MEDP - Earnings call transcript Q3 2020

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Operator

Good day, ladies and gentlemen, and welcome to the Medpace Third 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 at that time. [Operator Instructions] As a reminder, this call may be recorded. I would now like to introduce your host for today’s conference call, Kevin Brady, Medpace’s Executive Director of Finance.

begin. may You

Kevin Brady

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

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

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

August Troendle

on update involved to any Good concentration, to provide alleviate about day. COVID an concern with risk. we’re work I’d like cancellation that or margin

including at is work, COVID-related of million pass-through backlog than $XX less XX. amounts Our September

XXX less as revenue year-to-date of based Our COVID-related $XX work than September million from XX. is

amounts it and pass-through is painful proportionately will treatment differential studies. non-COVID a recovery, we summary, In of vaccine to COVID not studies. to vaccine XX% and into should growth sustainable studies often difference that awards, roughly our large relative financial backlog this quarter review independent the seen are than Jesse larger and our third studies COVID XXXX, Although has with slow on Most on forward rather guidance. now our are path but work. results of been a accelerate now relates

Jesse Geiger

increased million prior quarter a $XXX.X quarter everyone. increased a quarter $XX.X reported good entering Thank of million which compared of On net XXXX, $X.XX quarter income in a prior of organic to backlog to you, primarily X.X% of compared million for in compared year to XX.X% XX.X% prior margin on diluted SG&A backlog represents reimbursed on compared by was income out-of-pocket revenue. a was a increase higher XX.X% quarter EBITDA third and $XX.X as Net $XXX.X was tax the $XX.X increase lower and year income higher X.XX attributable year million, the August, in business per XX.X% resulting from The quarter year EBITDA $X.X net Ending from to morning, book-to-bill. in XX.X% was awards the XX of September the increase compared was prior GAAP prior an year. share was the margin Revenue prior new third to billion, the the and of quarter the costs increased X.X% third on to driven million million basis, currency basis. EBITDA in third XX.X% net In rate. EBITDA XXXX, the period. the basis XXXX. income net lower higher constant the in year-over-year of third effective was GAAP year. Net lower expenses $XX GAAP constant in to period. primarily the currency $X.XX in third and of period.

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

and of had the our remaining we at any quarter. repurchase quarter, not repurchase we During under authorization $XX.X share million did shares end the the

authorization our the outstanding has on brings ended which up million of to quarter debt, We $XX of the no additional Directors our Board revolving current total million. $XXX third repurchases, million cash, with authorized Additionally, of of $XXX.X capacity share credit. undrawn and line

now are provide Our position revenue EBITDA. XXXX quarter to last unchanged for the guidance XXXX in guidance for is initial and and a we from

the year For range revenue to billion $XXX we and of to XXXX, be the full of EBITDA million $X.XX range in billion, $XXX to in $X.XXX expect the million.

earnings we full between that, year will XX% your we turn in Additionally, detailed and the over And to additional XXXX to can plan we February. back tax guidance so questions. are With fourth operator our XX%. take full on rate XXXX the expecting call provide I quarter call year a

Operator

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

John Kreger

a about and pandemic? ability the start thanks get very ago? can metrics enrolled them your August, studies year say, you you given could us to with share there talk any let’s up Are Hi, much. versus,

August Troendle

of site of growing for still well around is metrics There reduction We there’s is growth really some delays don’t a in look, to are above. rates have availability were as provide ago, and baseline both sometimes reflection many difficulties. I improved we to I in kind certainly considerably. have and startup staff still year standpoint related operational have recruitment significant for of activities a studies. think startups a difficulty think But level it. from above to a as things or Certainly back total delays a were that you. and sites, No, I But

is strong, I but many difficulties. rates, time. therapeutic think at particularly And changes impaired the recruitment based So still is of on over And some sites. course, area there are environment it

I we the adapting strong. business And do is I may now, current is be the see months but at think not that and moment see what everyone so environment we what from three very well think

John Kreger

boosts Great, treating not more changes it any of Thanks. thank new the on And of Are the of then sort clients, last funding of couple sustainable follow-up; we’ve seen sort seeing they your in are a you. over you as significant quarters? signs given that of the trend? behavior part a

August Troendle

Well, think head having again, got strong. to I’m alleviating. environment out. go and that cash forward, I think program not that to do authorization into to sure do I move due your COVID, there figure very reluctance quite even is of But the our was a is the how of much I think bit to I

into I months most normalized saying, a the but we’re at of kind six time difficulty terms proceed the use in we waiting not of think are headwind of another resources. maybe people and can may have enough be well, sites, productive that and things

moving are things I of difficulties. So in forward the think spite

changed. funding think And There’s so environment. what’s really that’s good I

programs held. there think go lot being that Many of were a want to is them I forward. of

something time more is year We have are people being may move still some evaluated ago, saying but but are resources a more the forward. moved be and think the little do than this, this take I more think to it is it that held, a can now forward. I We’ve situation. bit might should

John Kreger

very much. you Thank

Operator

with Truist Your next question Draper comes Sandy of from the line

Sandy Draper

much. sharp got million reiterated is COVID first just about a you seems COVID revenue the I potential guidance factored around guidance Thanks in were there, drop, the guidance revenue I revenue a impact? in assume into down, and for question, $XXX what when very inputs you’ve at another guess think of just the for I low-end look even to at the assuming key your guidance slow when think would like the year, your or put trying pretty the it next the

August Troendle

Jesse?

Jesse Geiger

Sandy. thanks Yes,

that volatile XXXX, range. so into did The it decide then I held, relates the maybe hold and to As it range guidance first environment, maintained to or we does continued hit the that we XXXX. move contemplate

out This well up the in on range of come of the that would down, thought headwind early restrictions view a to then the increased restrictions be this could related – a trajectory EBITDA site lockdowns impact are a revenue COVID on site and into revenue as percentage is the it tracking increase environment and and as still the payment tailwind potential little but and low-end of a contemplate but within could, in relates and is the factored given for scenario progressing, we be site here range, push that range there one XXXX, current the of investigator activity. faster our important does margin we somewhat that and range have was We uncertain. to be potential XXXX. And possibilities would activity be it could as that’s with would

of themes the like then environment site the progress positively. a low-end include contemplate access continued some to that the things in the of And XXXX, and turbulence business hold high-end of would some similar true. at revenue and things could continuing At that range robust would

Sandy Draper

math terms of – in for about revenue the Great. in. are on trying looks be really it in correctly, about million-ish the a follow-up, midpoint-to-midpoint, incremental is, coming thinking or I in expense like modeling there mostly and because a again think low be really have we XX implied EBITDA. should lot only helpful. think the the thinking essentially And of revenue incremental about to the are this of of coming passive if relatively That’s going guidance guess more contribution incremental we $XXX you doing EBITDA, about at cost my just side, it’s especially guidance margin SG&A, when but I’m expenses What the to is it’s it the that XXXX or where goods

Jesse Geiger

discussed the year of been in travel have headcount year as and and been investments been meeting cost suppressed lower in this Yes. where have number well such as both a costs pace have the expense, discretionary areas of of training, Primarily we’ve growth of our and here costs hiring, recently, this in this as and environment. in goods, terms

to plan XXXX, come been have some a do of about muted hire And into the we categories year aggressively back. cost moving so investments that this cost do think little we and we to as

Sandy Draper

for the Jesse. Thanks Great. comments,

Jesse Geiger

Sandy. Thanks Yes.

Operator

Dave next [Operator comes of line with Instructions] from question Jefferies. Your the Windley

Dave Windley

question. quarter? in Hi, your from for you projects just COVID came bookings if on my the that taking thanks Good did but I this comment apologize missed it, I percentage morning. of

August Troendle

of half Hey we’ve think was cumulative roughly the again, it’s specifically didn’t. of last this didn’t that, on kind but maybe in of bookings on we We commented We kind I COVID quarter, quarter. just that And Dave, close No. comment probably is August. had. to this

Dave Windley

the your comfortable? awards back And John’s seeing are not robust answer – that, kind on a to part of clients the your people maybe press as robust interpreted I date if is then was and reluctant relation more of setting question seeing already Are accelerating clients the had get and I funding would to Okay. in being that been even you more do that still move RFP still into on question you made, environment. answer, maybe RFP pipeline activity that or start of you to forward, but a correctly if to step maybe willingness up

August Troendle

Yes. I think we environment. a are RFP seeing robust very

as it’s it. strong seen think as I I’ve

Dave Windley

just twist different slightly similarly ending backlog look progression question, a relative the to especially to quarter, if with at level. progression the And the to didn’t same the then say kind implies backlog quarter the that the it might backlog the I if wondering RFP keeping And range rate say be in revenue burn simply Sandy’s assumes really established what wondering end then third of was want of down like and in I strong on It there of likely or look drops that guidance XQ rate? just signal anything much XQ kind by the closer that’s level environment? Jesse lower of – Okay. than back midpoint of that does or rationale your fourth you really already burn range the should your changing the guidance, the deliberate to you’re

August Troendle

correct. think that’s I

Jesse Geiger

to the a Yes. the to I that XX.X% tracking think static of, range on within revenue favorably, keep more Dave. guide. burn we’re range and I well XX.X% wanted That’s but things implies mean, case, rate the

Dave Windley

back activity not the are then of you to complete they kind and but the still their the dialing were shutdowns, that – the are Yes. are levels or maybe site of we’re they kind Is second communities. to question they certainly level accessibility on activity affect that better maintain able able quarter? And about seeing that regional headlines operations – of contemplating in European in seeing of and of regions outbreaks kind site say than

August Troendle

Currently now they’ve March, in maintaining back there than pretty – up been better much till et activities well, cetera.

manageable in with but I actively We’ll open keeping general, So where but to and we are currently. things think are difficulties, things see are running. Europe things some largely working throughout are go, we sites have

Dave Windley

would for say or that And Yes. the margin. put perhaps like either headwind, quickly growth a question just quantification put headcount the that then Is on effect on to can Sandy’s COGS biggest us sense to on and on growth magnitude? your – cost give a number in it something last maybe possible headcount the in or sounds question a is you

August Troendle

want you Jesse, to?

Jesse Geiger

grow we and do look we that past rapidly We XX% years Dave. we’ve to the plan Yes, over can, around been to of been level that, as able it’s headcount or at so. couple as

And we’re see we’ll we we aggressive hiring so as can how can and do. as

Dave Windley

All Thank Okay. right. you.

Operator

no I for Brady like over closing questions the any further would comments Mr. further to this call or time, there Kevin at back And turn remarks. to are

Kevin Brady

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

Operator

you concludes conference. Ladies today’s and your gentlemen, participating. this Thank for

You disconnect. may now

Medpace (MEDP) 27 Oct 202020 Q3 Earnings call transcript