
News Release
PPD Reports Fourth Quarter and Full Year 2020 Results
Provides First Quarter and Full Year 2021 Guidance
WILMINGTON, N.C. (Feb. 23, 2021) –
Highlights
- Fourth quarter net authorizations of
$1,297.6 million , representing 28.1% growth and resulting in a net book-to-bill ratio of 1.30x on a historical basis - Full year net authorizations of
$4,613.7 million , representing 20.5% growth and resulting in a net book-to-bill ratio of 1.32x on a historical basis - Ending backlog of
$8,187.9 million , an increase of 15.9% over the prior year-end on a historical basis - Fourth quarter and full year revenue of
$1,364.3 million and$4,681.5 million , representing growth of 30.3% and 16.1% over the same periods in 2019, respectively - Fourth quarter and full year net income attributable to common stockholders of
$73.1 million and$120.2 million , representing growth of 980.2% and 119.8% over the same periods in 2019, respectively - Fourth quarter and full year adjusted EBITDA of
$251.9 million and$875.7 million , representing 17.9% and 12.7% growth over the same periods in 2019, respectively - Fourth quarter and full year diluted EPS of
$0.20 and$0.35 and adjusted diluted EPS of$0.39 and$1.19 , respectively - Full year 2021 guidance: revenue of
$5,145 million to$5,304 million ; adjusted EBITDA of$970 million to$1,000 million ; adjusted diluted EPS of$1.37 to$1.45 - First quarter 2021 guidance: revenue of
$1,277 million to$1,302 million ; adjusted EBITDA of$225 million to$229 million ; adjusted diluted EPS of$0.30 to$0.32
“PPD’s talent and culture have been instrumental to our success,” said
Fourth Quarter 2020 Results
Revenue for the three months ended
Net income attributable to common stockholders for the three months ended
Adjusted EBITDA for the three months ended
Full Year 2020 Results
Revenue for the year ended
Net income attributable to common stockholders for the year ended
Adjusted EBITDA for the year ended
Important disclosures about, and reconciliations of, non-GAAP measures to their most directly comparable GAAP measures, including adjusted net income, adjusted diluted earnings per share and adjusted EBITDA, are provided in the “Non-GAAP Financial Measures” section of this press release.
Net Authorizations and Backlog
The following table provides select information related to PPD’s net authorizations and backlog as of and for the three months ended
|
Historical Basis |
|
ASC 606 Direct Basis |
|
ASC 606 Basis |
||||||||||||
(dollars in millions) |
2020 |
|
% Change |
|
2020 |
|
% Change |
|
2020 |
|
% Change |
||||||
Net authorizations.............................................. |
|
|
28.1 |
% |
|
|
|
28.1 |
% |
|
|
|
38.5 |
% |
|||
Ending backlog............................................... |
|
|
15.9 |
% |
|
|
|
16.2 |
% |
|
|
|
19.1 |
% |
|||
Backlog conversion............................................... |
12.7 |
% |
|
|
|
11.7 |
% |
|
|
|
11.6 |
% |
|
|
|||
Net book-to-bill............................................... |
1.30x |
|
|
|
1.36x |
|
|
|
1.38x |
|
|
||||||
The following table provides select information related to PPD’s net authorizations and backlog as of and for the year ended
|
Historical Basis |
|
ASC 606 Direct Basis |
|
ASC 606 Basis |
||||||||||||
(dollars in millions) |
2020 |
|
% Change |
|
2020 |
|
% Change |
|
2020 |
|
% Change |
||||||
Net authorizations............................................... |
|
|
20.5 |
% |
|
|
|
20.5 |
% |
|
|
|
31.5 |
% |
|||
Ending backlog............................................... |
|
|
15.9 |
% |
|
|
|
16.2 |
% |
|
|
|
19.1 |
% |
|||
Backlog conversion............................................... |
11.7 |
% |
|
|
|
11.1 |
% |
|
|
|
10.7 |
% |
|
|
|||
Net book-to-bill............................................... |
1.32x |
|
|
|
1.35x |
|
|
|
1.42x |
|
|
||||||
Financial Position
As of
As of
On
PPD’s adjusted total liquidity as of
Financial Guidance
PPD’s first quarter and full year 2021 guidance is as follows:
First Quarter 2021 |
Low – High ($) |
Low – High (Y/Y%) |
Revenue |
|
19% – 21% |
Adjusted EBITDA |
|
14% – 17% |
Adjusted diluted EPS |
|
25% – 33% |
Full Year 2021 |
Low – High ($) |
Low – High (Y/Y%) |
Revenue |
|
10% – 13% |
Adjusted EBITDA |
|
11% – 14% |
Adjusted diluted EPS |
|
15% – 22% |
First quarter and full year 2021 guidance assumes foreign exchange rates will remain in effect through the first quarter and full year. PPD’s guidance for adjusted diluted EPS also assumes (i) an estimated full year adjusted tax rate of between 23% and 24% and (ii) diluted weighted-average shares outstanding of 358 million as of
Webcast and Conference Call Details
PPD will host a conference call on
Investors and other interested parties may also listen to a live webcast of the conference call by logging onto the investors section of PPD’s website at https://investors.ppd.com. An online replay will be available after the call and can be accessed by dialing +1 844 512 2921, or for international callers, +1 412 317 6671. The passcode for the live conference call and the replay is 13715818. The replay will be available until
About PPD
PPD is a leading global contract research organization providing comprehensive, integrated drug development, laboratory and lifecycle management services. Our customers include pharmaceutical, biotechnology, medical device, academic and government organizations. With locations in 46 countries and more than 26,000 professionals worldwide, PPD applies innovative technologies, therapeutic expertise and a firm commitment to quality to help customers bend the cost and time curve of drug development and optimize value in delivering life-changing therapies to improve health. For more information, visit www.ppd.com.
Forward-Looking Statements
This press release contains forward-looking statements. These statements often include words such as “anticipate,” “expect,” “suggest,” “plan,” “guidance,” “believe,” “intend,” “project,” “forecast,” “estimates,” “targets,” “projections,” “should,” “could,” “would,” “may,” “might,” “will,” and other similar expressions, including forward-looking statements about the impact from the novel coronavirus disease (the “COVID-19 pandemic”). We base these forward-looking statements on our current expectations, plans and assumptions that we have made in light of our experience in the industry, as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances at this time, including the impact from the COVID-19 pandemic. As you consider this press release, you should understand that these statements are not guarantees of performance or results. The forward-looking statements contained herein are subject to and involve risks, uncertainties and assumptions and you should not place undue reliance on these forward-looking statements. Although we believe that these forward-looking statements are based on reasonable assumptions at the time they are made, you should be aware that many factors could affect our actual financial results, including the impact from the COVID-19 pandemic, and our ability to achieve our projected financial guidance, and therefore actual results might differ materially from those expressed in these forward-looking statements. Factors that might materially affect such forward-looking statements and projections include: any failure of our backlog to accurately predict or convert into future revenue; the fact that our customers can terminate, delay or reduce the scope of our contracts with them upon short notice or with no notice; the impact of industry, customer and therapeutic area concentration; consolidation amongst our customers, and the potential for rationalization of the combined drug development pipeline, resulting in fewer products in clinical development; our ability to accurately price our contracts and manage our costs associated with performance of such contracts; any failures in our information and communication systems, including cybersecurity breaches, impacting us or our customers, clinical trial participants or employees; our dependence on our technology network, and the impact from upgrades to the network; any failure to perform services in accordance with contractual requirements, regulatory standards and ethical standards; our ability to access clinical research sites, attract suitable investigators or enroll a sufficient number of patients (including as a result of the COVID-19 pandemic) for our customers’ clinical trials; any failure by us to comply with numerous privacy laws; our ability to keep pace with rapid technological changes that could make our services less competitive or obsolete; our ability to recruit, retain and motivate key personnel, including the loss of any key executive who becomes seriously ill with COVID-19; our dependence on third parties for critical goods and support services, including a significant impact from the COVID-19 pandemic on our suppliers; any violation of laws, including laws governing the conduct of clinical trials or other biopharmaceutical research, and anti-corruption laws, such as the
Backlog and Net Authorizations
Revenue is comprised of direct, third-party pass-through and out-of-pocket revenue from providing services to customers. Direct revenue represents revenue associated with the direct services. Third-party pass-through and out-of-pocket revenue (collectively, “indirect revenue”) represents the reimbursement by customers of third-party pass-through and out-of-pocket costs incurred by PPD under its contracts with customers.
Historically, PPD reported backlog and net authorizations on a basis which excluded indirect revenues and the impact of Accounting Standards Codification (“ASC”) 606 (“ASC 606”) on direct revenue (“Historical Basis”). During the first quarter of 2020, PPD began to assess backlog and net authorizations on an ASC 606 direct revenue basis (“ASC 606 Direct Basis”) and on an ASC 606 total direct and indirect revenue basis (“ASC 606 Basis”).
Net authorizations represent new business awards, net of award or contract modifications, contract cancellations, foreign currency fluctuations and other adjustments. Backlog for all periods represents anticipated revenues for work not yet completed or performed (i) under signed contracts, letters of intent and, in some cases, awards that are supported by other forms of written communication and (ii) where there is sufficient or reasonable certainty about the customer’s ability and intent to fund and commence the services within six months. Backlog conversion represents quarterly revenues for the period divided by opening backlog for that period. The net book-to-bill ratio represents the amount of net authorizations for the period divided by revenues recognized in that period.
Backlog might not be a reliable indicator of future revenue and PPD might not realize all or any part of the revenue from the authorizations in backlog as of any point in time.
Non-GAAP Financial Measures
In addition to the financial measures prepared in accordance with generally accepted accounting principles in
Adjusted EBITDA consists of net income or loss attributable to common stockholders of PPD, adjusted for changes in recapitalization investment portfolio consideration and net income or loss attributable to noncontrolling interest and before interest expense, net, provision for or benefit from income taxes and depreciation and amortization and eliminates (i) non-operating income or expense and (ii) impacts of certain non-cash, unusual or other items that are included in net income or loss that we do not consider indicative of our ongoing operating performance. Adjusted tax rate is calculated by dividing adjusted tax expense by adjusted income before the provision for income taxes, whereby adjusted tax expense equals the sum of the following line items: (i) (benefit from) provision for income taxes and (ii) tax adjustments, and adjusted income before the provision for income taxes equals the sum of the following line items: (i) income before (benefit from) provision for income taxes and (ii) total adjustments to net income. Adjusted net income (and adjusted diluted earnings per share) consists of net income or loss (and diluted earnings or loss per share) attributable to common stockholders of PPD before amortization and the elimination of (i) non-operating income or expense and (ii) impacts of certain non-cash, unusual or other items that are included in net income or loss that we do not consider indicative of our ongoing operating performance. In the case of adjusted EBITDA, adjusted net income and adjusted diluted earnings per share, we believe that making such adjustments provides management and investors meaningful information to understand our operating performance and the ability to analyze financial and business trends on a period-to-period basis. Although we exclude amortization of acquired intangible assets from our non-GAAP expenses, we note that revenue generated from such intangibles is included within revenue in determining net income or loss attributable to common stockholders of PPD. Net debt consists of the outstanding principal balance of the term loan, senior unsecured notes, finance lease obligations and revolving credit borrowings, less cash and cash equivalents, and the net leverage ratio is equal to net debt divided by trailing 12-month adjusted EBITDA.
Other companies in our industry may calculate adjusted EBITDA, adjusted tax rate, adjusted net income, adjusted diluted earnings per share, net debt, net leverage ratio, total liquidity and adjusted total liquidity differently than we do. As a result, these non-GAAP financial measures have limitations as analytical and comparative tools and should not be considered in isolation, or as a substitute for analysis of our results as reported under GAAP. Adjusted EBITDA, adjusted tax rate, adjusted net income, adjusted diluted earnings per share, net debt, net leverage ratio, total liquidity and adjusted total liquidity should not be considered as measures of discretionary cash available to us to invest in the growth of our business. In calculating these performance and liquidity financial measures, we make certain adjustments that are based on assumptions and estimates that may prove to have been inaccurate. Our presentation of adjusted EBITDA, adjusted tax rate, adjusted net income, adjusted diluted earnings per share, net debt, net leverage ratio, total liquidity and adjusted total liquidity should not be construed as an inference that our future results and financial position will be unaffected by unusual items.
PPD has not reconciled the forward-looking adjusted EBITDA and adjusted diluted earnings per share guidance included above to the most directly comparable GAAP measure because this cannot be done without unreasonable effort due to the variability and low visibility with respect to certain costs, the most significant of which are incentive compensation (including stock-based compensation), certain fair value measurements, recapitalization portfolio interest consideration and costs related to the uncertainties caused by the global COVID-19 pandemic, which are potential adjustments to future earnings. PPD expects the variability of these items to have a potentially unpredictable, and a potentially significant, impact on our future GAAP financial results.
|
|||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS |
|||||||||||||||
(unaudited) |
|||||||||||||||
(in thousands, except per share data) |
|||||||||||||||
|
Three Months Ended |
|
Years Ended |
||||||||||||
|
2020 |
|
2019 |
|
2020 |
|
2019 |
||||||||
Revenue........................................................................................................................ |
$ |
1,364,292 |
|
|
$ |
1,046,884 |
|
|
$ |
4,681,474 |
|
|
$ |
4,031,017 |
|
|
|
|
|
|
|
|
|
||||||||
Operating costs and expenses: |
|
|
|
|
|
|
|
||||||||
Direct costs, exclusive of depreciation and amortization..................................................................................................................... |
459,346 |
|
|
372,077 |
|
|
1,682,046 |
|
|
1,484,258 |
|
||||
Reimbursed costs..................................................................................................................... |
390,231 |
|
|
235,938 |
|
|
1,200,754 |
|
|
924,634 |
|
||||
Selling, general and administrative expenses..................................................................................................................... |
275,415 |
|
|
257,375 |
|
|
1,010,127 |
|
|
938,806 |
|
||||
Depreciation and amortization..................................................................................................................... |
72,721 |
|
|
66,934 |
|
|
279,116 |
|
|
264,830 |
|
||||
Long-lived and goodwill asset impairments..................................................................................................................... |
— |
|
|
1,284 |
|
|
1,414 |
|
|
1,284 |
|
||||
Total operating costs and expenses.................................................................................................................... |
1,197,713 |
|
|
933,608 |
|
|
4,173,457 |
|
|
3,613,812 |
|
||||
Income from operations................................................................................................................. |
166,579 |
|
|
113,276 |
|
|
508,017 |
|
|
417,205 |
|
||||
Interest expense, net........................................................................................................................ |
(50,937) |
|
|
(82,597) |
|
|
(216,932) |
|
|
(311,744) |
|
||||
Loss on extinguishment of debt........................................................................................................................ |
— |
|
|
— |
|
|
(93,534) |
|
|
— |
|
||||
Gain (loss) on investments........................................................................................................................ |
36,088 |
|
|
3,673 |
|
|
52,737 |
|
|
(19,043) |
|
||||
Other expense, net........................................................................................................................ |
(48,643) |
|
|
(23,985) |
|
|
(62,740) |
|
|
(27,143) |
|
||||
Income before (benefit from) provision for income taxes................................................................................................................. |
103,087 |
|
|
10,367 |
|
|
187,548 |
|
|
59,275 |
|
||||
(Benefit from) provision for income taxes........................................................................................................................ |
(1,877) |
|
|
(9,430) |
|
|
18,805 |
|
|
2,957 |
|
||||
Income before equity in losses of unconsolidated affiliates................................................................................................................. |
104,964 |
|
|
19,797 |
|
|
168,743 |
|
|
56,318 |
|
||||
Equity in losses of unconsolidated affiliates, net of income taxes........................................................................................................................ |
(2,501) |
|
|
(1,503) |
|
|
(8,187) |
|
|
(3,563) |
|
||||
Net income................................................................................................................. |
102,463 |
|
|
18,294 |
|
|
160,556 |
|
|
52,755 |
|
||||
Net income attributable to noncontrolling interest ........................................................................................................................ |
(2,366) |
|
|
(1,544) |
|
|
(6,865) |
|
|
(4,934) |
|
||||
Net income attributable to |
100,097 |
|
|
16,750 |
|
|
153,691 |
|
|
47,821 |
|
||||
Recapitalization investment portfolio consideration........................................................................................................................ |
(27,009) |
|
|
(9,984) |
|
|
(33,538) |
|
|
6,846 |
|
||||
Net income attributable to common stockholders of |
$ |
73,088 |
|
|
$ |
6,766 |
|
|
$ |
120,153 |
|
|
$ |
54,667 |
|
|
|
|
|
|
|
|
|
||||||||
Earnings per share attributable to common stockholders of |
|
|
|
|
|
|
|
||||||||
Basic................................................................................................................. |
$ |
0.21 |
|
|
$ |
0.02 |
|
|
$ |
0.35 |
|
|
$ |
0.20 |
|
Diluted................................................................................................................. |
$ |
0.20 |
|
|
$ |
0.02 |
|
|
$ |
0.35 |
|
|
$ |
0.19 |
|
Weighted-average common shares outstanding:........................................................................................................................ |
|
|
|
|
|
|
|
||||||||
Basic................................................................................................................. |
349,851 |
|
|
279,433 |
|
|
341,178 |
|
|
279,285 |
|
||||
Diluted................................................................................................................. |
357,226 |
|
|
282,603 |
|
|
346,684 |
|
|
280,693 |
|
||||
|
|||||||
CONSOLIDATED BALANCE SHEETS |
|||||||
(unaudited) |
|||||||
(in thousands, except par value) |
|||||||
Assets |
|||||||
|
|
||||||
|
2020 |
|
2019 |
||||
Current assets: |
|
|
|
||||
Cash and cash equivalents.................................................................................................. |
$ |
767,999 |
|
|
$ |
345,187 |
|
Accounts receivable and unbilled services, net.................................................................. |
1,609,718 |
|
|
1,326,614 |
|
||
Income taxes receivable...................................................................................................... |
22,386 |
|
|
27,437 |
|
||
Prepaid expenses and other current assets.......................................................................... |
146,100 |
|
|
119,776 |
|
||
Total current assets................................................................................................. |
2,546,203 |
|
|
1,819,014 |
|
||
|
|
|
|
||||
Property and equipment, net.................................................................................................... |
496,474 |
|
|
458,845 |
|
||
Investments in unconsolidated affiliates................................................................................. |
43,178 |
|
|
34,028 |
|
||
Investments............................................................................................................................. |
265,894 |
|
|
250,348 |
|
||
|
1,820,208 |
|
|
1,764,104 |
|
||
Intangible assets, net................................................................................................................ |
748,404 |
|
|
892,091 |
|
||
Other assets............................................................................................................................. |
201,643 |
|
|
156,220 |
|
||
Operating lease right-of-use assets.......................................................................................... |
171,839 |
|
|
181,596 |
|
||
Total assets............................................................................................................. |
$ |
6,293,843 |
|
|
$ |
5,556,246 |
|
Liabilities, Redeemable Noncontrolling Interest and Stockholders’ Deficit |
|||||||
Current liabilities: |
|
|
|
||||
Accounts payable................................................................................................................ |
$ |
176,341 |
|
|
$ |
130,060 |
|
Accrued expenses: |
|
|
|
||||
Payables to investigators............................................................................................... |
404,654 |
|
|
322,231 |
|
||
Accrued employee compensation................................................................................. |
331,156 |
|
|
263,834 |
|
||
Accrued interest............................................................................................................ |
2,825 |
|
|
44,527 |
|
||
Other accrued expenses................................................................................................. |
192,954 |
|
|
138,632 |
|
||
Income taxes payable.......................................................................................................... |
21,206 |
|
|
15,161 |
|
||
Unearned revenue............................................................................................................... |
1,060,544 |
|
|
1,110,872 |
|
||
Current portion of operating lease liabilities...................................................................... |
51,643 |
|
|
45,962 |
|
||
Current portion of long-term debt and finance lease obligations....................................... |
36,238 |
|
|
35,794 |
|
||
Total current liabilities........................................................................................... |
2,277,561 |
|
|
2,107,073 |
|
||
|
|
|
|
||||
Accrued income taxes............................................................................................................. |
18,658 |
|
|
38,465 |
|
||
Deferred tax liabilities............................................................................................................. |
54,535 |
|
|
92,225 |
|
||
Recapitalization investment portfolio liability....................................................................... |
191,923 |
|
|
191,678 |
|
||
Long-term operating lease liabilities, less current portion...................................................... |
137,657 |
|
|
153,766 |
|
||
Long-term debt and finance lease obligations, less current portion........................................ |
4,226,192 |
|
|
5,608,134 |
|
||
Other liabilities........................................................................................................................ |
98,908 |
|
|
33,017 |
|
||
Total liabilities....................................................................................................... |
7,005,434 |
|
|
8,224,358 |
|
||
Redeemable noncontrolling interest........................................................................................ |
34,929 |
|
|
30,036 |
|
||
Stockholders’ deficit: |
|
|
|
||||
Common stock |
|
|
|
||||
2,000,000 shares authorized; 350,858 shares issued and |
|
|
|
||||
350,132 shares outstanding as of |
|
|
|
||||
2,080,000 shares authorized; 280,127 shares issued and |
|
|
|
||||
279,426 shares outstanding as of |
3,509 |
|
|
2,801 |
|
||
|
|
|
|
||||
|
(13,268) |
|
|
(12,707) |
|
||
Additional paid-in-capital.................................................................................................. |
1,819,892 |
|
|
1,983 |
|
||
Accumulated deficit............................................................................................................ |
(2,271,808) |
|
|
(2,391,321) |
|
||
Accumulated other comprehensive loss............................................................................. |
(284,845) |
|
|
(298,904) |
|
||
Total stockholders’ deficit...................................................................................... |
(746,520) |
|
|
(2,698,148) |
|
||
Total liabilities, redeemable noncontrolling interest and stockholders’ deficit..... |
$ |
6,293,843 |
|
|
$ |
5,556,246 |
|
|
|||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||||||
(unaudited) |
|||||||
(in thousands) |
|||||||
|
Years Ended |
||||||
|
2020 |
|
2019 |
||||
Cash flows from operating activities: |
|
|
|
||||
Net income............................................................................................................................... |
$ |
160,556 |
|
|
$ |
52,755 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
||||
Depreciation and amortization................................................................................................ |
279,116 |
|
|
264,830 |
|
||
Long-lived and goodwill asset impairments............................................................................. |
1,414 |
|
|
1,284 |
|
||
Stock-based compensation expense........................................................................................ |
21,274 |
|
|
15,632 |
|
||
Non-cash operating lease expense........................................................................................... |
43,797 |
|
|
40,633 |
|
||
Amortization of debt issuance costs, modification costs and debt discounts................................ |
10,535 |
|
|
17,768 |
|
||
Non-cash losses (gains) on interest rate swaps |
2,572 |
|
|
(9,523) |
|
||
(Gain) loss on investments |
(52,737) |
|
|
19,043 |
|
||
Loss on unconsolidated affiliates |
8,187 |
|
|
3,563 |
|
||
Deferred income tax benefit |
(38,564) |
|
|
(84,795) |
|
||
Loss on extinguishment of debt.............................................................................................. |
93,534 |
|
|
— |
|
||
Amortization of costs to obtain a contract................................................................................ |
11,224 |
|
|
11,432 |
|
||
Other................................................................................................................................... |
(1,722) |
|
|
9,366 |
|
||
Change in operating assets and liabilities, net of effect of businesses acquired or sold: |
|
|
|
||||
Accounts receivable and unbilled services, net..................................................................... |
(278,471) |
|
|
(28,075) |
|
||
Prepaid expenses and other current assets............................................................................ |
15,577 |
|
|
(11,465) |
|
||
Other assets...................................................................................................................... |
(40,899) |
|
|
(31,288) |
|
||
Income taxes, net............................................................................................................... |
(7,001) |
|
|
7,712 |
|
||
Accounts payable, accrued expenses and other liabilities....................................................... |
141,238 |
|
|
26,283 |
|
||
Operating lease liabilities................................................................................................... |
(45,330) |
|
|
(39,065) |
|
||
Unearned revenue.............................................................................................................. |
(72,966) |
|
|
166,856 |
|
||
Net cash provided by operating activities..................................................................................... |
251,334 |
|
|
432,946 |
|
||
Cash flows from investing activities: |
|
|
|
||||
Purchases of property and equipment................................................................................ |
(163,331) |
|
|
(125,424) |
|
||
Acquisitions of businesses, net of cash and cash equivalents acquired.................................. |
321 |
|
|
(74,187) |
|
||
Capital contributions paid for investments......................................................................... |
(6,852) |
|
|
(4,069) |
|
||
Distributions received from investments |
43,974 |
|
|
452 |
|
||
Investments in unconsolidated affiliates............................................................................. |
(20,000) |
|
|
(30,000) |
|
||
Net cash used in investing activities............................................................................................ |
(145,888) |
|
|
(233,228) |
|
||
Cash flows from financing activities: |
|
|
|
||||
Repurchase of common stock............................................................................................ |
(626) |
|
|
(4,012) |
|
||
Proceeds from exercise of stock options............................................................................. |
24,264 |
|
|
4,524 |
|
||
Borrowing on revolving credit facility................................................................................ |
150,000 |
|
|
— |
|
||
Repayment of revolving credit facility............................................................................... |
(150,000) |
|
|
— |
|
||
Proceeds from issuance of senior notes............................................................................... |
1,200,000 |
|
|
891,000 |
|
||
Redemption of HoldCo Notes............................................................................................ |
(1,464,500) |
|
|
— |
|
||
Redemption of OpCo Notes.............................................................................................. |
(1,160,865) |
|
|
— |
|
||
Payments on long-term debt and finance leases................................................................... |
(41,137) |
|
|
(37,409) |
|
||
Distribution to noncontrolling interest holder...................................................................... |
(3,829) |
|
|
— |
|
||
Payment of debt issuance and debt modification costs......................................................... |
(20,738) |
|
|
(30,142) |
|
||
Payment of contingent consideration for acquisition of business........................................... |
(4,338) |
|
|
— |
|
||
Net proceeds from initial public offering............................................................................ |
1,772,960 |
|
|
— |
|
||
Recapitalization investment portfolio distribution................................................................ |
(20,474) |
|
|
— |
|
||
Return of capital and special dividend to stockholders......................................................... |
— |
|
|
(1,246,000) |
|
||
Net cash provided by (used in) financing activities....................................................................... |
280,717 |
|
|
(422,039) |
|
||
Effect of exchange rate changes on cash and cash equivalents........................................................ |
36,649 |
|
|
14,442 |
|
||
Net increase (decrease) in cash and cash equivalents..................................................................... |
422,812 |
|
|
(207,879) |
|
||
Cash and cash equivalents, beginning of the period....................................................................... |
345,187 |
|
|
553,066 |
|
||
Cash and cash equivalents, end of the period................................................................................ |
$ |
767,999 |
|
|
$ |
345,187 |
|
|
|||||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP MEASURES |
|||||||||||||||
(unaudited) |
|||||||||||||||
(in thousands, except per share data) |
|||||||||||||||
|
Three Months Ended |
|
Years Ended |
||||||||||||
|
2020 |
|
2019 |
|
2020 |
|
2019 |
||||||||
Net income attributable to common stockholders of |
$ |
73,088 |
|
|
$ |
6,766 |
|
|
$ |
120,153 |
|
|
$ |
54,667 |
|
Recapitalization investment portfolio consideration.................................................... |
27,009 |
|
|
9,984 |
|
|
33,538 |
|
|
(6,846) |
|
||||
Net income attributable to noncontrolling interest....................................................... |
2,366 |
|
|
1,544 |
|
|
6,865 |
|
|
4,934 |
|
||||
Net income........................................................................................................... |
102,463 |
|
|
18,294 |
|
|
160,556 |
|
|
52,755 |
|
||||
|
|
|
|
|
|
|
|
||||||||
Reconciliation to Adjusted EBITDA: |
|
|
|
|
|
|
|
||||||||
Interest expense, net................................................................................................. |
50,937 |
|
|
82,597 |
|
|
216,932 |
|
|
311,744 |
|
||||
(Benefit from) provision for income taxes.................................................................. |
(1,877) |
|
|
(9,430) |
|
|
18,805 |
|
|
2,957 |
|
||||
Depreciation and amortization.................................................................................. |
72,721 |
|
|
66,934 |
|
|
279,116 |
|
|
264,830 |
|
||||
Stock-based compensation expense........................................................................... |
5,175 |
|
|
3,931 |
|
|
21,274 |
|
|
15,632 |
|
||||
Option holder special bonuses (a).............................................................................. |
659 |
|
|
4,017 |
|
|
6,288 |
|
|
18,874 |
|
||||
Other expense, net (b).............................................................................................. |
48,643 |
|
|
23,985 |
|
|
62,740 |
|
|
27,143 |
|
||||
Long-lived and goodwill asset impairments................................................................ |
— |
|
|
1,284 |
|
|
1,414 |
|
|
1,284 |
|
||||
Loss on extinguishment of debt................................................................................. |
— |
|
|
— |
|
|
93,534 |
|
|
— |
|
||||
Sponsor fees and related costs (c).............................................................................. |
— |
|
|
934 |
|
|
448 |
|
|
3,805 |
|
||||
Severance and charges for other cost reduction activities (d)........................................ |
245 |
|
|
2,641 |
|
|
2,305 |
|
|
10,398 |
|
||||
Transaction-related and public company transition costs (e)......................................... |
1,233 |
|
|
9,959 |
|
|
10,177 |
|
|
22,950 |
|
||||
(Gain) loss on investments (f)................................................................................... |
(36,088) |
|
|
(3,673) |
|
|
(52,737) |
|
|
19,043 |
|
||||
Other adjustments (g)............................................................................................... |
7,749 |
|
|
12,148 |
|
|
54,825 |
|
|
25,530 |
|
||||
Adjusted EBITDA................................................................................................ |
$ |
251,860 |
|
|
$ |
213,621 |
|
|
$ |
875,677 |
|
|
$ |
776,945 |
|
|
|
|
|
|
|
|
|
||||||||
Reconciliation to Adjusted Net Income: |
|
|
|
|
|
|
|
||||||||
Net income.............................................................................................................. |
$ |
102,463 |
|
|
$ |
18,294 |
|
|
$ |
160,556 |
|
|
$ |
52,755 |
|
Amortization of intangible assets............................................................................... |
39,015 |
|
|
40,949 |
|
|
157,613 |
|
|
162,121 |
|
||||
Amortization of debt issuance and modification costs and debt discount....................... |
2,272 |
|
|
5,606 |
|
|
10,535 |
|
|
17,768 |
|
||||
Amortization of accumulated other comprehensive income on derivatives.................... |
(2,060) |
|
|
(2,366) |
|
|
(11,313) |
|
|
(9,523) |
|
||||
Stock-based compensation expense........................................................................... |
5,175 |
|
|
3,931 |
|
|
21,274 |
|
|
15,632 |
|
||||
Option holder special bonuses (a).............................................................................. |
659 |
|
|
4,017 |
|
|
6,288 |
|
|
18,874 |
|
||||
Other expense, net (b).............................................................................................. |
48,643 |
|
|
23,985 |
|
|
62,740 |
|
|
27,143 |
|
||||
Long-lived and goodwill asset impairments................................................................ |
— |
|
|
1,284 |
|
|
1,414 |
|
|
1,284 |
|
||||
Loss on extinguishment of debt................................................................................. |
— |
|
|
— |
|
|
93,534 |
|
|
— |
|
||||
Sponsor fees and related costs (c).............................................................................. |
— |
|
|
934 |
|
|
448 |
|
|
3,805 |
|
||||
Severance and charges for other cost reduction activities (d)........................................ |
245 |
|
|
2,641 |
|
|
2,305 |
|
|
10,398 |
|
||||
Transaction-related and public company transition costs (e)......................................... |
1,233 |
|
|
9,959 |
|
|
10,177 |
|
|
22,950 |
|
||||
(Gain) loss on investments (f)................................................................................... |
(36,088) |
|
|
(3,673) |
|
|
(52,737) |
|
|
19,043 |
|
||||
Other adjustments (g)............................................................................................... |
7,749 |
|
|
12,148 |
|
|
54,825 |
|
|
25,530 |
|
||||
Total adjustments.................................................................................................... |
66,843 |
|
|
99,415 |
|
|
357,103 |
|
|
315,025 |
|
||||
Tax adjustments1 (h)................................................................................................ |
(28,302) |
|
|
(25,550) |
|
|
(104,816) |
|
|
(80,961) |
|
||||
Adjusted net income.............................................................................................. |
$ |
141,004 |
|
|
$ |
92,159 |
|
|
$ |
412,843 |
|
|
$ |
286,819 |
|
|
|
|
|
|
|
|
|
||||||||
Diluted weighted average common shares outstanding................................................ |
357,226 |
|
|
282,603 |
|
|
346,684 |
|
|
280,693 |
|
||||
|
|
|
|
|
|
|
|
||||||||
Adjusted diluted earnings per share......................................................................... |
$ |
0.39 |
|
|
$ |
0.33 |
|
|
$ |
1.19 |
|
|
$ |
1.02 |
|
1 The GAAP effective tax rate was (2%) and (91%) for the three months ended |
|
|||
Reconciliation of GAAP to Non-GAAP Measures |
|||
(unaudited) |
|||
(in thousands, except net leverage ratio) |
|||
Calculation of Net Leverage Ratio as of |
|
||
Gross debt............................................................................................................................................................. |
$ |
4,289,740 |
|
Less: Cash and cash equivalents.............................................................................................................................. |
767,999 |
|
|
Net debt................................................................................................................................................................. |
$ |
3,521,741 |
|
Adjusted EBITDA.................................................................................................................................................. |
$ |
875,677 |
|
Net leverage ratio (net debt/trailing 12-month adjusted EBITDA)............................................................................... |
4.0x |
____________________
(a) Represents PPD’s costs associated with special cash bonuses paid to PPD’s option holders.
(b) Primarily represents losses from fluctuations in foreign currency exchange rates.
(c) Represents management fees incurred under consulting services agreements with certain investment funds of
(d) Represents employee separation costs, exit and disposal costs associated with the full or partial exit of certain leased facilities, costs associated with planned employee reorganizations and other contract termination costs from various cost-reduction activities.
(e) Represents integration and transaction costs incurred with completed or contemplated acquisitions, costs incurred in connection with PPD’s IPO, secondary offering, other transaction costs and costs associated with PPD’s public company transition.
(f) Represents the fair value accounting gains or losses primarily from PPD’s investments in
(g) Other adjustments include amounts that management believes are not representative of our operating performance. These adjustments include implementation costs associated with a new enterprise resource planning system, one-time costs incurred in 2020 associated with the termination of a long-term incentive program which has been replaced by a traditional stock-based program in 2020, advisory costs associated with the adoption of new accounting standards, one-time costs and income associated with the COVID-19 pandemic and other unusual charges or income.
(h) Includes the tax effect of non-GAAP adjustments at an estimated blended statutory tax rate of 26%, excluding the change in recapitalization investment portfolio consideration, and
PPD Contacts
Media:
+1 910 558 8760
media@ppd.com
Investors:
+1 910 558 4186
investors@ppd.com