Medpace(MEDP) - 2023 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue for Q4 2023 was $498.4 million, representing a year-over-year increase of 26.5$1.89 billion, a 29.2% increase from 2022 [37][38] - EBITDA for Q4 2023 was $95.8 million, up 19.2$80.4 million in Q4 2022, with a full year EBITDA of $362.5 million, a 17.7$78.3 million, a 14% increase compared to $68.7 million in the prior year, with full year net income of$282.8 million, a 15.3% increase from 2022 [66] Business Line Data and Key Metrics Changes - The company reported a net new business awards entering backlog in Q4 of $614.7 million, a 26.7$2.36 billion, an increase of 28.8%, with an ending backlog of approximately $2.8 billion, a 20.2$2.15 billion to $2.2 billion, representing growth of 14$18.4 million [32] Company Strategy and Development Direction - The company is optimistic about the funding environment and project progression, indicating a trend towards improvement after a volatile period [70] - The company plans to maintain a hiring growth rate of about 10% in 2024, aligning with expected revenue growth of approximately 15% [43] Management Comments on Operating Environment and Future Outlook - Management noted that cancellations are expected to remain within a normal range, with a projection of less than 4.5% for 2024 [26] - The company is seeing a clear direction in project starts and is optimistic about the business environment moving into 2024 [70] Other Important Information - The EBITDA margin for Q4 2023 was 19.2%, down from 20.4% in the prior year, impacted by higher reimbursable costs and personnel costs [31] - The company did not repurchase any shares during Q4 2023, with a total of approximately 781,000 shares repurchased for $144 million throughout the year [39] Q&A Session Summary Question: What is the outlook for headcount growth? - Management indicated a 10% growth in headcount for 2024, down from previous expectations of mid-teens growth, attributed to efficiencies and a more stable business environment [4] Question: What is driving the elevated level of pass-throughs? - Elevated pass-throughs are driven by inflationary costs at investigator sites and a mix of large Phase III studies, expected to remain elevated into 2024 [3] Question: How are cancellations tracking? - Cancellations are expected to stay within the usual range, indicating a more normalized level compared to previous years [26] Question: What is the outlook for EBITDA growth in 2024? - The company expects EBITDA to grow between 10.3% to 18.6% in 2024, despite not changing the revenue outlook [5] Question: How is the competition affecting share gains? - The company has been gaining market share, growing at a rate considerably above industry peers, with a win rate above long-term trends [7][21]