PPD, Inc.
Q1 2021 Earnings Call Transcript

Published: 28 Apr 2021

[Operator:]

Good morning, and welcome to PPD's First Quarter 2021 Earnings Conference Call. Please note, today's call is being recorded. At this time, I'd like to turn the conference over to Tracy Krumme, Vice President and Head of Investor Relations for PPD. Ms. Krumme, you may begin.

[Tracy Krumme:]

Good morning, everyone, and thank you for joining our first quarter 2021 earnings call. With me today to share our results are David Simmons, PPD's Chairman and CEO; and Chris Scully, our CFO. Before we begin, I would like to remind everyone that our discussion includes forward-looking statements that are subject to risks and uncertainties that could cause material differences in our actual results. Please refer to our 2020 Annual Report on Form 10-K for a discussion of these risk. With the exception of revenue, all references to income statements results are on a non-GAAP basis.

[David Simmons:]

Thank you, Tracy. And thank you all for joining us today. First, I'd like to start by highlighting the recent exciting news that we anticipate joining Thermo Fisher Scientific later this year. The opportunities to bring meaningful innovation to market faster and more efficiently, are as solid as ever. With that, I'm pleased to discuss our Q1 results. Since our IPO last year, we have now posted six consecutive quarters of solid financial performance as a public company. This achievement is first and foremost, a testament to the talent and culture we have at PPD and I would like to thank my colleagues for their continued dedication and relentless commitment to delivering high value services to our customers. Let me share a few Q1 highlights with you. We exceeded the high end of our guidance ranges for revenue, adjusted EBITDA and EPS. We posted a strong quarter of new business with net authorizations growth of 39% year-over-year. We had a backlog conversion rate of 12.4%. We realized year-over-year revenue growth of 29% with more than 25% growth in both our clinical and lab segments. And we delivered year-over-year EBITDA growth of 22%. Lastly, our balance sheet remained strong, with total liquidity of $1.4 billion and a net leverage ratio of 3.8 times, down from 4 times at year end. We entered the year in a position of strength, having grown our employee footprint by nearly 10% during 2020. We continue to build on this and for the second consecutive quarter grew our workforce by over 1,000 additional colleagues. We now have 27,000 employees around the globe and have maintained low turnover rates. As we welcome our new colleagues and continue to work on new and innovative development programs, the depth of our industry-leading expertise and experience continues to expand, bolstering one of the key differentiators of our performance.

[Chris Scully:]

Thanks, David. Good morning, everyone. I'll dive right into our results. On the commercial front, net authorizations grew 39.3% over quarter one of last year, with double-digit growth in both the clinical and lab segments. The solid performance across the business contributed to a net book-to-bill of 1.46x, one of our highest levels in recent years. We closed the quarter with record ending backlog up 18.7% over quarter one of last year. With respect to the P&L quarter one revenue grew 28.5% over quarter one of last year, underpinned by 28.3% growth in clinical and 29.5% growth in labs. Adjusted EBITDA growth for the same period was 22.4%. Similar to last quarter, our revenue growth outpaced adjusted EBITDA growth, primarily as a result of a higher mix of indirect revenue on COVID vaccine studies, which resulted in optically lower adjusted EBITDA margin. Rounding out the P&L adjusted EPS grew 45.8% year-over-year to $0.35 a share.

[End of Q&A:]

Ladies and gentlemen, this concludes today's conference. You may disconnect your lines at this time. Thank you all for your participation.