Q4 2023 Repligen Corp Earnings Call

Operator: Good day, ladies and gentlemen, and welcome to Repligen Corporation's fourth quarter 2023 earnings conference. My name is Sabrina, and I will be your conference caller.

Good day, ladies and gentlemen, and welcome to rapid agenda corporations fourth quarter of 'twenty, two 'twenty three earnings conference call.

Sabrina: My name is Sabrina and then would it be your coordinator well.

Operator: All participants will be in listening mode. With assistance, please signal a conference specialist by pressing the star key followed by the R. After today's presentation, there will be an, To ask a question, you may press star then 1 on a touch-tone phone. [inaudible] Preston, in order to accommodate all individuals who wish to ask questions, there will be a limit of two questions at a time. I would now like to turn the call over to your host for today's call, Sondra Newman, Head of Investor Relations for Revit. Thank you, and welcome to our fourth quarter 2023 report. On this call, we will cover business highlights and financial performance for the three and 12 month periods ending December 31, 2023, and we will provide financial guidance for the year 2024. Repligen CEO Tony Hunt and our CFO Jason Garland will deliver our report, and then we'll open the call up for Q&A.

Speaker Change: All participants will be in listen only mode.

Speaker Change: Should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.

Speaker Change: After todays presentation, there will be an unopposed shunyi two to ask questions to ask a question you May Press Star then one on attached on phone to withdraw your question. Please press Star then two.

Speaker Change: In order to accommodate all individuals who wish to ask questions. There will be a limit of two questions. At a time. Please note. This event is being recorded.

Speaker Change: I would now like to turn the call over to your hospital today's call. So I'm, Brian Newman head of Investor Relations for replication.

Sondra S. Newman: Thank you and welcome to our fourth quarter of 2023 report on this call. We will cover business highlights and financial performance for the three and 12 month periods ending December 31, 2023, and will we will provide financial guidance for the year 2024.

Sondra S. Newman: Religion, CEO Tony <unk>.

Brian Newman: Our CFO, Jason Garland will deliver a report and then we'll open the call up for Q&A.

Sondra S. Newman: As a reminder, the forward-looking statements that we make during this call, including those regarding our business goals and expectations for the financial performance of the company, are subject to risks and uncertainties that may cause actual events or results to differ. Additional information concerning risks related to our business is included in our filings with the Securities and Exchange Commission, including our 2023 annual report on Form 10-K, last year's annual report, our quarterly reports on Form 10-Q, and our current reports on Form 8-K, as well as other filings that we make with the Commission. Today's comments reflect management's current views, which could change as a result of new information, future events, or otherwise. The company does not obligate or commit itself to update forward-looking statements, except as required by law.

Brian Newman: As a reminder, forward looking statements that we make during this call, including those regarding our business goals and expectations for the financial performance of the company are subject to risks and uncertainties that may cause actual events or results to differ.

Brian Newman: Additional information concerning risks related to our business is included in our filings with the Securities and Exchange Commission, including our 2023 annual report on Form 10-K last years annual report.

Brian Newman: Our quarterly reports on Form 10-Q, and our current reports on form 8-K, as well as other filings we make with the commission.

Brian Newman: Today's comments reflect management's current views, which could change as a result of new information future events or otherwise the company does not obligate or commit itself to update forward looking statements, except as required by law.

Sondra S. Newman: During this call, we will be providing non-GAAP financial results and guidance, unless otherwise noted. Reconciliations of GAP to non-GAP financial measures are included in the press release that we issued this morning, which is posted on Repligen's website and on sec.gov. Adjusted non-GAAP figures on this call include the following: book-to-bill ratios, organic revenue growth, based business revenue which excludes COVID and M&A, non-COVID revenue, cost of sales, gross profit, and gross margin, operating expenses, including R&D and FG&A, income from operations, and operating margins, other income, pre-tax income, effective tax rate, net income, diluted These adjusted financial measures should not be viewed as an alternative to gap measures but are intended to best reflect the performance of our ongoing operations. Now, I'll turn the call over to Tony. Thank you, Sondra.

Brian Newman: During this call we are providing non-GAAP financial results and guidance unless otherwise noted.

Brian Newman: Reconciliations of GAAP to non-GAAP financial measures are included in the press release that we issued this morning, which is posted to Replicants when website and on SEC Dot com.

Brian Newman: Adjusted non-GAAP figures on this call include the following book to Bill ratio organic revenue growth base business revenue, which excludes COVID-19 and M&A non COVID-19 revenue.

Brian Newman: Cost of sales gross profit and gross margin operating expenses, including R&D and SG&A.

Brian Newman: Income from operations and operating margin other income pretax income.

Brian Newman: <unk> tax rate net income diluted earnings per share as well as EBITDA adjusted EBITDA and adjusted EBITDA margins.

Brian Newman: These adjusted financial measures should not be viewed as an alternative to GAAP measures, but are intended to best reflect the performance of our ongoing operations now I'll turn the call over to Tony Hunt. Thank.

Tony J. Hunt: Thank you Sandra.

Anthony J. Hunt: Good morning, everyone, and welcome to our 2023 fourth quarter and year-end report. In addition to reporting on our financial results today, the key objective for this call is to provide insight into how we see 2024 playing out for Repligen and the pacing of revenue as we go through the year. Having had a few months to reflect on our Q4 results and 2023 in general, we believe we are seeing some clear indicators that our markets are beginning to turn in a positive direction, especially given the strength in orders coming out last year. This will help drive growth for the company, especially as we move into the second half. As we all know, 2023 was a challenging year for Repligen and the bioprocessing industry.

Tony J. Hunt: Good morning, everyone and welcome to our 2023 fourth quarter and year end report.

Tony J. Hunt: In addition to reporting out on our financial results today are key objectives for this call is to provide insights into how we see 2024 playing out for <unk>.

Tony J. Hunt: Pacing of revenue as we go through the year.

Tony J. Hunt: Having had a few months to reflect on our Q4 results and 2023 in general we believe we are seeing some clear indicators of our markets are beginning to turn.

Tony J. Hunt: Austin direction, especially given the strength in orders coming out of last year.

Tony J. Hunt: This will help drive growth for the company, especially as we move into the second half 2024.

Tony J. Hunt: As we all know 2023 was a challenging year for Rockwell Jin bio processing industry.

Anthony J. Hunt: The first half of the year saw elevated stock levels at both CDMO and PharmEx, conservative capital spending and project delays at pharma companies, and deterioration in China, where orders dropped off rapidly and new opportunities for products declined. In the second half of the year, we started to see some positive signs of recovery. We aren't ready to call it a full recovery yet, but there is good reason for us to be optimistic. We see four indicators for RALP: opportunity funnel growth, improving pharmaceutical ordering patterns, early indications of CDMO recovery, and overall book-to-bill stimulus. So let's start with our opportunity.

Tony J. Hunt: The first half of the year, so elevated stock levels at both CMO confirm it sounds conservative capital spending and project delays and pharma companies.

The deterioration in China for Orbis dropped off rapidly and new opportunities for products declined.

Tony J. Hunt: In the second half of the year or are we starting to see some positive signs of recovery.

Tony J. Hunt: We arent ready to call a full recovery yet, but there is good reason for optimism.

Tony J. Hunt: We see four indicators for Robinson.

Tony J. Hunt: Opportunity funnel growth improving pharma ordering patterns early indications of CD MAU recovery and overall book to Bill strength.

Speaker Change: So let's start with our opportunity Paul.

Anthony J. Hunt: Our sales funnel improved in 2023, with our 50% and above opportunities up more than 50% compared to the start of the year. This is an important metric that we believe reflects the likelihood of customers placing orders in the near term. We also saw a rebound in pharma demand, especially in Q3, where pharma orders were up 50% versus the prior quarter. We finished the year with second-half farmer orders up greater than 30% versus. The CDMO market also improved in the second half of 2023, with orders up more than 25% in Q4 versus Q3, and up more than 20% versus the fourth quarter of last year. Again, some positive signs from our CDMO customers for the first time since the first half of 2022. Overall, our vote to bill improved in the second half of the year, coming in at 1.07 in Q3 and 1.03 in Q4.

Speaker Change: Sales funnel improved in 2023, 50% and above opportunities up more than 50% compared to the start of the year.

Speaker Change: This is an important metric that we believe reflects the likelihood.

Speaker Change: Placing orders in the near term.

Speaker Change: We also saw a rebound in farmer demand, especially in Q3 pro forma orders were up 50% versus the prior quarter.

Speaker Change: We finished the year with second half orders up greater than 30% versus Haynesville.

Speaker Change: The CMO market has also improved in the second half of 2020 with orders up more than 25% in Q4 versus Q3.

Speaker Change: More than 20% versus the fourth quarter of last year.

Speaker Change: Again, some positive signs from our ceding more customers for the first time since the first half of 2022.

Speaker Change: Overall, our book to Bill improved in the second half of the year coming in at 1.17 in Q3, one points Oaktree in Q4.

Anthony J. Hunt: Our filtration franchise also had a positive book-to-bill in both Q3 and Q4, at 1.15 and 1.03%. Ex COVID, the filtration book-to-bill was 1.13 in Q4. So two strong quarters in a row of orders for the largest and most affected by COVID fractures. Namely, one, we want to make further inroads into pneumatology.

Speaker Change: Our filtration franchise also had a positive book to Bill in both Q3, and Q4 115123, respectively.

Speaker Change: Ex COVID-19.

Speaker Change: <unk> book to Bill was 113 in Q4.

Speaker Change: So two strong quarters in a row of orders for our largest most impacted by Covid franchise.

Speaker Change: I look at the full year I was also very pleased with the way the brokerage team executed.

Speaker Change: <unk> focused on the key goals, we set for ourselves beginning 2023.

Speaker Change: Namely one.

Speaker Change: It's to make further inroads into new modalities to we wanted to strategically manage key accounts.

Anthony J. Hunt: And finally, we wanted to strategically manage key accounts to accelerate adoption of our technologies, especially at our top pharma and CDMO companies. Three, we wanted to launch new products with a focus on advanced analytics, systems, and filtration. And four, we wanted to rebalance the organization to address margin challenges. First on Humidology En-ROADS.

Speaker Change: Tolerate adoption of our technologies, especially in our top pharma on CD MAU count three.

Speaker Change: Three we wanted to launch new products with a focus on advanced analytics systems and filtration.

Speaker Change: Sure we wanted to rebalance the organization to address margin challenges.

Speaker Change: First on your modality and roads.

Anthony J. Hunt: Our new modalities business, which covers cell and gene therapy and mRNA, continues to gain ground. Driven by several late-stage and commercial winds in 2023, Humidity revenues in the fourth quarter were up 9% year-on-year. For the full year, new modalities represented 18% of total revenues, and while up only slightly versus 2022, the results are still impressive in light of the double-digit decline in sales across our industry. On the orders front, new modality accounts were up more than 10% in the second half of 2023 versus the first half of the year and up greater than 15% for the full year compared to 2022. The order strength was driven by Chrome, Filtration, and Analytics franchises, with notable product line strength from Opus, Good Management Assemblies, and Artisan Systems. We also added more than 85 new accounts. So we're really encouraged by our position and differentiation in this important market. Next on Managing Key Accounts

Speaker Change: Our new modalities business, which covers cell and gene therapy and mrna continues to gain ground.

Speaker Change: Driven by several late stage and commercial wins in 2023, new modality revenues in the fourth quarter were up 9% year on year.

Speaker Change: For the full year, new modalities represented 18% of total revenues, while up only slightly versus 2022. The <unk> results are still impressive.

Speaker Change: Did you define themselves across our industry.

Speaker Change: On the orders front, new modality accounts were up more than 10% in the second half 2023 versus the first tier and upgraded than 15% for the full year 2000.

Speaker Change: 'twenty two.

Speaker Change: The order strength was driven by chrome filtration and analytics franchises with notable product line strength from Opus third management's assemblies on artisan systems.

Speaker Change: We also added more than 85, new accounts in 2023, so we're really encouraged by our position and differentiation in this important market.

Speaker Change: Next on managing key accounts.

Anthony J. Hunt: The key objective for us in 2023 was to build out a key account program and team to drive growth at our top pharma and CDMR. With the Key Accounts team in place by mid-year, we were able to focus this group on improving our portfolio visibility. In 2023, orders from our top 10 pharma accounts were up 50% for the second half of 2023 compared to H1, and 20% for the full year compared to 2022. Out of our top 10 CDMO accounts, orders in the second half of 2023 were flat versus HR, but up nearly 15% when compared to the full year 2022. Again, directionally positive signs that our top accounts are beginning to show growth on that. Moving now to new product launches and adoption. Each year, it's been our goal to launch 8 to 10 new products, and in 2023, we launched, although these were first-year, partial-year products.

Speaker Change: A key objective for us in 2023 was to build out a key account program and cheap to do.

Speaker Change: Drive growth at our top pharma and C D more accounts with.

Speaker Change: Key accounts team in place by mid year, we were able to focus this group on improving portfolio of disability.

Speaker Change: In 2023 orders from our top 10 pharma accounts grow 50% in the second.

Speaker Change: 2023, compared to H, one and 20% for the full year 2022.

Speaker Change: At our top 10-C D. Moe accounts orders in the second half 2023 were flat versus H one.

Speaker Change: 15% when compared to full year 2022.

Speaker Change: Again, directionally positive signs that our top accounts are beginning to show growth for Maxim.

Speaker Change: Moving now to new product launches and adoption.

Speaker Change: Each year, it's been our goals launch eight to 10, new products and in 2023 and relaunched.

Speaker Change: Although these were our first year partial of your product offerings, they generated over $12 million in revenue in 2023.

Anthony J. Hunt: [inaudible] So despite the year's challenges, we're really proud of our innovation track. In 2023, 13% of our total revenue came from products launched between 2021 and the end of 2020. In the fourth quarter alone, that number was 16.

Speaker Change: So despite the challenges we're really proud of our innovation track record in 2023, 13% of our total revenue came from products launched between 2021 through the end of 2023.

Speaker Change: In the fourth quarter alone that number was 16%.

Anthony J. Hunt: This past year, the success of our new products was in three areas. The first was RPM, where our analytics customers are seeing the benefits of real-time process monitoring. Second was our artisan artist, where we have a market-leading, single-use system portfolio.

Speaker Change: This past year the success of our new products was in three areas. The first was RPM or analytics customers are seeing the benefits of real time process monitoring.

Speaker Change: <unk> was our artisan Rs systems, where we have a market leading single use systems portfolio and third was a tee up for the new XL controllers are doing well with the marketplace providing value.

Anthony J. Hunt: And third, with ATF, where the new Excel controllers are doing well in the marketplace and providing value in the form of more automation and control for our process intensification. And finally, regarding rebalancing research. Our entire team, from top to bottom, focused on cost containment, and the leadership team rolled out programs to right-size our organization. Through this difficult but prudent process, we reduced our workforce by more than 15%.

Speaker Change: Our automation and control for a process of Densification customers.

Speaker Change: And finally regarding rebalancing resources, our entire team from top to bottom focused on cost containment and the leadership team rolled out programs to rightsize the organization.

Speaker Change: Through this difficult, but prudent process, we reduced our workforce by more than 15%.

Anthony J. Hunt: We are consolidating facilities, merging three of our facilities into sister plants. We are adjusting inventories, and we are controlling. By year end, we were back to nearly 50% gross margin for the company. We expect to complete our rebalancing and streamlining activities by the end of Q2. And from there, we anticipate that margins will improve as our volumes improve over the next few years. So, moving now to our QPOR Business Results. As you saw in our press release this morning, we delivered $156 million in revenue, with our base business, which excludes COVID and M&A, up 1% pointually, down 13% year-on-year, and down 9% for the full year. Base revenue highlights in the fourth quarter included modest year-over-year growth and nice sequential growth for both their analytics and proteins, as well as the aforementioned positive impact from pneumatology. At a customer level, our non-COVID QPOR pharma revenues, which include M&A, were flat year-on-year.

Speaker Change: Our consolidated facilities merging three of our facilities and to sister plants, we are adjusting inventories and we're controlling expenses.

Speaker Change: By year end, we were back to nearly 70% gross margin for the company.

Speaker Change: We expect to be complete.

Speaker Change: Our rebalancing of the streamlining activities by the end of Q2.

Speaker Change: From there, we anticipate that margins will improve as our volumes improve over the next few years.

So moving now towards Q4 business results.

Speaker Change: As you saw in our press release, this morning, and delivered $156 million in revenue.

Speaker Change: Our base business, which excludes coping and M&A.

Speaker Change: 1% sequentially.

Speaker Change: Teen percentage year on year and down 9%.

Speaker Change: Sure.

Speaker Change: Base revenue highlights from the fourth quarter included modest year over year growth, a nice sequential growth for both our analytics and proteins franchises as well as the aforementioned positive impact from rheumatology accounts.

Speaker Change: At a customer level are non Covid Q4, pharma revenues, which includes M&A for flat year on year preceding Moes and integrators Q4 revenues were down, 20% and 10% respectively compared to Q4 of 2022.

Anthony J. Hunt: For CDMOs and integrators, QPOR revenues were down 20% and 10%, respectively, compared to QPOR of 2020. Meta Nova came in right on track at $5 million in revenues in Q4. The team continues to work through the early phases of integration.

Speaker Change: I don't know, but it came in right on track at $5 million of revenues in Q4.

Speaker Change: The team continues to work through the early phases of integration.

Anthony J. Hunt: We are happy with the progress we are making and expect to further integrate metanoga mix into our fluid management portfolio as we go through the year. Moving to orders, base business orders for the fourth quarter were up 3% year-over-year, and non-COVID orders for the fourth quarter were up 6% year-over-year.

Speaker Change: We're happy with the progress we are making unexpected further integrate mixing solutions into our fluid management portfolio as we go through the year.

Speaker Change: Moving to orders.

Speaker Change: Base business orders for the fourth quarter were up 3% year over year.

Speaker Change: Non corridor for the fourth quarter were up 6% year over year.

Anthony J. Hunt: From a customer perspective, non-COVID pharma and integrated orders were flat year-on-year, but CDMOs were up greater than 20% both year-on-year and sequentially. The order performance in Q4 is very encouraging, especially at CDMOs. We are starting to see some early signs of recovery.

Speaker Change: From a customer perspective, non COVID-19, COVID-19 pharma and integrated where orders were flat year on year, but CD most were upgraded than 20% year on year sequentially.

Speaker Change: The order performance in Q4 is very encouraging.

Speaker Change: Especially on CD ammo accounts greatly are starting to see some early signs of recovery.

Speaker Change: Okay.

Anthony J. Hunt: Moving now to franchise-level business highlights, in chromatography, our year-over-year revenues were down approximately 25% in the fourth quarter and down 4% for the full year. The fourth quarter decline was primarily driven by a higher mix of columns versus rest.

Speaker Change: Moving now to franchise level business highlights.

Speaker Change: Chromatography, our year over year revenues were down approximately 25% in the fourth quarter.

Speaker Change: 4% for the full year.

Speaker Change: Fourth quarter, just five was primarily driven by the higher mix of columns versus rest.

Anthony J. Hunt: On orders, Chrome was down 4% for the quarter and for the full year 2020. However, the opportunity volume for our OPUS product lines continues to increase, and for 2024, we expect chromatography revenue growth in the range of zero to five percent. In proteins, our year-over-year revenues were up 7% for the fourth quarter and down 9% for the full year. Our proteins franchise had a solid revenue and orders quarter driven by growth factors and custom affinity rest. That said, we expect weak demand for proteins in 2024, reflecting the Cytiva drop-off of approximately $10 million and lower forecasts for ligands from our other customers, including the discontinuation and wrap-down of some legacy residents by one of our partners. This is the one franchise where we see excess finished goods inventory in the channel, and we think it will take 2024 for this to reverse. And so, Protein's forecast in 2024 will be jobs 30 to 35. We expect the proteins business to have a strong bounce-back year in 2025, as new products targeting antibody and antibody fragment purification gain traction. We've built a market-leading set of ligands over the last two years, firmly establishing ourselves as the technology leader in this space.

Speaker Change: On orders Chrome was down 4% for the quarter.

Speaker Change: Year 2023.

Speaker Change: The opportunity Paul for Opus product lines continues to increase for 2024, we expect chromatography revenue growth in the range of zero to 5%.

Speaker Change: And proteins are year over year revenues were up 7% from the fourth quarter and down 9% for the full year.

Speaker Change: Our proteins franchise had a solid revenue and orders quarter, driven by growth factors and customer affinity resins.

Speaker Change: That said, we expect weak demand for proteins in 2024, reflecting the sudden drop off.

Approximately $10 million.

Speaker Change: Your forecast for ligands from our other customers, including the just kind of continuation of the ramp down of some legacy resins by one of our partners.

Speaker Change: This is the one franchise, where we see excess finished goods inventory in the channel and we think it will take 20 to 24 for this to reverse.

Speaker Change: So proteins forecast in 2024 will be down 35%.

Speaker Change: We expect the proteins business to have a strong bounce back year in 2025, as new products targeting antibody and antibody fragment purification gained traction we.

Speaker Change: We have built a market leading set of maintenance over the last two years firmly establishing ourselves as the technology leader in this space and we will be working closely with purely to drive market adoption for these products.

Anthony J. Hunt: And we will be working closely with Purolite to drive market adoption for these products. Infiltration, our year-over-year revenues were down approximately 20% in the fourth quarter and 30% for the full year. The declines were driven by a drop-off in COVID-related revenue, which was approximately $23 million in Q4 of 2022, compared to $8 million in Q4 of 2023. However, filter orders in Q4 were again strong, with a book-to-bill ratio of 1.03. Excluding COVID contributions in Q4, our filtration book to bill was 1.13.

Speaker Change: In filtration, our Europe are your revenues were down approximately 20% from the fourth quarter.

Marty.

Speaker Change: Sure.

Speaker Change: The declines were driven by the drop off in Covid with Asia.

Speaker Change: Which was approximately $23 million in Q4 of 2022 compared to $8 million in Q4 2023.

Speaker Change: Filtration orders in Q4 were again strong with a book to Bill ratio of 1.3.

Excluding COVID-19 contributions in Q4, our filtration book to Bill was 123.

Anthony J. Hunt: Driven by strong demand for XLATF, artisan systems, and fluid management assemblies. With a strengthening order book, our expectation in 2024 is that this franchise will be up 10 to 15% on our base and 5-10% on our reports. Finally, our year-over-year analytics revenue was up 2% in the fourth quarter of 2023 and up 6% for the full year. We're seeing solid orders for analytics, which were up 10% for the year. The analytics story of the quarter and the year was the strong traction for our FlowVPX and our RPM product and the continued adoption of PPE technology by new modality.

Speaker Change: Driven by strong demand for XL, Hei artisan systems and fluid management assemblies.

Speaker Change: With the strengthening order book our expectation in 2024 is that this franchise will be up 10% to 15% of our base business.

Speaker Change: 10% on a reported basis.

Speaker Change: Finally, our Europe with your analytics business was up 2% in the fourth quarter of 2023.

Speaker Change: 6% full year.

Speaker Change: We're seeing solid orders for analytics, which were up 10% for the year.

Speaker Change: The analytics story at the border ended the year with a strong traction for the PX on RPM product lines and the continued adoption of PPE technology, a new modality accounts.

Anthony J. Hunt: As the markets pick up, we expect the analytics business to grow 10-15% in 2024. In summary, despite the headwinds in proteins, our other three franchises combined are showing solid growth potential in 2024, projected to be up 9% on base business and 6% as reported at the midpoint of our guidance. So what do we expect to see as we move through the year? As we have repeatedly stated over the last six months, we see 2024 as a transition year for the company and industry, and we don't expect a full recovery until the second half of this year. However, we do expect revenues in the first half of 2024 to be moderately better than the second half. Great

Speaker Change: If the markets pick up we expect the analytics business to grow 10%, 15% in 2024.

Speaker Change: In summary, despite the headwinds in proteins or other three franchises combined are showing solid growth potential in 2024 projected to be up 9% on base business, 6% that was reported at the midpoint of our guidance.

Speaker Change: So what do we expect to see as we move through the year.

Speaker Change: As we have repeatedly stated over the last six months, we see 2024 is a transition year for the company and the industry.

Speaker Change: Don't expect a full recovery until the second half of this year.

Speaker Change: We do expect revenues in the first half of 2020 or to be moderately better second half 2023.

Speaker Change: We believe the strength we've seen in orders over the last six months supports our ability to reach our 2024 revenue targets.

Anthony J. Hunt: We believe the strength we've seen in orders over the last six months supports our ability to reach our 2024 revenue targets, including $300 million in the first half of the year. We expect stronger revenues and orders in the second half of the year, with revenues in H2 projected to be up 10-15% over H1, and $335 million at the mid-point of the program. All in.

Speaker Change: <unk> $300 million in the first half.

Speaker Change: We expect stronger revenues and orders in the second half of the year with revenues and hedge to projected to be up 10% to 15% over H, one or $335 million has been widespread.

Speaker Change: All in.

Speaker Change: Our guidance for 2024, it is in the range of $620 $650 million.

Speaker Change: Up two 7% for non Covid business with <unk>.

Speaker Change: M&A contributing three points of growth.

Speaker Change: We also expect that we will return to double digit revenue growth for our businesses in 2025.

Speaker Change: We believe that the increased emphasis we have placed on commercial execution is really helping to reshape and expand our opportunity.

Anthony J. Hunt: Our guidance for 2024 is in the range of $620 to $650 million, up 2% to 7% for non-COVID, with M&A contributing three points of growth. We also expect that we will return to double-digit revenue growth for this in 2025. We believe that the increased emphasis we've placed on commercial execution is really helping to reshape and expand our opportunity.

Speaker Change: The stronger funnel combined with our investment in key account management team along with an improving book to Bill environment provide some real momentum as we head into 2024.

Speaker Change: As we move through the year, our strategic priorities et cetera.

Speaker Change: Number one further expands our opportunity.

Speaker Change: Strength in order position on top accounts.

Speaker Change: Two is around launching new products with a focus on fluid management and integrated.

Speaker Change: System.

Anthony J. Hunt: The Stronger Funnel, combined with our investment in the Key Account Management team, along with an improving book-to-bill environment, provides some real momentum as we head into 2024. As we move through the year, our strategic priorities will center on them. Number one, further expand our opportunity bubble and strengthen our order position on top accounts. Two is around launching new products with a focus on food management and integrated P.A.T. Three is around building off our wind to a new methodology mark, and four is around successfully integrating MetaNova into Repligen and launching a portfolio of mixing solutions in the marketplace.

Speaker Change: Greed is around building off our Windsor, new modality markets.

Speaker Change: For us around successfully integrating melanoma, it's rutledge and launching a portfolio mixing solutions in the marketplace and finally five is around controlling our costs and increasing our margins as we go through the year.

Speaker Change: In summary, we are happy to be moving forward here in 2024, we have the right team and expertise in place across all aspects of our business from operations to finance to commercial.

Speaker Change: We'll continue to focus on bringing flexibility and efficiency to bio processing through internal R&D and M&A.

Speaker Change: We've entered 2024 with a stronger balance sheet.

Speaker Change: Our plan for delivering long term reward for our shareholders now.

Speaker Change: Now I'd like to turn the call over to Jason for a report on our financial performance.

Jason K. Garland: And finally, five is around controlling our costs and increasing our margins as we go through the year. In summary, we are happy to be moving forward here in 2020. We have the right team and expertise in place across all aspects of our business, from operations to finance to commercial, and will continue to focus on bringing flexibility and efficiency to bioprocessing through internal R&D and M&A. We entered 2024 with a stronger balance sheet and a clear plan for delivering long-term rewards for our shareholders. Now I'd like to turn the call over to Jason for a report on our finances. Thanks, Tony, and good morning, everyone.

Jason Garland: Thanks, Tony and good morning, everyone. Today, we reported our financial results for the fourth quarter and full year of 2023 and provided financial guidance for 2024 as.

Jason Garland: As we expected revenue in the fourth quarter stepped up nearly $15 million over a third quarter low point.

Jason Garland: We delivered total revenue of $156 million with approximately $8 million of Covid sales in the quarter.

Speaker Change: This is a reported decline of 17% for the fourth quarter were down 21% on an organic basis, which excludes the impact of acquisitions and currency fluctuations.

Speaker Change: Our total year 2023 revenue was $639 million and aligned with our October guidance.

Speaker Change: This was a year over year decrease of 20% as reported.

Speaker Change: 121% on an organic basis.

Jason K. Garland: Today, we reported our financial results for the fourth quarter and full year of 2023 and provided financial guidance for 2024. As we expected, revenue in the fourth quarter stepped up nearly $15 million over our third quarter low point. We delivered total revenue of $156 million, with approximately $8 million of COVID sales in the quarter.

Speaker Change: FX provided a slight tailwind in the quarter and for the total year FX had a negligible impact of less than 30 basis points of growth.

Speaker Change: For the total year, our base business, which excludes COVID-19 revenue in M&A was down 9% on a reported basis, we recognized $32 million of Covid revenue and approximately $7 million in M&A sales from our flex Biosys and met another acquisition.

Speaker Change: Therefore, our base sales were $599 million included in the 599 is just over $10 million of ligand sale by Teva, which will be negligible in 2024.

Jason K. Garland: This is a reported decline of 17% for the fourth quarter, or down 21% on an organic basis, which excludes the impact of acquisitions and currency fluctuations. Our total revenue for the year 2023 was $639 million, aligned with our October guidance. This was a year-over-year decrease of 20% as reported, and down 21% on an organic base. FX provided a slight tailwind in the quarter, and for the total year, FX had a negligible impact of less than 30 basis points of growth headwind. For the total year, our base business, which excludes COVID revenue and M&A, was down 9% on a reported basis.

Speaker Change: Tony shared the revenue performance of our franchises, but let me highlight the revenue performance across our global regions for.

Speaker Change: Context, the total year 2023, North America represented approximately 44% of our global business.

Speaker Change: Europe, and Asia Pacific and the rest of the world represented 37% and 19% respectively.

Speaker Change: Challenges of the year were global in nature, and we saw declines across all regions. The Europe, demonstrating the most positive momentum in the quarter.

Speaker Change: Year over year on a reported basis sales declined in North America by 20% for the fourth quarter and by 19% for the total year 2023.

Jason K. Garland: We recognize $32 million of COVID revenue and approximately $7 million in M&A sales from our Flex Biosys and Metanova acquisitions. Therefore, our base sales were $599 million. Included in the $599 is just over $10 million of Ligon sales to Cytiva, which will be negligible in 2024. Tony shared the revenue performance of our franchises, but let me highlight the revenue performance across our global region. For context, for the full year 2023, North America represented approximately 44% of our global business, while Europe and Asia Pacific and the rest of the world represented 37% and 19%, respectively. The challenges of the year were global in nature, and we saw declines across all regions, but Europe demonstrated the most positive momentum in the quarter. Year over year, on a reported basis, sales declined in North America by 20% for the fourth quarter and by 19% for the total year 2023. Europe was flat for the quarter, but down 19% for the year, and Asia Pacific was down 35% for the quarter and down 26% for the total year.

Speaker Change: Europe was flat for the quarter, but down 19% for the year.

Speaker Change: In Asia Pacific was down 35% for the quarter and down 26% for the total year.

Speaker Change: China remained as the most significant driver of the region's decline down 62% in the fourth quarter and down 41% for the total year 2023.

Speaker Change: Fourth quarter 2023, adjusted gross profit was $77 million or 20% decrease year over year, nearly $31 million of lower revenue.

Speaker Change: Delivering a 49, 1% adjusted gross margin.

There is still down about two percentage points versus the fourth quarter of 2022. This was a 700 basis point increase from the third quarter. This increase.

Speaker Change: This was driven by approximately 300 basis points from a lower level of inventory adjustments in the third quarter.

Speaker Change: 200 basis points from positive mix from higher protein and Covid filtration sales.

Speaker Change: 200 basis points from improved labor and overhead efficiencies and higher leverage on depreciation and capacity costs.

Speaker Change: With this fourth quarter adjusted gross margin exit rate. So what are your gross margin was 49, 5%.

Speaker Change: This is down 750 basis points from 2020, due on $163 million with less revenue.

Speaker Change: Thanks, Tony shared earlier, we have remained focused on cost management and rebalancing our resources through the second half of 2023. The majority of our restructuring actions will be complete within the first half of 2024, but we will remain diligent on our spending.

Jason K. Garland: China remains the most significant driver of the region's decline, down 62% in the fourth quarter and down 41% for the total year 2021. For the fourth quarter of 2023, adjusted gross profit was $77 million, a 20% decrease year over year, and nearly $31 million of lower revenue, delivering a 49.1% adjusted gross margin. So, still down about two percentage points versus the fourth quarter of 2022, but this was a 700 basis point increase from the third quarter. This increase was driven by approximately 300 basis points from our lower level of inventory adjustments in the third quarter and 200 basis points from positive mix from higher protein in COVID filtration cells.

Speaker Change: Investment prioritization, and we remain focused on driving productivity and efficiencies across our manufacturing network.

Speaker Change: That said for 2024, we expect our gross margin to remain at the 49% to 50% level.

Speaker Change: We believe we're turning the corner on profitability based on the actions we have taken in 2023 and will continue to take in 2024, coupled with higher leverage on increasing volumes going forward.

Speaker Change: Related to our actions, we incurred $8 million of restructuring charges in the fourth quarter.

Speaker Change: Down from $24 million of charges in the third quarter. This was mostly driven by noncash charges related to inventory revaluation and facility consolidations.

Speaker Change: All of these charges are nonrecurring in nature and are reflected only in our GAAP P&L in the fourth quarter and full year.

Speaker Change: So our current restructuring activities are primarily complete we evaluate the need for future discrete actions as we continue our margin expansion journey.

Jason K. Garland: 200 basis points from improved labor and overhead efficiencies and higher leverage on depreciation and capacity costs. With this fourth quarter adjusted gross margin action rate, total year gross margin was 49.5%. This is down 750 basis points from 2022 on $163 million of less revenue. As Tony shared earlier, we have remained focused on cost management and rebalancing our resources through the second half of 2023. The majority of our restructuring actions will be complete within the first half of 2024, but we will remain diligent in our spending. Best in Prioritization, and we remain focused on driving productivity and efficiencies across our manufacturing network.

Speaker Change: Continuing through the P&L, our adjusted operating income was $19 million in the fourth quarter down $22 million compared to the prior year. This is driven by the $20 million drop in adjusted gross profit just described with only a slight increase in SG&A from our investment in our sales organization.

Speaker Change: Total year 2023, adjusted operating income was $94 million down 59% on lower sales and gross margin.

Speaker Change: Offset by a nearly $3 million year over year reduction in total operating expenses.

Speaker Change: Total year adjusted SG&A was down 1% on a reported basis and adjusted R&D spend which is slightly down year over year as we essentially held our investments in technology development flat, while continuing to introduce innovative new products.

Speaker Change: Our total year 2023 operating income margin of 14, 8% includes about a five point headwind from depreciation which was only a three point headwind in 2022.

Jason K. Garland: That said, for 2024, we expect our gross margin to remain at the 49 to 50 percent level. We believe we're turning the corner on profitability based on the actions we have taken in 2023 and will continue to take in 2024, coupled with higher leverage on increasing volumes going forward. Related to our actions, we incurred $8 million of restructuring charges in the fourth quarter, down from $24 million of charges in the third quarter. This was mostly driven by non-cash charges related to inventory revaluation and facility consolidation. All of these charges are non-recurring in nature and are reflected only in our gap penalty for the fourth quarter and total year.

Speaker Change: This is reflective of the critical investments we have made in our capacity. Our total year 2023, EBITDA margin rate was 20% and more reflective of our profitability excluding the impact of the increased depreciation.

Speaker Change: Adjusted net income for the quarter was $19 million down $20 million versus last year.

Speaker Change: Total year, adjusted net income was $98 million down $90 million.

Speaker Change: This was driven by $138 million drop in adjusted operating income.

Speaker Change: And that drop was offset by just over $25 million of higher interest income net of interest expense from our improved interest rates on our cash position and approximately $20 million less tax provision.

Jason K. Garland: Though our current restructuring activities are primarily complete, we evaluate the need for future discrete actions as we continue our margin expansion journey. Moving through the P&L, our adjusted operating income was $19 million in the fourth quarter, down $22 million compared to the prior year. This is driven by the $20 million drop in adjusted gross profit just described, with only a slight increase in SG&A from our investment in our sales organizations. Total year 2023 adjusted operating income was $94 million, down 59% on lower sales and gross margins, offset by a nearly $3 million year-over-year reduction in total operating expenses. Total year adjusted SG&A was down 1% on a reported basis, and adjusted R&D spend was just slightly down year-over-year as we essentially held our investments in technology development flat while continuing to introduce innovative new products.

Your adjusted effective tax rate was 16, 2%.

Speaker Change: This tax rate benefited from the efficient use of cash in our Swedish operation related to the funding of our men another acquisition in the third quarter and from stock based compensation, we have not assumed a repeat of these benefits in 2024.

Speaker Change: Adjusted fully diluted earnings per share for the fourth quarter was 33.

Speaker Change: Compared to 68 in the same period in 2022.

Speaker Change: Consistent with our October guidance, our total year adjusted fully diluted EPS was $1 75, a year over year decline of 47%.

Speaker Change: Finally, with operating cash flow generation and the proceeds from our convertible debt exchange.

Speaker Change: We ended the quarter with $751 million of cash and cash.

Speaker Change: I'll now move to our guidance for total year 2024.

Speaker Change: Speak to adjusted financial guidance, but please note that our GAAP to non-GAAP reconciliations.

Speaker Change: 2024 guidance are included in the reconciliation tables in today's earnings press release and for further clarity or guidance as fully inclusive of the flex biosys and met or know the acquisitions, we made in 2023.

Jason K. Garland: Our total year 2023 operating income margin of 14.8% includes about a 5-point headwind from depreciation, which was only a 3-point headwind in 2022. This is reflective of the critical investments we have made in our capacity. Our total year 2023 EBITDA margin rate was 20% and more reflective of our profitability, excluding the impact of the increased depreciation. Adjusted net income for the quarter was $19 million, down $20 million versus last year. Adjusted net income for the quarter was $19 million, down $20 million versus last year. Total year adjusted net income was $98 million, down $90 million.

Speaker Change: As Tony shared earlier, our revenues for 2024 is expected to be in the range of $620 million to $650 million, we expect 2% to 7% growth for our non COVID-19 business with M&A contributing three points of that growth.

Speaker Change: As a note we will not be reporting on Covid sales in 2024, and this will be de Minimis.

Speaker Change: Thanks, Tony shared we expect revenues in the first half of 2024 to be better in the second half of 2023, and we expect revenue for the second half of 'twenty four to step up again.

Speaker Change: As I mentioned earlier, we expect to deliver adjusted gross margin in the range of 49% to 50% essentially flat with 2023.

Speaker Change: We see about 200 basis points of headwind from mix with our reduced proteins Salesforce gap.

Speaker Change: Salary increases material inflation and from resetting our incentive compensation back to normal levels for our employees in 2024 after being far below that in 2023.

Jason K. Garland: This was driven by a $138 million drop in adjusted operating income, and that drop was offset by just over $25 million of higher interest income, net of interest expense, from our improved interest rates on our cash position and approximately $20 million left in tax provision. Our total year-adjusted effective tax rate was 16.2%.

Speaker Change: The impact from these headwinds is expected to be entirely offset by the manufacturing productivity, which is forecasted to generate roughly 200 basis points of year over year adjusted gross margin improvement.

Speaker Change: Also note that price is assumed to be flat. This year, though we may raise prices selectively.

Jason K. Garland: This tax rate benefited from the efficient use of cash in our Swedish operation, related to the funding of our Metanova acquisition in the third quarter, and from stock-based compensation. However, we have not assumed a repeat of these benefits in 2024. Adjusted fully diluted earnings per share for the fourth quarter was $0.33 compared to $0.68 in the same period in 2022. Consistent with our October guidance, our total year adjusted fully diluted EPS was $1.75, a year-over-year decline of 47%. Finally, with operating cash flow generation and the proceeds from our convertible debt exchange, we ended the quarter with $751 million of cash in cash flow.

Speaker Change: We expect our adjusted income from operations to be between <unk> $83 million to $88 million.

Speaker Change: Or 13% to 14% adjusted operating income margin rate, which is down about 100 basis points from our midpoint.

Speaker Change: From 2023.

Speaker Change: And our adjusted operating income, we see line of sight to delivering 400 basis points of year over year productivity.

Speaker Change: However, total salary increases material inflation mix from lower protein sales and volume deleveraging creates greater than 300 basis points of headwind.

Speaker Change: And the headwind from resetting our incentive compensation is a total of 200 basis points of headwind at the adjusted operating income level with the majority of our incentive cost and SG&A.

Speaker Change: We remain focused on balancing our cost structure, taking immediate actions, while protecting the resources and investments needed to grow long term as our volume grows we expect profitability to grow with it adjusted EBITDA margins are expected to be in the range of 18% to 19% for the year reflective of the exclusion of roughly 500 basis.

Jason K. Garland: I'll now move to our guidance for total year 2024. I'll speak to adjusted financial guidance, so please note that our GAAP to non-GAAP reconciliations for our 2024 guidance are included in the reconciliation tables in today's earnings press release. And for further clarification, our guidance is fully inclusive of the FlexBioSys and Metanova acquisitions we made in 2023.

Speaker Change: This headwind fixed depreciation costs and the critical capacity expansions we have made.

Speaker Change: Continuing down the P&L, we expect our adjusted other income to be down year over year by an estimated $4 million to $5 million.

Speaker Change: This reflects the favorable but higher coupon on our convertible debt increasing from 0.3, 75% to one zero percent.

Jason K. Garland: As Tony shared earlier, our revenue for 2024 is expected to be in the range of $620 to $650 million. We expect 2 to 7% growth for our non-COVID business, with M&A contributing three points of that growth. As a note, we will not be reporting on COVID sales in 2024, as this will be de minimis.

Speaker Change: Also reflects an assumption that interest rates that we earn on our money market cash investments.

Speaker Change: We'll reduce through the course of 2024 as most forward.

Speaker Change: <unk> indicated a similar profile.

Speaker Change: Our 2024 adjusted effective tax rate is expected to increase to an estimated 21%.

Speaker Change: This increase versus 2023 ending rate of 16, 2% is driven by the 2023 benefits that I cited earlier not repeating in 2024 related to the acquisition funding and stock based compensation.

Jason K. Garland: As Tony shared, we expect revenues in the first half of 2024 to be better than in the second half of 2023, and we expect revenue for the second half of 2024 to step up again. As I mentioned earlier, we expect to deliver adjusted gross margins in the range of 49 to 50 percent, essentially flat with 2023. We see about 200 basis points as a headwind for mix with our reduced protein sales force cap, salary increases, material inflation, and from resetting our incentive compensation back to normal levels for our employees in 2024 after being far below that in 2023. The impact of these headwinds is expected to be entirely offset by manufacturing productivity, which is forecasted to generate roughly 200 basis points of year-over-year adjusted gross margin improvement.

Speaker Change: Incorporating all of these items, we expect our adjusted earnings per share to be between $1 42, and $1 49.

Speaker Change: 133% to 26% respectively versus last year.

Speaker Change: Approximately half of this reduction is from lower operating income and the other half is from both lower other income and the increased tax rate.

We've entered 2024 with a stronger balance sheet with $751 million of cash and cash equivalents.

Speaker Change: We will remain prudent in our spending while maintaining flexible dry powder.

Speaker Change: Our capex spending is expected to be flat to down 5% versus 2023. After 2023 was cut by more than 50% off of our 2022 peak spend.

Speaker Change: As we wrap let me reiterate our excitement to move forward in 2024, and our optimism about the bio processing market improving through the course of the year.

Jason K. Garland: I'll also note that prices are assumed to be flat this year, so we may raise prices selectively. We expect our adjusted income from operations to be between $83 to $88 million, or 13 to 14% adjusted operating income margin rate, which is down about 100 basis points from our midpoint. In our adjusted operating income, we see Line of Sights is delivering 400 basis points of year-over-year productivity. However, total salary increases, material inflation, mix from lower protein sales, and volume de-leveraging create greater than 300 basis points of headwinds. And the headwind from resetting our incentive compensation is a total of 200 basis points of headwind at the adjusted operating income level, with the majority of our incentive costs in SG&A.

Speaker Change: We will remain laser focused on the execution of our strategic priorities continuing to expand our position in top accounts.

Speaker Change: Delivering more innovation with differentiated new products building off our wins in new modalities.

Speaker Change: <unk> integrating men in Nova and remaining diligent on our cost control and productivity to support increasing margins as we go through the year.

Speaker Change: With that I'll turn the call back to the operator to open the lines for questions.

Speaker Change: We will now begin the question and answer session.

Speaker Change: Quick question you May Press Star then one on your touch tone phone.

Speaker Change: Are using a speakerphone please pick up your handset before pressing the keys.

Speaker Change: Any time your question has been addressed and you would like to withdraw your question. Please press Star then two.

Speaker Change: At this time, we will pause momentarily to assemble harvester.

Speaker Change: First question is.

Speaker Change: From that.

Stifel: Areas of with Stifel. Please go ahead.

Stifel: Hey, good morning, guys. Thanks for the questions here, Tony or Jason on the outlook for the year, maybe just to start there the $6 $20 million to $650 million in revenues I'm wondering if you could just maybe talk to the cadence of the year on your way to that total I mean, it sounds like you are still calling for.

Jason K. Garland: We remain focused on balancing our cost structure, taking immediate actions while protecting the resources and investments needed to grow long-term. As our volume grows, we expect profitability to grow with it. Adjusted EBITDA margins are expected to be in the range of 18% to 19% for the year, reflective of the exclusion of roughly 500 basis points as headwinds, fixed depreciation costs, and the critical capacity expansions we have made. Continuing down the P&L, we expect our adjusted other income to be down year over year by an estimated $4 to $5 million. This reflects the favorable but higher coupon on our convertible debt, increasing from 0.375% to 1.0%. It also reflects an assumption that interest rates that we earn on our money market cash investments will reduce through the course of 2024, as most forward quarter forecasts indicate a similar profile. In 2024, our Adjusted Effective Tax Rate is expected to increase to an estimated 21%.

Stifel: Acceleration in the back half of the year that you've alluded to before so can you just maybe help us with what under the assumptions that you have today you are looking for when it comes to a spread between the beginning of the year and the end of the year <unk>, one sorry <unk>.

Stifel: Just trying to think about how the order book at the momentum that you've kind of highlighted translates to that second half step up and just how your progress here.

Speaker Change: Yes, Thanks, Dan I think the.

Speaker Change: The orders that we brought in in the second half of the year, especially in Q4 definitely helps us in Q1 and Q2 typically the order books spreads out over a couple of quarters, it's not just the quarter ahead.

Speaker Change: Our expectation, we're going to be in that 300, probably $310 million in the first half of the year and then the remainder in the second half of the year.

Speaker Change: Probably around that 325 to $3 35 to get to the midpoint, if you're just looking at it from a midpoint. So I don't think theres going to be a huge amount of difference between Q1 and Q2.

Jason K. Garland: This increase versus 2023's ending rate of 16.2% is driven by the 2023 benefits that I cited earlier, not repeating in 2024, related to the acquisition funding and stock-based compensation. Incorporating all of these items, we expect our adjusted earnings per share to be between $1.42 and $1.49, down $0.33 to $0.26, respectively, versus last year. Approximately half of this reduction is from lower operating income, and the other half is from both lower other income and increased tax.

Speaker Change: And obviously.

Speaker Change: Next couple of quarters are going to be very important from an orders point of view because they will dictate a little bit of what happens in Q3 going into Q4.

Speaker Change: Okay. That's helpful and then Jason maybe on the on the margins EBITDA margins down a couple hundred basis points for the year. It sounds like there are a handful of factors at play there. If we look out a bit further I know youre not guiding to long term margins here, but it does sound like that's something that you spent a good time, a good amount of time thinking about.

Jason K. Garland: We've entered 2024 with a stronger balance sheet, with $751 million of cash and cash equivalents. We will remain prudent in our spending while maintaining flexible dry powder. Our FX spending is expected to be flat to down 5% versus 2023 after 2023 was cut by more than 50% off of our 2022 peak spend. Now, as we wrap up, let me reiterate our excitement to move forward in 2024 and our optimism about the bioprocessing market improving through the course of the year. We will remain laser focused on the execution of our strategic priorities, continuing to expand our position and top accounts.

Jason Garland: As you've done that do you have any loose thoughts on just.

Jason Garland: How we should think about the potential for post COVID-19 replicating to kind of come closer to resembling pre COVID-19 replica and when it comes to the margins do you think thats something in that.

Jason Garland: Low to mid Twenty's EBITDA margin level comes back into the picture at some point once you normalize on cost and on the top line comes back to a more normalized place.

Speaker Change: Yes, great Great question, Dan Thanks.

Speaker Change: I think hopefully you heard that we tried to provide a bit more details and context on the profit bridge.

To highlight a lot of the moving pieces I'm really pleased with the productivity and the cost efficiencies, we're driving it and again for 'twenty for a lot of that was even executed put through our actions in the second half of 'twenty three.

Operator: Delivering more innovation with differentiated new products, building off our wins and new modalities. Additionally, successfully integrating MetaNova and remaining diligent on our cost control and productivity to support increasing margins as we go through the year. With that, I will turn the call back to the operator to open the lines for questions. We will now begin the question and answer session, more than one for "Any time." [inaudible] I would like to withdraw from Dan Arias of... Good morning, guys.

Speaker Change: I know, we're not probably the first company to talk about some of the headwinds on resetting incentive compensation. So that's a real real headwind for us this year as well the other thing I'll note is again, we don't have the benefit of price right, we're assuming flat for the year, which which again is typically a profitability driver as well.

Speaker Change: Like we've talked about 2024 is a transition year for the top line.

Speaker Change: That's the way I see it for the profitability as well and I think the actions. We're taking are setting ourselves up to that longer term improvement I think to your question about how long it takes.

Daniel Anthony Arias: Thanks for the questions here. Tony or Jason, on the outlook for the year, maybe just to start there, the 620 to 650 million in revenues, I'm wondering if you could just maybe talk about the cadence of the year on your way to that total. I mean, it sounds like you're still calling for acceleration in the back half of the year that you've alluded to before, so can you just maybe help us with what, under the assumptions that you have today, you're looking for when it comes to a spread between the beginning of the year and the end of the year, 1Q to 2Q, sorry, 1Q to 4Q? Just try to think about how the order book and the momentum that Yeah, thanks, Dan.

Speaker Change: It's why we're continuing to see it could take a couple of years few years.

Speaker Change: To ensure that we've got the right structure and then as volume picks up over the coming years will be able to really benefit from a leverage on that but I think we're still we're still absolutely positive about where this is just going to take the right time to get there.

Speaker Change: Okay. Thanks, so much.

Speaker Change: The next question is from Matt <unk> with William Blair. Please go ahead.

Matt: Thanks, Good morning, I, just wanted to follow up.

Matt: And on the Opex side and I'm wondering if you can just maybe give a little more color on the way some of the cost savings will layer into the year and.

Matt: Sort of how the profitability cadence may or may not match, what the revenue cadence looks like throughout the year.

Anthony J. Hunt: I think the orders that we brought in in the second half of the year, especially in Q4, definitely help us in Q1 and Q2. Typically, the order book spreads out over a couple of quarters. It's not just the quarter ahead. Our expectation is that we're going to be in that 300, probably 310 million in the first half of the year, and then the remainder in the second half of the year, probably around that 325 to 335 to get to the midpoint. We're just looking at it from a midpoint.

Speaker Change: Yes, so from an opex it specifically.

Speaker Change: From a so first question your second part there the cadence will follow the topline right. So we will continue to see more leverage in the second half.

Speaker Change: As volume picks up so we absolutely believe that from an Opex again, if you think about will be up to five 6 million right at the midpoint again, I'll remind Scott I think its around $8 million of year over year acquisition right. So that just from our Manitoba, primarily that's not in the baseline.

Anthony J. Hunt: I don't think there's going to be a huge amount of difference between Q1 and Q2. Obviously, the next couple of quarters are going to be very important from an orders point of view because they will dictate a little bit of what happens in Q3 going into Q4. Okay, helpful.

Speaker Change: Again, there is a bit more than that from an impact on oi.

Speaker Change: <unk>.

Speaker Change: The return on our incentive compensation piece and then we've got normal merit salary increases as well and so those are a lot of the pieces that go up and then we're driving call.

Speaker Change: Call. It 20 plus million dollars of savings and productivity. So I think again, we're facing some of those those headwinds head on with with driving cost actions and savings and Matt I would add that all the.

Jason K. Garland: And then Jason, maybe on the margins, EBITDA margins down a couple hundred basis points for the year, it sounds like there are a handful of factors at play there. If we look out a bit further, I know you're not guiding the long-term margins here, but it does sound like that's something that you spent a good amount of time thinking about. As you've done that, do you have any loose thoughts on just how we should think about the potential for post-COVID Repligen to kind of come closer to resembling pre-COVID Repligen when it comes to the margins? Do you think that something in that low to mid-20s EBITDA margin level comes back into the picture at some point once you normalize on cost? and the top line comes back to a more normalized place. Yeah, great question, Dan. Thanks.

Speaker Change: Changes, we made in the company in the second half of last year.

Speaker Change: That's going to help us as we go through the year and Jason's comment on volume volume is going to drive everything that we need to see in the year. So second half of the year revenues are going to be higher and therefore, most of the leverage we're going to see is going to be on the opex side.

Jason Garland: Okay. Thanks, and then you spoke on the call about some trends you're seeing with pharma <unk> couple of the other categories that were that.

Jason Garland: There were headwinds last year were kind of early stage, which handles a nebulous term and then China. So I'm just curious what's contemplated.

Jason K. Garland: You know, look, I think, hopefully, you heard that we tried to provide a bit more details and context on the profit bridge, you know, to highlight a lot of the moving pieces. I'm really pleased with the productivity and the cost efficiencies we're driving, and again, for 24, a lot of that was even executed with our actions in the second half of 23. I know we're probably not the first company to talk about some of the headwinds on resetting incentive compensation, so that's a real headwind for us this year as well. The other thing I'll note is, again, we don't have the benefit of price, right?

Speaker Change: And the outlook as to how those two buckets will trend throughout the year.

Speaker Change: So the China bucket.

Speaker Change: There's no doubt that China is going to be.

Speaker Change: We kick in in 2024.

Speaker Change: As you might recall the first half of last year, we had really good revenue in China, because it was coming from orders that were placed in 2022, and if you actually looked at it purely on an order basis.

Speaker Change: Orders in Q1, and Q2 were much lower than the revenue that we brought into the company. So the outlook for China. In 2024 is really driven by the order pattern that we saw in 2023, and so we would expect China to be about 5% to 6% of our revenue.

Jason K. Garland: We're assuming flat revenue growth for the year, which, again, is typically a profitability driver as well. I think, like we've talked about, 2024 is a transition year for the top line. That's the way I see it for profitability as well, and I think the actions we're taking are setting ourselves up for that longer-term improvement. I think to your question about how long it takes, you know, that's where we're continuing to see it. It could take a couple of years to ensure that we've got the right structure, and then as volume picks up over the coming years, we'll be able to really benefit from leverage on that. But I think we're still absolutely positive about where this heads. It's just going to take the right time to get there.

Speaker Change: This year on.

Speaker Change: On the pharma side and <unk> side, I think pharma has shown some nice resilience over the last couple of quarters, we had an exceptionally strong order quarter in Q3, we had a good order quarter in Q4 for pharma.

Speaker Change: Quarters.

Speaker Change: So we think that pharma pharma is in is in reasonably good shape.

Speaker Change: The CMO part of our market like everybody else in the industry data the CDM ballpark really hasn't rebounded now that said we had a we had a very nice quarter in Q4, and if we looked at the orders in in <unk> in Q4 and compared it to the average of the.

Jason K. Garland: Okay, thanks. The question is from Matt Larew, William Blair. Good morning. I just wanted to follow up on the OPEX side and wonder if you could just maybe get a little more color on the way.

Jason K. Garland: And the cost savings will layer into the year and, you know, sort of how the profitability K to, [inaudible] Yes, so from an OPEX perspective, specifically Matt, from your second question there, that the cadence will follow the top line, right? So we'll continue to see more leverage in the second half as volume picks up. So we absolutely believe that.

Speaker Change: Five quarters, we're up probably 2025% so that's.

Speaker Change: That's an encouraging sign but it's one quarter I think we need to see a few more quarters from CD. Most before we say hey, the markets beginning to target.

Jason K. Garland: From an OPEX, you know, again, if you think about it, we'll be up 5, 6 million, right? At the midpoint, you know, again, our mine's got, I think it's around 8 million of year over year acquisition, right? So that's just from an Innova perspective; that's not in the baseline. Again, there's a bit more than that from an impact on the return on our incentive compensation piece. And then we've got normal, you know, merit salary increases as well.

Speaker Change: Okay. Thank you.

Speaker Change: Thanks, Matt.

Speaker Change: The next question comes from Puneet <unk> with Leerink partners. Please go ahead.

puneet: Yes, Hi, Tony Jason Thanks for the questions here.

puneet: Tony maybe if I could.

Speaker Change: So it's a little bit of high level. Thanks for all the details today.

Speaker Change: Yes.

puneet: When we look at the full year guide.

puneet: It appears to be going forward with a low single digit or mid point.

puneet: The question, we're getting from investors.

Speaker Change: That's the right number given all of the backdrop.

Speaker Change: The improvement that youre seeing across pharma.

Speaker Change: <unk> orders.

Speaker Change: Quarter over quarter.

Speaker Change: <unk> bookings and book to Bill is improving I mean number of factors across the business, ensuring so maybe just to talk to you about.

Speaker Change: No.

Speaker Change: Yes.

We're not really its really breaking up a lot. We've got the guide at mid single digits.

Speaker Change: The calculation right.

Speaker Change: Interest yes.

Speaker Change: I was able to make out.

Anthony J. Hunt: And so those are a lot of the pieces that go up, and then we're driving, you know, call it 20 plus million dollars in savings on productivity. So I think, again, we're facing some of those headwinds head on with driving a lot of cost actions and savings. And Matt, I would add that all the changes we made in the company in the second half of last year are going to help us as we go through the year. And Jason's comment on volume, volume is going to drive everything that we need to see this year. So in the second half of the year, revenues are going to be higher, and therefore most of the leverage we're going to see is going to be on the OPEX side. Okay, thanks.

Speaker Change: Might be on a phone there's a ton of static.

Speaker Change: It might be a few mute.

Because it's all static, but but I got your question why is the guide the right Guy.

Lynn.

Speaker Change: Okay, given given what's going on in the market.

Speaker Change: The way to look at it honestly is.

Speaker Change: We we have a.

Speaker Change: 2% to 7%.

Speaker Change: Guide on our non Covid.

Speaker Change: Part of our business for 2024, and if you take three points out for.

Speaker Change: M&A, which is essentially amount of Nova we're minus one to plus four if you actually look at it.

Speaker Change: If you take the headwinds we're seeing in proteins out of the equation, we're actually seeing about 9% growth on our other three franchises for the base business.

Anthony J. Hunt: And then, you know, you spoke on the call about some trends you've seen as far as TDMOs. A couple of the other categories that were headwinds last year were kind of early stage, which I know is a nebulous term, and then China. So I'm just curious what's contemplated in the outlook in terms of how those two buckets will trend throughout. For the China bucket, there's no doubt that China is going to be weak again in 2024.

Speaker Change: Year on year as reported would be 6%. So I actually think the guide is actually really solid and showing the impact of a stronger book to bill, which is predominantly coming from our filtration platform of our filtration platform.

Speaker Change: Our franchise in Q3 at a book to Bill of 115 in Q.

Anthony J. Hunt: As you might recall, in the first half of last year, we had really good revenue in China because it was coming from orders that were placed in 2022. But if you actually looked at it purely on an order basis, orders in Q1 and Q2 were much lower than the revenue that we brought into the company. So, the outlook for China in 2024 is really driven by the order pattern that we saw in 2023. And so, we would expect China to be about 5% to 6% of our revenue this year. On the pharma side and the CDMO side, I think pharma has shown some nice resilience over the last couple of quarters. We had an exceptionally good number of reporters.

Speaker Change: For them. It was 1.3, but if you took COVID-19 out because we had COVID-19 revenue in Q4 on the revenue side. It was $1. One three so our biggest franchise is showing some real strength.

Speaker Change: Which for me is really encouraging so I think to look at the guide while it may seem conservative in lower than you might expect it's really driven by the fact that proteins is down and our other franchisor is actually really really solid. So we think thats the right guide as we start the year.

Speaker Change: Thank you.

Speaker Change: You can hear me okay now.

Speaker Change: If we can just.

Speaker Change: Very good question on the protein.

Speaker Change: Providing aid.

Speaker Change: Putting we've really.

Speaker Change: With all due respect.

Speaker Change: Staticky I think it would be better to just leave it with one question I think it's almost impossible to make out.

Anthony J. Hunt: So we think that pharma is in reasonably good shape. The CDMO part of our market, you know, like everybody else in the industry, the CDMO part really hasn't rebounded. Now, that said, we had a very nice quarter in Q4, and if we looked at the orders in and CDMOs in Q4 and compared them to the average of the prior five quarters, we're up probably 20, 25%. So that's an encouraging sign, but it's just one quarter. I think we need to see a few more quarters from CDMOs before we say, hey, the market's beginning to turn. Okay, thank you. Thanks Matt.

Speaker Change: Questions I think its the phone line I don't think anyone else has had that issue.

Speaker Change: Is that okay, it's just really hard to hear.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: So maybe next question.

Speaker Change: The next question is from Jacob Johnson with Stephens. Please go ahead.

Jacob Johnson: Hey, good morning, everybody, Tony maybe just following up on that last question.

Jacob Johnson: The thing we're getting inbounds this morning about it.

Jacob Johnson: If I take the orders in <unk> and I annualize that that would seem to get me at least to the midpoint of your guidance. So can you just talk about how much of a recovery in <unk>.

Operator: This question comes from Puneet Souda with Learing Partners. Yeah, hi, Tony, Jason, thanks for the questions here. Tony, maybe if I could pull it up to a little bit of a higher level.

Further are you assuming much or any of our recovery in orders from what you saw in <unk> in the revenue guidance.

Speaker Change: Yes clearly.

Speaker Change: When you look at the orders that came in in Q3 and Q4, there are definitely having an impact.

Puneet Souda: Thanks for all the details today. You know, when we look at the four-year guide, which appears to be forward to low single-digits at midpoint, the question we're getting from investors is, you know, why is that sort of the right number given all the backdrop and improvement that you're seeing across pharma? You talked about CMO orders going 25 percent quarter-to-quarter. The filter business, I mean, a number of factors across the business are improving. So maybe just talk to us about, you know, Yes. We're not, you're really, it's really breaking up a lot. I, we got the guide at mid-single digit fit and then filtration.

In the first half of the year.

Speaker Change: I think the piece that maybe gets lost in this is that our proteins business will be down 30%, 35%. So we're kind of counteracting kind of that trend and look at every business every product line has challenges.

Speaker Change: So we're not making any excuses on that it's just it is what it is.

Speaker Change: But I think if you look at the growth of the other three franchises.

Speaker Change: They're coming in really around that.

Speaker Change: 6% to 9% range. So I think it's actually really good given the environment in the market.

Speaker Change: That the whole industry has gone through and we've gone through over the last year. So I think thats I think thats been masked a little bit by the weakness in proteins.

Operator: I got it. Why don't we address that? I was able to make out, Puneet, you, you, you might be on a phone. There's a ton of static, so it might be easier if you mute, because it's all static.

Speaker Change: Got it and maybe following up I think we're maybe puneet was going to try to guess just just on the protein.

Speaker Change: Business, Tony can you just flush out why what what's going on there and is this kind of a onetime impact.

Operator: But I got your question, you know, why is the guy the right guy, given? Okay, given what's going on in the market, I, I think the way to look at it, honestly, is, You know, we have a two to seven percent guide on our non-COVID part of our business for 2024. And if you take three points out for M&A, which is essentially melanoma, we're minus one to plus four. If you actually look at it, if you take the headwinds we're seeing in proteins out of the equation, we're actually seeing about nine percent growth on our other three franchises for the base business. And year on year, as reported, it would be six percent.

Speaker Change: In.

Speaker Change: In 2024.

Tony: Yeah. So I think it's a onetime impact I think everybody going into the year, we all kind of knew about <unk> going away I think what.

Tony: What happened is we kicked off Q1 was the forecast from our other two partners for ligands down versus what we were expecting.

Tony: And the reason is that starting in Q4 of 2022 through mid year of 2023.

Tony: Our partners were buying ligands in anticipation of a really good year decent year that didnt materialize. So it's not like the COVID-19.

Anthony J. Hunt: So I actually think the guide is actually really solid and showing the impact of a stronger book-to-bill, which is predominantly coming from our filtration platform. Our filtration platform in our franchise in Q3 had a book-to-bill of 1.15. In Q4, it was 1.03. But if you took COVID out, because we had COVID revenue in Q4 on the revenue side, it was 1.13.

Tony: Inventory Bill Jacobs. It was more people were expecting last year to be a better year. It turned out it wasn't and they are setting on ligand inventory. So they have to burn it off so it's a one time.

The real issue and in 2024.

But I can tell you the strategy we've put in place of the products that we have developed on the protein a ligands side.

Anthony J. Hunt: So our biggest franchise is showing some real strength, which for me is really encouraging. So I think, you know, to look at the guide, while it may seem conservative and lower than you might expect, it's really driven by the fact that Proteins is down and our other franchises are actually really, really solid. So we think it's the right guide as we start the year. Thank you, and hopefully you can hear me okay now, but just, if you can, just a very brief question. On the questions, could you provide more... Hey, Puneet, Puneet, Puneet, we really, in all due respect, it is so staticky, I think it would be better to just leave it with one question. I think it's almost impossible to make out the questions. I think it's the phone line. I don't think anyone else has had that issue. Is that okay? It's just really hard to hear.

Tony: We are by far the leader now in terms of getting.

Tony: Innovative protein a ligands since the marketplace in general it's been ramping up in terms of their commercial organization. So we continue to be really bullish about the long term growth for like I said for the proteins business for next year 2025, we expect that's going to be a 10% plus grower for us.

Got it thanks for the question Tony.

Tony: The next question comes from Dan <unk> with UBS. Please go ahead.

Dan: Thank you. My first question is on China I appreciate that you have a tough comp in the first half of 2024, but can you speak to the sequential trends in China has the revenue outlook, there bottomed or are you still seeing further deterioration quarter on quarter.

Operator: OK. So maybe next question. The question is from Jacob Johnson with Stephanie. Hey, good morning, everybody.

Dan: Yes, Thanks, Dan I would say that if we looked at our orders in China in 2023, they were pretty stable right. They were pretty consistent across the four quarters, plus or minus $1 million. So it was really there were really close to each other so I would say China is definitely bottom from an orders point of.

Jacob K. Johnson: Tony, maybe just following up on that last question, you know, the other thing we're getting inbounds this morning about is, you know, if I take the orders in 4Q and I annualize that, that would seem to get me at least to the midpoint of your guidance. So can you just talk about how much of a recovery and, you know, further, are you assuming much or any recovery in orders from what you saw in 4Q in this revenue guidance? Yeah, clearly, when you look at the orders that came in in Q3 and Q4, they're definitely having an impact in the first half of the year. I think the piece that maybe gets lost in this is that our protein business will be down 30, 35%. So we're kind of counteracting that kind of that trend. And look, every business, every product line has challenges. And so we're not making any excuses for that. It's just that it is what it is.

Dan: And if you look at it then from a revenue and 2024, we essentially annualized our orders in and that's going to be it for 2020.

Dan: For so if there is a pickup and there could be.

Dan: In the second half of the year, there is probably a little bit of goodness that could come from China and age too, but we don't expect it to be in the first half of the year. So it is a conservative I think forecast for China at 5% to 6%.

Dan: But it is only conservative.

Dan: If China.

Dan: If China starts to turnaround in the second half of the year.

Anthony J. Hunt: But I think, you know, if you look at the growth of the other three franchises, they're coming in really around that 6-9% range. So I think it's actually really good given the environment in the market that the whole industry has gone through and we've gone through over the last year. So I think it's being masked a little bit by the weakness in protein.

Dan: I.

Dan: Late that and then for my follow up Tony could you elaborate on how youre thinking about cell and gene therapy trends in 2024, and your business what growth is baked into that forecast and how concentrated is that customer base for you.

Tony: Yes, I think we've been consistent and in 2023 describing.

Anthony J. Hunt: Got it. And maybe following up, I think, where maybe Puneet was going to try to go, just on the protein business, Tony, can you just flesh out why, what's going on there? And is this kind of a one-time impact in 2024? Yeah, so I think it's a one-time impact.

Tony: Cell and gene therapy, and mrna so we're using new modality.

Tony: As kind of the bucket now because it is broader than cell and gene therapy.

Tony: We have about 2025 accounts that contribute to that.

Tony: <unk> majority of the revenue for us and we have benefited in 2023, and we will benefit in 2024 from customers, who have put us into commercial processes and into late stage processes. The majority of the growth and it wasn't really growth last year, we were flat year on year in terms of revenue for new modalities in 'twenty three versus.

Anthony J. Hunt: I think everybody going into the year kind of knew about Cytiva and Cytiva going away. I think what happened as we, you know, kicked off Q1 was the forecast from our other two partners for Lincolnstown versus what we were expecting. And the reason is that starting in Q4 of 2022 through mid-year of 2023, our partners were buying Lincolns in anticipation of a really good year or a decent year, and that didn't materialize. So it's not like the COVID, you know, inventory bill, Jacob. It was More people were expecting last year to be a better year. It turned out it wasn't, and they're sitting on Lincoln inventory, so they have to burn it off.

Tony: 'twenty two.

Tony: But it was driven by the commercial late stage top 20 opportunity as opposed to the long tail of style gene therapy mrna companies and as we look at 2024. Our expectation is those same companies that gave us a solid year in 2023 are the same.

Tony: Companies that will give us a solid year in 2024, and so we are baking in probably mid single digit to a level, maybe not 5% to 7% range.

Anthony J. Hunt: So it's a one-time real issue in 2024. But I can tell you the strategy we've put in place and the products that we have developed on the protein A ligand side, we are by far the leader now in terms of getting innovative protein A ligands into the marketplace, and PuroLite's been ramping up in terms of their commercial organization. So we continue to be really bullish about the long-term growth for ligands and for the proteins business. So next year, 2025, we expect that it's going to be a 10%-plus grower for us. I got it.

Tony: For 2024, because we haven't really seen the long tail of accounts.

Tony: Cover yet.

Speaker Change: Thank you.

Speaker Change: The next question comes from Connor Mec Nomura with RBC capital markets. Please go ahead.

Hey, guys. Thanks for taking the questions.

Speaker Change: Just on orders can you talk about the progression of orders throughout.

Speaker Change: Throughout Q4, and how things are looking.

Speaker Change: At the start of the year.

Speaker Change: Maybe start there the long haul.

Speaker Change: I missed the second part cars, so the progression of orders in Q4.

Operator: Thanks for your questions, Tony, for the next question comes from then-Leonard, with, Peace. Thank you. My first question is about China.

Speaker Change: And then have been looking at the start of the year.

Speaker Change: Oh purchase have started the year.

Speaker Change: Started 20 started 24, starting in 2020 for how things are progressing this year. So far yes, yes, okay. So I think.

Daniel Louis Leonard: I appreciate that you have a tough comp in the first half of 2024, but can you speak to the sequential trends in China? Has the revenue outlook there bottomed, or are you still seeing further deterioration quarter on quarter? Yeah, thanks, Dan. I would say that if we looked at our orders in China in 2023, they would be pretty stable, right? They were pretty consistent across the four quarters, you know, plus or minus a million dollars. It was really, they were really close to each other.

Speaker Change: I'll actually give you the last four months of 'twenty.

Speaker Change: 2023, we had an exceptionally strong September.

Speaker Change: Which obviously contributed to a really good Q3, we had very consistent order patterns in Q4, I would say very evenly distributed.

Speaker Change: Tober November and December and I'd say, we're on track as we kick off the year in terms of how the pacing as we're about halfway through the quarter. So we're tracking to where we thought we could be.

Anthony J. Hunt: So, I would say China has definitely bottomed from an orders point of view. And if you look at it, then from a revenue point of view in 2024, we essentially annualized our orders and said that's going to be it for 2024. So, if there is a pickup, and there could be, you know, in the second half of the year, there's probably a little bit of goodness that could come from China in H2, but we don't expect it to be in the first half of the year. So, it is a conservative, I think, forecast for China at five to six percent. But it's only conservative if China starts to turn around in the second half of the year.

Speaker Change: Okay, Great and then my follow on there is if you look at your guidance for this year what are you assuming for <unk>.

Speaker Change: Order growth progression through the year, and where would you need to be on a book to bill basis exiting the year to hit that guidance are you basically assuming.

Speaker Change: No real improvement in book to Bill throughout the year in your guidance.

Speaker Change: No no I would say that.

Speaker Change: The way we look at it is if you go back over six quarters.

Speaker Change: When the bottom started.

Speaker Change: To happen in the industry on the order side, which was really mid 2022. So if you look at Q3 'twenty to Q4, Q1, and Q2 2023, we had four quarters in a row Conor.

Anthony J. Hunt: And then for my follow-up question, Tony, could you elaborate on how you're thinking about cell and gene therapy trends in 2024 for your business? What growth is baked into that forecast? And how concentrated is that customer base for you?

Speaker Change: Our book to Bill was about <unk> <unk>.

Anthony J. Hunt: Yeah, I think we've been consistent, Dan, in 2023 describing Cell and Gene Therapy and mRNA. So we're using new modalities as kind of the bucket now because it is broader than cell and gene therapy. We have about 20, 25 accounts that contribute the vast majority of the revenue for us.

Speaker Change: And now we've gone through two quarters, which is the right one point or seven one point <unk> three we expect the first half of this year to average out around one to one book a book to Bill of one and then in the second half of the year, we're expecting a pickup of 10% to 15%. So the book to Bill will improve in the second half of the year I think.

Anthony J. Hunt: And we have benefited in 2023, and we will benefit in 2024 from customers who have put us into commercial processes and into late stage processes. The majority of the growth, and it wasn't really growth last year; we were flat year on year in terms of revenue for new modalities in 23 versus 22. But it was driven by the commercial late stage top 20 opportunity as opposed to the long tail of cell, gene therapy, and mRNA companies.

Speaker Change: Key quarter is.

Is going to be Q2, right. So for for us to hit the targets will require Q2 to be obviously, a little stronger, but then Q3 Q4 has to be 10% to 15% up.

Speaker Change: So four quarters, so think about it this way four quarters with book to Bill, It's Bob 0.84 quarters with book to Bill around that 1% 1.15, and then moving on from there where youre up around the one one where you would expect historically to be if youre going to be growing at the rate replica and typically grows at.

Anthony J. Hunt: And as we look at 2024, our expectation is that those same companies that gave us a solid year in 2023 are the same companies that will give us a solid year in 2024. And so we're baking in probably mid single-digit to a little, maybe not 5% to 7%, range for 2024 because we haven't really seen the long tail of accounts recover yet. Thank you.

Speaker Change: Okay perfect that answers my final question, you talked about double digit growth in 2025, but you will need to be above one.

Speaker Change: One or at or above a one one book to bill actually absolute sounds like.

Speaker Change: Okay.

Speaker Change: And what's encouraging toner is that our filtration business has been the one above one one for the last couple of quarters. So that's what that's probably the most encouraging part for us.

Operator: The next question comes from Conor McNamara with RBC Capital Market. Hey guys, thanks for taking the questions. Just on orders, can you talk about the progression of orders throughout Q4 and how things are looking at the start of the year? And maybe start there, and then I'll have a follow-up.

Speaker Change: Great. Thanks for the questions I appreciate it guys.

Speaker Change: The next question comes from Matt Hewitt with Craig Hallum Capital Group. Please go ahead.

Matthew Gregory Hewitt: Good morning, Thank you for taking the questions maybe the first one you talked in your press release about getting back to double digit growth in 'twenty five.

Conor Noel McNamara: And this is the second part, Conor, so the progression of orders in Q4 and then how they're looking at the start of the year. First it's the start of the year, start of 2024, how things are progressing this year so far. Yeah, yeah, okay.

Matthew Gregory Hewitt: Previously I think you've talked about maybe getting back to 20%, but as you look at that kind of target the double digit growth in 'twenty, five and had to rank what the key drivers of that are between funding.

Anthony J. Hunt: So I think... I'll actually give you the last four months of 2023. We had an exceptionally strong September, which obviously contributed to a really good Q3. We had very consistent order patterns in Q4. I would say very evenly distributed October, November, and December.

Matthew Gregory Hewitt: Inventory levels at <unk> M&A, China like how should we be thinking about what maybe what the key lever or two is to get you back to that faster growth rate.

Speaker Change: Yes, Thanks, Matt I would say that for us.

Anthony J. Hunt: And I'd say we're on track as we kick off the year in terms of how the pacing is. We're about halfway through the quarter, so we're tracking to where we thought we would be. Okay, great.

Speaker Change: It's the markets have too.

Speaker Change: Broadly come back right. So when you look at where we are starting 2024, clearly pharma is in better shape than what we were seeing with the <unk> market, we have a decent order quarter preceding most in Q4. So we went out 12 months from now.

Conor Noel McNamara: And then my follow-on question is, you know, if you look at your guidance for this year, what are you assuming for order growth progression through the year, and where would you need to be on a book-to-bill basis exiting the year to hit that guidance? Are you basically assuming no real improvement in book-to-bill throughout the year in your guidance? No, no, I would say that, you know, the way we look at it is, if you go back over six quarters, when the bottom started to happen in the industry on the order side, which was really mid-2022, So if you look at Q3, 22, Q4, Q1, and Q2, 2023, we had four quarters in a row, Conor, where our book-to-bill was about 0.8. And now we've gone through two quarters, which is like 1.07, and 1.03.

Speaker Change: <unk> back to growth mode pharma consistently.

Speaker Change: Moving forward in <unk>.

Speaker Change: Mode, and I think the proteins business back into recovery mode. In 2025. Those are the those are the things that will really drive our exposure in China is not huge so any growth in China. In 2025 is just going to be a positive because I think we have bottomed out in terms of.

Speaker Change: Where we're at in terms of revenue.

Speaker Change: Got it alright, that's helpful.

Anthony J. Hunt: We expect the first half of this year to average out around one to one, book to bill. And then in the second half of the year, we're expecting a pickup of 10 to 15%. So the book to bill ratio will improve in the second half of the year. I think a key quarter is going to be Q2, right? So for us to hit the targets, it will require Q2 to be obviously a little stronger, but then Q3 and Q4 have to be 10 to 15% higher. So four quarters, so think about it this way; four quarters with book-to-bill is about 0.8.

Speaker Change: Maybe just one more on the <unk> side, obviously, it sounds like Youre starting to see some improvement there.

Speaker Change: Is the inventory.

Speaker Change: Adjustments of the corrections that youre seeing at the CD most is that pretty broad based or are there specific.

Speaker Change: Products that are still sitting on their shelves I'm just trying to think I mean is it.

Speaker Change: Opus columns.

Speaker Change: They need to work through or is it filtration there or is it broad based like they bought a ton of inventory and are still there's there's pieces of equipment and products that they are still working through thank you.

Anthony J. Hunt: Four quarters with book-to-bill around that 1 to 1.05. And then moving on from there, where you're up around the 1.1, where you would expect historically to be if you're going to be growing at the rate Repligen typically grows at. Okay, perfect. That answers my final question of, you know, you talked about double-digit growth in 2025, but you'll need to be above, you know, 1.1 or at or above a 1.1 book to exit. And what's encouraging, Conor, is that our filtration business has been above 1.1 for the last couple of quarters. So that's probably the most encouraging part for us. Great. Thanks for the questions.

Speaker Change: Yeah CMO sides.

Speaker Change: I would say that if I had to pick one product category, where they've overstocked and has impacted rutledge and is probably on the components side of fluid management, so you'd think about.

CMO: Clamps, and you think about tubing and you think about that.

CMO: So all the things that people would buy.

CMO: They would stock up on with multiyear quantity. So I think that's probably the area that impact us. The most it's definitely not opus columns I think the other dynamic that people forget about Matt on <unk>. In 2023 is that there are less projects right. It just it wasn't just a.

Operator: Appreciate it, guys. This question comes from Matt. Craig Hallam, Good morning. Thank you for taking the questions.

Matthew Gregory Hewitt: Maybe the first one, you talked in your press release about getting back to double-digit growth in 2025. You know, previously, I think you've talked about maybe getting back to 20%. But as you look at that kind of target, double-digit growth in 2025, and had to rank what the key drivers of that are between funding, inventory levels at CDMOs, M&A, China, like how should we be thinking about what maybe the key lever or two is to get you back to that faster growth rate? Yeah, thanks, Matt.

CMO: Destocking phenomenon. It was also there were less projects being run and I think for the CMO markets come back then.

CMO: The biotech companies have to be running more projects outsourcing more projects large pharma has to be outsourcing more projects.

CMO: We are seeing some really nice positive.

CMO: Mentum at our top 10, <unk> accounts as you heard in my prepared remarks, but it is not the long tail, yet I think the long tail of CD, most has to recover and thats going to come with.

CMO: A healthier biotech environment increased funding et cetera et cetera.

Anthony J. Hunt: I would say that for us, the markets have to broadly come back, right? So when you look at where we are starting 2024, Carolee Pharma is in better shape than what we were seeing with the CDMO market. We had a decent order quarter for CDMOs in Q4. So it went out 12 months from now.

Speaker Change: Got it very helpful. Thank you.

Speaker Change: The next question comes from Paul Knight with Keybanc. Please go ahead.

Speaker Change: Yeah.

Speaker Change: Hi.

I guess I'll give you a break Tony but the questions for Jason.

Paul Richard Knight: EBITDA margins you've guided to here.

Here I think around 18 to 20, what do you what does rep legit aspire to as we think about one or two years.

Anthony J. Hunt: It's CDMOs back to growth mode, pharma consistently moving forward, like in growth mode. And then I think the proteins business will be back to recovery mode in 2025. Those are the things that will really drive it. Our exposure in China is not huge.

Jason Garland: Beyond 2024, I mean, <unk>, you've done 30% in 2022.

Jason Garland: What's kind of the.

Jason Garland: Goal, if I could express it like that.

Speaker Change: Yes, I think.

Speaker Change: For sure <unk>.

Anthony J. Hunt: So, you know, any growth in China in 2025 is just going to be positive because I think we have bottomed out in terms of where we are in terms of revenue. Got it. All right, that's helpful. And maybe just one more.

Speaker Change: 2025, really is where we're looking to drive but its kind of that mid <unk> in the next milestone and then we'll continue to see if there is opportunity to get north of that again.

Speaker Change: And those at the 30 points at which this COVID-19 volume profitability and net margins. It just really arent, what we see as a sustainable way to think about the mix of the business, but certainly there's that mid to mid twenties is absolutely where we're going to get back to you.

Anthony J. Hunt: On the CDMO side, obviously, it sounds like you're starting to see some improvement there. Are the inventory adjustments or the corrections that you're seeing at the CDMOs pretty broad-based, or are there specific products that are still sitting on their shelves? I'm just trying to think. I mean, are it opus columns that they need to work through? Or is it filtration?

Speaker Change: And Tony.

Speaker Change: Arm Association.

Speaker Change: We might have <unk> cell and gene approvals. This year do you see that in customer orders and what products do you make for this market as well.

Anthony J. Hunt: Or is it broad-based? Like they bought a ton of inventory, and there are pieces of equipment and products that they're still working through. Thank you. Yeah, on the CDMO side...

Tony: Maybe start we'll start with the products in the marketplace I would say that the.

Anthony J. Hunt: I would say that if I had to pick one product category where they've overstocked and it's impacted Repligen, it's probably on the component side of fluid management. So you think about clamps and you think about tubing and you think about valves, all the things that people would buy that they would stock up on in multi-year quantities. So I think that's probably the area that's impacted us the most. It's definitely not opus columns.

Tony: Drivers in new modalities for us are.

Tony: Definitely our filtration portfolio.

Tony: Products like Ats on our hollow fiber technology.

Tony: <unk> technology.

Tony: Also our systems are doing quite well like our artisan systems, and then opus comps that would probably be the three main product lines.

Anthony J. Hunt: I think the other dynamic that people forget about, Matt, on CDMOs in 2023 is that there were fewer projects, right? It wasn't just a destocking phenomenon. It was also that there were fewer projects being run.

Tony: We are obviously almost every company likes to use our.

Tony: Analytics technologies like solo solo BPA side would probably be the fourth product that does quite well and in cell and gene.

Anthony J. Hunt: And I think for the CDMO markets to come back, then biotech companies have to be running more projects, outsourcing more projects, and large pharma has to be outsourcing more projects. We are seeing some really nice, positive momentum at our top 10 CDMO accounts, as you heard in my prepared remarks, but it's not the long tail yet. I think the long tail of CDMOs has to recover, and that's going to come with a healthier biotech environment, increased funding, et cetera, et cetera. Very helpful. Thank you. The first question comes from Paul Knight.

Tony: In terms of 2014 approvals.

Speaker Change: Yes look.

Speaker Change: If there is more approvals this year I think it's going to benefit replica and I haven't gone through the <unk> to see which ones. We have you know.

Speaker Change: Customer opportunities our variety specced into the phase III, but as I said, we have 2025 accounts that are scaling. So if those are part of the 14, then yes, we will benefit from that.

Speaker Change: Okay.

The next question comes from Greater advanced <unk> with JP Morgan. Please go ahead.

Operator: I guess I'll give you a break, Tony, but the questions for Jason, you know, with the EBITDA margins you've guided to here, I think around 18 to 20. What do you, what does Repligen aspire to as we think about one or two years beyond 2024? I mean, Repligen.

Greater advanced: Perfect. Thanks for sneaking me in luxury been asked so maybe I'll just step one in around M&A and I know that you've had that asset for a few months here. So can you talk about how integration is going there and then any expectations for M&A and just talk about the state of the environment there.

Paul Richard Knight: You've done 30% in 2022. What's the kind of goal, if I could express it like that? Yeah, I think for sure 2025 really is where we're looking to drive, but it's kind of that mid-20s for the next milestone, and then we'll continue to see if there's opportunity to get north of that. Again, at the 30 points, it was just COVID, volume, profitability, and debt margins that just really aren't what we see as a sustainable way to think about the mix of the business. But certainly, that mid-20s is absolutely where we're going to get back to. And Tony, the Arm Association thinks we might have 14 cellogene approvals this year. Do you see that in customer orders, and what products do you make for that market as well?

Greater advanced: Thanks.

Speaker Change: Yes, yes, thanks, Rachel Yes men Nols, so far it's gone exactly as expected integration is going well with theirs.

Speaker Change: A real synergy between what <unk> is doing in the fluid management.

Nols: Business at <unk> is doing so we've integrated while the sales forces are trained we're working very closely with their team.

Nols: So expect all everything has been very positive so far.

Nols: And then from future M&A.

Nols: Obviously theres nothing has really changed I mean the.

Nols: The portfolio of companies that are out there that are available hasnt really changed that much over the last 12 months and we will continue to be selective in terms of what we go after.

Anthony J. Hunt: Maybe we'll start with the products in the marketplace. I would say that the drivers and new modalities for us are definitely our filtration portfolio, products like ATF and our hollow fiber technology. Also, our systems are doing quite well, like our Artisan systems and then Opus Comms. They would probably be the three main product lines.

Speaker Change: And apologies for coming back.

Speaker Change: Annoys someone's decided to have her on our routes.

Speaker Change: [laughter].

Speaker Change: Perfect. That's it for me Thank you guys.

Speaker Change: Thanks.

Speaker Change: The next question comes from Justin <unk> with Deutsche Bank. Please go ahead.

Justin: Hi, Good morning, everyone. Just a two parter for me can you talk about some of the underlying assumptions for the return to.

Anthony J. Hunt: We are, obviously, almost every company likes to use our analytics technologies like Solo and Solo VPE, so that would probably be the fourth product that does quite well in cell and gene. In terms of 14 approvals, yeah, look, if there are more approvals this year, I think it's going to benefit Repligen. I haven't gone through the 14 to see which ones we have.

Justin: Double digit growth into 2025.

Justin: And sort of what Youre seeing that did it gives you the confidence in that trajectory and then.

Justin: And then in terms of the.

Justin: The site consolidations.

Justin: At 1.4.

Justin: What point would you have to start adding capacity.

Justin: Capacity as you return to your double digit growth trajectory.

Speaker Change: Next year and beyond and maybe I'll start with the site consolidation piece I think we're in great shape.

Anthony J. Hunt: Customer Opportunities, or we're already specked into phase 3. But as I said, you know, we have 20, 25 accounts that are scaling. So if those are part of the 14, then yeah, we'll benefit from that. The next question comes from Rachel Vansdal. This is J.B. Morgan. Please go ahead.

Speaker Change: In terms of park, we have for facilities, we're doing a little bit of site consolidation, but in terms of capacity, we have capacity that's going to get us out for the next five years. So I don't think there is a lot more investment that we have to do of course, if we did an M&A and it required a capital investment and that's probably will be the exception.

Operator: Perfect. Thanks for squeezing me in. Lots are even asked, so maybe I'll just fit one in around M&A.

Rachel Marie Vatnsdal Olson: You know, for MetaNova, you've had that asset for a few months here, so can you talk about how integration is going there, and then any expectations for M&A, and just talk about the state of the environment there for this year as well. Thank you. Yeah, thanks, Rachel. Yeah, MetaNova so far has gone exactly as expected.

Speaker Change: In terms of kind of assumptions around getting back to double digit growth in 2025.

Speaker Change: It's really around fraud.

Speaker Change: Market recovery, it's kind of what I said earlier, a broad market recovery, we are in a significant number of late stage.

Anthony J. Hunt: Integration is going well. You know, there's a real synergy between what MetaNova is doing and what the fluid management business at Repligen is doing. So we've integrated well, the sales forces are trained, we're working very closely with their team. So expect, you know, everything's been very positive so far. And then, obviously, from future M&A, nothing's really changed. I mean, the portfolio of companies that are out there that are available hasn't really changed that much over the last 12 months and will continue to be selective in terms of what we go after. And apologies about the background noise. Someone's decided to hammer on her roof.

Speaker Change: <unk> so as those go into commercial I think we get a nice pickup from going from phase III into commercial and we're seeing that honestly in 2024 for some of our product lines. So I think thats a positive.

Speaker Change: And as the new products like we've been launching some great products over the last few years, we're really proud of what we've done on the system side Youre going to see as we go through this year.

Rachel Marie Vatnsdal Olson: Perfect. That's it for me. Thanks, you guys. Bye. This question comes from Justin Bowers with Deutsche Bank. Hi, good morning, everyone. Just a two-parter for me.

Speaker Change: New products are going to come out on the protein a ligands side as well I think all of those contribute in a very positive way to the double digit growth in in 2025.

Operator: Can you talk about some of the underlying assumptions for the return to double-digit growth into 2025? And sort of what you're seeing that gives you the confidence in that trajectory, and then, And then, in terms of the site consolidations, at what point would you have to start adding capacity as you return to your double-digit growth trajectory next year and beyond? Maybe I'll start with the site consolidation piece.

Speaker Change: Thank you Tony.

Speaker Change: This concludes our question and answer session I would like to turn the conference back over to Tony Hunt for any closing remarks.

Tony J. Hunt: Thanks Sabrina.

Tony J. Hunt: Great great for everybody to join US today, obviously right at the start of 2024 look forward to getting back together with everybody in may and talking about the progress we're making so again, thanks everybody for joining.

Anthony J. Hunt: I think we're in great shape, you know, in terms of what we have for facilities. We're doing a little bit of site consolidation, but in terms of capacity, we have capacity that's going to get us through the next five years, so I don't think there's a lot more investment that we have to do. Of course, if we did an M&A and it required a capital investment, then that probably would be the exception.

Speaker Change: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. Thank you.

Okay.

Speaker Change: [music].

Anthony J. Hunt: In terms of the kind of assumptions around getting back to double-digit growth in 2025, it's really around broad market recovery. It's kind of what I said earlier, broad market recovery. You know, we are in a significant number of late-stage processes, so as those go into commercial, I think we will get a nice pickup from going from phase three into commercial. And we're seeing that, honestly, in 2024 for some of our product lines. So I think that's positive. And that's the new product.

Anthony J. Hunt: We've been launching some great products over the last few years. We're really proud of what we've done on the systems side. And you'll see as we go through this year, a number of new products are going to come out on the protein A ligand side as well. I think all of those will contribute in a very positive way to double-digit growth in 2025.

Anthony J. Hunt: Thank you, Tony. This concludes our question and answer session. I would like to turn the conference back over to Tony Hunt for any closing remarks. Yeah, thanks, Sabrina. Look, it's great, great for everybody to join us today. Obviously, right at the start of 2024.

Operator: I look forward to getting back together with everybody in May and talking about the progress we're making. So again, thanks everybody for joining. The conference has now concluded. Thank you for attending today's presentation. Director of Photography and Editing Music by Music by Music by Music by Music by Music by [inaudible] ?? ?? © The Ultimate Parody Site! ??? ??? ??? © BF-WATCH TV 2021, , , , , , , ,