Repligen Corporation

Ladies and gentlemen, and welcome to Repligen Corporation's fourth quarter of 2024 earnings conference call. My name is MJ and I will be your coordinator. 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. Please note, there will be a question and answer session following the company's formal remarks. To ask a question, you may press star one on your telephone keypad. The company would like to note, there will be a limited timeframe for Q&A and as such management kindly requests that each individual ask one question to try to accommodate all. I would now like to turn the call over to your host for today's call, Sondra Newman, head of investor relations. Please go ahead.

Thank you and welcome to our fourth quarter of 2024 report. On this call, we will cover business highlights and financial performance for the three and 12 month periods ending December 31st, 2024. And we'll provide financial guidance for the full year 2025. Joining us on the call today are Repligen's president and chief executive officer, Olivier Lyo and our chief financial officer, Jason Garland. As a reminder, the forward looking statements that we make during this call, including those regarding our business goals and expectations for the financial performance of the company are subject to risks and uncertainties that may cause actual events or results to differ. Additional information concerning risks related to our business is included in our quarterly reports on form 10Q, our annual report on form 10K and our current reports on 8K, including the report that we are filing today, as well as other filings that we make with the securities and exchange commission. Today's comments reflect management's current views which could change as a result of new information, future events or otherwise. The company does not obligate or commit itself to update forward looking statements except as required by law. During this call, we are providing non-GAAP financial results and guidance unless otherwise noted. Reconciliation of GAAP to non-GAAP financial measures are included in the press release that we issued this morning, which is posted to Repligen's website and on sec.gov. Adjusted non-GAAP figures in today's report include the following, non-COVID and organic revenue and or revenue growth, cost of goods sold, gross profit and gross margin, operating expenses including R&D and SG&A, income from operations and operating margin, tax rate on pre-tax income, net income, diluted earnings per share, EBITDA and adjusted EBITDA as well as adjust EBITDA margins. These adjusted financial figures should not be viewed as an alternative to GAAP measures, but are intended to best reflect the performance of our ongoing operations. Now let me turn the call over to Olivier.

Thank you, Sandra. Good morning everyone and welcome to our 2024 first quarter and your end reports. We are happy with the way we finished 2024 and in addition to reporting our financial results in detail, we will share our 2025 strategic priorities and provide financial guidance for the new year. We have a lot of reasons to be positive about 2025 as we put specific 2024 headwinds behind us and we see a return to growth for the bioprocessing market. I'm pleased to share that we achieved the midpoint of our November guidance, they're reinforced quarter revenue of 167.5 million and full year revenue of 634.4 million despite a 3.5 million exchange rate headwind in the quarter. Product differentiation, excellent execution by our team and better market conditions have enabled us to deliver a 13% revenue growth ex-COVID in the fourth quarter versus the previous year. Our orders were also very strong in the fourth quarter with the highest order intake we've had since quarter two of 2022 and it was a six trade quarters that ordered outpaced non-COVID revenue. In quarter four, we were delighted by the strong performance from CDMOs and equipment, key market sectors that have been slower to recover. With this momentum and as our funnel continues to grow, we are well positioned as we enter 2025. After a great rebound in quarter three, our CDMO business had an even better quarter with sales and orders at high double digits sequentially. In fact, thanks to that very strong CDMO finish, our full year 2024 sales growth was similar at CDMO and pharma, both at high single digits. We saw a similar pattern for equipment. Following a solid quarter three, equipment was another important standout in the fourth quarter with both sales and orders at more than 30% sequentially. Thanks to that strong equipment finish, our full year 2024 sales growth was similar for consumables and equipment, both at 8% and 10% respectively. At the franchise level, filtration had another excellent quarter, both from a revenue and order point of view and analytics had a record quarter both in sales and orders since we acquired CTEK in 2019. And finally, 2024 has been a great year for new modalities with low double digit growth in both sales and orders as we built momentum with key accounts and new technology launches. Before entering into more detail, I would like to say that managing to deliver 3% of revenue growth in 2024, including COVID and considering the huge headwinds in protein and China demonstrates the fantastic execution of our teams and the uniqueness of our portfolio. And in fact, our full year revenue was in line with our initial outlook in February, 2024, adjusting for the restatement and additional currency headwinds. When I reflect on the full year, in addition to the forward momentum of the market and our results, I'm also very pleased with how the repugent team executed on the five strategic priorities we set at the beginning of 2024. First, our high probability funnel has increased through the year, driving force quarter orders to their highest level over the last 10 quarters. And even with very strong Q4 orders, we replenish the funnel. At the end of December, our greater than 50% probability funnel was up 16% versus the end of 2023. Our greatest sales organization, including our extended key account management team have done well in 2024, draining new leads at our top pharma and CDMO accounts and improving our portfolio visibility. Next, we launched several differentiated new products in 2024. Of note, in May, we launched our game-changing cross-flow RS10 RPM system, the first and only single-use TFF system for bench-scale GMP production with inline fully automated protein concentration measurements. In December, we launched the AVIPUR double-stranded RNA resin sold through our OpusPrip pack columns. This resin, using beads from our newly acquired Tanti business, is remarkable in that it is the first affinity resin to remove the double-stranded RNA impurity from transcribed RNA without heat or solvents. These and other launches in 2024 are offering innovative solutions for customers' unmet needs and add to our differentiated portfolio. We estimate that about 80% of our business come from highly differentiated technologies, which are a cornerstone in helping to grow above the market. Our third priority was to further build on our wins in new modalities. Our sales in new modalities have increased low double digits and now represents approximately 20% of our total revenue. We now have 25 accounts with sales above one million. The next priority was the successful integration of Metanova and preparing for the launch of new single-use mixer technology. We successfully integrated Metanova with our fluid management team and we are planning to formally launch our single-use mixers in quarter two of 2025. And finally, we further strengthen our discipline in cost control and expanded margin. Through select rooftop consolidation and additional restructuring actions, our operation teams have achieved targeted productivity gains. This has enabled us to finish the year with Q4 adjusted gross margin at 50.7%, adjusted operating margin at .9% and adjusted EBITDA margin at 20.9%. For the full year, we successfully expanded our adjusted gross margin by 140 basis points. Jason will discuss this further. In addition to our stated priorities in 2024, we have onboarded several experienced leaders from across the industry to strengthen our bench and position as well for years of growth. This includes, but is not limited to quality, services, product management and sales. We believe the diversity of talents and experience Replicent has today will enable us to become further fit for growth. So moving now to our fourth quarter and full year revenue and orders performance. As you saw in our press release this morning, fourth quarter 2024 sales stepped up from third quarter by nearly 13 million to reach 167.5 million and 634.4 million for the full year. Excluding COVID, this was our highest quarter in sales in quarter three of 2022, even with the higher than anticipated currency headwinds of 3.5 million in quarter four and 5.7 million for the year. Excluding COVID, we delivered Q4 revenue of 13% and 8% sequential growth for the full year 2024 non-COVID revenue growth came in as expected, up 3%. Moving to orders, our opportunity funnel delivered. Orders were exceptionally strong in quarter four, up 11% both sequentially and year over year. As I mentioned, this was the highest order intake we've had since the second quarter of 2022. For the full year 2024, total orders were up 9% with all franchises except proteins up over 10%. During the quarter, orders outpaced sales by 6% and for the full year, orders outpaced non-COVID sales by 4%. As it relates to customer segments, quarter four was another strong quarter for pharma supported by our key accounts focus. In quarter four, pharma sales were up mid-single digit sequentially and up high single digit excluding COVID year over year. Quarter four pharma orders reached a record level and were up approximately 20% versus quarter four of 2023. While pharma revenue was similar between H2 and H1, orders were up about 15% and landing 17% up for full year 2024. Within pharma, the remaining challenge is small biotech. So our sales in quarter four were on par with low-wish quarter three sales, order increased over 10% sequentially. We are hoping this will continue in the first half of 2025 so we will need to continue to monitor the funding environment. Where pharma as a whole has been going very well for several quarters, we now see confirmation that CDMO business has improved more durably and was a standout in the quarter. This is the case for both tier one and tier two CDMOs. CDMO revenue was up 20% sequentially and more than 40% year over year. Orders in quarter four also grew more than 15% sequentially and 11% year over year. Quarter four orders from CDMOs were the highest since quarter one of 2022, excluding COVID. We saw activity accelerate through the year with H2 CDMO sales about 40% higher than H1 and orders nearly 20% higher. This really illustrates the recovery of a critical market segment that reflects the overall health of the ecosystem. Moving now to product type, whereas consumables have had a positive trend for several quarters, equipment showed strong improvements and was another standout in the fourth quarter. Consumable performance was consistently healthy through the year and remained strong in the fourth quarter with non-COVID revenues up more than 20% year over year at the highest level since quarter two of 2022. Quarter four was also the highest order quarter for consumable in the last 12 quarters, up nearly 10% sequentially and 25% year over year. We are particularly excited by the traction we have due to our increased design in ACF in late phase and commercial products, as well as single use consumable attached to our systems. Moving to equipment, the ribbon we saw in quarter three accelerated in quarter four with both sales and orders up more than 30% sequentially and more than 10% year over year. Excluding COVID, our Q4 equipment orders reached a record level and while it was a slower start to the year for equipment, we saw a ribbon with H2O those approximately 25% higher than in H1. This reflects our success implementing ACF controllers at a majority of large pharma and CDMO companies, as well as starting to platform our TFF and Chrome systems. Our top quality systems coupled with our inline PET flow technology are really disrupting the market and we're excited about the future considering that every system plays can generate a flow of consumable sales. Moving now to franchise level business highlights, the top performers in the fourth quarter were filtration and process analytics. While filtration continues its positive trends through the year in analytics, we saw a strong turn up in the fourth quarter having been impacted by equipment softness in the prior periods. Proteins played out a bit better than we anticipated and we expect a return to growth in 2025 after this year's resets. Finally, chromatography saw a nice sales pickup in the fourth quarter. Reading down in each franchise and starting with filtration, our year over year filtration revenues ex-COVID were up 30% in the fourth quarter and 14% for the full year. The strong sales performance was across the portfolio, our largest and most diverse. Filtration revenue exceeded 370 million for the year, up 9% and representing nearly 60% of our total revenue. Within the portfolio, XLATF had a great year and finished with top line growth above 50%. Filtration orders in the fourth quarter were up about 30%, both sequentially and year over year, setting us up well for 2025. Excluding COVID, Q4 filtration orders were the highest of the last 12 quarters. Systems and flow kit orders were also at a record level in quarter four. So overall, great performance in quarter four for the different components of our filtration business and with strong contribution from new product launches. As we see continued strength and momentum exiting 2024, our expectation for 2025 is that this franchise will be up 9 to 12% on a reported basis and up 12.5 to .5% excluding COVID. In chromatography, our year over year revenues were up 10% in the fourth quarter and down 3% for the full year. Chromatography revenue of 123 million represented approximately 20% of total revenue in 2024. As mentioned previously, the full year decline was impacted by the higher mix of columns versus rating sales. On orders, Chrome was slightly down for the quarter but up mid double digit for full year 2024. In 2025, we'll focus on converting more large pharma companies to opus prepack column and Chrome systems, capitalizing on our powerful sales organization and leveraging technology differentiation. For 2025, we expect chromatography revenue growth in the range of 10 to 15%. In 2024, our proteins revenue was 74 million, a decline of 28%, which was actually better than our initial expectations. For the full year, we collected almost 10% more protein orders than sales. It has been a reset year with OEM ligand demand down to the minimum level. We had numerous custom ligand and resin wins in 2024 that we believe will become a true tailwind for the future. We are already seeing healthy demand for the AViPure double stranded RNA resin launch in December and look forward to introducing additional resins for unmade purification needs in 2025. Our close collaboration with PureLight on monoclonal antibodies and our AViTiTE 10T combine offering for emerging modalities should enable us to get back to 10 to 15% growth in 2025 with more control and ownership of this franchise future. Finally, our process analytics sales in Q4 were up 11% sequentially and up 8% year on year. For the full year, analytics sales were 59 million, an increase of 4% to 2023. We're seeing good order traction for analytics, which were up 10% for the year. In an overall very changing environment for analytical equipment and thanks to our fast growing flow VPX and RPM product lines, we had a solid year overall. We are happy to have experienced the highest quarter in the history of that business for both orders and sales in quarter four. And with this momentum, we expect analytics revenue growth of five to 10% for 2025. Jason will speak to the regional performance section, but I will comment that China was one of our key headwinds in 2024. We are currently planning on China sales being flat to 2024 and we remain optimistic about our long-term growth potential in this region. On the upside, the rest of Asia pack perform well in 2024 with full year sales up 12%. Transitioning to our 2025 outlook, we expect our revenue to grow low double digit, excluding COVID and potential for an exchange impact. Pacing is expected to track to our historical norms, that is second half stronger than first half, with Q1 being the weakest quarter and Q4 the strongest. Our full year guidance for 2025 is in the range of 685 to 710 million US dollar, up eight to 12% on the reported basis and up 10 to 14% excluding COVID. The great order traction we had over the last two quarters combined with our stronger product management and commercial team and a better market environment gives us high confidence in achieving our targets. To deliver this resource, our 2025 strategic priorities will center on the following. Number one is accelerating and maintaining above market growth by further improving customer experience and focusing on accelerated growth at key accounts and in Asia. Number two is capitalizing on our best in class innovation with increased investment in R&D. We already launched Solo Plus in our analytics business at the beginning of this year. We will also be particularly focused on our single use mixers launch, as well as several new ligands and raising for new modalities. Number three is increasing our margins by 100 to 200 base points, combining pricing discipline and achieving our RPS activity targets. Number four is maintaining our ambition to acquire one to two businesses to further strengthen our position with a focus on new modalities and PAT. And finally, number five is becoming further fit for growth and positioning ourselves to be a significantly bigger business in the not too distant future. We'll focus on implementing key tools for our human resources management and also creating a project management office to manage our key strategic program, including M&A integration, site consolidation and other key EBITDA generating projects. In summary, we're excited as we enter 2025. We have a great combination of the right team, products and market environments to deliver upon our priorities and goals. Our strong balance sheet will enable us to act on our M&A ambition as we identify unique technologies that can complement our differentiated portfolio. We have a clear plan for delivering long-term rework for our shareholders and look forward to updating you on our progress through this new year. Now I'd like to turn the call over to Jason for a report on our financial performance.

Thank you, Olivier. And good morning, everyone. Today we are reporting our financial results for the fourth quarter and full year of 2024 and providing financial guidance for 2025. Unless otherwise noted, all financial measures discussed reflect adjusted non-GAAP measures. As shared in our press release this morning, we delivered fourth quarter revenue of approximately $168 million and full year revenue of $634 million achieving the midpoint of our guidance despite a three and a half million dollar exchange rate headwind in the quarter. This is a reported increase of 1% for the fourth quarter or up 3% on an organic basis, which excludes the impact of acquisitions and currency headwind. As Olivier mentioned earlier, our fourth quarter non-COVID revenue growth was up 13%, which we believe is more representative of our performance. There was no COVID related revenue during the fourth quarter of 2024 versus $19 million in 2023. Our full year 2024 revenue was flat and up 3% on a non-COVID basis. FX was a net headwind of one point for the year and acquisitions contributed to approximately two points of growth. As Olivier shared color on our product franchise performance, I'll provide more detail in the performance across the global regions starting with revenue, where North America represented approximately 50% of our total full year revenue, Europe represented 34% and Asia Pacific and the rest of the world represented 16%. North America had a great fourth quarter being up 20% in revenue. Asia was equally strong in four Q with 20% revenue growth inclusive of China, while Europe was down 25% due to COVID and protein headwind. For the full year 2024, it was encouraging to see our largest region, North America delivering 12% revenue growth. Asia excluding China was also up 12% and for Europe non-COVID revenue growth was a 2% decline while reported was down 6%. And finally, China was a $25 million headwind for the year and represented about 3% of our 2024 full year revenue down from about 7% in 2023. On regional orders for the full year, North America was up 14%, Europe was flat for the full year and fourth quarter orders were up 24% and Asia excluding China was up 30% for the year. As Olivier shared, we're very excited about our ability to grow further in Asia and we'll be making investments to support growth. Finally, China orders were down about 20% for the year. However, second half orders were up 6% versus the first half supporting our view that we have hit bottom. Transitioning to profit and margins, the fourth quarter 2024 adjusted gross profit was $85 million and we delivered .7% adjusted gross margin. This is down 1.8 percentage points versus last year driven by a 3.5 point headwind COVID sales last year. Volume, price and productivity all drove net margin improvements. In fact, .7% is higher than the implied guide in November as we delivered more productivity than expected and have strong momentum carrying into 2025. For the full year of 2024, adjusted gross profit was $320 million up $10 million year over year and adjusted gross margin was .4% again slightly above implied guidance with the upside from the fourth quarter. Gross margin increased 140 basis points year over year and 200 basis points excluding the drag from lower COVID volume than 2023. Outside COVID, the year over year increase was driven by strong productivity and net realized price. We'll continue to see COVID headwind on the year over year margin growth for 2025. In 2024, we continue to evaluate our operations and assets to ensure we are well positioned to grow. As a result, we have continued to execute activities under the restructuring plan that we started in the middle of 2023. In the fourth quarter, we incurred approximately $45 million in non-recurring restructuring and other inventory related charges. The majority was non-cash inventory write-offs from further product rationalization. It was also a result of further evaluation of the inventory positions of certain materials secured in turbulent supply conditions during the pandemic. The valuation also considered the market conditions of the last 18 months and incorporated updated product strategies developed with new senior product management. Incorporating all of this, demand and product mixed projections were revised as a part of the company's annual strategic planning and budget sessions in 2024. Where inventory exceeded the projected requirements to be used before reaching their expiration date, they were written off. These charges are non-recurring in nature and therefore are reflected as expenses only in our GAAP P&L for the fourth quarter and full year and not in our non-GAAP adjusted results. We believe the restructuring plan started in 2023 is essentially complete. And we are well positioned to continue margin expansion in 2025. That said, we will continuously execute cost savings initiatives under our RPS productivity program and evaluate our site footprint, especially as we continue to make acquisitions. Continuing through the P&L, our adjusted income from operations was $25 million in the fourth quarter and $82 million for the full year, down approximately 5 million and 6 million versus 2023 respectively. The four-year reduction is driven by $11 million of 2023 COVID-related sales and $12 million from the impact of bonuses returning to normal levels for 2024. Partially offsetting these impacts was income growth through price, manufacturing productivity and operating expense management. Our full year adjusted operating expenses are up approximately $16 million versus last year, almost entirely driven by an increase in performance-based bonuses we paid in 2024. Fourth quarter operating expenses were up about 4% -over-year and were essentially higher than the third quarter, primarily due to the nature of year-end expenses, sales investments and some additional costs for Tanti for the month of December. The team has done a good job in 2024 balancing cost management while ensuring we are positioned to support growth and making necessary investments. We delivered fourth quarter 2024 adjusted operating income margins of .9% consistent with the third quarter. And with that ended the full year with .9% adjusted operating income margin near the midpoint of our prior guidance. This was down 100 basis points from 2023, which as mentioned earlier includes about 300 basis points of headwind from prior COVID business and bonuses returning to normal levels. Our full year adjusted EBITDA margin rate was 18.5%, which reflects the impact of greater than 5% point drag from depreciation on adjusted operating income. Adjusted net income for the fourth quarter was $25 million and the full year was $89 million down about 4 million or 5% from 2023. Improved adjusted other income from higher interest income essentially offset the -over-year reduction in adjusted operating income. That said about $5 million of higher adjusted income tax provisions fell through to adjusted net income. Our full year adjusted effective tax rate was .4% in line with our guidance, but more than four points higher than last year. Adjusted fully diluted earnings per share for the fourth quarter was 44 cents compared to 48 cents in the same period in 2023. For the full year 2024 adjusted fully diluted earnings per share was $1.58, about seven cents lower than last year. Finally, our cash position at the end of 2024 was $757 million down $27 million sequentially after using 55 million for the settlement of our Tanti acquisition as expected. This was partially offset by another strong quarter of strong cashflow from operations as we generated $42 million. For the full year, we generated $178 million of cashflow from operations, 56% more than 2023 on improved working capital management. I'll now move to an update on our guidance for the full year of 2025. I'll speak to adjusted financial guidance, but please note that our gaps to non-gap reconciliations for our 2025 guidance are included in the reconciliation tables in today's earnings press release. And for further clarity, our guidance is fully inclusive of our December acquisition of Tanti. That said, we do not expect to report acquisition related revenue for Tanti as our products will be used as a component in our avatide resin sales. As highlighted earlier by Olivier, our revenue for 2025 is expected to be in the range of $685 to $710 million. This represents growth of eight to 12% on a reported basis, or nine and a half to 13 and a half percent organic growth and 10 to 14% growth for our non-COVID business. Given the volatility related to currency exchange, we have assumed about a 150 basis points of -over-year headwind. Any additional fluctuations, higher or lower, could change that view. We will report organic growth rates in our quarterly results, removing the impact of currency. And as mentioned earlier, we do not currently have acquisition sales to remove from our organic growth rates. As Olivier shared, we expect revenues in the second half of 2025 to be higher than the first half. We expect the first quarter will step down a bit sequentially from the fourth quarter, but with -over-year growth roughly in line with the lower end of our full year guidance. We expect to deliver adjusted gross margins in the range of 51 to 52% with expansion from 2024. This is consistent with the 100 to 200 basis points of expansion that we have shared in our 2025 framework, now including roughly 50 basis points of headwind from foreign currency. We expect gross margin expansion will be driven by increased volume leverage, price improvements, manufacturing productivity, and strategic sourcing savings offset primarily by inflation and some 2024 COVID sales drag. Manufacturing productivity will be driven by a replicant performance system across all categories of cost of goods sold. We expect to see our price return to historic levels of low single digit given the current market environment. Our current outlook on gross margin reflects the net effect of assumed currency headwinds. However, it does not include any impact from potential tariffs being discussed in the current global trade environment. We believe we would have minimal impacts from changes in trade with China, Mexico, and Canada. That said, we continue to monitor the broader global trade environment as changes with Europe would have a much larger impact on replicants. We expect our adjusted income from operations to be between 99 to $106 million or 14 to 15% adjusted operating income margin, which is up 100 to 200 basis points versus 2024. Inflation, TANTI, and investments in operating expenses will be the key headwinds. We expect to more than make up for that with gross margin improvements from volume leverage, price, and manufacturing productivity. Overall, we will continue to manage operating expenses to grow slightly less than sales as we continue to balance cost efficiency with investments that are critical for growth and necessary to be fit for growth. We plan to increase R&D spending versus 2024. We will invest in the sales team with more application support and added leadership in Asia, and we plan to make GNA investments in tools and processes. Adjusted EBITDA margins are expected to be in the range of 20 to 21% for the year. Continuing through the P&L, we expect our adjusted other income to be down year over year by an estimated five to $6 million or 23 to $24 million. This reflects an estimated one percentage point of lower average interest rate versus 2024. This may fluctuate with actual Fed actions taken through the year, and it assumes minimal change in cash balance. Our 2025 adjusted effective tax rate is expected to increase to an estimated 22 to 23%. The increase versus 2024's ending rate of .4% is driven primarily by the absence of stock-based compensation windfall benefit that we have seen in the last several years. We will continue to evaluate tax planning options to improve from here. Incorporating all of these items, we expect our adjusted fully diluted earnings per share to be between $1.67 and $1.76, up nine to 18 cents respectively versus last year. We've entered 2025 with a strong balance sheet. We'll remain prudent in our spending while maintaining flexible dry powder for potential acquisitions. Our capex spending is expected to be down another 20 to 25% versus 2024 with our spending back to pre-COVID levels. As we wrap, let me reiterate our excitement to move forward in 2025 and our optimism about the bioprocessing market improving through the course of the year. We will remain laser focused on the execution of our strategic priorities, accelerating and maintaining above market growth, developing best in class innovation, expanding margins, maintaining our focus on strong M&A discipline and ensuring our people, processes and tools are fit in enabling our growth. With that, I will turn the call back to the operator to open the line for questions.

Thank you. As a reminder, in the interest of time, we kindly ask that analysts limit themselves to one question. To ask a question, you may press stars and one on your telephone keypad. If you are on a speaker phone, please pick up your handset before pressing the keys and to withdraw your question, you may press star then two. At this time, we will pause momentarily to assemble our roster. Today's first question comes from Dan Arias with Stiefel. Please go ahead.

Good morning, guys. Thanks for the questions here. Olivier, maybe a place to start would just be to ask how things have evolved here. I mean, last quarter, you felt good about CDMOs and capital equipment. You were cautious on China and emerging biotech. Is there anything that's shifted at all? And it seems like order activity stepped up, but I would love to just hear what you think is most important here to start the year. And then I guess I'd specifically be interested in those tier two CDMO accounts that showed some good signs of life last quarter. How confident are you in the sustainability of the improvement that it looks like you're seeing here? Thank you.

Yeah, so thanks, Dan, for the question. So you're absolutely right. I mean, what was really important for us in quarter four was a confirmation like both CDMO and capital equipment turn around that we started to see in quarter three was really fully confirmed. And in fact, we had a huge acceleration on both sides. I mean, particularly on the CDMO side where we had sales and orders increasing tremendously in quarter four. I mean, our sales were up more than 40% and our orders were up more than 11%, which as mentioned in the script, has brought us back to almost the same amount of growth at CDMO as we had at pharma for the entire year. And then we love that because we think CDMOs are like the exact reflection of the health of the entire ecosystem. And you mentioned the big guys. In fact, growth came from both tier one and tier two CDMOs, but yes, particularly at the big guys, we see a lot of traction happening right now. They've announced a lot of big deals and I think the entire ecosystem is starting to benefit from it right now for sure. And then on capital equipment, that's the other one where probably we saw an improvement earlier than others. And we had an incredible confirmation in quarter four. I mean, our sales were up more than 20% and our orders were up 25% versus quarter four of last year. So we've seen a huge improvement and we think our state of the art system offering is definitely positioning us very well on that side. Okay, thank you.

The next question comes from Rachel Battenstahl with JP Morgan, please go ahead. Perfect, good

morning and thank you for taking the questions you guys. So I wanted to dig into the opportunity with ATF here. You mentioned that ATF grew above 50% for the year. So could you walk us through how much revenue did you guys do in ATF in 2024 and then separately you've talked about getting spec'd into a blockbuster drug for ATF. You've also alluded to the fact that you may get spec'd into a second blockbuster drug. So how should we think about the timing of that benefit of getting spec'd in? Is there anything assumed for these blockbuster opportunities into 2025 guidance or would that be upside at this point?

Yes, thanks Rachel. So as you know, the filtration business is the biggest of all of our businesses. It's more than half, about 60% of our total business. It did about 373 million US dollar in 2024. We were never given the exact numbers of ATF, but it's the biggest part of the filtration business we have right now. And we are benefiting obviously from the fact we got designing in many late phase, if not commercial drugs over the last 12 to 18 months. The one I mentioned in quarter three is a blockbuster that is on the market and the typical timeline when you get confirmation you're designing in a commercial drug, you're getting the orders within a quarter, you're gonna deliver the hardware probably within the next six to 12 months. And then you start to see the consumable sales happening probably after a year or so. So for us, it's all about making sure we have wins quarter by quarter and then that we have somehow more and more of these install base because then the consumable share is gonna increase. And in fact, for the first time in 2024, our consumable ATF sales were above our hardware sales, which is a sign like in this install base is becoming really significant right now. So the last piece I would mention is we've been very successful getting designing with ATF at all CDMOs. I think in fact, nine of the top 10 CDMOs are using ATF very broadly. And now a lot of pharma company also starting to use ATF. So the best is still to come. So a lot of tailwind coming on the consumable side for sure.

Great,

thanks you guys.

The next question is from Punit Soda with Learing Partners, please go ahead.

Yeah, hi, Olivier, Jason, thanks for taking my questions here. I'll wrap up in one question. I think the question here is just in terms of how sustainable are the order trends that you're seeing, just given the backdrop of what we have seen from the peers, a recovery that hasn't been as smooth as one would have expected even back in 23 or 24. Just so trying to get a sense of that. And then wondering if you can elaborate if January and February order trends were also comparable to the Q4 or maybe even the stronger if you could elaborate on that, thank you.

Yeah, absolutely. So I'll start probably by talking about the fact in 2024, our order intake has increased every single quarter after the previous one. So basically from quarter one to quarter two, quarter two to quarter three, quarter three to quarter four. And in fact, between quarter four and quarter one, our order intake went up by 18%. So that's what we are very happy about because we've seen a progress of order intake really quarter by quarter. I would add to that, and I know we don't want to talk too much about book to bill anymore, but as you know, we've been the first one releasing book to bill ratio above one, and now it's like for six to seven quarters in a row. So that's why we're also very confident that the return to growth we've been experiencing now is very sustainable. And the last piece I would mention is really, if I look at all of our franchises, excluding protein, our order intake in 2024 was a double digit. So that's another very strong signal. Like we've got a strong portfolio of products. We recently said like about 80% of our portfolio is very differentiating. And I think that's a reflection of the growth we've seen in orders for the last several quarters now.

And just to be clear on, you know, in the quarter itself, are you seeing any trends that give you confidence overall?

Yeah, so as you know very well, we have a lot of companies which typically don't come on on the current quarter. All I can say is we will things are doing well and we were absolutely fine so far.

Okay, thank you.

The next question comes from Matt Leroux with William Blair, please go ahead.

Hi, good morning. It looks like based on recent order trends, that there is pretty good visibility across the portfolio. Of course, the one area that really you're calling for a different 25 and 24 is proteins. And you alluded to what that is. Could you really speak to the visibility on the protein side to that 10 to 15% growth and maybe within that comment on any early traction you're seeing with the new product launch and anticipation of other product launches this year?

Yeah, thanks Matt for the question. We knew like 2024 would be a tough year for protein. And in fact, we were thinking we have probably 30 to 35 million of headwind and it played out a little bit better than we expected, not that much better, but a little bit better. And the good news is as we knew it was a reset year. I mean, the business at the top two OEM partners we had is almost down to zero right now. So we, which means like no more headwind coming from that side. And what has been really good for us in 2024 is we progress really strongly on the rest of the portfolio and particularly on our avid tide and our coming 20 business where we won several deals for custom ligand or custom raising and development. And as you just mentioned, we also launched our first raising using the 20 bits, the double stranded RNA raising which has got really good traction so far. But the best is still to come. I mean, we've got several product launches planned in 2025 focusing mostly on new modalities. So we really think like from this point where today we should be back to the double digit growth that we experienced before the heat with the other OEM partners. And what I love even more than anything else is we've got our Disney in our hands much more today. I mean, it's so good that we can develop and launch our own raisins because then we can really control our own commercial activities to the large extent. And then the collaboration with PureLight on the other side is also doing very well. And we're working very closely with our partners on monoclonal antibody here.

The next question comes from Jacob Johnson with Stevens. Please go ahead.

Hey, good morning everybody. Maybe following up on Rachel's ATF question kind of in a bigger picture way. Olivia, you mentioned CDMOs have adopted ATF. It seems like some traction with pharma recently. Why are you seeing these wins with ATF now? It's a technology that's been around for a while. Are these seeds that were planted years ago? Is this key account strategy, good execution by the sales team? Just curious kind of qualitatively what's been driving the ATF wins recently.

Yeah, no, it's a great question, Jacob. And it's a bit of all what you mentioned. I mean, so what people may not realize is we've got a lab scale ATF solution, which is where people typically start putting their hand on the ATF technology, meaning like typically maybe three, four, five years ago. Also some of these companies would have started testing the technology at the lab scale and realizing that it was working really well. And then they might have decided to start getting it up a few years later and then have a couple of great successes operating at larger scale and so on. And then, you know, how it is with new technologies. Well, once the technology starts to be really well known in the industry, people are probably capable to adopt that faster and then just decide to move on maybe in a record timeframe versus what they would have done before. So if I look at the last big win we talked about in quarter three, which is a commercial drug, I mean, it's fair to say this one has been moving really fast and we start to see companies telling us, we've got the proof of concept, this technology works really well. So, and considering the regulatory changes are limited, we can probably activate implementing that technology faster than we would implement a technology that is not known at all in the industry. So it's a bit of a mix. You've got people who are faster than others. You've got people who have been having their hand on the technology for several years. All I can tell you is we still have a lot of wins, new wins coming, which is why we are so confident about the future and the wind are not beyond monocular antibodies where we start to see multiple wins on the new modality side using ATF as well. Got it, super helpful, thanks Olivier.

The next question is from Connor McNamara with RBC Capital Markets, please go ahead.

Thanks for taking the questions and congrats on a solid quarter. Can you just talk about what in-market assumptions you've incorporated in your fiscal 25 guide, guided to a Q1 that's gonna be at the low end of your guidance range and then that would assume there's some acceleration for you guys. Is that, are you assuming that in-markets kind of return to historic growth rates by the end of the year or is it more reputable specific that's driving that acceleration throughout the year?

Yeah, that's a really good question, Connor. I mean, again, I think we see ourselves a bit different than others from the point of view again, 80% of our portfolio is very differentiated. So I can't really talk about the global markets and then how people would see it from their own angle at this stage. Well, what we see from our side is we are probably back to the same pattern we experienced before COVID where typically H2 is a little bit higher than H1 where the strongest quarter in the year is always quarter four. And then quarter one, quarter three being a little bit lower, meaning we're gonna see certain acceleration from quarter one to quarter two for that kind of the pattern we always experienced before COVID and we think we're pretty much back to the same situation for us in 2025 year.

Great, thanks. And then just on pricing, can you quantify pricing impact in 24 and what you've incorporated in the 25 guide? Thanks for the question.

Yeah, so we achieved kind of that low single digit pricing back to the historical levels that we've traditionally seen and expect a similar case in 2025. So we feel like from that angle, our product differentiation allows us to capture price but to do it modestly and balance that with our customer relationships and again, keeping our products cost competitive for those solutions. So we'll continue on that same trend.

So we're gonna keep that in mind. And then we're gonna move on to the next question. The next question comes from Matt Hewitt with Craig Hellam. Please go ahead.

Good morning and congratulations on the strong finish to the year. A couple of questions regarding the equipment sales. Obviously you're seeing a strong recovery there. Was there any budget flush impact in Q4? And I guess another question would be, looking at your peers, some of them are still talking about headwinds on the equipment side. What do you think is the key differentiator for you versus maybe some of the issues that your peers are still having? Thank you.

Yeah, thanks Matt for the question. I think we need to look at hardware from one point of view which is you've got what I call really the lab, small scale type of hardware on one side which is the C-TECH part of our business. And then you've got more of the manufacturing larger scale type of hardware which is what we call artisan on one side and large scale system on the other side. So if I look at the first bucket which is more of the small scale type of hardware, we know like there is always a very strong quarter four and we experience it. I mean, we said it in the script. I mean, we are the record quarter ever for since we are quite C-TECH in terms of both orders and sales in quarter four. And I want to say probably half of it is like beginning of a start of a recovery for those smaller type of hardware. And I think some of these analytical company have seen the same, I think in quarter four. And then the other half is definitely coming from the seasonality where quarter four is always a quarter where you want to use your budget and then the order intake is always the higher favor. But then for the rest of the portfolio which is really what I call the manufacturing hardware piece, I think the situation is different. And then here, Matt, I want to think like the fact we launch products that are real state of the art, really high tech and not only high tech from a hardware point of view, but combined with our PET flow, VPEX technology, which is now included is almost 20 to 25% of every system we're selling is giving us a huge competitive advantage, which is why we are certainly gaining market share on that side. And then here, I mean, it depends. I mean, the fact we see CDMOs recovering so well makes me feel like that's one of the reason why we start to see so much more CAPEx spending coming from CDMO and we've seen quite a bit of it in quarter four. And so really on that side, which is a manufacturing hardware, I think we're gaining market share with probably better products, more and more features with our PET technologies and certainly also very focused on new modalities with which, as you know, with the launch of RS10 in particular, we've had a lot of wins over the last several quarters now. That's great, thank you.

Thanks. The next question is from Sabunambi with Guggenheim Securities. Please go ahead.

Hey guys, thank you for taking my question. And a follow up to the previous question. First off, thank you for clearly laying it out on how you achieve your 2025 guidance. Outside of ATF, I wanted to get additional color on why are you focused on newer modalities and PACs in specific? Are there areas where you see there is an unmet need and therefore winning accounts is easier or versus displacing some of the larger players?

Yeah, thanks for the question, Sabu. We love new modalities for a lot of reasons. And I'll try to just mention maybe a couple of them. The first one is when you look at the current pipeline of pharmaceutical company, I mean, today almost half of the products they have in their pipeline are coming from new modalities. And obviously it makes the life of the globalized R&D from those big pharma companies very complex because we are probably in the past, they were dealing with three or four different type of products. Now they have to deal with 10 to 15 different ones. So what do these guys need? They need a company that is capable to support them and support them with customized solution, support them with agility and ability to turn around a solution for the problems they are facing that they don't have a good solution for. And we think we are doing well here because we are indeed agile and we are faster probably than many others to develop and launch new products. And that's what probably those company really appreciate from us. So that's really one side, I think of the picture that is very important. There's a second one really about new modalities, the diversity that I... Also very interesting from the point of view, there is not one solution that fits it all. I mean, you have to really be capable to adjust the way you look at manufacturing from a totally different angle, because if you compare manufacturing of a CAR T product on one side, manufacturing of a VALVECTOR on the other side and now ADCs and so on and so on, I mean, they all have totally different requirements. And here again, you need to be capable to sit around a table and support the people the right way. And I think we all know like from a therapeutical point of view, there are beautiful stuff happening and that's probably in the next five to 10 years, a lot of these diseases that are not being cured today will be cured by some of these new modalities. So we are absolutely very, very excited about it. And we think we are bringing a lot of good solutions to our customers on that side.

Thank you for that. The next question comes from Justin Bowers with Deutsche Bank, please go ahead.

Hi, good morning, everyone. Olivier, can you expand upon the strength you saw in hardware during the quarter? Did that include any platform wins, your expansions or new placements there? And maybe talk about just where, which franchises you saw some of the strength in?

Yeah, no, absolutely. I mean, so on hardware, I talked already about RTC and about the large scale system. Don't forget that also a big part of our ATF business consisting system as well, so in hardware. So it's across the board. I mean, as we mentioned, as you heard, I guess you did very well in 2024. And obviously the hardware part of ATF did very well in 2024 as well. And then on the rest, which is more the filtration and chromatography systems, which is now today very, very much depending on the artists in Portfolio we acquired several years ago. Again, the reason why we are very successful here is because we've got very differentiating solutions with very high technology on one side and combination with PAT technologies on the other side. And people realize them. I mean, the people probably didn't know us much two years ago. Now they start to know us much more. And with the key account management focus we had, particularly at some of these big pharma, indeed we are starting to get platform. I mean, I want to say three or four big pharma company have decided to start platforming us last year for their CFS manufacturing solution. So that's definitely for us a big, big win we had in 2024. And then the last piece, party for the artists in Portfolio is there is full stickiness of consumable. Meaning like once you install an RF system, you're gonna get a flow of single use consumable sales for the next five to 10 years. And that's gonna be obviously a very significant tailwind for our business for the next few years as well here.

Thank you. And then one quick follow up just on the StrengthX and APACX China and some of the growth initiatives there. Is that currently being driven by CDMO or is the participation there in pharma and biotech as well? And where are you focusing the growth?

Yeah, I don't know exactly to tell you the truth, I would like to say that, I mean, if you think about a country like Korea, obviously you've got both the biggest CDMO in the world and you've got probably one of the biggest biosimilar company in the world. So if you think about a country like that, and I know I'm only picking up two companies down there, but you would say it's probably a pretty balance between the two. I don't have the exact number of something we would need to check, but back to the numbers themselves, I mean, you're right, like Asia did very well for us in 2024, including China. And in fact, APAC for the full year grew 12% including China in terms of sales and in terms of orders, we grew around 16%. So it was a really good year for us. I mentioned Korea, which is obviously a big area of focus for us and others as well. But people shouldn't forget country like Japan as well, who have been rebounding very nicely now for the last two to three years, because the government after COVID has decided to invest a lot of money. And then Singapore, which is kind of benefiting from the side of the softer China, where people are back to invest a lot in Singapore as well. So yeah, Asia outside of China did very well for us in 2024, and we've got big hopes that growth is gonna accelerate in 25 and beyond. And then on China, we think we've reached the bottom. I mean, our orders in the second half of 2024 were slightly higher than our orders in the first half. So we are hoping we've reached the bottom and we are gonna be back to growth mode somewhere, probably around the second half of 2025.

Thank you, I'll jump back into you.

The next question comes from Paul Knight with KeyBank. Please go ahead.

Thanks so much for the question. Regarding the recovery in CDMOs, what do you think's happening there? Is it they're getting past making material for COVID or they're seeing better financing from biotech? It's been odd that they've been really bullish, but now we're starting to see it in their orders for companies like Repligen. If you could comment on that first,

thanks. Yeah, no Paul, absolutely. And that's obviously a question we're asking ourselves every day. I'll start with the big CDMOs. I mean, the big CDMOs, what their obsession is is to get those very large long-term 10-year supply contract with big pharma company on commercial drugs. And I mean, if you look at the top two, if not maybe the top three or four, I mean, they've announced some of these very big deals over the last several months. And I mean, some of these have been the highest they've ever signed. And when you are one of these big CDMOs, I mean, this is giving you a lot of clarity, a lot of confidence over the next five to 10 years because you know you are kind of secured with the base business. You need to have to be successful for the next five to 10 years. And then you can start to do cool things with which is to grab maybe smaller products, earlier phase products that are gonna be the products for the future. So I think the big guys are definitely in very good shape today. Well, what I found interesting when we looked at our numbers was to see that the tail end, the smaller CDMOs, the tier two as we call them, did very well for us for the last two quarters. And here you would say it's probably because they're also benefiting from some of the tail end of the big pharma products that are not good fit to the larger CDMOs because they are probably smaller in size, but also I think the Biosecure Act definitely had some impact for some of the tier two CDMO, particularly in the US where we know some of these guys have benefited from it. In terms of the funding of small biotech, I mean, that's something we're still looking at very carefully. There were some improvement last year. I think the total funding was up about 45% versus 2023. What we didn't like too much was a trend where quarter by quarter funding went down. I mean, from 18 billion in quarter one to 15 in quarter two and then 12 and 12 in quarter three and quarter four. And I want to say January was pretty weak as well at around three to 3.5 billion US dollars. So that is something we still need to watch. If there is one segment that we think has not really recovered completely yet, it's really those small biotech. And

then lastly, I know you have a lot of hollow fiber capacity. What do you plan to do there? Could you use that capacity to somehow get into the GLP-1 market or is that kind of just still in R&D?

Yeah, no, that's a really good question. I mean, among a lot of stuff we want to focus on, one of them is to make sure we spend more time with our commercial team to get a design in with some of these very differentiating product we have. And it's not only hollow fiber, it's several others as well. So that's an initiative. And when you hear about the fact we're investing more into sales, I mean, that's definitely one of the area where we want to get more of these application specialist in our team so that we can spend more time designing those beautiful technologies we have that we know are gonna get more successes in the future. And then the hollow fiber is one of them, it's not the only one. Thank you. We have time for one more. Okay, maybe one more question. Yeah.

Our last question today will come from Doug Senkel with Wolf Research. Please go ahead.

Good morning and thank you for taking my questions. There was an earlier question about your year end instrument performance versus peers. And we're always hesitant to make calls about share shifts in an increasingly sticky market. That said, I am wondering if you are seeing any pickup and customers swapping out existing lines for your products in what seems to be an environment where at least based on what we're hearing from others, it seems like the build out of new lines is still muted. So I'm wondering if that's some of what's different about what's going on with you versus peers. And then just very quickly on guidance and really just pacing, given the order strength in Q4 and given how short it is now for you to, or how not long it takes for you to fulfill orders, it does seem like Q1, the commentary would seemingly de-risk things fairly substantially. I just wanna make sure we're not missing anything in terms of the size of the orders, the duration of the orders, because it certainly seems like the bias will be to the upside, given how you guided and the strength of orders and to your end, thank you.

Yeah, sure. No, I mean, for the first part of the question, I want to start by saying we are a very small actor on the hardware market. I mean, let's be honest, we are coming from a very low level. So obviously when you're coming with new products on this very significant market and you're bringing beautiful products and you don't have a lot of market share, at the beginning of the day, you can really only win unless you're not doing the job properly. So that's probably why we're seeing that market from a bit of a different angle. This being said, yes, we've had a lot of great wins over the last several quarters because we do have great products, again, combined with the right PST technology. So we are definitely getting market share. I mentioned earlier, what we like is we start to get platform at some of these big pharma companies who started buying one, two, three system, maybe a couple of years ago, and now who are buying one new system every other month. And that's something we are really very happy about because it means not only they like the product we launched a few years ago, but once they've been starting to use it, they realize it's a big differentiator. So that's definitely where we see traction, but again, we're coming from a low point in terms of having very low market share. And then just to answer the latter part of your question, yes, you're right. I mean, typically hardware have a lead time of three to six months. So you would assume like the orders you have in your plan for sales in quarter one, you receive them already in the previous quarter. That's absolutely fair, which is different from consumable where you can get consumable order in the quarter to deliver in the same quarter. So with this, I think we'll wrap it up for today. So thank you for joining the call. We really appreciate the time you took. We are all excited about the year to come and we'll talk soon together again. Thank you so much. Cheers.

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