Repligen(US:RGEN)2019-02-21 19:43Financial Data and Key Metrics Changes - The company reported a record quarter with revenues of $51.9 million for Q4 2018 and $194 million for the full year 2018, reflecting organic revenue growth of 25% in Q4 and 17% for the year [28][29] - Adjusted operating income increased by 31% year-over-year in Q4, and by 25% for the full year [29][39] - Adjusted net income for Q4 was $9.8 million, a 12% increase compared to the same period in 2017, while full year adjusted net income was $33.3 million, a 23% increase [39][40] Business Line Data and Key Metrics Changes - Filtration and chromatography product lines grew over 30% organically in Q4, with the ATF product line up over 60% year-over-year [17][20] - The Spectrum portfolio had a good quarter, up 14% to 15%, with full year sales up 24% on a pro forma basis [19] - The OEM proteins business was flat for the full year, with expectations for a decline of 5% in 2019 due to GE transitioning to in-house manufacturing [23][44] Market Data and Key Metrics Changes - Direct revenue growth in Q4 was strongest in Asia and North America, up over 47% and 38% respectively [32] - For the full year, direct products in Asia, Europe, and North America accounted for approximately 16%, 29%, and 55% of sales respectively [32] - The company expects its direct to customer filtration and chromatography businesses to grow at 20% to 25% in 2019 [44] Company Strategy and Development Direction - The company aims to build out a systems team focused on TFF solutions and to win market share in perfusion and clarification applications [24] - Continued investment in R&D is planned to develop disruptive technologies across three franchises [24] - The company is actively evaluating M&A opportunities to supplement organic growth [70] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's position to gain market share as the industry pivots towards flexible solutions and continuous processing [11] - The company anticipates a strong start to 2019, supported by a robust order demand and the opening of the Marlborough facility [18][19] - Management expects the first half of 2019 to be stronger than the second half, particularly for the proteins business [90] Other Important Information - The company increased its R&D spend to 8% of revenue in 2018, reflecting a commitment to innovation [15] - Adjusted gross margin for Q4 was 55.9%, down from 57.1% in the same period in 2017, while full year adjusted gross margin improved to 56.1% [33][34] - The company expects 2019 adjusted gross margin to be in the range of 56% to 57% [45] Q&A Session Summary Question: Can you break down the moving pieces between the GE transition in-house versus the growth factor in the protein business? - Management expects a strong first half for proteins, with ligands expected to decline while growth factors show reasonable growth. GE's transition will impact future volumes [51][52] Question: What revenue expectations do you have for TangenX and TFF this year? - The filtration portfolio is expected to see strong demand, with new products stimulating growth [54] Question: Can you provide an update on current capacity utilization and future investments? - The company has been diligent in capacity investments, with the Marlborough facility adding significant capacity. Future investments will focus on manpower rather than space [56][57] Question: What are the expectations for gene therapy in 2019 and 2020? - Management is enthusiastic about gene therapy, seeing demand for various products in this area [66] Question: What are the synergies expected from the Spectrum acquisition in 2019? - The target for 2019 is $5 million to $7 million in synergies, with a focus on cross-selling and geographic expansion [68][69] Question: How is the field service and applications team expected to impact revenue? - The field service team is growing rapidly, providing essential support and potentially impacting top-line growth [74] Question: What is the outlook for the OPUS product line? - The OPUS product line is expected to expand into larger commercial processes, benefiting from recent integrations and new product offerings [77] Question: How is the company addressing the growth of perfusion in the market? - Perfusion is growing, now accounting for about 25% of the market, with increasing applications in fed-batch processes [84] Question: What is the long-term outlook for the protein business? - The protein business is expected to remain flat to down 5% in 2019, with potential for recovery depending on new product introductions [92]