RPID - Earnings call transcript Q2 2024 | Rapid Micro Biosystems, Inc.

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Operator

Thank you for standing by. My name is [ Dee ] and I will be your conference operator today. At this time, I would like to welcome everyone to the Rapid Micro Biosystems Second Quarter 2024 Earnings Conference Call. [Operator Instructions]

I would now like to turn the call over to Michael Beaulieu with Investor Relations. ahead. go Please

Michael Beaulieu

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

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

growth adoption the uncertainty the related company's and business the runway, [indiscernible] cash operational of of macroeconomic enabling expectations are you planned remind system, of within future that development rapid including statements we for results cash federal of program, future begin, margins, to provisions future expenses, relating flow customer to Micro's Before activities assumptions Private additional on XXXX. Litigation and activities be Any our for pursuant statements statements like this financial statements, growth, of contained company forward-looking interest during the to for the forward-looking condition, efficiency achieve securities reduce made efforts anticipated expectations Securities business. may use impact our harbor to impact in our limited Reform the to many to without predictions and call and the financing, validation and or are Rapid events, I'd operating guidance system or placements this made to, of performance of cash gross statements regarding safe potential but performance, relate Act with call to XXXX, the laws, not activities, and revenue, including, Rapid financial statements usage of sterility Micro's direct of considered which meaning regarding cash goal positive that

materially a may of or from implied to due those variety the factors. forward-looking results statements expressed differ Actual in

time risks report recent filed the the business, the Form Rapid and and most Micro's uncertainties to associated description updated be and filings these Factors be please Securities and Commission For in quarterly that to of XX-Q SEC. statements the factors refer on should as our a list considered Risk of guarantee you Exchange consider with you our are and to with time these aware section estimates of from should with a We not future performance. subsequent only urge

broadcast required update call or XXXX. conference live any information and or new accurate or future of to This events whether The Micro is intention because time-sensitive otherwise. by any today, law, only revise financial X, information, as of except contains obligation, as Rapid statements, disclaims projections August the or forward-looking

that, And to Rob. turn I'll with call over the

Robert Spignesi

for Thank you you, everyone, us. Good Mike. morning, joining thank and

results a Mike revenue this outlook. financial These included press our that As release quarter morning. second our issued reaffirmed and results full our statement guidance mentioned, announcing we a exceeded year XXXX

are As release, highlights, we update we making an of XXXX our performance of against this earnings morning discussion a program. quarter followed second review today's I operational the on will part my efficiency and priorities. an begin by with our also progress announced

as QX announced then will operational will our value. shareholder to a Sean turn long-term the our the I over this believe outlook. results discuss who key detailed financial meaningfully increase as we efficiency financial the more program will drivers I of then review morning call will and provide well

in guidance we million performance. the to a provided revenue Total growth our to $X.X XXXX. was for Total XX% revenue and representing exceeded increased America, with demonstration In potential with Europe [indiscernible], held company. our and customers Innovation placements record and second compared Asia the quarter in growth systems quarter Pacific. May We quarter hosting of Starting second Lexington of the at our in Center quarter X direct we placed June, North second lab. the first

Additionally, during Sterility customers Rapid our second system announce are one existing quarter. with to placed we of direct we the growth that first our excited

near gross quarter, These We represented improvement to in margins, in costs. respect the in on margins and remain margin to we QX. With sequential breakeven which for continue reduced a increase significant manufacturing second further improvement from resulted QX initiatives and efficiencies QX. track product

Now would with XXXX against progress like I placements. priorities, discuss the made to we starting system chief our have accelerating

second our significant several efforts advancements. During engagement quarter, resulted in the customer

our their workflows over Growth our forward existing customers has multiple manufacturing move are deployed sites customers now our for Also, networks. multiple to a with globally global These lab proposition deployment future have as of Direct to of future are the our who already further continue across Growth further of the who selected is platform planning at deployments the technology system our We Direct customers organizations. and and has systems planning value and planning technology of are global strategy one quarters. platform across realized largest significant core processes who further their standardize

This are milestone. to technology it expected I customer the incorporates automation and strengthen standard positions like a recognize globally. exciting as of development. the to clear control drive demands to pharmaceutical in system Direct facilities drug would position better the are Also, These that biomanufacturing notable strategy developments the orders Growth quality and and advanced into complexity and state-of-the-art increasing most for continue

of guidance putting our our placed XX represented full with system year also of one Direct least This a for placements. achieve our placement in existing to July, us position we ninth strong system the customers. our In at system XXXth Growth year,

to forward events of largest again balance our we attended of customer XXXX, the best Looking had once X upcoming. and

to holding will that Johnson D.C. this Growth the last we Growth November, Washington, year's Direct Day, will partnership PDA we in which major announce be customers. be Similar Lonza. are we in our In exhibiting by with one X-day Day hosted of hosted our will Johnson, in Annual And Pharmaceutical at was excited by event be Microbiology year's to Direct & conference October,

will and data the global their largest best ] of Netherlands. and benefits near CDMOs deployment. world's discuss the prospective the operating [ in Growth well Direct site of share as the Masri practices integrity system as One customers for Current

stories success in attendance. customer including of from variety patient companies impact a hear stories, peer also will their Participants

Additionally, validated expect includes our the we strong a be tour event. to will [indiscernible] attendees Participants forward Growth that fully approximately also new expected, a will sterility Direct system local customer interest. environment. highlight of application a we XXX event Rapid this exciting look the With and in GMP

margins. to Turning gross

second significant delivered quarter. progress breakeven continue We and to gross in margins make the near

our leverage of to We decreased the revenue revenue second drive compared a increased XX% as our quarter second through cost this our while of and business of quarter dynamic, focused continue high to highlight growth reduction. cost To in XXXX. combination revenue X%

of We in trends in to achieve our to positive and these expect sustain margins second remain half gross the confident XXXX. ability

excited to commercial are we availability announce Growth Rapid of Sterility. Direct Next, the

of fact, with XX customers. during second we our existing global In the quarter, pharma one our Sterility Rapid top placed system first

X hosted in online application we led an in-person quarter, hands-on that Rapid even the discussions of This a as During on the release, sterility-focused as and topics expert new Sterility regulatory Day. a well include webinars workflows automating environment. product demonstration included Rapid

half capability and scale plan of continue in second the manufacturing events customer to XXXX. our We

we and the in our of been So encouraged XXXX first for half our are by strong, performance has summary, outlook.

We manage of in are on opportunities inflection business second high. this enable additional operational efforts XXXX flow positive positive recently track achieve strength. and customer program the the cash a Building to on with of the margins product actions without higher to on that gross efficiencies. is drive cash to our for the consistent to is This enterprise-wide program strong of focused half to review, in are completed are momentum. our improve addition by costs, reduce review Based and company prudently results company's Rapid financing. productivity. interest we XXXX We is priority of manufacturing end an and to realize increased Realty implementing efficiencies in in and expected ongoing service operational efficiency the This our financial our

Sean by and shareholder high-value will call, catalysts to fully well leading, why therapy A like workflows, I move as continue highlight embedded value implemented additional and to significant products. their turning highly enables clear control proposition becomes with microbial oftentimes believe companies mission-critical, secure and quality most to operate adoption in the more differentiated gene world's a them biologics platform. undergoing the our some customers the to But growth into deliver to Micro and rec global and value. details. efficiently century would biopharmaceutical sophisticated These largest cell which Rapid include and positioned we technology that allows operations automated is in securely XXst key data drivers provide before over

powerful becoming growth and penetration, of America, gross global commercial significant Asia, Broad a North a across only and of strong quality the control. pharmaceutical business revenue of revenue margins. not A rapidly against model, standard base which XXX our in systems base growing Europe with represents growing which includes industry clear progress including recurring but durable improving goal

our finally, value. path substantial we efficiency consistent positioned our expected operational strength over the cash last a further strongly achieving program announced believe we X years increases clear company's these create to drivers, today providing Based financial and flow. performance by on to shareholder And positive are the outlook,

momentum, We our conferences. including outreach, about messages investor value and meetings business these through upcoming outlook, increased will customer and reinforce proposition

Sean more the our that, discuss with in second outlook now turn quarter And will call to to and over Sean? I performance detail.

Sean Wirtjes

XX% to quarter my comments I'll in we morning. today everyone. additional a morning, on review revenue results. quarter of million announced full this our $X good QX QX and million second then XXXX. color and increased outlook, efficiency Rob, compared year start with Thanks, operational third our the I'll $X.X by followed XXXX program to review

Sterility to the the Growth placed year. During first compared X X our systems, last Rapid quarter second second in we including Direct quarter, System

compared time, revenue digits was systems the driven driven X QX to compared Service was systems in revenue This last QX revenue, at in higher last approximately The in the validation second service to quarter. the The to to Direct by growth contract the to comprised year. $X.X revenue product QX revenue primarily by which million $X.X XX% placed $X.X quarter in growth last the year. of year. in consumables in in in the compared quarter completed is growth rate Product compared and increased QX was second in what revenue. million We validations million single also year. consumables quarter million to of and the number record $X.X the was last in increased higher Growth quarter X XX%

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

negative second year. This percentage gross negative our Turning a $X.X or point This progress or X% QX were margins million to higher second in margins positively basis, negative negative year manufacturing million to of by in percentage negative to revenue compared the XX was are XX QX the on second to we or negative last positive and million placed X% improvement compared XX the gross quarter in combined product $X.X increase a $X.X point margins X% million or initiatives $X.X quarter or in margins. $X.X making in and to impacted costs million negative negative last with compared point margin negative reduce year. quarter XX% the demonstrates Growth in were higher million quarter. Direct gross On Service driven or last XX% our volume $X.X improvement. second meaningful quarter XX% negative The also percentage the increase Product positive efficiency. a productivity. systems represents

ongoing with XX% P&L, G&A lab our sterility of in Continuing were new the $X.X QX as application and approximately product spending marketing approximately increase expenses the million to respectively, as development the expenses total Lexington, XX%. compared efforts R&D to flat same year representing down million combined new innovation other were our center and a as $X.X which commercialization to million a of mainly were this area. increase QX, down associated was $X.X $XX.X focused in and prior operating quarter. sales expenses well expenses This Within and of OpEx, in reduce new time, R&D activities result in was million, the in rapid demo At Massachusetts.

QX compares savings QX. million compared million hold OpEx QX allowed in flat Net to loss in $XX.X quarter, loss last the This $X.XX $XX per of in net compensation of year. in quarter. us year million quarter. share was a second Net expenses per was in loss Stock quarter. spending the total quarter ended respect quarter. noncash share These depreciation prior expense and net in approximately capital of $X.X in with loss to the the to investments. in cash the expenses million and expenditures, With $X.X $XX and to million million and capital the $X.X We was second were amortization were expenditures $X.XX

our Now I'll year XXXX turn QX full outlook. to and

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

For quarter, we typical at system assumes of revenue $X which the for third summer total least seasonality. at expect reflects placements least and million

guidance expect We QX, in placements and and to revenue in typical cadence originally consistent March. peak continue annual our the to with we provided

within timing from expect quarter. to to in to increase shipments both customer relatively variability we be QX, be revenue expect then revenue $X and We and to continue QX of in consumables expect With the QX Looking with timing variability sequentially to respect with consistent the million revenue orders at the subject normal some by QX. of million and validation primarily to QX driven we activities. between $X.X service, consumables,

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

gross Turning margins. to

We QX expect QX margins gross in be and continue to full well the positive for as to both year. as

cost improve as by margins reduction expect to ongoing increasing product manufacturing sequentially initiatives driven efficiency QX, well in We as volumes. and

service higher increased based compared margins and higher to revenue expect QX We in on QX. productivity

savings million operational of be program of from costs efficiency XXXX. XXXX onetime We related severance in range offset $XX largely expect to continue by the over operating million with to and other in expenses the to the remainder $XX

$X program other involves non-headcount-related For and $X $X the cash as runway. is expense of across million today well primarily full as approximately year, in we approximately efficiency of revised income I'll program as million, interest amortization million; to relating business. well of approximately planned our we announced up, wrap expect operational and other the The depreciation of and in expectations To income, approximately as $X of hiring compensation reductions our workforce current stock longer-term CapEx comprised outlook and our expense reductions expenses focused million. review which the

to in result actions these approximate expect reduction cash an expenses We annual in burn. million our and $X

manufacturing assumptions drive Through the these are in savings product generated existing expect our and next achieve manufacturing efficiency, addition the overhead to cash end over service for by those our positive costs along assumptions These to without reduce higher by being financial increased of additional costs, with underpin actions, our growth, the programs we several XXXX productivity. control to flow revenue this of regarding financing. A combination years expectation. performance few

end revenue continued our annual gross in XX%; the reaching between margins, rates XXXX. of and average digits second, improvement First, annual mid-XXs by the growth mid-double meaningful

impacts minor following changes program, from step and down result of few the operating a a XXXX operational relatively our notable years; after capital each cash CapEx fourth, expenses relatively year. over levels working maintenance Third, in as efficiency of and flat in

year. guidance year also that current a our P&L cash from million income on starting each million including the no include burn in depreciation cash expect contribution and assumptions of important out our cash in It's based All $XX as have expense, a amortization will our XXXX. as we to well which XXXX compensation $X expectation are point we positive that to the for roughly full as and interest impact noncash stock on point above approximately

gross as efficiency years. confidence strong just over step our our working of expectation Together the financing. We we each in us summary, cash of additional flow today we revenue as improvement capital. supporting significant assumptions to believe an and cash growth to during additional continued in management burn CapEx of several outlined. with next margin the OpEx, intend and is in without well In host active of the reducing end the positive goal of important we an achieving announced by XXXX gives are This meaningfully planning event November, operational program provide investor color I've which

concludes my That comments.

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

Operator

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

Yuko Oku

the on Yuko is for This Tejas. call

With cash the operational uses. along program, capital you initiatives of announcement on could comment targets with improve the efficiency working new to

out and inventory this touched quarter? inventory to And on key get customers You how balancing so as of called you will available? stocking are you previously one the there that readily levers, reduction consumables comfortable be

Sean Wirtjes

It's Sean.

half well, second working which So I involves the reduction are, focused little of bit. set terms that we we It be think first that kind up managing in look for to we couple we capital, see things the on a different we're I'd will say, year the are very the are a up believe, actually in inventory forward where rebalancing, of inventory. year, of as us of say for period half of meaningful a

safety sure inventory We the across maintained make offerings we product have no disruptions. that have that we always that stock have ensure levels to to we have

did if the you a and that we the to lot period, to COVID attribute practices those chain to would of that issues, sure maintain have we do people stock safety supply management expect back and going not, think we did inventory to around and forward. have we a levels continue look making I

Robert Spignesi

Yuko, it's Rob.

receive review customer customers. inventory our globally And of also feedback and customers. part our that extremely performance, business strong quality reviews have we what from of chain is we the We with about call supply timeliness our continually and

Yuko Oku

underlying Could given although to Great. a the higher with that customer who in And applications? the other pricing, in value application, on system, you to key adopt is them the place perhaps and you sterility environmental? in may make elaborate is low-volume potentially Direct, placed differences automated slightly benefit [indiscernible] versus also, system system Growth comes factors workflow that the sterility attractive incentive prop it could versus a different then drove elaborate the on city the more less that of that any

Robert Spignesi

Sure, sure.

I think question, it's Yuko. a good

the higher you of a role task. volume type plays of tests in repetitive a automating automation is as yes, a EM kind in high-volume on So touched where

but full value even is very a environment Direct, remind volume of in important automation, Growth errors. listening clearly, integrity, a management, I'll automation, reduction also the in data is lower for proposition In security. Although data folks data strong

plays would setting So low while a I it a different versus high-volume role, a say, volume. automation in

the important, I think incredibly or improved amount and just is in volume. hands data integrity high of the low quality the time volume lower on again,

extremely Sterility has has is However, value on that Direct result. is strong Growth our to proposition Rapid the system time additional

one If recall, method. as to time can and this legacy contamination time as to X results. to compares days as go little you X to weeks day, And detection we to about generally final things well the give if little a as

with but to So is customers nature. the a customers recognition regard regard are fast business to time benefit implications, getting that and too, more to getting of not they to, which the used benefits automated of of [indiscernible], only universe have patients platform things technology, fully detection the release the of very and with more all planet incremental which sterility and and gating in of revenue of the cases, for some to is

the And this very strong. sterility another proposition the So just under -- again, of reminder. is value is

pharma. next-generation control is infrastructure build for strategy Our here across to the quality

monitoring, use the the or ages, all water a are value daily -- under this. is tests we platform. you is and sterility if testing key The testing, full So testing, bioburden -- part routine suite testing, of will, Growth product now essentially environmental of of full the Direct automating proposition the and across the sterility

Operator

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

Daniel Arias

you the existing base those versus uptake adopt don't you've it, together about the of and on some What or those is user that up following something that that now will think that be have? to that that -- system customers those that that Growth convinced gotten Direct are need just connected between you've they with capability within in sterility, difference maybe Rob, how general? there do feeling you on you've

Robert Spignesi

Yes.

out this wouldn't anyone point. again, -- I rule So it of using of at

from days early it's what about the in commercial -- -- excited the the we're the of seeing the we're feedback. product, availability So

having heard The in And feedback connections. about our strong. the the build global significant we're webinars remarks very and Sterility is You strong. customer funnel is Day,

expect So place within the strong universally existing in We did we that to customer system quarter say, a customer base, the would and existing a would large continue. trend feedback. to I

equipment capital a is process. It sales

we're regard segments, very, So we for expect it said, will those category. That on have which drilling -- previous cell strongly being new the timing. with injectables, to cycle as quite example, customer know, you gene very sales address new some vaccine right? calls, of of customers, biologics some segments as and also sterile in we strong, features touched and such application This therapy. and does the in So

would So large excitingly customer conversations, up opening new for incremental it's I also say, us. and with segments very

environmental where recent a a one in triggered we're new categories, having example process a there's and of sterility these sales with And monitoring. a customer conversation around it's

bit to majority So of is to end platform is the the effectively requirements strategy here microbial back a the question comments our that at I of automates companies. control -- the the made quality technology of bring the Yuko's a

sales with team solve our that Sterility. to microbial conversations already benefit that and QC the the globally we're their of problems. customer the launch to of is up workflow see now starting And So down have help and equipped

Daniel Arias

that Okay. but a be probably I while. everybody for that could in be the interested, case more. to be bit little or a hypothetically, just to dig need unlikely I that's should understand

but team or you either probably soon. the that So anytime happen or what adopters that's versus what gathered those you less going of like kind is they're you are know likely characteristics I'm those to everybody likely look understand adopters should use the sales to feel when that not road? talk trying most down I it, your at to together, of

Robert Spignesi

Yes.

Okay.

enough. fair So

So think the companies I with number rule consistent think largely the about have But it, new hard again, it's universal and our that approach, well. adopt I new know don't gene -- Growth if a segments. customers be extension you and to benefit larger customers earlier customers the likely the in was know does there in the data a will biologics -- because us most we funnel cycle higher this around it. have Direct. of Direct, globally is and . Growth managed out the know in of the menu that implemented Growth Growth cell the value applications Direct, have the the that Direct, around an And have of the

be, So and it customer if point kind customer. would that earlier placement had, I could large the would what be of out It it. to a would I to be existing though, customer an I adopters highlight, consistent do base. of, want got and is existing with our new the expect in we amount the customer funnel say, is would new nontrivial has I segments

Daniel Arias

XQ That's there. half. the Sean, on not do back get on to positive gross range need confident and sound like in high to the total in the see to flip how then the be All positive trajectory, But gross margin teens Okay. for to margin. year, for helpful. the you range actually in I in pretty hard full mid- you order like right. high single-digit XQ to And It's then,

So level I is if right from to the incremental increase, understand need better materializes a how not me And out? of here? so, just if improvement help that the little

Sean Wirtjes

sense probably number low and single now. think right we the that as QX Yes. second teens see on less digit makes a range it to QX little where to specific things Dan, about half and based I high

Daniel Arias

Okay. sort I extend And thought. then just the if could of

you working clearly. XQ XX-plus up the percent some from date, later hold, on feel be you'll things a at XXXX XQ? to talk -- up mean we'll I for you XQ. Because about margin nice how to know that you'll gross you but line I do have very cadence and if -- good be a So

off say margins can point anything XQ there is next So year? gross a jumping about you for as

Sean Wirtjes

mean expect would our pressure progress I the seasonality is sequentially mean get even there But to lot margins still across our typical I will to positive initiatives we in making thing then we think build a one revenue margins seasonality, volume QX. we're and from QX internal have to from areas on obviously up be more we still on point to our if QX matters. is be follow there. typical some of out Yes. I just

we I was think this talk end I'm but the today margins. end expect we we've to given get over point not going by business the of 'XX years across several point, guidance did and at a to gross that. about And of kind to mid-double-digit margin next what part the give of

that be 'XX, 'XX on gives feel will some think you for I think 'XX, average.

I number if think overall about to full maybe 'XX a down step So think but that overall could a exit 'XX the XXXX step-up up you QX, we in get building number. where point throughout where we're to a then for positively is QX, meaningful from year

Daniel Arias

makes can That work I sense. Yes. that. with

expansion operational to impact if team. Okay. in the does I to a How Last one, do the commercial on question slip just could, efficiency. of just that anything might when comes it

here. You've got new products important some

growing have sales coverage still the ambitions outside U.S. of you the think I

talk like conservation So touching cash can customers? in still growing just the it's out the sounds you more maybe franchise the important of still that context about

Robert Spignesi

it's Rob. Dan, Yes,

commercial our team -- we place. So in is

have we really calls. a consultative to team. -- we on sales but We view to specialist, the train do don't not we're meaningful So team. We previous professionals. sales We've them answered sterility be our see growth

they're able customers So and position full with applications. water Again, environmental on to of bioburden and work all of the range sterility monitoring applications.

North teams globally, Asia. in in Europe and we America, our constituted So view fully team place

but the So comfortable ability remarks. the we guide, are walked outlook the we term don't Sean to through coverage the near only in near-term the not see also prepared have to meaningful longer-term with that drive and the growth and in

questions? Some Okay.

I think that's the end of the question.

senior and excited our continued business. both So very interest wrap Listen, in we're thank appreciate a increasing about the I term up. things with you, long-term in about regard standpoint We're kind outlook for commercial today. the just horizon our customer see that level heard outlook, you customers with today we orders. everyone, what questions elements of over from discussions shorter some the here the the of multisystem to business and

you remarks. of I that in the some prepared heard think

globally conversations And what we're to encouraged seeing specifically the and quite we're builds orders. customers and currently there. So multisystem on regard with with negotiations with funnel

Margin improvement And clear priorities. see there. is top additional can you one demonstrable think and I of progress our clearly

flow third great operational to And early Rapid regard what additional Our management, pillar about of cash means of and positive achieving that excited financing. follow. the business for products, about to new excited returns more then efficiency Sterility and very prudent and with with focused our cash certainly, fourth the program pillar consistent without

shortly. thank now, and again, time. wrap the for look of We'll with speaking call to you many So your we you up forward

Operator

gentlemen, for this and call. Ladies concludes today's joining. you Thank all

disconnect. now may You

Rapid Micro Biosystems (RPID) 2 Aug 242024 Q2 Earnings call transcript