Revvity, Inc.

Hello, everyone, and welcome to Revity's fourth quarter 2024 earnings call. My name's Lydia, and I'll be your operator today. After the prepared remarks, there'll be an opportunity to ask questions. If you'd like to participate in the Q&A, you can do so by pressing star followed by one on your telephone keypad. I'll now hand you over to Steve Willoughby, Senior Vice President of Investor Relations, to begin. Please go ahead when you're ready.

Thank you, Operator. Good morning, everyone, and welcome to Revity's fourth quarter 2024 earnings conference call. On the call with me today are Prahlad Singh, our President and Chief Executive Officer, and Max Grykowiak, our Senior Vice President and Chief Financial Officer. I'd like to remind you of the safe harbor statements outlined in our press release issued earlier this morning and those in our SEC filings. Statements or comments made on this call may be forward-looking statements which may include but may not be limited to financial projections or other statements of the company's plans, objectives, expectations, or intentions. The company's actual results may differ significantly from those projected or suggested due to a variety of factors which are discussed in detail in our SEC filings. Any forward-looking statements made today represent our views as of today. We disclaim any obligation to update these forward-looking statements in the future, even if our estimates change. so you should not rely on any of today's statements as representing our views as of any date after today. During this call, we will be referring to certain non-GAAP financial measures. A reconciliation of the measures we plan to use during this call to the most directly comparable GAAP measures is available as an attachment to our earnings press release. I'll now turn it over to our President and Chief Executive Officer, Prahlad Singh. Prahlad?

Thank you, Steve, and good morning, everyone. In 2024, we made substantial progress towards achieving Revity's full potential. We expect this progress to be even more evident externally once industry demand more fully normalizes, which I believe we are now on a solid path towards as we start 2025. We've made meaningful strides in the last year by more fully integrating our recent acquisitions capitalizing on initial synergy opportunities, right-sizing our operations for the company we've now become, all while bringing significant new innovations to the market. We witness this progress every day within our organization, and it is becoming increasingly apparent externally as well. In 2024, we again outperformed most of our peers in terms of top-line growth, margin expansion, and adjusted EPS growth as our earnings per share were up a solid mid single digits year over year. This differentiated performance was on display in the fourth quarter as we generated 6% organic growth overall with over 30% adjusted operating margins. This led our adjusted EPS to be $1.42, which was solidly ahead of our expectations. I expect this outperformance will continue as we move forward due to Revity's significant operating leverage potential and differentiated growth prospects, which we believe will really start to shine through as pharma biotech spending continues to normalize. We are encouraged by the pharma biotech customer behavior we saw in the fourth quarter as our life science consumables continued to grow both sequentially and year over year. Given the fairly early cycle and quick turnover nature of our consumables due to their high degree of specificity, this was a promising sign that restructurings and other meaningful reductions from our pharma customers may now be behind us. However, we have yet to see a complete return to more normalized customer behavior given our continued softer trends during the latter part of 2024 particularly for our high-ticket life science instrumentation. Consequently, as Max will touch on more in a bit, we expect the stabilized demand environment we have seen from our pharma customers over the last two quarters to continue for the time being as we enter 2025, particularly given the increased uncertainties which exist today. With the industry's rebalancing of demand over the last two years, we feel it is appropriate to assume the current environment continues until we actually begin to see more meaningful and concrete improvements in overall demand. With this backdrop, we are looking for our total company organic growth in 2025 to be in the 3% to 5% range, which would be an improvement compared to the past couple of years. but still not fully back to what we believe is our normalized growth rate. Should demand start to improve more quickly than we are currently contemplating in this guidance, we would look to update our outlook appropriately as the year progresses. Following the last two years in which we actively managed our levels of internal spending, we are planning to step up our strategic internal investments in 2025 based on our expectation for organic growth to begin to improve this year. Despite this planned step up in spending, we still expect adjusted operating margin expansion this year of approximately 20 to 40 basis points from the 28.3 we generated in 2024. We anticipate this will result in the third consecutive year of differentiated growth and margin performance within our industry. It was great to see many of you in person out in San Diego recently at our investor day, with many others joining us online. As we showed during this event, Revity is having a meaningful impact on the advancement of science and medicine which is directly impacting and improving patients' lives. We also provided a more in-depth look into our business and explained what makes us so unique and why we are so confident about our future potential. You also had the opportunity to hear more about our innovation pipeline and how we are working collaboratively across the company and with our strategic customer partners to bring new and differentiated advancements to market. For those who joined us in person, you also had the opportunity to see our beautiful and impressive BioLegend campus, which is now our reagent center of excellence for the company, and gain a greater understanding of what makes us so unique and well positioned to continue to capitalize on opportunities in the future. We finished off the year with another strong quarter of innovation with the introduction of several new key capabilities, such as a unique sample processing offering for cell and gene therapy customers, which leverages our existing capabilities and allows us to enter completely new and emerging opportunities and exciting areas of science. We also are seeing good initial traction with some of our other recently introduced software offerings, such as our Phenologic.ai software. This new offering, which I first told you about last quarter, is being rapidly adopted by important partners in the preclinical CRO space, allowing them to both become more efficient and unlock new insights which were not possible in the past. We have also seen good initial traction with our newly introduced offerings in our signal software business. such as Signals Clinical and Signals Synergy, with even more expected uptake of both of them this year. We also made good progress on continuing to execute on important strategic partnerships and joint new product introductions. In November, we announced an expansion of our long-running relationship with the UK government by broadening our relationship with Genomics England and its generation study, which aims to screen up to 100,000 newborns for approximately 200 rare genetic conditions. Utilizing a lab in Manchester, UK, we were chosen to provide all the DNA extraction services for this study using our high-performance Chemagic 360 instruments and related consumables. This is an exciting project which is aimed to advance genetic understanding in a broad population with the ultimate goal of eventually providing earlier diagnosis and interventions for rare genetic conditions in newborns. Gravity is honored to partner with Genomics England and contribute to this significant study, recognizing the profound potential it holds to positively impact the lives of future generations. Earlier this month, we also announced a strategic partnership with Element Biosciences to jointly commercialize an IVD workflow for neonatal sequencing. This initiative builds on our recently launched NGS workflow for newborn sequencing, which utilizes Element's Aviti sequencing system. Once this cutting-edge IVD solution is approved and commercialized, it will highlight a continuation of our global leadership in newborn screening while supporting elements entry into the clinical diagnostic market. Now that we are well into our second year of our transformation as Revity, we announced in mid-November that beginning in 2025, we will be resegmenting the majority of what was our applied genomics business and moving it from our diagnostics reporting segment into our life sciences segment. We expect this change to benefit us both operationally and commercially. As part of this new segmentation, we are establishing a new life science solutions business unit within our life sciences segment, which will consist of the former applied genomics businesses, and our existing life sciences instruments, consumables, and technology and licensing businesses. The new life sciences solutions unit will represent approximately 85% of our overall life sciences segment, with the remainder accounted for by our signals software business. As we previously highlighted, our financial reporting will reflect this change beginning with our first quarter 25 quarterly results, which we will release next quarter. Overall, it appears we are now solidly on an upward trajectory heading into 2025 compared to what we and our industry have experienced over the past two years. However, we still have some uncertainty as to what the slope of this recovery will look like over the full year. So for the time being, we are assuming that the current demand environment continues for the entirety of the year. Revity is a special company, one that is leveraging the impressive creativity, passion, and knowledge base of our employees to allow us to be uniquely positioned to capitalize on where science and medicine are going in the future. We strongly believe that these efforts will result in both top-tier financial performance for our investors and dramatic advancements for patients around the world. With that, I will now turn the call over to Max.