Good day, ladies and gentlemen. Thank you for joining us on this call covering the quarter ended June 30, 2014. Also on the call today we have our CEO, Mr. Ciaran Murray; our CFO, Mr. Brendan Brennan, and COO, Dr. Steven A. Cutler. I would just like to note that this call is webcast and 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. 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. The company’s filings with the Securities and Exchange Commission discuss the risks and uncertainties associated with the company’s business. This presentation includes selected non-GAAP financial measures. For a presentation of the most directly comparable GAAP financial measures, please refer to the press release statement headed Consolidated Income Statements un-audited U.S. GAAP. 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. 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 to ask one related follow-up question. I would now like to hand over the call to our CFO, Mr. Brendan Brennan.

Thank you, Simon. Net revenues in quarter two 2014 were $376 million. This represents year-on-year growth of 12.5%. On a constant dollar organic basis, year-on-year growth was 7%. For the quarter, our top client represented 28% of revenue compared to 29% in quarter one 2014. Our top 5 clients represented 51% compared to 53% last quarter, top 10 clients represented 63% compared to 65% last quarter, and our top 25 clients represented 78% compared to 81% last quarter. We completed the Aptiv Solutions’ acquisition during the quarter, which meant we ended the quarter with approximately 11,000 staff. Gross margin expansion that has been a consistent trend over the past number of years continued in quarter two. Group gross margin for the quarter was 39.6% which compared to 38.2% in quarter one of 2014 and 25.9% in the comparable quarter last year. SG&A for the quarter was 23.3% of revenue compared to 22.6% in quarter one. For the remainder of the year, we expect SG&A as a percentage of revenue to be in line with quarter one. Looking beyond that, we expect the good progress we are making in leveraging our cost base to continue. As a result of the expansion of gross margin and ongoing SG&A management, operating income for the quarter was $48.3 million and operating margin of 12.8%. This compared to 12.3% in quarter one and 9.3% in the comparable quarter last year. The net interest expense for the quarter was $41,000 and the effective tax rate was 15.5%. Net income for the quarter was $40.8 million, a margin of 10.8% equating to earnings per share of $0.64 which compared to earnings per share of 57% in quarter one of $0.43 in the comparable quarter last year. DSOs in the quarter were 40 days, which compared to 35 days in quarter one and 23 days in the comparable quarter last year. At the end of June 2014, we had net cash flow $175 million compared to $364 million at the end of March 2014. The decrease in cash balance during the quarter was a result of the acquisition of Aptiv, the increase in DSO and the share repurchase of circa $11.5 million. With all that said, I would like to now hand over to Ciaran to talk about the current performance on our future business outlook.

Thank you, Brendan and good day everyone. Our strong start to 2014 has continued into quarter two. Gross bookings for the quarter were $521 million. Cancellations were $63 million, giving us a net bookings number of $458 million, which is a net book-to-bill of 1.22. These business wins combined with $200 million of opening backlog from Aptiv means our backlog now stands at over $3.4 billion, a 20% increase year-on-year. During the quarter, we were encouraged by the expansion of an existing strategic customer relationship and the development of a number of new partnerships. We expect these new relationships to move from the planning stage in the second half of the year and to begin delivering revenue next year. We have also seen the gross margins continue to expand in quarter two. Since quarter three 2011, the gross margin percentage has expanded by 540 bps. And at the same time, we have leveraged our cost base to reduce our SG&A percentage of revenue by 640 bps. All of this taken together has resulted in an expansion of our operating margin to 12.8% in quarter two 2014. With a strong margin performance in the first half of the year and better revenue visibility, we are increasing our full year EPS guidance from a range of $2.30 to $2.40 to a range of $2.62 to $2.68 and narrowing our revenue guidance to a range of $1.49 billion to $1.53 billion. Our revenue guidance implies that we will exit 2014 with operating margin towards the upper end of our existing target margin range of 12% to 14%. So, beyond 2014, we are now targeting operating margins in the region of 14% to 16%. We will continue to pursue our strategy of seeking targeted M&A opportunities that will further expand and enhance our existing capabilities and through the combination of our global scale, medical and scientific expertise and differentiated technologies with increasing return on investment of our customers’ R&D spend. Before I move to Q&A, I would like to thank everyone in the ICON team. This hard work and commitment is contributed to our performance in the first half of 2014. We will now take questions please.

Thank you. (Operator Instructions) And let’s take our first question from Ross Muken of ISI Group. Please go ahead.

Hi, this is James Clark in for Ross. Just some quick modeling question, I was wondering if you could give lab versus clinical revenues and also operating margins for those segments please?

No, they are not segments anymore and we have discussed this, a number of times in past calls. When we reorganized the business, the benefits I think of what we are seeing from margin performance, the performance has allowed, has rolled up into clinical and it’s treated in the clinical segment.

Okay. And then I guess maybe you could give some sort of qualitative comments on the early phase business, I think you said that it was up sequentially, maybe you could just talk about capacity utilization, pricing...

I am not sure where you are going, James. We didn’t comment on the early phase business specifically and help me as....

Okay. Then maybe – so maybe you could talk about your different pieces of the business, the large strategic players versus sort of more middle market, what you are seeing from...

I think if you look at the market, we talked about our customer concentration. So, strategic business is about half of our total business and also we will be continuing to perform in both of those market segments. And I think we did specifically note that during the quarter we had a very exciting expansion of one of our existing strategic relationships. And on top of that, we have developed a couple of new partnerships, which will drive revenue into next year.

Okay, thanks very much.

Thank you. We will now move to Sandy Draper of SunTrust. Please go ahead.

Thanks very much. Just one quick modeling question as well. Brendan, I missed – I know you heard about and get it down, you gave a constant dollar number and I was trying to get that in the split between the acquisition impact and FX impact?

Hey, Sandy. I did it was 7% on a constant dollar organic basis. And then if you just, I suppose if you take out the FX elements and just have the – I am sorry, which is I believe in the FX elements and just take out the acquisition, it was 9%.

Okay, perfect. Second question, well first also congrats on a great quarter and really nice to see you guys executing so well. When you look at the improvements you are making in gross margins, how much of this is really just your visibility now with these strategic partnerships and lining up your expenses to better match revenue, or are there – are you trying to find lower cost locations to do stuff, what are the impacts, because it’s obviously you are doing phenomenally well on that, I am just trying to understand what’s driving such improvement in that, that would be helpful? Thanks.

I mean, it’s kind of all of those things and many more things Sandy. It’s sort of a cocktail of levers that go into gross margin. And I think, I would probably say we are kind of seeing the benefit of probably almost three years of work that we have been doing targeting gross margin and restructuring. So some of it’s around productivity and the deployment of technology and making our people more efficient and getting them out to sites and doing the work more. Some of its improvement in the capabilities of our project management group and an element of visibility from strategic accounts would help the margins there. Some of it’s that over time our portfolio or mix of larger studies within our portfolio has changed there are more larger studies than they were in the past. And they give more visibility and certainty and staff stay on them longer. And then we are seeing the benefits of the reorganizations that we have made over the last year when we collapsed the lab segment and integrated it more closely into the existing clinical business. And then in the course of this year, the reorganization we talked about where we have pulled all of our smaller business units under consolidated operating structure to get synergy benefits across customers and revenue and selling as well as cost. So I think a cocktail of all of those things is driving the margin. I am looking at Steve here to see if there is anything you want to add color to that?

I think you mentioned them all. Just blocking and tackling execution.

Okay, great. Thanks so much. And again congrats, I will jump back in the queue.

Thank you. We will now move to John Kreger of William Blair. Please go ahead.

Hi, thanks very much. Ciaran, I think historically your gross margins topped out around 44%, now with kind of the different structure of the company a lot more strategic relationships, do you think that is a number that you can get back to or should we be thinking about something a bit lower than that longer term as a goal?

I am not sure John, historically how far back you are going to get 44%, so I suppose if I said in the fullness of time over centuries to come, there is no limit to the target that you can set, would it answer your question and kind. And we made a lot of progress in gross margin and we intend to continue to make progress on that. And we are always very conscious of managing the levers and the cost structure and things change in the future and the technology changes and work practices change. So as well as what I am saying is we will always drive for improvement, but I wouldn’t be saying 44% is sort of shorter term target. We have seen a good left in gross margin. We expect it to continue to expand and that’s reflected in our guidance modestly over the course of this year. And beyond this year, we continued to plan for gross margin expansion, but it would be quite some time I think before we see the 44%, because a lot has changed since those days when we posted that margin, you are right. The different pricing models, some of the strategic deals and the way they are structured would be we were trading off gross margin for the benefit of increased leverage and at the SG&A level. So if you look historically at that period where you were seeing 44% gross margin, if you were probably seeing 29% or 30% SG&A, I will use that as an example, I am not sure of the exact figures in what periods you are talking about. Over time then, one of the benefits of scale and some of the benefits of strategic partnerships around bringing scale and bringing visibility and bringing the ability to plan, you are kind of be able to offer better pricing and do more risk sharing or limit change orders and that kind of thing, because you know you are going to get it back in the bottom line. So it’s really the operating margin that’s what we look at. It’s the balance between those two factors, gross and SG&A that have changed with it, the changing nature of the business in the years. And I think if you look at our operating margin at the minute, it compares favorably to some of our historic highs, it’s either close to them or at them depending on how far back in time that you go.

Great. Thanks. One other unrelated question, if you kind of think about the revenue that you reported this quarter versus the bookings, are you seeing any interesting shifts that you would expect to play out over the coming year in terms of maybe where you are seeing growth across your geographies or kind of client type or even sort of top five clients versus your other clients, any interesting shifts there?

No, no, nothing that’s really worthy of particular note. We feel we have nicely – over the past year or two we have nicely balanced sort of portfolio where our revenue and our bookings come from and it’s – and around that 50% to 60% spread large versus the balance in biotech and mid-sized pharma specialty. If we were to go back a few years, we were probably loaded more towards the large and the things that we have been pretty happy with how we have grown other market segments. But there is nothing in the backlog of the business wins that we are seeing over this quarter or more recent quarters that will fundamentally alter the shape of that backlog funds to generate future revenue.

Great. Thank you.

Thank you. We will now move to Tim Evans of Wells Fargo Securities. Please go ahead.

Thank you. Ciaran, if I think about your business holistically, on many metrics you are one of the largest, most mature companies in the industry, you new operating margin target puts you at kind of the high end of where CROs operate. But the one metric that seems to be a legacy of a less mature company is balance sheet, specifically no leverage there. And I understand that you tend to take a more conservative view of your leverage, but is zero leverage be appropriate – the appropriate target here or is it tied to consider some degree of leverage for whatever purposes, whether it be additional M&A or share repurchases?

I mean, looking it holistically, our job Tim is to push shareholder value and return and we do that through a variety of ways. We have held very firmly to the view that over the years, 25 years ago we had five people working in a prefabricated building in the outskirts of Dublin. And over that time we have made a number of investment decisions and choices and expanded the company. We have done that by a combination of good organic growth, which we believe is very high quality growth supplemented by the acquisitions that we needed to fill in our range of services and our geographies, ultimately with the aim of being a top tier service provider that helps our customers return – increase their return on investments in R&D. So we pursued that strategy and we believe it’s worked. And as we look at the future, shareholder return is still paramount in our thinking and we certainly have no objection to looking at leverage. But for us it comes down to what are we going to do with the money, what does it to do shareholder return, we still believe as we look forward and talk to our customers and look at the technological changes in the industry, the changing demand of customers as they outsource more, as they run down their own internal capacity, their need for higher levels of expertise from CROs and perhaps they had in the past, we see opportunities to build up and continue to build up our technology offering, our scientific and therapeutic expertise across a broader range of services that we provide in new and adjacent services. So to the extent that we will continue to execute the plan that we believe delivers shareholder value. And we will take leverage when we need to do it and when it provides – when we have the M&A targets that we want to buy. So really it’s something we just monitor on an ongoing basis. And we are happy with how it’s working at the minute. We have over the past number of years made about 12 bolt-on acquisitions. We believe that’s a good strategy. We prefer to large risky value destroying acquisitions. And we have a list – a list of things we are looking at that, we think will add to our value and continue to enhance our delivery of value to shareholders. So, long way of saying sure, I don’t disagree with anything you say, but it will be dependent on the circumstances in front of us at the time.

Thank you very much.

Thank you. The next question comes from Eric Coldwell of Robert W. Baird. Please go ahead.

Thanks and good morning. When you acquired Aptiv, we thought that perhaps it would actually have a slightly dampening impact on the tax rate, a negative impact. In fact, you came out, I think slightly below your goal for the year of 15.5% this quarter. I am curious if you have an update to where you think the effective tax rate will be for the remainder of the year, a long-term outlook at this point and what drove the slight improvement here? And then secondarily, I want to come back to follow up on Aptiv.

Hi, Eric. How are you doing? It’s Brendan here. Yes, I know – I think you have to look at our tax rate in totality and Aptiv certainly for the quarter wouldn’t be a big enough part of the P&L. I can’t really move the dial in terms of the efficiency of the tax rate. It was a little lower – it dipped a little lower below the 16% we had indicated, but it wasn’t hugely off the mark, 15.5%. I expect actually for the remainder of the year, we will be probably closer to that ballpark than 16%. So, we will see a little bit of upside as we go to the remainder of the year, but I still kind of holds to the longer term 16% as we look forward beyond the current year. So, we have a very good look at our tax on a quarterly basis. And as I said after that we didn’t really move the dollars in terms of its impact this quarter.

Okay, thank you. And then Aptiv, I think you said that the backlog was $200 million, which frankly is a little better than I expected. Are there any nuances in the duration of that backlog that would change your burn rate going forward based on different business mix type of business? And then are there any early takeaways from the integration or just getting to know the company better now that it’s part of the fall, any early surprises or takeaways that in anyway change your thinking on the deal and what it brings to ICON? Thanks very much.

Hi, Eric. It’s Steve Cutler here. In terms of burn rate, no, we don’t see a different – a very different profile in terms of their contracts to the traditional ICON contracts. So, we see the burn rate, not very impacting dramatically over or at least really at all in terms of how it rolls out. In terms of surprises, no, no major surprise, no surprises in terms of the integration of the company. We feel there a solid company, a very strong company in a number of areas obviously the adaptive technology. The adaptive design is the area of the business that we are seeing a lot of interest in from customers and we have some real experts in the business now that can drive that. So, we are very enthusiastic about that with developing a device expertise and pushing that forward. We have also been able to uptick our business in Japan. We have a very strong group out there in Niphix and we are working through bringing all of those groups as well as the larger clinical business from the Aptiv Group into the organization orientating them, getting them comfortable with where we are – we are getting them into the ICON on culture. We are finding a lot of receptivity from the Aptiv folks who are doing really well. So, we feel good about where we are on that integration. It’s – there are some areas we are working through as always with these things it’s never perfect, but there is no surprises and we feel like we are really going to able to add significantly to our expertise, which is really the whole rationale for doing this, this sort of deal as Ciaran said.

That’s great. Thanks very much.

Thank you. The next question comes from Douglas Tsao of Barclays. Please go ahead.

Hi, good morning. Thanks for taking the question. So, obviously the margin performance this quarter was very strong. Just curious I know a little bit along the lines, I think it was Eric’s question earlier. If we go back historically how much further room do you think there is to sort of take up margins or at what point do you start to sort of bump up against the ceiling in terms of how efficient you can operate your business?

Without sounding trite, it sort of all depends. It all depends if I look into the future. It all depends on the way that trial execution goes and technology gets deployed. And it depends on I think I had pointed out when John asked the question that the balance between your gross margin strategy and your leverage and your SG&A strategy delivers operating margins. And I suppose we have said in the call that we have recalibrated the operating margin target over – beyond 2014 to the 14% to 16% range. That will be driven as it was in the past by a mix of improved gross margin and improved leverage in SG&A as the company continues to grow at the top line and reap those benefits. And sort of what the top lies who knows I mean it was not long ago on this call, I kind of said our operating margin target I think, the first when we talked it was 8% to 10%. At that time when it was pretty close to 1%, we got there and we reset it at 10% to 12% when we got there and we reset it at 12% to 14%. We have got there and we have reset the target. So, I suppose what I would say to you this we will talk in about a year or 18 months and as we have made progress on that target, we are not the kind of people that quit or stop. We would always be looking for the ways to generate the value in the business and get it to the bottom line and get it to the shareholders. So, there is room to go yet. I think it’s a positive signal. I am upbeat about it. I say it’s more in the current circumstances, a mix of gross margin and cost control rather than the old traditional model, but that’s working well for us. We think it will continue to work well and you can rest assure we won’t quit and every ceiling becomes a floor. So, we have set a target for the medium-term and we will do what we do and try and achieve that. And then we will look again and see where the next ceiling lies.

Okay, great. And then in terms of your backlog conversion rate, it seems to have picked up a little bit recently, do you think that, that’s something that we should consider on a go forward basis or do you think sort of new business wins are going to be the sort of predominant driver of sort of top line growth?

I think – it’s Brendan here, yes, I think it’s bounced about in the kind of 11.25 to 11.5 range. And they can do depending on the flow of business and the actual duration of the particular contracts that are running through revenue there. So, I mean, I would anticipate it not moving dramatically. So, I would say that the revenue growth is really more a story around business wins than it is in absolute revenue conversion terms.

Okay, great. Thank you.

Thank you. And I move to Todd Van Fleet of First Analysis. Please go ahead.

Hi, guys. Just thinking about even the risk of the nice guidance beyond 2014 on the margin of 14% -- I think you said 14% to 16%. You know as we have seen the operating margin for the business overall, I will move up nicely over the past couple of years. Is that change the way you think about your M&A strategy? It seems to me that we are kind of raise the bar a little bit and may perhaps narrow the pool a little bit of what you might be willing to consider given the improvements in the margin profile for the business, but just want to get your thoughts on that?

Hey, Todd, it’s Brendan here again. I mean, we have always been fairly selective about the companies that we acquire and we want to make sure they have good return on investment for our shareholders. So, you are always buying something that you can think you can work through the margins of the Group and that’s the way we will continue to do that over time. So, I don’t think there is any change of strategy really from that perspective. So, it’s really just making sure that you continue at scale. And we are saying we are going to continue to do that nice bolt-on acquisition strategy that we think as it creates more value over the longer term.

And we find too, Todd, in a way, the bigger we get, the easier these things are compared to the past. And we have very good infrastructure in the company in terms of our global support services and professional service model and then are kind of operational support groups scale has brought the ability to invest in technology and process in state-of-the-art stuff. So, every time we do a bolt-on, it gets a little bit easier and there are more opportunities to get leverage on both the operational support structures on the classical support functions like HR and finance and stuff like that. Have you have any views on that, Steve?

No, I think that’s right. I mean, we are becoming pretty good at this. We work at it pretty hard. And I think we see it as a core competence really. So we have people and I think a whole management group who are focused on making decisions, making the right decisions fast so that we can get the benefits of these acquisitions, I think the Aptiv one has been a good example. I think we have done that as well as any of them and the cross-country one a year or so ago was also the one we did well. So I think we are getting better and better at this and it’s something we are very focused on.

Great. Thanks guys.

Thank you. Moving on, to Greg Bolan of Sterne Agee, please go ahead.

Thanks guys. Obviously, FTE utilization is high, Ciaran, I guess as I think about your expanded targets here, is it safe to say that kind of this backlog growth moderates, hiring moderates that maybe FTE utilization has another leg up just in terms of reaching that kind of the mid-80% level was where you guys were at years back and maybe that’s where you are today, but then maybe talk about how FTE utilization has to play into this next leg up as it relates to margin expansion?

Sorry, Greg you are kind of breaking up a little bit here, so just to clarify you are asking about the revised target of 14% to 16% or did you mention numbers beyond that?

No, just 14% to 16% expanded margin goal and how much kind of FTE utilization will play into that, presumably it’s in a high level today, but just as you are thinking about backlog growth kind of stabilizes, slowing down, hiring slows down it would seem to me that the utilization is going to be one of the larger drivers of that kind of new goal, that 14% to 16%?

Its Steve Cutler here, I think that there may well be some opportunity to push a little on that area. We have made some progress in the area and there are certainly some groups around the company where our utilization is probably a little lower than we would like it to be in the longer term. But I have to say, I am not sure that’s going to be the major driver of that push towards greater efficiency. I think there is some opportunity, but I think it’s somewhat limited, we watch that very carefully. And we are conscious of the fact that our retention, our employees has moved in the right direction where we are well under 15% – under 15% turnover, over 85% retention, so. And that’s a mock we look at very carefully. I think if you push too hard in terms of the utilization, you have some downside on the retention area. So it’s an area we try to balance carefully in terms of how we work with our employees.

You also see, Greg too some of the efficiencies we would get to scale in terms of the more centralized functions supporting clinical trial, the benefit of remote and risk-based monitoring and what that does to cost profile and the ability to use people. The fact that the certain scale we are at, we pretty much have as many offices as we need maybe in the world, so you can get more people per office, more people per site. So it’s that whole mix shift thing. And yes, you are right, utilization is one of them, but we wouldn’t want to overplay that as the only one and even in the context of you talking about backlog and revenue. Our backlog is up 20% year-on-year and our book to bill – trailing book to bill book is 1.2, which traditionally supports that certainly high-single digits growth number. And so in the framework and the timeline that we are looking at that margin expansion target, we are looking at a healthy backlog, a decent trailing book to bill and a good tone in the market with some of those – those new relationships and partnerships that I mentioned that will go through the planning phase this year and develop revenue next year, so our target is within that context.

That’s great. Thanks guys. I want to echo the – congratulations on the margin performance. Thanks.

Thanks Greg.

Thank you. The next question comes from Sean Dodge of Jefferies. Please go ahead.

Thanks and congratulations on the quarter. Following up on Eric’s earlier question was there any contribution to bookings from Aptiv during the quarter and if so, how much?

There was a contribution, good, healthy contribution to target from Aptiv, but we don’t disclose the bookings numbers and parse it down for individual business, but suffice to say, it’s what we expect it to be within the context and scale of that business. As we move forward, we were not parsing it to be difficult. Aptiv integrates into the business. Their people become our people, that becomes part of our business, so its kind – it’s part of our business and there is no number to display it out.

Okay, very good. So maybe asking a little bit different way, has your bookings concentration changed at all during the last quarter or last couple of quarters, specifically are you starting to see a growing contribution from non-Pfizer base?

It’s fair to say that that I think Brendan your commentary was that revenue concentration from the top client had reduced a quarter or two to 28% to 29%. And so yes our new business reduces concentration. Over patterns from recent quarters, in some quarters it goes up, in some quarters it goes down, Sean. It would be hard for me to sort of honestly give you pattern. There are a lot of big trials that you win from bigger customers, so it’s just a question of in one quarter, the timing of the award and the planning of the trial is such that a large amount of we have seen amount of $100 million, $150 million or $200 million come into backlog at a particular time from larger customers. Then none might come in the next quarter. So quarter-on-quarter, it’s not really a fundamental change in your concentration, I think you have to look at that over a number of quarters historically. So I would say there has been no fundamental shift over the last number of quarters in our bookings concentration.

Understood. Thank you.

Thank you. Moving on to Steven Valiquette of UBS, please go ahead.

Hi. Thanks guys. It’s actually Jonathan Young on for Steve. Just going back to some of the expanded relationships, would you say that Aptiv may or may not have helped you to gain some of those relationships when you were pitching them?

No, these would have been stuff that’s been in progress long time. And we have been working on over many months and years and stuff like that. So now Aptiv came too late to influence those, but we look forward to that capability influencing future decisions as we go forward.

Okay. And then I guess just on the pricing side of them, which – was the pricing pretty much similar to prior contracts and relationships that you guys have had?

It is. Yes.

Okay. Great. Thanks a lot.

Thanks.

Thank you. And the next question comes from Robert Jones of Goldman Sachs. Please go ahead.

Hey, it’s actually Adam Noble in for Bob. I just want to ask around the long-term operating margin guidance you guys put out, it seems like given the performance from today and your guidance for SG&A to be relatively flat over the course of the year then most of that expansion would be coming from gross margin, but just any thoughts about potential areas of SG&A, leverage and what those might be and where over time you could bring that percent of revenue down to?

I think what we said and just to clarify it was that new operating margin target is for beyond 2014. And we said that we expected for the remainder of this year that SG&A would stay in line with what it was in Q1. But looking beyond that we expected the good progress that we are making in leveraging the SG&A cost base to continue. So the – that target that we set ourselves for the future is the combination of continuing to improve the gross margin as we have seen in the past, but also continuing to get more leverage off SG&A as that cost base grows more slowly than the company grows. And I think your second question which I forgotten, what was that?

Just specific areas of SG&A leverage, I mean it seems like you guys kind of indicating just slower growth of SG&A dollars, but any other potential areas of the cost structure that you think you could take it out?

I mean we have done a lot of work on this over the last few years. It’s just kind of more of the same to us, watching your cost base, watching where you locate your resources as the company grows, making sure resources were aligned with them. We have invested quite heavily in technology and ERP and other systems. We will refresh those investments and then make sure that we increase the scope of where they go into the organization, but there is no significant initiative that differs in anyway from what we have been doing over the last three years.

That makes sense. And just to ask around general R&D, it seems like some encouraging R&D spend by your largest bio-pharma partner. I was just hoping you would comment on the general appetite, some of the larger pharma companies with regards to their R&D budgets and what type of R&D growth do you think is needed to drive that high single-digit top line over the next few years?

Until we see any – sorry it’s Steve Cutler here. I don’t think we see any particular changes in R&D budgets in the last couple of quarters and even going forward. I think we see low single-digits continuing at about that’s I think where everyone feels we are at. There are certainly some companies. We see the biotech sector perhaps funding more of their trials in later stages. And we feel we are the beneficiaries of that in circumstances. So, there are number of biotech companies who move their compounds through and work into the phase, particularly Phase 2, Phase 3 area perhaps more so when the funds are available to them, they are able to access that capital. But in terms of R&D spend from the logic companies low single-digits, I think we still see the increase in penetration being the major driver to growth in our market and growth in the sort of numbers the high-single digits that we have been talking about really. So, it continues to be that, continued to be penetration. We are seeing some perhaps different models coming to the industry in terms of venture capital funding and others sort of virtual pharma companies who access capital markets and are playing in the space, which is a segment, which we are seeing a little bit of, but it really as I said low single-digits on the R&D spend increased penetration and we are good.

Great, thanks for the questions.

Thank you. The next question comes from Tycho Peterson of JPMorgan. Please go ahead.

Hey, guys. This is Tejas in for Tycho. Thanks for taking the question. Just wanted to follow-up quickly on Aptiv, I mean, can you give us some color on some of the cross-selling opportunities that you guys have identified when you did the deal in terms of limited client overlap? I mean, have you made any progress there in terms of selling Aptiv into your current sort of client base?

Yes. In the three months, so we are happy with the progress that we have made so far. It’s appropriate to our plan. And we are integrating, as Steve said, brings the guys in with ours and we are introducing to our clients, so yes. We have made a lot of progress in that front. It will then get into our business and over time we will see the benefits throughout the future. So far, we are very happy with where it’s at.

Okay. And then just a little bit of a longer term question, what do you think about the glide path in terms of increasing your gross and operating margins. I mean, obviously, there is bound to be some volatility quarter-to-quarter, but can you help us think through what might be sort of the key drivers of that volatility, if there is some? And then, how do you think about the tradeoff between top line growth and margin expansion over the next two years to three years?

I am not sure how to answer that, because you are making a presumption of volatility that we haven’t really seen for a while. And as we look at the – through the session of the backlog, the trailing book-to-bill, the business opportunity pipeline in front of us. And it leads us as I have already said to reset our margin targets. And we have talked about that about managing productivity and then cost base while growing the business modestly. I mean, in the past, the relationship between top line and bottom line has had very high rates of growth and you have to invest more quickly. And you have to load up staff and training more quickly and we have seen that trade-off in the past in that volatility. And if you go back a number of years, but that was used to be associated with growth rates of sort of 20, certainly 15% plus, 20%, those kind of numbers. I think in an environment where we are seeing that our organic growth is delivering high single-digit growth. And on top of that, our history of adding to our service offering with targeted quality bolt-on acquisitions and hoping so growth rate while we see this quarter top line 12.5% or whatever in that kind of double-digit number. It’s easier for us to manage the trade-off between the top line growth and the investment in the business. And we have also got changes compared to the past in the way that we deploy technology, more sophisticated systems with the level of scale that provides the backbone to support trials and ramp up with very expert equipment engine that is able to deliver people to the frontline faster, done in the past. And so you know lot of those factors, with better systems and control and metrics and operating metrics that look at individual performance on sites and productivity. So, all of those new tools compared to say the past, obviously all of those new tools, combined with more modest revenue growth levels that are in our expectation would diminish the chance of volatility, should however – should however at some point in future in exchange and growth covers to nosebleed 20 plus rates and it will become more challenging, but for our outlook the moment for the time horizon that we are looking at and for the support behind our new target we are seeing good growth of modest and manageable with the tools at our disposal.

Thanks. Ciaran, that’s helpful and congrats on the quarter.

Thanks.

Thank you. We will take the next question from Jeff Bailin of Credit Suisse. Please go ahead.

Thanks and good morning. Maybe to look at customer concentration again for a moment, you look at the first two quarters of 2014 have been very strong year-on-year growth in revenues for your largest client, and if you step back and strip that out – strip out Aptiv, it seems that the growth for legacy clients maybe is a little bit slower if for our math is correct. Is there anything timing related that you could discuss around the revenue trends outside of your largest clients thus far in 2014 and maybe what’s been impacting that?

Not too specific, because we for obvious reasons don’t quantify stuff, but I think I would point to my earlier comments and say we have expanded one of our existing strategic in terms of scope. And we have had a number of new partnerships. And I think I said in the comments that while that won’t impact too much on this year, new relationships will kick in next year and that revenue will kick in the future and that will help de-concentrate some of that. So, we are kind of happy now. We are very happy with the growth that we have got from our largest customer and we always said it was a structure of a deal that involves a very hard fast ramp up and that it would get to a level that would mature. The deal of that size is it was almost like doing a big acquisition. So, obviously, it got a good deal of focus and we looked after the rest of the business, we felt well and it still continued to grow though it wasn’t as if we took on the one account and neglected the rest of our business are excluded opportunities. But you are right to say that bid didn’t grow as quickly as the new bid, but it grew at pretty healthy rates of mid to higher single-digits, if you carve it out, mid single-digits. So, that was good. Now, we are in the position where we have added some new business. Our book-to-bill is healthy and we are happy with the mix of it. And I think as we look forward, we are not uncomfortable where we will go. And as our largest relationship matures, the growth – we think – with the things in place to get to that growth target that we talk about that the $1.2 trillion book to bill will put us in the high single-digits.

Okay, great. And maybe just one follow-up, while a lot of the client M&A chatter has thankfully died down since we all spoke last quarter, there still seems to be a decent mount of activity amongst the pharma and biotech players. On the positive side of the ledger, can you discuss your experience or any examples as your larger clients are acquiring small and midsize biotech, are you finding that your partners are asking you to get involved with these acquired entities?

Yes. I mean, that’s been happening for a long time, there is nothing new there. We tend to find that after the period of the national integration and strategic review that the pattern tends to be that we get involved in new projects from companies that are acquired with – by our key customers.

Great. Congrats on the quarter.

Okay, thank you.

Thank you. That will conclude today’s Q&A session. I would now like to turn the call back to Mr. Ciaran Murray for any additional or closing remarks.

Okay, thank you everyone for dialing in today and listening. We are pleased with the progress over the first half of 2014. And we look forward to working hard for the remainder of this year as we continue to position ICON as a global CRO partner of choice for the biopharma industry. Thank you everyone.