BLFS - Earnings call transcript Q3 2019

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Operator

Good afternoon ladies and gentlemen and welcome to the Q3 2019 BioLife Solutions Incorporated Earnings 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. [Operator Instructions]

As a reminder, this conference call is being recorded. to conference like host, to now Mr. would turn over the your I Chief Officer. de Financial Roderick Greef,

You may begin.

Roderick de Greef

conference the JP. thank the us Solutions you you, third for to Thank Good joining for afternoon, quarter of the results and financial operating everyone, XXXX. and call for review BioLife

summarizes nine this September months Earlier which XX, we for results XXXX. a issued financial afternoon, ended the release press our three and

this We Biogenic afternoon, a also release announcing Custom CBS. press purchase Systems asset or our of issued

this will we during projections certain future forward-looking uncertainties or other results cause reminder, are of financial that and a As statements actual and to call, events make regarding to These the statements risks differ company. may expectations. subject materially the performance future from

discussion the the that our as of that qualify periodic uncertainties and filed Company's SEC. filings statements, public and with detailed I you affect forward-looking risks the and For refer to business a other

statements change update are required that Company forward-looking or date law. factors they no are given. on these and except statements forward-looking as projections the by only to obligation therefore projections speak assumes and Company of based to any The subject as are statements

metrics we GAAP. GAAP not are press to results or to speak guidance. Reconciliations should be issued this financial alternative and we release viewed an or of call, non-GAAP financial included non-GAAP this to During adjusted adjusted will or the as non-GAAP adjusted metrics in These afternoon.

prior a or financial view our current M&A periods. metrics of light of believe to with the when of However we clear compared results adjusted in that use provides investors activity, non-GAAP our

CEO, over turn BioLife. to Now, Mike Rice, the to President call I'd and like

Mike Rice

everyone. afternoon the for joining you call. and Thank you Rod, Thank good

activities. our pleased QX results I'm discuss to and very

for to share, and in. I'll focused BioLife vision We our success of I'll start have on. right major next by we're sharing our milestone, a jump lot so

First, some history.

manufacturing. built used years, XX cell and nearly last leading therapy products, media we've gene in of critical BioLife biopreservation a the into Over supplier

product to space, the robust clinical the and very media and hard gene created therapy ensure to traditional enough We success. methods not that commercial worked cocktails in developers and category, convince preservation biopreservation best grade cell are

internal and Once number customer our media and XXXX, have scaled in of and of opportunities products identify and media a and projects CryoStor applications. to of for reach XXX seek long then the a to advantage position us clinical more HypoThermosol We used we’ll the balance optimized proprietary than we but on profitability roll to complementary Our time to business take now market to CryoStor up course tools. began current growth external trends hold we opportunities. HypoThermosol considered caused faster, in even environment scale R&D been business with bioproduction

a we SAVSU the we that and system our sterile didn't Earlier portfolio. to of acquired the own added product. the we automated remainder bio ThawSTAR thaw acquired Later, and Cold this year, gained evo technologies management Chain

outlook milestone for is very we've million as in and next for CBS, Our customer announced systems success reaching just revenue. our defined or our of positive acquisition coupled with these major biogenic $XXX acquisitions initial

CBS BioLife preservation, this, later have more and by risk like I'll say and therapies. scale portfolio improve the that to of even gene in services reducing in differentiated and call. manufacturer, products deeply novel partner By looks it more can filing of will companies. biologic quality the entrenched on, delivery these to storage, diversified focused and a about become we're success therapy of offering to vision The an cell

provide comments our So about business. now I'll some existing

soft two quarter due a less QX products anticipated. to to revenue, customers we than media ordering Turning experienced

portfolio. customer with is Our reliance base derisk lion's strategy XX a driver product about than share. on to media concentrated revenue our less current concentration the and This limited M&A for total is from highly primary concentrated customers a revenue our and generating a XXX

a nearly large QX, double and significant to new being we from this a from system. had XXXX. decrease to changeover calendar the fiscal distributor On revenue total our In note, a a year ERP order sequential start in a positive of volume, expect distributor XXXX

one order cell large by pace which one of our customer significant the clinical be a contract in - manufacturer, enrollment therapy patterns, end attribute on contract nature therapy We the to decrease sequential trials. volume. work cyclical dependence of had CMOs large Also order the can and this in affected user

from decrease these for $X Together, sequential accounted two million customers nearly QX. revenue

like also from obviously front again, grow swings So not only worth to these far returned revenue. on but to our top levels expand typical and de-risk experience to we volume repeating expect it's customers has hard from we're working line to time, in QX, but M&A portfolio this that sequential order time the to

internal pending our in customer is Our or use assessing direct CryoStor trials franchise of we therapy were supporting of track XX cross-reference and performing cell XX in how customers on HypoThermosol we other regen human for QX, cell gene file and new gene FDA metrics med master request new clinical therapies. and gained processed

over cell we've the market in with Astero gene of XXX bags. frozen to and track on is Integration most therapy thaw for product biologic materials segment. continues automated Progress of our ThawSTAR products shipped our ThawSTAR these and new for on products date, CB to the

management Therapeutics. adoption facilitate in you Legend Cold now introduce Nanjing and We Janssen, Miami the Gene Mustang customers, evo Tessa KBI new we ThawSTAR to Cell Conference CB the at in including of formally Chain and win system, January. Autolus, Pharma, Adaptimmune, continue Bio, plan Updating Therapy to

Product wins manufacturing. It's cold cell competitor management in and validations by of segment new emerged the new we've and therapy gene therapy companies gene a as and to chain appropriate. we cell forward leading continue clear customer look some several when sharing

by before. believe of the our that prospective than innovative not include multi-billion being through and very qualification is technology worldwide companies. several as a truly so to we're put expanding such robust process have is As more We quality incumbent suppliers conversation dollar biopharma customers much thought aspects

year. in for distributors products generating Fisher and our well Thermo QX, over XX% perform to XX% Key of continue QX worldwide with revenue media STEMCELL distributors of Technologies, include network indirect total Our MilliporeSigma, VWR. last growth

of the custom CBS-based nitrogen acquisition as all suburb liquid biogenic Detroit the Turning news day, related assets leading of other our in Northern CBS. announced held the nearly now designer, the to to or systems a and freezers privately supplier manufacturer advanced and we of significant of and of racks accessories.

from CBS, therapy a started June space adding dialog our and of to We cost Chain gene Founder amount products by several evo improve supplier. based year, supply of the a to the products ability the Cold reduce vertically to recognized and our relationships a quality and much CBS immediately along integrating acquisition, We accelerate of vision call adoption customers of leverage in and sale as with an CEO cell potential longitudinal our in our complementary opportunity of and products, an as therapy gene including and benefits the meaningful of revenue to to workflow possible. this products cell is and U.S. that

With administration. processes, shipment source and manufacturing of acquisition this preservation, the the the transport, workflows. into cold patient cryogenic cold material includes CBS now in following with assets, biologic we following chain acquisition plug now of the continuing cryogenic following work preservation, chain Starting the before manufacturing before following play and onsite with product storage, and we storage

in and we great marquee space the identified. we leverage fit forward CBS is cell synergies customers and their and integrating CBS the the tremendous in has operations the gene scale we to BioLife several business. realize therapy to look a see to

I'd about last M&A like comment strategy. one to make our

will on we've year, While not and be our rule for focus this year additional integrating activity been XXXX we very businesses next active would acquired. out some the

our highlights Rod? Now XXXX and I and additional call the to detail for guidance our financial XXXX. Rod for QX, preliminary guidance updated some present turn will back on to revenue CBS over for

Roderick de Greef

Thanks Mike.

I'd our CBS and our CBS, acquisition purchased of assets announced few $X quarter results, financial for XX all shares, million. of of earlier a in to today. issued like unregistered make a million comments the having third value of substantially Before which XXX,XXX common We we cash reviewing about

out stock revenue CBS million another We exceeded. product levels whereby of could owner certain cash new related years, over the an earn have if are or realize five $XX in structured

CBS that have $XX between will a to positive modest full but of year revenue million at adjusted anticipate We XXXX $XX EBITDA.

our incremental balance to $X of XXXX. realize of for We contribution million expect $X the to to revenue P&L

in near the line solid be over on will will in realize compression additional XXXX. term, capital nitrogen on contribution the XXXX, the based growth we accretive and liquid on equipment of basis, and introduction acquisition revenue of expect EPS profile expect margin freezers positive we of EBITDA in gross margin a adjusted Based the our adjusted new provide XXXX a an although fully

revenue million Moving reached total to representing our quarterly XXXX of quarter of the last million. for a third year's quarter revenue $X.X XX% $X.X increase over results, third

thought products automated related This in which of and early included XXX,XXX sales acquired quarter's acquired of related to evo April the revenue, revenue last was we August. XXX,XXX

XX% million, year third than revenue for X media Biopreservation up customers less expected expectations. than compared $X quarter to XXXX the last approximately and on of ordering two based million lower was

line As realized Mike expectations but QX QX. shortfall these our order two in in the order with up mentioned, customers to back volume is internal in unlikely from make we

the automated EVO The of Total margin XX% million profile year. XXXX. Adjusted product XX.X% gross revenue and the was quarter compared of decrease margin slight lower XX% for over adjusted of in was gross with lines. last for XX.X% XXXX to months in in up revenue X third compared margin XXXX the in was for in the third $XX.X XX.X% quarter gross The the $XX.X reflects the margin X-month million, period of thaw XXXX.

with increase of support expenses and operating to overall of $X.X higher adjusted $X.X The Adjusted operating of Astero totaled in SAVSU in the and headcount based compared expenses to growth for performance secondarily increased necessary is QX million the XXXX. acquisitions primarily our QX compensation. million and result

Adjusted in quarter operating XXXX million third to million XXXX. quarter for compared Adjusted was profit in XXXX $X.X the XXXX. $XX.X the in the operating $X.X compared period the X-months was with for million profit compared of $X.X in totaled XXXX. million operating with third $X X-month million period of for XXX,XXX expenses Adjusted

$X.XX income the compared per million XXX,XXX or with quarter shareholders $X.XX to common attributable $X.X for diluted Adjusted share share XXXX third diluted in was net of or XXXX. per

For period $X.X attributable or adjusted or $X.XX income diluted per in to compared XXXX. diluted with in million million share was XXXX, net shareholders X-month $X.XX the common share per $X.X

to in on totaled gain $X.X included XXXX X-month one-time and the the for three period $XX.X $X.XX the GAAP $X.X net million $X.XX of the XXXX. the income $X million acquisition EPS third SAVSU Adjusted was and compared in and EBITDA EBITDA for to periods respectively. period adjusted per of share, in million X-month and same quarter XXX,XXX compared million a and for

from SAVSU outlook includes XXXX, now this a of of April With August for in August beginning XX. provided from respect and on which we the Xth acquiring we November year, guidance impact to X, current our have updated the sterile CBS

from We the $X.X million to for product $XX.X will XXXX reflecting of XX% between expect EVO and to million revenue year-over-year This thaw total million line, to from XXX,XXX be the growth $X million $XX.X includes CBS. XX%. technology from $X million

the margin back on Our we and between product of XX% for increasing adjusted near-term acquisitions be to gross XXXX expect percentage revenue. XXs based between of climbing mid to the percentage compression SAVSU gross X our ultimately margin into XX% the should with do X of points, CBS,

We to be of to the expect XXXX, range XX.X operating expenses adjusted XX.X in million. million

SAVSU that the million X.X X.X realized in additional expenses million X.X quarterly we QX. operating have expect above between the to and of in CBS additions million We who

outstanding lines operating the fully XX.X of on summary expect diluted million remarks We currently full we have on would XX.X Finally, end of count. positive share net an common million. like my EBITDA to adjusted and I the shares income year of basis a with be our XXXX. and a in for count share issued to

Now I'd call like Mike. to to back over turn the

Mike Rice

Thanks again, Rod.

reaching I'm revenue. In in to on our to of interim XXX milestone grow potential summary, the bullish BioLife next million very

gene preliminary guidance this more has for than next halfway space revenue in us goal. the year cell The opportunity to therapy Our and tremendous. is

a a space supplier. very as trusted solid have this reputatiXon in We

life therapies in helping clinic. building growth of based the relationships to of customer customers playing shareholders rewarded have and bring a support your the very worked BioLife. like biologic for our lifesaving changing to our hard part satisfaction with us I'd that thank of We all and

to over take back call JP? questions. the turn to your operator the I’ll

Operator

Maxim question the McCarthy [Operator of Instructions] Jason line First comes from of Group.

now is line open. Your

Unidentified Analyst

for on Dave Hi everyone, it's Jason. line the

quarter, was you So many I guys in customers correctly? I Could new sure just did I this please year. think thought get heard repeat, third XX, don't that to make quite you how the I it want

Mike Rice

Mike Yes in Dave total the hi, space. gene is this cell XX XX and therapy

Unidentified Analyst

XX total?

Mike Rice

therapy gene with total and cell two in the six, segment. XX, XX

Unidentified Analyst

shed systems just and some you Thank Okay, equipment great, I'd color then could between more a biogenic thanks. biogenic on smart synergies both containers opinion SAVSUs custom custom freezing and if your eco the – And what that? cryogenic please in you. appreciate are

Mike Rice

Dave, Sure good question.

how CBS's temperatures The freezing it for dry cell cryogenic and therapies SAVSU gene are here it temperatures time-sensitive at what not. line products product therapy So at and that goes shippers and of by would that the sites is manufacturing temperature other both evo and other transport biologic vapor stationary is be and of line for repositories are containers sensitive. clinics

one stationary space. for one So, and is is across time movement

Roderick de Greef

a CBS. technology We believe a fundamentally we the in have in essentially to evo [ph] can the opportunity can doable that absolutely at the Detroit sourcing that building CBS, because have made is rather hardware abroad, than the at is products from what around

Operator

line comes from Janney. Our next of of Paul Knight question the

open. now is line Your

Paul Knight

was was customers was those on it too? on the million $X And two each in customers. if of Mike what going it two

Mike Rice

Paul, together their nearly two is QX decrease order new million media in sequential into of of was with transitioning one system. year. ERP QX distributor that fiscal customers for QX their was volume in was result a accounted a who The Concurrently softness a Yes correct. $X that customer

a So reload that's kind normal process. of a

in those reason their dynamics two there volume. softness were So the the for order

supplying The of and any them a Paul therapy organization. to and dictate their the the they know And manufacture suppliers clinical product customer CMO tools tool are which manufacturing for end much mercy buy reagents you or CMO cell our customers other gene enrollment contract that from the whatnot. the they're trial critical those really bioproduction as is how at customers going and of

Paul Knight

low saying in is it If - the looking growth or kind XX% in the estimate XX quarter XX% guess end the of I XX you I - of can of going media growth the do just guidance it go - what media for What shortfall XX is you're with of over and organic noise QX. it is at rate this was forward, the at preservation based XQ? on is is, think XX it you're

Mike Rice

Yes.

think, some right. this these, I blowing to in absorb just completely QX that million little year. the just under X% would for represents variability that whole number a saw of mean is conservative a of us we XX without $X Paul, allow year, growth the the I

on it's concentration so, we impactful the when based it And customer happens have.

is number. XX% think I conservative So a fair

Paul Knight

growth had the that revenue no at looking then And the correct? year correct CBS prior of and other and Astero what businesses had - revenue what's rate SAVSU no is prior year

Roderick de Greef

was we faster the $X the we roughly revenue evo I $X correct. grow to and we respect with next to million media both line than next the to million expect revenue percentage. de Paul is to would and line But to minimis. conversation said what That's year we expect said, come that a revenue I like would as the line detailed the more have What to have out conference for defer our mean and call. basically would CBS

that to through until out with variables, the work look how year like CBS, kind of defer go before shipped you QX, close that. integration at we come I'd like, on those might specifics to we get over get and really more out done see give what and but probably could some So whole

Paul Knight

in build a that about is And margin your of then level impact terms of they're gross the what operating? that what CBS on impacting year guiding you're hurt CBS talk you in of will gross and the what's could doing

Roderick de Greef

in, line a distribution through think a relatively the gross is two primarily on low would anticipate network. fundamentally things a we're is - perspective, which able that it confirm that has I growth Yes, have going interested we legacy with been new one direct product gross We selling margin from a a cases. the is sold up that margin, higher there really is there has which significantly we'll end which line, most to product plus probably in

importantly year percentage compress why blended going Those CBS an probably dramatically next CBS product revenue margin a back but from grow total we X things next overall the our our will is to as X revenue blended I margin more years said But then year perspective alter would pretty combined greater to the margin for new profile that in, forward, which kicks to the into in expect outer mid 'XXs. the as then points. of overall

Paul Knight

the lastly and you - with in that? commercial I would - clinical And gene increase the that are therapy, to gene American slower cell then would society guess suggest volume concur cell starting and whereas trials

Mike Rice

that. with we it as to applies sure us. not agree I'm Paul,

We continue every early customers and therapy and cell to gain new dozens very quarter. gene dozens stage of

while attract of so, on are number approvals we so literally bullish much they don't scale as to phases, new through are those dozens early long-term and and in forth. our some planting we prospects And that ability growth seeds be customers really their we're great going on their of of get buy to so the obviously and manufacturing

have there activity based know overall recent been bullish. approvals, is of at the some outlook disappoints you our our we're As but on least with some

Operator

Raghuram of Next question line comes from Selvaraju Wainwright. the of H.C.

Your line open. is now

Faizzan Ahmad

on this Faizzan understand have? this mean I cloud-based you questions couple synergistic, may system been have Ram. acquisition but answered, I is of what already quick its to think how This accretive - monitoring already is but we for the is been A

Mike Rice

a time monitoring so is similar and their internal freezers the of XX/X condition in called VersAlert, and allows that the have very the system the customers functionality, of to that's It's system temperature. that Faizzan, real

comment assured there be maintained And point. obviously opportunities that directly more integration be has at evo-IS of VersAlert the if So we'll to precious at over to that very the see into being right some they too the looking are temperature. this payload can biologic soon time, on the

Faizzan Ahmad

Do media with your the and one like what efforts for if and evo cold and and then so, see chain ThawSTAR any plans corporate you existing that pertaining the you BioLife customers? customers overlap customers. Solutions for group to thank Okay, are

Mike Rice

I up, Yes, Faizzan, part think broke I it. the get last but

tremendous is overlap. there So

one whether freezers be that gene might liquid across specific this the ThawSTAR customers portfolio current high now cold the different therapy no decision customers. minds and longitudinal CBS. there some the So our doubt there of critical evo freezer it's is products cell But these our and products makers stationary capacity chain whether companies rate workflow nitrogen these in system and common it's media, the was at protective every in -

all So critical maximize our all looking and customer and across in we're to possible of every of leverage tools relationships obviously those way play a current common role that exposure to base.

Faizzan Ahmad

And on could more you Casdin with accelerator the - co-investment color program provide Capital?

Mike Rice

Nothing really do we're initial and two they obviously investments some there time, other over Sexton we'll we new pan to very those be iVexSol things in add excited that about out happy than and evaluate if that announced are and we're great about sharing the and additional we're vetting share here us Casdin and to investments early in the a but to what partner excited do help company. stage potential of initial is duties other

Faizzan Ahmad

Okay, And Commissioner incoming changes therapy any regulatory the product outlook gene to in perceived Hahn? the I FDA excellent. at Stephen about under cell and for the also ask wish

Mike Rice

be onerous Yes I portfolio something as changes that any it in - specifically at say have our robust this indication would and mean that more our applies I a for to perceived our of as products in regulatory nothing point. framework more no or when products, the BioLife We

Operator

City of line the Partners. William from Spring March comes question Next Instructions] [Operator of

Your line is open. now

William March

you just explain, just about? I'm line it a - is CBS service supporting CBS the acquisition is a that confused you more or within here, SAVSU the little product around can excited or you're Could product with

Mike Rice

to provide happy more color. Bill some Sure, yes

every the frozen on So they're be several So for world long-term cell way, these one going these mean distributed I once products clinic. of produced volume they're going the particularly down freezers of and allogeneic it the gene of they're these therapies, are to frozen product need in before of right? their manufacturing. this allogeneic storage therapy to developing companies be actually to based think or

doses make there to. reason these for expensive a to backup where can precious whatever that goes a redundancy freezer very we sure And backup if also as is one down transfer

even upstream material bulk incoming starting about for source the there all market material stores the some final and the it's of but huge the storage intermediates, this. of product So manufacturing maybe and is are a

billion. report in and that year research nitrogen will dividers freezers, market estimates the market a the purchased liquid year racks that XXXX addressable accessories next exceed recently worldwide related for We calendar $X

nitrogen and Now, therapy, the that's that going some tremendous gene for be indications surveilling several rate got landscape we've of the the over in years. the is high-capacity liquid will mechanical freezers freezers, and cell next from obviously demand all freezers,

William March

acquisition taking pause a maybe, a And sounds be to are that M&A. guys this then little you it on with complete like bit going of

assets? acquisitions So that now to maybe guys year-to-date, three just completed the talk start or to of do what do kind you have integrating about, four you need internally these

Mike Rice

Bill. great question, Yes,

our some and operational soon. month doubt, got generation, the synergies up, in be to any digestion the capitalize our to next on. we've the identified marching efficiencies XX so test out as to something obvious on month here, obviously, no way. don't comes no that be of that year initial want anything is we'll So XX we'll no will for in do. and additional we be got integration but We've our remarkable But XX, and to mess M&A first focus mode XX, progress we've and X success and integration and doubt mantra Not revenue rule looking tasks that some doubt fairly and get be way don't foremost specific will

William March

to I the to the business products. way now one this rely have Is last or could change impact distribution start you more portfolio the is, maybe message of have prior your bio distributors. a lot selling guess sales How on I this now the you media does through how like as that going broader initiatives? whole And opposed that

Mike Rice

Yes right on, Bill.

risk deployed. is become holistic. doubt and we're to mix no the sort where these conversation figure going the has is sorry There customers think to right more and all thoughtful two right used So how they the to But out much do if deployed that analysis do going the - happen. to of the going are there we're manufacture cell sales problems and but administration of gene direct like indirect a they're broken assets they to are distribution I therapy related of to and are several solve a in things storage risk sound trying to record, and tools song are crappy

One, the of might developer not reimbursement the in patient then paid. respond. And that the not might is environment result get current the

from this innovative So we're the positioning portfolio is in derisk really BioLife perspective messaging technology tools a can of having most potential. our customers commercial

have success can chance all the really they what So max for about. here. it's That's

imagine actual Officer's chain mitigation Chief So management so down got risk you can conversations having technologies actually trying we're here and about risk with doing the Quality being great the really and that production that to the that we've of can broaden for to conversation the and just to some this down them. all CEOs, happens in they're do section manufacturing, starting Officers, Chief Medical who up on CMC manage folks

Operator

turn conference no at to showing I'm Instructions] the for closing President this [Operator questions would and to Mr. remarks. further CEO Rice, back I time. like Mike

Mike Rice

Thank good you, and afternoon. thanks JP everyone,

Operator

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

You may all disconnect.

BioLife Solutions (BLFS) 12 Nov 192019 Q3 Earnings call transcript