MEDP - Earnings call transcript Q4 2021

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Operator

Good day, ladies and gentlemen, and welcome to the Medpace Fourth Quarter and Full Year 2021 Earnings Conference Call. [Operator Instructions]. I would now like to introduce your host for today's conference call, Lauren Morris, Medpace's Director of Investor Relations.

You may begin.

Lauren Morris

Good morning, and thank you for joining Medpace's Fourth Quarter and Full Year 2021 Earnings Conference Call. today and CEO, our call President, Troendle; the Geiger; Jesse CFO, on is August our our Also Kevin Brady.

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

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

August Troendle

in good Good in had and day. year is anticipating good a XXXX. XXXX Medpace another year

the closely are issues October. guidance early Our in funding funding and guidance our past last over we current is XXXX biotech that provided XXXX wage Biotech monitoring year. essentially Two are down inflation. from unchanged is

However, business rate concerning few flow, current XXXX client that experienced RFPs half Despite to was approximately strengths. in was the lag and in increase maintain trajectory. quarters. strong XXXX. past to and the we that down of half project quarters the RFP in by the to headwind volume we in a RFP X sufficient related environment down first is January or inflation over a dollar compared awards other the growth has to have and be past Wage our will second Note awards backlog X several win financial compared an XX% over competitive accelerated to this margin. not delays XXXX reflect XX% believe strong months can weakening in to the signs January

reminder, are assumptions wage believe that quarter We a side are out each wage time guidance now rates in these usually Kevin Annual low anticipated our and and actual But As project will inflation will inflation assumptions headwind. trail set margin of our more generally on then Jesse performance, the detail. will remarks environment. guidance is in bill bid. at some that the addresses the and bid. actual of on project more by in adequately even our current review are inflation the make included

Jesse Geiger

increased resulting billion, increase $XXX.X XX.X% year a book-to-bill. prior XXXX. fourth Revenue of which quarter XX.X% net you, the million, was fourth and was in XX.X%. new in business $X.XXX XXXX from Full morning, $XXX.X X.XX% increase a year-over-year good for awards Thank over year million, to revenue the XXXX August, the Net everyone. entering represents of a backlog quarter

the in was labor represented retention as and Further, an was year. of of billion, For the increase in our business XX.X% in beginning X-related to able of conversion the backlog. backlog. months. and ending than quarter backlog approximately and grow year a from the and challenging Backlog employee robust next from we revenue call billion headcount awards XX.X% billion, top new continued $X fourth over XX of We and X% revenue for increase competitive projected discuss financial business in priorities were that, to will less XX.X% prior XXXX guidance. hiring prior net review only turn will December XXXX future full year of $X.X in XX will were XXXX. X.X% work our performance to remain more backlog to for XXXX, Overall, of and convert the With an COVID approximately of XX.X% detail I Kevin $X.XX the environment

Kevin Brady

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

As EBITDA XXXX X% on quarter in billion, the revenue XX.X%, which compared quarter XX.X% XX.X% to increased on compared X.X% $XXX.X margin the EBITDA the basis, a on to mentioned, increased million quarter a and EBITDA of $XXX.X constant a This $X.XXX in Full million represents period. million a compared quarter revenue million currency compared organic XX.X% was prior constant decreased reported respectively, in was XXXX. to to constant and increase $XX.X XX.X% fourth a XXXX. fourth or million $XXX.X fourth the year-over-year basis of of fourth $XX.X XXXX XXXX. and the prior basis. organic Full XX.X% currency represented Jesse year was in in XX.X% year. basis. a XX.X% to increase EBITDA of increased and year currency full for year On XXXX year

XXXX. higher EBITDA from million compared costs. In out-of-pocket increased to and employee-related For income net the $XX declined was income expenses in the net $XX.X year reimbursed year, the of period. full XXXX, of year, fourth quarter was compared reflecting XXXX EBITDA margin prior prior to million the in margin XX.X% XX.X%

well rate. quarter per was higher For compared share a XXXX, $XXX.X million income income driven year to as as in prior for the the full effective primarily was XXXX. to the income EBITDA Net tax the $X.XX year growth compared was diluted $XXX.X in million $X.XX net lower prior over year by period. Net

net compared to per For income share of XXXX, year $X.XX XXXX. share income the diluted full in was diluted net $X.XX per

our of top X represent In cash $XX.X revenue. and concentration, fourth free from XXXX our roughly repurchase net activities, days share respectively, sales We and shares days. quarter. we did was at outstanding and XX% the million customers any the our in negative operating of under the million quarter, customer flow repurchase generated remaining had and XX quarter, not fourth XX.X top $XXX.X Regarding our during XX%, end the authorization we

fourth We approved capacity debt $XXX cash, of credit. also with increase revolving Directors to share ended our million of outstanding quarter $XX $XXX million our on of the Board of million current and no an of repurchase Our program. line undrawn

XXXX. Moving now our to guidance for

XXXX reconfirming are earnings guidance third shared in we release. mentioned, our quarter August As our

over forecasting of are in XXXX, XX.X% XX.X% the to the of year total total range full $X.XXX billion for representing We of billion. growth revenue revenue billion $X.X to XXXX $X.XX

$XXX net With no back growth XX.X% million XX.X% over tax we that, our is to earnings repurchases additional XXXX XX.X% of the your range so income Our assumed share expected of in $XXX.X compared EBITDA and $XXX EBITDA the to diluted will the call in to million million XXXX. of and in in million, in per the in the there effective can $XXX to million are to XXXX XX.X%, $XXX be representing anticipate of rate I turn We share of XXXX range to to range $X.XX to guidance. forecast $X.XX. range operator of take the our and questions. We

Operator

[Operator Instructions].

William line from comes John the question Blair. with of first Kreger Our

John Kreger

RFP the mentioned decline you August, in January.

I think XX%. you said

decision lengthening curious, such Just you start-ups, or are like trial other signs any seeing as anything cycles client of slower hesitancy that?

August Troendle

an haven't a like our and there's I short really been any pick more and don't that's of period seen it does over think sign and signs. We it's issue, difficulty. There's frequently to base, always time, in always it of No. Look, funding take time. of getting difficult some a out real really funding, or there's delays. measure other client a always metric lack that -- But

concern. not develop my metric anecdotal And so to does it's difficult evidence to useful level a raise of and

John Kreger

We've hearing are that. clinical more seem change? new notable implications have diversity And that a business? helpful. more that approach out lately does different to FDA they of I'm That's question. patient curious Does and you the any Totally Great. want commentary like going CMS trials. been that -- cognizant there's on if you're of in how

August Troendle

client is United No, of have in sample ideas on recruitment, geographically, and sort within that's something consideration they pick stratified it States, it's Yes. an a or Generally, it site we trying not in patients would They is world important the early. of both to the of the issue. inhibits important breakout kind where sites. selection very very greatly around but like. what and diverse is and with factor get discussed A representative Generally, that trials. a

John Kreger

Great. And one last quick one.

get the is front of your you're concern. after? maybe other tactics the you going about wages that or for Are how going to experience changing in mentioned recruiting example, you're of You where level this, you're

August Troendle

No, I business think it's usual. as

a at think levels our level But entry quite remain wage bit. inflating, Our strategies are intact. particularly I recruitment the

Operator

Instructions]. [Operator

comes line with Hooker the next KeyBanc. from Our question Donald of

Donald Hooker

price up these XX% just you topic. the big I looks I mean, maybe saw this inflation like producer probably wanted numbers. to mean, year-over-year. more index some bit hear little on a inflation out are the morning, I

in to that trying to changing? important -- Like Can I I past, the because through? you to the X-year on are are mean just that's bit I push a that through there know -- more said contracts the I elaborate do So think prices? Is or industry on the you margin, X- an you contract, push is you topic? a know if those trying on

August Troendle

Okay.

in So is about contracts? I think pricing changes question different how your our

Donald Hooker

you changing Are Yes. though? the contracts structured Yes.

So past, in you... the

August Troendle

No.

no. answer so -- think quick that to I a is

in changed lag inflation the same fixed go-forward the our have to and in quite are that time of realize escalation when the do those contract we've building you there's have bid. between at that And rates. The We contracts. we contract. we do into We put the But assumptions used are fact, when pricing set wage bit to wage contracts. structure a not of rates

it year pricing started can a be and X it it set you or years. run before can So gets X X, at for bid,

but in really could inflation to would during a inflator we yet. more starting The term, out in long time. think work you're And will but incrementally our a do, that we've contracts, structure, point kind your under over a the for of go to or contract have new if wage cycle for of years the new many change bumping and the which rapidly So accelerating cost wage quite a contracts the done we contracts. affect something longer not in inflation, we're is significant address that's increase we you inflation variable

Donald Hooker

past. correct My have guys I me -- fairly you Yes. good sense the wrong, I'm power pricing mean, if in

is you do radically and probably changing contracts, you could in not from but hearing I'm able be you future, your to what fair? you the like so that feel you're doing might guess of I might escalators So the you Is -- future. that in in do terms anything in

August Troendle

think of course, Yes, is, it's that's address I I go-forward a for the dynamic to client. with can think pricing which that fixed difficult a fair. reimbursement But we change have existing negotiating bids, And contracts our you're rate.

Donald Hooker

question my be Got inflationary topic. follow-up on would you. the And similar maybe

the You guys is just kind on a flow. lot us super -- over Medpace in thoughts update maybe cash cash? that balance your is what just which cash are on around you balance And time? done any thinking on elaborate for good. holding of changes Can Maybe well sheet you obviously, deploying your generating right sheet, you've of

Kevin Brady

is Kevin. Don, Yes. this

saw organic to we'll relation that consistent for strategy, have in the with to continue to people been of going we're business, be or and the whether our growth we've allocation invest while it's a or infrastructure Just in capital now, where us, what that And the pillar were our going to the repurchases. granted be we Board. continue pillar of authorization you, of an million probably for opportunistic the $XXX that is #X about to share outside increase from in primary you

Operator

no call now to remarks. I back for to turn further would like the over questions Lauren showing queue. in the I'm closing

Lauren Morris

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

Operator

and Ladies you call. this your Thank gentlemen, participation. conference for concludes today's

You may now disconnect.

Medpace (MEDP) 15 Feb 222021 Q4 Earnings call transcript