Q2 2024 ICON PLC Earnings Call

<unk>, Vice president of corporate and commercial finance humour Lions.

Speaker Change: I'd like to note that this call's webcast and that there are slides available to download on our website to accompany today's call.

Speaker Change: 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. 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.

Speaker Change: And listeners are cautioned that forward looking statements are not guarantees of future performance.

Welcome to the Xerox Holdings Corporation's second quarter 2024 earnings release conference call.

Speaker Change: Forward looking statements are only as of the date, they're made and we do not undertake any obligation to update publicly any forward looking statements either 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 the form 20.

Speaker Change: After the presentation, there will be a question and answer session. To ask a question at that time, please press star 1 1 at any time during this call. You can withdraw your question simply by pressing star 1 1 again. At this time, I'd like to turn the program over to today's...

Speaker Change: As filed on February 23rd 2024.

To Mr. David Beckel, Vice President and Head of Invest Relations. Please go ahead, sir.

Speaker Change: This presentation includes selected non-GAAP financial measures, which Steve and Brendan will be referencing in their prepared remarks.

David Beckel: Good morning, everyone. I'm David Beckel, Vice President and Head of Investor Relations at Xerox Holdings Corporation. Welcome to the Xerox Holdings Corporation's second quarter 2024 earnings release conference call, hosted by Steve Bandrzak, Chief Executive Officer.

Speaker Change: For a presentation of the most directly comparable GAAP financial measures. Please refer to the press release section titled Condensed consolidated statements of operations, while non-GAAP financial measures are not superior to or a substitute for the comparable GAAP measures. We believe certain non-GAAP information is more useful to investors for historical comparison.

Speaker Change: He's joined by John Bruno, President and Chief Operating Officer, and Xavier Heiss, Executive Vice President and Chief Financial Officer.

Speaker Change: Purposes.

Speaker Change: At the request of Xerox Holdings Corporation, today's conference call is being recorded. Other recording and or rebroadcasting of this call are prohibited without the express permission of Xerox.

Speaker Change: 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 excludes stock compensation expense restructuring costs foreign currency gains and losses amortization and transaction related and integration related costs and their respective tax.

Speaker Change: During the call, Xerox executives will refer to slides that are available on the web at www.xerox.com slash investor.

Speaker Change: And we'll make comments that contain forward-looking statements which, by their nature, address matters that are in the future and are uncertain. Actual future financial results may be materially different than those expressed herein. At this time, I'd like to turn the meeting over to Mr. Bandrzak.

Benefits.

Speaker Change: We will be limiting the call today to one hour and would therefore ask participants to keep their questions to one each in the interest of time I would now like to hand over the call to our CEO Dr. Steve Cutler.

Mr. Bandrzak: Good morning, and thank you for joining our Q2 2024 earnings call.

Steve Cutler: Thank you Jody and good day everyone.

Steve Cutler: <unk> results in quarter, two continued a positive year to date trajectory of gross booked bus sold financial performance and further success in securing new business across our segments.

Mr. Bandrzak: Sequential improvements in adjusted operating income margin, cash flow, and revenue validate the comprehensive and strategic organizational changes implemented in Q1.

Speaker Change: Reinvention is a multi-year strategy to simplify operations and reposition Xerox towards market opportunities in print, digital, and IT services with the highest rates of underlying growth.

Speaker Change: This business wins and backlog grew by 7% and 10% respectively year over year as a leading scaled offering continues to resonate with our customers uniquely positioning icon to meet increasing demand for innovative and flexible solutions in clinical development.

Speaker Change: With transformational changes of this magnitude, progress may not always unfold in a linear fashion.

Speaker Change: We remain encouraged by the leading indicators that a market that support a solid demand environment.

Speaker Change: We experienced a short period of disruption in the first quarter during implementation of the redesigned operating model, but continue to execute reinvention according to plan.

Steve Cutler: <unk> continued growth and RFP flow of the overall consistent level of opportunities, we are seeing across our customer segments.

Speaker Change: Notable improvements in operating processes and financial results since the reorganization further out confidence

Steve Cutler: While biotech funding levels attenuated slightly in quarter two from a robust start in quarter. One we see this market continuing to stabilize.

Speaker Change: and the strategy's ability to deliver a targeted $300 million improvement in adjusted operating income above 2023 levels by the end of 2026.

Steve Cutler: <unk> seen a modest uptick in rfps on a trailing 12 bump and sequential basis within this segment.

Speaker Change: Summarizing results for the quarter, revenue of $1.6 billion, decreased 10% in actual and constant currency.

Steve Cutler: Importantly, customer sentiment appears to be improving and we remain optimistic around the contribution to midterm growth as important customer segment represents.

Speaker Change: Excluding the impact of year-over-year fluctuations in backlog and reduction in non-strategic revenue associated with the reinvention, core business revenue declined only modestly.

Steve Cutler: In the large pharma segment.

Speaker Change: We see continued opportunity to win and expand our support of the many customers seeking novel solutions.

Speaker Change: Adjusted EPS was $0.29, $0.15 lower year-over-year, primarily reflecting higher taxes and interest.

Speaker Change: While macro challenges and budget uncertainties remain effective at the forefront in the overall spending decisions. We have seen continued prioritization around the development of late stage clinical pipeline assets to advance drugs to market.

Speaker Change: Free cash flow was $115 million, an increase of $27 million compared to Q2 of last year.

Speaker Change: An adjusted operating margin of 5.4% was lower year-over-year by 70 basis points due to lower revenue offset by operating cost reductions.

Speaker Change: We believe this provides a certain degree of stabilization to the demand patents in this area of the market that have largely been steady through more volatile macroeconomic periods in recent years.

Speaker Change: With the disruption in Q1 firmly behind us, the benefits of streamlined organizations with improved operating focus are materializing in the financial results.

Speaker Change: Our offering in large pharma is particularly well placed to serve customers seeking flexible blended solutions encompassing both full service and functional elements of delivery without proven agility and scalability in both service areas.

Speaker Change: Q2 revenue was largely in line with expectations, marking an improvement in trajectory from Q1.

Speaker Change: Adjusted operating income margin improved more than 300 basis points on a sequential basis and free cash flow grew sequentially and year-over-year.

Speaker Change: One of the key strategic initiatives, we laid out at our Investor day in May was extending our leadership in the large pharma market through our blended solutions offering and our <unk>.

Speaker Change: Momentum in equipment orders and pipeline, new product launches, and improved sales processes are expected to drive stronger revenue growth in the second half of the year than originally expected.

Speaker Change: <unk> ability to customize a model for customers.

Speaker Change: This increasingly important approach was critical to our success in securing another new strategic partnership with a rapidly growing top 30 pharma company for full service solutions in quarter two.

Speaker Change: Despite an improved outlook in the back half of the year, we lowered full year revenue, adjusted operating income, and free cash flow guidance.

Speaker Change: We were selected for this partnership due to our ability to partner with this customer in creating a toilet operational solution that was optimized to fit their evolving needs.

Speaker Change: The reduction in full-year guidance primarily reflects the impact of incremental reinvention actions, including geographic and offering simplification.

Speaker Change: Deep understanding of various outsourcing models the ability to pivot between them was a key differentiating point for icon as well as our portfolio of integrated preclinical services that will create value in areas, such as site and patient solutions and laboratory services.

Speaker Change: The savings of which are now expected to be realized predominantly in 2025.

Speaker Change: Other impacts to margin, including higher freight and product costs, are also expected to be mitigated over time.

Speaker Change: Accordingly, the reduction in 2024 guidance has no bearing on our confidence in the three-year, $300 million adjusted operating income improvement target.

Speaker Change: This reinforces our recent success in building the ships outside of our top tier customers, creating a well diversified and balanced portfolio that is not overly concentrated to a particular customer or therapeutic area.

Speaker Change: In fact, our confidence in the three-year outlook has grown over the past quarter.

Speaker Change: But specifically in the first half of this year, we were able to grow revenue outside our top five customers by over 8% illustrating the success, we are having in executing our portfolio and developing our top tier customers of the future.

Speaker Change: Due to progress in the identification and estimation of reinvention cost reduction initiatives

Speaker Change: Now totaling more than $700 million between 2023 and 2026.

Speaker Change: and the quality and rigor behind the management infrastructure recently put in place to execute those initiatives.

Speaker Change: As we continue to grow and scale our company, we remain focused on leveraging the unique blend of experience and capability, we have in not only winning but executing and expanding large scale strategic partnerships that create strong value for both our customers and dotcom.

Speaker Change: John and Xavier will discuss the timing and consistency of future operating cost reductions in more detail.

Speaker Change: I'll now turn to our strategic priorities which continue to guide our decision framework as we execute the reinvention.

Speaker Change: Starting with a stronger core.

Speaker Change: While our perspective on this is demand environment has remained consistent we did receive an update late in the quarter pertaining specifically to next generation Covid vaccine trials that will cause an impact to our full year revenue in 2024 due to the delayed start of these studies.

John Newton Sourbeer: The change to the business unit-led operating model in Q1 and related changes to the sales organization were designed to catalyze market share growth by bringing sales and operations in closer alignment

John Newton Sourbeer: with the Economic Buyer Xerox offering while improving sales efficiencies.

Speaker Change: There were two primary but separate issues that affected the startup of these trials.

John Newton Sourbeer: We are seeing early evidence of the success of both fronts now that our sales team has settled into the new operating model.

Speaker Change: One was a delay in sponsors receiving regulatory guidance that was required before commencing trial enrollment pertaining to new variance specifications on.

John Newton Sourbeer: The sales, marketing, and pricing teams are working more collaboratively to design offerings and marketing strategies specific to client segments and routes to market.

Speaker Change: And the second was investigational product related issues that caused the delay in enrollment.

John Newton Sourbeer: Sales efficiency has improved through enhanced intelligence, better planning tools, and optimized sales coverage models.

Speaker Change: We are working closely with our development partners to ensure efficient and timely execution of these high priority studies that continue to be of critical importance to our customers and the safety and health of our communities.

John Newton Sourbeer: And work continues to reduce administrative burden given the sales team more time to focus on the highest quality opportunities and target new accounts.

Speaker Change: To be clear. These studies have not been cancelled and our expectation is that these trials will enroll the majority of patients in 2025 with startup related activities, having already commenced in some instances.

John Newton Sourbeer: These improvements are bearing out across top-line key performance indicators.

John Newton Sourbeer: Equipment order momentum continued in Q2, with orders and pipeline both higher year over year.

Speaker Change: With these anticipated changes, we now expect our COVID-19 related revenue to be approximately one 5% to 2% of total revenue for the full year in 2024, representing a year over year headwind of approximately 200 basis points to total revenue.

John Newton Sourbeer: Supplies revenue also grew in the second quarter and the first half of the year.

John Newton Sourbeer: Services KPIs are similarly strong.

John Newton Sourbeer: Revenue renewal rates for large accounts remained above 100% in Q2 and for the last 12 months, and across both print and digital services. New business signings are higher year-to-date with renewal rates ahead of internal targets.

Speaker Change: While we're disappointed by these unanticipated one off project delays. These do happen in our industry. They are limited to one specific area within our business, we remain confident in the strength and delivery of our underlying service offering as well as the benefits of a diversified mix of customers and therapeutic areas that constitute our.

John Newton Sourbeer: The benefit of improved sales operations will be augmented in the second half with a refreshed A3 product lineup, our largest and most successful product category.

John Newton Sourbeer: The lineup features what we believe is the world's first AI-assisted, multifunctional printers.

Speaker Change: Tayo portfolio.

Speaker Change: Our business performance, excluding Covid has been very solid with revenue growing 8% year to date over the first half of 2023 and is helping to offset some of the negative headwinds you're now expecting from both foreign exchange and the Covid specific study delays.

John Newton Sourbeer: The devices come with adaptive learning modules which save clients time by suggesting new and optimized workflows using AI-based algorithms to analyze device use patterns and user preferences.

Speaker Change: To that end given the excellent margin delivery year to date through strong project execution and cost control across the business as well as further leverage of our global business services model, we are increasing our full year adjusted EBITDA margin expectation to 21, 7% at the midpoint of that range.

John Newton Sourbeer: Also included are preloaded AI applications that enable users to summarize, convert handwritten notes, and automatically auto-redact any scanned documents.

John Newton Sourbeer: More importantly, these AI-enabled devices serve as a platform for a broader range of AI-assisted workflows, including intelligent document processing currently deployed by Xerox as a digital service.

Speaker Change: An increase of 80 basis points on a year over year basis.

Speaker Change: This outperformance coupled with expected savings on full year interest expense is supporting the increase of our full year adjusted earnings per share guidance, which we now expect to be in the range of $15 to $15 20, an increase of $17 three to $18 eight ascent.

John Newton Sourbeer: The updated platform combined with cloud-hosted AI applications and integration opens the door for innovative new use cases.

John Newton Sourbeer: The change to the business unit operating model has also brought increased focus on expanding digital and IT service penetration across our client base.

Speaker Change: Over the full year 2023.

John Newton Sourbeer: Stronger alignment between product development, solutioning, and sales teams is driving differentiated digital workflow solutions for traditional print clients who are increasingly looking to partners like Xerox to improve their most critical document workflow processes.

Speaker Change: Yeah.

Speaker Change: With the consistent trends in a broader demand environment, our expectation on book to Bill Reamer.

Speaker Change: <unk> in the range of one two to one three times on a quarterly basis, maintaining our previous target range.

John Newton Sourbeer: Our strategy of expanding total addressable market with every print client is progressing accordingly.

Speaker Change: Turning to financial performance in quarter, two net bookings grew 7% on a year over year basis, resulting in a book to Bill of one two times in the quarter and sustaining our trailing 12 month book to Bill ratio of 124 times.

John Newton Sourbeer: In Q2, we signed a deal with an existing print client in the European telecom space to provide an end-to-end customer acquisition solution for the client's new home broadband service.

Speaker Change: We again saw a strong performance in our large pharma business, particularly in full service solutions as well as for operational delivery services and data sciences, which notably secured a new sole provider award in the quarter.

Speaker Change: Total revenue increased five 3% on a constant currency year over year basis in the quarter gross margin of 29.9% increased 30 basis points over quarter, two 2023, and total SG&A expense decreased 40 basis points on a year over year basis to eight points.

Speaker Change: 7% of total revenue driving another quarter of strong adjusted EBITDA growth of 9% over quarter two 2023.

Speaker Change: This resulted in an adjusted EBITDA margin of 21, 2% in the quarter up 70 basis points year on year.

Speaker Change: With strong margin delivery through our P&L. In addition to the benefits of our debt refinancing we saw excellent year over year growth in adjusted earnings per share of approximately 21%.

Speaker Change: Following the successful repricing of our existing term loan B facility earlier. This year, we continued our strategy of further refinancing our variable debt in quarter two.

Speaker Change: We completed our inaugural SEC bond offering total $2 billion total offering totaling $2 billion you know, what we might which was met with very strong investor interest and initial order book of circa $15 billion.

Speaker Change: The proceeds of this offering were allocated to the repayment of our fixed term loan b debt, resulting in our current capital structure, which has approximately 72% of our debt subject to fixed rates.

Speaker Change: As we noted at our Investor day in May. This now provides us visibility to a reduction of approximately $110 million in interest expense over 2023, resulting in expected total full year interest expense in the range of $200 million to $210 million for 2024.

<unk> margin of 29, 9% increased 30 basis points over quarter, two 2023, and total SG&A expense decreased 40 basis points on a year over year basis to eight 7% of total revenue driving another quarter of strong adjusted EBITDA growth of <unk>.

Speaker Change: Importantly, this was a great milestone for our company and completing our first investment grade bond offering and providing increased balance sheet flexibility as we look to continue to optimally deploy capital on a go forward basis.

9% over quarter two 2023.

This resulted in an adjusted EBITDA margin of 21, 2% in the quarter up 70 basis points year on year.

Speaker Change: As we have previously stated we remain focused on M&A as a priority use of capital in the near term with a focus on strategic assets that continue to differentiate a clinical offering and drive value for our customers.

With strong margin delivery through our P&L. In addition to the benefits of our debt refinancing we saw excellent year over year growth in adjusted earnings per share of approximately 21%.

Speaker Change: However, as communicated previously we have authorization from our board of directors for a share repurchase program of up to $500 million to be deployed opportunistically on an ongoing basis, if the appropriate assets cannot be secured at the right price.

Following the successful repricing of our existing term loan B facility earlier. This year, we continued our strategy of further refinancing our variable debt in quarter two.

We completed our inaugural.

Speaker Change: We are updating our full year 2024 guidance range to account for the delayed COVID-19 related projects as well as foreign exchange headwinds due to the strengthening U S dollar since our quarter one report.

Bond offering total $2 billion total offering totaling $2 billion, you know, what we might which was met with very strong investor interest and initial order book of circa $15 billion.

Speaker Change: We now expect revenue to be in the range of 845 billion to $8 five 5 billion, an increase of four 1% to five 3% over full year 2023.

The proceeds of this offering were allocated to the repayment of our fixed term loan b debt, resulting in our current capital structure, which has approximately 72% of our debt subject to fixed rates.

Speaker Change: As I noted earlier, we are increasing our full year adjusted earnings per share guidance to a range of $15 to $15 20, an increase of $17. Three two I didn't point to 8% on a year over year basis, reflecting our strong margin delivery and continued cost management.

Speaker Change: As we noted at our Investor day in May. This now provides us with visibility to a reduction of approximately $110 million in interest expense over 2023, resulting in expected total full year interest expense in the range of $200 million to $210 million for 2024.

Speaker Change: Before I close out my prepared remarks, I want to provide a brief update on our CFO transition.

Speaker Change: We continue to make good progress on our search for a new CFO and we now have a small number of very strong candidates remaining in the process.

Speaker Change: Importantly, this was a great milestone for our company and completing our first investment grade bond offering and providing increased balance sheet flexibility as we look to continue to optimally deploy capital on a go forward basis.

Speaker Change: We expect to make a more detailed announcement regarding this transition later in the current quarter.

Speaker Change: Finally, I want to extend my sincere thanks to all of our colleagues at icon, but there are many efforts in the quarter and the first half of this year and supporting our customers and helping to accelerate the development programs to bring new therapies to patients around the world.

Speaker Change: As we have previously stated we remain focused on M&A as a priority use of capital in the near term with a focus on strategic assets that continue to differentiate a clinical offering and drive value for our customers.

Speaker Change: However, as communicated previously we have authorization from our board of directors for a share repurchase program of up to $500 million to be deployed opportunistically on an ongoing basis, if the appropriate assets cannot be secured at the right price.

Speaker Change: Brandon I'll now hand, it over to you to review our financial performance in more detail.

Brandon: Thanks, Dave.

Brandon: In quarter, two icon achieved gross business wins of 3.071 billion, an increase of seven 4% on a year over year basis. In addition, we recorded 493 million worth of cancellations, resulting in net awards in the quarter of 258 billion and net book to Bill of one to two times.

Speaker Change: We are updating our full year 2020 full guidance range to account for the delayed COVID-19 related projects as well as foreign exchange headwinds due to the strengthening U S dollar since our quarter one report.

Speaker Change: With the addition of the New awards in quarter, two our backlog grew to a record $23 8 billion, representing an increase of 2% on a quarter on quarter, one of 2024 or an increase of nine 9% year over year.

Speaker Change: We now expect revenue to be in the range of $8 four 5 billion to $8 five 5 billion an increase of four one to five 3% over full year 2023.

Speaker Change: Backlog burn was nine 1% in the quarter slightly down from quarter one levels.

Mr. Bandrzak: As I noted earlier, we are increasing our full year adjusted earnings per share guidance to a range of $15 to $15 20, an increase of $17 three two I didn't 0.8% on a year over year basis, reflecting a strong margin delivery and continued cost management.

Speaker Change: Revenue in quarter, two was $2 120 billion.

Speaker Change: This represented a year on year increase of four 9% or five 3% on a constant currency basis.

Speaker Change: Overall customer concentration in our top 25 customers decreased from quarter one 2024.

Speaker Change: Before I close out my prepared remarks, I want to provide a brief update on our CFO transition. We continue to make good progress on our search for a new CFO and we now have a small number of very strong candidates remaining proceeds.

Speaker Change: Our top five customers represented 24, 7% of revenue in quarter, two our top 10 represented a charge of nine 3%.

Speaker Change: Our top 25 represented 69%.

Speaker Change: Gross margin for the quarter was 29, 9% consistent with quarter, one 2024 as expected.

Speaker Change: We expect to make a more detailed announcements regarding this transition later in the current quarter.

Speaker Change: Gross margin increased 30 basis points over gross margin of 29, 6% in quarter two 2023.

Speaker Change: Finally, I want to extend my sincere thanks to all of our colleagues at icon, but there are many efforts in the quarter and the first half of this year and supporting our customers and helping to accelerate the development programs to bring new therapies to patients around the world.

Speaker Change: Total SG&A expense was $183 $5 million in quarter, two or eight 7% of revenue.

Speaker Change: This is in line with the prior quarter on total percent of revenue basis in the comparable period last year total SG&A expense was $192 9 million or nine 1% of revenue.

Speaker Change: Brandon I'll now hand, it over to you to review our financial performance in more detail.

Brandon: Thanks, Dave.

Brandon: Quarter, two icon achieved gross business wins of 3.07 billion, an increase of seven 4% on a year over year basis. In addition, we recorded 493 million worth of cancellations, resulting in net awards in the quarter of 2.58 billion and net book to Bill of one to two times.

Speaker Change: Adjusted EBITDA was 450.

Speaker Change: $4 million for the quarter or 21, 2% of revenue in the comparable period last year, adjusted EBITDA was $414 $2 million or 25% of revenue representing a very solid year on year increase of eight 7%.

Speaker Change: With the addition of the New awards in quarter, two our backlog grew to a record $23 8 billion, representing an increase of 2%.

Speaker Change: And expansion of 70 basis points in margin.

Speaker Change: Adjusted operating income for the quarter, two was $417 $3 million margin of 19, 7%. This was an increase of eight 7% adjust.

Speaker Change: On quarter, one with 24 or an increase of nine 9% year over year, our backlog burn was nine 1% in the quarter slightly down from quarter one levels.

Speaker Change: Adjusted operating income.

Speaker Change: $393.

Speaker Change: 8 million a margin of 19% in quarter two of 2023.

Speaker Change: Revenue in quarter, two was $2 120 billion. This represented a year on year increase of four 9% or five 3% on a constant currency basis.

Speaker Change: Net interest expense was $42 $9 million of course, too we're continuing to fix the full year interest expense to total approximately 200 $210 million.

Speaker Change: Overall customer concentration in our top 25 customers decreased from quarter one 2024.

Speaker Change: In 2024, roughly even split in total remaining interest expense for the remaining two quarters of the year.

Speaker Change: Top five customers represented 24, 7% of revenue in quarter, two our top 10 represented a charge of nine 3%, while our top 25 represented 69%.

Speaker Change: The effective tax rate was 16, 5% for the quarter. We continued to expect our full year 2024, adjusted effective tax rate to be approximately 16, 5%.

Speaker Change: Adjusted net income attributable to the group for the quarter was $12 $6 million a margin of 14, 7%.

Speaker Change: Gross margin for the quarter was 29, 9% consistent with quarter, one 2020 for unexpected.

Speaker Change: Gross margin increased 30 basis points of gross margin of 29, 6% in quarter two 2023.

Speaker Change: Equating to adjusted earnings per share of $3 75, an increase of 26% year over year.

Speaker Change: Total SG&A expense was $183 $5 million in quarter, two or eight 7% of revenue.

Speaker Change: In the second quarter. The company recorded $6 8 million of transaction and integration related costs of $45 $8 million of restructuring costs U S. GAAP income from operations met its $229 9 million.

Speaker Change: This is in line with the prior quarter on total percent of revenue basis in the comparable period last year and total SG&A expense was $182 $9 million or nine 1% of revenue.

Speaker Change: Or 10, 8% of revenue during quarter two.

Speaker Change: U S. GAAP net income in quarter, two was $146 9 million or one.

Speaker Change: Adjusted EBITDA was 454.

Speaker Change: Dollar and 76%.

Speaker Change: $4 million for the quarter or 21, 2% of revenue in the comparable period last year, adjusted EBITDA was $414 $2 million or 25% of revenue representing a very solid year on year increase of eight 7%.

Speaker Change: <unk> per diluted share compared to $1.40 per share for the equivalent prior year period, an increase of 25, 7%.

Speaker Change: Net accounts receivable was $1 198 billion at Turkey to June 2024. This compares with a net accounts receivable balance of $1 146 billion at the end of quarter one 2024.

Speaker Change: An expansion of 70 basis points in margin.

Speaker Change: Adjusted operating income for the quarter, two was $417 $3 million margin of 19.7%.

Speaker Change: <unk> was 51 days at June 30 of 2024, a decrease of one day from quarter, two 2000 history and an increase of two days from March 31 2024.

Speaker Change: This is an increase of eight 7%.

Speaker Change: Adjusted operating income.

Speaker Change: 393.

Speaker Change: 8 million a margin of 19% in quarter two of 2023.

Speaker Change: Cash from operating activities in the quarter was $218 6 million and free cash flow was $182 4 million in the quarter, an increase of 6% on a year over year basis.

Speaker Change: Net interest expense was $42 $9 million of course, too, but continuing six full year interest expense to total approximately 200 $210 million in.

Speaker Change: We continue to see customers seeking more competitive contracted credit terms as well as a desire to hold onto cash longer given the higher interest rate environment. We're currently in <unk>.

Speaker Change: In 2020 for whatever roughly even split in total remaining interest expense for the remaining two quarters of the year.

Speaker Change: The effective tax rate was 16, 5% for the quarter. We continued to expect our full year 2024, adjusted effective tax rate to be approximately 16, 5%.

Speaker Change: This dynamic is primarily focused on our large pharma customer growth, which has been growing faster at icon and thus driving greater impact on our overall DSO profile.

Speaker Change: Adjusted net income attributable to the group for the quarter was $12 $6 million a margin of 14, 7%.

Speaker Change: At June 30 of 2024 cash totaled $506 6 billion and debt totaled $3 4 billion, leaving a net debt position of $2 9 billion. This compares to net debt of $3 1 billion at March 31, 2024, and net debt of 4 billion at June <unk> 2023 capital expenditure.

John Newton Sourbeer: Equating to adjusted earnings per share of $3 75, an increase of 26% year over year.

John Newton Sourbeer: In the second quarter. The company recorded $6 8 million of transaction and integration related costs of $45 $8 million of restructuring costs.

Speaker Change: During the quarter was $26 3 million.

John Newton Sourbeer: U S. GAAP income from operations met its $229 9 million or 10, 8% of revenue during quarter two.

Speaker Change: From a capital deployment perspective, 2 billion of cash from the successful investment grade bond was used to repay 2.0, sorry 2 billion in 2000 $14 million.

John Newton Sourbeer: U S. GAAP net income in quarter, two was $146 $9 million.

Speaker Change: Our terminal <unk> additional additionally, our revolving credit facility was undrawn at the end of quarter two.

John Newton Sourbeer: 76.

John Newton Sourbeer: <unk> per diluted share compared to a $1.40 per share for the equivalent prior year period, an increase of 25, 7%.

Speaker Change: From a capital deployment perspective, Steve indicated our priorities for capital to be centered on M&A, where we can acquire assets that further strengthen our portfolio of services and the value proposition for customers. Our pipeline of opportunities is healthy yet we remain disciplined in our approach to evaluating acquisitions that will meet our criteria from a strategic.

John Newton Sourbeer: Net accounts receivable was $1 198 billion at Turkey to June 2024. This compares with a net accounts receivable balance of $1 146 billion at the end of quarter. One 2024 DSO was 51 days at June 30 of 2024, a decrease of one day from quarter to 25th Street and an increase of two days from March 31.

Speaker Change: And financial perspective.

Speaker Change: We also continue to consider opportunistic share repurchase given our strong balance sheet position.

Speaker Change: For cash.

Speaker Change: Our key assumptions behind our full year guidance remain in place and effective tax rate of 16, 5% free cash flow target of circa $1 1 billion.

Speaker Change: Cash from operating activities in the quarter was $218 $6 million and free cash flow was $182 4 million in the quarter, an increase of 6% on a year over year basis.

Speaker Change: Capex spend in the range of 150 to 200 million and interest expense in the range of 200 $210 million.

John Newton Sourbeer: We continue to see customers seeking more competitive contracted credit terms as well as the desire to hold onto cash longer given the higher interest rate environment. We're currently in this.

Speaker Change: Or for the full year 2024.

Speaker Change: Finally, I would like to also tank and icon employees for their dedicated efforts and cost too.

John Newton Sourbeer: This dynamic is primarily focused on our large pharma customer growth, which has been growing faster at icon and thus driving greater impact on our overall DSO profile.

Speaker Change: Operator, we are now ready for questions.

Speaker Change: Thank you.

Speaker Change: Just to ask a question you will need to press star one and one on your telephone and wait for your name to be announced.

Speaker Change: At June 30 of 2024 cash totaled $506 $6 million and that totaled $3 4 billion, leaving a net debt position of $2 9 billion. This compares to net debt of $3 1 billion at March 31st 2024, and net debt of 4 billion at June <unk> 2023.

Speaker Change: Please note we ask you to limit your questions to one.

Speaker Change: To withdraw your question Please press star one.

John Mccain: John Mccain.

Speaker Change: We will take our first question.

Speaker Change: Next question comes from the line of Justin <unk> from Deutsche Bank. Please go ahead. Your line is open.

John Newton Sourbeer: Capital expenditure during the quarter was $26 3 million.

Speaker Change: From a capital deployment perspective, 2 billion of cash from the successful investment grade bond was used to repay 2.0, sorry 2 billion in 2000 $14 million.

Speaker Change: Okay.

Speaker Change: Hi, good morning, everyone.

Speaker Change: In terms of what Youre seeing with large pharma.

Justin <unk>: What inning are we in in terms of.

John Newton Sourbeer: And all of our terminal in <unk> additional Additionally, our revolving credit facility was undrawn at the end of quarter two.

Speaker Change: Some of the announcements that we've seen.

Speaker Change: Let's say over the last six months.

Speaker Change: And how they're approaching.

John Newton Sourbeer: From a capital deployment perspective, Steve indicated our priorities for capital to be centered on M&A, where we can acquire assets that further strengthen our portfolio of services and the value proposition for customers. Our pipeline of opportunities is healthy yet we remain disciplined in our approach to evaluating acquisitions that will meet our criteria from a strategic.

Speaker Change: And what opportunities does that present for you outside of the core clinical business.

Speaker Change: You mean in terms of budget discussions of budget cuts, Justin is that where you're coming from.

Justin: Yes, that's right Steve.

Financial perspective.

Speaker Change: Yes, that's always hard to tell but I suspect well.

John Newton Sourbeer: We also continue to consider opportunistic share repurchase given our strong balance sheet position.

Mike: Into the middle of our guests I'm thinking fourth fifth and sixth I think we've we've we've seen a number of companies Mike fairly public announcements certainly as some of our top customers have been in that.

Speaker Change: Our key assumptions behind our full year guidance remain in place and an effective tax rate of 16, 5% free cash flow target of circa $1 1 billion Capex.

John Newton Sourbeer: Capex spend in the range of 150 to 200 million and interest expense in the range of 200 to 210 million.

Mike: In that cohort and so I think but I think we're seeing that starting to get through and we are pretty optimistic about large pharma growth in terms of R&D spending in terms of outsourcing growth going forward and that's what we see in our RFP numbers certainly on the trailing 12 months basis from large pharma we are in the in the low double.

John Newton Sourbeer: Or for the full year 2024.

Speaker Change: Finally, I would like to also tank icon employees for their dedicated efforts and cost too.

Speaker Change: Operator, we are now ready for questions.

Speaker Change: Thank you.

Speaker Change: Just to ask a question you will need to press star one.

Speaker Change: Digits, even even pushing up a little bit higher than that and so we're pretty optimistic around where large farmers going sometimes as I think I've said before on these calls the cost cuts in the budget, while they do have an immediate impact long term and I think more about how they spend their money and we can benefit from that and I think that applause to your second part of your.

Speaker Change: One on your telephone and wait for your name to be announced.

Speaker Change: Please note we ask you to limit your questions to one.

Speaker Change: To withdraw your question Please press star one.

John Mccain: John Mccain.

Speaker Change: We will take our first question on your face.

Speaker Change: Question comes from the line of Justin <unk> from Deutsche Bank. Please go ahead. Your line is open.

Speaker Change: Question around the IRI they are thinking about how best to deploy their capital I've been to one or two strategic partnership meetings recently with where they've been very open saying that they are not where they want to be and I think outsourcing and strategic partnerships is one of the ways. They are going to improve their efficiency their speed.

Speaker Change: Yeah.

Speaker Change: Hi, good morning, everyone.

Speaker Change: In terms of what Youre seeing with large pharma.

Speaker Change: What inning are we in in terms of.

Speaker Change: Some of the announcements that we've seen.

Speaker Change: Let's say over the last six months.

Speaker Change: Cost competitiveness and so on.

Speaker Change: And how they're approaching.

Speaker Change: Im encouraged by that attitude, but an open attitude that many of our larger pharma customers are taking and the opportunities that they are presenting to us even as they go through.

Speaker Change: And what opportunities does that present for you outside of the core clinical business.

Speaker Change: Considerations around IRI, and even even budget cuts it does present us with with opportunity in the long term.

Speaker Change: You mean in terms of budget discussions of budget cuts, Justin is that where you're coming from.

Justin: Yes, that's right Steve.

Speaker Change: Thank you.

Justin: Yeah, that's always hard to tell but I suspect well.

Speaker Change: We will take our next question.

Speaker Change: Your next question comes from the line of David Windley from Jefferies. Please go ahead. Your line is open.

Speaker Change: Into the middle of any I guess I'm thinking fourth fifth and sixth I think we've we've we've seen a number of companies make the public announcements certainly as some of our top customers have been in that.

David Windley: Thank you good morning, Thanks for taking the question.

David Windley: Steve I guess I'm interested I appreciate your comments on on large pharma, if I could sneak in kind of a two parter on.

Speaker Change: In that cohort and so I think but I think we're seeing that starting to get through and we're pretty optimistic about large pharma growth in terms of R&D spending in terms of outsourcing growth going forward and that's what we see in our RFP numbers certainly on the trailing 12 month basis from large pharma where in the in the low double.

David Windley: Biotech you had both at our <unk> Conference in June and then again on the call talked about attenuation and funding I wanted to understand is that just a funding comment or did you also see that flow through to your activity.

Speaker Change: And then thinking about your.

Speaker Change: Digits, even even pushing up a little bit higher than that and so we're pretty optimistic around where large farmers going sometimes as I think I've said before on these calls the cost cuts in the budget, while while they do have an immediate impact long term I think more about how they spend their money and we can benefit from that and I think that applause to your second part of your.

Speaker Change: Kind of the pace.

Speaker Change: Business flowing not only into backlog, but through backlog.

Speaker Change: Burn rate kind of.

Speaker Change: Just very moderately declining as it has.

Speaker Change: As has been the case for the industry for a long time I just wanted to understand if that's kind of what we should set is our expectation going forward.

Speaker Change: A question around the IRI they are thinking about how best to deploy their capital I've been to one or two strategic partnership meetings recently with where they've been very open saying that they're not where they want to be and I think outsourcing and strategic partnerships is one of the wise they are going to improve their efficiency their speed.

Speaker Change: Or do some of the global global business services and your new functional center of excellence approach have the ability to stem that tide.

Speaker Change: Sure Let me, let me take the biotech.

Speaker Change: Cost competitiveness and so I'm encouraged by that attitude, but are open attitude that many of our larger pharma customers are taking and the opportunities that they are presenting to us even as they go through.

Speaker Change: First we continue to see a constructive improvement in the biotech market I think we're all aware of the first quarter was pretty strong from an overall funding second quarter, perhaps not not so strong and so my comment was related to some attenuation in the funding side of things on the on the biotech in the second quarter, Although I think year to date, we see a very positive.

Speaker Change: Considerations around IRI, and even even budget cuts it does present us with with opportunity in the long term.

Speaker Change: Constructive.

Speaker Change: Progress in that biotech funding area in terms of the activity.

Speaker Change: Thank you.

Speaker Change: We will take our next question.

Speaker Change: We're still seeing opportunity something like.

Speaker Change: Your next question comes from the line of David Windley from Jefferies. Please go ahead. Your line is open.

Speaker Change: 50% to 60% of the opportunities that we have and the pending pipeline.

David Howard Windley: Thank you.

David Howard Windley: Morning, Thanks for taking the question.

Speaker Change: And I am talking about significantly to the top 25 are in the biotech space and these are very substantial opportunity. So we feel is there's plenty of opportunity and there are plenty of projects coming through interestingly as we look at cancellations in the.

David Howard Windley: Steve I guess I'm I'm interested I appreciate your comments on on large pharma, if I could sneak in kind of a two parter on.

David Howard Windley: Biotech you had both at our <unk> Conference in June and then again on the call talked about attenuation and funding I wanted to understand is that just a funding comment or did you also see that flow through.

Speaker Change: Biotech and the RFP area, we typically talk about biotech dollars coming through and not so much what actually gets decided on so we've seen actually in quarter two a reduction in the number of cancels in the pending side of things in other words proposals that come to us and we bid on.

Speaker Change: To your activity.

Speaker Change: And then thinking about your.

Speaker Change: Kind of the pace.

<unk> business flowing not only into backlog, but through backlog.

Speaker Change: What proportion of those always get canceled never actually come to decision we've seen a reduction in that and that I think gives me some.

Speaker Change: Burn rate kind of.

Speaker Change: Just very moderately declining as has as has been the case for the industry for a long time.

Speaker Change: Courage meant in terms of the rigor and the robustness of our pending pipeline and as I said of the top 25 opportunities about half of them are in the biotech segment. So it really shows it really shows I think that the biotech.

Speaker Change: I just wanted to understand if that's kind of what we should set is our expectation going forward.

Speaker Change: Or do some of the global global business services and your new functional center of excellence approach have the ability to stem that tide.

Speaker Change: Coming through the serious about offering us opportunities and they are substantial opportunities. We're talking about very significant multimillion tens of millions of dollars of opportunities. So I'm pretty optimistic around where the biotech market is going on around the opportunities that we're going to have to execute on those opportunities.

Speaker Change: Sure Let me, let me take the biotech.

Speaker Change: First we continue to see a constructive improvement in the biotech market I think we're all aware of the first quarter was pretty strong from an overall funding second quarter, perhaps not not so strong and so my comment was related to some attenuation in the funding side of things on the on the biotech in the second quarter, Although I didn't hear the date, we see a very positive.

Speaker Change: The backlog burn it did tick down a little bit and I think thats a consequence of the.

Speaker Change: Of the makeup of our backlog as you know a lot of it is is oncology and that will continue to be the case.

Speaker Change: Constructive.

Speaker Change: Progress in that biotech funding area in terms of the activity in our you know what.

Speaker Change: As of Excellence will I think help to mitigate that downturn, but I don't think it's necessarily going to change the overall challenge there the overall trend.

Speaker Change: We're still seeing opportunity something like.

50% to 60% of the opportunities that we have in the in the pending pipeline.

Speaker Change: We will still see I think.

Speaker Change: Our push perhaps down we're down at around the 9% we might push under that a little bit in the in the more medium term I think what will give us an opportunity as we get into some of these other therapeutic areas in cardiovascular and metabolic disease Covid trials will help us as well and.

Speaker Change: And I'm talking about significant lease or the top 25 are in the biotech space and this is a very substantial opportunity. So we feel as though there's plenty of opportunity and there are plenty of projects coming through interestingly as we look at cancellations in the in the biotech and the RFP area, we typically talk about biotech.

Speaker Change: And so as we as we improve the mix of or at least change the mix of our portfolio I think thats the opportunity from a.

Speaker Change: Dol is coming through and not so much what actually gets decided on so we've seen actually in the <unk>.

Speaker Change: From the start from a burn point of view. The other thing is as we said at our Investor day as well, we have a very clear and strong initiative around our study startup program, which I think is starting to pay some dividends and starting to improve so I do think that will be a mitigating factor as well and we'll be able to get studies started and get patients in and burn <unk>.

Speaker Change: Two a reduction in the number of cancels in the pending side of things other words proposals that come to us and we bid on.

Speaker Change: What proportion of those always get canceled never actually come to decision we've seen a reduction in that and that I think gives me some.

Speaker Change: Encouragement in terms of the rigor and the robustness of our pending pipeline and as I said of the top 25 opportunities about half of them are in the biotech segment. So it really shows it really shows I think that the biotech.

Speaker Change: A little bit more faster, which is also a good thing of course for customers as we complete those projects on time or even ahead of time. So there's a number of things we're doing and I think we see on the horizon as an opportunity to improve that backlog burn, but that oncology and rare disease.

Speaker Change: Are coming through the serious about offering us opportunities and they are substantial opportunities. We're talking about very significant multimillion tens of billions of dollars of opportunities, so I'm pretty optimistic around where the biotech.

Speaker Change: Portfolio composition is always going to be a continued challenge.

Speaker Change: Thank you.

Speaker Change: Market is going on around the opportunities that we're going to have to to execute on those opportunities.

Speaker Change: We will take our next question.

Speaker Change: Your next question comes from the line of Mark Smith from William Blair. Please go ahead. Your line is open.

Speaker Change: In terms of backlog burn it did tick down a little bit and I think that's a consequence of the.

Mark Smith: Hey, good morning, Thanks for taking our questions I wanted to follow up on the small biotech and get an update around some of the traction that youre, making with your revamped small biotech offering that you've been talking about over the last couple of quarters here and just how that reason.

Speaker Change: All of the makeup of that backlog as you know a lot of it is is oncology and that will continue to be the case.

Speaker Change: As of excellence.

Speaker Change: Help to mitigate that downturn, but I don't think it's necessarily going to change the overall challenge there the overall trend.

Speaker Change: Ramped offering has translated into your win rate here in the second quarter of this year. Thank you.

Speaker Change: We will still see I think you know.

Speaker Change: I think it's still early days Max and that we have as we said at the Investor day rebranded.

Speaker Change: Pushed perhaps down we're down at around the 9% we might push under that a little bit in the in the more medium term I think what will give us an opportunity as we get into some of these other therapeutic areas in cardiovascular and metabolic disease Covid trials will help us as well.

Speaker Change: Our biotech offering.

Speaker Change: I think we said at Investor day, we're known as a large pharma.

Speaker Change: So this is a process and this is somebody who is going to take a little bit of time, we are seeing some progress as I said, we've got a lot of opportunity to prosecute and that pending pipeline and I think the next couple of quarters, probably the next 12 months, we'll determine how how successful that refocus and rebranding is so I think it's a little early to call.

Speaker Change: And so as we as we improve the mix of the or at least change the mix of our portfolio I think that's the opportunity from a.

Speaker Change: From a start from a burn point of view. The other thing is as we said at our Investor day as well, we have a very clear and strong initiative around that study startup program, which I think is starting to pay some dividends and starting to to improve so I do think that will be a mitigating factor as well and we'll be able to get studies started and get patients in and burn.

Speaker Change: To declare victory in that space, we are seeing certain certainly we're seeing some progress in terms of opportunities to bid on.

Speaker Change: And we've won.

Speaker Change: Share of those but I'd like to perhaps give that question another another quarter or two before we really.

Speaker Change: Revenue a little bit more faster, which is also a good thing of course for customers as we complete those projects on time or even ahead of time. So there's a number of things we're doing and I think we see on the horizon as an opportunity to improve that back but that oncology and rare disease.

Speaker Change: Give you a definitive answer.

Speaker Change: Thank you.

Speaker Change: We will take our next question.

Speaker Change: Your next question comes from the line of Endesa performed person from Evercore ISI. Please go ahead. Your line is open.

Speaker Change: Portfolio composition is always going to be a continued challenge.

Speaker Change: Hi, maybe sticking on the biotech team like obviously in earlier this year, we saw him.

Speaker Change: Thank you.

Speaker Change: A massive increase in funding.

Speaker Change: We will take our next question.

Speaker Change: <unk> come through intuitive moderating thats a positive trend in the second quarter have you seen.

Speaker Change: Your next question comes from the line of Max.

Max: From William Blair. Please go ahead your line is open.

Eric: Where are we in terms of that bolus that we saw in the first quarter coming through I'm Crazy Eric the answer is that it varies somewhat but are those.

Max: Hi, good morning, Thanks for taking our questions I wanted to follow up on the small biotech and get an update around some of the traction that youre, making with your revamped small biotech offering that you've been talking about over the last couple of quarters here and just how that revamped offering has translated into your win rate here in the second quarter of this year. Thank you.

Speaker Change: Still coming in the RFP stage or are they sort of starting to confer like how do we think about that in terms of the opportunities that that presents.

Speaker Change: Yes, it's a good question Elizabeth I think I think it's fair to say that we're starting to see that.

Speaker Change: I think it's still early days Max and that we have as we said at the Investor day rebranded.

Speaker Change: That early year funding flow through and as I've said.

Speaker Change: Our biotech offering.

Speaker Change: The cancellations in the funding area in the proposer it seemed to be down in the second quarter. So I'm really encouraged by that.

Speaker Change: I think we said at Investor day, we're known as a large pharma.

Speaker Change: So this is a process and this is somebody who's going to take a little bit of time, we are seeing some progress as I said, we've got a lot of opportunity to prosecute that pending pipeline and I think the next couple of quarters, probably the next 12 months, we'll we'll determine how how successful that that refocus and rebranding is though I think it's a little early to call.

Speaker Change: The opportunity seems to be a much more robust pipeline of pending opportunities, which is which I think is good news for us we are seeing.

Speaker Change: That sort of push up in the mid single digits.

Speaker Change: Even even sequentially, we've seen our progress on that Q1 to Q2 and so on.

Speaker Change: To declare victory in that space, we're seeing certain certainly we're seeing some progress in terms of opportunities to beat on them.

Speaker Change: I am encouraged that in terms of awards and then converting to revenue I think we're probably still a couple of quarters away I think maybe Q4 early next year is going to be when that when that starts to play through but I think overall, we're starting to see that but we're at the sort of early part of that sort of progress if that makes sense.

Speaker Change: And we've won.

Share of those but I'd like to perhaps give that question another another quarter or two before we really give you a definitive answer.

Speaker Change: Thank you.

Speaker Change: We will take our next question.

Speaker Change: Thank you.

Speaker Change: We'll take our next question.

Speaker Change: Your next question comes from the line of it is from Jason <unk> from Evercore ISI. Please go ahead. Your line is open.

Speaker Change: Your next question comes from the line of Patrick Donnelly from Citi. Please go ahead. Your line is open.

Jason: Hi, maybe sticking on the biotech team like obviously in earlier this year, we saw a.

Patrick Donnelly: Hey, guys. Thanks for taking the questions.

Patrick Donnelly: Steve maybe one for you just on the bookings trends pretty solid first half year.

Speaker Change: Massive increase in our funding comes through intuitive moderating that's a positive trend in the second quarter have you seen.

Steve Cutler: Still right to think about kind of that mid <unk> range any changes to your level of confidence you, obviously, the RFP flow and things like that supported but just curious obviously last quarter sounded really good coming off that 1% to seven just wanted to take your temperature on the book to Bill trends and then just a quick housekeeping one for Brendan.

Speaker Change: Where are we in terms of that bolus that we saw in the first quarter coming through and I'm sure. The answer is that it varies somewhat but are those.

Speaker Change: Still coming in the RFP stage or are they sort of starting to confer like how do we think about that in terms of the opportunities that that presents.

Speaker Change: On the revenue guide it seems like if you back out the Covid piece, the core actually moved up over $50 million just want to make sure I'm doing the math on that correctly I appreciate it guys.

Speaker Change: Yeah. It's a good question Elizabeth I think I think it's fair to say that we're starting to see that.

Speaker Change: That early year funding flow through and as I've said the the.

Brendan: So maybe I'll take the first one and then I'll leave the second one to Brendan Patrick and we feel pretty good about where we are on the.

Speaker Change: The cancellations in the funding area in the proposal or it seemed to be down in the second quarter. So I'm really encouraged by that.

Brendan Patrick: Book to Bill one to two this quarter, 1% to seven last quarter. One two to one three is where we think we'll be in and what we need to do to order to continue the growth.

Speaker Change: That opportunity seems to be a much more robust pipeline of pending opportunities, which is which I think is good news for us we are seeing.

Speaker Change: Trajectory of the company. So there's certainly nothing that's happened in the last couple of months that would change our view on that.

Speaker Change: Sort of push up in them in the mid single digits.

Speaker Change: Even even sequentially, we've seen progress on that Q1 to Q2 and so on again I'm encouraged that you know in terms of awards and then converting to revenue I think we're probably still a couple of quarters away I think maybe Q4 early next year is gonna be when that when that starts to play through but I think overall, we're starting to see.

Speaker Change: I'll leave it at that we're optimistic as I said.

Speaker Change: <unk> cancellations seem to be down I'm encouraged by that the RFP opportunity seem to be continuing to move forward across the segments not just in large pharma, where its continued where we're doing well, but across the mid sized companies antibiotics as well. So overall, we're pretty constructive pretty optimistic on where we think the market will be and what we see.

Speaker Change: See that but we're at the sort of early part of that sort of progress if that makes sense.

Speaker Change: We can deliver the back end of the year in terms of a book to Bill Brendan you want to take the Coco.

Speaker Change: Thank you.

Speaker Change: We'll take our next question.

Brendan: Quick question.

Speaker Change: Sure Yes.

Operator: Your next question comes from the line of perfect on the Lee from Citi. Please go ahead. Your line is open.

Brendan: I think.

Brendan: It's well observed.

Speaker Change: And Steve you called it out when he was talking through his points. We've seen good good elements of growth in our core ex Covid, where we talked about being up for the first half of the year, 8%.

Speaker Change: Hey, guys. Thanks for taking the questions.

Speaker Change: Steve maybe one for you just on the bookings trends pretty solid first half year.

Brendan: And also out of our outside of our top five.

Speaker Change: Still right to think about kind of that mid <unk> range any changes to your level of confidence you, obviously, the RFP flow and things like that supportive, but just curious obviously last quarter sounded really good coming off that 1% to seven just wanted to take your temperature on the book to Bill trends and then just a quick housekeeping one for Brendan.

Speaker Change: Good growth and diversification of our cultural basin that's helpful.

An additional 8% so absolutely I think when you look at the component parts of the guidance.

Speaker Change: Is that circa $150 million of headwind from from from Covid and also we talked to the fact that whereas in or a bit of a headwind on the FX. There are 20 million. So I think that the revised <unk>.

Speaker Change: On the revenue guide it seems like if you back out the Covid piece, the core actually moved up over $50 million just want make sure I'm doing the math on that correctly I appreciate it guys.

Speaker Change: <unk> million a decrease does show good strength.

Brendan: Outside of those elements uncertainty good elements of growth there as a start.

Brendan: So I'll take I'll, maybe I'll take the first one and then I'll leave the second one the brand in a country and we feel pretty good about where we are on the on the.

Thank you.

We will take our next question.

Speaker Change: Book to bills went to two this quarter, 1% to seven last quarter. One two to one three is where we think we'll be in and what we need to do to to continue the growth.

Your next question comes from the line of Michael <unk> from Bank of America. Please go ahead. Your line is open.

Speaker Change: Trajectory of the company. So there's certainly nothing that's happened in the last couple of months that would change our view on that so I'll leave it at that we're optimistic as I said.

Speaker Change: Great. Thanks for taking the question guys.

I want to focus on the on the margin.

You said solid progress in <unk> and Youre raising the guide for the year it looks like Youre guiding to roughly 22% EBITDA margin.

Speaker Change: RFP cancellations seem to be down I am encouraged by that the RFP opportunity seem to be continuing to move forward.

Second half just to get to that full year number.

Speaker Change: So just wanted to against that a little bit further you called out.

Speaker Change: Cross the statements not just in large pharma, where its continued where we're still doing well, but across the mid sized companies antibiotics as well so you know.

Speaker Change: Project execution cost controls efficiencies things like that but just curious if you could go into that a little bit deeper.

Speaker Change: Overall were pretty constructive pretty optimistic on where we think the market will be and what we think we can deliver the back end of the year in terms of a book to Bill.

Do you expect those to continue going forward and I'm, just asking that in the context of your.

Speaker Change: Your analyst day, just a couple of months ago, you talked about 22 five.

Speaker Change: And then you want to take the call.

Speaker Change: Quick question.

Percent for 2027 so.

Speaker Change: Sure Yeah.

Speaker Change: I think.

<unk> already adding 22 in the second half of the year, just curious about the sustainability of that and how we should think about that as a jumping off point.

Speaker Change: It's well observed.

Speaker Change: And Steve called it out when he was talking through his points. We've seen good good elements of growth in our core you know ex Covid, where we talked about being up for the first half of the year, 8%.

Yes, Mark let me give you some high level thoughts on that and then I'll then Brendan jumping on a little more of the detailed overall I'm really pleased with the way the margins.

Speaker Change: And also out of our outside of our top five.

Speaker Change: Good growth and diversification of our customer base and that's why that's a place where an additional 8%. So absolutely I think when you look at the component parts of the guidance.

We continue to progress and expand we've done a number of numbers and it's not just in the sort of SG&A area. It's across the gross margin. So I think we're up 30 bps on a year.

Speaker Change: Is that you know circa $150 million of headwind from from from Covid and also we talked to the fact that whereas in a bit of a headwind on the FX. There are 20 million. So I think that the revised $100 million decrease does show good strength.

In gross margin due to good strong execution.

From our team and I'm really proud of the way the teams delivered on the work we have.

They're very efficient and enables us to be very aggressive in.

Speaker Change: Outside of those elements uncertainty good elements of growth there as a start.

On the money when we bid on these more strategic partnerships with the pricing environment is getting challenging in some of those areas, but we.

Speaker Change: Alright.

Speaker Change: Thank you.

Speaker Change: We will take our next question.

We have a lot of confidence in our ability to deliver margins or deliver work above the theoretical margins that we bid on so.

Michael Leonidovich Ryskin: Your next question comes from the line of Michael <unk> from Bank of America. Please go ahead. Your line is open.

Michael Leonidovich Ryskin: Great. Thanks for taking the question guys.

We have a good strong execution and thats, helping us on the on the gross margin line.

Speaker Change: To focus on the on the margin right. You know what you said solid progress in Q2, and you're raising the guide for the year it looks like Youre guiding to roughly 22% EBITDA margin in a SEC.

On the SG&A side as I said before we have a very very good global business services team.

That continues to challenge itself with respect to where they are located.

Michael Leonidovich Ryskin: Could have just to get to that full year number.

The automation AI, our I T team have done a great job in moving that forward as you can see on the head count we're pretty much flat over the year and yet we've been able to grow the business. So I think that shows you that we are focused on cost, but we are focused on getting more efficient and thats important because of the some of the challenges that we.

Speaker Change: So just wanted to against that a little bit further you've called out project execution cost controls efficiencies things like that but just curious if you could go into that a little bit deeper.

Speaker Change: Do you expect those to continue going forward and I'm, just asking that in the context of.

Speaker Change: Your analyst day, just a couple of months ago, you talked about 22 five.

We get as we said as I compete for these strategic partnerships. So overall.

Speaker Change: <unk> for 2027 so.

Rob I think 80 bps on the on the EBITDA number and that's a combination of both.

Speaker Change: Youre already hitting 22 in the second half of the year, just curious about the sustainability of that and how we should think about that as a jumping off point. Thanks.

And I, certainly see us being able to.

Speaker Change: You can't keep doing that you've obviously got some limits to that but we're challenging those limits I think is.

Speaker Change: Yes, Mark let me give you some high level thoughts on that and then I'll then Brendan jumping on a little more of the detail overall I'm really pleased with the way the margins.

My former boss used to say every ceiling becomes a floor and.

Brendan: Continue to progress and expand we've done a number of number then it's not just in the sort of STI area. It's across the gross margin. So I think we're up 30 bps on a year.

That's the way we're approaching it Brendan maybe on a more specific basis, you could give us a few thoughts.

Yeah, No I think maybe.

Brendan: In gross margin due to good strong execution.

That's all correct I think Michael to your question.

22% in the second half just to give a guide on that piece is broadly correct.

Brendan: From our team and that's you know I'm really proud of the way the teams delivered on the on the work we have.

Well. So obviously, we're looking for good margin expansion is as Steve said, that's going to come from both.

Speaker Change: They're very efficient and enables us to be very aggressive in.

But all elements of the business is cross control right across the organization. So we expect to see gross margin expansion in the second half on continued in really really good cost control and our SG&A and that should help us drive up to that overall position for 'twenty, one seven for the full year, but certainly in.

Speaker Change: On the money when we bid on these more strategic partnerships with the pricing environment is getting challenging in some of those areas, but we.

Speaker Change: We have a lot of confidence in our ability to deliver margins will deliver work above the theoretical margins that we bid on so you know that.

In the range of 20 twos in the second half.

Speaker Change: We have a good strong execution and that's helping us on the on the gross margin line.

Thank you.

We will take our next question.

Speaker Change: On the SG&A side as I said before we have a very very good global business services team.

And your next question comes from the line of Eric Coldwell from Baird. Please go ahead. Your line is open.

Speaker Change: <unk> continues to challenge itself with respect to know where they are located.

Thank you good afternoon.

Speaker Change: The automation AI, our I T team have done a great job in moving that forward as you can see on the head count.

So first one it is.

<unk> a bit of a nuanced question, but these COVID-19 delays.

Speaker Change: We're pretty much flat over the year and yet we've been able to grow the business. So I think that shows you that we are focused on cost, but we're focused on getting more efficient and that's important because of the some of the challenges that we.

Is that part of the equation on the EBITDA margin increase because those programs at least historically typically came with higher pass throughs. So you'll have.

Speaker Change: We get as we said the site complete for these strategic partnerships. So overall.

Perhaps a less negative mix from that revenue headwind.

Eric It's Brendan here, Yes, I think that's absolutely correct.

Speaker Change: We're up I think 80 bps on the on the EBITDA number and that's a combination of both.

As we went into the second half of the year and as we were thinking about our forecasting in our guidance for the start of the year, we were expecting those those programs to hit in the second half predominantly there obviously as we talked about the majority of it going to be delayed out into the very end of this year into 2025 still good works they'll get done but just delayed.

Speaker Change: And I certainly see as you know I think I will.

Speaker Change: Well.

Speaker Change: You can't keep doing that you obviously, you got some limits to that but we're challenging those limits I think because of.

Speaker Change: My former boss used to say every ceiling becomes a floor and.

Speaker Change: That's the way we're approaching it Brendan maybe on a more specific basis, you could give us a few thoughts.

That certainly will have a positive gross margin impact as we continue to ramp up other parts of our business that we were expecting and as we talked about are coming through.

Brendan: Yeah, No I think maybe you know that.

Brendan: That's all correct I think Michael to your question. It was circa 22%. The second half just to give a guide on that piece of it is broadly correct as well. So obviously, we're looking for good margin expansion is as Steve said, that's going to come from both you know, but all elements of the business is cross control right across the organization. So we expect to see.

Well as we go into second half of the year. So yes, I do think that'll have a positive gross margin mix impact.

Thank you and then on on.

On the DSO, you made really nice progress through 2023 with sequential improvements now.

Now, it's ticked back up into the last year average range here over the last couple of quarters.

Speaker Change: Gross margin expansion in the second half on and continued really really good cost control and.

You mentioned.

Speaker Change: Our SG&A and that should help us drive up to that overall position for 'twenty, one seven for the full year, but certainly in the range of 20 twos are in.

A.

It was either a more competitive environment or a continuation of a more competitive environment and then.

Speaker Change: In the second half.

I just wanted to clarify which is it is it is it that the.

Speaker Change #118: Thank you.

The competitive environment continues, but youre getting more mix from larger apartment that are traditionally more competitive or.

Speaker Change: We'll take our next question.

Speaker Change: And your next question comes from the line of Eric Coldwell from Baird. Please go ahead.

Or asking for more I should say.

Speaker Change: Your line is open.

Eric White Coldwell: Thank you good afternoon.

Or has has it actually is.

Eric White Coldwell: So first one it's probably a bit of a nuanced question, but these COVID-19 delays.

Is the pressure to delay payments actually increased.

Let me try that one from a high level and then again Brendan can jump in Eric certainly on the pricing environment I do think it has ramped up a little bit in the last.

Speaker Change: Is that part of the equation on the EBITDA margin increase because those programs at least historically typically came with higher pass throughs. So you'll have.

I want to say a few months even in maybe that's you tend to get involved in some of these more strategic meetings and.

Speaker Change: Perhaps a less negative mix from that revenue headwind.

Eric White Coldwell: Eric It's Brendan here, Yeah, I think that's absolutely correct and obviously as we went into the second half of the year and as we were thinking about our forecasting in our guidance for the start of the year, we were expecting those those programs to hit in the second half predominantly there obviously as we talked about majority of what you're going to be delayed out into the at the very end of this year into 2025 still.

Im aware of some of the requests in the asks that.

That larger pharma partners are looking for particularly for these more strategic relationships.

When they go to commit themselves to a three to five year type of relationship. They are looking for the best possible rights, they can get and it gets pretty hairy.

Eric White Coldwell: Good works they'll get done, but just delayed.

Times.

And there are one or two of our competitors who are willing to entertain some.

Speaker Change #101: That certainly will have a positive gross margin impact as we continue to ramp up other parts of our business that we were expecting and as we talked about are coming through as well as we go into second half of the year. So yes, I do think that'll have a positive gross margin mix effect.

There are some fairly unconventional sort of rates, we're not going there and I think that's not that's not the whole market, but there are one or two out there who.

We're moving in that direction and I think our customers can see through a lot of that.

Speaker Change: Thank you and then on the DSO you made really nice progress through 2023 with sequential improvements now.

So it does present something of a challenge and as I said before to the previous question I feel confident that our delivery and our execution can manage any.

Eric White Coldwell: Now, it's ticked back up into the last year average range here over the last couple of quarters.

Any challenges we have on that top line, because we are able to typically deliver a couple of hundred to 400 bps ahead of what we usually propose only blend into talk on a little bit more on the on the DSO side of things.

Speaker Change: You mentioned.

Eric White Coldwell: <unk>.

Eric White Coldwell: It was either a more competitive environment or a continuation of a more competitive environment and then.

Speaker Change: I just wanted to clarify which is it is it is it that the.

Thanks, Dave Yes, Eric on unjust I think there is.

Speaker Change #103: The competitive environment continues, but youre getting more mix from larger apartment that are traditionally more competitive or or.

Two two really salient points to note here first off obviously, we've been very successful in our large pharma group and we've seen probably more expansion of our business. So it was certainly the mix of our customer base.

Speaker Change: Or asking for more I should say.

Speaker Change: Or has has it actually.

Speaker Change: Has the pressure to delay payments actually increased.

Is that larger proportion certainly the revenues that come from them and consequently, the billing of the DSO, it's probably pushed more towards customers.

Brendan: Let me try that one from a high level and then again Brendan can jump in Eric certainly on the pricing environment I do think it has ramped up a little bit in the last.

Who do push shows on credit terms. There's no question about that so the mix is one piece I would say in terms of the competitiveness in terms of DSO and credit terms I would say that internally really more internally is from the pharma companies themselves as we know and we the very first question was about.

Speaker Change: I want to say a few months even in maybe that's you know you tend to get involved in some of these more strategic meetings.

Brendan: I'm aware of some of the requests in the asks.

Brendan: Larger pharma partners are looking for particularly for these more strategic relationships.

The implications of I array in the mix of call. It pharma companies are very focused on maintaining our cash balances and some of them have specific issues, where they really need to do that and 24% to 25. So I think the push on this from a credit terms perspective has been much more driven rather than by competition between zeros, but actually from the actual.

Brendan: When they go to commit themselves to a three to five year type of relationship. They are looking for the best possible rights, they can get and it gets pretty hairy at times.

Speaker Change #111: And there are one or two of our competitors who are willing to entertain. Some there are some fairly unconventional sort of rates, we're not going there and I think that's the whole market, but there are one or two out there who.

Pharma company based themselves.

And the folks that they're working with to manage their cost base and their R&D spend as well as our cash balances over the next couple of years.

Brendan: Who are moving in that direction and I think our customers can see through a lot of that got it. So it does present something of a challenge and as I said before the previous question I feel confident that our delivery and our execution can manage it.

If I could go back to Steve's response on the pricing competitiveness.

We heard earlier.

In the week from your competitor that is much more biotech focused that they felt like perhaps if anything maybe the pricing competitive competitiveness got a little a little easier in recent months that it was worse.

Brendan: The challenges we have on that top line, because we are able to typically deliver a couple of hundred to 400 bps ahead of what we usually propose.

Brendan: Only Brendan to talk on a little bit more on the on the DSO side of things.

A few.

A couple of quarters ago and before.

Brendan: Thanks, Dave Yeah, Eric on unjust I think theres two to really say again points to note here first off obviously, we've been very successful in our large pharma group and we've seen probably more expansion of our business. So it was certainly the mix of our customer base that is that larger proportions or any of the revenues that come from them.

Your mix is obviously a bit more skewed or balanced, but skewed more to big pharma and that competitor.

Is this a is this a nuance on pricing big farmers are youre seeing big farmers get a bit more competitive, particularly in strategic deals are you seeing the same thing in your smallest biotech base or could perhaps you align with your competitors' comments that maybe that cohort given the funding and the better mood as.

Brendan: And consequently, the billing of the DSO, it's probably pushed more towards customers you know who.

Speaker Change #123: Who do Bush shows on credit terms you know there's no question about that the mix is one piece I would say in terms of the competitiveness in terms of DSO and credit terms I would say that internally really more internally is from the pharma companies themselves as we know when we the very first question was about.

Is a little less.

Focused on price today than it was a few quarters ago.

Yeah, Eric I think you've characterized it very well that's exactly the way. We said, we don't we're not seeing the sort of pricing discussions and pricing pressure that we see in the biotech space as we do in the large pharma space, but it's kind of the way. It's always been when you have these large strategic partnerships three to five years.

Speaker Change: The implications of I array in the mix of call. It pharma companies are very focused on maintaining their cash balances and some of them have a specific issues, where they really need to do that in 'twenty four 'twenty five so I think that the push on this from a credit terms perspective has been much more driven rather than by competition between ciros, but actually from the actual.

Millions of millions of dollars annually.

They are looking and they tend to negotiate these upfront in the wheel lineup and.

And do the beauty parade.

As you would expect they are looking for the optimal terms Brendan referenced in terms of credit credit terms pricing.

Speaker Change: Pharma company based themselves and the folks that they're working with to manage their cost base and their R&D spend as well as our cash balances over the next couple of years.

And all of that sort of stuff and so it is a very competitive process because once you're in there.

Speaker Change #113: If I could go back to Steve's response on the pricing competitiveness.

Youre competing with one other or maybe two others. That's typically the way it goes and I expect that on the other hand as you rightly said in the biotech space.

Speaker Change #100: We heard earlier.

Speaker Change #109: In the week from your competitor that is much more biotech focused that they felt like perhaps if anything maybe the pricing competitive competitiveness got a little a little easier in recent months that it was worse.

Our.

Our competitors that are pretty well as well I think the pricing, while it's always competitive and we compete with them and others.

It's not as not quite as intense because you tend to be one off projects.

Speaker Change #116: A few.

Speaker Change #109: A couple of quarters ago and before.

One program on trial, maybe there is some follow on if you've got other indications to develop but it's a it's a different type of environment and I think one that <unk>.

Speaker Change #102: Your mix is obviously a bit more skewed or balanced, but skewed more to big pharma and that competitor.

Speaker Change: Is this a is this a nuance on pricing big farmers are youre seeing big farmers get a bit more competitive, particularly in strategic deals are you seeing the same thing in your smallest biotech base or could perhaps you align with your competitors' comments that maybe that cohort given the funding and the better mood as.

Blends itself too.

A slightly different outcome in terms of pricing although of course, the volume is not there then.

Thank you.

We will take our next question.

Your next question comes from the line of Scott.

<unk> Barclays. Please go ahead your line is open.

Speaker Change: Is a little less.

Speaker Change: Focused on price today than it was a few quarters ago.

Alright, thanks, guys.

Speaker Change #105: Yeah, Eric I think you've characterized it very well that's exactly the way. We said, we don't we're not seeing the sort of pricing discussions and pricing pressure that we see in the biotech space as we do in the large pharma space, but it's kind of the way. It's always been when you have these large strategic partnerships three to five years.

Scott I wanted to dig in on the enrollment delays.

And youre talking about how they're not canceling and theyre coming back. So can you give us a sense of the timing of how we should think about those kind of rolling back on.

And then more high level as like the delays were they caused more from.

You lacking those functions and having to subcontract out or partner with somebody else and then.

Speaker Change #105: Grids of millions of dollars annually.

Speaker Change #105: They are looking and <unk> and they tend to negotiate these upfront and we'll wind up and.

Would those issue has been rectified if you guys had those functions internally.

Speaker Change #105: And do the beauty parade.

Let me take the second part of your question first.

Speaker Change: As you would expect they are looking for optimal terms Brendan referenced in terms of of credit credit terms pricing.

No no. The advice we were looking for the regulatory advice was really from the agencies in terms of the variance that will.

Speaker Change: And all of that sort of stuff until it is it is a very competitive process because once you're in there.

Needed to be in the comparator so that was.

It was very specifically with the agency that wasn't something that we were able to provide.

Speaker Change #107: You know youre competing with one other or maybe two others. That's typically the way it goes and I expect that on the other hand is as you've sort of quite rightly said in the biotech space.

We pulled them obviously at our opinion that the customer was looking for so the agency advised so it wasn't anything that we didn't have.

Speaker Change #106: R R.

Speaker Change: Our competitors that are pretty well as well I think the pricing well, it's always competitive and we compete with them and others. It's not as it's not quite as intense because you tend to be one off projects.

That would've mitigated we needed that we didn't that advice and the other part of it was the investigational product as well so that were very specific issues nothing that we could have actually done well of course, we we jumped in and tried wherever possible to help but it wasn't anything we didn't have in terms of the.

Speaker Change: One program on trial might be there is some follow on if you've got other indications to develop but it's a it's a different type of environment and I think one that.

There lies the.

Speaker Change: Lends itself to.

We got the news in June sort of.

Speaker Change: A slightly different outcome in terms of pricing although of course, the volume is not there.

And so it.

It was pretty clear that there was going to be a delay it's not that it's not that actually work has stopped we're actually going to be enrolling around 400 patients in one of the trials.

Speaker Change: Okay.

Speaker Change #112: Thank you.

Speaker Change #110: We'll take our next question.

Speaker Change #116: Your next question comes from the line of from Barclays. Please go ahead. Your line is open.

Yeah.

That will be starting in sort of late August September. So the work is moving along well certainly on one of the trials the bulk of that.

Speaker Change #114: Alright, thanks, guys.

Speaker Change #127: I wanted to dig in on the enrollment delays.

Enrollment will not really be until early next year.

Speaker Change #162: And youre talking about how they're not canceling and theyre coming back. So can you give us a sense of the timing of how we should think about those kind of rolling back on.

And so because of the delays we've had but the initial part of one of those studies will happen the startup will stop but it's not going to be material enough to.

Speaker Change #159: And then more high level as like the delays were they caused more from.

Two impact and obviously the bulk of the enrollment with the investigator fees and our directories around monitoring and management.

Speaker Change #115: You lacking those functions and having to subcontract out or partner with somebody else and then.

Speaker Change #104: Windows issue has been rectified if you guys had those functions internally.

Where the bulk of the revenue was recognized as that work gets done so that won't happen until until next year.

Speaker Change #108: Now let me take the second part of your question first.

Thank you.

Speaker Change #131: No no. The advice we were looking for the regulatory advice was really from the agencies in terms of the variance.

We will take our next question.

Your next question comes from the line of John Dressing from Trust Securities. Please go ahead. Your line is open.

Speaker Change #108: Needed to be in the comparator. So that was it was very specifically with the agency and it wasn't something that we were able to provide we couldn't put them obviously at our opinion that the customer was looking for so the agency advised so it wasn't anything that we didn't have.

Thank you and thanks for taking my questions I actually want to follow up on comment around guidance, excluding Colgate and FX stable to improving as you think about the business over the past six months compared to expectations heading into the year. What are the key areas, where you highlighted that trends either macro front or from the company.

<unk> have been coming in better than your expectations and what are the areas you will say that they are not.

They didn't play out as well as the expected again I'm focused on core trends, excluding COVID-19 and FX.

Okay.

So Andrew I might I might take that one it's brendan here.

Obviously, when we when we looked at the modeling for the organization as we came into this year. Obviously, we were talking about different quantities of Covid work and obviously, we've spoken to that extensively on this call I think the positive signs as we've talked about a little bit already it's kind of some of our growth customers actually have it.

One very well during the course of this year and that's really closer with our outside the top five we've seen really very strong placement growth coming from them Theres. Some developing relationships there that we as Steve referenced in his prepared remarks, we see as the big customers of the future that and added to that the fact that we continue to do well on signing new.

Major relationships all of these things are very significant positives in that in that core business. So that continues at good price as we said it's up at our top five we grew year over year at 8% and Thats been driven by some of the good growth and probably even maybe even a little bit ahead of our expectations as we came into the year.

Speaker Change #108: Yeah.

Speaker Change #119: Your next question comes from the line of Joel I'm dressing from Trust Securities. Please go ahead. Your line is open.

As I said, probably more importantly, those new customer relationships that we continue to win are going to obviously be what really keeps us going as we go forward in the more medium term so still very much believe in our in our medium term growth outlook as we talked about at our New York Office.

Speaker Change #138: Thank you and thanks for taking my questions I actually want to follow up on comment around guidance, excluding Colgate and FX.

Speaker Change #121: To improving as you think about the business over the past six months compared to expectations heading into the year.

Thank you.

We will take our next question.

Speaker Change #124: What are the key areas, where you highlight that trends either macro front or from the company's specific had been coming in better than your expectation and what are the areas. You will see that they are not they didn't play out as well as the expected again and focus on core trends, excluding COVID-19 and FX.

Your next question comes from the line of Jack Meehan from Nephron Research. Please go ahead. Your line is open.

Thank you Hello, everyone.

I wanted to talk a little bit about just expectations around the burn rate. So.

Speaker Change: Okay.

Stepped down a little bit sequentially here.

Speaker Change: So Andrew I'm going to take that one it's Brendan here.

Based on the business, that's coming in the door and some of that.

Brendan: Obviously, when we looked at the modeling for the organization as we came into this year. Obviously, we were talking about different quantities of Covid work and obviously, we've spoken to that extensively on this call I think the positive signs as we've talked about a little bit already is kind of some of our growth customers actually has done very well during.

Adjustments you made can you just talk about like.

How do you think it trends.

Through the remainder of the year and do you think we're kind of at a bottoming point here as we enter 2025.

Hi, It's Brendan here again, obviously, we did step down a little bit in the current quarter were 191.

Steve: The course of this year and that's really closer with our outside the top five we've seen really very strong placement growth coming from them Theres. Some developing relationships there that we as Steve referenced in his prepared remarks.

In Q2, as we look at Q3, and Q4 and you look at our guidance obviously.

It's not terribly art and love to see that it will be kind of stepping down a little probably into the high eights as we think about the back half of the year.

Speaker Change #125: <unk> is the big customers of the future that and added to that the fact that we continue to do well on signing new major relationships. All of these things are very significant positives in that in that core business. So that continues at good prices. We said, it's up to our top five we grew year over year at 8% and Thats been.

That's really feels very solid when we look at our mix of backlog that we have the.

The trend in the longer term here has been one that.

Scene is decreasing and that's as much to do with the mix of the business that we have a lot of that is oncology.

Longer term in nature in the business. It just takes longer to burn through its all solid business wins, we've obviously talked about the fact that we have some <unk>.

Last-born vaccine work, which we think will kick in in 2025. So there is opportunity to push back on that a little bit, but the way I would look at it is it's more about.

From our perspective, it's more about trying to lessen the impact of the backlog burn rate dropping over time, so really what we're always trying to do and we'll continue to do in 2025 years to really have that impact as little as possible could we see some uptick maybe in that with different vaccine mixes as we go into 2025 without a bunch of them.

Much depend obviously business wins performance between now and the end of the year, but certainly we will be you can absolutely be guarantee that we will continue to make sure that we can reverse as much as we can in each quarter that will remain a significant focus for the company.

Thank you.

We will take our next question.

Your next question comes from the line of Tom <unk> from UBS. Please go ahead. Your line is open.

Thank you.

Can you discuss whether or not your view on the long term durability of Covid vaccine work has changed.

I know that it's changed much we we see the percentages of revenue from Covid.

Covid vaccine work is sort of moderately dropping but we do feel there is going to be opportunities such as with such as we're talking about today for the new next generation vaccines and even other vaccines coming through for.

Speaker Change: Come here has been one that has seen is decreasing and that's as much to do with the mix of the <unk>.

Speaker Change: Business that we have to sell a lot of that is oncology.

Similar diseases, because the 20 <unk>.

Speaker Change: Longer term in nature in the business. It just takes longer to burn through with all solid business wins, we've obviously talked about the fact that we have some <unk>.

So I.

I think this is going to be an ongoing thing.

Speaker Change: <unk> born vaccine work, which we think will kick in in 2025. So there is opportunity to push back on that a little bit, but the way I would look at it is it's more about.

Albeit fairly modest part of our work in the long term, but it will be fairly volatile as well. These these trials typically as you would expect very large trials very material trials and so when they hit and when they happen.

Speaker Change: From from our perspective, it's more about trying to lessen the impact of the backlog burn rate dropping over time, so really what we're always trying to do and we will continue to do in 2025 years to really have that impact as little as possible could we see some uptick maybe in that with different vaccine mixes as we go into 2025, which was <unk>.

That will have quite a significant impact as it did during the pandemic.

It's hard to predict the future in terms of what what's going to happen then than it was but I think certainly the regulators the agencies the governments around the world are very conscious about the potential for future pandemic wanting to be well prepared for that much better prepared.

Speaker Change #143: Much depend on obviously business wins performance between now and the end of the year, but certainly we will be you can absolutely be guarantee that we will continue to make sure that we convert as much as we can in each quarter and that will remain a significant focus for the company.

Then they were for the year.

For the recent one and I do think that will mean there'll be opportunities for us.

Speaker Change #120: Thank you.

Next gen or whatever that might be but it won't be it'll be hard to predict it will be inconsistent it'll be volatile.

Speaker Change #151: We will take our next question.

Speaker Change #148: Your next question comes from the line of Tom <unk> from UBS. Please go ahead. Your line is open.

All I can say and it's I don't have a crystal ball in front of me, Dan So it's difficult to sort of put too many specifics on it now.

Tom <unk>: Thank you.

Speaker Change #122: Can you discuss whether or not your view on the long term durability of Covid vaccine work has changed.

That we talked about it Dan was that it wouldn't be.

It would be somewhat similar to other infectious disease areas like clue that we see on an annual basis being call. It one sometimes 2% of revenue for us.

Speaker Change #153: I don't know that it's changed much we we see the percentages of revenue from Covid.

And then it could be somewhere in that range on an ongoing basis, obviously, our expectation based on the work that that we had one win was higher than that this year, but that's certainly something like that on a longer term basis. We don't think would be adams around there's a possibility that of course well will depend on.

Obviously the size of those trials and let me see come in ultimately.

Thank you.

We will take our next question.

Your next question comes from the line of Jack Wallace from Guggenheim Securities. Please go ahead. Your line is open.

Yes.

I wanted to quickly pushed back on the.

Receivables.

It sounds like you are.

I'm really not going to bank too much on price, but in terms of winning.

<unk> share inside of your larger customers.

The strength of your balance sheet.

And asset for Europe.

Be able to be a little bit more competitive than maybe some of your competitors on payment terms.

Alright, Thanks, Jack it's Brendan here.

Listen I think all of I think this is a competitive piece that goes into those conversations as I mentioned earlier on in my in my answering a different question. It is a big requirement from the pharma companies themselves as much to help them in their own cash flow issues in their own issues that they have generally speaking at the moment.

So I think everybody has met with the same response from large pharma is on this.

Our other competitors I think the strength of our balance sheet, certainly gives us an ability here, yeah, and that's something that we've looked at in the past is that we have.

Always saw our balance sheet and the strength of our balance sheet is a competitive advantage in our marketplace and we'll use that wherever and whenever we can be that deployment of capital from an M&A perspective or be that in the and the ability to negotiate deals with our customers. So yes, we will use everything that we have and ourselves to our advantage to make sure we're continuing to winning business on competitive.

Speaker Change #126: I don't think it would be out of the realm of possibility, but of course, well will depend on obviously the size of those trials and what we see come in ultimately.

Thank you.

Speaker Change #133: Thank you.

We will take our next question.

Speaker Change #129: We will take our next question.

Your next question comes from the line of Casey Woodring from Jpmorgan. Please go ahead. Your line is open.

Speaker Change #132: Your next question comes from the line of Jack Wallace from Guggenheim Securities. Please go ahead. Your line is open.

Okay.

Great. Thank you for taking my questions.

Speaker Change #129: Yes.

Cancellations in the quarter was slightly above 2% of beginning backlog, which has been your quarterly guide.

Speaker Change #134: Wanted to quickly touch back on the accounts receivables.

Speaker Change #146: Again, it sounds like you are.

Over time, but they were up 7% sequentially. So just wondering if there's anything to read into that Steve you mentioned earlier in the call that cancellations related to funding were down in the second quarter and then just on.

Speaker Change #152: Not really not willing to bet too much on price.

Speaker Change #155: In terms of you winning.

Speaker Change #129: Additional share inside of some of your larger customers.

Speaker Change #130: The strength of your balance sheet.

On the <unk> front, a few larger pharma companies have made some progress in the last couple of months. So.

Speaker Change #122: And asset for Europe.

Speaker Change #155: You're able to be a little bit more competitive than maybe some of your competitors on payment terms.

So curious if the recent updates we've seen in that space has changed your view on DLT one contribution in the near to medium term. Thanks for fitting me in.

Speaker Change #155: Alright, Thanks, Jack it's Brendan here.

Speaker Change #150: Listen I think all of I think this is a competitive piece that goes into those conversations as I mentioned earlier on in my in my answering a different question it.

So you're.

You're right there was a very very modest uptick on cancels in the quarter.

Speaker Change #160: It is a big requirement from the pharma companies themselves that there's much to help them in their own cash flow issues in their own issues that they have generally speaking at the moment. So I think everybody has met with the same.

Were not reading anything into that really at this stage.

We feel the pull.

Portfolio has been prosecuted pretty well.

Kansas can be volatile and can be up and down.

In this business Thats really why we exist in case things don't work. So we cant complain too much about that but we don't we don't see any trend any particular trend.

Speaker Change #150: Response from large pharma is on this oh there are other competitors I think the strength of our balance sheet certainly gives us an ability here, yeah, and that's something that we've looked at in the past as you know.

In that space in terms of the GOP ones.

We're encouraged by the by the research and the opportunities that are coming through in that space, particularly more in the large pharma area.

Speaker Change #122: And we've always thought our balance sheet and the strength of our balance sheet is a competitive advantage in our marketplace and we'll use that wherever and whenever we can be that deployment of capital from an M&A perspective.

We're also encouraged by some of the strategic partnerships we've won that.

Speaker Change #122: Or be that in the in the ability to negotiate deals with our customers. So yeah, we'll use everything that we have in ourselves where a bunch of just to make sure where we'll continue to winning business competitively.

Also working actively in that area. So.

Theres plenty of again opportunity and constructive positivity going forward and the GOP why we feel we're well placed for those very large scale trials.

Speaker Change #122: Yeah.

Speaker Change #128: Thank you.

All known as probably the best.

The vaccine <unk> in the industry.

And these trials engine the GOP ones. These are new will be there.

New indications are going to be very large trials and so.

Our scale, our infrastructure is well positioned to really be able to put those trials and to execute those trials really well on that technology in terms of <unk> is going to allow us to do them in a really efficient manner. So again I'm very positive about the future around around the whether it be obesity or carrier.

Metabolic areas diabetes.

And these trials will also burn a bit faster than some of the some of the rare disease or the oncology studies, we have so it's a good place and I'm looking forward to see more opportunity in that space and we're starting to see that.

Thank you.

We'll take our next question.

Your next question comes from the line of Matt <unk> from Goldman Sachs. Please go ahead. Your line is open.

Hi, Good morning, Thanks for squeezing me in just.

On capital deployment I know you have the buyback authorization you have talked about wanting to be active in M&A. Because this is like an either or decision for you can you do both depending on the potential size of the M&A transaction. How are you thinking about prioritizing those to capital deployment.

Effort.

I think we've been fairly clear that M&A will be our focus.

Yeah.

And we do have a number of opportunities in the pipeline at the moment that we feel a good chance of moving forward over the next three holistically.

Six months or so we have some targets in terms of the areas, we want to prosecute in and thats around around sites.

And around late stage of AMT labs, we've talked about those sorts of areas.

That's all starting to move together once these things always take a little longer than we'd like and of course there is.

We're not going to overpay in this area, but we do have some good opportunities in that space around how we facilitate the prosecution of out of our clinical work on.

Speaker Change #168: And to execute those trials really well on that technology in terms of <unk> is going to allow us to do them in a really efficient manner. So again I'm very positive about the future around around the whether it be obesity or cardio metabolic areas diabetes.

And improve our offering that's really where we're focusing on that.

Having said that I've also said, we want to we want to stay.

Sort of one five to $2 five in terms of the ratio of adjusted EBITDA and and so as we get towards the end of the year will be without any M&A will be approaching getting below that and so we will be of course, considering what the opportunities are for buying back and we will we won't be shy, where we see the opportunity.

Speaker Change #128: And these trials will also burn a bit faster than some of the some of the the rate is easily oncology studies, we have so it's a good place and I'm looking forward to see more opportunity in that space and we're starting to see that.

Speaker Change #128: Thank you.

Speaker Change #135: We'll take our next question.

Again, I would say it very clearly M&A is the focus and we do have some some opportunities but.

Speaker Change #158: Your next question comes from the line of Mike <unk> from Goldman Sachs. Please go ahead. Your line is open.

We want to use our balance sheet as <unk> already said, we have a very strong balance sheet.

Michael Leonidovich Ryskin: Hi, Good morning, Thanks for squeezing me in just.

Speaker Change #157: On capital deployment I know you have the buyback authorization you have talked about wanting to be active in M&A is this like an either or decision for you can you do both depending on the potential size of the M&A transaction. How are you thinking about prioritizing those to capital deployment.

And we're a good partner in that market and so.

We're going to continue to use it we're certainly not going back to.

The days perhaps.

510 years ago, when we really had very little debt at all we think thats a reasonable place to be and we feel we feel good about our positioning in that space.

Speaker Change #135: Effort.

Speaker Change #137: I think we've been fairly clear that M&A will be our focus.

There are now further questions I would like to turn the conference back to Steve Cutler for closing remarks.

Speaker Change #154: And we do have a number of opportunities in the pipeline at the moment that we feel a good chance of moving forward over the next realistically six months or so.

Okay. Thank you. Thank you operator, I think we certainly see a very constructive market going forward and certainly plenty of opportunity.

<unk> there is no doubt there'll be a little volatility, but with the biotech funding stabilizing and our opportunities increasing within large pharma we feel like.

Speaker Change #149: Have some targets in terms of the areas, we want to prosecute in there thats around around sites.

Speaker Change #137: At around life stage of AMT labs, we've talked about those sorts of areas and that's all starting to move together. Once these things always take a little longer than we'd like and of course as you know.

This is a good place to be and where we feel in a very strong position to be able to benefit from that constructive market. So thank you for joining the call today. Your continued interest and support of Iqos. We do appreciate it we look forward to further updates as we continue our progress in partnering with our customers and accelerating their critical medicines to the patients who need them. Thanks all.

Speaker Change #137: We're not going to overpay in this area, but we do have some good opportunities in that space around how.

Speaker Change #137: We facilitate the prosecution of out of our clinical work.

Speaker Change #137: And improve our offering that's really where we've where we're focusing on that but having said that I've also said, we want to we want to stay.

And have a good day.

Speaker Change #137: Sort of one five to $2 five in terms of the ratio of adjusted EBITDA and <unk>.

Speaker Change #137: So as we get towards the end of the year will be without any M&A will be approaching getting below that and so we will be of course, considering what the opportunities are for for buying back and we will we won't be shy, where we see those opportunities again I would say it very clearly M&A is the focus and we do have some some opportunities.

Speaker Change #137: We want to use our balance sheet as Brendan already said, we have a very strong balance sheet.

Speaker Change #137: A good player in that market and so we're going to continue to use it we're certainly not going back to the.

Speaker Change #139: The days perhaps.

Speaker Change #142: 510 years ago, when we really had very little debt at all we think thats a reasonable place to be and we feel we feel good about our positioning in that space.

Speaker Change #142: There are no further questions I would like to turn the conference back to Steve Cutler for closing remarks.

Steven A. Cutler: Okay. Thank you. Thank you operator, I think we certainly see some very constructive market going forward and certainly plenty of opportunity for.

Speaker Change #141: <unk> there is no doubt there'll be a little volatility, but with the biotech funding stabilizing and our opportunities increasing within large pharma we feel like.

Speaker Change #144: This is a good place to be and we are we feel in a very strong position to be able to benefit from that constructive market. So thank you for joining the call today. Your continued interest and support of Iqos. We do appreciate it we look forward to further updates as we continue our progress in partnering with our customers and accelerating their critical medicines to the patients who need them. Thanks all.

Speaker Change #140: Have a good day.

Speaker Change #139: Okay.

Speaker Change #145: This concludes today's conference call. Thank you for participating you may now disconnect.

Speaker Change #139: Okay.

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Speaker Change #139: Thank you.

Speaker Change #163: Good day and thank you for joining us on this call covering the quarter ended June 32024 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 EMR Lyons I would like to note that this call's webcast and that there are slides available to download.

Speaker Change #163: On our website to accompany today's call.

Speaker Change #166: 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. 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.

Speaker Change #163: And listeners are cautioned that forward looking statements are not guarantees of future performance.

Speaker Change #163: 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 statements either 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 the form 20.

Speaker Change #163: F filed on February 23, 2024.

Speaker Change #165: This presentation includes selected non-GAAP financial measures, which Steve and Brendan will be referencing in their prepared remarks.

Speaker Change #164: For a presentation of the most directly comparable GAAP financial measures. Please refer to the press release section titled Condensed consolidated statements of operation, while non-GAAP financial measures are not superior to or a substitute for the comparable GAAP measures. We believe certain non-GAAP information is more useful to investors for historical comparison.

Speaker Change #164: Purposes.

Speaker Change #164: 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 excludes stock compensation expense restructuring costs foreign currency gains and losses amortization and transaction related and integration related costs and their respective tax.

Speaker Change #164: Benefits.

Speaker Change #164: We will be limiting the call today to one hour and would therefore ask participants to keep their questions to one each in the interest of time I would now like to hand over the call to our CEO Dr. Steve Cutler.

Steven A. Cutler: Thank you Kelly and good day everyone.

Steven A. Cutler: <unk> results in quarter, two continued a positive year to date trajectory of growth marked by solid financial performance and further success in securing new business across our segments.

Speaker Change #167: Net business wins, and backlog grew by 7% and 10% respectively year over year as a leading scaled offering continues to resonate with our customers uniquely positioning icon to meet increasing demand for innovative and flexible solutions in clinical development.

Steven A. Cutler: We remain encouraged by the leading indicators in a market that support a solid demand environment.

Speaker Change #164: <unk> continued growth and RFP flow and the overall consistent level of opportunities, we are seeing across our customer segments.

Speaker Change #164: While biotech funding levels attenuated slightly in quarter two from a robust start in quarter. One we see this market continuing to stabilize and have seen a modest uptick in rfps on a trailing 12 month and sequential basis within this segment.

Speaker Change #164: Importantly, customer sentiment appears to be improving and we remain optimistic around the contribution to midterm growth. This important customer segment represents.

Speaker Change #164: In the large pharma segment, we see continued opportunity to win and expand our support of the many customers seeking novel solutions.

Speaker Change #164: While macro challenges and budget uncertainties remain a factor at the forefront in their overall spending decisions. We have seen continued prioritization around the development of late stage clinical pipeline assets to advance drugs to market.

Speaker Change #164: We believe this provides a certain degree of stabilization to the demand patents in this area of the market that have largely been steady through more volatile macroeconomic periods in recent years.

Speaker Change #164: Our offering in large pharma is particularly well placed to serve customers seeking flexible blended solutions encompassing both full service and functional elements of delivery without proven agility and scalability in both service areas.

Speaker Change #164: One of the key strategic initiatives, we laid out at our Investor day in May with extending our leadership in the large pharma market through our blended solutions offering and our differentiated ability to customize our model for customers.

Speaker Change #164: This increasingly important approach was critical to our success in securing another new strategic partnership with a rapidly growing top 30 pharma company for full service solutions in quarter two.

Speaker Change #164: We were selected for this partnership due to our ability to partner with this customer in creating a Thailand operational solution that was optimized to fit their evolving needs.

Speaker Change #164: A deep understanding of various outsourcing models and the ability to pivot between them was a key differentiating point for icon as well as our portfolio of integrated preclinical services that will create value in areas, such as site and patient solutions and laboratory services.

Speaker Change #164: This reinforces our recent success in building partnerships outside of our top tier customers, creating a well diversified and balanced portfolio that is not overly concentrated to a particular customer or therapeutic area.

Speaker Change #164: Specifically in the first half of this year, we were able to grow revenue outside our top five customers by over 8% illustrating.

Speaker Change #164: The success, we are having in executing our portfolio and developing our top tier customers of the future.

Speaker Change #164: As we continue to grow and scale our company, we remain focused on leveraging the unique blend of experience and capability, we have in not only winning but executing and expanding large scale strategic partnerships that create strong value for both our customers and icon.

Speaker Change #164: While our perspective on this year's demand environment has remained consistent we did receive an update late in the quarter pertaining specifically to next generation Covid vaccine trials that will cause an impact to our full year revenue in 2024 due to the delayed start of these studies.

Speaker Change #164: There were two primary but separate issues that affected the startup of these trials.

Speaker Change #164: One was a delay in sponsors receiving regulatory guidance that was required before commencing trial enrollment pertaining to new variance specifications.

Speaker Change #164: And the second with investigational product related issues that caused the delay in enrollment.

Speaker Change #164: We are working closely with our development partners to ensure efficient and timely execution of these high priority studies that continue to be of critical importance to our customers and the safety and health of our communities.

Speaker Change #164: To be clear. These studies have not been cancelled and our expectation is that these trials will enroll the majority of patients in 2025 with startup related activities, having already commenced in some instances.

Speaker Change #164: Okay.

Speaker Change #169: With these anticipated changes, we now expect our COVID-19 related revenue to be approximately 1.5% to 2% of total revenue for the full year in 2024, representing a year over year headwind of approximately 200 basis points to total with them.

Speaker Change #170: While we're disappointed by these unanticipated one off project delays. These do happen in our industry. They are limited to one specific area within our business, we remain confident in the strength and delivery of our underlying service offering as well as the benefits of a diversified mix of customers and therapeutic areas that constitute our.

Speaker Change #164: Entire portfolio.

Speaker Change #164: Our business performance, excluding Covid has been very solid with revenue growing 8% year to date over the first half of 2023 and is helping to offset some of the negative headwinds now expected from both foreign exchange and the Covid specific study delays.

Speaker Change #164: To that end given the excellent margin delivery year to date through strong project execution and cost control across the business as well as further leverage of our global business services model, we are increasing our full year adjusted EBITDA margin expectation to 21, 7% at the midpoint of that range.

Speaker Change #164: An increase of 80 basis points on a year over year basis.

Speaker Change #164: This outperformance coupled with expected savings on full year interest expense is supporting the increase of our full year adjusted earnings per share guidance, which we now expect to be in the range of $15 to $15 20, an increase of 17.3 to 18.8 ascent.

Speaker Change #164: Over the full year 2023.

Speaker Change #164: Yes.

Speaker Change #164: With the consistent trends in a broader demand environment, our expectation on book to Bill.

Speaker Change #164: Mine in the range of one two to one three times on a quarterly basis, maintaining our previous target range.

Speaker Change #164: Turning to financial performance in quarter, two net bookings grew 7% on a year over year basis, resulting in a book to Bill of one two times in the quarter and sustaining our trailing 12 month book to Bill ratio of 124 times.

Speaker Change #164: We again saw a strong performance in our large pharma business, particularly in full service solutions as well as for operational delivery services and data sciences, which notably secured a new sole provider award in the quarter.

Speaker Change #164: Total revenue increased five 3% on a constant currency year over year basis in the quarter gross margin of 29.9% increased 30 basis points over quarter, two 2023, and total SG&A expense decreased 40 basis points on a year over year basis to eight points.

Speaker Change #164: 7% of total revenue driving another quarter of strong adjusted EBITDA growth of 9% over quarter two 2023.

Speaker Change #164: This resulted in an adjusted EBITDA margin of 21, 2% in the quarter up 70 basis points year on year.

Speaker Change #164: With strong margin delivery through our P&L. In addition to the benefits of our debt refinancing we saw excellent year over year growth in adjusted earnings per share of approximately 21%.

Speaker Change #164: Following the successful repricing of our existing term loan B facility earlier. This year, we continued our strategy of further refinancing our variable debt in quarter two.

Speaker Change #164: We completed our inaugural SEC bond offering total $2 billion total offering totaling $2 billion. You know that we made which was met with very strong investor interest and initial order book of circa $50 billion.

Speaker Change #164: The proceeds of this offering were allocated to the repayment of our fixed term loan b debt, resulting in our current capital structure, which has approximately 72% of our debt subject to fixed rates.

Speaker Change #164: As we noted at our Investor day in May. This now provides us visibility to a reduction of approximately $110 million in interest expense over 2023, resulting in expected total full year interest expense in the range of $200 million to $210 million for 2024.

Speaker Change #164: Importantly, this was a great milestone for our company and completing our first investment grade bond offering and providing increased balance sheet flexibility as we look to continue to optimally deploy capital on a go forward basis.

Speaker Change #164: As we have previously stated we remain focused on M&A as a priority use of capital in the near term with a focus on strategic assets that continue to differentiate a clinical offering and drive value for our customers.

Speaker Change #164: However, as communicated previously we have authorization from our board of directors for a share repurchase program of up to $500 million to be deployed opportunistically on an ongoing basis, if the appropriate assets cannot be secured at the right price.

Speaker Change #164: We are updating our full year 2024 guidance range to account for the delayed COVID-19 related projects as well as foreign exchange headwinds due to the strengthening U S dollar since our quarter one report.

Speaker Change #164: We now expect revenue to be in the range of $8. Four 5 billion to 8.55 billion an increase of four one to five 3% over full year 2023.

Speaker Change #164: As I noted earlier, we are increasing our full year adjusted earnings per share guidance to a range of $15 to $15 20, an increase of $17 three to <unk>, 8% on a year over year basis, reflecting a strong margin delivery and continued cost management.

Speaker Change #171: Before I close out my prepared remarks, I want to provide a brief update on our CFO transition. We continue to make good progress on our search for a new CFO and we now have a small number of very strong candidates remaining proceeds.

Speaker Change #164: We expect to make a more detailed announcement regarding this transition later in the current quarter.

Speaker Change #164: Finally, I want to extend my sincere thanks to all of our colleagues at icon for their many efforts in the quarter and the first half of this year and supporting our customers and helping to accelerate the development programs to bring new therapies to patients around the world.

Speaker Change #164: Brandon I'll now hand, it over to you to review our financial performance in more detail.

Brandon: Thanks, Steve.

Brandon: In quarter, two icon achieved gross business wins of 3.071 billion, an increase of seven 4% on a year over year basis. In addition, we recorded 493 million worth of cancellations, resulting in net awards in the quarter of 258 billion and net book to Bill of one to two times.

Brandon: With the addition of the New awards in quarter, two our backlog grew to a record $23 8 billion, representing an increase of 2% on a quarter on quarter, one of 2024 or an increase of nine 9% year over year.

Brandon: Backlog burn was nine 1% in the quarter slightly down from quarter one levels.

Brandon: Revenue in quarter, two was $2 120 billion.

Brandon: This represented a year on year increase of four 9% or five 3% on a constant currency basis.

Brandon: Overall customer concentration in our top 25 customers decreased from quarter one 2024.

Brandon: Our top five customers represented 24, 7% of revenue in quarter, two our top 10 represented a charge of nine 3%, while our top 25 represented 69%.

Brandon: Gross margin for the quarter was 29, 9% consistent with quarter, one 2024 as expected.

Brandon: Margin increased 30 basis points of gross margin of 29, 6% in quarter two 2023.

Brandon: Total SG&A expense was $183 $5 million in quarter, two or eight 7% of revenue.

Brandon: This is in line with the prior quarter on total percent of revenue basis in the comparable period last year total SG&A expense was $182 9 million or nine 1% of revenue.

Brandon: Adjusted EBITDA was 450.

Brandon: 4 million for the quarter or 21, 2% of revenue in the comparable period last year, adjusted EBITDA was $414 $2 million or 25% of revenue representing a very solid year on year increase of eight 7%.

Brandon: And expansion of 70 basis points in margin.

Brandon: Adjusted operating income for the quarter, two was $417 $3 million margin of 19, 7%.

Brandon: This was an increase of eight 7%.

Brandon: Adjusted operating income.

Brandon: $393.

Brandon: 8 million a margin of 19% in quarter two of 2023.

Brandon: Net interest expense was $42 $9 million of course, too we're continuing our full year interest expense to total approximately 200 $210 million in.

Brandon: In 2024, roughly even split in total remaining interest expense for the remaining two quarters of the year.

Brandon: The effective tax rate was 16, 5% for the quarter. We continued to expect the full year of 2020 or adjusted effective tax rate to be approximately 16, 5%.

Brandon: Adjusted net income attributable to <unk> for the quarter was trained at $12 $6 million a margin of 14, 7% equating to adjusted earnings per share of $3 75, an increase of 26% year over year.

Brandon: Okay.

Brandon: In the second quarter. The company recorded $6 8 million of transaction and integration related costs of $45 $8 million of restructuring costs.

Brandon: U S. GAAP income from operations met its $229 9 million or 10, 8% of revenue during quarter two.

Brandon: U S. GAAP net income in quarter, two was $146 9 million.

Brandon: 76 cents per diluted share compared to $1.40 per share for the equivalent prior year period, an increase of 25, 7%.

Brandon: Net accounts receivable was $1 $198 billion at Turkey to June 2024. This compares with a net accounts receivable balance of $1 146 billion at the end of quarter. One 2024 DSO was 51 days at June 30 of 2024, a decrease of one day from quarter, two 2003, and an increase of two days from March 31 2000.

Brandon: For cash.

Brandon: Cash from operating activities in the order was $218 $6 million in free cash flow was $182 $4 million in the quarter, an increase of 6% on a year over year basis.

Brandon: We continue to see costs were seeking more competitive contracted credit determinant as well as the desire to hold onto cash longer given the higher interest rate environment. We're currently in <unk>.

Speaker Change #172: This dynamic is primarily focused on our large pharma customer growth, which has been growing faster at icon and thus driving greater impact on our overall DSO profile.

Speaker Change #172: At June 30 of 2024 cash totaled $506 6 billion and debt totaled $3 4 billion, leaving a net debt position of $2 9 billion as compared to net debt of $3 1 billion at March 31, 2024, and net debt of 4 billion at June <unk> 2023.

Speaker Change #172: Capital expenditure during the quarter was $46 3 million.

Speaker Change #172: From a capital deployment perspective, 2 billion of cash from the successful investment grade bond was used to repay 2.0, sorry, $2 billion and $14 million.

Speaker Change #172: Of our terminal in <unk> additional additionally, our revolving credit facility was undrawn at the end of quarter two.

Speaker Change #172: From a capital deployment perspective, as Steve indicated our priorities for capital to be centered on M&A, where we can acquire assets that further strengthen our portfolio of services and the value proposition for customers. Our pipeline of opportunities is healthy yet we remain disciplined in our approach to evaluating acquisitions that will meet our criteria from a strategic.

Steven A. Cutler: Financial perspective.

Steven A. Cutler: We also continue to consider opportunistic share repurchase given our strong balance sheet position.

Speaker Change #179: Our key assumptions behind our full year guidance remain in place and an effective tax rate of 16, 5% free cash flow target of circa $1 1 billion.

Steven A. Cutler: Capex spend in the range of 150 to 200 million and interest expense in the range of $200 million to $210 million.

Steven A. Cutler: Or for the full year 2024.

Speaker Change #180: Finally, I would like to also tank icon employees for their dedicated efforts and of course to.

Speaker Change #175: Operator, we are now ready for questions.

Speaker Change #174: Thank you as a reminder to ask a question you will need to press star one.

Speaker Change #173: One on your telephone and wait for your name to be announced please note. We ask you to limit your questions to one only.

Speaker Change #181: To withdraw your question. Please press star one and one <unk>.

Justin D. Bowers: We will take our first question and your first question comes from the line of Justin <unk> from Deutsche Bank. Please go ahead. Your line is open.

Justin: Hi, good morning, everyone.

Speaker Change #183: In terms of what Youre seeing with large pharma.

Justin D. Bowers: What inning are we in in terms of.

Speaker Change #192: Some of the announcements that we've seen.

Speaker Change #176: Let's say over the last six months.

Speaker Change #185: And how they're approaching IRA.

Speaker Change #172: And what opportunities does that present for you outside of the core clinical business.

Speaker Change #172: You mean in terms of budget discussions of budget cuts, Justin is that where you're coming from.

Justin: Yes, that's right Steve.

Justin: Yes, that's always hard to tell but I suspect well.

Speaker Change #184: Into the middle of any I guess, I'm thinking fourth fifth and sixth I think.

Speaker Change #178: We've we've seen a number of companies make the public announcements certainly as some of our top customers have been in that.

Speaker Change #178: In that cohort and so I think but I think we're seeing that starting to get through it we're pretty optimistic about large pharma growth in terms of R&D spending in terms of outsourcing growth going forward and that's what we see in our RFP numbers certainly on the trailing 12 month basis from large pharma where in the in the low double.

Speaker Change #178: <unk>, even even pushing up a little bit higher than that and so we're pretty optimistic around where large farmers going sometimes is I'll pick up said before on these calls the cost cuts in the budget, while while they do have an immediate impact long term I think more about how they spend their money and we can benefit from that and I think that applause to your second part of your.

Speaker Change #178: Question around the IRI they are thinking about how best to deploy their capital I've been to one or two strategic partnership meetings recently with where they've been very open saying that they're not where they want to be and I think outsourcing and strategic partnerships is one of the wise they are going to improve their efficiency their speed.

Speaker Change #178: Cost competitiveness and so I'm encouraged by that attitude, but an open attitude that many of our larger pharma customers are taking and the opportunities that they are presenting to us even as they go through.

Speaker Change #178: Considerations around IRI and even even budget cuts. It does I think present us with with opportunity in the long term.

Speaker Change #182: Thank you.

Speaker Change #188: We will take our next question.

Speaker Change #193: Your next question comes from the line of David Windley from Jefferies. Please go ahead. Your line is open.

David Howard Windley: Thank you.

David Howard Windley: Morning, Thanks for taking the question.

David Howard Windley: Steve I guess I'm I'm interested I appreciate your comments on on large pharma if I.

David Howard Windley: Could sneak in kind of a two parter on.

David Howard Windley: Biotech you had both at our <unk> Conference in June and then again on the call talked about attenuation and funding I wanted to understand is that just a funding comment or did you also see that flow through.

Speaker Change #186: To your activity.

Speaker Change #186: And then thinking about your.

Speaker Change #186: Kind of the pace.

Speaker Change #189: <unk> business flowing not only into backlog, but through backlog.

Speaker Change #187: Burn rate kind of.

Speaker Change #186: Just very moderately declining as has as has been the case for the industry for a long time.

Speaker Change #191: Just wanted to understand if that's kind of what we should set is our expectation going forward.

Speaker Change #186: Or do some of the global global business services and your new functional center of excellence approach have the ability to stem that tide.

Speaker Change #196: Sure Let me, let me take the biotech.

Speaker Change #190: First we continue to see a constructive improvement in the biotech market I think we're all aware of the first quarter was pretty strong from an overall funding second quarter, perhaps not not so strong and so my comment was related to some of the <unk> license and the funding side of things on the on the biotech in the second quarter, although on a year to date, we see a very positive.

Speaker Change #186: Constructive.

Speaker Change #186: Progress in that biotech funding area in terms of the activity in our in our group.

Speaker Change #186: We're still seeing opportunity something like.

Speaker Change #186: 50% to 60% of the opportunities that we have in the in the pending pipeline.

Speaker Change #186: And I'm talking about significantly to the top 25 are in the biotech space and these are very substantial opportunity. So we feel is there's plenty of opportunity and there are plenty of projects coming through interestingly as we look at cancellations in the in the.

Speaker Change #186: Biotech and the RFP area, we typically talk about biotech dollars coming through and not so much what actually gets decided on so we've seen actually in the in quarter two a reduction in the number of cancels in the pending side of things other words proposals that come to us and we bid on.

Speaker Change #186: What proportion of those always get canceled never actually come to decision we've seen a reduction in that and that I think gives me some.

Speaker Change #186: Encouragement in terms of the rigor and the robustness of our pending pipeline.

Speaker Change #186: And as I said of the top 25 opportunities about half of them are.

Speaker Change #186: We're in the biotech segment. So it really shows it really shows I think that the biotech.

Speaker Change #186: Coming through the serious about offering us opportunities and they are substantial opportunities. We're talking about very significant multimillion tens of millions of dollars of opportunity and so.

Speaker Change #186: So I'm pretty optimistic around where the biotech market is going on around the opportunities that we're going to have to execute on those opportunities.

Speaker Change #186: In terms of backlog burn it did tick down a little bit and I think thats a consequence of the.

Speaker Change #186: Of the makeup of our backlog as you know a lot of it is is oncology and that will continue to be the case.

Speaker Change #186: As of Excellence will I think help to mitigate that downturn, but I don't think it's necessarily going to change the overall challenge there the overall trend.

Speaker Change #186: We will still see I think.

Speaker Change #186: Pushed perhaps down we're down at around the 9% we might push under that a little bit in the in the more medium term I think what will give us the opportunity is as we get into some of these other therapeutic areas in cardiovascular and metabolic. These COVID-19 trials will help us as well.

Speaker Change #186: And so as we as we improve the mix of the or at least change the mix of our portfolio I think thats the opportunity from a.

Speaker Change #186: From the start from a burn point of view. The other thing is as we said at our Investor day as well, we have a very clear and strong initiative around that study startup program, which I think is starting to pay some dividends and starting to to improve so I do think that will be a mitigating factor as well and we'll be able to get studies started and get patients in and burn.

Speaker Change #186: Revenue a little bit more faster, which is also a good thing of course for customers as we complete those projects on time or even ahead of time. So there's a number of things we're doing and I think we see on the horizon as an opportunity to improve that backbone, but that oncology and rare disease.

Speaker Change #186: Portfolio composition is always going to be a continued challenge.

Speaker Change #194: Thank you.

Speaker Change #202: We will take our next question.

Speaker Change #198: Your next question comes from the line of Mark Smith from William Blair. Please go ahead. Your line is open.

Mark Smith: Hi, good morning, Thanks for taking our questions I wanted to follow up on the small biotech and get an update around some of the traction that youre, making with your revamped small biotech offering that you've been talking about over the last couple of quarters here and just how that revamped offering has translated into your win rate here in the second quarter of this year. Thank you.

Speaker Change #195: I think it's still early days Max and that we have as we said at the Investor day rebranded.

Speaker Change #186: Our biotech offering.

Speaker Change #199: I think we said at Investor day, we're known as a large pharma.

Speaker Change #186: So this is a process and this is somebody who is going to take a little bit of time, we are seeing some progress as I said, we've got a lot of opportunity to prosecute and that pending pipeline and I think the next couple of quarters, probably the next 12 months will will determine how successful that that refocus and rebranding is though I think it's a little early to call.

Speaker Change #186: To declare victory in that space, we're seeing certain certainly we've seen some progress in terms of opportunities to bid on.

Speaker Change #186: And we've won.

Speaker Change #186: Share of those but I'd like to perhaps give that question another another quarter or two before we really can.

Speaker Change #186: Give you a definitive answer.

Speaker Change #208: Thank you.

Speaker Change #205: We will take our next question.

Speaker Change #201: Your next question comes from the line of Elizabeth Anderson from Evercore ISI. Please go ahead. Your line is open.

Elizabeth Hammell Anderson: Hi, maybe sticking on the biotech team like obviously in earlier this year we saw.

Speaker Change #197: A massive increase in funding.

Speaker Change #204: <unk> come through intuitive moderating that's a positive trend in the second quarter have you Stan.

Eric White Coldwell: Where are we entered that bolus that we saw in the first quarter coming through and I'm sure. The Eric the answer is that it varies somewhat but are those.

Speaker Change #200: Still coming in the RFP stage or are they sort of starting to confer like how do we think about that in terms of the opportunities that that presents.

Speaker Change #200: Yes, it's a good question Elizabeth I think I think it's fair to say that we're starting to see that.

Speaker Change #209: That early year funding can flow through and as I've said that.

Speaker Change #209: The cancellations in the funding area in the proposer it seemed to be down in the second quarter. So I'm really encouraged by that that.

Speaker Change #186: That opportunity seems to be a much more robust pipeline of pending opportunities, which is which I think is good news for us we are seeing that.

Speaker Change #186: That sort of push up in them in the mid single digits.

Speaker Change #186: Even even sequentially, we've seen progress on that Q1 to Q2 and so on again Im encouraged that in terms of awards and then converting to revenue I think we're probably still a couple of quarters away I think maybe Q4 early next year is going to be when that when that starts to play through but I think overall, we're starting to.

Speaker Change #186: See that but we're at the sort of early part of that sort of progress if that makes sense.

Speaker Change #210: Thank you we will take our next question.

Speaker Change #213: Your next question comes from the line of Patrick Donnelly from Citi. Please go ahead. Your line is open.

Patrick Bernard Donnelly: Hey, guys. Thanks for taking the questions.

Patrick Bernard Donnelly: Steve maybe one for you just on the bookings trends pretty solid first half year is it still right to think about kind of that mid <unk> range any changes to your level of confidence you, obviously, the RFP flow and things like that supportive, but just curious obviously last quarter sounded really good coming off that 1% to 7% just wanted to take your temperature on the book to Bill.

Patrick Bernard Donnelly: Trends and then just a quick housekeeping one for Brendan.

Speaker Change #207: On the revenue guide it seems like if you back out the Covid piece, the core actually moved up over $50 million just want to make sure I'm doing the math on that correctly I appreciate it guys.

Speaker Change #215: So I'll take I'll, maybe I'll take the first one and then I'll leave the second one to Brendan.

Brendan: And we feel pretty good about where we are on the on the book to Bill is one to two this quarter, 1% to seven last quarter. One two to one three is where we think we'll be in and what we need to do to order to continue the growth.

Brendan: The trajectory of the company. So there's certainly nothing that's happened in the last couple of months that would change our view on that so I'll leave it at that we're optimistic as I've said.

Brendan: The RFP cancellation seemed to be down I am encouraged by that the RFP opportunity seem to be continuing to to move forward.

Speaker Change #212: The statements not just in large pharma, where its continued way, where it's doing well, but across the mid sized companies antibiotics as well so.

Speaker Change #207: We're all we're pretty constructive pretty optimistic on where we think the market will be and what we think we can deliver the back end of the year in terms of a book to Bill Brendan you want to take the.

Brendan: The core question.

Brendan: Sure Yes.

Brendan: I think it's well observed.

Steven A. Cutler: And Steve called that out when he was talking through his points. We've seen good good elements of growth in our core ex Covid, where we talked about being up for the first half of the year, 8% and also out of outside of our top five theres good growth and diversification of our customer base and that's why that's a place where an additional 8%. So absolutely I think when you look at the.

Steven A. Cutler: The component parts of the guidance.

Steven A. Cutler: What you see is that you know circa $150 million of headwind from from from Covid.

Steven A. Cutler: And also we talked to the fact that whereas in a bit of a headwind on the FX. There are plenty of areas. So I think that the revised $100 million decrease does show good strength.

Speaker Change #224: Outside of those elements uncertainty good elements of growth there as a start.

Brendan: Sure.

Speaker Change #214: Thank you.

Speaker Change #225: We will take our next question.

Speaker Change #227: Your next question comes from the line of Michael <unk> from Bank of America. Please go ahead. Your line is open.

Michael Leonidovich Ryskin: Great. Thanks for taking the question guys I want to focus on the on the margin rate what you said.

Speaker Change #218: Progress in <unk>, and you're raising the guide for the year it looks like Youre guiding to roughly 22% EBITDA margin in the second half just to get to that full year number.

Speaker Change #216: So just wanted to against that a little bit further you called out project execution cost controls efficiencies things like that but just curious if you could go into that a little bit deeper.

Speaker Change #216: Do you expect those to continue going forward and I'm, just asking that in the context of <unk>.

Speaker Change #217: The analyst day, just a couple of months ago, you talked about $22 five.

Speaker Change #216: Percentage for 2027 so.

Speaker Change #221: Youre already hitting 22 in the second half of the year, just curious about the sustainability of that and how we should think about that jumping off point. Thanks.

Brendan: Yes, Mark let me give you some high level thoughts on that and then I'll have been Brendan jumping on a little more of the detailed overall I'm really pleased with the way the margins.

Brendan: Continue to progress and expand we've done a number of numbers and it's not just in the sort of SG&A area. It's across the gross margin. So I think we're up 30 bps on a year.

Brendan: In gross margin due to good strong execution.

Speaker Change #216: From our team and I'm really proud of the way the teams delivered on the on the work we have.

Speaker Change #216: They're very efficient and enables us to be very aggressive in.

Speaker Change #216: On the money when we bid on these more strategic partnerships with the pricing environment is getting challenging in some of those areas, but we.

Speaker Change #216: We have a lot of confidence in our ability to deliver margins will deliver work above the theoretical margins that we bid on.

Speaker Change #216: Yes, we have a good strong execution and that's helping us on the on the gross margin line on the SG&A side as I said before we have a very very good global business services team.

Speaker Change #232: It continues to challenge itself with respect to know where they are located.

Speaker Change #216: Automation <unk> team have done a great job in moving that forward as you can see on the head count.

Speaker Change #216: We're pretty much flat over the year and yet we've been able to grow the business. So I think that shows you that we are focused on cost, but we're focused on getting more efficient and that's important because of the some of the challenges that.

Speaker Change #216: Then we get as we said the site compete for these strategic partnerships. So overall.

Speaker Change #216: We're up I think 80 bps on the on the EBITDA number and that's a combination of both.

Speaker Change #216: And I, certainly see us being able to.

Speaker Change #216: You can't keep doing that you, obviously got some limits to that but we're challenging those limits I think is that our.

Speaker Change #220: My former boss used to say every ceiling becomes a floor and.

Speaker Change #220: That's the way we're approaching it Brendan maybe on a more specific basis, you can give us a few thoughts.

Brendan: Yes, no I think maybe.

Brendan: That's all correct I think Michael to your question.

Brendan: 22% the second half just to give a guide on that base. It is broadly correct.

Speaker Change #222: Well. So obviously, we're looking for good margin expansion is as Steve said, that's going to come from both you know vote, but all elements of the business is cross control right across the organization. So we expect to see gross margin expansion in the second half and continued really really good cost control and our SG&A and that should help us drive up to that overall position for 'twenty, one seven for the full year.

Brendan: But certainly.

Brendan: In the range of 20 twos in the second half.

Speaker Change #229: Thank you.

Speaker Change #219: We will take our next question.

Speaker Change #245: And your next question comes from the line of Eric Coldwell from Baird. Please go ahead. Your line is open.

Eric White Coldwell: Thank you good afternoon.

Eric White Coldwell: So first one it's probably a bit of a nuanced question, but these COVID-19 delays.

Eric White Coldwell: Is that part of the equation on the EBITDA margin increase because those programs at least historically typically came with higher pass throughs. So you'll have.

Speaker Change #240: Perhaps a less negative mix from that revenue headwind.

Eric White Coldwell: Eric It's Brendan here, Yes, I think that's absolutely correct.

Speaker Change #261: As we went in the second half of the year and as we were thinking about our forecast and our guidance for the start of the year, we were expecting those those programs to hit in the second half predominantly there obviously as we talked about majority of what you're going to be delayed out into the at the very end of this year. It's 225 still good works they'll get done but just delayed.

Speaker Change #228: That certainly will have a positive gross margin impact as we continue to ramp up other parts of our business that we were expecting and as we talked about are coming through as well as we go into second half of the year. So yes, I do think that'll have a positive gross margin mix effect.

Speaker Change #223: Thank you and then on.

Speaker Change #233: On the DSO, you made really nice progress through 2023 with sequential improvements now.

Speaker Change #223: Now, it's ticked back up into the last year average range here over the last couple of quarters.

Speaker Change #230: You mentioned.

Speaker Change #230: A.

Speaker Change #260: It was either a more competitive environment or a continuation of a more competitive environment and then.

Speaker Change #242: I just wanted to clarify which is it is it is it.

Speaker Change #226: The competitive environment continues, but youre getting more mix from larger apartment that are traditionally more competitive or.

Speaker Change #234: Or asking for more I should say.

Speaker Change #246: Or has has it actually.

Speaker Change #243: Is the pressure to delay payments actually increased.

Brendan: Well, let me I'll try that one from a high level and then again Brendan can jump in Eric certainly on the pricing environment I do think it has ramped up a little bit in the last.

Brendan: I want to say a few months even in maybe that's.

Brendan: You tend to get involved in some of these more strategic meetings and I'm.

Brendan: I am aware of some of the requests in the asks.

Brendan: That larger pharma partners are looking for particularly for these more strategic relationships.

Speaker Change #241: When they go to commit themselves to a three to five year type of relationship. They are looking for the best possible rights, they can get and it gets pretty hairy.

Speaker Change #234: At times.

Speaker Change #234: And there are one or two of our competitors who are willing to entertain some there ISI affiliate unconventional sort of rates, we're not going there and I think that's not that's not the whole market, but there are one or two out there who.

Speaker Change #234: Who are moving in that direction and I think our customers can see through a lot of that got it.

Speaker Change #234: So it does present something of a challenge and as I said before the previous question I feel confident that our delivery and our execution can manage.

Speaker Change #234: Any challenges we have on that top line, because we are able to typically deliver a couple of hundred to 400 bps ahead of what we usually propose only.

Speaker Change #236: <unk> tended to talk on a little bit more on the on the DSO side of things.

Speaker Change #236: Thanks, Dave Yeah, Eric on unjust unknown I think there is.

Eric White Coldwell: Two two really salient points to note here first off obviously, we've been very successful in our large pharma group and we've seen probably more expansion of our business. So certainly the mix of our customer base.

Eric White Coldwell: Is that larger proportions or any of the revenues that come from them and consequently, the billing of the DSO is probably push more towards customers.

Speaker Change #231: Who do four shows on credit terms you know there's no question about that that mix is one piece I would say in terms of the competitiveness in terms of DSO and credit terms I would say that internally really more internally is from the pharma companies themselves as we know.

Speaker Change #239: First question was about.

Speaker Change #231: The implications of I array in the mix of call. It pharma companies are very focused on maintaining their cash balances and some of them have a specific issues, where they really need to do that in 'twenty born into 25. So I think the push on this from a credit terms perspective has been much more driven rather than by competition between zeros, but actually from the actual.

Speaker Change #231: Pharma company based themselves.

Speaker Change #231: And the folks that they're working with to manage their cost base and their R&D spend as well as our cash balances over the next couple of years.

Speaker Change #235: If I could go back to Steve's response on the pricing competitiveness.

Speaker Change #244: We heard earlier.

Speaker Change #252: The weak from your competitor that is much more biotech focused that they.

Speaker Change #235: They felt like perhaps if anything maybe the pricing competitive competitiveness, Scott a little a little easier in recent months that it was worse.

Speaker Change #238: A few.

Speaker Change #238: A couple of quarters ago and before.

Speaker Change #238: Your mix is obviously a bit more skewed or balanced, but skewed more to big pharma and that competitor.

Speaker Change #237: Is this a is this a nuance on pricing big farmers are youre seeing big farmers get a bit more competitive, particularly in strategic deals are you seeing the same thing in your smallest biotech base or could perhaps you align with your competitors' comments that maybe that cohort given the funding and the better motors is a little less.

Speaker Change #237: Focused on price today than it was a few quarters ago.

Speaker Change #237: Yes.

Rick: Rick I think you've characterized it very well that's exactly the way. We said, we don't we're not seeing the sort of pricing discussions and pricing pressure that we see in the biotech space as we do in the large pharma space, but it's kind of the way. It's always been when you have these large strategic partnerships three to five years hundreds of millions of dollars annually.

Rick: They are looking and they tend to negotiate these upfront and we'll wind up in.

Speaker Change #253: And do the beauty parade.

Speaker Change #253: As you would expect they're looking for optimal terms Brandon referenced in terms of credit credit terms pricing.

Brandon: And all of that sort of stuff and so it is it is a very competitive process because once you're in there.

Speaker Change #259: Youre competing with one other or maybe two others. That's typically the way it goes and I expect that on the other hand is as you rightly said in the biotech space.

Speaker Change #253: Our competitors that are pretty well as well I think the pricing, while it's always competitive and we compete with them and others.

Speaker Change #253: It's not as quite as intense because you tend to be one off projects.

Speaker Change #237: One program on trial, maybe there is some follow on if you've got other indications to develop but it's a it's a different type of environment and I think one that <unk>.

Speaker Change #237: Blends itself too.

Speaker Change #237: A slightly different outcome in terms of pricing although of course, the volume is not there.

Speaker Change #237: Okay.

Speaker Change #237: Thank you.

Speaker Change #249: We will take our next question.

Speaker Change #255: Your next question comes from the line of Fleet <unk> got from Barclays. Please go ahead. Your line is open.

Speaker Change #248: Alright, thanks, guys.

Speaker Change #248: Scott I wanted to dig in on the enrollment delays.

Fleet: And Youre talking about how they are not canceled and they're coming back. So can you give us a sense of the timing of how we should think about those kind of rolling back on.

Speaker Change #250: And then more high level as like the delays were they caused more from.

Speaker Change #247: You lacking those functions and having to subcontract out or partner with somebody else and then.

Speaker Change #257: Would those issue has been rectified if you guys had those functions internally.

Speaker Change #256: Let me let me take the second part of your question first.

Speaker Change #258: No no. The advice we were looking for the regulatory advisors was really from the agencies in terms of the variance.

Speaker Change #258: Needed to be in the comparator. So that was it was very specifically with the agency. It wasn't something that we were able to provide we couldn't we could've obviously at our opinion that the customer was looking for the agency advised so it wasn't anything that we didn't have.