Earnings call transcript Q4 2022

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

Operator

Good day, ladies and gentlemen, and welcome to the Medpace Fourth Quarter and Full Year 2022 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

Lauren Morris

Jesse thank full And the joining fourth our Medpace's today Brady. CFO, Good XXXX you earnings and President, Troendle; August year our on and conference quarter our is Kevin morning. CEO, for Geiger; call. call Also

to I forward-looking responses involve statements Securities meaning the questions we within remarks begin, you Litigation our teleconference Private of statements like the inherent would Before during XXXX. Reform remind this to that and your with that results uncertainties, current important include materially assumptions These Act filings discussed unknown may well as other the and our and are with known risks could and SEC. in as other XX-K our expectations. from to factors These factors actual Form of cause differ

we views update today's Please date of estimates rely assume even if should to our Accordingly, of after on any no representing statements, as obligation change. as forward-looking you not any today. statements note forward-looking that

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

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

August Troendle

business have be Almost update were quarter. Good in weakened a the forward-looking on business morning. environment I’d environment. quick give metrics The challenging. to and fourth depressed development the to continues like business

QX. across New RFPs, in award backlog our of cancellations moderately. initial above and were pipeline usual Cancellations notifications range is opening pending backlog. That above elevated down were the with X% all RFPs

Biotech downturn. for sentiment from has is I pipeline prepared possible date in the QX. we've remained reprioritization or believe this financing to frequently as Delayed poor sponsors. feedback of best as

We of terms of have financial tightened of selectivity avoid consistently pipeline, payment safe clients write-offs. of likelihood monitoring our and sponsor on on-going quality our negotiated financing, to improved condition diversified based and asset

of XXXX Our and to to our and confident speak write-offs guidance minimal we continue robust We bad and our beyond. debt above-industry DSO in diligence. believe in growth generate XXXX will remain

Kevin and review now financial QX. will for Jesse our results

Jesse Geiger

fourth $X.XX year represents XXXX. increase Thank million, and the billion, quarter you was $XXX.X Revenue year-over-year August morning XXXX XX.X% XXXX a revenue a increase good full and XX.X% which everyone. was from in of of

Net new business X.XX% awards entering fourth $XXX.X backlog resulting a million book-to-bill. the quarter increased year and from in in the X.X% prior net

$X.X XX, year increase $X.X full net an business an approximately backlog increase XX.X% of as of ending was awards billion and XXXX was XX.X% of the new December the This billion. from For were year. prior

will labor future environment priorities the XX.X% employee that XX and in a for to of and We end hiring billion quarter from project the backlog to prior conversion XX.X% backlog. will and $X.XX convert competitive grow headcount in approximately were remain fourth the months. year We [Indiscernible] was XXXX. retention of beginning able business the in of continued challenging in revenue next top

to that XXXX our Kevin in our Kevin? discuss I turn call guidance. the will over more performance and With detail to financial review

Kevin Brady

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

basis XXXX. basis. fourth basis and constant XXXX a was Full a year-over-year a This million on on of quarter a As XX.X% year billion, increase which XX.X% increase XX.X% on a represented revenue constant XXXX. was in represents currency revenue Jesse in currency basis, of and the on $X.XX mentioned, a reported $XXX.X XX.X% reported

compared to basis, million fourth of quarter a currency XXXX. year. increased of prior the fourth constant in EBITDA million the On XX.X% $XX.X to $XX.X compared quarter increased XX.X% EBITDA

Full year year XX.X% XXXX. XXXX fourth was XXXX. XX.X% was $XXX.X Full margin XX.X% compared constant EBITDA a basis margin million XX.X% prior from quarter year reported in to for and EBITDA EBITDA increased on a XX.X% in on was currency the compared basis, and period. XX.X% the to

EBITDA margin year, exchange growth, basis by increased expenses. the by behind foreign XXX strong driven points dollar benefits primarily out of net partially pocket offset and for headcount slower the reimbursed U.S. higher

quarter $XX increased million of net million of of In in $XX.X period. the fourth the income year compared XXXX, to income XX.X% prior net

XXXX, net represents XX.X% $XXX.X to year in For compared the million, increase. million a XXXX. $XXX.X income This full was

income the Net income in Net rate, period. gross by was and prior for per the EBITA compared lagging was interest share tax $X.XX year $X.XX primarily quarter a expense. effective diluted higher driven to

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

Regarding customer our concentration, customers five top roughly top revenue. of and and XX respectively, our XX% represent XXXX XX%

days. $XXX.X we flow our in was XX.X In activities generated million cash net the outstanding fourth quarter, negative from day sales operating and

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

For X.X the full million for $XXX.X we million. year approximately shares XXXX, repurchased

of As XX share have authorization under remaining program. repurchase million our we XXXX December $XXX.X

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

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

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

$XXX to is range of EBITDA in XXXX to in expected of compared gross the to XX.X% million million million X.X% of representing $XXX.X EBITDA $XXX Our XXXX.

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

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

Operator

comment question first line the from or open. your Sandy Our comes Partners. from Guggenheim Draper, Draper Mr. of Instructions] line is [Operator

Sandy Draper

Thanks very much.

out that a think for I was second. cut

for probably it Trying question for also the Jesse about commonly the first made sort August. the sort and looks guess about looking implied just but EBITDA margin you August, step-up like I and at think environment, of So spending. of comments macro the to in

sounds about so continue in the Generally, margins the you're Thanks. still I've always thoughts caution going guys comments your get aren't on the hiring hiring and love viewed time, suggest margins back that's -- because optimistic are XXXX? expanding, to same pretty and there's on But it if the when to some just you're like you're you it at business. some it's August, but hiring, would cautionary holding macro, would about

August Troendle

market. Look, have able Sandy. financial proceed And kind our with a difficulties Hi not of they lot of to to programs in proceed among clients turmoil were the signaled a Sure. the clients, been they going distress, had number thought and of there's I we've have our with.

elevated that's level we've cancellations. of and So an had

a our a downturn. the for could growth always start That need represent to that's affects and real of performance employees. So risk revenue and our our

for that pick, it's plans date, this the broad our our next pullback plans year. our to affect not to based To for guidance, point going year, where we've seen

to pullback well. But it funding the So robust longer still we pretty think it's grow. hire. the the it so growth, a are to I currently signaling the and we're, greater as see going continues, we And are think out But and there our continuing we're caution. are risk will making the risk. But things far, I ability through, impact still

that's I all we can say. think

Sandy Draper

the much are where the earn assuming up, million generation, and an you upper else follow the quick assuming one and given a have higher to would higher out little just given free thought rates down what been in for And income that not was on actually have than that or cash. of are It's there guidance is there's and I the flow you little this And your If cash I'll lower pay looking helpful. a thought at that's I'm straight just bit flow just Okay, what it income/expense over. cash on can something XX debt. interest would bit interest turn thought you Kevin, or as environment.

Kevin Brady

expense Now lowest and share we of still debt built cash first their not flow of on mentioned, bit in we're, little some the the books we're that a as are expecting interest we have you the our systems we guidance level our But free purchases. typically into are generating is quarter. because and quarter

of And year. the going for more X% so assuming that. half kind we're XXXX. rate we And But in will the and generate some of interest towards back an to range it's cash be

Sandy Draper

Okay, I'll that's helpful. over. turn it Thanks.

Operator

Thank you.

now next Smock, the Smock open. Max your or from is from comment of Our comes line William Mr. Blair. question line

Max Smock

can Hi, hear Okay. me? you

August Troendle

You. Hear Yes.

Max Smock

Perfect.

and how quickly, customers be is maybe question And move up Okay. that risk into in they we X%. it's around near much Do XXXX? overall funding of can your And just those any want customers? portion follow secure trouble any as at Thanks. that if insight term. what can't have risk relates to you that beyond a on backlog cancellations here you up at Sandy's of saying terms to backlog I detail could the, more of those here to bit above there then are provide

August Troendle

rate cancellation did our was of X% not, the, it outside but not up usual kind was Max, Sure, get of drastically, it range.

we've has slightly of program I Jessie, total reorganization, up. know. in not I have are that, group the difficulty clients. XX and you clients portion pre And moderately that at clients I you increase, So backlog handful, not it with our reprioritization, partnered a guess so striking elevated, might discussions of fun a non-partnered? of it's total the was mean, on number our funding clients that into about was that put whatever. are revenue that particularly but portion risk, or or do don't had a

Jesse Geiger

let from let total is over group of with we've conversations subset me specific that that The of we've But grab no, Let me a me information grab let had me a, that group. that specific total. it. the his

Max Smock

guess stock down, plans million of you're for up, but pointing right. -- then here, of okay, share in XXX perfect. this you still your have near time, all the I there. I capital things a allocation, And authorization highs as terms follow out slowing to And related, repurchase mean

for things repurchases not makes it and back the Thank here. sense help So whether slowing year as back you. share is think the or we everything potential XXXX, where be to move through given stock down you're you throughout in us buying just

Kevin Brady

Kevin. Max, this is

levels able in not we're continue not, up take those the an afraid As again, approach share the we done, historically, volatility look we've mean, what you traditionally But as were either. like. look we'll build the again. approach to that market opportunity, cash If repurchases opens at extent we XXXX, to share some quarter see to repurchases. level I and will We in can to some execute opportunistic fourth

Max Smock

Got Thank you. it.

Jesse Geiger

XX% customers Max, just Around that backlog that our pharma. are have non-partnered a follow is up. large with our of with of with,

Max Smock

Thank that's Okay, helpful. you.

Operator

you. Thank

Our from Windley. of Mr. Jefferies. next from comes David question line or the Windley comment

Your line now is open.

David Windley

-- thanks interested ladies the around Gentlemen, bridge I and gentlemen environment. to taking in a taking thanks I'm question for of in kind August my for Sandy's further guess question.

first I able was to to Bookings call bit pretty navigate think to effectively. of was been warning you've year you And able caution sounded the a year-over-year a growing. growth been where navigate, but us still as ago. down you little said,

have guidance that it post to I in that a be to it can higher add up percentage environment, is when the numbers the easy a get what's a the deteriorating guess conservative could things funnel more you kind should cut you outlook to is the chalk absorb to top turbulence that is to over of you a growth Maybe here. still to navigation wondering, you So allowing sales little and more turning what effort opportunities seems of you we I'm your something so or just more rocks that to detail allows of out. -- dropping going through

August Troendle

did and kind needed And difficulty the the we expanding of last about talk at to development able when avoid into years pipeline and Sure. our be ran cycle. we our more to be selective things business several back look to

effective. think I reasonably that's been

of year during there's can has greater a to you options of a past been much those, not greater and before so that, the a other more were last other -- able number -- only what but it churn, do. there's able I headwind, not we've that's is and when that opportunities, we're better been the been stalled having opportunities programs selective select and seeing year there this there mean course, to we're to pivot Of doesn't -- period but we and the financing, clients was funded others. than risk large we've to

I so a of it's think And mix things.

cancellations. I think in when be had to things to fill enough have switch opportunities fortunate we've to to we've been able and

had able fill in. lot to We've of cancellations we've been a

a So our a bit We there. lot I in volatile be a to environment with there's conservative, think always things of try particularly guidance.

out So And we exceed we we kind they hope more if where conservatism do not then do with have things come bit when know, this the we of come out as in can we a deteriorate guidance. environment.

David Windley

Got it.

that, on to by opportunities, other presumably opportunities, taking are to more other -- is to other a being the sensitivity opportunities. aggressive those around perceive you price or pry edges price up a those yourself share, of pivot served into competitor you bit Following part clients that able CRO, -- the you are you're and the as were is on little being lever those

August Troendle

we're other want we somewhere -- competitor look that feature a price else. looking hard They're and for. some say, opportunities of it's see Well, not from coming sort growth. share with of they're frustration. are that usually out at not I in kind I getting not terms when revenue dissatisfaction share to the the us But is to It's coming generally price think you just just

Our bookings BS. are metrics the think, revenue and I growth stuff, is all on fast,

I of that about all it the on depends down and the conversion talk rest in runs mean your growth. end, a and and rate book-to-bill your it revenue all to people it

other we've share. think current we any to superior seen ability think I describe growth, have I just we're the had pivot to so to don't programs. that. revenue We've we an taking -- environment of And

David Windley

for and question me guess related. I two-parter it's here. a Last Okay.

a backlog, a like now are you funding they don't you to your and clients burned they've very into financing quite So they time ways what presume and put something I their without careful have this is vetting in backlog? soon, about has or at need like the backlog through that. they in went project they're -- had but progressed

So maybe clarify just on that.

lot where are harder and And those that not your then especially with do less somewhat around pricing, -- they and payment that pinching relatedly, or terms. clients on suggest upfront, in of things small that if you're not DSOs seeing to a accepting we that. hear get like is that direct milestones capital you're terms would start are they delays And not

in So your and around backlog of bit little maybe kind sheet balance in that terms regard? a betting payment what's

August Troendle

there. start I'll Yes, Sure.

I to their You're have to pressure coming. in a this And environment, advanced payment as is environment, absolutely this there's right. guess, There more is, things. because lot be make are, in just financing we flexible we adamant sure of that

negotiation we we get tend kind a of be believe that funded to for already. So might We aggressive do is it more little more to very environment, flexible. client in a that terms of bit likely we the ensuring is better a this But get in is paid we work be and funding do.

DSOs. So in and our that see can -- you

they generally terms, have our We risk of favorable acknowledge because clients that payment have. the

a take, but give is that a it. I good and think at So I job think we do

get order We're kind to there not in that see give not can in order considerably You terms work. we where to of giving in situation work. win up we're

to our We we that are very we in get make sure paid. firm negotiations that have

means that if occur we'll losing cancellations fund. your first And they the work, then work. question and lose how was because So of about

David Windley

backlog are correctly. of clients for a don't clients have in just difficulty kind I'm that even if it's scenarios handful in are the understanding which a the they of your whole. getting have -- asking I'm backlog Well, their round next funding, I'm in concern sorry, that in no, if your of those And around some Max's expressed that just that question -- are about

August Troendle

short to cash going they or have a complete, to to program that project of the stage a funded it. there's look fair for be analysis. may funding interim of that first do we be in, things that or milestone terms them a aware other they an our markets portion be other in -- clients be of also spend on of number first before get supporting fully It see as able be There's It part may that of programs run will financial first product. have a assumed they a their but of and for a study. other not might that might they're because inflection for of an clients point there that And

I So a lot think things. mean I it's of different

I And the performing it along It's they're coming not is also a well going it's of is problem. too. look, revolutionary funded. product fantastic to often the in related out some get the a always context product funding of that's funding but product running of -- mean how is is

sometimes And not a to a they'd still to signals so or getting that And get the continue for the it's on. you during stage. the challenge otherwise looks funding safety not they trial, want for still interesting. breakthrough might looks that but product. signs, promising, next It whether killer a It for It's hoped. leads

David Windley

Yes.

August Troendle

that help? Does

David Windley

It does. Yes. does. It

Jesse Geiger

add backlog then factor on point incremental Dave, funding those the and some that but study. We backlog middle just capital to detailed me pull programs guidance one the point had the sponsor is basis becomes build journey. final that for incremental beginning, the raising don't every along revenue active time then projection we out raise up of into of range. capital a at let in need that a those But our do our in

in and backlog into some of revenue sitting there And the risk-adjusted while backlog, leading be still so projection unfunded that risk-assessed we've balance. activity the may

David Windley

kudos on a transparency the Thanks that. taken appreciated very environment. tough in much. your through it. about Got lot the navigation I've sorry Much of to time,

Operator

Thank you.

Sourbeer John from from or Our the Mr. comment UBS. of next line question comes

is Sourbeer, your now line open.

John Sourbeer

here one weakness there. just a I what cancellations questions. the know more guess maybe I taking specific class you're of or business? phase type others on the that. more and or there's But for on versus seeing within lot the thanks questions where Any been And therapeutic of Hi, book you're seeing

August Troendle

any it's that. area think on therapeutic No, of I focused particular don't programs. color don't I to or really have stage a

John Sourbeer

cost Got down color X%. new look it. at on did I around the the then appreciate some that And to awards environment. you quarter, just from mid-teens And on slow growth this

play those XXXX. how think Just out awards on color new any you through

August Troendle

environment. -- again, month-to-month. a think challenging I it playing it's -- look, No. I it's We're

have but far, things environment. a okay, been weaker So in

that's and Our supported win judge. strong, hard rate very been has things, to is which always

we we're to that X.X think we I range, but above see. hoping with have and continue book-to-bills that

John Sourbeer

And here one last Got then just me. for it.

were back just the hiring think I in there. December, there reports local some on

Just maybe any additional and color ability think the and to just that how about on just on margins pressures throughout wage you're we seeing that impacting the turnover year. pricing the pass just along

August Troendle

turnover Our nicely. has come down

we're traction on well. think doing getting We're good hires. I new

I reasonably think we're still a traction. good remains think tight are that but And rapidly. yes, hiring I we I labor pretty think there market, making

John Sourbeer

questions. Thanks for the taking

Operator

you. Thank

or question line line comes your the from RW open. Coldwell, Eric is next Coldwell Mr. comment Our of now Baird. from

Eric Coldwell

Can Yes. you hear me?

August Troendle

can. Yes, we

John Sourbeer

Great.

just improve hit August, more history? be versus detail I it decline Did get on on Any to quantitative quarter? You additional hoping sequentially data rate, longer-term helpful. little history, would a here it mentioned, the the was recent where stands fourth but in

August Troendle

Yes.

It quite I think bit. want that start and I the a get reporting around numbers a into metric. don't to actual numerically, and does bounce as

historically I strong in think down strong range slightly still in it's QX, it a ticked -- a but in range. very

the really been last year. true -- has which So

the really and a yes. selectivity, the were think rate. selecting of fortunate been really, projects part that's it, support we And win that's using a strong and So we've all in of us, rest for had but I

Eric Coldwell

the supply sites, access it but will, in normal Is it quarters, or And lab-based if is your not sort, etcetera. gears. the challenges mentions to When a shifting view think external about say, you industry study the pre-pandemic and challenges about of today operational at things we having does stack versus, macro various have improving where we been businesses, from not how staffing What times, you've When chain few operating the environment? last up environment? over -- hiring operating ample been there in that of necessarily weakening?

August Troendle

been been far sites particularly I industry. has It's a the of think at really and have rate rest inflation -- the the tight at the -- CROs among environment, among rate sites rate inflation the Sure. inflation that outstripped wage

So significant there at has sites. been very challenges

sites. pretty say there. tight more the would there's some been it of early. starting very see but There's been I it's lot a has strain and at end There I improvement. a light think of labor tunnel, to market maybe at the overall, But is so

think substantially labor pretty that think one labor as a still new to pretty found in I market easier historically environment. I is it seen otherwise, we hiring IT-related it The we area But employees. a recently staff. tight be that tight we've still see

any So I can know if on I provide don't more that. detail

Eric Coldwell

rate us quarter volatility fourth Kevin. tax no low you above rate here. great. X% do or or That's you the of for the that year next the of it the the you quarters. last give quarter exception pronounced zone to then where know I detail us fairly rate quarters? so guide had middle at in And want you fourth maybe and tax then This below the with see that tax call would you, expected on there quarter. One -- the any year, volatility this four have in if some might rate point, tax curious could any on first periods was X%, to more could enough and out. around historically XX%. I'm that be And over XX% Are in any driver in

Kevin Brady

as know, by heavily in is the fourth Eric, stock you Yes, exercises. option influenced quarter, rate our

And exercise -- options down. increases bit influence of that our less their income very operating so quarter in when options. really that was price people get predict the each X% and saw stock quarter a theory little accelerated goes going in the in to drove obviously increase difficult fourth And stock to what We the it's people of options. the are exercising in and as fourth year, and should don't what we impact passing

relation that to impact quarterly XXXX, to what it's So to in could your be. predict question hard answer

using of And I would it now, and how recommend just quarter, we'll for XX.X% see to XX.X% per of so that kind kind goes.

Eric Coldwell

from you. Okay. That’s me. all Thank

Operator

additional Thank any remarks. questions the to closing over showing this the conference turn I'd you. no like at time. management in for to I'm queue back

Lauren Morris

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

Operator

Ladies program. and gentlemen, today's concludes you thank for conference. participating This the in

You may wonderful now Everyone, have disconnect. a day.

Medpace (MEDP) 14 Feb 232022 Q4 Earnings call transcript