MRVI - Earnings call transcript Q2 2022 | Maravai LifeSciences Holdings, Inc.

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Deb Hart

Thank you, Vikram, and good afternoon, everyone. Thanks for joining us on our Second Quarter 2022 Earnings Call. Carl Hull, our Chairman and Chief Executive Officer; and Kevin Herde, our Executive Vice President and Chief Financial Officer.

Our correct press release and the slides that accompany today’s call are posted on our website.

If you look at the version of the press release that has our EBITDA margins at XX percent, please refresh your browser or go to our investor website at investors.maravai.com for financial information and quarterly results for the updated version.

on business Carl review update, results guidance. see you first the can and a with and you Slide will X, provide financial As Kevin will prepared up questions We’ll for the call following open the remarks. your results On cause Slide the that and differ. regarding make to to we company expectations those and you actions for the that including performance business risks forward-looking are of call, the statements during our we X, remind or that goals may the uncertainties financial subject

factors, Additional today those included could in we more views, information the not factors change the in itself update is or does described as our with to which commit or concerning these obligate as information, law. forward-looking required risk current SEC. press release by reflect Today’s other as our the statements, and fully that issued various filings as except comments well these of company result new a future events, are

benchmark we’ll the measurements our of GAAP using adjusted call, performance issued expense, net discussed Reconciliations financial are current measures in earnings the and to will During non-GAAP EBITDA, non-GAAP as metrics release guidance. adjusted today’s of tax in that The included of results our income and should income, and per financial this share. against we performance providing to the of be not be press results in alternative GAAP our adjusted to afternoon. measures call, investors intended certain enable These to measures historical an viewed be peers. that are

Carl. to So call I’ll now over the turn

Carl Hull

our We appreciate call afternoon, Well, thank today. joining you everyone. you, us Deb, good for and

we the fact had great Let a me start quarter. that with

earnings, across the cash first flows. revenue, results second strong Broad-based Production Acid drove portfolio strength Nucleic completed quarter Our better-than-expected half the and record of a year.

prior we year. XX% X. turn million on the second quarter, compared reported for the growing in our Today, quarter more revenue Let’s Slide to to total $XXX results detail in

adjusted year, margin up to On was and the a see up quarter prior share over XX% prior basis. adjusted adjusted adjusted of Our the first the million, of adjusted an on EBITDA year. EBITDA per led EBITDA half $X.XX for That you’ll reported the we XX% and $XXX the the results our Revenue million. free for flows quarter. $XXX EPS million record year X-month X, was a for quarter to Slide of XX% in the cash of compared performance $XXX

which million base revenue growth This X-month the COVID period, business, XX% EBITDA in margin. for CleanCap XX%. was represents top-line of EBITDA resulted excluding a $XXX Our adjusted

see, can As very a you XXXX is off solid to start.

Growth cell medicines, Turning today where Production see Nucleic segment to therapies, within offerings address Slide Maravai’s modalities for and pipeline our products. strong a is demand oligonucleotide mRNA X. multiple we and robust. Acid therapies, other across the therapies, genomic

Our quarter, XX% revenue Nucleic million Production year-over-year. business Acid of up had $XXX in the second

CleanCap COVID-XX-related experiencing healthy grew revenue, our demonstrating the Excluding enabling base business non-COVID acid we are XX% a pipeline. some year-over-year, nucleic

property. news We some to share have good intellectual also on

at proceedings technology U.S. our notice Office, ex received we reexamination and and been reexamined recently patents One all of CleanCap are U.S. the in our parte claiming claims Patent patentable. has Trademark that

field U.S. intellectual month. property reexamination our RNA. of foundational We in messenger our the of patents with the of by capping demonstrates that and technology receive this, We expect believe five-prime our together certificate to end claiming other position the the global

in customer of our Production on as Acid creation are base innovative services. our value both continue to messenger driver the growth see Nucleic business and products We key focusing we as long-term

therapeutic mRNA RNA preliminary modality. companies sizable R&D into a to new vaccines large have breakthrough as validation of and X. success Turning small Thanks made COVID-XX Slide large in for of Both to biopharma investments the the messenger part therapeutic and assets.

to as with to done development and a This right these nucleoside customers services. from small We’ve have messenger XXXX the that fact, with expected toolkit of modified products support X-fold nucleotide bodes especially we our assets increasing programs our RNA is an therapeutic and seen customers. nice consultant by top-tier in new grow CleanCap number we shows XXXX. with us incorporated vaccines are to market and uniquely positioned our In molecules, both of number quite the and phosphates track the other and traction work for are preexisting as well into new

tremendous manufactured while our in continue messenger We and improve the newest These customer improve value years of drive messenger RNA our base, to vitro quality should CleanCap RNA have to to transcription come. inclusion reactions. bring across customers to for and technology GMP other opportunity materials, programs a providing raw in critical to help

vaccines XX and approximately Maravai’s and As number expect to and impact may the XXX XX the the XXXX. new be in and we up more see approvals consultant in advises Alliance for of RNA third-party development According therapy cell cell that vaccine XX% between XXXX. as IND gene the starting per continues therapy Separately, of modalities. cell interest clinical therapy by later will to rise and infectious transformational clinical in approvals these the and Regenerative validate may FDA to XX efficacy near-term of and market the disease expects year and gene high Medicine, to than advancing therapeutic programs stages which accelerates, gene the messenger approvals per year commercial

ahead it has huge company’s programs have non-COVID growth catalyst growth about since COVID-related and the to Maravai. XXXX, that the us represented most excited operations While a is these opportunity revenue for long-term

COVID outlook. Slide to our X Turning and

revenues create we As of updated rewarding, our to has When the of vaccine vaccine has year, the major last, our to are of over helping some advised in our CleanCap. vaccination future in proud accept cycle. programs quarter, by the of phase or their of half we major vaccines related we that variant role, more million types XXXX products We prepared CleanCap our the be amazingly $XXX year. governments have to guidance that play COVID will million mass levels. and variability dynamic in shipments growth the indicated [ph] you particular, directly for pandemic. $XXX a been revenues about quarter to initial forecast vaccines vaccine from CleanCap XXXX with after tumors have have recently In of and difficult peak XX% new driven may customers attributable very previously we now our are and that that that so second you delayed believe our its shipments they Since XXXX. one contracted postponed the Pfizer, address changes continued COVID-XX evenly unexpected and customers time, shipped moved fourth of COVID-XX for the in split first first of the orders the all half that of Cumernafi being midpoint These vaccine plans be could, beyond XXXX the demand we course, would toward more We of of part demand know, the shift life of COVID-XX part thought market and fall.

the are and range the by about outlook, for for in previously market regard expected prior campaigns, revising guidance year difficult from lower our guidance. we $XX to COVID-XX our rosters, which million de-risk and vaccines demand predict effectively delayed lines XXXX to the CleanCap will Given revenue full dynamics time to booster the related

other year the Kevin range be total COVID quarter. $XXX inputs revenues central We’re with million into related and million this here in in divisions flux. midpoint. into certainties the to the minimum now XXXX our issue CleanCap many that assuming covered Difficulty] [Technical puts for durability this guidance XXXX, fourth space will investors may for million later takes guidance and of will at back-loaded half $XXX beyond. CleanCap the revised leaving in definitely somewhat vaccine and full related the concerned XXXX between is $XXX and go second the and discuss obviously in our of has This to Main a

updated working addition used to our our the that have customers guidance. XX-month we In forecast developing in with previous rolling to secure largest

$XXX the and XXXX. COVID be enter numerous Based factors on the we forecast next that down CleanCap could independently We work is that will changes for are and We engaged lead up vaccine-related develop forecasts demand between outside have consultants and latest next believe we have to to using the This in million now there XXXX. that or demand volume year. available. actually year, $XXX once for base an estimated in estimate million this data

Let’s move to Slide XX.

Another the to issue investors’ valuation. current of intense our of concerns market appropriateness interest

One more we fact that with our value because before, itself appropriately is undervalued, market’s are underlying unwillingness life believe we exciting and As massive have and success tools beyond look of significantly by science today. the among assess our to said to companies of stands which COVID-XX out. business, I the

and reported for after Today, revenues in later, revenues X million adjusted million are $XXX less our Maravai XXXX. years the EBITDA of in IPO generated $XXX Just team our that full than we $XXX November, year million, times need and same our note X at you that for been more is than levels. trading don’t stock probably levels adjusted the EBITDA I our IPO recently IPO to $XXX million, our as price. has in

to Slide Testing Safety turning XX our Now, Biologics business. and

business clearance and products. this the help in analytics, customers markets along biopharmaceutical of ensure and gene prediction process providing growth offering that their innovative high in cell support solutions vaccines, biologics, services viral related by and with products therapy, Our purity our and safety

down Testing, in from Our lockdowns China invasion. $XX year. to was and impacts X% pandemic main sporadic quarter The of to April sales suspend the Safety due last resumed decision and Biologics May, the our Ukraine second quarter to were during Russia X weakness in revenue million in

in normalized move regional to an their we’re through out outbreaks we the we’re eye operations the more year, seeing and but return currently business a for COVID As rest of lockdowns, China. keeping

catalog to We our Testing services technical and the and for needs. products to the superior customers’ Biologics in of innovate continue most our Safety of support and comprehensive quality offerings products, scale meet

on this including cell several ligand L platform calendar have kits, of product PGXX our a and new protein offerings. breadth line automated building planned a assay, several product year, further assay, We the launches

some leadership to XX Slide moving and Now, recent updates.

experience responsibility trusted specifically scaling supplier global [ph] initiatives. growth important our DA of as good look him I to team across Leddy our we businesses Executive newly wide global equity a In as life has a nucleic role global leadership team. in lot change and President diversity, differentiate Vice corporation joined of environmental and initiatives, and be and functions, including companies. has and to ESG sciences to Maravai Pete incredibly for forward First, us Pete components welcome Dr. playing in of Officer July leading an leading strive we are this as security. reporting. initiatives in Chief inclusion and resources, as facilities to Pete happy and variety life and function and industry, governance goal a our continues services our Administrative to human biologics, our science our shared a acids through created on

leadership Production Second, we’ve Acid the team well. as Nucleic expanded with

in Development; To are and this we messenger partner see scale we are Kate Broderick Both operations, quality to increasing Quality President, Research facilities, innovation initiatives. on as We innovation in our Regulatory. Senior our Vice to ever life RNA with more customers. Jay and as are our excited our as to systems, President, contributions and closely executives committed and seasoned their and Vice R&D investment and we best-in-class Dr. as quality and Lochhead, sciences end, brought we

the completed by end of is be to acquisition the MyChem of year. on the Third, the track integration

and commercial and messenger capabilities commercial in outreach RNA that molecular diagnostics extends We and activities manufacturing with raw therapy, development gene have teams. vaccine of materials R&D critical The the MyChem manufacturing. TriLink’s our cell addition used are merged and in product of their

with current and expected MyChem Looking initiatives. now forward, Research the Zhao, the the team chemistry CleanCap Vice of processes products developed fall variants and innovation to grade. new President entry Dr. Co-Founder, including leading of CEO supporting for the and Development, GMP launch the chemistry will be our Chanfeng is scaling

update to I’d Slide XX. to Moving on our plans. you like facilities expansion

importance Flanders the collaborative facility they the the occupancy award the and of development. of of Phase X with up Flanders the role of The the for mRNA view goal our is will acid $XX expansion in of is set vaccine of Defense, on COVID-XX agreement with their Department site is this where Phase expect therapeutic of fund have future quarter, to readiness part second a as we construction nucleic planned recognition During This production San and late occupancy nationwide first and we and beyond. Diego. pandemic the to X of government’s in half schedule, signed of million unique our We a significant capabilities of and XXXX. our to playing XXXX for

By phase an with a the the clean GE two to rooms. provide suite Flanders new our with manufacturing As operations some will site. of reminder, first moving us additional

safety new We small and here GMP further production and rest manufacturing site, increase the clean molecule our Phase Ridge in commercial both will the automation expand to manufacturing facility platform break and design a An for year. kit state-of-the-art increase and to us excellence extensive relocation will facilities. the beyond. storage than testing It will out move-in Southport future footage R&D, packaging spectrometry doubles capacity, provide this in capacity square holiday allowing and incorporated cold toward this team This nicely to has operations. at Carolina, of at and investing optimize more Leland, for Water mass culture flowing process a API customers significantly capacity, providing of current from North our enhance our end of been room operational design customized through while Likewise, the and growth. X and the upgrades. The new other over laboratory, our of the to support date sole a

new site, in and site our base corporate and also Ridge in an this radius between of to other. facilities new light and lab located space to G&A teams relocate midway XX,XXX further were all had of occupy a Diego, These accelerate example is office, each we of investments recently Center. Center space We light San will are plan within our in San Pacific and here of square continue later conveniently reside to Water to locations planned secured Pacific X-mile for some Diego feet growth The and Flanders the warehouse this year. the how in renovations the make and We business. which

active able additional inorganic remain to and also opportunities announce forward pursuing to in look the future. We in acquisitions being

that a specialized our are our improve directly footprint and serve material to to ability customers. international raw are committed we We as reach expanding supplier, we so actively expand key to our working global our may

brief Maravai XX, Lastly, I a you corporate update on Slide on give wanted to initiatives. some

We money talent have our our time, communities. launched can impact believe make a We various on our stakeholders. and getting positive support to that

which contributions company-wide and to range established we volunteer employee addition wide These late We organizations. a the have Foundation, implemented are both a Charitable charitable programs year. of an in metric for to non-profit Maravai

innovation, the diversity. on communities we year. a promoting charitable, slide and access local and for scientific operate, some Diego supports on balance Kevin, of the health in advancing educational which programs giving to more endeavors and Our the scientific our we San and guidance charitable including public San with supported, California quarter our the University I’ll This and particular performance organizations to emphasis and of of education supporting the University university advocating healthcare, details inclusion and have for of ask University, State and for Kevin? Diego, Diego. update San second shows

Kevin Herde

the for for our of Thank year components results current our financial discuss guidance of quarter good the happy afternoon, XXXX. and full I’m everyone. you, second to review the to Carl, and

present and some some regarding second Slide XXXX. more the of I will numbers. highlights financial quarter dive XX. updated GAAP with into the details cover then Given Starting Beginning the for our we guidance already, that results, on financial briefly

second percentage the continue base margin GAAP compares was million our compares million this quarter before attributable R&D XXXX, as R&D spend of $X million, from from business. in to as to quarter increase second operating spend This the and the million Income revenue in from at to $XXX was XX% quarter non-controlling $X for a $XXX of million the XXXX. quarter QX we which XXXX. quarter for to Our the was amount of operations $XXX net interests, the income of

than X% compared Adjusted is only GAAP XXXX Moving The $X for from for than less XXXX. small was the to to QX year-over-year. EBITDA the There Slide in million up Adjusted or reported QX measure gross was from XX. adjusted margin record EBITDA QX GAAP had slightly a million This $XXX quarter. represents $XXX the XX% EBITDA QX XXXX, EBITDA XXXX, adjusted to net our in better increase a a margins XX% favorable we EBITDA EBITDA to be GAAP forecasted. for million our and quarter. continue with adjustments still in XX% of reported

are share. to a basic Basic present EPS. net Turning diluted EPS. our with assumed adjusted diluted B shares GAAP basic were dilutive fully Slide awards awards other adjusted shares the Class Class the equity EPS, and here GAAP in equity average of extent measure be the B calculation of Class We and outstanding income Diluted also the other EPS, XX. A in measures, reflect divided average and effect weighted included Class used thus conversion and attributable shares And shares to EPS, QX to dilutive, the conversion. XXXX, net this then the A our and weighted calculation. by dilutive to in EPS, and income will

Lastly, is measure, the and B income Class most by and and other non-GAAP both adjusted which securities. diluted comparable of adjusted divided EPS, fully of equals for shares average focus dilutive us simplest, metric net A the

Our basic per EPS EPS quarter EPS per diluted for and per the adjusted $X.XX $X.XX share, share was was share. $X.XX was

to Slide Moving XX.

loan sheet balance cash net few million in the a position in with and $XXX present ended quarter we $XXX highlights. debt. financial and cash a We million other in metric Here

measure Our capital of hence That quarter million, the flow non-GAAP the with $XXX property and is cost $XX construction equipment, cash million. on of of EBITDA purchases robust will assets focused our with based expenditures and cash were government and strong $XXX funding our we expenditures EBITDA to prior be adjusted and which led and GAAP, further of reflected less portion Capital other million a of the free adjusted expectations reflecting calculation adjusted for quarter free incurred in the flow that are recognized. accordance with expansion investment office, highlighted. by consistent in improvements in facility capacity quarter in calls have as considered offset for of and prepaid

as We the collaboration which of these classified total, long-term expect capital XXXX, justify includes CapEx net under anticipated The million Defense I in XX-month and million. In grant year million offsets to of roughly facility. actually that to $XXX from debt, have million two-thirds other them. expenditures long-term $XX will assets Department we fiscal to our accounting pursuant we with for the EBITDA and $XX as I million fixed $XX million of XXXX $XXX some offset will assets of mentioned. With in remainder the cash $XXX the early in the million likely the remainder complete of Flanders of adjusted be GAAP $XX trailing

EBITDA We net and a X have an ratio basis. no gross leverage debt-to-adjusted times on

As our our innovation, we allocation the markets organic capacity in growth for look at strategic long-term and for from debt the capabilities offering further foundation investments bad and flows facilities and and the growth customers capital business. focused serve. cash systems, our people, investments we for to remain strong involves increasing That support on free we processes, our and in solidify base of

and investments to offerings. can our of our that continue believe technologies comes commitment focus growth combination This further as with M&A we to the be inorganic that strategy near-term include and expand capacity. capitalization, to increased in that dependability and breadth addition, along potentially In offerings, quality, continues available or for strongly acquire businesses evaluate we of with organic

of not forecasted predominantly vast interest the risks, majority our The strategy our earlier we of financial year. timely XXXX. interest good contracts the us has with combined and are operations any position. in and maintain material in U.S. Maravai rate Furthermore, to market year, repricing a debt expense hedging for and the for an allowed facing relates to dollar have it As structured we treasury impact this our range

flows us have balance financial to cash tremendous organic discussed, we drive provide and As build investments strong our sheet, performance, financial flexibility that inorganic will make capacity. both repeatedly and and

from for to the in The represented Acid second of the $XXX record as productivity XX% revenue Slide efficiencies Now million Production Diego a XX% is margin company’s business the and our business quarter, this for Production Nucleic in from in the fueled portion adjusted the – facility margin revenue our Acid MyChem of well of unique reflects generated EBITDA the to as the turning total provide EBITDA. acquisition. contribution Nucleic quarter products San and most the our and gains state-of-the-art value growth adjusted Production and XX. manufacturing

major for an Our CleanCap the major as our base XX% programs list approximately XXXX. continues the business increasing compared our year-over-year COVID-XX to quarter quarter are were XXXX, the to $XXX COVID-XX million million grew grow. our Nucleic Acid customers CleanCap using vaccine product $XXX second customers second Production in in of customer of ex-GAAP from portfolio revenues and and vaccine number revenue of

revenue in our the into contributed our Testing not X% business pandemic China, which company’s Cygnus ship slightly quarter, the below as Biologics or than products, and attributable of X% business Our segment’s in the of million estimate, Russia, compares Safety second quarter to to mostly this branded less ongoing virtually in the decision $X lockdowns internal all ongoing in XXXX. down were

were up While region impacted and second North was lockdowns, the XX%, respectively, versus the quarter. prior Europe and Asia-Pacific America XX% year by

Our quarter, $XX expenses in key to in XXXX Biologics were from mainly support at $XX the $XX in that’s the not were margin. Testing of the due that QX included Corporate million, up person the and adjusted million EBITDA business systems an EBITDA growth. drive and adjusted segment in investments of levels quarter, to million EBITDA XX% Safety

had continue key at XXX of a all ability track to employees, to to business key at QX our lease the We up Maravai. in support record from the talent we of to our with competitive XXX add regular full market. end continued labor a levels very June, At talent time for end

to $XXX expect saw revenue down midpoint now major million the is year. previous QX to down is down demand $XXX impact the just COVID about XX XXXX be remaining NAP minimums. our customers estimate reduce are The in guidance. our in million which to Thus, range weakness Now, $XX guidance, guidance. revenue vaccine in lower roughly updated actually as let’s of the our demand move XXXX to X% This we at million from to million previous $X attributable BST is $XXX our or our contracted for about financial than the or included to COVID-XX the attributable midpoint Slide current and their of million from revenues We that region, and expectation both to APAC specifically is half forecasting customers segments. we the the for reduction less

could of to million we to raw $X.XX have to share, fully million. forecast adjusted diluted million profile, in that non-GAAP EBITDA large be from measure a narrowed is Flanders from of to addition, this first GMP to a at in updated requirements. of $XXX $XXX facility, segment. strong requirements On guidance, overall $XXX million, adjusted certain our our previous and revenue we guidance updated but growth the margin half capability line a per compared including In BST removed adjusted $XX not these up $X.XX our just and about revenue over our adjustments including approximately prior expected non-GAAP we our our change measure, guidance, have our is updated to range Taking EPS midpoint, per business, of provide Based in $X.XX levels our grade COVID-XX-related the the range with a CleanCap over at to new for XX% near to in compared from guidance, X% customer order to share. our into and materials XX% midpoint that consideration the to XXXX for with the we $X.XX in a which of expect to million, future range $XXX EBITDA XXXX on XX% expect

quarterly to looking it see timing, we to business the in and at short X-month our continue choppiness As some relates periods.

of your half $XXX in $X.XX fourth to than actual higher. $XXX slightly the is first third the on the EPS $XXX be between to the the Based XXXX consist the forecasted half quarter will result $XXX second and will in of share revenues in our investments, about the approximate full-year continued guidance product in of EBITDA per million compared XX%. our Slide see XX%, other guidance we year half quarter in likely resulting initiative our you growth lower be quarter the range about second low representing expect to revenues results, the in to also mix, is XX, implied As and updated expected margin fully is our and year higher for million on million fourth of B million the an estimated and quarter guidance million due a as converted which that to Statistically share at likely EPS half with forecasted is half the XXXX. third and XXXX. by full second to between being the shares, $XXX the Class for be based in A first in shares and that. count assumption all diluted Class are results of This

are rate operations diluted XX%. an do reflect core tax of based on not fully that adjusted the adjusted our adjustments EPS, Additionally, including approximately

the get it adjusted to As adjustments non-GAAP to other needed range. our to relates EBITDA

million; non-GAAP amortization $XX from reconciling to $XX between for million stated XXXX million; invest a as GAAP million to showed capital for for depreciation to expect equity-based the earlier, we $XX of interest $XX million to our facility expenses expenditures, as and $XX include expectations And item $XX Our we I XXXX, $XX and million be to million million. which expansion. compensation, to vast EBITDA majority and $XX

GAAP GAAP income of net Our in is the EBITDA our the slide from adjusted presented to presentation. reconciliation and EBITDA EBITDA and press end release at of to

plan next which information related Form segment XX-Q, in detailed to will our be our the file addition, day. In we

So your remarks. turn thank now time for final some I’ll it you today. back to for Carl

Carl Hull

base exceptional are in product on and XX, with build our up in Slide right To growth strong leadership we positions target playing the high value. as Kevin. Thanks, other business wrap we in portfolio markets our

over the operations, disciplined us in in and to businesses, I evolving rapidly the therapy growth support to position questions. our now and and cell customer’s Kevin cash like and your and to in would to opportunities many strong our As support Vikram call invest Testing exciting our line and said, Nucleic innovate messenger base that back our facilities, needs. continue to business turn Safety RNA ways allow gene Acid open for people to Biologic the

Operator

First of Blair. go Matt Thank from instructions] ahead. with very Please sir. much, you William Larew the [Operator question line

Max Smock

they’re Hi. This we is should exactly provide And on detail Max year? a of go more bit is the little cadence hoping the COVID much appreciate nature or trend contracts, those detail any you how How could not on into for the then that taking around I Matt. still XXXX color Thanks whether around I the you my for the was of business. bigger already questions. booked. can expect pay?

Carl Hull

model, Well, of and little all The very vaccines themselves to with our that supply volumes, is the the chain. when us relations there’s just issue comes backward for Max, cascades though XXXX changed into our now and haven’t visibility our it customers.

So but really it’s now, is the can’t on all that of just comment much booked of our is how discussions to customers. focus that with of I right our say

Max Smock

Carl. the as move demand to you, say, going year? to case. XXXX. you be the kind you’re around then and next I I long XXXX take can you looks even thinking I’ll Thank to to mentioned or get to what like how hear there And out you rate anything demand in you And that that like hate settled we of past that it. what do the recognize difficult here, about Got run but not it’s is your had looks past be out whether go that’s still COVID think but curious future expected further in on

Carl Hull

longer-term just what immunizations roughly, you at many third to at between guidance, are have the conclusion focus My think in somewhere you’ll you always was its that people’s if Well, be to it’s here the we’re saying this the next going know monotonically XXXX. a going And to actually think delivered, to ends Yeah. see I But certain that that vaccines be vaccines on and two. the look, reached is year a is necessarily half actually at in we will up. that there XXXX manufactured not there of right, is that. a be don’t those number that look around of I where don’t market to made. peak most the have number similar arms, I look how of are how a delta volume really many see of that declining. remember view vaccine need and be on kind this the And believe prospects people to probably – same baseline based variants we personal

Max Smock

you it. Thank Got for my questions. taking

Carl Hull

You bet.

Operator

Thank you.

We Sykes Goldman with have Sachs. go line ahead. Matt from question a next of the Please

Matthew Sykes

and question. Carl my Kevin. taking Thanks Hi, for

Carl Hull

Sure.

Matthew Sykes

Maybe little bit. to gears a shift of just kind

RUO. as requirements I using be not today going we’ve potential made are in therefore, you’re start be feel switching going GMP GMP had heard serving Just transitioned facility, maybe CapEx terms to you you earlier more do similar just and that to in going additional but customer about RUO, people with canceled GMP that you GMP the obviously, the do the people of they’re to China forward? from where process using sort the contract earlier able you focus commentary channel mean, are forecasting, from and in Flanders but the in assume are process. on you you’re the capacity GMP things away would that your that capacity, and of to the that in And serve

Carl Hull

that, first would was China. I say all, say clarify, question. good that to just customer the in of Super

the there. with later committed also they immediately as the and order think of customer But I need program. the changed China in they some couple And decision had partnerships made large would this they Kevin the on sentences GMP, which to RUO material. was their they lockdowns be talking for an evaluated about it side, a thought same

the And seen, we you’re candidate big in And the cited. driver earlier getting that a pharma announcements more involved main that and of occurring programs. say often. I’d about that’s example more you around you’ve partnerships of exactly therapeutic. of is think relationships some it’s So course, the

that So big one I of eliminating is think potential pharma on, much as that G&P. any early mindset to drive happens, them the very and compliance will

and past unfortunately designed this that us is to to the exactly the I as quarter. us this. meet demands, government investment got we’ve And Flanders well support there from allow capital do not think think anticipated quick I we’re that as site we the those just to will have The positioned. allow

Matthew Sykes

Or M&A the given from should guess, a have with then for inorganic this M&A. I right And Kevin for we sheet Okay. MyChem Got going in aspect organic. the back the M&A? terms side. would is on the little I down might likely of simply you’re just discussed balancing accelerate? that in certain just come that on you Is just areas, to of to opportunity, valuations of So there timing waiting And probably basis a held some something case-by-case given currently, that. in or should… which there terms Thanks it. what of find valuation a have bit activity But your say? is more balance or have outside companies been right ability

Carl Hull

Thank your own you questions. for answering

So, adjusted. market. It’s And in those have aren’t that we null you’re be and look valuations Management certain we I we while expectations come clearly about and little have is a may down color quickly as right, always How are [ph]. just valuations that? mean, what of here. the picky for, not acceptance

Matthew Sykes

No. That’s one that? that then with. disclosed there earlier previously if this apologies call. any update on the late disclosed, I disclosed joined earlier missed in last had as just again non-COVID in I it And call, if question to involved you’re and Is And you. fair. apologies you the Thank

Carl Hull

we’ll just have you, I XXX No. I’m I well, locate What the update to can’t on that. tell back you split. to to and there’s seem it. I now. don’t for think here, it I’ll right any programs total before, said we looking Kevin? but here come

Matthew Sykes

taking Thanks much. very up I’ll follow questions. for my Thanks Okay. later. you

Carl Hull

Sure. All right.

Kevin Herde

about previously year. based was we had we an programs. about analysis in the hasn’t That It on did talked really in-depth XXX market that changed. earlier Carl,

market We haven’t revisited analysis. that

tally it inform work something are keeping periodically, a time that’s MRI decisions. that on using So we’re our some visit and point in metric it’s what derived not absolute we with necessarily an accumulating XXX – see internally an that not we’re parties other on rolling of at changes we third again, programs. But we to as that information

Matthew Sykes

Got it. Thank you.

Operator

you. Thank

Morgan the question line We next go Please Stanley. the Savant have ahead. Tejas from of with

Tejas Savant

be low and should of terms in thinking that think the to sort we we end of Can dose geographies, vaccine name fair on uptake, at we individual? which lands applicable of about million that in you Hey, Carl, assume by per the million other that evening. XXXX the the I market way, the booster assumptions versus right $XXX when assumption, on $XXX one sort share? to perhaps guys. Good where some but range embedded of midpoint it of were. top Is the appreciate year, high of COVID visibility

Carl Hull

Yeah. looked about it. I mean, we at the were thoughtful we’ve pretty way that

So we the consider just being didn’t number vaccines made. potentially of

in to of that’s offset, because in rate clinical while largest at also we various change of has that looked share And projections and in downward, be what a number – been the got understood that to trials of by exposed program course, the market what are and out smaller up. there also coming first an we’re the from and the that half? programs trajectory trajectory we’ve in XXXX already participants we’re We still

bit of an little a as there’s So there well. in offset

this soon to we kind triangulated we external refine had to as that is will and the a communicated be it’s as able feel we So completed work generate. that number of

Tejas Savant

with of Flanders. continuing mean perhaps ramp? those plans That’s these time at we XXXX, helpful. how occupancy as facilities margin I facilities those you’ve it. along utilization move takes and Leland expected think or of to normalize should about of just also got And new Carl, to COVID those revenue sort – lines. Got to in to headwinds then and

Kevin Herde

this huge it Yes. from not got are the the any our cost. get going a long-term very burden long-term other facilities But times. to we’re investments. here Look, reasonable. XXXX is not We than They good necessarily is leases, perspective, more on into mean have COVID overall number at these stage. guidance we I

So very our time. is having certainly And they’re of think facilities with flexibility and long the a the these out capability in we spread for period extremely investments important.

can from So COVID, the will of do in market CleanCap molecule manufacturing our changes some small lines, do away other some talking things, the demand some of these likely if as items. specifically revenue to they you’re other mix about and are COVID-related

be that think see several overly and concerned structure. have the we business shaping need going the we in cost us. to to think today over to to we about the to place that demand it’s able necessary putting to very the fixed respond the this And And support necessarily be things up that’s capability not we’re we’re important to We certainly is and mid- So long-term. something over next the years.

Tejas Savant

follow-up And for one it. then Got me.

are thinking of here? there? think perhaps of cell With therapy or out cash cancellations et decisions, your cost efforts, that any around the customer rising, you the cetera. see you delays, gene project about And efforts capital reduction do sort base at elongation and point? Are Any recession, conservation concerns you OpEx of this purchase and to beginning guys how

Carl Hull

Well, I’ll deal the Kevin talk Tejas. with the latter part, first part, let and I’ll about

the pullback are of customers on working seeing we diminution that not are or have that think number any this. who of I

show frame But know. we’ve all be and is in programs think a or imagination trying of conservatism seeing may in that move progress and to some time As to before, programs, own them are I and quite they’re you and that XXXX, the entrants conservation, cash examples not some forward by we company maybe tries time the more the there’s coming and field to well was as three concentrates but abandoning on we XXXX said well-funded stretch cases, forward what four by still their funded in more where move in. any

So cash what’s about that’s how here. on And, I going Kevin, characterize conservation.

Kevin Herde

things. bit, I that. manage might a and hiring business various always shifts. at. can how we we look everything to profile other our manage attrition best make into Yeah. the We for decision Nothing change trying We the our mix mean, run and we we’re through our little Certainly, as specific, can Tejas. products revenue backfill of

tight well. and address to changes. that any investments we cost labor, making concerted now make We manage a manage feel pretty and and investments But sort historical margins making. with the again, profitability there’s given look little game on the how we’re our of And right our structure we’re how the we’re on here, able our no we’re effort we we So the obviously, of to company. expenses,

Tejas Savant

Got it. Thanks, guys.

Carl Hull

a little Yeah. And flow quarter, free in $XXX bit with the million of cash cushion. of got we’ve

Tejas Savant

guys. Got it. you. time, Thank appreciate the I

Carl Hull

It’s my pleasure.

Operator

you. Thank

ahead. the Knight Paul from of have KeyBanc. go Please the We next line question with

Paul Knight

past about rate growth you mentioned of feel had ex-COVID, of that rate in kind How the you do Carl, the XXs. a Hi, growth Pfizer today? of in

Kevin Herde

I XX%. look this guidance you’re NAP brings of that our to prior to, were think around number core which year, specific Again, to that our I if at up to you we revisions year. think that’s this referring the number closer business, I to think

that long-term work grow of increasing, albeit the rate. the both slightly future, support I updated and that’s some that midpoint invest growth with business here for underscore we’re and we’re seeing into I right year the because opportunity. the side that doing now. remarks guidance of business Carl base of seeing And growth sort market this a is that this seeing why continuing in we’re going need the type think and mix on that different sensitivities of to think that the is the and prepared statistics of some to And each cited at number and think what the with with capabilities, the XX% that we’re I business, support that capacity in earlier we’re what

Carl Hull

bigger getting can Yes. we’re and quarter-to-quarter slippages jobs because as this is and do But I now would very say, slight from occur. getting Paul, some more we’re choppy

just a I trends as months. sense months to make it’s we’ll X X-month to to we would that say, compare look at and think necessarily be look is bit X- to going little tempered So be at probably and and X more

Paul Knight

Right. And $XX the would of last, transaction, that ex-COVID some include approximately right? of the MyChem then million

Kevin Herde

It include of Yes. some that. would

that into non-COVID the roll out that it breaking totals. separately not We’re would

Paul Knight

Okay.

Carl Hull

you. Thank

Operator

Thank you.

Please of the from next America. have question Bank of line We with ahead. Ryskin go the Michael

Michael Ryskin

at we’re same XX% was I’m the point. more year-over-year to XX% Thanks quarter. going Nucleic You’re a and the in to guys. bit first for follow-up getting you component? little Could on last think, the the guiding about Paul’s be the now non-COVID guide question, Production little bit question, more going to Great. talk I than Acid taking a

you fiscal China. the So a XQ on on detail little in bit year, bit mentioned more a little

of you hinted bit think a little Russia. I

that in If non-COVID you component what’s more acid. could the nucleic go then on going into and detail of on

Carl Hull

when Yeah. component time for a those from to a Well, have having with, not large estimates contribution do and at GMP rather the capability major we example, a has now raw right changes materials. online in

So that’s one.

they is effects have China business. primarily That’s Asia-Pacific where in second and The our Testing hit. really other been Safety Biologics

talk it we of as we So a base kind about talk when Production. business whole, Nucleic is about business, multiple base for also because and we Acid business about talk base from

So just clarify do better? you Kevin, have that any to you to two kind distinguish things. want of

Kevin Herde

Yeah.

I think that’s right.

COVID-related, this and what Carl we adjusting to, guidance based can for that big of given the pretty orders little the of As roughly I we think or I think Carl to, talked was part about, was all raw $XX And it the half But see And number year. guidance pretty lowering in expected There’s smaller at alluded a want for again, make some our in, we we which a on the material we for today down upside that. alluded Testing just under. of in it the remainder didn’t potential and as little sure the the lot delivering as of out and biggest that I our little midpoint so. bringing have things that was growth bit say that from be fact million probably The the be us confidence just Safety through. here reasons little Europe there’s certainty can a APAC growing to then were there choppy, things of to the region. keeping uncertainty region. of relatively just uncertainty that cited. come using And Certainly, just of little a out we purchase the would a we Biologics probably there’s small

Michael Ryskin

guess, Okay. All and this for XXXX. a follow-up is right. second And I for on the bit half, that little then and a

year? the you’re for about COVID And COVID You the looks non-COVID, that next bit like outlook already the acid half year, then year-over-year. also XX% to second guiding production of it your a nucleic for discussed outlook little for second half,

this second some there in outlook uncertain. going of bit half a from these apply away, – the of So, can the How little you of spoke one what’s both a downside? is for specific where of only this across is there my is, fourth Is from Because orders but of example, sort of quarter. we’re of vaccines given more use May do debate this is where Or COVID from come to a and the Thanks. for right, this? there’s little like stay COVID a read built changed some I something of having variant this sort here? scenario, of last I’ll guess, board. conversation in? an now, where There’s Is bit you and months upside in more the a COVID little repeat question feel Is X you don’t year? situation do maybe of your you and where conservatism non-COVID, as for back the a some those

Kevin Herde

Yeah.

already think that’s there of number, of our delivered work from them the POs are contracts how certainly, my just and the and a of perspective, I derisked things. manufactured – on lot I sort those and things are think relatively these

being Nucleic far kind see or locked So Production the percentage Acid in. don’t that Certainly, doesn’t larger have of of XXXX. COVID ticking fiscal the I as within that as as guaranteed calendar down number

our detail through But our go certainly still some we month I there’s when in process in there. So commercial forecasting with that think team. variability every

basically reflects sides We what of kind and one we’re looking and with assets our that’s base we we numbers, always giving base have of have guidance, have and sensitivities forecast. run as of we today on our it both This at. set

So risk, some the stage. on feel this certainly COVID a level that it our on course, well. little bit I get comfortable probably of inherent brought But, a as delivering just think, but to to nature certainly there’s we the more at there’s there’s business pretty business, down opportunity that’s of solid. And number, an inherent it’s in

Carl Hull

And now, in guide. put it couple this a conservative way, years pretty of Michael, we for we’re how

Michael Ryskin

Thanks much. Okay. All so right.

Carl Hull

Yeah.

bet. You

Operator

Thank you.

go of Jefferies. line We have Brandon the Couillard Please with next ahead. question from

Brandon Couillard

not like I’ll a margins but on scenario run rate to of run that, comment, take you’re rate? say, $XXX EBITDA to baseline down would revenues Kevin, sure afternoon. the look Hey, Good drop this. a million What under where willing flyer COVID the a thanks. CleanCap do

Kevin Herde

going we’re in there, for at you to what about there year of CleanCap, time, if revenues, look Yeah. you your I we at that XXXX that. million had had valuation $XXX than COVID look million part $XXX XXXX. you first would that think that question, talking about and in and Look, we’re to point EBITDA go say be XX% back we presented a when were I margin, going the bigger not Carl

I we CleanCap of be as look at just level and COVID a that into example we XXXX. and of will lower with So where an non-COVID going where on think were we

continue and bit very So, prospectively. of of I the to profitable a be think, very in to little prior sense give that was a high this business just profitable business you a spike COVID-XX and margin will to

Brandon Couillard

around a dollar order the number put could you was chance any canceled? question, quantify you that can customer second And that? you. Got Just

Carl Hull

High signal-digit lines.

Brandon Couillard

Great. Thank you.

Carl Hull

Okay.

Operator

you. Thank

from with We have go the next John line of Please the Sourbeer UBS. question ahead.

Deb Hart

last Great. ahead. Vikram, our go will be this question. John,

John Sourbeer

on the the biotech? non-COVID there? you much on But, taking funding slowdown. Hi, noticed just acid base how gene at thanks nucleic what following here. cell asked environment, guess, you look Tejas exposed about just of any maybe are questions the One, therapy is just to and up the mRNA some business, have for you And willing comment slowdown when and I to two programs

Carl Hull

the of programs. not look, a Well, we number think or that the of customers I seeing are in reduction outright cancellation

companies. virtual I also everybody mRNA mentioned all of be that’s may going to think largest pharma ex-COVID the prioritization to consists start-ups. business our within it’s way I the But smaller As from there companies, say that the fair on

which there. we’ve programs So bit and everything and revenues bulk But advancing need or of greater a they greater components. the in quantities come other from CleanCap of the or mRNA that really little either got business are for and

number a guess And will toward they’re customers other the more probably that smaller. of waiting point of the intuitive with my view, So, answer. like would way the revenue tilts the That be larger from till looks I program mid-to-large. biopharma, would,

John Sourbeer

business. look second when noticed Thanks. think there, one customer I any guess, the on any about half? is you you maybe, the stocking you at to there then, patterns the shifting outside GMP. When the if base And But and order have through the all another changes of

Carl Hull

am question, I part sorry, the first I said of the what?

John Sourbeer

you could think customers? you about there? when nucleic guess about noticed specific patterns order customer stocking And business acids, I you have any within talk

Carl Hull

that No. it of may the the side rapid all sensitive. and specific base stuff was be business, Not pretty on programs consumed

would So up. stock that’s not you kind the of that stuff

John Sourbeer

Got taking the questions. it. Thanks for

Carl Hull

You bet.

Deb Hart

you, ahead, Well, Okay. everyone. Vikram. thank Go

Operator

you. to hand remarks. Thank Ladies Hart we like Yes. reached session. Over over call the the I’d and to for of gentlemen, to have end And question-and-answer closing the to Deb you. back

Deb Hart

quarter. everyone, Well, at of for a thank us We’ll you, couple Vikram, today. thanks, and joining conferences be this

anyone Thank questions, out you. queue we to, in with So get night. great we feel to hope please that didn’t Events to have any a free call our and me check page. Apologies the you

Maravai LifeSciences (MRVI) 7 Aug 222022 Q2 Earnings call transcript