BioLife Solutions, Inc.

Welcome to the BioLife Solutions first quarter 2022 financial results conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Mr. Troy Wichterman, Chief Financial Officer. Please go ahead, sir.

Thank you, Rocco. Good afternoon, everyone, and thank you for joining this call. Joining me on today's call are Mike Rice, Chairman and Chief Executive Officer, and Rod DeGrief, President and Chief Operating Officer. Earlier today, we issued a press release announcing our financial results and operational highlights for the first quarter of 2022. As a reminder, during this call, we may make certain projections and other forward-looking statements regarding future events or the future financial performance of the company or its acquisitions. These statements are subject to risks and uncertainties that may cause actual results to differ materially from expectations. For a detailed discussion of the risks and uncertainties that affect the company's business and that qualify as forward-looking statements, I refer you to our periodic and other public filings filed with the SEC. Company projections are forward-looking statements, are based on factors that are subject to change, and therefore, these statements speak only as of the date they are given. The company assumes no obligation to update any projections or forward-looking statements except as required by law. During this call, we will speak to non-GAAP or adjusted results. Reconciliations of GAAP to non-GAAP or adjusted financial metrics are included in the press release we issued this afternoon. These non-GAAP or adjusted financial metrics should not be viewed as an alternative to GAAP. However, in light of our M&A activity, we believe that the use of non-GAAP or adjusted metrics provides investors with a clearer view of our current financial results when compared to prior periods. Now, I'd like to turn the call over to Mike Rice, Chairman and CEO of BioLife Solutions.

Thank you, Troy, and good afternoon, everyone. Thank you for joining our call. After my remarks, Troy will present our financials for Q1. Then Ron will provide an update on key operational initiatives he's managing, targeting gross margin improvements, specifically for our Sterling ULT freezer platform. And after that, we'll be glad to take your questions. Turning to Q1 revenue and customer highlights. Our team delivered another strong quarterly revenue performance, even more so considering the macro headwinds and specific supplier issues with regard to Sterling that we continue to experience and address. Total revenue is $36.2 million, up 115% from Q1 2021, representing organic growth of 45%, and continued strong biopreservation media revenue growth of 53%. While we had more than a dozen cryogenic freezer orders totaling over $1 million in revenue that didn't ship in Q1 due to a mix of supply constraint issues and customer acceptance timing, these orders have either shipped or are expected to ship in Q2. These delayed orders and overall demand created a significant backlog entering Q2, and we're aggressively working through the backlog and at this point are tracking to our internal plan for Q2. I'd also like to echo the strong growth sentiments in the cell and gene therapy space that other life science tools companies have expressed on their recent earnings calls. From our view, despite the depression evaluations across the sector, CGT is poised for explosive growth over the next few years, and the BioLife Solutions portfolio plays a vital role in improving quality and reducing risk. We're focused on optimizing and scaling our operations to meet anticipated demand for our tools and services. Our growth catalyst and business fundamentals are strong, and we're affirming our full year 2022 guidance, including on-plan expectations to return to positive adjusted EBITDA by the end of the year, which Troy will cover in a few minutes. Importantly, in turning to operations, I want to express my confidence and appreciation in the strong execution from our operations, quality, and engineering teams who leaned in, got a handle on integration demands of the Sterling acquisition, and continue a sustained commitment to optimize our production processes, supply chains, and QC and QA functions. Critical to continuing to deliver the highest standard of quality and service in our industry and feeding the customer demand we're experiencing, we realized important sequential improvements in gross margin and adjusted EBITDA and remain confident that we'll continue to see this sequential improvement throughout the rest of the year. Turning back to the customer and revenue side of the business in Q1, we gained at least 189 new customers across our three product and services platforms. And to remind you now, those are, first, cell processing, which includes biopreservation media and Sexton cell processing products. Second, our freezers and thaw systems platform, comprised of liquid nitrogen freezers and Sterling ULT mechanical freezers and automated thawing devices. And finally, storage and cold chain services, which includes our SciSafe storage services and our Evo cold chain management offering. New Q1 customers by product line included 23 now using biopreservation media, seven new Thostar users, seven new Evo cold chain end users, 25 new cryogenic freezer customers, 98 new Sterling ULT freezer customers, 25 new biostorage customers, and four new cell processing customers now using Sexton products. As a reminder, for the full year of 2021, we gained at least 700 new direct customers, and we also benefit from very productive distributors, with our two largest having sold and shipped our biopreservation media products to more than 4,200 unique end customers last year. Now I'll make some qualitative comments about our three revenue platforms and let Troy speak to revenue for each. For self-processing Q1, We gained 27 new customers and received confirmation that our cell processing media products will be used in at least 12 additional clinical trials for new cell and gene therapies. We estimate our viral preservation media products have been incorporated into more than 540 customer clinical applications, up from 450 at the end of 2020. For viral preservation media, we also remain confident that each customer clinical application, if approved, could generate annual revenue in a range of $500,000 to $2 million. To date, our biopreservation media is used in 10 approved therapies and our sextant self-processing media and vials are used in three approved therapies. Our biopreservation media products are also embedded in at least 10 additional CGT applications for which VLA or other regulatory approval filings are expected to be submitted this year and next year. I'll conclude by saying that our biopreservation media clinical customer base includes most of the CAR T-cell developers with our products embedded in a majority of the autologous and allogeneic platforms currently in development. We expect to be able to continue to take share from homebrew preservation cocktails as awareness grows of the critical role our engineered media formulations can play in reducing risk for CGT companies. We also see the recent and pending approvals of CGT products for first and second line treatments and approvals for new indications as two growth catalysts for our biopreservation media and other solutions. Turning to our freezers and thaw systems platform, again, we gained 130 new customers, including several notable cell and gene therapy and biotech companies. We remain hyper-focused on improving quality and reducing cost of our sterling ULT freezer products. The residual supplier and quality issues we're addressing are a result of customer demand that saw our ULT team more than double unit production in 2021 compared to 2020. We shipped nearly 8,000 freezers last year, and this demand surge strained our supply chain and exposed some latent quality issues of an underscaled sterling that we inherited. Rob will speak in more detail on our recovery and mitigation activities. Importantly, demand remains strong. and we're working very hard to reduce lead times with a goal of two- to three-week lead times for new orders by the end of June. As an update to a topic from our last call, we executed a new agreement with our largest ULT freezer distributor to add our CBS liquid nitrogen freezer portfolio to their BioLife offering. We're excited about the potential of this agreement and related sales and marketing activities to capture growth opportunities for LN2 freezers, and we'll have more to say about this throughout the rest of the year. In our final three revenue platforms, Storage and Cold Chain Services, which includes Evo Cold Chain Rentals and SciSafe Storage Services, we gained 32 new customers in Q1. That's 25 for Storage Services and 7 for Evo. Our SciSafe Storage Services platform is growing rapidly, and we remain very optimistic about our ability to profitably scale this platform to meet demand. Our opportunities list of potential new storage services customers is robust, and we continue to assess locations for a new U.S. biorepository. This morning, we issued a press release about a new co-marketing agreement and revenue-sharing agreement we executed with the Coriole Institute for Medical Research, wherein both parties will cross-market our respective storage services and bioprocessing and cell analytics services. We believe this combination of complementary services will benefit biotech researchers and companies and we look forward to reporting on this initiative later in the year once the program is in full swing. With our EVO cold chain management platform, cell and gene therapy companies now have full optionality to access our class-defining offering through our expanded specialty courier partner network that now includes World Courier, Quick International, Pathion, Marken, and Biocare. Q1 EVO shipments were up 60% over the same period last year, We have several evaluations and validations underway and expect continued growth in the platform. EVO shippers are now being used to transport apheresis collection, CAR T-cell therapies, umbilical cord blood, and other blood components including plasma and other biologic materials. The list of end users of EVO is really a marquee group of the leading CGT companies. As I mentioned before, we believe most CGT companies will move to validate and approve more than one shipping container and logistics partner over the next few years and that our EVO platform will emerge as a leading selection. Before I turn the call over to Troy to present our financials for Q1, I'd like to provide comments on some other current activities. In a couple of weeks, we'll be holding our inaugural Global Innovation Summit, where all of our hardware and software engineering teams and our marketing team will come together to review the CGT manufacturing, storage, and distribution workflows and the various innovations our smart folks are working on to better address unmet needs to further reduce risk for our customers. Through our acquisitions, we've assembled a world-class team of experts, and I fully expect us to identify additional areas where we can further innovate to optimize current practices and add value to our customer operations. This is a mid- to long-term strategy session to augment the near-term products we're developing. We'll have much more to say on this when appropriate about resulting new products and development projects that emanate from the Innovation Summit. One specific product line I can speak to is our liquid nitrogen high-capacity controlled-rate freezer offering. Last week, we exhibited and presented at the ISCT conference in San Francisco, and our flagship high-capacity rate freezer was the star of the show. We wrote 75 total leads at the conference and nine specifically for high-capacity rate freezers. We also have three additional models of various payload capacities in our new product development plan. Now I'll pass the call over to Troy.