Good day, and thank you for standing by. Welcome to the Q3 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you will need to press star one and one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one and one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Kate Haven. Please go ahead. Thanks. Good day, and thank you for joining us on this call covering the quarter ended September 30, 2023. Also on the call today, we have our CEO, Dr. Steve Cutler, and our CFO, Mr. Brendan Brennan. I would like to note that this call is webcast and that there are slides available to download on our website to accompany today's call. Certain statements in today's call will be forward-looking statements. These statements are based on management's current expectations and information currently available, including current economic and industry conditions. Actual results may differ materially from those stated or implied by forward-looking statements due to risks and uncertainties associated with the company's business, and listeners are cautioned that forward-looking statements are not guarantees of future performance. Forward-looking statements are only as of the date they are made, and we do not undertake any obligation to update publicly any forward-looking statement, either as a result of new information, future events, or otherwise. More information about the risks and uncertainties relating to these forward-looking statements may be found in SEC reports filed by the company, including the Form 20-F, filed on February 24, 2023. This presentation includes selected non-GAAP financial measures, which Steve and Brendan will be referencing in their prepared remarks. For a presentation of the most directly comparable GAAP financial measures, please refer to the press release section titled Condensed Consolidated Statements of Operations. While non-GAAP financial measures are not superior to or a substitute for the comparable GAAP measures, we believe certain non-GAAP information is more useful to investors for historical comparison purposes. Included in the press release in the earnings slides, you will note a reconciliation of non-GAAP measures. Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted Earnings Per Share excludes stock compensation expense, restructuring costs, foreign currency gains and losses, amortization, and transaction-related and integration-related costs, and their respective tax benefits. We will be limiting the call today to one hour and would therefore ask participants to keep their questions to one each, with an opportunity for a brief follow-up. I'd now like to hand the call over to our CEO, Dr. Steve Cutler. Thank you, Kate, and good day, everyone. ICON delivered impressive results in quarter three as we continue to work as a trusted partner for our customers in bringing innovative solutions to achieve their clinical development goals. The industry demand environment in clinical development remains healthy, with a solid level of opportunities present across all customer segments. Overall, RFP activity continued to improve in quarter three, with growth in the higher single digits on a trailing twelve-month basis. Net bookings increased 10% year-over-year, resulting in a good book-to-bill of 1.26x revenue in the quarter. Historically, we've seen a very close correlation between ASC 606 and ASC 605 net business wins, and that was the case this quarter as well. This has helped us to drive strong direct fee revenue growth and our margin progression. We are encouraged by the positive trends we are seeing across our business that have continued into the beginning of quarter four, and we remain cautiously optimistic that this trend will continue as we close out this year. With that said, we're mindful of macroeconomic factors driving uncertainty in a number of areas, including biotech funding levels, the interest rate environment, and evolving geopolitical concerns, all of which impact our industry. As customers face uncertainty or potential challenges in their business, whether it be from macroeconomic concerns, changes such as... or changes such as the Inflation Reduction Act or internal cost pressures, our role as a strategic partner becomes even more critical. We are constantly engaging with our customers in identifying solutions that accelerate clinical development while driving greater efficiencies across their portfolios. We do this in a number of areas, including implementing technology solutions, advanced data analytics, and streamlining rate-limiting development activities. We believe this backdrop presents ICON with even more potential opportunity in terms of outsourced work over time. Given the scale of the company and the range of our customer base, we are well diversified and embedded from a customer and service segment perspective, ensuring that the impact of any market changes can be managed effectively. To that end, we are seeing a significant level of demand, with customers seeking novel solutions to customize a development model that is built on flexibility and efficient delivery of services. As we've noted before, this often takes the shape of a blended model of development, incorporating elements of full service and functional solutions. Our competitive position has never been better in being able to address our customer needs in this regard. The experience, depth, and breadth of our capabilities across full service and functional solutions is unmatched in the industry. In addition, our market leadership extends beyond the services and solutions offered to the stability, tenure, and consistency of our team at an executive and operational level. This has allowed us to build and further develop strong customer relationships, leaving ICON well-placed to partner with customers in a more strategic manner. We also retain our singular focus in clinical development, which we believe provides improved project delivery for our customers and is a key differentiator in our industry. Our therapeutic depth and experience has led to continued success from a new business perspective. As we announced in September, we are partnering with BARDA as part of Project NextGen, to execute a phase II multi-year clinical trial to evaluate the effectiveness of next-generation COVID-19 vaccines. We were selected for this important trial due to our leading experience in vaccine development, and specifically in effectively executing recent first-generation COVID-19 trials. In the current year, we expect our COVID-related business to be in the range of 3%-4% of total revenue, and would anticipate that on a go-forward basis, would continue to represent a similar percentage of total revenue. We have continued our focused investments to drive forward our strategy in becoming the world's leading healthcare intelligence organization. One critical element we focused on is in improving overall patient access and engagement to make it easier for the site and patient to participate in clinical research. We have recently partnered with Lightship, a clinical trial provider that utilizes decentralized solutions to bring the trial to a patient, either through a mobile research unit or nursing team at a patient's preferred location. We believe Lightship's capabilities will nicely complement our decentralized trial offering and act as an extension of our broad Accellacare site network. This approach to development not only improves overall patient access, but importantly, it has the potential to reach more diverse patient populations as well, an issue that is an increasingly important factor in clinical development. We recently completed our annual celebration of our Own It culture at ICON, engaging every single employee across our organization, across time zones and global locations. We highlight the important work that we do in advancing life-saving products to the market, a noble mission that unites our dedicated workforce and underpins the unique culture and pride that differentiates our organization. A great testament to this point was the recognition that ICON received in September in being named as one of the world's best companies in 2023 by Time. This inaugural list is a compilation of the most outstanding global companies across a number of industries. The analysis ranked companies in three key areas: employee satisfaction, revenue growth, and sustainability. We were proud to be recognized amongst this prestigious group of companies as the top-ranked CRO on the list. This award is reflective of the increased scale of our organization and our commitment to making ICON the customer, partner, and employer of choice within our industry. Moving to our financial performance in the quarter, ICON delivered strong results, with 6% revenue growth over quarter 3, 2022. Direct fee revenue growth was again in the higher single digits on a year-over-year basis. Net bookings were also strong across our business segments, reaching a record level in quarter 3 and driving 10% year-over-year growth in our total backlog. Solid direct fee growth and our industry-leading cost management supported our double-digit Adjusted EBITDA growth, resulting in a margin of 21% in the quarter. This was driven by a continued increase in gross margin, as well as further leverage in our SG&A expense, which totaled 8.8% revenue in quarter three. The Adjusted EBITDA margin level of 21% was set as a midterm target for 2025, back in early 2022, and I commend our team for the impressive performance to deliver on this target well ahead of our initial plan. Further, despite the ongoing pressure on a year-over-year basis from increased interest expense, we continued to grow our earnings per share in quarter three with a notable 10% increase over quarter three, 2022. From a capital deployment perspective, we executed on our strategic priorities as previously outlined, with a focus on continued debt paydown, as well as a return to our M&A strategy, focused on tuck-in acquisitions in strategically important areas of our portfolio. In October, we closed a small but strategic acquisition of Phillips Pharma Solutions, a leading provider of medical imaging and cardiac safety monitoring solutions. This will enhance our medical imaging experience and capabilities, particularly in the therapeutic areas of cardiovascular and metabolic diseases. It also brings new core laboratory services to ICON, positioning us well to grow further in both existing and new customer relationships. While this is a small acquisition for ICON, expected to contribute less than $10 million in the fourth quarter, it's synergistic with our business in providing cardiac services that are needed on clinical trials. We expect to continue evaluating further strategic acquisitions as well as opportunistic share buy purchases as we move into 2024. I was also pleased with our recently announced return to an investment-grade debt rating by S&P Global Ratings. While we are still in discussions with other rating agencies, I'm confident that we will be able to restructure a significant portion of our variable rate debt within the next six months or so, which will, along with continued debt paydown, lead to significantly reduced interest expense in 2024. We will provide more details on this as we make further progress. With our performance through quarter three, we are reiterating our financial guidance for the full year 2023. We expect revenue to be in the range of $8.07 billion-$8.21 billion, an increase of 4.3%-6.1% over the prior year. Additionally, we expect adjusted earnings per share to be in the range of $12.63-$12.91, representing an increase of 7.5%-9.9% over the full year 2022. Before I close out my comments, I want to recognize our colleagues in Israel and the conflict area in the Middle East during this very difficult time. The safety and well-being of our employees is and will always be our number one priority, and we are actively supporting affected employees as well as customers in that region. We remain focused on ensuring continuity of our business operations and customer studies to the best of our ability, and we will continue to support our dedicated team, who have shown great resiliency during these challenging times. I'll now turn it over to Brendan for additional comments on our financial results. Brendan? Thanks, Steve. In quarter three, ICON achieved gross business wins of $3.06 billion and recorded $474 million worth of cancellations. This resulted in an impressive level of net awards in the quarter of $2.58 billion, a net book-to-bill of 1.26x. With the addition of the new awards in quarter three, our backlog grew to a record $22.2 billion, representing an increase of 2.6% on quarter two of 2023, or an increase of 10% year-over-year. Our backlog burn was 9.5% in the quarter, in line with quarter two levels, as we anticipated. Revenue in quarter three was $2.055 billion. This represented a year-on-year increase of 5.8% or 4.8% on a constant currency organic basis. Overall, customer concentration in our top 25 customers increased slightly from quarter two, 2023. Our top customer represented 8.5% of total revenue in quarter three, and our top five customers represented 25.7%. Our top 10 represented 40.4%, while our top 25 represented 62.2%. Our customer base remains well diversified, with a number of scaled partnerships, resulting in a lack of particular concentration across our top customers. Gross margin for the quarter was 29.8%, compared to 29.6% in quarter two, 2023. Gross margin increased 30 basis points over gross margin of 29.5% in quarter three, 2022. Total SG&A expense was $180.1 million in quarter three, or 8.8% of revenue. In the comparable period last year, total SG&A expense was $192.9 million, or 9.9% of revenue. The year-over-year reduction was driven by successful delivery of cost synergies related to the PRA transaction, as well as further implementation of our global business services model. Adjusted EBITDA was $432.5 million for the quarter, or 21% of revenue. In the comparable period last year, adjusted EBITDA was $379.6 million, or 19.5% of revenue, representing a year-over-year increase of 13.9%. Sequentially, adjusted EBITDA margin improved 50 basis points over quarter two margin of 20.5%. Adjusted operating income for the quarter three was $401.1 million, a margin of 19.5%. This is an increase of 13.7% over Adjusted Operating Income of $352.7 million, a margin of 18.2% in quarter three, 2022. Net interest expense was $78 million for quarter three, quarter three. We continue to expect that full-year interest expense to total amount approximately $310 million in 2023. The effective tax rate was 15.2% for the quarter. We continue to expect the full year 2023 Adjusted Effective Tax Rate to be approximately 15.5%, down from our full year 2022 effective tax rate of 16.5%. Adjusted net income attributable to the group for the quarter was $273.9 million, a margin of 13.3%, equating to adjusted earnings per share of $3.30, an increase of 10% year-over-year. In the third quarter, the company recorded $10.4 million of transaction and integration-related costs. U.S. GAAP income from operations amended to $264.3 million, or 12.9% of revenue during quarter three. U.S. GAAP net income attributable to the group in the quarter three was $163.7 million or $1.97 per diluted share, compared to $1.94 per share for the equivalent period in the prior year. Net accounts receivable was $1.129 billion at September 30, 2023. This compares with a net accounts receivable balance of $1.171 billion at the end of quarter two, 2023. DSO was 49 days at September 30, 2023, a decrease of 3 days from June 30, 2023. Cash from operating activities in the quarter was $341.5 million. Free cash flow was very strong in the quarter 3, increasing an impressive 82% sequentially. We were pleased with the improvement in DSO in quarter 3 and expect to make further progress in quarter 4, as our focus on billing levels and cash collection activities continue. At September 30, 2023, cash and cash equivalents totaled $315 million, and debt totaled $4.04 billion, leaving a net debt position of $3.73 billion. This compared to a net debt of $4.04 billion at June 30, 2023, and net debt of $4.24 billion at September 30, 2022. Capital expenditure during the quarter was $29.1 million. From a capital deployment perspective, we made a payment of $300 million on our Term Loan B facility in quarter three, and ended the quarter with a leverage ratio of 2.3 times net debt to adjusted EBITDA. We expect to make another payment on our Term Loan B facility in quarter four, which would result in total payments for the full year in the range of $800 million-$1 billion. We were pleased to receive an upgrade in our credit rating from S&P Global Ratings earlier this month to an investment-grade rating with a stable outlook. This upgrade was based on our strong operating performance and commitment to deleveraging since the acquisition of the PRA Health Sciences acquisition in July 2021. As we have done in the past, we will plan to issue full year guidance for 2024 in early January, in conjunction with our presentation at the JP Morgan Healthcare Conference. Finally, our key assumptions behind the full year guidance remain in place: an effective tax rate of 15.5%, free cash flow target of circa $1 billion, CapEx spend of circa $150 million, and interest expense of circa $310 million for the full year 2023. Before we move to Q&A, we want to thank all of the employees of ICON for their efforts in delivering our continued performance in quarter three. Operator, we are now ready for questions. Thank you. As a reminder, to ask a question, you will need to press star one and one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. We will take our first question. The question comes from the line of Max Smock from William Blair. Please go ahead. Your line is open. Hi, thank you for taking our question. It's Christine Rains for Max Smock. So I was hoping you could share, what growth was on both a direct fee and non-COVID basis, and what you see as your normalized range for pass-throughs as a percent of sales, and when you expect to get back to this level? Thanks. Yeah, well, well, I think you saw our reported numbers around 6% on a ASC 606 basis. Directly was a bit higher than that, in the higher single digits from a direct fee basis, and on a non-COVID basis, similar sort of number. So those... That, that's where we were from a, as I say, direct fee and non-COVID basis. Great, thank you. Then just a quick follow-up. How big of an impact have Pfizer's recently announced cost cuts been, and was this baked into your outlook, or were they unexpected? Thanks. Oh, no, these are, these are relatively expected. We're in close contact with our partner, customers on a regular basis, and we recognize the challenges that that particular customer has. We're working closely with them in terms of what they're looking to do. Nothing's been decided at this point. There's sometimes, with these sort of things, some opportunity for us in terms that they were happy to further consolidate their spending, even though they're looking to take that overall spend down over the relatively short term. So these things aren't always negatives for us, but we work closely with our partners to look at it, and we have that in the forecast, yeah. Great. Thanks for the color, and congrats on the quarter. Thanks. Thank you. Thank you. We will take our next question. The question comes from the line of Eric Coldwell from Baird. Please go ahead. Your line is open. Thank you. Good morning, good afternoon. I wanted to ask on the BARDA contract, given that that is a public information, visible contract, could you speak to all about the impact on awards in the third quarter, how you might see that evolving through the fourth quarter, and then really just the mechanics of how those contracts play out and how you take bookings on various relationships that could develop with, with different partners? I think there's a lot of interest in the mechanics of how the bookings play out through the BARDA contract. Thank you very much. Sure. Hi, Eric. Yeah, we don't give sort of specific details on individual contracts, but that was, as you well know, a subject of a release and certainly an important contract for us. We've taken the full amount of it. It's certainly not at the size as we've seen reported. It's significantly less than some of the reports we've seen in terms of the dollar amount there. So it is a phase II study. I wanna emphasize that, phase II study. So it's an important award, and it's a multi-year study. It's really gonna start... It won't have any impact, obviously, on this year. It's gonna start to play probably into the back end of next year, and it'll run for several years. You know, it is a vaccine study, so it'll probably burn a bit faster than some of our other trials, but these things do tend to, you know, to burn over several years. ... and that's certainly the case with this one. I think the important thing, though, around this COVID work is it's not one-off. We're seeing COVID work, COVID revenues at about 3%-4% of revenues this year. And quite frankly, we expect that to continue over the next couple of years, 2025, 2024, 2025, even into 2026. We believe COVID is something that's gonna, the work within the development work to bring on new generation and new pretreatments for COVID, is gonna continue. It's gonna become part of the normal clinical developments of the landscape. And so I don't think this should be thought of as a one-off. I don't think we're gonna have any sort of, you know, hills to climb, so to speak, as we go, as we go around with COVID. It's gonna be work that, that continues at around the low single digit in, in revenues, on a, on a long-term basis. So that's what I'd say about this. We have other similar sort of projects or similar sort of pending awards, in this space as well. And, and we'll hopefully be successful in those over the next couple of quarters, 6, 12 months and, and ongoing. So as I say, not a one-off, significant contract, but, but not one that's, at the, at the level that, that I've seen in some of the, some of the quotes, that's for sure. Yeah, I think I'm a bit surprised that you took the full amount in the third quarter, and I guess the concern is the street's looking at a public document that says a billion-dollar award spread across you and a few others, but you're the biggest. You know, I think the concern is obviously gonna be, without further definition, how much of your bookings came in 3Q from that? Because, you know, some people could do some quick math and think that your net bookings ex BARDA would be, you know, in theory, could even be down year-over-year, you know, book-to-bill below one. So I'm hoping you can maybe stretch here. Well, I can- Just a little more. I can tell you unequivocally that that is not the case. It wasn't even our largest award in the quarter. So, you know, our policy would dictate that we would take the full amount. That's what we would normally do, as we would with any other customer. In fact, it's a government contract. It's probably less likely to be canceled, I think, than some of the other ones we work with private companies. So, you know, we've just followed our normal policy. The number is significant, but not overwhelming, and it's something that we feel has been entirely appropriately taken this quarter. Okay. I think I'd add, Eric, you know, just- Yeah ... just to emphasize the fact. We've always been relatively conservative in how we book our business into our backlog, and I think that's been consistent throughout time. And as Steve said in his opening comments, you know, there's, there's not a great, there's a lot of similarity in the book-to-bill between our direct fee and our ASC 605, ASC 606. So between ASC 605 and ASC 606, there's not a lot of difference in terms of the book-to-bill that we do in the quarters, and certainly the case in the current quarter as well. So, I think, you know, yes, yes, it was a significant award, but we are conservative in doing this, and I think we have—we've taken an appropriate approach, and as Steve said, it's not even the biggest one of the quarter. So, I think we're in good place from that perspective. Okay. Thank you. Thank you. We will take our next question. Your question comes from the line of Justin Bowers from Deutsche Bank. Please go ahead. Your line is open. Hi, good afternoon or morning, everyone. Just taking a step back, can you sort of paint the landscape for, you know, large pharma customers and, and biotech customers and, and maybe sort of like contrast that to, you know, this time last year or maybe even earlier this year, just trying to get a sense of, of how the environment's evolved? Yeah, Justin. I mean, we've seen pretty constructive, positive RFP numbers for, certainly for the last two quarters over all the segments across biotech, large pharma, in our more sort of ancillary services, labs, early phase, et cetera, and obviously FSP as well. So, you know, I talked about high single digits as being a sort of across the landscape, and it's fairly consistently across those segments. So, you know, overall, we see a very constructive, a very positive sort of business environment. Obviously, there are some challenges out there in the macroeconomic environment. We're very aware of that, but, you know, I think we talked about cautiously optimistic as being our sort of watch words for this present time. There's nothing that we've seen, certainly from an RFP point of view or from an awards point of view, that would, that would change that. You know, it's a, it's a constructive, solid, positive environment we feel we're well-placed to benefit from. Got it. And then just a quick follow-up. In terms of the burn rate, when you look at the backlog now and sort of the awards over the last twelve months, is sort of the go-forward burn rate, you know, do we think it's similar in that 9.5%, ±, corridor, you know, over the next twelve months? Or anything in the backlog that would change the sort of the trajectory of that? Hey, Justin, it's Brendan here. I might take that one. Yeah, obviously, we, we've talked about 9.5%. For the full year, this year, that's our forecast position for 2023. As we look into our business wins, as they came in in the back end of the year, Steve made the comments there that we're, you know, cautiously optimistic about the future here, so that applies to Q4 as well. And, you know, we wanna see good development. So, we'll obviously give a much more fulsome update when we do our guidance. But at this stage, yes, it's in that corridor is probably not a bad way of thinking about things, albeit we will give further color, as I said, when we get to our guidance, which we are planning to do in January in JPM. Got it. Thank you. ... Thank you. We will take our next question. Your next question comes from the line of Derik de Bruin from Bank of America. Please go ahead. Your line is open. Hi, good morning, and thank you for taking my question. So, as you noted, you've done great work on the EBITDA margin, and you're ahead of—you basically have hit your target ahead of schedule. You know, I have to be the jerk and ask, where do we go from here? How much expansion do we continue to see going forward? Just any color on that. Yeah, sure, Derek. As you know, we're ahead of schedule on our EBITDA margin at 21% for the quarter. So we're very pleased with what you know, how we've been able to do that. That's been a combination of both improvements in the operational side of things, gross margin, and also on the SG&A front with our world-class global business services group. You know, I think going forward, given some of the market dynamics, probably any further uptick, and we're certainly aiming for that going forward into 2024, 2025, will probably come in the SG&A region. We, you know, we continue to push hard in the robotics AI, machine learning sort of space. We've got a significant amount of resource deployed in that area now, and that's increasing. We've got some fairly aggressive targets in that space. We're also looking at where, you know, where our workforces are located on the, you know, in the longer term, and making sure we're maximizing benefits in, in that position, in that case. Well, so there are a few more levers we can continue to pull in, probably more in the SG&A space than in the operational space, where we can possibly make some modest improvements, but it'll be more challenging, I think, in that area, in the medium term. Great. And I've had a number of investors asking questions about the CRO competitive dynamics in the market, given that, you know, you just had one company got spun out, you had another one taken private by private equity, maybe a little bit more focused on those businesses now than they were in the past. I guess, have you, you know, what's your sort of take on the CRO competitive landscape and how that evolves, given you've got some of these smaller players that have sort of had seen some changes? Yeah, it's been an interesting time in our industry over the last several years, I suppose, with some companies going private and just spinning out and the rest of it. You know, we do see the top three sort of starting to differentiate or move away from that sort of middle tier. That I think is being evidenced in the data that's coming out in terms of, you know, our revenues and profitability, et cetera. Scale, I think, represents an important differentiating advantage for those top three. So I think that will continue. Some of our competitors at more modest, the lower levels have got some challenges and some work to do, and they're gonna do it more in a private setting in one or two cases. That's for them to do, and I'm not gonna sort of get too specific on that. But it has, I think, offered us some opportunity to improve our market share or to put ourselves in a better position competitively. And that's usually a relatively short-term thing. They'll get their act together at some point. So for us, you know, as a stable, you know, committed, experienced, you know, organization focused in the clinical space and, you know, being very stable from a management point of view, you know, it's probably offered us some opportunity, and we're certainly keen to take that, and we've been, I think, benefiting from it. Thank you very much. Thank you. We will take our next question. Your next question comes from the line of Elizabeth Anderson from Evercore ISI. Please go ahead. Your line is open. Hey, guys, thanks so much for the question. Maybe just circling back to some of the pharma commentary. I think obviously investors have been a bit nervous because of sort of what's happening on tools and maybe on the early development side, which I understand obviously you don't, you don't play in. But how do we think about, like, from your conversations with pharma, like, where are they prioritizing the spending? And I guess I'm just sort of like a back way of of trying to figure out, like, how are you guys continuing to sort of outperform what we've seen as sort of worse results on some of the earlier stage stuff? Yeah. I mean, Liz, I'm not sure I can add much more to what I said before. You know, we've seen a very solid environment, RFP wise, award wise, right across the segments. Be it large pharma, the biotech, and more in the sort of ancillary services that we do. Labs have been strong for us. Recently, late phase, real-world evidence and, our late phase group has also, done well. So you know, it's been fairly broad-based. I would say, I think we've called it out before, there's been a little bit of a move towards FSP and hybrid solutions in the large pharma market. That's been a, that's been certainly a feature, and we, we feel well-placed to be able to, accommodate that and to put in place solutions that are more hybrid, I suppose, in terms of adding technology and adding opportunity to, to, you know, to push on with margins in, in that space. So, you know, but overall, again, it's I say, a broad-based, positive environment. Biotech funding, of course, you know, remains something of an overhang, but even that seems to be, to us, stabilizing. And, and I think the last, month or two, there's some, there's some green shoots there. So, you know, again, we're finding good science getting, getting funded. So I, I won't say any more. I think the, you know, as I said, broad-based, positive, constructive. Maybe, maybe just to add to that, Elizabeth, it's Brendan here. You know, obviously, folks are gonna spend the money on the phase II-III drugs that are closer to, you know, the market, and have more potential, even if they're thinking about a transaction. So that's always a prioritizing area, and we've seen that in past cycles as well. ... Got it. No, and maybe one follow-up for you, Brendan. You obviously had a nice improvement in the DSOs in the quarter. How do we think about the, like, go-forward rate for that and sort of where it might normalize? I know you've been talking about sort of differences between sort of pharma's recent behavior and, biotech. So any more color on that would be helpful. Yeah, everybody's keen to hang on to their dollars at the moment, Elizabeth. I think that, that's fair to say, ourselves included. I mean, I think we've talked about, you know, in this organization, with the blend of customers we have and the blend of commercial terms we have, that the mid-40s is good. It's. That's a good position. So if everything works well, that's where we should be. If we're doing exceptionally well, we're below that, and if we're doing a little off that mark, we need to catch up. I still think that's where we're looking for. So as we think about the fourth quarter, obviously, we're glad to be back in the forties now, at 49 at the end of Q3. But certainly, we're still looking to improve on our 2-3 days as we go into the fourth quarter. And I think that's important from our cash conversion cycle, as well as we get into the back half of the year to get to our free cash flow targets. So that certainly is our target that we're confident we can continue to go about doing that work as we get into Q4. Got it. Thank you. Thank you. We will take our next question. The next question comes from the line of Jack Meehan from Nephron Research. Please go ahead. Your line is open. Thank you. Good morning. Good afternoon. Brendan, I know you said you would provide guidance to JPM. I was wondering, though, if you had any framing comments for 2024 you could share around puts and takes. And just one thing I'd be keen to hear about is just thoughts on interest expense, like how does the recent debt upgrade maybe play into that? Yeah. Is this, please give us the guidance before the guidance? Exactly. Yeah, yeah, yeah, I thought it was. Listen, I'll start on interest. I do think we have a good opportunity here. Obviously, we've talked about the fact we've got a $300 million forecast for 2023. We've just been upgraded, and we hope that we'll see more traction on the other agencies before the end of the year. That will give us an opportunity to hopefully even consider, you know, changing the structure of our debt as we go into the first quarter of 2024. You know, I think there's, you know, there's a real opportunity to bring that interest down very substantially, like in the ballpark of circa $100 million year-over-year. So that, that's obviously a very, very significant part of our overall thinking for next year. It's one of the reasons why, as we get into, you know, we have to see how things will play out from the agency's perspective and the timing of when we could do that. So it's also another reason why January makes more sense to give more color and more detail on that perspective. I don't know, Steve, if you have any comments on the broader 2024 piece, Jack's asking for there at the moment, but from my perspective, listen, we've got another quarter to do here. That's what we're focused on in Q4, and we think our book-to-bill, it's all to play for. There's a good market environment there. And if we can keep all those pieces moving, we should be in good charge for 2024. Yeah. I would, I would concur with that, Jack. You know, we'll, we've got a couple of months to go in this, in this year. There's a lot of, lot of things at stake, and, you know, we're obviously pushing through as much as we can get into, into this year from a, from an awards point of view. And at that point, we'll sit down and work out, where we'll be in, in 2024, but we're not ready to, to get too specific about that at this stage. Great. Okay. And as one follow-up, just wanted to nitpick, the cancellation number a little bit here. It stepped up, you know, a bit, quarter-over-quarter. Just curious what you're hearing about from customers, like, if there's any reprioritizations, you know, in the portfolio there, just, and maybe expectations for the fourth quarter. No, we haven't seen any sort of specific patterns in the cancellations. You know, there's a, you know, there's a it's a tad up, but really not anything out of the ordinary. We didn't think, we certainly seen no areas of concern or specific, as I say, consistent patterns in that number. I think you could expect a, you know, a similar number, 2% or sort of number, in the fourth quarter. That's the sort of expectation I would have, but we're certainly not seeing any certainly in sort of any pattern or increased level of cancellation due to any sort of environmental factor, so to speak. That's, that's 2% on opening backlog, Jack, is what we typically would expect and have seen historically. Great. Thank you, guys. Thank you. We will take our next question. The question comes from the line of Patrick Donnelly from Citi. Please go ahead. Your line is open. Hey, guys. Thanks for taking the questions. Steve, maybe just a follow-up on Eric's BARDA questions earlier. Still getting a few investor inbounds on that piece. I guess, to ask a different way or frame it a different way, you know, when you think about 4Q book-to-bill, is this the right ballpark, this 1.25 type area, the right ballpark? Or should we be looking to back out BARDA and think about the 4Q number more in that, whatever it ends up being, 1.1, 1.15, whatever that might be, range? Just given what you're seeing on RFPs, it would be helpful maybe to frame up that 4Q book-to-bill expectations, you know, given what you've seen over the last couple of months. Well, you know, I think, Patrick, you know, we've said pretty clearly that RFPs have been up in the last couple of quarters, so we're seeing plenty of opportunities. We got to 1.25, 1.26 this quarter. My expectations will be at a similar number for Q4. There may or may not be other BARDA or COVID-type work in there, but if and if there is, great. If there isn't, I think we'll, you know, we'll still be around that number. So you know, you should stop thinking about this as a one-off. We have a number of large, you know, pending proposals or, you know, projects in the hopper, I suppose. And, you know, some of them come through, some of them don't, some of them get delayed, some of them get pushed up. As I said, we've got more of this BARDA work in the hopper as well. And, so I think in the next, maybe not fourth quarter, but in Q1, Q2 next year, we will get decisions on that, and we feel like we're in a good position to, you know, to win that sort of work. Where, as I said, we were, I think the premier vaccine developer in the industry, and I think that's well known. So, you know, I think you can expect similar sort of number. That's certainly our aspiration, our expectation for Q3, based on those increased opportunities that we're seeing, as I said, broad-based across the industry. No, that's really helpful. And I guess another 2024 before 2024 question, you know, just given, again, the book-to-bill this quarter, you know, the fact that you're talking about COVID as a percentage being flat next year. If you can do another 1.5 in Q4, yeah, that seems, over the historical period, that type of book-to-bill would typically imply, you know, something a little more in the high single digit growth, particularly given, you know, COVID not stepping down. Any change to that framework? You know, just when you think high level about what the book-to-bill implies for next year. I appreciate it. Sure. I mean, you know, it really will come down to the composition of the work and what sort of work we get to win. If, you know, if there are some vaccine studies in there, then you, you're right. We would be pushing up more towards the high single digits. If it's more oncology work or slower burn work, then that we may be a little different. It really depends upon what happens in the next couple of months as we get towards the end of the year. And as I said to, I think it was Patrick's question. We'll sit down... Or Jack's question. We'll sit down and work out, okay, what's the composition of that backlog? What are the expectations? Is there any rescue work in there? Is there any vaccine work in there? And how do we think about prosecuting it and then executing it? That will essentially determine what we come back to you in January with from a guidance point of view. Very helpful. Thank you. Okay. Thank you. We will take our next question. Your next question comes from the line of Casey Woodring from JP Morgan. Please go ahead. Your line is open. Great. Thanks for taking my questions. So you mentioned high single digit RFP growth on a trailing twelve-month basis. Curious, what was that growth rate in the quarter, and then if you could break that up by customer in the quarter? Curious if SMID RFPs continued to grow month-over-month, as they had over the first six months of the year. And then just curious, you know, if some of that deliberate decision-making you've seen in SMID has even improved quarter-over-quarter. I think underlying funding trends have at least stabilized in the SMID market. So just wanted to get your updated thoughts on that customer segment. Okay. Just to clarify, I think we've talked about seeing, you know, RFP growth being greater in the last two quarters, so Q3 and Q2. I think that's where we've talked about some nice uptick on the RFP. So it's not on a trailing twelve-month basis, it's more on a more recent basis than that, Casey. In terms of, you know, the opportunities across the sort of large or SMID, I mean, it's been pretty broad-based. SMID, biotech, large pharma, again, in the last two quarters, in that sort of high single digit range. And you know, we've seen decisions being made within a reasonable timeframe, et cetera. So, you know, it is what it is. You know, the market seems pretty constructive to us across the different segments, large, SMID, and the biotech. So I'm not sure I can say any more than that. Got it. And then just a follow-up on the pharma budget piece. Given where we are in the year, how have those conversations trended in terms of large customer cost cuts? You know, that was mentioned earlier, but it doesn't sound like those cost cuts will necessarily hit R&D spending at the moment. But just, you know, is there any indication that if macro doesn't improve here soon, that R&D spend could be, you know, the next kind of cost-cutting measure from those customers, or, are those kind of more insulated? Thank you. Yeah, I mean, we see the same information that you do in terms of, you know, R&D budgets and, you know, where they are going forward and what the likely growth is there. You know, we're seeing 4, 5, 6%, sort of, as a market growth number. Our experience with specific customers is similar. One or two, of course, as you well know, have got some specific challenges in the very short term, but we're their partners. As I said, we believe we can provide some solutions for them, and we can help them to reduce some of their costs, but also not necessarily reduce our revenues, because they can help us by consolidating some of their spend. So as I say, when these sort of things come out, it's not always bad news. In fact, it's often, you know, we come out of it fairly positively. So I'm, you know, optimistic that as we go into the budgeting season, that we'll be able to maintain or even improve our share of wallet within some of our larger customers and be an even better partner to them in terms of helping them to be more efficient, irrespective of the model that they're prosecuting or the spend that they have to provide. Thank you. Okay. Thank you. We will take our next question. Your next question comes from the line of Dave Windley from Jefferies. Please go ahead. Your line is open. Hi. Thank you. Thanks for taking my questions. A few probably cleanups. Brendan, on the answer on the debt cost that you gave- Mm-hmm. -the $100 million potential reduction in interest expense. Yep. Is that purely cost of debt change, or is that assuming some reduction in cost of debt and then applying cash flow to reduce debt balances as well? ... Yeah, we'll have a look. I do think it obviously assumes continued debt pay down in the back end of this year. Dave, as we get into the first quarter, yeah, probably in that quarter as well. Then we'll have a look at where the overall market is sitting, both from an interest perspective and also what we can get away from, you know, if we get the investment-grade pieces. Obviously, we'll be looking to move to investment-grade bonds type structures. So, it will be a combination of those things. But in the short term, over the next six months, yes, absolutely, we'll be continuing the debt pay downs. Okay. Then on, in thinking about, you know, cadence of studies and the comment that Steve, you made about approaching the end of the year and preparing guidance and things of that sort, and looking at the mix of business. This year's target for burn rate has been 9.5%. You seem to be trending, you know, holding right in around that level, kinda starting higher, ending a little bit lower, as you had said, you probably would early in the year. Do you think that a similar progression of burn rate is likely? Is it too early to be able to really make a call on that? I'm just wondering if, you know, if we start at 9.6, end at 9.4, is next year starting at 9.4 and ending at 9.2? And, you know, how should we think about that moving through the year? Thanks. Yeah, I think it's a little early to be, you know, prophesying on that one, David, to be honest with you. You know, obviously, our aim is to improve our burn rate, you know, and we do have several initiatives ongoing within the organization to, you know, to do things faster and to improve our burn like, you know. So we push it, you know, up from 9.5%, not down. So we, you know, we believe we'll end the year at around 9.5% in quarter four. That's what we expect. Our aim would be to, you know, to do things operationally and efficiently, you know, in an efficient manner, I suppose, so that we can move that, at least hold it and possibly even increase it. That's certainly what we're trying to do for the... So I don't like your scenario of 9.4 or 5 down to 9.2. That's not where we're trying to go at all, and I do expect that we're gonna be able to hold it, at a minimum, hold it next year and possibly increase it. Excellent. I'm glad you don't like that. The last question for me is around, Steve, you mentioned in your prepared remarks in talking about some of the environmental things, you did mention geopolitical. And I wondered if you could elaborate on that a little bit in terms of how, you know, the ways in which you see that affecting, I'm assuming, you know, a big one is site access, and but how you see geopolitical affecting the business or affecting your clients and their clinical operations. And if you could, you know, comment about how much of the kind of global site landscape is or is not available to you at the moment, and how does that then read through to Accellacare for ICON? Thanks. Right. Right. Right. Yeah, Dave, I mean, you know, I think you're obviously referring to Russia, Ukraine, China, Israel now. Yeah. So to take Israel specifically, you know, we have a pretty, well, a very important operation in Israel, and we're certainly reaching out to our employees, and particularly the ones have been directly impacted by the horrible events that have been going on there and supporting them. And obviously, our concern is with them and with our business operations to continue out there. However, you know, we have around about 250 people in Israel, so it's not a huge part of our operation. It's well under 0.5% of our revenues. An important 0.5%, of course, 'cause we have customers out there as well. But, it's not gonna be a material impact in terms of site access, at least in the short term. In fact, you know, our employees are doing a fantastic job in continuing to, you know, to monitor sites out there and to keep our customers' projects going. So, you know, I'm just incredibly grateful to them for what they're doing and how they're manfully and, you know, so resilient in continuing to, you know, to do that work out there. So the bottom line from a financial point of view is a minimal impact. China, we had some impact on earlier in the year, but that's really sort of coming back to sort of normal now. We're seeing some significant growth rates in China, over last year. You'd expect that because last year was quite low, but we're really bouncing back in China now, which I'm really pleased about. And Russia, Ukraine, it's kind of, you know, more of the same. We're certainly diminished in terms of capability and site access there, and we're not putting any new site studies in Russia, of course. Ukraine, again, thanks to the resiliency of our employees, we're able to monitor the studies that we have in that country, and we've been able to close some databases again, thanks to the incredible dedication of our employees. So, but we're not really - we're not adding more work there. So there is some impact, you know, across Russia, Ukraine, and Israel in terms of access to sites. But overall, I don't think it's a really significant, or it won't be any more significant going forward than what we have now. Certainly, Russia, Ukraine is the sort of greatest area of where we've been doing studies, and that has already been impacted. It won't be going back up anytime soon, but I don't think it's gonna go down any further either, so unless we close our studies. But overall, I think a fairly modest impact in terms of site access across our global network, which means from, you know, from Accellacare, you know, we've seen some uptick in their recruitment. They recruit now at something like twice as fast as our sort of normal sites, if I can use that term, ad hoc type sites, non-Accellacare sites, and they've been very successful in doing that. They get things started quickly. The quality there is very good. So I'm pleased with the increasing contribution they're making. We recruit about 10 or 12% of our patients now at the Accellacare site network, so they're making an increasing contribution to our overall patient recruitment numbers. I'd like that, of course, going forward to be bigger, and that's probably an area on the M&A front that we're gonna be looking at in terms of site networks to expand that network and get a greater contribution from Accellacare, particularly as we move more into the decentralized clinical trials. Sorry for the extra question. Thank you. Okay. Thank you. We will take our next question. Your next question comes from the line of Tim Daley from Wells Fargo. Please go ahead. Your line is open. Hey, thank you. So, Steve, wanted to dig into a comment you made on Casey's RFP question. You know, you talked about how the broad customer set, you know, RFPs are looking good. But you also mentioned, I think, budget season, when that comes around. So could you just kind of walk us through a typical timeline of the budget season? Like, when do you get firm communication from customers? They've got their 2024 budgets in hand, you know, this is what we're willing to spend, or this is, you know, how we're looking to adjust our initial outlooks. Just kind of, just January, February, December, just if you could help us kind of map that out in our heads. Yeah, I mean, I don't know that we're specifically directly involved. I mean, I hear a little bit from customers around budget season, whether their budget's going up or whether it's, you know, staying flat. It doesn't. It usually doesn't go down. Other than maybe one or two exceptions, that, you know, they have certain circumstances, but usually we're talking about a reasonable increase. And we find actually in the fourth quarter, they have budget to spend, and they'll sometimes allocate that budget a little more aggressively or assertively or faster than they would because they need to spend it or lose it. So, you know, as I say, we get sort of, I'd say, indirect feedback, Tim, on the budgets and what they're likely to be. We see the surveys as well, and we're, you know, we're optimistic that the budget rate or the R&D growth rate will be, you know, probably more mid-single digits. That's the sort of number that we sort of expect to be basing our budget on, and our targets on, going into next year, at least from an R&D. We obviously want to take market share and, but potentially do better than that. But, you know, I think that's what I'd say around the customer budget season. You know, they don't come to us and, you know, give us a huge amount of insight into what their budgets are gonna be. We get a fairly general sort of qualitative feel for, particularly with our partners, as to, as to what they're gonna spend or how they're gonna spend it, or if they're gonna, you know, adjust their models or, or do that sort of thing. But it's, it's all fairly qualitative. Got it. Great. And then just a quick follow-on here. So, Steve, you know, higher level question was, you know, not trying to have you make a call on rates where they're going, but just, you know, hypothetically, if funding costs or discount rates are higher, you know, hypothetically, to keep the NPV IRR models unchanged, do you have to tweak some other assumptions, whether that's increasing probability of success? You know, is that a recipe where we get some, like, cannibalization or demand destruction in the industry and, you know, with higher hurdle rates in terms of success, that might result in lower number of trials that are going through in a higher rate scenario? Could you kinda just juxtapose, like, that concept, for us? It's something I've been speaking to investors on recently. Would love to get your take on it? Tim, Tim, I might give this a crack. It's Brendan here. I mean, I don't know if our... I mean, at a macro level, as a finance guy, even in a pharma company, obviously they're looking at, yes, you're right, hurdle rates and interest rates and all those pieces, but that's from a holistic perspective. When it gets to drug development, it's really about the candidate drug and how that moves forward and, you know, the potential that they have in their pipeline. No one's going to underspend in terms of return on investment if they think they have quality drugs and they have the opportunity to do that. And you can see that in the overall environment. So it does come down to the specific company, I would say, more so, and the actual drug pipeline that they have. We've seen, I think, probably more promise in the drug pipelines in the last six months, and people moving forward and getting on with their getting their fundings in place and moving in the right direction than we have in the first half of this year. So I think that the trend is positive. Albeit, I'm sure someone's doing that math at a very senior level, but I don't know that it pragmatically impacts on trial by trial decisions. Great. Appreciate the feedback. Thanks. Thank you. We will take our next question. Your next question comes from the line of Jack Wallace from Guggenheim Partners. Please go ahead. Your line is open. Yeah, thanks for taking my questions. Just as a follow-up to the last one and maybe to, you know, get a little bit more color here. But as the CRO said to yourself, it sounds like you're in a position to help your customers, you know, reduce costs, improve efficiency. You may be able to say, you have higher hurdle rates with funding and opportunity for more outsourcing to improve efficiency, which can help the portfolio NPV, your question, so that, you know, the right candidates are getting funded, but they're being funded and brought to market more efficiently because of incremental outsourcing? Well, that would certainly be our contention, Jack. You know, we believe we offer a very effective and a very efficient method of getting, you know, drugs to market, compounds to market, and devices to market, you know, that complies and fits in nicely with the cost of capital. ... You know, obviously, the different segments of the markets have different views on that. Large pharma have opportunity and obviously have their own capabilities, mid-size to some extent, and biotech's very limited. So, you know, we see the various models that we offer as an efficient way. We have to continually drive ourselves to be more efficient, to be more cost-effective, because we recognize it's a very competitive business and, you know, companies do have choices, not just within the CRO industry, but, of course, to do the work themselves, internally. So, you know, we to some extent compete against not just the IQVIAs and the PPDs, but against, you know, the internal groups as well. We constantly remind ourselves that we need to be 20% better than our customers. It's a goal that we have as an organization in terms of our operational metrics that we monitor and the way we do our work. You know, we recognize that there's always competition in this industry, and it's important to, you know, to keep moving forward. I appreciate that. And just, last one is a housekeeping. Is Pfizer still your largest customer? Well, we don't comment on specific customers, Jack, but the fact that you're asking the question might indicate that there are others in the mix at the moment. Thank you so much. Thank you. We will take our next question. Your next question comes from the line of Ann Hynes from Mizuho Securities. Please go ahead. Your line is open. Hi, good morning. You know, margins obviously improved to your 21%, and with gross margin continuing to be a driver of that, can you just describe what's happening in the labor market? Is it running-- If it's running ahead of your expectations, what do you think is driving that? Secondly, just to get back to the book-to-bill and BARDA, because I am getting more questions, and I'm sorry if you already said this, but just to confirm, ex-BARDA, did-- would a book-to-bill, would it have improved sequentially or at least been above that kind of 1-1.2 mark for the quarter? That'd be great. Thanks. Okay, let me tell you, let me tell you first one, Ann, around the labor market. You know, we're certainly seeing some, I think, attenuation, I suppose, of wage or labor pressures in that market. Our retention has been increasingly positive. We've gone up on a month-by-month, quarter-by-quarter basis over the last, well, probably six or eight quarters now. So we're well above pre-COVID levels. And, while you know, expectations with inflation and all of that, you know, will mean that the merit increases, you know, we'll need to be considering those carefully as we go into early next year. You know, we feel we're in a good place, and we feel we've been adequately coping and compensating our employees, and that's reflected in the very strong retention that we have, as an organization. In terms of the, you know, the book-to-bill, we reported 1.26x. I think, again, I'll say it again, some of the reports we've seen in terms of the dollars associated with that BARDA contract were significantly inflated. And I'll put it that way. We're not going to talk about the individual award or the book-to-bill with or without it, but they were significantly inflated. Well, it was an important award. It wasn't the largest award that we had in the quarter. It's an important award. There are several others of them in the quarter. The direct fee book-to-bill was similar. In fact, I think it was a little bit ahead of the 606. So, you know, it was an award that, you know, that still certainly compensated as well on the direct fee line as well. And so we feel good about where we are with that. We feel there are other opportunities, and as I said, you know, this COVID stuff is not a one-off. We don't feel that this is a one and done. We feel we've got opportunities in ongoing quarters to win these sorts of projects. And we expect to be successful as we have been in quarter three. Okay, great. Thanks. Very helpful. Thank you. There are no further questions, so I would like to hand back to for closing remarks. Thanks, operator. Thank you all for joining us today and for your interest in ICON. We remain encouraged by the positive underlying fundamentals in the CRO market, and we are confident in not only our strong positioning as a strategic embedded partner to new and existing customers, but our ability to navigate the current dynamic environment as well. We look forward to updating you on further progress as we close out 2023. Thanks, all, and have a good day. This concludes today's conference call. Thank you for participating. You may now disconnect.