Release Date: May 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Repligen Corp (RGEN, Financial) reported solid Q1 revenue of $151 million, aligning with expectations and maintaining guidance for the first half of 2024.
- Non-COVID Filtration orders increased by 20% year-on-year in Q1, with revenue up by more than 10%, indicating strong demand in this segment.
- Consumable orders showed a positive uptick, increasing by more than 10% both sequentially and year-on-year, suggesting recovery from previous destocking challenges.
- New modality revenue grew by over 15% compared to Q1 2023, with orders up 8%, highlighting growth in this innovative sector.
- Successful launch of new products like the fully automated GMP-ready filtration system RS10, and positive feedback at industry conferences, enhancing product portfolio and market competitiveness.
Negative Points
- Overall Q1 revenues were down $31 million or 17% year-on-year, primarily due to a $23 million decline in COVID-related revenue.
- Protein orders decreased by 30% as anticipated, continuing to pose significant challenges to revenue streams.
- CDMO orders were down both year-on-year and sequentially, indicating ongoing volatility and lack of a stable rebound in this customer segment.
- Weakness in capital equipment purchases across the industry, reflecting broader market hesitations.
- Continued market challenges in China, contributing to regional revenue declines and impacting overall performance.
Q & A Highlights
Q: Can you discuss the trends in China, particularly in relation to the BIOSECURE Act and CDMO market dynamics?
A: (Anthony J. Hunt, CEO & Director) The CDMO market in China showed positive order trends in Q4 but did not repeat in Q1, indicating ongoing weakness. Pharma has been more positive. The BIOSECURE Act's impact is still uncertain, and we are closely monitoring how it will be implemented and its effects on our operations and customer interactions.
Q: Could you elaborate on the 30% decline in Protein orders this quarter and the expected trend for the rest of the year?
A: (Anthony J. Hunt, CEO & Director) The 30% decline in Protein orders aligns with our expectations set in February. We anticipate this trend to continue throughout the year, maintaining a 30% to 35% decline by year-end.
Q: How did orders trend throughout the quarter, and what are the expectations for order pickup in the latter half of the year?
A: (Anthony J. Hunt, CEO & Director) January was lighter, with stronger performance in February and March. April orders were as expected. For achieving our second-half targets, we anticipate a need for order pickup in Q2 and Q3. Positive signs include consumable trends, although challenges remain with CDMO market rebound and capital equipment demand.
Q: What are the current challenges and expectations around the CDMO market's recovery?
A: (Anthony J. Hunt, CEO & Director) The CDMO market exhibits lumpiness, particularly in top accounts, affecting order consistency. However, orders from CDMOs have shown a 10% increase over the last six months compared to the previous period. The market's full recovery is still pending, and we are closely watching potential impacts from recent industry acquisitions and regulatory changes.
Q: Can you discuss the Chromatography business recovery from resin shortages and expectations for growth this year?
A: (Anthony J. Hunt, CEO & Director) The resin supply issue is resolved, with capacity and lead times back to pre-COVID levels. The Chromatography business is expected to grow 0% to 5% this year, influenced by pharma and CDMO dynamics. Growth in new modalities and potential upticks in CDMO orders could push growth towards the higher end of our forecast.
Q: What are the margin impacts from the Protein business and other mix changes this quarter?
A: (Jason K. Garland, CFO & Chief Compliance Officer) Protein margins are above average, but the significant impact this quarter came from high-margin COVID sales in the previous year. The mix changes, including lower equipment sales and stronger consumables, also influenced the gross margins.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
