On February 24, 2020 Medpace Holdings, Inc. (Nasdaq: MEDP) ("Medpace") reported financial results for the fourth quarter and full year ended December 31, 2019 (Press release, Medpace, FEB 24, 2020, View Source [SID1234554671]).
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Fourth Quarter and Full Year 2019 Financial Results
Revenue for the three months ended December 31, 2019 increased 19.7% to $229.9 million, compared to $192.1 million for the comparable prior-year period. Revenue for the year ended December 31, 2019 increased 22.2% to $861.0 million, compared to $704.6 million for the year ended December 31, 2018. On a constant currency organic basis, revenue for the fourth quarter of 2019 increased 19.5% compared to the fourth quarter of 2018 and increased 22.4% for the year ended December 31, 2019 compared to the year ended December 31, 2018.
Backlog as of December 31, 2019 grew 21.3% to $1.3 billion from $1.1 billion as of December 31, 2018. Net new business awards were $281.1 million, representing a net book-to-bill ratio of 1.22x for the fourth quarter of 2019, as compared to $231.2 million for the comparable prior-year period. For the year ended December 31, 2019, net new business awards were $1,094.4 million, representing a net book-to-bill ratio of 1.27x, compared to $899.4 million for the year ended December 31, 2018. The Company calculates the net book-to-bill ratio by dividing net new business awards by revenue.
For the fourth quarter of 2019, total direct costs were $167.2 million, compared to total direct costs of $131.1 million in the fourth quarter of 2018. For the full year 2019, total direct costs were $615.3 million, compared to $489.1 million in the full year 2018. Selling, general and administrative (SG&A) expenses were $21.3 million in the fourth quarter of 2019, compared to SG&A expenses of $20.6 million in the fourth quarter of 2018. For the full year 2019, SG&A expenses were $95.2 million, compared to $75.7 million for the full year 2018.
GAAP net income for the fourth quarter of 2019 was $29.8 million, or $0.78 per diluted share, versus GAAP net income of $22.8 million, or $0.61 per diluted share, for the fourth quarter of 2018. This resulted in a net income margin of 13.0% and 11.8% for the fourth quarter of 2019 and 2018, respectively. GAAP net income for the full year 2019 was $100.4 million, or $2.67 per diluted share, versus GAAP net income of $73.2 million, or $1.97 per diluted share, for the full year 2018. This resulted in a net income margin of 11.7% and 10.4% for the full year 2019 and 2018, respectively.
EBITDA for the fourth quarter of 2019 increased 1.2% to $41.1 million, or 17.9% of revenue, compared to $40.7 million, or 21.2% of revenue, for the comparable prior-year period. EBITDA for the full year 2019 increased 6.2% to $149.6 million, or 17.4% of revenue, compared to $140.9 million, or 20.0% of revenue, for the prior year. On a constant currency basis, EBITDA for the fourth quarter of 2019 increased 0.5% from the fourth quarter of 2018 and increased 4.3% for the full year 2019 compared to the full year 2018.
Adjusted Net Income for the fourth quarter of 2019 increased 14.5% to $32.2 million, compared to $28.1 million for the comparable prior-year period. Adjusted Net Income per diluted share for the fourth quarter of 2019 was $0.85, representing an increase of 11.8%, compared to Adjusted Net Income per diluted share of $0.76 for the comparable prior-year period. Adjusted Net Income for the full year 2019 increased 18.7% to $113.3 million, compared to $95.5 million for the prior year. Adjusted Net Income per diluted share for the full year 2019 was $3.02, representing an increase of 16.6%, compared to Adjusted Net Income per diluted share of $2.59 for the prior year.
A reconciliation of the Company’s non-GAAP financial measures, including EBITDA, EBITDA margin, Adjusted Net Income, and Adjusted Net Income per diluted share to the corresponding GAAP measures is provided below.
Share Repurchase Authorization
The Company’s Board of Directors has authorized a share repurchase program of up to $100 million of the Company’s common stock. The extent and timing of repurchases depends on market conditions, applicable regulatory requirements, and other considerations. The share repurchase program does not obligate the Company to acquire any minimum amount of common stock and the program may be modified, limited, extended, suspended or terminated at any time at the Company’s discretion. The Company currently expects that the repurchases under the program will be made in compliance with the SEC’s Rule 10b-18.
Balance Sheet and Liquidity
The Company’s Cash and cash equivalents were $131.9 million at December 31, 2019, and the Company generated $56.9 million in cash flow from operating activities during the fourth quarter of 2019.
Financial Guidance
The Company forecasts 2020 revenue in the range of $975.0 million to $1,005.0 million, representing growth of 13.2% to 16.7% over 2019 revenue of $861.0 million. GAAP net income for full year 2020 is forecasted in the range of $123.4 million to $127.4 million. Additionally, full year 2020 EBITDA is expected in the range of $170.0 million to $178.0 million. Based on forecasted 2020 revenue of $975.0 million to $1,005.0 million and GAAP net income of $123.4 million to $127.4 million, diluted earnings per share (GAAP) is forecasted in the range of $3.24 to $3.34. This guidance assumes a full year 2020 tax rate of 19.0% to 21.0% and does not reflect the potential impact of any share repurchases the Company may make pursuant to the share repurchase program.
Conference Call Details
Medpace will host a conference call at 9:00 a.m. ET, Tuesday, February 25, 2020, to discuss its fourth quarter and full year 2019 results.
To participate in the conference call, dial 800-219-7113 (domestic) or 574-990-1030 (international) using the passcode 4168269.
To access the conference call via webcast, visit the "Investors" section of Medpace’s website at medpace.com. The webcast replay of the call will be available at the same site approximately one hour after the end of the call.
A supplemental slide presentation will also be available at the "Investors" section of Medpace’s website prior to the start of the call.
A recording of the call will be available at 12:00 p.m. ET on Tuesday, February 25, 2020 until 12:00 p.m. ET on Tuesday, March 10, 2020. To hear this recording, dial 855-859-2056 (domestic) or 404-537-3406 (international) using the passcode 4168269.