Medpace (MEDP) 25 Apr 232023 Q1 Earnings call transcript

Good day, ladies and gentlemen, and welcome to the Medpace First Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time.

As a reminder, this call may be recorded.

I would now like to introduce your host for today’s conference call, Lauren Morris, Medpace’s Director of Investor Relations.

begin. may You

our thank earnings And is joining first Geiger; Medpace’s CEO, Good call. you Also XXXX and Jesse President, conference Troendle; today Kevin on quarter Brady. August morning. our for CFO, the our call

like unknown begin, this Act that uncertainties, during from our remind we XX-K results the Reform include may involve XXXX. forward-looking responses are Before as These the and expectations. other risks SEC. factors that to actual our your Private as and factors meaning Litigation known and cause important with of to the to you with assumptions Form of statements and filings discussed would I in questions teleconference These our well other remarks could statements materially within differ inherent current Securities

as obligation forward-looking that change. estimates any you even note assume Please as today. we statements update representing any of forward-looking statements, rely if to views should of on today’s date not after Accordingly, no our

in in at to with measures most earnings provided slides During GAAP call investor.medpace.com. today’s such the non-GAAP or gain this non-GAAP of superior measures we investors of call. referring these not financial to measures Investor available connection complete measures more available the is are of we measures. to be non-GAAP earnings believe financial are slides the the results. certain replacement section GAAP presentation measures, A These in for help directly comparable but will understanding reconciliation our a comparable a press call, and The also Relations release website

August to like I to would With turn the now call that, Troendle. over

total sequential basis. improved flow with environment RFP pending improved up QX The on of and a Thank value also RFPs you significantly. Lauren. Business year-over-year dollar in

quarter, three even in sequential have of the April. relatively showed Although January to to February and further weeks on level the they improvement first improved March, to were a down word notifications strong

about a on The over point toward down And at were this favorable. cancellations sequential backlog XX% look trends optimistic QX. XXXX. basis pipeline Total our cautiously build in are we

guidance XXXX review now guidance. full detail have financial our financial strong and will updated and now in results greater raising the We’re with our year in QX in results. visibility Kevin and QX line Jessie we into performance XXXX

And everyone. Thank morning, you, August. good

Our We approximately year business the a increase XX of in X.XX% XXXX was $X.X XX to $X.XX revenue revenue next quarter convert of from awards quarter increase in the billion, an of net backlog. XX.X% $XXX.X the XX.X% was prior was March approximately increased to first was billion XX.X% backlog which beginning first of conversion resulting backlog in million, backlog in first backlog Net the $XXX.X XX.X%. in the as And the million, book-to-bill. quarter prior new entering from represents which year. of year-over-year project of months. that will Ending

XXXX. continued X.X% for over we make hiring XXXX, will quarter, in and retention top remain in from end in progress XX.X% hiring first the year. to continued business XXXX and from Employee future In prior the priorities of the adding

performance with will detail I our that, review to discuss and call Kevin the XXXX Kevin? financial in And turn guidance. to over our more

in. to and listening morning Thank you good Jesse everyone

to XX.X% represented basis. funding less and XX.X% mentioned, the The basis a quarter reported million the million compared XX.X% reflected was quarter first challenges of increase currency for anticipated of clients. million than EBITDA for This revenue As of results increased $XXX.X strong first Jesse quarter of a revenue in XXXX. $XX.X the XXXX. year-over-year in $XX.X on on our a constant

for headwinds margin positively total quarter for revenue. year the the the balance prior of of costs XX.X% EBITDA was increased quarter XX.X% periods. quarter proportion for in EBITDA year. prior XX.X% constant first the a of anticipate compared to wage currency basis, was EBITDA a inflation, margin On the revenue. We margin the compared reimbursable to gross, year the as headcount the impacted entire a by result as strong first

net to in quarter the million net to EBITDA In effective the increased of of $XX.X income XX.X% growth period. of million compared year was driven of XX.X% by XXXX, income $XX.X prior income in rate Net prior primarily tax X.X% a the period. higher first lagging year compared

for the income $X.XX prior share $X.XX per diluted quarter to in year was Net period. compared the

XX% flow customers represent quarter, concentration, from first customer of In and five million quarter in top generated activities. Regarding and cash operating respectively, first our roughly our XX the we top XX% revenue. $XX.X

sales day outstanding Our XX.X was days. negative net

million. we a shares quarter approximately the During for XXX,XXX $XXX.X repurchased total of

March As share had million authorization program. of we XXXX, our $XXX.X repurchase of on XX remaining

at position $XX.X $XXX of million, debt composed of of which cash was of quarter was end the $XX.XX. net Our and million the debt

leverage net months last approximately Our ratio X.X times is XX EBITDA.

to XX.X% XXXX. to XX.X% updated now representing year for $X.XXX XXXX of of is Moving range of the in guidance over total our revenue $X.XX billion growth billion. Full to now revenue billion, $X.XXX expected XXXX, total

XXXX net X.X% in XXXX. growth EBITDA range diluted This share is million of is compared assumes to Guidance on diluted exchange forecast foreign $X.XX. XX March based the in tax of XXXX million as $XXX repurchases representing $XXX Our of to is expected be average are our in XX.X% guidance to XX.X% $XXX Earnings in We the in additional million of of range XXXX. rates and or share shares There per weighted to full range million EBITDA effective $X.XX XXst. expected for a to XXXX of $XXX.X income to the rate guidance. outstanding of $XXX. year no XX.X% million

so can will the operator over to call back take the that, we your I turn questions. With

our of Please question, For David comes the Windley your Jefferies. it line Instructions] line [Operator from David, you. ask first from Thank question. open. your is

in my proposed, seeing but some taking seem not are But I data, thanks little of some for have I a to our guess question. build-up so that be starting. toggled I Hi, studies missed are bit of late, apologize. group, are I a over may for we this. the of

RFPs So not in patient of getting actual call dates were were with not maybe and the And seeing wonder be a I that first that and studies little like environment. specific wondered that in that estimated to flipping are this not you’re I you sounds It awards juxtaposes starts of clinical seem kind the it, be this kind stronger, anything limbo moving be softer. if forward? sitting but start trials.gov said the are in. to

were was August. stalled of certainly our see Yes, did QX, that, we kind forward. of what kind not expecting where backlog mean, studies but it’s the gotten last do of things things stage. snowballing and sort quarter it’s think had of I but this we kind into would our and of not at a but of of that see class effect, RFPs guess maybe of lot forward. you seen seen thinking well, a we’ve David, things we not quite and are more this Yes, are that I than that of and awarded, I to But pause redesigning are that I we clients, in by that the on kind a represent programs worsening, to unsure, bit think, or improved, have of doesn’t and greater their Client funding number Certainly, a have unable stalled. kind cause program move number tends programs of those. like of less anticipated hold. moving of that a environment of And is things and have put in

and your diverse. your quite concentration And we it. was your then the biotech kind there? same the has concentration you usually customer jumped in of concentration are And if in small flesh been you’re Perhaps out could slide focus those Got both the to customer you’re the driver I’m tandem. I in therapeutic the wonder historically that assuming given what related noticed deck thing.

versus at off, I -- think, kind We first suddenly at at quarter you’re first year. quarter pie first look the last these are the year. of year cumulative of looking for charts this

rather trends downturn very amount quarter had Many small -- been So over greater been is quarter X our comparison. comparison our we’ve guess, more clients or seen this midsized have a X a awards this X, have of the challenges. and clients. than a that the in There’s is bookings no of I one

awards, very kind to and oncology, biotech infectious studies which type to antivirals, disease have of have smaller metabolic have have of a tends lot clients be anti-infectives, -- provide. difficulties strong funding That's tend I’d always toward the our been which number. We had have which in profile

Got it.

Okay.

XXXX of that multiple you’re jump saying those growth the more is metabolic So that? that been clients guess insinuating XQ buckets, And is question the a over you’d that has be little the -- I idiosyncratic, is you that the right? I is building guess XQ but over is mentioned, around specific the course what that perhaps that maybe driving in

right. That’s

year. in seeing client I is metabolic, no is been strong our which the no very rise think has what past there’s diversified a no very – pushing pool. There There’s that, large study. you’re it’s one cumulative a throughout

So came nothing it in or concentration nothing large we strong anything. have no there. particularly real unusual, There’s

Just number across the board, studies. large a of

Thanks. much. very you it. Got Thank Okay.

One comes question. now your ask from line William Max, the open. It moment of is Please Blair. for from your your next question. line Smock Max

of next Hey good to on morning. expected XX for quickly growth to here backlog months. in the lack the revenue One me over not convert

seen flat think time that was I we’ve it quarter-over-quarter, first the this.

that beyond how new this coming XX would booking in help given out So and the portion Does really are saw that just wondering as the to dues months? the bookings next from orders mean opposed this can if go you change that understand happen, bookings of you strong past studies outsized us longer-term customers the quarter?

terms are Sorry, you it’s what Max, saying months? flat? next of You're seeing XX in

Yes.

at portion total backlog look you over backlog at expect of convert to subtract revenue expected the -- XX converts and and months, look actually out called you growth to if that backlog you if of or -- XX backlog the So portion the the that suggesting next quarter-over-quarter, revenue over you of that out months, next rather is right? the growth lot that’s to to a all flat your

same here into the that non-next up in stayed big on X.XX at bookings backlog first jump XX-month spite and going quarter. saw of So the that in you quarter, a metric the the in

in months? So the would expected saw bookings be the next flat, the here the of large backlog the portion step-up not your just actually you why wondering Why that that quarter? convert first to XX that is really in given beyond

should again, relative the QX, in fourth months roll months have the next X.X have to off might the an or so been XX of maybe next in increase in to seen we range. you From X.XX quarter, the Yes. XX -- for, kind

jumped million. $XXX to Yes,

Yes.

not doing so you number, expected backlog to so out get this. I’m -- that’s billion, I’m the a months, poor -- next I’m about which Sorry, revenue $X.XX portion if total to of would the about you that XX not ended billion. over be convert your back the right, talking job phrasing talking from portion that’s $X.XX

the you to quarter your... go the back If back fourth $X.XX you out billion, and

rate conversion increased. That’s out. pointing has you’re what Our

it. Okay. Got

think I mean... I -- Yes,

Yes, the first that’s revenue a function and picking of conversion the up rate quarter. here in the growth heavy

saying So that... if you’re

don’t that drawing anything. we any out for think don’t. reason particular or I have I

in we in continue to Max, low of backlog No, next of over revenue our And quarter. into the XX% see the we’re here our first typically, what XX convert the months. kind will that’s

mix of nothing’s that got different you it’s Clearly, In stages we’ve at a existing portfolio think changed really and of those So as in about, regard. programs, progression. backlog.

adding quarter, which new strong. very awards that we saw in And the in were then the you’re

awards are studies new starting So existing what a up we’ve and through got it’s kind that the of an of backlog. balance

I Okay. it’s I month I about Yes. your but Got backlog non hasn’t the first point because time extra out. stood appreciate there that up, think jumped conversion picking out just it. number

outside accelerated last dig the X strong, here, acknowledging growth question it’s revenue still couple quarters. want really and since were into pretty Dave’s the from on did customers the X of up to your revenue that customers Following top I top over

there any to we’ve seen revenue that from much going in around came is here moving And back quarter LIB is then August, fourth big the looks you step-up a what role contribution Therapeutics driver. expected can how bookings provide with LIB and quarter? from is you. that causing revenue the And forward from given you from first detail your the here, Thank just and company, recently key that confirm in exactly XXXX? like LIB XX-K the it Can

Yes.

of revenue of in be of it think our just III it’s I programs. I have there’s the unusual its in front think don’t amount the at but think anything -- point me, peak Phase don’t queue. there. I will I

All for Thank the day. you.

for your One next moment question.

Your please next the Sandy, from is of Guggenheim Draper open, line ask question question. comes line your your Partners. Sandy from

questions your this but and you’re assuming of modeling way backlog at down. the look as I current moderate guidance conversion some XX that X depend to rate now guidance. get backlog much. some me. revenue which, Obviously, out, rate, very of looks what Thanks I was just that are, right sort Really, bookings for in you will pointed it One, and when up. the guidance like starts above revenue on conversion that your Otherwise, your

wanted on you’re And of then can would me So that. to first you sort of sure an be one, sort I’m what of for my just give rate? targeting the conversion backlog That right make question. idea if

do the things rest little balance the a of to back bit expect in Yes, down the of the Sandy, you’re slow half right. year. We or

XX%. with for the a burn year X.XXx kind rate to of of For year, the XX.X% somewhere the book-to-bill range. in

quarter and to XXXX. where were going of the third fourth in kind of it’s So we back

funding quarter and quarter fourth pointed first his activities setup we first the out lower that kind as reimbursable and August clients XXXX. saw with a than We’ve and quarter direct just challenges of drove to ranges quarter with less prepared The the in but in of perfect anticipated that we for that with had us to quarter accelerated cancellations in expect first had remarks. back that really come revenue, activities third service really

I X wanted expecting And Okay. the first when my I to more X-part just is staying is Or that year is going of reduction it mix a revenue hiring question, expected just the because -- obviously down increasing? on come you’re are assumes is I to I really and because margins -- go look to of And helpful. some the the aggressively? then there’s down at to margin question. higher margins that Great. then more guess or or then it guide, quarter That’s it EBITDA when gross service One, come full EBITDA driven guess, next some over SG&A pass-through up quarters. the is hiring? if Thanks. margin, back the next I

was Yes. our driven had it really the first that by Good leverage question. cost The on raise the structure. we revenue and that enabled quarter

remain that think to headwinds the you expect our cost about we structure the pretty if expect in rest the the The first quarter when we intend quarter. aggressive we couple pointed out progress the do year, from in the year, So of headwinds is balance year, of some to One we that much things. continue of hiring made balance the you last same hiring. of the a in

our is hiring quarter. typically quarter second highest The

out, reimbursable We got pointed of wage we inflation continue a as balance year. as pressures. do to the expect be the elevated our of cost But to then percentage you revenue

a three So really. factors it’s of those combination

But X is flow It fair question August, things my and quarters. maybe X, this then last we’ve -- what or not was, are the about August positive Jesse. environment commentary RFP better. I’m the breaking me, that question was your because than notably And Great. it’s more seen last to like awards Okay. probably is really a sure about for competitors news. just obviously, sounds

when I calling Danaher comments the definitely of and at and Wuxi, was concerned seem look out to there funding biotech But LabCorp/Covance and out environment. more some

be shift, can Just you of positive total just you think are a but you concerns. me, winning out any had spaces obviously, when, to more thoughts folks confusing -- bit calling different just, seem some guys you to little share, a because there think operating it’s do other out

So there. any Thanks. I’d love just commentary

difficulty like bad of client characterize different would anticipated. certainly than don’t a the is have and have and this But And year both I have year we few not last years. things. this quarter drop RFPs profile, as stalled. the in quarter the We and getting Yes. last not growth profile seen is a through Things our come And seen less Everyone’s -- know. turn QX base improving off time. over programs we etcetera. down through certainly bit of funding I and

accrual. the We our have clients of that us a cash continue a over seem on of and still certainly funding programs. under there’s they kind quarter. just going we’re But to things difficulty pay have are were number to that installed clients basis The and thought having improve

think again. low as could as always I point. at see direction And we’ve -- the can the far things the we But so right we’re near in turn are things seen we this think in term,

helpful. Okay, Thanks. really great. That’s

Your question Sourbeer [Operator Instructions] of next the ahead. comes John go please from John, line from UBS.

just there Hi, asked thanks for in. I on the maybe question. what taking little bit in deeper a just Sandy guess digging

RFP like environment? you like indications? quarter-to-quarter, larger have there, guess into down? year-over-year. think I there peers come any has customers? additional despite going it I out guess mean just despite color commentary Is that is just So it it funding Is do the sounds just -- this up I Where that there? the specific strength some is of additional

Yes.

our because I have it. of said kind So I usual RFPs mirrored still profile. client

and had awards larger the moving have companies. forward stronger that We from programs are

in so see rather breakout the midsized chain it’s kind pharma within the coming a smaller larger our up from been it biotech. you’d that than biotech. moving shows number provide, we And even But of

tends historically of difficulty that flow not funded and with a same. the that is remained helps. to and it predictive in a challenged of the biotech RFP is much to if the the they our largest breakout have in terms companies. about the past. small better actually very companies don’t have that be have -- lot tends But of There’s same I as proportions are it client our know of So still very funding than more having lot

mentioned, also, Appreciate cancellations you XX%. I know think, And pipeline down I it.

And the provide XQ since in takeover color that's any have here? Why just into and that early April SBB think what’s do there? how color maybe the you trended additional might can anecdotal and here? normalizing any spike then seen Just you you

we had much know part were Yes. phenomenon. some we clients difficulty lot are more that’s clients their a And funding. seen funds, the QX profile haven’t have And stop that are And that a of companies the we’ve largely, things was but raising don’t that and we it and to been bankruptcy as much we able declared raise had Well, remaining seeing challenged of and seen. QX that in not not anticipated -- I and having of as just kind as that of had programs. profile seen now

questions. Well the for Great. taking thanks

conference no to are to Medpace’s now Lauren of at closing There turn the remarks. like to Relations, Morris, over Director I further back time. would questions this Investor for

today’s Thank for on in second for to call. forward interest speaking quarter again XXXX on joining us you We call earnings Medpace. and our your with look you

today’s for conference Thank This call. concludes participating. you

disconnect. may You now