Medpace Holdings, Inc. (NASDAQ:MEDP) Q2 2020 Earnings Conference Call - Final Transcript
Jul 28, 2020 • 09:00 am ET
Good day, ladies and gentlemen, and welcome to the Medpace Second Quarter Earnings Conference Call. [Operator Instructions]
I would now like to introduce your host for today's conference call, Kevin Brady, Medpace's Executive Director of Finance. You may begin.
Good morning, and thank you for joining Medpace's second quarter 2020 earnings conference call. Also on the call today is: our President and CEO, August Troendle; and our CFO and COO of Laboratory Operations, Jesse Geiger.
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, including the ongoing impact of COVID-19 on our business, are discussed in our Form 10-K and other filings with the SEC. 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.
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. I have a few comments to put our financial numbers in context. Q2 revenue was reduced by 15% to 20% below plan as a result of the pandemic disruptions. We believe future quarters will see a lesser impact and expect to get back on a more normalized growth path in 2021. Compared to pre-March 11 run rates, lab sample volumes continue to be depressed approximately 20%. Physical monitoring visits are improving but remain about 20% -- about 30% below levels prior to March.
Our second half margin is projected to be significantly above that of the recent past, driven to a large extent, by an anticipated reduction in the expected rate of growth below original plan. Heavy investment in hiring and training in advance and to permit rapid organic growth has depressed our margin significantly over the past few years. Those growth costs will be significantly reduced in the second half of 2020.
Starting in Q4 this year and continuing into 2021, we expect to ramp up hiring activity, which should bring 2021 margin back down as revenue accelerates. Although Q2 net new business awards recognized as backlog were down 9% compared to Q2 of 2019. This