Q4 2024 Maravai Life Sciences Holdings LLC Earnings Call

Greetings and welcome to a mere by life Sciences fourth quarter 'twenty 'twenty four results earnings call. At this time, all participants are in a listen only mode.

Unknown Executive: Greetings. Welcome to Maravai Life Sciences fourth quarter 2024 results earnings call.

Operator: At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad.

<unk> and answer session will follow the formal presentation. If anyone should require operator assistance. Please press star zero on your telephone keypad. As a reminder, this conference is being recorded and it's now my pleasure to introduce Gephardt head of Investor Relations. Thank you you may begin.

Operator: As a reminder, this conference is being recorded.

Debra Hart: It is now my pleasure to introduce Deb Hart, Head of Investor Relations. Thank you. You may begin. Good afternoon, everyone. Thanks for joining us on our fourth quarter and year-end 2024 earnings call. The slides accompanying today's call are posted on our website and available at investors.maravai.com.

Gephardt: Good afternoon, everyone. Thanks for joining us on our fourth quarter and year end 2024 earnings call.

Gephardt: Slides accompanying today's call are posted on our website and available and investors thought more about dotcom.

Debra Hart: As you can see from the agenda on slide two, Trey Martin, Chief Executive Officer, and Kevin Herde, Chief Financial Officer, are joining me today. Following their prepared remarks, we'll open the call for the question and answer session. We remind you that management will make forward-looking statements and refer to GAAP and non-GAAP financial measures during today's call. It is possible that actual results could differ from management's expectations. We refer you to slide 3 for more details on forward-looking statements and our use of non-GAAP financial measures. Our press release provides reconciliations to the most directly comparable GAAP measures, and we also provide a reconciliation of non-GAAP financial information on our investor website.

Speaker Change: As you can see from the agenda on slide two trade Martin Chief Executive Officer, and Kevin Hardy Chief Financial Officer are joining me today.

Gephardt: Following their prepared remarks, we'll open the call for the question and answer session.

Gephardt: Remind you that management will make forward looking statements and refer to GAAP and non-GAAP financial measures. During today's call. It is possible that actual results could differ from management's expectations.

Gephardt: We refer you to slide three for more details on forward looking statements and our use of non-GAAP financial measures. Our press release provides reconciliations to the most directly comparable GAAP measures and we also provide a reconciliation of non-GAAP financial information on our Investor website. Please also refer tomorrow by the FCC.

Debra Hart: Please also refer to Maravai's SEC filings for additional information on the risks and uncertainties that may impact our operating results, performance, and financial condition.

Gephardt: For additional information on the risks and uncertainties that may impact, our operating results performance and financial condition.

Kevin Herde: Now I'll turn the call over to Kevin. Thank you, Deb, and good afternoon, everyone. Thank you for joining us today.

Kevin Hardy: Now I'll turn the call over to Kevin.

Kevin Hardy: Thank you Deb and good afternoon, everyone.

Kevin Hardy: Thank you for joining us today, we are holding this call later than we have in the past I appreciate your patience as we work with.

Kevin Herde: We're holding this call later than we have in the past, and I appreciate your patience as we worked to close out our 2024 audit and complete our 10K filing. Let me walk through the items that caused the delay and the outcome of each.

Kevin Hardy: Closed out our 2020 for audit and complete our 10-K filing let.

Kevin Hardy: Let me walk through the items that caused the delay in the outcome of each please turn to slide five.

Kevin Herde: Please turn to slide five. First, an error was identified during the year-end finance foreclosed process with respect to revenue recognition timing associated with a single shipment that resulted in approximately $3.9 million in revenue being recorded in the final week of the second quarter of 2024 upon shipment when it should have been recorded in the first week of the third quarter of 2024 upon receipt by the customer. Our contractual order terms typically result in revenue recognition upon shipment.

Kevin Hardy: First an error was identified during the year end financial close process with respect to revenue recognition timing associated with a single shipment that resulted in approximately $3 9 million in revenue being recorded in the final week of the second quarter of 2024 upon shipment when it should have been recorded in the first week of the third quarter of 2024 upon receipt by the customer.

Kevin Hardy: All contractual order terms typically result in revenue recognition upon shipment whoever the terms for this particular order, but different and that difference was not communicated timely to our accounting team.

Kevin Herde: However, the terms for this particular order were different, and that difference was not communicated timely to our accounting team. Based on the shipping teams for this order, we should have recognized revenue upon receipt of the shipment by the customer or about a week later than we did. This timing error had no impact to the full year results and did not result from any override of controls, misconduct, or fraud.

Kevin Hardy: Based on the shipping teams for disorder, we should have recognized revenue upon receipt of the shipment by the customer or about a week later than we did this timing error had no impact our full year results and did not result from any override of controls misconduct of fraud.

Kevin Herde: As it relates to this error, we have revised our quarter results for the second and third quarters of 2024 basically for the shift in this revenue from Q2 to Q3, and those revised totals are presented in Note 18 in the Notice of Consolidated Financial Statements in our Form 10-K.

Kevin Hardy: As it relates to this error, we have revised our core results for the second and third quarters of 2020 for basically for the shift in this revenue from Q2 to Q3 and those revised totals are presented in note 18 in the notes to the consolidated financial statements in our Form 10-K.

Kevin Hardy: Secondly, we conducted an assessment of goodwill associated with our acquisition of all of a sudden and needed additional time to complete and conclude on the $11 $9 million noncash charge related to goodwill impairment.

Kevin Herde: Secondly, we conducted an assessment of goodwill associated with our acquisition of Alpazym and needed additional time to complete and conclude on the $11.9 million non-cash charge related to goodwill impairment. In connection with these matters, we determined that we did not maintain effective controls over our revenue process and our goodwill impairment assessment process, and thus have identified these as material weaknesses in internal control over financial reporting.

Kevin Hardy: In connection with these matters, we determined that we did not maintain effective controls over our revenue process and our goodwill impairment assessment process and that's what identify these material weaknesses in internal control over financial reporting.

Kevin Herde: I'll conclude on this topic by noting that our financial statements for 2024 received an unqualified opinion from our independent auditors, and I'd like to thank the hard work of our accounting team and audit committee to help get our 10K filed within the 15-day automatic extension period provided by Rule 12B-25.

Kevin Hardy: I'll conclude on this topic by noting that our financial statements for 2024 received an unqualified opinion for Martin and others.

Speaker Change: Like to thank the hard work of our accounting team out of committee help get our 10-K filed within the 15 day automatic extension period provided by rule <unk> 25.

Kevin Herde: Now let's get to our Q4 and full year 2024 financial results on slide 6. We reported fourth quarter revenues of $57 million, about at the midpoint of our expectations for the quarter.

Speaker Change: Now, let's get to our Q4 and full year 2020 for financial results on slide six.

Speaker Change: We reported fourth quarter revenues of 57 million above the midpoint of our expectations for the quarter.

Kevin Herde: We reported revenue of $259 million for the full year, again near the midpoint of our stated revenue range of $255 million to $265 million, which we mentioned previously in early January of this year. Biologic Safety Testing Segment contributed $15 million in Q4 and $63 million for the full year. our nucleic acid production segment at revenue of $42 million in Q4. This includes approximately $14 million of high-volume clean-cap revenue for customers with commercialized vaccines. For the full year, the nucleic acid production revenue was $196 million with the base NAF revenue at $130 million. High volume clean cap revenues were $66 million for the year.

Speaker Change: Reported revenue of 259 million for the full year again near the midpoint of our stated revenue range of $255 million to $265 million, which he mentioned previously in early January of this year.

Biologics safety testing segment contributed $15 million in Q4 and $63 million for the full year.

Speaker Change: Our nucleic acid production segment had revenue of $42 million in Q4.

Includes approximately $14 million of high volume cap revenue customers was commercialized vaccines.

For the full year, the nucleic acid production revenue was 196 million with the base math revenue at $130 million high volumes and card revenues were $66 million for the year.

Kevin Herde: This includes the $50 million in signed agreements at the beginning of 2024 and an additional $16 million for high volume clean caps shipped to customers with commercialized vaccines in the year.

Speaker Change: This includes the $50 million in signed agreements at the beginning of 'twenty 'twenty, four and an additional $16 million for high volume kleen capped shipped to customers with commercialized vaccines in the year.

Speaker Change: Breaking down our full year revenues by customer type, we estimate that 48% of our 'twenty 'twenty four revenue was from Biopharma 25 per cent for life science, and diagnostics, 5% from Cro's, Gmos, and <unk>, 4% from academia and roughly 18% of our revenue was shipped to distributors, including to the car.

Kevin Herde: Breaking down our full year revenues by customer type, we estimate that 48% of our 2024 revenue was from biopharma, 25% for life science and diagnostics, 5% from CROs, CMOs, and CDMOs, 4% from academia, and roughly 18% of our revenue was shipped through distributors, including to the customer categories I just mentioned.

Speaker Change: Spring categories I just mentioned.

Speaker Change: Let's turn to slide seven.

Kevin Herde: Let's turn to slide seven. Our gap net loss before non-controlling interests was $46 million for the fourth quarter of 2024. This compares to a gap net loss of $110 million for the fourth quarter of 2023.

Speaker Change: Our GAAP net loss before Noncontrolling interests was 46 million for the fourth quarter of 2024.

Speaker Change: This compares to a GAAP net loss of $110 million for the fourth quarter of 2023.

Kevin Herde: Gap net loss before non-controlling interest for the year was $260 million compared to a gap net loss of $138 million for 2020. Adjusted EBITDA, a non-gap measure, was a negative $1 million for Q4 2024 compared to $21 million of positive adjusted EBITDA in Q4 2023. Our adjusted EBITDA in Q4 2024 lagged our expectations for the quarter by about $7 million or so. About half of this variance was tied to lower product gross margin contributions from slightly lower overall revenues, an unfavorable mix of product revenues, mostly lower GMP clean cap, unfavorable manufacturing operations variances, and an additional non-cash E&O reserve for inventory at alpha sign.

Speaker Change: <unk> net loss before non controlling interest for the year was $260 million compared to a GAAP net loss of $138 million for 2023.

Speaker Change: Adjusted EBITDA, a non-GAAP measure was a negative 1 million for Q4 2024 compared to $21 million of positive adjusted EBITDA in Q4 of 2023.

Speaker Change: Our adjusted EBITDA in Q4, 2024 lagged our expectations for the quarter by about $7 million of stuff.

Speaker Change: About half of this variance was tied to lower product gross margin contributions from slightly lower overall revenues and unfavorable mix of product revenues, mostly lower GMP clean cap.

Speaker Change: Favorable manufacturing operations variances and additional noncash reserve for inventory at all of a sudden.

Kevin Herde: The other major components of the expense variance was led by $1.3 million in bad debt expense associated with one of our NAP customers that made the decision to wind down operations in late Q4 following a less than desirable preclinical outcome. The additional SG&A variance was further due to higher external fees, including legal fees tied to our initiation of litigation to protect our trade secrets and audit and professional fees tied to our year-end accounting work.

Speaker Change: The other major components of the expense variance was led by $1 3 million in bad debt expense associated with one of our customers that made the decision to wind down operations in late Q4, following a less than desirable pretty clinical outcome.

Speaker Change: The additional SG&A variance was further due to higher external fees, including legal fees tied to our initiation of litigation to protect our trade secrets and audit and professional fees tied towards year end accounting work.

Kevin Herde: Adjusted EBITDA for the year was $36 million and adjusted EBITDA margin of 14% lower than anticipated as a result of the softer than anticipated Q4 bottom line performance as I just discussed.

Speaker Change: Adjusted EBITDA for the year was 36 million and adjusted EBITDA margin of 14% lower than anticipated as a result of the softer than anticipated Q4 bottom line performance as I just discussed.

Kevin Herde: I will discuss EBITDA by segment in a few slides. Moving to slide eight and some additional financial highlights, we ended the year with $322 million in cash, $300 million in long-term debt, resulting in a $22 million net cash position. As a reminder, we voluntarily paid down $228 million of this term loan with cash on hand in December of 2024.

Speaker Change: I will discuss EBITDA by segment in a few slides.

Speaker Change: Moving to slide eight and some additional financial highlights we ended the year with 322 million in cash 300 million in long term debt, resulting in a $22 million net cash position.

Speaker Change: As a reminder, we voluntarily paid down $228 million of this term loan with cash on hand in December of 2024.

Kevin Herde: This pay down was allowed under our debt agreement without penalty and is expected to lower our net interest expense for 2025.

Speaker Change: Theres pay down was allowed under our debt agreement without penalty that is expected to lower our net interest expense for 2025.

Kevin Herde: I will discuss 2025 guidance in a few slides. In the fourth quarter, we used $15 million in cash and operating activities and ended 2024 with $7 million in cash provided by operating In 2024, we had gross capital expenditures of $30 million and received $7 million in BARDA offsets for a net total capital expenditure of $23 million for the full year of 2024. Overall, we've invested over $150 million in the past five years in building our capabilities across our purpose-built manufacturing facilities to support our business.

Speaker Change: I will discuss 25 guidance in a few slides.

Speaker Change: In the fourth quarter, we used $15 million in cash in operating activities and ended 2024 was $7 million in cash provided by operating it.

Speaker Change: In 2024, we had gross capital expenditures of $30 million and received $7 million in BARDA offset spread net total capital expenditure of $23 million for the full year of 2024.

Speaker Change: Overall, we've invested over 150 million in the past five years in building our capabilities across our purpose built manufacturing facilities or to our business.

Kevin Herde: We expect this intensive capital cycle to be winding down in 2025, but have positioned us with the facilities and capacity we expect to need to fully support the business over the foreseeable future. We view our state-of-the-art facilities, capacity, automation, and quality processes as unique assets and key differentiators, enabling us to best serve our markets and provide for margin expansion with revenue growth over time. Appreciation and Amortization ended the year at $48 million in line with our expectation in the previous guide. Interest expense net of interest income was $5 million in Q4 2024 and ended the year at $20 million in line with our expectations and guidance.

Speaker Change: We expend expect this intensive capital cycle be winding down in 2025 that has positioned us with the facilities and capacity, we expect to need to fully support the business over the foreseeable future.

Speaker Change: If you are state of the art facilities capacity automation and quality processes as unique assets and key differentiators.

Speaker Change: US to best serve our markets and provide for margin expansion with whoever new growth overtime.

Speaker Change: Depreciation and amortization ended the year at $48 million in line with our expectation that previous guidance.

Speaker Change: Interest expense net of interest income was $5 million in Q4, 'twenty 'twenty four and ended the year at $20 million in line with our expectations and guidance.

Kevin Herde: Stock-based compensation, a non-cash charge, was $11 million in the quarter, $49 million for the year, consistent with our guidance of roughly $50 million for the year.

Speaker Change: Stock based compensation and noncash charge was $11 million in the quarter $49 million a year are consistent with our guidance of roughly $50 million for the year.

Kevin Herde: We ended 2024 with 142 million Class A shares outstanding and 111 million Class B shares outstanding for a total of 253 million shares outstanding at 1231.24. For Just DDPS, the diluted weighted average share count was $255 million for Q4 and $254 million shares for the full year of 2024.

Speaker Change: We ended 2024 with 142 million class a shares outstanding and 111 million class B shares outstanding for a total of 253 million shares outstanding at 12 31 24.

Speaker Change: For adjusted EPS, the diluted weighted average share count was 255 million for Q4, and 254 million shares for the full year of 2024.

Speaker Change: Let's next turn.

Kevin Herde: Let's next turn to slide nine and discuss segment performance in the court. Our nucleic acid production segment, which includes both our Discovery and GMP products and services marketed under our TriLink Glen Research and Alpazent brands, had revenues in the fourth quarter of $42 million and adjusted EBITDA of $4 million. For the year, revenues for our NAP segment were $196 million with adjusted EBITDA of $51 million for a margin of 26%, included in the revenues in the fourth quarter were the $14 million in high-volume clean-cap product sales.

Speaker Change: Turning to slide nine and discuss segment performance in the quarter.

Speaker Change: Our nucleic acid production segment, which includes both our discovery and G. M P products and services market under our Trialing Glenn Research analysis that brands had revenues in the fourth quarter of $42 million and adjusted EBITDA of $4 million for.

Speaker Change: For the year revenues for N P segment for 196 million with adjusted EBITDA of 51 million for a margin of 26% included in the revenue in the fourth quarter for the $14 million in high volume clean cap product sales.

Kevin Herde: Moving to slide 10. Our biologic safety testing segment, which includes products and services that are a Cygnus brand, had revenues of $15 million in the fourth quarter, just above $10 million for a margin of 66%. For the year, revenue for this segment was $63 million, and just above that was $44 million for a margin of about 70%.

Speaker Change: Moving to slide 10.

Speaker Change: Our biologic safety testing segment, which includes products and services that are a sickness brand AD revenues of 15 million in the fourth quarter, just EBITDA 10 million for a margin of 66%.

Speaker Change: For the year revenue for this segment was $63 million and adjusted EBITDA was 44 million or margin of about 70%.

Kevin Herde: As detailed in the segment results, the combined adjusted EBITDA of our operating segments prior to our corporate shared service expenses was $95 million for 2024, a combined margin of 37%. Corporate Shared Services impacting adjusted EBITDA, which includes centralized functions such as HR, finance and accounting, legal information technology, and incremental expenses associated with being a public company, totaled $15 million in the quarter and $59 million for the year, down almost 10% from 2023 as a result of our cost reduction action.

Speaker Change: As detailed in these segment results combined adjusted EBITDA of our operating segments. Prior to our corporate shared service expenses was $95 million for 2020 for a combined margin of 37%.

Speaker Change: Corporate shared services impacting adjusted EBITDA, which includes centralized functions, such as HR finance and accounting legal information technology and incremental expenses associated with being a public company totaled 15 million in the quarter and 15 9 million for the year down almost 10% from 2023 as a result of our cost reduction actions.

Speaker Change: Please let's turn to slide 11.

Kevin Herde: Please let's turn to slide 11. Now, overall, we've seen a high degree of variability in our revenues and our financial results in these past five years. The dynamics of the pandemic, followed by the post-pandemic market and various factors, have created challenges in the accurate forecasting of financial results.

Overall, we've seen a high degree of variability in our revenues and our financial results in these past five years the dynamics of the pandemic followed by the post pandemic market. Various factors have created challenges in the accurate forecasting of financial results that having been said, we sit here today with a collection of assets products and service offerings and market opportunities that weird.

Kevin Herde: That having been said, we sit here today with a collection of assets, product and service offerings, and market opportunities that we are very excited about. As we look at the sum of Maravai today, prior to the dynamics of high volume clean cap, we had a 2024 base business of $193 million in revenue. We look forward to 2025, acknowledging that full year visibility continues to be a challenge, and various market political and global events will continue to evolve. We are focused on returning our base business to growth. We anticipate our base business, which excludes high volume clean cap, to be about $185 million to $205 million or to grow in the low single digits at the midpoint.

Speaker Change: We're excited about.

Speaker Change: As we look at the sum of marrow by today prior to the dynamics of high volume clean cap, we had a 2020 for base business of $193 million in revenue.

Speaker Change: We look forward to 2025 acknowledging that full year visibility continues to be a challenge and various market political and global events will continue to evolve we are focused on returning our base business to growth we anticipate.

Speaker Change: Stay at our base business, which excludes high volume clean cap to be about 185 million to $205 million or to grow in the low single digits at the midpoint.

Speaker Change: We currently do not have any binding commitments from our top customers for high volume clean cap demand for 2025.

Kevin Herde: We currently do not have any binding commitments from our top customers for high volume clean cap demand for 2025. Thus, we believe it to be prudent to guide only to our base business as discussed without incorporating any high volume clean cap into our initial 2025 Revenue Guide. To the extent commitments are received for high-volume clean gaps throughout the year, we will incorporate those into any guidance updates as we progress through 2025. Please note we are focused on our base business growth for all our business units. This includes our discovery offerings within our NAP segment, which represent revenue contributions from the acquisitions of TriLink, MyChem, Molecular Assemblies, and Officine Bio.

Speaker Change: Thus, we believe it would be prudent to guide only shore based business.

Speaker Change: As discussed without incorporating any high volume clean cap into our initial 2025 revenue guidance.

Speaker Change: Does it extend commitments are received for high volume cleaned out throughout the year, we will incorporate those into any guidance updates as we progress through 2025.

Speaker Change: Please note we're focused on our base business growth for all our business units.

Speaker Change: This concludes our discovery offerings within our Napp segment, which represent revenue contributions from the acquisitions of Trialing, Mike M. Molecular assemblies in our fishing <unk> bio.

Kevin Herde: And further in our IAPA segment are the GMP products and services under trialing, the Oligo offerings branded under Glenn Research, and the Alphazyme enzyme products. Finally, all of our products and services in our BST segment are branded as CYGNSS.

Speaker Change: And Furthermore, I pay Sigma at the G E. G M P products and services under Trialing. The all of the offerings branded underground research and the ALP as I'm enzyme products.

Speaker Change: Finally, all of our products and services and Rps tea segment are branded as sickness.

Speaker Change: As a result of the overall revenue guidance expectations here of 185 million to $205 million.

Kevin Herde: As a result of the overall revenue guidance and expectations here of $185 million to $205 million, we do not anticipate being in a positive adjusted EBITDA position at these levels, and thus we are not providing guidance for that profitability metric in 2025 at this stage. We remain committed to a combination of funding areas of growth and strategic value while maintaining cost containment in other areas. We continue to manage our overall business and cost structure in a manner that we believe is appropriate, allows us to support our strategy. In 2025, we will continue to invest in our commercial footprint expansion and intellectual property protection and prosecution.

Speaker Change: I anticipate being in a positive adjusted EBITDA position at these levels and thus, we're not providing guidance for that profitability metric in 2025 at this stage.

Speaker Change: We remain committed to a combination of funding areas of growth and strategic value, while maintaining cost containment in other areas. We continue to manage our overall business and cost structure in a manner that we believe is appropriate allow us to support our strategy.

Speaker Change: In 2025, we will continue to invest our commercial footprint expansion and intellectual property protection and prosecution.

Kevin Herde: We expect to make those investments while also mindfully reducing spend in other areas. As for the cadence of estimated revenues, we are focused on execution across our business. We will see some variability, mostly in GMP services over the course of the year, as those bills will correspond to the timing needs of our customers and their corresponding clinical trial plan. We currently estimate our first quarter to be between $43 million to $45 million in total revenues, most likely slightly up from our most recent Q4 2024 based business total, which was $43 million. Our total reported revenue is $57 million, less than $14 million in high volume clean cap.

Speaker Change: We expect to make those investments while also mindfully reducing spend in other areas.

Speaker Change: As for the cadence of estimated revenues, we're focused on execution across our business.

Speaker Change: We will see some variability mostly in GMP services over the course of the year as those bills will correspond to the timing needs of our customers and there are corresponding clinical trial plans.

Speaker Change: We currently estimate our first quarter to be between $43 million to 45 million in total revenues most likely slightly up for most recent Q4 2020 for base business total, which was 43 million. Our total reported revenues of $57 million less the $14 million in high volume cleanup.

Kevin Herde: Now turn to slide 12 and we'll give you some additional full year views for 2025. We expect interest expense net of interest income between $14 million and $16 million. Appreciation and amortization between $50 million and $55 million. Equity-based compensation, which we show as a reconciling item from GAAP to non-GAAP EBITDA to be between $45 million to $50 million. As of fully converted diluted share, weighted average share count for the year of 256 million shares.

Speaker Change: Now turn to slide 12, and we'll give you some additional full year views for 2025.

Speaker Change: We expect interest expense net of interest income between 14 million and 16 million.

Speaker Change: Depreciation and amortization between 50 million and $55 million.

Speaker Change: Equity based compensation, which we chose the reconciling items from GAAP to non-GAAP EBITDA to be between 45 million to $50 million.

Speaker Change: As if fully converted diluted share weighted average share count for the year of 256 million shares.

Speaker Change: Finally, as we've discussed capital expenditures are expected to decline to $15 million to $20 million in total for 2025, mostly tied to about a $10 million expansion of our enzyme manufacturing capabilities and we foresee total capex decreasing even further going to trying 26.

Kevin Herde: Finally, as we have discussed, capital expenditures are expected to decline to $15 to $20 million in total for 2025, mostly tied to about a $10 million expansion of our enzyme manufacturing capabilities. And we foresee total CapEx decreasing even further going into 2026.

Trey Martin: I'll now turn the call back over to Trey.

Trey: I'll now turn the call back over to Trey.

Trey: Thank you Kevin.

Trey Martin: Thank you, Kevin. 2024 was both a challenging and pivotal year for our company. We navigated multiple headwinds that impacted our financial performance, but remained laser focused on building the foundation for future growth. We successfully delivered on key strategic initiatives, completing our multi-year facility expansions, improving our turnaround times, launching approximately 50 innovative new products, acquired complementary assets, and advanced critical partnerships. Although it may take more time for these efforts to be fully reflected in our financial performance, we've established many capabilities for future market growth.

Speaker Change: 'twenty 'twenty four was both a challenging and pivotal year for our company, we navigated multiple headwinds that impacted our financial performance, but remain laser focused on building the foundation for future growth.

Speaker Change: We successfully delivered on key strategic initiatives, completing our multi year facility expansions, improving our turnaround times launching approximately 50 innovative new products acquired complementary assets and advance critical partnerships.

Speaker Change: Although it may take more time for these efforts to be fully reflected in our financial performance. We've established many capabilities for future market growth.

Speaker Change: Let's turn to slide 14.

Trey Martin: Let's turn to slide 14. The pandemic was a transformative time for Maravai's trialing business that highlighted our clean cap franchise and led to significant reinvestment in the company. As we are forecasting on only our base business for 2025, without high volume clean cap, we wanted to share a reminder that Maravai is a consolidation of several category leading companies that roll up into our two reporting segments. Within our NAP segment, our TriLink Discovery products and services will benefit from the two acquisitions that we've closed here in the first quarter of 2025. Oficine Bio and Molecular Assemblies bring us unique assets and capabilities to create a new ecosystem in the life science tool space.

The pandemic was a transformative time for more revised trailing business that highlighted our clean cap franchise and led to significant reinvestment in the company.

Speaker Change: As we were forecasting on only our base business for 2025 without high volume clean cow. We wanted to share. A reminder, that <unk> is a consolidation of several category leading companies that roll up into our two reporting segments.

Speaker Change: Within our segments, our trailing discovery products and services will benefit from the two acquisitions that we've closed here in the first quarter of 2025.

Speaker Change: Have you seen a bio in molecular assembly is bring us unique assets and capabilities to create a new ecosystem and a life science tool space.

Trey Martin: Our Trilink GMP products and services, which are now utilizing our new Flanders I and II facilities and which are receiving excellent feedback from our customers, are prime for future growth in the genomic medicines market. Our commercial investments for the GMP business began in 2024 and the funnel continues to grow with an impressive list of opportunities. Our AlphaZyme Enzyme business is adding new customers at an exciting rate and is also enabling our vertical integration across our supply chain input. Finally, we continue to serve the oligonucleotide synthesis market, both research and diagnostic, with our Glenn Research Portfolio of Products and Trilink Discovery Oligoservices.

Speaker Change: Our trailing GMP products and services, which are now utilizing our new Flanders, one in two facilities, which are receiving excellent feedback from our customers are primed for future growth and the genomic medicines market.

Speaker Change: Our commercial investments for the GMP business Bank began in 2024 and the funnel continues to grow with an impressive list of opportunity.

Speaker Change: Our alphas I'm enzyme business is adding new customers at an exciting rate.

Speaker Change: And it's also enabling our vertical integration across our supply chain inputs.

Speaker Change: Finally, we continue to serve the oligonucleotide synthesis market, both research and diagnostic with our Glenn research portfolio of products and Trialing discovery Oligos surfaces.

Trey Martin: Revenues by customer type within our NAP segment for 2024 were 56% biopharma, 32% life science and diagnostic, 5% academia, 1% CRO, CDMO, and about 6% through distributors. Our biologic safety testing segment, represented by the gold standard Cygnus branded products, along with the new innovative Mach V line, continues to be an amazing business for Maravai and a true category leader. Revenues by customer type within our BST segment for 2024 were 22% biopharma, 3% life science and diagnostic, 1% academia, 17% CDMO, and about 58% through distributors. As we look ahead in 2025, we're focused on a return to growth for the business units that comprise our base business.

Speaker Change: Revenues by customer type within our <unk> segment for 2024 were 56% Biopharma, 32% life science, and diagnostic 5% academia, 1% C. R. O C D M O and about 6% through distributors.

Speaker Change: Our biologics safety testing segment represented by the gold standard sickness branded products, along with a new innovative Mark V line continues to be an amazing business from Aro VI and a true category leader.

Speaker Change: Our revenues by customer type within our <unk> segment for 2024 were 22% Biopharma, 3% life science and diagnostic 1% academia.

Speaker Change: 17% C D M O and about 58% through distributors.

Speaker Change: As we look ahead in 2025, we're focused on a return to growth for the business units that comprise our base business.

Trey Martin: The biotech funding environment and our clinical customers' current emphasis on later stage programs remains an ongoing dynamic in which we need to manage our business. We've taken steps to improve visibility into our participation in customers' clinical programs to help us operate and predict our sales funnel with improved accuracy. I'll speak to this in a moment. To navigate this period responsibly, we continue to streamline our operations and corporate support cost structures while investing in key commercial and strategic initiatives. The capacity and capabilities that reside within our cost base should allow for a high rate of variable margin contribution as the business returns to growth.

Speaker Change: The biotech funding environment and our clinical customers current emphasis on later stage programs remains an ongoing dynamic in which we need to manage our business with.

Speaker Change: We've taken steps to improve visibility into our participation in customers' clinical programs to help us operate and predict our sales funnel with improved accuracy I'll speak to this in a moment.

Speaker Change: To navigate this period responsibly, we continue to streamline our operations and corporate support cost structures, while investing in key commercial and strategic initiatives.

Speaker Change: The capacity and capabilities that reside within our cost base should allow for a high rate of variable margin contribution as the business returns to growth.

Trey Martin: As a brief aside, we estimate that our Maravai wide supply chain is over 95% sourced from vendors here in the United States, which should serve to protect us from any potential tariff policies that could impact the cost of sales profile. Our focus for 2025 will be to execute our return to growth strategy for all base businesses, regardless of market condition. We are taking several steps to diversify our base business with new products and services. Importantly, our confidence and our abilities to respond to the market is unwavering. We believe the strategic investments we've made over the past several years and continue to make in 2025 have positioned us to capitalize on significant mid to long term growth opportunities.

Speaker Change: A brief aside we estimate that our MRO VI wide supply chain is over 95% sourced from vendors here in the United States, which should serve to protect us from any potential tariff policies that could impact the cost of sales profile.

Speaker Change: Our focus for 2025 will be to execute our return to growth strategy for all based businesses regardless of market conditions.

Speaker Change: We are taking several steps to diversify our base business with new products and services importantly, our confidence in our abilities to respond to the market is unwavering.

Speaker Change: We believe the strategic investments we've made over the past several years and continue to make in 'twenty five have positioned us to capitalize on significant mid to long term growth opportunities. We're.

Trey Martin: We're focused on building a diversified, growing, predictable franchise as a life science tool provider.

Speaker Change: We're focused on building a diversified growing predictable franchise as a life science tool provider.

Speaker Change: Turning to slide 15, let me walk you through these investments and our opportunities to drive further growth.

Trey Martin: Turning to slide 15, let me walk you through these investments and our opportunities to drive further growth. First, our new Flanders 1 and 2 facilities are fully operational, built to support the GMP chemistry and mRNA businesses for the next decade, and ready to scale as demand accelerates. With modest fixed overhead costs, we expect improved margins as we bring in additional customers this year. In Flanders 2, we recently secured additional scope of work with an existing cell therapy customer, extending our support from their Phase 2-3 pivotal trial to now support their late-stage and commercial launch activities.

Speaker Change: First our new Flanders, one and two facilities are fully operational built to support the GMP chemistry and mrna businesses for the next decade and ready to scale as demand accelerates.

Speaker Change: With modest fixed overhead costs, we expect to improve margins as we bring in additional customers. This year.

Speaker Change: In Flanders too, we recently secured additional scope of work within the existing cell therapy customer extending our support from their phase II.

Speaker Change: Three pivotal trial now support their late stage and commercial launch activities.

Trey Martin: This reinforces our new ability to support customers throughout the drug development pipeline and grow our revenue as their programs advance over time.

Speaker Change: This reinforces our new ability to support customers throughout the drug development pipeline and grow our revenue as their programs advance over time.

Speaker Change: Second in 'twenty 'twenty four we launched about 50, new products across our five brands, including expanded Oligos services custom Chemistries, new catalog chemistry, and mrna offerings differentiate it enzymes and additional cell system and host cell DNA detection kits from sickness.

Trey Martin: Second, in 2024, we launched about 50 new products across our five brands, including expanded oligoservices, custom chemistries, new catalog chemistry and mRNA offerings, differentiated enzymes, an additional cell system, and host cell DNA detection kits from Cigna. We believe these innovations are crucial to strengthening our competitive position and driving revenue diversification. We will continue to add additional products, services and capabilities at a high rate to drive base business growth.

Speaker Change: We believe these innovations are crucial to strengthening our competitive position and driving rather than new diversification.

Speaker Change: We will continue to add additional products services and capabilities at a high rate to drive base business growth.

Speaker Change: Third our recent strategic acquisitions and newly acquired assets from our PCA and molecular assemblies are expected to give us the tools technologies and team to establish a best in class DNA and RNA design and discovery platform.

Trey Martin: Third, our recent strategic acquisitions and newly acquired assets from Officine and Molecular Assemblies are expected to give us the tools, technologies, and team to establish a best-in-class DNA and RNA design and discovery platform. This will enable us to offer an integrated solution for mRNA candidate design that accelerates our clients' work using our own chemistries, enzymes, and proprietary technologies as input. This vertical integration is unique in the industry and enhances our ability to reduce costs and improve margins while broadening our capabilities in a rapidly evolving market. Our customers benefit from working with one partner who has expertise in all the input areas.

Speaker Change: This will enable us to offer an integrated solution for mrna, Canada design that accelerates our clients work using our own chemistries enzymes and proprietary technologies as inputs.

Speaker Change: This vertical integration is unique in the industry and enhances our ability to reduce costs and improve margins, while broadening our capabilities in a rapidly evolving market.

Speaker Change: Our customers benefit from working with one partner, who has expertise in all of the input areas.

Trey Martin: A key bottleneck in mRNA therapeutic discovery is the ability to execute high-throughput screens of many design variants to define the best possible lead candidate. We will now have an AI-driven bioinformatics platform that enables the design of experiments and the scaled-out manufacturing system to build as many combinations as possible of proprietary caps, modified chemistries, UTR sequences, and tailing strategies to meet our customers' needs and enhance their candidates' performance.

Speaker Change: A key bottleneck anymore RNA therapeutic to discovery is the ability to execute high throughput screens of many design variance to define the best possible lead candidates.

Speaker Change: We will now have an AI driven bioinformatics platform that enables the design of experiments and the scaled out manufacturing system to build as many combinations as possible our proprietary caps modified chemistries you T R sequences and tailing strategies to meet our customers' needs and enhance their candidates performance.

Trey Martin: Thank you for joining us. Our recent partnerships, including a large new distribution agreement with VWR in Europe and additional CleanCap supply agreements, allow for broader reach quickly. These will get CleanCap and our NAP product portfolio into more customers' hands. The velocity of clean cap commercial license and supply agreements has increased. We executed 11 new agreements in 2024, bringing our total to 43 license holders. These licensees represent global customers spanning the spectrum from large pharma to innovative biotech and a mix of clinical, commercial, academic, CDMO enablement, and nucleic acid manufacturing platforms. These new agreements are expected to provide us with greater visibility into customer phase advancement with disclosure requirements for IND and or BLA filing.

Speaker Change: Fourth.

Speaker Change: Our recent partnerships, including a large new distribution agreement with VW are in Europe, and additional clean cap supply agreements allow for broader reach quickly. These.

Speaker Change: These will get clean cap in our product portfolio into more customers hands.

Speaker Change: The velocity of clean cap commercial license and supply agreements has increased we executed 11, new agreements in 2024, bringing our total to 43 license holders.

Speaker Change: These licensees represent global customers spanning the spectrum from large pharma to innovative biotech and a mix of clinical commercial academic C. D M O enablement and nucleic acid manufacturing platforms.

Speaker Change: These new agreements are expected to provide us with greater visibility into customers' phase advancement with disclosure requirements for <unk> BLA filings.

Trey Martin: With this added disclosure requirement, three customers reported to us IND or IND-equivalent acceptance during Q4.

Speaker Change: With this added disclosure requirement three customers reported to us IND or IND equivalent acceptance during Q4.

Speaker Change: All of these efforts should add to the revenue diversification of the company. So that our future growth is not dependent on bolt clean cap reagent inputs for Covid vaccines alone, but company wide through the broad contribution from each of our businesses as we continue to build on our strong foundation and expand our customer relationships and constantly improve our offerings.

Trey Martin: All of these efforts should add to the revenue diversification of the company so that our future growth is not dependent on bulk clean cap reagent inputs for COVID vaccines alone, but company-wide through the broad contribution from each of our businesses as we continue to build on our strong foundation, expand our customer relationships, and constantly improve our offerings. Because our entire business is 100% consumables, and we have heavier exposure to early stage discovery work in NAP and clinical trial starts in BST, we believe we will be an early beneficiary as the macro environment for life science improves, which could provide additional tailwind.

Speaker Change: Because our entire business is 100% consumables and we have heavier exposure to early stage discovery work and in a pea and clinical trial starts and DST. We believe we will be an early beneficiary as the macro environment for life science improves which could provide additional tailwind.

Speaker Change: Finally, I mentioned, our challenges last year in demand and forecasting demand.

Trey Martin: Finally, I mentioned our challenges last year in forecasting demand. To address this, we've enhanced our ability to track and anticipate clinical market trends. Our clinical trial business intelligence platform, which we developed in-house over the last several quarters, provides real-time insights into mRNA and RNA-related programs, including new program starts and phase progression for clinical trials. This reduces our reliance on costly consulting services, but more importantly, brings us closer to the data and gives us proprietary insight when blended with our own commercial data.

Speaker Change: To address this we've enhanced our ability to track and anticipate clinical market trends.

Speaker Change: Our clinical trial business intelligence platform, which we developed in house over the last several quarters provides a real time insights into mrna and RNA related programs, including new program starts and phased progression for clinical trials.

Speaker Change: This reduces our reliance on costly consulting services, but more importantly brings us closer to the data it gives us proprietary insight when blended with our own commercial data.

Speaker Change: Please turn to slide 16 to review our findings.

Trey Martin: Please turn to slide 16 to review our findings. We're seeing continued growth in mRNA and gene editing programs with roughly 1,500 discovery and development stage candidates currently in the pipeline we track. Focusing on discovery remains critical to our strategy to drive adoption of our technologies in customer programs, and we are engaging customers early in the development process. Our ability to support them from pre-clinical projects through GMP and commercialization gives us a strong competitive edge which we've enhanced further with our recent acquisitions and new product innovations. Currently, we estimate that 70% of target programs are in the preclinical phase, while 30% have entered the clinic.

Speaker Change: We're seeing continued growth in mrna and gene editing programs with roughly 1500 discovery and development stage candidates currently in the pipeline we track.

Speaker Change: Focusing on discovery remains critical to our strategy to drive adoption of our technologies in customer programs and we are engaging customers early in the development process.

Speaker Change: Our ability to support them from preclinical projects through GMP and commercialization. It gives us a strong competitive edge, which we've enhanced further with our recent acquisitions and new product innovations.

Speaker Change: Currently we estimate that 70% of target programs are in the preclinical phase while 30% have entered the clinic, we continue to estimate clean cap market share at approximately 30% for clinical stage programs, we track and closer to 40% at the discovery stage, which should drive increased.

Trey Martin: We continue to estimate clean cap market share at approximately 30% for clinical stage programs we track and closer to 40% at the discovery stage, which should drive increased future participation in clinical programs. The growing number of clinical mRNA programs, now estimated at 447, with CleanCap customers representing about 30%, indicates positive pipeline momentum. According to our data, of these 136 clinical programs, 43% are in Phase 1, 43% are in Phase 2, and 14% are in Phase 3 or 4. Despite fluctuations in preclinical candidate numbers due to the funding challenges and other market dynamics, the overall program count remains strong, with over 1,000 programs estimated.

Speaker Change: Future participation in clinical programs.

Speaker Change: The growing number of clinical mrna programs now estimated at 447 with clean cap customers, representing about 30% indicates positive pipeline momentum.

Speaker Change: According to our data of these 136 clinical programs, 43% are in phase, 143% are in phase two and 14% are in phase three or four.

Speaker Change: Despite fluctuations in preclinical candidate numbers due to the funding challenges and other market dynamics. The overall program count remains strong with over 1000 programs estimated.

Speaker Change: Currently we are engaged with customers representing about 40% of preclinical drug candidates.

Trey Martin: Currently, we are engaged with customers representing about 40% of preclinical drug candidates. When funding conditions improve, we expect these programs to accelerate. However, even in the current environment, our market position remains strong.

Speaker Change: When funding conditions improve we expect these programs to accelerate.

Speaker Change: However, even in the current environment, our market position remains strong while not every preclinical program will advance our discovery customers, who buy products and service from us and enter the development pipeline of the potential to generate 7% to 10 times more revenue per program as they progress through clinical stages.

Trey Martin: While not every preclinical program will advance, our discovery customers who buy products and service from us and enter the development pipeline have the potential to generate 7 to 10 times more revenue per program as they progress through clinical stages, presenting a significant opportunity for growth. As these programs progress, we are now well positioned to provide critical GMP services to these customers along with our GMP reagents. The recently completed capacity investments at Flanders II allow us to support the customer's program progression from Phase II clinical material through commercialization.

Speaker Change: Presenting a significant opportunity for growth.

Speaker Change: As these programs progress we are now well positioned to provide critical GNP services to these customers along with our GMP reagents.

Speaker Change: The recently completed capacity investments at Flanders to allow us to support the customer's program progression from phase II clinical material through commercialization.

Speaker Change: Double clicking into our pipeline data on slide 17.

Trey Martin: Double-clicking into our pipeline data on slide 17. For Clean Cap customer programs, you'll notice that we're involved across multiple modalities, including gene editing. And, as the heat map on the right indicates, the top disease target of these programs is now cancer, which cumulatively makes up an estimated 38% of the programs in development.

Speaker Change: Clean cap customer programs, you'll notice that we're involved across multiple modalities, including gene editing.

Speaker Change: And as the heat map on the right indicates the top disease target of these programs is now cancer, which cumulatively makes up an estimated 38% of the programs in development.

Trey Martin: Today, 80% of the pipeline we track is for development programs other than infectious disease. As I mentioned earlier, we've also strengthened our license and supply agreements, requiring customers to disclose milestone achievements like IND and BLA submissions. All this provides us with greater visibility to forecast as the early stage programs advance.

Speaker Change: Today, 80% of the pipeline, we track is for development programs other than infectious disease.

Speaker Change: As I mentioned earlier, we've also strengthened our license and supply agreements requiring customers to disclose milestone achievements like IND and BLA submissions.

All of this provides us with greater visibility to forecast is the early stage programs advance.

Speaker Change: Turning to slide 18, we will continue to focus on innovation to movie.

Trey Martin: Turning to slide 18, we will continue to focus on innovation to move the industry forward and build new revenue streams as a leading mRNA producer and raw material supplier. We know our ability to provide products and services supporting the entire customer life cycle is a resounding value proposition for customer choice. With the acquisition of Oficine and the asset acquisition of Molecular Assemblies, plus our enzyme portfolio expansion through AlphaZyme, our Trilink Discovery products and Trilink GMP capabilities, we can incorporate raw materials and production expertise into our end-to-end service and supply offering, scaling from early research to clinical product, which is totally unique in this industry.

The industry forward and build new revenue streams, as a leading mrna producer and raw material supplier.

Speaker Change: We know our ability to provide products and services supporting the entire customer lifecycle is a resounding value proposition for customer choice.

Speaker Change: With the acquisition of O P. CNA in the asset acquisition and molecular assemblies, plus our enzyme portfolio expansion through alphas I'm, our trailing discovery products and Trialing GMP capabilities, we can incorporate raw materials and production expertise into our end to end service and supply offering scaling from early research to clinical product.

Speaker Change: Which is totally unique in this industry.

Trey Martin: We firmly believe in our ability to enable the next generation of medicines, and I'm confident that the foundation we've built can drive sustainable, profitable growth for our base business in the years ahead.

Speaker Change: We firmly believe in our ability to enable the next generation of medicines and I'm confident that the foundation, we built can drive sustainable profitable growth for our base business in the years ahead.

Trey Martin: This concludes our prepared remarks. Kevin and I are happy to answer your questions.

Speaker Change: This concludes our prepared remarks.

Speaker Change: Kevin and I are happy to answer your questions.

Operator: So I'll turn the call back to the operator for instructions. Thank you.

Speaker Change: I'll turn the call back to the operator for instructions.

Speaker Change: Thank you.

Operator: If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue.

Speaker Change: To ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue.

Speaker Change: Press Star two if he would like to remove your question from the queue and for participants using speaker equipment may be necessary to pick up your handset before pressing the star keys, we ask that you. Please limit to one question and one follow up question one moment, while we poll for questions.

Operator: And for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. We ask that you please limit to one question and one follow-up question.

Matt Stanton: One moment while we pull for questions. Our first question is from Matt Stanton with Jeffries. Please proceed. Thanks for taking the question. Maybe just for Kevin, as it relates to kind of the profitability picture here in 25. I understand you're not guiding on EBITDA margins, but is there any kind of guardrails you can give us in terms of gross margins? Obviously 66 million coming out is a big headwind, but are there other cost actions and levers at your disposal? You've obviously had a lot of capacity over the last years too, but I think people are trying to base business revenues.

Speaker Change: Our first question.

Stanton: Not Stanton with Jefferies. Please proceed.

Speaker Change: Hey, Thanks for taking the question, maybe just for Kevin as it relates to kind of the profitability picture here in 'twenty five.

Speaker Change: I understand you're not guiding on EBITDA margins, but is there any kind of guardrails you can give us in terms of gross margins.

Speaker Change: Obviously 66 million coming out it's a big headwind, but are there other cost actions and levers at your disposal, you've obviously got a lot of capacity over the last years do but I think people are trying to anchor to some type of profitability metric as we move forward on this you know base business revenue. So any more color you can give us just maybe what you're thinking about on the gross margin level for <unk>.

Matt Stanton: So any more color you can give us just maybe what you're thinking about on a gross margin level for 25 and other cost levers at your disposal. as you kind of return to profitability or look to return to profitability.

Speaker Change: 25 mm and other cost levers at your disposal.

Speaker Change: A return to profitability or look to return to profitability.

Kevin Herde: Yeah, thanks, Matt. I appreciate the question. Yeah, look, certainly, you know, the cost structure is always on our mind. You know, as we look at our cost structure for 2025, we see it looking very consistent with 2024. We're putting in cost measures to limit certain costs, reduce them, to offset the increases we're making in certain other areas. Certainly, the acquisitions that we've made, the continued expansion of our commercial footprint, and the commitment to defend and prosecute our intellectual property around Clean Cap are all strategic investments, and we're making offsets to keep our cost structure very consistent with how it looks versus 2024.

Speaker Change: Yeah. Thanks, Matt I. Appreciate the question Yeah look certainly you know the cost structure is always on our mind.

Speaker Change: You know as we look at our cost structure for 2025, we see it looking very consistent with 2024.

Speaker Change: Putting in cost measures to limit certain cost to reduce them to offset the increases were making in certain other areas certainly the acquisitions that we've made there.

Speaker Change: And continued expansion of our commercial footprint and the and the commitment to defend and prosecute our intellectual property around clean cap are all strategic investments and we're making offsets to keep our cost structure very consistent with how it looks versus 2024.

Kevin Herde: When it comes to the overall margin profile, I'll tell you, you obviously can do the math and taking our 24 revenues of the 259, or just even about 36, and see we had a $223 million cost structure there, you know, about $200 million of that or so, we consider fit.

Speaker Change: When it comes to the overall margin profile I'll tell you you obviously can do the math and taking our 24 revenues of $2 59, our adjusted EBITDA at 36 and seaweed.

Speaker Change: $223 million cost structure, there you know about $200 million of that or so consider fix.

Speaker Change: It's a combination of those things that arent necessarily the variable inputs to our our revenue generation.

Unknown Executive: www.blrb.nlm.

Unknown Executive: Pasadena, California 20 to $230 million revenue range, based on some of those inputs is roughly where we're adjusted EBITDA neutral, as we say here.

Speaker Change: And any of that that area is because that $200 million going to stay relatively flat year over year and as we looked at our variable component of our revenue that's generally ranges between 10 and 12%.

Speaker Change: So it kind of gives you a good sensible.

Speaker Change: 1% to $230 million revenue range based on some of those inputs is roughly where we were adjusted EBITDA neutral as we sit here today.

Terry: Terry can you go to the next question. Please yes. Our next question is from Doug Schenkel with Wolfe Research. Please proceed.

Operator: Terry, can you go to the next question, please? Yes.

Doug Schenkel: Our next question is from Doug Schenkel with Wolf Research. Hey, good afternoon, guys. Thanks for taking the questions. So improving visibility was a clear point of emphasis in your prepared remarks. I was just wondering if one, you know, beyond tracking market data, are you implementing processes with key customers to ensure better visibility there? Two, how do we get comfortable that the launch of 50 new products won't hinder these improvement efforts? And then third, you know, does carving out high value clean cap essentially wall off your area of lowest visibility from from the perspective of setting financial guidance for this year?

Doug Schenkel: Hey, good afternoon, guys. Thanks for taking the questions. So improving visibility was a clear point of emphasis in your prepared remarks.

Terry: I was just wondering if one.

Terry: Beyond tracking market data are you implementing processes with key customers to ensure a better visibility there to how do we get comfortable that the launch of 50 new products.

Terry: Will it hinder these improvement efforts and then third you.

Terry: Just carving out high value clean cap essentially wall off your area of lowest visibility from a from the perspective upsetting financial guidance for this year. Thank you.

Doug Schenkel: Thank you.

Trey Martin: Yeah, I think I think we can go in reverse order. And yes, you're absolutely right that the high volume clean cap, you know, last year, we had a firm commitment of about 50 million. We've reported that, you know, ended up at 66. But these commitments are completely based on the timing of, you know, a handful of very large customers clinical programs. We do have quarterly updates required, but obviously in the case of last year, we had dynamic movement in. At this point, as Kevin reported, we have no firm commitment for this year. And that has been the biggest swing and the biggest difficult dynamic for predictability that is obviously material.

Terry: Yeah, I think I think we can go in reverse order and yes, you're absolutely right that the high volume clean cap.

Terry: Last year we.

Terry: We had a firm commitment of about $50 million.

Terry: We've reported that ended up at 66, but these commitments are completely based on the timing of AR.

Terry: Handful of very large customers clinical programs.

Terry: We do have quarterly updates are required, but obviously in the case of last year, we had dynamic movement in them.

Terry: At this point as Kevin reported we have no firm commitment for this year.

Terry: And that that has been the biggest swing and the biggest difficult dynamic for predictability that is obviously material.

Trey Martin: We mentioned that our updated agreements, and we are proud of the increase in the number of license agreements we've signed this year. Our updated agreements have mandatory disclosure requirements for certain clinical trial milestones that our legacy pandemic era agreements did not. So we're hoping that that drives visibility with the larger, those would be GMP, clean cap customers specifically. Obviously, when someone is using our new service offering, we have a very, very intimate visibility of the timing of their program, their expected stage, and all things that are involved. So all of those are ways that we hoped we can add significant visibility going forward to the clinical or the GMP business, which is, of course, the material order.

Terry: We mentioned that.

Terry: Our our updated agreements and we are proud of the increase in the number of license agreements. We've signed this year our updated agreements have mandatory disclosure requirements for certain clinical trial milestones that are legacy pandemic era agreements did not.

Terry: And so we're hoping that that drives visibility with the larger those would be GMP clean cap customers specifically.

Terry: Obviously when someone is using our new service offering we have.

Terry: We're a very intimate visibility of the timing of their program their expected stage and in all things that are involved.

Terry: So all of those are ways that we hoped we can add significant visibility going forward to the clinical or the GMP business, which is of course the material orders.

Speaker Change: Our next question is from Matt <unk> with William Blair. Please proceed.

Matt Larew: Our next question is from Matt Larew with William Blair. Please proceed. Good afternoon, I was hoping we could speak a little bit.

Speaker Change: Hi, good afternoon.

Speaker Change: I was hoping you could speak a little bit too.

Matt Larew: segment growth and cadence. Kevin, you referenced $43 to $45. And the first quarter, I think that's sort of down, low double digits at the midpoint, and I, you know, to hit the midpoint of your guidance, it seems like you'd have to, in the back after you're growing high single or low double digits. So maybe speak to the underlying market assumptions that are embedded in that. Color, Jimson BST vs. NAP, that would Yeah, happy to do that, Matt. Yeah, I think, as I mentioned, you know, the first quarter here on the base business, and we'll be referring to that a lot, respectively, be up a little bit from where the fourth quarter left us.

Speaker Change: Secondly, gross.

Speaker Change: <unk>.

Speaker Change: Chelsea, Kevin you referenced $43 million to $45 million.

Speaker Change: In the first quarter, I think that's sort of down low.

Speaker Change: Double digits at the midpoint.

Speaker Change: The midpoint of your guidance it seems like you've said in the back half of the year, but growing high single or low double digits.

Speaker Change: Yes.

Speaker Change: So maybe speak to the underlying market assumptions that are embedded in that.

Speaker Change: If you can provide color in terms of the <unk>.

Speaker Change: Would be upside as well.

Speaker Change: Happy to do that Matt Yeah, I think as I mentioned, you know the first quarter here on the base business and I'll be referring to that a lot prospectively be up a little bit from where the fourth quarter left us. We then see some increased timing based upon our forecast currently coming through Q2 and into the back half of the year.

Kevin Herde: We then see, you know, some increased timing based upon our forecast currently coming through Q2 and into the back half of the year. Some of that comes from the visibility we have with what's going on at Flanders and scheduling those GMP programs. And that's really going to be the largest driver of quarter to quarter volatility for us is when those programs come through and we do those builds. As you know, those are somewhat periodic. And then from there, heading into the back half of the year, I think what we see is the completion of the integration of the two acquisitions we did in the first quarter, and how those acquisitions bring a differentiated customer experience and offering for the discovery part of trialing.

Speaker Change: Some of that comes from the visibility we have with them what's going on at Flanders in scheduling those GMP programs, and that's really going to be the largest driver of quarter to quarter volatility for us is when those programs come through them you use those bills as you know those are somewhat periodic.

Speaker Change: And then from there heading into the back half of the year and I think what we see is the completion of the integration of the two acquisitions you did in the first quarter.

Speaker Change: And how those acquisitions bring.

Speaker Change: A differentiated.

Speaker Change: Customer experience and offering for the discovery part of Trialing I think that's the one area that we're really looking to stabilize its probably been one of the more volatile again, that's where we have our UO products chemistry product Salvador products, a lot of research products and I think that's the one area that's been under pressure over the last couple of years, particularly when we look for the ACA.

Kevin Herde: I think that's the one area that we're really looking to stabilize. It's probably been one of the more volatile. Again, that's where we have our RUO products, chemistry products, oligo products, a lot of research products. And I think that's the one area that's been under pressure over the last couple of years, particularly. And we look for the acquisitions and some of the work we've been doing with the new product, as well as the new product introductions, you know, to drive some growth going into the back half of the year. And that kind of stacks up from that roughly 43 to 45 million, then stepping that up into the, you know, those, those 50,000 to 50 million or so, a quarter revenue totals you need to get to the midpoint of our guide.

Speaker Change: <unk> and some of the work we've been doing with the new product as well as the new product introductions.

Speaker Change: <unk>.

Speaker Change: Growth going into the back half of the year and that kind of stacks up from that roughly.

Speaker Change: <unk> $43 million to $45 million and stepping that up into the.

Speaker Change: Of those $50 million or so.

Speaker Change: Our quarter revenue totals you need to get to the midpoint of our guidance.

Namby: Our next question is from southern Namby with Guggenheim. Please proceed.

Sabu Nambi: Our next question is from Sabu Nambi with Guggenheim. Please proceed. Hi, this is Rikki Ann for Subu. Thanks for taking our question. So you'd made the large voluntary debt repayment at the end of the year.

Speaker Change: Yeah.

Speaker Change: Hi, This is working on for Sue. Thank you for taking my question.

Speaker Change: And you'd need the large voluntary debt repayment at the end of the year and so just wondering how we should think about your capital allocation priorities for the coming year in 2025, and also maybe as a follow up to that to what your appetite for M&A would be going forward. Thank you.

Kevin Herde: And so just wondering how we should think about your capital allocation priorities for the coming year in 2025. And also, maybe as a follow up for that to what your appetite for M&A would be going forward. Thank you. Yeah, we thought it was prudent to lower our cash interest expense for a couple of reasons. One, our interest rate cap that had served us very well in 2024 helped limit down our interest expense by a couple million dollars and provide us with good cash flow, expired in January. And we did put in a new cap at this stage, still assessing the rate volatility.

Speaker Change: Yeah, we thought it was prudent to lower our cash interest expense for a couple of reasons one our interest rate cap that it served us very well in 2024.

Limit down our interest expense by a couple of million dollars and provides us with good cash flow expired in January.

Speaker Change: And we didn't we didn't put in a new cap at this stage still assessing the rate volatility. We also didn't see M&A for us in the higher range of what we are generally looking at we didn't need that extra gross up that <unk> been carrying for a while I think.

Kevin Herde: And we also didn't see M&A for us in the higher range, what we were generally looking at. So we didn't need that extra gross up that we've been carrying for a while. You know, I think we're still interested in things, certainly. We have some more financial constraints than we probably used to have. But you can see that we've already printed two deals here in 2025 and continue to look to things that are complementary from a technology perspective. You know, at the right price point for us, that price point's probably a lot smaller than it was, but we still see assets out there that are available.

Speaker Change: We are still interested in things certainly we have some more financial constraints than we probably used to have but you can see that we've already printed two deals here in 2025 and continue to look at things that are complementary from a technology perspective.

Speaker Change: The rock right price point for us that price points, probably a lot smaller than it was but we still see assets out there that are available and we were.

Kevin Herde: And we're very active in evaluating them in both sides of the business. And we think there's some opportunities there. We're not going to shy away from getting things done if the business case makes sense, and we can do it financially. Certainly with CapEx coming down and interest rates coming or interest expenses coming down, that frees up a little cash for us as well to address those. We're going to continue to evaluate things.

Speaker Change: Active in evaluating them in both sides of the business and we think there's some opportunities there and we're not going to shy away from getting things done if the business case makes sense and we can do it financially.

Speaker Change: Certainly with Capex coming down in interest rates coming our interest expenses coming down that frees up a little of cash for us as well to address those.

Speaker Change: We're going to continue to evaluate things I'd say fundamentally, though we're happy with the collection of assets. We do have a good lift and a lot of activity to integrate the two businesses that we just took on and really look forward to seeing how those will we'll drive that.

Trey Martin: I'd say fundamentally, though, we're happy with the collection of assets. We do have a good lift and a lot of activity to integrate the two businesses that we just took on and really look forward to seeing how those will drive a better customer experience and revenue in the discovery area. Trey, you want to expand on that at all? No, that was excellent.

Speaker Change: Our customer experience and revenue in the discovery area, Trey I want to expand on that I don't know that it was excellent.

Trey Martin: As was asked in the previous question, there is a bit of staging. We're tucking in the assets of molecular assemblies and the front end of Officine onto Trilink. And as Kevin said, both of those projects are expected to be finished right around the midpoint of the year. and start to drive further growth in the, specifically in the discovery area in both of those cases and the back half.

Speaker Change: As was asked in the previous question there is a bit of staging.

Speaker Change: We're tucking in the assets of molecular assemblies.

Speaker Change: And the front end of <unk> onto Trialing and as Kevin said both of those projects are expected to be finished.

Speaker Change: Right around the midpoint of the year.

Speaker Change: And start to drive further growth in the specifically in the discovery area in both of those cases in the back half.

Tejas Savant: Our next question is from Tejas Savant with Morgan Stanley. Please proceed.

Tejas Savant: Our next question is from Tejas Savant with Morgan Stanley. Please proceed. Hey guys, good evening.

Tejas Savant: Hey, guys good evening.

Kevin Herde: Maybe, Kevin, one for you on the guide. Can you just elaborate a little bit on, you know, any sort of headwinds you're baking in from the ongoing changes at NIH and FDA in the context of your academic or biotech customer spending and what are you assuming for China growth this year? Yeah, I'll take both of those. Thanks for the questions. Yeah, as you know, our academic exposure is pretty small directly. There's certainly a halo and trickle down effect of that spend from a government perspective that will impact some of the research part of our business.

Speaker Change: Maybe Kevin one for you on the guide can you just elaborate a little bit on.

Speaker Change: Any any sort of headwinds you are baking in from the ongoing changes at NIH and FDA in the context of your academic or biotech customer spending and what are you assuming for China growth this year.

Speaker Change: Yeah, I'll take both of those paths. Thanks for the questions. Yeah. As you know our academic exposure is pretty small directly there.

Speaker Change: Theres, certainly a halo and trickle down effect of that spend from a government perspective that will impact some of the research part of our business, but again, it's relatively small as we look at the different components of our business. So we don't have a direct tie to NIH funding.

Kevin Herde: But again, that it's relatively small, as we look at the different components of our business. So we don't have a direct tie to NIH funding. So I don't see that as a huge headwind. But we do contemplate that certainly on the lower end of our guidance range. And again, we would see that more in the, again, in the discovery area, you know, as we move forward there. The second part of the question was China, yeah, so China, just getting to China specifically, you know, we saw China do $13.6 million over the full year. That was split $11.9 million in BST, $1.7 million in nucleic acid production, and really our exposure there, as you know, is really in the BST part of the business.

Speaker Change: So I don't see that as a huge headwind, but we do contemplate that certainly on the lower end of our guidance range and again, we would see that more in again in the discovery area as we move forward there.

Speaker Change: And the second part of the question was China, China, So China, just getting to China specifically.

Speaker Change: We saw China to $13 6 million.

Speaker Change: Over the full year that was split 11 nine in D. S. T. One seven and nucleic acid production and really our exposure. There as you know is really in the B S. T part of the business that really didn't it's been bouncing around a little bit didn't move all that much if we looked at it specifically, we did $3 4 million.

Kevin Herde: You know, that really didn't, it's been bouncing around a little bit, didn't move all that much. If we look at it specifically, you know, we did $3.4 million in China in BST in Q4, and if I look back over the last four quarters before that, going back to Q3 and then back to Q4 2023, it's bounced around between $2.1 and $4.2 million. So it kind of, it's been leveling out more in that $3 million range. We see that as, we're calling that basically flat for 2025, and if there is any churn there, I think we're seeing churn within the region, if in anything.

Speaker Change: And in China, and B S. T in Q4, and if I look back over the last four quarters before that going back to Q3, and then back to Q4 2023, it's bounced around between two one and $4 2 million. So the kind of low it's been leveling out one that that $3 million range, we see that as we're calling that basically flat.

Speaker Change: <unk> for 2025.

Speaker Change: And if there is any any churn there I think we're seeing churn within the region listen anything so we've already seen some examples of some CMO type business flexing out of China and going to other parts of the Asia Pac region in the sickness kits moving with that business. So it might be some temporary shift.

Kevin Herde: So we've already seen some examples of some CDMO-type business flexing out of China and going to other parts of the Asia-Pac region, and the Cygnus kits moving with that business. So you know, it might be some temporary shifts, but we're not anticipating any growth. We think based, working with our distributor, as you know, most of our, all of our revenue there through the Cygnus segment is through one of our distributors, and has been for a while. You know, they're calling the year flat, you know, we're keeping a close eye on it, and the only disruption we've seen thus far was picked up in another region very quickly.

Speaker Change: But we don't we're not anticipating any growth, we think based working with our distributor as you know most of our all of our revenue there through the sickness segment is through one of our distributors. It has been for a while they are calling the year flat.

Speaker Change: We're keeping a close eye on it and the only disruption we've seen thus far was picked up and another in another region very quickly. So we feel that theres not a lot of exposure there.

Unknown Executive: So we feel that there's not a lot of exposure there. Got it.

Speaker Change: Got it that's super helpful.

Unknown Executive: That's super helpful.

Unknown Executive: And then one on just philosophical question on that fixed cost structure. I know you've talked about it in the past as something that opens up the possibility of significant leverage as the top line recovers. But I guess my question is just more on why such a high fixed cost structure and why you've taken this sort of strategic decision to keep that $200 million run rate intact. Are there any levers you can pull if things get worse for some reason, you know, in the context of what you're seeing in the near term in your end market?

Speaker Change: And then wanted to just create philosophical question on that fixed cost structure I know you've talked about it in the past as you know.

Speaker Change: Something that opens up the possibility of significant leverage as the top line recovers, but I guess my question is just more.

Speaker Change: Why such a high fixed cost structure and why you've taken this sort of strip.

Speaker Change: Strategic decision to keep that $200 million run rate intact.

Speaker Change: Any levers you can pull if things get worse for some reason.

Speaker Change: In the context of what Youre seeing in the near term in your end markets.

Trey Martin: Yeah, there certainly are. We are pulling some of those levers incrementally, as Kevin implied. The fundamental decision, roughly the $200 million cost structure, is to keep all the capabilities that we have built over the last couple of years available for market expansion. That's really the fundamental part of the strategy. And we realize that this is a different situation than we've been in before. But That's fundamentally it, to make a material change, you know, in that cost structure, where we are basically running one building unit per business unit, would require compromising, you know, our ability to respond to any market return.

Kevin Hardy: Yes, there certainly are we are pulling some of those leavers incrementally as Kevin implied.

Kevin Hardy: The fundamental decision roughly the 200 million cost structure is to keep all the capabilities.

Kevin Hardy: That we have built over the last couple of years available for market expansion.

Kevin Hardy: That.

Kevin Hardy: So really the fundamental part of the strategy.

Kevin Hardy: And we realize that this is a.

Kevin Hardy: This is a different situation than we've been in before.

Kevin Hardy: But that's.

Kevin Hardy: That's fundamentally it to make a material change.

Kevin Hardy: And that cost structure, where we are basically running one building unit per business unit would require compromising our ability to respond to any market return.

Kevin Herde: Yeah, to break that cost structure down just a little bit more for everyone, you know, that breaks down roughly half of that cost structure is our is our labor force, and roughly 580 employees as we sit here today. And even at the midpoint of our 25 base business guide, you know, it's right around $340,000 in revenue per head. So very consistent with the universe of life science tools companies that are out there. So we don't we think we're in decent shape there. But we need to continue to invest in expansion of our commercial. And we're continuing to do that and getting that more intimacy with the customer there that we believe serving as well and filling up the pipeline nicely.

Kevin Hardy: Yes, it's a break that cost structure down just a little bit more for everyone.

Kevin Hardy: That breaks down roughly half of that cost structure is as our labor force and roughly 580 employees as we sit here today and even at the midpoint of our 2005 base business Guide.

Kevin Hardy: Right around $340000 and revenue per head, so very consistent with the universe of life science tools companies that are out there. So we don't we think we're in decent shape, there, but we need to continue to invest in the expansion of our commercial.

Kevin Hardy: And we're continuing to do that and getting that more intimacy with the customer there that we believe is serving us well and filling up the pipeline nicely.

Kevin Hardy: Other large part of that as Trey mentioned is roughly $40 million or so in annual facility costs and thats spread over seven facilities, none of which have.

Kevin Herde: And the other large part of that, as Trey mentioned, is roughly $40 million or so in annual facility costs. And that's spread over seven facilities, none of which have, you know, a single cost that's, that's much more significant than the average. So, and we feel all of those building expenses are really part of why we have the leverage and the capabilities that we have. And I think all of them have revenue profiles that recover that that Thank you.

Kevin Hardy: A single cost that is much more significant than the average so we feel all of those building expenses are really part of why we have the leverage and the capabilities that we have and I think all of them.

Kevin Hardy: Have revenue profiles that could recover that.

Kevin Hardy: Quickly so I think that when you look at that we think the cost structure. There is reasonable we are looking at other things, though and always will and certainly to the extent, we don't return to growth will continue to look at the cost lever to be able to.

Kevin Hardy: And the time for it we do return to growth but.

Unknown Executive: with the base set of assets that we have.

Kevin Hardy: But with the base set of assets that we have.

Our next question is from Dan Arias with Stifel. Please proceed.

Dan Arias: Our next question is from Dan Arias with Stiefel.

Dan Arias: Please proceed. Yeah, guys, thanks for the questions.

Dan Arias: Yes, hi, guys. Thanks for the questions. Kevin when you say that you are forecasting in the base business only and excluding high volume clean cap does that mean, the COVID-19 vaccine contributions have been scrubbed from the forecast entirely or is it just the obvious customers that have been taken out I mean, how much of anything within the forecast really has anything to do.

Kevin Herde: Kevin, when you say that you're forecasting the base business only and excluding high volume clean cap, does that mean that COVID vaccine contribution? have been scrubbed from the forecast entirely? Or is it just the obvious customers that have been taken out? I mean, how much of anything within this forecast really has anything to do with COVID, marketed, development stage, combo vaccine, and sort of anything? Yeah, I mean, we think it's basically zero, Dan. I mean, we're taking out everyone that has a commercialized vaccine in their demand. We're not taking it out. They're not giving us any forecast.

Dan Arias: With Covid marketed development stage combo vaccine and sort of anything in between.

Dan Arias: Yeah, I mean, we think it's we think it's basically zero Dan I mean, we're taking out everyone that has a commercialized vaccine in their demand.

Dan Arias: We're not taking it out they're not giving us any forecast somewhere by default taking it out as you know we've never had a year, but thats roughly been less than $60 million going back to 2020. So it is certainly unique to have.

Kevin Herde: So we're by default taking it out. As you know, we've never had a year where that's roughly been less than $60 million going back to 2020. So it's certainly unique to have zero. We don't feel there's anything else out there. I mean, we don't know, of course, when we ship a clean cap to a customer, if it's a small order, what they're potentially using it for. But when we look at our clinical data insights, when we take that and put it against, you know, our active customer base, we don't see any indications that there's any material amount of COVID that could be in those numbers.

Dan Arias: Zero, we don't feel there's anything else out there I mean, we don't know of course, when we ship.

Dan Arias: Clean cap to a customer if its a small order what they are potentially using it for but when we look at our clinical data insights when we when we take that and put it against our active customer base. We don't see any indications that there is there is any material amount of COVID-19 that could be in those numbers.

Kevin Herde: Given that our product is fungible and not marked for the end indication, we think that what we're doing in the guide that we're giving is reflective of no Okay, and then maybe just what percentage of revenues did the top 10 customers come to comprise for 24? And what do you think that that will be? Yeah, if you'll give me a second, I have that. I just don't want to misquote it here. Yeah, I've got it. I'll let Kevin look at the 25. We were top 10 was 48% in 23, 46% in 24. And so I think we're showing a gradual diversification there.

Given the given that our proxy fungible and not not marked for the and indication we think that what we're doing in the guide that we're giving is is reflective of no COVID-19 revenue for 25.

Speaker Change: Okay, and then maybe just what percentage of revenues did the top 10 customers come to comprise 24, and what do you think that that will be for 25.

Speaker Change: Yes, if you'll give me a second I have that I just don't want to.

Speaker Change: I misquoted here.

Speaker Change: Okay.

Kevin Hardy: Yes, I've got it and I'll, let Kevin look at the 25, we were yes.

Kevin Hardy: Top 10 was 48% and 23, 46% and 24.

Kevin Hardy: And so I think we're showing a gradual diversification there.

Speaker Change: Our next question is from Catherine Schulte with Baird. Please proceed.

Catherine Schulte: Our next question is from Catherine Schulte with Baird.

Catherine Schulte: Please proceed. Hey guys, thanks for the questions. Maybe first, just what are you assuming for revenue contribution from your recent acquisitions that you mentioned? And then second, you know, if we back out the 66 million of high volume clean cap in 24, and I think it was 61 million in 23, you know, that implies base NIP was down about 20% for the year, and I think down close to 30% in the fourth quarter. So are those COVID numbers comparable? Is that the right math? And, you know, if so, what makes you confident in that base business stabilizing here in 25?

Catherine Schulte: Hey, guys. Thanks for the question maybe first just what are you assuming for revenue contribution from your recent acquisitions that you mentioned and then second.

Catherine Schulte: Back out the $66 million of high volume and cap in 'twenty, four and 90 $361 million in 'twenty, three and that implies.

Catherine Schulte: <unk> was down about 20% for the year down close to 30% in the fourth quarter. So are those COVID-19 numbers comparable is that the right math and if so what makes you confident in that base business stabilizing here at point in time.

Kevin Herde: Yeah, I'll take the latter half of that. Thank you, Catherine. The Q4-23 number had a pretty large multi-million dollar essentially take-or-pay chemistry order in it. that skewed the Q4 results in comparison here. There's not a large overriding similar order in Q4-24. And we do view that, well, not COVID-specific, but specific of the era that within 23, we had contracts for take or pay on more things than just clean cap. And that was specifically in Q4-23.

Speaker Change: Yeah, I'll take the latter half of that.

Catherine Schulte: Thank you Catherine.

Speaker Change: The Q4, 'twenty three number had a pretty large multimillion dollar.

Catherine Schulte:

Catherine Schulte: Essentially take or pay chemistry order in it.

Catherine Schulte: That skewed skewed to Q4 results in comparison here.

Catherine Schulte: There is not a.

Catherine Schulte: There's not a large overwriting similar order.

Catherine Schulte: In Q4 24.

Catherine Schulte: And we do view that well not COVID-19 specific but specific of the era that within 23, we had.

Catherine Schulte: Contracts for take or pay on on more things than just clean cap.

That was specifically in Q4 23.

Catherine Schulte: Okay.

Catherine Schulte: And then Kevin the other side of that was.

Kevin Herde: And then Kevin, the other side of that was our contribution for the small acquisitions. Yeah, so molecular assemblies is really more of a supply chain technology vertical integration play for us, and nothing specific on the revenue line there, other than how it's going to complement what we're doing in discovery. As it relates to fissionate bio, we're looking at. Low single-digit millions, you know, one or two million dollars distinctly from that company. We didn't buy them for their revenue contribution. We bought them for their software platform and basically the revenues that they have today. their cost structure.

Catherine Schulte: Our contribution for the small acquisitions, yes, so amongst other assemblies as really more of a supply chain technology vertical integration play for us. So nothing specific on the revenue line there other than how it is going to complement what we're doing in discovery as it relates to efficiently buy out we're looking at.

Catherine Schulte: Low single digit millions, one or $2 million distinctly from that company, we didn't buy them for the revenue contribution we bought them for their software platform.

Catherine Schulte: And basically the revenues that they have today.

Catherine Schulte: Our cost structure.

Kevin Herde: And so we'll be looking for both their contributions and helping us take their very unique website capabilities and e-commerce capabilities over to TriLink Discovery and then as well continue to support them in the marketing of their AI platform.

Catherine Schulte: So we'll be looking for both their contributions in helping us take their very unique website capabilities and e-commerce capabilities over to trailing discovery and then as well continue to support them in the marketing of their AI platform.

Catherine Schulte: Great and then no you don't want to guide to adjusted EBIDTA, but anyway, just to put some guardrails on how you think about cash burn for the year.

Kevin Herde: Great, and then, no, you don't want a guide to Adjust City, but anyway, just put some guardrails on how you think about cash burn for the year. Yeah, I mean, look, I think, I think we gave you a pretty good view of what our cost base is and what our variable cost base is. So I think that's a pretty simple math equation. You know, when you look at the CapEx, and the cash interest that we gave you, and then you layer in the two acquisitions, I think some of all those pieces will get you a relatively, a relatively direct total.

Catherine Schulte: Yeah, I mean look I think I think we gave you a pretty good view of what our cost basis, and what our variable cost basis, I think that's a pretty simple math equation.

Catherine Schulte: You look at the Capex.

Catherine Schulte: And the cash interest that we gave you.

Catherine Schulte: And then you layer in the two acquisitions I think the sum of all those pieces will get you a relatively relatively.

Catherine Schulte: A relatively direct total and again the large variable there is do we end up getting any drop ins for vaccine revenues that the top of that one way or the other and what you each quarterly as that comes through.

Kevin Herde: And again, the larger variable there is, is do we end up getting any drop ins for vaccine revenues that, that toggle that one way or the other, and we'll update you each quarterly, as that comes through.

Matt Sykes: Our next question is from Matt Sykes with Goldman Sachs. Please proceed. Hi, good afternoon. Thanks for my questions. Maybe just shifting the focus to BST. I know that the growth hasn't necessarily achieved what it had historically, even in sort of the pre-IPO financials. It was a double-digit grower. But just given the amount of EBITDA contribution that it now represents, I mean, it's getting pretty close to where NAP is in total EBITDA in 2024.

Speaker Change: Our next question is from Mac Sykes with Goldman Sachs. Please proceed.

Mac Sykes: Hi, good afternoon. Thanks, taking my questions, maybe just shifting the focus to be S. T.

Mac Sykes: I know that the growth hasnt necessarily achieved.

Mac Sykes: What it had historically even in sort of the pre IPO financials. It was <unk>.

Mac Sykes: Double digit grower, but just given the amount of EBITDA contribution that it now represents I mean, its getting pretty close to where nap is in total EBITDA in 'twenty four.

Matt Sykes: Could you just maybe talk a little bit about the strategy to try to drive further growth? Maybe talk a little bit about what your current penetration and market share is. And then, are there any strategies like doing more direct, less distribution, or anything that you've kind of come up with to help drive growth in that segment, just given how important that level of profitability is going to be over the course of this year? Yeah, thank you. Those are good observations, because you can see from the numbers that we reported that a significant part of the channel for Cygnus is distribution.

Mac Sykes: Could you just maybe talk a little bit about the strategy to try to drive further growth maybe talk a little bit about what your current penetration and market share is and then are there any strategies like doing more direct less distribution or anything that you've kind of come up with to help drive growth in that segment, just given how important that level of profitability.

Mac Sykes: It's going to be over the course of this year.

Speaker Change: Yes. Thank you that those are good observations because you can see from the numbers that we reported that a significant part of the channel for sickness.

Speaker Change: As distribution and a significant reason that it's so profitable is that it's not a direct.

Trey Martin: And a significant reason that it's so profitable is that it's not a direct, you know, the direct sales force is essentially U.S. based.

Speaker Change: The direct sales force is essentially U S based.

Trey Martin: So we see opportunity for Cygnus in, as Kevin sort of hinted, specifically in Europe and APAC outside of China as I think projects shift from China, things go with them, but that creates a little bit of a disruptive lag. The other, you know, we're getting traction year over year here on MachV, which is a brand new method of doing viral clearance. And we're seeing good signs there. And of course, recently announced that we're moving into host cell DNA detection, which is another large chunk of the biologics market. So both of those two growth vectors, in addition to the services which have grown nicely and have honestly helped to buffer that period of geographic shift, those growth vectors, those three for Cygnus, we continue to emphasize and lean on as we move forward.

Speaker Change: No.

Speaker Change: We see opportunity for Cygnus, and as Kevin sort of hinted spin.

Speaker Change: Specifically in Europe, and APAC outside of China, as I think projects shift from China, and things go with them, but that creates a little bit of a disruptive lag.

Speaker Change: The other.

Speaker Change: We're getting traction year over year here on Mark V, which is a brand new.

Speaker Change: Method of doing viral clearance.

Speaker Change: And we're seeing good signs there.

Speaker Change: And of course recently announced that we're moving into wholesale DNA detection, which is another large chunk of the biologics market. So both both of those two growth sectors. In addition to the services, which have grown nicely and have honestly helped to buffer that that period of geographic shift.

Speaker Change: Those growth sectors as three for sickness, we continue to emphasize and lean on as we move forward.

Speaker Change: Got it that's really helpful and then.

Matt Sykes: Got it. That's really helpful.

Trey Martin: And then just for my follow up, just going back to the high volume clean cap customers, I can understand the demand picture issues that exist there. But I'm also wondering, just do you have visibility into what inventories they're carrying of things that you ship might have maybe last year or even the year before? And is that part of the issue that they just have overstock and they just need to work through that? Or do you not even have visibility into what levels of inventory those specific customers are holding? It's the latter still. It's still the pandemic era agreements and the communication people, because of strategic supply chain concerns, people certainly bought as much as they could.

Speaker Change: Just for my follow up just going back to the high volume clean cap customers I can understand that.

Speaker Change: Manned picture issues that exists there, but I'm also wondering just do you get visibility into what inventories theyre carrying of things that you ship, maybe last year or even the year before and is that part of the issue that they just have overstock and they just need to work through that or do you not even have visibility into what levels of inventory at those specific customers are holding.

Speaker Change: It's the latter still the.

Speaker Change: It's still the pandemic era agreements and the communication people because a strategic supply chain concerns people certainly bought.

Speaker Change: As much as they could.

Trey Martin: And they're not keen to give us exact inventory totals, as you might imagine. But all of our, We have been improving significantly our interactions with all of our pandemic era, you know, high volume, clean cap customers and trying to drive that intimacy, working with them, not only just as a reagent supplier, but hopefully as a deeper partner.

Speaker Change: And they're.

Speaker Change: They are not keen to give us exact inventory totals as you might imagine.

Speaker Change: But all of our we have been.

Speaker Change: We have been improving significantly our interactions with all of our pandemic era high volume clean cap customers.

Speaker Change: And trying to drive that intimacy.

Speaker Change: Working with them not only just as a reagent supplier, but hopefully as a deeper partner.

Brandon Couillard: Our next question is from Brandon Couillard with Wells Fargo. Please proceed.

Brandon Cullard: Our next question is from Brandon Cullard with Wells Fargo. Please proceed. Thanks. Good afternoon, guys.

Brandon Couillard: Hey, Thanks, Good afternoon, guys. Kevin can you just share with us the high volume clean cap revenue numbers for the first second and third quarter of last year. So we can.

Kevin Herde: Kevin, can you just share with us the high volume clean cap revenue numbers for the first, second and third quarter of last year? get to a base business, base loan. So, if we're looking at 24, basically... And round numbers here, first quarter, fourth quarter, 9, 20. 5, 17, 14. got it.

Brandon Couillard: Get to us.

Brandon Couillard: Base business baselines.

Brandon Couillard: Ann.

Brandon Couillard: So if we're looking at 'twenty four basically.

Brandon Couillard: And round numbers here first quarter fourth quarter $9 20.

Brandon Couillard: 517 2014.

Brandon Couillard: Okay got it.

Trey Martin: And then Trey, be helpful if you just maybe talk a little bit more about how the pipeline at Flanders 2 is developing, you know, how it may stack up right now, maybe compared to where you thought you'd be, you know, three or six months Absolutely. Yeah, that is some good news. The funnel's been growing there significantly. We were really proud. I've mentioned in our public comments before that it's not trivial to get people to jump into a brand new facility. Many of you, all 15 of our sell-side folks here, have seen this facility in person.

Brandon Couillard: And then Trey.

Speaker Change: Be helpful fuses, maybe talk a little bit more about how the pipeline at Flanders two is developing.

Brandon Couillard: It may stack up right now and maybe compared to where you thought you'd be three to six months ago.

Speaker Change: Absolutely yes.

Speaker Change: That is some good news the funnel has been growing there significantly we were really proud.

I've mentioned in our public comments before that.

Speaker Change: It's not trivial to get people to jump into a brand new facility. Many of you all 15 of our sell side folks here have seen this facility in person.

Trey Martin: And we were able to get some phase two and two, three commitments early. As we announced in the prepared remarks, we have now a commitment to go through commercial. And that's just a really good response to a brand new facility in that industry. The funnel there is working well, but at the same time, one of our reasons for caution there is what we talked about last year with customer programs sliding out for nothing to do with our partnership, but their clinical interactions with regulatory agencies or their funding, et cetera, et cetera. So the good news is that the funnel has built really nicely.

Speaker Change: We were able to get.

Speaker Change: We were able to get some phase II in two three commitments early.

Speaker Change: As we announced in the prepared remarks, we have.

Speaker Change: Now our commitment to go through commercial.

And that's just a really good response to a brand new facility in that in that industry. The funnel there is working well, but at the same time as we are one of our reasons for caution there.

Speaker Change: As what we talked about last year with customer programs sliding out for reasons that have nothing to do with our partnership but their clinical <unk>.

Speaker Change: Interactions with regulatory agencies or their funding et cetera et cetera. So the good news is that the funnel has built really nicely.

Trey Martin: And the dynamic there is that we look to... The predictability is a little better there because if we're talking about a Q3 or Q4 program, we're really booking that now. So you're usually booking a couple quarters ahead in that business.

Speaker Change: And the dynamic there is that we look to bid.

Speaker Change: The predictability is a little better there because if we're talking about a Q3 or Q4 program, we're really booking that now.

Speaker Change: So you are usually booking a couple of quarters ahead in that in that business.

Operator: Sherry, we'll take one last question and then Trey has some closing remarks.

Speaker Change: Gerry will take one last question and then Trey has some closing remarks.

Operator: Thank you.

Speaker Change: Thank you our final question will be from Andrew <unk> with Keybanc capital markets. Please proceed.

Anders Nowkoski: Our final question will be from Anders Nowkoski with KeyBank Capital Markets. Please proceed. Hi, thanks for taking my question. This is Anna on for Paul Knight.

Anna: Hi, Thanks for taking my question. This is Anna on for Paul Knight.

Anders Nowkoski: I have two questions, but maybe to start, how is traction of new products such as CleanScribe and what is the overall strategy of new products? Are they more commercial facing or would you view them as preclinical focus? Yeah, largely preclinical focused. You could say that the ability to support phase three in commercial was a new product in quotes, but that's a service business, obviously. So the 50 new products we call out there are across all of the other business units, essentially Cygnus and TriLink Discovery, Alphazyme, and so on. And yeah, we've been really excited by the attraction of CleanScribe.

Anna: I have two questions that maybe to start.

Speaker Change: Traction of new products, such as clean scribe and what is the overall strategy of new products are they more commercial facing or would you view them as preclinical forecast.

Speaker Change: Yes, large largely preclinical focus you could say that the ability to support phase III and commercial was a new product in quotes but that's that's a service business. Obviously, so the 15 new products, we call out there are across all of the other business units essentially <unk>.

Speaker Change: <unk> trailing.

Speaker Change: Trailing discovery Alpha Zyman, so on and yet we've been really excited by the traction of clean scribed Theres clearly market demand.

Trey Martin: There's clearly market demand. This is one thing that we've identified before. In the pandemic, people did not necessarily have time for process improvement. They had to scale what they had. We're really happy about the early look at CleanScribe being a differentiated enzyme that improves process and lowers impurity. And the uptake of that has been great. Alphazyme has added more customers there than any other product in our history together. So yeah, and that starts, as you asked, in the Discovery area. And we're hopeful that like M6, which took just one year from Discovery launch to GMP, that this can move very quickly as well.

Speaker Change: This is one thing that we've identified before in.

Speaker Change: And the pandemic people did not necessarily a time for process improvement they had to scale what they had.

Speaker Change: We're really we're really happy about the early look at clean scribe being a differentiated enzyme that improves process and lowers impurity and the uptake of that has been great Alpha <unk> has added.

Speaker Change: More customers there than any other product in our.

Speaker Change: And our history together.

Speaker Change: Yes, and that starts as you asked within the discovery area and we're hopeful that like in six which took one just one year from discovery launch to GMP.

Speaker Change: That this can move very quickly as well and as Kevin has mentioned our last large capex project for the company.

Trey Martin: And as Kevin has mentioned, our last large CapEx project for the company is to essentially extend the capability for Alphazyme to make enzymes that'll be used in late phase programs. God, it's so tough, Paul.

Is to essentially extend the capability for Alfa designed to make enzymes that it'll be used in late phase programs.

Speaker Change: Got it so helpful.

Trey Martin: So, with that, I see we're at time, so I'll just make a few closing remarks here.

Speaker Change: So with that I see we're at time.

Speaker Change: So I'll just make a few closing remarks here.

Trey Martin: I'd like to thank everybody for your time today and your patience as we worked with the independent auditors to close the books for 2024, to get our materials filed within the grace period, and to schedule and execute this call. We feel that despite the ongoing challenges and uncertainty in the biopharma and life science sectors, we're encouraged by pipeline progression we see for mRNA gene editing and cell therapy. We're laser focused on what we can control, which is driving innovation, expanding our customer base, protecting our IP, and managing our costs effectively. We're confident in our differentiated technologies, our products, and our world-class services.

Speaker Change: Like to thank everybody for your time today and your patience as we worked with the independent auditors to close the books for 2024 to get our materials filed within the Grace period and to schedule and execute this call.

Speaker Change: We feel that despite the ongoing challenges and uncertainty in.

Speaker Change: In the Biopharma and life science sectors, we're encouraged by pipeline progression, we see for mrna gene editing and cell therapy.

Speaker Change: We're laser focused on what we can control, which is driving innovation and expanding our customer base protecting our IP and managing our cost effectively.

Speaker Change: We're confident in our differentiated technologies, our products and our World class services.

Trey Martin: We have a strong balance sheet. We have a net cash position and a manageable debt position that gives us flexibility. And we will remain diligent in our cost control as we've mentioned several times today. Through organic and inorganic investments, we believe we've built a solid foundation for long-term, profitable, sustainable growth and value creation across our base businesses. We're a unique player here in the genomic medicine space, and we have a vertical U.S. supply chain and truly differentiated performance with our proprietary technologies. We remain committed to executing our strategic vision and delivering strong results to unlock the full potential of our business for all shareholders.

We have a strong balance sheet, we have a net cash position and a manageable debt position that gives us flexibility and we will remain diligent in our cost controls we've mentioned several times today.

Speaker Change: Through organic and inorganic investments. We believe we have built a solid foundation for long term profitable sustainable growth and value creation across our base businesses.

Speaker Change: We're a unique player here in the genomic medicine space and we are a vertical U S supply chain and truly differentiated performance with our proprietary technologies.

Speaker Change: We remain committed to executing our strategic vision and delivering strong results to unlock the full potential of our business for all shareholders.

Trey Martin: Thank you.

Speaker Change: <unk>.

Speaker Change: Okay.

Speaker Change: Thank you. This will conclude today's conference you may disconnect. Your lines at this time and thank you for your participation.

Operator: This will conclude today's conference. You may disconnect your lines at this time and thank you for your participation. www.mytrendyphone.co.uk

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