Paul Knight • KeyBanc Capital Markets

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CFO Marco Dal Lago stated that the normalized growth for 'other containment' solutions is expected to be in the low- to mid-single-digit range, as the company's strategic focus is on High-Value Solutions. CEO Franco Stevanato added that the Engineering division serves both external customers and provides a critical internal competitive advantage for the BDS segment.

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CEO Franco Stevanato stated that the Fishers plant, with a planned €0.5 billion investment, is targeted to generate €0.5 billion in revenue by its full ramp-up in 2028. He confirmed Latina is progressing well with syringe production and preparing for cartridge manufacturing. CFO Marco Dal Lago reiterated the fiscal 2025 CapEx guidance of €250 million to €280 million, primarily for these growth projects.

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CFO Marco Dal Lago clarified the Fishers timeline is "exactly in line with our plan." CEO Franco Stevanato stated the Engineering plan involves creating centers of excellence and expects a return to target margins by mid-2025. Regarding start-up costs, Marco Dal Lago noted the combined Fishers and Latina operations currently have a negative gross profit, indicating the magnitude of the drag.

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CEO Olivier Loeillot expressed excitement about the CAR-T space, highlighting that the ATF technology is seeing increased adoption as it helps maximize cell yields. He believes cell therapy is entering a 'second wave' of growth. Regarding China, he confirmed that its development as an innovator, with a large pipeline and significant investment, is a key reason for his bullish long-term outlook and the company's increased investment there.

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President and CEO Olivier Loeillot attributed the recovery at large CDMOs to their success in securing major, long-term supply contracts with big pharma. He noted smaller, Tier 2 CDMOs are also performing well, potentially benefiting from the BIOSECURE Act. Regarding hollow fiber, the strategy is to increase investment in application specialists to drive design wins for this and other differentiated products, rather than a specific market focus.

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President and CEO Olivier Loeillot identified the absence of 2024's headwinds as a key tailwind for 2025. He highlighted ATF consumables, systems uptake, and a rebound in the proteins franchise (driven by new offerings) as key growth drivers. He stated that new modalities, including cell and gene therapy, will represent 20% or slightly more of total 2024 revenue, with high-teens order growth year-to-date.

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Eric Green, Chair, President & CEO, explained that the growth in Crystal Zenith was primarily driven by strong customer demand related to a particular new drug launch. He noted that while there is an element of timing to the revenue, the increased interest and demand are encouraging signs for the product line.

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CEO Eric Green explained that utilization at the Dublin site is currently low and is expected to ramp up throughout the year, with drug handling capabilities coming online in late 2025 or early 2026. CFO Bernard Birkett attributed the strong operating margin to improved efficiencies in the E&PC business, better-than-forecast margins in contract manufacturing, and disciplined spending on SG&A and R&D.

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CEO Eric Green expressed strong confidence in returning to the 7-9% long-term growth algorithm, driven by the strength in HVP components. CFO Bernard Birkett detailed that the Dublin facility's ramp-up will become more material in H2 2025, with drug handling capabilities coming online in late 2025 or early 2026. He clarified drug handling is final drug packaging, not fill-finish services.

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CEO Eric Green confirmed the Phoenix facility (SmartDose) began its commercial ramp-up in Q3 after receiving FDA approval and is performing well. He noted the Grand Rapids facility is currently ramping up commercial production for GLP-1s, while the Dublin facility will commence device manufacturing in early 2025, with drug handling capabilities to be added later. CFO Bernard Birkett added that a fully automated line will be implemented in Phoenix during 2025 to drive efficiency and margin improvement.

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CEO Roderick de Greef responded that the company is more than halfway through renegotiating prices with key customers holding legacy discounts. He noted these changes are being phased in over a 36-month period, which will create a tailwind for the next three years. Regarding M&A, he confirmed BioLife is evaluating a few small, tuck-in acquisitions similar to PanTHERA and is refining its strategic filter criteria.

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CEO John P. Marotta stated that they are in the early stages of the ABS journey but have successfully realigned the sales organization regionally and are investing in 24 new sales headcount. He asserted that the SMS business is not yet at its full potential, with more details to be shared at a future Investor Day. Regarding China, he highlighted Azenta's 5% growth, attributing it to a successful local-for-local strategy that makes their China business operate like a domestic company.

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CEO John P. Marotta outlined a clear capital allocation hierarchy, prioritizing internal investments and M&A over share buybacks, which are considered last. He emphasized the need to build credibility before resuming a consolidator strategy. Marotta also differentiated Azenta's automated stores from the general ULT freezer market, stating they are sophisticated warehouse management systems for specific applications and are not impacted by the ULT supply glut.

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CFO Frank Stokes provided the headcount, stating the GI sales force is in the mid-60s and the dermatology sales force is in the high 60s. He indicated that dermatology growth would be episodic, while the GI team's size will be evaluated after the recent expansion settles before deciding on further additions.

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CFO Frank Stokes confirmed the company has "grown into its P&L" and will continue to manage expenses prudently, aiming to grow expense categories at a lower rate than revenue. He noted future SG&A growth depends on sales force expansion, while R&D spending, ideally 10-15% of revenue, is limited by the ability to deploy capital effectively on viable projects.

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CEO Kim Kelderman clarified that the instrument growth was in the protein analytical portfolio and does not include the COMET platform, which is reported separately in spatial biology. CFO Jim Hippel added that COMET interest remains very high. Kelderman also confirmed that while western blot is a primary beneficiary of China's stimulus, other platforms like Maurice are also seeing increased traction.

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