Logo of jester cap with thought bubble.

Image source: The Motley Fool.

Syneos Health, Inc.  (NASDAQ:SYNH)
Q3 2018 Earnings Conference Call
Nov. 06, 2018, 8:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning, ladies and gentlemen, and welcome to the Syneos Health Third Quarter 2018 Earnings Conference Call. At this time all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. I would like to hand the conference over to Ronnie Speight, Senior Vice President of Investor Relations. Please go ahead, sir.

Ronnie Speight -- Senior Vice President of Investor Relations

Good morning, everyone. With me on the call today are Alistair MacDonald, our Chief Executive Officer; Jason Meggs, our Chief Financial Officer; and Michelle Keefe, our President of Commercial Solutions.

In addition to the press release, a slide presentation corresponding to our prepared remarks is available on our website at www.investor.syneoshealth.com. Remarks that we make about future expectations, plans and prospects for the company constitute forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995, and we disclaim any obligation to update them.

Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including the impact of the changes to the revenue recognition accounting standard. These factors are discussed in the Risk Factors section of our Form 10-K for the year ended December 31st, 2017, and our other SEC filings.

During this call, we will discuss certain non-GAAP financial measures, which exclude the effects of events and transactions we consider to be outside of our core operations. These non-GAAP measures should be considered as supplement to, and not a replacement for, measures prepared in accordance with GAAP.

For a reconciliation of non-GAAP financial measures with the most directly comparable GAAP measures, please refer to the appendix of our presentation. I would now like to turn the call over to Alistair MacDonald. Alistair?

Alistair Macdonald -- Chief Executive Officer

Thank you, Ronnie. Good morning everyone and thank you for joining our third quarter call. As we continue to build momentum with our unique business model, I'm pleased to report a solid third quarter, which exceeded our expectations for profitability.

Based on the level of customer engagement we are experiencing, we believe the breadth of our offerings, continues to resonate well in the marketplace as we generate awareness and understanding of our combined clinical and commercial offering.

Additionally, our integration efforts continue to progress ahead of schedule in all phases of our operations and our superior customer delivery was recognized with several industry awards during the quarter. I'd like to begin by taking you through some highlights from the third quarter.

First, we had solid overall sales performance with total net awards of $920 million and an overall book to bill ratio of 1.17 times for the quarter and 1.21 times year-to-date. This solid performance was broad-based, driven by contract awards that were fueled by strong collaboration across our clinical, commercial and integrated solutions teams.

Second, our Commercial Solutions segment returned to year-over-year growth, with revenue up 5% compared to the third quarter of 2017, and up sequentially for the second consecutive quarter.

Third, we closed our acquisition of Kinapse. This acquisition expands our regulatory, safety, and pharmacovigilance consulting and operations in the post-approval arena. It deepens the (Technical Difficulty) multiple other facets of our business, including our clinical trial transparency, medical writing and quality operations, consulting capabilities in the areas of R&D and clinical operations, medical affairs, market access and quality and compliance.

Kinapse also expands our Asia Pacific operational and delivery capabilities and doubles our consulting foot print in Europe. Turning to our results by business, we remain pleased with the progress of our commercial solutions offering, as the team continues to build momentum in the strengthening macro environment.

In addition to the growth we experienced during the quarter, net awards of $244.2 million were up 19% sequentially resulting in a year-to-date book-to-bill ratio of 1.08 times, which is largely consistent with our target level of 1.10 times.

Our overall commercial pipeline is growing in line with expectations, with FDA new drug approvals already exceeding the near record levels of 2017 and customer feedback, indicating a growing desire to increase commercial outsourcing over time. Our full-service communications business serves as one of the key differentiators for our Commercial Solutions segment and represents the largest healthcare only network in the world.

During the quarter, our communications teams continue to demonstrate their outstanding creative ability to help customers achieve their commercialization goals and were recognized with multiple industry awards.

For example, GSW, our largest advertising agency, was named, Agency of the Year by Ad Age and Modern Healthcare at the Modern Healthcare IMPACT awards.

GSW also received awards from medical, marketing and media magazine for the best professional print campaign and the best digital initiative for non-consumers. Digital excellence is the focus for our customers, and our digitally native commercial experts continue to deliver. Our Clinical Solutions segment also continues to build momentum in the market. Third quarter net awards were $676 million, resulting in a net book to bill ratio of 1.24 times for both the quarter and the trailing 12 months.

These awards were broad-based across all customer segments and were particularly strong among our core small to mid-sized customers. We also remain engaged in ongoing discussions regarding strategic relationships with other large pharma customers. Given our strong year to date awards, total backlog has grown 14% since the third quarter of 2017.

With regards to clinical net service revenue under ASC 605, we expect growth of approximately 4% a share, up from 2.6% growth in 2017.

It is worth noting that this growth rate has been negatively impacted by extended start-up phases on certain programs, driven by the complexity of our new large programs along with other customer and regulatory delays. While these timing factors are impacting our revenue guidance for this year, our focus is on cost management and synergy capture results in only minor adjustments to our expectations for adjusted EBITDA.

In the clinical segment, I also want to highlight our continued strategic focus on investigative site relationships through both our catalyst site programs and site relationships. We use a variety of data-enabled and multi-channel approaches to patient recruitment fueled by the expertise of our communications business to align our customer's studies with the appropriate sites.

These efforts continue to be central to our operating philosophy, and I'm very proud to say that we recently won the Eagle award in the CRO category from the Society of clinical research sites for the second consecutive year.

Importantly, this award is voted on by more than 10,000 sites in 47 countries. Next, I'd like to provide updates on some of our ongoing strategic investments. In our Commercial Solutions segment, we are making ongoing investments to further enable integrated offerings. This includes expanding our teams with seasoned strategic commercial talent (ph) and investing in specialized technology platforms to support multi-functional, multi-channel marketing execution.

Providing flexible dynamics services across multiple channels enabled by data and analytics is critical for our customers' success in a rapidly evolving market. For example, we recently initiated a new customer engagement and incorporated our newly developed predictive (ph) market modeling, which is being used to inform iterative strategic decisions on media channels, budget modifications and timing of media (ph) investments.

This is only one example of the dynamic capabilities we are building to support our customers end-to-end commercialization needs. We've also continued to invest in our integrated solutions or ISG team. During the third quarter, we strengthened this team by adding experienced asset strategists to work with our customers to optimize performance across the product development life cycle.

We are also bolstering ISG's cross-functional operational capabilities, utilizing the Trusted Process, which enables management and customer assets both across clinical and commercial.

This team is driving a unique collaborative approach to creating customer solutions. A recent example included utilization of our real world evidence expertise, robust adherence data, and commercial insights to create a unique clinical delivery strategy for a mid-sized biopharma customer.

This strategy results in the award of a large Phase III study during the third quarter. We also continued to enhance our data strategy to optimize how data and digitization fuel our Biopharma Acceleration Model, similar to our strategy regarding technology and investigative sites. We believe in a more modern approach to date the digital solutions partnering with best of breed third parties, allowing us to remain source agnostic, nimble and ahead of the curve.

We call this (inaudible) multiple option strategy dynamic assembly, which enables us to address the nuances of each customer, trial protocol and product launch quickly while leveraging the best advances in a flexible and capital-efficient manner. Our ability to synthesize data and technologies delivers meaningful customer value through optimization tools, intelligence platforms and predictive modeling.

This approach to partnering with like-minded partners was recently recognized when we won the Medidata's Accelerator Awards as part of the Medidata Architect of Hope program.

This recognized our pioneering work with protocol first to create an integration between electronic medical records and electronic data capture systems to reduce the data entry burden for investigative sites. This is the tool we are using in complex oncology studies where we have seen reduced site burden and costs accelerators for the timelines and improved data quality.

Finally, our team is also exceeding our expectations on integration activities. We are therefore increasing our previous estimate of 2018's realized synergies by $10 million to $75 million to $80 million. We realized approximately $22 million of savings during the third quarter, bringing our year-to-date total to $54 million, prior to our strategic reinvestment.

We also remain very confident in our ability to realize a $125 million in synergies annually by 2020, and we continue to work toward identifying additional opportunities.

In closing, let me express my sincere gratitude to my 23,000 Syneos Health colleagues worldwide who make all of this progress possible, including our new team members from Kinapse, and I wanted to add a special thanks to the teams that participated in our multiple industry awards this quarter.

Overall, our team's engagement, dedication and focus on continuing to deliver for both our new and existing customers truly sets them apart. Now let me turn it over to Jason for more comments on our financial performance.

Jason?

Jason M. Meggs -- Chief Financial Officer

Thank you, Alistair and good morning everyone. Let me remind you that our results are on an adjusted or non-GAAP basis, as if the merger closed at the beginning of the earliest period presented as defined on slide 2.

Consistent with prior periods, we will be discussing the current period results under the previous revenue standard to facilitate the period to period comparisons. For these comparisons under ASC 605, we will be discussing adjusted service revenue excluding reimbursable expenses.

I would like to start with a brief summary of our third quarter results. A few items I am particularly pleased with include, our strong adjusted EBITDA performance under ASC 606 with 16% sequential growth exceeding our forecasts and establishing strong momentum for the full year. Our return to year-over-year growth by the Commercial Solution segment along with continued growth in our pipeline of new business opportunities.

Our accelerated realization of synergies for 2018 and the reinvestment that allows us to make in order to drive future growth, and our progress on the balanced capital deployment strategy with the closing of the Kinapse acquisition, the funding of our accounts receivable securitization facility to lower interest costs and our continued leverage reduction.

Now, I will review our financial results in more detail. On slide 3, we show our results under both ASC 605 and 606, but I'll begin by discussing results under ASC 605. Our total adjusted service revenue for the third quarter of 2018 was $787.7 million, up 3% compared to $766.6 million for the third quarter of 2017. This was net of a foreign exchange headwind of $3.1 million.

The increase was driven by a 2% improvement in our Clinical segment, which grew from $533.4 million in the third quarter of 2017, to $543.6 million in the third quarter of 2018.

This growth in our Clinical segment is driven by strong net awards in the last 12 months, although it was partially offset by delays in the start-up of new awards and existing studies and backlog, along with an unfavorable revenue mix during the current quarter.

I would also note that under ASC 605, our clinical quarterly revenue trends during 2018 have fluctuated due to the timing of customer contract modifications. If normalized for this timing, year-over-year revenue growth rates would have been in the 3% to 4.5% range for each of the first 3 quarters of 2018.

Our commercial segment not only posted another quarter of sequential growth, but also returned to year-over-year growth in the third quarter. More specifically, commercial revenue increased by 5% to $244.1 million in the third quarter of 2018, compared to $233.2 million in 2017.

Adjusted EBITDA for the third quarter increased by 16% from $138.9 million in 2017 to $160.5 million in 2018 with the associated margin increasing from 18.1% to 20.4%.

This included a foreign exchange benefit of $3.2 million. The benefit of clinical and commercial revenue growth along with other cost savings and realized synergies were partially offset by an unfavorable revenue mix in our Clinical segment. Adjusted EBITDA for the third quarter included approximately $5 million of benefits that we originally expected in the fourth quarter.

For the third quarter of 2018 adjusted EBITDA includes the realization of $22 million in synergies, before the impact of our strategic reinvestment to drive growth. Adjusted net income increased by 42% for the third quarter of 2018 to $80.3 million from $56.5 million for the third quarter of 2017.

Adjusted diluted EPS grew by 43% from $0.54 in the third quarter of 2017 to $0.77 in the third quarter of 2018. These increases were driven primarily by our growth in adjusted EBITDA, lower interest expense, the reduction of our non-GAAP tax rate to 27.5% and the impact of our share repurchases during the first half of 2018.

Now, I want to summarize our results under the new ASC 606 standard. Adjusted total revenue for the third quarter which includes reimbursable expenses was $1.12 billion representing 3.9% sequential growth.

This is comprised of adjusted total revenue of $822.1 million for clinical and $295.7 million for commercial. Total adjusted EBITDA in the third quarter was $158.5 million, representing 15.7% sequential growth and a 14.2% adjusted EBITDA margin.

Total adjusted EBITDA was $424.2 million year-to-date. Under ASC 606, adjusted net income was $78.8 million for the third quarter, resulting in an adjusted EPS of $0.75.

Now moving to cash flow and balance sheet. During the third quarter of 2018, our cash flow from operations was $125.8 million on an as-reported basis. Our combined net DSO for the quarter was 46 days under ASC 605 and we ended the quarter with $132.4 million of unrestricted cash and total debt outstanding of $2.86 billion.

Slide 7 provides an update on our debt management and capital deployment activities. We remain focused on a balanced approach to capital deployment to drive shareholder value. This includes debt repayment tuck-in acquisitions and share repurchases as determined by available cash flow as well as market opportunities and conditions.

During the third quarter, we achieved several key milestones. First, we utilized $183.6 million proceeds from the funding of our accounts receivable securitisation facility to reduce our outstanding term loan B, reducing the related interest cost by 100 basis points.

Second, during the third quarter we repaid an additional $36.7 million of our term loans, bringing our total debt reduction since the closing of our merger to $186.2 million on track with our plan to reduce our overall ASC 605 net leverage to approximately 3 times by the end of 2019.

Third, we closed our acquisition of Kinapse, which is immediately accretive to earnings. As Alistair highlighted, this transaction expands our consulting and operational capabilities in multiple disciplines and should help fuel our growth in key markets.

We continue to expect our non-GAAP effective tax rate for the full year 2018 to be approximately 27% to 28%. The cash tax rate may fluctuate due to changes in the jurisdictional allocation of our taxable income, so we continue to expect the total cash outlay for these taxes to be approximately $10 million for the year.

Turning now to our guidance as outlined on slide 8, we've taken into account a number of factors including our existing backlog, current sales pipeline, trends in cancellations and delays and our estimated merger synergies net of reinvestments.

Further, our guidance is based on current foreign currency exchange rates, expected interest rates and our expected tax rate. Our guidance is also based upon our estimated diluted share count, excluding any share repurchases subsequent to the third quarter. We are adjusting our ASC 606 guidance to reflect the following. Incremental foreign exchange headwinds of approximately $28 million since our initial guidance in May with $8 million occurring during the third quarter, delays in our clinical backlog conversion as a result of extended study start-up given increased protocol complexity and other delays and somewhat slower ramp of our new strategic relationships and awards compared to our initial expectations.

Therefore, we now expect full year revenue in the range of $4.38 billion to $4.44 billion. Despite this lower revenue guidance, due to our year-to-date performance, ongoing improvements in operational efficiency and cost management as well as accelerated synergies, we are only lowering our adjusted EBITDA guidance midpoint slightly.

We now expect adjusted EBITDA in the range of $585 million to $605 million. Lastly, we are increasing our expected adjusted diluted EPS to $2.66 to $2.80. We based our updated adjusted EPS guidance for the full year on among other things expectations of interest expense of approximately $127 million, expected merger synergies of $75 million to $80 million before the impact of our related strategic investments and a fully diluted weighted average share count for 2018 of approximately 104.7 million shares which will vary by quarter.

Since we are focusing our business primarily under ASC 606, we are no longer updating our formal guidance under ASC 605. However, I wanted to provide you with some directional commentary for the fourth quarter. Under ASC 605, we expect mid-single digit sequential revenue growth in our Clinical segment and mid double-digit sequential revenue growth in our Commercial segment.

We expect adjusted EBITDA, sequential growth in the mid double-digit range. While we are not providing full 2019 guidance, we did want to provide directional commentary on ASC 606 revenue growth based on what we see today.

We expect our revenue growth rate to accelerate further in 2019, assuming reimbursed expenses grow in line with direct fee revenue growth. For our Clinical segment, we expect a more modest acceleration, primarily due to the start-up delays, I highlighted earlier as well as an estimated incremental FX headwind of $35 million based on current exchange rates.

For our Commercial segment, we expect a more rapid acceleration with the opportunity to exceed our view of the commercial market growth rate. This completes our prepared remarks and we would be happy to answer any questions.

Operator?

Questions and Answers:

Operator

Thank you. (Operator Instructions). And our first question comes from Robert Jones of Goldman Sachs. Your line is now open.

Robert Jones -- Goldman Sachs -- Analyst

Great. Good morning, thanks for the questions. I guess, Alistair and Jason, just looking at the bookings, kind of in a vacuum obviously healthy 1.24, I think on the clinical side, obviously healthy, but year-over-year, it does look like bookings declined a bit and I think most of us would characterize the environment as pretty healthy right now on the clinical side.

So I was wondering if you could delve a little bit deeper into maybe what drove a little slower bookings growth than at least what we've been seeing, I know you mentioned the strategic partnership wins, curious how much of that played a part relative to just maybe some of the other underlying business that you have?

Alistair Macdonald -- Chief Executive Officer

Thanks, Bob, and good morning. Thanks for the question. I think we're at 1.24 trailing 12 months in last 2017 we're about 1.3 overall. So I think 1.3 was running a little bit hot to be -- to be honest in awards, and we've changed the awards booking policy to some degree.

So it kind of pulls our awards down a little bit compared to where it used to be, obviously we just take the first share of FSPs. We only booked (inaudible) full service is going to and that's going to come into backlog within the next six months and we didn't always have that policy in place all the way through 2017.

So that naturally pulls it down a little bit. I think the environment is strong, and I think as an organization, we are seeing good strength and growth in this mid (ph) with I think, a lot of people are saying that's a very buoyant market funding -- budget funding is kind of strong underneath that.

And as we've transitioned into what we now believe as the number 2 CRO by revenue, we've become the new kid on the block in the big pharma and those negotiations, discussions and the NRI (ph) cost in MSAs fully in place, takes a little bit of time.

So we expect to start seeing us penetrate that sector, although we've been well in 2018 in that sector, I think, about where we expect it to be, I think we can accelerate a little bit as we go into 2019. Jason any?

Jason M. Meggs -- Chief Financial Officer

No, I think that's a good summary.

Robert Jones -- Goldman Sachs -- Analyst

I guess, just one quick follow-up on the kind of acquisition, you know, I think originally you guys had mentioned it being kind of immaterial neutral to this year. Sounds like maybe it's helping a little bit this year. So I guess, just an update on what drove, what seems like modest accretion or expectations for modest accretion in '18 and then anything you can share with us about how we should think about that asset as part of the enterprise as we look out to fiscal '19?

Alistair Macdonald -- Chief Executive Officer

Yeah, absolutely, Kinapse is an organization we've actually worked with for a couple of years, Bob, so what we saw when we put the merger together and we started to deploy these end-to-end platform is, we have some gaps in the model, not more scale gaps and capability gaps and Kinapse actually closed about six of those gaps for us in one single deal.

So we saw it as a very valuable asset to us in the end-to-end kind of the ISG platform that we're putting together and the fact that we worked with them for a couple of years, we've -- and worked their way and culturally strong alignment and I think it's -- puts us in a sector that has some high potential growth areas and we are already seeing I think some nice revenue synergies or opportunities to drive revenue synergies from that group.

So it gives us a lot more strength in consulting horsepower in Europe as well as a bigger footprint in Asia Pac on the service side. Jason any--?

Jason M. Meggs -- Chief Financial Officer

Yeah, on the EPS accretion, I think we still see as being inferior to this year, although it is slightly accretive, just given the short period that's in the year, the accretion is coming more from what we're seeing on just lower CapEx and depreciation and some other items there, Bob.

Robert Jones -- Goldman Sachs -- Analyst

Okay, great, thanks.

Alistair Macdonald -- Chief Executive Officer

Thank you.

Operator

Thank you. And our next question comes from John Kreger of William Blair. Your line is now open.

John Kreger -- William Blair -- Analyst

Thanks, good morning. Alistair, I think back on slide 4 of the deck, you guys referred to unfavorable revenue mix in both the clinical and commercial solutions. Can you just give us on update on what you're seeing there and what specifically is unfavorable in the portfolio?

Jason M. Meggs -- Chief Financial Officer

Hey John, it's Jason here. So we did see a little bit of an unfavorable mix in both businesses due to timing of certain items coming through into revenue in both businesses, one, just driven by, as I mentioned in the call, the fluctuations that we see in contract modifications that we need to look at over the year instead of quarter-to-quarter and then a little bit of the same on the commercial side, it is something that we see catching up predominantly in 4Q, in both businesses.

John Kreger -- William Blair -- Analyst

Okay. So when we hear that, we should think kind of modifications and adjustments as opposed to certain types of businesses that might have lower margins?

Jason M. Meggs -- Chief Financial Officer

In this instance, yes, it can be both, John, but in this instance, yes, it is the former.

John Kreger -- William Blair -- Analyst

Got it, got. Okay, and then Jason, another one for you, I think in your remarks you talked about seeing kind of accelerated benefits at the EBITDA line. Some things you expected to get in the fourth quarter, can you just, was that a $5 million benefit, and just elaborate on what that was?

Jason M. Meggs -- Chief Financial Officer

Yeah. So we talked last quarter about the fact that we saw some of the KPI based bonuses that could come through the end of the year. We saw some PTO accrual reversals that come through at the end of the year, et cetera, and as we're just continuing to integrate and come together and get a better line as view (ph) those in closing those things out some of that benefit came forward into 3Q.

So just wanted to make sure that, that was clear that it wasn't additive to what we had already expected in the full-year guidance.

John Kreger -- William Blair -- Analyst

Great, thanks. And then one last one, can you remind us how much floating rate debt you have versus the total debt outstanding?

Jason M. Meggs -- Chief Financial Officer

So we have about 55% is fixed rate as of the end of September, and 45% variable.

John Kreger -- William Blair -- Analyst

Great, thank you.

Jason M. Meggs -- Chief Financial Officer

Thanks John. Welcome.

Operator

Thank you. And our next question comes from David Windley of Jefferies. Your line is now open.

David Windley -- Jefferies -- Analyst

Hi, thanks. Alistair, as you're talking about kind of continuing to push efforts around ISG, it prompts me a question in my mind as to whether you are dedicating operational resources to that or is ISG primarily kind of the coordination in marketing customer facing element of the business and then the business you win in ISG has been handed off to the operational segments? How should I think about that?

Alistair Macdonald -- Chief Executive Officer

Well, good morning, Dave. It's a bit of both actually. So the ISG team is led by -- it's about a dozen folks now who have the kind of bandwidth and understanding of both clinical and commercial that real world evidence play in the middle and the connections in and out of our consulting business to pull out altogether.

So they're able to prepare and look at a value proposition in a different way of how we accelerate the customer, all the way across the continuum right, so pulling all those fits together. They then lead a coordination role -- and I'll let Michelle add, but they lead a coordination role for us to then deliver that work across the commercial and across the clinical organizations as they are. The work is the same, it's delivered in a different orientation with a different kind of a push.

So I think Michelle, your view of that from the commercial perspective?

Michelle Keefe -- President of Commercial Solutions

Sure. So when the ISG identified these opportunities across Clinical and Commercial, they quickly get our commercial integration team involved, so we have a team that has expertise in really understanding all the assets that we have under the commercial umbrella and how to integrate those assets to drive the best launch possible for that particular asset.

And so, we worked very closely with them, but to your point, David, when we get into the day-to-day operations of delivering the work that does occur in the commercial unit if it's commercial business, and the clinical unit, if it's a clinical business.

Alistair Macdonald -- Chief Executive Officer

I will add one thing, or so Dave, there is a lot of operational coordination as well. So it's not just a different kind of sales pitch. It's a different delivery. We're doing the same things in more or less the same order, but in a more expedited, more vigorous manner. So we are lining up compressing all the kind of dead space in the process and almost negotiate with the customers to say in the trusted process style, this is what we're going to need, this is when it's going to be needed and this is what -- this is how it helps us continue to drive the pace of the development and I think what we're seeing from customers in terms of the feedback is that they expect that it saves them considerable time from -- to going to the market and hit peak sales. So that's where it's all about right, driving that speed.

David Windley -- Jefferies -- Analyst

Sure. And in the past you've I think quantified as much as $300 million or maybe a little over $300 million of wins, is there an update to that number?

Alistair Macdonald -- Chief Executive Officer

No, not this time. I think Q3, we had some assistance from ISG. We had a big Phase III clinical award in the quarter that was a real collaborative effort between our general medicine team and the ISG Group pulling data, building a very strong data digital play that helped us win that award over some of our usual suspect competitors, if you like.

So we're pretty pleased with their contribution, but that wasn't what we would consider a typical ISG win, because it was more clinical. I think it evolves into an ISG award as that company gets through clinical, but they wanted to hold off that conversation until they're through their clinical phasing, a little bit. That's sometimes what we see, is people are interested, they want to do it, but they don't want to do it yet, because they still got to get through some of the kind of contingent hurdles of clinical.

David Windley -- Jefferies -- Analyst

Okay, and then, a last one real quickly, Jason, sounds -- thinking about EBITDA, fourth quarter you had some pull forwards into third, you've identified some things that kind of kick in the fourth quarter, can you help me with the kind of net effect or the sequential impact from third quarter to fourth quarter on EBITDA? I think you kind of talked about revenue, I missed it if you pointed at EBITDA at all.

Jason M. Meggs -- Chief Financial Officer

So on the 605 side, Dave, we did talk through that with the sequential double-digit growth, 606 we're solving for the prepared guidance that we have there and given what we saw in 3Q in terms of sequential growth and what we can see with the growth of the actual revenue line and then some of this mix coming back to us in quarter 4, and then just normal Q4 activity, we feel confident with the 606 side as well.

David Windley -- Jefferies -- Analyst

Okay, thank you.

Operator

Thank you. And our next question comes from Eric Coldwell of Baird. Your line is now open.

Eric Coldwell -- Robert W. Baird -- Analyst

Thanks very much and good morning. The first one and I'm sorry I'm toggling quite a few calls this morning, revenue growth, I think you made some comments on 2019 clinical incremental FX headwinds, slower starts frankly something we've heard from just about everybody at least once, over the last year.

Commercial more rapid acceleration and possibly above market, I was hoping if you could be a little more specific on that. When you're talking about the acceleration rates, are you talking about versus what you were seeing in 2018, versus Street expectations? I'm just not 100% clear on when you gave that kind of qualitative commentary what you really were implying with the growth rates for clinical and commercial next year?

Alistair Macdonald -- Chief Executive Officer

Yeah, I'll start and I'll pass it to Jason, Eric. Yeah, I mean I think we see a healthy market on both sides, as we get back into our stride, if you like, and (inaudible) wise in clinical. We're looking at accelerating the growth from where we are at and Jason will cover that a little bit more.

And then on the commercial side, I think we've already talked about it a little bit, that environment continues to develop, not just from the number of products going through the approval processes here in the US and also over in Europe, but also the kind of intent of the customers that were in the conversations with in terms of increase in the amount of outsourcing they're doing in that sector.

So that's something we obviously track very closely, because our major competitor, if you like in that sector in commercial for that outsourcing work is actually farmer (ph) himself. So that the sentiment on outsourcing piece is very important for us when we look at forecasting growth in penetration in that sector, but Jason any --?

Jason M. Meggs -- Chief Financial Officer

Yeah, good morning. So the growth is -- if you look at clinical, it's -- we grew 2.5% in '17, we are going to be in that approximate 4% range, in this year, where we've always looked at the market in that 6% range, there we've got a couple of headwinds with the FX and the start-up delays, however, we see acceleration from the four, and then when you look at commercial, right, we were contracted last year growing low single digits this year.

So often easier, sort of large point when the backlog growth that we see coming out and the pipeline being healthy, we see that getting up above potentially what we see, what we call there on the market growth of 7% on that business.

So that's what we're looking at the year-to-year acceleration that we're seeing in both businesses.

Eric Coldwell -- Robert W. Baird -- Analyst

That's super helpful. And then I just kind of a technicality here, but maybe it's too early to even know, but this administration, obviously with the Trump blueprint and what is our -- and Trump have recently talked about with foreseeing farmers to list their prices in direct to consumer advertisements.

I'm curious if you see that having any influence positive or negative on your business in 2019 and perhaps what customers are talking about as they start to think about some of these changes that are coming in terms of how the administration looks at transparency in the drug pricing marketplace.

Alistair Macdonald -- Chief Executive Officer

We're not political commentators, but thankfully -- I think, I'm not sure politicians know what's going on that (inaudible) allowing for us to comment on it, but we monitor that market obviously, we're in constant talks, discussions with customers about their approach to what impact drug pricing has on them, we've seen that threat of being growing drug pricing, and we operate in the European centers where it's -- it's there already, you've got nice and other agencies around Europe that really that kind of helps us drive business almost, because our customers don't sit in front of those agencies every day, but we do and part of our advantage is to bring that current knowledge that we got from a meeting yesterday with one customer into a meeting tomorrow for another customer, where we are getting that intel and what they're expecting to see what the HOL (ph) packages need to look like.

So that's enabling us to help customers in clinical design better solutions, better evidence, packages that are going to pass muster when they get to that point. And then obviously that information gets carried across into commercial. So Michelle is out in about every day talking about this.

So Michelle, do you want to --?

Michelle Keefe -- President of Commercial Solutions

So a couple of things. We have a public relations practice that we called reputation and risk management and that team in PR spends a lot of time tracking all what's going on in the pricing and political environment around pharma and life sciences.

And they are in constant conversation with C-suite at a variety of pharma organizations around how are they interpreting this and how are they reacting to it and I think right now, it's a -- they are really trying to understand the impact that this may have, and I think it's may, may have, and our teams are working with these pharma CEOs and C-suite on designing strategies on how would you then talk to patients about the medications and how would you make patients aware of things that are available to them in the marketplace to treat their variety of disease states.

So we have our hand on the pulse of that. I don't think we're ready to make a public statement around what we believe is going to happen because I think we all know that things change over time, but I think we're very well positioned to partner with our Life Sciences' customers to address whatever situation happens, and I think we're in a position of strength candidly to do that.

Eric Coldwell -- Robert W. Baird -- Analyst

That's fantastic, my last one quickly. Jason, I know you've talked about the PTO accrual reversals in the past. It's not a surprise to hear about that. I'm curious if you could possibly quantify the total impact you see on adjusted EBITDA for calendar '18. And then, any thoughts on whether your policies or planning for 2019 might change as a result of what you're seeing in 2018. Thanks so much.

Jason M. Meggs -- Chief Financial Officer

Yeah, so we'll go back to front there, so we have been looking at that as we've come together this year and are continuing to harmonize that within confines of obviously US GAAP and the rules there. We have not quantified what that is, this year, Eric and -- I don't have that at hand actually, but don't believe we're going to want to quantify that, last year we did say and this is probably the way to think about it that there will be the restart in quarter one, as you come out of quarter four that will see the sequential hit to margins.

So that's probably the way to think about it. And we can look at that as we head into quarter one.

Eric Coldwell -- Robert W. Baird -- Analyst

Okay, all good. I knew we were expecting this, so I appreciate the comments. Thank you.

Jason M. Meggs -- Chief Financial Officer

Thanks.

Operator

Thank you. And our next question comes from Sandy Draper of SunTrust. Your line is now open.

Sandy Draper -- SunTrust Robinson -- Analyst

Thank you very much. A lot of my questions have been asked and answered. So maybe just a capital deployment question. Just your updated thoughts, you commented guidance does not include share repurchases. When you think about share repurchases to paying down debt, tuck-in acquisitions. Just any update on sort of how you and the board are thinking about priorities there and willingness to be more aggressive in buying back stock or is it more focused on paying down debt hitting leverage targets or do you think the activity level is strong enough and the tuck-in acquisitions and you'll end up using more cash there. Thanks.

Alistair Macdonald -- Chief Executive Officer

Good morning, Sandy. So our priority remains again that debt down, again the leverage down to 3 -- approximately 3 times on the 605 by the end of 2019, and then looking at probably next priority, the next priority for us is being opportunistic, I mean we knew, we wanted to go after Kinapse because of the capabilities that they bought, we like the asset, we like what it does for us in terms of competitive space in high growing markets, global revenue synergies across clinical and commercial.

And then, the share repurchase probably in third place along those. We want to remain nimble and opportunistic in that M&A space, I think we've got some work to do in both sectors.

As we learn more and more about the model that we have and we listen more and more to customers, we're seeing gaps where we have the capability, but perhaps maybe not always the scale, so there's a couple of areas, I think in and around commercial that we'd be interested in adding capability and then obviously, we're constantly looking at capability in Asia Pac where labor market is tight, et cetera, et cetera on the clinical side.

So those 3 are the primary priorities to pay down the debt, M&A and then share repurchase.

Sandy Draper -- SunTrust Robinson -- Analyst

Great, that's helpful.

Jason M. Meggs -- Chief Financial Officer

Thanks Sandy.

Operator

Thank you. And our next question comes from Ross Muken of Evercore ISI. Your line is now open.

Ross Muken -- Evercore ISI -- Analyst

Hi, thanks guys, good morning. So just again going back to sort of what happened to the burn and some of the trial push out, I guess what how much of this is kind of a drug complexity and just the general recruitment time versus sequencing and generally when the farmers (ph) are starting up, maybe some of these studies -- and what I'm getting to is like how much is in sort of your control versus out of your control and as you think about that moving into next year given the bookings mix, does that continue to be probably a bigger or maybe confidence window, just given the mix of trials that are coming in on net new wins?

Alistair Macdonald -- Chief Executive Officer

So it is, I think you hit most of the points actually, so it's start of complexity. So some of these trials that we're picking up and delivering now are -- have a tremendous amount of complexity to them not just in the locations that we're taking them to obviously from a regulatory pathway perspective, but also the actual drug type or the class that they are, cell and gene therapy, et cetera.

So a much heavier lift with IOB, much heavier lift in the approval pathways. So you've got that factor. Some of it is outside of our control is re -- I won' t say reprioritization with customers, but a slowing down of a trial to get another one up and running and get it kind of out of the way, a kind of an elongation of that decision making, so trials are awarded. We're not seeing cancellations, et cetera, but the trials are awarded and moving forward, they're just slowing down almost the start points for them. Whether that's because the protocol is more complex, the IP is more complex.

So we're seeing a little bit of that, and I think somebody else said on the call earlier on that some of the -- of our (inaudible) have seen that, which is the trend and we're taking that into account for future guidance because I think as we've got more capable in those areas, it does affect the revenue burn on that type of trial.

So I mean Jason, any positive thoughts on how that impacts us for 2019? I think we've factored that in what we've how it reset, but --

Jason M. Meggs -- Chief Financial Officer

Yeah. I mean, I think the, we have the FX headwind, we have the delays here that we've looked at and thought about and ultimately what we're -- we're focused on is the fact that our book-to-bills are where we expected and our pipeline remains healthy, we've got the growth acceleration, EBITDA and EPS is there for this year.

So those are the things that we're looking at and focused on.

Sandy Draper -- SunTrust Robinson -- Analyst

Great, thanks.

Jason M. Meggs -- Chief Financial Officer

Thank you.

Operator

Thank you. And our next question comes from Tycho Peterson of JPMorgan. Your line is now open.

Tycho Peterson -- JPMorgan -- Analyst

Thanks. A lot of question have been asked at this point, but I had a couple for Jason, just to clarify, you know, on commercial, has the fact that the guidance was kept intact here really driven by the Kinapse deal close, I know you talked about EPS, but just curious as to, on the revenue side, how much do you think that adds in the fourth quarter?

Alistair Macdonald -- Chief Executive Officer

Yeah. So obviously we are rolling that into the commercial segment, so that is in the guidance. That said, the business has returned to year-on-year growth excluding that, and that's what we were -- we're looking to drive in the business and the Kinapse is adding that strategic capability that we're looking to get. So business is still growing year-on-year, excluding the impacts of Kinapse.

Tycho Peterson -- JPMorgan -- Analyst

And then I guess just one clarification on the 4Q EBITDA, you had the question earlier, but if you pull forward the $5 million, again (ph) 4Q EBITDA would be less by $5 million, but what is the annual guidance go by down by $5 million, especially with the 3Q, was that FX, is that revenue mix, can you maybe parse out the other components of the EBITDA cut given the 3Q upside?

Jason M. Meggs -- Chief Financial Officer

it's just related to tightening that revenue range and bringing the overall revenue down Tycho, just being prudent as we -- as we see that come out and tighten up to the volume of the revenue.

Tycho Peterson -- JPMorgan -- Analyst

And then just lastly on the cost synergies, can you maybe just talk on what drove the $10 million increase? And then as we think about implications of that for EBITDA margins next year, can you just provide us any directional color and then how should we think about upside to that longer-term target of $125 million, $150 million by 2020?

Jason M. Meggs -- Chief Financial Officer

Yes. So I'll start and Alistair can add any color. Yeah, I mean, we are seeing the incremental synergies in 2018, really across the board, whether it's labor, the non-labor sort of procurement driven savings, facility rationalization, the team just has done a great job across the board there getting that completed, when you look at next year, and thinking about the margins, obviously, we're still going through that process, but we will exit the year with a run rate ahead of 2018.

That said, there could be mixed differences between the segments as we talked about earlier on the growth side that could mute some of that and then we need to continue to make investments in the business to drive growth. So we're seeing the exit rate improved, but not getting too far ahead of ourselves and then continuing to look at the $125 million and in 2020. Do we see more there? I'll let Alastair comment, but we're still very focused on taking that further if we can.

Alistair Macdonald -- Chief Executive Officer

Yeah, absolutely, I mean we constantly review the structure of both the business, both the big business call it, units, the Commercial and Clinical to look at, are they optimized for delivery as well as efficiency and we're still going through that work on both units and I think we -- we are confident in the $125 million for the exit in run rate in 2020.

But we are still evaluating opportunities together up to the potential 150 that we talked about on day one of the merger. So we're continuing to review that, we've had great acceleration for the synergies and we had a dinner last night with the team that's been driving that and thank them for their efforts, so terrific job to get through the ERP consolidations, so we've done, HRIS consolidation drove changes without missing a beat for the customers. So we are pleased with that.

We got to keep that performance up and keep managing more and more efficiently and we've got other things to come is office consolidations continue to kind of roll out around the world and they're all kind of well-known, I understand there is time but they take a while to get out of leases.

So we have that to come into 2019, etcetera. So, we are pretty confident where we were at with it, very happy with the acceleration that we've seeing in that sector and constantly asking for how we get from the $125 million to $150 million.

Tycho Peterson -- JPMorgan -- Analyst

Okay. And if I can just ask one quick follow-up in closing, here. Just on the clinical backlog burn to Ross' question, you know, should we expect it to kind of remain at these levels do you think for 4Q or do you have any insight there?

Jason M. Meggs -- Chief Financial Officer

Yeah, I mean -- this is Jason, so the burn rate did tick down in quarter 3 on the clinical side as you know, some of that is just the, the fact that we had a large amount of awards in quarter two that just those things burning out over 40, 50 months whatever it might be right, your rates are going to tick down just mathematically.

So we do see that in the guidance sort of staying where it is in the range, not jumping back up to the where we were in the last several quarters in that 14% and 14.5%, but looking at that as we get into '19 to -- to start to normalize a little bit more backup and to a higher number, but not necessarily where we are given the types of studies that we're winning.

Tycho Peterson -- JPMorgan -- Analyst

Okay, thank you.

Jason M. Meggs -- Chief Financial Officer

Thanks.

Operator

Thank you. And our next question comes from Erin Wright of Credit Suisse. Your line is now open.

Erin Wright -- Credit Suisse -- Analyst

Great, thanks. Most of my questions have been taken here, but the overall pricing environment, can you comment on that? Have there been any sort of meaningful changes that you would note?

Alistair Macdonald -- Chief Executive Officer

Good morning, Erin. No, not really. I think the pricing environment has been pretty robust. So I mean across FSP full-service commercial as well, we haven't seen any changes in that really.

Erin Wright -- Credit Suisse -- Analyst

Okay, great. And then -- and then can you discuss some of the dynamics you're seeing across working capital accounts? Are you seeing longer payment times from customers or shorter payment times to investigators and I guess were there any sort of anomalies or anything we should be thinking about there in the latest quarter? Thanks.

Jason M. Meggs -- Chief Financial Officer

Yeah. Hi, Erin, it's Jason. We have been quite vocal that as we move further and further into large pharma, we are going to continue to see extension to payment terms. The good news there is that they do often have supply chain, financing arrangements that are reasonably priced, when you look at the cost of our debt. So we will continue to look at that in a period where we are de-levering and putting capital to use.

In terms of the quarter, we had nothing really to speak of in the accounts, I mean we did have the first quarter challenge around getting the ERP that both clinical businesses together and corporate together where we got a little bit behind on the billing. We got caught up on that in quarter 2, continuing to manage that in quarter 3.

So nothing really noteworthy in quarter 3.

Erin Wright -- Credit Suisse -- Analyst

Okay, great. Thank you.

Operator

Thank you. And our next question comes from Jack Meehan of Barclays. Your line is now open.

Jack Meehan -- Barclays -- Analyst

Thanks, good morning everyone. In the commercial segment, could you help us with the moving parts in terms of the contract starts and the contribution from Kinapse in the fourth quarter, just to get to that mid-double digits step up and then as we think about 2019, could you just remind us of the normal seasonality in this business and just how we should think about the fourth quarter is as a leaping off point?

Alistair Macdonald -- Chief Executive Officer

So you mean from the seasonality from a bookings perspective, Jack on the commercial side?

Jack Meehan -- Barclays -- Analyst

I mean from a revenue perspective as well, just normally is there first quarter, a little bit of a step down in terms of revenue on the commercial side, just how we should think about the phasing, based off, of the step up, in the fourth quarter?

Alistair Macdonald -- Chief Executive Officer

Yeah. So Jack, we do see the fourth quarter and the commercial business, where there is a step up, the -- you finished the, on the Selling Solutions side, the full year of your sales KPIs or your performance KPIs and get bonuses, et cetera, which we tend to have some more heavily proportion to the fourth quarter.

You see where customers want to spend their budgets during the year, so you will see a ramp in your utilization, to get things pushed through et cetera.

So you do tend to see 4Q be a strong quarter. It's not as pronounced in terms of that sort of down in 1Q, depending on what's going on in the businesses because you could be starting up teams, and selling solutions in 1Q, just the same as you could in 4Q. So it's a little less pronounced than what you might see on the clinical side and what was the -- Jack, the first part of your question there on the commercial side?

Jack Meehan -- Barclays -- Analyst

Yeah. Just the bridge going from the third quarter to the fourth quarter, that mid double-digit step up, how much is kind of new wins, that you've had versus the contribution for a full quarter of the Kinapse acquisition?

Alistair Macdonald -- Chief Executive Officer

Yeah. So, the Kinapse acquisition is not driving a material piece of that. It is driving some of that naturally because we closed in August, so we had a month and a half versus three months. So there is some there, but it's really the items I just went through in terms of what you see in, seasonally in 4Q, that we talked about in the second quarter call.

And then as also, we did have some wins in quarter three, that we're starting to see those pull through to revenue in quarter four, in all businesses, but certainly, the Selling Solutions businesses has seen some of that get going.

Jack Meehan -- Barclays -- Analyst

Great. And just as a follow-up, Alistair, I'd be curious to get your thoughts, there's been a few large pharma sponsors, you talked about some cost reductions on the sales side, I'd be curious how your discussions are going with some of those customers? Do you view that as positive. You're getting more outsourcing or if you have any concerns around potential contracts?

Alistair Macdonald -- Chief Executive Officer

Yeah, I think it's a concern, you have to watch it, you have to be careful with it, but, as pharma looks to lower its cost in that sector, we're a variablized option for them for that cost. So whether they can buy a part of an existing team, that we already have up and running in the right regions or in the right therapy areas, that's a positive. I mean, Michelle you live and breathe every day in it.

Michelle Keefe -- President of Commercial Solutions

So each quarter more and more senior leaders in pharma are talking about wanting to variabilize their cost on the sales line, and we're having conversations with more and more companies around us being a strategic partner in providing that support.

We're also seeing the desire to have more blended team, so sales reps with nurses and call center and reimbursement specialists and really looking at a market or a region and saying, what is the right deployment strategy for that geography based on what's going on with the customer base, the payer base et cetera.

And so because we are purpose-built to have that kind of operational backbone and flexibility, more and more customers are coming to us to deploy those kinds of teams. So we do not see to your point, we don't see significant growth in the sales channel line, but we do see growth overall in deploying the right people against the -- against the right strategy for brand.

So overall, we believe that we're well positioned to -- in a scenario where, to your point, the sales rep growth is not going to be significant in the future.

Jack Meehan -- Barclays -- Analyst

Thanks for the feedback.

Alistair Macdonald -- Chief Executive Officer

Thanks, Jack.

Operator

Thank you. And our next question comes from Daniel Brennan of UBS. Your line is now open.

Daniel Brennan -- UBS -- Analyst

Great, thank you. Thank you for the questions. Jason, I wanted to better understand the burn this quarter and the outlook, I know you referenced the strength of your 2Q bookings that naturally led to a decline in the burn rate. But at the same time you guys discussed study mix issues. And you also did lower the Clinical revenue outlook.

So I'm just wondering from current levels, can you comment on your level of visibility and confidence in the forward burn outlook you provided?

Alistair Macdonald -- Chief Executive Officer

Well, in 4Q you can, we've obviously looked at and scrubbed quite rigorously the backlog and what we see coming through in quarter four based on the delays that came up in the third quarter, that we've talked about. So what we attempted to do there was to make sure that we had something that we felt comfortable could come through and we saw visibility to the production metrics in the head count and everything to actually get the work done.

So we did keep it down and then there is still the larger backlog there from the quarter two awards. So, feel like we've looked at it for quarter four about every which way we can Dan, in terms of what we're doing on the updated guidance.

Daniel Brennan -- UBS -- Analyst

Okay, great. And then, early in the conversation, you guys clarified a bit of the outlook on clinical indicated by your 2019 commentary. But just -- just so I understand, so if the market is growing 6% are you implying that your growth will be at 6, above 6, bracket 6, I'm just trying to get a little more clarity on, kind of teasing out the qualitative commentary versus that 6% number.

Alistair Macdonald -- Chief Executive Officer

Well, we're not giving guidance for 2019 today. But we're seeing accelerating growth from where we've been, as Jason said, we did the 2.6% in '17, 4% this year, we'll be accelerating ahead of that, confident we'll be accelerating ahead of that, in 2019, but we are not giving guidance today, we'll talk about that in Q1.

Daniel Brennan -- UBS -- Analyst

Yeah, OK.

Jason M. Meggs -- Chief Financial Officer

Yeah, just keep in mind, those delays are there Dan, in the FX headwind that we're looking at this point, so just think about the sort of the market and then taking those things into account.

Daniel Brennan -- UBS -- Analyst

Okay. And then -- and then if you wouldn't mind, just on the integrated offering. I know there was a couple of questions asked earlier in the call, but I believe you mentioned another contract win in your prepared remarks. So can you just provide some details about the bookings this quarter? Integrated versus non-integrated, just any, any color on the success you're having there?

Alistair Macdonald -- Chief Executive Officer

Yeah, I mean we won big Phase III in Gen Med group with a big assist from the ISG team. We didn't book it as ISG, because we don't actually see it as an ISG model. It's a Phase III award which would typically just go through our clinical bookings, even though the ISG team had a huge assist and a big hand in pulling together the solution that helped win it. When that takes over, when that organization gets into that Phase III, sees how that's panning out, they want -- they want this to wait on the conversations of how we then commercialize that drug with them.

So if they had gone ahead with that straight away, we'd booked it as ISG, but they didn't want to do that, so our internal kind of rules and regulations, if you like to say that that's a clinical award, so it goes into the clinical award bucket.

So we have a nice pipeline of ISG opportunities. The team has grown, we've invested in it. And we are very happy and confident with where that's taken us in the market.

Daniel Brennan -- UBS -- Analyst

Great. Okay, thank you.

Alistair Macdonald -- Chief Executive Officer

Thanks, Dan.

Operator

Thank you. And that concludes our question-and-answer session for today. I'd like to turn the conference back over to Alistair McDonald for closing remarks.

Alistair Macdonald -- Chief Executive Officer

Okay, thank you. So, very happy with the solid quarter. We continue to see good commercial and clinical momentum with ISG providing a strong differentiator for us. So thank you very much everybody for your attendance today and your continued interest and investment in the company. So have a great day and be good. Thank you.

Operator

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may all disconnect. Everyone have a great day.

Duration: 64 minutes

Call participants:

Ronnie Speight -- Senior Vice President of Investor Relations

Alistair Macdonald -- Chief Executive Officer

Jason M. Meggs -- Chief Financial Officer

Robert Jones -- Goldman Sachs -- Analyst

John Kreger -- William Blair -- Analyst

David Windley -- Jefferies -- Analyst

Michelle Keefe -- President of Commercial Solutions

Eric Coldwell -- Robert W. Baird -- Analyst

Sandy Draper -- SunTrust Robinson -- Analyst

Ross Muken -- Evercore ISI -- Analyst

Tycho Peterson -- JPMorgan -- Analyst

Erin Wright -- Credit Suisse -- Analyst

Jack Meehan -- Barclays -- Analyst

Daniel Brennan -- UBS -- Analyst

More SYNH analysis

Transcript powered by AlphaStreet

This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.

Motley Fool Transcribers has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.