Fortrea Holdings Inc.

Ladies and gentlemen, thank you for standing by. Welcome to Fortria third quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you would need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would like now to turn the conference over to Hema Nguva, Head of Investor Relations and Corporate Development. Please go ahead.

Good morning. Thank you for joining Fortria's third quarter 2024 earnings conference call. I am Hema Nguva, Head of Investor Relations and Corporate Development at Fortria. On the call with me today are our CEO, Tom Pike, and CFO, Jill McConnell. The call is being webcasted, and the slides accompanying today's presentation have been posted to the investor relations page of our website, fortier.com. During this call, we'll make certain forward-looking statements within the meaning of Private Securities Litigation Reform Act of 1995. These statements are subject to significant risks and uncertainties that could cause actual results to differ materially from our current expectations. We strongly encourage you to review this report we filed with the SEC regarding these risks and uncertainties. In particular, those that are described in the cautionary statement concerning forward-looking statements and risk factors in our press release and presentation that we posted to the website. Please note that any forward-looking statements represent our views as of today, November 8, 2024, and that we assume no obligation to update the forward-looking statements even if estimates change. During this call, we'll 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 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. With that, I'd like to turn it over to our CEO, Tom Pike. Tom?

Good morning, everyone. Welcome to the call. Let me start by saying that Fortria had a solid quarter of execution and progress on our strategic objectives. Our bookings landed well, and we delivered on other key metrics as anticipated. Fortria, as you probably know, is a pure play CRO serving phases one through four. We're a leading global provider of clinical pharmacology or phase one development, functional service provision, which we call FSP, and full service outsourcing. Fortria is broad and deep in how we address the market. We have preferred relationships with some large pharmaceutical firms and have broad exposure to biotech. Our business overall is about 50-50 between large pharma and biotechs. Our large pharma partners appreciate that we have sufficient scale to conduct clinical services almost anywhere in the world. The biotech customers value that we're small enough to give our customers the personal attention they need to drive agile solutions. Both types of customers value our 30 years of experience and expertise. Since Fortria spun out of our parent, our customer and net promoter scores have improved, especially recently. We're getting external recognition too. This quarter, Pharma Times recognized a number of Fortrians for their great work, including an in-house CRA, global project manager, and other roles. In addition, Fortria has just been named a finalist in Fierce Healthcare's Excellence in Data-Driven DEI Award for our DEI Dashboard. We're also a finalist in the CRO of the Year category in the annual Scripp Awards. Both awards will be announced in early December. All that is pretty incredible, given we've only been independent for 16 months. Now here are some highlights of our execution and progress during the quarter. We achieved a book-to-bill of 1.23 for the quarter. We closed a number of important projects with larger pharmaceutical customers, and we had success with biotechs. Our pipeline of opportunities for the next two quarters is solid. Our exit from our former parent is nearly in sight, with over 90% of the servers and application systems migrated to our independent Portria environment. Our EBITDA and revenue were in line with our expectations. And finally, we continue to uncover why this business is underperformed financially and the people, process, and technology required to fix that. As usual, I'll provide some detail on some of these highlights, and Joe will fill in with others. Last quarter, I discussed a new large farmer relationship and some footholds, as we call them, of work in other larger companies. This quarter, we made progress getting started with these customers, including responding to some early request proposals. For instance, one of the footholds resulted in an attractive full-service engagement. This project is a significant phase three trial that Fortrea won based on our therapeutic expertise in the specific area and our deep investigator relationships. Some other larger projects also came through as planned from longtime larger customers. Biotech companies also featured strongly in our full service wins in the third quarter across a number of therapeutic areas. We had key biotech wins in oncology, diabetes, dermatology, and autoimmune disease. While we're known for our oncology expertise across our customer mix, We continue building a strong position in other areas such as ophthalmology, where expertise in wet AMD and gene therapy skills are seen as a strong differentiator. Fortria's real-world evidence consultants and scientists won several virtually designed observational studies in the Asia-Pac region for different pharma customers. Our consulting and science help us differentiate. Our clinical pharmacology business continues to have strong bookings, with attractive book-to-bills customers and indications. As we've discussed in the past and with analysts, our lead executive for CPS saw some softness in biotech around the time of the spin and has successfully transformed the mix to ensure a strong pipeline of attractive opportunities. That team has been particularly successful with larger pharmaceutical firms who are spending. Our CPS business also continues to have a solid pipeline of qualified new business biotech customers. For instance, this quarter, we secured an important contract with a new biotech customer for a phase one study supporting its Alzheimer's program. What was significant about this award is that we were initially not selected for the program, but were able to unseat the incumbent CRO because of our solutions focus and expertise in the area. Our experience with complex programs in CPS helps us transition our strong relationships in phase one into phase 1B and 2. As we discussed last time, we're making progress there with an increasing win rate. We also continue to press ahead with some productivity and innovative technology projects. We have a nice tool that's used by Fortria and a couple of pharmaceutical firms for study oversight and optimization. We showed our roadmap to customers and several prospects this quarter and generated a lot of excitement. AI and ML is being added to try to improve predictability and utility to that tool. We're also looking at some other interesting applications of technology and AI tools in practical complex areas, such as protocols and amendments, SOPs, a CRA co-pilot tool, and continuous data cleaning. Now let me address the questions I anticipate you will ask about our second half bookings. As we told you, going into the third quarter, our pipeline was higher than the average of the prior three quarters with a nice mix of large pharma and biotech. Coming into the fourth quarter, the same metric held and the pipeline was greater than the average of the prior three quarters. Consistent with our Q2 commentary, we continue to target a 1.2 book to bill for the second half. We know that we need to execute through the quarter. Regarding revenue and adjusted EBITDA, in light of the backdrop of spin-related complexity, I'm pleased with our execution. In addition to a strong quarter for new business, we delivered on expectations of revenues. We also continue to expand our margin, delivering EBITDA as we expected. We know that we have continued work to do, but we're making progress. Let me hand over to Jill, then I'll wrap up with some comments about the remainder of the year. Jill?