-service solutions. The renewal reinforces our strong delivery, history of execution for this important customer, and our collective team's collaboration to drive efficiency across their development portfolio. Another important factor in ICOM's ability to secure and grow our customer partnerships is the development of innovative solutions across our portfolio. We are excited about the future potential of our comprehensive and cost-effective offering in clinical trial tokenization.
Brendan Brennan: As well as potential share repurchases.
Brendan Brennan: Our preferred use of capital remains M&A and we have a number of opportunities in the pipeline that we are currently engaged on which would add scale and capability to fast growing strategic areas of our portfolio.
Brendan Brennan: Our key assumptions behind the full year guidance remain in place.
Brendan Brennan: Effective tax rate of 16, 5% free cash flow target of circa $1 1 billion capex spend in the range of $150 million to $200 million in interest expense in the range of $200 million to $230 million all for the full year 2024.
Brendan Brennan: Finally, I'd also like to sincerely, thank our icon employees around the world for their hard work and dedication in delivering our strong performance in quarter one.
Speaker Change: Operator, we are now ready for questions. Thank.
Speaker Change: As a reminder, if you wish to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw your question Press Star one again.
Speaker Change: Please remember to limit yourself to one question with an opportunity for a short follow up if needed.
Speaker Change: Please stand by while we prepare your first question.
Speaker Change: The first question comes from chose Rohit at TD Cowen Charles Your line is open. Please go ahead.
Hi, Thanks. This is Adam on for Charles we've seen an uptick in emerging Biopharma funding I'm wondering if you can give us a sense of what's usually the general timeframe for that to flow into Rfps bookings and then ultimately revenue you guys noted seeing stabilizing biotech demand.
Adam: I'm wondering if you guys are already starting to see in the robust growth in net wins this quarter.
Adam: But with that contribute.
Adam: Sure.
Speaker Change: So overall we've seen.
Solid increase in Rfps.
In the quarter and most of the low double digits, but in the biotech funding as you've as you've noted is suddenly.
Very nicely, we haven't seen that necessarily come through so much on the rfps, just yet and I would expect that's probably going to be delayed a quarter or two so we would expect somewhere in the second half of the year for the results of that biotech funding assuming it continues of course to.
Steven A. Cutler: This end-to-end approach follows patients longitudinally through their health care journey beyond their participation in a clinical trial. The surge in drug development in areas like diabetes and obesity has increased the need to collect and analyze long-term follow-up safety, efficacy, and health expenditure data.
Speaker Change: To come through in terms of awards and then as we get towards the end of the year and even into next year.
Speaker Change: To hit the revenue line. So I think what we've seen we continue to see solid demand in the Baltic, but the real uptick in the opportunity I think going forward is probably more weighted towards the end of the a couple of quarters delay and then as we get into early next year on the on the revenue side of things.
Speaker Change: That's helpful. Thank you.
Speaker Change: Please standby for your next question.
Speaker Change: Your next question comes from Max Smoke William Blair Max Your line is open. Please go ahead.
Maxwell Andrew Smock: Everyone. Thanks for taking our questions.
Steven A. Cutler: We are anticipating greater market, regulatory, and reimbursement requirements in the future, hence the need to deliver broader, more comprehensive insights that ultimately drive increased value for our customers. Turning to our financial performance in Quarter 1, our team delivered another period of strong results across a number of measures. Total revenue increased 6% on a year-over-year basis.
Maxwell Andrew Smock: Steve you called out a continuation of positive trends here in the second quarter results were solid and you had a great quarter for bookings given things seem to be moving in the right direction. Here can you just walk through the rationale for taking down the high end of your guidance range for 2024.
Maxwell Andrew Smock: Yes.
Maxwell Andrew Smock: It's still early in the year.
Maxwell Andrew Smock: And of course, we have I mean, we've narrowed the guidance as you've noted but significantly.
Steven A. Cutler: Significantly now so both the EPS and the revenue side, because it's still early in the year, we feel it is not appropriate necessarily to increase the midpoint of the guidance. It was really just a matter of we're pretty confident about that about that midpoint as we as we announced it initially and so we feel at this point.
Steven A. Cutler: Right thing to do is just to narrow that guidance, we will certainly be looking at.
Steven A. Cutler: What we'll be doing in the next couple of months and as we get to the July call.
Steven A. Cutler: We'll see where we are but it is.
Steven A. Cutler: Inevitably in our business.
Steven A. Cutler: There are puts and pulls things some headwinds and some tailwind and overall as we're only three months into the year from our announced results point of view, we felt it was the right thing to do with the narrow as well.
Confident about the midpoint, but not.
Steven A. Cutler: Not to move that midpoint at this point.
Speaker Change: Understood. Thank you for that maybe just to clarify on quickly on the Rfps is mentioned up low double digits. In total do you have that breakdown or how that breaks down between biotech and large pharma and then how does each of those buckets compare to where they were at at the end of last year and then it sounds like based on your prior answered a few minutes ago.
Steven A. Cutler: Gross Margin was 29.9%, which increased 10 basis points over quarter one 2023, and total SG&A expense decreased 90 basis points on a year-over-year basis to 8.7% total revenue, driving a very strong adjusted EBITDA growth of 11.3% over quarter one. This resulted in an adjusted EBITDA margin of 21.2% in the quarter, up 100 basis points year-on-year. Given the performance on adjusted EBITDA growth and the continued pay-down of our Term Loan B debt, we saw excellent year-over-year growth in adjusted earnings per share of 20%. The execution of our Capital Deployment Strategy continued as planned in the first place.
Speaker Change: You would actually expect rfps to get better from here given the lag between Sunday and.
Speaker Change: Ultimately showing up in Rfps I, just wanted to make sure I understood that correctly. Thank you.
Speaker Change: Yes, I mean, well advanced the second part of your question first yes, we do think there is.
Speaker Change: As a bit of a lag period DSO.
Speaker Change: Better funding environment that we've all seen in the first quarter or so we talked about that.
Speaker Change: We think that's going to flow through probably in the second half of it and so to be absolutely crystal clear on that is the lag of at least a couple of quarters.
Speaker Change: In terms of the.
Speaker Change: Really split out too much.
Speaker Change: The RFP data, but qualitatively certainly large pharma continues to be strong and we've seen that biotech has also been solid.
Speaker Change: Quite as strong in it but it does seem to be on the on the uplift so.
Speaker Change: If I look at sort of low.
Speaker Change: Low double digits large pharma is well above that.
Speaker Change: It takes probably more in the mid singles, if I had to put it.
Speaker Change: With a number on it and it's as I say solid strong we're seeing some plenty of good opportunities in the biotech space. We've been successful at win rate in that biotech space has gone up over the last quarter or so so we feel good about.
Speaker Change: The solutions and the propositions, we're putting in front of it.
Speaker Change: Customers and their receptivity to those.
Speaker Change: But as I say overall.
Speaker Change: Very solid very constructive environment on the RFP front and feel good about where the market is heading a rule.
Speaker Change: Got it thanks again for taking my questions.
Speaker Change: Good.
Steven A. Cutler: This important capability is strategically aligned with our approach to providing an enhanced integrated office. At the same time, we improved the terms of our revolver facility, and we are working closely with our banking partners to progress the refinancing of our debt. We are updating our full-year 2024 guidance range to account for our financial performance in quarter one and the positive market environment we've seen so far. The new ranges maintain the midpoint of our previous guidance range, reflecting an outlook that is consistent in terms of overall market activity and our performance year-to-date.
Speaker Change: Thanks, Tim next question.
Speaker Change: Next question is from Casey Woodring at J P. Morgan Casey. Your line is open. Please go ahead.
Speaker Change: Right.
Casey Rene Woodring: Great. Thank you for taking my questions.
Casey Rene Woodring: So your book to Bill target for the year is one to five on average the midpoint of that 1213 range I know bookings fluctuate on a quarterly basis, but given the strong start to the year and the improving funding backdrop do you think you can sustain quarterly bookings above that 125 number and then on.
Speaker Change: On that point.
Speaker Change: From a quarterly phasing perspective, if we see some more bookings.
<unk> here that we saw in Q1 <unk> above <unk> five is it fair to assume that there would be upside to the back half of the year.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: We've had a good quarter on the bookings it was very solid.
Speaker Change: Really pleased with the way that's the market.
Speaker Change: I'm not going to get ahead of ourselves in terms of going above the 125, I think thats still the target that we have we will see how the biotech funding and.
Speaker Change: The environment sort of contributes to RFP opportunities in the back end as we've as we've talked about.
Speaker Change: It's not out of the question that we could be above that but I think at this stage, we will stick with our one two to $1 three and be somewhere in the middle of that on an average basis across the quarters that thats the way, we think about it.
Speaker Change: We got above that I'm not sure that.
Revenue takes a bit of a wallet to flow through a lot of the work we're still winning is oncology.
Speaker Change: Burn rate is around 9.2, I don't see that going up anytime soon so.
Speaker Change: There may be some modest impact if we have a particularly strong second quarter on the business wins, but not suddenly get a promise that at this stage I think we feel like the opportunity to flowing through nicely is that it's very early in the second quarter, but the.
Speaker Change: The opportunities are flowing through nicely we have a good.
Speaker Change: Opportunity list and I feel confident about our performance in Q2, but it's very early days on that front and we feel.
Speaker Change: As that plays out.
Speaker Change: We'll come to July.
Speaker Change: Just.
Our forecast and where we go and so overall positive strong constructive, but we're not ready to declare a victory in two.
Steven A. Cutler: Before I hand it over to Brendan for further detail on our financial... I want to provide a brief update on our previously announced CFO. Finally, we are looking forward to our upcoming Investor Day, which will take place on May 30th in New York City. This resulted in a solid level of net awards in the quarter of $2.65 billion and a net book-to-bill of $1.27 billion.
Speaker Change: The push too fast.
Speaker Change: What you'd like us to do.
Speaker Change: Got it that's helpful. And then maybe just a quick follow up can you talk about your win rate in the quarter and maybe elaborate on how much of the bookings growth. You saw was a result of share gains versus trial growth coming back. Thank you.
Speaker Change: Oh.
Speaker Change: Win rate was consistent with where it's been to the large the large pharma win rate has been very positive and thats been consistent biotech certainly came back in the quarter very well. So we feel we feel we're making a lot of progress.
Speaker Change: In the biotech space.
Speaker Change: With the opportunities that we pitch them, we got some good opportunities in the hopper for the second quarter. So we feel that we're on a guy in nicely with the biotech that story the rebranding that we put in place towards the end of last year is really starting to gain some traction with customers. We have a number of various.
Speaker Change: A very significant opportunity as some of these biotech opportunities.
Speaker Change: A really large really large trials really large programs and.
Speaker Change: We've been successful on a number of them. So we feel.
Speaker Change: We're in a good place and the right strike bipolar, but it's not as high of course in biotech and large pharma, where we tend to have the strategic partnerships, but we compete very strongly and increasingly strongly in that space and we feel the rebranding approach is really starting to pay dividends along with the.
Speaker Change: The good people and the good thing we have on the on the biotech but.
Speaker Change: Okay. So don't want to prepare the next question.
Speaker Change: Yeah.
Speaker Change: Your next question comes from Ann Hynes Mizuho Securities. Your line is open. Please go ahead.
Brendan Brennan: Our backlog burn was 9.2% in the quarter, slightly down from the quarter 4 levels, and we anticipate similar levels through the remainder of the year. Gross margin for the quarter was 29.9% compared to 30.4% in Q4 2023. Gross margin increased 10 basis points to a gross margin of 29.8% in Q1 2023. Adjusted EBITDA was $444 million for the quarter, or 21.2% of revenue. In the comparable period last year, adjusted EBITDA was $399.1 million, or 20.2% of revenue, representing a very strong year-on-year increase of 11.3%, an expansion of 100 basis points in March.
Ann Kathleen Hynes: Hi, good morning.
Ann Kathleen Hynes: Bob mentioned M&A as a priority in your prepared remarks can you just remind us.
Ann Kathleen Hynes: What type of <unk>.
Ann Kathleen Hynes: Services I need that you think I kind of missing and then secondly, your dsos down year on year, but they did tick up sequentially. If you could provide some more data around that that'd be great.
Speaker Change: Sure I'll take the M&A and then I'll, let Brendan annually.
Speaker Change: So question.
Speaker Change: And we've been fairly clear in the path.
Speaker Change: As a priority and it is around adding capabilities.
Speaker Change: Two services and functions that we currently have in the organization. So we're looking to do uptick it could be in the Barclays space. It could be in the <unk> space it could be in the other parts of the business devices.
Speaker Change: There's a number of areas that we feel.
Speaker Change: We could move that.
Speaker Change: So the functional service area within our organization up to be either one or two in the market. Overall of course, we we feel it was very good or equal number one or even a little ahead in some areas certainly in the FSP space.
Speaker Change: By far the number one player on the full service space, we're very close to being the number not the number one player but there are areas within that business as I said in laboratory sites devices that we feel that are within our filing we can within our wheelhouse, but it could be uptick from them.
Speaker Change: From a revenue and operational point of view to help us to really provide a little more scale in some of those areas.
Speaker Change: Those are the sorts of areas. We're focused on we have a number of those opportunities in the hopper.
Speaker Change: As you've seen.
Speaker Change: Our finances, and our balance sheet now lend themselves.
Speaker Change: Much more effectively too.
Speaker Change: Making those transactions we've done a couple relatively recently with human first in bottles that were relatively small we're looking to continue that but the uptick in terms of the.
Speaker Change: The revenue and EBITDA.
Speaker Change: Contributions. These are these new ones would make to the to the overall P&L.
Speaker Change: Yes, Thanks, Sean.
Speaker Change: I was still heartened I suppose by the level of cash from operations and free cash flow, which is for which is very strong in the quarter. So I'm very happy that where we're making a lot of progress from where we were in the past, albeit yes. We did see a two day attenuation in the DSO from Q4 to Q1, I don't think Theres anything particular, there. We said we would continue to focus on being in the mid 44.
Speaker Change: All year, so thats, obviously our goal.
Speaker Change: We had unfortunately Easter just happen to have hit.
Easter holiday period happened to hit at the exact end of the quarter to 31 March Easter was there any this year so that didn't help.
Brendan Brennan: Adjusted net income attributable to the group for the quarter was $288.5 million, a margin of 13.8%, equating to adjusted earnings per share of $3.47, an increase of 19.7% year-over-year. In the first quarter, the company recorded $7 million of transaction and integration-related costs.
Speaker Change: But it's a couple of days so thats something I think we can recoup as we go through the course of the year and still overall happy with the cash flows which were very strong in the quarter.
Speaker Change: Alright. Thanks.
Speaker Change: Please standby for your next question.
Speaker Change: The next question comes from Dan Leonard at UBS. Your line is open. Please go ahead.
Daniel Louis Leonard: Thank you Steven I was hoping maybe you could elaborate a bit further on your improved win rate in biotech.
Daniel Louis Leonard: Oh.
Steven: Dan I couldn't give you a million reasons why we've.
Steven: Improve that.
Steven: It is a multifactorial thing.
Steven: We've had some great opportunities.
Steven: And the team I think we have new leadership in the biotech space and they're doing a good job.
Steven: In bringing our organization really threw in the in that in terms of that.
Steven: Customers in biotech and attraction and understanding of what our offering is we have as I said 8000 people in that story is resonating well with the with the biotech customers they recognize.
Steven: As you'll know it's.
Steven: It's typical for biotech customers to at least have some sort of consideration to smaller <unk> because they believe they can be more fast.
Steven: At the end of the day, we have 8000 people dedicated to running the budget and they can have.
Operator: DSLO is 49 days for March 31, 2023, a decrease of 5 days from Quarter 1, 2023. Our preferred use of capital remains M&A, and we have a number of opportunities in the pipeline that we are currently engaged on, which would add scale and capability to fast-growing strategic areas of our portfolio. Our key assumptions behind the full year of guidance remain in place. Please stand by while we prepare your first.
Steven: With the new leadership.
Steven: Ptolemy and an ability to move that business into and to make decisions in that business.
Steven: In a quick and agile manner I think we've said we've addressed that albeit within the.
Steven: Within the framework of a large and very financially stable and viable company. So that's the benefit that we're trying to get both to our biotech customers and that's resonating very well.
Steven: Couple of discussions with myself and they understand what we bring now to the biotechs, but that dedicated.
Steven: Resource and financial stability and ability to bring innovation and creativity and agility.
Steven: To the projects so.
Steven: As we have a senior managers sort of doubled down and focusing on these on these key opportunities in terms of engaging with customers talking to them understanding their needs putting to them the various innovations and.
Steven: In solutions that we can as an organization present.
Steven: It's starting to really resonate nicely and it's.
Steven: Turned into it gave us a nice uptick on the win rate.
Steven: One reason that the sort of thing happens.
Steven: But it is I think a trend and I do believe it will continue.
Speaker Change: Thank you.
Speaker Change: Related follow up I, just wanted to make sure I understand better the biotech rebrand.
Steven A. Cutler: So overall, we've seen a solid increase in RFPs in the quarter, in the sort of low double-digit sort of area. And biotech funding, as you've noted, has certainly ticked up very nicely. We haven't seen that necessarily come through so much in the RFPs just yet, and I would expect that's probably going to be delayed another quarter or two. So we would expect somewhere in the second half of the year for the results of that biotech funding, assuming it continues, to come through in terms of awards.
Speaker Change: A couple of years ago at your Analyst Day, you talked about your dedicated business units for biotech 8000 employees and such.
Steven: What what exactly changed at the end of the year.
Speaker Change: I don't know I don't know that.
Speaker Change: Changed operationally for the half point of view, what I think we've done that was communicated at better accustomed to engage.
Speaker Change: You have new leadership in there and they've done a really nice job.
Speaker Change: In making that connection with customers personally and.
Speaker Change: Face to face basis. So there is this.
Speaker Change: An element of icon the node I think is a larger pharma CRO and the path.
Speaker Change: Quite valid and continues.
Speaker Change: As you well know, but we also do.
Speaker Change: Significant amount of work about 30%, 35% of our work is in the biotech space.
Speaker Change: So it is a very important segment for us as you all know there's a lot of innovation in drug development comes out of the biotech sort of drug research comes out of the biotech a lot of the new drugs I think it was about 40% of new drugs that go to market last year through FDA.
Speaker Change: <unk> added in the biotech space.
Speaker Change: Make a huge contribution to the drug development landscape and being.
Speaker Change: Key provider and a key partner of that segment is really important so I think value better understand that that we've been able to communicate that better our marketing message is getting out there, but probably more important marketing is a key senior leaders in that team have been out talking with customers and having them understand what it means.
Operator: And then as we get towards the end of the year and even into next year, to hit the revenue line. So I think what we've seen, we continue to see solid demand for biotech funding. The real uptick and the opportunity I think going forward is probably more weighted towards the end of the year, a couple of quarters later, and then as we get into early next year on revenue. That's helpful.
Speaker Change: To add 8000 people are available to them.
Speaker Change: And so then to be able to put the innovation with that level of financial liability. It's a communication thing and I think we're really starting to get on top of that now and I think it is.
Speaker Change: An important point and that that made that structurally actually it isn't different than what we presented at the analyst day in terms of having a dedicated segment to biotech with dedicated resources, it's really around that that customer perception and making sure people understand that which is what we are redoubling efforts on and not making the stock.
Speaker Change: <unk> team is there.
Speaker Change: I appreciate that thank you both.
Speaker Change: Okay, Thanks, Tim, but I won't have to pay on next question.
Speaker Change: The next question is from Michael Risking at Bank of America. Please go ahead.
Michael Risking: Great. Thanks for taking the question guys.
Michael Risking: Brian I'll say, congrats and wish you the best going forward I know you will still be here for the next couple of calls.
Michael Risking: So let's go for tax level.
Michael Risking: Yes.
Michael Risking:
Speaker Change: Wanted to focus a little bit on the big pharma segment, a little bit.
Michael Risking: Customers, who bought it but I think in your prepared remarks, you called out.
Michael Risking: <unk> of robust demand and you talked about R&D for.
Michael Risking: For the group for 2024 seems to be pretty stable in line with prior.
Michael Risking: To get a sense of how much of that is already locked in when we think of where we are in the year. In April is there is there a risk of that changing as you go forward I know budgets can be stacked, but theres also news. This morning of Bristol announcement chop costs 2200, layoffs. So theres still some things that are fluid in that end market Im just curious how those conversations have evolved year to date and sort of upside.
Michael Risking: Downside risk for the rest of the year.
Michael Risking: Yes.
Operator: Thank you. Your next question comes from Max Smock at William Bear. Max, your line is open, please go ahead. We think that's going to flow through probably in the second half of the year, so to be crystal clear on that, there's a lag of at least a couple. Please hold on while I prepare the next question. Your next question comes from Ann Hynes at Mizuho Securities. Your line is open, please go ahead. Hi, good morning.
Speaker Change: Mike I will tell you might want to jump in.
Speaker Change: As you said, we've seen pretty strong demand in the large pharma space and it's not just this quarter, it's been really over the last 12 18.
Speaker Change: <unk>.
Speaker Change: Nothing has changed in that right now you.
Mike: Have some of the larger companies change their models or adjusted their budgets.
Mike: Absolutely. The answer is yes to that we've seen a little you're certainly seeing some of that in the first quarter with <unk>.
Mike: Revenues from that would be gone down and up in different areas.
Speaker Change: We're very encouraged by it.
Mike: But the overall growth of the organization because certainly outside of our top top 10 on a year on year basis, we've seen significant revenue uptick in growth and that's not necessarily all sort of smaller customers out.
Mike: The biotech customers of some of the.
Mike: Quite large for us so it doesn't exactly it quite when you go outside top 10 outside the top 25 to be smaller biotech customers.
Mike: That that segment has certainly increased and there's one or two in the on the operational ones of our of our revenue group that have come down a bit because of the things that you just mentioned the budget cuts and some challenges they have with the patent extensions et cetera et cetera. So it's.
Mike: Quarter to quarter. It can go one way or the other or sometimes we finished a significant project at the end of last year and then the revenue falls off a little bit.
Operator: You both mentioned M&A as a priority in your prepared remarks. Can you just remind us what type of services or needs that you think ICON is missing? And then secondly, your DSOs are down year over year, but they did tick up sequentially. If you could provide some more data on that, that'd be great. Please stand by for your next... Yeah, and I think it's an important point, Dan, that you made that, structurally, actually, it isn't different than what we presented at Analyst Day in terms of having a dedicated segment to biotech with those dedicated resources. You never know, but you might not be able to announce the successor until later in the year. But you've got the analyst date coming up in May.
Mike: For the first quarter.
Mike: That sort of thing happens overall, we see a very stable and very strong demand in the in the large pharma and as I think I talked about sort of 3% to 4%, but we believe we're.
Mike: We're taking market share in that space.
Mike: Part of our growth is due to our strong.
Mike: This new delivery in that space.
Mike: So it's a strong.
Mike: And our continuing market for us.
Mike: We are we believe while there will be puts and pulls in the ups and downs and some customers will have greater budget challenges many of them have some significant patent life.
Mike: <unk> loss of exclusivity issues coming up over the next that's a relatively common theme is a constant thing that they deal with on a regular basis. It means they have to do more R&D to bring new compounds through so.
Mike: We feel good about that.
Speaker Change: Yeah, No I think just reflecting on it.
Speaker Change: The things that we talked about at the start of our call are as you know.
Speaker Change: We have actually seen pretty decent traction from.
Speaker Change: From the large pharma group and probably more on the full service side of the house as well as we've come into 2024.
Speaker Change: And that's been that's been heartening, but you'll also see in our statistics that we continue to diversify the customer base the customer.
Speaker Change: Base continues to diversify and so that.
Speaker Change: Large concentration, it's always going to be there as part of our piece. It's always part of <unk> are built but it continues to diversify and to Steve's point. Some go up some go down what we're focused on as an organization is that an holistic terms, we're moving in the right direction and I feel we have a market both in pharma and biotech that ready to support.
Speaker Change: That so yeah, that's where we want to see continuing is that is that add diversification increasing over time.
Speaker Change: Okay. That's helpful and I appreciate it if I could squeeze in a quick follow up going back to the CFO transition.
Speaker Change: Sounds like.
Speaker Change: You never know, but you might be able to announce a successor and so later in the year, but you've got the analyst day coming up in May so.
Speaker Change: Anything you can say in terms of what we should look forward too.
Speaker Change: From the event.
Speaker Change: Whether you can look forward to our plans for the next few years.
Operator: So anything you can say in terms of what we should look forward to from the event? That's great. Thanks. I appreciate all that.
Speaker Change: Okay.
Speaker Change: Where we are and what our innovation is in that we're going to move the organization.
Speaker Change: In terms of.
Speaker Change: At the Investor day anyway, but we will certainly we will provide an update on our CFO transition at the Investor Day, We will have some further information on it.
Speaker Change: At that time, although it's still relatively early days, having said that we're moving fairly quickly we've engaged a global recruitment firm.
Speaker Change: We already have interest from some very good candidates no. One of course is going to approach Brendan Brendan Let me say thank you.
Speaker Change: Unless we can clone him in the next six months.
Speaker Change: We do have to replace them in the quarter as I mentioned, we wish him all of it but we have we have already some interest with some some very good candidates.
Speaker Change: Who run public companies and so we feel good about the position we're in.
Speaker Change: As I will.
Speaker Change: Vessel days off of our lives only what is it a month of <unk>. So we won't have any sort of definitive announcement for them at that point, but I'll certainly give you an update on where we are and we.
Speaker Change: We have a.
Speaker Change: Fairly tight timelines in terms of long lists and Shortlists and might.
Speaker Change: <unk> appointments and we do anticipate that we will have somebody on board within the course of this year, that's the expectation and I do hope that the other.
Speaker Change: Overlapped with with Brendan.
Speaker Change: A little from him.
Speaker Change: The adult but so that's where we are we feel that we're in a reasonable place given the fairly early on in the in the search.
Speaker Change: That's great. Thanks, I appreciate all the color.
Operator: The next question comes from Eric Coldwell at Baird. Your line is open, please go ahead. Curious if you could share with us the number of small biotechs that you work with, whether you want to call that emerging biopharma, pre-revenue clients, however you wish to define them, and then how that number has changed, and then also what that is as a percent of revenue and/or backlog. I think a couple of years ago it was like this...
Speaker Change: Thanks, Tim next question.
Speaker Change: Our next question comes from Eric Coldwell with Baird. Your line is open. Please go ahead.
Eric White Coldwell: Thanks very much.
Eric White Coldwell: I wanted to go back to the the biotech rebranding in the <unk>.
Eric White Coldwell: Improved twin right and you're you're double down focus there I'm curious if you could share with us.
Eric White Coldwell: A number of small biotechs that you work with.
Eric White Coldwell: Whether you want to call that emerging biopharma pre revenue clients. However, you wish to define them and then.
Eric White Coldwell: How that number has changed and then also.
Eric White Coldwell: What that is as a percent of revenue and our backlog I think a couple of years ago. It was laid out of somewhere around if I remember about 16% of revenue the way you used to define it so.
Eric White Coldwell: If you could give us an update on that and then.
Operator: Thank you. If I could just throw one more in, I'll jump off. Hey guys, thanks for taking the questions. Maybe on the back of that last one on the headcount piece, it's probably one for Brendan.
Eric White Coldwell: With this focus is it on the really small really early stage biotech clients or is it more mid and large biotech where.
Eric White Coldwell: You are just looking to further penetrate.
Eric White Coldwell: Our more mature biotech segment I'm I'm curious on how broad the focus is how how deep you're going in terms of.
Eric White Coldwell: The nascency of some of these clients their their size et cetera. Thank you.
Eric White Coldwell: Okay.
Speaker Change: And that question Eric.
Speaker Change: Try to unpack it a little bit.
Eric White Coldwell: Yeah.
Eric White Coldwell: The biotech rebound we think.
Eric White Coldwell: Overall, as I indicated sort of low 30% about revenues and that sort of number that the number I think we've talked about a few years ago was all out with capital market dependent.
Brendan Brennan: Just on the margin side, obviously SG&A has been a nice lover. Can you talk about, is that still heading towards eight here in the relatively near term? And obviously, you guys are talking about 50 bits overall, but can you just talk about the margin dynamics, FSP? That shift seems to quiet down a little bit. I guess it's just because consumer service has been strong for you guys, better margins on that front. But again, can you just talk about, I guess, the SG&A levers?
Eric White Coldwell: Biotech the ones that.
Eric White Coldwell: Really required to go out and raise money and that's around 15%. So we work with a variety of <unk>.
Eric White Coldwell: <unk> in the vicinity.
Eric White Coldwell: Inventory exactly how many but it's around 500 sort of so the number it's a lot of them. We do anything from small consulting projects with them to very very large scale phase III and the hundreds of millions of dollars with.
Eric White Coldwell: With some of them there.
Eric White Coldwell: Engineering themselves they work in a different way to large pharma.
Eric White Coldwell: And hence having a different focus on them or.
Eric White Coldwell: A group of people, who focus on them differently in terms of the ability to engage in terms of our opportunity to input on the on the trial design on the development programs.
Eric White Coldwell: It's a very different market.
Eric White Coldwell: And one that.
Eric White Coldwell: Our people I think.
Eric White Coldwell: Increasingly working extremely well and I think as I said with the rebrand.
Eric White Coldwell: The customers are understanding that and appreciating that and also.
Eric White Coldwell: While while I recognize our expertise and resources I also recognize our financial viability and stability, which I think.
Eric White Coldwell: Is it something thats very important win when.
Eric White Coldwell: And these customers want to take a drug right through the market rather than just to.
Eric White Coldwell: Partner up with us with a large pharma so we offer them a different strategic options at least companies going forward and that's I think extremely valuable to them and we've been able to sort of communicate that to the market.
Brendan Brennan: Is it still right to think about that 8% near term? And then again, that FSP shift, it feels like you guys have that well under control, but it's, Yeah, Patrick, well, I think from just maybe starting off with the gross margin piece, you know, and I think we kind of clearly indicated coming into this year that we still were targeting to be in around where we were in the current quarter, around that 30% mark for the full year. And that's obviously because there are lots of moving parts underneath that.
Eric White Coldwell: So it gives you a little bit of a flavor.
Eric White Coldwell: But what that what that group of customers.
Speaker Change: Thank you if I can.
Speaker Change: Could just throw one more and then I'll jump off.
Speaker Change: Headcounts been flat over the last year and you are growing in the mid single digits.
Speaker Change: I'm just curious what your thoughts are on.
Speaker Change: Labor productivity retention and then also hiring.
Speaker Change: <unk> 2024 progresses, and maybe moving into 2025, if current trends continue.
Speaker Change: Sure well you're right. We have we haven't increased head count dramatically, it's been very flat over the last 12 months or so and yet the EBITDA level to increase revenue.
Speaker Change: Good part of the reason is that our strategy around.
Speaker Change: Our efficiency, we've been able to bring in and use the <unk>.
Speaker Change: Machine learning.
Speaker Change: It has been.
Speaker Change: Mifid can contribute in fact that our ICEE group has done an excellent job in bringing that in and I think we talked about 2 million hours of time.
Speaker Change: Last year, and we've got a target of something like $3 5 million for this year. So that's a that's a really important part of it the optimization of the location of our workforce is also an important part of it we have to.
Speaker Change: Terrific team here at icon, who work really hard and they were very efficient and who understand the need to continue to be more efficient.
Speaker Change: That's a really important part of what we do and I think the other part of it is the systems and technology that we are continuing to be able to deploy around the organization has given out our smart people the opportunity to be more efficient to operate and to get more done within the same amount of time.
Speaker Change: All of those things I think have helped us to keep our head count pretty pretty flat I think it has gone up 100 wholesale.
Speaker Change: <unk>.
Speaker Change: And it's really allowed us to be continually more productive we have to do that.
Speaker Change: We set ourselves a goal of 1 billion, increasing at least 70% of productivity each year to allow.
Speaker Change: Has to be to.
Speaker Change: Continue to be the efficient organization, we can be part of it I think thats helped is on the retention.
Speaker Change: The team manages it.
Speaker Change: And the organization has done a terrific job in continuing to engage people in a way that's brought our retention up too.
Speaker Change: It's in the high <unk> now.
Speaker Change: No. There is a time, we've had better retention in the organization.
Speaker Change: It's.
Speaker Change: Quite extraordinary the way, it's improved on a quarter by quarter basis really over the last.
Speaker Change: <unk> post post Covid.
Speaker Change: Well, we're in much better retention that we had pre COVID-19, probably better retention that we've had at any time in our history.
Speaker Change: And again it gets distributed to the managers and the leaders of the organization.
Speaker Change: We've created environment around here that people want to work in and people feel engaged.
Speaker Change: So I'll give them the credit on that front, but it's all helped us to.
Speaker Change: To become more efficient and institute to avoid having to increase our <unk>.
Speaker Change: Head count in line with our revenue.
Speaker Change: Please standby for your next question.
Speaker Change: The next question is from Patrick Donnelly at Citi. Your line is open. Please go ahead.
Brendan Brennan: Steve made reference to our efficiency as an organization. You made reference to the fact that we were talking a little bit more last year about FSB, albeit full service has been much more impactful so far this year. And that obviously has a little bit of a shift in the margin profile, but it's taken account of in terms of our forecast gross margin there at around the 30% mark. So, yeah, those pieces are kind of baked in, if you like, in terms of margin shift.
Patrick Bernard Donnelly: Hey, guys. Thanks for taking the questions.
Patrick Bernard Donnelly: Maybe on the back of that lots of them head count piece, it's probably one for Brandon just on the on the margin side, obviously SG&A has been a nice lever.
Patrick Bernard Donnelly: Can you talk about is that still heading towards eight year in the relative near term.
Patrick Bernard Donnelly: And obviously you guys were talking about <unk> overall, but can you just talk about the margin dynamics FSP that shifted seem to quiet down a little bit of I guess, it's just for consumer services has been strong for you guys better margins on that problem.
Patrick Bernard Donnelly: Again can you just talk about I guess, the SG&A levers still right to think about that 8% near term and then again FSP ship.
Speaker Change: You guys got that well under control, but a small part of that as well.
Speaker Change: Yes, Patrick well I think from the just maybe starting off with the gross margin piece and I think we kind of have clearly indicated coming into this year that we still are targeting to be in around where we were in the current quarter and around that 30% Mark for.
Speaker Change: For the full year and Thats, obviously, there's lots of moving parts underneath that Steve made reference to our efficiency as an organization you made reference to the fact that we were talking a little bit more last year about FSP, albeit full service has been much more impactful. So far this year and that obviously has a little bit of a shift in the margin profile, but it's taken account of in terms of our forecast.
Speaker Change: Gross margin there in around the 30% Mark.
Speaker Change: Yes, those pieces are kind of baked in if you like in terms of margin shift and we feel that we can sustain that 30% gross margin in that profile as I kind of mentioned on numerous calls in the past our leverage that we expect and we talked about 50 bps of expansion in 2024 is predominantly on SG&A I think you can see we're making good progress on.
Brendan Brennan: And we feel that we can sustain that 30% gross margin in that profile. As I kind of mentioned in numerous past, our leverage that we expect, and we talked about 50 bps of expansion in 2024 is predominantly SG&A. I think you can see we're making good progress on that. I had referenced that as where we expected to see margin leverage this year. And yeah, we always, you know, we were assiduous cost managers, as you well know.
Speaker Change: That has had referenced that was where we expected to see the margin levers. This year and yes. We always we are a <unk> cost managers as you well know and we look to bring efficiency using the same pieces that Steve referenced in terms of our gross margin efficiencies are our technology the use of systems and the use of <unk>.
Speaker Change: <unk> learning AI and robotics to ensure that we're as efficient as an organization that people spend their time working on value added work as opposed to Roche.
Speaker Change: Things that can be automated so that's why we continue to look at and I think that will probably predominantly with the large way, we will be leveraging our margin and cost base and not just this year, but into the future. So yes, we're making good progress and we'd like to see that progress continue.
Brendan Brennan: And we look to build efficiency using the same pieces that Steve referenced in terms of our gross margin efficiency. So our technology, the use of systems, and the use of machine learning, AI, and robotics to ensure that we're as efficient as an organization, and people spend their time working on value-added work, as opposed to roads or things that can be automated.
Speaker Change: Thanks, Chris.
Speaker Change: Yeah.
Speaker Change: Our next question comes from Justin Bowers with Deutsche Bank. Please go ahead.
Justin D. Bowers: Hi, good afternoon Slash morning, everyone. So.
Justin D. Bowers: With large pharma here can you talk a little bit about <unk>.
Justin D. Bowers: Philosophy of decision, making amongst the large pharma.
Justin D. Bowers: Clients.
Justin D. Bowers: With respect to either new programs or the outsourcing outsourcing approaches.
Justin D. Bowers: Relative to last year.
Justin D. Bowers: And some of the concerns there and then.
Justin D. Bowers: Just with respect to outsourcing penetration I think historically we saw.
Justin D. Bowers: We've seen the industry grow, let's say, one or two points per year there.
Justin D. Bowers: Is that is that.
Justin D. Bowers: Is that still intact.
Justin D. Bowers: For 2024.
Justin D. Bowers: The next couple of years.
Speaker Change: Sure Justin.
Justin D. Bowers: I'll answer the second part first penetration here I wanted to 2% you wanted to do.
Speaker Change: 100, 200 bps I think is the way, we think about it and that's why.
Speaker Change: That's what we think about it we think there's still plenty of upside over the next decade or two.
Operator: So that's where we continue to look. And I think that will probably be the main way we will be leveraging our margin and cost base, not just this year but into the future. So, yeah, we're making good progress and would like to see that progress continue. Your next question comes from Justin Bowers at Deutsche Bank. Please go ahead. Hi, good afternoon slash morning, everyone.
Speaker Change: Maybe there's a there's no data.
Speaker Change: Ceiling.
Speaker Change: 70, 75%, but we're probably only in sort of 50, 55% now so I think there's still plenty of room for upside on the penetration side and of course, it varies depending on which company you're at large pharma is going to be lower than it is in the bucket.
Speaker Change: Typically do.
Speaker Change: Pretty much everything.
Speaker Change: In terms of velocity of decision.
Speaker Change: Don't think we see any particular change in the velocity of decision things can take some time and sometimes they are.
Speaker Change: Happened very quickly a risky project can be might've been mined.
Speaker Change: It's a large development program with a new asset.
Speaker Change: And significant indications that could take three to six months really depending on the on the individual customer on their circumstances, they are raising money or not.
Speaker Change: I don't see any much difference between large pharma between biotech sometimes the biotechs take a fair bit of time on this is possibly possibly there a little faster in terms of making decisions on the join us too much of a difference on that front and I certainly haven't noticed any elongation of the decision velocity over the last quarter.
Speaker Change: Well I think that.
Speaker Change: That's <unk> at about the same rate as normal.
Speaker Change: Understood, Yes, I was just thinking in terms of.
Speaker Change: It impacted <unk>.
Speaker Change: The rate environment last year, and how that change so quickly, but I'll take the restaurant offline I appreciate the question.
Speaker Change: Thanks, John.
Speaker Change: So next question.
Speaker Change: The next question is from David Windley of Jefferies. Please go ahead.
Steven A. Cutler: So we'll stick with large pharma here. Can you talk a little bit about the velocity of decision making amongst the large pharma clients for 2024, and you know. Sure, Justin, I mean, I'll answer your second part first. Penetration, yeah, 1-2% a year. 1-2%.
David Howard Windley: Hi, Thanks for getting me in.
David Howard Windley: My first question, Steve you both mentioned.
David Howard Windley: A couple of times about large pharma and <unk> being strong to start off the year you also mentioned.
David Howard Windley: The client renewal on that front I wondered if those are one and the same or if the large pharma in SSO uplift is broader than just that one client renewal maybe you can give some color around that.
Speaker Change: Well the particular renewals that is particularly in full service.
Speaker Change: That's certainly the case, but I think the I think it goes the full service sort of come back yet.
David Howard Windley: It goes.
David Howard Windley: It was a bit beyond that 111 customer typically in our industry, we see a little bit.
David Howard Windley: And Roundabouts in the pendulum goes one way and it comes back the other I think a year or so ago, we will see a pushed more towards functional I think thats now starting to come back and we're seeing we're seeing maybe a little bit more of a I wouldn't say at that time, a lot of horse at Hanmi.
Steven A. Cutler: I think that's the way I think about it, and that's what we think about it. We think there's still plenty of upside over the next decade or two. There's no doubt a ceiling, maybe at 70, 75%, but we're probably only at sort of 50, 55% now. So I think there's still plenty of room for upside on the penetration side, and of course, it varies depending on which company you're at. For large farmers, it's going to be lower than it is in biotech, where we'll typically do pretty much everything for them. In terms of velocity decisions, I don't think we will see any particular change in the velocity decision.
David Howard Windley: But there is probably an attenuation of that push towards FSP and its coming back a little bit on the pulse of what we probably are seeing more than anything is the increase in these what we call. These blended models.
David Howard Windley: We are particularly large pharma of course wanted to do or want to have the facility to do both.
David Howard Windley: Both are more functional approach and a more full service a bunch of that makes sense.
David Howard Windley: Project I might do the data management.
David Howard Windley: Medical writing off that deliver through a functional service agreement, but the clinical and the project management for the particular trial of the particular program would be more on a full service basis.
David Howard Windley: And we feel like we're very well positioned to be able to accommodate those sorts of solutions. We have we are the biggest on the FSP provider and we obviously have a very very significant footprint in full service as well so the our ability to put those models together.
David Howard Windley: I think I'm pretty standard in the industry.
David Howard Windley: So when we add that and we had our technology and our networks to it we can put together a really compelling offering for these large pharma customers.
Speaker Change: Great. Thanks, and then switching subjects following up on some comments around data strategy and you talked about <unk>.
Speaker Change: I guess I'm thinking about.
Speaker Change: Your internal symphony asset, but probably also reliance on an external data assets.
Speaker Change: And maybe you could just comment on your current thoughts.
David Howard Windley: On data strategy and then also.
David Howard Windley: Kind of how critical is data versus maybe the analytics, what you do with the data how you bring the data to the sites things like that and maybe put.
Operator: Things can take some time, and sometimes they happen very quickly. A rescue project can be made, and a decision can be made in a week. If it's a large development program with a new asset, in a significant indication, that could take three to six months, really, depending on the individual customer, on their circumstances, on whether they're raising money or not. I don't see any much of a difference between large farmers and biotech. Sometimes the biotechs take a fair bit of time on these things, possibly they're a little faster in terms of making decisions, but I'm not sure I notice too much of a difference on that front. I certainly haven't noticed any elongation of decision velocity over the last quarter or two.
David Howard Windley: Talk about what is your data strategy currently and then.
David Howard Windley: How important is the data strategy in the context of of actually.
David Howard Windley: Delivering at the site level.
David Howard Windley: Sure.
Speaker Change: Let me start with a token.
Speaker Change: Symphony business that we have within the organization.
Speaker Change: Critical part of our business from the token authorization level I think I'm really excited about <unk>, because I think it gives us the ability to follow up patients in a very cost effective manner for an extended period of time well beyond the clinical trial. So when you think about as we get into more of the obesity trials, where we have to treat thousands of patients.
Speaker Change: Over an extended period of time and the ability to collect data very cost effectively with them I think offers us a huge opportunity. It offers our customers a huge opportunity.
David Howard Windley: You think if.
David Howard Windley: Back in the day, when it goes or if you're old enough to remember the <unk> challenges around.
David Howard Windley: Cardiovascular events in the pipe.
David Howard Windley: Been able to token is a lot of that a lot of those patients.
David Howard Windley: Instead of having it be tablet.
David Howard Windley: Putting context, those cardiovascular events and potentially at a different outcome, but that's the that's the way I'm thinking about the ability for us to.
David Howard Windley: <unk> patients in the in this obesity space in the diabetes space, where were doing back again to some of these really large scale clinical trials, we've been away a bit from these large scale clinical trials.
David Howard Windley: In the rare diseases very specifics more than 100 patient studies will be studies that I think the opportunity going forward is to get into some of these really large ones I think our ability to <unk>. These patients to follow them up and to provide that data to customers on a long term basis is really exciting in terms of the data strategy.
Steven A. Cutler: The next question is from David Windley at Jefferies, please go ahead, on client renewal on that front. I wondered if those are one in the same or if the large pharma and FSO uplift is broader than just that one client renewal. Maybe you could give some color around that.
David Howard Windley: We continue to not necessarily want to own all of the data we have.
David Howard Windley: <unk> data from a number of different sources Symphony is a really important part of that but we had a lab.
David Howard Windley: <unk> data, we have a number of external sources of data around some sightline and organizations without principles, we have a clinical.
David Howard Windley: Altra management system, and what we are bringing together from a number of different sources isn't the ability through our technologies into identify patients for trials and to fund those licenses get those patients into clinical trials one of our initiatives.
Steven A. Cutler: Well, David, the particular renewal we've had is particularly in full service, so that's certainly the case. But I think the full service sort of comeback, if that's the way to put it, goes a bit beyond that one customer. Typically, in our industry, we see a little bit of swings and roundabouts, and the pendulum goes one way and comes back the other. I think a year or so ago, we were seeing a push more towards functionality.
David Howard Windley: The innovation space is through an organization called <unk>, where we can actually utilize the electronic medical records and go out and find patients and bring patients and have patients referred to a clinical trial. So it's early days on that one with trying that out on a number of trials, particularly in some of these more rare disease.
David Howard Windley: Trials, but the ability for us to access data that we don't necessarily own but we have access to them. We can bring together and collect through our system through our <unk> system, which you've seen I know that at the Investor day, and you'll see some more of this technology at our Investor Day in New York next month.
David Howard Windley: Show you, what we've been doing and what we're able to do in terms of bringing these disparate sorts of data together presenting them in a way that allows us to take actions and take and make insights into where we find patients for clinical trials. It's for us. It's all about delivering patients into clinical trials and doing that in a really cost effective in a timely basis.
David Howard Windley: Our whole data strategies.
Speaker Change: I'll, let you know.
Speaker Change: Towards that I know, that's a bit of a high level lines that we'll be able to give you a bit more information on this David.
Speaker Change: At the Investor Day in New York.
Speaker Change: On the phone.
Speaker Change: Yeah.
David Howard Windley: Thanks, very much and Brendan Brennan congrats on your career and icon I appreciate working with you. Thank you.
Speaker Change: Alright, I appreciate that.
Speaker Change: We still have a number of questions less in the interest of time, we will be limiting you to one question only please standby for your next question.
David Howard Windley: The next question is from Elizabeth Anderson Evercore ISI. Please go ahead.
Steven A. Cutler: I think that's now starting to come back, and we're seeing maybe a little bit more of a... I wouldn't say it's a tidal wave or a tsunami, but there is probably an attenuation of that push towards FSP, and perhaps it's coming back a little bit on the full service.
Elizabeth Hammell Anderson: Hi, guys. Thanks, so much for the question, maybe pivoting off of what David just asked.
Elizabeth Hammell Anderson: Do you think about the current market for real World evidence I mean, I think that there's like some maybe two phenomenon going on maybe some sort of cyclical element on it and also maybe some sort of structural changes as we've seen.
Elizabeth Hammell Anderson: Obviously, the rise in AI and that kind of thing impacting the market could you sort of give us what do you sort of view is.
Elizabeth Hammell Anderson: What's going on there with your business and sort of where you see the competitive landscape shaking out over the next year or two thanks.
Steven A. Cutler: What we probably are seeing more than anything is an increase in what we call these blended models, where particularly large pharma, of course, want to do or want to have the facility to do both, both a more functional approach and a more full service approach, if that makes sense. Great, thanks. And then switching subjects, following up on on some comments around data strategy, and you talked about tokenization, uh... your internal symphony asset but probably also reliance on on external data assets You know, kind of how critical is data versus, you know, maybe the analytics, what you do with the data, how you bring the data to the sites, things like that, and maybe put, Talk about what is your data strategy currently and then how important is the data strategy in the context of actually, you know, delivering at the site level.
Speaker Change: Yes, we can.
Speaker Change: Continue to see real World is an important really important part of the landscape and what we need to do is simply a part of that.
Speaker Change: We have other sources of real world evidence as Bill mentioned, the Viridor Im opportunities.
Speaker Change: It's.
Speaker Change: We see continued interest in there we see opportunity for growth in the <unk>.
Speaker Change: Particularly as we get as I said these larger scale trials I think real world is going to be continuing and again, it's going to grow significantly. So there's a lot. There's a lot. There I don't think we see any sort of major shift right now, but I think as the obesity drugs really start to be developed over the new round of <unk>.
Speaker Change: To be developed we will see increasing and increasing well for real world evidence and the ability to access it and to take insights from it.
Speaker Change: So I can write one of them for hours about real world I won't do that.
Speaker Change: Again, you'll see more about that at our Investor day in a in a couple of weeks.
Speaker Change: Great. Thanks, so much and congrats Brandon it's been a pleasure.
Speaker Change: Please standby for your next question.
Speaker Change: Next question is from Jack Meehan of Nephron Research. Please go ahead.
Speaker Change: Hi.
Jack Meehan: Thanks for squeezing me in.
Jack Meehan: Just one question in the past in the deck, you've also given us the contribution from the number one customer as well I was just curious how theyre doing what was their contribution in the quarter. Thanks.
Jack Meehan: Yeah, Hi, Jack Brennan here with similar to last quarter and that kind of 8% to 9% range.
Jack Brennan: I think we wanted to move away from being overly focused on one customer I think I made the point earlier in the call that we are seeing a more diversified company as we go forward and it aligns again, what our quarterly filings with the SEC that we would carve out one to five is that the way we will be showing that as we go forward.
Jack Brennan: Please standby for your next question.
Jack Meehan: Next question is from Lucas.
Lucas: Barclays. Please go ahead.
Lucas: Great. Thanks.
Lucas: Can you talk about the like the pass throughs that the trends that youre seeing here in the current quarter and the elevated booking your bookings that you had for this quarter anything thats step up there.
Speaker Change: We're just trying to find anything I guess to pick out or find issues.
Speaker Change: Well no look there Luke.
Speaker Change: And here obviously.
Lucas: We had a very solid quarter.
Lucas: Terms of bookings, but that wasn't based on elevated pass throughs or anything like that we had a very solid direct fee book to bill as well after similar so no nothing nothing there. It's particularly gets you guys worried about was a very solid quarter across the organization and very much in terms of direct field. So.
Speaker Change: Great. Thanks, I vote for windley to throw his hat in the ring Brandon.
Speaker Change: Oh Wow the gig yes, yes.
Speaker Change #101: We put them in.
Speaker Change: <unk>.
Speaker Change: What are the total blue.
Lucas: I will describe it Steve space right now.
Steven A. Cutler: Thanks, Tim next question.
Lucas: This comes from Jack Wallace of Guggenheim Partners. Please go ahead.
Lucas: Hi, This is Mitch on for Jack Thanks for taking my question.
Mitch: Most of mine have been asked and answered, but maybe just one on therapeutic mix is there anything to note in regards to changes in mix in the first quarter or in the pipeline.
Mitch: No not really we continue with a good 40% of our work in the oncology space and then the rest of them are sort of between 10 and 15.
Steven A. Cutler: Thanks. Let me start with tokenization. The symphony business that we have within the organization is a critical part of our business from the tokenization level. I'm really excited about this tokenization because it gives us the ability to follow up patients in a very cost-effective manner for an extended period of time, well beyond the clinical trial. So when you think about as we get into more of these obesity-type trials where we have Alex, you know, aligned towards that.
Mitch: Effective vaccine.
Mitch: CNS.
Mitch: Cardiovascular.
Mitch: It might mix it might go up and down a little bit on a trial, if a big draw comes in but really still.
Mitch: 50% of it about 40% of oncology and rare disease, and so that tends to dominate our portfolio.
Mitch: Yes.
Speaker Change: Please standby for your final question.
Speaker Change: Yeah.
Speaker Change #106: And this comes from Chilean dosing at curious Securities. Please go ahead.
Chilean dosing: Thank you and thanks for squeezing me in and congrats Brendan.
Chilean dosing: Just wanted to ask about bio secure act and what congrats on executing.
Chilean dosing: Global pharma customers and even this act process you can see this having any implications for the Seattle industry and global Seattle.
Chilean dosing: John.
Speaker Change #100: Yes Julien.
Speaker Change #100: One profess to be an expert in the.
Speaker Change #100: Since of the secure act.
Speaker Change #102: Got it.
Speaker Change #103: There are potential issues I think it's probably more.
Speaker Change #103: It's more a question for our pharma customers in terms of.
Speaker Change #100: Their access to <unk> and those sorts of organizations and the potential, particularly I think in China.
Speaker Change #100: For some challenges in terms of supply and I guess, if it's supply of.
Speaker Change #100: Drug product.
Speaker Change #100: <unk> potentially be some implications with supplier.
Speaker Change #100: Clinical trial supplies, but.
Operator: I know that's a bit of a high-level answer. We'll be able to give you a bit more information on this, David, at Investor Day in New York in a month. Thanks Dave, I appreciate that. Thank you. We still have a number of questions left, so in the interest of time, we will be limiting you to one question only. Please stand by for your next question. Hi guys, thanks so much for the question.
Speaker Change #100: Really.
Speaker Change #100: Our pharma.
Speaker Change #100: Rather than a pretty smart people and they plan very well for these sorts of things. So I'd be very surprised if we saw any really material impact I know there are some tenants.
Speaker Change #100: As I've expressed those to that to the government.
Speaker Change #100: I think the supply chain challenge I think has been on going now for several years.
Speaker Change #100: And I think they've already thought very hard about where they get men, particularly the manufacturing of the drug and their IP is done.
Speaker Change #100: And so I don't see much implication for us certainly in the short term.
Speaker Change #105: Thank you.
Speaker Change #105: Yes.
Speaker Change #107: Okay. So I think we're in the.
Speaker Change #108: Question. So thank you operator.
Speaker Change #109: I want to thank you all for joining our call today and for your continued interest and we look forward to seeing many of you at our upcoming Investor Day in New York City, and providing you with an opportunity to spotlight. The important work we do here at icon. Thank you all and have a good day.
Operator: Maybe pivoting off of what Dave just asked, how do we think about the current market for real world evidence? I mean, I think that there are like some, maybe two phenomena going on, maybe some sort of cyclical element to it, and also maybe some sort of structural changes, as we've seen, you know, obviously, the rise in AI and that kind of thing impacting the market.
Speaker Change #104: This concludes today's conference call. Thank you for participating you may now disconnect speakers. Please standby.
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Operator: Could you sort of give us your view of what's going on there with your business and sort of where you see the competitive landscape shaking out over the next year or two? Thanks. Great. Thanks so much and congrats, Brendan. It's been a pleasure. Thanks, Elizabeth. Cheers.
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Operator: Please stand by for your next question. The next question is from Jack Meehan in Nephron Research. Please go ahead. Yeah, hi, I'm Jack Brennan here. We're similar to last quarter in that kind of 8% to 9% range.
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Operator: I think we want to move away from being overly focused on one customer. I think I made the point earlier in the call that we are seeing a more diversified company as we go forward. And it aligns again with our quarterly filings with the SEC that we would carve out one to five. That's the way we'll be showing that as we go. Please stand by for your next... The next question is from Luke Sergott at Barclays. Please go ahead. Great, thanks. Great, thanks. I vote for Windley to throw his hat in the ring, Brendan. Oh, for the gig, yeah, yeah, yeah, yeah. We need to talk, Luke. I won't describe Steve's face just now.
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Operator: Please stand by for your next question. This comes from Jack Wallace at Guggenheim Partners. Please go ahead. And this comes from Jailendra Singh at Truist Securities. Please go ahead.
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Operator: Thank you, and thanks for squeezing me in, and congratulations, Brendan, as well. I just wanted to ask about the Biosecure Act and what you guys are hearing from your global pharma customers. And even if this act passes, do you see this act having any implications for the CRO industry and global CRO players like ICON? Yeah, Jailendra, I won't profess to be an expert in the implications of the Biosecure Act, but there are potential issues.
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Operator: I think it's probably more for our farmers; it's more a question for our farmer customers in terms of, you know, their access to CDMOs and those sorts of organizations and the potential, particularly in China, for some challenges in terms of supply, and I guess if it's the supply of their drug product, there may potentially be some implications for the supply of clinical trial supplies. But really, our pharma brethren are pretty smart people, and they plan very well for these sorts of things. So I'd be very surprised if we saw any really material impact.
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Steven A. Cutler: I know there are some concerns about whether they've expressed those to the government, but I think the supply chain challenge, I think, has been going on now for several years, and I think they're thinking, and I think they've already thought very hard about where they get, particularly the manufacturing of their drug and their APIs, done, and so I don't see much implication for us. Thank you. Okay, so I think we're at the end of the questions, so thank you, Operator.
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Steven A. Cutler: I want to thank you all for joining our call today and for your continued interest in ICON. We look forward to seeing many of you at our upcoming Investor Day in New York City, and providing you with an opportunity to spotlight the important work we do here. Thank you all and have a good day. ??? ??? ??? ??? ??? ??? ??? ??? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? Music Music Music Music Music Music Music Music Music Music Music ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music, ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ??
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