PPD Reports Fourth Quarter and Full Year 2020 Results
PPD, Inc. (Nasdaq: PPD) reported robust financial results for Q4 and the full year 2020. Q4 net authorizations reached $1,297.6 million, up 28.1%, with a net book-to-bill ratio of 1.30x. FY 2020 net authorizations totaled $4,613.7 million, reflecting 20.5% growth. Revenue for Q4 was $1,364.3 million (up 30.3%), and for FY 2020, $4,681.5 million (up 16.1%). Net income rose significantly, with Q4 net income of $73.1 million (up 980.2%). For 2021, PPD anticipates revenues between $5,145 million and $5,304 million.
- Q4 net authorizations increased by 28.1% to $1,297.6 million.
- FY 2020 net authorizations totaled $4,613.7 million, representing a 20.5% growth.
- Q4 revenue rose to $1,364.3 million, a 30.3% increase year-over-year.
- Net income for Q4 2020 soared by 980.2% to $73.1 million.
- Total liquidity increased by 65.7% to $1,066.4 million as of December 31, 2020.
- 2021 guidance projects revenue growth of 10% to 13%.
- Net debt stood at $3,521.7 million with a leverage ratio of 4.0x trailing 12-month adjusted EBITDA.
PPD, Inc. (Nasdaq: PPD), a leading global contract research organization, today reported its financial results for the fourth quarter and full year ended December 31, 2020.
Highlights
-
Fourth quarter net authorizations of
$1,297.6 million , representing28.1% 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 , representing20.5% 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 of15.9% 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 of30.3% and16.1% 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 of980.2% and119.8% over the same periods in 2019, respectively -
Fourth quarter and full year adjusted EBITDA of
$251.9 million and$875.7 million , representing17.9% and12.7% 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 t o$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 t o$0.32
“PPD’s talent and culture have been instrumental to our success,” said David Simmons, PPD’s chairman and CEO. “The challenges of the pandemic put a spotlight on our people, differentiated capabilities and therapeutic expertise – and PPD excelled in that spotlight. Not only have we played a key role in developing vaccines and therapeutics to prevent and treat COVID-19, but our unwavering commitment to study continuity and deployment of innovative solutions in this dynamic environment produced outstanding financial results. As we add another year of double-digit growth to our long track record of strong performance, we are very well positioned for 2021.”
Fourth Quarter 2020 Results
Revenue for the three months ended December 31, 2020 increased
Net income attributable to common stockholders for the three months ended December 31, 2020 was
Adjusted EBITDA for the three months ended December 31, 2020 was
Full Year 2020 Results
Revenue for the year ended December 31, 2020 increased
Net income attributable to common stockholders for the year ended December 31, 2020 was
Adjusted EBITDA for the year ended December 31, 2020 was
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 December 31, 2020 compared to the three months ended December 31, 2019:
|
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 December 31, 2020 compared to the year ended December 31, 2019:
|
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 December 31, 2020, cash and cash equivalents were
As of December 31, 2020, PPD had
On January 13, 2021, PPD entered into and closed a new (i)
PPD’s adjusted total liquidity as of December 31, 2020 was
Financial Guidance
PPD’s first quarter and full year 2021 guidance is as follows:
First Quarter 2021 |
Low – High ($) |
Low – High (Y/Y%) |
Revenue |
|
|
Adjusted EBITDA |
|
|
Adjusted diluted EPS |
|
|
Full Year 2021 |
Low – High ($) |
Low – High (Y/Y%) |
Revenue |
|
|
Adjusted EBITDA |
|
|
Adjusted diluted EPS |
|
|
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
Webcast and Conference Call Details
PPD will host a conference call on Wednesday, February 24, at 9:00 a.m. (Eastern Time) to discuss its fourth quarter and full year 2020 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.
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 Wednesday, March 10, 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 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 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, 2019 as updated by the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020, and other SEC filings, 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.
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 the United States (“GAAP”), this press release contains certain non-GAAP financial measures, including adjusted EBITDA, adjusted tax rate, adjusted net income, adjusted diluted earnings per share, net debt, net leverage ratio, total liquidity and adjusted 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 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.
PPD, INC. AND SUBSIDIARIES |
|||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS |
|||||||||||||||
(unaudited) |
|||||||||||||||
(in thousands, except per share data) |
|||||||||||||||
|
Three Months Ended December 31, |
|
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 PPD, Inc.................................................................................................................. |
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 PPD, Inc.................................................................................................................. |
$ |
73,088 |
|
|
$ |
6,766 |
|
|
$ |
120,153 |
|
|
$ |
54,667 |
|
|
|
|
|
|
|
|
|
||||||||
Earnings per share attributable to common stockholders of PPD, Inc.: |
|
|
|
|
|
|
|
||||||||
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 |
|
||||
PPD, INC. AND SUBSIDIARIES |
|||||||
CONSOLIDATED BALANCE SHEETS |
|||||||
(unaudited) |
|||||||
(in thousands, except par value) |
|||||||
Assets |
|||||||
|
December 31, |
||||||
|
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 |
|
||
Goodwill, net........................................................................................................................... |
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 December 31, 2020 and |
|
|
|
||||
2,080,000 shares authorized; 280,127 shares issued and |
|
|
|
||||
279,426 shares outstanding as of December 31, 2019................................................ |
3,509 |
|
|
2,801 |
|
||
Treasury stock, at cost, 726 and 701 shares as of |
|
|
|
||||
December 31, 2020 and 2019, respectively................................................................ |
(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 |
|
PPD, INC. AND SUBSIDIARIES |
|||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||||||
(unaudited) |
|||||||
(in thousands) |
|||||||
|
Years Ended December 31, |
||||||
|
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 |
|
PPD, INC. AND SUBSIDIARIES |
|||||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP MEASURES |
|||||||||||||||
(unaudited) |
|||||||||||||||
(in thousands, except per share data) |
|||||||||||||||
|
Three Months Ended December 31, |
|
Years Ended
|
||||||||||||
|
2020 |
|
2019 |
|
2020 |
|
2019 |
||||||||
Net income attributable to common stockholders of PPD, Inc...................................... |
$ |
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 ( |
|||||||||||||||
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 December 31, 2020 |
|
||
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 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”).
(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 Auven Therapeutics Holdings, L.P. and venBio Global Strategic Fund, L.P.
(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
View source version on businesswire.com: https://www.businesswire.com/news/home/20210223006094/en/
FAQ
What were PPD's Q4 2020 net authorizations?
What is the revenue growth for PPD in FY 2020?
How much did PPD's net income increase in Q4 2020?
What is PPD's 2021 revenue guidance?
What is PPD's net debt and leverage ratio as of December 31, 2020?
