RPID - Earnings call transcript Q4 2021 | Rapid Micro Biosystems, Inc.

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Operator

00:05 Good day, and welcome to the Rapid Micro Biosystems Fourth Quarters 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] As a reminder, this call may be recorded. 0:32 I would like to turn the call over to Mike Beaulieu, Investor Relations.

begin. may You

Mike Beaulieu

and Biosystems morning, for the joining XX:XX quarter thank and Micro fourth call. full-year Rapid Good you XXXX earnings

on as Harbor are of the Litigation today, copy quarter Federal to we and are for I'd today statements a press in Rapid the meaning aware including with SX consider on Exchange variety provisions XXXX. X:XX may the Executive factors. on be X:XX Commission Wirtjes, release risks results expectations today statements, the Xth, urge XXXX Any are Actual of This future with July materially forward-looking or our Securities President conference and not company's is be only issued Financial Risk disclaims me as website broadcast Rapid XXXX. intention sensitive but fourth and or Micro should events, announcing this Securities information Chief and that business. Earlier to Rapid the begin, a otherwise. COVID-XX those except of Chief Investors made of Growth Factors Sean development is predictions Private only projections Before Direct under Officer; list section. Micro's the Events financial Rob and call X:XX any results available now Officer. full-year the during these due in release differ and and and obligation, statements to associated refer accurate with contained statements or the a and whether limited Joining Spignesi, to or that call Reform that March information, estimates uncertainties events, the and X:XX business on the business, of relate X:XX which section financial performance results. the to Rob. Micro's guarantee time XXXX. Micro's call Securities or and in the call revise or considered growth, impact Rapid are this live or you customer over a Act update within factors and Laws, I'll System, because of And of should be you of not rapidmicrobio.com adoption by contains News of forward-looking the of future made performance. of remind turn many like implied we any We and that, you XXth, to from considered future at potential statements forward-looking the For Form financial statements required may new statements call interest, to these description Safe law of to expressed pursuant forward-looking please to filed condition, relating the statements expectations of A to

Rob Spignesi

to Good you, Thank XX:XX everyone, us full-year Mike. and results. thank XXXX you our joining review fourth for and quarter morning,

Rapid harmful Micro and MQC, into control as bacteria, X:XX I the in-process our such on testing and contamination, of organisms. of a personnel raw We're process. our remind microbial constant final quality process at critical from production global a of includes products environments, This Biosystems. pharmaceutical aspect to of performance, getting manufacturing drug materials like Before mold, materials, other or everyone of mission focused is details regulated microbial revolutionizing would the which sterility

customers all and Turning modalities, growing global end-to-end setting And enable future pharmaceutical our platform Our half proposition traditional is as in resonating automation we year. It segments. excited is revenue disruption to to was intensity. little XX%, $XX of of and while is modernize growing. large the market fully cell value manufacturer compared X:XX count Total increased of quality and very foundation under approximately billion which and strongly. fast to We XX%, over our remain million, We we pharmaceutical commercial pharmaceutical with biologics MQC XXXX million, full-year and the are to testing includes Growth top control MQC The manual manufacturers for to the the opportunity. advanced This commercial for $XX.X the increased which replaces $XX.X competitive address Direct results. XX manufacturing. therapy especially XXXX. the and pressure strong about automates process, revenue compared ripe prior our at X:XX

systems. systems XXXX, we is For we to a basis, at X:XX increase, XXXX. systems placed the XX% full-year end XX cumulative placed XX of the XXXX compared XXX the validation as have On of the end completed and of

a increase, XX% revenue driven Additionally, annual X:XX we by XXXX, XXX% to consumable systems, utilization validated higher increased last Recurring in contracts. by year-end. compared XX have service in

approximately the good seek System Direct support represented in of and are in that therapies. Europe, demonstrate the cell and these in Together, and X:XX revenue companies our additional customers within We points and year. balanced early continue in is systems. a about the existing recognizing in two-thirds and placed Solution placed with systems Geographically, and to other in being expand be America still existing about have demonstrates new manufacturers, commercial compared are the between and While new we placed one-third North Entering global a regions new X:XX the XX% of customers Moving as were footprint value gene success. with variability balance set in of Direct XX% land commercial progress finally, funnel drive with their customers, existing of with between systems with XX% then XX% we diverse expect customers proposition and we and our our of pharma customers’ were of forward, systems opportunities our expand include to X:XX XXXX, the a sites to our to notwithstanding, and fully customers. expand the strategy, prior Asia recurring manufacturing we growth, where customers. of with existing and CDMOs. And network. and that Pacific. of This revenue XXXX, to making expect growth XX% new X:XX were we In XXXX, new used of to quarterly Growth a purchasing mix customers placed an initial across robust including customer investments organization to manufacturing approximately customers are of Growth biologics top of place systems systems commercial placed future

investing In our and operational funnel continued coupled continued includes continue We us drive quality X:XX multi-year including and capabilities most investments that positions. And as our heavily several commercial and importantly, tools size Direct with Looking capabilities, including expand developing we including our strategy, gene provided development is product weighted growing operations a teams summary, the that will development, operational XXXX, commercial, direct and we expansion. enable goals our to well leadership While critical will public our across believe and the investments growth, significant productivity and Growth to expanding segments. support training at some force XXXX in global to the System increasing key target strengthened to execute funnel teams, and digital our our fast was opportunities size year Micro. in in transformative drive sales and a biologics forward the nearly expanded to marketing commercial in as sales of marketing headwinds we sales and cell we offering capital our following doubling plan, therapy investments Despite financial and commercial modalities team, effectiveness. the strategic and of towards XXXX. position, and and significantly achieve X:XX and Rapid our initial executed land growth against product the

innovative our where also a the we X:XX also quality capability and Asia leadership not investing team are position expanded automated demonstrate excited have previously our region, about a products that in We further meaningful in control. are will microbial We had new presence. Pacific

to downstream workflow. additional Our upstream product Growth service our and the on in focused is platform provide Direct and customers' strategy leveraging

few from This teams advanced will to to our the to provide beta a our an We customer would software our giving We begin are decisions capability categories to and our later more development that pleased making. like goal with on product product been X:XX important track testing to mold progress supports product detection events have are of pipeline. this respond differentiate of updates I other is of This enable microorganisms. mold to contamination customers make customers year. quickly. early of information

the and announce that within several enhancing applications We beta feature This in of also excited into Directs’ capabilities X:XX pharmaceutical to We global beta customer for and to QX, customer vision our our excited to expanding further we're we with core get integrated plan Growth has have a start rapid customer are system XX this other our workflows. adopted testing underway. sterility application. top

compelling platform accelerate and final testing and and and customers existing platform As products the delivering This gene products sterility we Moreover, the rapid integrating product will vaccines, versus important X:XX Growth discussed extend therapies. offer on quickly. their products as cell on Direct data especially for sterile rapid benefits into to injectables, application release and enable differentiation sterile our sterility integrity to more will ship biologics, a have automated Direct test customers automation market. time-sensitive and is such sterility our Growth

Around or infrastructure operational when efficiencies deliver We in the chain are cost expand investing site looking Massachusetts. reductions. Lexington, of drive to to manufacturing we mid-year consumables in new are also our capacity product to global forward completion manufacturing our and supply

even customers To manufacturing XX:XX second opportunity critical supply robust more serve of to is The we are and about site will in long-term front continuity very of to our growth. us. summarize, excited our the enable

consumable strong building we drive business our are and higher placements increase cumulative a utilization. as We recurring system revenue

to balance our strong and including make and discuss will that over investments turn call new flexibility and have XXXX sheet and to the beyond. value we Sean? commercial XX:XX continue the to growth strategic product expand I our drive financial enhance to results. Sean Additionally, and development in With financial operational create to a to capabilities,

Sean Wirtjes

newly compared million we was in what revenue, placements revenue. This rapid high-end was in systems we the to in XX the pre-announced also XX:XX increase in contract which XX%, by a compared caused reported online commercial to limitations QX lower early largely access and recurring Growth including was services existing to year. from As Commercial that from million, the to validation service January the Systems During of The revenue from QX onset was fourth early validation due combined total year, increase by completed was driven and systems million fourth were resulted revenue and in XXX%, revenue, million decline recurring XXXX. validations XX:XX by well the the includes fourth Direct timing in due the that significant increase extent placement million, million and of quarter, of growth revenue range by $X.X Rob process in we higher XX:XX omicron less XX:XX revenue of fourth quarter $X.X our last million, revenue placements due XX everyone. by the as on revenue several consumables. was flat, systems, a XXXX. issues to growth by basis good higher quarter three the $X.X QX completed to in down Systems revenue. quarter shifted and $X.X other in morning $X.X QX compared into a validation of discussed Direct placements On Thanks, the was some customer primarily increased fourth in QX. Systems increased was utilization half XXXX service was quarter of was met to XX:XX at January. us cumulative we QX XX% revenue quarter consumables the over lesser our $X.X of This the Growth placements, the $X.X customers. our XXXX. revenue expectation In total revenue utilization revenue for contrast, increased product we slightly slightly quarter in system specific last site our Commercial revenue, coming XX:XX to system compared million. for decline declined an continued the customer growth sets in morning fourth both customer which Fourth strong of good increases Non-recurring essentially commercial Within than of quarter, is impact consumables, with $X.X in the which offset the includes up XXXX. consumables lower compared in to system at contracts recurring consumables partially the of which second and XXXX. offset rate Growth in placements. XX:XX partially and validated driven in to and service validated in XX

fully grew due to growth. to trend the we of metrics give our average time XX, expect we revenues recurring in in XXXX, was a XX% factors validated of validated While To in These quarter-to-quarter, that It's includes us metrics was including cumulative transition of an from our for field routine systems system well the over new revenue on to make the important per in increase year. keep the consumable up During over this validated $X.X $XX,XXX. the XX:XX finish metric yet to contribution revenue over important in not forecasting factors several routine are these they and million for number recently use, number revenue to mind looking and XXXX to in those BARDA considered Consumable have up vary XX of our related and systems well around $XXX,XXX contract can that expect to and from to in to and validations, per continue in transitioned systems pace full several systems was QX. long-term system $XXX,XXX non-commercial revenue with systems. the rates timing with the to use only do confidence we XX:XX routine use. at run average be individual customer at commercial

compared cost both in with substantially, have As $X.X that QX the lower efforts, the placements $X.X in number sales quarter. XX% placements a margins systems improved reduction revenue anticipate impact and and the as product the to decrease the mainly to BARDA XX:XX our to our past with year and a QX year. consumables reminder, across efficiency system can in margins. in expect fourth against recognizing last drive margins or sequential negative The any in initiatives period we Product was were product product made existing compared we over increasing variability volume margins negative well to We mainly system would help been made volumes XXXX. of field compared improvement we've illustrate service Turning and last to XX:XX these year. negative was margins in reflecting to we margins. progress QX, and in quarter, continue validation in last on negative contract through that product had XXXX. due to have have in Service or The and XX:XX cost XX% both execute million in investments to not Product in work period, in gross To year. our XXXX. as during way decrease million system flat margin as personnel reducing X% XX% same incremental the were do the completed QX slight due this non-commercial

slightly combined gross activity over We On both to in increase. offset a placements basis, improved with productivity service investments our improvement as margins impact by and expect and commercial XX% these the system service of XX:XX significant from drive mix margins. more improved negative a than revenue to continued QX of negative employee margin of the XXXX lower higher XX% volume consumable to course

million million due was to R&D, of commercial prior incurred as This million, a of to The of quarter. higher increased primarily publicly was quarter investment total fourth development, the $X.X million to G&A continue higher fourth in XX:XX manage in sales in attributable quarter. of million $X.X $XX.X $XX.X down well just We to traded as and business common operating consisting of loss company. million expenses of experience fourth as $X.XX XXXX. in total some in XXXX, operate to from operating the higher share, XXXX. costs the expenses due and and in to employee-related in the product in loss increase in the Net pressures was largely in were to per in net materials, $XX.X this compared the to them that expenses did marketing, to and operating compares I Moving due labor quarter, XX:XX fourth any G&A. the $X.X QX net inflationary actively increase costs P&L, material $X.X fourth in freight, XX:XX impact year not the and loss in expenses $XX.XX Net a loss compares million as The shareholders quarter was discussed. XXXX quarter

loss the reminder, million $X.X We of of QX stock $XXX.X the QX million, a quarter We cash million stock last the comp to to with we outstanding periods. CapEx, strength $X.X capital and initiatives our common XXXX. expenditures believe net in ended substantial the connection between respect million, As to equivalents year and our a in IPO share were toward common July of outlook. on with fourth to as turning average XXXX. for the continue expense scale number our balance was than investments. in Now invest depreciation path expenses because growth in in portion was and gives and XX:XX weighted the XXXX was materially preferred conversion the XX:XX us shares flexibility our in $X.X per of This and expense of accounts higher amortization outstanding decrease of in sheet on cash, guidance XXXX year, profitability. our stock this non-cash With

to We variability largest guidance and of this revenue for million high-end guidance source XX%. of of on placements low-end the range. are System between reaffirming growth $XX the representing million, XX% provided potential of January between we $XX are commercial and Xth the full-year approximately

increasing and QX. customers with limitations in in we geographies of January customer impact have early signs some person recently and headwinds ability continued thus revenues QX year our revenue look expect placements back While that we in due we as benefits And by Omicron increasing to from in grow well have and commercial commercial these interact base seasonal from our from system in the consumables there to lessen far to contracts, the From ramping placements As related as XX:XX primary starting in our peaking assumes halves, seen One, in the the validated service quarter sequentially systems sites XX:XX and access expected revenue use. second revenues the lowest guidance as to of QX continue COVID will two progresses our half as system similar first the Looking to and them ongoing we commercial factors. to delivered our the represent two, of our to increased impact into year, normal to trends. that assumes headwinds, driven with QX, commercial year. continue be move routine XX% year-end investments outlook XXXX of at half. the lower and expected roughly of recurring remainder

We new XXXX in validated be with in-line higher number slightly expect than of the to systems XXXX. or

validations and expect cadence Although, outlook. currently between some year gradually as it's concludes my placements have of we note that to That on important the comments increase our the to XX:XX variability quarterly we progresses system seen XXXX and quarters. historically

this questions. for call Operator? up So point, at open the we'll

Operator

question [Operator comes Max first XX:XX from Our Instructions] Masucci with Cowen.

Your is line open.

Max Masucci

XX:XX for Hi, taking questions. the thanks

one molecule IND testing customers First filing. Automated capabilities, around implement are varies biologics sure you conducting implementation. Direct small But System, or manufacturing it you development, drug cell versus know, Direct And companies customers. that seeing before Growth Growth these in-house. the of is timing the after therapy for for are biopharma gene and just and MQC their Like, I'm

be would System? as to it time when curious a Growth introduce ideal Just Direct

Rob Spignesi

commercialization and Yes, again are Good after most question, Max, the installations product -- and our and gene segment placements so XX:XX biologics broader Rob. cell is of our within therapy. of it's

X of where therapy. installed have cell Phase especially and Although we've examples purchased and trials, in we been gene do in

our process would to portfolio. certainly of -- process one part X is opportunity X composite, of being the I work the it -- said, upstream the Phase elements in commercial of that's of So our possibly earlier in -- and That key the see manufacturing the to we strategy. current say, and phase Phase quality in become

Max Masucci

a biopharma XX:XX thinking just for customers therapy maybe even you small companies; molecule. by could Great. the versus demand CDMOs? And between gene you're it sense then biologics about type, trends maybe give companies we seeing demand and And if for just cell us split then customer and can

expectations how Just hear be curious of during in 'XX? types customer those for XXXX and demand to trended each

Rob Spignesi

the demand Biologics our less -- -- injectables, certainly as principal generally and remained portfolio you market or composite a in we've on you've the current prop so Right, gene into expand XX:XX we therapies therapy strongly to And biologics with principal and would with for as through in biologics in way therapy capture segment standpoint, of regard I scope. manufacturer therapies, prop The around categories, that our strong of demand to CDMOs value cell is at just look value and biologics it XX:XX the is our the as well think in of cell but our gene those demand. segments is much was majority is and strong -- manufacturing seen walked and with any expansion quite us strongly. call type and other our value majority prepared prepared from and our small prepared the remarks, as But do manufacturer it’s would the and based principal the of sterile I I say The manufacturer what strong, CDMOs. heard gene of in performing at cell remarks across we remarks sales proposition and of and those discussed team, as and the our and that's companies are the focus end in cell of I gene previously feature molecule is resonate those is resonating current are we also are commercial and the a both CDMO. as

Max Masucci

seen US rest Omicron cooled maybe offer one, base, you're versus the the Maybe EU around off be and has Great. cooled world. the a bit, variant rebound rebound in impact quick of -- -- XX:XX as customer that global just a final just the off helpful. has you if anything can would you've serving but a there's

Rob Spignesi

yes. Yes, XX:XX

the part the major things very first a green are happened in the So Sean's seeing long the getting one week. time. had in first looked customers in of example, for we a although particular, comments that's but site lot we of a like It's quarter US -- on QX, better per last our just shoots time and

would in between say XX:XX North the I is QX, which it's it Asia, then still least visit probably with. experience, of of on a And know, America protocol in based most call You at mode, and planning COVID expect lockdown when and but Asia. go mode. somewhere early Europe that more significant a most our part we being in to said, are customer we through the trip

alleviating. are, kind restrictions of, the company optimistic. by and incrementally It’s company So the case, optimistic but cautiously -- still case we we're about

Max Masucci

questions. for XX:XX the taking Great, thanks

Rob Spignesi

XX:XX Thank you.

Operator

next Tycho from Our comes with Morgan. XX:XX question J.P. Peterson

is line Your open.

Casey Woodring

Hi questions. is on Thanks Tycho. for guys, XX:XX this Casey for taking my

Rob Spignesi

XX:XX Hey, Casey.

Casey Woodring

XX:XX Wanted – to hey. of get a sense

then of total that and implied in can terms where the both go instruments? how XXXX by the system and end of per a the you then the is think you routine XXXX? instruments in us [indiscernible] of do many would database of what's guide, So now and right for And routine give sense pull-through use

Sean Wirtjes

XX:XX it’s Casey, Yes. Sean.

that first in modest what on I as I got focusing system increase mentioned relatively number the number, base, that my remarks. we've the So that modeled in validated question on in think $XX,XXX a

be think that months, yes typically and customers. use. the customer So, existing got and new of into talked our to base validation it’s than from routine base ways. number than longer whether about talked going after applications, with we're routine yet, there don't that and we things the already XX:XX them for down. do manage their project they grow in for use, and customers we're will accelerate work are we've to in faster it sometimes that drivers more of and routine So every continue opportunities as past with accelerating that, they to systems, to production, We accelerate about time over more have that time. different get shrink of different see of to of time But the to it to going more factors process so are We've lag about as goes a up We've are we're lines expect different opportunity three that of customers it’d process. adding see those target things take utilization kind both is naturally see goes over metric we those so that some overall continuing and directly as use, at customers, there and ramp to that XX:XX doing some do that both increase we increasing we significant

Casey Woodring

the XX:XX Got margin space it. then of margin then That's helpful. And a instrument. in our the usually profile gross consumables, and have higher on the consumables the

then ultimately do the there's want optimize to costs the And just you of where a get So any to you see margin guys are out understanding at better what here? And if there? shaking long-term goes once into consumables consumable manufacturing way scale? process

Sean Wirtjes

you well. many them this talked as opportunities There we're we as before mean, XX:XX going think I of Yes, When right of cost are lots about to sure. and after optimize us, about now.

leverage grow with cost we in But as negative close talked bigger XX:XX positive for This dollar multi-million don't online over there growth the very anything volumes, customers, and is low, challenges we and in investments long-term ourselves going them taking get the scale. margins from as that built, relatively out in the talked to lot of do is the trending us therefore, past. low an suppliers, different cost drive and and relatively we've rate forward going product just expansion consumable consumable of to just significant Lexington adding of to volume is can into base XX%-ish of of big do we improvement us rapidly. -- are infrastructure our where to is drive about At range our out in us in expect individual -- you us to shrink going for volume cost leverage is And going allocated lot today The made have well. moving margins going ultimately adding product. to where the a of expect we consumable to that what's going to of to facility forward. we're margins grow to not be provider we support and things we automated -- expect for the up consumables that the consumable time One line So about get that help facilities, that XX:XX to margins will mid-year. of gets is a the we consumables the a bring which the growth overhead an we've amount at and is will we've

So pretty we couple years ourselves and expect a now, ultimately we overall. out to where trajectory we that on up to be think consumable look terms in moving we'd we're getting would expect the can positive space get steep be where to we from margin of a of in

Casey Woodring

staffing XX:XX how So there high likely are would towards customer also you. throughput But Got are And client thinking near-term terms any color maybe for impacts if in guys curious just then of about the dynamic the shortages, some it, Thank thank you there. you both any to drive kind instruments? as solution? validating yes, an color and demand this placing there? of side incremental automated demand on all

Rob Spignesi

a certainly labor. Casey, human Yes, know, you risk it's XX:XX our manage customers to of view our value way proposition, system part the a as of

of core imagine in part market. value current the a as and you So our it's resonating, strongly prop definitely may

number enablement been through a previous data in it’s not capability strong customers on side, a in lab a -- It [indiscernible] COVID by of they and touched well certainly conversations, great we remote also automation I in idea have looking hasn't it with to a side intro have historically, people our from and my that data remarks. part resonates bring so of issues, the value as prop. at the comments As

Operator

question Dan XX:XX Stifel. next comes from Arias Our with

is line Your open.

Dan Arias

levels thanks said XX:XX you pretty are you the were use Good XXXk, questions. Sean, and drive when look that that systems that those bucket some then morning, routine pull-through of at there think are over I the high guys, for XXXk. consumables

then, to mean, conceptualize, there? plays when And get common? to level? and it try I to to I customer of are And just who guess, then expectation getting could that I'm have hear gets size what should be about timeline to to average that? kind go thinking levels? when, but that it, the and understand And is I'd the where we be overall you the about into should what what we took characteristics be can use when in who to those what customers those sure So curious How

Sean Wirtjes

have was to are some work us on and a we've Rob to historically, some the from progress some target it down comments too. to there's both going get use months, XX:XX do. we making I a some lot Yes, a consumables XX:XX to it we’re make validation we quite narrow more are frank, trying to three customers benefit the so to have I that in Yes, that, get months, -- there, most but shrink got we're in year, I'll between opportunity of going some varies be routine have that said which are and may bit more and consistent. it said that. timeline that We start than think And I here think three as is The sooner. earlier,

terms XX:XX customer with that from who something a today is is use in that. I cases to number who where customer don't really our in has of where you, but time middle use. -- being taking for taken range It the typical -- do would that I than think that a customer. for in have the specific be would the be of average would In with it the typical validation about get to less So an plus, XXXk somewhere routine

of said I gene that within cell and is testing the that therapy, intensity level before think we've very for high. EM sector

So does volumes pulling come EM as a we would bit down generally And ultimately but well. to extent biologics that maybe kinds to expect I'll high consumables be customers. of little it as volumes use to comment And you -- high particularly slightly well, let generating lesser of of and case. typically Rob, in revenue, on those through

Rob Spignesi

XX:XX Yes, sure.

just given as mostly is our – and I I footprint a manufacturing monitoring Dan, jump on, a in application-driven our to of volume that's so mean of right at the of that. think it think pretty environmental tracks to off comments, Sean's facility now XX%-plus spot closely

to environmental volume in systems the and biologics. systems higher gene cell So tend be monitoring our both and yielding and higher

latent water segments. some but on So that's focused to to is testing very you very, energy high There a world at volume, I application some as there utilization volume revenue. test sales the our tell dedicated could it for the example, very got in is have campus We parts site on and funnel, growing full important of also focused our being if bringing forward-looking got a both our a the And system that end gene But is and team a water against continuing bit on examples our -- capacity, it’s around tend maximize the with environment of out to systems of can partnering XX:XX other. we're improving I to it for to in has and tests ultimately the in of biologics monitoring. maximize to capacity. capacity more on, cell we've that high the tends therapy, majority are environmental and and sites EM utilization used different and note system be focused think water the not XX:XX bioburden be we've lower or consumable highest customer level, bring and a

Sean Wirtjes

just only only that's bioburden, not I'd EM how for remember working so is volume Yes, to that more other Dan Xx water bioburden important driver, is and as or different pricing quite XX:XX roughly between the a and the out market. you the is price about think that add the in thing bit is water

Rob Spignesi

of world some latent that as so the that systems Right, and around XX:XX capacity time interesting of the some over lever well? an becomes

Dan Arias

XX:XX Yes, okay.

be And mentioned, just extent that saw back placement and of go of related are dynamics them to some you aren't idiosyncratic the things just in of the factors sort the to the that to some some to you can which then place, you should might what kind and the or it’s looking any we're mentioned? are we factor thinking of crop aside year, in one-time the that sense you Okay, about talk that that quarter of you then of helpful. would the to those situations. into COVID and half there the first up of getting XQ from XQ And or when

Rob Spignesi

add and will of Yes, XX:XX start Dan well. as I'll a Sean couple comments

construction had and and right to push the due we decent customer So is delays. non-COVID order the sized timing related example one maybe good multi-system a to issues,

that is details it’s related in could size to if But customer be COVID out to at underlying place impact of the prepared, that fundamentally, ready, not the to difficult flesh hard the It's the system. Now construction. times. not extremely is

that’s multi-unit ahead of that at is the countermeasures can types team build access challenges these help an sized it, really and the having us funnel of the out exists type into we but managing the XX:XX that we're we're site our of with risk exist, of example one as that order our level? some was So around meaningfully a as will Looking that and of that hedge against Yes, quarter. risk also do get risks of some quality and these that, sales our of first case in well. build nature major idiosyncratic of funnel managing, associated but have an half, scale any risks better around we

Sean Wirtjes

too, construction that of are because all. they their I on out we reason decided or Rob the it, that order. XX:XX color Yes, bit it about pushed needed was increase construction guess, deal one to the needed they size that just of the at talked

facility, construction the put systems. to which to needed they So in fit a needed ultimately it different

– timing, a it's yes. us, for good the So answer it impact just it

Dan Arias

if be will in if But to two XXXX, mean, should thinking the some order point, in yes. I thinking and point it’s the sizes three want it they that Yes, XXXX – you I like could up is QX, so was XX:XX larger? I fall into initially XXXX, at capture

Rob Spignesi

sure. That's good Yes, a yes. assumption, XX:XX

Dan Arias

of the cell are more other? just and that picking then to by to you funnel process, where are things kind of were that the growing going biopharma looked -- over you because it way your demand and on was and the that profile? the calibrate were? like to Are Is just looked where we the now the like way two-thirds that type Okay we CDMO and versus through customer we it that when funnel up overall and kind biopharma and rest piece then was gene I XX:XX lastly think the looks now? generally point IPO just mentioned contributing

Sean Wirtjes

and CDMO. look manufacturing so bit in is chunk We on I’d a manufacturer say end modality. XX:XX biopharma the the Yes, two-thirds a at more to still is as rest that of that tend big principal product probably it

funnel therapies. XX%-plus biopharma So manufacturing and specifically the is biologics combination CDMO of of better in and and gene the than those cell our funnel their and

Rob Spignesi

XX:XX funnel biggest So is of is segment by and cell followed biologics therapy category, it biopharma gene vast our the single the majority think of as CDMO. in and the

Dan Arias

it. Got XX:XX

Thank Okay, good. very guys. you,

Rob Spignesi

Sure. XX:XX

Operator

question from next Our Savant XX:XX with comes Stanley. Morgan Tejas

is line open. Your

Tejas Savant

good Hey XX:XX morning. guys,

XQ in it’s validated impact XQ? think dynamic access impacted you to here why us systems versus on the and the one XQ shift -- in XQ? So site system But predominantly Rob walk you the through Sean, can just issues placements

Rob Spignesi

Yes. XX:XX

what pretty and up I validations QX Tejas, we say, -- would recall, essential view how and is to critical if picked related quickly that the customers access in So activities. you and

So function type through our a QX that, of of between and again once process can more on their it's tend QX delay process system as folks going in installation the get validation cause that essential which always allows validations. -- some there's and is bit purchasing site, is in noise to viewed little and of

get to are with of different we bit News regard know opportunities to and with especially ability them little access, pick you back up. As site on-site some get XX:XX our sales kind us we our allowed performing. how business out newer just that ran activity customers the based issue of their site there. and opportunities practical That's associated on a with were access

Sean Wirtjes

a point And know, at you that important we slipped in it’s them number validations I any the weeks. were seeing think, in at that the few to that measure of we broadly, just quarter to add of remember we of a time, because -- of handful the have a in Tejas factors end process. just to given more We that case, metric XX:XX the and

to have validation Rob that at want If issue these clear that than created -- between do historically we business we been extent need exacerbated variability just quarters. the they we're around, think So sure to -- us. that don't I those materially placements because the numbers system so The future not look and they've say timing we'll validation. it for to some at bounce things of can have of we an it with think an -- with did part the when example, we in way, Yes, expectation that, bounce our new quarterly back continue we'll see sales? QX, about question want access consumable in meaningful I happened look goal meet -- that to -- and that's system things XXXX they slipped happening bigger I set future cycle look to that and our critical XX:XX COVID that, on of we have that. basis as met it's a And at to with but to do said we you the with is I annual in although, QX kinds talk were things goal? just is the and going just any our normal what's impact historical tended issues the around make

Tejas Savant

And Got margins quick basis? on margin of dynamics still pointed ones in couple some gross here But a then it. XX:XX you’ve on on in are to here, consolidated the margin ‘XX of line. just gross fourth think targeting I That's the sort a helpful. breakeven the quarter the a you of

Rob Spignesi

will we Yes, margins fourth gross range in the be of XX:XX quarter. guidance positive our at we the midpoint on are

Tejas Savant

thinking Sean for facility 'XXs build allocated high be of, then, million is OpEx, and or sort fair to sort so of out? we the mid Lexington should on mean, Great it. Got another with of, XX:XX I $X

Sean Wirtjes

-- CapEx, or or OpEx XX:XX you Tejas asking

Tejas Savant

XX:XX Well, both actually, yes.

Sean Wirtjes

Okay. would rate XX:XX will OpEx, being so bit be. revenue that about think as on our Yes, growth below what I a commercial little

in year a we with couple be and yes in That's investments we thing year. level be made driven the it, costs that by bit big entire those annualizing, have now, the won’t this an we first there we that a for really we're same us a the other lower. public So XXXX that is of asked quite will have little company things, You've carry

growth annualization a look of those drives we rate gap we to and revenue costs. little growth higher would bit those forward, as the So there other be expect growth XX:XX between in year is And we OpEx a profitability bigger this toward drive as year. the consideration, CapEx after relatively over side yes Lexington couple time. there's a this things CapEx, On significant in a

out number So you CapEx probably this there us year. for fair threw a the is about that think relatively number to

Tejas Savant

also And wanted regarding your to but It's context, to then the before, focus, out? a sort Helpful. you've bringing come couple just supply especially up taken geopolitical that it. can the Got chain of accelerate business ensure that now you not XX:XX measures proactive times pressures, about here? big like I talk of facility European continuity. it's just recent a think of build possibly to customers but more plans of about given, Rob, point over in some And all the tensions

Rob Spignesi

a of I -- business the XX:XX early see part Well second in customers Europe various sites well. during mentioned to at visit Tejas, in to point that QX, that look as to

in inventory and us, for downstream both So mind top upstream for generally, goods and America we it just more of our is both continue hold to Europe customers. finished North

disruptions times. kind current We supply up through of including into haven't major chain seen any COVID

go forward. are now it's -- European the much plan our coming project -- in you And site the question, actual anyway manufacturing on the good on as We for ultimately on the investing and as we're discussed, Europe know here Still selection we well. but because principal the a very timing plate Lexington of we're back well, as backup Lexington looking low for as course into and as conclusion to we manual then up and XXXX. is the manufacturing around focused that, and on but have there and TBD

Sean Wirtjes

the couple this probably XX:XX CapEx next number And over be investment that'll year. one our of after years

Tejas Savant

add And here just Rob, from customer think announcement color starting beta mentioned a and it to customers the customer helpful. more optionality first second following customers, the could final it. solely sterility for Got on feedback you I Yes. for on application then That's grow to is one new me one XX:XX And for in adopt Or color the platform? any sterility? on often quarter. whether existing direct the

Rob Spignesi

is on XX:XX of we're from working the getting which quite both. excited. that especially we're beta general Oh, customers, those yes, What’s with feedback

fit with that a our you Q&A as a new benefits. the market second It's has in well. value application markets. and like value well. It and prop about automation in customers also there think And injectables therapies, absolutely gene resonate of for top all base, strongly sterility and touched and a cell as the here of where away I molecule small data of have biologics Direct other but only So prop also there need the full the but bit our very rapid core customer the see segments like sterile value market about other married we proposition of call the high XX:XX types a the existing selling walk Growth is system to sterility we question, that integrity to not the the is

system but adopted stand-alone be So and also we currently we a regards as related view full the it assay certainly as have, it with to profile that can assay basis.

there maybe the dog of of we in and any the kind the assay if -- customer, new is entirety is will you workflow customers. to in goal or envision, really but to lead Our – know, lead acquire instrument you obviously is given do

Tejas Savant

you, thank helpful, Rob. Very XX:XX

Rob Spignesi

Sure. XX:XX

Operator

like over XX:XX back There are no I’d Rob to the call turn further closing remarks. questions. any for

Rob Spignesi

joining company. Okay. in thank your We us interest for you XX:XX appreciate our Well, today.

Cowen are with and we the look there. attending week many Investor speaking you Next Conference of forward to Healthcare

Operator

concludes This XX:XX program. the

Everyone disconnect. day. have now may a You great

Rapid Micro Biosystems (RPID) 4 Mar 222021 Q4 Earnings call transcript