Repligen Corporation

Good day, ladies and gentlemen, and welcome to Repligen Corporation's first quarter 2026 earnings conference call. My name is Samantha and I will be your coordinator. Please note there will be a question and answer session following the company's formal remarks. The company would like to note that there will be a limited time frame for Q&A, and as such, management kindly requests that each individual ask one question to try to accommodate all. I will now turn the call over to your host for today's call, Jacob Johnson, Vice President of Investor Relations for Repligen.

Thank you, Operator, and welcome everyone to our 2026 First Quarter Report. On this call, we will cover business highlights and financial performance for the three-month period ended March 31st, 2026, and we'll provide financial guidance for the full year 2026. Joining us on the call today are Repligen's President and Chief Executive Officer, Olivier Lilliot, 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 risk and uncertainties that may cause actual events or results to differ. Additional information concerning risk related to our business is included in our quarterly reports on Form 10Q, our annual report on Form 10K, our current reports, including the Form 8K that we are filing today, and 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 oblige 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. Reconciliations 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, 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, other income or expense, tax rate on pre-tax income, net income, diluted earnings per share, EBITDA, adjusted EBITDA, and adjusted EBITDA margin. These adjusted financial measures should not be viewed as an alternative to GAAP measures, but are intended to best reflect the performance of our ongoing operations. With that, I'll turn the call over to Olivier.

Thank you, Jacob. Good morning, everyone, and welcome to our 2026 first quarter call. We are delighted to share our first quarter 2026 results. Great execution once again by our team enabled us to deliver 15% reported revenue growth or 11% organic and 160 basis points of adjusted operating margin expansion. Mid-teens top line growth coupled with disciplined cost management resulted in margins outperforming expectations. In addition to our strong financial performance in the quarter, we advanced several key strategic priorities. This includes the launch of our transformation office, the associated sale of the Polymem business, and a new partnership in China. This OEM relationship advances our strategy in the country, where we are seeing significant growth again. I'll touch on each of these initiatives in more detail shortly. As I reflect on our end markets and company today, it's encouraging to see the strengths we're seeing across all of our customer segments. The talented and experienced team we have assembled is executing fiercely on our differentiated strategy. This has resulted in a very rich high probability opportunity funnel that just needs to be coupled with faster customer decision making. We did see encouraging signs in the first quarter and remain convinced the capital equipment tap will open. We delivered 194 million of first quarter revenue driven by healthy demand across our board portfolio and all geographies. Analytics led the way with 50% plus growth, but all of our franchises grew nicely again in the first quarter. Consumables, including proteins, grew double digit, which was coupled with solid capital equipment growth, and services remained a standout with 30% plus growth. Capital equipment demand benefited from strength in analytics, mixers, and easier comps. We also saw growth across our diversified customer base and all geographies. All the trends were solid in the first quarter, with a significant pickup in March, and included some conversion of our robust capital equipment funnel. Our first quarter results and these recent order trends reinforce our confidence in our full-year revenue outlook. Jason will provide more details. We are reiterating our expectation for 9% to 13% organic growth while updating our reported revenue guidance to reflect the sale of our non-core and low-margin polymem business. This reduces our full-year revenue outlook by $7 million, but improves our margin outlook. In addition, given our strong first quarter performance, we are increasing our adjusted earnings per share guidance for the full year. We remain excited about our differentiated product portfolio, the global team we've built, and the strategy we're executing. As we look ahead to the next several years, we see a number of opportunities across our portfolio that position us for robust growth and allow us to continue to outpace the market. Looking at our performance by end market, we saw widespread strengths across our customer base. CDMO revenues grew mid-teens, with similar growth across both Tier 1 and Tier 2. Biopharma revenues also grew, despite a very difficult comparison. we saw notable growth outside of large pharma, including 20% plus growth from emerging biotechs. We continue to be encouraged by growth from this customer base, though demand remains below historical levels. OEM and integrator demand was very robust given growth in fluid management. From a geographic point of view, we saw strength across all regions led by Asia Pacific. This included a near doubling of revenues in China with our best revenue quarter in the country in over two years. This is a testament to the team we've put in place. Asia Pacific remains a key strategic region, and I will discuss the progress on our strategy in China shortly. As expected, new modalities were dilutive to growth given the gene therapy headwind we previously discussed. We continue to see healthy growth in cell therapy and also in gene therapy when excluding that specific headwind. I wanted to update you on the following three strategic initiatives. First, as we have emphasized recently, we are committed to expanding margins while balancing the efforts needed to support future growth. In an effort to accelerate both of our fit for growth journey and our path to 30% adjusted EBITDA margin by 2030, we have formed a transformation office that will ensure we have the right prioritization and resources focused on these critical initiatives. Key focus areas under this program include efforts to optimize our manufacturing footprint for increased cost efficiency, improving the profitability of certain product lines through targeted productivity and rationalization, continuously improving service to our customers, and efforts to capture the value of our differentiated products And finally, acceleration of our IT modernization and AI implementation across all functions. Jason will walk you through more details, but in terms of financial impact, we estimate this effort should result in at least one point of annualized margin benefit by the end of 2027. We remain committed to our goal of doubling the business and expanding margin while further progressing our fit for growth capabilities. The Transformation Office will enable us to achieve and accelerate all of this. So most of these initiatives have just kicked off. We're happy to share that as part of these efforts, on March 30th, we divested the Polymem operation in France for nominal proceeds. While this facility was a key contributor to Repligen's ability to supply product during the pandemic, the business has since reverted to non-core cells outside bioprocessing and has operated at a net loss. In 2025, Polymem generated $7 million of revenue and an adjusted operating loss. The new owner will offer synergies in the common market in which they operate. Second, we remain more excited than ever by our growth opportunity in Asia. In fact, Jason and I recently returned from a week-long visit to the region where we met with both key customers and our Asia leadership team. We are building a great team and continuing to gain traction with key customers in the region. We are also thrilled to announce that while in the region, we signed a critical partnership to expand our capabilities and local presence in China. The partnership outlines an OEM relationship that will increase our competitiveness and access to local manufacturing beginning in 2027. It will be a multi-phase and multi-product arrangement that we expect to expand over the coming years. After our trip, we have more conviction than ever that China will be a meaningful player in biopharma for years to come. Finally, I want to comment on our IT investments and digitization journey. On our last call, we mentioned investment in our IT organization in 2026 as part of our Feed for Growth journey. We have made key additions to our team this year including new data management and AI experts. We have implemented AI across a variety of functions, including but not limited to legal, commercial, and supply chain. And as part of our transformation office, we're also working to further optimize our data infrastructure, which will allow us to better implement AI in the coming years. To support our customers, Our analytics franchise is well positioned for an increasingly digital environment. Our PSE product portfolio allows for the collection of both upstream and downstream data in real time. We have integrated our Flow VPX into our downstream filtration system and are working to replicate this on the upstream side. We announced a partnership with Novasign last year and are working to integrate their digital twin capabilities into our next-generation small-scale filtration systems. We see digitization as a multi-year journey, and it remains a key strategic focus area for our company. Before I turn the call over to Jason, I'll provide some more detail on our franchise-level performance. Starting with filtration, revenue grew mid-single digits on a reported basis in the quarter, driven by freed management, ETF, and other consumables. Excluding the gene therapy headwind, this franchise would have delivered double-digit growth. With the sale of Polymem, we now expect filtration growth to be roughly mid-single digits in 2026 on a reported basis. This also contemplates a moderated ATF outlook in 2026 due to customer-specific timing dynamics that are expected to be a tailwind in 2027. As a result, We see ETF returning to strong growth in 2027 and beyond, and we continue to see overall healthy consumable demand across our portfolio. We remain extremely confident in our process intensification leadership position. After over a decade of seeding our ETF technology, we have built a high amount of trust from the biopharma industry. We will continue to prioritize further innovation and advancements that will allow us to remain the industry's partner in process identification. Chromatography revenue increased over 25% driven by growth in Opus columns. We continue to win new customers globally as they appreciate the plug and play convenience of prepack columns. Given the traction we're seeing in Opus, we now expect 20% plus growth in chromatography in 2026. With this outlook, we do expect a slightly higher mix of chromatography revenue versus our initial expectations. It was a great quarter in proteins with mid-teens growth on top of a very strong prior comparison. We saw healthy demand across our offerings led by our ligands, reflecting the benefits of the strategy we put in place to control our own destiny in proteins. we expect protein growth of at least low double digits for the year. Our analytics franchise had another phenomenal quarter with 50% plus growth. This was led by notable strength in our downstream analytics offering, which had a record quarter. This benefited from strong demand for our solo VP plus, including new placements and upgrades. We continue to assume analytics growth of 20% plus given momentum in downstream demand and a growing contribution throughout the year from our upstream analytics offering. To wrap up, we are very pleased with our start to 2026. We delivered 11% organic growth in the first quarter, which is right in line with the midpoint of our full year guidance. This, coupled with operating expense discipline has reinforced our confidence in our full-year revenue outlook and enabled us to increase our adjusted earnings per share guidance. In addition, we made tangible progress on our strategic priorities, which positions us well to drive robust growth and margin expansion in coming years. Now, I turn the call over to Jason for the financial highlights.

Thank you, Olivier, and good morning, everyone. Today we are reporting our financial results for the first quarter of 2026 and providing updated guidance for the full year 2026. Unless otherwise noted, all financial measures discussed reflect adjusted non-GAAP measures. As shared in our press release this morning, we delivered first quarter revenue of $194 million, reported year-over-year increase of 15%, This is an 11% organic growth, excluding the impact of acquisitions and foreign exchange. Foreign currency contributed three points of growth, and we had two months of inorganic contribution from our upstream analytics acquisition. As Olivier offered details on our product franchise performance, I'll provide more color on our regional performance. Starting with quarterly revenue mix, North America represented approximately 46% of our total. represented 37 percent, and Asia Pacific and the rest of the world represented approximately 17 percent. North America grew mid-single digits, driven by Opus and Analytics. EMEA grew more than 20 percent, driven by Proteins and Opus. And Asia Pacific grew more than 25 percent, driven by ATFs, Mixers, and Analytics. And as previously mentioned, we had very strong growth in China. Transitioning to profit and margins, First quarter adjusted gross profit was $108 million, and adjusted gross margin was 55.5%. This was 180 basis points of margin expansion versus last year. The year-over-year increase was driven primarily by volume leverage, pricing execution, and favorable product mix, all of which more than offset inflation and tariffs. The favorable mix was driven by growth in our analytics business and certain accretive filtration products. In addition, first quarter gross margin also benefited from cost absorption timing associated with production levels required to support the sales ramp through the year. We expect this benefit to normalize over the remainder of 2026. Continuing through the P&L, our adjusted income from operations was $30 million in the first quarter, up 28% year-over-year on a reported and organic basis. OPEX grew 11% on an organic basis. We remain thoughtful about balancing investments in the business while expanding margin. We expect some additional investment in the second quarter. This translated to an adjusted operating margin of 15.4% in the first quarter, which was an increase of 160 basis points year over year on a reported basis. and 200 basis points of margin expansion, excluding M&A and the impact of foreign currency. Adjusted EBITDA was $40 million in the quarter, or just under 21% adjusted EBITDA margin. Moving to the bottom line, adjusted net income was $27 million, a 22% year-over-year increase. Higher adjusted operating income was offset by slightly lower interest income on declining interest rates. Our first quarter adjusted effective tax rate was 22%, which starts the year on the low end of our full year guidance, which remains unchanged. Adjusted fully diluted earnings per share for the first quarter was 48 cents compared to 39 cents in the same period in 2025, or an increase of 23%. Finally, our cash and marketable securities position at the end of the first quarter was $785 million, of $17 million sequentially from the fourth quarter. This was driven by $28 million of strong cash flow from operations, offset by $5 million of capex in the quarter. We remain focused on optimizing our working capital to drive improved cash flow conversion. I will now speak to adjusted financial guidance. As Olivier mentioned, we are reiterating our organic growth guidance for full year 2026, while updating guidance for the sale of POLYMEM and our first quarter results. Our guidance also assumes a couple million dollars of tariffs or charges in 2026. We are now guiding 803 to $833 million of revenue or 9 to 13% growth on both a reported and organic basis. Our update and guidance now reflects only one quarter of revenue from POLYMEM which removes approximately $7 million of revenue from the full year previously included in guidance. This continues to assume just under a point of benefit from foreign currency, which we realized in the first quarter. A reported growth of 9 to 13% assumes the following, mid-single-digit growth in filtration, greater than 20% growth in chromatography, proteins growth greater than low double digits, and 20% plus growth in analytics. We now expect 110 to 160 basis points of gross margin expansion for the year. This assumes a slight benefit from the divestiture, partially offset by higher chromatography mix and limited impact from the conflict in the Middle East. With the strong Q1 performance, the sale of POLYMEM and judicious management of OPEX, we are raising our adjusted income guidance. we now expect $124 to $132 million of adjusted operating income. This implies 160 to 200 basis points of operating margin expansion, which represents a 30 basis point increase at the midpoint versus our prior guidance. Continuing through the P&L, we now assume $19 million of adjusted other income and continue to assume a 22 to 23% adjusted effective tax rate. Putting this together, we expect adjusted fully diluted earnings per share to be between $1.97 and $2.05. This is up 26 to 34 cents versus 2025, or up 18% at the midpoint, and four pennies higher than our prior guidance at both the low and high ends of the range. To assist with the quarterly cadence, we expect Q2 organic revenue growth to be similar to the first quarter. As a result, our guidance does not require a second half acceleration to achieve the midpoint of our full year outlook. We expect second quarter gross margin to be slightly below our full year guidance range and OPEX to pick up slightly sequentially following our disciplined OPEX control in the first quarter. We expect second half OPEX to be similar to 2Q. As a result, we expect solid operating margin expansion in the second quarter while the third quarter will likely represent the lowest margin quarter of the year. Our balance sheet remained strong as we ended the first quarter with $785 million of cash in marketable securities. We will remain prudent in our spending while maintaining substantial dry powder for potential acquisitions. We expect CapEx spend to be approximately 3% to 4% of 2026 revenue. Before we wrap, I wanted to briefly follow up on the transformation office that Olivier shared earlier. We are thrilled to establish a team of both internal and external experts to drive focus improvements in areas that will drive our fit for growth capabilities and margin expansion. This is a change in mindset that reinforces the structured framework is required to drive margin expansion beyond volume leverage. As Olivier shared, we expect to see meaningful benefits from the initiatives. We are still finalizing the detailed scopes and benefits, but expect to generate at least one point of annualized margin benefit by the end of next year and continue into 2028 and beyond. We will see benefits in both gross margin and at the EBIT and EBITDA level. We see this effort accelerating our path to our 2030 EBITDA target. In other words, Our path to reaching 30% adjusted EBITDA margins will be less weighted to the out years than previously communicated. We expect non-recurring charges of approximately $5 to $6 million through 2027 associated with this effort. These will be excluded from our adjusted non-GAAP results. Finally, Olivier and I would like to thank our Repligen teammates for delivering a strong start to 2026. We continue to be energized by the opportunities ahead, and we are focused on advancing our strategic efforts in 2026. With that, I'll turn the call back to the operator to open the line for questions.

We will now begin the question and answer session. Please limit yourself to one question. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Dan Arias with Stiefel. Dan, your line is open. Please go ahead.

Good morning, guys. Thank you. Jason, nice start to the year on the margins there. Obviously, you went through some of the moving parts, but can you just maybe summarize what within the quarter was sort of incidental? I guess you could call it mixed elements, timing of cost items versus more of a reprioritization. That sounds like maybe it's starting to be in play here. And then like along those lines, the transformation office impact. I know you said you're still working through the moving parts there, but is the right way to think about that THE NORMAL ONE TO 200 BITS OF ANNUAL OFF MARGIN EXPANSION THAT YOU'VE BEEN TALKING ABOUT PLUS THE IMPACT OF TRANSFORMATION YOU KNOW AND IS THAT LIKE 100 BITS TO FISCAL 27 OR ARE YOU KIND OF RUN RATING YOU KNOW BY THE TIME YOU GET TO THE YEAR AT THE END OF THE YEAR AT 100 BITS I JUST WANT TO MAKE SURE THAT WE GET THE MODELING ELEMENT OF THAT OF THAT WHOLE EXERCISE RIGHT

Hey, Dan. Good morning. Olivier here. I'm just going to kick it off and then let Jason give you more details. I mean, we're obviously extremely happy about how we delivered on margin expansion in quarter one, but beyond quarter one, obviously being able also to have line of sight of further improvement towards the rest of the year as well. And yes, you're right, the transformation office is an initiative like we've been thinking about for a long period of time. Now that we have the right people on board, we said that's the right time to kick it off. And as you'll hear from Jason in a few seconds, it's really a mix of getting acceleration on the feed for growth side, but also accelerating margin improvement.

But Jason, yeah. Yeah. So, Dan, great question. A lot of pieces in there. We'll go through it. So, yeah, really happy with the first quarter gross margin. and overall margin performance. You know, I think to your question, the driver really was volume, volume leverage price, so continuing to execute that. And to your point, strong mix, really from analytics growth, as well as a few of the, I'll say, product lines within our overall filtration franchise. There was a timing element to your point on a little bit from timing of cost absorption that will unwind through the year. But overall, it sets us up for, you know, well and high confidence in our guide for expanding gross margin by about 110 to 160 bps for the year. From a profile perspective, yeah, we do expect 2Q to be lower than 1Q. You know, 3Q may step down slightly from that as well. And then fourth quarter back, you know, higher as we, you know, grow on volumes through the end of the year. Most of that change will be driven by the mixed phasing. So here's what I'd say, though. On a total year versus a total year or full year versus full year basis year over year, mixed is still a neutral dynamic for us. But for the first quarter being positive, we'll see some mixed headwinds in the second and third. And then, you know, again, fourth quarter steps back up, mostly on higher chromatography sales. And to your point, again, that cost absorption unwinds. So again, a real great start and puts us right in track to our guide. Lift it up a little bit with PolyMIM. On the Transformation Office, yeah, again, great questions as well. Look, I'll start by, you know, it's really about creating this structured program where we allocate the right resources to our priorities. So there's a real heavy fit for growth execution and developing the capabilities we need. and then the margin expansion side. That one point of annualized margin expansion by end of 27, think of that as more in the run rate. You know, we'll have various elements and projects that will, you know, I'll say come into initiation over several months, right? We haven't assumed anything in 2026 yet, but there may be, you know, some benefits that we'll share later in the year if they come in early. But we're really expecting a run rate to start, you know, by the end of 27 and then kind of seeing full benefits in 28. To your point, that's going to be on top of our normal run rate, and that was the message that we tried to share in here as well. Again, we've talked a lot about this path to 30% EBITDA target by 2030, but that we would be more weighted toward the back end. We think this initiative helps us to be less weighted in those out years, which brings some incremental in the early years. I'm really excited about all this. Great start to the year. Okay, super. Thank you.

Your next question comes from the line of Doug Schenkel with Wolf Research. Doug, your line is open. Please go ahead.

Hi, this is Madeline Mullen on for Doug. Just a question on equipment. You mentioned that there was a pickup in equipment in March. Where was the strength most notable? Was it by category and customer type? And did that help you in the quarter or was it more the order book? And then I think last quarter you mentioned that there were some RFPs you were waiting on. Have you started to hear back on those or do you feel that pharma companies are still digesting some of the MFN deals? Thank you.

Yeah, good morning, Madeleine. And yeah, good questions. I mean, capital equipment increased year on year in quarter one on what was pretty easy comp to be very open. And that was mostly driven by strength in both analytics and and mixers as well. We've partly seen a nice pickup of mixer demand in China, which is one of the reasons why China did so well for us in quarter one. So similar to peers as well, we've seen all those increasing in the quarter. I mean, after what was maybe a bit of a slower start in January up to mid-February, we've seen a real acceleration of order intake towards the second half of the quarter, and particularly on the capital equipment side. We realize pharma is still taking their time, but it was good to see indeed finally some answers coming and positive answers. And to your last point on RFP wins, yes, we start to win some of the RFP. We answered two towards the end of last year, which is for us very encouraging because, as I mentioned previously, we didn't really have a seat at the table before. So overall, very encouraging, and we would like to see further acceleration of decision-making, but definitely going in the right direction right now.

Your next question comes from the line of Matt LaRue with William Blair. Matt, your line is open. Please go ahead.

Hi, good morning. You call that 20% growth from emerging biotech, and that comes off at three very strong quarters to end 2025. You did reference it's still below historical levels. We're now working off the back of two straight quarters of strong funding data. There's been some positive clinical updates. you're going to be escaping the one large customer head. And so, Olivier, I'd just be curious for your take on sort of what's remaining to get emerging biotech back to strength, and how you feel about the momentum over the last couple quarters.

Yeah, good morning, Matt. Yeah, obviously very happy to see the fourth quarter in a row of very significant growth for that customer segment. I mean, I've said, like, we've seen each of these segments coming back one after the other, and that was the last one. To be still fair, I mean, quarter one comp were pretty easy still. So I want to see quarter two still showing exactly the same growth. But overall, it sounds like this market segment is back to a much more normal type of behavior. And you're right, the customer, the biotech funding numbers also look very good. I mean, quarter one was almost double what it was last year. And April was very strong. I mean, I think I've seen numbers around 10 billion US dollar funding in April. So the good news is we've seen really a nice rebound. We're still of the opinion that the money that has been injected has not reached yet all of these guys fully to the extent that they are spending much more money. So to your point, yes, what we've seen should hopefully be very sustainable, and we're hoping to see a similar type of growth over the next few quarters for emerging biotech. But definitely something that we're very excited about. Fourth quarter in a row, very nice growth here.

Okay, thank you.

Your next question comes from the line of Philip Song with Lyric Partners. Philip, your line is open. Please go ahead.

This is Philip on for Puneet. You mentioned China nearly doubled in Q1. This is off a low base after just two quarters of growth in the second half and I think 2% to 3% revenue contributions. I was wondering if you could just unpack this some more, just how much impact was from the OEM partnership, kind of what was the composition between large pharma and CDMOs, and I guess how would you characterize how much was ordered timing versus sort of genuine demand acceleration? Thank you.

Yeah, no, good morning, Philippian. Absolutely delighted about the way Q1 paid out for us in China. I mean, you've heard me talking about it quite a lot over the last several quarters, and it was absolutely awesome to almost see a doubling of ourselves in China in quarter one. You're right, it was on very low comp. What I'm even more excited about, to be honest, is our funnel looks really very strong. I mean, Jason and I were in the region recently. We spent almost a week with the team down there and we're seeing a funnel that looks really very strong across all of China right now. And that's very exciting. By the way, talking about China, all of Asia did very well. I mean, that was our fastest growing market geographically in quarter one. But obviously, to a question about the OEM partner, I mean, this has no impact yet. I mean, we literally just signed the agreement a couple of weeks ago. So we're going to take transfer different parts of our portfolio, particularly on the filtration consumable side. And we expect those guys, those partners to be up and running probably towards the beginning of next year. But it's never really black and white. And where you're somewhat probably clear asking the question is, It's a good, strong signal we're giving to customers in China that we are back and that we're going to really reclaim our market in China with that partner. But also, we really want to be part of that huge upcoming market growth we're seeing in China over the next several years. So there might be already a little impact that people feel like, wow, Reptigen is going to become really, indeed, a very strong actor in China for China. And that's why we're delighted about that agreement. It is just a first step, Philippe. I mean, we are looking at expanding that collaboration and potentially with other partners as well in China over the next several years, but very excited to be back in China.

Thank you.

Your next question comes from the line of Casey Woodring with JP Morgan. Casey, your line is open. Please go ahead.

Great. Thank you for taking my questions. Um, so you had a one point organic beat in one queue and expect similar growth in two queue, but you kept the low end of the full year guide unchanged. Maybe just talk about how much of that is driven by the moderated view for ATF in the second half versus the rest of the business. And then on ATF, you know, could you provide more color on the customer timing dynamics that are driving that more moderated view in the second half? I think in the past you had talked about a second half ramp and ATF consumables tied to one of the blockbusters that you respect into. So, Is that really just a function of a customer delaying commercial launch? And then, you know, what gives you confidence that things will pick up in 27? Thank you.

Yes, good morning, Casey. So, first of all, I mean, we're obviously very happy we started quarter one at the midpoint of our full year guidance. And as you heard us saying, we estimate quarter two will probably be about the same. So obviously, it will set us up very well for the guidance we've given at the beginning of the year. And the midpoint would assume at this stage there is no need for any acceleration toward the second half of this year, which is probably a little bit of a refugee-specific situation that we're very happy to be in right now. It's a really high comfort zone for us from that point of view. we would be disappointed if we would land at the low end because that would somehow imply a softening of the market that we're actually not seeing today. So we're more hopefully looking to reach the high end. And in order to reach the high end, we would need some type of acceleration both of our consumable business, and you mentioned ATF. I'll come back to that in 10 seconds. But also that some of these equipment orders we've been receiving now in the last couple of months would also be potentially delivered this year, which is not a given yet because we need to hear about our customer side preparedness to be able to accommodate that or not. So that's kind of really the way to look at the guidance for this year. We are quartering to the year with a very strong start. With a couple more quarters, we'll know much more about how the year is going to play out by the end of July when we report out on the on quarter two. In terms of ACF, yes, I mean, we have always been very transparent. I mean, we were transparent last year about what happened with that specific gene therapy program. We said we're going to be transparent. ACF has got a huge runway for the next several years. I mean, I can tell you we're more bullish than ever. A couple of our customers came to us beginning of this year explaining as they were managing inventory this year on a couple of commercial drugs that have been using ATF now for a few years. This is not something unusual for what is still a pretty new technology where at the beginning people built a little bit more stock maybe than they will need finally. We know it's going to be a real tailwind for us from 27 onwards. because these are two commercial drugs that will require more, because the drugs themselves are growing very nicely. So it's really just a temporary inventory management that we're facing. What's interesting about those two customers is, in fact, they are implementing ATF across many more products than this specific commercial drug I was talking about, which is why we know next year is going to be a real tailwind for these customers for the commercial drugs themselves, but also across the new ones they are implementing ATF at right now.

Great. That's super helpful. Thank you. Thanks, Casey.

Your next question comes from the line of Daniel Markowitz with Evercore. Daniel, your line is open. Please go ahead.

I wanted to follow up on emerging biotech. It's good to see four quarters in a row, if I heard correctly, of growth from this customer segment. And I wanted to talk about the benefit from biotech funding recovery, which seems like it could flow through to BACAF for this year and help in BACAF in 2027. Can you help frame the potential timing of when this benefit might occur? Remind us your exposure to this customer set and help us understand what the contribution could look like once we start to see that benefit?

Yeah. No. Good morning, Dan. I think you nailed it already pretty well. I mean, four quarters in a row of very significant growth. I mean, I would say very significant growth in quarter one was above 20% of growth. This being said, the activity level still remains slightly below historical level. So that's why we're saying it's probably a little bit too soon to call it a trend. But maybe to be a bit more specific, we mentioned in previous call, like we've seen some of the growth coming from some of these small biotech getting acquired. That was particularly the case in quarter two, quarter three of last year. It's fair to assume that some of the funding that we started to improve toward quarter three of last year has maybe started to reach some of these companies toward the end of last year and probably a little bit more in quarter one. I do expect it to become a real stronger tailwind from quarter two, quarter three onwards to be confirmed, but that's what we could expect. We would expect looking at this much better biotech funding environment we've been experiencing. And to answer your specific question, I mean, it's still lower than 10% of our total sales. I want to say probably more into the 8% to 9% vicinity in quarter one, but probably trending back to the 10% that we experienced in the past in the next few quarters, I would imagine.

That's helpful. And then just to follow up, can you talk about the ETF opportunity more broadly? How penetrated is this market and how would you frame the potential impact from competitive product introductions?

Again, maybe let me start by saying HCF grew in Q1, both by the way in capital and consumable as well. We've just decided to moderate our expectation for 2026 because of this transitory headwind that we've been hearing from the two specific customers. But apart from that, I mean, we are still extremely bullish. I mean, we are getting our products designed in multiple new products, multiple new modalities as well. I mean, we've talked about the successes we've had on the cell therapy side, and that has become a very significant tailwind for us over the last several quarters. We are also very heavy on innovation. And I tell you, I'm very, very confident about the fact that we were going to be leading the process intensification for the next several years. I mean, I have zero doubt about that. And we've got a lot of innovation being worked out right now with several launches that we expect to happen probably towards one, towards the beginning of next year, and then one or two others toward mid or end of next year. So we are absolutely very bullish, and the runaway on ATF is still absolutely very strong, yeah.

Great. Thank you very much.

Your next question comes from the line of Mac Etoc with Stevens. Mac, your line is open. Go ahead.

Hey, good morning and thank you for taking my questions. Maybe just following up on some of the previous order related questions, just looking at what you called out during March, can you just unpack what specifically changed in the order environment at that point? Was it tied to improving customer decision-making, budget releases, increased activity within certain end markets like maybe analytics or upstream systems? And how is that exit rate carried in April at this point?

Hey, Matt. Good morning. Well, it's a little bit of all of that, to be honest with you, but maybe let me take one step back. So you're right. I mean, we had a little bit of – well, taking two steps back first. What a fantastic quarter for in terms of order intake. And I really want to say fantastic. I mean, it was like in fear we had not seen like for probably the previous several years and so on. So it was somehow pretty, pretty expectable that the beginning of quarter one would be a little bit softer. But then towards mid of February, we started to see a really significant acceleration. that has enabled us to get a very strong order intake for the full quarter one, really in the right zip code in terms of book-to-bill, like what we spent for the previous several quarters. So really, across the board, a very healthy quarter one, thanks to what happened in March. What's more important, honestly, is an order, because we said it can be somewhat a little bit lumpy. As you know, we're tracking our funnel, and I want to say we are really – extraordinary discipline on the way we're tracking our funnel. And one part of the funnel I'm looking at myself on a weekly basis is what we call the high probability funnel, which is a probability that is above 50% of closing orders within the next two to three quarters. And I mean, that funnel of high probability is at the highest level ever. In fact, I just made the exercise a week or two ago looking at how did it look versus what it looked like a year ago, and it's significantly higher than what we've seen a year ago. So from that point of view, we are very confident about the way things are going to play out for the next several quarters. What we're not still controlling fully is decision-making, and that's maybe where indeed I would still see a bit of a difference between consumable and equipment. Both look really good for this year. I mean, in terms of guidance for the Fulio, we see both growing double digits in sales, But obviously, most of the headwind we've talked about are going into consumable, as you know, meaning the gene therapy program on one side and then these two ATF customers on the other side. So it means like consumable are still doing extremely well. On capital equipment, it's fair to say like analytics and mixers have been leading the pack. We would like to see a real acceleration of what we call the bigger type of CapEx equipment. We started to win some of these RFPs. As I mentioned earlier, if the tap of capital equipment really opens this is going to be a massive opportunity for all of us. And I say massive because I think the water is just waiting for the tap to open, and then it's going to become like a totally different story for all tool providers. So that's kind of really a long answer to a short question, but that's across the board how we're seeing order intake and how we're seeing as a different part of the business between consumable and hardware.

Your next question comes from the line of Paul Knight with KeyBank. Paul, your line is open. Please go ahead.

Yeah, thank you. Congrats on the quarter. When you look at the China market right now, is this domestic demand or is it multinationals expanding their bioprocess capabilities in that market?

Yeah, good morning, Paul. Yeah, I have to say at this stage, the vast majority, and I say the vast majority, at least what I have a good line of sight of is really China, local demand market that's coming back. And we've had really a lot of successes. I mentioned mixers already a couple of times, but beyond mixers, even on our filters, consumable and so on, we're seeing a lot of these customers coming back now. As you know very well, Paul, we are facing much more competition than we were before, which is why we've been pushing and now implementing that strategy that I think is very different Very differentiating as well versus what others might have been doing where we are really going to capitalize on local company to help us gaining our market back. I've said several times the China market today is totally different than it was five years ago, even maybe three years ago, even to a certain extent. If you want to succeed in China, you have to appear to be much more really Chinese than you were before. And that's the only way you're going to be able to defeat competition locally. We found a partner that we like a lot because we know the management team pretty well, but also they are still in the early phase of growth. And I've seen so many of these companies being successful over the last several years that collaborating together, we feel we have got an incredible runway over the next several years. But the demand is really from Chinese company for Chinese local demand, which we know is going to grow very significantly over the next several years now with all of the money that has been injected into the China ecosystem. Thank you.

Your next question comes from the line of Brendan Smith with TD Cowen. Brendan, your line is open. Please go ahead.

Great. Thanks for taking the questions, guys. Congrats on the quarter. I wanted to actually ask just another one on the transformation office a bit. Any more granularity on what kinds of margin optimization efforts you really have going on there? I guess, are you focused on certain segments more than others? I know you mentioned some AI process involvement. So I guess just wondering if there's any potential for some of the relative margins across your different segments to maybe close ranks a bit from some of the historical spread we've seen. Thanks.

Yeah, good question. So, you know, we highlighted kind of four buckets. One is manufacturing footprint in terms of how to optimize that. So that, of course, will hit either different product lines or help us drive efficiencies across the overall network. The other piece to your point is really this improving profitability on certain product lines. So, you know, this example of where do we look at our portfolio, what's dilutive to the overall average, and how can we look at design changes, how can we look at manufacturing efficiencies? To your point, how do we look at the product skews that we have to try to raise that overall? And then it's things like PolyMEM, again, where we saw that as a non-core product, not even within bioprocessing, and not only dilutive at the margin, but a loss at the bottom line. And so, you know, that was fairly unique, though, you know, so just to caution you in terms of opportunities at that level, but it's absolutely about finding the below margin products and then increasing those. The other piece is also around how do we serve our customers better? How do we get more value? So, again, you might see that within the product lines. And then the other big bucket is this topic of it modernization as well as Ai and we kind of keep them connected, but also have very different paths on each of those we've talked a lot about the need to. upgrade our it infrastructure is data, you know i'll say optimization it's looking at the you know when you look at the number of. Patrick Corbett, Applications and vendors, we have for our size company, we can rationalize that that's the type of thing that actually drives synergies and cost savings. Patrick Corbett, But, as well as bring how do we leverage SAP you know our ERP as well to to get more out of that and then from an AI perspective it's this balance of. Patrick Corbett, You know, looking at the tools that are available, but then also going back into each process and function. and understanding the problems that we're solving and the use cases for those AI, you know, I'll say solutions. And so incredibly exciting for us. Again, this is about allocating the right resources, you know, focusing internal experts as well as bringing external experts to help us accelerate that. And again, it's just another example of kind of the long game that we're playing on both margin expansion as well as being able to grow and scale.

Your next question comes from the line of Matt Stanton with Jefferies. Matt, your line is open. Please go ahead.

Hey, thanks. Maybe just one in the context of the order commentary and then the kind of high probability funnel you laid out, Olivier. Can you just remind us, in terms of your equipment portfolio and the order book there, how quickly you turned that? I think historically you had kind of talked about earning two-thirds of the order book six months or less, I think it'd be helpful to kind of get an updated number on that given the evolution of the portfolio, you know, as it relates about what could maybe show up in orders today and income and revenues in the back half of the year versus 27. It sounds like mixers, you know, analytics, some of those are maybe shorter cycle type equipment than the larger projects you talked about, Olivier, but it would just be helpful to kind of level set the order book, how quickly you think you can turn that today and, you know, how that maybe has evolved from a couple years ago. Thanks.

Hey, good morning, Matt. Yeah, I think you answered your question very well. So I'll try to add some more details here. But you're absolutely right. Like, we've got very different type of hardware in our portfolio. So the two you mentioned, you're right, both mixers on the one side and And analytics on the other side, turnaround time is very short. I mean, in fact, for analytics, typically, you can even turn around an order within a couple of weeks or so. For mixers, and here I would differentiate what we call the stainless steel mixers, which is what we acquired when we acquired Metanova two years and a half ago from the single-use mixers. These times are slightly different. For the stainless steel side, we are like below three months. For the single-use mixer, we would probably be a little bit more than three months. And so there is a slight difference here. And then comes what we call, well, even within the larger scale type of hardware, there is still a difference. For ATF, the ATF system very often were capable to turn around delivery in three months or even less sometimes if we've got no customization to achieve. For downstream system, whether TFF or Chrome system, it really depends, again, whether it's catalog type of product or whether it requires some customization. If it's catalog, turnaround time can also be in the range of three months. Also, if it's custom, probably more into the five to six months range. But what's becoming probably more important than our own lead time is really customer preparedness and especially now that we start to enter into these onshoring projects more and more we will see probably very different cases where people already have brownfield or people need to build everything from scratch and then this is what we don't control fully where our lead time might be absolutely enabling us to recognize those revenues this year but it might well be that those sites are only already by mid of 27 or even maybe second half of 20 seven or so and then as you know when i mentioned about the blocks but we had we won a couple of years ago now on atf i mean it's a specific example where the customer side is still just being finalized right now so but what we don't control fully is customer preparedness and especially with ensuring that that's something we're all going to have to figuring out better in in the upcoming few quarters here thanks appreciate it

Your next question comes from the line of Matt Hewitt with Craig Hallam Capital Group. Matt, your line is open. Please go ahead.

Good morning and great start to the year. You know, analytics is becoming a much bigger demand area for your customers, whether it's the CDMOs or the pharma companies. You're seeing increased demand. You're speaking to some of the growth that you're seeing there. From an investment standpoint, Where do you see opportunities to invest in that area, whether it's, you know, real-time monitoring or, you know, taking some of the data that you're capturing and kind of helping your customers identify areas for improvement? Is this an area that you're investing internally or is an area that you see from an M&A perspective maybe augmenting some of your existing capabilities? Any discussion there? Thanks.

Yeah, Matt, great question. I mean, obviously, as you mentioned, we're really excited about the traction we're seeing on process analytics. I mean, 50% growth in quarter one, 40% organic, really downstream analytics. I mean, we've never seen that before. In fact, historically, quarter one was always the weakest quarter from a seasonality point of view. So that was really obviously an incredible performance. And you're asking absolutely the right question. What are we doing to make sure we capitalize on that and we even can double down on that over the next several years? So first of all, as you know, we said that upgrade cycle is just still at the beginning. So that's going to be tailwind for us for the next several years. if not probably several years. But beyond that, and I didn't talk so much about the PAT side, but PAT has got huge traction as well. I mean, as you know, we launched our FlowVPX inline protein concentration technology a year and a half, two years ago or so, which has got incredible traction while working on multiple other PAT technologies, product upgrade or product launches that will happen over the next one to two years. So talking about investment and talking about organic investment, we're investing a huge amount of money on the R&D side to make sure we've got many more products on our shelves over the next several years, but both from an outline but also from an inline point of view. And you'll hear Ted talking about that massively over the next several quarters and years. And then, yes, in terms of M&A, absolutely. I mean, as you know, capital spending, top priority number one for us is on M&A side. I mean, we landed quarter one with $785 million of dry powder. So we are looking at several opportunities. And if the right opportunity comes on the analytic side to complement our offering further and so on, we would be very interested in that. So the last piece I would mention, and services are benefiting from that grandly as well. I mean, our service business grew more than 30% in quarter one. And the good news is we've got a very nice attachment rate of service to our analytical equipment. So that's another area we're investing into quite a bit. And then particularly for that piece that is linked to the analytical business here. Thank you.

Your next question comes from the line of Justin Bowers from NJ. Justin, your line is open. Please go ahead.

Morning, everyone. And it's Deutsche Bank, but I'll squeeze a multi-parter into one. So on the proteins, pretty strong quarter, especially against tough comp. Can you talk about some of the drivers there? And then is that more of a shorter cycle business, i.e. how much visibility do you have into that? And then Over the next two to three years, is that a franchise that you believe can continue to grow above fleet average?

Hey, Justin. Good morning. Happy to have a question on protein because that's another business. I'm so happy about the progress we're seeing here. So, yes, you're right. I mean, meeting growth, lapping on what was a very strong quarter one 2025 was a really great positive surprise for us. And honestly, we've got good demand across all our offering, but partly on the legal side. I mean, I mentioned in the past, we've really become closer and closer with PureLight. We work really very much hand-in-hand together, and they have fantastic traction, and we're very happy about the way we collaborate together. That has been one of the reasons why Protein did so well. So we're in the long-term type of business here because beyond that specific collaboration, the fact also we have this in our hands for all of the non-monoclonal antibody side of the business is also very encouraging because Protein, we are winning multiple and when i say multiple it's really multiple designing and it's a business that takes a little bit of time because where you first need to get designing and then you start to deliver some first pilot quantities and then hopefully some of these products are either making it to the market or if they are already on the market people are our customers are going to put the trigger to switch from one supplier to us With all of the designing we've been working on and we've got a dedicated team now that is going on the market, getting fantastic response from the market because I've never seen a company capable to develop a new ligand in three months and a new resin in six months. I'm absolutely very bullish about that market for the next several years. I think the best is still to come here for sure.

Thank you.

We have reached the end of the Q&A session. I will now turn the call back to Olivier Loyault for closing remarks.

Thank you all for joining our call today. We had a very great first quarter and we're executing against a plan without line. which is outpacing market growth, delivering margin expansion. And Jason gave you a good number of details about what we're achieving on that side. And finally, making tangible progress on our strategies. I really want to thank all of our Repligen teammates. We have an incredible team and we're delivering a fantastic start of the year and looking forward to talking to you again in a quarter from now. Thank you all.

This concludes today's call. Thank you for attending. You may now disconnect.