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REPLIGEN CORP (RGEN)·Q2 2024 Earnings Summary

Executive Summary

  • Q2 2024 printed in line: revenue $154.07M and adjusted EPS $0.33, matching consensus; revenue missed by ~$0.04M; GAAP EPS was $0.06 .
  • Guidance narrowed: FY24 revenue to $620–$635M (midpoint -$7.5M); adjusted EPS unchanged at $1.42–$1.49; adjusted operating income cut to $76–$81M; tax rate lowered to 20%; other income raised to ~$24M .
  • Orders strength as catalyst: Q2 orders $157M, book-to-bill 1.02; CDMO book-to-bill >1.4; new modalities orders +40% YoY; management expects stronger H2 with non‑COVID revenue +11% YoY and Q4 particularly strong .
  • China is the swing factor: 2024 China revenue now 4% ($25M), -$10M vs prior view; team rightsized in the region; FX also a headwind .
  • Stock reaction: positive H2 setup and tightened range drove a sharp move; media reported +16.4% on Jul 30 after the announcement .

What Went Well and What Went Wrong

  • What Went Well

    • Orders momentum: total orders +20% YoY (+30% ex. Proteins); CDMO orders +20%+ sequentially and YoY; book‑to‑bill >1.4 at CDMOs .
    • New modalities strength: Q2 orders +40% YoY; H1 revenues >10% and orders >20% YoY; book‑to‑bill ~1.1 .
    • Consumables and equipment recovery: consumables revenues up double digit vs Q1 and orders +30% YoY; equipment orders +20% vs last quarter and ~15% YTD; RS systems gaining traction (first RS10 placements) .
    • Strategic positioning: pending acquisition of Tantti adds novel macroporous bead tech synergistic with Avitide and OPUS; expected breakeven on adjusted margins/EPS in 2025, accretive in 2026 .
    • Quote: “We are confident in Repligen’s ability to resume above‑industry growth in the second half of 2024 and into 2025.”

  • What Went Wrong

    • China deterioration: 2024 China revenue now 4% ($25M), -$10M vs Q1 view; rightsizing the team; Q2 China down 38% YoY; no recovery expected in 2024 .
    • Proteins headwind: known ~$8M per quarter drag; 2024 Proteins revenue guided $67–$72M and expected rebound only in 2025; margins impacted by mix .
    • Profitability pressure: adjusted operating margin 10.1% (down ~8 pts YoY); adjusted EBITDA margin 15.2%; incremental incentive comp + volume inflation weighed; adjusted OI guide cut by $7M .
    • Seasonality: management flagged Q3 as the lightest quarter, with Q4 expected to carry the H2 ramp .

Financial Results

MetricQ4 2023Q1 2024Q2 2024
Revenue ($USD Millions)$156.0 $151.0 $154.07
Adjusted EPS ($USD)$0.33 $0.28 $0.33
GAAP EPS ($USD)——$0.06
MarginQ2 2023Q1 2024Q2 2024
Gross Margin (GAAP)50.2% 49.5% 49.8%
Gross Margin (Adjusted)50.2% 48.6% 49.6%
Operating Margin (GAAP)12.2% 1.3% 1.0%
Operating Margin (Adjusted)18.5% 7.8% 10.1%
EBITDA Margin (Adjusted)24.2% 13.4% 15.2%
Q2 2024 Actuals vs ConsensusActualConsensusBeat/Miss
Revenue ($USD Millions)$154.07 $154.11 Miss ($0.04M)
Adjusted EPS ($USD)$0.33 $0.33 In line
  • Segment/Franchise highlights (qualitative KPIs)
    • Pharma: revenues up ~15% sequentially and ~20% YoY; orders +5% sequentially and +40% YoY .
    • CDMO: sales down as anticipated; orders +20%+ sequentially and YoY; book‑to‑bill >1.4 .
    • Filtration: revenues up mid‑single digits YoY in Q2; non‑COVID filtration up ~10% YTD; ATF systems revenues +50% in Q2 and +40% H1; TangenX +30% YoY .
    • Chromatography: sequential revenue +~10%; OPUS revenues up high single digits in Q2; OPUS orders >20% H1 .
    • Analytics: up mid‑single digits YoY; promoting Flow technology as part of ARTeSYN systems .
    • Orders and cash: Q2 orders $157M; book‑to‑bill 1.02; cash & equivalents $809M at quarter end .

Guidance Changes

MetricPeriodPrevious Guidance (May 1, 2024)Current Guidance (July 30, 2024)Change
Total Reported Revenue ($USD)FY2024$620M–$650M $620M–$635M Lowered (range narrowed, midpoint -$7.5M)
Adjusted Gross Margin (%)FY202449%–50% 49%–50% Maintained
Adjusted Income from Operations ($USD)FY2024$83M–$88M $76M–$81M Lowered
Adjusted Operating Margin (%)FY202413%–14% 12%–13% Lowered
Adjusted EBITDA Margin (%)FY202418%–19% 17%–18% Lowered
Adjusted Other Income ($USD)FY2024$18M–$19M ~$24M Raised
Adjusted Effective Tax Rate (%)FY2024~21% ~20% Lowered
Adjusted Net Income ($USD)FY2024$80M–$84M $80M–$84M Maintained
Adjusted EPS (Diluted) ($USD)FY2024$1.42–$1.49 $1.42–$1.49 Maintained
GAAP Net Income ($USD)FY2024$28.5M–$32.5M $9.5M–$13.5M Lowered
GAAP EPS (Diluted) ($USD)FY2024$0.51–$0.58$0.17–$0.24 Lowered

Drivers: incremental weakness in China (-$10M) and FX, volume impact; OpEx updated (+$3M) but offset by stronger other income and lower tax rate; H2 profile weighted to Q4 .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’23 and Q1’24)Current Period (Q2’24)Trend
CDMO demandEarly signs of recovery in Q4 with CDMO orders +20% QoQ; lumpiness at top accounts; destocking easing Tier‑2 CDMOs drove strength; CDMO orders +20%+ seq/YoY; book‑to‑bill >1.4 Improving
ChinaBottomed orders; 2024 expected 5–6% of revenue; weak APAC Q2 sales -38% YoY; 2024 4% of revenue ($25M); guidance cut by ~$10M; rightsizing team; no turnaround in 2024 Deteriorating
Consumables destockingDestocking “behind us for the most part” by Q1; consumables orders +10% seq/YoY Consumables revenues up double digit vs Q1; orders +30% YoY; destocking “finally behind us” Improving
Capital equipmentWeaker in Q1; seasonal; RS10 launch; expect H2 pickup Equipment orders +20% QoQ; strong funnel; expect further pickup H2 Improving
New modalities2023 flat YoY; H1’24 CN: mid‑teens Q1 growth; driven by top 20–25 accounts Q2 orders +40% YoY; book‑to‑bill ~1.1; H1 revenues >10%, orders >20% Improving
Key account strategyBuilt in 2023; expanding visibility at top pharma/CDMO Team covers 20 top accounts; positive impact; strategic focus into 2025 Strengthening
Margin/OpEx49–50% GM target; productivity offsets headwinds; OpEx savings program Adjusted GM 49.6%; adj OI margin 10.1%; further ~7% OpEx reduction planned for H2; tax rate lowered; other income raised Stabilizing
Guidance/H2 weightingH2 step-up expected vs H1; double‑digit growth in 2025 target H2 non‑COVID +11% YoY; Q3 seasonally lighter; Q4 strong; FY revenue range narrowed; adj EPS unchanged Confirmed

Management Commentary

  • Tony Hunt (CEO): “We are narrowing our revenue guidance to reflect incremental China weakness… we are confident in Repligen’s ability to resume above‑industry growth in the second half of 2024 and into 2025.”
  • Olivier Loeillot (incoming CEO): “Key account management team now covers 20 of our top accounts… focus on innovation and disruptive technologies… catalyst for sustained long‑term growth.”
  • Jason Garland (CFO): “Adjusted operating income margin improved sequentially to ~10%… expect 12–13% for the year through volume leverage and further operating expense cost reductions.”
  • On regions: “China… represented 4% of our total business in the quarter… we have seen no signs of recovery and do not expect to see a turnaround in 2024.”

Q&A Highlights

  • CDMO strength: Tier‑2 CDMOs drove order rebound; management sees this as an encouraging turn; durability to be tested in coming quarters .
  • Seasonality and phasing: Q3 typically lightest; Q4 expected very strong; Q3 revenue seen in the $151–$155M range .
  • China clarification: 2024 revenue ~$25M (~4% of total); reduced guidance primarily due to China; rightsized team .
  • H2 order assumptions: ~4% order growth needed H2 to hit midpoint; ~5% revenue growth required .
  • Margin trajectory: gross margin tracking the 49–50% guide; step up in margins expected in Q3 and further in Q4 via volume leverage and OpEx reductions .

Estimates Context

  • Q2 2024 compared to Wall Street consensus: adjusted EPS $0.33 vs $0.33 in line; revenue $154.07M vs $154.11M (miss ~$0.04M) . S&P Global consensus data was unavailable; third-party sources used.
  • Implied revisions: Revenue guide narrowed (China/FX), adjusted OI lowered, but tax rate and other income improvements offset; adjusted EPS guide held at $1.42–$1.49—analysts likely trim revenue/operating income while leaving EPS broadly unchanged near midpoint .

Key Takeaways for Investors

  • Orders momentum across CDMO, consumables, and equipment sets up a stronger H2; watch Q3 seasonality and Q4 execution as key catalysts .
  • China remains a headwind (-$10M to FY revenue vs prior view); management has taken actions (rightsizing) but does not expect recovery in 2024—model conservatively on APAC .
  • Margin path intact: GM guided 49–50%; sequential improvement in adjusted OI margin with further ~7% OpEx reduction planned in H2; expect more leverage in Q4 .
  • New modalities are an emerging growth engine: orders +40% YoY, RS systems uptake, and pending Tantti acquisition bolster chromatography proposition—watch for Q4 resin launches .
  • Proteins headwind is transitory: 2024 down year; rebound expected in 2025 with new ligand products and Tantti synergies; limits near‑term mix/margins .
  • Guidance changes are surgical: narrowed revenue range, EPS held; tax and other income offsets provide resilience—signals confident H2 execution .
  • Trading lens: Near‑term, Q3 softness could create entry points ahead of a Q4‑weighted ramp; medium‑term thesis rests on new modality adoption, key accounts strategy, and margin expansion as volumes recover .
Notes:
- All adjusted figures are non-GAAP; see reconciliations in the press release **[730272_2bacb345bc9c418589b9a1eafed6c0c6_8]** **[730272_2bacb345bc9c418589b9a1eafed6c0c6_9]** **[730272_2bacb345bc9c418589b9a1eafed6c0c6_10]** **[730272_2bacb345bc9c418589b9a1eafed6c0c6_11]** **[730272_2bacb345bc9c418589b9a1eafed6c0c6_12]**.
- Consensus values sourced from MarketBeat/Seeking Alpha due to S&P Global data constraints **[https://www.marketbeat.com/earnings/reports/2024-7-30-repligen-co-stock/]** **[https://seekingalpha.com/article/4708166-repligen-corporation-rgen-q2-2024-earnings-call-transcript]**.