MEDP - Earnings call transcript Q3 2017

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Operator

Good morning and welcome to Medpace's Third Quarter 2017 Earnings Conference Call.

Before we begin, I will read Medpace's Safe Harbor regarding forward-looking statements.

During today's call, management's remarks and responses to your questions during this teleconference may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve inherent assumptions with known and unknown risks and other important factors that could cause the Company's future results to differ materially from management's current expectations including those discussed in the risk factor section of our Form 10-K for the year ended December 31, 2016, filed with the SEC. Management disclaims any obligation to update forward-looking statements in the future even if estimates change. rely views of after as not as forward-looking today. should management's representing of you on today's any statements Accordingly, any date

the financial are the most provided investor.medpace.com. today's directly Investor During to of GAAP presentation measures Company's such will slides management as comparable available release financial measures. attachments call. its and available non-GAAP call to non-GAAP the today’s with of press section A The in at to be measures on connection is slides reconciliation earnings call, Relations certain website referring earnings

As that, opening President for a reminder, this and over conference the Medpace's call Officer, is Executive remarks. being Dr. I recorded. now to With Chief Troendle, Troendle, will Dr. please August call turn begin.

Dr. August Troendle

to With Chief earnings quarter backlog quarter towards X% welcome million, Thank Operating during Medpace's and third me increase this business over third represents the Geiger, Jesse you. Labs. call. Good Financial is Officer Officer, entering the call Chief XXXX everyone new on sequential XXX day Net were a and QX third the the and in improved million, business XXX project quarter Ending consecutive over awards. continued and has fourth in the second of October strong was new X% observed the year's environment quarter. improving quarter. backlog business increase last month The of quarter into a awards of we that

brief That by XXXX, revenue growth overall quarter. expect completes we acceleration our performance and anticipate we QX, now for QX down to the revenue of in in Although, financial Jesse review XXXX. sequentially be beginning will introduction,

Jesse Geiger

everyone and August, in. you, morning to listening Thank good

to net XX.X attributable cost. primarily XX.X the GAAP In third $X.X million, net XX revenue employee and quarter, represents transaction to points third quarter million employee compared XXX third driven of Adjusted the partially from million to of reduced million for for we our and S-X in costs. of our of to corporate X%, net had million by for expenses year of income and the third XXXX trends the and the higher hiring by and and versus payments Filing. in our increased growth income related revenue of was calculation on year XXXX. net quarter million This XXXX, third the the share per X related of XX.X% includes income XX.X XX.X% $X.XX period. the in adjustments million, Adjusted the income third to related X the which now EBITDA period. Moving adjusted highlights million financial XXXX. in basis of $X.XX, to diluted of was presentation. income EBITDA quarter our service income declined per quarter in Net of campus XX.X offset to prior compared quarter key net diluted the Adjusted in in decline Adjusted X primarily in XXXX to lease of X.X%, prior GAAP share compared of year in GAAP net quarter XX.X EBITDA was our growth quarter Slides period. margin quarter was GAAP third prior interest compared was the the growth

quarter across Year-to-date periods. of our net total that of three a breakdown growth. we market portion mix opportunities size, With to regard business small area. concentration further was a where diluted and of the large which represent we midsized year-to-date segment adjusted XXXX $X.XX we revenue flat and continued Slide revenue primarily and was on remains by growth of growth XXXX remain third our per quarter in both our Third our categories income for therapeutic X, by provided for core our focused share customers see serving versus On oncology, have customer driven XXXX. by largest customer market biopharma of a

net diversified Regarding X concentration, customers provides representing of top X a top respectively summary our roughly days XX which strong million as was days day Slide we an XX% and compared billings our total for and increase well free of we as mix of with operating we from maintain as to a decreased year-to-date. liquidity driven in the activities periods. positions XXXX a in and flow result generation our trade receivable cash in sales a revenue X.X of customer improvement third and third quarter, flow X.X cash quarter. as from well third generated to again the quarter of and collection to the decrease leverage a the accounts advanced primarily sequential both in outstanding, compared our experienced activities. the by schedule conversion This decrease second XX% In prior XX quarter the year year-to-date our cash in

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

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

the repurchase X combined million total $XX.X and quarter, the million. share contributed share purchases million approximately approximately shares to a the in quarter. share program, million $XX repurchased from share During shares X.X million under These earnings $X.X per we X.XX for for per of Cinven

for our X. updated to on Moving guidance XXXX now Slide

XXX range of organic over million XXXX X.X% XXXX, of in guidance revenue XXX service the million. the growth million representing XXX.X is for to X.X% full year service net to net Our of now revenue

range XXX to Our XXXX is of guidance XXX in million the million. adjusted EBITDA

adjusted $X.XX. net XX.X range net diluted to now diluted to range On share. XX of and to $X.XX in we the GAAP income income is the million million share GAAP XXXX now range and an XXXX $X.XX million expected in million per per $X.XX earnings adjusted XX.X basis, Our is XX forecast of to

your has per impact diluted will Our take can third the to full updated turn With operator, so over call reflects XXXX. the share $X.XX questions. that, year in repurchased guidance the shares quarter of for approximately which the we back the an I

Operator

William Kreger Blair. Our the comes you. [Operator question from Thank Instructions] of first line John of

Your line open. is

John Kreger

us competing any or update landscape just you number pricing the any an see dynamics? on changes Are as bids you of the seeing for competitive in it? give can August, you people

Dr. August Troendle

really think you're When haven't was dynamics in bring often competitors. but and three of even kind No, if pick to likely bid seen say I are, for the certain see any, number pick they a number competitive defenses. situation, any I and of change a there you’re certain change, a don’t a they in groups

many of assessment their be of type considered tends just the to hard are much they to net competition is? it, groups it's the get there beginning? it from How Whether So, same broadening they of narrowing really core time. process regardless how

big there. a seen really never change I've So,

John Kreger

thinking that's about And little clear benefit us your pretty bit happened that is early in there business Can again. this late'XX your are a sense What how thanks. becoming hindsight? now and the clients normal a ebb here your kind the what and 'XX, world? of Or just was business Thanks. give change Okay, of flow of you as the prospective? reaccelerating about from of the

Dr. August Troendle

in mean what and but on clients of low in don’t pause getting They getting before. to related was number I and don’t a we are that have move that’s that. funding ongoing had place less clients closing cause for demo at substantial finally our a closing for having of funding, to programs upon not on They’re underlying a that commitment difficulties of number loan coordinated had some initiating lot then clients had depended project. the in way. forward, cash to usually funding, know plans it, is a long ultimate take had and financed and And Sure, ready stage funding that plans we a tightly in and having and not to had number I that that fair to a certain they least evaporated funding of their a a had delay we our and

our to a of and a in insight I I any and the difficulty of which pricing an -- funding things part But lot was important of was other environment. have our it really know going don’t business. know political business, is I pressure that. underlying So concerned the about dynamics don’t across whether there on subset

John Kreger

bad Thanks. could that balance sheet in to One be one think items have Jesse, on give any quick off? update last have an Great. you situation? position you on write Jesse. you that the debt can just a the for us Do

Jesse Geiger

thanks. Sure,

bad debt the collections fairly of from quarter many the that challenged secured I that and receivable perspective. at credit And cash have bad quarter, against in so $XXX,XXX cash a baseline So, around we're we flow comments in strong the was earlier recognized funding. debt in least drove we the year to customers a have think QX had the some the in

Operator

next comes from Thank Windley question you. our with And Jefferies. Dave

open. now is line Your

Unidentified Analyst

Dave for is Hi this morning. guys on this [Jerry Megason]

sequential the in correctly touch XQ that Just as driving August, on you on little that? you a revenue Can just factors on as lower so mentioned math briefly implies decline elaborate guys bit you bit believe I the growth. had well? I EBITDA touch little do could margin, a underlying wanted And it to

Dr. August Troendle

take Sure, Jesse. I'll one. that

revenue sequentially challenged benefit a -- a function in So, the these earlier for the expected having projects of QX few in is delayed from from from to benefit QX really QX revenue credit some decline of from some the year. recognition

that be to from So, in bit quarter. as decline revenue driving down a continued perspective, implying drove well a some employee expected fourth cost. then function that was in primarily fourth be quarter. margin the related down cost will revenue increase of And margin -- That's and was little the a also as the in the

Unidentified Analyst

a but system where's win XQ gave improve. currently? guys And you then volume in had to XQ volumes, played rates RFP expected kind in out your Is and of that RFP without decline discussed

Dr. August Troendle

a service the winning. me is areas quantitate across there new because versus We therapeutic There don't is I of for various it's it's don't accounts, across volume just across lines, think companies, say factors. meaningful across lot we look first and more -- let quality. to existing in mean we volume that includes Yes, RFP a opportunities RFP aggregate. reason

I an -- we number we very have. meaningful. of and the opportunities with don't the So we're flow we doesn't really it's RFP us But think and the quality comfortable overall much, think have do

a As environment third over improved I business ago just we've far. in the so quarter, seen six and into much months continued of third is really not said quarter fourth has which but that

well. comfortable pretty and which least moving feel we reign forward are the pretty we So are into abated at things difficultly that

Unidentified Analyst

on the one size, pharma? skewed last that math Is towards from been consistent seeing If midsized more of that's bookings? Or client growth that I smaller the with is been driven the pharma it been just seems do me. most revenue kind then of you've your And by what clients. with by

Jesse Geiger

Yes, is mid it's from small. growth coming really and the

Operator

Donald question next our And KeyBanc. Hooker you. comes from with Thank

Your line is now open.

Donald Hooker

to your been tracking levels staffing you're I and your of stable. staff So is and I've sort relatively guess revenues starting remained grow

operating leverage guess you X.X sort going now. a decent of fairly XXXX would you fair clarity any levels there's I there forward, I there And the So is to that give staffing assume then that induction? around will Thanks. folks thinking near-term? be be, in I you can about need guess where

Dr. August Troendle

Yes, okay.

we staffing So changed accelerate to hasn’t started because really much revenue. haven't

in fair was the QX driven As increase mentioned, a delayed by Jesse recognition. amount

will been we great to is I increase. We mean sustainable margin. three year ticking up, like do or has just but X% We think begin revenue in that been will our think into a to large a and some at picks about level, something change revenue kind it's QX in leverage not XX% we numbers last quarters. bit that, the the we at little hiring our same I but do year wouldn’t XXXX, expect again, margins up in do there, kept somewhat a So hire on I acceleration it's with flat have that in point up we and currently of new as translate been around begin but

Donald Hooker

Okay, you. got

your sort in guess So, your comments I in your line of here employee base. base you're somewhere of interpreting terms

Dr. August Troendle

growth slack, I a That we're we of take which but environment, meaningful pretty New we base growth up amount much a line. means we the in do. anticipate think if don’t near that slack have Year reasonable to we for intend

Donald Hooker

maybe lab -- number a ahead the Jesse of out next of Got you you. have kind capabilities year, I in if you're focused of on if you looking around right. projects I understand new for that question for Last building and me. capital that’s recall Can terms correctly

the we of going a a CapEx free should nice So can that? rate level Thanks. of kind kind sustainability what expect this about quarter of flow you cash Obviously, talk you had of forward? sense get run

Jesse Geiger

then to Sure, of in was increase and X% thanks expect our in range some projects approximately that be or John. third quarter far do the expanding forward, the laboratory to of percent facilities, year. so expect those going X.X%. primarily would fourth CapEx related around as we as into revenue about as a X% logistics next it up We quarter CapEx percentage percentage to in to it

Operator

Suisse. our comes And next Wright from Erin you. question Thank of Credit

Your line is open. now

Erin Wright

on the environment cancelation Can X% where win to your rate relative in also typical you broader of kind Thanks. kind right across And your like of range? the rate quarter sort pricing follow of comment then the up kind that was I'd of you're discussions of to sort and X% of seeing now?

Dr. August Troendle

Our win rate good. was

I think seeing win the the comfortable a very had pretty we of of again we strong were rate we're late the quality and quarter. with in opportunities

So we’re overall. comfortable with that

of part question. second the Sorry,

Jesse Geiger

and were notable third with the long-term wasn’t been take in cancelation and third average to it. X% higher there off X%. has than in will quarter that quarter. to the speak I in cancellations our part individual Obvious around Second quarter rate third not any the Cancellations in

Erin Wright

just then hearing seeing a or these that's broader mean, unusual customers? are smaller your biotech with of kind or biotech are of notable, a Thanks. anything conversations your environment. I And funding follow-up, anything you kind

Dr. August Troendle

not year. like seeing earlier anything we're we Yes, in the were notable

in new have any environment, seeing we're here business unusual influence either programs the funding of terms or going impacting new forward, In positively quarter. that third and not negatively

Operator

Instructions] [Operator next Robert comes Amparo Securities. with question Wells our from Fargo And

now is open. line Your

Robert Amparo

on stake tax question forward? a modeling, a reform. tax Just What as be quick modeling they absent so should going steady

Jesse Geiger

or you tax XX% take to So, that's think from good rate any expect about the as a we term give into do absent near was changes be effective we our baseline mentioned QX approximately rate year as full for probably XX.X%, tax XXXX and reform.

Operator

And not the this August further to any time. now call over turn to showing for remarks. I'm at questions I Dr. would any back Troendle like further

Dr. August Troendle

look and joining interest our year to call, you February. call much speaking thank Alright, in I forward earnings in third and for appreciate full Medpace. again very on XXXX your us earnings quarter we you QX to for And probably our

Operator

Ladies participating and have day. a thank program everyone in conclude and today's you today's gentlemen, may for This conference. you wonderful does

Medpace (MEDP) 31 Oct 172017 Q3 Earnings call transcript