MEDP - Earnings call transcript Q1 2024

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

Operator

Good day, ladies and gentlemen, and welcome to Medpace's First Quarter 2024 Earnings Conference Call. [Operator Instructions] As a reminder, this call may be recorded. I would like to introduce your host for today's conference, Lauren Morris, Medpace's Director of Investor Relations.

You may begin.

Lauren Morris

Good morning, and thank you for joining Medpace's First Quarter 2024 Earnings Conference Call. today and CEO, our call President, Troendle; the Geiger; Jesse CFO, on is August our our Also Kevin Brady.

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

our These today. on factors obligation are XX-K any statements as of estimates after change. views filings discussed note if assume even in with Please the today's of no forward-looking that Accordingly, statements we any our date Form SEC. representing you rely other not as forward-looking update to and should

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

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

August Troendle

reimbursable in than are model if everyone. bit impact is entirely in and and this costs was a lower coming difficult full Revenue our revenue quarter lower by projections, day, it for year this numbers. came Reimbursable our to unclear Good internal driven will anticipated. first the costs

By range was and not related which X.X%. revenue were cancellations usual internal were above This altered Direct not plan, our revenue Net we problems. in came our remain to with guidance. projections. of by our below increased driven awards in funding have large, and below the line drivers cancellations,

year. improved strong enough from and for The quality environment funding but RFP last environment believe next remains improving and current generate the stable growth nicely remains stable value and from to grow dollar We QX. us backlog to accelerating revenue year. guarded is

first margin was year have therefore, and strong we profit XXXX. Our implied in guidance the our margin quarter, EBITDA full raised for our and for

productivity geographic and committed delivering improvements to We margin year, full on past a This staff. are investment year improvement distribution through process optimizing year-over-year we've increased basis. of automation, our

employee revenue, employee planned. growth previously now Last quarter, expect but we roughly of XXXX X% maintaining our to revenue to year anticipating approximately while as XX% achieve XX% were direct X% growth growth this

over quarter. that, the With for the Jesse I'll to turn his on call comments

Jesse Geiger

approximately represented new you, $XXX XXXX which entering XX.X% quarter XX.X%. Net Ending August, book-to-bill. from a increased and the everyone. net awards Revenue quarter of million, Thank year-over-year for of in year was backlog million, business resulting $X.XX increase XX, first the an X.X months that next will of beginning in was the of backlog year. approximately billion of increase backlog quarter billion, XXXX, backlog. XX.X% XX.X% as the We in revenue from March of our backlog prior to first $XXX.X good in the morning, to conversion was convert a first prior project and the $X.X XX

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

Kevin Brady

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

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

from of quarter was period. XXXX, to XXXX. for prior first of benefited to compared the activities, the year EBITDA direct in productivity of Similar million $XXX.X quarter margin million and first margin foreign the XX.X% service exchange. increased $XX.X to compared quarter first XX.X% XX.X% in the EBITDA EBITDA the

the In driven of lower million was year net prior $XX.X as well the XX.X% increased million effective as income XXXX, in income period. X% compared tax prior period. a to $XXX.X by of in interest year quarter net of gross of above compared the in primarily EBITDA XX.X% the income Net first quarter to income gross rate

per the diluted year Net income to quarter share was the compared $X.XX in period. prior for $X.XX

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

flow our fourth quarter, did outstanding quarter. and We In net $XXX.X sales shares the during from repurchase operating first the XX.X days. days cash million generated we was not in negative activities, any

$XXX program. had XXXX, million share we $XXX.X remaining and As under March our of million in cash authorization XX, repurchase

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

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

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

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

Operator

the our And William from [Operator is line come Blair. Max question going of with Smock to first Instructions]

Max Smock

just starting the off bookings Maybe one the on with for number quarter.

driven your by to relative was miss the mentioned cancellations. elevated you So expectations

gross can cancellations how for normal that implied if were of you range, what would trended here then growth quarter? the if have kind And commentary in quarter? within on in some the a wonder bookings first bookings give Just us

August Troendle

be bookings that than outside and This to quarter, and cancellations the taken less range, up Sure. more was the usual which August. we've Yes. recently. of were miss in they nicely is gross it Sequentially, drove X.X% the were our

the specific all those without coming for -- have it call. was we cancellations, I into that number would think, book-to-bill think the range, but in been I up So were of have a don't it. expecting I

Max Smock

X helpful. higher Got level That's maybe And here. it. X then

in customers' Just in over RFP here to the seen the we this funding of quarter off bookings through obviously, metrics general terms bit sense start in but terms great as some -- far of environment, normalize other around we so flows, key seems you've here, the got things year of and of trends month-over-month and a the move the year. or second to like a it maybe

seeing lot in clients change nervous spite you move expectations interest sense for around you from Or get environment all? do at here change in optimism rates the are -- general, So or funding that throughout the the about to of still a we XXXX? of funding in as there's

August Troendle

their We clients really don't look, look struggling. still expectations But at there some or I with I guess, programs excitement. and have whether clients or forward yes, moving I Yes. that about not. they're see positive are

that but very opportunities So good strong forward. that with moving a changed, there hasn't environment is are also business opportunities,

of continuing for better overall, So There's client than base, that mix. be last and it struggling somewhat are be to I always things going that But clients to going there's are are think -- clients to funding. much a remains always year improve. in our

for So year. I it think the looks good

win have just we to opportunities, of terms them. In

Max Smock

off X sneaking just August. and point, final maybe X Yes, that

the level mentioned to you To for XXXX. revenue order step bookings what to bookings you cadence -- how up get we think pick up move should revenue about you through in that growth year? out that do to next to see So as came expecting we target, you and to in have need that XXXX? of still confirmed growth And think revenue

August Troendle

bookings continuing will what cancellations, I of growth. mean, we permit without past I that in think to have the a had in accelerating that Yes, generate us, lot year

in even numbers. of predate some really new getting a So booking of which awards it's matter our

awards it's next I think that so and nice of book-to-bills I And see -- having winning is close between think acceleration our X.XX, a push year. the the back environment X.X-something, will to there, a -- start us them we'll and -- the it's to matter new

Operator

of question with to from Instructions] And next line [Operator our the Coldwell going Baird. is Eric come

Eric Coldwell

revenue. couple a I want reimbursable the on to do

do walk did the why bookings hard project? revenue the the change that in quarter, Are report And of any lower expected? you market that the revenue was the within versus reimbursable drivers bookings, then concept was or past? mix the recent on that's what was First, there any did to it random versus the in have you reimbursable than just service

August Troendle

the Kevin, I as to of on burn the... timing they think I the quarter particularly guess, and I'll was the difficult take is are in in have largely have. it. do of continuing that I It's don't comment that very of bookings there that want awards to part you on the bookings predict. indirect unusual. course, quarter, And But breakout. nothing things along

Kevin Brady

of the take question, can I Yes, first part Eric. your

even know, very Just mention the do terms were costs that call as to volatile. I I expect in they call I costs, is year-over-year. mean, reimbursable and you and before reimbursable it the did that, elevated of be in quarter-to-quarter, last

kind seeing of just And there. a there's lot in We're -- pattern just a saw last what of to similar we year. variables

is you've You've sites, sites so are starting thousands and predict. challenging got you've inflationary some got of got over it costs there, how study mix, and talking you're up, in to

I percentage a revenue, XXXX. to still of expect in we what as saw in, come those costs to similar

to where of those so that, in we the from is a balance first that quarter. the saw that my year result the And expectation as costs of reimbursable accelerate

how that costs to in But the are towards of quarter the the reimbursable end me guidance. have balance to lean revenue the weaker first and kind of see of the lead little come the a we'll lower However, more in year. bit does wait costs those again,

August Troendle

this look going indirect, pass-through or Eric, range to in to if revenue seeing as bookings are that be our portion decrease probably going going that mean, to disproportionately not we're they're you're forward, we've a of increase disproportionately direct. trying towards I or indirect cost seen. our

Eric Coldwell

communicate. company recognition unique awards don't or I given gets difficult understand talked see, a closer it this, till generation on facing lumpiness just this and to when an Yes. theory and you model we be X bit as phase. wait conceptually But the And profile is a you bookings bookings, report a quarter months -- generation. I'm wrong That's bit always where The a are and is in on to my a revenue out revenue somewhat go the awards, has historically getting fair. that Street On award about to might curious, maybe maybe there. award X, I've were that ago taking of hard quarter, a thought Medpace prediction XX Medpace you but

bookings I of of and awards quarter course, X perhaps be little So aftermath -- ago higher cancels. of quarter this a mentioned of bit softer you maybe could gross thought a or this awards the less some the or the

notifications award of first are is that delay initial award based relative this take on have theory advance Or an awards when biotech your funding curious, to or or the the just to -- it's there's to the off uplift bit XX take revenue is cases? theory that I'm based bookings actually months on quarter? you award close a performance in bookings you the it that in peers generation, aren't that base the seeing into a you whether stronger you in that when the from an some get in would

August Troendle

Yes.

of when think a companies an of contract I think number contract lags there course, hear do everyone and the on of first it I based because other has award. reporting lag you a

no always So lag matter reporting. who's some there's

is that true. definitely So

there, mean, I There ready quarter. is go -- things some right to things run. same some are through

Sometimes and before general, recognition. that change new is there program rapidly. studies a have in it's reach do But is, a awarded lag rather they that backlog a award recognized in

But other asked bookings increase miss and in our mean a flat of -- kind here? really we our it, side rate in don't of did then weaker missing the relatively bookings I I win expectations was the quarter-over-quarter by about our did cancellations. driven not is our was change quarter. in you that -- have or the on

So that was true, too.

of a And very strong. that's We around. something bounces came couple quarters off of that

talked rates. strong we about I think win

that that, bit I upon was down too, that. projections a based around, bounces just I do but that the little and quarter, So don't long-term make any think in

Eric Coldwell

If I with Kevin. could do X more

Just the the the of rate, tax rate missed in lower for tax the I quarter the lowering driver year. the and

Kevin Brady

again option quarter. the It's in first exercises

discrete As quarter. those you the know, are in items

Eric Coldwell

new exercises the stock highs Yes. just the setting option the in That was it, quarter? on

Kevin Brady

That's right, Eric.

Operator

going come [Operator is Jack Guggenheim line Instructions] question to of our And with from Wallace next Securities. the

Jack Wallace

first slower quarter? reacceleration say, hiring churn to Is headcount wanted I the in versus, in just your related the to about to regrettable year. ask any that prior quarters is this next expectations Or there -- lower of growth year? change any of growth

August Troendle

Yes. changed wanted add, about our XXXX. this just of I point, to or optimism I is, hiring at directed think don't reflective

things where But need bit, think, hiring our addressed staff which and go by improved I ahead. like Jesse, has influenced think I that we is a and I that, productivity -- is quite and that.

Jesse Geiger

some just handle very is No, comfortable to I for current quarter we QX future the projects. headcount line traditionally But of going was those comments. projects, net us. echo sometimes we to in lower and same handle have with feel to a staffing

good. to hire, to opening comments, continue retention has slightly as mentioned headcount lower be although will August rate growth in his very, and at of We very a continued projection

Jack Wallace

there on if material at? helpful. maybe could to relative Is you way. the the the any your there of -- of a different looking you ask is there? through of the backlog near-term comment to Got then this some your just That's also And question in you. change you're And expectations awards pass-throughs year, mix revenue pass in

And again, have to, here point relative about noise been bookings partially is the trying some to prior to it's in going the by pass-throughs explained say, quarters, the where revenue get pass-throughs periods we're over more in couple if may be thinking of if you're changes And elevated? progression. is the there direct next

Kevin Brady

as mean, and in it's shifts just any burning we're seeing I of of I programs. portfolio mix terms this Jack, progression bookings across are mean, No. is Kevin. backlog, had of August mentioned, big things how our the not more

continue good throughout seeing in activities progress of direct And to expect of some and so that terms revenue, just XXXX. direct in kind continued we're

growth has As kind guide around of XXXX. direct mentioned, is expect revenue something a to the for XX% August

August Troendle

Yes.

costs, I think revenue pass-through is I drive direct we we which think revenue. one say thing more pass-through the in than comfortable can our feel the projections

miss, -- is we the be so confident it a more more likely -- on it indirect. did other. I have But would So think if in we're the one than

Operator

question from Our going line to Instructions] next is of Dan come [Operator UBS. with the Leonard

Daniel Leonard

improvement in funding stable compared compare comment that a the the prepared might How to expected the were in to that RFPs have made does You QX. what you in given QX environment?

August Troendle

Yes. And up. actually they were

was were Numbers over in I the to the in they number QX a quality we from of environment. kind they're coming up think actually both think I in And stable QX. kind year, were and saying improved. improvement across expect bit of last where I upon in based

people are opportunities. coming that lot -- around good us I a you plans. programs have They signals sometimes But get and forward. shopping fundraising and are very that a strong to we there's opportunities mean for that of confidence are moving just -- companies funded with

think has So I environment the improved.

Daniel Leonard

Do just quick outlook seen M&A impact at quarters couple in recent And of we've the a activity over your might past follow-up. biotech you the uptick think all?

August Troendle

win. on -- what we depending Long-term in the I a to effect and out performance. don't keep But has our particularly short has that's think term, client, M&A book keep. sometimes takes sometimes tend not, where we sometimes term, an the we good, on shorter upon

Operator

next the of Instructions] from is question [Operator line with Bowers Deutsche Justin come Bank. Our going to

Justin Bowers

employee in the projection really growth terms I'm change no year, just it's -- in related productivity. the And assumption this if like are understand it the there or of to sounds for why to there's revenue those lower trying So outlook? change

So leverage some an something think durable of and get beyond? more about is the to growth there? that we there into ability that's Is operating XXXX sort as

August Troendle

Yes.

do quite do that. we bit improving trimming little think that productivity is a a and and are in staffing. signaling of we're what did of that's think I we've optimization bit invested We

rates, by you've our little of terms gains. productivity but a reduced seen of driven in it's bit growth So that

tried that. of past will from now last at it we're in that beyond with elevated -- a that range has Part good a down this but improvement COVID started for and turnover, improving it lot year. and it's we of are I continuously and over productivity retention that It's turnover, the have to year through through very -- this and put continue place and come is the think

think at gain, proportion think productivity core that other of FX productivity. I to There's improve. improving other factors sometimes I basis So like swallow least but opportunities a there's can net, our -- we're that a on things the pass-throughs and margin on and

Justin Bowers

environment? of then normal was did of than data out by more sense in little that driven maybe would get And have -- cancellations, that a the terms there sense of this a programs the thought or you a help you just by higher or or call funding sort therapeutic And quarter. and restart of Do Okay. out is didn't? were to us the that call you they better either anything phase area, to

August Troendle

to and failed cancellations in view, past be the It's large, appear from sure. to entirely difficult was it sort quarter upon But by and cases, based that compounds. this product funding scenes reprioritization our out was, -- and the Yes, saw did sometimes we factor. behind It a whether hence, not the performance quarter.

was the performance product really led it the So usual random cancellations, think. kind of I activities the that to

Operator

[Operator And question David Jefferies. from Windley our the Instructions] of with line comes next

David Windley

a clarification. wanted I start first with to

to that right, bookings just accelerating you to suspect 'XX. to for I everybody make transcript Max's on that wanted X.XX. I I the looking would in purposes of X.XX. support knows mean earlier growth book-to-bill getting to August, achieve to But you think So sure. just said question X.X or levels you to be X.X

August Troendle

but you're, to I was right, digit start the going second X.X-something. to with,

to So X.XX to what of I say. X.XX kind is was trying

David Windley

Right, as right. much. Figured

more On you the precisely about guys cancellations, book. thinking how just

near-term whether about those when Maybe that these actual revenue cancellations could to were And are close studies that -- the today of I So you're starts, your in were very past, on suggests maybe me would the any kind having that the you're as talk impact bookings cadence? cancellations taken presume. you late given study bookings to your started. taking referencing already -- your already

August Troendle

are do. revenue you're quarter these in They direct were on to spite push year's But were normal They are on in were revenue. would of that did confident in booking range. it studies These again, XX% roughly running in-line right, have in what have -- flat not this result they massive. Yes, that an outside effect do to of were and our and our -- do we a quarter. in been feel backlog, near-term they

kind it that's out. of So how played

David Windley

manifest taken quarters then couple win are And win referencing about initial from gross you that that ago lower also then it. you regard, notifications of commented rates. like award rate talking Or rates to quarter? current of the the trying the Got bookings in about I'm I'm IAN's award to In commentary. a in sure in are be correctly and make you on this quarter? just calibrating

August Troendle

Yes.

talk I whenever the we're about win in happened not changes current what rate, backlog. do reflect quarter and necessarily talking about in So

not are in So wins, the which which initial They're wins be most not current do awards, quarter. of they awards. appear or would

backlog I of that winning of put were So they a a things wouldn't refer past, cetera. et because quarter, lot into things mixture lot that happen currently are the a of to things and kind in

David Windley

points making, elaborate you you're arbitrage some around mentioned, going or I -- by Got it. productivity that advantage some that Could there? moving points cost costs think, on take geography. functions And Are offshoring are those and labor of on you and then little what's the to you on bit? a

August Troendle

on Partially but it. IT exactly It's too, yes. partially correct. operations that's side, on Yes, side, the

David Windley

quantification think any that us can you yield time? what give might And over on you

August Troendle

Europe we for that, of do India. be to number over support particular pick a not But provide I both geographies, time. productivity we'll are don't improving to and some on but We our financial cheaper goals things think in drastic, keeping in it's but going No. specific moving some

David Windley

apologize on through and Got was But level, going their coming one talked but anybody essentially year, the factors, X who's sites participation last those for for trials. inflation about reimbursement to elevated few ask more, the in a pass-throughs, you sites, me. from of had asking it. more I'm I behind the for the

pass-throughs has or if I cause mean, inflation some to way already that or is been speak, lower? in these that bias amount that's said, if normalize started of I wondered a -- if so persistent I would acknowledging actually everything that site to to rates, wondered

August Troendle

the current think after the of backlog, I have that a think these spiral things think change. on miss are I don't do that et we as reflective while. we projections at that I COVID inflationary saw I pass-through can the last few been that's and in in cetera, look done. years, mean, that for

we're I but think going a to to continued I there's mean see I don't prior reversion pricing, a know don't spiral. that

crunch issue. for way certainly being improves, But that bidding and an in moderated. at that Whether So down and as terms at at I substantial acute there's sites staffing the pull inflation. it it time a least has or of kind will was back premium appeared of as staff see one really don't the

don't it come over but slowly So acute time, may I down think change. there's

Operator

would for at the like I'm And questions And closing Morris hand to Lauren over showing further no remarks. time. this conference any to I back

Lauren Morris

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

Operator

This for Thank conference call. you today's participating. concludes

You may now disconnect.

Medpace (MEDP) 23 Apr 242024 Q1 Earnings call transcript