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ICON Reports Fourth Quarter and Full Year 2014 Results and Issues 2015 Earnings Guidance

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ICON plc (NASDAQ:ICLR) , a global provider of drug development solutions and services to the pharmaceutical, biotechnology and medical device industries, today reported its financial results for the fourth quarter and full year ended December 31, 2014.

In the fourth quarter net revenue grew 13.0% year on year to $390.1 million from $345.2 million in the same quarter last year.

Income from operations before non-recurring charges was $60.4 million or 15.5% of revenue, compared to $38.7 million or 11.2% for the same quarter last year.

Net income before non-recurring charges was $54 million or 87 cents per share on a diluted basis, compared with $33.5 million or 53 cents per share for the same quarter last year.

Full year net revenues for 2014 increased 12.5% to $1,503 million from $1,336 million in 2013.

Full year income from operations before non-recurring charges was $211.1 million or 14.0% of revenue, compared with income from operations before non-recurring charges of $130.2 million or 9.7% of revenue in the previous year.

On a US GAAP basis, income from operations was $202.4 million or 13.5% compared with $121.2 million or 9.1% in the prior year.

Full year net income before non-recurring charges for 2014 was $181.3 million or $2.87 per share on a diluted basis, compared with net income before non-recurring charges of $110 million or $1.77 per share on a diluted basis last year.

On a US GAAP basis net income for the full year was $172.5 million, compared to $102.8 million last year. Net margin for the full year 2014 was 11.5% of revenue, up from 7.7% in 2013. Earnings per share on a US GAAP basis for 2014 was $2.73 per share compared with $1.65 in 2013.

Full year 2015 revenue guidance is in the range of $1,610 – $1,675 million, representing growth of 7-11%. This includes the recently announced acquisition of MediMedia Pharma Solutions; on a constant currency organic basis revenue is expected to grow by 6-10%. Earnings per share guidance is in the range of $3.45 – $3.60, an increase of 20-25%.

Days sales outstanding, comprising accounts receivable and unbilled revenue less payments on account, were 40 days at December 31, 2014, compared with 32 days at the end of December 2013.

For the quarter ended December 31, 2014, cash generated from operating activities was $75.2 million and capital expenditure was $10.2 million. For the full year 2014, cash flow from operating activities was $170 million and capital expenditure was $32.8 million. In addition, we completed $107 million of share repurchases during the quarter and in total $140 million for the full year. Consequently the company’s net cash amounted to $216 million at December 31, 2014, compared to net cash of $321 million at December 31, 2013.

CEO Ciaran Murray commented, “In 2014 our excellence in execution, along with our market leading innovative solutions enabled our customers to enhance the productivity of their development programmes and further consolidated our position as a leader in the drug development industry. This has enabled us to book $1.8 billion of new business, to grow our closing backlog by 16% to $3.6 billion and drive revenues by 13% to over $1.5 billion. By continuing to improve our operational performance and expand our margins we increased EPS by 62% to $2.87. For 2015 we are guiding revenue to be in the range of $1,610 – 1,675 million, an increase of 7-11%, and earnings to be in the range $3.45- $3.60, an increase of 20-25%.”

In addition to the financial measures prepared in accordance with generally accepted accounting principles (GAAP), this press release contains certain non-GAAP financial measures, including non-GAAP operating and net income and non-GAAP diluted earnings per share. While non-GAAP financial measures are not superior to or a substitute for the comparable GAAP measures, ICON believes certain non-GAAP information is useful to investors for historical comparison purposes.

ICON will hold its fourth quarter conference call today, February 25, 2015 at 9:00 EST [14:00 Ireland & UK]. This call and linked slide presentation can be accessed live from our website at http://investor.iconplc.com. A recording will also be available on the website for 90 days following the call. In addition, a calendar of company events, including upcoming conference presentations, is available on our website, under “Investors”. This calendar will be updated regularly.

This press release contains forward-looking statements. These statements are based on management’s current expectations and information currently available, including current economic and industry conditions. These statements are not guarantees of future performance or actual results, and actual results, developments and business decisions may differ from those stated in this press release. The forward-looking statements are subject to future events, risks, uncertainties and other factors that could cause actual results to differ materially from those projected in the statements, including, but not limited to, the ability to enter into new contracts, maintain client relationships, manage the opening of new offices and offering of new services, the integration of new business mergers and acquisitions, as well as economic and global market conditions and other risks and uncertainties detailed from time to time in SEC reports filed by ICON, all of which are difficult to predict and some of which are beyond our control. For these reasons, you should not place undue reliance on these forward-looking statements when making investment decisions. The word “expected” and variations of such words and similar expressions are intended to identify forward-looking statements. Forward-looking statements are only as of the date they are made and we do not undertake any obligation to update publicly any forward-looking statement, either as a result of new information, future events or otherwise. More information about the risks and uncertainties relating to these forward-looking statements may be found in SEC reports filed by ICON, including its Form 20-F, F-1, S-8 and F-3, which are available on the SEC’s website at http://www.sec.gov.

ICON plc is a global provider of drug development solutions and services to the pharmaceutical, biotechnology and medical device industries. The company specialises in the strategic development, management and analysis of programs that support clinical development – from compound selection to Phase I-IV clinical studies. With headquarters in Dublin, Ireland, ICON currently, operates from 83 locations in 38 countries and has approximately 10,600 employees. Further information is available at www.iconplc.com.

ICON plc
Consolidated Income Statements (Unaudited)
(Before restructuring and other items)
Three and Twelve Months ended December 31, 2014 and December 31, 2013
(Dollars, in thousands, except share and per share data)
Three Months Ended Twelve Months Ended
December 31, December 31, December 31, December 31,
2014 2013 2014 2013
Revenue:
Gross revenue 528,211 450,062 2,030,286 1,784,345
Reimbursable expenses (138,138) (104,821) (526,970) (448,287)
Net revenue 390,073 345,241 1,503,316 1,336,058
Costs and expenses:
Direct costs 229,876 215,326 903,167 845,413
Selling, general and administrative expense 85,425 79,241 336,461 313,931
Depreciation and amortization 14,335 11,963 52,542 46,514
Total costs and expenses 329,636 306,530 1,292,170 1,208,858
Income from operations 60,437 38,711 211,146 130,200
Net interest expense 204 39 366 (302)
Income before provision for income taxes 60,641 38,750 211,512 129,898
Provision for income taxes (6,671) (5,270) (30,248) (19,902)
Net income 53,970 33,480 181,264 109,996
Net income per Ordinary Share:
Basic 89c 54c $2.95 $1.81
Diluted 87c 53c $2.87 $1.77
Weighted average number of Ordinary Shares outstanding:
Basic 60,394,465 61,431,281 61,496,115 60,907,274
Diluted 61,908,135 62,828,079 63,131,417 62,253,251
ICON plc
Consolidated Income Statements (Unaudited)
(US GAAP)
Three and Twelve Months ended December 31, 2014 and December 31, 2013
(Dollars, in thousands, except share and per share data)
Three Months Ended Twelve Months Ended
December 31, December 31, December 31, December 31,
2014 2013 2014 2013
Revenue:
Gross revenue 528,211 450,062 2,030,286 1,784,345
Reimbursable expenses (138,138) (104,821) (526,970) (448,287)
Net revenue 390,073 345,241 1,503,316 1,336,058
Costs and expenses:
Direct costs 229,876 215,326 903,167 845,413
Selling, general and administrative expense 85,425 79,241 336,461 313,931
Depreciation and amortization 14,335 11,963 52,542 46,514
Restructuring and other items 8,796 8,796 9,033
Total costs and expenses 338,432 306,530 1,300,966 1,214,891
Income from operations 51,641 38,711 202,350 121,167
Net interest expense 204 39 366 (302)
Income before provision for income taxes 51,845 38,750 202,716 120,865
Provision for income taxes (6,671) (5,270) (30,248) (18,053)
Net income 45,174 33,480 172,468 102,812
Net income per Ordinary Share:
Basic 74c 54c $2.80 $1.69
Diluted 73c 53c $2.73 $1.65
Weighted average number of Ordinary Shares outstanding:
Basic 60,394,465 61,431,281 61,496,115 60,907,274
Diluted 61,908,135 62,828,079 63,131,417 62,253,251
ICON plc
Summary Balance Sheet Data
December 31, 2014 and December 31, 2013

(Dollars, in thousands)

December 31, December 31,
2014 2013
(Audited) (Audited)
Net cash

216,000

320,836

Accounts receivable 370,956 342,581
Unbilled revenue 146,163 113,239
Payments on account (280,097) (297,347)
Total 237,022 158,473
Working Capital 281,148 352,259
Total Assets 1,527,791 1,442,460
Shareholder’s Equity 950,206 910,579

ICON/ICLR-F

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