Okay, this is your water, Keith's water, everybody's water. All right, I think we will get started since we are officially in time. All right. Hi, everybody. Thanks so much for joining us this afternoon. I'm Elizabeth Anderson. I'm the Healthcare Technology and Distribution Analyst here at Evercore. Very pleased to be joined by ICON, Brendan Brennan, CFO, as many of you know, Kate Haven IR, as many of you probably also know as well. Okay, so maybe just to kick it off with sort of the question of the hour for the last many hours. Investors continue to be worried about a slowdown in pharma R&D spend. So how can you kind of give us a lay of the landscape right now, and how do you think about, you know, tracking it as we've gone through the last couple of months? Yeah, it's been an interesting period. We've obviously seen probably two divergent elements, and particularly from our point of view over the last while. I think CROs, to start off with, have been somewhat insulated from other reductions that we've seen in R&D, because obviously people are still keen to get through their Phase II and III development. It's the nearest thing to commercialization. They need to focus on that now. I think it's clear, though, as well, that they're still in that paradigm, looking for ways to, you know, make more efficient their R&D spends on a year-over-year basis. That's certainly the case. But I do, I do think, as I said at the beginning, there's certainly two divergent pieces. There's the biotech industry and there's the large pharma, and those two- Yeah ... pieces are not firing on the same kind of at the same point. So the biotechs we've seen obviously have had a torrid time of it. From 2022 into 2023, funding levels have been down, IPO market has been closed. It's been difficult period of time. I think what we saw in the beginning of, you know, mid-ish of this year, actually, June, July timeframe, was actually really kind of, you know, better traction for them. I wouldn't say it's, you know, I don't think anybody's, you know, doing the victory dance, far from it. But I do think what we've seen is stabilization in their marketplace from a funding environment perspective, and that's been positive over the last month, two months, continues to be from that January period or, sorry, to July period onwards. And we've seen that in our business wins in Q3, and it still looks to be positive as we come into Q4. There's no great precipice there that should make that particularly worse. In fact, we've come to an interest environment where people are generally more positive about the future on interest rates. And so actually, I think they're gaining a bit of traction. And some of the long-term healthcare investors have been sitting on the sideline are going back into that space. So I think that is a good news story. That's certainly helped us from a business wins perspective in Q3. We expect it to continue to help us in Q4 to get back into the kind of mid-1.2 ranges. Pharma is a different animal at the moment. It's got that kind of shadow hanging out there in terms of the Inflation Reduction Act. It's thinking about how it shapes its R&D spends over the next number of years to, as I said, get as many drugs into Phase II and III and really push as much productivity as possible. I think as part of that, they've been pulling back in other sectors, pulling back in discretionary trends, maybe more pulling back in discretionary commercialization spends, but also in any phase clinical development and preclinical discovery a little bit, and focusing more on that Phase II and III area, which obviously we're. This is the core of our organization. What we've also seen, I suppose, the other trend, that we've referenced on a couple of our earnings calls as well, is that kind of blending of what they're looking for from a Phase II, III biotech provider. So, you know, traditionally, obviously, and still to this day, the weight of it is still full service outsourcing. So we take the project, we, you know, we, you know, often involved in the design, and we run it from soup to nuts effectively. I think the blending of the idea of that between that and FSP, which is, you know, more that, you know, they, they hire our—you know, effectively, we hire staff to them, so their clinical monitoring force globally might be an ICON employees who are embedded in the pharma company. So they're looking at: How do I get something in between those two points? Can I have a situation where I have some clinical monitoring, some full service outsourcing, and a blend of two? Do people have to work on my SOPs? Can they work on the CRO's SOPs? How much of the management of that workforce can I outsource as well? Obviously, we lead the field in FSP, and we're one of the biggest organizations in the world in full service outsourcing as well. So I think it from that perspective, it feels like a good time for us to be in the marketplace, and I think that's playing really well from the interactions we're having with our partners at the moment as well. Got it. That makes sense. Is the right precedent in sort of this pharma spending to think about, like, prior large pharma in the large pharma M&A from like the, I don't know, early 2000s, where you have just had kind of like initially these organizations would combine, they would cut spending, but then like, I don't know, some period of months later, maybe 6, whatever months later, there's actually more of an opportunity for you guys as you're like saying, "Hey, I understand you're reducing your budget. Hey, we're 20%-30% cheaper. Like, here's a great way to keep the pipeline while also- Yeah ... hitting the cost targets. No, I think that's, and we've seen that not only in that period, but like directly after the Great Financial Crisis, where- Yeah ... you really saw pharma companies looking to show that they're being effective with their own cost control and their own cost base. Yeah. Really, you know, and that's obviously, that was the advent of the big strategic relationships. So we've seen that- Yeah ... and we continue to see that. That's certainly something that's weighing on their minds at the moment. How do I—it's particularly the C-suites of these organizations who are looking at: How do fundamentally we do our research and development? How do we get a better bang for our buck- Mm-hmm ... in terms of this? I think that's always an opportunity for large-scale CROs, such as ourselves. And it's, and particularly, especially with the flavor of this one that is more runs to FSP, I think that for ICON, particularly, given our experience at developing those types of relationships, given our experience of running that type of business, it suits us particularly well in this particular environment. But I do think it's always an opportunity. We're out there with existing customers. We're asking them - What are we not doing for you today that we have that service that we could be doing? How do we bulk up in the existing relationship? And for new customers, we're exploring what kind of, you know, delivery service they want, how much FSP, how much full service, and how we're best placed to do that blend. It's been a very active period in terms of conversations around that. These last couple of months into the end of this year, it's been really active from that perspective with those large pharma customers. Got it. No, that makes sense. And how are there anything to call out in terms of, like, therapeutic area switch, switches, maybe? No, I mean, it's, you know, we've kind of worked through the kind of that very heady time of the vaccines piece, obviously through COVID. We're. I would say that, particularly the CROs are well down the other side of that hill at this point. Mm-hmm. So that's not an incremental headwind from 2023 to 2024. Obviously, oncology, rare disease, CNS are still very, very prominent in terms of numbers of drugs in development. Yeah. You know, people are obviously you're talking about metabolic. It's an area that people are focused on. It's still a relatively small part of the overall, you know, landscape. It's probably, you know, maybe just, you know, around or just under sub-10%, you know, so it's in around that kind of number. And obviously, it's probably gonna be a high-growth area. Yeah ... and we're all gonna look to that as well, and I think, we've a lot of experience in that space, so we'll be looking to take any advantage we can there. But, you know, the traditional weighting towards oncology, CNS, and orphan indications is very much back where it was prior to COVID. Got it. Okay. That makes sense. And then any sort of changes in RFP flow as we're thinking about Q4? No, at this stage it remains solid, and we talked about being up nicely, year-over-year on a trailing twelve-month basis. That persists into Q4. Mm-hmm. I think the mix of it is different – is pretty decent as well, so it's not... You know, we've seen obviously, as I mentioned, we saw a kind of good recovery in biotech and emerging biotech, small biotech, particularly in Q3. That remains stable, is the best way to put it- Yeah ... as we go into Q4. So that's good, and we see a fair amount of interest from the mid and the large. The large guys, it's not, you know, it's kind of a different animal. You know, it's not tactical business wins. That's not what... You're kind of having more long-term conversations with them around their- Yeah ... sourcing model, and that sometimes shows up in an RFP flow and sometimes doesn't- Yeah ... because, you know, that can be. It's more binary in terms of how that's won. Yeah. But generally speaking, I'd be pretty happy with where things are, and they certainly have been at least as good as they were in Q3. Okay. No, that's, that's certainly good to hear. Are you seeing any sort of pullback in terms of, like, you obviously are very much focused on Phase III, and like, on the Phase IV, sort of like real-world evidence part of the business, is that somewhere where you're seeing any kind of, like, pullback in spend from the pharma side? No, no, not to this point, fortunately. It's been a really good growth business for us. You know, a lot of those studies are often mandated now. Yeah. They're not optional. They used to be more optional in the past. It's often mandated at this point. So that still remains an active space. That's been a really good growth sector for us as part of our organization. We've seen that grow nicely into the double digits over the last number of years. So, and the business wins trend has been very solid there as well. So it's not expected, actually, my expectation certainly is that in 2024, it has another good, solid year of pretty solid growth. You know, one of the other things that we're talking about and thinking about and have been discussing over the last year or so is the, you know, the quantum of, you know, is this—what phase of the cycle are we at with large pharma in terms of how much business they put out there? Are they gonna be eager now to put actually more products out into Phase II, III work- Yeah ... in the anticipation that they need to, you know, offset this, this, IRA or offset their own internal patent cliffs? That's been, that's been something that's been an interesting dynamic. I think from my read of it, they're at a point at the moment where they're figuring out what method they want to do their outsourcing in- Mm ... and with how many providers they want to do that outsourcing. I don't think the rubber's quite met the road yet in terms of any glut of additional trial work that they want to do as they go into 2024. Yeah. But it'll be very interesting to see. I mean, I would agree with the thesis, that they do need to put more work into that phase to get more of a commercial bang for the buck. Yeah. But to this point, it's still more in the former of working out the structure, and we'll hopefully see more drugs come into development and more study starts as we go into 2024. Got it. And if we think about some of your sort of data and analytics portion of your business, that should be sort of relatively more insulated from some of these pressures, too, in terms of just, like, number of seats, and that's sort of a steadier business overall. Thinking about, like, Symphony or- Yeah, it is. It is. It's, you know, it's been, I would say there's a, there's a little bit of a discretionary spend there- Yeah ... as well, in fairness, so it is a little more impacted, I would say, that part of the organization. It's a relatively small, as you know, Yeah ... Elizabeth, it's, you know, you know, single digits in terms of its revenue contribution to Icon. So they're having, I would say 2023 has been a tougher year for them than 2022. Yeah. I think we're still seeing that in the back half of the year. So, you know, they've got probably a tougher hill to climb as we go into 2024- Yeah ... off the back of the business win. So again, you can see that discretionary, you know, decision-making around where money is being spent happening even in the ICON organization. Okay. No, that, that makes sense. Have you guys ever talked about the percentage of your revenue that comes from the FSP business? I mean, we've talked about it kind of from a notional perspective. It represents circa 20% of our- Okay ... of our total revenues, but it's, it's a very solid business. You know, on the combination of our two legacy companies, ICON and PRA, obviously we brought together the largest FSP player in the world. But even as standalone, ICON had a lot of experience dealing with FSP and that type of market. Yeah. I think people get a little concerned and maybe appropriately about the margin profiles in that business versus the full service part of the world, and how the mix shift will impact on overall margin profiles. I think what I would say is that we've got a lot of experience running that type of organization. Yeah. Obviously, with the bigger scale of the organization now as in the combined organization, it represents an important part of our contribution margin and our, and our EBITDA indeed. You know, I think we're, we're also known as an industry or in the industry as a company that is really very, very focused on cost control. Yeah. And I think, you know, I think if you've got that discipline as an organization, if you're experienced in how to deploy the recruitment solutions that you need to develop good FSP-type relationships, you understand what the customer's expectation is of the employees from a experience perspective, you can really make that business work. I mean, we're a business that does 21% EBITDA profiles, even with a higher proportional part of our business being FSP, than the rest of our peer set. So I think it's a really, really strong business, and it can have, you know, when managed well, it can, you know, produce very, very solid EBITDAs. Got it. And if we think about sort of the flow of that, like I'm just trying to think of like how to frame, you know, if it's roughly 20% now, like, and it's maybe towards the higher end of what we've seen recently. Like, what is the typical range? Like, does it sort of range from like maybe 15%-25%? That's kind of the right range to think it is. Is it like, you know, 18-20... You know, like, I'm just trying to think of, like, if we're talking about that sort of broader shift towards it, like, I appreciate what you were saying in terms of the contribution. Like, how big of an impact are we really talking about in terms of that shift? I'm just trying to think through. In revenue percentage terms? Either revenue percentage terms or how you think - Yeah. I was thinking about it in those kinds of terms, but- Yeah, yeah. So I mean, I still don't- Just like a broad, you know? Yeah, I think it's probably, you know, in the short term, this is more around evolving conversations that we're having with customers. Okay. So, and again, the way this business is awarded is that you kind of have to sign a new relationship, and then, you know- Yeah ... we'll take a year of it into backlog at a time. So I, I do think, you know, the, you know, 80% of our, our business for next year or there or thereabouts is already decided by the end time you get to the end of Q3. So for, for 2024, specifically, I don't know if it moves the dial that much. Maybe it's- Yeah ... a couple of percentage, you know, so. But it's not gonna go from like 20%-50%. No, no, no, no. ... in the next five years. I'm, like, that's- That's what I'm trying to like- That certainly wouldn't be my expectation, and certainly it's, you know, certainly we're seeing a lot of demand in the space, and I think maybe we, you know, if we're sitting here this time next year, we can have that conversation again. But certainly at this stage, you know, we would see it moving maybe in the 20%-25% range in, you know, over that- Okay ... period of time. But it's, you know, I don't think it's, I don't think it's... No, I don't think it's going to 50% of the total business. Right. It also is like it would depend on the mix of biotech too, right? 'Cause that- Of course. Yeah. Yeah, 'cause this is, this is peculiar to those top, you know, really 20-25 companies in the world. Yeah. No, that makes sense. Okay, that's very helpful. So I think one area where ICON probably gets less credit than average is sort of on your suite of tech assets. So can you talk about the tech investments you've made sort of since the PRA acquisition and, and how that plays into the business? Yeah, sure. We have. I mean, obviously, you know, it's one of the areas where we're really very focused on, and we kind of break it out into numerous compartments. So it's not just, you know, it's certainly we'd have software solutions that we offer and certainly are very fundamental to our business, but we also think about it from the perspective of automation and robotics. And probably the third leg of the stool, if you like, is AI and how we deploy AI in our organization, and how we're further deploying it into new tools that we're using in the marketplace. So I think if you look at the kind of the fundamental part, you know, the software systems that we have, you know, there's some really well-established systems like Firecrest, that's really, really informative and useful for the doctors at the actual patient sites. It really helps them to get a quick understanding of where the trial is at, where this patient is at, what the actual visit, you know, what's gonna occur at that actual visit. Mm-hmm. And that gives them a really, kind of, again, takes the pain out of the process for them. We're integrating that now with one of the big pieces that came across on the PRA acquisition, which was our DCT, our decentralized platform. And that's gonna allow the doctor then to have the ability to actually run the DCT trial in the same kind of format. And we have a DCT platform that's very scalable, very quick to scale. Obviously, each time you're building a DCT, it has to be bespoke. It has to be for that particular trial. Mm-hmm. So I think one of the advantages of ours is it's very, very quick to scale. It's quick to build. We can get that up at industry best time frames. And again, and it's interoperable with the Firecrest tool, which is effectively the site enablement tool for doctors. So I think that's there are some of the, you know, the bigger pieces that we've, you know, certainly focused on post-acquisition from a technology perspective in terms of what really moves the dial. I mean, the other one to mention is, and this is somewhere we have been augmenting this particular tool with AI, is One Search. One Search is our data aggregator, that allows us to design clinical research, and it's obviously, then we're now layering an AI level on it, so it's, it's also looking at a much broader suite of information, being able to interrogate a much broader suite of information than it was in the past. And what it allows us to do, again, is it, it produces from an AI perspective, a first design of the clinical trial perspective. Then, of course, we have people who come in and review that in the same way we do often work with AI. It's not just AI in isolation, it's AI and people overlaying their own experience. Mm-hmm. But that's giving us the ability to actually go to customers saying, although this might sound, maybe won't sound counterintuitive, but certainly when we look at the vast majority of the data we're seeing, it's telling us that these are the particular sites that are going to be faster for recruiting your patients for your particular indication on your trial. And that can have a meaningful impact in terms of speed to patient recruitment, which is the big metric in our industry. So, you know, both of those systems have, both Firecrest and One Search have won an awful lot of awards in terms of, you know, leading platforms in the space. And then to maybe get to one more system that we just recently launched from the AI perspective, which is Cassandra. And that's a kind of a system, again, that looks at your trial, and it will give you a 90%-95% accuracy in terms of telling you whether you'll be mandated by the FDA or the EMA to do a post-approval trial. And of course, if you're collecting the information, if you know that when you're doing your Phase 2 or 3 trial, you can collect more information and have much more of the work done so that it's not as hard a task when you get to that point. So again, it's just another really good example of where we're kind of really feel like we're leading the field from an AI, and we have a center of excellence around AI. As I said, the Cassandra award has been, or has been awarded numerous awards in the industry for the use of AI in the space. So it's something we're very excited about. It doesn't stop there. It goes into the organization, though, and we look at, as you guys know, a lot of what we do around, you know, automation, robotics, is very important to our core space- Yeah. ... and driving the efficiency of our core space, and that's somewhere where we're gonna continue to look at that. So I see this as being really core critical to our strategy as we move forward. Our customers, and whether it be mix of FSP or just customer expectation around cost delivery and efficiency, we're going to have to be more efficient. We're gonna have to be more automated in how we do our services. And so this push towards the use of technology, the use of automation in what we do on a day-to-day basis, and the use of smart AI, is gonna be a big strategic part of how we move forward. How, in terms of that, like, how much of that is sort of deployed and sort of in use with trials now versus some of this is still sounds like it's more in expansion mode, right? Like, that... I just sort of- So- Thinking about the opportunity now versus in a couple of years. Cassandra is a live product. Okay. You can buy that today and deploy it on your studies if you want. Likewise, One Search is something that we can deploy today if people, you know, when we're working with our customers, and, you know, that it's, it's broad-based, it's not one particular customer set- Yeah ... who would often use One Search to be able to get better visibility. I would say that we're still doing where some of the work that we're doing around Firecrest and the DCT platform in merging that is still ongoing. Yeah. So that's, that's something that we're working on at the moment. But as I think of the future, and you think about, you know, how things like digital twins or biosimulation might have an impact upon early clinical development, be it Phase I or Phase II, about how much of that could be done in silico, and get us to decision points faster- Mm. They're the areas that we're really excited about, you know, how do we develop and how, as a clinical research organization, do we—are we on the front foot of the development of that? I think one of the things that we're very conscious of is that we want to be the people who are really expert in this. We don't want to leave it to our customers to try to figure their way out and do it on a piecemeal-by-piecemeal basis. If we can bring a kind of a global solution to how this is, how you can deploy this kind of technology, you can apply it to a biotech that doesn't have the same resources as a large pharma, and they can use that advantage that we can bring them. So it's very exciting from that perspective. Yeah. No, that makes sense. Have you been able to sort of quantify the impact on patient recruitment timelines? Like, is that something you said, like, "Hey, over the you know, as we think about since, I don't know, PRA, we've been improved it, I don't know, whatever%? Yeah, no, it's in terms of our One Search tool, we have seen where it can actually be 20% more efficient than, you know, the normal process around, you know, patient recruitment. That's certainly something, a metric that we continue to track, and we're looking to always improve upon that as well. Now, it's not all of this is pretty therapeutic-dependent- Yeah. you know? Yeah. So obviously, it's gonna be different in different therapies, but, you know, that's, so there's a bit of a broad brush measure, but that's certainly the kind of quantum we've been seeing. Got it. I mean, the other piece we track, too, is, you know, reducing non-enrolling sites, for instance- Mm ... I'm... I'm sure it's still a big problem in the industry. And it's not just around patient recruitment, but it's around site start-up and making sure we're selecting the right sites right out of the gate, and that's obviously improving overall timelines. Yeah. No, that makes sense. And then in terms of, like, do clients are sort of specifically seeking out these sort of, like, solutions? Or they're just kind of like, "Please run my trial," like, "I'm not sure how you get there, but, you know, like- Yeah ... I wanna, I wanna get there?" Like, how did, how does the- maybe the answer is both, you get sort of the, the all of that. But, like, how specific are they in their, I guess, in their request, versus you're just like, "Oh, it's part of our wraparound, like, that we... In fairness, in most instances, the client, you know, they have to be introduced to the solution. Yeah. Yeah, so you know, that, and that's fair. They- Yeah ... unless they have that experience or they've used it before, they're not gonna have that experience, so. But it's something that we kind of go with the full suite of what we can offer in the first place- Yeah ...on in any environment. And then it's a bit of a smorgasbord. They can kind of pick and choose as they feel it's gonna really benefit them in terms of their clinical research process. Got it. They also want to know what's deployable today- Mm ... right? I mean, they're less interested, I guess, and obviously, we have a number of pilots that we run across the organization in AI and tools generally, but they want to understand where we've had experience in bringing those tools to them. And obviously, the more, the better in terms of what we've actually done and being able to show that to them. Right, so that they're not the guinea pig on- Exactly ... whatever the- Yes ... that deployment is. Okay. No, that certainly makes sense. Okay, so maybe if we sort of go from sort of that, you know, sort of broader level down to sort of 2024. If we sort of think about 2024 conceptually, how do we think about the puts and takes on the gross margin line? I think you has mentioned, you know, FSP as a mix. Mm. You know, I think you've talked about historically that you sort of see that capping sort of 29.5%-30%, something like that. If we think about next year, like, are there... What other points... what am I missing on that? No, I think that's, it's not a bad summary. In fairness, we, you know, we think about, you know, obviously in the third quarter there, we were at 29.8- Mm-hmm ... which was, you know, we're very, very happy with. We talked, you know, a year and a half ago about when we're gonna be selling some of our medium-term targets- Yeah -to be in the range of 29%-30% from a gross margin perspective. I think as we go into 2024, yes, I think FSP mix is something that we need to consider. And maybe that has a little bit of a headwind at gross margin. Mm-hmm. It's still very much comfortable in that 29%-30% range, so it's not moving back that much- Yeah ... if at all. Then, of course, we will, we will continue to do the hard work to try to be as efficient as possible and kinda keep it towards the top end of that range. But, yeah, there could be with business mix shift a little bit there, a little more pressure on gross margin. I think the corollary to that maybe there or the components of that that you need to consider is then we've also... At the same time we talked about 29%-30%, we talked about 8%-9% SG&A. Yeah. And- That was gonna be my next question. Oh, there you go. That's, that's somewhere where we've been really successful, where, you know, we're at 8.8% in Q3. Yeah. We've said 8%, you know, that's, that's kinda where we want to get in the medium term. We do feel that we wanna see about 30-50 basis points of margin expansion next year as we go into 2024 for the full year, 2023 versus 2024. Yeah. EBITDA. And that's, you know, that's gonna be a combination of all those things. Further leverage on SG&A, maybe a little bit of a headwind on gross margin, but all in all, we feel comfortable that we can still perform that. Got it. And then in terms of that, and maybe this is sort of a part for both of those components, like the pricing roll-through that was sort of caught all the CROs, sort of, you know, as inflation took off and was a little bit of a headwind. That should be... You should be getting to the point if inflation is coming down, where you're getting, and you're getting better pricing, presumably on, like, a bigger percentage or contracts. Like, that should almost start to become at some point a little bit of a tailwind or not so... That's not the right way to think about that? 'Cause like- I don't know if I think about, like, given that it's a keenly priced industry and you do have, you know, large pharma really kinda trying to belt tighten at the moment, I'm not sure I'm putting too much of- Right. Fair ... you know, I'm putting too much weight into that. I think what the nice part of the whole inflationary environment is, of course, is on our salary, on our cost base, you know, on the salary increase costs. We've seen really, really good levels of turnover in terms of it dropping substantially from where we were a couple of years ago. We're now below where we would've been historically from a turnover perspective in our headcount. So it's a really stable headcount base. And I think the inflationary environment on that side of things will help us a little bit more this year. So I think when I think about it from a cost from a pricing and cost perspective, I think the cost perspective is more the benefit than the pricing at this point. Got it. Okay. And then maybe turning to what you were just saying about sort of the 30-50 basis points of annual margin expansion, mostly on the SG&A side, how do we think about the opportunities within the global business services model that you said that maybe that also plays into some of those wage things that you just sort of mentioned? Yeah, and there's that. I suppose that's probably a mix of headcount and where we locate folks globally. I think we've done a really good job in terms of, you know... The ICON model has always been a standardized process on large systems with, you know, cohorts of folks in centralized offices and oftentimes they're in lower cost locations like Mexico and India. And that's the way we've actually rolled it out across the combined organization as well. So we're, I would say, 75% of the way to kind of achieving where we wanted to be from day one in terms of that. So we have the systems in place, we have the standardization in place, and we have a lot of the teams actually, you know, shifted to those locations. So we've seen a huge benefit from that in terms of that cost base, in terms of that SG&A structure. And that continues to be a big part of how we play out to that 8% target we're talking about as we go forward. I think the other part that maybe we haven't explored as much yet is about the continuation of automation- Mm ... and the continuation of using efficient process and how we really... This is not as much about, you know, people often say, "Is this about, you know, crunching the headcounts?" Not necessarily about that, but it does allow us to maintain headcounts and continue to grow the top line and kind of break that connection between necessarily having to increase headcount with revenue growth. So it's both in our gross margin and in our SG&A. Mm-hmm. And it's about how much automation can you bring to bear on the lives of people who are doing stuff that really they don't find exciting, interesting. You know, how many, you know, kind of rote tasks can you take out the lives of people? And it doesn't matter whether they're a frontline CRA or whether they're someone who's working in AP, you know, making payments to our suppliers. You know, it, it really is about how much of that can we be focused on? And that's where we have that center of excellence in our organization, around automation, around robotics, and robotic process automation. And that's, as I said, we keep that separate from AI, we keep it separate from the, from the frontline systems, 'cause we realize that there's real hard work to be done in automating an awful lot of what we do. But that really, again, helps us drive our ability to be efficient, to be margin-focused as an organization, but also to make sure that we're being extremely cost-efficient and back to our customers again and giving that benefit back to them also. That makes sense. And I think in your, in your prior statement, you were just saying, talking about you're sort of 75% of the way there on the global business services model. Is that kind of like, you think you'll be all the way there, or, or maybe you're never all the way there? Mm. Right. Maybe that's the wrong way of thinking about it, but the next sort of closing that rest of the 25% gap, is that kind of like a through 2025 kind of event, and that's the way we should think about it? Yeah. Or is it, think about it as a longer tail than that? I mean, I think certainly it's medium term, so it's maybe over the next couple of years, whether that's 2024, 2025, and 2026. But I wouldn't necessarily it all has to be done by the end of 2025. Okay. Certainly it's the way I view it at the moment, is that certainly we want to be moving through that over the next couple of years. Okay. And have you ever quantified sort of the impact of some of these, like, robotics and automation things that you've talked about, or? I mean, we're not, not in dollar terms. We talk and think about it in terms of, you know, numbers of hours that are done through automation in the organization, and, you know, we've talked about, you know, start having certain internal targets. We're looking to we kind of started off with saying, you know, something like, "Could we get to a target of 1 million hours of automation being done by process automation or robotics?" And then our kind of our next target was to double that. So, you know, so these are they're significant numbers in terms of, I suppose, when you think about that on an annual basis and the amount of work that people would've been doing to drive that same level of delivery. You know, they are significant numbers, and that's, that's why, I mean, it's a, it's a well-established process in the organization now. We started this about... Myself and Tom O'Leary, the Chief Information Officer, started this process of RPA and really looking into it about six or seven years ago, and it's been, you know, something that we've continued to invest in to develop our own internal skill sets around. 'Cause I think we know that, you know, as, as the, you know, the further we go, the bigger we get as an organization, the more important it's gonna become that we're, we're extreme ly efficient. That makes a ton of sense. Okay, maybe moving away from the, the margin line, and talking about some of the non-operating items. Can you walk us through the $100 million of interest expense improvement, and potential timing there? I think, you know, on interest particularly, we have, you know, that's a kind of our default position, and what do I mean by that? I mean that if we follow the same course we've been doing over the last two and a half years, in terms of our levels of debt paydown on our Term Loan B particularly, we should be able to deliver on the $100 million. So it's much around, yes, we've put... You know, we're now at 60%, fixed versus floating interest rates with hedges put in place. But it also means that if we continue that aggressive level of paydown, we should be able to decrease our total interest bill for next year by circa $100 million. I suppose the opportunity that isn't spoken to in that is obviously we've just been made investment grade. Yeah ... by S&P. We're hoping that Moody's will follow suit before the end of the year. That gives us the opportunity then to consider kind of refi-ing that entire Term Loan B, moving to an investment-grade bond type structure- Mm-hmm ... where we'll be circa 2x debt-to-EBITDA by the end of the year, so we're kind of solidly in that rating territory. And then, of course, if we do that, A, we can still get the $100 million of savings or should be able to get the $100 million of savings, depending on interest rates in the first quarter, of course. But we can also then obviously have a situation where from maybe that point onwards, we don't need to make that quantum of debt paydown on a quarterly basis. 'Cause obviously, you've got fixed rates, and you've got fixed bonds, and they're gonna be coming up over a period of time, and we're happy with that level of debt in the organization. That gives us a lot more room for maneuver on M&A and from a even a stock buyback perspective. So, I mean, that's where we'd like to be. Our default position at the moment is assuming nothing happens, we can still get the $100 million down. Yeah. But we'd like to be able to be in a position to refi and have that cash and availability to use it to continue to build out the organization. Okay, and you need both, you need both rating agencies to move you to investment grade. Yeah, absolutely. Okay. That makes sense. And then how do you sort of think about that sort of fixed versus variable rate exposure? Well, I guess two questions. One, the $100 million assumes current interest rates going forward? Yeah, I gave you... Yeah, the current curve or expectation, yeah. The current curve or expectation, okay. And then two, how do you think about the mix of sort of variable versus fixed rate debt at this point? We're comfortable with that actually. You know, there would've been a time, I suppose, and if you look at our peers, they're probably more like 80% fixed than we are. We're about 60% fixed, which I think right up until maybe in the last couple of months, people have said, "Mm, maybe higher is better." As people think now we're, we're topping out on the interest curve, people are actually saying, "Oh, hang on, now is not the time to fix more." So funny enough, I was in New York just 2 days ago, talking with, you know, some of our, our banking colleagues about what, what the mindset in the marketplace is around that. They were saying, "Actually, you know, 60/40 is a pretty good place to be right now because you can take the opportunity as those interest rates start to fall." That's the big question, though, right? That's the one everybody's scratching their head about. Are the Fed gonna move in March, April, or is it gonna be higher for longer, like they've been saying? Yeah ... up to this point? So that's the piece I think that we need to scratch our heads on a bit and think about. But right now, I'm pretty comfortable with the 60/40, particularly in the context of being able to possibly actually flip the entire Term Loan B and move to a more fixed environment as we go forward. We've been able to obviously aggressively pay... I mean, the structure of the debt of the Term Loan B, obviously, we've been aggressively paying that down, and we still have the opportunity to do that on the floating piece of that, of the Term Loan B. Yeah. No, that makes sense. And how do we think... Okay, so if, you know, maybe that's obviously, you know, improved, an improvement in terms of cash outlays if you're not paying this interest expense and, et cetera. How do you think about sort of, on the cap deployment front, like, what's most attractive to you in this environment considering sort of valuations and, available assets? I mean, certainly the preference is for additional M&A. I mean, it's, it's sort of a return to the pre-PRA, you know, acquisition strategy, which is more of a string of pearls sort of bolt-on in nature. Mm-hmm. It's really focused around sort of the ancillary areas of the portfolio and our service offering, where we're not quite at the scale that we'd like to be. So it's areas like, you know, laboratory services and even that late phase area we were talking about earlier, you know, Phase IV in general, Site and Patient Solutions, technology. I mean, there's a number of areas where we feel like we have... It would be a nice, you know, opportunity to scale that in a faster manner than organically growing those businesses as we have been doing. So, you know, the challenge, of course, is that valuations in the space are still quite high. Yeah, that's what I was gonna ask, how that's- Who we buy, you know, a lot of private equity, you know, interests. Yeah. So that's always the, you know, the push and the pull in terms of, you know, the attractiveness of opportunities from a strategic, you know, perspective and how we weigh that against some of the financial, you know, and valuation metrics. So certainly we'd like to see that step up in 2024. I think that's our expectation. And then, you know, alongside, you know, share buyback and certainly could be more aggressive on the buyback front if we obviously don't deploy as much, you know, in M&A. Okay. And you're talking when you say step up in M&A, you're talking about year-over-year basis, that's kind of how you're thinking about it? Correct. Yes, Correct. Yes, obviously we did a very small- Yeah, yeah, yeah. -Yeah. That's just... okay. Yes. I just know whether that was like a pre-PRA- Yes ... commentary step up for that or recently. Okay, that certainly makes sense. If we think about also maybe on the sort of cash flow front, how is the collections process going? Like, how, you know, how has that process been unrolling as we get through the end of the year? Yeah, it's hard work. It remains very focused attention to each of your debtors, and making sure that you're having open and active communication with them around the timing of their invoices, the timing of our billing, all of those pieces. I think we've done a good job on getting back to a better position. To this point, we're at 49 days of DSO at the end of Q3. Good for me, given our credit terms across our book of business, is in the mid-40s. So that's, you know... So optimal is mid-40s. Okay. So we're not a million miles off what optimal looks like. In order to get there, I think we're very focused on doing exactly what I said, which was, you know, following up with customers, making sure they're happy with their invoices, making sure there's no specific additions, issues, or reasons why they can't make payments on that invoice. Yeah. You know, as we look at the pressure and where it's coming from, it really is the large pharmas that are creating the pressure in the DSO. Yeah. It's not-- we don't have really significant DSO exposure in our biotechs or mid-sized customers. And you've got large pharmas who have, you know, credit terms of, you know, circa 90 days on average. So it is-- that's why we're obviously we're exposed to that as part of our, you know, the obviously, our mix shift of FSP is, you know, obviously, that's much more large pharma as well, as you can imagine. Yes. Yes. Yes. So that's been, that's been the continuing trend during the course of the year. And so it's, it's all about that. I think we have the ability to maybe get down those two or three days in the last quarter of the year. That's certainly what we're focusing on, and a lot of hard work going into making that happen. But I don't feel at this point like there's anything that we're doing that's structurally incorrect or, you know, we're not getting after billing points or any of the, all of that is kind of, you know, is done and dusted. It's really just, you know, trying to get cash out of folks at this point in time with the interest rates the way they are at the moment, it's pretty tough. So it takes a lot of work. But, we're very focused on, as I said, getting that 2 or 3 days down. And I wouldn't say I'll be declaring victory at that point, but certainly mid-40s is in or around the right level for where we should be. Yeah. No, that makes sense. In terms of, like, free cash flow improvement, any other sort of key areas besides that, that are sort of something you guys are thinking about? You know, from a cash flow perspective, our balance sheet is pretty simple. It's not unlike our P&L account to that extent. If you can keep your DSO stable, there's a bit more front-loading in the cost base with taxes and insurance costs in the first half of the year- Mm-hmm ... and some data cost licenses that we have that usually get renewed in the first half of the year. So it's a little heavier on cash usage. So cash usage in the second half is always a bit better, and we saw that, particularly even with the improvement in DSO in Q3, we still saw very significant or fairly significant part of our cost base being, you know, just our total amount of payments we need to make in Q3 versus Q2. So, you know, we expect that to be the case in Q4 as well, but it's not-- I mean, the major lever to pull is still DSO. Just that. And are you subject to any of the Pillar Two impact? Of course, yeah, yeah. Like, like most other non-US companies or companies that have US presences outside the US, yeah, absolutely. You know, the global minimum tax rate is not a new thing. You know, that 15% global tax rate is, is coming in from, from 2024 and, and we'll be, you know, certainly subject to that. We're about 15.5% effective tax rate at the moment. We were about 16.5% last year. In, in the kind of medium term, I've been saying that, well, we can expect to... I suppose if you have a minimum of 15%, I know it's been, most people have been saying that year-over-year impacts from 2023 to 2024 could be quite significant, like 1%-2%. I think it's probably for us, maybe it's in that percentage range, between 15.5% and 16.5%. And And again, in terms of giving you maybe kind of a little more color on that, I would say at this point, from what I'm seeing at the moment from my team internally, is probably at the higher end of that range. Okay. So I would say about 16.5% is probably the way to think about that. The good news, if that's the way you want to color it, is that that should stabilize there afterwards. There is no, at least to this point, there's no big other OECD implementations that we can think of that mean that we should move significantly out of that 16%-16.5% range as we go forward into 2025, 2026, and onwards. So it feels like we're kind of back to a more post-transaction and all of the other pieces, a much more even, stable tax rate as we go forward. Got it. Okay, that makes sense. And then I think on the, just the last side on the capital deployment, any changes in sort of like the ongoing, you know, business needs as you think about some of these, like, initiatives that you've been talking about? Like, should we think about sort of like CapEx and things like that as being fairly consistent going forward as%? Yeah, I mean, it's interesting. Most of our CapEx is not anything other than people's time now. It's, you know, a lot of what we spend on CapEx, and we spend—I mean, we'll probably spend, I mean, we spent about $150 million last year. Yeah. It'll be in that, maybe a little less this year, but certainly in that ballpark. We'd like to, you know, I mean, I think as we go into every year, we want to spend a bit more, so we'd like to do a bit more than that next year. But it really comes down to, you know, the internal costs of people's time, because software, as we all know, is a service now, so you pay for it on your P&L account. Yeah. CapEx really has shifted over time. Yeah ... from being the acquisition of licenses and hardware to really people's time. So we feel like we are doing a good job. As I said, we've a lot of internal folks who are focused on automation and on AI and system development that are gonna move the dial in the company, and we're able to service that at that kind of $150-ish million on an annual basis. So not expecting any dramatic changes at the moment on that one. Got it. And as we have just a little bit more than a minute left, what do you think at this point is, like, the, that is most misunderstood about ICON by investors? You know, I think things are certainly... I mean, there was, you know, the level of... It's been an interesting year. This has been a, I think, a better year at actually telling the story, I think for people getting their heads around the risk profile of the CROs, of getting past the point of being overly concerned about integration with the PRAs. We've obviously seen the margin profile come through really strongly as well. I think if I was here even earlier in this year, I would've said that, I think the most missed part is how successful we've been at margin development, in the context of bringing 2 20,000-person service organizations together. Yeah. That has been a phenomenal story and have been hard, hard-fought, and right across our organization, everybody takes a part of the share of the glory of that one. In fairness, I think the market has a better understanding and a better appreciation for that now, and I think that's something that has been pleasing to see over the last while. I think it's, you know, there is still a lot of nervousness out there. There's still a lot of other pieces at play, how the biotech's gonna impact, how large pharma's gonna impact. But I do feel pretty good about where we are in the marketplace at the moment. I think we've got a very competitive offering. I think our mix, as I said at the beginning, of FSP and full service, and the ability to blend that, is probably unmatched at our scale in the industry at the moment. So I think if there was anything that I would say, that is, you know, maybe that's it, which is we feel like we're in a really good place, in a solid marketplace, where we can take advantage, given our unique business mix at the moment. Sounds great. Thank you so much, Brendan