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REPLIGEN CORP (RGEN)·Q1 2024 Earnings Summary

Executive Summary

  • Q1 2024 revenue of $151.3M and adjusted diluted EPS of $0.28; GAAP diluted EPS $0.04. Margins compressed vs prior year due to COVID mix rolling off and proteins weakness, but gross margin held around ~49% GAAP .
  • Guidance reaffirmed: FY24 revenue $620M-$650M, adjusted operating margin 13%-14%, adjusted EPS $1.42-$1.49, adjusted EBITDA margin 18%-19% (unchanged from Feb) .
  • Book-to-bill 0.99 in Q1 and 1.03 over the last nine months, signaling gradual recovery in orders; non-COVID Filtration revenue up 12% y/y and new modalities revenue up 16% y/y .
  • Key catalysts: H2 orders pickup needed to achieve guidance, continued strength in Filtration/consumables, recovery in chromatography, and RS10/Fluid Management launches; headwinds remain in Proteins and China/CDMO lumpiness .

What Went Well and What Went Wrong

  • What Went Well

    • Non-COVID Filtration revenue grew double-digits y/y and >15% sequentially; orders +20% y/y, supported by ATF wins specified into nine late-stage/commercial processes since mid-2023 .
    • New modalities revenue up 16% y/y; sequential growth greater than 15% tied to top 20–25 accounts scaling with Repligen technologies .
    • RS10 launch (automated GMP-ready filtration system) and initial bag/film technology underpin Fluid Management strategy; Metenova contributed >$5M revenue in Q1 as planned .
    • Management quote: “We delivered a solid first quarter… Filtration franchise excluding COVID delivered double-digit revenue growth, both sequentially and year-over-year… we are holding our adjusted 2024 financial guidance” .

  • What Went Wrong

    • Proteins: orders down ~30% y/y and revenue down y/y and sequentially; Cytiva demand dropped to “essentially zero,” with another partner burning off ligand inventory; management still expects -30% to -35% Proteins revenue in 2024 .
    • China weakness persisted; CDMO orders/lumpiness remain a drag, offsetting strength in pharma and consumables .
    • Capital equipment demand was weak (seasonal and budget release timing); Analytics also saw slower start due to capital constraints despite a strong opportunity funnel .

Financial Results

MetricQ3 2023Q4 2023Q1 2024
Revenue ($USD Millions)$141.2 $156.0 $151.3
GAAP Diluted EPS ($)$0.32 —$0.04
Adjusted Diluted EPS ($)$0.23 $0.33 $0.28
Gross Margin (%) - GAAP25.9% 49.1% 49.5%
Gross Margin (%) - Adjusted42.0% 49.1% 48.6%
Operating (EBIT) Margin (%) - GAAP3.4% —1.3%
Operating (EBIT) Margin (%) - Adjusted3.7% —7.8%
Adjusted EBITDA Margin (%)10.2% —13.4%

Franchise/KPI detail

KPIQ1 2024vs Q1 2023Sequential
Book-to-Bill0.99 ——
Book-to-Bill (last 9 months)1.03 ——
Filtration (non-COVID) Revenue Growth—+12% y/y >15%
New Modalities Revenue Growth—+16% y/y >15%
Proteins Orders—-30% y/y —
Metenova Revenue Recognized$5.0M+ ——
Base Revenue (Non-GAAP)$145.1M -9% y/y —

Balance sheet snapshot

Metric ($USD Thousands)Dec 31, 2023Mar 31, 2024
Cash, Cash Equivalents & Marketable Securities$751,323 $780,617
Working Capital$952,881 $954,703
Total Assets$2,824,411 $2,849,269
Long-term Obligations$695,046 $700,353
Stockholders’ Equity$1,971,203 $1,970,601

Guidance Changes

MetricPeriodPrevious Guidance (Feb 21, 2024)Current Guidance (May 1, 2024)Change
Total Reported RevenueFY 2024$620M–$650M $620M–$650M Maintained
Adjusted Gross MarginFY 202449%–50% 49%–50% Maintained
Adjusted Income from OperationsFY 2024$83M–$88M (13%–14% margin) $83M–$88M (13%–14% margin) Maintained
Adjusted EBITDA MarginFY 202418%–19% 18%–19% Maintained
Adjusted Other IncomeFY 2024$18M–$19M $18M–$19M Maintained
Adjusted Tax RateFY 202421% 21% Maintained
Adjusted EPS (Diluted)FY 2024$1.42–$1.49 $1.42–$1.49 Maintained
Adjusted Net IncomeFY 2024$80M–$84M $80M–$84M Maintained

Earnings Call Themes & Trends

TopicQ3 2023Q4 2023Q1 2024Trend
Orders/Book-to-billStrengthening orders; total book-to-bill 1.07; Filtration 1.15 Book-to-bill 1.03; ex-COVID Filtration 1.13 Q1 book-to-bill 0.99; 9-month 1.03; April tracking as expected Improving but uneven
Filtration performanceNo COVID revenue; base business dominated revenue Filtration orders strong; 2024 outlook +10–15% Non-COVID Filtration revenue +12% y/y; orders +20% y/y Strong, leading franchise
Proteins headwinds2024 expected -30% to -35% 2024 proteins forecast reiterated Orders -30% y/y; Cytiva demand ~zero; still -30% to -35% for FY Ongoing headwind 2024
China/CDMOIndustry challenges; China decline China ~5–6% of FY24 revenue expected; CDMO improving but not fully recovered Continued China weakness; CDMO lumpiness; Biosecure Act watched Weak APAC; gradual CDMO recovery
ChromatographyRevenue -25% in Q4; outlook +0–5% 2024 Resin shortage resolving; improving supply Supply challenges “behind”; 0–5% growth expected Gradual recovery
Capital equipment2023 H2 step-up in CapEx spend Seasonally lighter Q1; budgets release later Weak Q1 CapEx; expect pickup Q2/H2 Seasonal recovery expected
New modalitiesQ4 revenue +9% y/y; 18% of FY revenue Focus on top 20–25 accounts +16% y/y revenue; >15% sequential; concentrated in top accounts Positive, concentrated growth
Cost/marginsRestructuring charges; adjusted GM ~42% in Q3 Adjusted GM 49.1% in Q4; FY24 adjusted GM 49–50% Adjusted GM 48.6%; productivity offsets ~200 bps headwinds Stable around ~49–50%

Management Commentary

  • “We delivered a solid first quarter, with revenue of $151 million… our Filtration franchise excluding COVID delivered double-digit revenue growth… we are holding our adjusted 2024 financial guidance” (Tony Hunt) .
  • “We believe that destocking is essentially behind us. We see positive trends in consumables and our orders are holding steady, staying 2% to 3% ahead of sales over the last 9 months” (Tony Hunt) .
  • “Adjusted gross margin in the range of 49% to 50%… headwinds from mix, salaries, inflation and incentive reset expected to be offset by manufacturing productivity” (Jason Garland) .
  • “We launched the industry’s first fully automated GMP-ready filtration system called RS10… expect meaningful contribution in 2024” (Tony Hunt) .

Q&A Highlights

  • China/CDMO: Management sees continued China weakness and CDMO lumpiness; Biosecure Act implications being monitored; pharma demand more resilient .
  • Proteins: Headwinds tracking exactly with plan; orders down ~30% y/y; 2024 revenue down 30–35%; expected bounce-back in 2025 as partners burn off ligand inventory and new products ramp .
  • Orders cadence: January lighter; February/March strong; April in line; need orders pickup through Q2/Q3 to hit H2 targets; consumables demand uptick indicates destocking largely behind .
  • Capital equipment: Weak Q1 reflective of seasonal budget release; RS10 traction expected to drive 2024 sales; systems strategy ties consumables into equipment .
  • Chromatography: Resin supply normalized; 0–5% growth expected; OPUS adoption rising, particularly in new modalities .
  • Margins: EBITDA margin cadence to improve with volume through the year; profitability levered to higher H2 volumes and cost actions .

Estimates Context

  • S&P Global consensus estimates could not be retrieved at this time due to provider request limits; therefore, explicit comparisons to Wall Street consensus are unavailable. The company reported Q1 2024 revenue of $151.3M and adjusted diluted EPS of $0.28 against unchanged FY24 guidance ranges .
  • Implication: Estimate models likely need to reflect proteins headwinds, stable gross margin around 49%–50%, and H2 order/revenue step-up; lack of consensus access prevents explicit beat/miss determination at this time.

Key Takeaways for Investors

  • Orders momentum is improving but uneven; hitting FY guidance requires a clear H2 pickup, with Q2 a key inflection for book-to-bill and capital equipment recovery .
  • Filtration/consumables strength and RS10 launch provide durable growth vectors; ATF specifications into nine late-stage/commercial processes should support consumables pull-through .
  • Proteins headwind is transitory (2024) and masks stronger underlying growth across other franchises; management expects a rebound in 2025 as ligand inventories normalize .
  • China remains a drag; CDMO demand is improving but still choppy; investors should watch Biosecure Act developments and budget release timing for capital equipment .
  • Margins: Adjusted gross margin targeted at 49%–50%; productivity actions offset mix/inflation/incentive headwinds; profitability should scale with volume in H2 .
  • Liquidity strong with $781M cash and stable working capital; provides flexibility to invest in product launches and selective M&A (Metenova integration tracking well) .
  • Near-term trading: Stock likely sensitive to Q2 order trajectory, capital equipment demand recovery, and any updates on CDMO normalization; medium-term thesis supported by product innovation and new modalities exposure despite 2024 proteins reset .