Yahoo Finance Medpace Holdings, Inc. (NASDAQ:MEDP) Q1 2024 Earnings Call Transcript
Medpace Holdings, Inc. (NASDAQ:MEDP) Q1 2024 Earnings Call Transcript April 23, 2024
Medpace Holdings, Inc. isn't one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Good day, ladies and gentlemen, and welcome to Medpace First Quarter 2024 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, 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. Also on the call today is our CEO, August Troendle; our President, Jesse Geiger; and our CFO, Kevin Brady. Before we begin, I would like to remind you that our remarks and responses to your questions during this teleconference may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve inherent assumptions with known and unknown risks and uncertainties as well as other important factors that could cause actual results to differ materially from our current expectations. These factors are discussed in our Form 10-K and other filings with the SEC.
Please note that we assume no obligation to update forward-looking statements even if estimates change. Accordingly, you should not rely on any of today's forward-looking statements as representing our views as of any date after today. During this call, we will also be referring to certain non-GAAP financial measures. These non-GAAP measures are not superior to or replacement for the comparable GAAP measures, but we believe these measures help investors gain a more complete understanding of results. A reconciliation of such non-GAAP financial measures to the most directly comparable GAAP measures is available in the earnings press release and earnings call presentation slides provided in connection with today's call. The slides are available in the Investor Relations section of our website at investor.medpace.com.
With that, I would now like to turn the call over to August Troendle.
August Troendle: Good day, everyone. Revenue for the first quarter came in a bit lower than our internal projections, and this was driven entirely by reimbursable costs coming in lower than anticipated. Reimbursable costs are difficult to model, and it is unclear if this will impact our full-year revenue numbers. Direct revenue drivers remain in line with plan, and we have not altered our revenue guidance. Net awards came in below our internal projections. This was driven by increased cancellations, which were above our usual range of below 4.5%. By and large, the cancellations were not related to funding problems. The funding environment remains guarded, but stable and improved from last year. We believe the current environment is strong enough for us to grow backlog nicely and generate accelerating revenue growth next year.
RFP dollar value and quality remain stable to improving from Q4. Our profit margin was strong in the first quarter, and we have raised our full-year guidance for EBITDA and therefore our implied margin for 2024. We are committed to delivering year-over-year margin improvement on a full-year basis. This past year, we have increased our investment productivity through automation, process improvements, and optimizing geographic distribution of staff. Last quarter, we were anticipating approximately 10% employee growth to achieve our 2024 revenue, but now expect 5% to 7% employee growth this year, while maintaining direct revenue growth of roughly 15% as previously planned. With that, I'll turn the call over to Jesse for his comments on the quarter.
Jesse Geiger: Thank you, August. Good morning, everyone. Revenue for the first quarter of 2024 was $511 million, which represented a year-over-year increase of 17.7%%. Net new business awards entering backlog in the first quarter increased 10.8% from the prior year to $615.6 million, resulting in a 1.2 net book to bill. Ending backlog as of March 31, 2024, was approximately $2.9 billion, an increase of 18.2% from the prior year. We project that approximately $1.56 billion of backlog will convert to revenue in the next 12 months, and our backlog conversion in the first quarter was 18.2% of beginning backlog. Now, with that, I will turn the call over to Kevin to review our financial performance in more detail and discuss our 2024 guidance. Kevin?
Kevin Brady: Thank you, Jesse, and good morning to everyone listening in. As Jesse mentioned, revenue was $511 million in the first quarter of 2024. This represented a year-over-year increase of 17.7% on a reported basis and 17.6% on a constant currency basis. EBITDA of $115.7 million increased 24.6% compared to $92.8 million in the first quarter of 2023. EBITDA margin for the first quarter was 22.6% compared to 21.4% in the prior year period. Similar to the first quarter of 2023, the EBITDA margin benefited from direct service activities, productivity, and foreign exchange. In the first quarter of 2024, net income of $102.6 million increased 40.7% compared to net income of $72.9 million in the prior year period. Net income gross above EBITDA gross was primarily driven by interest income in the quarter, as well as a lower effective tax rate of 9%, compared to 15.3% in the prior year period.
Net income per diluted share for the quarter was $3.20, compared to $2.27 in the prior year period. Regarding customer concentration, our top five and top 10 customers represent roughly 22% and 29%, respectively, of our first quarter 2024 revenue. In the first quarter, we generated $152.7 million in cash flow from operating activities, and our net days sales outstanding was negative 60.1 days. We did not repurchase any shares during the fourth quarter. As of March 31, 2024, we had $407 million in cash and $308.8 million remaining under our share repurchase authorization program. Moving now to our updated guidance for 2024. Full year 2024 total revenue is unchanged and expected in the range of $2.15 billion to $2.2 billion, representing growth of 14% to 16.7% over 2023 total revenue of $1.89 billion.
Our 2024 EBITDA is now expected in the range of $415 million to $445 million, representing growth of 14.5% to 22.8%, compared to EBITDA of $362.5 million in 2023. We forecast 2024 net income in the range of $347 million to $369 million. This guidance assumes a full-year 2024 effective tax rate of 15% to 16%, interest income of $22.9 million and 32.1 million diluted weighted average shares outstanding for 2024. There are no additional share repurchases in our guidance. Earnings per diluted share is now expected to be in the range of $10.79 to $11.47. Guidance is based on foreign exchange rates as of March 31, 2024. With that, I will turn the call back over to the operator so we can take your questions.
Operator: Thank you. [Operator Instructions] And our first question is going to come from the line of Max Smock with William Blair. Your line is open. Please go ahead.
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