Q1 2020 Earnings Call
At this time I would like to welcome everyone to the I keep young first quarter 2020, <unk> earnings Conference call.
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After the speaker's remarks, there will be a question and answer session.
If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad.
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Thank you.
I would now like to turn the call <unk>, Andrew Marr, Senior Vice President Investor Relations and Treasury Mr. Mark quick please begin your conference.
Thank you.
Good morning, everyone. Thank you for joining our first quarter earnings school.
With me on the call today already busy chairman and Chief Executive Officer.
Got it executive Vice President and Chief Financial Officer.
Eric Shaban Executive Vice President and General Counsel, Nick Charles Senior Vice President financial planning and analysis, and John Healthcare Senior Director Investor Relations.
Today, we will be referencing a presentation there will be visible during the school for those of you on a workout.
Presentation, but also be available following the school.
Yes, and presentation section of our TV <unk> Investor Relations website, well, what I keep yet.
Before we begin I regard coping with most inside information discussed by Madison. During this conference call will include forward looking statements.
Actual results could differ materially from like stated or implied fourq would just be segments due to risks and uncertainties associated with somebody business.
Including the impact from the Karen Good morning thing, which are discussed in the company's farming <unk> Securities and Exchange Commission.
Moving on annually.
Okay and subsequent FTC farming.
In addition, we will discuss non-GAAP financial measures on the screen.
We should be considered or something to another substitute for nothing major decide in accordance with gap.
A reconciliation of these non-GAAP measures for the comparable GAAP measures is included in the press release Encumbrances doesn't fighting.
Before we went back with US is we're conducting the schools in various remote locations.
All that makes will become the colder smoothly.
I would now like to turn it over to walk chairman and CEO already be.
Thank you Andrew and good morning, everyone goes through one so it's safe and well.
Thanks for joining us and all reformer 2020, Onee school I want to apologize in advance it even the crises I wouldn't be a little longer and minorities today.
In an effort to provide you with them our color on what we've seen on the ground.
This has always if we don't have time to get to your question in all seems available to answer questions. After the cool.
Today, We review our first poor performance. We also provide guidance for the second quarter and update our who your guidance like of course 19.
First let's review, how we'd be navigating the challenges over the last couple of months, you basically going to create crisis management structure to ensure that we relied on for your which is a called the organization I'll be meeting everyday with my senior leadership team and the schools communication has allowed us to be our jarden. Besides you can always sponsored a crises and connectivity.
Currently centered around for priority.
First let's take your employees patients healthcare professionals customers suppliers, we frequently in July.
Ladies exposure of course, if we could substantially all trouble.
Supply BP to feed based on brilliant schools facilities and out most of all self walk ruble.
But then we've got pretty draws that infrastructure to enable remote working and avoid service disruption second.
It's clinics and hospitals have become nexus people and I mean, how to become unsafe for difficult for patients to travel.
Continues to do everything you know probably attribute to get disruptions to clinical trials and I'm sure patients.
[music].
Wherever possible, we have been transitioning to remote monitoring with the number of remote monitoring visits are reaching five times the level do we're playing through the quite.
We have leveraged our existing drug delivery and home health services for the job at home loved Julie.
Perhaps we could whatever we could we be the neighborly feel it helps visits to ensure continuity of contract between investigator accretion and C.L. King we've been transitioning walkers up trial study hall or virtual Claudio platform.
Hello.
To help all clients an older organizations management plans will be outbreak really growing capabilities for example.
The blind got people dealing technology to we eat all your insights to help all clients like the progression of the disease managed capacity and money through supply chain.
I couldn't be engaged with clients to regularly executive briefing.
We we market trucking reports white papers thought leadership pieces and what do you know to help them I understand the lucky of all these dynamics of the outbreak.
Good how things would be about finding.
We are joining you go global response to the quite decent contributing a resource systems resumption.
Lastly for example, UK on behalf of Department of Health jointly Yaki said National Statistics.
Oxford University of do you keep buying the center.
Easy commands a country wide testing program will you be households, <unk> 19 infection and major.
We provided a nice you get into has developed a new treatments what could be 19 <unk>.
He did you see HIV and food Lucky.
In the U.S., we're partnering with the University of Texas.
You got you love to do identifying vaccine candidate weaker than currently available to us.
You want to Europe, Europe, collaborating governments and the industry to develop several experimental vaccine candidates you read up one site networks and data outfits.
What sort of like fine line.
Yeah of course involving multiple filed for could be banking girl, Pcs and vaccines, which I'll talk more about Italy.
During its critical time, we continue to innovate two weeks ago. Our R&D you lost your first technology enabled movies might be drawn on watching solution.
I see 19 trials dotcom.
Yes online platform we connect.
Actually risk individuals and resources to ongoing Cobiz Nike, Inc. Research projects would be less mission.
The real will launch acute care project registry.
The platform would apply all vast experience, we registries and I'm going.
To help connect stakeholders and advanced information sharing to better understand how things we can prevent didnt.
If successful all of these will bring machine to threaten treatments to patients.
Now before I review the results of the quotas, let's take a look at some of the operational impacts to our business caused by the virus.
It is important to note across all of our segments you impact from the virus has temporarily.
Client demand and interest you know differentiated offerings remain strong.
When you go on a.
For the unpopular hampered or would you like.
You know in India.
Slide stocked up they should recruitment.
Oh, the most docket parts of the clinical trial Lifecycles sites monitoring visits have also been boxes adult today, only 20% of our global sites or crude access the boardwalk.
<unk> onsite monitoring.
On the other then data collection, the regulatory reporting activities are more or less confusion with equal interruption.
For due flight trials, we are coordinating closely local health, we'll probably see them customers.
Pretty broad were not properties in feasible I'll services and technology, we're going to increase we would be.
Great and centralized monitoring for trial and remote patient.
I fight access remains constrained we are seeing an uptick in demand consents virtual trials equal and connected devices.
Well the crisis subsides, we anticipate that some trials, we require minimal additional work to satisfy requirements over and above the remote.
But the vast majority substantial most of the other trials, we don't require see already used onsite and perform the top.
Checking documentation et cetera that we would not have performed safely during the price.
R&D business development activity has remained strong.
We have not had single called related cancellations.
Audit fees are holding strong at levels that are in line with 2019, which was a record year end up 45 pipeline remained at the record Hot.
Face to face interaction declines.
He is challenge.
These defenses for example have you made.
Some new business like TV getting.
Okay.
In technology, and then we've had no interruption beat up supply or demand.
Our data production centers remain fully operational and I'll technology and on deliveries continue the ordinary course.
Bruce.
The bulk of the business the rely on face to face interactions well dependent on person gabens eventual conferences are experiencing disruption.
The prospect you forefront of all real would be required site monthly that he has also been impacted.
That said, you're going to a higher proportion of recurring living.
In the South segment remained relatively well insulin.
[noise] business development activities. However.
Has been somewhat home food I decisions are being delayed due to the situation.
Finally see at summit nothing much of it back from the fourth quarter and what's happening here is that clients are reluctant to all through their commercial footprint.
FTC patients at the crises will subside.
The near term.
That's a result, we have not seen any significant cancellations at this stage. Yeah. We're also trying to deliver services, we multi <unk> billion and virtual meeting however activity has become much more challenging.
You too would decline in sales reps.
And of course physical attention and focus.
[laughter] physician attention focused on the coffee 19 clients.
This is developing has also become challenging see SMS <unk> decision, making and reduce always peafiel.
No again these Bugs York, Let's review the first quarter results.
Rather than for the first quarter can mean, a $2.754 billion and it was slightly higher than our most recent guidance range 11 beat was mostly driven by bust through.
Which can lead to higher than we haven't 60 basis.
Segment perspective technology analytic solutions, Lebanon, kidney like $1.170 billion.
Constant currency growth was 5.5%.
On a new solutions was $1.441 billion.
4% at constant currency.
Excuse me it passed through headwind of approximately 300 basis points services growth would have been over 5%.
Contracts the other medical solutions revenue this quarter was $196 million <unk>, 2.6% at constant currency essentially <unk>.
Well we expected.
First quarter, adjusted EBITDA was $562 million and first quarter adjusted EPS was one dollar.
I want to highlight bookings growth in RMBS, which was impressive by any standard, but especially so you're going to build a backdrop.
First quarter contracted backlog, including past.
Grew 14% year over year to $19.6 billion.
March 31st 21.
In the first quarter awards.
And knit business.
Net new business was strong across the board.
ATM contracted net new business.
Including.
Boston.
At March 31st was up 7.5 per cent compared with your new business at the end of last year.
The cost effective book to be release, you, including Boston was one point 42 for the first quarter of 21, and excluding Boston the first quarter contracted to deal with 135.
The MTM contracted to be lease you up more city foods was 143, improving Boston and 136, excluding pass throughs.
The team was of course awarded a number of course 19 treatment than vaccine trial during the first <unk>.
Most of which are not not contracted bookings or backlog when I just mentioned.
In fact, you do treatments in vaccines. We are currently working on duty seeks Cobiz 19 awards, we the pipeline of 70 other products potential project of course.
These projects are generally have you been discounted contributing to the general effort against Govies 19, so they want to present much although booking.
Both.
Significant number of these studies and transformative trial design, including several with government sponsorship and many using the real world comparator arm and shakes uniquely positioned to de lever on behalf of our customers.
Dramatic as these crisis.
Actually subside will not change or we just freeze fundamental dynamics in fact, I believe the prospects wrong industry are better than ever.
We all know something to squeeze will experience a permanent loss of revenue.
They're short cycle or consumer oriented nature. However, we are long cycle business, serving the critical needs of the pharma industry. We've got good visibility into a long term business due to our backlog and pipeline.
In our case work is just be boost to the right.
These crises. He's a reminder of how critical of the pharmaceutical industry for society patients. We continued to required Nobody's medicine.
It is no viable substitution for drug discovery.
We have an enormous wall to play and helping our clients really lifesaving treatment to patients for example every year.
100 million patients are treated you don't college.
500 million patients for cardiovascular disease, and even talking more than two watering 50 million people suffer from more than 6000 rare diseases.
The need for customers to use real world data advanced analytics and technology.
Why would therapeutic expertise.
So with clinical trials timelines and launch new Mvcs has become even more than doing these prices.
We'd be even more relevant to our customers than we were before the crisis stock.
Why do of course of ours is uncertain.
And no one knows for sure how the balance of where you will evolve.
One could of course stepped back and say well, let's spend guidance and see what happens.
We'd be easy confident on us to have a point of view and to make assumptions about what our business looks like as we navigate these disruption.
And I'll period point of view is that the business was snapback as the crises subside.
Hopefully later this year and certain to 2021.
Given these assumptions about the future we've focused on maintaining operational capability as we navigate through the crises.
We of course, taking aggressive actions to manage costs in line with revenue declines.
Also ensuring we are ready for we could cover.
We've stopped renewing temporary employment contracts into second quarter, we negotiated realistic leases and vendor contract.
For some of our projects.
We stop much of our discretionary third party spend and then you do actions to control costs.
However for now we do our best to preserve employment and to the extent, who can do not affect based compensation for employees.
I want to take care of our employees as much as possible, especially.
People problems.
Yeah, I agree to ask that we need to speak together in anticipation of the strong rebound we are expecting <unk> demand for all sort of.
Many companies are announcing broad based production they affect these music and for portions of their stuff, we're taking a somewhat more nuanced approach.
Yes of course, but for some employees, we need to find mob during these difficult time the option of a reduced for.
It's very small parts of our business, where utilization has dropped very significantly we are using that might be temporary partial work weeks with corresponding pay reductions.
In total to date.
Approximately 650 people employed.
Hi, I do requested Simon.
Well be happy to take time off these represent less than 1% of our total workforce obviously.
She's going to be called we'd be delayed and our assumptions prove to be materially different from our current from reality, we off was prepared to make more drastic the seasons.
Conditions on the ground differ.
For now the rest of up 67000, plus employees will not see any broad meant that the rebates compensation reductions.
Separately.
As an expression of solidarity people gold goes affected by the crises, we are launching a temporary voluntarily pay reduction program. This quarter for the most senior executives across the company ranging from 10% for as GBP, 20% for my direct reports and to 50% for this year.
These executive pay cost would be entitled to fund I can react here.
In coffee Nike lead program, we are launching this week.
The proceeds from these executive feed costs would be distributed.
No were pretty level Cold war facing somebody hardships as a result of the quarterly banking outbreak.
Finally, I want to highlight to you that had the same time as we are focused on managing the crises and helping organization navigate through these difficult farms.
We have also in parallel started our annual planning process well next year.
Much earlier than usual.
This is normally in end of summer through end of your activity.
No we have already started engaging our leadership team and our business units. The planned for 2021 based on various scenarios of recovery.
What are we usually provide on your guidance at the beginning of the you're comparing to the Releasable fourth quarter earnings. We hold these fuel to provide 2021 guidance earlier than usual.
Now I'll be turning over to Mike for some sale on the quarter and it's something we've laid out for the remainder reminder of 21 Mike.
Thank you are a good morning, everyone. I also hope that you are saying, a safe and healthy let's start with revenue.
First quarter revenue of $2.754 billion grew 3.7% at constant currency and 2.6% reported.
As already noted revenue outperformed our revised first quarter guidance due to greater than expected pass throughs, which is we have said are very hard to predict.
Technology and analytics solutions first quarter revenue of $1.117 billion grew 5.5% at constant currency and 3.9% reported.
R&D solutions first quarter revenue of $1.441 billion grew 2.4% at constant currency and 1.8% reported.
First quarter contract sales and medical solutions revenue of $196 million grew 2.6% on a constant currency basis and 1.6% reported.
Turning to profit.
Adjusted EBITDA was $562 million for the first quarter.
First quarter GAAP net income was $82 million and GAAP diluted earnings per share was 42 cents.
Adjusted net income was $294 million for the first quarter or $1.50 cents per share.
Let's now turn to R&D solutions backlog.
[noise] closing backlog at March 31st 2020 was $19.6 billion.
New business wins remain strong and to date, we have not experienced any coal that 19 related cancellations.
Let's now review the balance sheet.
As of March 30, Onest cash and cash equivalents totaled $927 million and debt was approximately $12 billion, resulting in net debt a $11.1 billion.
Our net leverage ratio was 4.7 times, our trailing 12 month adjusted EBITDA.
Cash flow from operating activities was $163 million into first quarter.
Capex for the quarter was 141 million and free cash flow for the quarter was $22 million.
A reminder, the first quarter is seasonally our lightest free cash flow quarter.
To date, we have not experienced any collection delays related to covert bank team.
Prior to the covert 19 outbreak, becoming a pandemic in March the company had repurchased $321 million of its common stock in the first quarter, including the purchase of 1 million shares in connection with the February 2020, private resale by certain stockholders.
Since the covert 19 outbreak became a pandemic in March we have temporarily suspended share repurchase activity.
As of March 30, Onest 2020, we'd approximately $1 billion of share repurchase authorization remaining.
We continue to have strong liquidity.
At March 31st we had over $900 million of cash on the balance sheet and $1.4 billion of available boring borrowing capacity on our revolver.
Our first maturity of any size is not until 2023, which is our term loan a held by a consortium of our relationship. Thanks.
We also have approximately $1 billion that EBITDA cushion on one of our maintenance covenants in our credit agreement and about $1.1 billion under the other.
Our senior secured net leverage ratio must be below four times and at March 31st It was 2.17 times.
Our interest coverage must be above 3.5 times and as at March 31st we were at 5.92 times.
And finally, I would point out that we have a lot of flexibility with capital allocation, which includes capex.
M&A and share repurchases.
And which would typically equate to about $2 billion per year.
Before we turn to guidance it will be useful to take a closer look at the covert 19 situation in China.
In China, there were about eight weeks of a public health emergency from January to March.
During which about 80% of our clinical research sites in China inaccessible.
After that eight week period activity started to return to normal outside of the who Bay province, and by the end of March about 40% of our sites where inaccessible.
As we moved into April.
Services outside of a day returned to normal with nearly 100% of clinical research sites, becoming accessible during may.
As we recast our 2020 guidance, we have used what we have seen in China as a reference point and we are using a proprietary model with predictive analytics and a all right which is guiding our forecast.
All models rely on the accuracy of the inputs used in the model and the future course of the virus is inherently uncertain.
Despite this uncertainty we've used our best efforts to estimate the impact of covert 19 on our business and when resetting 2020 guidance.
We've assumed that new cases of the virus continue to increase globally through the second quarter.
Then level off and begin to decline by the end of the quarter.
This slide here shows the number of active cases per 100000 people.
At the curves of the number of new cases, or symptomatic cases would be similar.
We expect that business activity begins to recover during the third quarter as access the clinical research sites resumes gradually during the quarter, where they returned to 100% functionality.
At the beginning of the fourth quarter.
[noise] currently with the exception of China most of the company's offices are close and substantially all of the accusing employees are working remotely.
Caused this is also the case with our clients business development and execution activities, especially when they require face to face interaction had been inhibited.
We assume that commercial activity gradually resumed throughout the second and third quarters and returns to normal by the beginning of the fourth quarter.
[noise] currently approximately 80% of our clinical research sites are in accessible.
We assume the number of inaccessible sites will average about 70%.
Through the second quarter.
For the third quarter, we expect an average of 35% of sites to be an accessible with all sites open and accessible by the beginning of the fourth quarter.
Based on those assumptions, we are revising our full year twentytwenty guidance ranges.
[noise] full year revenue was now expected to be between 10 billion.
$600 million to $10.925 billion.
The new revenue guidance includes an unfavorable 75 million dollar impact to reflect FX rates as of April 24.
For full year profit, we expect adjusted EBITDA to be between 2.200 billion and 2.300 billion.
And we expect adjusted diluted EPS to be between.
$5.75 per share and $6.10 per share.
This guidance assumes foreign currency rates at April 24th 2020 remain in effect for the rest of the year.
Now turning to guidance for the second quarter of 2020.
Consistent with the assumptions that we laid out for full year guidance, including the assumption that business starts to return to normal in some parts of the world in the third quarter.
We are expecting to second quarter, we'll have the biggest impact from covert 19, representing approximately half of the expected total impact for the year.
Assuming FX rates in April 24th 2020 remain constant through the end of the quarter, we expect revenue to be between $2.365 billion and $2.440 billion.
Note that FX is expected to be a headwind to revenue growth of approximately 150 basis points in the second quarter.
Adjusted EBITDA is expected to be between 445 million and $470 million and adjusted diluted EPS is expected to be between one dollar per share and $1.90 cents per share.
You should note in the second half of 2020 of the remaining impact from covert 19, we expect approximately 75% to be weighted to the third quarter.
So in summary continued strength and new business.
Wins position us well for returned to strong growth and the momentum we had earlier in the year.
We are utilizing our unique unique capabilities to help and fight against covert 19 globally.
We are engaging with clients around the world at a much higher level and frequency than ever before.
We are taking cost actions to mitigate the impact but have decided to prioritize operational capability in anticipation of the returned to normal.
Later this year.
We expect that migration back to normal business conditions by the beginning of the fourth quarter with the second quarter bearing most of the impact from covert 19.
And we are already planning for 2021 in anticipation of a return to our growth trajectory.
And with that let me hand, it back to the operator for QNX.
Thank you.
This time I would like to remind everyone in order to ask your question. Please press Star then the number one on your telephone keypad.
Your first question comes from the line of Chicago Peterson from Jpmorgan.
Your line is open.
Hey, Thanks appreciate all the color or I'm just wondering if he can talk to you know the mitigation efforts what percentage has actually moved too you know a virtual enrollment.
At this point and you know how comfortable the FDA is maybe switching trials midcourse Terry to more remote monitoring you could just talk to those dynamics.
Well. Thank you Bobby on your questions about 50% I would say.
To remote monitoring.
Obviously.
No. They had he has he should guidance on.
How we should.
More money to read the guidelines are extremely beneficial to provide.
The way to enable remote approaches.
To monitor patients and site data, obviously, you have to check that will take you got medications and so on.
No we do the the industry's largest central money bring organization.
And it's across five global locations its supposed basis. It supports our remote money through do you have hundreds.
Oh really successful years, if we could read the money to the sudden audience.
In which remote monitoring monitoring has been the key component before the crisis.
And no we complete thousands of remote monitoring successfully every year and the numbers loan.
So we were happy with.
Give me Doug.
There are no I, just decide that flaws, where remote monitoring of data is not always an option.
You know, even when technology and complexity of the dry and the regulatory infrastructure lousy sometime.
Not only.
Feasible.
Not all of the components of the joint also made money to remove.
So the key to money to successfully.
He's to apply the appropriate level of removed and onsite monitoring based on <unk>.
That's really the therapeutic understanding of the book of goal.
Along stronger than the extent technology. So we've got all these elements at scale, but not every trial lends itself to movement.
And then for follow up as we think about the recovery just wondering if you could give us some color on what type of work and could come back sooner you know phase one versus two three oncology versus other therapeutic areas and your to what degree you have to fight through sites that have been re purpose for more collision and bedside have been turned over you know how much of the headwind could that be as we think about.
Trial sites getting back up and running.
Obviously, we'll look we've got to over 100000 sites around the world. So the situations.
Side by side than you'd like to form to develop differences.
You know patient safety, obviously anymore color G.
No one is paramount because the pictures on the meal, especially the ones like trials.
We are you know you can you can just off the treatment course, so those are more likely to.
To do to come back faster.
No the activities that are hampered by by by the lack of access.
On site stocked up.
Patient enrollment.
And I'm just cause.
Money funds, we suggest among them.
Also beauty bought and as you know we've got to be backlog.
Of of the trial in stock options, so that that has.
The key engines for thank you I'll ask everyone to if you could just.
I'm concerned this fall into.
Two questions one that's it's an obvious follow up thanks.
Well.
Our next question comes from Bob Jones from Goldman Sachs.
And this happen.
Hey, Thanks for the questions I guess, maybe just to follow up on that that line of questioning Ari you know it yeah. If you look at the update from the end of March with the number of sites that you guys framed as an accessible.
I think real time, you're saying, 80% and then obviously expecting 100% back online by for Q.
Maybe just spending a little bit more time understanding whats informing you know the cadence of the recovery. Obviously you guys are are a lot closer to it then then us on this side of the world and so just trying to get a better sense of of really kind of how you're thinking through that type of.
That type of recovery, because I think on the surface obviously it does seem to.
To be fairly sharply kind of be shaped from here to the ended the year.
Well.
No what we're talking about views accessibility to onsite monitoring that doesn't necessarily mean that all of the activities related to the trial are going to be unable just because we can now access fee for you the sun.
Also have tough patients coming back for example in China.
Even one decide to go but not all patients are willing to to come in.
We would be the lingering concerns.
So that's number one member [noise].
Once the site.
The accessible to all CRH, then they couldn't going on for full.
All the talk that.
As I said in my introductory remarks, I'll, let me talk that we cannot do we move but the vast majority of the chug odd doesn't require us to go back on site.
And do the work that we would have gone.
Now the second quarter over quarter.
You know checking documentations, making sure everything you get older and so on TV, which is required and I'll clients or you told us they will require that wouldn't be except.
We move.
Money to revisit it's really to check on the patients and to do all the things that can do woke me, we still have to go on site. He got to work. So it's not bad does include a catch up if you will.
Given trial.
Good news and I think they'll clients understand that the overall cost. So the trial is going to go up because.
In addition to the remote money doing these things, which we've now we still have to do an on site visit you won't be the same onsite because a lot of yet.
I've been done remotely.
But there is an incremental piece of work that seems to be done.
Two into a full compliance. So this is part of why he looks like and shape.
Somewhat.
That's helpful I'll leave it there thanks sorry.
Thank you.
Your next question comes from Eric <unk> from Baird. Please go ahead. Your line is open.
Thanks, very much couple of topics first off in the in the early days or by two via there was a lot of talk about fixed price contracts and I I know that conversation died down overtime, but I am curious to the extent that you implemented fixed price contracting what are the impacts on those contracts in the current environment.
And secondarily or as an add on I'm curious if you have any early views on what change orders will look like over the next year or so.
Net negative net neutral net positive just just your best guess on what happens to the total.
Book of business compared to original expectations, and what you might need to go back to clients for thanks.
Thank you Eric Okay, I think its a.
Good question, but look when we said it strikes I think you could be.
It took off and we'll see Thrace right.
We don't have any cost like it's one price for everything.
Part of the contract that Doug are based on in specific.
Milestone being that she will be changed for thesis, but specific value to be paid.
Now all using the old contracts have caveat out how circumstances and look all clients want the trial to two beacon boxes. So they understand.
There are changes the schools that are being discussed.
You know a fixed prices is assuming the site.
I just can't actually before if you cannot be per phone. Then you know there's no. There's no we've seen the contractual obligations. So how can scope changes I'm not I understand will fluctuate council on but we've done a concern for us.
With respect to the book of business.
In aggregate.
[laughter] RFP froze as I said earlier or essentially flat.
Through a not doesn't 19, whether these $2 or in volume.
And as you know.
Got it 90 was it was a real real record year.
Our total R&D pipeline.
He is up mid teens year over year.
And our 45 pipeline for the next 12 months. He is the largest qualified pipeline we've ever had.
So the message I'm trying to San Antonio and frankly, while bite, we see very easy to conclude that.
We owe cells are.
Somebody to do we do you see the very resilient industry, the pharma industry and as they said before it's not going away anything.
I think you know people would've liked the bus to target pharma company.
These folks hopefully we received and people are possible I'm, just saying how crucial drug discovery.
And.
Frank in every we are.
Very confident.
I'm going to 22001, we are this is why you decided not to.
Full through operational kit to be even.
Many of our employees on essentially.
You know on home not not months ago utilized.
Decided we want to take care of them because we've got some expectations for 2021. He's also why we've decided to engage with the leadership team.
Now, we really started planning for 221, because again, we have good visibility on the bulk of it.
Thanks, Doug.
Okay.
Your next call comes from the line of John Kreger from William Blair. Your line is open.
Thanks, very much I already mentioned a number of things you've been able to do that helped mitigate the crisis like remote monitoring and virtual visits and tell others. That's just curious in your view as you move to the recovery phase lets say next year.
Do you think any of these things are going to sort of be structurally adopted by sites and clients or are you getting them, primarily it's just temporary a ways to mitigate that crisis. Thanks.
Yeah, I mean look we.
No long before the crisis has been advancing.
Our virtual firewall platform.
And she will be was lead by lifted.
Last year, and which for which we having a lot of demand.
Right now no. Many many clients going to ask whether we can transition now it's hard to know to tidied up.
You know the middle of the trial.
The water do we need to do we can and because of the accelerating development. So.
With that you took the trend we continue and certain.
But you will always need a physical visits as well okay. There's no no we around these <unk>.
Virtual trial means that.
All the pieces that can be done with multi we'd be done removed.
The patients has to.
Interact with their physician and to the degree they could be tele health they'll do that but the we'd be easy going corrections as well. So yes, we do your question yes.
People and accelerate the way to thinking about.
No.
Going forward.
So yeah, I mean look.
That's true I know, which will look you've got the unit price for a remote monitoring you do less than standard no inputs insight you wouldn't that there's less effort is no. We also less but through expense because as you know there's no. There's no trouble for example to decide.
On the open ended is more the time and more productivity.
And you will again I've said before in person site visits are still required even virtual trials.
To meet the schools, they felt very patient criteria and field.
I'll do the standards the regulatory standards change, we seem to verify the schools they either.
And so yeah. I mean, you tried a budget is actually doing the conference of the crises are they said before probably all going to go up.
Not down for now.
Great. Thank you.
Your next question comes from Patrick Donnelly from Citi.
Okay.
Great. Thanks already maybe just on the task business. It seems like that's proving pretty durable during during these uncertain times can you just talked through recent trends conversations with customers. There and then just expectations kind of through this and then again on the other side. It feels like we have a pretty good handle on the R&D business, you're expecting that acceleration on the back end can you just talked about the pace.
Faster in the year and then again on the other side of this as well.
That's.
Good.
And different peaking in each area of the business that we couldn't hear the puts parts of your question attached to it and sorry.
With that business, Okay, yes, yes.
Well no I mean again I just want to remind you just got business recruiting or can be divided into three foods.
Which is our Vicki.
Legacy I am as info business.
And then you've got.
Technology business, and then you've got mm technology that maybe because and then you've got the real world.
Business.
So with respect to information on the demands and our ability to supply.
Oh, Oh, the information has been.
Anything has had little uptick.
In the middle of the crises and once again this is a business that you still we can be flat.
HM.
No it's subscription base licensees.
And he is more than 90% are encouraging.
So that that these is entitled Dot.
Hmm.
Part of the business that.
On the real world side that based on they should level data and so on these intact the parts of the business that's field.
Prospective.
Study more feed or more keen to be ideas business and does it require.
A site visits that I've seen either type of characteristics and has that it'll be some headwind.
As a result for the crises.
The technology and that it these businesses basic Dr. leverage is also a licenses and recurring business.
What you true frankly, <unk> business is that.
The the business that requires that will marketing and sales.
That requires face to face in direction, the it's not to be business Franke buddies.
You know, it's actually worked really coming to a whole could you just can't have.
Meetings with doctors you can have the conferences, where all the older compliance meetings and so on take place.
And it's very hard to do remotely youre, making.
I think we love to embrace always to what percent of that business has been moved to whether you know type format.
But it's clearly not the same thing and so that that that is gonna be affected.
But again, it's a very small pause.
Of the global.
So yes that is widens like inside.
Then on awesome.
With respect to.
So I can talk the business, which is.
Platform.
With crossed the one haulage cost to the Mark over 100 wins.
We could do for you lost success, where we need to us up hutongs against the competition.
We are happy with a handful of exceptions.
Generally speaking you're not seeing any slowdowns.
In the blended patients actually weve seen acceleration.
We went live in the middle of the crisis for several deployments.
That was very successful license from the year nice feedback from clients.
The demand for remote detailing continues to rise with the we'll see.
Remove daily which is the most secure a.
Compliant platform in the spring.
We also launched in Q1 now compliance solution the commercial space.
We also launched HCP engagement management, which already has full wins in Q1 is strong pipeline. So the technology platform business.
We've not seen any slowed down even on the development from.
Now they are all you know projects on that he keeps we've got the movie to consulting projects all of that I've always you know.
These delayed.
And some of the business development activity.
It's just be boosted the right because the meetings can take place and it goes declines themselves off somewhat on a whole with respect to.
Focuses of somewhat discretionary.
Project. So that obviously is a headwind to the rest of the your food fourth quarter in first quarter next year and again. These are smaller parts of the does it.
Thank you.
That's helpful. Thanks, sorry.
Your next question comes from Sandy Draper from Suntrust. Your line is open.
Thanks, very much for taking the question and just.
With regards to time of the via a quick when I think for from Mike on the this delay of the share the halting of the share repos, what is sort of that's the key factors that that open that back up to you is it really if you hit your fourth quarter everything is fully ramped back up then you go back do you want to see a couple of quarters is how should we think about the going back to.
A more normalized capital deployment strategy, where did the factors that go into that decision. Thanks.
Sure. Thanks for the question.
You know as we mentioned we did we did repurchase 321 million of our stock in the first quarter and that all occurred largely before the crisis.
Including a a chunk that we participated in a secondary offerings by our sponsors I think you know we're gonna be judicious with respect to capital deployment, obviously manage our liquidity as a as a priority.
I mentioned in the prepared remarks, we've not seen any disruption to or delays and collections. At this point, we're continuing to manage that closely and carefully we've got $1.4 billion on our one point.
5 billion dollar facility, that's a undrawn so puts us in a very good liquidity.
Spot, but the same time, obviously with declines in EBITDA bridge ratio Yeah. It was picked up a bit we're going to monitor that carefully.
We prioritized keeping our employee base and a great place and not impacting based compensation in any way in anticipation of a big.
You know delivery task as as things come back to normal and I think that on share repurchases will just you know continuing to monitor a as we get through the prices what the prudent time to reenter the market, obviously, we would love to be buying shares at the at the current levels.
The same time are gonna be very judicious with our capital allocation, whether it's M&A share repurchase or Capex and and I think will you know logically find the most prudent time to reenter when we get through to the other side.
Great. Thanks for answering the question.
If you want one more question many things upon for one more quickly.
Right.
[noise]. Our final question comes from Shlomo Rosenbaum from Stifel. Your line is open.
Hi, Thank you very much for taking my question to already can you talk a little bit more about how billing works in the current environment or on the CR oversight of people can't get into the sites.
There are a portion of what did you that's billable call. It for portions not billable and then just to clarify is part of this when they actually have to go back in physically the cost of.
Dead additional cost you expected to be largely borne by the clients versus being borne by the company is that correct.
Thanks, Phil with Yeah. The second part of your question. Yeah, obviously are they said before the or as a result of the crisis.
Changes of scope to the trials and that include.
Publication, who declines as to how do we handle.
That incremental work that needs to be done.
I see the first question I wasn't sure I understood. The practical the actual the way that the feeling a little might you have insights on that yeah. I mean, I think you know bear in mind that you know revenue was is driven by a percentage of completion not so much the billing.
But to the extent that we're able to.
Complete tasks and the ordinary course in progress toward completion.
You know, we're able to build that in some cases, if we have milestones that we actually physically cannot hit because of factors that are outside of our control in some cases, we have to have that conversation are having those conversations with clients that allow us to.
Bill and collect.
In cases, where we're just you know stuck on not being able to hit up a predetermine milestone that didnt anticipate this kind of pandemic. So we haven't seen a disruption at this point and we're continuing to monitor we have a great roadmap in China where sites.
Our now reopening and we've not seen really any disruption of note at all anywhere in the billing and collections front, including in the RMBS business.
Thank you.
Yeah. Thanks for taking the time to join US today, everyone and we look forward to speak Andy we're getting on our second quarter 2020 earnings cool jet and our valuable to the rest of it I used to take any follow up questions that you might have thank you.
[noise]. This concludes today's conference call you may now disconnect.
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