Medpace(US:MEDP)2024-07-23 20:03PART I — FINANCIAL INFORMATION Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements for the periods ended June 30, 2024, and 2023 It includes the balance sheets, statements of operations, comprehensive income, shareholders' equity, and cash flows, along with detailed notes explaining the basis of presentation, accounting policies, and specific account details such as revenue by therapeutic area and related party transactions Condensed Consolidated Balance Sheets As of June 30, 2024, the company's total assets grew to $1.92 billion from $1.66 billion at year-end 2023, primarily driven by a more than doubling of cash and cash equivalents to $510.9 million Total liabilities increased modestly to $1.16 billion, while total shareholders' equity saw significant growth to $763.6 million from $559.0 million over the same period Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total Assets | $1,920,048 | $1,656,828 | | Cash and cash equivalents | $510,894 | $245,449 | | Total current assets | $872,523 | $593,828 | | Total Liabilities | $1,156,449 | $1,097,878 | | Advanced billings | $638,417 | $559,860 | | Total Shareholders' Equity | $763,599 | $558,950 | Condensed Consolidated Statements of Operations The company demonstrated strong year-over-year growth For the second quarter of 2024, net revenue increased 14.6% to $528.1 million, and net income rose 44.7% to $88.4 million For the first six months, net revenue grew 16.1% to $1.04 billion, with net income up 42.5% to $190.9 million Diluted EPS for Q2 2024 was $2.75, up from $1.93 in Q2 2023 Statement of Operations Summary (in thousands, except per share data) | Metric | Q2 2024 | Q2 2023 | YTD 2024 | YTD 2023 | | :--- | :--- | :--- | :--- | :--- | | Revenue, net | $528,104 | $460,868 | $1,039,148 | $894,942 | | Income from operations | $105,150 | $78,393 | $209,219 | $164,597 | | Net income | $88,351 | $61,068 | $190,942 | $133,962 | | Diluted EPS | $2.75 | $1.93 | $5.96 | $4.20 | Condensed Consolidated Statements of Comprehensive Income For the second quarter of 2024, comprehensive income was $87.8 million, slightly below the net income of $88.4 million due to a $0.5 million loss from foreign currency translation adjustments For the six-month period, comprehensive income was $188.4 million, impacted by a $2.5 million foreign currency translation loss Comprehensive Income (in thousands) | Metric | Q2 2024 | Q2 2023 | YTD 2024 | YTD 2023 | | :--- | :--- | :--- | :--- | :--- | | Net income | $88,351 | $61,068 | $190,942 | $133,962 | | Foreign currency translation adjustments | ($548) | $120 | ($2,517) | $1,198 | | Comprehensive income | $87,803 | $61,188 | $188,425 | $135,160 | Condensed Consolidated Statements of Shareholders' Equity Shareholders' equity increased from $559.0 million at December 31, 2023, to $763.6 million as of June 30, 2024 This growth was primarily driven by net income of $190.9 million recognized during the first six months of 2024 - Total shareholders' equity grew to $763.6 million at June 30, 2024, from $559.0 million at December 31, 202313 - The increase was mainly due to $190.9 million in net income for the first six months of 2024, which significantly reduced the accumulated deficit13 Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2024, net cash from operating activities was $269.1 million, a significant increase from $162.6 million in the prior-year period, mainly due to higher net income and a large increase in advanced billings The company ended the period with $510.9 million in cash and cash equivalents, up from $245.4 million at the start of the year Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $269,074 | $162,594 | | Net cash used in investing activities | ($10,260) | ($17,970) | | Net cash provided by (used in) financing activities | $8,326 | ($134,893) | | Increase in cash | $265,445 | $10,873 | | Cash at end of period | $510,894 | $39,138 | Notes to Condensed Consolidated Financial Statements The notes detail the company's business as a global clinical research organization and key accounting items Notable points include no share repurchases in H1 2024, with $308.8 million remaining authorized Remaining performance obligations (backlog) stood at $3.2 billion Revenue is disaggregated by therapeutic area, with Oncology being the largest contributor at $163.0 million for Q2 2024 Significant related-party transactions for services and leases are also disclosed - The company did not execute any share repurchases during the first six months of 2024 As of June 30, 2024, $308.8 million remains authorized under the repurchase program19 - As of June 30, 2024, the Company had approximately $3.2 billion of performance obligations remaining to be performed for active projects34 Revenue by Therapeutic Area (in thousands) | Therapeutic Area | Q2 2024 | Q2 2023 | YTD 2024 | YTD 2023 | | :--- | :--- | :--- | :--- | :--- | | Oncology | $162,952 | $147,089 | $318,150 | $289,040 | | Other | $112,432 | $101,055 | $220,832 | $188,159 | | Metabolic | $106,302 | $87,860 | $209,941 | $174,700 | | Cardiology | $60,699 | $51,130 | $116,336 | $97,747 | | Central Nervous System | $46,519 | $37,726 | $90,655 | $76,423 | | AVAI | $39,200 | $36,008 | $83,234 | $68,873 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management reports strong financial performance, with Q2 2024 revenue up 14.6% YoY to $528.1 million, driven by broad-based growth in key therapeutic areas Net new business awards were $551.0 million for the quarter, contributing to a 13.7% YoY increase in backlog to $2.92 billion The company's liquidity is robust, with cash increasing to $510.9 million and no outstanding debt Operating income grew significantly due to revenue growth outpacing the increase in direct and SG&A costs Key Performance Metrics (in millions) | Metric | Q2 2024 | Q2 2023 | YTD 2024 | YTD 2023 | | :--- | :--- | :--- | :--- | :--- | | Net New Business Awards | $551.0 | $574.8 | $1,166.5 | $1,130.6 | - Backlog increased by 13.7% to $2,924.9 million as of June 30, 2024, compared to $2,571.9 million as of June 30, 202379 - The increase in revenue for Q2 and H1 2024 was broad-based, primarily driven by growth within the Metabolic, Oncology, and Other uncategorized therapeutic areas85 - The company's liquidity remains strong, with cash and cash equivalents of $510.9 million and no indebtedness as of June 30, 202492104 Item 3. Quantitative and Qualitative Disclosures About Market Risk The company states that there have been no material changes to its quantitative and qualitative disclosures about market risk compared to those described in its Annual Report on Form 10-K for the fiscal year ended December 31, 2023 - There have been no material changes to the company's market risk disclosures since the 2023 Annual Report on Form 10-K108 Item 4. Controls and Procedures Based on an evaluation conducted by management, including the CEO and CFO, the company's disclosure controls and procedures were deemed effective as of June 30, 2024 There were no material changes in internal control over financial reporting during the quarter - Management concluded that disclosure controls and procedures were effective as of the end of the reporting period, providing reasonable assurance that required information is recorded and reported in a timely manner110 - No changes occurred in the company's internal control over financial reporting during the second quarter of 2024 that have materially affected, or are reasonably likely to materially affect, these controls112 PART II — OTHER INFORMATION Item 1. Legal Proceedings The company is party to various legal proceedings incidental to its business Management does not believe the resolution of these matters is reasonably likely to have a material adverse effect on its financial statements - Ongoing legal proceedings are considered incidental to business and are not expected to have a material adverse effect on the company's financial condition113 Item 1A. Risk Factors The company reports no significant changes from the risk factors that were previously disclosed in its Annual Report on Form 10-K for the fiscal year ended December 31, 2023 - There have been no significant changes from the risk factors disclosed in the company's 2023 Annual Report on Form 10-K114 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This item is reported as 'Not applicable,' indicating no unregistered sales of equity securities or specific use of proceeds from registered securities during the reporting period - This section is marked as 'Not applicable'115 Item 3. Defaults Upon Senior Securities The company reports 'None,' indicating there were no defaults upon senior securities during the period - The company reports 'None' for this item116 Item 4. Mine Safety Disclosures This item is reported as 'Not applicable' - This section is marked as 'Not applicable'117 Item 5. Other Information This section discloses trading arrangements by company officers CEO August J Troendle adopted, modified, and then terminated a non-Rule 10b5-1 plan to sell up to 190,000 shares Executive Vice President Susan E Burwig adopted a non-Rule 10b5-1 plan to sell up to 7,681 shares - CEO August J. Troendle adopted a non-Rule 10b5-1 trading plan on April 25, 2024, to sell up to 190,000 shares, modified the price limit on May 22, and terminated the plan on May 30, 2024119120121 - Executive VP of Operations, Susan E. Burwig, adopted a non-Rule 10b5-1 trading plan on June 5, 2024, to sell up to 7,681 shares119121 Item 6. Exhibits This section provides an index of the exhibits filed or furnished as part of the quarterly report Key exhibits include the Restated Certificate of Incorporation, CEO and CFO certifications (Rule 13a-14(a) and Section 1350), and Inline XBRL documents - The report includes an index of all exhibits filed, such as corporate governance documents, officer certifications, and interactive data files (XBRL)122125