Good day, ladies and gentlemen, and welcome to the Medpace second quarter 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 Good morning, thank you for joining Medpace's second quarter 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 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. Good day. I'm going to make a couple of quick comments on the business environment, then turn things over to Jesse and Kevin to review the details. The business environment continues to improve. RFP volume in Q2 was up sequentially over an already strong Q1. Award notifications rebounded strongly in Q2. We're making good progress toward a strong 2024 in building our backlog. Jesse? Thank you. Good morning, everyone. Revenue in the second... $0.9 million, which represents a year-over-year increase of 31.2%. Net new business awards entering backlog in the second quarter increased 27.6%. From the prior year to $574.8 million, resulting in a 1.25 net book-to-bill. Ending backlog as of June 30th, 2023, was approximately $2.57 billion. This was an increase of 18.6% from the prior year. We project that approximately $1.42 billion of backlog will convert to revenue in the next 12 months, and backlog conversion in the second quarter was 18.7% of beginning backlog. With that, I will turn the call over to Kevin to review our financial performance in more detail, as well as our guidance expectations for the balance of 2023. Thank you, Jesse. Good morning to everyone listening in. As Jesse mentioned, revenue was $460.9 million in the second quarter of 2023. This represented a year-over-year increase of 31.2% on a reported basis and 31% on a constant currency basis. Revenue for the six months ended June 30, 2023, was $894.9 million and increased 31.2% on a reported basis and 31.3% on a constant currency basis from the comparable prior year period. Revenue growth for the quarter was favorably impacted by higher pass-throughs, particularly at investigator sites. As a reminder, pass-throughs impact both revenue and cost under ASC 606 for revenue recognition. EBITDA of $83.6 million increased 22.8% compared to $68.1 million in the second quarter of 2022. On a constant currency basis, second quarter EBITDA increased 21.8% compared to the prior year. Year-to-date EBITDA was $176.5 million and increased 27.4% on a reported basis and 25.2% on a constant currency basis from the comparable prior year period. EBITDA margin for the second quarter was 18.1%, compared to 19.4% in the prior year period. Year-to-date EBITDA margin was 19.7%, compared to 20.3% in the prior year period. EBITDA margin for the quarter was impacted by reimbursable costs, which accelerated further during the quarter, driven by increasing investigator site costs and continued improvement in site activity across the portfolio. In the second quarter of 2023, net income of $61.1 million increased 23.7% compared to net income of $49.4 million in the prior year period. Net income growth over the prior year was primarily driven by higher EBITDA and a lower effective tax rate. Net income per diluted share for the quarter was $1.93, compared to $1.46 in the prior year period. Regarding customer concentration, our top five and top ten customers represent roughly 23% and 30%, respectively, of our year-to-date revenue. In the second quarter, we generated $82.5 million in cash flow from operating activities, and our net day sales outstanding was - 42.6 days. During the quarter, we repurchased approximately 126,000 shares for a total of $23.9 million. As of June 30th, 2023, we had $308.8 million remaining under our share repurchase program. During the quarter, we paid $60 million against the credit facility, and our net debt position at the end of the quarter was $15.9 million, which was composed of debt of $55 million and cash of $39.1 million. Moving now to our updated guidance for 2023. Full year 2023 total revenue is now expected in the range of $1.84 billion-$1.88 billion, representing growth of 26%-28.8% over 2022 total revenue of $1.46 billion. Our 2023 EBITDA is now expected in the range of $340 million-$358 million, representing growth of 10.4%-16.2% compared to EBITDA of $308.1 million in 2022. The revenue guidance anticipates the higher second quarter investigator site activity and cost continue the balance of the year, as well as continued growth in direct service activities. Guidance is based on foreign exchange rates as of June 30th, 2023. This guidance assumes a full year 2023 effective tax rate of 17.5%-18.5% and 31.8 million diluted weighted average shares outstanding for 2023. There are no additional share repurchases in our guidance. We forecast 2023 net income in the range of $256 million-$271 million. Earnings per diluted share is now expected to be in the range of $8.04-$8.50. With that, I will turn the call back over to the operator so we can take your questions. Thank you. As a reminder, to ask a question, press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from David Windley from Jefferies. Your line is open. Hi, good morning. Excuse me. Good morning. Thanks for taking my questions. I wanted to dig in on the site commentary from a few different angles. August, I think, well, several of you actually commented that the level of throughput or activity at sites is improving. I wondered what you would attribute that to. Is it better staffing, or is it perhaps, you know, higher levels of payment to them to either, you know, support them or incentivize them to get more done? Yeah, Dave, this is August. I mean, I think it's a combination of things. In general, I think staffing is improving at sites. Operations are coming more normalized. You know, there was a lot of disruption for quite a bit of time now. You know, the reimbursement at sites has gone up in many cases, and in some cases that helps. You know, it's fundamentally a, you know, staffing and a... You know, the other reason, you know, our costs are, you know, going up in our activity is also the, you know, the positioning of programs that, you know, a lot of awards over the last period of time and things getting into the rapidly recruiting, you know, phase of trials. I think it's all good news, and that, in general, I think things are getting back to a normalized pace and things are moving along nicely, and that speaks well for our performance on trials. Excellent. That's helpful. Thank you. Do you see that, or is it possible to quantify how much of a, I'll call it a knock-on effect, positive knock-on effect that is having on your direct revenue? I'm trying to get a sense for, you know, how much are pass-throughs just going up because, you know, some inflationary factor, versus how much is, you know, more throughput that then would mean more direct revenue for you as the CRO, and how should we think about that, you know, say, pulling through or continuing through the next several quarters? Yeah, I mean, I think that's difficult to try to sort out. You know, there is obviously some inflationary effect. I, you know, and I guess you could look at inflationary effect on both sides, although our margins are strained by the fact that, you know, our contracts are fixed price and, you know, last for a number of years. You know, inflation already, you know, assumptions made at time of execution of the bid, you know, for a project. There is quite a bit of lag for that. Some site costs have been raised, you know, kind of midterm, and you could say there's some, you know, a bit of inflation, and that's outpaced our inflation. I think it's site inflation. You know, how much is increased? You know, increased volume at sites doesn't necessarily translate into, you know, directly into increased, you know, direct fees. I mean, it drives a number of the direct fees, but it's not a, you know, direct relation, and it depends on the type of trials you're doing. You know, some trials have more indirect as opposed to direct. You know, it, it depends on the, you know, sort of the size of the trial and the type of trial. It, it's really impossible, I think, to try to sort that out in terms of, you know, what, you know, what percentage is being driven by, you know, different factors. We do see good traction in activity. I think, you know, that is driving direct fees also. We will see a ramp in direct fees and growth of the company overall. The indirects, because they were partially because they were depressed for, you know, such a time during, you know, the pandemic, and things are coming better and better online, they've outpaced, you know, as there's been a recovery or, you know, growth in our fees, and there has been a greater amount of inflation. We might consider there to be, you know, some amount of increased average percentage of pass-throughs as a part of projects going forward. A lot of it's driven by the individual uniqueness of a project. It's hard to sort that out. We're, you know, we're growing well, both direct fees and indirect fees, and it's not just a inflationary effect of investigator costs. Got it. Last question for me. If I. You know, not saying my assumptions for pass-throughs were correct or whatever, but if I just kind of neutralize for the difference in what you experienced versus my expectation to see, you know, what depressive effect that, just that higher pass-through would have had on margin, you know, it looked like, I think about 90 basis points. More importantly, I guess what I'm looking at is first quarter was really high relative, and on that same basis, it looks like margin, so kind of normalized margin did decline by, you know, 300 basis points or so. Could you talk about mix effects or, you know, hiring trends or things like that would have had an effect on, you know, kind of the margin, apart from the effect of pass-through dilution? Yes. Kevin, you want to- Yeah, Dave, this is Kevin. You know, as I talked on the first quarter call, you know, we did expect some headwinds related to, you know, kind of our incremental hiring and then just wage inflation, with that being, you know, our annual merit, you know, hitting in the second quarter here. So we did see some of that inflationary impact and the impact of the hiring that we've done. You know, we see that impact in the second quarter in addition to, as you mentioned, the impact from the reimbursable costs. Got it. That's all for me. Thank you very much. Thank you. One moment for our next question. Our next question comes from Max Smock with William Blair. Your line is open. Hey, good morning. Thank you for taking our questions. Wanted to start off just following up on Dave's questions on pass-throughs here. August, you mentioned being back at sort of a normalized level. Do you think it's fair to say we're at the right level now in terms of pass-throughs as a percentage of total revenue, or could there be potentially some headwind at some point in the future as pass-throughs normalize? Thank you. I'm sorry. The question is, do I think that the level percentage of pass-throughs as a part of our total revenue will remain the same going forward? Yeah. Do I think it'll be a headwind and a dropping off? Potentially a headwind and a dropping off. I mean, I guess the question is, yeah, is it going to remain at, kind of at this 38%, 39% level that we saw in the second quarter, or do you think that growth slows here as we move into the back half of 2023? Yeah, I think, you know, projecting precisely where, you know, where it's going to go in a given quarter is difficult. I do think that it's not going to continue rising beyond that significantly. I think it will tend to normalize a bit lower over the longer term. I, you know, I don't want to be, you know, trying to pick, you know, particular quarters. You know, a lot of things are difficult to, you know. It is very difficult to project, you know, the rate of recruitment and the rate of indirect fees. It's a lot easier for us to, you know, be projecting, you know, direct fees. I don't want to get into trying to, you know, refine that in terms of a, you know, a model. I do think that we're kind of at a in a higher level of indirects. Again, it's the type of studies you're doing that can influence things quite a bit, and it's not just the recovery from, you know, COVID, and this is a new normal necessarily. It, you know, it's gonna vary over time. Yeah. Yeah, Max, as mentioned, it is very difficult to forecast the pass-through costs. Just in our guidance, you know, we do expect it to be elevated the balance of the year. We're not gonna give a specific percentage, but we do expect it to be elevated. That is an assumption in our guidance. Yeah, that's helpful. Thank you both. I guess, Kevin, following up on that point there, you mentioned, you expect it to be elevated. That's incorporated in the guidance, but be curious to hear what is baked into the guidance for direct fee revenue, in particular, you know, up 24% year-over-year so far here in the first half of 2023. Can you just talk about what you have embedded for direct fee revenue, in particular, as we move into the back half of 2023 and then to 2024? Yeah, I mean, we're not gonna speak to 2024 at this point. Just in terms of 2023, you know, the largest portion of the guide increase was driven by the elevated pass-throughs. You know, that, again, coming back to my comment on, you know, we do expect pass-through costs to be elevated, similar to what we saw in the second quarter, is what's built into our guide. Got it. Maybe one just quick modeling cleanup one for here for me. In terms of backlog conversion, again, elevated, I think last quarter you pointed to stepping back down towards 17.5%. How should we think about backlog conversion moving forward here? Has there been any change to your assumptions in terms of mid-1.2 range book-to-bill for 2023? Yeah, good question. You know, I did expect the burn rate to come back down, but obviously with the increase that we saw in pass-through activities, that did, you know, remain elevated, at least kind of at that higher 18%. I think we'll be in that, you know, kind of 18.5% range the balance of the year with a booking of about a 1.2-ish to 1.25 range. Sorry, Kevin, just to clarify, that 1.2-1.25 range, that's for the back half of the year, or is that for 2023 in total? That's for 2023. Got it. Thank you. Thank you. One moment for our next question. Our next question comes from Sandy Draper from Guggenheim. Your line is open. Thanks so much. I guess want to sort of address this, the question around inflation and pricing and pass-throughs as it relates to bookings. Obviously, another very strong bookings quarter. You're up close to 30% year to date in terms of your first half of your bookings versus last year. Can you talk at all to, you know, is any of that as you've been? I think, obviously, you talked about, you know, your new business, you can price with the inflation. You know, how much of an impact is that? How much is, and I don't obviously expect exact numbers, how much might be, okay, some of these trials that you're signing, for whatever reason, are ones that have more pass-through revenue? I'm just trying to think through, are there things that sort of are pushing up that growth rate, or is it really just a function of the markets improving and, you know, the mix of businesses is apples to apples, and so it's a clean, nearly 30% type of growth? Well, I, I think it's, you know, things are growing across the board. We've had a greater amount of pass-through growth and direct growth just lately. You know, it's difficult unless, you know, we get into, you know, trying to sort out, you know, pass-through bookings and direct bookings and all the rest of it. It, you know, it is difficult to get back to a 605 type of look at things. Look, I, I, you know, there is a lag between, you know, winning work and it working its way through. Things look very good from our perspective in terms of the opportunities now. I mean, there was a time for several quarters that, you know, award notifications and, you know, RFPs and, overall business environment had softened, and that's come back quite a bit. You know, a lot of it's a pivot to better-funded clients. I don't know how much of it's, you know, funding itself, but the business environment has improved quite a bit. We're, you know, we're lining up new work, and I think we're gonna have, you know, good growth going forward, this year and next. You know, we're not gonna get into specifics on 2024, you know, and guidance there until next quarter. Things are looking much improved over, you know, what they were a couple quarters ago. You know, I think it looks good. I, you know, trying to sort out, you know, and getting back to a 605 type of, you know, look at things is difficult to do. I don't know, Kevin or Jesse, you have any comments? No, I think it was well said. You know, if you look at kind of the composition, then, you know, we don't see a significant change, but it's kind of hard to sort some of that out, just given the overall portfolio that we have. Okay, I appreciate that. That's definitely helpful commentary. Maybe one follow-up on the hiring side. You guys were targeting, I think it was close to 20% growth. I think that's right. You're tracking sort of mid-teens. I know you guys set an aggressive target, but would just love to hear sort of your updated thoughts on your targets for hiring. Do you feel like you're, you know, progressing well? It doesn't look like there's any indication that you guys would be slowing down hiring, but just any comments on the environment and how you're tracking towards your goals for hiring? Thanks. Yeah. Hi, it's Jesse. Progressing well, against goals. It is still a challenging environment. I would say for the year, we're likely going to end up in the high teens to 20% growth for the year. Maybe I'll just add one part of that. The one good thing is, turnover has really dropped back to normal, you know, pre pandemic or maybe even lower in many cases. You know, the churn has dropped and makes things a lot easier to manage. I think we're in good shape with, you know, hiring and staffing. Super. Thanks, August. Thanks. Thank you. One moment for our next question. We have a question from John Sourbeer from UBS. Your line is open. Hi. Hello, this is Tienchi calling for John Sourbeer. Thanks for taking the question. Given the current funding environment and your year-to-date performance, are you taking share versus peer? you know, do you have any commentary on how is Medpace waning? Are we taking share, are you asking? Yes, that is correct. I look, I don't know what that really means. Look, our growth has been for years, you know, year after year. You know, we have a slide in the in our deck on, you know, growth in revenue and EBITDA and net income, et cetera. We've, on an entirely organic basis, we've outstripped the growth of any of the peers. You know, we've I guess if, you know, the way most I hear most analysts talk about it's bookings that are share. On that basis, I guess we've been losing share for a decade. You know, I tend to look at things in terms of revenue and profit, et cetera, and, we're, you know, appear to be taking share, but, I can't quantify, you know, what that, what that represents. Thank you. I got a second one, is, have you noticed any increasing project delays, you know, since 1Q? You know, any color on that? Yeah, I mean, things overall have been accelerating, since the first quarter. Thank you very much. That's all for me. Thank you. Okay. Our next question comes from Eric Coldwell, from Baird. Your line is open. Well, thank you very much. I should have lowered my hand. I think all of my topics have been covered, but, congrats on a good quarter and look forward to future updates. Thank you. Thanks, Eric. Thanks, Eric. Yeah, thanks. Okay, showing no further questions at this time. I'd like to turn the call back to Lauren Morris for any closing remarks. Thank you for joining us on today's call and for your interest in Medpace. We look forward to speaking with you again on our third quarter 2023 earnings call. This concludes today's conference call. Thank you for participating. You may now disconnect.