Medpace Holdings, Inc.

Good day, ladies and gentlemen, and welcome to the MedPace fourth quarter and full year 2020 earnings conference call. At this time, our participants are in a listen-only mode. Later, we will conduct a question and answer session, and instructions will be followed at that time. If anyone should require operator assistance, please press star then zero on your touchtone phone. As a reminder, this call may be recorded. I would now like to introduce the host for today's conference, Kevin Brady, MedPace's Executive Director of Finance. You may begin.

Good morning, and thank you for joining MedPace's fourth quarter 2020 earnings conference call. Also on the call today is our President and CEO, August Trundle, and our CFO and COO of Laboratory Operations, Jesse Geiger. 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 Security 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, including the ongoing impact of COVID-19 on our business, 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 to discuss our financial results in 2021 guidance.

Thank you, Kevin. Good morning, everyone. Our net new business awards entering backlog in the fourth quarter increased 27.6% from the prior year to 358.6 million, resulting in a 1.38 net book to bill. For the full year 2020, net new business awards were 1.2 billion, an increase of 7.4% and ending backlog as of December 31st was $1.5 billion, an increase of 20.1 percent from the prior year. Revenue was $259.7 million in the fourth quarter of 2020. This represents a year-over-year increase of 13 percent on a reported basis and 12.2 percent on a constant currency organic basis. Full-year 2020 revenue was $925.9 million, which represents a 7.5 percent increase from 2019, or 7.3 percent on a constant currency organic basis. EBITDA of $60.2 million increased 46.3 percent compared to $41.1 million in the fourth quarter of 2019. Full year 2020 EBITDA increased 25.5% to 187.8 million compared to 149.6 million in 2019. On a constant currency basis, fourth quarter and full year EBITDA increased 46.4% and 24.6% respectively compared to the prior year. EBITDA margin for the fourth quarter was 23.2% compared to 17.9 percent in the prior year period. For the full year, 2020 EBITDA margin was 20.3 percent compared to 17.4 percent in 2019. The higher margin was primarily attributable to lower reimbursed out-of-pocket expenses and employee-related expenses as a percentage of revenue. In the fourth quarter, 2020 net income was $50.9 million compared to net income of $29.8 million in the prior year period. For the full year 2020, net income was $145.4 million compared to $100.4 million in 2019. Net income growth was primarily driven by higher EBITDA as well as lower amortization, effective tax rate, and interest expense. Net income per diluted share for the quarter was $1.35 compared to 78 cents in the prior year period. For the full year 2020, net income per diluted share was $3.84 compared to net income per diluted share of $2.67 in 2019. Regarding customer concentration, our top five and top ten customers represented roughly 17% and 25%, respectively, of our 2020 revenue. In the fourth quarter, we generated $105.5 million in cash flow from operating activities, and our net day sales outstanding decreased compared to the third quarter from negative 27.4 days to negative 33.6 days. During the quarter, we repurchased approximately 411,000 shares, at an average price of $115.42 for a total of $47.4 million. And we have $102.6 million remaining under our current share repurchase authorization. We ended the fourth quarter with $277.8 million of cash, no outstanding debt, and $50 million of undrawn capacity on our revolving line of credit. Moving now to our guidance for 2021. We are now forecasting total revenue in the range of 1.075 billion to 1.175 billion for the full year 2021, representing growth of 16.1% to 26.9% over 2020 total revenue of 925.9 million. Our 2021 EBITDA is expected in the range of 205 million to 225 million, representing growth of 9.2 percent to 19.8 percent compared to EBITDA of 187.8 million in 2020. We anticipate our 2020 effective tax rate to be in the range of 15 to 16 percent. We have assumed 37.8 million fully diluted shares for 2021, and there are no share repurchases in our guidance. We forecast 2021 net income in the range of $154.5 million to $170.5 million and earnings per diluted share in the range of $4.08 to $4.50. With that, I will turn the call back over to the operator so we can take your questions.