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PPD, Inc. (PPD)
Q1 2021 Earnings Call
Apr 28, 2021, 8:00 a.m. ET


  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Good morning and welcome to PPD's first-quarter 2021 earnings conference call. Please note, today's call is being recorded. At this time, I'd like to turn the conference over to Tracy Krumme, vice president and head of investor relations for PPD. Ms.

Krumme, you may begin.

Tracy Krumme -- Vice President and Head of Investor Relations

Good morning, everyone, and thank you for joining our first-quarter 2021 earnings call. With me today to share our results are David Simmons, PPD's chairman and CEO; and Chris Scully, our CFO. Before we begin, I would like to remind everyone that our discussion includes forward-looking statements that are subject to risks and uncertainties that could cause material differences in our actual results. Please refer to our 2020 annual report on Form 10-K for a discussion of these risks.

With the exception of revenue, all references to income statement results are on a non-GAAP basis. I would also like to remind you of a few important details which are consistent with previous earnings calls. When referring to our financial performance, we'll be doing so on an ASC 606 basis. When referring to our commercial performance, including metrics related to net authorizations and backlogs, we'll be doing so on historical ASC 605 basis to maintain comparability with prior periods.

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Due to the recently announced transaction between PPD and Thermo Fisher Scientific, I would like to point out that we will not be conducting a Q&A session following our prepared remarks today. And with that, I'll turn the call over to David.

David Simmons -- Chairman and Chief Executive Officer

Thank you, Tracy, and thank you all for joining us today. First, I'd like to start by highlighting the recent exciting news that we anticipate joining Thermo Fisher Scientific later this year. The opportunities to bring meaningful innovation to market faster and more efficiently are as solid as ever. With that, I'm pleased to discuss our Q1 results.

Since our IPO last year, we have now posted six consecutive quarters of solid financial performance as a public company. This achievement is, first and foremost, a testament to the talent and culture we have at PPD. And I would like to thank my colleagues for their continued dedication and relentless commitment to delivering high-value services to our customers. Let me share a few Q1 highlights with you.

We exceeded the high end of our guidance ranges for revenue, adjusted EBITDA, and EPS. We posted a strong quarter of new business, with net authorizations growth of 39% year over year. We had a backlog conversion rate of 12.4%. We realized year-over-year revenue growth of 29% with more than 25% growth in both our clinical and lab segments, and we delivered year-over-year EBITDA growth of 22%.

Lastly, our balance sheet remained strong, with total liquidity of $1.4 billion and a net leverage ratio of 3.8 times, down from four times at year end. We entered the year in a position of strength, having grown our employee footprint by nearly 10% during 2020. We continue to build on this and for the second consecutive quarter grew our workforce by over 1,000 additional colleagues. We now have 27,000 employees around the globe and have maintained low turnover rates.

As we welcome our new colleagues and continue to work on new and innovative development programs, the depth of our industry-leading expertise and experience continues to expand, thus bolstering one of the key differentiators of our performance. During 2020, we strengthened our relationships with both existing and new customers as we remain agile in the face of the pandemic and delivered on customer priorities despite impediments. These relationships are flourishing as we expand our book of business with clients into new therapeutic areas or capabilities. Our experience, expertise, and customer relationships have fueled continued growth in our backlog, which is well diversified across our clinical and lab segments, biopharma and biotech customers, and therapeutic areas.

Looking ahead, we will continue to innovate for the future. On past calls, I shared the growth in the volume of our digitally enabled and decentralized trials. In this past quarter, we were recognized by ISG as a leader in digital clinical trial solutions. We are also making strides in the real-world evidence space with additional data partnerships to build upon our leading capabilities in patient-centered research, modeling, and health economics outcomes research.

As a testament to our offerings, we are seeing strong authorizations growth for post-approval and real-world evidence studies. We have momentum with our customers across both biopharma and biotech. We're well positioned to take advantage of growing R&D spend with our expertise and experience in key therapeutic areas, strong customer relationships, and continued innovation. Customers are seeking to progress development of their high-value assets in the current environment regardless of therapeutic area.

And lastly, we've experienced a continuation of growth in our traditional portfolio of business, which represents the lion's share of our backlog. With that, I'll hand it over to Chris.

Chris Scully -- Chief Financial Officer

Thanks, David. Good morning, everyone. I'll dive right into our results. On the commercial front, net authorizations grew 39.3% over quarter 1 of last year, with double-digit growth in both the clinical and lab segments.

The solid performance across the business contributed to a net book to bill of 1.46 x, one of our highest levels in recent years. We closed the quarter with record ending backlog, up 18.7% over quarter 1 of last year. With respect to the P&L, quarter 1 revenue grew 28.5% over quarter 1 of last year, underpinned by 28.3% growth in clinical and 29.5% growth in labs. Adjusted EBITDA growth in the same period was 22.4%.

Similar to last quarter, our revenue growth outpaced adjusted EBITDA growth, primarily as a result of a higher mix of indirect revenue on COVID vaccine studies, which resulted in an optically lower adjusted EBITDA margin. Rounding out the P&L, adjusted EPS grew 45.8% year over year to $0.35 a share. Turning to the balance sheet, we closed the quarter with cash of $826.4 million. With respect to our liquidity, our cash balance and available revolver capacity increased our total liquidity position to $1.42 billion as of March 31st, up 60.7% over the same time last year.

Our net leverage ratio at March 31st improved to just below 3.8 times trailing 12-month adjusted EBITDA, down from 4.0 times at year-end and 4.5 times at March 31, 2020. I'm happy to report that this marks the achievement of our pre-pandemic commitment at the time of our IPO to move into the three times range in 2021. Before wrapping up, I'd like to echo David's comments about the exciting news as we anticipate joining Thermo Fisher Scientific later this year. We envisioned that the enhanced capabilities of the combined company, united by common missions, will provide significant opportunities to enable our colleagues and customers to accelerate bringing new medicines to market and more efficiently.

And with that, operator, we will conclude the call.

Questions & Answers:


[Operator signoff]

Duration: 13 minutes

Call participants:

Tracy Krumme -- Vice President and Head of Investor Relations

David Simmons -- Chairman and Chief Executive Officer

Chris Scully -- Chief Financial Officer

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