Simon Holmes - Vice President Investor Relations and Corporate Development Brendan Brennan - Chief Financial Officer Ciaran Murray - Chief Executive Officer and Executive Director Steve Cutler - Chief Operating Officer.

Ross Muken - Evercore ISI Timothy Evans - Wells Fargo Securities LLC John Kreger - William Blair & Co. LLC Eric Coldwell - Robert W. Baird & Company, Inc Adam Noble - Goldman Sachs & Co. David Windley - Jefferies LLC Jonathan Groberg - UBS Securities LLC Sandy Draper - SunTrust Robinson Humphrey, Inc.

Erin Wilson - Credit Suisse Securities Greg Bolan - Avondale Partners LLC Donald Hooker - KeyBanc Capital Markets, Inc Tycho Peterson - JPMorgan Securities LLC Michael Baker - Raymond James & Associates.

Good day, ladies and gentlemen, and welcome to the ICON Quarter Three Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Mr. Simon Holmes. Please, go ahead, sir..

Good day, ladies and gentlemen. Thank you, Gail. Thank you for joining us on this call covering the quarter ended September 30, 2016. Also on the call today, we have our CEO, Mr. Ciaran Murray; our CFO, Mr. Brendan Brennan; and our COO, Dr. Steve Cutler.

I would just like to note that this call is webcast, and there are slides available to download on our website to accompany today’s call. Certain statements in today’s call will be forward-looking statements.

Actual results may differ materially from those stated or implied by forward-looking statements due to risks and uncertainties associated with the Company’s business, and listeners are cautioned that forward-looking statements are not guarantees of future performance.

The Company’s filings with the Securities and Exchange Commission discuss the risks and uncertainties associated with the Company’s business. This presentation is selected non-GAAP financial measures.

For a presentation of the most directly comparable GAAP financial measures, please refer to the press release statement headed Consolidated Income Statements Unaudited U.S. GAAP.

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 purposes.

We’ll be limiting the call today to one hour and therefore, ask participants to keep their questions to one each, with an opportunity to ask one related follow-up question. I would now like to hand the call to our CFO, Mr. Brendan Brennan..

Thank you, Simon. In quarter three, we achieved gross business awards of $572 million, cancellations were $62 million resulting in net awards of $510 million and net book-to-bill of 1.21. Our total backlog of business grew by 11.8% year-on-year to circa $4.25 billion.

This include a $115 million our backlog from the ClinicalRM acquisition which closed during the quarter. Excluding this backlog grew 8.9% year-on-year. Net revenue in quarter three was $420 million. This represented year-on-year growth of 6.4% or 6.8% on a constant currency basis. On a constant dollar organic basis year-on-year revenue growth was 4.3%.

Our client concentration continued to improve in the quarter, with our top client representing 25% of revenue compared to 31% for the full-year 2015. Our top five clients represented 44% compared to 49% last year. Our top 10 represented 57% compared to 63% last year, while our top 25 clients represented 76% compared to 78% last year.

Following the acquisition of ClinicalRM we ended quarter three with close to 12,600 staff an increase of approximately 300 from the end of quarter two. Group gross margin for quarter three was 42.1% compared to 42% in quarter two and 42.6% in the comparable quarter last year.

Our global business services model continues to deliver operational efficiency and as a result SG&A in quarter three was 19.3% of revenue compared to 19.5% last quarter and 20.9% in the comparable period last year. Operating income for the quarter before non-recurring charges was $81 million, an operating margin of 19.3%.

This compared to 19% last quarter and 18.1% in the comparable quarter last year. Net interest expense for the quarter was $2.8 million the same as the previous quarter and up from $647,000 in quarter three 2015. The effective tax rate in the quarter remained unchanged at 14%.

Net income for the quarter before non-recurring charges was $67.4 million, a margin of 16%, equating to earnings per share of $1.19. This compares to earnings per share of $1.14 last quarter and $1.02 from the comparable quarter last year, an increase of 17%.

DSOs in the quarter were 50 days compared to 46 days last quarter, and 46 days in quarter three 2015. During the quarter, cash generated from operating activities was $52 million, and capital expenditure was $9.5 million. We close the acquisition of ClincialRM for initial cash consideration of $52.4 million.

As a result, at September 30, 2016, the Company had net debt of $98 million compared to net debt of $97 million at June 30, 2016, and net debt of $31 million at the end of September 2015. Also during the quarter, we incurred a $4.1 million restructuring charge as part of our 2016 restructuring plan to enhance the efficiency of our operating model.

With all that said, I would now like to hand the call over to Ciaran..

Okay. Thank you, Brendan. During the quarter, we continue to see good demand in the market as our customers continue to invest in R&D pipeline and outsource more of their development.

By executing on our strategic vision of being a CRO focused on operational excellence enabled by market leading innovation and having the right range of service capabilities, we delivered another strong quarter of business wins. The $510 million of net awards we achieved was a new record for Icon and represented a net book-to-bill of 1.21.

As a result of this, our backlog grew by 12% year-on-year. It’s particularly encouraging that not only the revenue grow by 6.4%, but revenue outside of our top account grew 15% over the same quarter last year. Consequently, our revenue concentration with the largest customer reduced to 25% in the quarter. That’s the lowest level since quarter two 2013.

We will continue to drive future revenue growth by further enhancing our service capabilities and entering new markets. As part of this strategy, we closed the clinical acquisition during the quarter.

ClinicalRM bring to Icon deep expertise and had to operate within markets for government and NGO sponsored research and they will lead Icon’s effort to further penetrate this market segment. Along side targeted M&A, we are deploying capital to return the value to shareholders through share repurchases.

Last quarter, we received approval to buyback shares of up to circa US$400 million, and since commencing the current program on October 1, we have repurchased shares worth approximately US$28 million.

Through a combination of revenue growth, operational efficiency and use of our balance sheet, we grew quarter three earnings to $1.19 which is an increase of 17% over this time last year. As we look forward to the end of the year, I want to take this opportunity to reaffirm our full-year guidance.

We expect 2016 earnings to be in the range of $4.60 to $4.80 and revenue to be in the range of US$1.665 million and US$1.680 million. You will have also seen today that we’ve announced a planned succession of executive leadership.

An important factor in Icon’s success over the past number of years has been the work we have put in to develop an industry-leading management team. This team has driven our continued progress and winning new business, growing our backlog, and diversifying our customer base.

Icon is well positioned for the future, so I feel that now is the right time for me to step in to the role of Chairman and for Steve Cutler to take over as Chief Executive Officer of the Company. This transition will be complete on March 1, 2017. Under these circumstances I’m looking at Steve and I would like to ask him to say a few words..

Thanks, Ciaran. I’m delighted to have been given the opportunity to take on the role of CEO at Icon. I’m fortunate to work with a great team of people here at Icon and we will remain focused on executing the strategy. This helped us to be successful as we continue to grow the business and enhance our position as the CRO partner of choice.

I’m very much looking forward to working with Ciaran and the rest of the Board during the transition period and beyond. Thanks..

Okay. Thank you, Steve. Before moving to our Q&A, I’d like to take this opportunity to thank the entire team at Icon. It’s their hard work and commitments everyday that delivers the results that we deliver in quarters like this. So thank you everyone and we are now ready for questions..

[Operator Instructions] We will now take our first question from Ross Muken from Evercore ISI. Please go ahead..

Good morning, gentlemen and congrats to both you Steve and Ciaran. In terms of the end market environment, obviously the book-to-bill was quite good. Could you just give us a little more color on R&D activity in general and how you’re feeling about overall sort of the non-Pfizer momentum.

I mean it seems certainly like the growth rate within maybe emerging pharma continue to be quite robust.

And so maybe just give us a little bit of feel for how you things are [indiscernible] if you seen any changes whatsoever in the end market?.

Hi, Ross. How are you? It’s Ciaran on here. We are feeling good about the end market and our funnel and some of the business opportunities is strong and our deal flow is good. We have a number of exciting and interesting conversations with potentially new accounts and the exciting accounts by doing things differently.

So I would characterize the tender of the overall market has been great healthy and very encouraging. It hasn’t fundamentally changed, but what we’ve been looking after some time there. We are seeing a pretty balanced amount of activity across the large biopharma and mid-size small emerging companies and then a kind of deal flow market that we see.

We have seen that probably over the last six to eight quarters. We kind of like the balance of our businesses broadly is about half or just over a half large pharma and the rest between the other market, so we kind of like. So that’s looking well and we are happy with that. You mentioned the momentum that non-Pfizer business, that’s been good.

I mean we have been adding accounts and brought in our customer base and booking decent awards for eight quarters now. And the nature of this work and that work was coming from new accounts across the large, medium, small.

The nature of the work was a bit slower to brought either backlog and once it was in there, because it was complex and there was a lot of new technologies and combination therapies and interesting stuff like that to strip a little bit harder if you could open and running.

Particularly like this quarter and that’s 15% growth rate outside of the top of hand we started to see the stuff that we expected to conclude. And we had a good quarter with that top customer as well.

As you know we are new DMSA in the first half of the year, so there is a lot of focus in us and I think it’s going well there, business is slowing and relationship is good and we expected it to mature, for some time now we have seen that pattern. I think we’ve seen that we’ve been able to offset any leveling off not kind with the growth side of it.

And looking at the forecast I’m comfortable that we’re probably getting close to Q3 or Q4 as you should see it’s close to the run rate on our top accounts which is encouraging as well, so that’s taken together with business wins and the backlog at the stage of the market and I think positioned us well as we look towards the future.

Anything you want to answer that Steve..

No, I’ve spoken to that quite large..

I think that’s right, I think we’ve certainly seen solid funding environment within biotech space, so that’s starting to – we’ve seen some improvements there.

Our devices – some interesting devices area and not just in large opportunities from a project bases, but also some alliance opportunities out there as well which is obviously something we’re very focused on. So all-in-all a pretty positive sort of business environment..

And maybe just Brendan quickly on the gross margin line, to us it look generally sort of what we should expect for the second half and maybe going forward.

I mean how [indiscernible] you with sort of the margin level there and confidence towards the ability to get operating leverage mainly from the SG&A line?.

Hey, Ross. We are happy with where we are at in gross margins areas at the moment, you saw it peak up a little bit a little and obviously from quarter-to-quarter and little bit up and down a little, but that 42% range is where we’re kind of happy at the moment and that’s a range where we can continue to started towards.

We obviously start again this quarter a good leverage on our cost base and that obviously popped up to 19.3 on the op margin mainly due to a good leverage from the cost base in terms of SG&A percentage.

You know something we’ve been working on for years now thinking back to the five years ago when its obviously Ciaran stepped in the rolls were in currently it was closer to 27% to 28%, you’re now up 19.3% SG&A.

So it’s an ongoing story and something we focus on every quarter, every year and there’s an area where we will look to see a benefit in the future..

Excellent. Thanks guys..

Our next question is coming from Tim Evans from Wells Fargo Securities. Please go ahead..

Thank you. Ciaran or Brendan either one, it looks to me that on a year-to-date basis your working capital investment has been maybe something like $150 million drag on your total free cash flow. That would be an unprecedently large number for you guys.

Can you just talk about what’s going on there perhaps there’s multiple factors or just like to get a better sense for that and then like what do you expect for working capital needs going forward?.

Hi, Tim. It’s Brendan here, I’ll take that one. I think listen it’s primarily in relation to our DSO management. And it’s been obviously you saw in this quarter, it going up to 50 days that’s obviously quite a move and it’s a fairly significant, everyday is a very significant chuck of dollars on an annual basis. It’s in the mid-teens in terms of impact.

So that’s been the big driver there and we’ve seen the commercial terms on contract that were negotiating.

Putting billing points later into the revenue cycle, so we have seen both the billing points getting later into the actual revenue generation and we’ve seen the actual number of days that folks are asking for from a bill debt perspective and on gating.

That puts us in a range we have a target range there about 45 to 55 days we are happy that the 50 days is in that range and I think that’s where we’ll see it going forward..

Yes, I think Tim. Actually that we see this is possibly an area of competitive advantage almost differentiation. And you know in an industry where the top CROs are always challenged to differentiate each other.

And as you know we have a very low level of success even in an environment with low cost of capital and with the only publicly quoted CRO with investment grade that from recent Standard & Poor’s.

So it gives us an opportunity when we sit down and when we do deals with the customers to look at exactly what we want to do with commercial terms and times like this if it means that DSOs at 50 days rather than 45, we are comfortable enough for that. But as Brendan says I think we are probably in the middle of our expected range..

Okay. And then just to follow on the gross margin question quickly. Some of the comments you’ve made in the past have suggested that you did expect a little bit of gross margin pressure going forward that would offset some of the SG&A leverage that you would get.

How much of the SG&A leverage would you expect to actually flow through to the operating margin, is it half give us maybe just some directional sense there?.

I suppose it kind of depends on the circumstances to some extent Tim, when we’re modeling looking forward. We’re pretty much modeling around the business where we are now 42%-ish gross margin might go up a little bit if you did see the side of that on a particular quarter, that the kind of 19 in the bps and SG&A.

And what it relates as we do as we look forward again and you know its not balance between revenue and margin and growth and what you want to do with the business and if we feel there are circumstances where we are seeing pressure on gross margin are we want to take a position.

We fund that out of SG&A, so none of that will flow through that’s the bottom line and operating margin will stay around that 19% to 20% level where we’re at now or half of it will flow through.

So it’s hard to get a right precise number, but you know what I say in directional terms it’s the lever we’ll use try closing the business and I’ve been too specific.

We see a number [10 bps] outside through SG&A leverage hitting the bottom line which keeps us and that margin range of somewhere between 19% and 20% spend and exactly what we want to do with the business..

Thank you..

Our next question is coming from John Kreger from William Blair. Please go ahead..

Hi, thanks very much.

I’m not sure we’re doing the math right, but it looks like your clients two through five had some nice growth year-over-year in the quarter for the first time in several quarters? Are you starting to see growth from those accounts or is there maybe some cycling of new relationships into that that top five bucket?.

No. We’re starting to see growth there. I think what we’ve been seeing for the last number of quarters and our commentary is being around the fact that we’ve been happy with the level of business wins with our top customers you know two to five and that we’ve been happy with new relationships we’ve added.

But the initial roll has been it’s been said in the backlog a little bit longer than we would like. So I think what we’ve seen this quarter is stuff start to come through right across the range of our clients two to five and they’re performing well and broadly.

And then I don’t think that top five has changed this quarter, and I am looking at Brendan here. So there is nobody cycle new into that top five, so we’re seeing the growth from there..

Great. And Ciaran thank you. I’m sure you probably don’t want to talk too much about 2017 at this early stage.

But just curious what is your view about what sort of a reasonable normalized organic revenue growth number is for Icon at this point and its lifecycle and when you think you can achieve that given the revenue transition that you’ve been going through?.

Yes. I think I was expecting since you ask me this, John, every year on this call just [indiscernible] different ways to try and give guidance earlier than I’d like. So this is not guidance, but I will give some broad views about my view.

And I’m happy to give them because I can look at Steve and I can say whatever I want you know and I’m not the guy to worry about. The way we look at this, we’re sitting in sort of two and a half months from here. And the way we would characterize next year in terms of revenue growth initiatives oftentimes.

Our trailing book-to-bill is 1.1-ish; we’ve come off a solid quarter of 1.21 net book-to-bill, net of $510 million which was a record level of net business for us. Q2 was a record level in that business, at that time it’s $502 million.

It’s broadly based work and across our client bench, as I say, we’ve seen good wins coming through from our top accounts this quarter as we would have expected as we sort of work through the MSA stuff. So the great variable is a lot of this is complicated stuff and we’re looking forward and we’re looking at the burn rate conversion of the backlog.

But my sense on it certainly looking into Q4 should be around 10.4 again and certainly in the earlier part of the year that we can see at this stage it might go down or whatever later in the year. But for now, it’s looking pretty solid at that 10.3, 10.4 level and so look forward. So you think that was a business wins that we’ve got.

You take that with the same stuff flow through in Q3. Looking at our largest account, what I think it’s kind of approaching run rate now.

We got expected transition from that account where it matured and designed a bit, we are coming to end of the action with the quarter where we’ve one more business from that account –revenue and things look solid there.

So Q4, I should say a run rate, so and I think you take all of that together, we would be looking at revenue growing in mid to high single digits next year. I mean forex and things of the variables in that. But that’s the sense that I have offered this year.

And then combined that with our expected leverage that Tim just asked about on the SG&A, any other share buyback and using our balance sheet and I would suggest that we’d expect earnings growth to be in the low to mid double digits next year. So we think it’s setting for a decent revenue growth a little bit more and earnings growth.

And then of course, we still intend to pursue our policy of String of Pearls or bolt-on acquisitions to find new services and new things that makes more attractive in the new markets, so we expect to the extent that we’re able to forecast the timing of that and execute in that that will be incremental to anything I’ve just spoken about..

Very helpful. Thank you..

Our next question is coming from Eric Coldwell from Robert Baird. Please go ahead..

Well, personally I really like John Kreger’s questions. So I hope you keep them coming. Congrats on everything. Dr. Cutler well deserved, Ciaran congrats to you. I guess my first question really is always a tough one when the future or Chairman of the Company still sitting in the room, but Dr.

Cutler what are you going to do differently, in terms of your style, your strategy, where would you say that maybe you have a different vision or view of the world then perhaps Ciaran has had over the last five years?.

Good afternoon, Eric, good morning. Thanks for your comment. I think at this stage nothing is going to happen, that’s going to be too much different. We still have a four to five month period until the change actually happens obviously been in the organization for about five years now and I know the organization well.

I think there are still things we have to do and still opportunities we have to improve the business and to grow the business. The fundamental underlying strategy I think is sound. We want to be the best partner in the industry. We [indiscernible] efforts operationally very sound and an excellent that’s what we’re trying to do.

We look to develop our people enhance capabilities. We are a full service, prudently focused organization. Nothing in that sort of five key sort of fundamental areas was going to change, it will be more of the same, we will fine-tune a little bit here and there.

There will be some aspects, I think we have as I said some opportunities to push on a little harder and to drive the business a little more, but it’s – steady she goes, there it’s really I think the fundamental strategies work well for us really over the last five or six years.

And so Ciaran and I have been with the business and we don’t see that changing as a fundamental matter and certainly short to medium-term..

Yes. I would tend Eric, I mean it’s a long time. I mean one of our – I would say designing and characteristics in Icon and what makes it with customers and along customer relationships and the relationships we built. We are a collaborative organization and there’s also the fact that we’re kind of more [indiscernible] you again.

We don’t have so much of the [cult of the big man] and you can see in other cultures and other places. So I would say our strategy over the past five years certainly since I took over.

I certainly agree, but I certainly saw the strategy reflected that combined include what was with great management team here at Icon I should say Steve and I have worked very closely for a long time and it certainly wouldn’t have been overly influenced by anything that’s I thought it was being able.

So I don’t see a tremendous – Steve will do things his own way and that’s great and I think that – a good thing about translation I believe every organization needs frequency that are certainly regular refreshing at the top, but I think as a Company what I should see here is a smooth and orderly transition based on the side that we’ve been behaving collaboratively for long time and I’ve always taken the view that this day comes [indiscernible] in the interests of the shareholders in the company and the staffs and it’s not really about impressing, so that’s all I would add to that..

That’s great. If I could be allowed to one more question. Shifting gears a little bit. I know this is a tough one and I really don’t want to put too fine of a point on it, but we spent the last three to five years talking about one client in particular quite often. And you’ve made some comments today that you’re getting closer to a run rate.

It sounds like your book-to-bill was positive in the quarter with your biggest client and do you hitting close to a run rate here in the third or fourth quarter. To me run rate means that something in the ballpark of hundred thousand a quarter continues for an extended period of time.

To be fair that’s a lot higher than I was thinking coming out of the Investor Day back in May. So I just say for this to be an ongoing controversy into 2017, and my thinking about this correctly that something plus or minus say 5% on what you did this quarter is where you see this revenue trending over the next several quarters.

Is that a fair interpretation?.

I would still all in this quarter has to say Q4 I think I mentioned would be lower than Q3 did not significantly maybe 5% or 7% or something like that. There’s still a lot of moving parts there. So when I say, yes, we are approaching the run rate. You’re thinking about it correctly, whether that’s 95 or 93 or something like that.

I think that’s probably we are seeing it in a minute, but the great variable then and the level of business wins and very strong Q3 and it could be strong in Q4.

There’s a lot of business to these customers so that’s if we send – that’s precise and you would like it because the great variable is how much a win just in Q3 even Q4 and in Q1 and Q2 next year.

But my sense looking at it is that the business wins are approximating that 100 million mark, but I expected to be a little bit less than that and that’s where we sell the run rate somewhere in the mid-90’s..

But that’s really helpful. Again, congrats to everyone and all. I will leave the floor now. Thanks..

Thanks, Eric..

Our next question is coming from Robert Jones from Goldman Sachs. Please go ahead..

Thanks for the question. This is Adam Noble in for Bob.

Could you give us an update around the strategic partnership with IBM Watson you know understanding it’s still pretty early, but how is that being used or impacting your win rate and conversations with pharma sponsors so far?.

Yes, this is Steve Culter here. We’re using almost still building that partnership with IBM Watson I would say it had modest impact at this stage I think it’s still fairly early. We got into that whole partnership early on it was and is involved quite significantly really as we gone along.

But the fact is we’re using the partnership where we’re including, we are talking about particularly our strategic alliance partners about it. It has been helpful on - more on a tactical level, on a number of projects, but I wouldn’t say it’s making a material difference to our business right at the moment.

I think that remains to come as we go forward. We continue to fine tune and to evolve, we will see I think over the next probably 12 months that will start to really have this sort of impact little..

Gotcha. That’s super helpful. And just to sneak one more in. I know wasn’t official guidance but thinking about 2017 your comments around mid-to-high single-digit revenue growth.

Just want to confirm does that include some of the benefit from ClinicalRM or is that kind of excluding it on a more on an organic basis?.

No. That would include and in the benefit from ClinicalRM but would not include any further acquisitions that we make to..

Gotcha. Thanks..

Okay..

Our next question is from David Windley from Jefferies. Please go ahead..

Hi, good afternoon to you all and my congratulations to you on the continuity in transition. Thanks for taking the questions. I think I wanted to focus on backlog conversion rate not overly focused on that, but to you there is terms not to put too fine a point on it.

But I think you’ve talked in the last quarter or two that because the Pfizer backlog had been well established that the higher revenue kind of the running toward the 26% of full-year revenue seen a little bit more revenue come through from Pfizer was reflective of a slightly faster backlog burn rate from them which would then suggest that the rest of the book of business to perhaps of the complexity that you mentioned Ciaran has been burning off more slowly.

Should we think about those two converging and the non-Pfizer business kind of normalizing back up to a higher number if I have my math right and then how do I think about that Ciaran you said 10.4, 10.3 next year.

Could there be an upward bias to that I guess I’m just trying to figure out how the dynamics are playing out with complexity and some of the studies moving forward?.

Yes. I mean you are thinking about it in the right way Dave. In broad terms what I can say is I would not expect it to go up to answer that part of the question..

Okay..

And I think we’re happy at 10.4 might – let me say it going through a 10.3 and that’s what we can see at the moment.

Because what we’re seeing I mean you make the point that some of the Pfizer stuff was converting quicker and some of the new stuff was converting more slowly but I think that maybe to add more complexity to how you think about it, it’s not just the nature of the work and that affects the conversion rate.

The new more complex work takes longer to start up but it can’t get to a point where you know the converting start to speed up for a while – when recruitment you find to get through recruitment and slight initiation things to get start.

So what we’ve seen probably in Q3 is complex so that we put into backlog maybe four quarters ago starting to burn now a little bit quicker, so that’s bringing that rate up a little bit. But I don’t see because of just the way that backlog structured. I don’t see that’s going up anymore.

The sort of thing that would bring it down and remember backlog I mean there’s also good news in lowering the conversion.

Business wins would have been particularly good and be budget over a number of quarters we’d be piling stuff into the backlog that if it’s of the current sort of therapeutic profile and complexity then it will be stop for a while before it comes out again four quarters later and that could temporarily bring your burn rate down.

So that’s why I’ve been I think appropriately cautious about it and you know think of it is 10.4. I can certainly see that in the foreseeable future. I don’t see a lot of upside to it. And then depending on the profile of next years there’s a trend that we look forward to, it could be 10.3 or 10.2. But I think we are not terrific for a while yet..

Okay. And then if I – if I guess if I think about a backlog growth rate of 12%-ish and a burn rate that remains within 10 basis points or 20 basis points as you are talking about relatively stable.

It seems that that would suggest to me that kind of organic revenue growth could very well be in the high single digits of not pushing double is the – is the missing link there something like the average duration of a trial, therapeutic area, rotation or things like that, average duration of a trial going into backlog is just longer and that is – that’s kind of a forever phenomenon in this industry?.

I’d always love to say for ever, but it’s certainly the current trend, the stuff is taking longer and I think we’re comfortable looking at the backlog of the flag in the mid to high single digits at this point, because just the – it’s early in the year we’re not giving guidance, we have work to do, there’s a bunch of projects and there’s much complexity.

Yes, these projects are live just because they sometimes get a good place and start to [burden then], you have to factor into your thinking that might slowdown again, that might glitch, might be taking those on a study that’s slow [indiscernible] recruitment program, when the customers are thinking of safety or efficacy issues.

So my point is just a ton of moving pieces that has to pull together and we try and we get numbers like that to be as you know appropriately prudent as we coming into factor for the unknowns that will pop up in the course of next year..

Thank you..

The next question is coming from Jonathan Groberg from UBS..

Great. Thanks [Simon], and good morning. I might have missed it with all the moving pieces around FX.

Can you quickly comment how that impacted the quarter for you guys?.

Yes. Sure. It’s Brendan here. We said we had a bit of a – you pulled down our year-on-year growth a little bit, we were 6.4% in terms of revenue growth that would have been 6.8% in a constant currency environment. So it was a little bit of a headwind and say there are 240 bps in the quarter.

Not a huge amount of impact, quarter down in the P&L accounts or EPS may have been affected to the June of – at the bottom line on op income by 10 bps or 20 bps, but something on that..

Okay, great. And then one another follow-up.

Where there any changes in bad debt levels and also in the quarter there have been some more therapeutics recently in the market or there any that you specifically kind of looking out that made you a little bit – make you concerned or expect to impact you?.

Jonathan, it’s Steve Cutler. I think we reported $62 million in cancellations. So we had some cancellations, one or two failures based on, I think one was safety, one was efficacy, but nothing class orientated that we were able to pickup anyone. So nothing of any other concern from our point of view on that front..

And bad debt level?.

Jonathan. Brendan again here. No, in fact I think our bad debt level is actually decreased, our provisions decreased in the quarter, so there’s nothing to get concerned about..

Great. Thanks..

The next question is coming from Sandy Draper from SunTrust. Please go ahead..

Thanks very much. My congrats Ciaran to you. It’s been real pleasure and Steve looking forward to working with you going forward. Maybe just two quick questions, one internally focused.

There were some commentary early in the year, I’m not sure if it’s necessary as much specific from you guys about the potential for wage inflation and maybe seeing a little bit more competition around wages, just wanted to get any updates there. And then the follow-up would be you talked about the pipeline of interesting things.

Ciaran I wasn’t too efficient about M&A activity or deals, but just starts on the types of things you are looking for where generally pricing is and how you guys are different as you’re looking at things, you’re different in seeing yourself as a buyer and why someone be more incline to sell to you guys then such just price then any of the other CRO? Thanks..

I’ll take the first of the question Sandy and thank you for your kind remarks and then I’ll let Steve is probably more appropriate as he talks about the M&A and deals and what makes us special though. I think something is what phase though, but I’ll leave Steve talk about that one hopefully.

No we want to be – we are talking about wage inflation and we’re not seeing anything out of the normal from what we’ve seen. Every year there’s some markets that start and some markets that slow and there’s some kind of great start across your workflow to 15,000 people in some place that might be more demand and others.

But generally washes those and balances towards our reasonable normalized levels. We are expecting the same to continue in the future.

And then we’re proactive to I mean if you go over the years, we’ve very successfully managed the cost base and where we look at our resources and we’re in the growth and deploy technology to get the best out of it and defuse and develop workforce, so it’s not an issue that we’re expecting to materially overhang in anyway in our numbers next year.

So there’s nothing that’s worrying me there. And then on the M&A sideline.

Steve?.

Sandy, thanks for your comments. I think you mentioned we’ll focus on continuing our strategy around a string of pearls around identifying assets that we think bring value, add to us where we are a little – or bring the capability that we don’t have in terms of sort of specific advantage on that one.

I think we feel we can provide a vision and a strategy that’s aligned with many of the organizations where we’re going after.

We aligned in that clinical space, some of their competitors have sort of a – seem to have moved to life in that going into other areas and I think we’re able to outline a strong vision and strategy around the clinical space of how particular opportunity can bring value to that focus.

I think we feel being focused in that area is a real strength and a real advantage. At the end of the day as Ciaran said the price is a major driver and the other things are more add-on or additional around the price.

You need to be out of pattern and we see this – there’s certainly for good assets the prices are, is probably more at the high end and at the low end at the moment. So the competition around maybe the assets, many of the good assets on the market is high.

There is plenty available that are not interested in and we don’t see it brings much value and we are pretty disciplined in our approach that we just don’t want to get into the middle of the stuff, but we want to get into the stuff that really bring something to our business and to our shareholder.

So that’s our focus and we think we can provide a pretty good as I said vision of alignment for that for those assets..

Great. Very helpful comments from both you guys. Thanks..

Our next question is coming from Erin Wilson from Credit Suisse..

Great, thanks. You describe the mix of new business win that you previously mentioned sponsor size and type, but anything you can say about therapeutic category of the new business wins.

And are you seeing any sort of meaningful shifts in therapeutic focused generally speaking?.

Erin, no, there is now real shift between – we are strong in the oncology area, we are strong in the cardiovascular area, and I think you’ve seen us and the wins we had over the last quarter and year-to-date are very much in line with that sort of business.

I think our FX will be strong in all of those areas and we don’t see any major shift in the marketplace already from a therapeutic basis now..

And contributions from CRM expected in I guess the fourth quarter basically, what I want to know here is everything still on track, have there been any sort of changes in underlying trends across that business that I guess you should be aware?.

Now I am happy to say that we’ve no changes in the underlying trends and we are still on track..

Great, thank you..

Your next question is coming from Greg Bolan from Avondale Partners. Please go ahead..

Congrats Ciaran. I remember marketing with you. The web behind the years is my first marketing trip many years ago as you are being the CFO, so great move upward in the rank. So the one question I have is just on hit rate.

As you think about we haven’t talked about this in a while but you know I think at one point it was kind of in the low-30s upwards of mid-30s for you guys.

As you think about when you walk into our [indiscernible], a lot of you guys a lot of the CROs now the top tier CROs seem to have a like-for-like services and I just wanted to kind of see what seems to be kind of the determining factor and your win rate these days versus say five years ago?.

Maybe I’ll take the first one and then Steve could – and thanks for coming Greg. Yes, it seems like yesterday it’s all gone so quickly but yes, it’s what the fundamental when it hasn’t changed much over the years. It can go up or down quarter-on-quarter it can sometimes be started by disproportionately large when or something like that.

But it’s holding in that 30 something low 30 something mark generally. The differentiators are kind of the same as they’ve always been for us. I think it is fair to say that you know the top couple of CROs in the world are good companies and good work for the clients, to maybe varying degrees you know the same strength.

So we’re really concerned to is a lot of it is the strength of your track record and your relationship with the client trust you know these are complicated trial and it’s not just about cost I’m happy to say you know why people are still want to maximize investments.

I think it’s fair to say that everyone appreciate this, it’s a complicated high knowledge value added work with the big sticks at the end of it, that’s so much work to come of any trial.

So it’s trust it’s knowing that when you work together and you hit the rough spot that you’re all collaborated and get through it and deliver it and deliver the best quality projects and you know on time and towards the time and towards the budget.

And then it’s sometimes the – you might be looking off to turn up on a given Friday for RFP with the team that have just finished there’s a – very strategic about the team that has finished similar work at a place you had of your competition so you know one week you might lose to a competitor A, and next week you beat them and it will come back to very fine things like that.

So but I would say it’s always been less in 12 years that I worked here and nothing has changed there. I don’t know Steve has any different answer..

No. I think that’s right, I would say Greg the third about right one-third low 30s mid to low 30s is about five times very pending upon the segment of the market particularly if anyone talking about alliance partners it’s much higher in the alliance partner as you’d expect.

And we’re seeing some opportunities in that part of the business and we’re also seeing our business development, which has done a nice job in bringing us more opportunities to you know our funnel is improving and he’s growing.

So you know we have the opportunity to win that work, it’s been growth to us and we are working hard on making sure I hit right, stays in the right percentages and even increases, so plenty of opportunity here..

That’s great. Thanks. And then I guess kind of what I’m trying to get at to some degree is it just seems like our checks come back almost consistently that you guys seem to have some of those better higher as you want to call them net promoter’s scores whatever you want to call them client satisfaction among your peers.

And I just if I think about your market share gains over the years. Does it still like specifically among the top tier call it the top five Clinical CROs.

So there’s still like you guys have seen your share maybe accelerate a little bit over some of your I guess like-for-like peers just in terms of size or I guess to your point Steve win rates pretty much steady and nothing really new to share there?.

I would say maybe a little bit I mean if I go back say 20 quarters ago I just pick that number, I don’t have here because it’s my first quarter as CEO. Yes I mean our business that year was about $956 million for 2011 for the full-year. This year we’re guiding 1,665, to 1,680 or whatever.

So the numbers would suggest I think we probably over that period are grown a number of our competitors, some of that that was skewered by success and unlimited number of events.

So I think it’s always hard to say you are taking market share, but I think every CRO has a slightly different portfolio, a slightly different list of some customers whether it’s a strategic preference and longstanding relationships and I know that the generality of the markets can move one way.

But if our top three or four customers have all got robust pipelines at that point in time and are investing. So then our market is kind of going up by one of our competitors, customers might be on – and that will turn and that allows us.

So I’m always reluctant to say we’re taking market share because I think the marketers will be spoke in many ways for the top CRO, but there are numbers we suggest, we probably are growing a number of our larger peers over that period..

Great. That’s great. Thanks, congrats Ciaran..

Your next question is coming from Donald Hooker from KeyBanc. Please go ahead..

Great. Good morning. So I guess you were trying to focus a lot here on backlog burn and I know you guys have a pretty sizable and successful functional outsourcing business which I always think of that is being sort of a booking the plays out over a longer period of time.

Is there maybe more demand there around sort of more functional kind of projects? Is that fair to think that that might impact the backlog burn over the next 18 months?.

Hey, Donald. It’s Steve Cutler here. I think we’ve talked about this on the last call and I think at that time I said it was probably too early to call it a trend. I’m probably going to further again to that statement in that. We’re certainly seeing some nice growth within that business. I think we are taking some market share within that business.

But easy – becoming a much more significant proportion of the outsource, I’m not sure I’m quite ready to say that, yes, and we are certainly seeing interest and as you well know there are a number of companies who operate that model and we continue to operate that and we are very committed to that model and we’re very happy to work with them and we’ve been successful with a number of those companies over the last couple years.

Our DOCS business has done well and we’re looking to expand the opportunities to do functional service provision within that group, but more in sort of data management sort of sat there as well. So we see the growing market, we see us doing well. But I don’t know that it’s necessarily a huge trend in the market.

I think full services still remains the dominant outsourcing mode, that’s the right way to put it, but FCP is certainly there and is certainly keeping pace..

And maybe just a quick follow-up in terms of the bookings. I think you all mentioned briefly that there were some pent up demand around Pfizer.

Can you share maybe a little – quantify a little bit maybe what that might have been if I heard you correctly and kind of I guess in the past you sort of helped us understand kind of book-to-bill outside and inside of Pfizer, it seems like a revenues kind of from your discussion around sort of the outlook of revenues from Pfizer, the bookings might have been lower, but I’m just trying to drag that together maybe if you could share that? Thanks..

I think what I said was a – they were bigger than revenue..

Okay..

I think that 1.2 that we have today, we tended to share that in the past to try and emphasize the points that we were going very quickly in a way that we were confident and always allow the company to continue to grow the topline to expectation, while reducing concentration which is – it’s a very fair trick and we managed to do that.

So we shared that number then and to emphasize that point this quarter we didn’t share it because it was pretty much 1.2 for both of those categories. That was a good quarter all around..

That’s helpful. Thank you so much..

The next question is coming from Tycho Peterson from JPMorgan. Please go ahead..

Hey, thanks. I’ll add my congrats as well. I wanted to go actually back to the question that Greg asked on just kind of hit rate of funnel and obviously the numbers speak for themselves. But has the nature or tone of your discussions changed at all with the [indiscernible] merger out there.

I mean as those discussions evolving at all to the point you have to kind of tender detail some of what they’ve been talking about?.

No. What I would say is the short answer, Steve might have a longer answer than that..

Actually no it’s not something we’ve spend much time, we are worrying about our [own] business stock rather than what they are doing, so we’ve seen some opportunity that maybe we would have seen otherwise, but I don’t think I can quantify that at this stage..

Probably a bit early, but nobody should be talking about that. No, Tycho..

Okay. That’s helpful.

And then a quick one on some of the acquisitions you’ve done with CMG part of the value proposition that was accelerate the sort of times, can maybe just talk you know now that you’ve had it almost a year whether that actually played out as expected?.

Yes, it’s not quite either, I think we got them on board earlier in this year, so February I think they came on.

So we are just starting to see some progress in terms of start of times, we are certainly seeing some interest from our customers in terms of our operating model there and the fact that we’re bringing we are getting much closer to sides, sorry it was the same but so getting close to the year and we are driving patient seem to those that model and brings those patients into it.

Certainly some of our customers are really buying into the whole integrated estimate network model. It remains a key part of our strategy, again it’s a little slower than I would like it to happen.

Tycho but that the underlying model we believe in, we believe is right and we are starting to see some benefits albeit with projects that are typically in the normal oncology space and that’s an area we are working on, but we are starting to see those benefit flow through..

Okay.

And then lastly on ClinicalRM from a funding perspective, funding lots in there E&I state has been pretty soft there and particular to the last month I assume because you are dealing with longer-term projects, you don’t have a lot of volatility there, but can you maybe just address that?.

I think Simon was trying to say. No, we’re not seeing any fundamental change in the funding at the end of the pipeline where we are. We’ve seen a lot of funding going to the sector over the last couple of years. We’ve a lot of customers in that sector and they tend to be fully funded and ready to go and have the money in place for the trials.

So there’s been no change at the moment in our outlook there..

Okay. Thank you..

Our last question is coming from Michael Baker from Raymond James. Please go ahead..

Yes. Thanks a lot.

I know you have a number of initiatives underway to address increasing trial complexity; I was wondering if you could just highlight some of the ones that are seen in earlier payoff?.

We do have a number of initiatives Michael underway, but it’s kind of terms that payoff I think to some extent I find it hard to characterize that in enterprises. These initiatives all form interlocking pieces of the jigsaw – to make up and the whole sort of clinical trial that we do.

And what we really deal with is trying to solve certain patients, certain problems there, the speed of patients that are getting insights of data monitoring and risk-based monitoring and quality and the things.

So these initiatives, you kind of invest to pull together an offering which is relevant to your customers in terms of we do the best projects the level is also we enable that with the best technology and this is what we’re going to do. And the way you kind of measure payoff and these none of them are particularly convent.

There are initiatives around thoughts, around innovation, around to find innovations.

And the object is to get out a better trial that you can sell, so the payoff to us is that probably continue to grow our business that were attractive and when we’ve done that this quarter that were attractive to our existing customers if you’ve given us work and repeat business that happens.

So we add new customers to find the offering that have attracted and that happens.

So I can’t sort of give you a payoff and a specific way link to a specific initiative, but one I can’t say is that the feedback we’re getting from our customers is very good that our offering is pretty much there at the leading edge, they like it and they’re happy buy us and that sourcing..

Thanks for the color and congratulations to you and Steve..

Thanks Michael..

Thank you. End of Q&A.

I would like now to turn the call back to Mr. Ciaran Murray for any closing remarks..

Okay. Thank you everyone for listening today. We’re very pleased with our performance in quarter three. We’re looking forward to working hard for the rest of the year as we continue to enhance our position as the CRO trusted partner of choice in drug developments. Thank you, everyone. Good day..

Ladies and gentlemen, that will conclude today’s conference call. Thank you very much for your participation. You may now disconnect..