Medpace(MEDP)2024-10-22 21:33Financial Data and Key Metrics Changes - Revenue for Q3 2024 was $533.3 million, representing a year-over-year increase of 8.3% [7][8] - Year-to-date revenue for the nine months ended September 30, 2024, was $1.57 billion, an increase of 13.3% [8] - EBITDA for Q3 2024 was $118.8 million, up 31.7% from $90.2 million in Q3 2023, with an EBITDA margin of 22.3% compared to 18.3% in the prior year [8][9] - Net income for Q3 2024 was $96.4 million, a 36.7% increase from $70.6 million in the prior year [9] - Full-year 2024 total revenue is expected to be in the range of $2.09 billion to $2.13 billion, representing growth of 10.8% to 12.9% over 2023 [10] Business Line Data and Key Metrics Changes - Net-new business awards entering backlog in Q3 decreased 12.7% year-over-year to $533.7 million, resulting in a net book-to-bill ratio of 1.0 [7][8] - Ending backlog as of September 30, 2024, was approximately $2.9 billion, an increase of 8.8% from the prior year [7] Market Data and Key Metrics Changes - RFPs were down modestly year-over-year and sequentially, but the quality of RFPs appears good [6][14] - The business environment remains decent despite elevated cancellations, with expectations for future growth [6] Company Strategy and Development Direction - The company aims to rebuild its pipeline of opportunities and expects book-to-bill numbers to approach a more usual range of greater than 1.15 in the second half of 2025 [6][10] - The company remains focused on its core business strategy, emphasizing biotech and full-service work, without pursuing large pharma contracts [59] Management's Comments on Operating Environment and Future Outlook - Management noted that elevated cancellations were primarily due to companies funded during the COVID high running out of money, rather than dissatisfaction with services [12][24] - The company anticipates that if cancellations return to normal levels, it can rebuild its pipeline and improve future backlog recognition [6][10] Other Important Information - The company generated $149.1 million in cash flow from operating activities in Q3 2024 [9] - As of June 30, 2024, the company had $656.9 million in cash and $308.8 million remaining under its share repurchase authorization program [9] Q&A Session Summary Question: Can you quantify the cancellations and their trends? - Management indicated that cancellations have been elevated across the board, primarily from companies that ran out of funding during the COVID high, with no specific trend across therapeutic areas [11][12] Question: What is the competitive environment like? - Management noted that while the environment is competitive, there has not been a trend toward aggressive pricing or irrational behavior among competitors [14][54] Question: What are the expectations for book-to-bill in Q4? - Management expects book-to-bill to be better than 1.0 but below 1.2, indicating a slight improvement from Q3 [36] Question: How much of the backlog is from the 2020-2021 vintage? - Management acknowledged that there is a portion of backlog from that period, but did not provide specific numbers [40] Question: What is the current headcount and employee growth outlook? - The company increased headcount by about 1.8% from the prior year and expects to maintain this level through Q4, with accelerated growth anticipated in 2025 [44][62] Question: What is the current backlog burn rate? - The burn rate has been consistent at 18.2% for the last three quarters, influenced more by bookings than by the progress of studies [66]