Good day, ladies and gentlemen, and welcome to Repligen Corporation's First Quarter 2024 Earnings Conference Call. My name is Keith, and I will be your coordinator today. Please note this event is being recorded. I would now like to turn the call over to your host for today's call, Sondra Newman, Head of Investor Relations.

Thank you, operator, and welcome to our first quarter of 2024 report. On this call, we will cover business highlights and financial performance for the 3-month period ending March 31, 2024, and will provide financial guidance for the year. Joining us on the call today are Repligen's CEO, Tony Hunt; our CFO, Jason Garland; and our Chief Commercial Officer, Olivier Loeillot. As a reminder, the forward-looking statements that we make during this call, including those regarding our business goals and expectations for the financial performance of the company are subject to risks and uncertainties that may cause actual events or results to differ. Additional information concerning risks related to our business is included in our quarterly reports on Form 10-Q, our annual report on Form 10-K and our current report on Form 8-K, including the report that we are filing today, and other filings that we make with the SEC. Today's comments reflect management's current views, which could change as a result of new information, future events or otherwise. The company does not obligate or commit itself to update forward-looking statements, except as required by law. During this call, we are providing non-GAAP financial results and guidance, unless otherwise noted. Reconciliations of GAAP to non-GAAP financial measures are included in the press release that we issued this morning.

Thank you, Sondra, and good morning, everyone. As you saw in our press release this morning, we delivered a solid first quarter on revenue and orders. With Q1 revenues coming in at $151 million, we are right on track to delivering $300 million to $310 million in the first half of 2024. Orders were in line with our expectations, resulting in a book-to-bill of 0.99 in the first quarter and 1.03 over the past 9 months. We're satisfied with these results, especially in light of tough sequential and year-on-year comparisons and the known headwinds in COVID, Proteins, and China. During the first quarter of last year, 2023, we realized $23 million of COVID-related revenue, none of which was recurring. And as we shared with you on our February call, we anticipate Proteins headwinds of over $30 million in 2024, which we saw play out during the first quarter. Importantly, we continue to see signs of recovery in the market and feel confident that the destocking challenges are behind us for the most part. Our confidence is reinforced by what we are seeing in Filtration performance, consumables demand, and new modality momentum. In Filtration, our largest franchise, year-on-year non-COVID Filtration orders were up 20% in Q1, and revenue was up by more than 10%. We also saw a nice sequential uptick in non-COVID Filtration revenue of greater than 15%. Regarding consumable orders where destocking has been the most pronounced, we've seen a positive uptick in demand outside of Proteins. For the first quarter of 2024, these consumable orders increased by more than 10%, both sequentially and year-on-year. Both sales and orders from new modality accounts were another area of strength, at levels higher both sequentially and year-on-year. New modality revenue growth in the first quarter of 2024 was greater than 15% compared to the first quarter of 2023, and orders were up 8%. While encouraging, these positives were offset by the aforementioned weakness in Proteins and capital equipment purchase constraints as reported across the industry. Our expectation is that markets will improve as we go through the year, with stronger order trends in the second half, and so revenue guidance range is unchanged for 2024.

Thank you, Tony, and good morning, everyone. Today, we reported our financial results for the first quarter of 2024 and left the adjusted financial guidance unchanged for the full year 2024. Revenue in the first quarter was down $4 million sequentially from a strong fourth quarter driven primarily by the expected headwind from Proteins, on lower affinity ligands and resin demand. We delivered total revenue of $151 million in the quarter. This is a reported decline of 17% year-over-year or down 20% on an organic basis, with acquisitions contributing 3% of our reported growth and currency providing nearly a 1% headwind. As Tony mentioned, for the quarter, our base business, which excludes COVID revenue and M&A, was down 9% on lower Proteins sales. We recognized $23 million of COVID revenue in the first quarter of 2023 and approximately $6 million in M&A sales in the first quarter of 2024 from our 2023 acquisitions. Therefore, our base sales were $145 million in the first quarter versus $160 million in the prior year.

In summary, we're off to a good start here in 2024. 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. Our guidance is based on our expectation to see orders pick up in the second half of the year. We remain confident in the medium- to longer-term potential in bioprocessing with stronger growth in view for 2025. With that, I will hand it over to Jason for a financial update.

Our adjusted income from operations was $12 million in the first quarter, down $29 million compared to the prior year, driven by the $27 million drop in adjusted gross profit described earlier, with an additional $3 million increase in adjusted SG&A and a $1 million decrease in adjusted R&D as we managed the timing of our technology investments while continuing to introduce innovative new products. Continuing through the P&L, our adjusted other income is expected to be between $18 million and $19 million. We will continue to monitor the progression of interest rates and update this outlook as appropriate through the year.

I just want to ask on some of the trends that we're seeing here in China. Obviously, we have some of the headlines related to the BIOSECURE Act. You also called out some of the lumpiness from CDMOs. So can you just walk us through what are you seeing there from a customer perspective and conversations?

In general, I think we are observing ongoing weakness in China. The CDMO market, which had some very encouraging order trends in the fourth quarter, did not continue into the first quarter. Therefore, we are not fully out of the difficulties facing CDMOs yet. However, the pharmaceutical sector has been significantly more positive.

Maybe, Tony, just thinking about orders a different way. Can you just talk about how orders trended throughout the quarter? And any commentary you'd like to give about April, if possible?

I would say that we were very similar to most of our peers with January being somewhat of a lighter month. And then February and March were actually pretty strong. April has also come in close to where we would have expected it to come in. I think when we look overall at where we need to be, we need to see a pickup in orders as we go through Q2 and through Q3 for us to hit the second half of the year target.

Can you hear me okay?

Yes, we can hear you, Puneet.

Just one on book-to-bill and then I have a follow-up.

When I look at the book-to-bill, I don't have the book-to-bill for ex Proteins, but I think the way to look at this is honestly to look at it on a 9-month basis. So if you look at our book-to-bill over the last 9 months, it's 1.03, which is a healthy sign. We've known about the Proteins headwind. We're trying to make up for that in terms of strength in consumables.

I think we have the right funnel to deliver on what we need to deliver in 2024. We're still not where we would like to be with the CDMOs. We have started to see some improvements. There are a lot of moving pieces right now.

Tony, maybe on Chromatography, is the market still a bit constrained by supply? Or is it back where it needs to be?

I would say that when we look at the chromatography business, the supply challenge is definitely behind us. The main players on the chromatography resin side have built capacity and lead times are essentially back to where we would have seen in the pre-COVID days.

It sounds like the U.S. was up, EU was down slightly tied to ligands. Would just be curious if you could talk a bit more about the trends within pharma between those 2 regions?

If you look at us as a company over the last 3 or 4 quarters, we've been pretty consistent on the orders and pretty consistent on the revenue. What we need to see is an uptick, and that’s the way that we get to our sort of guide for the year.

This does conclude the question-and-answer session. I would now like to turn the conference back over to Tony Hunt for any closing comments.

Thanks, Keith, and thanks, everybody, for joining. A solid start to the year for us. Look forward to catching up with everybody at the end of July, beginning of August. Thanks again.