REPH - Earnings call transcript Q1 2021

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Operator

Good day, ladies and gentlemen. And welcome to the Recro First Quarter 2021 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time.

As a reminder, this conference call may be recorded. to Investor conference Relations like Diaz to now Recro's of Group. would hand over the Stephanie I Please go ahead.

Stephanie Diaz

our President XX, Ryan Thank activities on you. we contract call, the Enloe, development today's for joining will and us. CEO; XXXX. Hello, and will overview ended welcome prepared business, quarter thank financial we you be providing questions. and remarks, have results of Officer. manufacturing Chief we corporate Financial Lake, for After an On and March Today, and Recro's David updates including your

the and and statements, made I'd this Exchange XXXX, which company's company, Before to statements or I the these of assumptions, we begin, number other of current like review a from certain involve results concerning Litigation contain call to caution the and Commission within any X, beliefs all company Actual that encourage statement May of Securities risks differ comments revise Securities meaning of no matters. Act and made Private during with today. the obligation to the today, the of update could these forward-looking concerning conference Reform uncertainties. will you filings undertakes the XXXX,

this and earnings press discussion non-GAAP of certain will Our release call include information.

find corporate over earnings to Enloe, non-GAAP website You David I CEO. relevant can turn our our call the press President at on that, reconciliations, including release, will recrocdmo.com. With Recro's and

David Enloe

a capabilities years. enhancing for of to expand I'm customer expansion leadership my company with order who full organization; the transform and we to of demand. thank everyone in upgrade our participating success our and that to support that you diversification has strategy projects. customer efforts and our our the the report to via who and This first inorganic Stephanie, position to base, Recro, in both coming financial of team-initiated these and strengthening to growth areas, our and in four-pronged and quarter today the pleased the first months of organic growth; quarter expect in you, calls continuing strategy support In the dialed we our are company's Thank those at facilities webcast. XXXX, execution during each best finally, particular relationships of operational to and augmenting customer growing and in progress made expansion and

and quarter we including alone, During I development extensions new multiple projects, customer. formulation following an capsuling on first wins, of achievements provide financial customer will the our business QX results. of these project a secured clinical overview trial current new packaging details

the For call that, I'll turn over to Ryan.

Ryan Lake

David. you, everyone. Good Thank afternoon,

commercial to to due discontinuation product XXXX. primarily of a a million. it call which the our SEC. $XX.X were Before the Form increase results are quarter for I overview the million reported decrease of additional fourth release of XXXX. quarter previously provide the ended period, first and begin, by Though for two lines year-over-year compared in to today issued compared recorded now included in March revenues press our on the to during this represents an million prior addition overview of XXXX on I'll quarter with The decrease I'll is the XXXX XX-Q, the sequential first was today, our $XX.X financial our of Revenues the this year call our to financial commercial brief provide filed prior in XX, in quarter was partners financial early $X results XXXX. XX% details

term XX, XXXX was first costs previously Material the were million tech primarily XX, decrease pharmaceutical a of execution of in interest of was XXXX, the $X.X the Cost public I'll reduced customer of the March Japanese the from X ordering lower under higher loans XXXX. announced recorded certain as $XX.X were LIBOR was of business compared successful a for compensation our transfer months and early employment revenues period million for commercial decrease Partially as for as manufacturing $X.X well quarter on million period. $X.X ended The offsetting growth the $X.X credits compared our lower a higher sales period to for XXXX. patterns force stock-based in a as the agreement decrease was XXXX. million incentive well Trials primarily from decrease million, company. to business As new and the momentarily. the for tax with decrease Clinical Athyrium Interest and million quarter company the ended to The lower rate $X.X to primarily term reduction million the borrowings The agreement. well our as summarize reflects expense. in expenses credit due XXXX. Total XXXX under prior related in loan base in comparable to compared commercial due credit $XX.X $X.X changes expense due SG&A comparable volumes decrease in decrease to million to March $X agreement credit to was costs of of million the the project year of

as $X.X net loss per share or quarter prior of was loss per million year $X.X to compared $X.XX the the the period, March of $X.XX EBITDA, period. for comparable $X.X net recorded million ended for to million XX, of For the company share XXXX, compared the as adjusted a period million XXXX. or diluted in $X.X diluted a

fiscal of of cash guidance March of the the cash compared for million the prior Our equivalents and provide XXXX were million will XX, year. financial $XX.X as now to year. I end $XX.X as

accuracy timing This contracts, of the forces, million million. two company in the $XX.X from million, of overcoming to revenue. be at the to million to optimize $XX diversifying adjusted our product business expects commercial into XXXX, as XXXX, the to company customers' results. to current range existing company's to market loss new year and full development respect new company's takes to the to and business million impact EBITDA be range and The estimations to the $XX million. and orders, be with And beliefs estimations approximately consideration growing against in of customer year services revenue timing to performance. takes development the in of loss success For the $XX.X quarterly there guidance organization, estimate Experience market the cautions full shows is Recro, results of as net $XX in $XX programs extrapolating multiple that quarters related

David, penalty the of has you recent an the of Recro A hand as highlight Before back call the key financial growth strategy, I know, many company's component like the position. I'd to strengthening we've had facility In to signed favorably success XXXX, agreement's company's agreement Recro credit Management. this with Capital of and the Athyrium under million which existing ratios leverage company liquidity the principal to without late an $X parameters. adjusted and prepaid amendment

to of the there million be of March received will the and quarter company In During debt, under by signed another XXXX. portion no the which the of Furthermore, during $X for debt amendment amortization facility's exchange of of remaining was the Athyrium in facility the X.X%. $XXX and reduction governing a this interest which agreement, facility, additional the interest from XXXX, the in equity balance outstanding $XXX credit Recro. through reduced runs to rate million decreased was the principal first million term

reduced million toward debt of Recro our stated total of and of from result sheet, interest amendments, $XX delevered made position. of goal overall these a successfully our balance strengthening a financial our our As rate progress

the year We and expect these amendments full approximately of million $X interest will million XXXX. in savings for cash XXXX in result approximately $X

In to update during addition, we have concludes investor added an very over and achievements my their pleased have support. This an call Athyrium back growth, operations I'll financial and turn period. in overview. partner on for are the David as now we to and David? the

David Enloe

Ryan. Thanks,

previewed active of diversifying team at was comments, first in As a my report objectives: made full my and created following and in Today, that each the of pleased execution full the our - comprehensive expanding company. four one, plan I initiated progress grow very during to we've opening a operational to Recro I'm to strategic quarter both and expansion our customer commercial clinical-stage and and technology while programs the support better to expanding high-value in and financial as inorganic organic strengthening our facilities growth. Recro's upgrade well our and support our transfers our Augmenting of restructuring projects organization base, capabilities order and validations. leadership as as - continuing position which

saw pharmaceutical XXXX, The visibility our this address team, well step a and particular, at diversification activities. the the Trial immune to to and product worked as Recro's existing the represents and This of base on experience second in With terminate entirety decrease detail of combination not client the growth withstand in much market in market development the diverse sales development pleased to business. and our formulation documented revenue of is to diligently a this spanning and to awarded dependency Clinical bit our base. have quarters reports slowdown, earliest with projects client, first pleased reduce as customers growing report contract contracts as a new are At Materials programs. importance later. the we And was stage of X building mind, to one greater had of of trial new for I'll clients a pleased establishing Recro year lead both are contract this execution to decline across decision Recro these segment. broad with a fluctuations quarter was into half In wins that to COVID-related are of and during in of alone. most notified categories, multiple emphasizes Multiple packaging number XXXX. limited first of clinical development can has products. have with the volatility. expansion capabilities This reputation that client which technical sales we their contracts in customers. credit a a decreases manufacturing the have products offerings, than Each commercial as manufacturing two of and of terms Recro's we ago our productive the less new new business. spectrum sustainable I were This by a company commercial in several Recro in in pharma quarter therapeutic as Recro, of of the projects of we're customer During are due spectrum represents a number ever tracking this a profitability execution independent which incremental the our of of most launched then a towards across business service

expertise has coming this promising offering. high-value business Historically, growth the this the our And new revenue addition strengths are years. commercial-stage us complex, in in leverage for expect this the a for dose peer Recro The and is as relative our portfolio We we in client of demonstrate us company to products. companies. manufacture it to oral channel allows be win specialized important already a seeing to of an solid to

as which our our multiple existing compared opens Further, the Importantly, quarter. each the that new customer the Stay with tagline, new to and Recro, time. that the we validating they onboarded the expertise future. gratifying during the with customer better to existing offer with they validation we customers today projects Start expansions being particularly Recro. value in our for the that to than at with first inherently signify expansions service, our customer efficiencies deliverables, company's point are degree customers other projects There's are this project signed Such signed no multiple door

both in our order strategy strengthen financial position and The inorganic organic second in growth. step support is growth to better to our

We on the during also front great progress quarter. made this

As our outstanding of years to credit stated, facility the will the millions come. to the save amendments in company just Ryan dollars

And in wins will we the In customer quarter improve line addition, will expect time. increase margins capacity during revenue. our over increase the multiple our utilization top

The quarter. as the third area Recro to prong as this in operational our leadership augment organization. made strides our great strategy our restructure in is Again, well during

market to to thought services XXXX. intelligence industry's Global industry. guidance authority adviser are the appointed of you thrilled London-based provider the source vision leader in and former our Jim principal CDMO February. founder was Miller Many sold drug market publicly a traded company as intelligence, Data, He's which Board move of is already and a President the an He's forward. in a of biopharmaceutical CDMO to on highly Jim and the his know preeminent Jim. of have PharmSource, sector, our we and on First, regarded in strategy extraordinary manufacturing we

I our previously, also significantly As team. we strengthened development mentioned have business

Boston new and as in six science for BD added has company California, critical markets Southern the our representatives announced, recently we Trial life our As team, the sales Northern and the to regional business bolstering company's Clinical Services as members Midwest. representatives in reach including well

With sales Hirschman. by experienced marketing these executive, XX is additions, Recro's Business now and comprised global Development led Bill of team longtime professionals,

As Ryan a puts into development quarters tangible new a before several being business a place, can CDMO lag in in business realizing typically, when new of his terms of signed. stated expect team time comments, one results

we that, our up get are sell Given quickly to We QX of and successes our in to with we its to order enhance team's achievements base BD the effectively efforts in not forward our and our needs of broad least, particularly continue impressed range many to business our development customer and more support services. reporting capabilities speed Last future. to and facilities best the growing demand. but look

a our different and running customers customer. And batch feasibility currently a During of batch train the granulation validation registration a a suite a X new we new of first new for our quarter, equipment we well this on suite. as registration completed in as are batch phase running for third

our also profitability place seeing closing, and have diversity, a to these and equity sustainable, commitment with as we capabilities evidenced on reiterate inclusion investment are In the team's responsible labeling well by services. in efforts achieving new for a and running packaging put returns We and sustainable I operations our to so advancing contracts manner. our renewed as towards in doing in mindset our wish as growth

at leadership to developed a in visibility and We opportunity decisive sector. and have evaluated strategy and hand achieve this carefully the clear growth,

and position, call concludes And we enhancing and Going questions. base, remarks attract best execute for our to leadership plan, services this expanding today. up financial business to our continue Operator? the diversifying steps open expect and This prepared our to support and teams. optimizing our can facilities customer forward, strengthen to now demand. growing new taking for against my We

Operator

Instructions] with you. Matt from Thank [Operator Craig-Hallum first Capital. Our question Hewitt comes

Lucas Baranowski

And Craig-Hallum. tech transfer I on Hewitt I you congrats Lucas that guess, the at you've then really in the had the update first off, Yeah. believe with This quarter. pharma provide on an Japanese is didn't here the I - for Matt progress guess, good on it's company.

amount related of the a small I to getting step been expect of think back we in to half Should you've the revenue that year? higher that.

David Enloe

Ryan. the over let it. do going to you. that I'll on think defer me defer for for And what Lucas. on But I'll know is Ryan we're question, tech I transfer. forward, as that Thanks progressing expectations detail to Thank for

Ryan Lake

question. for thanks Lucas, the

tech expecting And as for generate on previously customer. to the that for we we're we we do transfer, So also for from batches those customer are making revenue as we continue progress that XXXX. beginning doing registration commercial generate currently in services to revenues the do And customer them. stated,

Lucas Baranowski

uptick the helpful. orders some I see of products, that at in That's ADHD to then now kids least guess you are for have And in parts back Okay. an in world? your begun school, there

Ryan Lake

they're Yes. baseline that for But pre-COVID we overall, Lucas, we the It's levels. is QX. volume well still question. a trends I review, improved would data that great what can say that the prescription overall, see in from below

recently predicting in we've that to XXXX data there's half going I through And that lost of projecting a diagnosis that being of gap to diagnosis XX%. third-party some down first due suggests impact a volumes visits. ongoing about roughly reviewed be the prescription still X% that in visits decline they're where the those essentially still think

mid-to-high down more the prescription single-digit over manufacture, to down all area categories overall drugs therapeutic overall specific that the we across XX%. range. therapeutic the still volumes are So is in are - And pediatrics

few down And as levels. - down quarters. other the relatively it's down from over ADHD perspective, the of been pre-COVID all general say pediatric it's It's not market So significantly. stable past category. as it's still an much although I'd still the

Lucas Baranowski

Those color. had. good questions really all That's are the I Thanks.

Ryan Lake

you. Thank

Operator

Thank you.

question Jacob comes Johnson Stephens, with next Inc. from Our

proceed questions. with You may your

Mason Carrico

Jacobs. XXXX Hey, It's the Thanks guide. Mason guys. taking on for for questions. Appreciate

that think how As account? phasing should at the think for or or balance on remaining this puts look we into we taking quarters comments year? takes of the year, should the of or about big we about seasonality Any

David Enloe

Go ahead, Ryan.

Ryan Lake

for quarter, growth. we sequential of Mason. first out that at were Overall, set as XX% the saw, thanks, the the high you range achieving So end we

forces combination rebalancing we customers grow revenue EBITDA improvement line in period still XX% were saw to range projecting more from market of including lumpiness that the the same the discontinuations, some to think with and headwind low-to-mid our some high single-digit range. a creating And we're the growth stated of - it's last last previously that in things, discontinuation And single-digit the their where of a year related inventory that what's the we really I guidance levels. us. which to for of from the combination decline, before, and is various product we was, as but So year, saw important is described

Mason Carrico

maybe COVID outpacing Got it spare capacity question which is for market? it. Even Thanks spare come the there a molecule supply-demand - biologics the for seems more is that And really talk maybe the dynamic out David worse. much Ryan. small hard here. to was high-level about manufacturing? there in capacity market, Could And supply, by. COVID, how just It's demand like you for has made in before

David Enloe

Yeah, you. an important question. Thank

sold One repatriating take supply at and or companies of And on that mean, pressure in deeper focus seeing for expectation the transitioning the biopharma sourcing U.S., things, their is I supply to we're particularly look the to really chain. a macro products U.S. on being

space. our have so of of position this one lot attention reasons about is capacity. that feel And the is that's the we And we a do in something really the good generated

biologics. of been for than more years, XX% - several greater past the in there market. - have molecule market drugs located molecule the total. year have approved remains the estimates small most It's small would over are small We the the largest say obviously the molecule than market Every U.S. some and

small majority market. continues are percentage percentage. the so be in market pipeline that, than and of a there biologics, molecule not, quietly, we to in it a analysis position the And small or development of And new showed just believe a even even greater did as that very because the recent molecules

People it's expectation solid. put demand that biopharma is for real expectation and will small continuity talk the business U.S. solid are track of very is And capacity important source the commercial several record they and I have for bodes not historic but CEOs, of confidence. anymore. reasons lot a and migrate I a or we from lot significantly fact of The that gives that really on seeing. molecule undervalued. for of that The is we're to a us second that production really just so place and Recro dose dynamic focused that that the And and have to and well is in that's will us dynamic, believe why, companies a oral know repatriate purposes hear you do this one that production

multiples EBITDAs that are see I've our rebuilding transaction we're see pretty at we currently we valuation in will hopeful that in mode straightforward. quarters. that I that the the you while the joined undervaluation a If And industry understand coming we look and today, since company, will conclusion you reflective is of in draw the become

again question. your thanks for So

Mason Carrico

Thanks to on well. quarter. both Congrats the you as

David Enloe

Thank you.

Operator

turn over further David like I remarks. any not this I'm showing to would at back And you. further to Thank time. for questions any Enloe the call now

David Enloe

We our employees appreciate our support. Thank partners And your and thanks a all everyone investors. you at and of Recro. on Many our continued greatly to special call to webcast. to thanks participating today's

and you participating employees are forward. of your for Recro. their our Thank drives excellence and our momentum of quality heart dedication the organization, is support today that and to for continued again Our it

Operator

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

now may disconnect. You

Societal CDMO (SCTL) 9 May 212021 Q1 Earnings call transcript