Medpace Holdings, Inc. (NASDAQ:MEDP) Q4 2023 Earnings Call Transcript
Medpace Holdings, Inc. (NASDAQ:MEDP) Q4 2023 Earnings Call Transcript February 13, 2024
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Operator: Good day, ladies and gentlemen, and welcome to the Medpace Fourth Quarter and Full Year 2023 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 call, Lauren Morris, Medpace's Director of Investor Relations. You may begin.
Lauren Morris: Good morning, and thank you for joining Medpace's Fourth Quarter and Full Year 2023 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 a 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 Jesse Geiger.
Jesse Geiger: Thank you, Lauren, and good morning, everyone. Our revenue for the fourth quarter of 2023 was $498.4 million, which represents a year-over-year increase of 26.5%. Full year 2023 revenue was $1.89 billion, a 29.2% increase from 2022. Net new business awards entering backlog in the fourth quarter increased 26.7% from the prior year to $614.7 million, resulting in a 1.23 net book-to-bill. For the full year 2023, net new business awards were $2.36 billion, an increase of 28.8% and ending backlog as of December 31, 2023, was approximately $2.8 billion, an increase of 20.2% from the prior year. We project that approximately $1.53 billion of backlog will convert to revenue in the next 12 months and backlog conversion in the fourth quarter was 18.5% 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 $498.4 million in the fourth quarter of 2023. This represented a year-over-year increase of 26.5% on a reported basis and 26% on a constant currency basis. Full year 2023 revenue was $1.89 billion and increased 29.2% on a reported basis and 28.9% on a constant currency basis from 2022. EBITDA of $95.8 million increased 19.2% compared to $80.4 million in the fourth quarter of 2022. Full year EBITDA was $362.5 million and increased 17.7% from the comparable prior year period. EBITDA margin for the quarter was 19.2% compared to 20.4% in the prior year period. Full year EBITDA margin was 19.2%, compared to 21.1% in 2022. EBITDA margin compared to the prior year was impacted by higher reimbursable costs, personnel costs and the foreign exchange benefit in 2022 behind the strong US dollar.
In the fourth quarter of 2023, net income of $78.3 million increased 14% compared to net income of $68.7 million in the prior year period. For the full year 2023, net income was $282.8 million compared to $245.4 million in 2022, which represents a 15.3% increase. Net income growth lagging EBITDA growth was primarily driven by a higher effective tax rate of 15.8% compared to 13.3% in the prior year period. Net income per diluted share for the quarter was $2.46 compared to $2.12 in the prior year period. For the full year 2023, net income per diluted share was $8.88 compared to net income per diluted share of $7.28 in 2022. Regarding our customer concentration, our top 5 and top 10 customers represent roughly 23% and 30%, respectively, of our full year 2023 revenue.
In the fourth quarter, we generated $156.4 million in cash flow from operating activities, and our net days sales outstanding was negative 48.3 days. We did not repurchase any shares during the fourth quarter. For the full year 2023, we repurchased approximately 781,000 shares for $144 million. As of December 31, 2023, we had $245.4 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 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 $400 million to $430 million, representing growth of 10.3% to 18.6% compared to EBITDA of $362.5 million in 2023.
We forecast 2024 net income in the range of $326 million to $348 million. This guidance assumes a full year 2024 effective tax rate of 16% to 17%, interest income of $18.4 million and 32 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 $10.18 to $10.87. Guidance is based on foreign exchange rates as of December 31, 2023. With that, I will turn the call back over to the operator so we can take your questions.
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