Release Date: November 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Repligen Corp (RGEN, Financial) reported a strong third quarter with a 10% year-over-year sales growth and a 6% increase in orders.
- The company's CDMO business rebounded to its highest revenue level in the last 18 months, indicating overall industry health.
- Repligen Corp (RGEN) achieved record revenue for new modalities, tracking to the highest annual revenue and order intake to date.
- The filtration franchise led in revenue growth, and chromatography saw an exceptional quarter for orders, up 35% year-over-year.
- Repligen Corp (RGEN) opened a new Training and Innovation Center, enhancing customer engagement and support.
Negative Points
- China remains a significant headwind, contributing only about 4% of 2024 revenues, with a 50% year-over-year decline in Q3.
- Emerging biotech showed weakness in Q3, with concerns over funding and clinical trial starts impacting performance.
- The company faces a $60 million to $65 million headwind from protein-related sales, impacting overall growth.
- Equipment orders have been slower to recover, although the funnel is strong, indicating potential future challenges.
- Repligen Corp (RGEN) is still finalizing required amendments for impacted financial statements due to a restatement.
Q & A Highlights
Q: Can you walk through some of the assumptions behind the fourth quarter revenue ramp, particularly from a budget flush perspective?
A: Olivier Loeillot, President and CEO, explained that the fourth quarter is traditionally the highest due to seasonality. The company has seen a consistent ramp-up of orders throughout the year, positioning them strongly for Q4. October was a strong month, which contributed to narrowing the guidance range.
Q: Equipment revenue was up low single digits sequentially. Can you speak to funnel velocity and whether deals are closing at the same rate or faster?
A: Olivier Loeillot noted that despite a tough environment, the company has a strong funnel, particularly with the ARTeSYN portfolio gaining market share. The time to close deals varies, typically taking three to six months for smaller hardware and six to nine months for larger scale.
Q: What about the improvement in the CDMO business suggests a more sustainable path forward?
A: Olivier Loeillot highlighted that the CDMO business has shown significant improvement over the last two quarters, with orders up mid-teens compared to the same period last year. Both large and small CDMOs are performing well, and key account management has driven improvements at major accounts.
Q: How does the COVID restatement impact margin expansion in 2025?
A: Jason Garland, CFO, stated that the restatement is margin accretive, and the company expects to achieve 100 to 200 basis points of gross margin improvement over the next few years, with no significant impact from the restatement.
Q: Can you discuss the overlap between CDMOs and newer modalities, and how much of the business is in Phase I and II versus later stages?
A: Olivier Loeillot mentioned that while exact numbers aren't available, a significant portion of new modality sales involves CDMOs. About 65% of the overall business is in clinical phases, with projects moving from early to later phases, driving consumable sales.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
