RPID - Earnings call transcript Q1 2024 | Rapid Micro Biosystems, Inc.

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Operator

Thank you for standing by. My name is John, and I will be your conference operator for today. [Operator Instructions] I would now like to turn the call over to Mike Beaulieu, Head of Investor Relations. Please go ahead.

Michael Beaulieu

Good morning, and thank you for joining the Rapid Micro Biosystems First Quarter 2024 Earnings Call.

our call Sean Spignesi, today, Wirtjes, a release the Executive and we on financial press and XXXX Officer; Chief announcing me are President Rob Chief issued results. Joining quarter first Financial Officer. Earlier A company's at copy News Events rapidmicrobio.com the the website section. in of is Investors on release & the available under

made cash for Litigation Direct to Before financial this usage not margin, made within customer performance guidance and gross runway, but and Growth development adoption placements validation interest Reform XXXX, planned expenses, revenues, may growth, and are and of predictions for including call and forward-looking anticipated condition, are to statements company's Act business cash to of during of the the activities, that or System, activities laws, expectations system the related business. Actual in regarding I'd of may those to launch Micro's and commercialization Micro's potential impact pursuant be Securities including, factors. statements, materially limited to securities XXXX. of differ you future remind harbor statements Any a the like to, begin, statements the implied of forward-looking contained macroeconomic safe of the statements this expressed we expectations on or forward-looking call variety that Rapid statements Sterility in or and from uncertainty Rapid future planned the statements results relating federal meaning provisions results events, Rapid many the Private considered relate which to of due

you X, the our recent to please refer section considered Risk be as and only with Form with description future projections risks Micro's updated be performance. This intention estimates information obligation, uncertainties should these SEC. We conference only of and annual disclaims the aware of Commission, is accurate a of not business, with factors list filings XX-K with call on Exchange required are Rapid as or time of otherwise. And except time and now by law, these forward-looking Factors that, turn May and any that should time-sensitive or new update you to any call statements, guarantee consider to statements Securities because urge filed and and XXXX. I'll in a future information, Rob. events For the contains from subsequent report the Micro associated of the today, our or most revise broadcast as these whether to or over to financial Rapid live

Robert Spignesi

and I results call Mike. financial to I everyone, XXXX. you, Sean review highlights turn us. with Thank this begin our of you our for the our call detailed quarter then first will joining morning, a an morning's Good overview of followed for for will of more priorities and and thank review a by over performance outlook.

all million to Direct total the quarter $X.X in in of revenue existing ahead We First XXXX. is XX% first March the Growth exceeded X guidance. compared quarter, guidance provided quarter customers. our represents placed in the to to quarter and performance revenue row Systems that a the sixth of increased This we

our system a of XXXX now public a First prior we quarter Consumable digits has of XXXX. This in second to of achieved which XXXX $XX grown manufacturing of value our first XX% recurring at company. full results and are least each set that quarterly at Systems total, compared the and least sales, actively we consumables double reflect new their since million became record, XX a revenue are placements. and least XX% record QX are strength in increased in quarter quarters revenue the XX% and part increased year-over-year by quarter recurring our exceeding reaffirming XX XXXX, at global growth In Direct guidance revenue networks. and solid start across demonstrates Growth their year customers using to representing realizing are

commercializing new prudently our margins, for execute improving placements, continue to these gross accelerating against strategic and We and brief of priorities. managing products priorities provide our context a system innovative update to cash. I'd like

data Direct Over These meetings Europe. further would deployment some customers and Direct the with North accuracy, months, human I realizing and resonating I costs. customers is many reduced visited Growth continue full They of America benefits. include customer the to few integrity, benefits feedback. across past manufacturing meaningful our across to recent hands-on networks. error automation lower Systems productive, proposition plan are value of and The labor The are Growth always enhanced Growth Direct's global improved like provide and

the product addition, Growth which clear can Growth efficiencies, the reduced waste in and capacity, critical efficiency manufacturing the provide and manufacturing and demand operations speed enable In Moreover, customers industry offers Direct release, Direct to and for the flexibility faster capacity. operational can inventories. production unlock quality increased less additional given control enable to

the are segments in cell modalities industry-wide therapies biologics the accelerating adoption and advanced gene integrity efficiencies, injectables and manufacturing. The effective growth molecule as these sterile of are for suited modalities pace is need and for the data also Importantly, of improved and vaccines, which small of operational advanced other automation. such ideally for

an automation part solution. customers implement networks, As that confident we the manufacturing of their Growth is are important across Direct the

system of acceleration in the to the in placements half expect year. continue We second an

executives. global quality Our of underpinned senior-level a and our funnel, purchases customers' Direct visibility size our staffed fully sales confidence and team sales Growth the from by is into

next is improving Turning gross margins. which to our priority,

gross inflection on to the to focused service to on the continue efficiency product manufacturing of margins second expect initiatives and We productivity cost in for year. remain our reduction, improvements. We half positive from benefit track an

this exceeded of forward has successful look technology commercialization customer interest this Sterility. for has the breakthrough expectations. Since earlier Rapid year, launch growing to and our been and we announcement Next, our

the Growth providing an second scale-up with to forward our at and Our manufacturing into associated are Sterility on June, on mid-XXXX Center the trained, technology experience commercial the hands-on Innovation we and demonstration Direct for lab completing transfer our we R&D remain launch teams for hosting We quarter from are are with early earnings live look August. and activities. In platform. a update and customers Lexington call in Rapid a schedule

Turning to management. cash

We our reducing partly burn cash operating and expenditures are capital. working by capital focused controlling expenses, on

our networks. further Growth Early summarize Customers I on quarter to strong, strong Systems a key to and outlook. my prepared deployment continue of to messages a XXXX, consumable up including interest about for proposition by launch. Wrapping Rapid revenue. quarter. are across customer Sterility The full value remarks, in a operational global record midyear was in remain start integrity. their the our plan Direct solid providing manufacturing data first It from we is automation, improved Direct a So Growth schedule delivering long-term efficiencies and is excited

gross the our XXXX Sean call and continued expect half and pharma we customer performance our have proposition high-growth business cost, with model with profitability on And path with companies. improvement world-class proven more We efficiency revenue. a a discuss I'll of to strong that, top now thereafter. And and value margins first quarter productivity our detail. to XX outlook a the of of is recurring XX% global Sean? over technology in an that lead durable our embedded in the initiatives to in are second with positive base to to customer turn attractive consisting workflows, focused

Sean Wirtjes

revenue start to results full second and year XXXX. million and XX% QX quarter million Rob, with then everyone. $X quarter compared my review and I'll first morning, comments discuss outlook. XXXX increased today to in good our our Thanks, QX $X.X a of

X During first Growth to the compared we year. placed quarter last in Systems X quarter, Direct the first

consumables, the X revenue in increase into X planned is QX. to first early impacted in quarter to due quarter Growth on the in driven a of systems, quarter the the record quarter completed validations of in a well level XX% System. to QX increased as million growth last also Direct million result the XX% validated compared year. The in by in as first systems year. $X.X in compared higher as some last primarily Product of million Service growth well number QX in and the driven several in $X.X consumables which $X.X revenue revenue, of prior million as to QX to by by that as We last year. made was growth year validation quarter the were to Service was validated expected The validation product compared originally revenue shipments continued during activity revenue QX. a increase quarter in QX revenue was that contracts shifted increased $X.X service in to compared comprised primarily higher from

year QX consists quarter. consumables last systems mainly increased which $X.X which million contracts $X.X annual and million million of and compared Nonrecurring First in recurring $X.X QX the $X.X to of service was in prior comprised in is million revenue, revenue, compared to XX% revenue year. validation quarter to

Turning the QX Product year. $X.X to in first quarter were to compared gross negative $X.X margins. negative in margins last million million

increase stepped product we've first year, into to in some LIMS site $X.X These or compared revenue improvement product XXXX, nonrecurring benefits and the and largely margins As or quarter benefits XX% year. our mix we QX is from in margins last to the This million first revenue. unfavorable lower from this was and high-margin costs consumable was to down offset negative revenue gross QX last negative quarter to software QX negative negative manufacturing proportion of million shifted expected slightly to year. quarter, in customer negative our lower higher $X.X from which partially in to the negative year. Service XX% basis, efficiency. product typical delays QX QX to mainly to attributable for placements QX by actions combined $X.X a the Compared were due and system taken last QX continued On million due compares readiness due business, expenses. were first $X.X margin in million

the as amortization loss Net in control This QX. capital outlook. $X.XX approximately operating and in versus our to quarter. representing through compares manufacturing reduction down share to were prior $XX quarters the year million With in the last of as quarter, of remaining the continue the the and versus million, cost noncash $XX.X productivity. Continuing a was an to prior and be versus in investments compared approximately with expect in expense QX Sales to we first prior focused and million and QX increase first $X.X $XX.X per tightly million turn loss the R&D were $X.X in quarter in as capital of and work progress expenses $XX.X service We the and of net in were and a compensation the continue year our expenditures, million the respect to largely with total G&A marketing expenses million initiatives expenses first our million expenditures $X.X XX% were in balance our quarter. P&L, We well make reduction the to the stock lowest launch activities loss XX% $X.X spending quarter per margins improvement of to our of on QX million year revenue expenses were on year and efficiency as $X.X as cash QX, upcoming sheet. I'll meaningful volumes prior year. the quarter, were to increase we full was first million business. Net $X.X then to QX Sterility. the expenses on combined product year XXXX gross was million Rapid We expect ended expenses million we year. in the depreciation now and period, X% of way reduction prior $X.XX due quarter $XX.X share a associated loss compared year period. net

to and which place of at will million XXXX, This guidance that XX%. continue reflect purchase least scale customer revenue systems. $XX of We year year-over-year at at we for timing continues assumes uncertainty This growth some related of the implies expect to total least to revenue decisions. XX least full the

cadence in and and at For QX, which least peak our March. to the expect QX total guidance with sequentially least in then at in we expect system million, we provided the quarter, increase $X typical placements We revenue and consistent X revenue second of annual assumes placements.

consumables. at Looking

increase sequentially systems QX, We within QX to to in in as sequentially orders compared timing to in more $X.X of then again to expect year, quarter QX million this and and primarily shipments. QX routine enter of service, to revenue variability be decrease new then of use. With activities. by the customer respect between timing over expect to revenue complete primarily we balance driven validation and and million revenue We expect due the each the consumable the $X range, with validation

in X XX least at of at second the including guidance XXXX, our validations reaffirming are in quarter. We least

Turning to gross margins.

negative. We to QX margins compared be expect expect the still in meaningful quarter, sequential second to we first improvement quarter the but

we in QX for well and to the year. both Thereafter, as expect positive QX gross margins as continue full

to We manufacturing remain well efficiency volume cost and margins increasing quarter expect product ongoing each reduction but based as on improve negative. initiatives as

each double-digit remaining revenue higher expect service on X based the productivity. We positive quarters year of margins in and the of improved

in to costs, manufacturing remain and our product overhead grow Looking confident margins forward, productivity. service continue in improve our increase meaningfully manufacturing ability higher we XXXX and we drive costs beyond efficiency, as reduce gross control revenue, to

million. million of continue be $X and approximately of expect stock XXXX compensation is expense and to to with in of of to approximately million; income We $XX depreciation $X primarily million million; of in amortization CapEx operating income other comprised $XX interest expenses approximately range of approximately which a $X expense million $X

for cash full we continue expect to $XX of XXXX. year roughly Finally, million the burn

our reduce Looking next revenue improvement comments. cash working provide goal years a through over drive the of growth, each and my supports second concludes several the of investments margin out least This our OpEx, existing burn our further, with management at as CapEx is half towards of combination our cash we meaningfully and runway profitability into us to of expectation and that XXXX. That capital.

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

Operator

from question The Tejas Morgan the of Savant first Instructions] comes [Operator line from Stanley.

Yuko Oku

This Yuko on Tejas. call for is the

customer similar to Some you with budget to take purchases? sales pressure seeing your your of been of further large dynamic? have seeing on on And respect Could the worsening sentiment elongation whether you're peers what's CapEx leading a elaborate cycles. a

Robert Spignesi

Yuko, it's Rob.

budgets -- our with customer the to experience So similar and previous is view quarters.

the is say, on control purchases we're regard So continued larger for I'd quality to and with the is, seeing what scrutiny budget at labs end. CapEx ours, least

question can it up So well. part of pick the as second your

is There's quarters. a bit cycles would lead But regard I no slower with being And executing say, changes manufacturing it. understand to impacts said, more is approval to a with -- through Growth in around get slower strategic another global to have seen, and past program answer Direct, network. different the customer's multiple scrutiny. process the is few to Biosystems So project a that Micro we're sites dynamic as important well. That moreover, many cases, considered meaningful over Rapid an we more to

Growth cases prioritized. doesn't while from insulate our have projects that Direct to So have purchases notable us where these continued we dynamics, be for seen

Yuko Oku

with Or in could this And you then And it. you frame, interest the something customer? could until that the upcoming communicating the remaining Sterility on midyear expected already, Got launch your to to-dos a give customer a actively if time seeing? sense something the separate it commercial you're you're us question. event the elaborate launch communicating follow-up before launch? is you then you're also, customer for actively holding is are

Robert Spignesi

Yes.

have we customers. order, communicating reverse in So been to

voice belief would technology-enabled system much available communicated that time solutions full are the the automated in which the time results, in what market the reaffirms year, faster proposition I'll of in full of it, the Rapid that market. the have strong. features certainly -- in and features detection, integrity. Those market that from method, needs automation, Show those complement We recent quite at as today manual we Growth is view, still faster our to call expected, data show, full Direct the a It not has, to and the automation and provides, this our other to our walk not the Sterility majority available earlier customer away, the I today. legacy value call, of this differentiated That's trade in what's interest market a PDA Annual work is,

the transfer are to include elements Sterility final part launch the of first to dos development process your manufacturing. with our the the to of regard to The question

organizations as think process charged of the the the commercial and So will of and to up this shipment for progressive final then manufacturing product customers. handoff stages the R&D be with the to scaling release that

Operator

from Stifel. line the Dan of comes question from next Arias The

Daniel Arias

little have the placement you the Rob, can in bit you that talk acceleration the instrument of trajectory. maybe just a about confidence

on are be of X based you time where comment by the should something just X XQ I Or the we looking what think than alone. can systems than the double more I actually -- higher for think you higher? in around, by you that have end did to XQ. you're year, rolls But

that path kind where with So of just just a checking so and funnel of to of year make on are. that suggestive we is than full more you're that sure the sales the higher a couple jive getting boxes

Robert Spignesi

Yes.

particular, standing year confidence full staffed funnel confidence globally by in at fully field looks executing team. continue our and our it of placements of guidance, the number a of to this critical executives networks viewed where to factors. continue system to in composition, guidance our as want is So a customers look of customers, get to a access spend we And priority guide customer least backstop teams of behind across And senior customers. Sales planning time with the network. the across -- diversity bit the diversity to automation. I it. customers, a helpful quite to the driven The automation I'm XX the to deployments for and we the comes confidence of our lot like -- size seeing continuing at customers' is which increasingly plan mentioned and well a are include as is being increasingly, strategic is our as manufacturing level well, is from geographic, we

a as of we quality a platform operations. to of bit a access practical becoming from senior decision-makers strategic, time accordingly, are In manufacturing We larger standpoint. quite b, where level And a, and some well. better customers, these I and get and more of spend a spent my that's large

well. be sterility. would insight confidence X as provides last And that and So the

impact expecting year, sort don't right an we've enormous the mentioned for we're serving upside. but think in we we're -- I the of not

So the elements of a give to are notwithstanding confidence number of question scrutiny. budget our potential guide impact us colluding these Yuko's that in

Daniel Arias

Yes.

question gaining sold side, the bit talk on forward? a might that quarter, Okay. on it that reacceleration Sean, the Embedded the where question the site, that maybe quarter? whether or but which And here impactful. believe, and customer that you then can this Can what of that consistency customer I you're about a that, might look visibility you for with consumable going then was about little be like? had you some last within And X about is just a talk are that

Sean Wirtjes

Yes, sure. Yes.

this as the we expected some mentioned quarter, have think QX we I in So in remarks, things we that QX. prepared happened did in

the service growth and of XX% of that sale So Rob the was mentioned that in kind comp lines. does site highest reflect amongst the the you mentioned. And that growth customer tough product a that different because business

didn't ongoing in have QX. did that in consumable site, from kind did -- We an benefit high So clearly that into that last year. we QX have sales level that of not

as So it that been for if were result. would that higher have XX% not a challenging comp

forward, looking the based the of orders in timing on guided shipments So and largely the consumables. of the down QX, sequentially

the seen couple you've years a have tendency around in do we past from of it So quarter-to-quarter. bounce to

important pull-through. The was of going the think are where in to and pull-through the I XX% above trends more kind in annual the at look things quarter.

about the talked year. way we part of that in flat think looking the relatively year quarter because part through of the pull-through last that year year, sale last site this for I

but contribution more in with with I that revenue touch think from a half up site bought the think in XXXX X half close be in some us in will in to of where see that, things them it's site from second for off of to that we So second them, like moving to level into we'll it going particularly coming sign it first be a I that the feels and we contribution direction do or year. is at I the XXXX, the are some positive them. don't the going half. are expect

Daniel Arias

XXXX. to thought, -- just I it that feeling about the know we're we're finish I okay But like XXXX, Okay. are feels like of think first half And still then of you if of against comps sort tailwind. come the it to way have the explain to situation the can actually year, that year the that beginning going and a this of not in be at

Sean Wirtjes

the anything, be a I don't I why would a comp. next -- see should that if little tailwind on year mean, it bit of Yes.

So yes, discussion think negative I don't a be item will 'XX. it in

Operator

of The Ma Steven next question from comes TD Cowen. from the line

Poon Mah

can types for a Sterility sense give and going of organizations be that Rapid June demo, you the to the attending? On on are us interest

Robert Spignesi

Yes.

But So less from our from sterile customers we're other base, leans we still is we're but placement. segments representation which injectable represented gene towards our and current as compiling Steve. all biologics therapies, such a which current customer bit selling also in -- customers, the manufacturing where a expect

around the customers, which penetration and sterility our significant. approach strategy So within certainly is is current

well. of have we say, top the global to attracting we that As global segments you top majority don't XX companies XX, new would new include know, I as have

So array broad those for expect and of we a customers events. do a diverse group

Poon Mah

Yes.

on Okay. Sterility. then sticking And Rapid Great. maybe

Was in presentation mentioned would think a a mentioned? a show the at that you prior that be conference. you I before that call there trade technical

Robert Spignesi

We Yes. I -- it was. sorry? It am had

Poon Mah

data that or somewhere white or? paper Was published

Robert Spignesi

No.

that's our with would is We data a internal a that internal top-level have have at point do have was formalized, claims paper to at customer. groups this What the show, some plan we call our -- our either with or available. test ultimately publicly product internal and white don't would do but we furnished we I been documentation

Poon Mah

And Rapid then me. on Great. Okay. Sterility. last X for Sticking

is staffed, now force, force and the the sales that launch? sales dedicated Rapid up ready On Sterility ramped for fully

Robert Spignesi

Yes.

on on touched this we call. So the last

commercial approach trained to existing to is leverage our on continues trained who's and increasingly be the platform. sales Our force core been

application with the We sterility help specific elements specialists discussion customers. have will or likely a that can with specialist of

dedicated per everyone. envision a Steve sales for sterility don't se. Great. up thanks force Well, question, standing the we stand-alone So and

have great joining for all weekend. you and thank a So today,

Operator

concludes Ladies conference today's this for you Thank participation. and your call. gentlemen,

disconnect. You may now

Rapid Micro Biosystems (RPID) 3 May 242024 Q1 Earnings call transcript