MEDP - Earnings call transcript Q1 2019

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, ladies and gentlemen, and welcome to the Medpace First Quarter 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. [Operator Instructions].

As a reminder, this call may be recorded. to Medpace's host Executive like call, today’s now Brady, Kevin Director would introduce for your conference I of Finance.

begin. may You

Kevin Brady

Good CEO, Laboratory August Operations, joining for and our call. call thank Geiger. COO quarter Troendle is And of and today and conference the Also Medpace's President our Jesse CFO XXXX on morning. first you

in of Act and this Before of of the within responses to impact and results we our that current to that important our remarks and Form the statements Reform if Litigation we began, of any today's standards. are These the revenue today. update the assume Securities representing forward-looking could XX-K questions note These Private would as forward-looking with we XXXX. recognition view our no of statements involve the the actual teleconference of to factors SEC. our Risk section unknown factors changes future, during you assumptions statements discussed any the Please inherent Factors cause the include to Accordingly, with statements like estimates you known date other not from including on filings even meaning to other differ remind materially in forward-looking obligation risks as and rely may should change. expectations, after that your

section provided turn to The the the A is available be such Earnings remarks. also we to understanding financial financial help the non-GAAP With now but Presentation for reconciliation Earnings Release August Investor of available on results. certain we today's gain slides the call. measures our measures. measures comparable website Relations to GAAP call, call investor.medpace.com. to with replacement would a Troendle non-GAAP more that, or Call superior investors connection referring for at opening Press directly I are measures in these and of complete measures non-GAAP this not will the of most are on During believe a measures, These GAAP Slides over comparable

August Troendle

Kevin. on our everyone. business results with Number have year. you, business quick level Good Jesse of reviews somewhat quarter. for the to one, quarter below the last three consistent remains and comment environment Thank financial I environment; the morning topics past the before

if Although amounts. revenue-based level in sequentially awards net net overall awards or higher at meaningful any higher continued at the cancellations have margin. QX significantly sure a and/or a bad represents Number expectation million, three, were cancellations in cancellations, not quarter down or two; normal. level QX But new revenue luck Number in in of averages. XXXX. $XXX represent reflecting this pass-through service were above in headwind proportion I’m the historical recent the direct case of

progress with down our in of effectively line in in XXXX good This margin continued and business anticipated plan. has reflects our QX. As hiring We well advance needs. anticipate in come hiring success

gaps taken In we’ve addition, a fill have of contract they've to where come staff number up. on

Jesse or slightly now our for year review performance expect the QX. We in margin financial full QX. below level at will

Jesse Geiger

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

the to an the now in backlog reminder awards a first basis XXX are a otherwise metrics in the first million increased organic on As of the to resulting unless and of basis billion, year. of first was quarter to first quarter XXX, ASC prior X.X% business quarter as the entering XXXX. under reported costs, primarily employee Net million all year in year. $XXX.X declined the in The XX.X% the backlog basis On EBITDA period. higher by constant reimbursed XX.X% in And book-to-bill. $XXX.X points EBITDA of quarter for net financial of related to which decrease increase new partially represents attributable XXX currency prior year offset XX from was expense and in compared increased operating noted. XX.X% of a X.XX compared quarter backlog $XX.X on currency Revenue higher ASC presentation XX.X% lease revenue. margin XX.X% prior on from to million in versus XX.X% $XX.X out-of-pocket March XX.X% the year-over-year a EBITDA an basis was basis. prior XXXX expenses constant increased $X.X a and growth million the

any quarter For we the adjustments to first have did XXXX of not EBITDA.

deemed diluted have and operating at compared employees first increased was by In increased of no an to payments. revenue was $X.XX prior We headcount growth adoption $X.XX was reimbursed share million to for as to in ASC year. longer year. million $X of primarily driven excluded GAAP GAAP first to million to million partially no XXXX net Xst the million and campus costs the X,XXX quarter $XX these of corporate growth prior income employee prior the offset of of EBITDA And headcount expenses. XXX. assets XXXX, net from $XX.X growth $XX.X out-of-pocket of employee GAAP in quarter showing longer related first compared are the leases lease liabilities year. net income to with the The $XX.X focus and of we income income continues the be Adjusted compared year. and adjustment quarter we of adjusted XX.X% the of in the converted Adjusted area income by net buildings the quarter, net higher the this per January first end in quarter we EBITDA. Therefore,

quarter. $X.XX, diluted per adjusted $X.XX, and income income any of first XXXX share first net diluted grew purchase we XX.X% did shares in not adjusted the XXXX share per net versus quarter of quarter First

representing negative from we outstanding day the compared Regarding X.X in net remain quarter the respectively $XX five activities of first quarter In the to XX% with to we sales quarter. total mix million customer and decreased well generated diversified revenue fourth and concentration, maintain operating flow roughly we our days. days – X.X customers from our Top cash a Top XX our and XX% negative for

of million $XX.X leverage composed LTM debt times million, X.X is Our end quarter million at position ratio approximately net $XX.X of $XX.X gross net the debt our and EBITDA. cash was of the and of

our revenue the now XXXX; Moving updated total $XXX.X total million range $XXX guidance full to in representing to of XX.X% of XX.X% $XXX million XXXX forecast over million. growth XXXX, now for we revenue of the year for to

in and EBITDA of out-of-pocket expecting are compared we range of our EBITDA in the expenses million We XXXX to XXXX. $XXX expectation $XXX reimbursed to million maintaining million are $XXX.X elevated

ASC campus EBITDA lease XXX adjusted previous adjustment no and guidance treatment the further corporate assumed Our lease. for

to XX%. to these EBITDA guidance adjusted is our rate respect We XXXX range anticipate in EBITDA tax with new guidance be our of our comparable to to previous XX% the leases. So effective

$XX.X questions. an operator of the that, million to income call net $X.XX the share range forecast net fully XXXX. $XX $X.XX. back million to stock adjusted $XX.X in income range XXXX, the We guidance the and XXXX million no have to as so in million diluted for and the $X.XX. I to adjusted to in forecast in basis XXXX the our We your repurchases With and will $XXX GAAP EPS we $X.XX per exchange shares of turn On assumed can March in range XX, adjusted take of of million rates $XX.X over we diluted earnings GAAP of range

Operator

first Wright of Credit Our comes Thank you. line Suisse. from question Instructions] from Erin [Operator the

may You begin.

Erin Wright

Great. Thanks.

little that cancellation reprioritization were influencing not continuing that bit there’s and a this? You are or more it if what cancellation, sure dynamics -- mentioned the of trend there? some nature of funding trends. that pipeline the you’re sort color just But if Thanks. is I’m curious the which any

August Troendle

I failure. so mostly those, Yes. or pipeline between but – differentiate yes, product

Erin Wright

of And on sort side dynamics of? biotech any funding those

August Troendle

haven’t really things. know seen Again a a it's stalling slowdown. really funding, like in in total seen things are past reprioritization of that funding – that’s issue. We of No. pipeline always to impacted slowdown no, times not But a a from have a difficult we

Erin Wright

Okay. can and broadly. that hiring margin should the of thinking speak about we How here? be And quarterly you from that doing you’re trend progression the level more

August Troendle

sort we of hiring. rate So, I should been hiring on continue think we the

to so the and of We year staff course hire XX% pretty linearly. expect or over the

Erin Wright

or here? the anomalies kind progression about think quarterly forward, we EBITDA should margin of any trends going And of

Jesse Geiger

Yes.

I at think of margin for of the kind year around the percentage. stick the beginning comments in progression, they EBITDA quarterly year full the on And guidance that August level to year, we’ll were from the margins a call about QX.

Erin Wright

Okay, great. Thank you.

Operator

question from Thank our the you. comes William Blair. line from And Kreger next John of

may You begin.

John Kreger

so should expenses we think change, Hi. flowing And just did not or Jesse, up I million, higher through is but again, think about clarify just revenue guidance about to very that went reimbursed topline? Thanks EBITDA the the much. $XX

Jesse Geiger

Yes. right. That’s

John Kreger

significant pretty could on to driving side shows that small the changes does your mix, In from was great. any that biopharma revenue some change coming a side. there from add implications of Thanks. deck mix the look the and you Anything or perspective? those Okay, like from have franchise cardiovascular your other and therapeutic on what’s revenue slide

Jesse Geiger

area more the No good to change I broad other a on little and mix see therapeutic be area, lumpy programs growth we’re of cardiovascular shift in small guess an where continues The some that implications. biopharma area to the tend we be focus than But by an areas. towards opportunities. therapeutic

any notable percentage, that of drivers I has about therapeutic think else I particular out nothing on that call influence specific but period-to-period there that So in classes. an the would any

John Kreger

one, August, last you too to they behavior how drug react when DC increase being influence that prices your Thanks. do all? about their rhetoric then talk Okay. one Does of to out And clients the at high?

August Troendle

with them. I discussed that never

John Kreger

All right. Thank you.

Jesse Geiger

John. Thanks,

Operator

the Thank you. from Baxter line from next question Stephen Research. [Operator comes of Instructions] Our Wolf

begin. may You

Stephen Baxter

win the Thanks wondering I Hi. on in quarter. was comment you your for question. could if the rate

rates Just bookings that any flow about differences in about the trying the performance between quarter? RFP there’s consider material should think and whether to we when thinking win

August Troendle

cancellations strong win Yes. between Win often win correlation that pretty I result strong see rate. in generally said rate cancellations was and high a rates. and you think We

are I winning. have teams you off strong that when of of chance winding enhanced projects down think are coming have that you very

Stephen Baxter

That then follow-up. sense. is a Okay. And makes

cash the wondering I years? you think over has you been but company would of of the on that company is priorities if over be on in I’m organic capital’s approaching given your change the couple net comment Obviously With next wondering the if sheet position, few the was evolution past what balance deployment growth quarters? could historically, focused

Jesse Geiger

to be strategy the our of growth organic use our us. the as And then over debt with share repurchases continue next next continue couple primarily We’ll quarters. down strategy. capital pay for We’ll Yes. logical here could

Stephen Baxter

Thank Okay. you.

Jesse Geiger

Thanks, Stephen.

Operator

you. a Erin have Thank from Wright our question, Suisse. And next Credit we follow-up from

You begin. may

Erin Wright

at across And of of core kind I’m customers. And a just beginning the you’re biotech continuing of you last particularly the from saw environment what Thanks. call August, you mentioned Great. quarter. sort curious

some trends of a you’re are of key you important conversations or sort identifying mentioned across this You your look metrics that Like you of are that the you kind of How and that think to the this environment. customer more underlying market? across what at kind are trends measuring your demand environment? looking customers and in subdued

August Troendle

RFP the And I GAP]. flow actually I’m subjectively, as on general, I it think mostly both just GAP] pretty quality [AUDIO quantitatively numbers, flows said, misleading flow from sometimes total business yes, think all focused that’s total both pretty and I’ve the very of good environment and and I [AUDIO think is RFPs for of funding. because for and in value for

Erin Wright

Okay, great. Thank you.

Jesse Geiger

Thanks, Erin.

Operator

the Windley comes And question Jefferies. line our next from from you. of David Thank

begin. may You

David Windley

night if apples-to-apples a is it guidance was But from delta that actually Hi. that the guidance there to EBITDA which want imply on similar confirm And adjusted those been of an description the has you to this deck, in a going apply sure not case? asked. to you if late, shift we EBITDA would an between that that apologize to down. actually description that’s just two. the year last just Jumping I that last I your kind EBITDA delta provided want make

August Troendle

[AUDIO GAP].

David Windley

of And case is really by else. way end sure if the a up, my with it’s audio At the on anybody that’s least breaking bad. kind I’m not

Jesse Geiger

campus adjusted as corporate to adjustment lease [Audio the to get an Gap] EBITDA.

the by EBITDA basis. the P&L burdened current year in adjusted is lease on So campus that already

that’s the is in EBITDA one So and lease the year between year current the delta EBITDA prior accounting. change

August Troendle

So they should be exactly comparable?

Jesse Geiger

Yes.

David Windley

Okay.

-- the flows lease burden corporate other the So through campus burden that…? is an line,

Jesse Geiger

operating in adjusted burden to it then depreciation year its year current an In adjustment prior through negative we if and prior EBITDA a in it EBITDA flow as period. It it adjusted interest flows EBITDA. year lease through were operating for the and expense with lease the

David Windley

environment of coming Okay. And that the and your end makes me if for out it, All Erin you understand high? August, of from of then, as answer as right. projects really sell it your And kind correctly book-to-bill strong. was where answers of then that the where project. still some staffing to to that. teams you to came Thank level I yet I Is the that of – have not into Is a not maybe -- you improving? tail as it against you it book-to-bill does one said healthy see your healthy Is new but is like unchanged? caught pretty kind in easier match

August Troendle

Okay.

components [ph]. So, multiple to that

David Windley

Yes.

August Troendle

guidance. us as So, business environment level of QX that was relatively is for and [Indiscernible], book to business been it consistent our along I’d as plan very it, think it’s and strong it and environment I and our strong like QX, of adequate last that but middle meet – well, soft, but to year

enough do some high and two And in think to got when have again, advantage adequately I you’ve historically got high. a always teams. high strong. I rates for strong very higher little So surprisingly it’s very strong us for cancellation been very cancellations, again think last that bookings despite it’s of because rebook bit ready quarters, think you’ve I you

think case. any hiring? in we in of I true stand good. How we’re that’s think I terms

I level a think projects. to our and level. so at to we do good environment business continued hire at relative continuing so and the are I we think anticipate we’re or XX% growth that upcoming

pass-through the increase areas higher really so are had and thing other little for awards growth staff compression. is is increase of some and in in and have we’ve terms our to I pressure component capacity We mix than that as in had we’ve But our staff of given the I mentioned part cost the level booking margin staff in needs. look a of of our the reason move mentioned that some base they a yes, bookings some course as contract where

David Windley

leave question different this way ask just and one floor. me Let I’ll the

to of we’re hire You your from way. and untrained have and about how thinking them past kind on not that relative competitors relative about competitor’s you’re bring book-to-bill are ability then in the them your your hiring qualitative your train for said me to to book-to-bill think and in that you to relatively people example, book-to-bill employees, a

those kind environment we’re into think the reconcile said is in a taking of that sustainable all of you me X.X book-to-bill the you’re better to I those. than is Medpace account, you’ve those to X.XX to past me. actually little kind our for from of things and odds level the but maybe hearing things doing that that, sluggish, seem it Help

August Troendle

Okay.

X.X amount of So, math X.XX under got X.X point. components that our X.XX when XXX good understand a fair and XXX XXX the can basis; was levels average. new level than said, you XXX actually and That lower to XXX the probably I to is that it. for equivalent And relative nobody us. with is

you all revenue got moving care to it. drive of revenue. pre-fund X.X probably and that and of So, current given the a is you about But profitability rest pass-through the What employment X.X these service all our mix a versus part. the service

-- get a is – And current now X.X I and it’s I math, its a said, X.XX basis, what X.X to but usually require complex the mixture. so bookings X.XX, XXX to maybe its under X.X like to

to. not I’d like we’re booking yes, So where

with environment us We’re meeting our But think not at. in guidance. I work plan consistent we the booking is where could our

David Windley

that. you. Thank Appreciate

Operator

Thank you.

no like this time. back Kevin the closing we for now As at of Brady have to remarks. right turn further call to I’d questions

Kevin Brady

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

Operator

the you have day. you disconnect. program all gentlemen, and and conference. This great thank a in today’s does Everyone may . for conclude participating Ladies

Medpace (MEDP) 30 Apr 192019 Q1 Earnings call transcript