Q2 2024 Medpace Holdings Inc Earnings Call
Operator: Good day, ladies and gentlemen, and welcome to Medpace's second quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode.
Okay.
Speaker Change: Good day, ladies and gentlemen, and welcome to Mad Phase second quarter 'twenty to 'twenty four earnings conference call.
Speaker Change: At this time all participants are in a listen only mode.
Operator: 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.
Speaker Change: Later, we will conduct a question and answer session and instructions will follow at that time.
As a reminder, this call maybe recorded.
Norm: Now I'd like to introduce your host for today's conference call norm or Mad place director of Investor Relations you may begin.
Lauren Morris: Good morning, and thank you for joining Medpace's second quarter 2024 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.
Speaker Change: Good morning, and thank you for joining med piece of second quarter 2024 earnings Conference call and 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.
Lauren Morris: 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 a replacement for the comparable GAAP measures, but we believe these measures help investors gain a more complete understanding of results.
Speaker Change: Statements within the meaning of the private Securities Litigation Reform Act of 1995 six.
Speaker Change: 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.
Speaker Change: These factors are discussed in our Form 10-K, and other filings with the SEC.
Speaker Change: 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.
Speaker Change: 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.
Speaker Change: The Asian 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.
Lauren Morris: 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, everyone.
August James Troendle: The slides are available in the Investor relations of our website at Investor doesn't that tastes dot com with that I would now like to turn the call over to August Troendle.
August James Troendle: Net new business awards entering backlog were down in Q2 compared to the same quarter of 2023. This was primarily the result of significantly elevated project cancellations, including backlog cancellations that were more than 2x the quarterly average of the calendar year 2023. Gross bookings were strong, and had the cancellation rate been equal to the average quarterly rate in 2023, our net booked to bill would have been 1.24. However, cancellations were disproportionately high in the month of June, with April and May cancellations in line with our expectations for a strong quarter.
August James Troendle: Good day everyone.
Speaker Change: Net new business awards entering backlog were down in Q2 compared to the same quarter of 2023.
This was primarily the result of significantly elevated project cancellations, including backlog cancellations that were more than two X. The quarterly average of the calendar year 2023.
Speaker Change: Gross bookings were strong.
Speaker Change: <unk> had the cancellation rates equal to the average quarterly rate in 2023, our net book to Bill would have been 1.24.
Speaker Change: Cancellations were disproportionately high in the month of June with April and May cancellations in line with our expectations for a strong quarter.
August James Troendle: Reasons for cancellations included reprioritization, impaired sponsor liquidity, and acquisition of one sponsor by a large pharma with subsequent decision to move the work to an existing preferred provider, as several of the cancellations involved awarded work not yet recognized in backlog. We also anticipate a depressed book-to-bill ratio in Q3. The business environment remains robust.
Speaker Change: Reason for cancellations included re prioritization.
Speaker Change: Impaired sponsored liquidity and.
Speaker Change: An acquisition of one sponsored by large pharma with subsequent decision to move to work to an existing preferred provider.
Speaker Change: And several of the cancellations involved awarded work not yet recognized in backlog. We also anticipate a depressed book to bill ratio in Q3.
Speaker Change: The business environment remains robust and we continue to be optimistic about our future growth, but it may take a few quarters to replenish the flow of opportunities converting into backlog at a more normalized rate.
August James Troendle: And we continue to be optimistic about our future growth, but it may take a few quarters to replenish the flow of opportunities converting into backlog at a more normalized rate. I should stress that despite the challenged backlog growth, we continue to anticipate industry-leading organic revenue growth and profitability. In fact, we are raising our 2024 EPS guidance, as will be discussed by Kevin. With that, I'll turn the call over to Jesse. Thank you, August. Good morning, everyone.
Speaker Change: I should stress that.
Speaker Change: Despite the challenge backlog growth, we continue to anticipate industry, leading organic revenue growth and profitability.
Speaker Change: In fact, we are raising our 2024 EPS guidance as will be discussed by Kevin.
Speaker Change: With that I will turn the call over to Jesse.
Jesse: Thank you all this good morning, everyone.
Jesse J. Geiger: Revenue for the second quarter of 2024 was $528.1 million, which represents a year-over-year increase of 14.6%. Net New Business Awards entering backlog in the second quarter, which were influenced by higher cancellations, decreased 4.1% from the prior year to $551 million and resulted in a 1.04 netbook to bill.
Jesse: Revenue for the second quarter of 2024 was $528 1 million.
Jesse: Which represents a year over year increase of 14, 6%.
Jesse: Net new business awards entering backlog in the second quarter.
Speaker Change: Which were influenced by higher cancellations decreased four 1% from the prior year to $551 million.
Speaker Change: This resulted in a 1.04 net book to Bill.
Speaker Change: Ending backlog as of June 32024 was approximately $2 9 billion.
Speaker Change: An increase of 13, 7% from the prior year.
Speaker Change: We projected approximately 1.585 billion of backlog will convert to revenue in the next 12 months.
Speaker Change: And backlog conversion in the second quarter was 18, 2% of beginning backlog.
Jesse J. Geiger: Ending backlog as of June 30, 2024, was approximately $2.9 billion, an increase of 13.7% from the prior year. We project that approximately $1.585 billion of backlog will convert to revenue in the next 12 months. And backlog conversion in the second quarter was 18.2% of beginning backlog. Now, 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 2024. Kevin?
And 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 2024.
Kevin M. Brady: Thank you, Jesse, and good morning to everyone listening in. As Jesse mentioned, revenue was $528.8 million in the second quarter of 2024. This represented a year-over-year increase of 14.6%. Revenue for the six months ended June 30, 2024 was $1.04 billion and increased 16.1%. EBITDA of $112.3 million increased 34.2% compared to $83.6 million in the second quarter of 2023. Year-to-date EBITDA was $227.9 million and increased 29.1% from the comparable prior year period.
Speaker Change: Kevin.
Kevin: Thank you Jessie and good morning to everyone listening in.
Kevin: As Jesse mentioned revenue was $528 1 million in the second quarter of 2024.
Kevin: This represented a year over year increase of 14, 6%.
Kevin: Revenue for the six months ended June 32024 was 1.04 billion and increased 16, 1%.
Kevin: EBITDA of $112 3 million increased 34, 2% compared to $83 6 million in the second quarter of 2023.
Kevin: Year to date EBITDA was $227 9 million.
Kevin: Increased 29, 1% from the comparable prior year period.
Kevin M. Brady: Even a margin for the second quarter was 21.3% compared to 18.1% in the prior year period. Year-to-date EBITDA margin was 21.9% compared to 19.7% in the prior year. Even a margin benefited from direct service activities, Continued Productivity, and Foreign Exchange.
Kevin: EBITDA margin for the second quarter was 21, 3%.
Kevin: Paired to 18, 1% in the prior year period.
Kevin: Year to date EBITDA margin was 21, 9% compared to 19, 7% in the prior year.
Kevin: EBIT margin benefited from direct service activities.
Kevin: <unk> productivity and foreign exchange.
Kevin M. Brady: In the second quarter of 2024, net income of $88.4 million increased 44.7% compared to net income of $61.1 million in the prior year period. That income grows ahead of EBITDA growth was primarily driven by higher EBITDA and interest, partially offset by a higher effective tax rate in the quarter. That income per diluted share for the quarter was $2.75 compared to $1.93 in the prior year period.
Kevin: In the second quarter of 2024 net income of $88 4 million increased 44, 7% compared to net income of $61 1 million in the prior year period.
Kevin: Net income growth ahead of EBIT growth was primarily driven by higher EBITDA and interest income.
Partially offset by a higher effective tax rate in the quarter.
Kevin: Net income per diluted share for the quarter was $2 75.
Kevin: Compared to $1 93 in the prior year period.
Kevin M. Brady: Regarding customer concentration, our top five and top ten customers represent roughly twenty-two percent and twenty-nine percent, respectively, of our year-to-date revenue. In the second quarter, we generated $116.4 million in cash flow from operations, and our net day sales outstanding was negative 58.1 days. We did not repurchase any shares during the second quarter.
Speaker Change: Regarding customer concentration our top five and top 10 customers represent roughly 22% and 29% respectively of our year to date revenue.
Speaker Change: In the second quarter, we generated $116 4 million in cash flow from operating activities and our net days sales outstanding was negative <unk> 58, one days.
Speaker Change: We did not repurchase any shares during the second quarter.
Kevin M. Brady: As of June 30, 2024, we had $510.9 million in cash and $308.8 million remaining under our share of purchase authorization. Moving now to our updated guidance for 2024. Full year 2024 total revenue is now expected in the range of $2.125 billion to $2.175 billion, representing growth of 12.7% to 15.3% over 2023 total revenue of $1.89 billion. Our 2024 EBITDA is now expected in the range of $430 million to $460 million, representing growth of 18.6% to 26.9% compared to EBITDA of $362.5 million in 2023.
As of June 32024, we had $510 9 million in cash.
Speaker Change: And $308 8 million remaining under our share repurchase authorization program.
Kevin M. Brady: We forecast 2024 net income in the range of $361 million to $383 million. This guidance assumes a full year 2024 effective tax rate of 15 to 16%, interest income of $24 million, and 32.1 million diluted weighted average shares outstanding. There are no additional share of purchases in our guide.
Moving now to our updated guidance for 2024.
Full year 2020 for total revenue is now expected in the range of $2 125 billion to.
Speaker Change: To to $1 75 billion.
Speaker Change: Representing growth of 12, 7%.
Speaker Change: The 15, 3% over 2023 total revenue of $1 $8 9 billion.
Speaker Change: Our 2020 for EBITDA is now expected in the range of $430 million to $460 million.
Speaker Change: Representing growth of 18, 6% to 26, 9% compared to EBITDA of $362 5 million in 2023.
Speaker Change: We forecast 2024 net income in the range of 361 $9 million to $383 million.
Speaker Change: This guidance assumes a full year 2024 effective tax rate of 15% to 16%.
Speaker Change: Interest income of $24 million.
Speaker Change: And $32 1 million diluted weighted average shares outstanding.
Speaker Change: There are no additional share repurchases in our guidance.
Operator: Earnings per diluted share is now expected to be in the range of $11.24, to $11.93. Guidance is based on foreign exchange rates as of June 30, 2024. With that, I will turn the call back over to the operator so we can take the questions. Thank you. Ladies and gentlemen, to ask a question, please press star 1-1 on your telephone and then wait to hear your name announced.
Speaker Change: Earnings per diluted share is now expected to be in the range of $11 24.
Speaker Change: To $11 93.
Speaker Change: Guidance is based on foreign exchange rates as of June 32024.
Speaker Change: With that I will turn the call back over to the operator, so we can take your questions.
Speaker Change: Thank you.
Speaker Change: Ladies and gentlemen to ask a question. Please press star one on your telephone and then wait to hear your name announced to withdraw your question. Please press star one again.
Operator: To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Eric Coldwell with Baird. Your line is open. Thank you. Good morning.
Speaker Change: Please stand by while we compile the Q&A roster.
Speaker Change: Our first question comes from the line of Eric Coldwell with Baird. Your line is open.
Eric White Coldwell: I wanted to obviously dive into the cancellations. I was hopeful you could provide maybe some more details around perhaps the number of cancellations or, you know, maybe relative sizing. Were there any that were particularly large here?
Yeah.
Eric White Coldwell: Thank you and good morning, I wanted to obviously dive into the cancellations I was hopeful you could provide maybe some more details around.
<unk> the number of cancels or.
August James Troendle: And, you know, I'm curious if there's any way you could help us frame your expectations for the 3Q cancellations experience or what you're expecting at this juncture for a reasonable netbook to bill range, given that some of these cancellations are for awards that had not previously been placed into backlog. Thank you. Yeah, sure, Eric. This is August.
Speaker Change: Maybe relative sizing, where there any that were particularly large here and.
Speaker Change: I'm curious if there's any way you could help us frame your expectations for the <unk> cancellations experience or what you're expecting at this juncture for a reasonable net book to Bill range given that some of these cancels are for awards that had not previously been placed into backlog.
August James Troendle: It's surprising, you know, usually, you have a big cancellation quarter; it's a couple driving things. And I don't think this was far off; it was several that were, were large, but it wasn't just one or two, you know, very large cancellations. So it was pretty evenly distributed in that way, although, you know, some of the bigger ones do, you know, drive a lot of it.
Speaker Change: <unk>.
Speaker Change: Yes sure.
Speaker Change: As August.
Speaker Change: It surprised usually.
Speaker Change: You have a big cancellation quarter. Its a couple things and I don't think this was far off it was several debt.
Speaker Change: We are large but it was it wasn't just one or two very large cancellation. So it was pretty.
Speaker Change: Distributed that way, although some of the bigger ones do.
Speaker Change: Drive a lot of it.
August James Troendle: And again, they were kind of across the board in terms of, you know, what the rationale for the cancellation was, and primarily that was kind of a reprioritization compound, not meeting expectations, don't, you know, want to focus on other projects. And yeah, the cancellations are kind of on programs, and there were cancellations that involved just sort of things that were awarded but hadn't gotten to the backlog. We were getting very close to things that were in backlog, but we didn't have all of the backlog recognized yet, you know, under our policy. So it does cause kind of a gap there that will impact our Q3 bookings. But it depends upon the continuation of cancellations. They were kind of focused in Q2.
Speaker Change: And again, they were kind of across the board.
Speaker Change: In terms of what the rationale for the cancellation was and primarily that's kind of a re prioritization compounds not meeting expectations don't want to focus on other.
Other projects.
And yes.
Speaker Change: Is it cancellations you know we're kind of on programs and there were cancellations that involve just sort of things that were awarded but hadn't got into backlog. We are getting very close and things that were in backlog, but we didn't have all of your backlog recognized yet.
Speaker Change: Our policy.
Speaker Change: So it does cause.
Speaker Change: Kind of a gap there.
Speaker Change: That will impact our Q3 bookings, but it depends upon the.
Speaker Change: Continuation of cancellations they were kind of focused in.
August James Troendle: I don't see a reason why they should continue elevated, but I also don't have a good rationale for why we have cancellations that are twice the kind of run rate in Q2. So I think cancellations are always kind of that. Unknown, and can happen at any point.
Speaker Change: In Q2.
Speaker Change: I don't see a reason why they should continue elevated but I also don't have.
Speaker Change: Good rationale for why they.
Speaker Change: Why why we have cancellations that are twice kind of a run rate.
Speaker Change: And in Q2 so.
Speaker Change: I think cancellations are always kind of that.
Speaker Change: Unknown.
August James Troendle: We have reasonable visibility on awards coming along, and awards looked good, and we're, you know, getting to the point of backlog recognition. It was cancellations that caught us by surprise, and, you know, they always do in another quarter, but yes, we already see a challenge to Q3 based on the cancellations that we had in Q2 that will impair your recognition of backlog from projects that were cancelled.
Speaker Change: Can happen at any point, we have reasonable visibility on <unk>.
Speaker Change: Towards coming along and awards looked good in.
Speaker Change: We are.
Speaker Change: Getting to the point of <unk>.
Speaker Change: Backlog recognition.
Speaker Change: It was the cancellations that caught us by surprise and they always Canada and another quarter, but.
Speaker Change: But yes, we already see.
Speaker Change: A challenged Q3 based on the <unk>.
Speaker Change: Cancellations that we had in Q2 that will impair.
Speaker Change: Your recognition of backlog from projects that were canceled now.
August James Troendle: I realized that, You know, very difficult to forecast the remaining cancellation experience this quarter, as well as your gross bookings experience this quarter. But just to help level the playing field, are you, at least at this point, initially thinking of a book to build that is similar to 2Q's experience? You know, something maybe a little better, but not quite in that typical 1, 2 plus zip code?
Speaker Change: I realize it.
Speaker Change: Very difficult to forecast.
Speaker Change: The remaining cancellation experienced this quarter as well as your gross bookings experienced this quarter.
Speaker Change: But just to help level set are you at least at this point initially thinking of book to Bill that is similar to <unk> experience.
Speaker Change: Something maybe a little better but not quite in that typical 1% to plus ZIP code or are we talking of book to bill that could.
August James Troendle: Or are we talking about a book to build that could, you know, at this juncture, could reasonably look like something lower than 2Q's experience? Well, look, you know, in early June, I thought we were gonna have a book to bill of at least 1.2. So, you know, it's late in the quarter that you really kind of round things out and know where they are. So that's really difficult to say. I would hope it's above the current quarter. I think a 1.2 is, you know, probably not in the cards.
Speaker Change: At this juncture could reasonably looked like something lower than <unk> experience.
Speaker Change: Well look.
Speaker Change: <unk>.
Speaker Change: In early June I thought we're going to have a booking book to bill.
Speaker Change: At least one point too.
Speaker Change: So.
Speaker Change: Yeah.
Speaker Change: It's late in the quarter that you really kind of round things out and know where they are.
Speaker Change: So thats really difficult to say I would hope its above the current quarter I think at 1.2 is.
Speaker Change: Probably.
Eric White Coldwell: But so I think you're kind of setting yourself up in that kind of range is where I would expect. Somewhere like we booked this current quarter at 1.04, to hopefully get, you know, closer to 1. Okay, thank you very much.
Speaker Change: Not in the cards, but so I think youre kind of <unk>.
Speaker Change: Setting in that kind of range is where I would expect so.
Sure.
We booked as current quarter, one point on Florida.
Speaker Change: Hopefully getting closer to the one point too.
Operator: I'll let others jump in. Thanks. Thank you. Please stand by for our next question. Our next question comes from the line of Max Smock with Wim Blair. Your line is open. Hi, good morning.
Speaker Change: Okay. Thank you very much I'll, let others jump in thanks.
Speaker Change: Thank you.
Speaker Change: Please standby for our next question.
Speaker Change: Our next question comes from the line of Max Smock with William Blair. Your line is open.
Maxwell Andrew Smock: Thanks for taking our questions. Maybe one here for me on win rate. You mentioned you had some cancellations that were associated with an acquisition where the sponsor ended up moving some, I think you said, work to a larger player. And you mentioned gross booking seemed solid in the quarter, but any sort of update you can give us around how much of the booking shortfall, if any, was tied to maybe a step down in win rate?
Maxwell Andrew Smock: Hi, Good morning, Thanks for taking my questions. Maybe one here for me on win rate. You mentioned you had some cancellations that were associated with an acquisition were.
Speaker Change: Sponsor ended up moving some I think you said work to a larger player.
Speaker Change: You mentioned gross bookings seem solid in the quarter, but any sort of update you can give us around how much of the bookings shortfall. If any was tied to maybe a step down in win rate and did you see any sort of improvement in win rate after a bit of a step back that you took.
Maxwell Andrew Smock: And did you see any sort of improvement in win rate after the bit of a step back that you took in the first quarter here? No, the win rate was good, you know, not outstanding, but it came back, snapped back from, it was down a bit in Q1.
Speaker Change: Took in the first quarter here.
Speaker Change: No.
Speaker Change: Win rate was was good.
Speaker Change: Not outstanding but it came back snapback from was down a bit in Q1.
August James Troendle: The business environment again looks very good. I really think we're in a position to rebuild, you know, kind of that pipeline, you know, nicely. It's, you know, we kind of have a little bit of a gap here, but, you know, I don't see a long-term issue. And I, you know, we are, you know, our win rate is good. Our opportunities are good. I think, you know, it's hard. Look, you know, CEOs are always optimistic. I really am.
Speaker Change: The business environment again looks very good I really think we're in a position to rebuild.
Speaker Change: Kind of that pipeline.
Speaker Change: Nicely.
Speaker Change: We got kind of a little bit of gap here, but.
Speaker Change: I don't see them long term.
Issue.
Speaker Change: We we are in our win rate is good our opportunities are good I think.
Speaker Change: Yes.
Speaker Change: It's hard to look at CES, we're always optimistic.
August James Troendle: I'm not the kind of guy who, you know, tends to put a lot of fluff into it. But, you know, things really do look a lot stronger than this unfortunate bookings, you know, reflect. That's helpful, August. Maybe just put in some more color on that.
Speaker Change: Really am.
Speaker Change: I'm not the kind of guy who.
Speaker Change: It tends to put a lot of fluff into it but things really do look a lot stronger than this unfortunate bookings.
Speaker Change: Right.
Speaker Change: That's helpful. I guess, maybe just putting some more color on that.
August James Troendle: To kind of frame out what you're seeing on the business environment side, can you give us an update on how RFP flows and initial awards and 2Q trended and then any sort of initial look, I guess, at how these metrics are trending so far here in the third quarter? Yeah, RFPs were strong. I think they were up about 16%, you know, both sequentially and year over year. So it was, you know, really strong.
Speaker Change: To frame out what you are seeing on the business environment side can you give us an update on how RFP closed an initial awards and <unk> trended and then any sort of.
Speaker Change: Initial look I guess at how these metrics are trending so far here in the third quarter.
August James Troendle: We have, and again, you know, RFP numbers. I never, I don't like discussing numbers numerically because numerically isn't a good way to discuss RFPs, because you can have lousy RFPs and a lot of rehashed RFPs and a lot of searching for, you know, you know, them trying to line up things when it looks unlikely that the project is going to go forward. But we had a very, we have a very good pipeline of RFPs.
Speaker Change: Yes.
Speaker Change: If these were strong I think.
Speaker Change: They were up about 16%.
Speaker Change: Both sequentially and year over year. So it was really strong we have.
Speaker Change: And again RFP numbers I never.
Speaker Change: Discussing numerically because numerically isn't.
Speaker Change: A good way to discuss Rfps, because you can have lousy rfps and lot of rehashed rfps in a lot of searching for.
Speaker Change: Funding rfps to support.
Speaker Change: I.
Speaker Change: Trying to line up things when when it looks unlikely that the project is going to go forward.
August James Troendle: So I think that, you know, if you look at kind of a, you know, if you qualified them or, you know, graded them, I think we're, you know, it's not only a numeric increase in RFPs, but the quality of our, Again, our initial awards were strong in the quarter, and all the other metrics look good except cancellations. I mean, that's basically it.
Speaker Change: But we had very we have very good pipeline of Rfps. So I think that if you.
Speaker Change: You look at kind of <unk>.
Speaker Change: Qualified them or graded them.
Speaker Change: I think we are.
Speaker Change: It's not only a numeric increase in rfps, but the quality of Rfps.
Speaker Change: Again.
Speaker Change: Initial awards were strong in the quarter and.
Speaker Change: Everything that all the other metrics look good except cancellations that's basic.
August James Troendle: This is difficult, always difficult, you know, cancellations are always there as a... [inaudible] growth numbers on a, you know, gap basis in the meantime. Yeah, absolutely. And maybe just sneaking one final one here for me.
Speaker Change: Basically it is.
Speaker Change: Difficult always difficult cancellations.
Speaker Change: Are always there.
Unknown Executive: A possible downside, but you know, everything else looks good and I think that things will normalize and we will get back on to, you know, backlog growth, you know, rate stomp, but and and look, we're going to put up great growth numbers on, you know, gap basis in the meantime. Yeah, absolutely, and maybe just sneaking one final one here for me. You talked about, you know, third quarter bookings, obviously going to be depressed, maybe a step up off that one point of four.
<unk>.
Speaker Change: A possible downside, but.
Speaker Change: Everything else looks good and I think that things will normalize and we will get back on to <unk>.
Speaker Change: Backlog growth.
Speaker Change: Right.
Speaker Change: But.
Speaker Change: And look we're going to we're going to put up great.
Speaker Change: Growth numbers on GAAP basis in the meantime.
Speaker Change: Yes, absolutely and maybe just sneaking one final one here from me you talked about third quarter bookings, obviously going to be depressed maybe.
Maxwell Andrew Smock: You talked about, you know, third quarter bookings, obviously going to be depressed, maybe a step up off that 1.04. But is there any detail you can give us on the timeline for book to bill to move back above 1.2? And what that means for 2025?
Speaker Change: Maybe a step up off that one point up for but is there any detail you can give us on the timeline for book to Bill to move back above one point too and what that means for 2025 Im assuming the step up in revenue you called for is obviously off the table next year, but can you frame out the range of outcomes for how we should be thinking about revenue next year, given your commentary about it taking some time to it.
Unknown Executive: But is there any of you tell you can give us around the timeline for book to build to move back above one point two and what that means for 2025.
Unknown Executive: I'm assuming the step up in revenue you call for is obviously off the table next year, but can you frame out the range of outcomes for how we should be thinking about revenue next year, giving your commentary about it. Making some time to rebuild backlog.
Maxwell Andrew Smock: I'm assuming the step-up in revenue you called for is obviously off the table next year. But can you frame up the range of outcomes for how we should be thinking about revenue next year, given your commentary about it taking some time to rebuild the backlog? I think it's too early to talk about next year.
Speaker Change: We built backlog.
August James Troendle: And, you know, I think we will have some kind of view on that next quarter. And of course, we get to look at where things shake out and what it looks like, you know, like I said, you kind of see what is lined up for possible, you know, getting across the line, cancellations are always a wildcard, but you can kind of line up what is likely to get across the line. I think we'll have good, at least reasonable, insight into things normalizing in Q4. We still have a problem in Q4. I hope to be able to tell you that at the end of Q3. But I think it's a little bit too early to talk about the impact on 2025.
Unknown Executive: I think it's too early to talk about next year, and you know, I think we will have, you know, kind of as you on that next quarter, and of course we get to look at where things shake out and what it looks like. You know, I guess we see, you know, the next quarter, you kind of see what is lined up for possible, you know, getting across the line. I think we'll have good, at least reasonable, you know, insight is his things normalizing in Q4. We still have an improvement Q4; I hope to be able to tell you that.
Speaker Change: I think it's too early to talk about next year.
Speaker Change: We will have.
Speaker Change: Kind of a view on that next quarter and of course, we get a look at where things shake out and what.
Speaker Change: It looks like.
Speaker Change: As I said, we see.
Speaker Change: The next quarter, you kind of see what is lined up for possible getting across the line cancellations are always the wild.
Speaker Change: Wildcard, but you can kind of lineup what is likely to get across the line I think we'll have good.
Speaker Change: At least reasonable.
Speaker Change: Insight is things normalizing in Q4, we still have no problem in Q4, I hope to be able to tell you that.
Unknown Executive: At the end of Q3, but I think it's a little bit too early to talk about the impact on 2025. Except to say that I anticipate, I continue to anticipate better than industry growth, and you know, if we're going to continue to perform well, I do not think this is a prolonged pull back in. You know, and anything, you know. I mean, if it was rewards and opportunities were drying up, that's a much more concerning situation. You know, we've got some, you know, a group of projects that were moved, but I don't think that is predictive of the long term.
Speaker Change: At the end of Q3, but I think there's a little bit too early to.
Speaker Change: I talked about the impact on.
Speaker Change: 2025.
Maxwell Andrew Smock: Except to say that I continue to anticipate better than industry growth and that we're going to continue to perform well. I do not think this is a prolonged pullback in anything. You know, I mean, if it was awards and opportunities and the quality of life were drying up, that's a much more concerning situation. You know, we've got some, you know, a group of projects that were removed, but I don't think that is predictive in the long term.
Speaker Change: Except to say that.
Dissipate I continue to anticipate.
Speaker Change: Better than industry growth.
Speaker Change: We're going to continue to.
Perform well I do not think this is a prolonged pulled.
Maxwell Andrew Smock: You know, cancellations are, you know, random things, and we've got an upswing. I just don't think that's a pattern that's going to continue. Thanks again for taking our questions. Thank you. Our next question comes from the line of Tucker Rimmers with Jeffreys. Your line is open. Is that you?
Speaker Change: Pull back in.
Speaker Change: And anything I mean, if it was.
Speaker Change: Awards and opportunities, we're drawing up that's a much more concerning situation.
Speaker Change: We've got some.
Speaker Change: A group of projects that were removed, but I don't think that is predictive of the long term.
Unknown Executive: You know, I mean, cancellations are, you know, random things, and we've got an upswing. I just don't think that's a pattern that's going to continue.
Speaker Change: Cancellations are random things and.
Speaker Change: Got an upswing I just don't think that's a pattern that's going to continue.
Unknown Executive: Thanks again for taking our questions. Thank you.
Speaker Change: Got it thanks again for taking my questions.
Unknown Executive: Please stand by for our next question.
Speaker Change: Thank you.
Speaker Change: Please standby for our next question.
David Windley: Our next question comes from the line of talk of rumors with Jefferies; your line is open. That may might be Dave Winley was Jefferies. If you can hear me, can you hear me? We can hear you. So wrong code number. Sorry.
Speaker Change: Our next question comes from the line of Tucker Remmers with Jefferies. Your line is open.
Operator: It might be Dave Windley with Jefferies. If you can hear me, can you hear me? We can hear you. Okay, great. Thanks.
Speaker Change: Okay.
Speaker Change: So that may might be Dave windley with Jefferies.
David Howard Windley: You can hear me can you hear me.
Speaker Change: We can hear you okay great. Thanks.
So Ron code no sorry.
David Howard Windley: Sorry. A few questions. Thanks for taking my questions this morning. So the impact on bookings and backlog, you've guided revenue. I guess I'm wondering how we should think about revenue conversion in light of the fact that it sounds like some of these cancellations were either revenue generating, or about to be revenue generating. How does that impact your near-term revenue? Yeah, Dave, this is Kevin.
Unknown Executive: A few questions. Thanks for taking my questions this morning. So the impact to bookings and backlog, you've guided revenue.
Speaker Change: A few questions. Thanks for taking my questions. This morning, so the.
Speaker Change: The impact to <unk>.
Speaker Change: Bookings and backlog.
Kevin Brady: I guess I'm wondering how we should think about revenue conversion in light of the fact that it sounds like some of these cancellations or were either revenue generating or about to be revenue generating. How does that impact your near-term revenue? Kevin, you know, just in terms of 2024, we do feel pretty good about it. Certainly there's a little bit of headwind associated with some of those councils. We'll see how those programs kind of tail off and finish up, but we still feel good about revenue.
Speaker Change: Guided revenue I guess I'm wondering how we should think about.
Speaker Change: Revenue conversion.
Speaker Change: In light of the fact that it sounds like some of these cancellations were either revenue generating.
Speaker Change: Or about to be revenue generating.
Speaker Change: How does that impact your near term revenue.
Kevin M. Brady: Just in terms of 2024, we do feel pretty good about it. Certainly, there's a little bit of headwind associated with some of those cancellations. We'll see how those programs kind of tail off and finish up, but we still feel good about revenue. Now, we did take the midpoint of the guidance and the guidance range down a little bit. That was more indicative of pass-through activity and the decline that we saw in the first quarter. However, it did bounce back a bit in the second quarter.
Speaker Change: Kevin you want to yes, yes.
Kevin just in terms of 2024.
Kevin: We do feel pretty good about certainly there is a little bit of headwind associated with some of those cancels.
Kevin: Those programs.
Kevin: Kind of tail off and finish up.
Kevin Brady: Now we did take the midpoint of the guidance and the guidance range down a little bit. That was more indicative of the past directivity and the decline that we saw in the first quarter. It did bounce back a bit in the second quarter, but at the same time, it wasn't something that we could overcome the decline that we saw in the first quarter. But now we feel good about revenue, kind of the balance of the year and particularly on the direct service side. Again, there was a bit of headwind associated with these councils, but still feel good about where we are.
Kevin: Feel good about revenue now we did take the midpoint of the guidance and the guidance range down a little bit.
Kevin: Was more indicative of the pass through activity and the decline that we saw in the first quarter.
Kevin: It did bounce back a bit in the second quarter.
Kevin M. Brady: But at the same time, the decline that we saw in the first quarter wasn't something that we could overcome. But no, we feel good about revenue, the kind of balance of the year, in particular on the direct service side. Again, there was a bit of headwind associated with these cancellations, but I still feel good about where we are. OK. On the pipeline, I guess a couple of things that we've heard a little bit and not been sure exactly how much credit to put on them are that oncology as a therapeutic area is perhaps among the most volatile right now, perhaps more jockeying around of programs and intentions in that space that, you know, has been highly invested in and kind of crowded.
Kevin: But at the same time it wasn't something.
Kevin: Something that.
Kevin: We could overcome the decline that we saw in the first quarter, but now we feel good about.
Kevin: Revenue kind of the balance of the year in particular on the direct service side.
Kevin: Again, there was a bit of headwind associated with these cancels but still.
Unknown Executive: Okay. On the pipeline, I guess a couple of things that we've heard a little bit and not been sure exactly how much credit to put on them are that oncology as a therapeutic area is perhaps among the most volatile right now, perhaps more jockeying around of programs and intentions in that space that has been highly invested and kind of crowded. And then we also hear that there's quite a bit of price competitiveness. And I think we talked about some one-off kind of deep discount deals by some of the bigger CROs that you had seen in the first quarter.
Kevin: Still feel good about where we are.
Kevin: Okay.
Kevin: On the on the pipeline I guess, a couple of things that.
Kevin: We've heard a little bit and not been sure exactly how much credit to put on them are that.
Kevin: Oncology as a therapeutic area is perhaps among the most volatile right now perhaps more jockeying around us.
Kevin: Our programs and intentions in that space that has been highly invested in kind of crowded.
Kevin M. Brady: And then we also hear that there's quite a bit of price competitiveness, and I think we talked about, you know, some one-off kind of deep discount. I'm wondering, you know, if you're seeing more of that. Sounds like wind rate bounced back up, and so that's encouraging relative to that, on those two fronts. Is there any theme in oncology specifically, and is there a theme of large players being more price competitive?
Kevin: And then we also hear that theres quite a bit of price competitiveness and I think we talked about.
Speaker Change: Some some one off kind of.
Speaker Change: Deep discount.
Speaker Change: Deals by some of the bigger <unk> that you had seen in the first quarter.
Unknown Executive: I'm wondering, you know, if you're seeing more of that. Sounds like win rate bounced back up. And so that's encouraging relative to that.
Speaker Change: Wondering.
Speaker Change: If youre seeing more of that it.
Speaker Change: It sounds like win rate bounce back up and so that's encouraging relative to that but on those two fronts.
Unknown Executive: But on those two fronts, is there any theme in oncology specifically, and is there a theme of large players being more price-compositive? In terms of our cancellations, we're not overly concentrated in oncology relative to our overall oncology. I don't think I don't have the exact number, you know, whether percentage-wise, but oncology is obviously a big part of our work. And it was a big part of the cancellations, but I'm not really sure if that's a factor. You know, pricing overall, look, it's a competitive market. We have seen some cases of very aggressive looking for things, given the environment we're coming out of.
Speaker Change: Is there any theme in oncology, specifically and is there a theme of large players being more price competitive.
August James Troendle: In terms of our cancellations, they were not overly concentrated in oncology relative to our overall oncology. I mean, I don't think, I don't have the exact number, you know, whether percentage-wise, but, you know, oncology is obviously a big part of our work and it was a big part of the cancellations, but I'm not really sure if that's a factor. You know, pricing, you know, overall, look, it's a competitive market. I [inaudible] We have seen some cases of, you know, very aggressive, you know, looking for things, given the, you know, environment we were coming out of.
Speaker Change: In terms of our cancellations.
Speaker Change: We're not.
Speaker Change: Overly.
Speaker Change: Concentrated in oncology relative to our overall oncology, but I don't think I don't have the exact numbers, whether it percentage wise, but.
Speaker Change: Oncology is obviously, a big part of our.
Speaker Change: Work and it was a big part of the cancellations, but.
Speaker Change: I'm not really sure if thats.
Speaker Change: A factor pricing overall.
Speaker Change: Look it's a competitive market.
Speaker Change: We have seen some cases of <unk>.
Speaker Change: Very aggressive.
Speaker Change: Looking for things given the environment, we were coming out of actually think things are a lot better now, but a few quarters back.
Unknown Executive: I actually think things are a lot better now, but a few quarters back, things were a lot tighter, I think, for a lot of groups. And there was some maybe aggressive pricing, but it's really not, I think, a driver thinks now.
August James Troendle: I actually think, you know, things are a lot better now, but, you know, a few quarters back, you know, things were a lot tighter, I think, for a lot, a lot, a lot of groups, and there was some, maybe, you know, aggressive pricing, but I think it's really not, I think, a driver of things. Okay, last question for me, your head count, growth in the first quarter was, I think, lower than expected in this quarter. It's basically flat.
Speaker Change: Things were a lot tighter I think for a lot.
Speaker Change: A lot of groups and there were some.
Speaker Change: Maybe aggressive pricing, but it's really not I think.
Unknown Executive: Okay, last question for me: your head count growth in the first quarter was, I think, lower than expected. In this quarter, it is basically flat. I mean, that certainly, you've talked about some productivity initiatives, but I'm guessing that those don't preclude any hiring at all or net hiring at all. So how should we think about, you know, kind of the margin increase that you're showing in the guidance today?
Speaker Change: A driver of things now.
Speaker Change: Okay last question for me your head count.
Growth in the first quarter was I think lower than I expected in this quarter its basically flat.
Jesse J. Geiger: I mean, certainly, you've talked about some productivity initiatives, but I'm guessing that those don't preclude any hiring at all or net hiring at all. So how should we think about, you know, the kind of the margin increase that you're showing in the guidance today? I'm sure positively influenced by the lack of hiring and the sustainability of that when this growth resumes, and you have to resume the hiring front. Help us with your hiring thoughts. Yeah, David, and Jesse.
Speaker Change: I mean that certainly you've talked about some productivity initiatives, but I'm guessing that those.
Speaker Change: Don't preclude any hiring at all our net hiring at all so how should we think about.
Speaker Change: Kind of the margin increase that youre showing in the guidance today.
Jesse Geiger: I'm sure it positively influenced by the lack of hiring and the sustainability of that when this growth resumes and you have to resume the hiring front, help us with your hiring thoughts. Yeah, David's Jesse. Yeah, I mean, we're still expecting hiring. You know, the retention is continued to be good; productivity has been good, good efficiency, but we do anticipate, you know, some kind of mid, perhaps, you know, mid to low mid single digit net headcount growth for the year. So still hiring despite, despite the cancellations and despite continued. Productivity and efficiency. Okay, so and so that hiring you anticipate for the balance of the year, and that's baked into the most of your margin can absorb that and still go up as you're as you're guiding.
Speaker Change: Sure.
Speaker Change: Positively influenced by the lack of hiring and the sustainability of that win this growth resumes and you have to resume the hiring front to help us with your hiring thoughts.
Jesse J. Geiger: Yeah, I mean, we're still expecting hiring. You know, the retention has continued to be good. Productivity has been good, and good efficiency.
David: Yes, David Jesse Yes, we're still expecting.
David: Hiring.
Speaker Change: The retention has continued to be good productivity has been good good efficiency.
Speaker Change: But we do anticipate some kind of mid perhaps.
Speaker Change: Mid to low mid single digit.
Jesse J. Geiger: But we do anticipate, you know, some kind of mid, perhaps, you know, mid to low mid, single digit net headcount growth for the year. So still hiring, despite the cancellations, and despite continued productivity and efficiency. Okay, so and so that hiring you anticipate for the balance of the year and that's baked into the more so your margin can absorb that and still go up as your guide. Correct, it's baked into the guidance.
Speaker Change: Net head count growth for the year, so still hiring despite.
Speaker Change: Despite the cancellations and despite.
Speaker Change: Continued.
Speaker Change: Productivity and efficiency.
Speaker Change: Okay, So and so that hiring you anticipate for the balance of the year and thats baked into the.
Speaker Change: And so the most of your margin can absorb that and still go up as your as your guidance.
Unknown Executive: Thank you for the guidance.
Speaker Change: Alright Thats great.
Into the guidance.
Unknown Executive: Okay, thank you. Thank you.
Jesse J. Geiger: Okay, thank you. Thank you. Please stand by for our next question. Our next question comes from the line of Dan Leonard with UBS. Your line is open.
Speaker Change: Okay. Thank you.
Unknown Executive: Please stand by for our next question.
Daniel Louis Leonard: Thank you. I have a follow-up to that last question. Was the muted hiring in the quarter reflective of any countermeasures you took in response to the weaker bookings? Or was that consistent with your plan?
Speaker Change: Thank you.
Speaker Change: Please standby for our next question.
Unknown Executive: Our next question comes from the line of Day and Lunar with UBS. Yalan is open. Thank you. I have a follow up to that last question. Is the muted hiring in the quarter? Was that reflective of any countermeasures you took in response to the weaker bookings, or was that consistent with your plan? Again, primarily consistent with plan. The cancellation came very late in the quarter, very late in the quarter and at the elevated level, and we were continuing to hire around a recording to plan through the quarter.
Speaker Change: Our next question comes from the line of Dan Leonard with UBS. Your line is open.
Daniel Louis Leonard: Thank you I have a follow up to that last question is the muted hiring in the quarter was that reflective of any counter measures. You took in response to the weaker bookings or was that consistent with your plan.
August James Troendle: Again, primarily consistent with plans. The cancellation came very late in the quarter, very late in the quarter and at an elevated level, and we are continuing to hire kind of according to plan through the quarter. And then separately, that acquisition of a customer by Large Pharma, was that a trial that was already in flight? Because I know that moving that type of work would be unusual.
Speaker Change: Hey, Dan primarily consistent with plan.
Speaker Change: Cancellations came very late in the quarter very late in the quarter and at the elevated level and we are continuing to hire.
Daniel Louis Leonard: And kind of according to plan through the quarter.
Unknown Executive: And then separately, that acquisition of a customer by large pharma. Was that a trial that was already in flight? Because I know that moving that type of work would be unusual. Could you clarify that and also clarify whether that was the biggest factor in the elevated cancellations or just one of many? That was just one of many, and the project was very early, but near, you know, near, you know, running near, near significant revenue. So it was late in the pipeline; should have been, you know, was in backlog. So it was already, you know, was running in the field.
Speaker Change: And then separately that acquisition of a customer by large pharma was that a trial that was already in flight.
Speaker Change: I know that moving that type of work would be unusual could you clarify that and also clarify whether that was the biggest factor in the elevated cancellations or just one of many.
August James Troendle: Could you clarify that and also clarify whether that was the biggest factor in the elevated cancellations or just one of many? That was just one of many. And the project was very early, but near, near, you know, running near, near significant revenue. So it was, you know, late in the pipeline, when it should have been, you know, was in backlog. So it was already, you know, was it was running in the field.
Speaker Change: That was just one of many.
Speaker Change: The project was very early but.
Speaker Change: Sure.
Speaker Change: Nir.
Nir: Running near your significant revenue.
Nir: So it was.
Nir: In the <unk>.
August James Troendle: So had, you know, patients being recruited, but it wasn't, you know, it fully wasn't, you know, wasn't very broadly operational. And then, final question, I'd love to be able to better quantify the impact of the double cancellation rate compared to typical. Can you remind me what the normal cancellation rate is? So I can do my own math on doubling that. Yeah, well, we've talked about that our cancellation rates didn't normally run below four and a half percent. Thank you very much.
Nir: Pipeline should have been.
Speaker Change: Got it.
Speaker Change: In backlog so it was already.
Unknown Executive: So had, you know, patients being recruited, but it wasn't fully, you know, wasn't very broadly operationalized yet.
He was running in the field.
Speaker Change: Patients are being recruited.
Speaker Change: But it wasn't.
Speaker Change: It fully.
Speaker Change: Very broadly operationalized yet.
Unknown Executive: And then final question. I'd love to be able to better quantify the impact of the double of cancellation rate compared to typical. Can you remind me what is the normal cancellation rate so I could do my own math on doubling that? Yeah, well, we talked about that our cancellation rates didn't normally run below 4.5%.
Speaker Change: And then final question I'd love to be able to better quantify the impact of the double of cancellation rate compared to typical can you remind me what is the normal cancellation rate. So I could do my own math on doubling that.
Speaker Change: Yeah, well we've talked about.
Speaker Change #100: Cancellation rates normally run below four 5%.
Unknown Executive: Thank you very much.
Unknown Executive: Thanks, Tim. Please stand by for our next question.
Speaker Change #101: Thank you very much.
Anne Hines: Thanks, Tim. Please stand by for our next question. Our next question comes from the line of Anne Hines with Mizzou Health Securities. Your line is open. Hi, good morning.
Daniel Louis Leonard: Thanks, Dan.
Speaker Change #102: Please standby for our next question.
Ann Hynes: Our next question comes from the line of Ann Hynes with Mizzouhole Securities. Your line is open.
Speaker Change #103: Our next question comes from the line of Ann Hynes with Mizuho Securities. Your line is open.
Ann Hynes: Hi, good morning. I know you made a comment that cancellations got worse in June. Could you give us an update on what's happening in July since it's later in the month?
August James Troendle: I know you made a comment that cancellations got worse in June. Can you give us an update on what's happening in July since it's later in the month? And my second question is just around RFP activity. I believe you said RFP activity is up 16% year over year. Is that just actual RFPs, or does that represent in terms of revenue? So if it doesn't, can you tell us from a revenue perspective how the total RFP activity is up year over year? That'd be great. Thanks.
Hi, Good morning, I know you made a comment that cancellation Scott worsen in June.
Ann Hynes: Can you give us an update on what's happening in July since it's later in the month and my second question is just around the RFP activity. I believe you said RFP activity is up 16% year over year is that just the actual rfps or does that represent.
Unknown Executive: My second question is just around the RFP activity. I believe you said RFP activity is up 16% year over year. Is that just actual RFPs? Or does that represent in a revenue term? So if it doesn't, can you tell us from a revenue perspective that the total RFP activity is up year over year? That'd be great.
Speaker Change #105: And revenue terms. So if it doesn't can you tell us from a revenue perspective.
Speaker Change #106: The total RFP activity up year over year that'd be great. Thanks.
Unknown Executive: Thanks. So I don't have numbers on the actual dollar value of the RFP, but that's what we're talking about in percentage terms. It's percent of dollars. So 60% of that means dollar value of the RFPs are funded to in the quarter. We're up 16%. You know, we're not disclosing the actual dollar value, but those are dollar values. We don't talk about numbers unless I specifically call that out. We don't really think that's relevant. And then you asked about cancellation in July. Yeah, today, nothing unusual, not like in June. So no, no unusual activity in July.
August James Troendle: So, yeah, I don't have numbers on the actual dollar value of the RFPs, but that's what we're talking about in percentage terms, the percent of dollars. So 16% up means the dollar value of the RFPs responded to in the quarter was up 16%. I, you know, I'm not disclosing the actual dollar value, but those are dollar values. We don't talk about numbers unless I specifically call that out. And then you asked about cancellations in July; in July, yeah, today, nothing unusual, not like in June. So, so no, no unusual activity.
Speaker Change #106: So.
Don't have numbers on the actual dollar value of the RFP, but that's what we're talking about percentage terms as a percent of dollars.
Mccann: 16, Mccann up beans, diavik dollar value of the Rfps.
Speaker Change #108: Chris I wanted to in the quarter were up 16%.
Speaker Change #109: We're not disclosing the actual dollar value, but yes.
Speaker Change #110: But those are dollar value, we don't talk about numbers unless I, specifically called that out we don't really think thats relevant.
Speaker Change #112: And then you asked about cancellations in July.
Speaker Change #110: Okay.
Speaker Change #110: Yes.
Speaker Change #110: Nothing unusual not like in June so.
Speaker Change #110: So no.
Speaker Change #110: No unusual activity in July.
Unknown Executive: And then maybe we can just talk about even obviously you're able to guide despite the book to bill is very strong. Can you just talk about the drivers of that? That'd be great as well. Thanks. Yeah, I mean, it's continued good progression in our direct service activity. We've kind of mentioned previously just improved continued improved productivity that we're seeing on existing staff and somewhat slower hiring in the second quarter. Again, it's just the mention we do think that will end the year kind of mid single digits, mid to lower single digits for the year. So that might pick up in the balance of the year.
Kevin M. Brady: And then maybe we can just talk about EBITDA. Obviously, your EBITDA guide, despite the book to bill, was very strong. If you just talk about the drivers of that, that'd be great as well.
Speaker Change #117: And then maybe we can just talk about even though obviously your EBITDA guide despite the.
Speaker Change #111: Book to Bill was very strong can you just talk about the drivers of that that'd be great as well. Thanks.
Kevin M. Brady: Thanks. Yeah, I mean, there's continued good progression in our direct service activity. As we've kind of mentioned previously, just improved, continued improved productivity that we're seeing on existing staff and somewhat slower hiring in the second quarter. Again, as Jesse had mentioned, we do think that we'll end the year kind of in the mid-single digits, mid-low single digits for the year. So that might pick up in the balance of the year. And we have a little bit of FX benefit in the quarter as well from the strengthening of the dollar. Thanks.
Speaker Change #113: Yes, I mean, it's continued good progression in our in our direct service activities.
Speaker Change #118: As we've kind of mentioned previously.
Speaker Change #114: Just improve continue to improve productivity that we're seeing on existing staff.
Speaker Change #116: Somewhat slower hiring.
Speaker Change #124: In the second quarter again, it's just you had mentioned we do.
Speaker Change #114: That will end the year kind of mid single digits mid to low single digits for the year, so that might pick up in the back.
Unknown Executive: And we have a little bit of that that's done, is it in the quarter as well from the strengthening of the dollar.
Speaker Change #114: <unk> of the year.
Speaker Change #114: And we have a little bit of FX benefit.
Speaker Change #113: In the quarter as well from the strengthening of the dollar.
Unknown Executive: Thanks.
Speaker Change #113: Thanks.
Unknown Executive: Thank you.
Unknown Executive: Please stand by for our next question. Our next question comes from the line of charge, right with TD Cohen. The line is open. Yeah, thanks for picking the questions. I wanted to ask in terms of maybe in terms of the guidance, right with the cancellations and sort of the step down the backlog. Maybe first if you how much of the backlog reduction is a function of path to revenue versus maybe direct service revenue. Yeah, I think that we don't really get. I can tell you the percentage of the quarter cancellations that were passed through was around 50-55%. Okay, and then we kind of back into them for a backlog as well in terms of reduction there, is that a good profit?
Speaker Change #115: Thank you.
Speaker Change #119: Please standby for our next question.
Charles Reilly: Thank you. Please stand by for our next question. Our next question comes from the line of Charles Reilly with TD Cohen. Your line is open.
Speaker Change #127: Our next question comes from the line of Charles <unk> with TD Cowen Your line is open.
Charles Reilly: Yeah, thanks for picking the questions. I wanted to ask in terms of, Maybe in terms of the guidance, right, with the cancellations and sort of the step down the backlog, maybe first, if you could, how much of the backlog reduction is a function of path through revenue versus maybe direct service revenue? Yeah, they canceled it.
Charles <unk>: Yes, thanks for taking the questions.
Charles <unk>: Wanted to ask in terms of.
Yeah.
Maybe in terms of the guidance range with the cancellations.
Speaker Change #122: Stepped on the backlog maybe first how much of the backlog reduction is a function of pass through revenue versus maybe direct service revenue.
Charles <unk>: Yes.
Jesse J. Geiger: I guess we're both cancelling, I mean... can't percentage of direct versus indirect cancellation, we don't, I can tell you the percentage of the quarter cancellations that were passed through was around 50, 55%. Okay, is that kind of, and then we can kind of back into them for a backlog as well, in terms of reduction there. Is that a good process?
Charles <unk>: Yes.
Speaker Change #121: I guess for both percentage effect.
Speaker Change #123: Okay percentage of direct versus indirect cancellation, we don't.
Speaker Change #123: I can tell you I can tell you the percentage of the.
Speaker Change #128: Quarter cancellations that were pass through was around $50, 55%.
Speaker Change #125: Okay and is that kind of and we can kind of back into them for backlog as well in terms of the reduction there.
Speaker Change #125: Good property.
Charles Reilly: In terms of the watch house, When we look at the backlog reduction, because I guess the question I'm trying to ask is if we think about the burden rate and reaching the revenue guide for this year, You know, obviously, because it seems like if it's more pass-through, is that a function of why the EBITDA guide remains, actually has gone up, and instead, you know, when we think about getting to the 2 billion, you know, 2 billion plus in the revenue guide, should we expect a material uptick than in the burn rate because we're really just taking out on service revenue, which would have been more stable anyway? Yeah, no, I think what you will see is probably somewhat of an increase in the burn rate, the balance of the year in light of the cancellation.
Unknown Executive: In terms of the White Charles?
Charles <unk>: In terms of a lot of Charles.
Unknown Executive: When we look at the backlog reduction, because I guess the question I'm trying to ask is, if we think about the murder rate and reaching the revenue guide for this year, obviously, because it seems like if it's more passed through, is that a function of what the EBITDA guide remains actually gone up? And instead, when we think about getting to the 2 billion plus in the revenue guide, should we expect a material uptick than in the murder rate because we're really just taking out on service revenue, which would have been more stable anyways? Yeah, and I think what you will see is you're probably somewhat of an increase in the burn rate, the balance of the year in light of the cancellations.
Speaker Change #126: When we look at the backlog reduction because I guess the question I'm going to ask us if we think about the burn rate in reaching the revenue guide for this year.
Charles <unk>: <unk>.
Charles <unk>: Obviously, because it seems like it was more pass through is that a function of what the EBITDA guide remains.
Charles <unk>: Actually it's gone up and instead.
Charles <unk>: When we think about getting to the $2 billion 2 billion plus in the revenue guide should we expect.
Speaker Change #129: Material uptick than in the burn rate because we're really just picking up on service revenue, which would have been more stable anyways.
Speaker Change #130: Yes, I think what you will see us.
Speaker Change #131: Probably somewhat of an increase in the burn rate.
Speaker Change #132: Balance of the year in light of the cancellations.
Charles Reilly: And as I had mentioned earlier in the call, the reduction in revenue guidance is primarily related to past. Both in terms of the reduced pass-throughs that we saw in the first quarter, but then also the cancellation, to which Jesse pointed out, a little bit heavier on the pass-through on those cancellations than direct.
Unknown Executive: And as I had mentioned earlier in the call, the reduction in the revenue guidance is primarily related to pastors. You've both in terms of the reduced pastors that we saw in the first quarter, but then also the cancellations, to which Jesse pointed out, a little bit heavier on the pass-through on those cancellations than direct.
Speaker Change #132: As mentioned earlier in the call.
Speaker Change #132: Yes.
Speaker Change #132: The reduction in the revenue guidance is primarily related to passengers.
Speaker Change #132: Both in terms of the reduced pass throughs that we saw in the first quarter, but then also the cancellations.
Speaker Change #132: And to which Justin pointed out a.
Justin: A little bit heavier on the pass through.
Justin: Those cancellations.
Unknown Executive: And I guess just overall, obviously, we had a very strong funding quarter in the first quarter for biotech, still an overall piece in the second quarter, and when you look at the first half, very strong relative to the prior year, is that funding yet to translate through? You know, you kind of mentioned that without the cancellations, you're looking at a book to build 1.24. Are you, would you say that, you know, from a gross bookings perspective, we are seeing this funding flowing through, or is that still, do you think, you have to come in terms of the activity?
Justin: Direct.
Kevin M. Brady: And I guess just overall, we, you know, obviously, we had a very strong funding quarter in the first quarter for biotech, you know, still a decent second quarter. And when you look at the first half, you know, very strong relative to the prior year. Is that funding yet to translate through? You kind of mentioned that without the cancellations, you're looking at a book to bill of 1.24.
Justin: And I guess just overall.
Speaker Change #134: Obviously, we had a very strong funding quarter in the first quarter for biotech.
Speaker Change #134: Overall, <unk> second quarter and when you look at the first half.
Speaker Change #134: Very strong relative to the prior year.
Speaker Change #135: Is that is that funding yet to translate through.
Speaker Change #136: You kind of mentioned that without the cancellations, you're looking at a book to Bill of 124.
Kevin M. Brady: Are you, would you say that, from a gross bookings perspective, we are seeing this funding flow through, or is that still, do you think, yet to come in terms of activity? I think the business environment is strong and is going to remain strong.
Speaker Change #137: Are you would you say that from a gross bookings perspective, we.
Speaker Change #138: We are seeing this funding.
Speaker Change #139: Through or is that still do you think you have to come in terms of the activity.
Unknown Executive: I think the business environment remains strong and is going to remain strong. I don't know about what's flowing through where, but you know, the business environment is strong. I think we will replenish our pipeline of projects that are converting into backlog. And of course, ending it gets to backlog. You know, we tend to burn direct faster than indirect, and so cancellations tend to have a higher percentage of indirect direct when they cancel. But, you know, I think the environment is going to keep up and we will replenish our pipeline, but, you know, I don't know about what funding is tied, what opportunities, etc.
Speaker Change #139: Hi.
Speaker Change #139: The business environment remains strong and is going to remain strong.
August James Troendle: I don't know about what's flowing through where, but the business environment is strong. I think we will replenish our pipeline of projects that are converting into backlog. And, of course, anything that gets to backlog tends to burn direct faster than indirect, and so cancellations tend to have a higher percentage of indirect to direct when they cancel. But I think the environment is going to keep up, and we'll replenish our pipeline. I don't know what funding is tied to what opportunities, etc.
Speaker Change #139: Yes.
I don't know about whats flowing through where but.
Speaker Change #139: If the business environment strong I think we will replenish our pipeline.
Speaker Change #140: Projects that are converting into backlog.
Speaker Change #140: And of course anything that gets to backlog.
Speaker Change #141: It tends to burn direct faster than indirect and so cancellations tend to have a higher percentage of indirect direct when they when they cancel.
Speaker Change #141: But.
Speaker Change #141: Yes.
Speaker Change #142: I think the environment's going to keep up to replenish our pipeline, but I don't know about funding.
Speaker Change #142: Funding is tied to what opportunities et cetera.
Unknown Executive: Okay, great. If I can just speak with Lord, just in the castles, you mentioned one was to do an acquisition, client getting acquired by a large pharma client that moved that business. Can you kind of help size relative to overall cancellations? How much of the cancellations was related to that? No, but it wasn't. It was not most of the cancellation or anything like that. It was a size cancellation, but not one of the larger ones, but not overwhelmingly driving it. Okay, that's great.
Charles Reilly: Great. If I could just sneak one more, just in the cancellation, you mentioned one was due to an acquisition client getting acquired by a large pharma client that moved that business. Can you kind of help me size relative to the overall cancellations, how much of the cancellation was related to that? No, but it wasn't, it was not, you know, most of the cancellation. It was, it was a size cancellation, but not one of the larger ones.
Speaker Change #143: Okay, great if I could just sneak one more just in the calculation you mentioned one was due to an acquisition on getting acquired by large pharma.
Speaker Change #144: Client that moved that business can you kind of help size relative to the overall cancellations how much of the cancellations was related to that.
Speaker Change #145: No, but it wasn't.
Speaker Change #145: It was not.
Speaker Change #146: Most of the cancellation or anything like that.
Speaker Change #147: It was it was a sizable cancellation, but not.
Speaker Change #147: One of the larger ones, but not yet.
August James Troendle: Overwhelming. Okay, that's great. Thanks a lot.
Speaker Change #147: Overwhelmingly.
Speaker Change #148: Driving it.
Unknown Executive: Thanks a lot. Thank you.
Speaker Change #149: Okay, that's great. Thanks, a lot.
Unknown Executive: Please stand by for our next question.
Speaker Change #149: Thanks.
Jack Dawson Wallace: Thank you. Please stand by for our next question. Our next question comes from the line of Jack Wallace with Guggenheim Securities. Your line is open.
Speaker Change #150: Please standby for our next question.
Jack Wallace: Our next question comes from the line of Jack Wallace with Guggenheim Securities. Your line is open. Thanks for taking my questions. I wanted to just ask kind of a broader question about the cancellation related to the M&A event. Just looking back in your company's history as we see the biotech industry has gone through cycles of higher M&A. Have you typically lost most of those clients when they've been acquired by large pharma? Have you been able to maintain a decent amount of the business post-acquisition?
Speaker Change #151: Our next question comes from the line of Jack Wallace with Guggenheim Securities. Your line is open.
Jack Dawson Wallace: Thanks for taking my questions. I wanted to just ask kind of a broader question about the cancellation related to the M&A event. Yeah, just looking back at your company's history as the biotech industry has gone through cycles of higher M&A. Have you typically lost most of those clients when they've been acquired by a larger pharma?
Jack Dawson Wallace: Hey, Thanks for taking my questions.
Jack Dawson Wallace: I wanted to just ask kind of a broader question about the cancellations related to the M&A event.
Ashwin: Just looking back in your company's history Ashwin, the biotech industry has gone through cycles of higher M&A.
Speaker Change #154: Have you typically lost most of.
Speaker Change #154: Those clients when they've been acquired by large pharma or if you've been able to maintain.
August James Troendle: Have you been able to maintain a decent amount of the business post acquisition? Thank you. Yeah, losing a project that is in backlog and running in the field is highly unusual. Um, so that was, uh, uh, the reason I mentioned it. It's like it almost never happens, but losing future work from that client is very frequent. So if they get acquired by a large pharma, usually they bring it into their systems
Speaker Change #155: A decent amount of the business post acquisition. Thank you.
Unknown Executive: Thank you. Yeah, losing a project that is in backlog and running in the field is highly unusual. So that was, I mentioned it. It almost never happens. But losing the future work from that client is very frequent. So if they get acquired by large pharma, usually they bring it into their systems. And we're cut out for future work, but it's very rare that they pull a study that is actually started and decide to move it. So that was very unusual.
Speaker Change #155: Yes.
Speaker Change #155: Okay.
Speaker Change #156: Losing a project that is in backlog and in running in the field is highly unusual.
Speaker Change #157: So that was it.
Speaker Change #157: Sure.
Speaker Change #157: I mentioned.
Speaker Change #158: It almost never happens.
Speaker Change #158: But losing the future work from that client is very frequent.
Speaker Change #158: So if they get acquired by large pharma, usually they bring it into there.
August James Troendle: And we're cut out for future work. But it's very rare that they pull a study that has actually been started and decide to move it, so that was very unusual.
Speaker Change #158: Systems.
Speaker Change #158: And were cut out for future work, but it's very rare that they pull a study that has actually started.
Speaker Change #158: And decided to move it so that was very unusual.
Unknown Executive: Yeah, thank you.
Jack Dawson Wallace: Yeah, thank you. That's very helpful. And then just thinking about the competitive environment, have you seen any changes in posture and activity from some of your larger CROs coming down market a bit and, and just kind of another kind of question there around pricing, you know, which types of competitive actors have been most aggressive on price or have been most, you know, formative in terms of how they're attacking the new, new business? Thank you. Yeah, no, that would be, you know, largely kind of anecdotal.
Unknown Executive: That's helpful. And then just thinking about the competitive environment. Have you seen any?
Got it. Thank you that's helpful. And then just thinking about the competitive environment have you seen any.
Unknown Executive: You just changed your posture and activity from some of your larger CROs coming down market a bit and and just kind of another kind of question there around pricing, which types of competitive actors have been most aggressive on price? Or have been most, you know, formative in terms of how they're attacking the new, new business. Thank you. Yeah, now that would be largely kind of anecdotal. I think the competitive environment remains much the same. I don't I don't see a big change; there certainly is a, you know, most of our competition is larger players. And you know, by and large.
Speaker Change #159: You just change in posture of activity from some of your larger Crs coming down market a bit in <unk>.
Speaker Change #160: And just kind of another kind of question there on pricing which types of.
Speaker Change #160: Competitive actors have been most aggressive on price.
Speaker Change #161: Or have been most formative.
Speaker Change #162: In terms of.
Speaker Change #163: How they are attacking the new new business. Thank you.
August James Troendle: I think the competitive environment remains much the same. I don't, I don't see a big change there, certainly as a, you know, most of our competition is larger players. And, you know, by and large, so I don't really see a change in that overall dynamic. I think there was a time a few quarters back when things, I think, were much worse in terms of the funding environment.
Speaker Change #164: Yes that would be largely kind of anecdotal.
Speaker Change #164: I think the.
Speaker Change #164: The competitive environment remains.
Speaker Change #165: Much the same.
Speaker Change #165: I don't see a big change there certainly is.
Speaker Change #165: Or our competition is the larger players.
Unknown Executive: So I didn't really see a change in that overall dynamic. I think there was a time when a few quarters back when things I think were much worse in terms of a funding environment. And there was maybe a little bit more talk about competitive pricing and, you know, some of our larger competitors making some very aggressive moves possibly, but I think the environment is relatively normalized in the competitive environment.
Speaker Change #165: And by and large.
Speaker Change #165: So I don't really see a change in that overall dynamic I think there was a.
Speaker Change #165: Time win.
Speaker Change #165: A few quarters back when.
Things I think we're much.
Speaker Change #165: Worse in terms of the funding environment and there was maybe a little bit more talk about <unk>.
August James Troendle: And there was maybe a little bit more talk about competitive pricing and some of our larger competitors making some very aggressive moves, possibly, but I think the environment is relatively normalized in a competitive environment.
Speaker Change #165: Competitive pricing.
Speaker Change #165: <unk>.
Speaker Change #165: Some of our larger competitors, making some very aggressive.
Speaker Change #165: Moves, possibly but.
Speaker Change #165: I think the environment is relatively.
Speaker Change #165: Normalized into competitive environments.
Speaker Change #166: Got it thank you.
Unknown Executive: Well, you stand by for our next question.
Jack Dawson Wallace: Thank you. Thank you. Please stand by for our next question. Our next question comes from the line of Justin Bowers with Dutcher Bank. Your line is open. Hi, good morning, everyone.
Speaker Change #166: Thank you.
Speaker Change #167: Ladies standby for our next question.
Unknown Executive: Our next question comes from the line of Justin Bowers with Dieter Bank. Yelana's open. Hi, good morning, everyone. Can you remind us of your backlog policy and the gist of the question is trying to understand your visibility on the three key bookings? As you enter into two Q in your prepared remarks, you made some comments based on, you know, what's coming in on a backlog and how that would impact three Q. Yeah, just in terms of our backlog policy, you know, there's a couple of criteria that have to be in place or dating items that have to be in place before it's put in the backlog.
Speaker Change #168: Our next question comes from the line of Justin Bowers with Deutsche Bank. Your line is open.
Justin D. Bowers: Can you remind us of your backlog policy and, the gist of the question is trying to understand your visibility on the 3Q bookings? As you enter into 2Q, in your prepared remarks, you made some comments based on, Um, you know, what's coming in on the backlog and how that, um..., would impact 3Q. Just in terms of our backlog policy, there's a couple of criteria that have to be in place or gating items that have to be in place before it's put in the backlog. There can't be any regulatory hurdles that are still pending.
Justin D. Bowers: Hi, Good morning, everyone can you.
Justin D. Bowers: Remind us of your your backlog policy.
Speaker Change #170: The gist of the question is trying to understand your visibility.
Justin D. Bowers: On.
Speaker Change #171: The <unk> bookings as you enter into <unk> in your prepared remarks, you made some comments based on.
Justin D. Bowers:
Speaker Change #172: Whats come in and out of backlog and how that.
Speaker Change #172: Would impact <unk>.
<unk>.
Speaker Change #172: Yes, Jonathan This is Scott go ahead go ahead, Kevin sorry.
Speaker Change #173: Just in terms of our backlog policy.
Speaker Change #174: And there's a couple of criteria that have to be in place reducing items that have to be in place before it's put in the backlog and their campaign a regulatory hurdles.
Unknown Executive: There can't be any regulatory hurdles that are still pending. The program has got to be ready to get started and actively recruiting patients. There can't be any funding issues. So there's got to be clear on a site to funding and where that funding is going to come from before we'll put that into backlog. So the programs that we do put in that in the backlog, they are starting to actively generate revenue relatively shortly after we put those programs in the backlog. And so a cancellation out of backlog does have a near term impact on revenue, depending on how those programs wind down and finish out.
Speaker Change #174: That are still that are still pending.
Speaker Change #174: The program has got to be ready to get started and actively recruiting patients.
Kevin M. Brady: The program has got to be ready to get started actively recruiting patients. There can't be any funding issues, so there's got to be a clear line of sight to funding and where that funding is going to come from before we put that in the backlog. So, the programs that we do put in the backlog, they are starting to actively generate revenue relatively shortly after we put those programs in the backlog. So, a cancellation out of the backlog does have a nearer-term impact on revenue, depending on how those programs wind down and finish out.
Speaker Change #174: There can't be in a funding issue so theres got to be clear line of sight to funding.
Speaker Change #174: Where that funding is going to come from.
Speaker Change #174: We will put that in to backlog and so.
Speaker Change #174: The programs that we do put them in the backlog.
Speaker Change #174: Starting.
Speaker Change #174: To actively generating revenue.
Speaker Change #174: Relatively shortly thereafter.
Speaker Change #174: Put those programs in the backlog.
And so a cancellation.
Speaker Change #174: Backlog.
Speaker Change #174: It does have a near term impact.
Speaker Change #174: On revenue.
Speaker Change #174: Depending on how those programs.
Unknown Executive: But, as always mentioned as well, there were some cancellations that happened for programs that were awarded that were not yet in backlog, and how that does funnel of opportunities, you know, eventually convert into in the backlog and new awards, it remains to be seen. And we do have to continue to fill up that pipeline and fill that gap. And as all this had mentioned, your Q3 is potentially going to be a little bit light if we kind of fill up that pipeline. Okay, so you were in that. The other criterion for backlog recognition is we only put the first three years of a project into backlog, and then the balance beyond three years kind of bleeds in over time as quarters progress.
Kevin M. Brady: But, as August mentioned as well, there were some cancellations that happened for programs that were awarded that were not yet in the backlog, and how those funnels of opportunities eventually convert into backlog and new awards remains to be seen. We do have to continue to fill up that pipeline and fill that gap. And as August mentioned, Q3 is potentially going to be a little bit light as we kind of fill up that pipeline.
Speaker Change #174: Wind down and finish out.
Speaker Change #174: As August mentioned as well there were some cancellations that happened for programs that were awarded that we're not yet in backlog and how that this funnel of opportunities eventually convert them to <unk> and.
August: And the backlog and new awards remains to be seen.
Continue to fill up that pipeline fill that gap.
August: And as August mentioned.
Speaker Change #181: Q3 is definitely going to be a little bit light.
Speaker Change #178: As we kind of go up.
August: Pipeline.
Kevin M. Brady: And on top of that, the other criterion for backlog recognition is that we only put the first three years of a project into backlog, and then the balance beyond three years kind of bleeds in over time as quarters progress. And so some of those active backlog cancellations also had a portion that was straddling backlog and also some pre-backlog that would then impact future quarters like Q3 and beyond. Okay, so cancellations, it's not like... To give you a little bit more, also, to address your question directly and kind of our visibility on it, sometimes things are awarded and don't get to the backlog for quite a long time.
Speaker Change #176: Okay very helpful.
Speaker Change #177: The other the other criterion for.
Speaker Change #177: Backlog recognition as we only put the first three years of a project into backlog and then the balance beyond three years kind of bleeds in over time as quarters progress and so some of those active backlog cancellations also had a portion that we're straddling backlog and also some pre backlog.
Unknown Executive: And so some of those active backlog cancellations also had a portion that was straddling backlog and also some pre backlog that would then impact future quarters like Q3 and beyond. Okay, so cancellations sometimes like to give you a little bit of work also to address your question regularly, and kind of our visibility on it. Sometimes things are awarded and don't get the backlog for quite a long time, and maybe because they're out looking for funding and they look like they're lining things up and they're going to start things and we're, you know, could be. You know, we're doing some early startup kind of, but on hold for the rest of the project because they don't have funding.
Speaker Change #177: That would that impact future quarters, like Q3 and beyond.
Speaker Change #177: Yeah.
Speaker Change #179: Okay, so cancellations sometimes right.
Speaker Change #180: So just to give you a little bit also address your question directly on kind of our visibility on it sometimes things are awarded.
I don't get to backlog for quite a long time and it may be because they are out looking for funding and it looks like they're lining things up and theyre going to start things in or could be.
August James Troendle: And it may be because they're out looking for funding, and it looks like they're lining things up, and they're going to start things, or, you know, could be, you know, we're doing some early startup kind of, but on hold for the rest of the project because they don't have funding. And so you're kind of ready to run forward as soon as they, you know, close on funding. And, you know, it might be, it looks like it's coming in the next quarter. It looks like they've raised the money. They're going to give us the green light.
Speaker Change #180: We're doing some early startup kind of put on hold for the rest of the project because they don't have funding and so you are kind of ready to run forward as soon as they close on funding and.
Unknown Executive: And so you're kind of ready to run forward as soon as they, you know, close on funding and, you know, might be, you look like it's coming in the next quarter. Looks like they've raised the money, they're going to go give it the green light, we're going to move forward. So you do have quite a bit of stuff that's in that whole pattern that could be pulled or could go forward. In the corner. Okay, that's helpful, understood. So there were, you know, of the cancellations, there were some that were in backlog and some that were not in backlog in the current period, but you were in some of them going into backlog into 3Q.
It might be year to year, it looks like it's coming in the next quarter. It looks like they've raised the money they're going to go gives us the green light and we're going to move forward.
Justin D. Bowers: We're going to move forward. You know, so you do have quite a bit of stuff that's in that whole pattern that, you know, could be pulled or, you know, could go forward. Okay, that's helpful.
Speaker Change #180: So you do have.
Quite a bit of stuff that's in that told pattern that could be pulled or could go forward into the quarter.
Justin D. Bowers: Understandable. So there were, you know, of the cancellations, there were some that were in backlog, and some that were not in backlog in the current period, but you were going into backlog into 3Q. Okay, that's right. And then just, Okay, and then in terms of hiring, you've had some productivity measures, right? It sounds like this year.
Speaker Change #182: Okay Thats helpful. Understood. So there were.
Speaker Change #182: Cancellations there were some that were in backlog.
Speaker Change #183: We're not in backlog in the current period, but you were somewhere about <unk>.
Speaker Change #184: Knowing into backlog into <unk>.
Unknown Executive: Okay, that's all right. And then just, okay. And then, in terms of hiring, you've had some productivity measures, right? It what's the new, is there sort of a, you know, rule of thumb or, you know, back of the envelope way for us to think about, you know, hiring on the go forward based on some level of revenue growth now that you've instituted some of these productivity programs. And just like, for example, for every 10% revenue growth, there's going to be, you know, a 4% growth in FTEs. That's sort of the gist of the question. Yeah, Jesse, it can be volatile.
Speaker Change #185: Okay, that's great and then just.
Kevin M. Brady: What's the new, is there sort of a rule of thumb or, you know, back of the envelope way for us to think about, you know, hiring in the future, based on some level of revenue growth now that you've instituted some of these productivity programs? And just like, for example, you know, for every 10% revenue growth, there's going to be, you know, a 4% growth in FTEs. That's sort of the gist of the question.
Speaker Change #185: Okay, and then in terms of hiring you've had some productivity measures right.
Speaker Change #185: It sounds like this year.
Speaker Change #186: What's the new.
Speaker Change #186: Is there sort of a.
Speaker Change #186: Rule of thumb or <unk>.
Speaker Change #186: Back of the envelope way for us to think about.
Speaker Change #186: Tiring on the go forward.
Speaker Change #186: Based on some level of revenue growth.
Speaker Change #186: Now that you've instituted some of these productivity.
Speaker Change #186: Grams.
Speaker Change #186: And then just like for example.
Speaker Change #187: For every 10% of revenue growth there is going to be a 4% growth in ftes.
That's sort of just to the question.
Kevin M. Brady: Yeah, Justin, it can be volatile. I mean, it can depend from time to time on where we are with people versus near-term revenue. We're looking at the funnel, we're looking at the pipeline, we're estimating staffing needs on an ongoing basis, trying to determine, Excuse me. How much of a buffer do we have?
Unknown Executive: I mean, it can depend from time to time, you know, where we are with people versus near-term revenue. You know, we're looking at the funnel; we're looking at the pipeline. We're estimating staffing needs on an ongoing basis, trying to determine, excuse me, how much of a buffer do we have? Are we sitting on some excess capacity, or have we gotten to too high of a utilization level, you know, where we need to, you know, aggressively hire and catch up from time to time. And so it over time, it really depends on kind of how those two sit, how revenue projection sits versus staffing needs.
Speaker Change #187: Yes, Jeff and it can be volatile it can depend from time to time.
Speaker Change #188: Where we are with with people versus near term revenue. We're looking at the funnel. We're looking at the pipeline we're estimating.
Speaker Change #188: Staffing needs on an ongoing basis trying to determine.
Speaker Change #189: Excuse me.
Speaker Change #190: How much of a.
Kevin M. Brady: Are we sitting on some excess capacity, or have we gotten to too high of a utilization level where we need to, you know, aggressively hire and catch up from time to time? And so, over time, it really depends on how those two sit, how revenue projection sits versus staffing needs. We have been fortunate, as we've mentioned lately, in terms of good retention and low turnover, which has been kind of reducing the needs for, you know, more gross hiring.
Speaker Change #190: Buffer do we have are we sitting on some excess capacity or have we gotten.
Speaker Change #190: Too high of a utilization level, where we need to aggressively.
Speaker Change #190: Our higher end catch up from time to time and so over time, it really depends on on kind of how those two sit how revenue projections sits versus versus staffing needs. We have been fortunate as we've mentioned.
Unknown Executive: We have been fortunate, as we've mentioned lately, in terms of good retention and low turnover, which has been kind of reducing the needs for, you know, for more gross hiring. But kind of how that progresses, how the rate of hiring progresses versus the revenue rate, you know, as we move through, you know, into 2025 will largely be dictated by, you know, how the pipeline shapes up and how the, you know, award and then revenue growth looks as we move into the year. Okay, appreciate it.
Speaker Change #190: Lately in terms of of good retention and low turnover, which has been.
Speaker Change #190: Reducing the needs for.
Kevin M. Brady: But kind of how that progresses, how the rate of hiring progresses versus the revenue rate, you know, as we move through, you know, into 2025 will largely be dictated by, you know, how the pipeline shapes up and how the, you know, award, and then revenue growth looks as we move into the year. Okay, appreciate it. I'll take the rest offline.
Speaker Change #190: For a more gross hiring but kind of how that progresses, how the rate of hiring progresses versus the revenue rate as we move through.
Speaker Change #190: And into 2025, we will largely be dictated by.
Speaker Change #190: How the pipeline shapes shapes up and how the.
Speaker Change #190: Award.
Speaker Change #190: And then revenue growth as we move into the year.
Unknown Executive: I'll take the rest off line. Thank you.
Speaker Change #191: Okay I appreciate it I'll take the rest offline.
Justin D. Bowers: Thank you. As a reminder, ladies and gentlemen, that's star 11 to ask the question. Please stand by for our next question. We have a follow-up question from the line of Eric Coldwell with Baird. Your line is open. Thanks very much.
Speaker Change #190: Okay.
Unknown Executive: As a reminder, ladies and gentlemen, that's *#11 to ask the question.
Thank you as.
Speaker Change #192: As a reminder, ladies and gentlemen that star one to ask a question. Please.
Unknown Executive: Please stand by for our next question.
Speaker Change #193: Please standby for our next question.
Eric Coldwell: We have a follow-up question from the line of Erick Coldwell with Bear. Yelonne is open. Thanks very much. Last quarter, you did mention still a 1-2 book development. You did mention higher cancels in Q1. And obviously, some of these cancels did impact 2Q to a limited amount.
Speaker Change #194: We have a follow up question from the line of Eric Coldwell with Baird. Your line is open.
Eric White Coldwell: Last quarter, you did mention still a 1-2 book to bill, but you did mention higher cancels in Q1. And obviously, some of these cancels did impact revenue. I'm curious if you could tell us the impact of year-to-date heightened cancellations, if that makes sense, on 2Q's revenue? I don't think I can sort that out.
Eric White Coldwell: Thanks very much.
Last quarter, you did mentioned still a one two book to Bill, but you did mentioned higher cancels in Q1, and obviously some of these cancels did impact.
Eric Coldwell: I'm curious if you can tell us the impact of year-to-date heightened cancellations, if that makes sense, on 2Q's revenue?
Speaker Change #195: <unk> to a limited amount I'm curious if you could tell us the impact of year to date heightened cancellations if that makes sense on <unk> revenue.
Speaker Change #196: I don't know.
Kevin M. Brady: Right. And, you know, well, they were somewhat elevated in Q1, Eric, but not significant enough that it had a major impact on Q2, and as August mentioned, the Q2 cancellations were primarily in June. The elevation that we saw was... So probably not more than, say, $1 million, $2 million at the most, correct? Is that a fair number?
Speaker Change #196: Awesome.
Speaker Change #196: Right.
Speaker Change #196: And.
Speaker Change #196: While they were somewhat elevated in Q1, Eric it wasn't.
Significant enough that a major impact on Q2 and as August mentioned Q2 cancellations were primarily in June the elevation that we saw was in June.
Eric White Coldwell: So probably not more than say 1 million $2 million at the most correct is that a fair.
Eric White Coldwell: I don't know, Eric. I mean, like August said, we didn't quantify it, but... Not as significant. Yeah, what I'm what I'm trying to get to here is let's let's call this, you know, in the zip code of 100 to 110 million of incremental abnormal cancels in 2Q, uh... you would have had six fifty five of net awards at a one two four book to bill you did five fifty one so you know zip code of you know one oh five, You said the pass-through or indirect cancels were somewhat disproportionate, 50 to 55% of the total.
Eric White Coldwell: I don't know, Eric but August 7th we can quantify it but.
Eric White Coldwell: Yes.
August: Significant amount yes.
August: Yes.
August: What I'm trying to get to here is let's let's call. This and the ZIP code of $100 million to $110 million of incremental abnormal cancels and <unk>.
August: You would have had $6 55 of net awards at a one four book to Bill you did 551 so.
August: The ZIP code of 105.
Speaker Change #197: You said the pass through or indirect cancels were.
Speaker Change #197: Somewhat disproportionate $50 to 55% of the total.
Eric White Coldwell: So I'm thinking, you know, $50 million, give or take, $50 million of direct fee cancellations that were deemed as abnormal this quarter. Your backlog is three years, that's 12 quarters, I take $50 million, I divide it by 12, I'm coming up with something like $4 million, a little over $4 million a quarter of revenue impact on the direct fee side and maybe closer to $5 million on the indirect fee side, if the duration of all of these cancels were equally split across the next three years, which, you know, obviously is not going to be the case, and you would have a tail beyond the three years you put in backlog.
Speaker Change #198: So I'm thinking $50 million give or take $50 million of direct the cancellations that were deemed as abnormal this quarter. Your backlog is three years, that's 12 quarters I take $50 million divided by 12, I'm coming up with something like $4 million, a little over $4 million a quarter of revenue impact.
Speaker Change #197: <unk>.
Speaker Change #197: On the direct fee side, and maybe closer to $5 million on the indirect side.
Speaker Change #199: If the duration of all of these cancels were equally split across the next three years, which.
Speaker Change #199: Obviously is not going to be the case and you would have a tail beyond the three years you put in backlog, but directionally speaking if I do that I am coming up with about $9 million a quarter of revenue headwind you get to something like $17 million to $18 million for the year you cut guidance by 25 and I'm just trying to understand if that's directionally the.
Eric White Coldwell: But directionally speaking, if I do that, I'm coming up with about 9 million a quarter of revenue headwind. You get to something like 17, 18 million for the year, and you cut guidance by 25. I'm just trying to understand if that's the directionally the theme on why you're cutting revenue by a little over 1%. Is the thought process behind that the correct thought process?
Speaker Change #200: Team on why Youre cutting revenue by a little over 1% as the thought process behind that the correct thought process.
Eric White Coldwell: Or do these cancellations, you know, truly skew more to the first, the next 12 months, or are they, in fact, more balanced? I'm just trying to get a dynamic for how we start. You're not going to guide 25, but we need to start thinking about it. So, trying to get a sense of where we go with our models. Thank you very much.
Speaker Change #201: Or do these cancellations truly skew more to the first the next 12 months or or are they in fact more balanced I'm just trying to get a dynamic on how we start you're not going to guide 25, but we need to start thinking about it so.
Speaker Change #202: Trying to get a sense on where we go with our models here.
Speaker Change #201: Yeah.
Speaker Change #201: Okay.
Speaker Change #203: A lot of moving pieces.
Speaker Change #204: Okay. Okay.
August James Troendle: I was just going to say, you know, your math sounds fine. I don't really think that's how we're doing our projections are based on, well, it looks like we lost this out of it. And therefore, it's going to come down by this amount. I mean, it's kind of a buildup of everything going forward again. And so we just don't quantify the amount that was lost, but your calculations are probably correct.
Speaker Change #204: Yes.
You can see.
Speaker Change #205: Whats your math sounds fine I don't really think Thats, how we are doing our projections is based on what it looks like we lost this adequate there.
It's going to come down by this amount I mean, it's kind of a buildup of everything going forward again, and so we just don't quantify the amount that was lost but your calculations are probably true there would've been an upside I mean, I think it's a bigger thing we've seen is the drop off in some of the pass through.
August James Troendle: There would have been an upside. I think the bigger thing we've seen is the drop off in some of the pass-through expenses that have, you know, maybe had an impact on revenue. Now, we would have had an upside. We probably would have beat revenue if we hadn't had cancellations. But, yeah, I mean, you're right.
Speaker Change #205: <unk> expenses that.
Speaker Change #205: <unk> had a bigger it had an impact on on revenue now we would've had an upside we probably would've beat revenue if we hadn't had cancellations but.
Speaker Change #205: Tom and cancellations, sometimes remembered arent always.
Speaker Change #205: Media revenue ceases at that moment it just means they see so over the next.
Speaker Change #205: Quarter.
Speaker Change #205: Possibly or whatever so it may not even impact the current quarter.
Speaker Change #205: And it may be farther out sometimes it's two quarters out that drop off in all of the revenue from that project is for our backlog cancellation.
Speaker Change #205: Yes.
Speaker Change #205: It's something that isn't in backlog yet.
Speaker Change #205: That can affect but generally.
Speaker Change #205: The next quarter or the next few several quarters going forward, but but yes, youre right its a big headwind to revenue overall.
Eric Coldwell: Yeah, and thank you for all of that, and I think ultimately what I was trying to get to is if there hasn't been much impact today, and I was asking my follow-up question was, you know, how do the candles impact, you know, the next couple of court, this court, or the next quarter or two, from a, you know, transitory event, since you wind those down, you get wind down payments, et cetera, I was just trying to get a sense of there was anything more built into the 25 million revenue reduction, because, you know, again, very simple and arguably very incorrect math.
Kevin M. Brady: It's a, you know, it's a big headwind to revenue overall. Yeah, and thank you for all of that. And I think ultimately, what I was trying to get to is if there hasn't been much impact to date, and my follow-up question was, you know, how did the cancels impact the next couple of this quarter or the next quarter or two from transitory events as you wind those down, do you get wind down payments, etc.
Speaker Change #206: Yes, and thank you for all of that and I think ultimately what I was trying to get to is if there hasn't been much impact to date and I was actually my follow up question was how did the cancels impact.
Speaker Change #207: The next couple of quarters, this quarter or the next quarter or two from transitory events as you wind those down do you get wind down payments et cetera, I was just trying to get a sense. If there was anything more built into the $25 million revenue reduction because again very simple and arguably very incorrect math would get us to something like 17 $18 million.
Kevin Brady: Math would get us to something like 17, 18 million impact for this year, and that would be before including potential wind down payments or, you know, some of these cancels that may have a few months left in their life in three queue. And, so I'm just trying to get a sense on if you, you know, quite frankly, if you built in some extra cushion with the 25 million, or if I'm just thinking about it wrong. So Eric, I mean, it is always mentioned, I think you're thinking about it right logically that there is some headwind there. Now, in terms of quantifying it, that's a bit of a challenge, but as I had mentioned, the lowering of the revenue ranges is really twofold. It's number one, it's the lower past directivities that we saw in the first half of the year, in particular the first quarter. As I had mentioned on the first quarter call, with those reimbursables coming in lower, I expected it to potentially be on the lower side of the range, and just kind of like the rebounding in the second quarter, but maybe not as much as I had anticipated. That's part of it, and then the other piece of it's going to be the headwinds on these cancellations.
Speaker Change #207: <unk> for this year and that would be before including potential wind down payments or some of these cancels that may have a few months left in their life and <unk> and.
So I'm just trying to get a sense on if you quite.
Speaker Change #214: Quite frankly, if you built in some extra cushion with the $25 million or if im just thinking about it wrong.
Kevin M. Brady: No, Eric, I mean, as I always mention, I think you're thinking about it, right, logically, that there is some headwind there. Now, in terms of quantifying it, that's a bit of a challenge. But as I had mentioned, the lowering of the revenue range is really twofold. Number one, it's the lower, faster activities that we saw in the first half of the year, in particular, the first quarter, because I had mentioned on the first quarter call that with those reimbursables coming in lower, I expected it to potentially be on the lower side of the range. And just kind of with the rebounding in the second quarter, but maybe not as much as I had anticipated.
Eric White Coldwell: So Eric as August mentioned, I think youre thinking about it logically if there is some some headwind there now in terms of quantifying it.
Eric White Coldwell: Bit of a challenge, but as I had mentioned.
Speaker Change #209: The lowering of the revenue range is really twofold number one it's the lower faster activities that we saw in the first half of the year in particular, the first quarter.
Speaker Change #207: I have mentioned on the first quarter call with those Reimbursable is coming in lower expected it to potentially be on the lower side of the range.
Speaker Change #206: And just kind of what's the rebounding in the second quarter, but maybe not as much as I had anticipated.
Eric White Coldwell: That's part of it. And then the other piece of it is going to be the headwinds on these cancellations. This is going to be a combination of the two, if that's helpful. Okay, yep, it is.
Speaker Change #206: That's part of it and then the other piece of it is going to be.
Kevin Brady: It's going to be a combination of two. If that's helpful.
Speaker Change #206: The headwinds on these cancellations.
Operator: Thank you. Okay. Thank you.
Speaker Change #208: It can be a combination of it too.
Unknown Executive: Okay, yep, it is. Thank you. Thank you.
Speaker Change #212: Okay. Yes. It is thank you okay.
David Windley: Please stand by for our next question. We have a follow-up question from the line of Dave Waintley with Jeffrey; your line is open. Thanks. Following up on Eric's line of questioning on the pastries. So Kevin, the last part of your answer that you just gave, my recollection is that, as you described, first quarter was low on pastaries. And, but your expectation was that it would still jump back up and run at about a 38% similar to last year, 38% of total revenue level. I could be wrong and not remembering something about the lower end, but remember 38% of total revenue, similar to last year.
David Howard Windley: Please stand by for our next question. We have a follow-up question from the line of Dave Windley with Jeffrey. Your line is open.
Thank you.
Speaker Change #210: Please standby for our next question.
Speaker Change #210: We have a follow up question from the line of Dave Windley with Jefferies. Your line is open.
David Howard Windley: Thanks. Following up on Eric's line of questioning on the pass-throughs, so... Kevin, the last part of your answer that you just gave, my recollection is that, as you described, the first quarter was low on pass-through, but your expectation was that it would still jump back up and run at about 38%, similar to last year's 38% of total revenue level. I could be wrong in not remembering something about the lower end, but I remember 38% of total revenue was similar to last year.
David Howard Windley: Thanks, following up on Eric's line of questioning on the pass throughs. So.
Speaker Change #208: Kevin.
David Howard Windley: The last part of your answer that you just gave my recollection is that.
Kevin: As you described first quarter was low on pass throughs.
Speaker Change #211: But your expectation was that it would still jumped back up and run at about a 38% similar to last year at 38% of total revenue level.
I could be wrong, and not remembering something about the lower end, but remember 38% of total revenue similar to last year. It sounds like what youre, saying today is.
David Howard Windley: It sounds like what you're saying today is that it is trending lower than that. And so some of this is a reset of expectations around pass-throughs. So I guess confirm that, put magnitude on it, if you could, you know, 38 drops to what, and then, How, where's the point of stabilization? You know, several years ago, it was 33, 34. It got up to 38 and changed last year.
David Windley: It sounds like what you're saying today is that, that is trending lower than that, and so some of this is a reset. I guess, of expectations around pastaries.
Speaker Change #213: That is that is trending lower than that and so some of this.
Speaker Change #215: As a reset of expectations around pass through so.
Kevin Brady: So I guess confirmed that. Put magnitude on it if you could, you know, 38 drops to what. And then. How. Where's the point of stabilization? You know, several years ago it was 3,334. It got up to 38 and changed last year. Where's that going? Yeah, I mean, today nothing's changed in terms of, you know, our ability to predict where it's going to go. You know, certainly, as I mentioned in the first quarter, I did expect it to increase, and it did in the second quarter. I think we finished it like 38.4% of revenue in the second quarter.
Speaker Change #216: I guess confirm that.
Speaker Change #217: Put magnitude on it if you could 38 drops to watch.
Speaker Change #218: And then.
Speaker Change #218: Where is the point of stabilization several years ago. It was $33 34, it got up to 38 and change last year.
Kevin M. Brady: Where's that going? Yeah, I mean, Dave, nothing's changed in terms of our ability to predict where it's going to go. You know, certainly, as I mentioned in the first quarter, I do expect it to increase, and it did in the second quarter. I think we finished at like 38.4% of revenue in the second quarter. And so it did rebound from the first quarter.
Speaker Change #219: Where's that going.
Speaker Change #220: Yes, I mean, nothing has changed in terms of.
Speaker Change #220: Our ability to predict where it's going to go.
Speaker Change #220: Certainly as I mentioned in the first quarter I do expect it to increase and it did in the second quarter I think we finished at 38, 4%.
Kevin Brady: And so it did rebound from the first quarter, and modeling what suggests that it's going to be at or slightly above these levels for bounce of the year. Let's see how it finishes out, but that's kind of what the modeling would suggest at this point in time. And we'll try to provide more color in the third quarter call on 2025 here. Like just as a general statement, you don't have a view as to whether it feels like there's a little post-COVID inflation rate at the sites and things like that. And is that normalizing, and maybe we're headed back over the long term to something like 34 instead of 38?
Of revenue in the second quarter, and so did did rebound from the first quarter.
Kevin M. Brady: And modeling would suggest that it's going to be at or slightly above these levels for the balance of the year. We'll have to see how it finishes out, but that's kind of what the modeling would suggest at this point in time. And we'll try to provide more color in the third quarter call on 2025. So, like, just as a general statement, you don't have a view as to whether we're, you know, it feels like there's a little post-COVID inflation rate at the sites and things like that. And is that normalizing, and maybe we're headed back over the long term to something like 34 instead of 38? In the long term? I don't know.
Speaker Change #220: And modeling would suggest that it's going to be at or slightly above these levels for the balance of the year.
Speaker Change #220: Want to see how it finishes out, but thats kind of what the modeling would suggest at this point in time.
Speaker Change #220: We'll try to provide more color.
Speaker Change #220: In the third quarter call on 2025 years.
Speaker Change #221: So like just as a general statement.
Speaker Change #222: You don't have a view as to.
Whether it feels like Theres, a little post COVID-19 inflation rate at the sites and things like that and is that normalizing and maybe we're headed back over the long term is something like 34 instead of 38.
Kevin Brady: In the long term, I don't know. I mean, I don't know that it's going to go back to those historical levels.
David Howard Windley: I mean, I don't know that it's going to go back to those historical levels, but it probably will trend back to those levels. But, but again, I'll provide more color on 2025 and the third quarter. Okay, last question for me. The balance sheet's now at a half a billion dollars. Can you talk to us about your intent for the use of the balance sheet, please?
Speaker Change #222: In the longer term.
Speaker Change #223: Don't know.
Speaker Change #222: I don't know.
Speaker Change #222: That is going to go back to those historical levels.
Kevin Brady: It's probably will trend back to those levels, but again, I'll provide more color on 2025 as a court.
Speaker Change #222: Probably will trend back to those levels, but that's again I'll provide more color on 2025 in the third quarter.
Kevin Brady: Okay, last question for me: balance sheets now at a half billion dollars. Can you talk to us about your intent for a use of the balance sheet, please. Thanks. Yeah, I mean, Dave, more kind of the same. You know, we'll continue to invest in the organic growth of the business. That's going to be our first priority. We do have some elevated capital expenditures that will happen here as we expand the campus, as I had mentioned previously. But beyond that, you really, it's just continue to look for opportunistic share of purchases and to the extent that we're able to travel at levels that we see valuable.
Kevin M. Brady: Thanks. Yeah, I mean Dave, more of the same, you know; we'll continue to invest in the organic growth of the business. That's going to be our first priority. We do have some increased capital expenditures that will happen here as we expand the campus, as I had mentioned previously. But beyond that, you really just need to continue to look for opportunistic shares of purchases. To the extent that we're able to travel at levels that we see valuable, we'll go ahead and get those executed. And if not, we're okay building some levels of cash.
Speaker Change #222: Okay last question for me.
Speaker Change #224: Balance sheet is now at $5 billion can you talk to us about your intent for use of the balance sheet. Please. Thanks.
Speaker Change #225: Yes, Dave more more kind of the same.
Speaker Change #224: Yes.
Speaker Change #224: We will continue to invest in the organic growth of the business.
Speaker Change #226: That's going to be our first.
Speaker Change #227: I already.
Speaker Change #227: We do have some.
Speaker Change #227: Some elevated capital expenditures that will happen here.
Speaker Change #227: Span the campus.
Speaker Change #227: I had mentioned previously.
Speaker Change #227: But beyond that.
Speaker Change #227: You really it's just continue to look for opportunistic.
Speaker Change #227: Share repurchases.
Speaker Change #227: And to the extent that we're in.
Kevin Brady: We'll go ahead and get those activities, and if not, we're okay building some levels of cash. Great.
Speaker Change #227: Able to trigger at levels that we see valuable we'll go ahead and get those executed if not we're okay building some levels of cash.
David Howard Windley: Great, thanks for taking my extra questions. Thanks, Dave. Thank you. Ladies and gentlemen, I'm showing no further questions in the queue.
Unknown Executive: Thanks for taking my extra questions. Thanks, Dave.
des: Great. Thanks for taking my questions. Thanks des.
Unknown Executive: Thank you.
Unknown Executive: Ladies and gentlemen, I'm showing no further questions than the queue.
Speaker Change #229: Thank you.
Speaker Change #229: Ladies and gentlemen, I'm showing no further questions in the queue I would now like to turn the call back to Laura for closing remarks.
Lauren Morris: I would now like to turn the call back to Lauren for closing remarks. Thank you for joining us on today's call and for your interest in Medbase. We look forward to speaking with you again on our third quarter 2024 earnings call. Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect.
Lauren Morris: I would now like to turn the call back to Lauren for closing remarks. Thank you for joining us on today's call and for your interest in MedBase. We look forward to speaking with you again on our third quarter 2024 earnings call.
Laura: Thank you for joining us on today's call and for your interest in Med D. As you look forward to speaking with you again on our third quarter 2024 earnings call.
Unknown Executive: Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect. Thank you.
Speaker Change #231: Ladies and gentlemen that concludes today's conference call. Thank you for your participation you may now disconnect.
Speaker Change #231: Okay.
Speaker Change #231: [music].
Speaker Change #231: Okay.
Speaker Change #231: Okay.
Speaker Change #231: Okay.
Speaker Change #231: Yes.
Speaker Change #231: [music].