CryoPort, Inc.

Reminder, this call is being recorded. I will now turn the call over to your host, Todd Frommer from KCSA Strategic Communications. Please go ahead.

Thank you, Operator. Before we begin today, I would like to remind everyone that this conference call contains certain forward-looking statements. All statements that address our operating performance, events, or developments that we expect or anticipate occurring in the future are forward-looking statements. These forward-looking statements are based on management's beliefs and assumptions and not on information currently available to our management team. Our management team believes that these forward-looking statements are reasonable as and when made. However, you should not place undue reliance on any such forward-looking statements because such statements speak only as of the date when made. We do not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of due information or future events or otherwise, except as required by law. In addition, phones will be statements that are subject to certain risks and uncertainties that could cause actual results, events, and developments to differ materially from our historical experience and our present expectations or projections. These risks and uncertainties include but are not limited to those described in Item 1A, Risk Factors, and elsewhere in our annual report on Form 10-K, filed with the Securities and Exchange Commission, and those described from time to time in other reports which we file with the Securities and Exchange Commission. It is now my pleasure to turn the call over to Mr. Gerald Shelton, Chief Executive Officer of CryoPort. Jerry, the floor is yours.

Thank you, Todd. Good afternoon, ladies and gentlemen. Thank you for joining our second quarter earnings call today. With us this afternoon is our Chief Financial Officer, Robert Stavanovich, our Chief Scientific Officer, Dr. Mark Sawicki, and our Vice President of Corporate Development and Investor Relations, Thomas Heinzen. As a reminder, we have uploaded our second quarter 2024 in review document to our website. It can be found under investor relations and the news and events section. This document provides a review of our financial and operational performance and a general business outlook. If you've not had a chance to read it, I would encourage you to go to our website and download it. I will provide you with a brief update on our business and then We'll take your questions. During the second quarter of 2024, we saw continued progress across all business units as revenue from each improved sequentially. Our revenue from the support of commercial cell and gene therapies especially stood out this quarter, increasing 51% year over year and 20% sequentially, reflecting strong demand for these treatments. This growth demonstrates another step in the ramp of these lifesaving therapies. Turning to MBE Biological Solutions, our primary life sciences products business, we saw modest sequential improvement for the quarter as we continued to experience lower overall product demand as compared to previous years. We anticipate continued softness in demand for MVE products for the remainder of 2024 and extending into 2025 as government, academic, and industrial customers continue to delay capital expenditures and leverage their existing footprints of progenic systems capacities. We have executed strong cost management across our manufacturing facilities at MVE and aligned the direct workforce and current market demand and reduced SG&A expenses to ensure continuing positive cash flow contribution from MVE. Longer term, we expect demand to improve as excess cryogenic systems capacities are absorbed. This is not an if in our view. It's a matter of when, as cryogenic systems must eventually be purchased to store biological commodities that are created and or produced every day globally for research, experimental, clinical, and commercial purposes. Based on the current softness of the demand for our life sciences products and our anticipated sequential revenue growth for life sciences services, we are revising our full year 2024 revenue guidance to the range of $225 million to $235 million, with revenue expected to continue to improve progressively over the next two quarters and into 2025. As we mentioned on our last earnings call, we have been implementing cost reduction and capital alignment or realignment measures as well as adjusting the build-out pace of our global capabilities and infrastructure to be more in line with current market environments. Our team has been working diligently on this, and we have made substantial progress progress in implementing many of these actions. We anticipate our cost reduction initiatives will be fully implemented by the end of 2024 and will positively impact Crawford's financial results for the second half of 2024 with approximately $22 million in annualized cost savings, moving us toward our goal of profitability and a return to positive adjusted EBITDA in 2025. Our cost reduction and capital realignment plans will enable us to continue to successfully service our customers and execute on our key growth initiatives as we optimize our operational efficiencies across our global operations. Through these actions, which are in process, we intend to drive profitable growth in our key markets, enhance operating performance, and generate positive cash flow. Our entire management and leadership team is committed to ensuring the success of this plan and we intend to execute on it swiftly and effectively. In addition to our cost-cutting initiatives and cost realignment plans, we're monitoring our operations daily to adjust for any near-term obstacles related to the overall industry and economic environment while maintaining a long-term strategic view of our business. In addition to driving continued sequential revenue growth, we also intend to maintain a strong balance sheet position. We ended the quarter with a $427 million cash balance, and we expect to generate positive cash flow through the actions we have underway. Our cost reduction and capital preservation initiatives take into consideration our key strategic growth plans, which include our global supply chain center network and bioservices solutions, as well as our IntegraCell platform for providing cryopreservation services to ensure we balance our commitment to long-term profitable growth in the current market conditions. Our team is well aware of the short-term challenges we're facing. Despite these, we remain confident in a broad market recovery for the life sciences industry, with the exception of China, which we think will likely remain challenged through 2025. Our current full-year 2024 revenue outlook includes sequential improvements across all our service offerings driven in part by the ramp of clinical and commercial cell and gene therapies we currently support. We remain confident in our market-leading business and the long-term growth of the life sciences. Biotech funding has improved, new therapy approvals have quickened in pace, and Cryoport is well-positioned to benefit from this as our markets start picking up. The new services and products we are launching this year will further diversify our revenue streams and allow us to comprehensively support our clients. And as I mentioned earlier, we have been and are executing on our cost reduction and capital realignment initiatives, and when combined with our expected return to year-over-year revenue growth for the second half of 2024, this should significantly push our goal of profitability. This concludes my prepared remarks. I will ask the operator to open the lines for your questions.