Medpace Holdings, Inc. Q3 FY2024 earnings call

• Backlog cancellations were above the usual range for three consecutive quarters, resulting in depressed net-new business awards and a net book-to-bill ratio of 1.0 in Q3.
• Revenue in Q3 2024 was $533.3 million, up 8.3% year-over-year; year-to-date revenue was $1.57 billion, up 13.3%.
• EBITDA in Q3 2024 was $118.8 million, a 31.7% increase from the prior year; year-to-date EBITDA was $346.7 million, up 30% from the prior year.
• EBITDA margin improved to 22.3% in Q3 2024 from 18.3% in the prior year period.
• Net income in Q3 2024 was $96.4 million, a 36.7% increase from the prior year; net income per diluted share was $3.01.
• Cash flow from operating activities in Q3 was $149.1 million, and net days sales outstanding was negative 62 days.

Revenue for the third quarter of 2024 was $533.3 million, representing a year-over-year increase of 8.3%. Year-to-date revenue was $1.57 billion, up 13.3%. EBITDA in the third quarter was $118.8 million, an increase of 31.7% compared to the prior year period. Year-to-date EBITDA was $346.7 million, up 30% from the comparable prior year. EBITDA margin for the third quarter was 22.3%, compared to 18.3% in the prior year period. Net income in the third quarter was $96.4 million, up 36.7% from the prior year period. The top five and top 10 customers represent roughly 22% and 29% respectively of year-to-date revenue.

• Full-year 2024 total revenue is expected in the range of $2.09 billion to $2.13 billion, representing growth of 10.8% to 12.9% over 2023.
• 2024 EBITDA is expected in the range of $450 million to $470 million, representing growth of 24.1% to 29.7% compared to 2023.
• 2024 net income is forecast in the range of $376 million to $388 million.
• Earnings per diluted share is expected to be in the range of $11.71 to $12.09.
• 2025 guidance will be provided on the fourth quarter call in February.

• Elevated backlog cancellations have depressed net-new business awards and impacted the book-to-bill ratio.
• Uncertainties in the business environment could lead to continued cancellations and affect future opportunities.
• Volatility in reimbursable costs and pass-through revenues may impact financial performance.

Q: David Windley of Jefferies asked about cancellations and pricing.

A: August Troendle stated cancellations weren't tied to specific therapeutic areas and pricing was normalized.

Q: Max Smock of William Blair inquired about cancellations and win rate.

A: August Troendle discussed cancellations from funded COVID companies and win rates.

Q: Eric Coldwell of Baird questioned cancellations and book-to-bill.

A: August Troendle mentioned expecting Q4 book-to-bill to improve and back to 1.15+ in 2025 H2.

Q: Ann Hynes of Mizuho asked about 2025 margins and backlog.

A: Kevin Brady and August Troendle said 2025 guidance not provided yet and discussed backlog dynamics.

Q: Dan Leonard of UBS asked about cancellations and book-to-bill Q4.

A: August Troendle said Q4 book-to-bill would be better than Q3, between 1 and 1.2.

Q: Justin Bowers of DB asked about backlog vintage and employee growth.

A: Jesse Geiger and Kevin Brady discussed backlog vintage and employee growth plans.

Q: Charles Rhyee of TD Cowen asked about funding, share repurchase, and pass-throughs.

A: Kevin Brady and August Troendle talked about funding dynamics, share repurchase strategy, and pass-throughs.

Q: Unidentified Analyst inquired about Q3 cancellation trends.

A: August Troendle discussed Q3 cancellation trends and book-to-bill expectations.

Q: Max Smock of William Blair asked about RFP flow.

A: August Troendle talked about RFP flow trends in Q3.

Q: David Windley of Jefferies asked about go-to-market and cancellations.

A: August Troendle discussed go-to-market discipline and cancellation sources.

Q: Eric Coldwell of Baird asked about backlog burn and number of projects.

A: Kevin Brady and August Troendle talked about backlog burn and number of projects (in the 500 range).

Q: Charles Rhyee of TD Cowen asked about pass-throughs and share repurchase triggers.

A: Kevin Brady and August Troendle discussed pass-through dynamics and share repurchase triggers.