Q1 2024 Qiagen NV Earnings Call
Ladies and gentlemen, thank you for standing by I am Melinda you're P. G I call operator.
Operator: Ladies and gentlemen, thank you for standing by. I'm Melinda, your PGI call operator. Welcome and thank you for joining Qiagen's first quarter 2024 earnings conference call webcast. At this time, all participants are in a listen-only mode. Please be advised this call is being recorded at Qiagen's request and will be made available on their internet site. The prepared remarks will be followed by a question and answer session. If you'd like to ask a question, you may press the star key followed by one on your touchtone telephone. Please press the star key followed by zero for operator assistance. At this time, I'd like to introduce your host, John Gilardi, Vice President of Corporate Communications and Investor Relations at Qiagen. Please go ahead.
Melinda: Welcome and thank you for joining Qiagen. This first quarter 'twenty 'twenty four earnings conference call webcast. At this time all participants are in a listen only mode. Please be advised this call is being recorded at Qiagen request and will be made available on their internet site. The prepared remarks will be followed by a question and answer session.
Melinda: You'd like to ask a question you May press star followed by one on your Touchtone telephone.
Melinda: Please press the star key followed by zero for operator assistance.
Melinda: At this time I'd like to introduce your host John <unk>, Vice President of corporate Communications and Investor Relations at Qiagen. Please go ahead.
John Gilardi: Thank you, Operator, and welcome to all of you for joining us on this call. We appreciate your interest in Qiagen. Our speakers today are Thierry Bernard, our Chief Executive Officer, and Roland Sackers, our Chief Financial Officer. This call is being webcast live and will be archived on the Investor Relations section of our website at www.qiagen.com. You can also find a copy of the quarterly results, the press release, and the presentation on our website.
John: Thank you operator and welcome to all of you for joining us on this call. We appreciate your interest in Qiagen. Our speakers today are Terry Bernardo Chief Executive Officer, and Roland Soccer's, Our Chief Financial Officer. This call is being webcast live it will be archived on the Investor Relations section of our website at Www Qiagen Dot Com you can also find.
Melinda: A copy of the quarterly results press release and the presentation on our website.
John Gilardi: We will begin with remarks from Thierry and Roland, followed by a Q&A session. But before we start, let me remind you again that we are going to host Capital Markets Day on June 17, and the event will be held at the New York Stock Exchange. An invitation has already been sent out, and information is available on our website under the events section. You can also attend this event online, but we'd love to see you in person.
Unknown Attendee: We'll begin with remarks from Terry enrolling followed by Q&A session. Before we start let me note again that we are going to host a capital markets day on June 17th and the event will be held at the New York Stock Exchange, an invitation has already been sent out and information is available under our website under the events section you can also attend this event online but.
Melinda: We'd love to see you in person.
John Gilardi: Let's now go over our Safe Harbor Statement. The views expressed during this conference call and the responses to your questions represent the views and perspectives of management as of today, April 30, 2024. We will be making statements and providing responses to your questions that convey our intentions, beliefs, expectations, and predictions for the future. Such forward-looking statements fall under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks and uncertainties, and actual results may differ materially from those suggested by these forward-looking statements.
Melinda: Now go over our Safe Harbor statement the views expressed during this conference call and the responses to your questions represent the views and perspectives of management as of today April 30th 'twenty 'twenty, four we will be making statements and providing responses to your questions that convey our intentions beliefs expectations and predictions for the future. These forward.
Melinda: Looking statements fall under the Safe Harbor provisions of the private Securities Litigation Reform Act of 1995, they involve risks and uncertainties and actual results may differ materially from those suggested by these forward looking statements factors that could influence results are mentioned in our filings with the U S Securities and Exchange Commission.
John Gilardi: Factors that could influence results are mentioned in our filings with the U.S. Securities and Exchange Commission. These filings are available on the SEC's website and also on our website. Qiagen disclaims any intention or obligation to update any forward-looking statements. Additionally, we will refer to certain financial measures not prepared following generally accepted accounting principles or GAAP. All references to EPS or Earnings Per Share refer to diluted EPS. You can find a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures in our press release and the presentation. Now, I'd like to hand over the call to Thierry.
Melinda: These filings are available on the Sec's website and also on our website qiagen disclaims any intention or obligation to update any forward looking statements. Additionally, we will refer to certain financial measures not prepared following generally accepted accounting principles or GAAP, all references to EPS or earnings per share refer to diluted EPS.
Melinda: You can find a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures in our press release and the presentation now.
Melinda: I'd like to hand over the call to Terry.
Thierry Bernard: Thank you, John. And good morning, good afternoon, or good evening, depending on where you are in the world, to all of you.
Thierry Bernard: Thank you Joan and good morning, good afternoon, or good evening, depending on where you are in the world to all of you. Thanks for joining US we are very pleased today to report another solid quarter in which our teams focused on execution.
Thierry Bernard: Thanks for joining us. We are very pleased today to report another solid quarter in which our teams focused on execution and delivered results ahead of our plan. Despite the cautious capital spending environment among our customers, our results show that we are on track to achieve the goals for 2024. Let me share our key messages with you.
Thierry Bernard: <unk> delivered results ahead of our plans.
Thierry Bernard: These past the cautious capital spending environment, among our customers. Our results show that we are on track to achieve the goals for 2024.
Speaker Change: Let me share our key messages today.
Thierry Bernard: First, our results for the first quarter of 2024 were ahead of the outlook as we worked through the final quarter of the COVID-19 pandemic. Qiagen achieved net sales of $462 million at constant exchange rates, which was ahead of the outlook for at least $455 million CER. This represented a 5% decline from the first quarter of 2023.
Speaker Change: First our reserves for the first quarter of two for the non 24 were ahead of the outlook as we work through the final quarter, Oh pandemic COVID-19 headwinds.
Speaker Change: Okay. You got 10 achieved net sales of $462 million at constant exchange rates, which was ahead of the outlook for at least $455 million C. E. R.
Speaker Change: This represented a 5% decline from the first quarter of 2020 free.
Thierry Bernard: And sales were down 1% CER for the non-COVID product group. However, recurring consumable sales continue to account for more than 85% of total net sales, a signal of the durability of our sales base. One of the highlights of Q1 was the 5% CER growth of our Diagnostic Solutions product group. This confirms the strength and resilience of our portfolio mix as we saw double-digit sales growth for the QuantiFerron TB test and for the QIAstat syndromic testing system amid solid placement.
Speaker Change: And says well don't 1% CER for the non core product groups.
Speaker Change: Recurring consumable sales continue to account for more than 85% of total net save a signal of the durability of our sales base.
Speaker Change: One of the highlights of Q1 was the 5% CER growth of our diagnostic solutions product group.
Speaker Change: This confirms the strength and the resilience of our portfolio mix as we saw double digit sales growth for the quantified once you'd be test and for the chaos that syndromic testing system sorted.
Speaker Change: So the placement.
Thierry Bernard: Adjusted Earnings Per Shares were 0.47 at CER and ahead of the outlook for at least 0.44 CER. As a second key message, our teams executed on our balance and focus strategy and delivered growth in many pillars. This really creates a foundation for us to build momentum during the year.
Speaker Change: Adjusted earning per shares were.
Speaker Change: Going 47th I C E R and ahead of the outlook for at this point 44 C E O.
Speaker Change: The second key message our teams execute on a well balanced and focused strategy and delivering growth in many pilatus.
Speaker Change: Really creates a foundation for us to build momentum during the year.
Thierry Bernard: Quantiferon once again delivered a strong quarter with 11% CER sales growth fueled by positive demand trends in every region. The first quarter also marked another quarter with net sales above $100 million. Cells of Kiastat diagnostic were up 21% CER. We saw a high level of demand for panels for both respiratory as well as non-respiratory testing. While we continue to see a solid trend in terms of instruments placed, our teams are still working collaboratively with the FDA to get a final decision on the gastrointestinal panel submission.
Speaker Change: <unk> once again delivered a strong quarter with 11% CER sales growth fueled by positive demand trends in every regions. The first quarter also marked the quarter with net sales above $100 million.
Speaker Change: Sales of chaos that diagnostic we're up 21% CER, we saw a high level of demand in panels for both respiratory as well as non respiratory testing why do we continue to see a solid trend in terms of in three months placement.
Speaker Change: Our teams are still working collaboratively with the FDA to get to a final decision on the gastro intestinal panel submission.
Speaker Change: Our digital PCR systems carry a queasy also delivered solid double digit CER growth with strong expansion in consumables and an ongoing high level of instrument placement. We are very pleased to see the increasing demand for this differentiated technology.
Thierry Bernard: Our digital PCR system, QIAQUITI, also delivers solid double-digit CER growth with strong expansion in consumables and an ongoing high level of instrument placement. We are very pleased to see the increasing demand for this differentiated technology. A key driver of consumables growth has been the expansion of applications for use on Kayakwiti, particularly for biopharma applications to support pharma research and development and new drug discovery. However, sample text cells were clearly impacted by the COVID headwind and also by weaker demand trends in China.
Speaker Change: A key driver of consumables growth has been the expansion of application for use on cash equity, particularly for Biopharma application to she bought pharma research and development and new drug discovery.
Speaker Change: Sample take cells were clearly impacted by the Covid head wind and also by weaker demand trends in China.
Thierry Bernard: For this product group, we still anticipate better year-on-year trends during the rest of the year and continue to expect low single-digit CER growth for 2020. Particularly noteworthy, in this first quarter, higher sales of automated consumables for use on Kaya Symphony, Kaya Cube Connect, or is it? Pneumonic cells were below our expectation for the quarter of 2024.
Speaker Change: For this product group, we still anticipate better year on year trends during the rest of the year and continue to expect low single digit C E. Our growth for 2024 plus.
Speaker Change: Particularly noteworthy in this first quarter, where how you're set up automated consumer boats for use on KFC potent <unk> connect or is it too.
Speaker Change: <unk> sales were below our expectation for the quarter of two frozen in 'twenty four as.
Thierry Bernard: As we have noted before... We are reviewing strategic options and plan to have a decision by our capital markets day on June 17th. As a third mistake, we saw an ongoing high level of profitability with a 25.7% adjusted operating income margin. This compared to 25.6% in Q1 2023, as our teams realized efficiency gains, particularly in administrative functions, while Qiagen made investments in research and development and commercialization initiatives. The progress in the first quarter shows how our teams are determined to deliver on our target for an adjusted operating income margin of at least 28% for the year 2024.
Speaker Change: As we have noted before.
Speaker Change: We are reviewing strategic option and plan to have a decision by our capital markets day in June of 17.
Speaker Change: As it filled message we saw an ongoing high level of profitability with a 25, 7% adjusted operating income margin.
Speaker Change: This compared to 25, 6% in Q1 2023.
Speaker Change: Our teams realized efficiency gains, particularly in administrative functions, while carrier Didnt made investment into research and development and commercialization initiatives.
Speaker Change: The progress in the first quarter shows how our teams are determined to deliver on our target for adjusted operating income margin of at least 28% for the year of 2024.
Speaker Change: And as a last point, we are reaffirming our full year of 2020 for outlook.
Thierry Bernard: And as a last point, we are reaffirming our full year 2024 outcome. Our plan is for 2024 net sales of at least $2 billion at CER and adjusted EPS of at least $2.10, also at constant exchange rates. Like many other companies, we are closely monitoring macro trends, focusing on our goals for 2024, and building confidence in delivering on our guidance. Now, I would like to hand over to Roland for a review of our financial results.
Speaker Change: Our plan is for 2024 net sales of at least $2 billion at CER and adjusted EPS of at least $2.10 also at constant exchange rate.
Speaker Change: Like many other companies we are closely monitoring macro trends focusing on our goals for 2024 and building confidence in delivering on our guidance.
Speaker Change: And I would like now to hand over to her now for a review of our financial results.
Speaker Change: Thank you Teri.
Roland Sackers: Hello everyone. Thank you as well for joining our call. Our results for the first quarter were ahead of our goals and show Qiagen is building momentum. However, net sales of 459 million U.S. dollars declined 5% at actual rates and also 5% at constant exchange rates despite some modest pressure on results due to the strengthening of the U.S. dollar. Consumables and related revenues had to absorb the COVID headwinds from 2023, and this led to the 4% CER decline over the year-ago period. Instruments sales declined 9% CER, reflecting the challenging environment for capital purchases.
Teri: Hello, everyone. Thank you asked about for me for joining our call.
Teri: Our results for the first quarter were ahead of our goals and show Qiagen is building momentum.
Teri: Net sales of $4 59 billion U S dollars declined 5% extra words at all it's a 5% at constant exchange rates. Despite some modest pressure on our results due to the strengthening of the U S dollar.
Teri: Consumables and related revenues had to absorb a COVID-19 headwinds from 'twenty to 'twenty three and this led to the 4% CER decline what was the year ago period.
Teri: Instrument sales declined 9% CER, reflecting the challenging environment for capital purchases.
Roland Sackers: At the same time, we saw good placement trends for Kaya Symphony, Kaya QUT, and Kaya Stadt DX. Among the four product groups, Diagnostic Solutions led the performance. Here again, we saw double-digit gains for QuantiPheron and QIASTAT-DX, while our personal healthcare business also delivered single-digit improvements in the first quarter of 2020, and Saab Technologies. As mentioned earlier, we were pleased to see higher consumable sales for automated kits. The results for sample technologies take into consideration that we, along with other companies, had larger price increases at the start of 2023. However, this year, the price increase was more in line with historical levels of a low single-digit increase.
Teri: At the same time, we saw good placement trends for chaos for the kayak acuity and Kai I start the X systems.
Teri: Amongst our four product groups diagnostic solution lets the performance Yeah again, we saw double digit gains for quantified and kind of start the eggs, while our personal health care business also delivered single digit improvements over the first quarter of 2023.
Teri: And softer technologies as mentioned earlier, we were pleased to see higher consumable sales for automated kits.
Teri: The results for <unk> technologies take into consideration that we along with other companies hit larger price increases at the start of trial 20 suite.
Teri: Yeah, It's a price increase for smart life. This has historical levels of a low single digit increase. Additionally.
Roland Sackers: Additionally, we faced COVID-19 headwinds with an underlying sales decline at a modest low single-digit CER rate. We are anticipating improved growth trends during the year as we launch marketing initiatives to highlight the differentiation of our portfolio. Additionally, the decision by Congress for essentially flat federal funding for life science research in the U.S. budget was in line with our planning, and this outcome provides customers with clarity on budget. For PCR nucleic acid amplification, the ChiACQUITY digital PCR system continued on a solid trajectory, delivering solid double-digit CAR cell growth over the first quarter of 2023.
Teri: Additionally, the first COVID-19 headwinds.
Teri: <unk> sales declined at a modest low single digit C outweighed.
Teri: Anticipating improved growth trends during the year as we launch marketing initiatives to highlight the differentiation of our portfolio.
Teri: Additionally, the decision by Congress for essentially flat federal funding for life Science research budget, what's it like this are planning and this outcome provides customers with clarity what budgets.
Teri: At PCR nucleic acid amplification Sakai accurately digital PCR system continued on a solid trajectory delivering solid double digit CER sales growth over the first quarter of 'twenty to 'twenty three.
Roland Sackers: Key drivers have been the expansion of consumable sales, particularly to biopharma customers, along with ongoing high levels of instrument placement. We anticipate better trends in this product group as the year progresses. In Genomics NGS, sales were unchanged from the first quarter of 2023, although we saw higher sales of universal library prep kits for use with third-party next-generation sequencers.
Teri: Key drivers have been the expansion of consumable sales, particularly to biopharma customers, along with ongoing high levels of instrument placements.
Teri: We anticipate that our transit this product group as the year progresses.
Speaker Change: It does not make sense, yes sales were unchanged from the first quarter of 'twenty three.
Speaker Change: So higher sales of Universal Library prep kits for use with third party next generation secret sauce.
Teri: That's at our Qiagen digital insights bioinformatics business were slightly lower for the quarter due to the timing of a large customer contract.
Roland Sackers: Details in our Qiagen Digital Insights Bioinformatics business were slightly lower for the quarter due to the timing of a large customer contract, but we continue to see solid demand trends for this business and continue to expect sales growth above 10% CER for 2024. Among the regions, sales in the Americas reflected the impact of COVID-19, while results benefited from improving demand for quantiferon, QIAstat, and QIAcurity consumables. The Europe-Middle East-Africa region saw sales decline by 2% CER over the first quarter of 2023, but underlying results rose at a single-digit CER rate, excluding the pandemic-hit region. Among the top countries were France, Switzerland, and the United Kingdom.
Teri: But we continue to see solid demand trends for this business and continue to expect sales growth above 10% see a 424.
Teri: Amongst the regions such as the Americas reflected the impact of Covid of Covid headwinds.
Teri: Results benefited from improving demand for quite the field kind of start in character with the cultural goods.
Teri: The Europe Middle East Africa region saw sales declined 2% what was the first quarter of 'twenty, three but underlying results or is it a single digit C outweighed excluding Japan.
Teri: Big headwinds.
Teri: Amongst the top countries, where France, Switzerland, and the United Kingdom.
Roland Sackers: Our regional expansion in the Middle East helped this result. In the Asia-Pacific-Japan region, sales in China declined at a double-digit CR rate, reflecting the macro challenges in this market that are not showing signs of improvement. However, at the same time, we saw improved results in India and South Korea and continue to see dynamic opportunities in targeted emerging markets. Let's now review the rest of the revenue. The adjusted cost margin was 67.1% of sales, modestly lower than the first quarter of 2023 as it worked on increasing efficiencies after a period of capacity utilization expansion in recent years.
Teri: Our regional expansion in the Middle East Hut helped these results.
Teri: In the Asia Pacific, Japan region sales in China declined at a double digit CER rate, reflecting the macro challenges in this market that are not showing signs of improvement.
Teri: However at the same time, we saw improved results in India, and South Korea, and continued to see dynamic opportunities in targeted emerging markets.
Speaker Change: Let's now review the rest of the income statement.
Speaker Change: The adjusted gross margin was 67, 1% of sales modestly lower than the first quarter of 'twenty three as he rocked on increasing efficiencies after a period of capacity utilization expansion and the reason recent years.
Roland Sackers: For the first quarter, adjusted operating income declined 5% to $180 million from the first quarter of 2023, in line with the decline in sales. However, we focused on investing in R&D and delivered an improvement in the adjusted operating income margin to 25.7% of sales compared to 25.6% in the year-ago period. To close out the income statement, adjusted EPS was $0.46 for the first quarter, while results at constant exchange rates were $0.47 and ahead of the outlook for at least $0.44. The adjusted tax rate of 20% was at the high end of the outlook, while the average diluted share count at $226 million was also in line with our expectations.
Speaker Change: First quarter adjusted operating income declined 5% to $180 million from the first quarter of 'twenty three in line with the decline in sales.
Speaker Change: We focus on investing in the R&D and delivered an improvement in adjusted operating income margin to 25, 7% of sales compared to 25, 6% a year ago period.
Speaker Change: To close out the income statement adjusted EPS was <unk> 46 cents for the first quarter. Our results at constant exchange rates about 47 cents and ahead of the outlook for at least 44 cents.
Speaker Change: Adjusted tax rate of 20% was at the high end of the outlook, what's the average diluted share count at $226 million was also in line with our expectations.
Speaker Change: Turning to cash flow it's a.
Roland Sackers: Turning to cash flow, the trends at the start of 2024 have been very positive; operating cash flow nearly doubled to $133 million over the first three months of 2023, with a significant improvement in working capital management and inventory management, as well as collection of accounts receivable. The cash flow rose nearly 1.5 times over the level in the first quarter of 2023 to 97 million U.S. dollars, while at the same time, we saw a slight increase in investments in property, plant, and equipment as we continue to transition into our new enterprise resource planning environment.
Speaker Change: Trends at the start of 'twenty four have been very positive operating cash flow nearly doubled to $1 $33 billion over the first three months of 'twenty suite with significant improvement of working capital management.
Speaker Change: Until their management as well as collecting of accounts receivables.
Speaker Change: Free cash flow was nearly one five times what was the level at the first quarter of 'twenty three to 97 billion U S dollars. While at the same time, we saw a slight increase in investments in property plant and equipment as we continue to transition into our new enterprise resource planning involvement.
Speaker Change: We are paying particular attention on measures to ensure a high level of cash conversion, while maintaining adequate supplies to provide products to customers on how to vote without disruptions, especially in light of the current macro trends and logistical challenges.
Roland Sackers: We are paying particular attention to measures to ensure a high level of cash conversion while maintaining adequate supplies to provide products to customers around the world without disruptions, especially in light of the current macro trends and logistical challenges.
Speaker Change: Continuing with the balance sheet.
Speaker Change: Our liquidity position was about $893 million at the end of the first quarter of 24 compared to one $1 billion at the end of 'twenty three.
Roland Sackers: Continuing with the balance sheet, our liquidity position was about $893 million at the end of the first quarter of 2024 compared to $1.1 billion at the end of 2023. This level includes the $300 million cash payout for the synthetic share repurchase in January, which removed about 6.8 million shares outstanding. As a result, our leverage ratio at the end of the first quarter stood at 0.9 times net debt to EBITDA, compared to 0.6 times at the end of 2023.
Speaker Change: This level includes a suite of that billion dollars of cash payout for the synthetic share repurchase in January which had moved about $6 8 million.
Speaker Change: Million shares outstanding.
Speaker Change: As a result, our leverage ratio at the end of the first quarter stood at one nine times net debt to EBITDA compared to five six times at the end of 'twenty three.
Speaker Change: As a reminder, we have about $6 billion of debt, we reaching maturity in September.
Speaker Change: Even though a healthy balance sheet and strong cash flows we want to create value through our capital allocation policy that has served us well.
Roland Sackers: As a reminder, we have about $600 million of debt maturing in September. Given our healthy balance sheet and strong cash flows, we want to create value through our capital allocation policy that has served us well. We continue to invest organically in the business while also reviewing various targeted bolt-on acquisitions that would complement our portfolio. The share repurchase at the start of 2024 is also a signal of our views about the valuation of Qiagen and our commitment to increasing returns. I would now like to hand it back to Thierry.
Speaker Change: We continue to invest organically into the business. While also have your values targeted bolt on acquisitions that would complement our portfolio.
Speaker Change: The Seattle purchased at the start of 'twenty. Four is also a signal of our views about the valuation of Qiagen and our commitment to increasing returns.
Speaker Change: I'd now like to hand back to you.
Speaker Change: Thank you all right.
Speaker Change: Now, let me take a moment to go over some of the progress our teams have made in advancing our portfolio.
Speaker Change: First of all.
Speaker Change: We are strengthening our dominant position in sample technologies. The first step in that process is to gain access to DNA and RNA.
Thierry Bernard: Now, let me take a moment to go over some of the progress our teams have made in advancing our portfolio. First of all, we are strengthening our dominant position in sample technologies, the first step in lab processes to gain access to DNA and RNA. Key expansion areas for Qiagen involve new kits to support customers in fields like microbiome or liquid biome. Those areas are increasingly becoming critical to life sciences research and are in the early stages of clinical application.
Speaker Change: Key expansion areas for Qiagen involved new kits to support customers in fields like microbiome or liquid biopsy.
Speaker Change: Those areas are increasingly becoming critical to life Sciences research and we are in the early stages of clinical application.
Speaker Change: Let me start for example, with the launch of the packs Jean urine liquid biopsy set.
Speaker Change: Which offers a new non invasive approach to collect cell free DNA from urine.
Thierry Bernard: Let me start, for example, with the launch of the PACT Gene Urine-Liquid Biopsies, which offers a new non-invasive approach to collect cell-free DNA from urine. This technology holds potential for detecting minimal residual disease, such as in cancer patients, and improving the identification of therapeutic targets and patient monitoring for disease progression. Another example is that Qiagen has a long-standing commitment to helping improve health for people around the world
Speaker Change: This technology holds potential for detecting minimal residual disease, such as in cancer patients and improving the identification of uropathy targets and patient monitoring for disease progression.
Speaker Change: Another example is that quite yet.
Speaker Change: As a long standing commitment to helping improve health for people around the world.
Speaker Change: Quality film for latent TB screening continues to be a key element in the global fight against your bulky disease, which remains a leading cause of death.
Thierry Bernard: QuantiFERON for latent TB screening continues to be a key element in the global fight against tuberculosis, which remains a leading cause of death. Recent tuberculosis outbreaks in the U.S., such as in Chicago or in San Diego, underscore the urgent need for robust screening measures. These outbreaks, particularly among immigrant populations and in areas with already high tuberculosis incidence rates, highlight the importance of proactive screening initiatives. This is why we continue the conversion to modern blood-based testing from the old skin test. And the majority of the market worldwide and in the U.S. is available for this conversion.
Speaker Change: [noise] resend tuberculosis outbreak in the U S.
Speaker Change: So it says in Chicago, or San Diego underscores the urgent need for robust screening measures.
Speaker Change: These outbreaks, particularly among immigrant population and in areas. We've already hired you Bill ketosis incidence rates highlight the importance of proactive screening initiatives.
Speaker Change: This is why we continue the conviction to move them blood based testing from the old skin test and the majority of the market worldwide and in the U S. He's available for this conversion.
Speaker Change: In March our global awareness event to support work to Bill Kudos is day was a great success with over 3000 participants and the opinion of the significance of collaborative efforts in raising awareness.
Thierry Bernard: In March, our global awareness event to support World Tuberculosis Day was a great success with over 3,000 participants, underpinning the significance of collaborative efforts in raising awareness. Additionally, we announced a new partnership with the International Panel Physician Association to reinforce our commitment to TB screening. Together with the IPPA, a non-profit organization focused on improving migrant health, we are jointly promoting the use of AIGRA technologies like Coantiferon for screening immigrants as young as 2 years old.
Speaker Change: Additionally, we announced a new partnership with the International panel physician Association to reinforce our commitment to TB screening.
Speaker Change: So here's what we do.
Speaker Change: I P. P. A nonprofit organization focused on improving migrant health. We are jointly promoting the use of I grow out technologies like quantified for screening immigrant as young as two years old.
Thierry Bernard: This is part of our efforts to enhance early detection and support the U.S. target of eliminating domestic tuberculosis cases by 2050. As part of Qiagen's commitment to the global fight against tuberculosis, we recently launched a CHIACIC panel that enables whole genome sequencing of tuberculosis samples. This breakthrough will enable real-time epidemiology of tuberculosis outbreaks. A Critical Need for Tuberculosis Surveillance and Control. Another important development was the launch of our new software for Kiastat diagnostics. This upgraded version enables remote access to the system from other devices and a Lowe's healthcare professional to gain faster access to results and collaborate more efficiently with Kayakwiti on DigitalPCR.
Speaker Change: This is part of our efforts to enhance early detection and she bought the U S targets over eliminating dummies jabil kudos use cases by 2050.
Speaker Change: As part of courage and commitment to the global fight against tuberculosis.
Speaker Change: We recently launched Okay, you seek panel.
Speaker Change: That enabled whole genome sequencing of Jabil ketosis samples.
Speaker Change: This breakthrough will enable real time epidemiology of tuberculosis outbreaks.
Speaker Change: Critical need for Jabil kudos history of Williams and control.
Speaker Change: Another important development was the launch of our new software for chaos that diagnostic.
Speaker Change: This upgraded version enables remote access to the system from all of the devices.
Speaker Change: And those health care professionals to gain faster access to results and collaborate more efficiently.
Speaker Change: Okay, Yeah queasy on digital PCR.
Speaker Change: We are expanding the utility of this technology for use in cancer research and oncology testing.
Thierry Bernard: We are expanding the utility of this technology for use in cancer research and oncology testing. Our teams recently launched new kits for use in enabling better cancer detection through deeper simultaneous analysis of EGFR and BRAF mutations that has not been possible with other tests. Those mutations are found in many cancer types, and the kits are designed to reduce the incidence of false positive results in our Qiagen Digital Insights bioinformatics business. Additionally, we have launched an artificial intelligence-driven knowledge base for advancing drug discovery among our pharma and biotech customers.
Speaker Change: Our teams recently launched new kits for use in enabling better cancer detection.
Speaker Change: Deeper simultaneous analysis of Egfr and BRAF mutation that has not been possible with all the tests.
Speaker Change: Those mutations are found in many cancer types and the kids are designed to reduce the incidence of false positive results.
Speaker Change: And I will tell you James digital insight bioinformatics business.
James: We have launched.
Speaker Change: TC saw in televisions driven knowledge base.
Speaker Change: We're advancing the rest of the school theory, among our pharma and biotech customers.
Speaker Change: This database is built on vast sets of biomedical literature, and scientific sources and can extract cows that relationships between genes diseases drugs and biological entities from genomic data.
Thierry Bernard: This database is built on vast sets of biomedical literature and scientific sources and can extract causal relationships between genes, diseases, drugs, and biological entities from genomic data. This new software will help our customers to better understand disease mechanisms and identify new drug targets. So across our portfolio, you can really see that Qiagen is developing breakthroughs, addressing important customer demands, as we together harness the power of biology that is impacting our daily lives. Now, back to Roland for details of our outline.
Speaker Change: This new software will help our customers to better understand disease mechanisms and identify new drug targets.
Speaker Change: So across our portfolio you can really see that qiagen is developing breakthrough addressing important customer demands as we together harness the power of biology that is impacting our daily life and now back to you all for details of our outlook.
Speaker Change: Thank you to you let me now provide more perspectives on our outlook for 'twenty fall at Altra post the second quarter.
Roland Sackers: Thank you, Thierry. Let me now provide more perspectives on our outlook for 2024 and also for the second quarter. The start of the year shows that we are building momentum to achieve our full year outlook for at least $2 billion of sales at CER. This represents at least 2% CER growth from the $1.97 billion in 2023 and also at least 3% CER growth in the non-COVID portfolio. The plan for 24 remains on track.
Speaker Change: Start to the year stores that we are building momentum to achieve our full year outlook for at least $2 billion of cells at CER Cisco presents at least 2% CER growth funds, a ballpark nine $7 billion 20 suite at all it's at least 3% see alcohol in the non covered portfolio.
Speaker Change: The plan for 'twenty four remains on track like others, we expect a more muted start to get taught to solid mid single digit C. Outgrowth in the second half.
Roland Sackers: Like others, we expect a more muted start and a return to solid mid-single-digit CR growth in the second half. We continue to expect growth in the quantiferon TB test of at least 10% CER, while also expecting double-digit CER cell improvements from QIAcuity and QIA-STAT-A.
Speaker Change: We continue to expect growth in the quantifier ought to be test of at least 10% see a while also expecting double digit CER sales improvements from Kai acuity and kind of start to X.
Roland Sackers: Our Qiagen Digital Insight business is also set to deliver growth at a double-digit CR pace for the year as well. In terms of profitability, we have reaffirmed our outlook for adjusted EPS of at least $2.10 at constant exchange rates. The key profitability driver is our expectation to reach at least 28% adjusted operating income margin in 2024, and up at least one percentage point from 27% in 2016. This reflects our commitment to operational efficiency while investing in R&D and new product development and commercialization.
Speaker Change: Archives of digital insight business is also set to deliver growth at a double digit CER pace for the year.
Speaker Change: Israel.
Speaker Change: In terms of profitability, we have reaffirmed our outlook for adjusted EPS of at least $2.10 at constant exchange rates.
Speaker Change: The key profitability driver is our expectation to reach at least 28% adjusted operating income margin for 'twenty, four and up at least one percentage point from 27% in 'twenty three.
Speaker Change: This reflects our commitment to operational efficiency, while investing in R&D and new product development and commercialization.
Speaker Change: As for currency movements and based on rates as of April 26, we expect a neutral impact on full year net sales, but for the adverse impact of about one <unk> per share on adjusted EPS results.
Roland Sackers: As for currency movements, and based on rates as of April 26, we expect a neutral impact on full-year net sales but an adverse impact of about 1 cent per share on adjusted EPS results. For the second quarter, we have set an outlook for net sales of at least $495 million CER and adjusted earnings per share of at least $0.50 per share also at CER. I would like to now hand it back to Thierry.
Speaker Change: For the second quarter, we have set the outlook for that sales of at least 495 million U S. Dollar CER and adjusted earnings per share of at least 57 cents per share also at C. O I would like to now hand back to you.
Speaker Change: Thank you all and we are now getting closer to the Q&A session. So let me just provide you with a quick summary.
Thierry Bernard: Thank you, Roland. We are now getting closer to the Q&A session, so let me just provide you with a quick summary.
Speaker Change: First.
Speaker Change: We are fully on track to achieve our goals for 2024.
Thierry Bernard: We are fully on track to achieve our goals for 2020. Our execution of our balance and focus strategy, anchored by our pillars of growth, has been instrumental in navigating those uncertain times. The anticipated decline in sales for the first quarter was less than our initial expectations, and the results demonstrate the effectiveness of our strategic initiatives.
Speaker Change: Our execution on our balance and focused strategy.
Speaker Change: Thank God, but yeah, we're pillar of growth has been instrumental in navigating those unfiltered times.
Speaker Change: The anticipated decline in sales for the first quarter was less than our initial expectations.
Speaker Change: And the results demand demonstrates the effectiveness of our strategic initiatives.
Speaker Change: In this quarter.
Thierry Bernard: We are particularly pleased with the double-digit sales growth for QuantiFerron, for KIA-STAT Diagnostic, and for KIA-QUIT. This is a real testament to the strength and resilience of our diversified portfolio, led by 85% of sales from highly recurring consumables. Another message is that we are pleased with the very good level of profitability. Our teams are committed to delivering on the fully-adjusted operating income margin target of at least 28%. Efficiency initiatives are helping to create more flexibility and enhance our effectiveness across the Qiagen organization.
Speaker Change: We are particularly pleased with the double digit sales growth for quantity of them for.
Speaker Change: Okay, yes that the agnostic and for cash equity.
Speaker Change: This is a real testament to the strength and resilience of our diversified portfolio led by 85% of sales from highly recurring consumables.
Speaker Change: Who knows what message is that we are pleased with the very good level of profitability.
Speaker Change: Our teams are committed to delivering on the full year adjusted operating income margin target of at least 28%.
Speaker Change: You shouldn't see initiatives are helping to create more flexibility and enhance our effectiveness across the <unk> organization.
Speaker Change: All of those actions are positioning <unk> for solid mid term growth.
Thierry Bernard: All of those actions are positioning Qiagen for solid mid-term growth as we deliver higher sales and improvements in profitability. I take advantage of this call to personally invite you again to attend our Capital Markets Day event on June 17th at the New York Stock Exchange. This will be an opportunity to meet with our leadership team and learn more about our strategy to deliver our mid-term ambitions for improving sales and profitability. I am personally really looking forward to seeing all of you in person. With that, I'd like now to hand it back to John and the operator for the Q&A session. Thanks a lot for your attention. Ladies and gentlemen,
Speaker Change: We deliver higher sales and improvements in profitability.
Speaker Change: I take advantage of the school to personally invite you again to attend our capital markets day event on June 17th at the New York Stock Exchange.
Speaker Change: This will be an opportunity to meet with our leadership team and learn more about our strategy to deliver our midterm ambitions for improving sales and profitability.
Speaker Change: I am personally really looking for water gain to seeing all of you in person with that I'd like now to hand back to John and the operator for the Q&A session. Thanks, a lot for your attention.
Speaker Change: Ladies and gentlemen at this time, we'll begin the question and answer session anyone who wishes to ask a question you May press star followed by one on their touch tone telephone.
Operator: Ladies and gentlemen, at this time, we'll begin the question and answer session. Anyone who wishes to ask a question may press a star followed by one on their touchtone telephone. If you wish to withdraw your question, you may press the star followed by two. To ensure we can accommodate as many people as possible, please limit yourselves to one question and, if necessary, one follow-up. Your microphone will also be muted after you finish asking the question. Anyone who has a question may press a star followed by one at this time. One moment for the first question, please, and we'll take our first question from Matt Sykes of Goldman Sachs. Please go ahead.
Operator: If you wish to withdraw your question you May press Star followed by two to ensure we can accommodate as many people as possible. Please limit yourselves to one question and if necessary one follow up your microphone will also be muted after finish asking the question anyone who ask a question you May press star followed by one at this time.
Speaker Change: For the first question please.
Speaker Change: Okay.
Speaker Change: And we will take our first question from Mac Sykes with Goldman Sachs. Please go ahead.
Matthew Carlisle Sykes: Hi, good morning. Thanks for taking my questions.
Matthew Carlisle Sykes: Hi, good morning, Thanks for taking my questions.
Matthew Carlisle Sykes: Maybe just to start out, just on Quantiferon. It's been a pretty strong engine of growth for you previously, and looking at the first quarter results, I just want to gauge sort of the phasing of growth for Quantiferon over the course of the year to reach that greater than $450 million target that you set out. And just is the OMON collaboration that you announced in January a part of that guide, or is that potential upside?
Matthew Carlisle Sykes: Maybe just to start out.
Matthew Carlisle Sykes: Just unquantified on it's been a pretty strong engine of growth for you.
Matthew Carlisle Sykes: Previously and looking at the first quarter results.
Matthew Carlisle Sykes: Wanted to gauge sort of the phasing of growth for quantify on over the course of the year to reach that greater than $450 million target that you set out.
Matthew Carlisle Sykes: And just is the Oman collab.
Matthew Carlisle Sykes: Collaboration that you announced in January a part of that guide or is that potential upside.
Thierry Bernard: So, thanks for the question. So, directly on OMAN, yes, it's part of our guidance for 2024 since we announced it. We are currently deploying the solution together with the OMAN authorities, so it is going per plan, as we said before. And now on the phasing, you know that traditionally quantiferon accelerates, starting in Q3 and Q4 for many reasons. First of all, because we have a lot of local initiatives in different countries, such as, for example, the back-to-school initiatives in the U.S. So we always expect basically a weaker Q2 and then an acceleration again in Q3 and Q4. And at this moment, we are well on track to achieve the guidance that we gave you.
Speaker Change: So thanks for the question so directly on Oman, Yes, it's part of our guidance for 2024 since we announced it. We are currently deploying the solution to get there with Yamana authority. So it goes to a plan as we said before and.
Matthew Carlisle Sykes: Now on the phasing.
Matthew Carlisle Sykes: You know that traditionally a.
Matthew Carlisle Sykes: Quantify them accelerates starting.
Matthew Carlisle Sykes: In Q3 and Q4 for many reasons.
Matthew Carlisle Sykes: First of all because we have a lot of local initiatives in different countries such as for example, the back to school initiatives in the U S. So we always expect basically a weaker Q2, and then an acceleration again in Q3 and Q4 and at this moment, we are well on track to achieve the guidance that we gave you.
Speaker Change: Got it and then just on cash flow, which is really strong this quarter.
Matthew Carlisle Sykes: Got it. And then just on cash flow, which is really strong this quarter, maybe just talk about some sort of further improvements. It looks like working capital and lower accounts receivable were the main driver of the operating cash flow. Just maybe, talk about your expectations for free cash flow generation. And then, Thierry, from a capital allocation standpoint, maybe just kind of sort of go over your priorities over the course of this year as it relates to debt, M&A, and organic opportunities.
Matthew Carlisle Sykes: Maybe just talk about sort of further improvements it looks like working capital and lower accounts receivable was the main driver of the operating cash flow just maybe talk about your expectations for free cash flow generation and then Terry from a capital allocation standpoint, maybe just kind of.
Thierry Bernard: I sort of go over your priorities over the course of this year as it relates to.
Thierry Bernard: That M&A organic opportunities.
Speaker Change: Thank you so I will propose that whole loan takes on the cash flow generation and they will come back to you on the capital allocation or long yes.
Speaker Change: Yeah, Thank you and.
Speaker Change: Before I go to the cash flow just ultra that just talk to your first question I had in mind of course, but tier was describing was clearly the relative growth numbers absolutely sequentially. We clearly ought to go integral here also from the first to the second quarter.
Thierry Bernard: Thank you. So I will propose that Roland takes on the cash flow generation, and I will come back to you on the capital allocation. Roland? Yeah.
Speaker Change: But for the second quarter last year, clearly was a quite strong one.
Speaker Change: Having said that on the cash flow. We are very pleased with the full year. It's clearly are important to have a good start and our operating cash flow.
Roland Sackers: Yes, thank you. And before I go to the cash flow, let's just do your first question. Keep in mind, of course, what Thierry was describing was clearly the relative growth numbers. Absolutely.
Speaker Change: There'll be probably somewhere in the midst of five for that million dollar plus and our free cash flow are probably at least $350 million I do think there's potential for upside our single biggest opportunity for us is clearly.
Roland Sackers: And sequentially, we're clearly also going to grow here also from the first to the second quarter. But the second quarter last year clearly was a quite strong one. Having said that, on cash flow, we're very pleased with the full year. It's clearly important to have a good start.
Speaker Change: Our inventory levels, it's quite obvious that right now we maintain our Oh, that's an all time high inventory levels driven by.
Speaker Change: I wanted to try to logistical challenges, but also some officers political reasons.
Speaker Change: Variability this year on China and others.
Roland Sackers: And our operating cash flow will probably be somewhere in the mid of $500 million plus. And free cash flow, probably at least $350 million. I do think there is potential for upside. The single biggest opportunity for us is clearly also inventory levels. It's quite obvious that right now we maintain more or less an all-time high inventory level driven by, on the one hand side, the logistical challenges, but also some of these political reasons and variability we see around China and others. We do believe that things have an opportunity to normalize in the second half of the year as well. That would be an addition. Thank you, Roland and Catherine.
Speaker Change: We do believe that a six have an opportunity to normalize in the second halves of years for that would be an addition.
Speaker Change: Thank you Benoit on capital deployment, so, Iran. The free main axes for capital deployment, I think that carriers in steel.
Benoit: Ah prioritize organic investment and Aaron D or growth.
Speaker Change: With our investments in R&D, you know that we have a ratio which is slightly.
Benoit: About 10% of R&D research and development investment to sales, but we want also these investments to be profitable. So I would say priority to profitable organic investment you know that we have also a very healthy balance sheet.
Speaker Change: Sure we are constantly looking at potentially.
Thierry Bernard: Thank you, Roland. On capital deployment, so around the three main axes for capital deployment, I think that Qiagen still prioritizes organic investment and R&D or growth with our investment in R&D. You know that we have a ratio of slightly above 10% of R&D, research, and development investments to sales, but we also want these investments to be profitable. So I would say priority to profitable organic investment. You know that we also have a very healthy balance sheet.
Speaker Change: Potentially accretive and synergistic acquisition, mainly bolt on we have several discussion ongoing.
Benoit: Early to give details, but it's clearly a priority and fill WC anytime we see a good opportunity to return value to our shareholders. As we have proven for example, with the recent share buyback.
Benoit: We will not hesitate to do that but that would be basically in order of priorities.
Speaker Change: Thanks very much.
Speaker Change: Yeah.
Speaker Change: Our next question comes from <unk> with Morgan Stanley. Please go ahead.
Morgan Stanley: Good morning, Thanks for taking my questions I have two.
Morgan Stanley: Please.
Morgan Stanley: What's your view on U S lab developed tests.
Thierry Bernard: So we are constantly looking at potentially accretive and synergistic acquisitions, mainly bolt-ons. We have several discussions ongoing. It's too early to give details, but it's clearly a priority. And third, obviously, anytime we see a good opportunity to return value to our shareholders, as we have proven, for example, with the recent share buyback, we will not hesitate to do that. But that would be basically in order of
Morgan Stanley: Yes.
Morgan Stanley: Can you give us a sense of your exposure, whether that's what portion of your tests classified as an LTE or your exploration show reference labs across the business.
Morgan Stanley: Just help us quantify your exposure to that could be very helpful.
Morgan Stanley: Second question is on <unk>.
Morgan Stanley: You're planning to update us on the business.
Morgan Stanley: But at this stage.
Morgan Stanley: The outcomes, you've considered which appear most likely and could you remind us on the margin profile.
Operator: Our next question comes from Aisyah Noor of Morgan Stanley. Please go ahead.
Aisyah Noor: Good morning. Thanks for taking my question. I have two, please.
Morgan Stanley: Okay.
Morgan Stanley: Okay.
Speaker Change: Thanks, Sharon So first question on the ADT, a crystal what it would be premature to comment you know that it takes was issued by.
Aisyah Noor: The first question is, what's your view on the U.S. Lab-Developed Test, or LDT, ruling released by the FDA recently, and can you give us a sense of your exposure, whether that's what portion of your test classifies as an LDT or your exposure to reference labs across the business? If you could just help us quantify your exposure, that could be really helpful. The second question is on Pneumodex. I appreciate your planning to update us on the business in June, but at this stage of the review, and of the outcomes you've considered, which appear most likely, and could you remind us of the margin profile of the Pneumodex business?
Speaker Change: The FDA only yesterday as a reminder, it's a 532 pages long text.
Speaker Change: So it takes time to proceed but a couple of points to highlight.
Speaker Change: This is not new.
Speaker Change: <unk> has been saying for many years that they believe that they have an oversight of laboratory developed test.
Speaker Change: Taken from what we have seen so far.
Speaker Change: The text issued yesterday.
Speaker Change: He is much softer than the first version that we saw towards the end of 2020 free in that there shouldn't if you remember noticed were grandfathered the option for grandfathering does exist in the new proposal.
Speaker Change: Sure.
Thierry Bernard: Thanks Aisyah. So first question on LDT: first of all, it's a bit premature to comment. You know that the text was issued by the FDA only yesterday. As a reminder, it's 532 pages long. So it takes time to proceed. But a couple of points to highlight.
Speaker Change: The exposure of Qiagen is very limited not to say not significant at this moment I, even believe that it will reinforce the positioning of companies like Qiagen.
Speaker Change: We shall supplying.
Speaker Change: Quality control components.
Speaker Change: <unk> laboratories or industries that are developing Leds.
Speaker Change: And fourth when I say its premature is because everybody is expecting some litigations to start now as we know that several major actors in the U S, especially the association of laboratories are probably not in agreement with this proposal too early.
Thierry Bernard: This is not new. The FDA has been saying for many years that they believe that they have an oversight of laboratory development, taken from what we have seen so far. The text issued yesterday is much softer than the first version that we saw towards the end of 2023. In that version, if you remember, no tests were grandfathered.
Speaker Change: Yeah.
Speaker Change: One new <unk>.
Thierry Bernard: The option for grandfathering does exist in the new proposal. Third, the exposure of Qiagen is very limited, not to say not significant at this moment. I even believe that it will reinforce the positioning of companies like Qiagen, which are supplying Quality Control Components to laboratories or industries that are developing LDT. And fourth, when I say it's premature, it's because everybody is expecting some litigation to start now, as we know that several major actors in the U.S., especially the Association of Laboratories, are probably not in agreement with this proposal. Too early
Speaker Change: We confirm that we will take a definitive stance.
Speaker Change: By June 17th.
Speaker Change: We continue to look on them or to work on several scenarios.
Speaker Change:
Speaker Change: As we said previously.
Speaker Change: Both of those scenarios with a finding of partners or shutting down the activities are accretive to our P&L. They are accretive from a gross margin standpoint, a bit margin standpoint, and EPS as well. This is what I would say today and more details and more.
Speaker Change: Details on the decision by June 17.
Speaker Change: Great. Thank you very much.
Speaker Change: Our next question comes from Michael <unk> with Bank of America. Please go ahead.
Thierry Bernard: On Pneumodics, we confirm that we will take a definitive stance by June the 17th. We continue to look at, or work on several scenarios. As we said previously, both of those scenarios, whether finding a partner or shutting down the activity, are accretive to our P&L. They are accretive from a gross margin standpoint, EBIT margin standpoint, and EPS as well. This is what I would say today, and more details on the decision will be available by June 17th.
Michael: Hey, Thanks for taking my question guys and congrats.
Michael: Yeah.
Michael: Underlying market condition.
Michael: Yeah.
Michael: Yeah.
Michael: Are you seeing from.
Michael: Awesome.
Michael: Yeah.
Michael: Yes.
Michael: Yes.
Michael: Unfortunately.
Michael: Right.
Michael: Change.
Michael: Sure.
Michael: Yes.
Michael: Sure.
Operator: Our next question comes from Michael Ryskin with Bank of America. Please go ahead.
Speaker Change: So Michael I must confess that your voice was seriously Moorefield I I understand that you are asking about the market conditions. So if I got right, but do not hesitate to come back.
Michael Leonidovich Ryskin: I want to ask you a little bit about underlying market conditions. You know, as you look through the rest of the year, we're a quarter of the way through. You talked a little bit about the demand patterns you're seeing from Pharma and Biotech, and also from academia and government with their comments on the flat US NIH budget. Just any update on how the first three, four months of the year have played out, and if there's any change relative to your expectations, you know.
Michael: Market condition, especially academia research I think all know alluded to that first point that I would say at least in the first quarter, we get clarity or we got clarity on the level of public funding for example, the budget for the NIH, but also in those countries. We know that he is going to be flat. This is exactly what we factored in.
Michael: Our our budget.
Thierry Bernard: So, Michael, I must confess that your voice was seriously muffled. I understand that you are asking about the market conditions. So if I got it right, but do not hesitate to come back and discuss market conditions, especially academic research. I think Roland alluded to that first point that I would say, at least in the first quarter, we get clarity or we get clarity on the level of public funding, for example, the budget for the NIH, but also in other countries, we know that it is going to be flat.
Michael: Budget 2024, we highlighted in our call. This morning that we continue to see.
Michael: Certain cautiousness in our customers for capital spending for capital expense, which is not a surprise because as you know Michael there are so many so many countries go into election. This year that election are always creating a bit of attention.
Michael: We see this all we planned these to improve as those elections upcoming behind us and we are progressing towards the end of the year.
Thierry Bernard: This is exactly what we factored in our budget for 2024. We highlighted in our call this morning that we continue to see a certain cautiousness in our customers for capital spending, for capital expenditure, which is not a surprise because, as you know, Michael, there are so many, so many countries going to elections this year that elections are always creating a bit of attentism. We see this, or we plan for this to improve as those elections are coming behind us, and we are progressing towards the end of the year. That's what I would clearly highlight.
Michael:
Michael: That's what I would add clearly highlight.
Michael: We expect the market to slowly ramp up sequentially. We said in the press release. This morning yesterday and this morning that we do not expect the Chinese market to bonds, Mike anytime soon at least not before 2025.
Michael Leonidovich Ryskin: We expect the market to slowly ramp up sequentially. We said in the press release this morning, yesterday, and this morning that we do not expect the Chinese market to bounce back any time soon, at least not before 2025. So at the moment, the market environment fits what we did factor for 2024.
Michael: So at the moment the market environment fits what we did factor for 2024.
Michael: Okay.
Speaker Change: Okay. That's helpful.
Speaker Change: Okay.
Michael: Hum.
Speaker Change: A quick follow up I wanted to just touch on them.
Michael: For the fourth wall.
Michael: Well.
Michael: Yes.
Michael: Okay.
Michael: If you could provide any color on that.
Michael: You've got a couple of different product lines.
Michael Leonidovich Ryskin: Okay, that's helpful. And I took my headphones off, so hopefully this is easier to hear. I don't know if you still can't hear me.
Michael: Complexity.
Michael: In terms of that.
Michael:
Michael: Thanks.
Speaker Change: I'm absolutely I don't know John if you can help me, but from where I am hearing Boston the voices tumor food that you don't get a half of the question at least.
Michael Leonidovich Ryskin: Quick follow-up, I wanted to just specifically touch on the instrument portfolio. I know that's a very small part of your business, but that can be some challenge. If you could fill out any color within that, you know, you've got a couple different product lines, it's all on the instrument store side, the complexity of the instrument is on ASP, just any change in that environment as you start the year.
John: No I get it.
Speaker Change: I, probably haven't placed at least one of them.
Speaker Change: Easy to understand I agree but.
Speaker Change: It's about it's about portfolio growth with others I do think while we see so many other companies that overall instrumentation business is.
Speaker Change: Given the overall market environment are clearly not diseases, but at this stage.
Thierry Bernard: Absolutely, I don't know, John, if you can help me, but from where I am here in Boston, the voice is too muffled; I didn't get half of the question. There is a lot of background noise. Yeah, please, please, Roland.
Speaker Change: Same time.
Speaker Change: Particular instruments like archive to TNK I'll start with price points are onsite at $40000 actually is still at a quite normal environment.
Speaker Change: Was it in cement costs more than $100000. It gets more difficult so I would say.
Roland Sackers: At the same time, particular instruments like our CAYA-280 and CAYA-STAT with price points around $30,000-$40,000 are actually still in quite a normal environment. Once an instrument costs more than $100,000, it gets more difficult. So I would say overall, while it's in a quite difficult environment for the more expensive instruments, given our exposure, in particular, to CAYA-280s, CAYA-STATs, and CAYA-3s of this world, we feel quite comfortable going through 2024.
Speaker Change: All while it's quite a difficult environment for the more expensive instruments, given our exposure particular to us as a kind of acuity sky starts cubes.
Speaker Change: <unk> such as what we feel quite comfortable.
Speaker Change: Going through 2024.
Speaker Change: Thank you okay. Thank you.
Speaker Change: Yeah.
Speaker Change: We go next to the line of Hugo <unk> with BNP Paribas.
Hugo: Hi, Hello, Thanks for taking my questions Hi, guys.
Hugo: Two first in class that's the.
Hugo: Thank you for the comments around the fact that you choose a walkie talkie EHS.
Roland Sackers: Thank you, Roland. Okay, thank you.
Speaker Change: Can you.
Hugo: Maybe help us understand your level of confidence in getting approval by the end of June.
Operator: We go next to the line of Hugo Solde with BNP Paribas.
Hugo Solvet: Hi. Hello. Thanks for taking my questions. Hi guys. I have two.
Hugo: Two loads are the tests the guest will testify in H two and on past tax can you maybe give us a bit more.
Hugo Solvet: First, on ChIA-Stats. Thierry, thank you for the comments on the fact that your teams are working closely with the FDA. Can you maybe help us understand your level of confidence in getting your approval by the end of June to roll out the test, the gastro test in H2? And on ChIA-Stats, can you maybe give a bit more color on the placement trend? And second, on regulation, can you share your thoughts on the FDA's process to down-classify high-risk IVD tests? Thank you.
Speaker Change: More color on the placement trend and cig on regulation can you share your thoughts on the FDA process to dump classify IV IV test. Thank you.
Speaker Change: Okay.
Speaker Change: Thank you we'll go so first of all on the level of chaos of confidence for the.
Speaker Change: Approval.
Speaker Change: What I can say is that we have submitted all of our data.
Speaker Change: To the FDA and since our latest submission we didn't get.
Speaker Change: Any more questions.
Speaker Change: And the data were solid and good.
Speaker Change: They were solid in terms of analytical performance.
Speaker Change: And they were solid compared to competition.
Thierry Bernard: Thank you, Hugo. So, first of all, on the level of confidence for the GI approval. Hugo, what I can say is that we have submitted all our data to the FDA, and since our latest submission, we didn't get any more questions. Any more questions? and the data were solid and good. They were solid in terms of analytical performance, and they were solid compared to the competition. So now, obviously, I cannot speak on behalf of the agency. However, we are in constant contact.
Speaker Change: So.
Speaker Change: Now, obviously I cannot speak on behalf of the agency.
Speaker Change: We are in constant touch we will continue to do so because it's important for carriers and to get these tests to prove this is the only thing I can say I cannot talk on behalf of the agency based on our data I'm confident.
Speaker Change: One carrier starts.
Speaker Change: On your questions for the trends of our placement as we said in the press release, it's a very.
Speaker Change: Healthy trends, we are over a 100 units for the.
Speaker Change: Quarter, but what is all the more satisfying for us is.
Thierry Bernard: We will continue to do so because it's important for Qiagen to get this test approved. This is the only thing I can say. I cannot talk on behalf of the agency.
Speaker Change: One to see the growth at more than 20% in many of our panels and not driven by Covid. So I'm, referring to Gi in Europe for example to meningitis.
Thierry Bernard: Based on our data, I'm confident. On Kaya Stats, on your questions about the trends in placement, as we said in the press release, it's a healthy trend, we are over 100 units for the quarter, but what is all the more satisfying for us is... One, to see growth of more than 20% in many of our panels and not driven by COVID. So I'm referring to GI in Europe, for example, to meningitis. And two, the fact that despite having only one panel available in the U.S., we are still able to place instruments. That's very encouraging.
Speaker Change: And to the fact that despite having only one panel available in the way that we are still able to place the instrument that's very encouraging.
Speaker Change: On the FDA I, we don't see downgrading, but making it easier.
Speaker Change: On some days, so don't moving them from.
Speaker Change: PMA to five 10-K, I think it's acknowledged.
Speaker Change: Acknowledgment of Oh from the agency.
Speaker Change: They need to keep moving in bringing added value test.
Speaker Change: I remind everybody that affect NDA submission is not reviewed either you still need to submit a significant level of clinical data you still need to go through.
Thierry Bernard: Third, on the FDA, I wouldn't say downgrading but making it easier on some tests or moving them from PMA to 510K. I think it's an acknowledgment from the agency that they need to keep moving in bringing added value tests. I remind everybody that a 510K submission is not trivial either. You still need to submit a significant level of clinical data. You still need to go through a review, so I don't say it's downgraded. It's just the FDA is willing to move ahead on basically approving added value tests. But both submissions take time and require clinical data.
Speaker Change: And so I don't say to downgrade it it's just a.
Speaker Change: The EBITDA willing to move ahead on.
Speaker Change: Basically you're proving out the value tests, but booth, both submissions take time and take clinical data.
Speaker Change: Thank you very much.
Speaker Change: Yeah.
Speaker Change: We will go next to the line of Patrick Donnelly with Citi. Please go ahead.
Patrick Bernard Donnelly: Hey, guys. Thanks for taking the question.
Patrick Bernard Donnelly: Gary maybe a follow up on the China piece.
Patrick Bernard Donnelly: So how do you guys have a few different vertical where both life science diagnostics and then the cottage brands private label Bad brand can you just talk a little bit about going through each of those what you're seeing are there different trends in China, and just expectations as we work our way through the year there it doesn't sound like you're overly optimistic on improvement there just wanted to talk through the outlook.
Operator: We'll go next to the line for Patrick Donnelly with Citi. Please go ahead.
Patrick Bernard Donnelly: Hey guys, thanks for taking the questions. Thierry, maybe a follow up on the China piece. I know you guys have a few different verticals there, both life science and diagnostics, and then the Qiagen brand, the private label brand. Can you just talk a little bit about going through each of those, what you're seeing, are there different trends in China, and just expectations as we work our way through the year there? It doesn't sound like you're overly optimistic about improvement but just want to talk through the outlook for the year.
Patrick Bernard Donnelly: Sure.
Speaker Change: Well I wouldn't say Patrick are optimistic or pessimistic I would say coherent.
Speaker Change: We keep saying the same thing since 2023.
Patrick Bernard Donnelly: Where we said that we would never expect.
Patrick Bernard Donnelly: The Chinese market to bonds back anytime soon and we always said.
Patrick Bernard Donnelly: At least not before end of 2024, and probably more 2025 and.
Patrick Bernard Donnelly: And we maintain that position.
Patrick Bernard Donnelly: The Chinese market is in a transition phase post COVID-19 that.
Patrick Bernard Donnelly: He is impacting both life science and clinical diagnostic.
Thierry Bernard: Well, I wouldn't call Patrick optimistic or pessimistic; I would say coherent. We keep saying the same thing since 2023, where we said that we would never expect the Chinese market to bounce back anytime soon, and we always said at least not before the end of 2024 and probably more 2025, and we maintain that position. The Chinese market is in a transition phase post-COVID that is impacting both life science and clinical diagnosis. Qiagen has a relatively limited exposure to the Chinese market, 6% of our revenues.
Speaker Change: Okay, Yeah, China is a relatively limited exposure to 6% of our revenues.
Speaker Change: And we have I think the strategy that is needed to tackle the need of the Chinese market, which is.
Speaker Change: First.
Speaker Change: Investing into local R&D and manufacturing.
Speaker Change: Many times it makes sense.
Speaker Change: Take care and having a double brand.
Patrick Bernard Donnelly: Second brand, which is still being exclusively to Chinese customers with Chinese product.
Patrick Bernard Donnelly: We are obviously monitoring all the initiatives.
Patrick Bernard Donnelly: And by the Chinese authority to try to boost their market, especially the recent capital investment initiatives.
Thierry Bernard: And we have, I think, the strategy that is needed to tackle the needs of the Chinese market, which is first investing in local R&D and manufacturing, and whenever this makes sense, taken having a double brand. The second one, which is serving exclusively Chinese customers with Chinese products. We are obviously monitoring all the initiatives.
Patrick Bernard Donnelly: It's too early to say, what's going to be the impact, but we are fully and closely monitoring.
Patrick Bernard Donnelly: So for us.
Patrick Bernard Donnelly: China in 2024 is on track with our expectation, we don't see any bonds back and as I've said many times before.
Patrick Bernard Donnelly: Starting 2025 these markets should represent a mid single digit growth opportunity for a company like Qiagen.
Thierry Bernard: ...taken by the Chinese authorities to try to boost their market, especially the recent capital investment initiative. It's too early to say what the impact will be, but we are fully and closely monitoring it. So for us, China in 2024 is on track with our expectations. We don't see any bounce back. And as I said many times before, starting 2025, this market should represent a mid-single-digit growth opportunity for the company Qiagen.
Patrick Bernard Donnelly: Okay.
Speaker Change: Okay. That's helpful.
Speaker Change: And then Roeland you want on the on the margin.
Speaker Change: Yeah.
Roeland: Pretty healthy ramp throughout the year, which is pretty good for you guys can you just talk through the moving pieces.
Roeland: Through that higher exit rate on the margin side, the key variables visibility into execution.
Speaker Change: Yes.
Roeland: Yeah, Hi, well I think all set a good start into the year. We also expect that our second quarter has another charter or writing income adjusted clearly growing nicely to the 27% range, so what you're saying.
Patrick Bernard Donnelly: Okay, that's helpful. And then Roland, give me one on the margins. You obviously had a pretty healthy ramp throughout the year, which is pretty typical of you guys. But can you just talk through the moving pieces as we work our way through that higher exit rate on the margin side and the key variables and visibility into the execution there? Thank you. Yeah, hi, um...
Speaker Change: There is a good win and therefore, I think auto visibility for the rest of the year that we can make.
Speaker Change: Or at least 28%.
Speaker Change: While we believe that R&D investment stays at about 10% for the full year, probably a bit lower relatively in the fourth quarter. So there's still leverage opportunity on SG&A a well.
Roland Sackers: Yeah, hi. Well, I think overall, as you said, a good start to the year. We also expect already that the second quarter will have another ramp in terms of operating income adjusted, clearly going nicely to the 27% range. So I do think there's a good ramp and, therefore, I think there's also visibility for the rest of the year that we will make at least 28%. While we believe that R&D investment stays around about 10% for the full year, probably a bit lower relatively in the fourth quarter, there's still a leverage opportunity around SG&A, where again, we clearly still have utilization coming from our digitalization efforts, but also, scale, of course, is going to help us as well.
Speaker Change: Well again.
Speaker Change: Clearly steel utilization coming from our digital utilization efforts.
Speaker Change: But also our scale of course, it's going to helps as well so overall.
Speaker Change: Continued to see margin improvement options not only for 'twenty four but also beyond and of course, we're going to talk about that one.
Speaker Change: Our capital market day.
Speaker Change: Our tax rate was a bit higher.
Speaker Change: In Q1, I would assume that normalize over the rest of two years ago. So as I said, so far which is the start was quite healthy for us.
Roland Sackers: So overall, we continue to see margin improvements and options not only for 2024 but also beyond. And, of course, we're going to talk about that on our capital market day. The tax rate was a bit higher in Q1. I would assume that it normalized over the rest of the year as well. So, as I said, so far, I would say the start was quite healthy for us. Thank you. Next, we go to Jack Meehan with
Speaker Change: Thank you.
Speaker Change: Yeah.
Speaker Change: Next we go to Jack Meehan with Nephron Research. Please go ahead.
Jack Meehan: Thank you Hello, everyone.
Jack Meehan: Maybe just to start I was wanted to dive into the genomics results can you talk about visibility into the QD I contract timing you called out in the release and just the path to getting back to growth for that business for the rest of the year what your visibility is.
Jack Meehan: Yeah.
Speaker Change: So Jack is very simple.
Speaker Change: Q1 was mainly due for two of timing of revenue recognition and basically it's even a four one contract or.
Operator: Next, we go to Jack Meehan with Nefron Research. Please go ahead. Thank you. Hello, everyone. Maybe just to start, I was wanting to dive into the genomics results. Can you talk about that?
Speaker Change: You know that in this <unk> business, sometimes we have a large contract, especially with pharma.
Speaker Change: That doesn't question at all first of all the investment plan that we explained to the market.
Speaker Change: Six months ago.
Jack Meehan: So Jack, it's very simple. The Q1 was mainly due to timing of revenue recognition. And basically, it's even for one contract. You know that in this QDI business, sometimes we have large contracts, especially with pharma. That doesn't question, at all, first of all, the investment plan that we explained to the market six months ago, and that doesn't question at all our goal for double-digit growth for the rest of the year. So it's just a question of timing of recognition. Okay, great.
Speaker Change: And that doesn't question at all I will go for double digit growth for the rest of the year.
Speaker Change: So so it's just a question of timing of recognition.
Speaker Change: Okay, Great and then on Chi acuity can you talk about a little bit more on some of the key menu that you expect to roll out throughout the year and.
Speaker Change: Like what that should mean in terms of the pace of growth within the PCR line. Thanks.
Speaker Change: Well, we believe as we said many time Jack that the solution is a double digit growth potential I'm, referring to the digital PCR K equity line.
Thierry Bernard: And then on Chi Acuity, can you talk a little bit more about some of the key features that you expect to roll out throughout the year and what that should mean in terms of the pace of growth within the PCR line? Well, we believe, as we have said many times, Jack, that this solution has double-digit growth potential. I'm referring to the digital PCR-KYAC-WITI line. And when I say double digit, it's much closer to 20% than the, let's say, low double digit number one.
Speaker Change: And when I say double digit it's much closer to the 20% under let's say low double digit number one second as you know we have an extremely differentiated company, we offered many workflows and systematically since the last of the law.
Speaker Change: For years, we developed a menu first for life science.
Speaker Change: And it really <unk>.
Speaker Change: <unk> started a year and a half ago. When we started to have Biopharma implication now we are moving also to cell and gene therapy application and QC control for pharma.
Thierry Bernard: Second, as you know, we have an extremely differentiated company. We offer many different workflows. And systematically, for the last three years, we developed a menu first for life science, and it really made a difference a year and a half ago when we started to have biopharma applications. Now we are moving also to cell and gene therapy applications and QC control for pharma. But remember also that we remain committed to launching the solution for the clinical market.
Speaker Change: But remember also that we remain committed to launching the solution for the clinical market.
Speaker Change: We won't carry equity to be FDA approved we expect this platform to be FDA approved we expect that for this for 2024 and then the plan is to launch a menu around <unk> oncology.
Speaker Change: Panels like <unk> for example.
Speaker Change: So that's the plan that we confirm.
Speaker Change: And this is where we want to go both life science and research and clinical application.
Speaker Change: Yeah.
Speaker Change: We'll go next to Catherine Schulte with Baird. Please go ahead.
Thierry Bernard: We want Kayakuiti to be FDA-approved. We expect this platform to be FDA-approved. We expect that this will happen in 2024, and then the plan is to launch a menu around hemato-oncology panels, like BCR-ABL, for example. So that's the plan that we confirm. And this is where we want to go, both in life science and research and clinical application. We'll go next to Catherine Schulte with Baird. Please go ahead.
Catherine Walden Ramsey Schulte: Hey, guys. Thanks for the question maybe first on the academic side you mentioned the NIH budget came in line with your expectations, we have seen a slowdown in NIH outlays in the last two quarters. So could you just talk to what you're hearing from customers in that end market.
Speaker Change: Well as we said before Katrina.
Speaker Change: If you compare for example, 2023 was <unk> 24 in 'twenty three.
Operator: Hey guys, thanks for the questions. Maybe first on the academic side, you mentioned the NIH budget came in line with your expectations.
Speaker Change: We did budget for roughly a 3% increase of DNA is bridgett and we were right.
Speaker Change: This year, we were more cautious for different reasons, the economic context, the political context, and we said flat and we were right as well.
Catherine Walden Ramsey Schulte: Well, as we said before, Catherine, if you compare, for example, 2023 with 2024, in 2023, we did budget for roughly a 3% increase in the NIH budget, and we were right. This year, we were more cautious for different reasons, the economic context, the political context, and we said flat, and we were right as well.
Speaker Change: We continue to have extremely active collaboration with the NIH in the sense for example.
Speaker Change: You have heard about.
Speaker Change: The recent detection for example of H five N. One in milk for example, this is.
Speaker Change: Our field, where we collaborate with the NIH you have seen also.
Thierry Bernard: We continue to have extremely active collaboration with the NIH in the sense, for example, that you have heard about the recent detection, for example, of H5N1 in milk, for example. This is a field where we collaborate with the NIH. You have also seen the previous discussion, especially in February, around the detection of CLAID-1 and CLAID-2 for monkeypox. This is another field where we collaborate with the NIH. We have an amplitude of fields where we can collaborate with major researchers, from components, oligos, enzymes, to a finished product, whether it is PCR or digital PCR.
Speaker Change: Previous discussion, especially in February our year round, the detection of <unk>, one and <unk> two for Monkey pox decision knows a field where we.
Speaker Change: Elaborate with the NIH and we have an MPT the Av for all periods, where we can collaborate with these major research.
Speaker Change: From components or egos enzymes too.
Speaker Change: A finished product whether it is PCR or digital Pcr.
Speaker Change: Sure.
Speaker Change: It's it fits what we are planning for the year, we believe that our.
Speaker Change: I cannot speak on behalf of the American authorities, obviously, but it's a kind of a transition period and it's clear that I haven't seen the U S offer it is saying that they don't want to invest in high value.
Thierry Bernard: So it fits what we planned for the year. We believe that, I cannot speak on behalf of the American authorities, obviously, but it's a kind of transition period. And it's clear that I haven't seen the US authorities saying that they don't want to invest in high-value technologies or research and development for the future. So we are still confident that this funding will bounce back at some point. Okay, great.
Speaker Change: Technology is a research and development for the future. So we are still confident that.
Speaker Change: These are funding with bonds will bounce back at Dupont.
Speaker Change: Yeah.
Speaker Change: Okay, Great and then in sample Kirk how did the non Covid business performed outside of China, and what's your outlook for sample type for the second quarter should we see a return to growth on the non COVID-19 basis or will that be more of it.
Catherine Walden Ramsey Schulte: And then in sample tech, how does the non-COVID business perform outside of China? And what's your outlook for sample tech for the second quarter? Should we see a return to growth on a non-COVID basis, or will that be more of a back half? I would prefer, as Roland said, to say that we still expect low to low single-digit growth throughout the year. It's too early in the quarter.
Kirk: I would I would prefer as Warner said to say that we still expect a low to low single digit growth throughout the year, it's too early in the quarter or you see it.
Kirk: As we explained I mean are.
Kirk: We are impacted here.
Speaker Change: By by weak demand in China, obviously, the COVID-19 impact, but on the non Covid. We are pleased on one hand with the placement of instruments now we need to accelerate.
Thierry Bernard: You see, as we explained, I mean, we are impacted here by weak demand in China, obviously the COVID impact, but on the non-COVID, we are pleased on the one hand with the placement of instruments. Now we need to accelerate the consumables, both manual and automated. The market is probably moving faster into automated sample take. But once again, I ask you to see the sequence of growth through the full year, not just in the quarters.
Speaker Change: Consumables, both manual and automated the market is moving probably faster into automated.
Speaker Change: Sample take but once again I ask you to see the sequential growth through the full year not just on quarter two.
Speaker Change: Okay.
Speaker Change: Okay. Thank you.
Operator: We go next to Falko Friedrichs with Deutsche Bank. Please go ahead.
Speaker Change: We go next to Saka Friedrichs with Deutsche Bank. Please go ahead.
Falko Friedrichs: Hey, Thank you for taking my question.
Falko Friedrichs: Hey, thank you for taking my question. So the Roche CMD is coming up now in May. Everyone's looking forward to see if they do anything on the latent tuberculosis side of things. Irrespective of the decision, can you just briefly remind us why you still believe that you would be sitting on a great business here that you can grow further, even if they were to enter that market? And then related to that, if they decide to enter the market, would that change anything with regard to your further rollout strategy? Thank you.
Falko Friedrichs: So the Roche CMT is coming up now in May everyone's looking forward to see.
Falko Friedrichs: If they do anything on the other latent tuberculosis side of things.
Falko Friedrichs: Irrespective of the decision can can you just please keep in mind this.
Falko Friedrichs: Why are you why you still believe that.
Falko Friedrichs: You'd be sitting on a great business here that you can go so that even if they were to end.
Falko Friedrichs: Right.
Falko Friedrichs: Then related to that if they decide to enter the market what that change anything with regard to your sort of rollout.
Speaker Change: Thank you.
Thierry Bernard: Thanks Falko. I cannot talk on behalf of any competitors. I'm talking for Qiagen, and I know that we have built the most automated? Universal. Automated Workflow, for latent TB detection.
Speaker Change: Okay.
Speaker Change: Thanks, Hari Kumar I cannot talk on on on behalf of any competitors I'm talking for Qiagen and I know that we have built.
Speaker Change: What is the most automated.
Falko Friedrichs: You never shortly.
Falko Friedrichs: Automated workflow.
Falko Friedrichs: For latent TB detection.
Thierry Bernard: Many people have been mined, the agreement with diethylene, which is key and has proven extremely efficient since we executed on it, but it starts also at the pre-anatical step, with the agreement with TKAN and Hamilton. There is no comparison on the market at the moment with that work. Second, as you have seen also recently, Falko, we continue to invest in the product itself. The fourth generation did replace the third generation.
Falko Friedrichs: Many people have in mind.
Falko Friedrichs: The agreement with various arena, which is key and that's proven and extremely efficient since we executed on it.
Falko Friedrichs: But is that also on the pre analytical step.
Falko Friedrichs: With the agreement with chicken and Hamilton.
Falko Friedrichs: There is no comparison on the market.
Falko Friedrichs: Moment with that work for them.
Falko Friedrichs: Taken as you have seen or saw recently vertical we continue to invest on the product itself.
Falko Friedrichs: The fourth generation did replace the third generation.
Thierry Bernard: And we continue to get publications in peer review on this fourth generation. Overall, since we have launched, let them be quantified. It's more than 3000 publications. It's unprecedented. There have been competitions for many years. [inaudible] The main one is an antiquated technology called the skin test, and that market is still under-penetrated, probably below 40%, so the potential to convert is still significant in the U.S., obviously, but also in other markets, and Beyond Skin Test.
Falko Friedrichs: And we continue to get publications in peer reviews.
Falko Friedrichs: On this.
Falko Friedrichs: Fourth generation overall since we have launched.
Falko Friedrichs: Latent TB quantitatively.
Falko Friedrichs: It's more than 3000 publications.
Falko Friedrichs: Unprecedented.
Falko Friedrichs: Sure.
Falko Friedrichs: There has been competitions for many years.
Falko Friedrichs: Core quantity film.
Falko Friedrichs: The main one.
Falko Friedrichs: Is an antiquated technology corridor.
Falko Friedrichs: Skin test.
Falko Friedrichs: And that market.
Falko Friedrichs: It's still under penetrated probably below 40% so the potential to convert is significant in the U S. Obviously, but also in those markets.
Falko Friedrichs: And beyond skin test.
Thierry Bernard: The emergence or the presence of other competitors, independent or not, never really changed. The growth rate of Qiagen, All Our World Marketship, So, do not take this for complacency. We monitor the market very well, but we have not seen anything concrete yet. What I know is that we continue to invest in our solution, in the market transformation, and we believe that we are still very well positioned to lead that market. Next, we go to the line of Dan Leonard.
Falko Friedrichs: The emergence of the presence of also competitors independent or not never really changed.
Falko Friedrichs: The growth rate of carrier Jim.
Falko Friedrichs: All of our market shares.
Falko Friedrichs: So.
Falko Friedrichs: Do not take these for complacency.
Falko Friedrichs: We monitor the market very well.
Falko Friedrichs: But we have not seen anything concrete yet.
Falko Friedrichs: What I know is we continue to invest on our solution.
Falko Friedrichs: On the market conversion and.
Falko Friedrichs: And we believe that we are still very well positioned to lead that market.
Speaker Change: Okay. Thank you.
Dan: Next we go to the line of Dan.
Operator: Next, we go to the line of Dan Leonard with UBS. Please go ahead. Hello, and thank you. I have a follow-up to an earlier question on your sample tech business. What is your level of conviction?
Falko Friedrichs: Dan Leonard with UBS. Please go ahead.
Unknown Executive: Hello, and thank you I have a follow up to an earlier question on your sample Tech business.
Unknown Executive: Has your level of conviction that sample Tac can grow low single digits for the year has that level of conviction changed at all in the past three months.
Unknown Executive: No, as we have said, we reiterate that vision for the full year once again in 2024. We are spending significant marketing time and analysis to understand the trends of the market worldwide. And so far, this basically confirms that assumption. So, no change for the moment.
Speaker Change: No as we have said, we reiterate that vision for the full year once again 2024.
Falko Friedrichs:
Falko Friedrichs: We are spending significant marketing time, an analysis to understand the trends of the market worldwide.
Falko Friedrichs: And so far this basically confirms.
Falko Friedrichs: That assumption so no change for the moment.
Thierry Bernard: Thank you. And then in my follow up, Terry, you mentioned H5N1. How do you think about Qiagen's ability to respond if there is a greater need for testing for H5N1, either in livestock or, you know, God forbid, humans? So, as usual, we are extremely proactive with every relevant authority. I spoke about the NIH before, but it's not only the NIH that we need to discuss. Proactively, about one, the situation without panicking, and second, the solution.
Speaker Change: Thank you and then my follow up Terri you mentioned H five N. One how are you thinking about <unk> ability to respond if there is a greater need for testing for H five N one either in livestock or God forbid humans.
Speaker Change: Yeah.
Terri: So as usual we are extremely proactive with every relevant authorities I spoke about the NIH before but it's not only the MH.
Speaker Change: To discuss.
Speaker Change: Ah proactively.
Speaker Change: About one the situation without panicking.
Speaker Change: And second do solutions.
Thierry Bernard: And as I said before, what is very interesting with Qiagen is that when I say solution, it's not just about a kit. If the NIH decides to develop their own kit for the CDC, they will... use Qiagen components. So we can answer from component to finish kits, whether this kit is on a PCR format, on a digital PCR format, or a next-generation sequencing format.
Speaker Change: And as I said before what is very interesting with Sky adjourn is that when I say solution, it's not just about to keep.
Speaker Change: <unk> decided to develop their own kit or the CDC they will.
Speaker Change: Use cajun components. So we can answers from component.
Speaker Change: <unk>.
Speaker Change: Finished goods, whether these kits is on the PCR format on.
Speaker Change: On the digital PCR format or a next generation sequencing from it.
Thierry Bernard: You know that during the first major outbreak some years ago of H5N1, Qiagen was one of the most relevant companies to step up to this challenge. And we will continue to do the same. We are very vigilant for H5N1, and for the development of monkeypox as well. And so we are ready and constantly negotiating and discussing with those agencies.
Speaker Change: You will note that during the first major outbreak some years ago.
Speaker Change: Of H five N one carrier Jane was.
Speaker Change: One of the most relevant company to step up to this challenge.
Speaker Change: And.
Speaker Change: We will continue to do the same.
Speaker Change: We are very vigilant on H five N. One on the development of Monkey books as well.
Speaker Change: And so we are ready and constantly negotiating and discussing with those agencies.
Speaker Change: Okay.
Speaker Change: Understood. Thank you.
Operator: We go next to Doug Schenkel with Wolf Research. Please go ahead.
Speaker Change: We go next to Doug Schenkel with Wolfe Research. Please go ahead.
Douglas Anthony Schenkel: Hey guys, thanks for taking my questions. A very quick follow up on Quantiferon.
Douglas Anthony Schenkel: Hey, guys. Thanks for taking my questions.
Douglas Anthony Schenkel: Quick follow up on quantity or I'm curious I think you've described really well.
Thierry Bernard: Thierry, as I think you described really well, the focus of the investment community on competition is, you know, it's not like we unearthed something that you haven't been thinking about for years. You've been competing against legacy approaches. There is an existing IGRA competitor on the market. With that in mind, is it fair to say you're going to describe in detail the CMD, not just how you stack up clinically and from a process perspective compared to alternatives, but that you'll also talk in detail about efforts you've made to contractually lock in customers based on the strength of your assay and anticipate potential competition that gets broader? Is that a fair assumption?
Douglas Anthony Schenkel: Focus in the investment community on competition is.
Douglas Anthony Schenkel: It's not like we are in or something that you haven't been thinking about for years, you've been competing against legacy approaches.
Douglas Anthony Schenkel: There is an existing competitor on the market with that in mind is it fair to say youre going to describe in detail. The cfd not just how you stack up clinically and from a process perspective compared to alternatives, but youll also talk in detail about efforts you've made to contractually locked in customers based on the strength of your assay and anticipate.
Douglas Anthony Schenkel: That potential competition.
Douglas Anthony Schenkel: Gets broader is that a fair assumption.
Douglas Anthony Schenkel: It's a very clear assumption, a dog or it's such a.
Thierry Bernard: It's a very clear assumption, a dog, it's such a key product for us that the CMD plans to give in the details of what our expectations are for the coming years. We are also very much monitoring. The situation of our contracts, so we will give details on the percentage of contracts that are locked into pre-annual contracts so that you will really see that there is no complacency. There is extreme vigilance. There is investment, and there is confidence that this can continue to be a growth driver for our company.
Douglas Anthony Schenkel: A key product for us that the CMG plans to give any details of what our expectations for the coming years.
Speaker Change: We.
Speaker Change: Are also.
Speaker Change: Very much monitoring.
Speaker Change: The situation of our contracts. So we will give details on the percentage of contracts that are locked into priori in your contract.
Speaker Change: So that you really see really that there is no complacency here.
Speaker Change: There is extreme vigilance.
Speaker Change: There is investments and there is confidence.
Speaker Change: That this can continue to be a growth driver for our company.
Douglas Anthony Schenkel: Thank you for that. And then I just have a quick question on the quarter.
Speaker Change: Yes.
Speaker Change: Thank you for that and then just a quick question on the quarter other companies have reported.
Thierry Bernard: Other companies have reported, at least those that have reported thus far, a slower than expected start to the year when it came to lab activity and reagent demands. And then, you know, seemed to indicate that there was a pickup in activity in March and April. I just want to be clear, did you guys see the same thing? And if so, is a continuation of that trend fully reflected in the guidance assumptions? Or are you waiting for the trend to extend for a longer period of time before you would factor something like that into your guide? Thank you.
Speaker Change: At least those that have reported thus far are slower than expected start to the year. When it came to lab activity on reagent demand and then it seemed to indicate that there was a pickup in activity in March and April I, just want to be clear did you guys see the same thing and if so is the continuation of that trend fully reflected in guidance assumptions are.
Speaker Change: Are you waiting for the trends.
Speaker Change: To extend for a longer period of time before you would factor or something like that into Europe to your guide. Thank you.
Thierry Bernard: I think, Doug, Roland alluded to that during the presentation on his part. There is...
Speaker Change: I think Doug Oh, no I alluded to that during the presentation in his part.
Douglas Anthony Schenkel: There is a.
Thierry Bernard: Softness on the life science market, not just for Qiagen. If you look at competition, I believe that we outperform competition and competition results in terms of growth. And there is more dynamism at the moment on the clinical market. The softness on life science mainly translates into caution on capital expense.
Douglas Anthony Schenkel: Softness on the life science market not just for a carrier Jim If you look at competition I believe that we.
Speaker Change: Outperform competition and competition results in terms of growth.
Speaker Change: And there is.
Speaker Change: More dynamism at the moment on the clinical market.
Speaker Change: Softness on life science, mainly translates.
Speaker Change: In Q.
Speaker Change: Cautiousness on capital expense.
Douglas Anthony Schenkel: And as we have explained, for us, it was planned. We did even better than what we expected in Q1. We did better than the competition that has reported results, at least those that are completely comparable to Qiagen. And as we said, and Roland as well, we reaffirm our guidance. So we see a significant improvement. This is where we are at the moment. Okay, thank you again. We'll take our last question from Dan Brennan with TD Cowan. Please go ahead.
Speaker Change: As we have explained.
Speaker Change: For us it was planned.
Speaker Change: We did even better than what we expected.
Speaker Change: On Q1, we did better than the competition that have reported the results at least those that are completely comparable to qiagen and as we said.
Speaker Change: Well, we reaffirmed our guidance so.
Speaker Change: So we see you seem quite showed improvement.
Speaker Change: This is where we are at the moment.
Speaker Change: Okay. Thank you again.
Speaker Change: Okay.
Speaker Change: We will take our last question for Dan Brennan with TD Cowen. Please go ahead.
Daniel Gregory Brennan: Great. Thank you maybe first one just on.
Daniel Gregory Brennan: <unk> for the case and I know there was a question earlier on the digital PCR portfolio, but after that.
Operator: Great, thank you. Maybe the first one would be just on PCR implications.
Daniel Gregory Brennan: 12% decline in <unk> I know the press release says you expect the business to improve through the year, what's assumed for the base business.
Daniel Gregory Brennan: Digital PCR and kind of what drives that improvement as you see it progress through the year.
Daniel Gregory Brennan: Because we have such a wide portfolio in PCR. I'm not talking about digital PCR, which is made up of all the technologies, newer applications, and overall, we believe that the trend will follow the market trend in our sequential improvement expectation. So do not forget that we have a significant installed base also, which is driving this assumption. So this is confirming what we have said, but again, Dan.
Daniel Gregory Brennan: Okay.
Speaker Change: Because we have such a wide.
Speaker Change: Portfolio in PCR.
Speaker Change: Not talking digital PCR, which is made of.
Speaker Change: Older technologies, a newer application.
Speaker Change: That.
Speaker Change: Overall, we believe that the trend will follow the market trend and our sequential improvement expectation.
Speaker Change: So.
Speaker Change: Do not forget that we have a significant installed base or so which is driving these these assumptions. So this is this is.
Speaker Change: Confirming what we have said, but again done.
Thierry Bernard: Clearly, in PCR, because we focus on it and because this is also a symbol of that new Qiagen for the last years. The effort in R&D, the efforts in presence on the ground, marketing, and sales will not go overall for the PCR portfolio.
Speaker Change: Clearly in PCR, because we focus on because.
Speaker Change: This is also a symbol of that new carrier Gen for the last years.
Speaker Change: My fault in there Randy.
Speaker Change: A fourth in presence on the ground marketing and sales will not go overall.
Speaker Change: For the PCR portfolio each will go to the digital piece here because this is where we can really take a number one or anything but the number one position in the market. So that's the allocation of priorities and this is what you will see also clearly on June 17th.
Thierry Bernard: It will go to the digital PCR portfolio because this is where we can really take a number one or a number one position on the market. So that's the allocation of priorities. And this is what you will also see clearly on June 17. Maybe related to that, is it reasonable to think you'll roll out kind of new multi-year growth and or margin targets in June and kind of can you step back, and what are the goals for investor day?
Speaker Change: Yeah.
Speaker Change: Maybe related to that is it reasonable to think you'll rollout kind of new multi year growth and your margin targets in June and kind of can you step back and what are the goals for the Investor day.
Thierry Bernard: I think the goal, and Roland can chime in as well, the goal for investor day is to go, on the ambitious top line and also bottom line, for the coming four years, to show why we do believe that we have significant growth drivers in our portfolio, and we will show clear numbers here. But we also believe... that Qiagen needs to accelerate its improvement in improving profitability. And we want also to show with what kind of efficiency measures.
Speaker Change: I think the Gordon or Don can chime in as well the Gulf or the Investor day.
Speaker Change: Is to go.
Speaker Change: On the ambitions.
Speaker Change: Top line and also bottom line.
Speaker Change: For the coming.
Speaker Change: Four years.
Speaker Change: Is to show what.
Speaker Change: Why do we do believe that we have significant growth drivers in our portfolio.
Speaker Change: And we will show clear numbers here.
Speaker Change: But we also believe.
Speaker Change: That <unk> needs to accelerate.
Speaker Change: On improving profitability.
Speaker Change: And we want also to show with what kind of efficiency measures, we want to achieve that.
Thierry Bernard: We want to achieve. And obviously, it's also an opportunity for you guys to meet some of the new management of Qiagen. You know that we have brought in different new managers on the Executive Committee, a new Head of Operations, a new Head for Life Science, a new Head for Clinical Diagnostics. And you will also see those last two ones, Head of Life Science and Clinical Diagnostics, on stage and giving their assumptions for the growth of their respective portfolios.
Speaker Change: And.
Speaker Change: Obviously.
Speaker Change: It's also an opportunity for you guys to meet also part of the new management of Qiagen, you'll know that we have brought.
Speaker Change: Different new manager at the Executive Committee, a new head of operation a new head for life Science, when you had four clinical diagnostic.
Speaker Change: And you will see or saw those last two ones ahead of life science and clinical diagnostic onstage and given there are also assumptions for the growth of their respective portfolio.
Speaker Change: Okay.
Speaker Change: Terrific. Thank you.
Thierry Bernard: Yes, thank you, Thierry. On that point, again, we look forward to seeing you on June 17th in New York at our event. And if you have any questions or comments in the meantime, please do not hesitate to reach out to us. And thank you again for your interest in Qiagen. Bye-bye.
Speaker Change: Thank you Terry on that plane again, we look forward to seeing you on June 17th in New York at our event and if you have any questions or comments in the meantime, please do not hesitate to reach out to us and thank you again for your interest in Qiagen Bye bye.
Ladies and gentlemen, this concludes the conference call. Thank you for joining us and have a pleasant day. Goodbye.
Speaker Change: Ladies and gentlemen, this concludes the conference call. Thank you for joining and have a pleasant day Goodbye.
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