INC Research Reports Third Quarter 2015 Results

October 29, 2015

Highlights

  • Book-to-bill of 1.4x for the third quarter of 2015 and 1.3x for each of the nine and twelve month periods ended September 30, 2015.
  • Net new business awards of $327.7 million and $879.1 million for the three and nine months ended September 30, 2015, respectively.
  • Adjusted net service revenue growth of 15.4% and 14.7% for the three and nine months ended September 30, 2015, respectively.
  • Adjusted diluted earnings per share growth of 152.2% and 160.7% to $0.58 and $1.46 for the three and nine months ended September 30, 2015, respectively.
  • GAAP diluted earnings per share of $0.64 and $1.42 for the three and nine months ended September 30, 2015, respectively.
  • Increased full year net service revenue guidance to $910 million to $914 million and adjusted diluted EPS guidance to $1.91 to $1.97.

RALEIGH, NC, Oct. 29, 2015 (GLOBE NEWSWIRE) -- INC Research Holdings, Inc. (Nasdaq:INCR), a leading global Phase I to Phase IV contract research organization, today reported financial results for the third quarter and year-to-date periods ended September 30, 2015.

"INC Research delivered another consecutive quarter of record strong results," stated Chief Executive Officer Jamie Macdonald.  "These results further underscore the success of our approach in leveraging therapeutically-aligned teams, our proven Trusted Process clinical trial methodology and best-in-class site relationships to deliver unmatched Phase I-IV global clinical development programs for our customers. I am extremely proud of our employees worldwide whose ‘Can do, I own it’ mindset and unwavering commitment to all of our stakeholders make these results and INC’s continued success possible.  In a robust market and with strong growth prospects, we are confident in the future outlook for the Company and as a result are increasing our earnings expectations for full-year 2015."

Third Quarter 2015 Results

Adjusted net service revenue for the three months ended September 30, 2015 increased by 15.4% to $234.5 million, compared to adjusted net service revenue of $203.3 million for the three months ended September 30, 2014.  Adjusted net service revenue for the nine months ended September 30, 2015 increased by 14.7% to $673.4 million, compared to adjusted net service revenue of $587.0 million for the nine months ended September 30, 2014.  Adjusted net service revenue for the three and nine months ended September 30, 2014 excludes an estimated $4.5 million and $9.0 million, respectively, in net service revenue from higher-than-normal contract change order activity that the Company believes is not representative of ongoing operations.  Adjusted net service revenue growth during both the third quarter and first nine months of 2015 was primarily driven by continued strong awards over the last two years, a lower cancellation rate of previously awarded business and a positive revenue mix.  In 2015, revenue grew across all therapeutic areas and has been particularly strong in the central nervous system, oncology and other complex therapeutic areas.  During the three and nine months ended September 30, 2015, fluctuations in foreign currency exchange rates resulted in an unfavorable impact of $10.3 million and $31.9 million, respectively, on net service revenue compared to the same periods in the prior year.    

Income from operations for the three months ended September 30, 2015 increased 95.0% to $44.3 million, compared to $22.7 million for the three months ended September 30, 2014.  Income from operations for the nine months ended September 30, 2015 increased 149.3% to $112.7 million, compared to $45.2 million for the nine months ended September 30, 2014.  Operating margins for the three and nine months ended September 30, 2015 were 18.9% and 16.7%, respectively, compared to 10.9% and 7.6% for the same periods in the prior year.

The Company's income from operations includes certain expenses and transactions that the Company believes are not representative of its core operations.  Excluding these items, adjusted income from operations was $56.0 million for the three months ended September 30, 2015, compared to $32.1 million for the three months ended September 30, 2014, representing growth of 74.4%.  Adjusted income from operations was $151.2 million for the nine months ended September 30, 2015, compared to $88.3 million for the nine months ended September 30, 2014, representing growth of 71.3%.  Adjusted operating margin for the three and nine months ended September 30, 2015, was 23.9% and 22.5%, respectively, compared to 15.8% and 15.0% for the same periods in 2014.

The Company reported net income for the three months ended September 30, 2015 of $37.8 million, resulting in diluted earnings per share of $0.64, compared to net income of $12.4 million, or $0.24 per diluted share, for the three months ended September 30, 2014.  Net income for the nine months ended September 30, 2015 of $86.4 million, resulted in diluted earnings per share of $1.42, compared to net income of $25.9 million, or $0.50 per diluted share, for the nine months ended September 30, 2014. 

Adjusted net income for the three months ended September 30, 2015 was $33.9 million, or $0.58 per diluted share, compared to $12.1 million, or $0.23 per diluted share, for the same period in the prior year.  Adjusted net income for the nine months ended September 30, 2015 was $88.8 million, or $1.46 per diluted share, compared to $29.4 million, or $0.56 per diluted share, for the same period in the prior year. 

Adjusted EBITDA for the three months ended September 30, 2015 increased 63.8% to $60.3 million, up from $36.8 million for the three months ended September 30, 2014.  Adjusted EBITDA for the nine months ended September 30, 2015 increased 57.0% to $164.8 million, up from $104.9 million for the nine months ended September 30, 2014.  For the three and nine months ended September 30, 2015, adjusted EBITDA margins increased to 25.7% and 24.5%, respectively, from 18.1% and 17.9%, for the three and nine months ended September 30, 2014, respectively.

Important disclosures about and reconciliations of non-GAAP measures, including adjusted net service revenue, adjusted income from operations, adjusted operating margin, adjusted net income and adjusted diluted earnings per share,  EBITDA and adjusted EBITDA, to the corresponding GAAP measures, are provided below and attached to this press release.

New Business Awards and Backlog

Backlog grew by 17.3% to $1.8 billion as of September 30, 2015, as compared to $1.5 billion as of September 30, 2014.  For the three, nine and twelve months ended September 30, 2015, fluctuations in foreign currency exchange rates resulted in an unfavorable impact on our September 30, 2015 backlog in the amount of $3.1 million, $29.0 million and $48.1 million, respectively, primarily due to the weakening of the Euro and British Pound against the U.S. dollar.  Net new business awards were $327.7 million, representing a book-to-bill ratio of 1.4x, for the three months ended September 30, 2015 as compared to $249.3 million for the three months ended September 30, 2014.  Net new business awards were $879.1 million, representing a book-to-bill ratio of 1.3x, for the nine months ended September 30, 2015 as compared to $633.5 million for the nine months ended September 30, 2014.

Business Outlook

The Company is updating its 2015 full-year guidance as outlined in the following table.  The guidance takes into account a number of factors, including current foreign currency exchange rates, expected tax rates, and the Company’s overall outlook. 

  Guidance Issued   Guidance Issued
  10/29/2015   7/30/2015
  Low   High   Low   High
Net service revenue $910 million   $914 million   $900 million   $910 million
GAAP diluted EPS(1) $ 1.84     $ 1.93     $ 1.44     $ 1.60  
Adjusted diluted EPS(1) $ 1.91     $ 1.97     $ 1.69     $ 1.80  

(1) Guidance includes one-time benefits of $7.7 million ($4.9 million net of tax), representing approximately $0.08 per share, realized during the nine months ended September 30, 2015.

Additionally, the Company maintains its long-term targets of 10% - 12% Net service revenue growth, 13% - 15% Adjusted EBITDA growth, and up to 20% Adjusted diluted EPS growth.

Important disclosures about and reconciliations of non-GAAP measures, including adjusted net income and diluted adjusted earnings per share to the corresponding GAAP measures are provided below and attached to this press release.

Webcast and Conference Call Details

INC Research will host a conference call at 8:00 a.m. EDT on October 29, 2015, to discuss its third quarter 2015 financial results.  The live webcast will be available in listen-only mode on the Events section of the Company's Investor Relations website at investor.incresearch.com.  To participate via phone, please dial +1 (877) 930-8058 within the United States or +1 (253) 336-7551 outside the United States, approximately 15 minutes before the scheduled start of the call.  The conference ID for the call is 60130163.

An archived replay of the conference call will be available online at investor.incresearch.com after 1:00 p.m. EDT on October 29, 2015.  In addition, an audio replay will be available for one week following the call and will be accessible by dialing +1 (855) 859-2056 within the United States or +1 (404) 537-3406 outside the United States.  The audio replay ID is 60130163.

About INC Research

INC Research (Nasdaq:INCR) is a leading global contract research organization ("CRO") providing the full range of Phase I to Phase IV clinical development services for the biopharmaceutical and medical device industries.  Leveraging the breadth of our service offerings and the depth of our therapeutic expertise across multiple patient populations, INC Research connects customers, clinical research sites and patients to accelerate the delivery of new medicines to market.  The Company was ranked “Top CRO to Work With” among large global CROs in the 2015 CenterWatch Global Investigative Site Relationship SurveyINC Research is headquartered in Raleigh, NC, with operations across six continents and experience spanning more than 100 countries.  For more information, please visit www.incresearch.com.

Forward-Looking Statements

Except for historical information, all of the statements, expectations, and assumptions contained in this press release, including our updated 2015 guidance and long-term targets, are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995.  Actual results might differ materially from those explicit or implicit in the forward-looking statements.  Important factors that could cause actual results to differ materially include, but are not limited to: fluctuations in our financial results; our ability to maintain or generate new business awards; our backlog not being indicative of future revenues and our ability to realize the anticipated future revenue reflected in our backlog; our ability to adequately price our contracts and not overrun cost estimates; our customer or therapeutic area concentration; international economic, political and other risks; our ability to increase our market share, grow our business and execute our growth strategies; and the other risk factors set forth in our Form 10-K for the year ended December 31, 2014, Form 10-Q for the quarter ended March 31, 2015 and other SEC filings, copies of which are available free of charge on our website at investor.incresearch.comINC Research assumes no obligation and does not intend to update these forward-looking statements, except as required by law.

Use of Non-GAAP Financial Measures

In addition to the financial measures prepared in accordance with GAAP, this press release contains certain non-GAAP financial measures, including Adjusted Net Service Revenue, Adjusted Income from Operations, Adjusted Operating Margin, Adjusted Net Income (including Adjusted Diluted Earnings per Share), EBITDA and Adjusted EBITDA.  A “non-GAAP financial measure” is generally defined as a numerical measure of a company’s financial performance that excludes or includes amounts so as to be different than the most directly comparable measure calculated and presented in accordance with GAAP in the statements of operations, balance sheets or statements of cash flows of the Company.

The Company defines Adjusted Net Service Revenue as net service revenue excluding the impact of higher-than-normal change order activity that occurred during 2014.

The Company defines Adjusted Income from Operations as income from operations excluding the impact of higher-than-normal revenue change order activity and certain expenses and transactions that the Company believes are not representative of its core operations, namely, management fees that terminated in connection with the Company's initial public offering, acquisition-related amortization, restructuring costs, transaction expenses, stock compensation expense, contingent consideration related to acquisitions, and asset impairment charges.  The Company defines Adjusted Operating Margin as adjusted income from operations as a percentage of adjusted net service revenue.

The Company defines Adjusted Net Income (including Adjusted Diluted Earnings per Share) as net income (including diluted earnings per share) excluding debt refinancing expenses, loss on extinguishment of debt, other (income) expense and the items excluded from adjusted income from operations mentioned previously.  After giving effect to these items and other unusual tax impacts during the period, the Company has also included an adjustment to its income tax rate to reflect the expected long-term income tax rate.

EBITDA represents earnings before interest, taxes, depreciation and amortization.  The Company defines Adjusted EBITDA as EBITDA excluding the impact of higher-than-normal revenue change order activity and certain expenses and transactions that the Company believes are not representative of its core operations, namely, management fees that terminated in connection with the Company's initial public offering, restructuring costs, transaction expenses, stock compensation expense, contingent consideration related to acquisitions, asset impairment charges, debt refinancing expenses, loss on extinguishment of debt and other (income) expense.  The Company presents EBITDA and Adjusted EBITDA because it believes they are useful metrics for investors as they are commonly used by investors, analysts and debt holders to measure the Company's ability to service its debt obligations, fund capital expenditures and meet working capital requirements.

Each of the non-GAAP measures noted above are used by management and the Board to evaluate the Company's core operating results as they exclude certain items whose fluctuations from period-to-period do not necessarily correspond to changes in the core operations of the business.  Adjusted Net Service Revenue, Adjusted Income from Operations, Adjusted Operating Margin, and Adjusted Net Income (including Adjusted Diluted Earnings per Share) are used by management and the Board to assess its business, as well as by investors and analysts, to measure the Company's performance.  Adjusted EBITDA is also a useful metric for management, investors and debt holders to measure the Company's ability to service its debt obligations.

Non-GAAP measures have limitations in that they do not reflect all of the amounts associated with the Company's results of operations as determined in accordance with GAAP.  Investors are encouraged to review the reconciliations of the non-GAAP financial measures to their most directly comparable GAAP measures included in this press release and the accompanying tables.

Investor Relations Contact:
Ronnie Speight
Vice President, Investor Relations
Phone: +1 (919) 745-2745
Email: Investor.Relations@incresearch.com

Press/Media Contact:
Lori Dorer
Senior Director, Corporate Communications
Phone: +1 (513) 345-1685
Email: Corporate.Communications@incresearch.com


 

INC Research Holdings, Inc. and Subsidiaries
GAAP Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
 
  Three Months Ended
September 30,
  Nine Months Ended
September 30,
  2015   2014   2015   2014
Net service revenue $ 234,494     $ 207,763     $ 673,384     $ 596,003  
Reimbursable out-of-pocket expenses 115,651     90,861     322,970     255,141  
Total revenue 350,145     298,624     996,354     851,144  
               
Costs and operating expenses:              
Direct costs 135,530     129,557     398,988     381,102  
Reimbursable out-of-pocket expenses 115,651     90,861     322,970     255,141  
Selling, general and administrative 40,429     38,185     113,354     104,332  
Restructuring and other costs (28 )   2,951     1,566     6,126  
Transaction expenses 403         922     2,042  
Asset impairment charges         3,931     17,245  
Depreciation 4,357     4,734     13,543     16,628  
Amortization 9,462     9,597     28,413     23,337  
Total operating expenses 305,804     275,885     883,687     805,953  
Income from operations 44,341     22,739     112,667     45,191  
               
Other income (expense), net:              
Interest income 28     26     157     226  
Interest expense (3,065 )   (12,929 )   (12,687 )   (41,853 )
Loss on extinguishment of debt         (9,795 )    
Other income (expense), net (1,003 )   5,136     4,138     6,177  
Total other expense, net (4,040 )   (7,767 )   (18,187 )   (35,450 )
Income before provision for income taxes 40,301     14,972     94,480     9,741  
Income tax benefit (expense) (2,487 )   (2,417 )   (8,089 )   16,569  
Net income 37,814     12,555     86,391     26,310  
Class C common stock dividends     (125 )       (375 )
Net income attributable to common stockholders $ 37,814     $ 12,430     $ 86,391     $ 25,935  
               
Earnings per share attributable to common stockholders:              
Basic $ 0.67     $ 0.24     $ 1.47     $ 0.50  
Diluted $ 0.64     $ 0.24     $ 1.42     $ 0.50  
Weighted average common shares outstanding:              
Basic 56,325     51,905     58,583     51,900  
Diluted 58,764     52,514     60,826     52,215  


INC Research Holdings, Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Measures
(in thousands)
(unaudited)
 
  Three Months Ended
September 30,
  Nine Months Ended
September 30,
  2015   2014   2015   2014
Adjusted Net Service Revenue:              
Net service revenue $ 234,494     $ 207,763     $ 673,384     $ 596,003  
Change order adjustment (a)     (4,500 )       (9,000 )
Adjusted Net Service Revenue $ 234,494     $ 203,263     $ 673,384     $ 587,003  
               
Adjusted Income from Operations:              
GAAP income from operations $ 44,341     $ 22,739     $ 112,667     $ 45,191  
Amortization (b) 9,462     9,597     28,413     23,337  
Restructuring and other costs (c) (28 )   2,951     1,566     6,126  
Transaction expenses (d) 403         922     2,042  
Asset impairment charges (e)         3,931     17,245  
Stock-based compensation (f) 1,668     881     3,288     2,305  
Contingent consideration treated as compensation expense (g) 114     285     446     643  
Monitoring and advisory fees (h)     137         420  
Change order adjustment (a)     (4,500 )       (9,000 )
Adjusted Income from Operations $ 55,960     $ 32,090     $ 151,233     $ 88,309  
GAAP Operating Margin 18.9 %   10.9 %   16.7 %   7.6 %
Adjusted Operating Margin 23.9 %   15.8 %   22.5 %   15.0 %
               
EBITDA and Adjusted EBITDA:              
Net income as reported $ 37,814     $ 12,555     $ 86,391     $ 26,310  
Interest expense, net 3,037     12,903     12,530     41,627  
Income tax expense (benefit) 2,487     2,417     8,089     (16,569 )
Depreciation 4,357     4,734     13,543     16,628  
Amortization (b) 9,462     9,597     28,413     23,337  
EBITDA 57,157     42,206     148,966     91,333  
Restructuring and other costs (c) (28 )   2,951     1,566     6,126  
Transaction expenses (d) 403         922     2,042  
Asset impairment charges (e)         3,931     17,245  
Stock-based compensation (f) 1,668     881     3,288     2,305  
Contingent consideration treated as compensation expense (g) 114     285     446     643  
Monitoring and advisory fees (h)     137         420  
Other (income) expense (i) 1,003     (5,136 )   (4,138 )   (6,177 )
Loss on extinguishment of debt (j)         9,795      
Change order adjustment (a)     (4,500 )       (9,000 )
Adjusted EBITDA $ 60,317     $ 36,824     $ 164,776     $ 104,937  
Adjusted EBITDA Margin 25.7 %   18.1 %   24.5 %   17.9 %


INC Research Holdings, Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Measures (Continued)
(in thousands, except per share data)
(unaudited)
 
  Three Months Ended
September 30,
  Nine Months Ended
September 30,
  2015   2014   2015   2014
Adjusted Net Income:              
Net income as reported $ 37,814     $ 12,555     $ 86,391     $ 26,310  
Amortization (b) 9,462     9,597     28,413     23,337  
Restructuring and other costs (c) (28 )   2,951     1,566     6,126  
Transaction expenses (d) 403         922     2,042  
Asset impairment charges (e)         3,931     17,245  
Stock-based compensation (f) 1,668     881     3,288     2,305  
Contingent consideration treated as compensation expense (g) 114     285     446     643  
Monitoring and advisory fees (h)     137         420  
Other (income) expense (i) 1,003     (5,136 )   (4,138 )   (6,177 )
Loss on extinguishment of debt (j)         9,795      
Change order adjustment (a)     (4,500 )       (9,000 )
Adjust income tax to normalized rate (k) (16,565 )   (4,683 )   (41,845 )   (33,842 )
Adjusted Net Income $ 33,871     $ 12,087     $ 88,769     $ 29,409  
               
Diluted weighted average common shares outstanding 58,764     52,514     60,826     52,215  
               
Adjusted Diluted EPS $ 0.58     $ 0.23     $ 1.46     $ 0.56  


(a) Net service revenue for the three and nine months ended September 30, 2014 have been adjusted by $4.5 million and $9.0 million, respectively, to remove the impact of the higher-than-normal change order activity.
(b) Represents the amortization of intangible assets primarily for customer relationships and backlog.
(c) Restructuring and other costs consist of: (i) severance costs associated with a reduction of workforce in line with the Company's expectations of future business operations, and (ii) lease obligation and termination costs in connection with abandonment and closure of redundant facilities.
(d) Represents fees associated with the Company's May and August 2015 registered secondary common stock offerings, debt placement and refinancing, and costs incurred in connection with business combinations and potential acquisitions and other corporate transactions.
(e) Represents impairment of goodwill and long-lived assets associated with the Company's Phase I Services and Global Consulting reporting units.
(f) Represents share-based compensation expense related to awards granted under equity incentive plans.
(g) Represents contingent consideration expense incurred as a result of acquisitions and accounted for as compensation expense under GAAP.
(h) Represents monitoring and advisory fees paid to affiliates of Avista Capital Partners, L.P. in the periods prior to the Company's initial public offering in November 2014, as well as reimbursements of expenses paid to affiliates of Avista Capital Partners, L.P. and affiliates of Teachers' Private Capital pursuant to the Expense Reimbursement Agreement.  These arrangements were terminated upon completion of the Company's initial public offering. 
(i) Represents other (income) expense comprised primarily of foreign exchange gains and losses.
(j) Represents loss on extinguishment of debt associated with the Company's May 2015 debt refinancing.
(k) Adjustment for the income tax effect of the non-GAAP adjustments made to arrive at adjusted net income using the estimated effective tax rate of 36% in 2015 and 37% in 2014.  In 2015 and 2014, the Company's effective tax rate has been adjusted in order to reflect the removal of the tax impact of its valuation allowances recorded against its deferred tax assets and changes in the assertion to indefinitely reinvest the undistributed earnings of foreign subsidiaries.  Historically, the Company has recorded a valuation allowance against some of its deferred tax assets, but believes that these valuation allowances cause significant fluctuations in its financial results that are not indicative of the Company's underlying financial performance.  Specifically, the majority of the Company's revenue was generated in jurisdictions in which it recognized no tax expense or benefit due to changes in this valuation allowance.  In addition, 2015 has also been adjusted for the elimination of a $2.6 million benefit from the release of a reserve for a pre-acquisition uncertain tax position associated with Kendle International, Inc., a company we acquired in July 2011.


 

INC Research Holdings, Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Full-Year 2015 Guidance
(in millions, except per share data)
(unaudited)
 
  Adjusted Net Income   Adjusted Diluted
Earnings Per Share
  Low   High   Low   High
Net income and diluted earnings per share $ 111.0     $ 116.0     $ 1.84     $ 1.93  
Adjustments:              
Amortization (a)   37.9       37.9          
Stock-based compensation expense (a)   5.2       5.2          
Contingent consideration treated as compensation expense (a)   0.5       0.5          
Transaction expenses (a)   1.4       1.4          
Restructuring expenses (a)   2.6       2.6          
Asset impairment charges (a)   3.9       3.9          
Debt extinguishment costs (a)   9.8       9.8          
Other (a)   (3.9 )     (4.1 )        
Income tax effect of above adjustments (b)   (53.4 )     (54.7 )        
Adjusted net income and adjusted diluted earnings per share $ 115.0     $ 118.5     $ 1.91     $ 1.97  


(a) Amounts are estimates with an estimated range of +/- 5% and are presented gross without the benefit of income tax reduction.
(b) Income tax expense is calculated and the adjustments are tax-affected at an approximate rate of 36%, which is the midpoint of our range for the expected income tax rate of 35% to 37%.  This adjustment also excludes the impact of the valuation allowances recorded against our deferred tax assets and other unusual tax impacts during the period.  Historically, the Company recorded a valuation allowance against some of its deferred tax assets, but believes that these valuation allowances cause significant fluctuations in its financial results that are not indicative of the Company's underlying financial performance.


INC Research Holdings, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands, except share data)
(unaudited)
 
  September 30, 2015   December 31, 2014
ASSETS      
Current assets:      
Cash and cash equivalents $ 136,091     $ 126,453  
Restricted cash 431     505  
Accounts receivable:      
Billed, net 176,952     130,270  
Unbilled 153,795     118,101  
Current portion of deferred income taxes 16,610     16,177  
Prepaid expenses and other current assets 37,423     35,393  
Total current assets 521,302     426,899  
Property and equipment, net 39,734     43,725  
Goodwill 552,838     556,863  
Intangible assets, net 161,755     190,359  
Deferred income taxes, less current portion 15,910     15,665  
Other long-term assets 11,502     11,576  
Total assets $ 1,303,041     $ 1,245,087  
LIABILITIES AND STOCKHOLDERS' EQUITY      
Current liabilities:      
Accounts payable $ 14,348     $ 16,548  
Accrued liabilities 110,505     111,655  
Deferred revenue 337,279     246,902  
Current portion of long-term debt     4,250  
Current portion of capital lease obligations 53     441  
Total current liabilities 462,185     379,796  
Long-term debt, less current portion 475,000     415,277  
Capital lease obligations, less current portion     11  
Deferred income taxes 27,826     30,368  
Other long-term liabilities 20,177     27,426  
Total liabilities 985,188     852,878  
Commitments and contingencies      
Stockholders' equity:      
Preferred stock, $0.01 par value; 30,000,000 authorized, 0 shares issued and outstanding at September 30, 2015 and December 31, 2014, respectively      
Common stock, $0.01 par value; 600,000,000 shares authorized; 56,483,381 and 61,233,850 shares issued and outstanding at September 30, 2015 and December 31, 2014, respectively 565     612  
Additional paid-in-capital 584,002     634,946  
Accumulated other comprehensive loss (38,474 )   (26,200 )
Accumulated deficit (228,240 )   (217,149 )
Total stockholders' equity 317,853     392,209  
Total liabilities and stockholders' equity $ 1,303,041     $ 1,245,087  



INC Research Holdings, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
 
  Nine Months Ended
September 30,
  2015   2014
Operating activities      
Net income $ 86,391     $ 26,310  
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization 41,956     39,965  
Loss on extinguishment of debt 9,795      
Stock repurchase costs 922      
Amortization of capitalized loan fees 1,079     4,818  
Stock-based compensation 3,288     2,305  
Provision (recovery) for doubtful accounts (440 )   2,811  
Deferred income taxes 112     (22,233 )
Foreign currency adjustments (2,302 )   (10,697 )
Asset impairment charges 3,931     17,245  
Other adjustments (152 )   388  
Changes in operating assets and liabilities:      
Accounts receivable billed and unbilled (84,107 )   (11,373 )
Accounts payable and accrued liabilities (2,085 )   18,546  
Deferred revenue 93,753     51,338  
Other assets and liabilities (11,019 )   (2,095 )
Net cash provided by operating activities 141,122     117,328  
Investing activities      
Acquisition of business, net of cash acquired     (2,302 )
Purchase of property and equipment (11,565 )   (17,739 )
Net cash used in investing activities (11,565 )   (20,041 )
Financing activities      
Payments on long-term debt (475,001 )   (5,453 )
Proceeds from issuance of long-term debt 525,000      
Payments of debt financing costs (4,987 )    
Payments related to business combinations (973 )    
Principal payments toward capital lease obligations (398 )   (2,455 )
Payments of stock repurchase costs (922 )    
Payments for repurchase of common stock (150,000 )   (38 )
Payments related to tax withholding for stock-based compensation (3,161 )    
Proceeds from the exercise of stock options 1,058     108  
Dividends paid     (375 )
Net cash used in financing activities (109,384 )   (8,213 )
Effect of exchange rate changes on cash and cash equivalents (10,535 )   (243 )
Net change in cash and cash equivalents 9,638     88,831  
Cash and cash equivalents at the beginning of the period 126,453     96,972  
Cash and cash equivalents at the end of the period $ 136,091     $ 185,803  

 

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