Q1 2024 Repligen Corp Earnings Call

Keith: Good morning, ladies and gentlemen, and welcome to Repligen Corporation's first quarter of 2024 earnings conference call. My name is Keith, and I will be your coordinator today. After today's presentation, there will be an opportunity to ask questions. To ask a question, you press the star, then 1 on your telephone keypad. To withdraw your question, please press star, then 2. Please note this event is being recorded. Please note that in order to accommodate all individuals who wish to ask questions, there will be a limit of two questions at a time. I would now like to kindly call over to your host for today's call, Sondra Newman, Head of Investor Relations. Please go ahead, ma'am.

Good day, ladies and gentlemen, and welcome to Robinson Corporation's first quarter of 'twenty 'twenty four earnings conference call My.

Keith: My name is Keith and I'll be your coordinator today.

Keith: After todays presentation, there will be an opportunity to ask questions to ask a question you Press Star then one on your telephone keypad to withdraw your question. Please press Star then two please note. This event is being recorded.

Keith: Please note that in order to accommodate all individuals who wish to ask questions. There will be a limit of two questions at a time. So now let's turn the call over to your host for todays call Sondra Newman have head of Investor Relations. Please go ahead map.

Sondra S. Newman: Thank you, operator, and welcome to our first quarter of 2024 report. On this call, we will cover business highlights and financial performance for the three-month period ending March 31st, 2024, and we'll provide financial guidance for the year. Joining us on the call today are Repligen CEO Tony Hunt, our CFO Jason Garland, and our Chief Commercial Officer Olivier Lilliot.

Sondra S. Newman: Thank you operator, and welcome to our first quarter of 2020 for report on this call. We will cover business highlights and financial performance for the three month period, ending March 31, 2024, and we will provide financial guidance for the year.

Sondra S. Newman: Joining us on the call today are replicated CEO, Tony <unk>, our CFO, Jason Garland.

Sondra S. Newman: Our chief commercial officer Olivier video.

Sondra S. Newman: As a reminder, the forward-looking statements that we make during this call, including those regarding our business goals and expectations for the financial performance of the company, are subject to risks and uncertainties that may cause actual events or results to differ. Additional information concerning risks related to our business is included in our quarterly reports on Form 10-Q, our annual report on Form 10-K, and our current report on Form 8-K, including the report that we are filing today and other filings that we make with the SEC.

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

Sondra S. Newman: Additional information concerning risks related to our business is included in our quarterly report on Form 10-Q, our annual report on Form 10-K, and our current reports on form 8-K, including the report that we are filing today and other filings that we make with the SEC.

Sondra S. Newman: Today's comments reflect management's current views, which could change as a result of new information, future events, or otherwise. The company does not obligate or commit itself to update forward-looking statements, except as required by law. During this call, we are providing non-GAAP financial results and guidance, unless otherwise noted. Reconciliations of GAAP to non-GAAP financial measures are included in the press release that we issued this morning, which is posted on Repligen's website and on fec.gov.

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

Sondra S. Newman: During this call, we're providing non-GAAP financial results and guidance unless otherwise noted reconciliations of GAAP to non-GAAP financial measures are included in the press release.

Sondra S. Newman: We issued this morning, which is posted to <unk> website and on FCC Docker.

Sondra S. Newman: Adjusted non-GAAP figures in today's report include the following book-to-bill ratios, organic revenue growth, base business revenue, which excludes COVID and M&A, non-COVID revenue, cost of sales, gross profit, and gross margin, operating expenses, including R&D and SG&A, income from operations, and operating margin, other income, effective tax rate, net income, diluted earnings per share, as These adjusted financial measures should not be viewed as an alternative to GAAP measures but are intended to best reflect the performance of our ongoing operations.

Sondra S. Newman: Adjusted non-GAAP figures in today's report include the following book to Bill ratio organic revenue growth base business revenue, which excludes COVID-19 and M&A.

Sondra S. Newman: <unk> revenue cost of sales gross profit and gross margin operating expenses, including R&D and SG&A income from operations and operating margin. Other income pretax income effective tax rate net income diluted earnings per share as well as EBITDA. It does.

Sondra S. Newman: EBITDA and adjusted EBITDA margins. These adjusted financial measures should not be viewed as an alternative to GAAP measures, but are intended to better reflect the performance of our ongoing operation now let me turn the call over to Tony Hunt.

Sondra S. Newman: Now, let me turn the call over to Tony Hunt. Thank you.

Anthony J. Hunt: Thank you, Sondra, and good morning, everyone, and welcome to our Q1 earnings call. As you saw in our press release this morning, we delivered a solid first quarter in revenue and orders. With Q1 revenues coming in at $151 million, we are right on track to delivering $300 million to $310 million in the first half of 2024. Orders were in line with our expectations, resulting in a book-to-bill of $0.99 in the first quarter and $1.03 over the past nine months.

Anthony J. Hunt: Thank you Sondra and good morning, everyone and welcome to our Q1 earnings call.

Anthony J. Hunt: As you saw in our press release. This morning, we delivered a solid first quarter on revenue on orders.

Anthony J. Hunt: With Q1 revenues coming in at $151 million, we are right on track to delivering 300 millions for $310 million in the first half of 2024.

Anthony J. Hunt: Orders were in line with our expectations, resulting in a book to Bill of <unk> 99 in the first quarter and one point to three over the past nine months.

Anthony J. Hunt: We're satisfied with these results, especially in light of tough sequential and year-on-year comps and the known headwinds in COVID proteins and China. During the first quarter of last year, 2023, we realized $23 million of COVID-related revenue, none of which was recurring.

Anthony J. Hunt: We're satisfied with these results, especially in light of the tough sequential and year on year comps and the known headwinds in Covid proteins in China.

Anthony J. Hunt: During the first quarter of last year 2023, we realized $23 million of Covid related revenue, none of which was recurring and as we shared with you on our February call. We anticipate proteins headwinds of over $30 million in 2024, which we saw play out during the first quarter.

Anthony J. Hunt: And, as we shared with you in our February recall, we anticipate protein headwinds of over $30 million in 2024, which we saw play out during the first quarter. Importantly, we continue to see signs of recovery in the market and feel confident that the de-stocking challenges are behind us for the most part. Our confidence is reinforced by what we are seeing in filtration performance, consumables demand, and new modality momentum. For Infiltration, our largest franchise, year-on-year non-COVID filtration orders were up 20% in Q1, and revenue was up by more than 10%.

Anthony J. Hunt: Importantly, we continue to see signs of recovery in the markets and feel confident that the destocking challenges are behind us for the most part.

Anthony J. Hunt: Our confidence is reinforced by what we're seeing in filtration performance consumables demand pneumatology momentum.

Anthony J. Hunt: Yeah.

Anthony J. Hunt: In filtration, our largest franchise year on year non COVID-19 filtration orders were up 20% in Q1 and revenue was up by more than 10% we.

Anthony J. Hunt: We also saw a nice sequential uptick in non-COVID filtration revenue of greater than 15%. Regarding consumable orders, where de-stocking has been the most pronounced, we've seen a positive uptick in demand outside of protein. For the first quarter of 2024, these consumable orders increased by more than 10%, both sequentially and year-on-year.

Anthony J. Hunt: We also saw a nice sequential uptick in non COVID-19 filtration revenue of greater than 15%.

Anthony J. Hunt: Regarding consumable orders were Destocking has been the most pronounced we've seen a positive uptick in demand outside of proteins.

Anthony J. Hunt: For the first quarter of 2020 for these consumable orders increased by more than 10% both sequentially and year on year.

Anthony J. Hunt: Both sales and orders from new modality accounts were another area of strength, at levels higher both sequentially and year-on-year. New modality revenue growth in the first quarter of 2024 was greater than 15% compared to the first quarter of 2023, and orders were up 8%. While encouraging, these positives were offset by the aforementioned weakness in proteins and capital equipment purchase constraints as reported across the industry. Our expectation is that markets will improve as we go through the year with stronger order trends in the second half, and so the revenue guidance range is unchanged for 2024.

Anthony J. Hunt: Both sales and orders from new modality accounts were another area of strength at levels higher both sequentially and year on year.

Anthony J. Hunt: Pneumatology revenue growth in the first quarter of 2024 was greater than 15% compared to the first quarter of 2023 and orders were up 8%.

Anthony J. Hunt: While encouraging these positives were offset by the aforementioned weakness in proteins and capital equipment purchase constraints as reported across the industry.

Anthony J. Hunt: Our expectation is that the markets will improve as we go through the year with a stronger order trends in the second half and so revenue guidance range is unchanged for 2024.

Anthony J. Hunt: For the quarter, our overall revenues were down $31 million or 17% year-on-year, driven primarily by the $23 million decline in COVID-related revenue. Our base business revenues were down approximately 9% in the first quarter, reflecting the anticipated decline in proteins and partially offset by filtration sales for our ATF business during a very strong quarter. Overall, non-COVID orders were flat year-on-year.

Anthony J. Hunt: Yeah.

Anthony J. Hunt: For the quarter, our overall revenues were down $31 million or 17% year on year, driven primarily by the $23 million decline in COVID-19 related revenue.

Anthony J. Hunt: Our base business revenues were down approximately 9% in the first quarter, reflecting the anticipated decline in proteins and partially offset by filtration sales for our H S business had a very strong quarter.

Overall, non COVID-19 orders were flat year on year.

Anthony J. Hunt: Within our franchises, protein orders were down 30%, as expected, which was more than offset by an approximate 20% increase in filtration demand. Excluding proteins, orders as reported from our non-COVID filtration, chromatography, and analytics franchises were up 7% year-on-year and up 13% when you compare the last six months' performance to the prior six month period. Overall, order dollars are consistent with what we observed in the second half of last year while covering the drop-off in protein. At a customer level, pharma orders were in line with Q4 and up greater than 10% year-on-year. CDEMO orders were down year on year and sequentially.

Anthony J. Hunt: Within our franchises protein orders were down 30% as expected, which was more than offset by an approximate 20% increase filtration demand.

Excluding proteins orders has reported from our non Covid filtration chromatography and analytics franchises were up 7% year on year and up 13% when you compare with the last six months performance to the prior six month period.

Anthony J. Hunt: Overall order dollars are consistent with what we observed in the second half of last year, while covering the drop off in proteins.

Anthony J. Hunt: On a customer level pharma orders were in line with Q4 and upgrade within 10% year on year.

Anthony J. Hunt: <unk> orders were down year on year on sequentially.

Anthony J. Hunt: Some of the softness can be attributed to lumpiness in orders from a few of our larger accounts, but it's fair to say that at this point, we're not seeing a true sticky rebound from CDMOs. The good news here is that when we take a look at the last six months versus the previous six months, both CDMO orders and pharma orders are up about 10%. New modality orders were also strong, up high single digits in Q1 versus the corresponding period last year.

Anthony J. Hunt: Some of the softness can be attributed to lumpiness in orders from a few of our larger accounts, but it's fair to say that at this point, we're not seeing a true sticky rebound from C D malls.

Anthony J. Hunt: The good news here is that when we look when we take a look at the last six months versus the previous six months, both seeding them all orders in pharma orders are up about 10%.

Anthony J. Hunt: New modality orders were also strong up high single digits in Q1 versus the corresponding period last year.

Anthony J. Hunt: As noted on our February call, strength and new modalities are directly tied to our top 20 to 25 accounts who are scaling with our technology. Strategically, Q1 was another good quarter for the company. Our latest acquisition in the fluid management mixing space, Metanova, had a strong quarter for revenues and orders. Our collective teams continue to work through the integration plan with a focus on managing a broader network of distributors and new product development. In fact, we just launched our first bag and film technology into the single-use bag market, paving the way for the launch of our single-use mixes in the second half of this year.

Anthony J. Hunt: As noted on our February call strengthen pneumatology says directly tied toward top 2025 accounts, who are scaling with our technology.

Anthony J. Hunt: Strategically Q1 was another good quarter for the company our latest acquisition in the fluid management mixing space melanoma.

Anthony J. Hunt: <unk> quarter for revenues and orders our collective teams continue to work through the integration plan with a focus on managing a broader network of distributors and new product development.

Anthony J. Hunt: In fact, we just launched our first bag of building technology into the single use bag market paving the way for the launch of our single use makes us in the second half of this year.

Anthony J. Hunt: In addition, our R&D team successfully developed and launched the industry's first fully automated GMP-ready filtration system called RS-10. The feedback at the Interfects Conference earlier this month on these two new product launches was incredibly positive, and we expect the system for mRNA in cell and gene therapy processing to make a meaningful contribution in 2024. We are clearly executing on our strategy to differentiate ourselves in the market with best-in-class systems and follow-on consumables.

Anthony J. Hunt: In addition, our R&D team successfully developed and launched the industry's first fully automated GMP ready filtration system called <unk>.

Anthony J. Hunt: The feedback at the <unk> Conference earlier this month on these two new product launches was incredibly positive and we expect the system for mrna and cell and gene therapy crossing to have a meaningful contribution in 2024, we.

Anthony J. Hunt: We are clearly executing on our strategy to differentiate ourselves in the market with best in class systems and follow on consumables.

Anthony J. Hunt: So moving now to our quarterly performance. The story of the quarter was the performance of our filtration and fluid management businesses. Our filtration franchise had a very strong quarter, with non-COVID revenue growth of more than 10%. As mentioned earlier, this was driven by the success of ATF, where we have been specified into nine late stage and commercial processes since mid 2023. The impact of these late stage wins drives more consistency in consumables and should be a key driver of growth for this business over the coming years, especially as many of these drugs are in the ramp-up phase.

Anthony J. Hunt: So moving now to our quarterly performance.

Anthony J. Hunt: The story of the quarter was the performance suffered filtration and fluid management businesses.

Anthony J. Hunt: Filtration franchise had a very strong quarter with non COVID-19 revenue growth up more than 10%.

Anthony J. Hunt: As mentioned earlier this was driven by the success of a T F where we have been specified into nine late stage and commercial processes since mid 2023.

Anthony J. Hunt: The impact of these late stage wins drives more consistency in consumables and should be a key driver of growth for this business over the coming years, especially as many of these drugs are in the ramp up phase.

Anthony J. Hunt: In addition, the fluid management business had a good quarter for both revenue and orders. We are seeing some very positive signs as our investments in this area are beginning to pay off. In chromatography, our office prepack column business had a solid quarter, slightly up in revenue versus Q4. The opportunity funnel is strong, and we expect further growth in revenues here in Q2, as this business continues to recover from the resin shortage challenges in prior years.

In addition, the fluid management business had a good quarter for both revenue and orders we are seeing some very positive signs as our investments in this area are beginning to pay off.

Anthony J. Hunt: In chromatography, our opus pre packed column business had a solid quarter slightly up on revenue versus Q4.

Anthony J. Hunt: The opportunity funnel is strong and we expect further growth in revenues here in Q2 as this business continues to recover from the resin shortage challenges in prior years.

Anthony J. Hunt: A major driver of growth for us is the continued uptick in opus demand in the new modality markets as more customers switch to the convenience of pre-packed columns versus self-packed. Our analytics business had a slower start to the year, mainly driven by fewer dollars per capital equipment purchase. This is consistent with what we have seen for this franchise over the last few years. Again, our funnel of opportunities is strong. There continues to be strong demand for flow VPX and real-time process management, or RPM.

Anthony J. Hunt: A major driver of growth for US is the continued uptick in opus demand to the new modality markets as more customers switch the convenience of pre packed columns versus self packed.

Anthony J. Hunt: Our analytics business had a slower start to the year, mainly driven by fewer dollars per capital equipment purchases.

Anthony J. Hunt: This is consistent with what we have seen for this franchise over the last few years again, our funnel of opportunities is strong there continues to be strong demand for flow be PX and real time process management, our RPM and we continue to see these technologies as the drivers of growth for analytics here in 2024.

Anthony J. Hunt: And we continue to see these technologies as the drivers of growth for analytics here in 2024. Finally, we had a weak quarter in proteins; revenues were down both year on year and sequentially, as Cytiva demand dropped to essentially zero. And, as we noted in February, another partner is burning off inventory, which also impacts our performance. The Q1 decline in proteins is in line with our guidance for the year of a 30 to 35% drop-off in revenues.

Anthony J. Hunt: Finally, we had a weak quarter in proteins revenues were down both year on year and sequentially, a slight chiba demand dropped to essentially zero and as we noted in February another partner is burning off inventory, which also impacts our performance.

Anthony J. Hunt: The Q1 decline in proteins is inline with our guidance for the year of 30% to 35% drop off in revenues. However, we continue to expect growth in filtration chromatography and analytics as previously guided.

Anthony J. Hunt: However, we continue to expect growth infiltration, chromatography, and analytics as previously guided. In summary, we're off to a good start here in 2024. We believe that destocking is essentially behind us. We see positive trends in consumables, and our orders are holding steady, staying two to 3% ahead of sales over the last nine months. Our guidance is based on our expectation to see orders pick up in the second half of the year. We remain confident in the medium to longer-term potential of bioprocessing, but stronger growth is in view for 2025. With that, I will hand it over to Jason for a financial update.

Anthony J. Hunt: In summary, we're off to a good start here in 2024, we believe that Destocking is essentially behind US we see positive trends in consumables and our orders are holding study staying 2% to 3% ahead of sales over the last nine months.

Our guidance is based on our expectation to see orders pick up in the second half of the year.

Anthony J. Hunt: We remain confident in the medium to longer term potential in bio processing with stronger growth in view for 2025 with that I will hand, it over to Jason for a financial update.

Jason K. Garland: Thank you, Tony, and good morning, everyone. Today we reported our financial results for the first quarter of 2024 and left adjusted financial guidance unchanged for full year 2024. Revenue in the first quarter was down $4 million sequentially from a strong fourth quarter, driven primarily by the expected headwind from proteins on lower affinity ligands and resin demand. We delivered total revenue of $151 million in the quarter. This is a reported decline of 17% year over year, or down 20% on an organic basis, with acquisitions contributing 3% of our reported growth and currency with nearly a 1% headwind. As Tony mentioned, for the quarter, our base business, which excludes COVID revenue and M&A, was down 9% on lower protein sales.

Thank you Tony and good morning, everyone.

Today, we reported our financial results for the first quarter 2024, and left adjusted financial guidance unchanged for full year 2024.

Revenue in the first quarter was down $4 million sequentially from a strong fourth quarter, driven primarily by the expected headwind from protein on lower affinity ligands and resin demand we.

Anthony J. Hunt: We delivered total revenue of $151 million in the quarter. This is a reported decline of 17% year over year or down 20% on an organic basis with acquisitions contributing 3% of our reported growth and currency with nearly a 1% headwind.

Anthony J. Hunt: As Tony mentioned for the quarter, our base business, which excludes COVID-19 revenue and M&A.

Anthony J. Hunt: One 9% on lower protein sales, we recognized $23 million of Covid revenue in the first quarter of 2023.

Jason K. Garland: We recognized $23 million of COVID revenue in the first quarter of 2023 and approximately $6 million in M&A sales in the first quarter of 2024 from our 2023 acquisition. Therefore, our base sales were $145 million in the first quarter versus $160 million in the prior year. Tony shared color on our franchise performance, so let me quickly highlight the performance across our global region.

Anthony J. Hunt: Approximately $6 million in M&A sales in the first quarter of 2024 from our 2023 acquisitions.

Therefore, our base sales were $145 million in the first quarter versus $160 million in the prior year.

Speaker Change: Tony shared color on our franchise performance. So let me quickly highlight the performance across our global regions.

Jason K. Garland: For context, in the first quarter of 2024, North America represented approximately 49% of our global business, while Europe and Asia Pacific and the rest of the world represented 33% and 18%, respectively. For our non-COVID business in the first quarter, North America was up on strength across all franchises except protein, and Europe was slightly down, with the decline in ligands being offset by strength and filtration. The decline in Asia Pacific and the rest of the world was driven by continued weakness in China.

Speaker Change: For context in the first quarter of 2020 for North America represented approximately 49% of our global business.

Speaker Change: Europe, and Asia Pacific and the rest of the world represented 33% and 18% respectively.

Speaker Change: For our non Covid business in the first quarter North America was up on strength across all franchises except protein.

Speaker Change: And Europe was slightly down with a decline in ligands being offset by strength in filtration.

Speaker Change: Klein in Asia Pacific and the rest of the World was driven by continued weakness in China.

Jason K. Garland: First quarter 2024 adjusted gross profit was $74 million, a 27% decrease year-over-year, while delivering a 48.6% adjusted gross margin on $31 million of lower revenue. The year-over-year reduction in gross margin of over six points reflects roughly four and a half points of mixed headwind from the high COVID sales in the first quarter of last year, with the remainder tied to reduced volume. Our gross margin remained roughly consistent with our 4th quarter 2023 exit rate, down about 50 basis points with slightly lower volume, and consistent with achieving our 2024 total year guidance of 49 to 50%.

Speaker Change: First quarter 2024, adjusted gross profit was $74 million.

Speaker Change: 27% decrease year over year.

Speaker Change: Delivering a 48, 6% adjusted gross margin on $31 million of lower revenue.

The year over year reduction in gross margin of over six points reflects roughly four and a half points of mix headwind from the hi, Kobe sales in the first quarter of last year.

Speaker Change: With the remainder tied to reduce volume.

Our gross margin remained roughly consistent with our fourth quarter 2023 exit rate down about 50 basis points with slightly lower volume and consistent with achieving our 2020 for total year guidance of 49% to 50%.

Jason K. Garland: As we have shared before, we remain focused on cost management and ensuring we have the right balance of resources. We continue to execute restructuring actions and will remain diligent in our spending and investment prioritization, and we remain focused on driving productivity and efficiency across our manufacturing network.

Speaker Change: As we have shared before we remain focused on cost management and ensuring we have the right balance of resources.

Speaker Change: We continue to execute restructuring actions and we will remain diligent in our spending investment prioritization and we remain focused on driving productivity and efficiency across our manufacturing network.

Jason K. Garland: As an update, we incurred just over $1 million of restructuring charges in the first quarter, down from $8 million of charges in the fourth quarter. This was mostly driven by severance and facility exit costs. All these charges are non-recurring in nature and are only reflected in our GAP P&L for all periods.

Speaker Change: As an update we incurred just over $1 million of restructuring charges in the first quarter down from the $8 million of charges in the fourth quarter. This.

Speaker Change: This was mostly driven by severance and facility exit costs.

Speaker Change: All of these charges are nonrecurring in nature and are only reflected in our GAAP P&L for all period.

Jason K. Garland: Though our current restructuring plans are coming to an end, we will evaluate the need for future discrete actions as we continue our margin expansion journey. Continuing through the P&L, our adjusted income from operations was $12 million in the first quarter, down $29 million compared to the prior year, driven by the $27 million drop in adjusted gross profit just described, with an additional $3 million increase in adjusted SG&A and a $1 million decrease in adjusted R&D, as we manage the timing of our technology investments while continuing to introduce innovative new products. The increase in adjusted SG&A is driven by $2 million from both of our acquisitions that closed after the first quarter of 2023. SG&A is also impacted by the annual increase in salaries.

Speaker Change: So our current restructuring plans are coming to an end, we will evaluate the need for future discrete actions as we continue our margin expansion in Germany.

Speaker Change: Continuing through the P&L, our adjusted income from operations was $12 million in the first quarter down 20, my $29 million compared to prior year driven by the 27 million dollar drop in adjusted gross profit just described.

Speaker Change: An additional $3 million increase in adjusted SG&A, and a $1 million decrease in adjusted R&D as we manage the timing of our technology investments, while continuing to introduce innovative new products.

Speaker Change: The increase in adjusted SG&A is driven by $2 million from both our acquisitions that closed after the first quarter of 2023.

Speaker Change: SG&A was also impacted by the annual increase in salaries sequentially Opex was up $4 million in the first quarter of 2024 versus the fourth quarter of 2023. This also includes the impact of annual salary increases higher stock based comp and the timing of external services.

Jason K. Garland: Sequentially, OPEX was up $4 million in the first quarter of 2024 versus the fourth quarter of 2023. This also includes the impact of annual salary increases, higher stock-based comp, and the timing of external services. In the fourth quarter, Scott Comp benefited from grants dissolving with employee exits, which did not repeat and, in fact, was offset by new grants in the first quarter.

Speaker Change: Pete.

Speaker Change: In the fourth quarter stock comp benefited from grants dissolving with employee exits, which did not repeat and in fact was offset by new grants the first quarter.

Jason K. Garland: Our first quarter 2024 operating income margin of roughly 8% includes about a five point headwind from depreciation, which had been a four point headwind in the same 2023 period. This is reflective of the critical investments we have made in capacity. Year over year, our operating income margin is primarily driven by roughly nine points of negative mix at the operating margin level from COVID sales last year and about a seven point drag from volume deleveraging on OPEX and our fixed capacity structure with lower sales.

Speaker Change: Our first quarter 2024 operating income margin of roughly 8% includes about a five point headwind from depreciation which had been a four point headwind in the same 2023 period.

Speaker Change: This is reflected both the critical investments we have made in capacity.

Speaker Change: Year over year operating income margin is primarily driven by roughly nine points of negative mix at the operating margin level from Covid sales last year and about a seven point drag from volume deleveraging on Opex and our fixed capacity structure with the lower sales. Both of these are partially offset by.

Jason K. Garland: Both of these are partially offset by nearly two points of net year-over-year cost-initiative benefits. Our first quarter 2024 EBITDA margin rate was approximately 13%, which excludes the drag of increased depreciation. Adjusted net income for the quarter was $16 million, down $20 million versus last year. This was driven by a $29 million drop in adjusted operating income, offset by $2 million of higher interest income, net of interest expense, from improved interest rates on our cash position, and approximately $6 million less tax provision. Our first quarter adjusted effective tax rate was 18.7%.

Speaker Change: Nearly two points of net year over year cost initiative benefits.

Speaker Change: Our first quarter 2020 for EBITDA margin rate was approximately 13%, which excludes the drag of the increased depreciation.

Speaker Change: Adjusted net income for the quarter was $16 million down $20 million versus last year. This was driven by the $29 million drop in adjusted operating income offset by $2 million of higher interest income net of interest expense from improved interest rates on our cash position and approximately <unk> <unk>.

Speaker Change: $6 million less tax provision.

Speaker Change: Our first quarter adjusted effective tax rate was 18, 7% while the rate in the quarter includes a discrete benefit from stock based compensation. The total year adjusted effective tax rate is still on track for 21% as guided in February.

Jason K. Garland: While the rate in the quarter includes a discrete benefit from stock-based compensation, the total year adjusted effective tax rate is still on track for 21% as guided in February. Adjusted fully diluted earnings per share for the first quarter was $0.28 compared to $0.64 in the same period in 2023. Finally, with a strong generation of cash flow from operations in the quarter, we increased our cash position to $781 million, $29 million from the end of 2020.

Speaker Change: Adjusted fully diluted earnings per share for the first quarter was 28 <unk>.

Speaker Change: Compared to 64 cents in the same period in 2023.

Speaker Change: Finally, with the strong generation of cash flow from operations in the quarter, we increased our cash position to $791 million up $29 million from the end of 2023.

Jason K. Garland: I'll now move to a quick update on our guidance for the full year of 2024. I'll speak to adjusted financial guidance, but please note that our gap to non-gap reconciliations for our 2024 guidance are included in the reconciliation tables in today's earnings press release. And for further clarification, our guidance is fully inclusive of the FlexBioSys and Metanova acquisitions we made in 2023. In summary, we have made no changes to the total year adjusted guidance ranges that we shared in February.

Speaker Change: I'll now move to a quick update on our guidance for the full year of 2024.

Speaker Change: I'll speak to adjusted financial guidance, but please note that our GAAP to non-GAAP reconciliations for our 2024 guidance are included in the reconciliation tables in todays earning press release.

Speaker Change: And for further clarity or guidance as fully inclusive of the flex biosys in melanoma acquisitions made in 2023.

Speaker Change: In summary, we have made no changes to the total year adjusted guidance ranges that we shared in February.

Jason K. Garland: Running quickly through the P&L, our revenue for 2024 is expected to be in the range of $620 to $650 million, while we continue to manage three key headwinds, COVID, proteins, and China. We expect 2% to 7% growth for our non-COVID business, with M&A contributing three points of that growth. As a note, we will not be reporting on COVID sales in 2024, as this will be the

Speaker Change: Quickly through the P&L our revenue for 2024 is expected to be in the range of $620 million to $650 million. While we continued to manage three key headwinds COVID-19 proteins in China.

Speaker Change: We expect 2% to 7% growth for our non Covid business with M&A contributing three points of that growth.

Speaker Change: As a note we will not be reporting on Covid sales in 2024 as this will be de Minimis. We expect revenues in the first half 2024 to be better than the second half of 2023 and.

Jason K. Garland: We expect revenues in the first half of 2024 to be better than the second half of 2023, and we expect revenue for the second half of 2024 to step higher again. We expect to deliver adjusted gross margins in the range of 49 to 50%, essentially flat to 2023. To summarize, in February, we see about 200 basis points of headwind from mix with our reduced protein forecast.

Speaker Change: And we expect revenue for the second half of 2024 to step higher again.

Speaker Change: We expect to deliver adjusted gross margins in the range of 49% to 50% essentially flat to 2023.

Speaker Change: To summarize in February we see about 200 basis points of headwind from mix with our reduced proteins forecast salary.

Jason K. Garland: Salary increases, material inflation, and resetting our incentive compensation back to normal levels for our employees in 2024 after being far below that in 2023. The impact from these headwinds is expected to be entirely offset by manufacturing productivity, which is forecasted to generate roughly 200 basis points of year-over-year adjusted gross margin rate improvement. We still assume prices will be flat for the year, though we will raise prices selectively.

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

Speaker Change: The impact from these headwinds.

Speaker Change: It will be entirely offset by the manufacturing productivity, which is forecasted to generate roughly 200 basis points of year over year adjusted gross margin rate improvement.

Speaker Change: We still assume price will be flat for the year, though we will raise prices selectively.

Jason K. Garland: We expect our adjusted income from operations to be between $83 to $88 million, or 13 to 14% adjusted operating margin rate, which is down about 100 basis points at our midpoint versus 2023. In our adjusted income from operations, we see line of sight to delivering 400 basis points of year-over-year productivity. However, total salary increases, material inflation, mix from lower protein sales, and volume de-leverage create greater than 300 basis points of headwind, and the headwind from resetting our incentive compensation is a total of approximately 200 basis points of headwind at the adjusted income from operations level, with the majority of our incentive costs in SG&A.

Speaker Change: We expect our adjusted income from operations to be between <unk> $83 million to $88 million or 13%, 14% adjusted operating margin rate, which is down about 100 basis points at our midpoint versus 2023.

Speaker Change: Our adjusted income from operations, we see line of sight to delivering 400 basis points of year over year productivity. However, total salary increases material inflation mix from lower protein sales and volume deleverage creates greater than 300 basis points of headwind and the headwind from resetting our incentive comp.

Speaker Change: Station is a total of approximately 200 basis points of headwind at the adjusted income from operations level with the majority of our incentive comp costs in SG&A.

Jason K. Garland: As discussed earlier, we remain focused on optimizing our cost structure while protecting the resources and investments needed to grow long term. As our volume grows, we expect profitability to grow with it. Adjusted EBITDA margins are expected to be in the range of 18 to 19% for the year, reflective of the exclusion of roughly 500 basis points of headwind from fixed depreciation costs from the critical capacity expansions we have made. Continuing through the P&L, we expect our adjusted other income to be between $18 and $19 million. We will continue to monitor the progression of interest rates and update this outlook as appropriate through the year. Our 2024 Adjusted Effective Tax Rate is expected to be an estimated 21%.

Speaker Change: As discussed earlier, we remain focused on optimizing our cost structure, while protecting their resources and investments needed to grow long term.

Speaker Change: As our volume grows we expect profitability to grow with it.

Speaker Change: Adjusted EBITDA margins are expected to be in the range of 18% to 19% for the year reflective of the exclusion of roughly 500 basis points of headwind from fixed depreciation costs from the critical capacity expansions we have made.

Speaker Change: Continuing through the P&L, we expect our adjusted other income to be between $18 million to $19 million. We will continue to monitor the progression of interest rate and update this outlook as appropriate through the year.

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

Jason K. Garland: Incorporating all of these items, we expect our adjusted earnings per share to be between $1.42 and $1.49, down $0.33 to $0.26, respectively, versus last year. As we wrap up, let me state that we will remain laser focused on the execution of our strategic priorities. Continuing to expand our position in Top Account and delivering more innovation with differentiated new products, building off our wins and new modalities. We successfully integrated Metanova and remain diligent on our cost control and productivity to support an increase in margins as we go through the year. With that, I'll turn the call back to the operator to open the lines for questions.

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

Speaker Change: And $1, 49% down 33% to 26 cents, respectively versus last year.

Speaker Change: As we wrap up.

Speaker Change: Let me state that we will remain laser focused on the execution of our strategic priorities.

Speaker Change: Continuing to expand our position in top accounts.

Speaker Change: Diverting more innovation with differentiated new products building off our wins in new modality.

Speaker Change: Successfully integrating met of Nova and remaining diligent on our cost control and productivity to support increase in margins as we go through the year.

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

Keith: Yes, thank you. We will now begin the question and answer session. To ask a question, you may press star, then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the key. If at any time your question has been answered and you would like to withdraw it, please press the star then 2. At this time, we will pause momentarily to assemble the roster. And the first question comes from Rachel Van Asdael with J.P. Morgan.

Speaker Change: Yes. Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad.

Speaker Change: Speakerphone, please pick up your handset before pressing the case if any time. Your question has been addressed and we tried to withdraw it. Please press star then two.

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

Speaker Change: And the first question comes from Rachel <unk> with J P. Morgan.

Rachel Marie Vatnsdal Olson: Perfect. Hi, good morning, and thanks so much for taking the questions. So first off, I just want to ask about some of the trends that we're seeing here in China. Obviously, we have some of the headlines related to the Biosecure Act.

Rachel: Thanks, Hi, good morning, and thanks, so much for taking our questions. So first of all I just wanted to ask on some of the trends that we're seeing here in China. Obviously, we have some of the headlines read it related to buyers to Cure Act you also called out some of the Lumpiness from Indiana. So can you just walk us through what are you seeing there from a customer perspective from conversations.

Anthony J. Hunt: You also called out some of the loneliness from CDMOs. So can you just walk us through what you are seeing there from a customer perspective and from conversations? And then also, just in terms of your expectations for the year, what are you thinking about China in terms of how it will end? Thanks.

Speaker Change: And then also just in terms of your expectations on the or how are you thinking about China in terms of how it all thanks so much.

Anthony J. Hunt: Yeah, so thanks, Rachel. I'll start a little bit on that. And then I'll ask Olivier, who's joining us today, who's spending a lot of time out in the region, to also comment. But in general, I think what we're seeing is continued weakness in China; the CDMO market, which had some very positive order trends in Q4 didn't repeat in Q1. And so we're not out of the woods yet in terms of CDMOs. Pharma, of course, has been much more positive. Maybe Olivier, would you like to comment a little bit on the kind of the China situation, what you're seeing, and a little bit on the CDMO pharma? Yeah, absolutely.

Speaker Change: Yeah. So thanks, Rachel all starts have all been on there, sometimes I'll ask Olivier who's joining us today.

Speaker Change: Spending a lot of time out in the regions also comments, but in general I think what we're seeing is continued weakness in China, the CMO market, which.

Speaker Change: <unk> had some very positive.

Speaker Change: Kind of order trends in Q4 didn't repeat in Q1.

Speaker Change: And so it's just not out of the woods yet in terms of our CDO bonds are at pharma of course, that's been much more positive maybe Olivier would you like to comment a little bit on kind of the China situation, what youre seeing a little bit on the CD them all formats.

Olivier Lilliot: So Tony just mentioned, we don't really see any improvement yet on the Chinese market side. As you mentioned, obviously, there are two potential facts happening right now. The Biosecure Act, which is a little bit too early to say whether it will pass or not. And we work with most of the big pharma CDMOs, meaning wherever the product ends up, it doesn't matter for us. In terms of the Chinese stimulus, the scope is very broad right now. So we are also waiting to hear how this will be implemented, and we are staying very close to our customers.

Olivier: Absolutely peaceful.

Olivier: As mentioned, we don't really get improvement yet on the China market side, you mentioned, obviously, the two potential happening right now the bio secure act, which is a little bit too early to say whether it will.

Olivier: And we work with most of the big pharma Atmos, meaning like where it was a prototype <unk> doesn't matter for us and in some of the China two minutes.

Olivier: The scope is very broad right now so we all need to wait.

Olivier: All of these will be limited and we are taking very close to all customers.

Olivier Lilliot: Great. Thank you.

Speaker Change: Okay. Thank you and then just as my follow up nice to hear the strength in the portfolio ex proteins and equipment this quarter, but I just wanted to go alongside some of the protein weakness it would be a bit more. So I believe you mentioned that orders on proteins were down 30%. This quarter can you just walk us through how did that land relative to your expectations and then.

Rachel Marie Vatnsdal Olson: And then just as my follow-up, nice to hear the strength in the portfolio, ex-proteins and equipment this quarter, but I just wanted to dig into some of the protein weakness a bit more. So I believe you mentioned that orders for proteins were down 30% this quarter. Can you just walk us through how that lands relative to your expectations? And then, in terms of the cadence of the protein headwind throughout this year, has anything changed in your assumptions? And what should we expect in terms of the exit rate for proteins this year? Thank you.

Speaker Change: In terms of the cadence.

Speaker Change: It's a headwind throughout this year has anything changed in your assumptions and what should we expect in terms of an exit rate for proteins. This year. Thank you.

Speaker Change: Thanks Rachel.

Speaker Change: Protein side, where when we got together back in February we said down about 30% to 35% it's exactly in line with.

Anthony J. Hunt: When we got together back in February, we sat down at about 30 to 35 percent. It's exactly in line with what we were expecting. I think in a lot of the follow-up calls, we were saying probably around that $8 million per order, that range.

Speaker Change: What we were expecting I think in a lot of the follow up calls, we were saying probably around that $8 million per quarter that range.

Anthony J. Hunt: And it's exactly in line with that. And if you look at the orders in Q1 and you actually just take proteins out, we're pretty much in line with what we saw in Q4, X proteins. So it is what we were expecting. There's nothing that's changed, and we expect to be down 30 to 35 percent at the end of the year.

Speaker Change: Exactly in line with that and if you look at the orders in.

Speaker Change: In Q1, and you actually just take proteins out were pretty much in line with what we saw.

Speaker Change: In Q4 X protein so.

Speaker Change: It is what we were expecting Theres nothing has changed.

Speaker Change: We expect to be down.

Speaker Change: 35% at the end of the year.

Jacob K. Johnson: Thank you. And the next question comes from Jacob Johnson, with Stephen.

Speaker Change: Thank you and the next question comes from Jacob Johnson with Stephens.

Speaker Change: Yeah.

Jacob K. Johnson: Good morning. Maybe, Tony, just thinking about orders in a different way, can you just talk about how orders trended throughout the quarter and any commentary you'd like to give about April, if it's possible, as we think about just any kind of signs you'd point to, to support the view that orders will continue to pick up in the back after this year?

Jacob K. Johnson: Good morning, maybe Tony just just thinking about orders at a different way can you just talk about how orders trended throughout the quarter.

Jacob K. Johnson: Commentary you'd like to give about April.

Jacob K. Johnson: If possible as we think about just any kind of signs you'd point to.

Jacob K. Johnson: To support the view that orders will continue to pick up in the back half of this year.

Anthony J. Hunt: Yeah, I'm smiling. Thanks.

Speaker Change: Yes, Im smiling. Thanks, Thanks for the April question.

Anthony J. Hunt: Thanks, Jacob, for the April question. But yeah, the I would say that. We were very similar, I think, to most of our peers with, you know, January being somewhat of a lighter month, and then February and March were actually pretty strong. And that's how we ended up where we were with, you know, a hooked about 0.99 and covering off a fair amount of the protein shortfall. You know, April has come in pretty close to where we would have expected it to come in.

Speaker Change: But yeah.

Speaker Change: I would say that we.

Jacob K. Johnson: We were very similar I think Tim most of our peers with January being somewhat of a lighter month than February and March were actually pretty strong and thats. How we ended up where we were with the book to.

Jacob K. Johnson: Well <unk> 99.

Jacob K. Johnson: Covering off a fair amount of the protein shortfall no April has come.

Jacob K. Johnson: Come in pretty much close to where we would have expected it to come in.

Anthony J. Hunt: You know, I think when we look overall at where we need to be, we need to pick up orders as we go through Q2 and through Q3 for us to hit the second half of the year targets. I think that's the expectation.

Jacob K. Johnson: I think when we look overall at where we need to be.

Jacob K. Johnson: We didn't see pick up in orders as we go through Q2 and through Q3 for us to hit the second half of the year targets I think that's the expectation there is some real nice positive signs that we're seeing I mean, the consumable trends in Q1 that is something that.

Anthony J. Hunt: There are some really nice positive signs that we're seeing. I mean, the consumable trends in Q1, that is something that is really, really positive because that really points to the fact that the de-stocking piece is more or less behind. Troublesome parts and the annoying parts are really the CDMO market not fully rebounding, you know, dealing with this weakness, continued weakness in China. And, you know, I know a number of our peers talked about the capital equipment side of the market. And yes, we were no different. We saw weaker capital equipment, but Q1 is typically a slower quarter for capital equipment anyway. So that's kind of what we see, Jacob.

Jacob K. Johnson: Is really really positive because that really points to the fact that the destocking piece is more or less behind troubled some parts of the annoying parts are really the you know the.

Jacob K. Johnson: The CMO market now fully rebounded dealing with this weakness continued weakness in China and.

Jacob K. Johnson: I know a number of our peers talked about the capital equipment side of the market.

Jacob K. Johnson: And yes, we were no different we saw weaker capital equipment, but Q1 is typically a slower quarter for capital equipment anyway. So that's kind of what we see Jacob.

Anthony J. Hunt: Got it. Thanks for that, Tony. And that last comment, I guess, is what I wanted to follow up on, you know, the weakness in capital equipment. You know, you've been on this journey to build out a systems portfolio. Does anything about the current kind of capital equipment demand environment impact the trajectory of those efforts, or is it just kind of seasonality?

Jacob: Got it thanks, Congrats Tony and that last comment I guess is what I wanted to follow up on.

Jacob K. Johnson: The weakness in capital equipment, you've been on this journey to build out.

Jacob: Total portfolio.

Jacob K. Johnson: Just anything about the current.

Jacob K. Johnson: Kind of capital equipment demand environment impact the trajectory of those those efforts or is it just kind of seasonality.

Anthony J. Hunt: Yeah, I'll start and maybe have Olivia talk a little bit about kind of one of the launches we made this year, which I think is a really important launch for us. I would say that, you know, the capital equipment market. When you finish off a year like 2023 and you can go back over the last 5-10 years, you definitely have dollars at the end of the year that people spend, and then the budgets are set, but some of the dollars don't get released.

Anthony J. Hunt: Yeah, I'll start maybe high but let me talk a little bit about kind of one of the launches. We've made this year, which I think becomes a really important launch for us.

Speaker Change: Would say that.

Speaker Change: The capital equipment market.

Speaker Change: When you're finished off a year like 2023, and you can go back over the last five to 10 years.

Speaker Change: You definitely have dollars at the end of the year that people spend the budgets are set but some of the dollars don't get relief. So we think it's more of a dollar is getting released as opposed to any real sort of bigger issue that we should be worried about.

Anthony J. Hunt: So we think it's more of a dollars getting released as opposed to any real sort of bigger issue that we should be worried about. Now, as you noted, we've spent a lot of time over the last 4 years building out a capital equipment portfolio, and we're wrapping a lot of our consumables, whether it's on the fluid management side or it's on our filtration consumables into those systems.

Anthony J. Hunt: As you noted we've spent a lot of time over the last four years building out a <unk>.

Anthony J. Hunt: Our capital equipment portfolio systems portfolio, and we're wrapping a lot of our consumables, whether it's on the fluid management side or on our.

Anthony J. Hunt: Filtration consumables.

Anthony J. Hunt: Into those systems, we've made a lot of progress and.

Anthony J. Hunt: Olivier joined back in October of last year, and he spent a lot of time, maybe Olivier you want to chop or talk a little bit about the more recent launch of what youre seeing with capital equipment in the market Yeah. No absolutely. So we did just launch a new product called Alright, then which is a very unique bench scale.

Olivier Lilliot: Yeah, no, absolutely not. So we did just launch a new protocol, RS10, which is a very unique bench-scale TFS system. I mean, I've hardly ever seen so much traction on a launcher in the last several years, one of the reasons being, like, it's really for the low-volume type of application, and this is a perfect fit for new modalities like mRNA and telogen therapy, so really great.

Anthony J. Hunt: I mean not.

Olivier: <unk> seen some not so much traction on the launch in the last several years one of the reason being light in Sweden for low volume type of application that needs a perfect fit for the new modalities like R&D.

Olivier: R&D and <unk> got great traction on that side on that we expect to be generating significant pillow ADT abroad.

Olivier Lilliot: Got it. Thanks for answering the questions, guys.

Speaker Change: Got it thanks for taking the questions guys.

Puneet Souda: Thank you. The next question comes from Puneet Souda with Lering Partners.

Speaker Change: Thank you.

Speaker Change: And the next question comes from Puneet <unk> with Leerink partners.

Puneet Souda: Yeah, hi, Tony. Can you hear me okay? Yeah, yeah, we can hear you, Puneet.

puneet: Yes, Hi, Tony can you hear me okay.

puneet: Yes, yes, we can hear you okay.

Anthony J. Hunt: Okay, great. Okay, so just a first one on book-to-bill and then a follow-up. I mean, it appears that proteins are where the challenges are, but you've pointed out proteins challenges for the last few quarters. So just wondering, you know, if there's a book-to-bill number that you have here for X proteins and, overall, leaving proteins aside, when you look at the overall sales funnel, I think you talked more about that last quarter as well. So wondering, you know, what you're seeing in the sales funnels, you know, as we head into this sort of second half of the first part of the year.

puneet: Okay, great. Okay. So just first one on book.

puneet: Book to Bill.

puneet: And then a follow up.

puneet: I mean, it appears that proteins is where the challenges are but you pointed about proteins challenges for the last few quarters. So I'm just wondering you know.

puneet: If there is a book to Bill number that you have here for ex proteins and overall.

puneet: Meeting proteins aside.

puneet: When you look at the overall sales funnel I think you could talk more about that last quarter as well so wondering.

puneet: What youre seeing there and the sales funnels.

puneet: As we as we head into this sort of second half of course first part of the year.

Anthony J. Hunt: Okay, yeah, look, when I look at the book to bill, I don't have the book to bill for X proteins, trust me, but I think the way to look at this is, honestly, to look at it on a nine-month basis. So if you look at our book to bill over the last nine months, it's 1.03. I think that's a healthy sign, right?

Speaker Change: Okay, Yes look when I look at the book to Bill I don't have the book to Bill for X proteins in front of me, but I think the way to look at this is honestly to look at it on a nine month basis. So if you look at our book to Bill over the last nine months. Its 1.3, I think that that's a healthy sign.

Speaker Change: About 2% to 3% as of sale.

Speaker Change: Sales in terms of orders.

Anthony J. Hunt: We're about two to 3% ahead of sales in terms of order. And, you know, we've known as, we've chatted, and we've had conversations with investors and analysts on this. We've known about the protein headwind.

Speaker Change: <unk>.

Speaker Change: We know we've known that.

Speaker Change: We've chatted then.

Speaker Change: We've had conversations with.

Speaker Change: Investors and analysts on this we've known about the proteins headwinds so.

Anthony J. Hunt: So, you know, that $8 million per kind of quarter challenge, we're trying to make up for that in terms of strengthening consumables and strengthening our products in new modalities. And you can see, you know, our biggest franchise, which is filtration, up 20% on orders year on year, then up, I think it was 8, 10% on sales. So it's very encouraging.

Speaker Change: About $8 million per quarter challenge, we're trying to we're trying to make up for that in terms of strength in consumables and strengthen our products and new modalities that you can see our biggest franchise, which is filtration.

Speaker Change: 20% on orders year on year.

Speaker Change: I think it was a 10%.

Speaker Change: So it's very encouraging.

Anthony J. Hunt: There's just a little bit of chop and noise still in the market that's getting flushed out, and we expect as we go through the year, that will begin to improve. The sales funnel, you know, I think what's interesting about the sales funnel is, you know, we've talked a lot about that over the last 12 months. You know, year on year, the sales funnel continues to be up. I would say if we looked at the percentages, you know, what's at 50 versus 75 versus 90, 75 and 90% of our funnel is pretty much unchanged versus what we saw at the beginning of the year.

Speaker Change: A little bit of chop a noise still in the market, that's getting flushed out and we expect as we go through the year that begins to improve.

Speaker Change: The sales funnel.

Speaker Change: I think what's interesting about the sales funnel is we've talked a lot about that over the last over the last 12 months year on year itself continues to be up.

Speaker Change: I would say if I looked at we looked at the percentages.

Speaker Change: 50 versus 75 versus 97, 5% to 90% part of our funnel is pretty much unchanged versus what we saw at the beginning of the year, 50% is down a little bit, but we have a lot of new opportunities that are entered into the fall.

Anthony J. Hunt: 50% is down a little bit, but we have a lot of new opportunities that have ventured into the funnel. So we think it's, we have the right funnel to deliver on what we need to deliver in 2024.

Speaker Change: We think we have the right funnel to deliver on what we need to deliver in 2024.

Puneet Souda: Got it, and then just a follow-up on the CDMO side. You said, you know, CDMO stickiness is not what you would have seen before or expected. Can you elaborate a bit more on that and what you mean there? And in terms of the overall recovery within the CDMO, is there something fundamentally different?

Speaker Change: Got it and then just a follow up on the <unk> side, you said you know <unk> stickiness.

Speaker Change: It is not what you would have.

Speaker Change: <unk> seen before or expected.

Speaker Change: Just can you elaborate a bit more on that and what do you mean, there and in terms of the overall recovery within the CDM or is there something fundamentally different there.

Anthony J. Hunt: Yeah, I'll start, and I'll have Validia because he's actually spent a lot of time over the last quarter and a half actually out visiting not only the key pharma accounts but also the key CDMO accounts. Um, for me, the CDMO customer base really is. You know, what we're seeing is more around lumpiness within certain accounts. But if you actually look at the kind of the long tail of outside the top 10 CDMOs, it's pretty consistent over the last couple of quarters in terms of revenue and orders.

Speaker Change: Yeah, I'll start and I'll have Bolivia, because he spent actually a lot of time over the last quarter or no.

Bolivia: Actually out visiting none of these are key part of my accounts, but also with key seed them all accounts.

Speaker Change: For me the.

Speaker Change: The C D M O.

Speaker Change: Customer base really is.

Speaker Change: What we're seeing is more around lumpiness within certain accounts, if you actually look at.

Speaker Change: Kind of the long tail of outside the top 10, <unk>, it's pretty consistent over the last couple of quarters in terms of.

Speaker Change: Revenue and orders.

Anthony J. Hunt: We're just seeing a little bit of a chop in the top 10 accounts, so it bounces up and down. And therefore, based on how that moves, you can have stronger quarters or weaker quarters. Maybe Olivier, do you want to chat a little bit about what you're seeing in the marketplace?

Speaker Change: Just seeing a little chop in the top 10 accounts, so it bounces up and down there or based on how that moves you can have stronger quarters are weaker quarters, but maybe Olivier do you want to chat a little bit about what youre seeing in the marketplace No no absolutely I would just add that the good news is the last six months, although we see a malls have been painful on the high.

Olivier Lilliot: You know what? Actually, I would just add that the good news is the last six months' orders with CDMOs have been 10% higher than the previous six months' orders. So although we are still not where we would like to be with CDMOs, at least we have started to see some improvements. There are also quite a lot of moving pieces right now, potential moving pieces with the recent acquisition of Catalan by Novo and also the potential implementation of the Biosecurity Act, which means that probably some of the projects are moving from one CDMO to the other and so on. And it might also be turning a little bit of side notes for the time being.

Olivier: Under the previous six months of orders, where we are not where we would like to be with AMOLED Ics, we started to see some improvements there.

Olivier: So quite a lot of moving pieces right now potential moving pieces with the <unk>.

Olivier: So that equation of Cat island by Novo and also the potential implementation of.

Olivier: The Biosecurity Axa, which mean that probably be some of the project saw a.

Olivier: Moving from one to be able to yield around so on and it might be also turning a little bit, though I know it's for the IV.

Puneet Souda: Okay. Helpful, guys. I'll hop off.

Speaker Change: Okay helpful guys.

Speaker Change: Ill hop off.

Daniel Anthony Arias: Thank you. And the next question comes from Dan Arias, so stay for...

Speaker Change: Thank you and our next question comes from Dan Arias from Stifel.

Daniel Anthony Arias: Morning, guys. Thanks for the questions.

Daniel Anthony Arias: Good morning, guys. Thanks for the questions Tony maybe on chromatography.

Anthony J. Hunt: Tony, perhaps on chromatography, I think your phrasing was that the business continues to recover from the resin shortage. Is that to say that the market is still a bit constrained by supply? Or is it back where it needs to be? And then just assume that you are in better shape than you were last year? Is it fair to think about Chrome growing a little bit this year? I mean, I think the outlook was for zero to 5%. Seems like the low end of that is less likely, but maybe I'm not considering it.

Daniel Anthony Arias: Youre phrasing was that the business continues to recover from the resin shortage is that to say that the market is still a bit constrained by supply or is it back where it needs to be.

Daniel Anthony Arias: And then just assuming that you are in better shape than you were last year is it fair to think about from growing a little bit. This year I mean, I think the outlook with for zero to 5% it.

Daniel Anthony Arias: It seems like the low end of that is less likely but maybe I'm not considering something.

Anthony J. Hunt: No, I would say that, um... When we look at the Chrome business, the supply challenge is definitely behind us. I think both, you know, the main players on the chromatography resin side have built capacity, and lead times are essentially back to where we would have seen in the pre-COVID days. So I think that's really a non-issue.

Daniel Anthony Arias: So I would say that.

Daniel Anthony Arias: When we look at the chrome business.

Daniel Anthony Arias: Fly challenge itself I think behind Us I think.

Daniel Anthony Arias: The main players on the chromatography resin side.

Daniel Anthony Arias: And lead times are essentially back to where we would have seen in the pre COVID-19.

Daniel Anthony Arias: So I think thats an on it that's really a non issue.

Anthony J. Hunt: I think we're, you know, when you look at our Chrome business and you kind of say, how does it split up? I mean, it's a. I don't know if it's exactly 50-50 CDMOS and pharma, but obviously, you can imagine the pharma side and small, medium-type biotech are doing well. And then CDMOS is, you know, we're still waiting for some recovery there.

Daniel Anthony Arias: I think we're.

Daniel Anthony Arias: When you look at our <unk> business.

Speaker Change: Hi, Sam.

Sam: How does it split up I mean, it's a.

Sam: I don't know if it's exactly 50 50 CD most in pharma, but obviously you can imagine the pharma side is in small and medium type biotech is doing well and then CD models is we're still waiting for some recovery there. So it's a little bit of that.

Anthony J. Hunt: So it's a little bit of that that slows it down, but we're thinking the 0-5% is pretty solid for the year. Dan, is there some upside? I think that will really come from an order uptick that we're looking to see in the second half of the year. What's very encouraging for us is, you know, if I went back two years ago, we looked at the new modality space two years ago, and we were surprised that we weren't getting as much traction with the open prepack column in that space.

Sam: Slows it down like we're thinking the zero to 5% is pretty solid for the year.

Sam: Is there some upside I think that will really come from an order uptick that you were looking to see in the second half of the year plus very encouraging for US is if I went back two years ago, we looked at the new modality space two years ago.

Sam: Rice that we weren't getting as much traction with the.

Sam: Opus Prepacked column in that space, and we put a real effort, telling us and now we're really seeing the traction and we're getting a lot of companies that typically would say hey look a little microphone columns theyre looking to the convenience of getting self product from us as a service. So I think thats, probably not look to an area, where we would see probably continued growth in <unk>.

Anthony J. Hunt: And we put a real effort into it, and now we're really seeing the traction. And we're getting a lot of companies that typically would say, hey, look, we'll pack our own columns. They're looking for the convenience of getting self-packed from us as a service. So I think that's, if I look to an area where we would see growth, it's probably continued growth in new modalities and then a pickup in the CDMO side that could get you to the higher end of that 0-5% growth.

Sam: All of these and then a pickup in the CD most side that could get you to the higher end up at six 5% growth.

Jason K. Garland: Okay, and then Jason, maybe on EBITDA margins, anything from a cadence standpoint that's noteworthy, or is it sort of fair to model sequential improvement across the year as the volumes ramp in order to get to that 18, 19%? And then you touched on the fixed cost element. When we think about the leverage you can pull this year versus what's more for next year, can you just maybe make a comment on OPEX cost containment versus what might need to be done on the production side? Yeah, I agree.

Speaker Change: Yes, okay.

Speaker Change: And then Jason maybe on EBITDA margins anything from a cadence standpoint, that's noteworthy.

Speaker Change: Is it sort of fair to model sequential improvement across the year as the volumes ramp in order to get to that 18%, 19% and then you touched on the fixed cost element. When we think about the levers you can pull this year versus what's more for next year.

Speaker Change: Can you just maybe make a comment on opex cost containment versus what needs to be done on the production side. Thanks Tom.

Jason K. Garland: Great, thanks, Dan. Look, yeah, I think we've been trying to be clear that our profitability would be increasing with volume through the year, and to your point, that's certainly how we see this playing out, especially with the second half step up over the first half in aggregate. We'll see, if you look at kind of where we are for the first quarter 8% to get up to the guidance of 13, 14, that's going up about 5 points.

Tom: Okay, great. Thanks, Dan look yeah, I think we've been we've tried to be clear that that our profitability would be increasing with volume through the year end and to your point, that's certainly how we see this playing out.

Speaker Change: Especially with the second half step up over the first half in aggregate.

Speaker Change: We will see if you look at kind of where we're at from first quarter, 8% to get up to the guidance of 13 14.

Speaker Change: Going up about five points will I think to answer some of your questions, we'll get probably one to two points of that from higher gross margin no both through a little bit of leverage, but but mostly through the cost actions and profitability actions. We're taking we'll get two points of straight volume leverage on that Opex right. So just opex constant and then.

Jason K. Garland: I think to answer some of your questions, we'll get probably 1 to 2 points of that from higher gross margin, both through a little bit of leverage, but mostly through the cost actions and profitability actions we're taking. We'll get 2 points of straight volume leverage on that OPEX, right, so just OPEX content, and then, as you can imagine, we'll then get the rest through further reduction programs for OPEX. So we're continuing to execute that, and to your point, really, with the higher volumes in the second half, we'll see that profitability.

Speaker Change: And then as you can imagine will then pick up the rest through further reductions reduction programs drop back so we're continuing to execute that.

Speaker Change: To your point really the higher volume with the higher volumes in the second half, we'll see that profitability to step up.

Speaker Change: Okay. Thank you.

Jason K. Garland: Thank you. The next question comes from Conor McNamara with RBC Capital Markets.

Conor Noel McNamara: Thank you and the next question comes a corner Mcnamara with RBC capital markets.

Conor Noel McNamara: Hey guys, thanks for taking the question. Tony, just getting back to the book-to-bill. One of the things you highlighted was a book-to-bill greater than one for the last nine months versus 0.99 for the quarter. So I'm just curious if there was anything else in Q1 around seasonality or higher cancellations or just timing of equipment that gives you confidence that you should be above one for the rest of the year.

Speaker Change: Yes.

Conor Noel McNamara: Hey, guys. Thanks for taking the question, Tony just getting back to the book to Bill.

Mcnamara: One of the things you highlighted was the book to Bill greater than one for the last nine months versus.

Mcnamara: Nine nine for the quarter. So I'm just curious if there was anything else in Q1 around seasonality for higher cancellations or just timing of equipment that gives you confidence that you should be above one for the rest of the year.

Anthony J. Hunt: Yeah, so on the Q1, I don't think there was anything unique in Q1 or different in Q1 versus, say, what we've seen over the last three or four quarters, besides what we kind of highlighted in proteins. I mean, if you take the proteins out, then, you know, you can see the impact on orders between Q4 and Q1 is purely the protein piece. Now, look, you can look at any portfolio, whether it's us or any of our peers, and you're going to have lumpiness in different sections or segments of the market.

Speaker Change: Yes, so on the on the Q1 I don't think there was anything unique.

Speaker Change: In Q1 are different in Q1 versus say, what we've seen over the last three or four quarters. Besides what we kind of highlighted in proteins. I mean, if you take the proteins out then.

Speaker Change: You can see the impact on the borders between Q4 and Q1 is purely the proteins piece now look at you can look at any portfolio, whether it's us or any of our peers and youre going to have lumpiness in in different sections or segments of the market. So for instance.

Anthony J. Hunt: So, for instance, you know, in Q4 versus Q1, we had stronger consumables in Q1 versus Q4, but we had weaker capital equipment. You know, we were stronger in Asia, you know, including China in Q4 and weaker in Q1. But when it all kind of bounces out, it comes in around the same number, right?

Speaker Change: In Q4 versus Q1, we had stronger consumables in Q1 versus Q4, but we had weaker capital equipment.

Speaker Change: We're stronger in Asia.

Speaker Change: Including China in Q4, and weaker in Q1, but it all kind of balances out.

Speaker Change: It comes in around the same number right.

Anthony J. Hunt: And, yeah, no, look, we need to see, you know, increased traction. So the goodness we're seeing in consumables has got to continue. We've got to see a bounce back on the capital equipment side, and we've got to see CDMOs also beginning to rebound a little bit more. And, of course, we're all, you know, as you know, we're in a bit of a unique position as a company, because while everybody's dealing with COVID as a headwind, we've got protein as a headwind. While everybody's dealing with COVID in China's headwinds, we've got an additional headwind, which is protein. So it masks a little bit of the goodness that's going on in the portfolio.

Speaker Change: Yeah, No look we need to see.

Speaker Change: Increased traction until the goodness, we're seeing in consumables. That's got to continue we got to see a bounce back in the capital equipment side, we've got to see <unk> also beginning to rebound a little bit more.

Speaker Change: And of course, we're all as you know.

Speaker Change: We're in a bit of a unique position as a company because while everybody is dealing with COVID-19 as a headwind we've got proteins headwind.

Speaker Change: While everybody is dealing with COVID-19 in China's headwinds, we've got the additional headwind which is protein so it.

Speaker Change: Masks, a little bit of the business that's coming on portfolio.

Anthony J. Hunt: Got it. Okay, it makes sense. Thanks for that. And then just on margins, can you comment on what the margins are on the proteins business, if there's anything else as far as mix that impacted the gross margins this quarter, you know, equipment's weak and consumables strong, or anything else worth calling out as far as the margin mix?

Speaker Change: Got it okay. It makes sense. Thanks for that and then just on margins can you.

Speaker Change: Can you comment on what the margins are on the proteins business, if there's anything else as far as mix that impacted the gross margins this quarter.

Speaker Change: Equipments weekend consumables strong.

Speaker Change: Or anything else worth calling out as far as the margin mix.

Anthony J. Hunt: Yeah, I mean, look, the proteins are certainly above average. I think the other thing, too, to keep in mind is both on a year over year, first quarter to first quarter basis, $23 million of COVID sales at very high margins last year in the first quarter. And then when you look at it sequentially from fourth quarter 23 to first quarter 24, again, $8 million of COVID revenue in the fourth quarter at high margins.

Speaker Change: Yeah, I mean look.

Speaker Change: Proteins is certainly above average I think the other thing too to keep in mind is both on a year over year first quarter to first quarter basis.

Speaker Change: $3 million of Covid sales at very high margins last year in the first quarter and then when you look at it sequentially from fourth quarter 'twenty three the first quarter 'twenty four again $8 million of Covid revenue in the fourth quarter at high margins. So so I think it's more about this COVID-19 dynamic in terms of some of the margin changes you.

Anthony J. Hunt: So I think it's more of this COVID dynamic in terms of some of the margin changes you do on a comparable basis and less so, maybe protein. But certainly, that's a drag for us as well throughout the year.

Speaker Change: Can you do on the comparable basis.

Speaker Change: And less so maybe protein, but certainly that's certainly that's a drag for us as well as through the year.

Conor Noel McNamara: Got it. Okay. But the proteins are above average. I guess that was the bigger question. So thanks.

Speaker Change: Got it okay, but the proteins is above average I guess that was the bigger question, so, but yes, yes, yes.

Anthony J. Hunt: Thanks for the questions; I appreciate it.

Speaker Change: Yes, absolutely.

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

Matthew Richard Larew: Thank you. And the next question comes from Matt LaRue of William Blair.

Speaker Change: Thank you and ask a question comes from Matt Larew with William Blair.

Speaker Change: Yeah.

Matthew Richard Larew: Hey, good morning. I'm sorry, another one on CDMOs. It sounds like, given, Tony, your comments around the lack of destocking, that it's not sort of an inventory work-done issue and maybe more of an activity issue. So, I guess, just curious, if you were to break out, you know, either your own orders or just conversations with CDMOs, is there any way to cut it, you know, from a modality perspective, early stage, late stage, just to help maybe, you know, give us confidence on weather orders returned throughout the year.

Matthew Richard Larew: Hey, good morning I'm.

Matthew Richard Larew: Sorry, another one on <unk>.

Matthew Richard Larew: It sounds like Tony your comments around the lack of destocking, but it's not sort of an inventory work down this year and maybe more of an activity issue. So I guess just curious if you were to break out.

Matthew Richard Larew: Either your own orders or just conversations with CDM mode is there any way to cut it from.

Matthew Richard Larew: From a modality perspective early stage late stage perspective, just to help maybe give.

Matthew Richard Larew: Give us confidence.

Matthew Richard Larew: Whether orders return throughout the year.

Matthew Richard Larew: At the <unk> level.

Matthew Richard Larew: Yeah.

Anthony J. Hunt: at the City Mall level. Bye. Yes, for the CDMOs question. Yeah. Look, as I said earlier, I think what we're seeing is more lumpiness at the top accounts. And of course, you know, we know that for the tier two, tier three CDMO players, the small biotech companies feed into that. And look, it's encouraging to see the biotech funding returning. Right? And it's also encouraging to see that we, you know, the industry had a strong start to the first quarter in terms of the number of drugs approved. I think there were six MABs, five biosimilars, and there were three or four gene therapy drugs.

Speaker Change: Yes for CD most question yeah.

Speaker Change: But as I said earlier I think what we're seeing is more lumpiness at the top accounts.

Speaker Change: And of course, we know that.

Speaker Change: The tier two tier three CMO players.

Matthew Richard Larew: The small biotech.

Matthew Richard Larew: Company's feed into that.

Matthew Richard Larew: But it's encouraging to see the <unk>.

Matthew Richard Larew: Biotech funding returning right and it's also encouraging to see that we the industry had a strong start to the first quarter in terms of number of drugs approved right. I think there were six mobs five five biosimilars, where three or four gene therapy drugs. So that's that's actually at a pace that's b.

Anthony J. Hunt: So that's actually at a pace that's better than we've seen in previous years. All of that is going to help the CDMO market. Right because a lot of those smaller and medium-sized biotech companies turn to the CDMO industry to do that. And for us, like we were also encouraged when you look at the MAB side; I think we were in two-thirds of those MABs that got approved with products from Repligen. So it's, again, leading indicators that we like. And, you know, we'll see as we go through the year how it all plays out.

Matthew Richard Larew: Better than we've seen in prior years all of that is going to help.

Matthew Richard Larew: The CMO market right, because a lot of those smaller and medium sized biotech companies turn to C. D. Moe.

Matthew Richard Larew: Industry too to do that and for US like we were we were also encouraged when you look at the map side I think we were in two thirds of those masks that got approved.

Matthew Richard Larew: Products from Rutledge so it's.

Matthew Richard Larew: Again, leading indicators that we like.

Matthew Richard Larew: We'll see as we go through the year have all plays out.

Speaker Change: Okay. Thank you.

Anthony J. Hunt: That comment I see maybe feeds into my next question, which is you referenced infiltration, non-COVID revenue of 10% driven by ATF. And he said, second to nine late stage and commercial processes since mid-23. Could you maybe give us a little context in terms of that number relative to, you know, the total number of late stages?

Speaker Change: That comment actually maybe feeds into my next question, which you referenced until.

Matthew Richard Larew: On filtration nonprofit graphic of up 10% driven by ATF.

Speaker Change: Second the nine late stage and commercial processes and mid 'twenty three could you maybe give us a little context in terms of that number relative to that.

Matthew Richard Larew: Total number of late stage of commercial processes are perhaps thought that number would compare to a typical year or a typical period in terms of your involvement in transportation commercial with ATI.

Anthony J. Hunt: Yeah, let me start, and I'll have Daphne and Olivier talk through some of the nuances of the nine late-stage drugs that we're in. But, you know, 8-ATF is, I would say, Repligen as a company, right? We have, you know, 35% of our revenue coming from commercial, and 65% of our revenue coming from clinical. So, you know, we've been working obviously on many of these product lines, whether it's ATF or it's our consumables like hollow fibers, flat sheet cassettes. So we would start to, we would expect that we would see

Speaker Change: Yes, let me start and then I'll hop off.

Speaker Change: Nothing else Olivier talked through some of the nuances.

Speaker Change: Nine nine late stage drugs that we're in.

Speaker Change: Yes.

Speaker Change: ACF is I would say that.

Speaker Change: Ratledge announcer company right.

Speaker Change: 35% of our revenue coming from commercial 65% of our revenue coming for clinical so we've been working obviously on many of these product lines, whether it's ATF or <unk>.

Speaker Change: Our consumables like a hollow fibers flat sheet cassette. So we would start to we would expect that we would see more approvals coming through it.

Speaker Change: That was that's a high number of approvals to get into short periods of time.

Speaker Change: And I can say that just having worked myself another.

Speaker Change: Companies in this industry over the last 25 plus years.

Speaker Change: But maybe Olivier do you want to speak a little bit to kind of how the nine split up between maths in vaccines. So people can get a sense of what we're talking about.

Olivier Lilliot: I would just add that we started that ATF journey several years ago, and it's really great to see how we're collecting fruit right now because these nine projects we've been designing recently, which are anywhere between phase three or commercial phase, are added to another set of tens of products we were already designing. And as Tony just mentioned, this is really across the board.

Olivier: I would just add that indeed, we started <unk> several years ago, what's going on it's really great to see how we're collecting the foods right now because it's nine projects we've been designing the recently, which are anywhere between phase III, our commercial rebates I did too in all of those.

Olivier: It will depend on products, where we were already designed.

Speaker Change: And as Tony just mentioned this is really across the board.

Speaker Change: The problem is the vaccine side monoclonal antibody and more recently you did win.

Speaker Change: The tenant gene therapy arena as well, so we have great traction on that.

Speaker Change: Comparable ETF, because indeed, what those product that moves towards commercialization volume to be decreased significantly.

Speaker Change: Thank you.

Olivier Lilliot: Thank you. And the next question comes from Matt Hewitt with Cape Horn.

Speaker Change: Yeah.

Speaker Change: Thank you and the next question comes from Matt Hewitt with Craig Hallum.

Matthew Gregory Hewitt: A couple on it.

Matthew Gregory Hewitt: Good morning, thanks for taking the questions. Maybe first up, with the new bags that you're launching, what will that mean for the MetaNova single-use technology? I mean, has that been a gating factor, or, you know, and therefore getting the bags launched will mean that that can be a driver later this year, or how should we be thinking about that?

Matthew Gregory Hewitt: Good morning, Thanks for taking the questions maybe first off with the new bags that you're launching what will that mean for the meta Nova single use <unk>.

Matthew Gregory Hewitt: Technology, I mean has that been a gating factor or.

Matthew Gregory Hewitt: And therefore getting the bags launch will be mean that that can be a driver later this year or how should we be thinking about that.

Anthony J. Hunt: Yeah, I'd say it's not quite impacting MetaNova yet. You kind of have to have the bags in the market. So when we did the FlexBias deal a year ago, the thought process was, hey, also accelerate the commercialization of a Repligen film slash bag. So that's what happened.

Speaker Change: Yes, I'd say, it's not quite impact things that and that'll be yes, you kind of have to have the bags into the market. So when we did the <unk>.

Matthew Gregory Hewitt: The flex spices deal a year ago, the thought process was.

Matthew Gregory Hewitt: Also accelerate the commercialization of a rutledge in.

Matthew Gregory Hewitt: Films flashback. So that's what's happened the next phase actually does a Martin I don't know, but because we wanted to get out in the second half of this year like this mixing technology, which would be single use making certain amount of know the math as you might recall, it's been very much a stainless steel.

Anthony J. Hunt: The next phase actually does involve MetaNova because we want to get out in the second half of this year with this mixing technology, which would be a single-use mixer. And MetaNova, as you might recall, has been very much a stainless steel, repeat-use type mixing technology. And so now this gives us a single-use mixing portfolio. But to be able to do that, you need to have the bag. We have the bag. Now we can marry it up with single-use impeller technology from MetaNova. We will get that into the marketplace in the second half of the year.

Matthew Gregory Hewitt: Repeat use type.

Matthew Gregory Hewitt: Mixing technology until now this gives us a single use mixing portfolio, but to be able to do that you need to tap the back we have right now.

Matthew Gregory Hewitt: Marry it up with with the single use.

Matthew Gregory Hewitt: <unk> technology from a notebook, we get that into the marketplace in second half of the year.

Matthew Gregory Hewitt: Got it. And then kind of separately here, and I realize the Biosecure Act, it's, it's, there's still question where it's going to go from here, and even if it is ultimately made law, it's really a zero-sum game for you. But with, you know, there's already been some pharma companies that have come out and said that they're already having discussions about moving some of their production around. Does that create a little bit of a lag where CDMOs, in particular, but even pharma companies are trying to figure out, okay, well, if we have to move from, you know, CDMO A to CDMO B, but we don't know the timing, is So maybe it exacerbates the lumpiness over the next couple of quarters, or how should we be thinking about that?

Matthew Gregory Hewitt: Sure.

Speaker Change: Got it and then kind of separately here and I realize the bio secure act.

Speaker Change: There is still question, where it's going to go from here.

Matthew Gregory Hewitt: Even if it is ultimately made law that it's really a zero sum game for you, but with you know theres already been some pharma companies that have come out and said that we're already having discussions about moving.

Matthew Gregory Hewitt: Some of our production around does that create a little bit of a lag where C. D malls in particular, but even pharma companies are trying to figure out okay. Well, if we have to move from C. D. C. D. M O E C D won't be but we don't know the timing is there any risk that that creates a timing lag so maybe.

Matthew Gregory Hewitt: Exacerbates the lumpiness over the next couple of quarters or how should we be thinking about that thank you.

Anthony J. Hunt: Yeah, and Libby did a nice job of kind of giving everybody an overview of where the Biosecure Act is at. We just don't know the answer, and you know we've had lots of questions on this, as you can imagine over the last couple of months. I think it's a wait-and-see situation, but if it were to pass and there were changes, then yeah, there would be some tech transfer lag that would probably happen, but let's see how this all plays out.

Anthony J. Hunt: Thank you. Yeah, I know the beat.

Speaker Change: Yes, let me have done a nice job of kind of giving everybody an overview.

Speaker Change: On the secure act is that we just don't know the answer.

Speaker Change: We've had lots of questions on this as you can imagine over the last couple of months I think it's wait and see but if it were to pass and there were changes then yes, there would be some tech transfer lag would probably happen, but let's see how this all plays out we're focused on serving our customers.

Anthony J. Hunt: We're focused on serving our customers and making sure we get products delivered on time with the highest quality, and you know we're in processes; we'll stay in the processes. That's our goal. I understand. Thank you. Thank you, and the next question comes from Paul Knight with KeyBank Capital Markets. Hi Tony, um, I know you're not, you haven't...

Speaker Change: Making sure we get products delivered on time with the highest quality.

Speaker Change: Brent plus seats will stay in the processes, that's our view.

Speaker Change: Understood. Thank you.

Speaker Change: Yeah.

Paul Richard Knight: Thank you, and the next question comes from Paul Knight with KeyBank Capital Markets.

Speaker Change: Thank you and the next question comes from Paul Knight with Keybanc capital markets.

Paul Richard Knight: Hi, Tony.

Paul Richard Knight: No you're not you haven't been involved in GOP ones is there any way you could be with.

Paul Richard Knight: Product development and then the last question or second question would be what portion of the.

Paul Richard Knight: Opus pre packed column market so to speak is still homebrew half or what's the level of that.

Anthony J. Hunt: That's a great question about the office prepack column. I would say that the vast majority, I'll answer that question first, but the vast majority of the CDMO side of the industry has moved to Pre-PAC calls. And I would say the smaller, medium-sized biotech companies have also moved to prepack columns. I would say large pharma is a bit of a mixed bag. You have some large pharma companies that really embrace having the flexibility of getting prepackaged columns delivered when they need them, and you still have a significant number of pharma companies that, you know, we know how to pack our columns.

Paul Richard Knight: So great question on the Opus Prepacked column.

Paul Richard Knight: I would say that the vast majority I'll answer that question first but the vast majority of the CMO side of the industry.

Paul Richard Knight: Has moved to pre packed columns.

Paul Richard Knight: I would say the smaller medium sized biotech companies have also moved to Prepacked columns I would say large pharma is a bit of a mixed bag you have some large pharma companies that really embrace.

Paul Richard Knight: Having the flexibility of getting Prepacked columns delivered when they need them and you have.

Paul Richard Knight: Still a significant number of pharma companies that.

Anthony J. Hunt: We pack it ourselves and do a good job. We're not interested, but it's a bit of a slow grind, and one of the things maybe Olivia can talk about is, you know, with the implementation of our key account management structure, that is one of the focus areas that we have, and maybe we'll chat about that in a minute. But on the GOP ones, we do play a little bit in them, but it's just not big enough for us to call it out as meaningful We continue to look to see the areas where we can play, but, you know, for us, at least today, it's

Speaker Change: We know how to pack our columns, we pack it ourselves we do a good job, we're not interested in but it's a bit of a slow.

Paul Richard Knight: A slow Brian and one of the things maybe Olivier can talk about is with the.

Paul Richard Knight: With the implementation of our <unk>.

Paul Richard Knight: Key account management structure that is one of the focus areas that we have.

Paul Richard Knight: And maybe we'll talk about that and then on the GOP ones that we do play a little bit in it but it's just not big enough for us to call it out as meaningful but you can imagine technology like.

Paul Richard Knight: Our components side mixing side of what we do on fluid management, there's definitely some involvement there.

Paul Richard Knight: We continue to look to see.

Paul Richard Knight: The areas, where we can play but for us at least today, it's not.

Paul Richard Knight: Big planes, maybe Olivier do you want to talk a little bit about kind of how the key account management teams focusing on on the pharma side for pre packed columns in the lab to hear and just maybe to add one point to your question on what specific fee. The big difference between <unk> and pharma pharma. They know in advance what product it would have to manufacturer of the next 12 months.

Olivier Lilliot: And just maybe to add one point to your question on Opus specifically, the big difference between CDMOs and pharma is that pharma knows in advance what product they will have to manufacture over the next 12 months. CDMOs don't always know, which is why they love Opus, because then they have a set of columns ready to use for whatever product they might catch in the next six to 12 months. Yeah. But back to care plan management, as you know, we've built that team.

Speaker Change: <unk> don't want to wait.

Paul Richard Knight: Note, which is why the law will boost because then they have a set of columns ready to use for whatever products they might actually.

Olivier: In the next six to 12 months, but back to kick on management as you know we've been talking about a year ago, We're really happy about the point, we have on that side on the we're really covering both big pharma is on one side on the top CDN, but with as well on the other side on to make sure. We do like we got capable to offer the <unk> offering we have in the.

Paul Richard Knight: What we do today.

Paul Richard Knight: Thanks.

Olivier Lilliot: Thank you. The next question comes from Justin Bowers with Deutsche Welle.

Paul Richard Knight: Thank you and then last question comes from Justin Bowers with Deutsche Bank.

Justin D. Bowers: Hi, good morning, everyone. So I have a couple questions. Just one on the CDMO comments and the sort of the lumpiness you're seeing there is that Is that more around equipment sales? Or is it just fits and starts in terms of ordering patterns? And the gist of it is like, how close are we? Or are we back to normal ordering patterns? And is this just sort of like the post COVID norm? And then the second part is, on your comments about needing to see CapEx come back, is that... Is that more targeted towards CDMO or new builds or sort of replacements?

Justin D. Bowers: Hi, good morning, everyone. So a couple of questions just one on the on the CDO comments CMO comments and the sort of the Lumpiness you're seeing there is that.

Justin D. Bowers: Is that more around equipment sales or is it just fits and starts in terms of of.

Justin D. Bowers: Hum ordering patterns in the gist of it is like are how closer we are are we back to normal.

Justin D. Bowers: Ordering patterns.

Justin D. Bowers: Is this just sort of like.

Justin D. Bowers: The post Covid norm.

Justin D. Bowers: And then and then the second part is.

Justin D. Bowers: On your comments about you're going to see Capex come back is that.

Justin D. Bowers: Is that more targeted towards CD M O R or new builds or sort of replacements, just trying to get a sense.

Justin D. Bowers: On those areas.

Anthony J. Hunt: Yeah, no problem, Justin. On the CMO lumpiness, there's definitely some capital equipment in there, but there's also consumables. So it's not, it's, you just, you just can't look at the data and say, oh, it's all capital equipment. It's, it's, it's a combination of both. So I don't think it's, it's, it's favoring one versus the other.

Speaker Change: Yes, no problem Joseph I'm, the CMO Lumpiness, there is definitely some capital equipment in there, but there's also some consumables. So it's not it's you just you just can't look at the data and say Oh, It's all capital equipment. It's it's it's a combination of both so I don't think it's it's it's favoring one versus.

Speaker Change: The other.

Justin D. Bowers: And then the Capex come back I think that's more around.

Justin D. Bowers: Dollar is getting released if you look at how last year played out on Capex, We went back and looked at this it was it was light in terms of Capex or biotech pharma <unk> in the first half of last year and then there was a big step up in Capex spend in the second half of the year. So.

Anthony J. Hunt: And then the CapEx comeback, I think that's more around dollars getting released. If you look at how last year played out on CapEx, we went back and looked at this. It was light in terms of CapEx for biotech pharma and CDMOs in the first half of last year, and then there was a big step up in CapEx spend in the second half of the year. So, you know, that's just a year ago. If you went back and looked at other

Justin D. Bowers: That's just a year ago, if you went back and looked at other years.

Justin D. Bowers: Q1 does tend to be on the lighter side.

Justin D. Bowers: The picks up as you go through Q2 and into the into the second.

Justin D. Bowers: Half of the year.

Justin D. Bowers: And then just my follow-up. Can you remind us what the revenue opportunity is and the scale up when you go from an early stage to a late stage or commercial program, a la the nine programs you mentioned last year? And then was there a book to bill for CGT that you could provide as well?

Speaker Change: Thank you and then just my follow up can you remind us.

Speaker Change: What the what sort of the revenue opportunity is in the scale up when you go from an early stage to like a late stage or commercial program or the nine programs you mentioned last year and then.

Speaker Change: Was there a book to Bill for C. G. T that you can provide as well.

Anthony J. Hunt: Yeah, on the CGT, new modality space, it was a little bit above one, so, you know, a nice quarter for that portfolio. You know, it's hard to put a dollar amount on when you go, you know, from phase one to two to three to commercial, but in general, the revenues tend to double, right? I think it's not a bad way to kind of look at it. But, you know, obviously, if you get into more of a blockbuster drug, and there's high, high demand, it could be much higher than a factor of two; it could be a factor of four between phase three and commercial, but typically, the revenue.

Speaker Change: New modality space. It was it was it was a little bit above one so.

Speaker Change: Nice nice quarter four for that portfolio.

Speaker Change: It's hard to put a dollar amount on when you go from a phase one to two to three months of commercial but in general the revenues tend to double right I think it's not a bad way to kind of look at it but.

Speaker Change: But obviously, if we get into a more of a black blockbuster drug in its and there is high high demand it could be much higher than a factor of two could be a factor of four between.

Speaker Change: Phase III and commercial but typically the revenues with Dol.

Speaker Change: I appreciate it thank you.

Matthew Jay Stanton: Thank you, and the next question comes from Matt Stanton with Jefferies.

Speaker Change: Thank you and that's kind of a question of mass Santana with Jefferies.

Matthew Jay Stanton: Thanks. Maybe sticking with the theme of new modalities, Tony, a two-parter for you, I guess. First, 1Q is up mid-teens. I think you've been looking for 5 to 7 for the year. That's still the right way to think about it.

Speaker Change: Okay. Thanks, maybe sticking with the theme of new modalities, Tony to partner for you I guess first one <unk> was up mid teens I think you'd been looking for five to seven for the year, that's still the right way to think about it as a potentially.

Anthony J. Hunt: Is there potentially a bit of upside there on the heels of a strong start here in 1Q? And I guess, you know, why can't that part keep up the pace we've seen aside from maybe tougher comps in the back half of the year and then just, you know, longer term stepping back? Any reason we can't see a return to the kind of healthy double-digit growth for this part of the market given a softer period more recently? And then you talked about the adoption of Opus within this category? Are there any other parts of the portfolio you think are relatively under-indexed to the new modalities? Thanks.

Anthony J. Hunt: Upside there on the heels of a strong start here in <unk> and I guess why can't that part keep up the pace. We've seen aside from maybe tougher comps in the back half of the year and then just longer term stepping back any reason.

Jason K. Garland: Can't see returned to kind of healthy double digit growth for this part of the market given the softer period more recently and then you talked about adoption of Opus within this category are there any other parts of the portfolio do you think are relatively under indexed to the new modalities.

Anthony J. Hunt: Yeah, thanks, Matt. There's a good few questions in that, but I'll decipher it and walk you through it.

Sondra Newman: Yes, Thanks, Matt.

Speaker Change: There is a good two questions is that for all of them.

Speaker Change: The cyber and walk you through it.

Speaker Change: I would say that.

Anthony J. Hunt: I would say that You know, good quarter, obviously, in Q1, obviously, double-digit growth, which is great. We've been pretty consistent, though, in saying that the new modality strength is coming from 2025. So it's not like the whole humidality space, the long tail in humidalities, really hasn't caught up yet.

Speaker Change: Good quarter, obviously in Q1, obviously double digit growth, which is great.

Anthony J. Hunt: We've been pretty consistent in saying that the new modality strength is coming from 2025 accounts. So it's not like the whole new modalities space, the long tail and new modalities really Hudson hasn't caught up yet so that biotech investment.

Anthony J. Hunt: So, you know, biotech investment that's starting to pick up in the first quarter for the industry should have an impact, but it could be nine to 12 months before anyone really sees that flowing into the manufacturing side of the equation. So I think we have to be a little careful that we don't take Q1 and say, oh, look, we're just going to take Q1 and annualize it because it really is driven by this sort of handful of accounts that we have that are scaling. So that's probably the most important part.

Speaker Change: Starting to pick up in the first quarter for the industry shouldn't have an impact, but it could be nine to 12 months before.

Speaker Change: The one really sees that flowing into the manufacturing side of the equation.

Anthony J. Hunt: So I think we have to be a little careful that we don't bucket, we don't take Q1 and say Oh, we're just going to.

Speaker Change: Take Q1 and annualize it because it really is driven by this sort of a handful of accounts that we have better scale. So that's probably the important part and I do think youre right. The tougher comps in the second half of the year, we'll definitely slowed down the growth last year, if you remember.

Anthony J. Hunt: But I do think you're right. The tougher comps in the second half of the year will definitely slow down growth. Last year, if you remember, we had essentially the same revenue in 2023 as we did in 2022 in the new modality space. That was actually a great result, given how challenging, A, the space was, and B, the overall bioprocessing market. So I think we're in the right range in what we said, in that 5% to 7% range. And I'd like to see another quarter or so before we say that that could be higher.

We had essentially the same revenue in 2023 as we had in 2022 and the new modality space that was actually a great result, given how challenging.

Anthony J. Hunt: The space once and be the overall bio processing market. So I think we're in the right range, while we sat and that's like 5% to 7% range and I would like to see another quarter or so before we say that that could be higher.

Anthony J. Hunt: Yes.

Anthony J. Hunt: Okay, thanks. And then I guess just on the second part, you know, longer term, is there anywhere in the portfolio for the new modalities, you know, you talked about adoption with OpenSea really focused on, are there other parts of the portfolio that are kind of under indexed, and you may look to run the same playbook over the coming years here, specifically within the new modalities?

Speaker Change: Okay. Thanks, and then I guess just on the second part longer term is there anywhere the folio on the new modalities. You know you talked about adoption with opus. He's really focused on are there other parts of the portfolio that are kind of under index and you may look to run the same playbook over over the coming years here, specifically within the new modality.

Anthony J. Hunt: Yeah, if I looked at all the markets that we play in, New Modalities is one where I think a vast majority of the Repligen technology portfolio plays out. I think we're at maybe 20% of revenue now in New Modalities. And so when I look at our portfolio, you can clearly see Opus, even our analytics business, when we bought the analytics business back in 2019 from C Technologies, it had no revenue in the New Modalities space.

Anthony J. Hunt: Yeah.

Anthony J. Hunt: All the.

Anthony J. Hunt: Markets that we play in new modalities is one where I think a vast majority of the rest of the chip technology portfolio plays out I think we're at maybe 20% of revenue now in new modalities and so when I look at our portfolio you can clearly see opus, even our analytics business.

Anthony J. Hunt: When we bought the analytics business back in 2019 from C technologies.

Anthony J. Hunt: It had no revenue in that you'd modality space and I think around 20% of our revenues now coming from new modalities. So that's it on some very nice positive uptick or hold fluid management portfolio definitely opportunities. We're getting traction there and then you just have to look at anything from hei to our flat sheet cassettes.

Anthony J. Hunt: And I think around 20% of the revenue is now coming from New Modalities, so that's a very nice positive uptick. Our whole fluid management portfolio is definitely an opportunity, and we're getting traction there. And then you just have to look at anything from ATF to our flat sheet cassettes.

Anthony J. Hunt:

Anthony J. Hunt: Our whole portfolio of products really plays nicely in this space. And then maybe I could finish up, Matt, with a comment from what Olivier said, which was that the RS10 launch is absolutely geared towards this customer base. So if you think about where we are placing bets, we're definitely placing bets in this space. And some of the products that we're launching right now are totally geared towards this customer base, like the RS.

Anthony J. Hunt: Our whole portfolio of products really play nicely in the space and then maybe I'll finish up.

Anthony J. Hunt: Not with a comment from one of the he said, which was you know the RF 10 launches is absolutely geared towards this customer base.

Anthony J. Hunt: If you think about where are we placing bets. We're we're definitely placing bets in the space and some of the products that we're launching right now are totally geared towards this customer base like the RF Tam.

Matthew Jay Stanton: Thanks. If I could just maybe squeeze one more in,

Speaker Change: Thanks, if I could maybe squeeze one more in it sounds like the U S was up he was down slightly tied to ligands would just be curious if you could talk a bit more about the trends within pharma between those two regions any.

Anthony J. Hunt: It sounds like the U.S. was up, and the EU is down, slightly tied to ligands. I would just be curious if you could talk a bit more about the trends within pharma between those two regions. Any differences between the top 10 or 20 accounts and the small to mid-sized customers between the U.S. and Europe in the quarter? Thank you.

Anthony J. Hunt: Any differences between top 10 or 20 accounts in the small to mid size customers between U S and Europe in the quarter. Thank you.

Anthony J. Hunt: Yeah, I would say that if we looked at the regions, the one region that was down in Q1 was APAC, right, with China. That was probably the one region where, if you looked at, if it had a similar performance as what it had in Q4, we would be talking, you know, about a much higher vote-to-bill, right? But again, I'm not trying to make any excuses.

Speaker Change: Yeah, I would say that if.

Anthony J. Hunt: If we looked at the regions. The one region that was down in Q1 was was APAC right with China that was probably the one region, where if you looked at if it has a similar performance as far as it had in Q4, we would be talking.

Anthony J. Hunt: A lot of much higher book to Bill right, but again I'm not trying to make any excuses. The problem is every quarter. There is something that you weren't expecting that you'll have to deal with and so but if you look at us as a company over the last three or four quarters, we've been pretty consistent on the orders and pretty consistent on the revenue.

Anthony J. Hunt: The problem is that every quarter, there's something that you weren't expecting that you have to deal with. And so, look, if you look at us as a company, over the last three or four quarters, we've been pretty consistent on orders and pretty consistent on revenue. What we need to see is an uptick, right? And that's the, look, that's the way that we get to our sort of guide for the year. X proteins, I think we're up around 6% or so in, a lot of execution that we have to do to get there.

Anthony J. Hunt: We need to see is an uptick right. That's the but that's the way that we get to our our sort of guide for the year. If you think about it where if you check it.

Anthony J. Hunt:

Anthony J. Hunt: Thanks proteins, I think were up around 6% or so.

Anthony J. Hunt: In.

Anthony J. Hunt: In Q1 versus where we were and I'm not actually if you look at where we will be in the first half of this year. If you take the midpoint of say $305 million between 300 and $310 million you go back to the last six months of last year were probably up 6% ex proteins on revenue so to get to our midpoint.

Anthony J. Hunt: So our guidance, we would need to be up 8% in the second half of the year versus the first half. So I don't think it's like a huge stretch, but we have a lot of execution that we have to do to get that.

Speaker Change: Great. Thank you.

Speaker Change: Thank you.

Anthony J. Hunt: And this does conclude the question that session I would now like to turn the conference back over to Tony Hunt for any closing comments.

Anthony J. Hunt: Thank you. And this does conclude the question and answer session. I would now like to turn the conference back over to Tony Hunt for any closing comments.

Anthony J. Hunt: Great. Thanks, Keith. And thanks, everybody, for joining us. Obviously, a solid start to the year for us. Look forward to catching up with everybody at the end of July, beginning of August. So thanks. The conference has now concluded. Thank you for attending today.

Anthony J. Hunt: Great. Thanks, Keith.

Speaker Change: Thanks, everybody for joining obviously, a solid start to the Europe for us or it's catching up with everybody at the end of July beginning of August so thanks again.

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

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

Keith:

Keith: Goodbye.

unknown: BF-WATCH TV 2021

Keith: [music].

unknown: Mhm.