REPLIGEN CORP Q4 FY2024 earnings call

Management Statement and Operational Highlights

• Finished 2024 strong, achieving the midpoint of guidance despite a $3.5 million exchange rate headwind in Q4. Full-year revenue was $634.4 million.
• CDMO and equipment segments rebounded strongly in Q4, with CDMO sales and orders up high double digits sequentially and equipment sales and orders up over 30% sequentially.
• Launched new products in 2024, including the KrosFlow RS 10 RPM system and AVIPure double-stranded RNA resin. Integrated Metenova and plan to launch single-use mixers in Q2 2025.
• High probability funnel increased, sales organization improved, and new modalities grew low double digits. Strengthened cost control and expanded margins, with Q4 adjusted gross margin at 50.7%, adjusted operating margin at 14.9%, and adjusted EBITDA margin at 20.9%.

Segment Performance

• Filtration: In 2024, filtration revenue was approximately $373 million, representing nearly 60% of total revenue. Fourth quarter non-COVID revenue grew over 20% year-over-year, and orders were up nearly 30% sequentially and year-over-year. For 2025, filtration revenue is expected to grow 9%-12% reported and 12.5%-15.5% non-COVID.
• Chromatography: Chromatography revenue in 2024 was $123 million, ~20% of total revenue. Full-year 2024 revenue declined 3% due to a higher mix of columns vs resin sales. For 2025, chromatography revenue is expected to grow 10%-15%.
• Protein: Protein revenue in 2024 was $74 million, a decline of 28%. In 2025, protein revenue is expected to return to 10%-15% growth.
• Process Analytics: Process analytics revenue in 2024 was $59 million, an increase of 4% from 2023. For 2025, process analytics revenue is expected to grow 5%-10%.
• CDMO and Equipment: CDMO sales and orders saw high double-digit sequential growth in Q4, and equipment sales and orders were up over 30% sequentially in Q4. Full-year 2024 CDMO and pharma sales grew high single digits, while consumables and equipment grew 8% and 10% respectively.

Guidance

• 2025 revenue guidance: $685 million to $710 million, representing 8%-12% reported growth and 10%-14% non-COVID growth.
• Adjusted gross margin: Expected to be in the range of 51%-52% in 2025, expanding from 2024.
• Adjusted income from operations: Expected to be between $99 million to $106 million, or 14%-15% adjusted operating income margin.
• Expectations: Plan to increase R&D spending, invest in the sales team with application support and leadership in Asia, and make G&A investments in tools and processes.

Risks

• Currency exchange rate fluctuations, which can impact revenue and margins.
• Global trade environment and potential tariffs, though minimal impact from changes with China, Mexico, and Canada is expected, but Europe could have a larger impact.
• Funding environment for small biotech, which can affect sales to that segment.
• Nonrecurring inventory write-offs and restructuring charges as part of the restructuring plan started in 2023.

Question and Answer

Q: Dan Arias asks about evolution of CDMO and capital equipment trends, confidence in Tier 2 CDMO sustainability.

A: Olivier Loeillot talks about CDMO and equipment turnaround, growth from Tier 1 and 2 CDMOs, with sales and orders increasing tremendously in Q4.

Q: Rachel Vatnsdal asks about ATF revenue in 2024, timing of blockbuster drug benefits.

A: Olivier Loeillot discusses ATF's role in filtration, with a timeline for benefits from designing in commercial drugs, where orders increase within a quarter, hardware is delivered in 6-12 months, and consumable sales follow after a year.

Q: Puneet Souda asks about sustainability of order trends, January/February order trends.

A: Olivier Loeillot mentions increasing order intake quarter-over-quarter, with book-to-bill ratio above 1 for six to seven quarters, indicating sustainable growth.

Q: Matt Larew asks about protein segment visibility, new product launches.

A: Olivier Loeillot talks about protein segment reset, new product launches in 2025, including the AVIPure double-stranded RNA resin, and expectation of 10%-15% growth in 2025.

Q: Jacob Johnson asks about drivers of ATF wins, qualitative factors.

A: Olivier Loeillot discusses lab scale adoption, known technology leading to faster adoption, with wins from both monoclonal antibodies and new modalities using ATF.

Q: Conor McNamara asks about end market assumptions for Q1 2025, pricing impact.

A: Olivier Loeillot mentions H2 stronger than H1, and Jason Garland talks about pricing returning to historical low single digit levels.

Q: Matt Hewitt asks about equipment sales recovery, budget flush impact, differentiator vs peers.

A: Olivier Loeillot talks about hardware segments, PAT technology differentiating factor, with platform wins at big pharma companies and consumable stickiness.

Q: Subbu Nambi asks about focus on new modalities and PAT, unmet needs.

A: Olivier Loeillot discusses new modalities' prevalence in pharma pipelines, agility in developing solutions to meet unmet needs of big pharma companies.

Q: Justin Bowers asks about APAC ex-China growth drivers, focus areas.

A: Olivier Loeillot talks about APAC ex-China growth, with countries like Korea, Japan, and Singapore showing growth, and expectation of acceleration in 2025.

Q: Paul Knight asks about CDMO recovery drivers, hollow fiber capacity plans.

A: Olivier Loeillot discusses CDMO recovery from large pharma contracts and funding for small biotech, and plans to focus on sales team and application specialists for hollow fiber and other technologies.

Q: Doug Schenkel asks about share shifts vs peers, order strength impact on Q1 guidance.

A: Olivier Loeillot talks about market share gain with new products, hardware lead times, and orders in Q1 being influenced by previous quarter's orders.