PPD, Inc. (Nasdaq: PPD), a leading global contract research
organization, today reported its financial results for the first
quarter ended March 31, 2021.
Highlights
- Net authorizations growth of 39.3% over first quarter 2020 to
$1,481.6 million, resulting in a net book-to-bill ratio of 1.46x on
a historical basis
- Ending backlog growth of 18.7% over first quarter 2020 to
$8,682.5 million on a historical basis
- Revenue of $1,378.4 million, representing growth of 28.5% over
first quarter 2020
- Net income attributable to common stockholders of $74.5
million
- Adjusted EBITDA of $240.9 million
- Diluted earnings per share of $0.21
- Adjusted diluted earnings per share of $0.35
“PPD’s strong financial performance has continued,” said David
Simmons, PPD’s chairman and CEO. “In addition, our more than 39%
growth in net authorizations further underscores the demand for our
differentiated capabilities across both the clinical development
and labs services segments. Our talented colleagues have extended
their track record of gaining share and delivering for customers.
As we now anticipate joining Thermo Fisher Scientific later this
year, the opportunities to bring meaningful innovation to market
faster and more efficiently are as solid as ever.”
First Quarter 2021 Results
Revenue for the three months ended March 31, 2021 increased
28.5% to $1,378.4 million, compared to $1,072.5 million for the
three months ended March 31, 2020. At the segment level, Clinical
Development Services revenue of $1,117.4 million grew 28.3% and
Laboratory Services revenue of $261.0 million grew 29.5%, each
compared to the three months ended March 31, 2020.
Net income attributable to common stockholders for the three
months ended March 31, 2021 was $74.5 million, or $0.21 per diluted
share, compared to $4.2 million, or $0.01 per diluted share, for
the three months ended March 31, 2020. Adjusted net income for the
three months ended March 31, 2021 was $124.8 million, or $0.35 per
diluted share, compared to adjusted net income of $76.5 million, or
$0.24 per diluted share, for the three months ended March 31,
2020.
Adjusted EBITDA for the three months ended March 31, 2021 was
$240.9 million, compared to $196.9 million for the three months
ended March 31, 2020.
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.
Backlog and Net Authorizations
The following tables provide select information related to PPD’s
backlog and net authorizations as of and for the three months ended
March 31, 2021, compared to the three months ended March 31,
2020:
Historical Basis
ASC 606 Direct Basis
ASC 606 Basis
(dollars in millions)
2021
% Change
2021
% Change
2021
% Change
Net authorizations
$
1,481.6
39.3%
$
1,481.6
39.3%
$
2,193.9
54.8%
Ending backlog
8,682.5
18.7%
9,020.6
19.1%
13,053.2
22.9%
Backlog conversion
12.4%
11.4%
11.3%
Net book-to-bill
1.46x
1.52x
1.59x
Financial Position
As previously disclosed, on January 13, 2021, PPD entered into
and closed a new (i) $3,050.0 million aggregate principal amount
senior secured first-lien term loan facility (the “New Term Loan”)
maturing in January 2028 and (ii) $600.0 million committed
principal amount senior secured first-lien revolving credit
facility maturing in January 2026. The proceeds from borrowings
under the New Term Loan, together with cash on hand, were used to
(i) refinance in full the principal amount outstanding and accrued
and unpaid interest, fees and other amounts then due and owing
under the then-existing credit agreement and (ii) pay fees and
expenses relating to the new credit agreement.
As of March 31, 2021, cash and cash equivalents were $826.4
million, gross debt was $4,301.4 million and net debt was $3,474.9
million, resulting in a net leverage ratio of 3.8x trailing 12
month adjusted EBITDA.
As of March 31, 2021, PPD had $598.4 million of borrowing
capacity under its revolving credit facility. Total liquidity,
which is comprised of PPD’s borrowing capacity under its revolving
credit facility and cash and cash equivalents of $826.4 million,
was $1,424.8 million as of March 31, 2021, representing 60.7%
growth compared to March 31, 2020.
Financial Guidance
Due to the proposed merger with Thermo Fisher previously
announced on April 15, 2021, which is subject to regulatory
approvals in addition to the satisfaction of customary closing
conditions, PPD will no longer be providing financial guidance.
Webcast and Conference Call Details
PPD will host a conference call on Wednesday, April 28, 2021 at
8 a.m. (U.S. Eastern Time) to report its first quarter 2021
financial results. The conference call can be accessed live over
the phone by dialing +1 877 407 0784, or for international callers,
+1 201 689 8560. Due to the proposed merger, there will be no
opportunity to ask questions on the conference call.
Investors and other interested parties also may 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
13717929. The audio replay will be available until Wednesday, May
12, 2021.
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 offices in 47 countries and more
than 27,000 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,” “believe,” “intend,” “project,” “forecast,”
“estimates,” “targets,” “projections,” “should,” “could,” “would,”
“may,” “might,” “will,” and other similar expressions. 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
uncertainties associated with the transaction with Thermo Fisher
Scientific Inc. (“Thermo Fisher”); the occurrence of any event,
change or other circumstance that could give rise to the
termination of the merger agreement; the inability to complete the
proposed merger due to the failure to satisfy conditions to
completion of the proposed merger, including that a governmental
entity may prohibit, delay or refuse to grant approval for the
consummation of the transaction; risks related to disruption of
management's attention from our ongoing business operations due to
the transaction; the effect of the announcement of the proposed
merger on our relationships with customers, operating results and
business generally; the risk that the proposed merger will not be
consummated in a timely manner; the costs of the proposed merger if
the proposed merger is not consummated; restrictions imposed on our
business during the pendency of the proposed merger; potential
litigation instituted against us or our directors challenging the
proposed merger; 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. Some of the factors, risks and
uncertainties that might materially affect the forward-looking
statements contained herein and may make an investment in our
securities speculative or risky include, but are not limited to,
the following: 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 U.S. Foreign Corrupt
Practices Act and the United Kingdom Bribery Act of 2010;
competition between our existing and potential customers and the
potential negative impact on our business; our management of
business restructuring transactions and the integration of
acquisitions; risks related to the drug and medical device
development services industry that could result in potential
liability that could affect our business, reputation and financial
condition; any failure of our insurance to cover the potential
liabilities, including indemnification obligations, associated with
the operation of our business and provision of services and changes
to our insurance coverage; our use of biological and hazardous
materials, which could violate law or cause injury or death,
resulting in liability; international or U.S. economic, currency,
political and other risks, such as those from the COVID-19
pandemic; disruptions to our operations by the occurrence of a
natural disaster, pandemic (such as the COVID-19 pandemic), or
other catastrophic events; the current and uncertain future impact
from the COVID-19 pandemic on our business, growth, reputation,
prospects, financial condition, results of operations (including
components of our financial results), cash flows and liquidity;
changes in tax laws, such as U.S. tax reform, or interpretations of
existing tax laws; economic conditions, import/export implications
and regulatory changes relating to the United Kingdom’s exit from
the European Union; any inability to adequately protect our
intellectual property or the security of our systems and the data
stored therein; our investments in third parties, which are
illiquid and subject to loss; the substantial value of our goodwill
and intangible assets, which we might not fully realize, resulting
in impairment losses; difficult and volatile conditions in the
capital and credit markets and in the overall economy, including
those caused by the COVID-19 pandemic; the fragmented and highly
competitive nature of the drug development services industry;
changes in trends in the biopharmaceutical industry, including
decreases in research and development spending and outsourcing; the
potential adverse effect that the political, economic and/or
regulatory influences and changes impacting the United States and
international healthcare industry could have on both our customers’
and our businesses, including as a result of healthcare reform; any
patent or other intellectual property litigation we might be
involved in; risks related to our indebtedness; risks related to
ownership of our common stock; the significant influence certain
stockholders have over us; other factors beyond our control; and
other risk factors set forth in the Company’s Annual Report on Form
10-K for the fiscal year ended December 31, 2020, as such factors
may be further updated from time to time in our periodic filings
with the SEC, copies of which are available free of charge on the
SEC website at www.sec.gov. These cautionary statements should not
be construed by you to be exhaustive and are made only as of the
date hereof. We undertake no obligation to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise, except as required by law.
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.
PPD has continued to report backlog and net authorizations on a
basis that excludes indirect revenues and the impact of Accounting
Standards Codification (“ASC”) 606 (“ASC 606”) on direct revenue
(“Historical Basis”). PPD also assesses 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 the United States
(“GAAP”), this press release contains certain non-GAAP financial
measures, including adjusted EBITDA, adjusted net income, adjusted
diluted earnings per share, net debt, net leverage ratio and total
liquidity. A non-GAAP financial measure is generally defined as a
numerical measure of a company’s financial performance or financial
position that excludes or includes amounts so as to be different
than the most directly comparable measure calculated and presented
in accordance with GAAP.
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
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 net income, adjusted diluted earnings per share, net debt,
net leverage ratio and 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 net income, adjusted
diluted earnings per share, net debt, net leverage ratio and 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 net income, adjusted diluted earnings
per share, net debt, net leverage ratio and total liquidity should
not be construed as an inference that our future results and
financial position will be unaffected by unusual items.
Beginning in the first quarter of 2021, PPD made certain
presentation changes as described below to the reconciliations of
(i) adjusted EBITDA and (ii) adjusted net income, in each case, to
net income (loss) calculated in accordance with GAAP. The
presentation changes had no impact on previously reported adjusted
EBITDA or adjusted net income for any prior period. In order to
provide comparability between the 2021 period and the corresponding
2020 period, PPD recast its historical reconciliations of adjusted
EBITDA and adjusted net income to net income (loss) calculated in
accordance with GAAP to conform to the new presentation.
For the purposes of reconciling both adjusted EBITDA and
adjusted net income to net income (loss) calculated in accordance
with GAAP, PPD now presents the provision for (benefit from) income
taxes as a separate reconciling item. In addition, for the purposes
of reconciling adjusted net income to net income (loss) calculated
in accordance with GAAP, each of (i) adjusted income before
provision for (benefit from) income taxes and (ii) adjusted
provision for (benefit from) income taxes are now presented as
reconciling items. The new presentation differs from PPD’s
historical practice of aggregating periodic reconciling items to
present a total of all such adjustments in connection with the
calculation of adjusted net income. PPD believes the new
presentation will assist investors and other users of the
supplemental non-GAAP financial information, primarily in
evaluating the periodic adjusted provision for (benefit from)
income taxes and related periodic adjusted tax rates.
In addition, for both the reconciliation of adjusted EBITDA and
the reconciliation of adjusted net income to GAAP net income, the
amount of PPD’s equity in losses of unconsolidated affiliates is
now presented as a separate reconciling item as opposed to the
historical practice of being included within the reconciling item
titled “other adjustments”. PPD believes the separate presentation
of equity in losses of unconsolidated affiliates provides
additional detail that will assist investors and other users of the
financial statements in evaluating the differences between non-GAAP
financial measures and their most directly comparable GAAP
measures.
PPD, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except per
share data)
Three Months Ended March
31,
2021
2020
Revenue
$
1,378,380
$
1,072,462
Operating costs and expenses:
Direct costs, exclusive of depreciation
and amortization
477,624
414,439
Reimbursed costs
380,837
250,850
Selling, general and administrative
expenses
293,936
247,776
Depreciation and amortization
73,143
66,315
Long-lived asset impairment
1,584
—
Total operating costs and expenses
1,227,124
979,380
Income from operations
151,256
93,082
Interest expense, net
(47,212
)
(64,710
)
Loss on extinguishment of debt
(10,677
)
(50,065
)
Loss on investments
(37,229
)
(26,872
)
Other income, net
9,004
29,294
Income (loss) before provision for
(benefit from) income taxes
65,142
(19,271
)
Provision for (benefit from) income
taxes
15,053
(7,717
)
Income (loss) before equity in losses of
unconsolidated affiliates
50,089
(11,554
)
Equity in losses of unconsolidated
affiliates, net of income taxes
(2,753
)
(1,566
)
Net income (loss)
47,336
(13,120
)
Net income attributable to noncontrolling
interest
(1,455
)
(2,718
)
Net income (loss) attributable to PPD,
Inc.
45,881
(15,838
)
Recapitalization investment portfolio
consideration
28,612
20,062
Net income attributable to common
stockholders of PPD, Inc.
$
74,493
$
4,224
Earnings per share attributable to common
stockholders of PPD, Inc.:
Basic
$
0.21
$
0.01
Diluted
$
0.21
$
0.01
Weighted-average common shares
outstanding:
Basic
350,431
318,221
Diluted
357,662
322,424
PPD, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
(unaudited)
(in thousands, except par
value)
March 31, 2021
December 31, 2020
Assets
Current assets:
Cash and cash equivalents
$
826,425
$
767,999
Accounts receivable and unbilled services,
net
1,835,088
1,609,718
Income taxes receivable
24,782
22,386
Prepaid expenses and other current
assets
155,039
146,100
Total current assets
2,841,334
2,546,203
Property and equipment, net
502,852
496,474
Investments in unconsolidated
affiliates
39,524
43,178
Investments
229,884
265,894
Goodwill, net
1,813,840
1,820,208
Intangible assets, net
707,623
748,404
Other assets
175,087
201,643
Operating lease right-of-use assets
157,854
171,839
Total assets
$
6,467,998
$
6,293,843
Liabilities, Redeemable
Noncontrolling Interest and Stockholders’ Deficit
Current liabilities:
Accounts payable
$
171,079
$
176,341
Accrued expenses:
Payables to investigators
465,861
404,654
Accrued employee compensation
260,037
331,156
Other accrued expenses
221,693
195,779
Income taxes payable
28,786
21,206
Unearned revenue
1,224,256
1,060,544
Current portion of operating lease
liabilities
47,907
51,643
Current portion of long-term debt and
finance lease obligations
35,000
36,238
Total current liabilities
2,454,619
2,277,561
Accrued income taxes
21,693
18,658
Deferred tax liabilities
50,816
54,535
Recapitalization investment portfolio
liability
163,311
191,923
Long-term operating lease liabilities,
less current portion
126,860
137,657
Long-term debt and finance lease
obligations, less current portion
4,212,710
4,226,192
Other liabilities
43,734
98,908
Total liabilities
7,073,743
7,005,434
Redeemable noncontrolling interest
34,371
34,929
Stockholders’ deficit:
Preferred stock - $0.01 par value; 100,000
shares authorized
None issued and outstanding
—
—
Common stock - $0.01 par value; 2,000,000
shares authorized
351,609 shares issued and 350,935 shares
outstanding as of March 31, 2021 and
350,858 shares issued and 350,132 shares
outstanding as of December 31, 2020
3,516
3,509
Treasury stock, at cost, 674 and 726
shares as of March 31, 2021 and
December 31, 2020, respectively
(12,461
)
(13,268
)
Additional paid-in-capital
1,833,774
1,819,892
Accumulated deficit
(2,197,315
)
(2,271,808
)
Accumulated other comprehensive loss
(267,630
)
(284,845
)
Total stockholders’ deficit
(640,116
)
(746,520
)
Total liabilities, redeemable
noncontrolling interest and stockholders’ deficit
$
6,467,998
$
6,293,843
PPD, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
Three Months Ended March
31,
2021
2020
Cash flows from operating activities:
Net income (loss)
$
47,336
$
(13,120
)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization
73,143
66,315
Long-lived asset impairment
1,584
—
Stock-based compensation expense
7,500
5,272
Operating lease right-of-use asset
expense
12,174
9,819
Loss on investments
37,229
26,872
Deferred income tax (benefit) expense
(12,201
)
8,790
Loss on extinguishment of debt
10,677
50,065
Other
7,965
12,839
Change in operating assets and
liabilities:
Accounts receivable and unbilled services,
net
(230,883
)
(61,700
)
Prepaid expenses and other current
assets
(5,508
)
22,135
Other assets
16,475
(9,546
)
Income taxes, net
8,533
(18,767
)
Accounts payable, accrued expenses and
other liabilities
28,069
(48,119
)
Operating lease liabilities
(12,742
)
(9,868
)
Unearned revenue
158,802
(21,614
)
Net cash provided by operating
activities
148,153
19,373
Cash flows from investing activities:
Purchases of property and equipment
(26,811
)
(42,768
)
Capital contributions paid for
investments
(1,219
)
(452
)
Net cash used in investing activities
(28,030
)
(43,220
)
Cash flows from financing activities:
Proceeds from New Term Loan
3,034,750
—
Redemption of 2015 Term Loan
(3,064,006
)
—
Borrowing on revolving credit facility
—
150,000
Redemption of HoldCo Notes
—
(1,464,500
)
Payments on long-term debt and finance
leases
(999
)
(10,427
)
Payment of debt issuance costs
(23,018
)
—
Net proceeds from initial public
offering
—
1,774,941
Recapitalization investment portfolio
distribution
(12,819
)
—
Proceeds from exercise of stock
options
9,311
2,709
Payments related to tax withholdings for
stock-based compensation
(2,199
)
—
Purchase of treasury stock
—
(865
)
Net cash (used in) provided by financing
activities
(58,980
)
451,858
Effect of exchange rate changes on cash
and cash equivalents
(2,717
)
(34,834
)
Net increase in cash and cash
equivalents
58,426
393,177
Cash and cash equivalents, beginning of
the period
767,999
345,187
Cash and cash equivalents, end of the
period
$
826,425
$
738,364
PPD, INC. AND
SUBSIDIARIES
Reconciliation of GAAP to
Non-GAAP Measures
(unaudited)
(in thousands, except per
share amounts)
Three Months Ended March
31,
Twelve Months
Ended
March 31, 2021
2021
2020
Net income attributable to common
stockholders of PPD, Inc.
$
74,493
$
4,224
$
190,422
Recapitalization investment portfolio
consideration
(28,612
)
(20,062
)
24,988
Net income attributable to noncontrolling
interest
1,455
2,718
5,602
Net income (loss)
47,336
(13,120
)
221,012
Reconciliation to Adjusted
EBITDA:
Interest expense, net
47,212
64,710
199,434
Provision for (benefit from) income
taxes
15,053
(7,717
)
41,575
Depreciation and amortization
73,143
66,315
285,944
Stock-based compensation expense
7,500
5,272
23,502
Option holder special bonuses (a)
719
2,105
4,902
Other (income) expense, net
(9,004
)
(29,294
)
83,030
Long-lived asset impairment
1,584
—
2,998
Sponsor fees and related costs (b)
—
448
—
Severance and charges for other cost
reduction activities (c)
256
754
1,807
Transaction-related and public company
transition costs (d)
2,414
3,625
8,966
Loss on extinguishment of debt
10,677
50,065
54,146
Loss (gain) on investments (e)
37,229
26,872
(42,380
)
Equity in losses of unconsolidated
affiliates (f)
2,753
1,566
9,374
Other adjustments (g)
4,028
25,257
25,409
Adjusted EBITDA
$
240,900
$
196,858
$
919,719
Reconciliation to Adjusted Net
Income:
Net income (loss)
$
47,336
$
(13,120
)
Provision for (benefit from) income
taxes
15,053
(7,717
)
Amortization of intangible assets
38,600
39,697
Amortization of debt issuance costs and
debt discount
1,923
3,857
Amortization of accumulated other
comprehensive income on derivatives
—
(2,342
)
Stock-based compensation expense
7,500
5,272
Option holder special bonuses (a)
719
2,105
Other income, net
(9,004
)
(29,294
)
Long-lived asset impairment
1,584
—
Sponsor fees and related costs (b)
—
448
Severance and charges for other cost
reduction activities (c)
256
754
Transaction-related and public company
transition costs (d)
2,414
3,625
Loss on extinguishment of debt
10,677
50,065
Loss on investments (e)
37,229
26,872
Equity in losses of unconsolidated
affiliates (f)
2,753
1,566
Other adjustments (g)
4,028
25,257
Adjusted income before provision for
income taxes
161,068
107,045
Adjusted provision for income taxes
(h)
36,274
30,537
Adjusted net income
$
124,794
$
76,508
Diluted weighted-average common shares
outstanding
357,662
322,424
Adjusted diluted earnings per share
$
0.35
$
0.24
PPD, INC. AND
SUBSIDIARIES
Reconciliation of GAAP to
Non-GAAP Measures
(unaudited)
(in thousands, except net
leverage ratio)
Calculation of Net Leverage Ratio as of
March 31, 2021
Gross debt
$
4,301,368
Less: Cash and cash equivalents
826,425
Net debt
$
3,474,943
Trailing twelve month adjusted EBITDA
$
919,719
Net leverage ratio (net debt/trailing 12
month adjusted EBITDA)
3.8
x
_______________
(a) Represents PPD’s costs associated with
special cash bonuses paid to PPD’s option holders.
(b) Represents management fees incurred
under consulting services agreements with certain investment funds
of Hellman & Friedman LLC and its affiliates and The Carlyle
Group Inc. and its affiliates. These consulting services agreements
terminated upon consummation of PPD’s initial public offering
(“IPO”).
(c) 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.
(d) 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.
(e) Represents the fair value accounting
gains or losses primarily from PPD’s investments in Auven
Therapeutics Holdings, L.P. and venBio Global Strategic Fund,
L.P.
(f) Represents unconsolidated losses from
PPD’s equity method investments in Medable, Inc. and Science 37,
Inc.
(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 application,
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) Represents the estimated tax effect on
adjusted income before provision for income taxes using applicable
statutory rates and other adjustments that are not representative
of PPD’s operating performance.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210427006124/en/
PPD Contacts Media: Ned Glascock +1 910 558 8760
media@ppd.com Investors: Tracy Krumme +1 910 558 4186
investors@ppd.com
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