Q2 2021 PPD Inc Earnings Call

Good morning, and welcome to P. P D second 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 Tracey creamy Vice President and head of Investor Relations for P. P. D. Mitch creamy you may begin.

Good morning, everyone.

And thank you for joining our second 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.

Certainties that could cause material differences and our actual results.

Please refer to our 2020 annual report on form 10-K for a discussion of these risks.

With the exception of revenue all references to income statement results are on and non-GAAP basis.

I would also.

And I'm from reminds you of a few important details which are consistent with previous earnings calls.

When referring to our financial performance will be doing so on and ASC 606 basis.

And when referring to our commercial performance, including metrics related to net authorizations and backlog will be doing so.

On a historical ASC 605 basis to maintain comparability with prior periods.

Lastly, due to the pending transaction between P. P D and Thermo Fisher scientific I would like to point out that we will not be conducting a Q&A session. Following our prepared remarks today.

And with that I'll turn the call over to David.

Thank you Tracy and good morning, everyone.

Thank you for joining us today on our second quarter, 2020.1 call.

I am pleased to report that we had another strong quarter of performance across the board and are now marking 7 consecutive quarters of solid financial.

Performance as a public company.

We are excited about the proposed merger with Thermo Fisher scientific which is expected to be completed by the end of 2021.

Until then it is business as usual PPD and our teams are continuing to fire on all cylinders and.

I'm very proud of our colleagues around.

And the globe for their hard work and commitment to the high quality levels of service PPD is known for.

Let me share a few second quarter highlights.

We delivered year over year, net authorizations growth of 58% and a net book to bill ratio of 1.5.

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We realized 56% revenue growth with our clinical and laboratory services segments, each up significantly either.

I'd note that this is on top of revenue growth and the second quarter of 2020 despite.

The onset of the pandemic last year.

And we delivered year over year EBITDA growth of 32%.

Lastly, our balance sheet continues to strengthen as we further reduced our net leverage ratio to 3.4 times as of quarter and.

With a long trend line of robust new business Awards.

Kids and continued improvement and site based activity. It is critical that we are staffed to effectively resource our customer studies.

To that and we now stand at more than 28000 colleagues globally reps.

Representing 15% year over year growth and our employee footprint.

With our long tenured employee base and infusion of top talent and strong training programs. Our best in class team remains well positioned to service our record ending backlog, while our expertise across priority development areas continues to grow.

Such as cell and gene therapy.

Therapy and vaccines.

In addition to employee growth, we continue to expand our facilities footprint and capacity ahead of demand.

In May we held the Grand opening for our previously announced 67000 square foot multipurpose lab and Suzhou China.

We also announced plans to expand our GMP laboratory and Athlone Ireland.

Both significantly increasing the size of our GMP facility, and adding cell and gene therapy to the locations portfolio of services.

Looking ahead.

I'm optimistic about the future of clinical.

Research and with strong underlying industry fundamentals, including cutting edge scientific and technology advancements and robust customer funding.

The investments that we're making and digital technologies real world evidence.

And reducing site burdens will enable trials.

And to be even more patient centric long term.

It's an exciting time and the industry and as I look ahead to our expected acquisition by Thermo Fisher I'm excited about the possibilities to meaningfully impact the development and delivery of life changing medicines.

I'll now hand, it over to Chris.

To go into more details on our financial results.

Thanks, David Good morning, everyone similar.

Similar to last quarter I'll dive right into our results.

And the commercial front net authorizations grew 58, 4% over quarter 2 of last year with double digit growth and both the clinical and lab.

Segments.

The continued solid performance across the business contributed to our net book to Bill ratio of 155 times.

We closed the quarter with record ending backlog up 22, 3% year over year.

With respect to the P&L quarter, 2 revenue grew 55.8.

And then over last year underpinned by 59, 5% growth and clinical and 47% growth and labs.

Adjusted EBITDA growth for the same period was 32, 4%.

Our revenue growth outpaced adjusted EBITDA growth, primarily as a result of the timing of certain disagree.

8 per soft items and quarter 2 and.

And the continued higher mix of indirect revenue on Covid studies.

Which has continued to result in and optically lower adjusted EBITDA margin.

Excluding indirect and on a year to date basis, the first half year on year growth rates for revenue and adjusted EBITDA are relatively aligned.

Greek rounding out the P&L adjusted EPS grew 56% year on year.

239 per share.

Turning to the balance sheet, we closed the quarter with cash of $949 million.

With respect to our liquidity, our cash balance and available revolver capacity increased their total.

And be positioned to 1.55 billion as of June 30th of 56, 1% from the same time last year.

Our net leverage ratio at June 30th improved to 3.4 times trailing 12 month adjusted EBITDA down from 3.8 times at March 31st.

Liquid and 4.5 times at June 30th 2.

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Before wrapping up I'll Echo Davids comments about being incredibly proud of how our colleagues across the organization.

To deliver for our customers quarter after quarter.

Truly exhibiting the operational excellence for which PPD is known and.

Highlighted and recent accolades.

With the healthy CRO industry backdrop, our momentum and the enhanced capabilities of the combined company. We remain excited about our plans to join Thermo Fisher and the resulting opportunities to bring new medicines to market faster and more efficiently.

And with that operator.

And this will conclude the call.

Thank you ladies and gentlemen. This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation.

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