Medpace (MEDP) 25 Jul 232023 Q2 Earnings call transcript

Good day, ladies and gentlemen, and welcome to the Medpace's Second 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, second 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 assume begin, with this Act that during our remind we and the Reform could assumptions include may involve results to XXXX. forward-looking statements forward-looking obligation if discussed responses Before These as other well cause factors as the are to your XX-K of Private meaning to Litigation estimates actual differ and factors of to even you risks and views unknown should statements and you of after statements would forward-looking I as known change. any questions teleconference from remarks representing statements important we within today. materially inherent of filings Securities on uncertainties, with expectations. other our Please not that as no These our date today's SEC. rely Form current update in the Accordingly, our that any note

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

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

in improve. going our notifications QX. over Jesse making was Kevin to QX. comments rebounded to a business Good volume to already We're review and backlog. environment XXXX the on strong toward in Award turn an day. good in environment up Jessie? to the continues and sequentially things RFP The QX building progress over quick details. business couple strong strongly I'm make

in Good increased Thank in awards year XX.X%. you. [technical from the in quarter million, to second the Net book-to-bill. represents a second increase $XXX.X morning, prior a X.XX everyone. difficulty], of new the business XX.X%, Revenue entering year-over-year backlog which net resulting

as backlog quarter billion. the beginning approximately XX, from increase XX backlog. was conversion prior XX.X% that of revenue June next the Ending backlog year. approximately to project was We of of XX.X% XXXX billion $X.XX was months, of $X.XX will and second the This convert in in backlog an

over guidance I with will review for the as And well detail, financial turn in expectations as call that, our XXXX. of our balance to performance the Kevin, to more

everyone morning Thank to in. you, Jesse. listening And good

prior increase basis, on increased Jesse Revenue represented six for XXXX. year-over-year was XXXX reported period. currency comparable million second XX% and year from June As in of XX.X% a XX, quarter basis XX.X% a was on a reported the This months constant on $XXX.X a and on mentioned, the revenue constant million $XXX.X a and of basis XX.X% currency the basis. ended

at the pass-throughs for growth investigator higher Revenue favorably quarter by impacted particularly was sites.

As impact under Standard pass-throughs and Accounting XXX revenue for revenue a cost reminder, the recognition. both

EBITDA site EBITDA year driven to the EBITDA continued margin XX.X%, XX.X% prior a cost, million by $XX.X XX.X%, and on cost activity was to was second of quarter, reimbursable compared in basis, during improvement which $XX.X XX.X% year the quarter the was comparable margin in to Year-to-date, the period. of compared the reported increased further the second portfolio. accelerated investigators On million XX.X% increased compared a a period. across currency for on quarter basis quarter second prior increased in in the XX.X% prior quarter $XXX.X and to XX.X% prior for EBITDA currency compared impacted was in XXXX. margin period. EBITDA the constant the and EBITDA year Year-to-date, constant in site by XX.X%, increase basis, year.

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

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

our the top-five million in top-XX quarter, our days. negative customers we was and second generated our XX% flow year-to-date concentration, net roughly of day cash from customer In and represent XX% outstanding activities. sales Regarding XX.X And respectively, $XX.X revenue. operating

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

June As program. had million under remaining we XXXX, repurchase XXX.X of share XX, our

against During of the of position quarter we composed net facility, cash the the end credit million, $XX million. which the $XX.X at $XX.X million debt was debt was $XX and our paid ad quarter million of of

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

and activities. $XXX continued the of million, Our in XXXX. of second continue million higher expected to guidance range XXXX well $XXX.X quarter now is the representing year, million XX.X% growth balance anticipates service growth EBITDA $XXX direct EBITDA the compared as of to the investigators as site of costs in XX.X% in The to activity revenue

income XX, is XXXX million This average and as weighted to of Guidance for range XX.X% $XX.X additional million million. $XXX assumes to are effective XXXX. of in XXXX. exchange rate year foreign XX.X% $XXX June shares outstanding our the We no on in rates diluted a share XXXX repurchases based There of forecast tax net guidance full guidance.

be expected $X.XX. to $X.XX Earnings share now the to is in range per diluted of

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

Instructions] [Operator Windley from you. Thank comes Our first David from Jefferies. question

open. line Your is

of taking -- I or several incentivize sites level staffing, -- you them well from me. wondered on or to better few excuse that actually to to. levels I the throughput August, I more morning at would site questions. commented them the morning. good in support of for that attribute them it Good Is Hi, to is angles. you to dig wanted improving. what Thanks get my think, payment either commentary done? of or higher perhaps, it different activity is

Dave, Yeah. is August. this

I general. things. think In it's a combination of

sites are is I at normalized. becoming time. improving and There's more of a think of operations quite bit staffing a for lot disruption

-- has lot that, staffing. of and are going costs Now I -- recruiting along and in up news, trials. cases, I pace. back getting the all our But are our in things awards many in good our nicely. fundamentally of moving but, up, getting the rapidly on activity to think reason, period the well that it's speaks phase over it's cases, time is of that reimbursement are of a And and the trials. sites performance helps, other gone the that, general, programs some And And also positioning normalized the and for things into a things think last

helpful. Thank That's Excellent. you.

throughput, because, continuing So for, through some then do you pulling-through how is that how as effect we your -- see And inflationary quarters? about factor, next a possible much much trying that think I'm should are up versus -- knock get on the several the of how call to is you just having quantify, So it positive pass-throughs or more a or it for direct direct would CRO? revenue on that, going to mean much I'll knock more sense revenue? is a on effect how say,

on out. Yeah. sides. at you difficult look try I obviously effects. sort could to And both that's mean, guess some effect inflationary I think to There inflationary is I

for margins a our fact -- Although, our are fixed bid by already of last number years inflation of are the strained a assumptions of contracts made and project. the a -- time that, for price execution

that. bit of there lag of quite So, is for kind a

But, have volume it's of some direct raised, sites translate doesn't how outpaced of fees. of it I a can say, direct a think midterm, -- I inflation, direct Some but into inflation, been site and costs kind much is increased site drives directly increased necessarily you mean, our not number feeds, relation. a at into bit that's and there's inflation.

trial. of trials of And, trials depends depends out, is being in see by I But and doing. percent of you're to different -- we of it factors. impossible, type have the trial what sort really driven do sort some terms and size it's activity. the that the more it to direct, on the the think as indirect And on try opposed good type in of And traction

think, fees company and in I also we of overall. is driving the seems will that ramp direct and a see growth direct

lot been for partially better recovery been and better and outpaced there were and -- of average a increased were might greater during they of I there are going we things The so of a because by they projects such as some But a a individual of forward. RFPs, project. of there's the of has as a it's pandemic, believe consider be of uniqueness depressed amount to a indirect, time in driven online, amount pass-throughs inflation part growth percentage becoming because

to hard sort direct But and costs. growing well, we're investigator indirect just not that effect an inflationary out. it's and it's both fees, So of

difference for Got expectation XX of margin. look effect I for pass-through would to -- I about It versus not had just see, whatever. higher you in just me. think my pass-throughs for it. kind assumptions depressive points. have I the were or If Last question neutralized if that my But that saying basis correct what what experienced on like,

effects that the looking at quarter an effect I'm normalized had from talk have or that points XXX is and relative so was on so. things the margin basis, basis would of of really kind first did more trends kind mix -- -- or it I But you dilution? guess, importantly, effect or like about looks margin like decline that by apart on, what Could high hiring pass-through same of margin

Kevin, you want to?

Yeah, Kevin. Dave, this is

headwinds second first talked kind wage hiring incremental just did on on the here. then some that expect our quarter merit hitting of inflation, quarter I and annual to related we the call, our As being

and addition reimbursable did from the so, to, as impact we've we impact done. the in the some impact in you impact that quarter see that see that mentioned, hiring of inflationary second We And of the costs. the

Thank all me. you very for much. That's it. Got

One question. next you. for our Thank moment

Our question comes from Smock next Blair. William Max with

line is open. Your

taking morning. you normalized to August, Thank level point for you as could you the pass-throughs pass-throughs it's being our questions at on on or as of terms sort Thank good in following potentially pass-throughs here. at Dave's Hey, think some percent a up we're you. I headwind of wanted off at right the say, there Do to level. a start revenue, be questions. now are back of mentioned lost? fair total future in just some

sorry. I'm

of that will revenue So the part question is, the do pass-throughs of going remain I level as forward? same percentage total our think a the

Yeah.

and a dropping it be headwind there off? would Or

kind of it question headwind this that is, the the here think half I is quarter? dropping second do going as XX%-XX% a we remain level guess at the mean, XXXX? in move Potentially, Or slows and off? to saw of into yeah, growth it we you back that I

going Yeah, -- projecting go a And trying I to beyond the a think I precisely I it's that it's don't bit it's continue But to think, will that lower difficult. particular to longer want to given not it significantly. going where think to I over be, do rising to quarters. in normalize pick term. quarter, tend try

indirect A easier of projecting to is a recruitment direct -- fees. direct lot to or rate to rate us lot for and are fees. things of the project, difficult difficult very it of the It's

that going that is model. -- type this higher But I a And bit. so, terms of the to you're But kind overtime. And trying studies I a into of we're the new not vary clarify in at get don't a can of indirect. it's level It's to again, from refine And to recovery a normal of quite think want do influence just things necessarily. COVID. doing it's that

an guidance, as elevated, it Yeah, a to expect pass-through be is costs. be balance of the expect give to that to percentage, but to our just we in the in year. assumption elevated guidance. is our We're forecast difficult Max, specific very it the do going it But not do mentioned, we

far point that guidance. Yeah. But That both. to Kevin, to in baked on the the fee the hear in into you for guess, be direct for have so I expected that's first year-over-year XX% move XXXX? of revenue you we you guidance direct into incorporated and following you as up particular, just of 'XX talk into half what the half in Can be mentioned, that curious elevated, what that's is fee about XXXX? helpful. revenue, Thank back embedded here particular in up

was this guide we're elevated speak increase XXXX the I Yeah, mean, driven terms going of the not of in to largest to portion point. the at by pass-throughs. XXXX, It's

comment my the elevated saw to what's back in what second coming cost that again, to is our quarter, on we be guidance. pass-through that to so And built into do we expect similar

quick modeling, maybe it and up me. one one here Got just clean for

backlog again, terms In conversion, of elevated.

stepping How -- range think is there to here? XX.X%. your assumptions last down about to in forward XXXX? change towards moving think back mid-X.X I you conversion quarter, has pointed should there backlog been And we any terms for book-to-bill of any

Yeah, good of saw of pass--through But a I the XX.X% did at with year did in to we the XX%. higher that I in expect rates of obviously of elevated, be question. the balance come burn that kind range, activities least X.XX kind that increase X.X-ish booking down. about think back remain the range. the that we'll And to or

Kevin. Sorry,

is range, that to that XXXX clarify X.X back year, total? to X.XX in of that's half the for or for Just the

That's XXXX.

you. it. Got Thank

for question. our moment next One you. Thank

comes question Sandy next Guggenheim. from Our Draper from

open. is line Your

much. so Obviously, of as to in pricing and pass-throughs, bookings. sort inflation want around quarter. very this strong it I address to and guess question Thanks relates bookings the another

you've is obviously, to you in -- half expect close how of that much new -- much business, numbers. any inflation, all your price you talked -- can up I of to XX% first as that? is of been obviously is of year-to-date an think, terms the don’t with at bookings you exact impact last Can You're year. and your talk versus I about How your

that things pushing And -- pass-through of through, XX% nearly is that for really that these a a and growth? are improving. reason, the is it just much growth rate How markets the apples-to-apples, it's there mix signing you're function to are just of up okay, I'm sort or be might of think businesses some of so type that trials have are clean of trying ones more revenue? whatever

greater bookings, the there XXX-type between Things It's things think lately. environment terms overall pass-through way And had But and direct that working for its of amount a pass-through to bookings, the work, our a quarters look back softened. look, in very growing are get difficult difficult growth We've across to award that, good, RFPs, time of look opportunities at I perspective notifications the a is things. lag all several enough through. into and it. trying growth rest business of direct now. had from mean, a was it we winning and out there and Well, and of I board. sort just to is it and get

And better-funded a has pivot that's come lot bit. back of how A know business a the bit. improved but quite much funding its of to clients. I environment quite itself, don't it's

So, I going growth XXXX ago. were on we're We're until looking couple good forward to this next. quarters work, get next But, and much quarter. and think improved lining to not are guidance have, going up year specifics into and they we're what things there new over going a

do. to trying good, difficult any looks at to you comments? out, or look Kevin it to of think is I XXX-type things sort do a have getting and So, back Jesse,

it I well said. No, think was

kind we the that see out, don't of hard overall But of have. composition, at portfolio that change. it's some a look to of significant we kind sort given just you If the

I commentary. hiring Okay, guys that. That's maybe on appreciate And follow-up I believe side. were definitely one the targeting. helpful you

it was think I think that's to growth, I XX% right. close

towards the And would indication environment hiring? and just comments doesn't how Do slowing you of hiring, on sort guys your sort to you're feel progressing be know well? you target, you for would of Thanks. the look mid-teens. any goals but like targets just for you're your tracking again, hear love it any You're that tracking on your thoughts set an I down there's aggressive like but on updated hiring. guys

I year, well Jesse. growth year. It in Hi, gold. XX% Yeah. say for challenging the is up We're still end likely against environment. a it's would to progressing for the we're going the to high-teens

even Yeah, cases. pre-pandemic or maybe turnover many part thing that. normal has that of in The one I'll to good back add maybe to one dropped really is, lower

And easier has a and lot things so, to the manage. makes churn is dropped

good think and I in shape with So, we're staffing. hiring

and August thanks. Thanks, Super.

Thank our you. question. for next And one moment

UBS. We John have question from from Sourbeer a

open. line Your is

in is This Chin Shi [ph] for question. hello. John Sourbeer. taking the Thanks Hi, calling for

the any your share do taking performance, funding you environment Metapace year-to-date are given commentary have waning? and So current And how on you peer? is versus

asking? taking we you share, Are

Yes, that correct. is

on means. basis, that way, And, on don't year-after-year. our been at look analysts that years, of a terms in most I the guess we've, that what I we've But, bookings growth for guess I Look, be Look, revenue basis, the quantify We've we our to -- know share a peers. our share, outstripped and, income revenue I losing what And an organic And And, has represents? really we've is in and slide and decade. for cetera. in appeared on I at hear we're to any et EBITDA share. growth growth most of the what -- about, cetera. have et net entirely and talk but tend of taking I profit been things can't that deck

Thank you.

you is, that? second color project of of Sort have one delays any any XQ, since increase on noticed in

I things the have been mean accelerating quarter. overall Yeah, since first

Thank me. all you much. very That's for

you. Thank

next Okay, from question Coldwell from comes well, Eric Baird. our

line open. Your is

my much. very should you hand. thank have Well, lowered I

all been a congrats Thank think good look of But And to quarter. my I forward I you. covered. future on have updates. topics

Thanks, Eric.

Thanks, Eric.

Yeah. Thanks.

at questions I'm Okay, to Lauren time. Morris for the turn remarks. closing showing to call I'd this further no like any back

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

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

now disconnect. may You