Repligen at RBC Capital Markets: Strategic Growth Insights

On Tuesday, 20 May 2025, Repligen Corporation (NASDAQ:RGEN) presented at the RBC Capital Markets Global Healthcare Conference 2025, offering a strategic overview that showcased both strengths and challenges. The company highlighted its robust growth trajectory, particularly in its ATF franchise, while also addressing external pressures such as tariffs and foreign exchange impacts.

Key Takeaways

• Repligen’s acquisition of Nine08 Devices added $10 million to its sales.
• The company anticipates 11.5% to 15.5% organic non-COVID growth.
• Tariffs and surcharges could slightly boost sales by under 1%.
• Repligen is actively pursuing M&A opportunities in bioreactors and cell culture media.
• The ATF franchise is expected to see strong growth in the latter half of the year.

Financial Results

• Nine08 Devices Acquisition: Contributed $10 million in sales for 2025, with an annualized impact of $2.5 to $3 million per quarter.
• FX Impact: Initial guidance included a 1.5-point FX headwind, now a potential tailwind of over 0.5 points.
• Tariff Impact: Passing surcharges could increase sales by just under 1%; EPS impact is neutral.
• Customer Concentration: Largest customer accounts for 6% of sales; no new modality customer exceeds 3%.
• ATF Contribution: Potential for $15 million plus annually from significant ATF wins.

Operational Updates

• Tariffs and Manufacturing: 90% of U.S. sales are tariff-exempt or manufactured domestically. Repligen is exploring dual manufacturing in Europe.
• China Market: Represents about 2% of sales, with potential exposure under $5 million in the second half due to tariffs.
• ATF Franchise: Despite tough Q1 comps, strong growth is expected later this year. Repligen partners with 9 of the top 10 CDMOs, enhancing yield by 3 to 4 times.

Future Outlook

• Growth and Expansion: Repligen aims to continue outpacing market growth and capitalize on U.S. onshoring.
• Capital Deployment: Focus on M&A for differentiated products and innovation, targeting bioreactors and viral filtration.
• Revenue Timing: New facilities’ revenue expected in 3+ years for greenfield and 1-2 years for brownfield projects.

Q&A Highlights

• Tariffs: Customers understand the tariff environment; Repligen collaborates to minimize costs.
• China Market: Expected to contribute to growth despite current challenges. New leadership appointed in Asia and China.
• Onshoring: Could lead to increased equipment purchases and long-term consumables revenue.
• M&A Criteria: Seeking acquisitions that enhance product differentiation and are not long-term dilutive.

For a deeper dive into Repligen’s strategic plans and financial performance, refer to the full transcript below.

Full transcript - RBC Capital Markets Global Healthcare Conference 2025:

Conor McNamara, Life Science Tools and Diagnostics Analyst, RBC Capital Markets: There’s my yeah. I guess we’re ready to start. Okay. Good afternoon, and welcome to the RBC Capital Markets twenty twenty five Global Healthcare Conference. I’m Conor McNamara, the life science tools and diagnostics analyst.

With me today, and it’s my pleasure to host Repligen, and with us are CFO, Jason Garland and new head of IR, Jacob Johnson. Welcome, and thank you for being here, gentlemen. Thank you. Thanks, Conor. So let’s just start with post Q1.

Can you walk us through, in the quarter, what are some of the things that you incorporated in the guidance? And what changed in Q1 versus Q4?

Jason Garland, CFO, Repligen: Yeah. So thanks, Conor. The the the only change we had incorporated into the guide in in April was the inclusion of the nine zero eight devices acquisition that we did. So that was about a $10,000,000 add of of sales. It’s slightly accretive to gross margin, but doesn’t really move the needle, and then it it brings about a 50 bp dilution at the operating margin.

You know, we brought we brought on some, I’ll say, incremental sales and in R and D costs with that acquisition. You know, we’ll be able to turn that accretive here over the the next twelve to eighteen months, but with the the inclusion, it it it it it dragged. What we didn’t include was some of the other macro environment things going on. So FX is an example. You know, when we gave the guide at in the beginning of the year in February, we called out that we had about a one and a half point headwind of FX when we, you know, did the the first quarter call that flipped to about a one point tailwind.

And as we stand here today, it’s probably just north of a half a point of tailwind. So things move around, which is frankly why we didn’t put it in at the point just to see how that would move. And sorry, just to

Conor McNamara, Life Science Tools and Diagnostics Analyst, RBC Capital Markets: be clear, your guidance still incorporates the headwind.

Jason Garland, CFO, Repligen: It still incorporates the headwind. But as you do your modeling and thinking about what we’re seeing today, it could be, again, at today’s rates, probably about half a point or just over half a point of gain. And then that would fall through to some bottom line improvement as well. And then the other thing that we did not include in the guide was the impact of tariffs. But again, we tried to be transparent of what we were seeing.

So, know, there’s probably about almost just under a point of potential sales increase, right, just from the ability to pass on surcharges and or some pricing. And at the EPS level, it’s probably a push. And so that’s what we would see today, and I’m I’m happy to share more on tariffs as we

Conor McNamara, Life Science Tools and Diagnostics Analyst, RBC Capital Markets: go forward. Okay. Let’s yeah. Let’s break those. FX is pretty simple to understand, I think.

On the $9.00 8, so the 10,000,000, that’s a that’s not an annualized number. That’s

Jason Garland, CFO, Repligen: That’s the 02/2025. Okay. Yeah. So annualized, it will be higher. We got, you know, just one month of sales in the first quarter.

Okay. Alright.

Conor McNamara, Life Science Tools and Diagnostics Analyst, RBC Capital Markets: So it’s 2 and a half

Jacob Johnson, Head of IR, Repligen: to 3,000,000 a quarter is the way to think about it as we get into next year. Okay.

Conor McNamara, Life Science Tools and Diagnostics Analyst, RBC Capital Markets: Yep. And then on the tariffs, so you said it would be just over one point Accretive Under a point. Just under a point accretive growth, assuming you took price to offset all of the tariffs. So can you walk us through where the tariff impacts are?

Jason Garland, CFO, Repligen: Yeah. There’s a lot of moving pieces there. So so first, the majority of our manufacturing is in The US. And then if you take our sales, half of it goes to The US and and half of it outside. So what we sell in The US, Ninety Percent of that is made in The US as well, or there’s some products that very discreetly have been called out to be exempt.

So that that’s the lion’s share within the The US sort of manufacturing and sale. The so that means that some of that, some the 10%, there are some things that we make primarily in Europe that would come in. And these are these would be products that we would then pass a surcharge on to customers. And that’s what makes up a lot of that that point I said of of extra sales. Outside of The US, you know, so take, you know, 50% of what we sell or 50 or of our total half of our sales, 50%, half of that is made in The US.

Mhmm. So this is the the the part of the business that we’re watching to see if there are any retaliatory, you know, tariffs put in place with our with where we’re selling. So Europe, of course, would be the the biggest exposure for us. The good news there is that, you know, Europe has been pretty transparent about what products and commodities they would, you know, implement tariffs on if they were to to retaliate, they and they haven’t done so yet. And so that’s, you know, about a quarter of the sales, you know, is actually subject to that amount.

So you start to whittle down as you can see the pieces that have exposure, you know, and again, in that case, we would likely enact surcharges to try to cover it. I mean, then you’ve got the China dynamic, which is certainly in a better place today than it was a couple of weeks ago. But again, as you whittle down that amount of sales, if you look at we called out that China was about 2% of our sales. Annualize that and you look at we had already shipped first quarter. We had already moved a lot of our inventory for the second quarter into China.

And you look at what left in the second half and you’re talking kind of less than $5,000,000 sales exposure there. And in this environment now at the more the 30% rate, we would look to try to pass that on the surcharge to our customers. So that’s where all the pieces come in. I guess the last piece I’d say is that 10% of what we make in The U. S.

Has foreign sources, directly foreign sourced. And so that’s the potential impact on our cost of goods sold. And that’s the type of cost that we would then look to the pass through with a likely pricing increase more general, but tied to the tariffs. And so all that all those surcharges in terms of that smaller amount as well as the the pricing is where we get that Okay. You know, just under a point of sales increase.

Conor McNamara, Life Science Tools and Diagnostics Analyst, RBC Capital Markets: Okay. And and you’re not taking or you don’t have any planned actions to mitigate any of this other than the surcharges? Like, no no manufacturing moves or any or No.

Jason Garland, CFO, Repligen: We we actually will. We we we’re looking at that now. So, you know, the the good news is that a lot of our manufacturing is tool, you know, sort of dual capabilities and across the ocean, you know, our Opus columns is is a great example of that. You know, we make we do that in The Netherlands and Europe. We also do that in The US.

But there are some areas that that are only in The US. And so we’ll look to see if it makes sense to create some dual capabilities within Europe. And we’ll look at what’s the likelihood of tariffs, is it cost neutral, right? I mean, obviously, the bad news as you spread your manufacturing is you, you know, you dilute your overhead leverage and those other things. And so we want to make sure that it’s more, you know, at least cost neutral.

And and again, it and even if then it’s cost neutral and there aren’t tariffs put in place, it again, it builds out our portfolio to have dual capabilities. We are actually looking at that.

Conor McNamara, Life Science Tools and Diagnostics Analyst, RBC Capital Markets: All right. And thanks for all that clarity.

Jason Garland, CFO, Repligen: Yes, lot of moving pieces of tariffs.

Conor McNamara, Life Science Tools and Diagnostics Analyst, RBC Capital Markets: And just what has been your customer response the tariffs? Now you would you’re making it what you just said is it makes sense that you would be able to pass on that surcharge. Any pushback from your customers? I mean, we’re coming out of the pandemic where pricing definitely was up versus historical levels. And so are you getting any pushback on those surcharges?

Or do your customers realize, hey, that’s just the cost of doing business now? And so any pushback there? And then the second part to that, any change in just demand or buying patterns from your customers overall from what’s going on with the tariffs? Either they’re making smaller orders or they’re waiting to see what finally happens, anything like that that you’ve seen from a customer perspective.

Jason Garland, CFO, Repligen: Yeah. So I think in terms of, you know, taking on surcharges, I think the industry understands the environment. I think we’re not we’re not the only, you know, company in the space to talk about using surcharges. That certainly is understandable by the customers where there’s unique situations or we can find other ways to help minimize that cost for them, then we certainly will have a discussion. But but, you know, no no outright sort of, hey, you know, we’re not taking this.

We’ve already had some on that into The U. S. Side. We’ve already passed on some surcharges, so we started to see that. I think in terms of buying patterns, we haven’t I think the big question out there is are people pulling things in, right?

Are there is there another stocking dynamic going on? We haven’t seen evidence of that yet. One of the one of the things that we’ve been looking at and we think would be an indicator of that particularly would be if a customer already has an order place, you know, it’s it’s in our backlog. Let’s say it was due in September, and then then they might come to us and say, hey. I really want that next month or we haven’t seen, you know, really any examples of that specifically.

So I I do think that we’ll have to keep monitoring it, you know, every fortunately, every day there’s a a different dynamic for for them to think about And we’re, you know, very watchful in those things,

Conor McNamara, Life Science Tools and Diagnostics Analyst, RBC Capital Markets: but no real change in behavior going And last question on tariffs, I promise, maybe. Have you seen is there any longer term opportunity for you as a U. S .-based manufacturer that maybe you could take share or, you know, you’re going to have a higher priced competitor in The U. S? So, is there any opportunity from a tariff perspective to accelerate your growth or take more market share down

Jason Garland, CFO, Repligen: the road? So I think that, you know, our products are going to be competitive, you know, no matter where the region. I think in the cases where if we make it in The US and our competitor that’s directly selling on in that particular product is outside outside The US, it might it might be a benefit. Again, we don’t always face a lot of direct direct or head to head competition on our products. Right?

A lot of them are are unique or they offer a differentiated solution. And so I think we’ll offer that where we can. I think what’s also interesting is a lot of the onshoring announcements that have been made. And again, with the ability to make nearly all of our products in The U. S.

That being able to help them as as as companies build up new facilities that we could be a part of that. And it might be it might be over a course of of years, right? Those things, especially a greenfield could be multiple years before it’s ready. But in as much as we could supply them U. S.

Content as well as, again, bread and butter is offering products that increase yield and efficiencies. And so again, we would believe that anyone starting up a new facility would want to incorporate that into their design.

Conor McNamara, Life Science Tools and Diagnostics Analyst, RBC Capital Markets: And then let’s just talk about end markets and how you guys are doing there. You know, what your mantra has always been or has been for quite some time is you’ve got an end market that’s growing high single digits. You guys can grow five to 10 points above that. If you look at Q1, the other bioproduction players talked about, you know, mid to high single digits. You guys grew 14%.

So that would play right in line with that. You grew five points above a high single digit growth market. Do you think that’s a good characterization of what happened in Q1? And that’s how we should be thinking about the end markets is, hey, the things have returned to normal. There’s high single digit growth out there in the market.

We’re going to continue to grow significantly above the market. Is that a dynamic that you think played out in Q1 and that’s how we

Jason Garland, CFO, Repligen: should think about the rest of the year? Yes. I think that we have the best line of sight and visibility to our own, right, you know, outlook, of course. So we we’ve talked about 11 and a half to 15 and a half percent organic non COVID growth. And I think we’ve also heard some of the bigger players even talk about that high single digit for the year and their outlook.

So I think it does fit. And I think it fits again with our ability to outpace the market. The first quarter again was a great start to the year, not only in the top line, but the bottom line as well. We certainly had some strong proteins recovery as well and that helped the quarter. But it’s reflective of that guidance that we’ve given is reflective of that above market growth.

Conor McNamara, Life Science Tools and Diagnostics Analyst, RBC Capital Markets: Okay. And just as we think about the acceleration throughout the year, I know you had a little bit of equipment weakness in Q1, which strength elsewhere didn’t, you know, masked some of that. But can you talk about the dynamic of some you had a couple of wins at the end of last year that I think played through with just the timing. Was there some weakness on the equipment relative to Q3 and Q4? And then how does that play out for the rest of the year?

So yeah. So This is related to

Jason Garland, CFO, Repligen: the APS. Yeah. I’m sorry. For ATF? Yeah.

I see. Yeah. And so so ATF, I mean, we’re really very excited about how that franchise continues to to grow and the opportunities it has. I think uniquely in the first quarter, it had really tough comps to February first quarter two thousand twenty four. It still got some tough comps, not as much in the second, and we really see the ATF sort of second half of the year is where we’ll see a lot of that year over year growth rate.

But we also talked about wins that we’ve been able to get in commercial and blockbuster programs and really love the momentum we’re seeing. We’re in nine out of the 10 biggest CDMOs talking with the tenth about how we can partner. And what’s even exciting for for us as well is with most of those CDMOs, it’s it’s one program that we’re on today. So there’s obviously a lot of room to expand that across multiple programs and multiple facilities as they build those out. And so a lot of great tailwind.

I think just again, life isn’t linear. You can have some lumpiness and we’ll see more of that growth really come through in the second half.

Jacob Johnson, Head of IR, Repligen: Connor, if I could add just one thing, as people kind of think about the magnitude of these wins, because we’ve been asked a lot about that, a commercial customer for ATF could be, call it, low to mid single millions of consumable pull through annually. Maybe some of these larger wins, you could be looking at something at $15,000,000 plus a year just in terms of framing that opportunity. You

Conor McNamara, Life Science Tools and Diagnostics Analyst, RBC Capital Markets: still have no I think it’s no customer, no program is more than 3% of sales. So, you’ve got you know, there’s you’re not levered to any specific program. But as you probably the the these wins, the ones you had last year, obviously, help help you guys.

Jason Garland, CFO, Repligen: Yeah. So I’ll just so three we have no more than 3% we called out in the new modality space.

Conor McNamara, Life Science Tools and Diagnostics Analyst, RBC Capital Markets: That’s right.

Jason Garland, CFO, Repligen: Our single biggest cost customer is six, but it’s the same point and one that that we really wanted to to get people thinking more about is that we we do have very much a diverse portfolio. And that, you know, even within these customers where it might be 6%, it’s not a single program. So there’s a, you know, a lot of a lot of room there for managing the ups and downs. And and so, again, I, you know, I think, hopefully, that people will see that, okay, if one program has some sort of negative view and or positive that that we that we can manage that both up and down and that we’re building out a a portfolio that’s very different than what it was even five years ago. And just give

Conor McNamara, Life Science Tools and Diagnostics Analyst, RBC Capital Markets: the programs that that you won last year, these were as a program progressed later in in the clinical program. I think it was stage two to stage three or stage three to market. And you you won that program. You were able to displace who was there first. So how much opportunity is there for that for you guys in the future and vice versa?

You know, it’s kind of my view that once someone’s specked in, they’re specked in. So why were you able to to win that contract and and and Is

Jason Garland, CFO, Repligen: this for ATF, you’re telling? Yeah. Well, so for ATF, though, there there was no incumbent. So, again, think about ATF as as an opportunity to increase yield. Right?

I mean, we we see on average maybe three to four times yield improvement for for ATF. And so we really think about it as a customer saying, might need to my my volume is growing. I might need to put in another line. Well, guess what? If you have ATF, you may not need to do a second line or even a third for that matter until the volume grows.

And so the the wins, think about it as these were already commercial programs that we were still able to demonstrate the value creation and the and our customers then incorporated it in. And I think the the point is that even in a commercial stage that especially at the n minus one level where our ATF usually sits, it can our customers can still get that specked in through regulatory requirements and as little as maybe even a year. So that’s that’s the the I think the bigger here is that that it’s not, okay, we missed the clinical window. We can’t we can’t help. Thanks for that.

Thanks for that clarity.

Conor McNamara, Life Science Tools and Diagnostics Analyst, RBC Capital Markets: And just kind of some other questions outside of tariffs and cadence of growth this year. Just on China, that, you you had that fall off and that’s 2% to 3% of sales now. How should we think about that region as an opportunity? Has that historically been has China historically been accretive to growth for you guys? And as we look over the next, you know, decade, is that a region that you do see as important down the road?

And in the medium term, will it be, you know, is it going to continue to be a slight drag on on growth, albeit a much smaller drag given the size?

Jason Garland, CFO, Repligen: Yes. Yes. And yes. So definitely accretive growth. We expect there it to be accretive in the future.

We’re still very bullish on that region. But in the short term, we we still do see some headwind. I think, you know, as a testament to that, you know, we’ve added both a new leader in the Asia region who’s very knows the China market in particularly well. And then we also added a new GM in China. So we’re very optimistic that with the relationships they bring and the experience they have in the market that we’ll be able to approach it differently and get some of that traction back, but it will take time.

Conor McNamara, Life Science Tools and Diagnostics Analyst, RBC Capital Markets: And then earlier in the Q and A, you talked about on sourcing manufacture or in sourcing manufacturing, bringing manufacturing capacity up in The U. S. And there’s been announcements by a lot of pharma companies that are investing in The U. S. Manufacturing.

So how does that impact you? So if you’ve got a customer that’s currently manufacturing outside of The U. S, they bring it in house into The U. S. I’m assuming they have to buy more equipment.

There’s a tech transfer. So ultimately, that’s a win for you, at least on the equipment side, I would assume. Right. And then should we think about on the consumables, you know, at a run rate, it’s no real change? Or is it, you know, is this is it actually significant from an opportunity for you guys as these build outs get announced?

Jason Garland, CFO, Repligen: Yeah. I mean, you can liken it maybe some of the biosecure discussions. Right? If if the volume doesn’t change, then you get the, I’ll say, the one time benefit, oh, I’m building a new plan, so I’m gonna duplicate the hardware. And then the consumables on a on an equal demand basis, they’re gonna be the same.

But if if that now new location creates a new opportunity set, then then we could grow with it as well. Yeah. I guess if

Conor McNamara, Life Science Tools and Diagnostics Analyst, RBC Capital Markets: you look at a facility that’s being transferred maybe five years ago, you didn’t have the the suite of products. And so now they know, okay, this time when we do it, we’re going to do it right. So they come to you and and, you know, it offers more of an opportunity. Yeah. It’s just a

Jason Garland, CFO, Repligen: pure tech transfer. No. Great. Great. Great point.

Again, back to ATF, it may even help them to spend less in their in their, you know, in their in their CapEx. We do offer a lot more in the portfolio and could absolutely have a bigger play in that.

Conor McNamara, Life Science Tools and Diagnostics Analyst, RBC Capital Markets: And what’s the time for this to start generating P and L? Because we’re seeing these announcements, which I’m assuming means that they’re starting to get you’re starting to see RFPs, which I don’t

Jason Garland, CFO, Repligen: know that it’s yet. Right? I mean, I think I mean, we’ve kinda heard if it’s a greenfield, it could be three plus years. If it’s a brownfield, maybe it’s a year or two. So, I mean, there’s still, I think, some time, you know, that that is gonna pass before we start to see orders in hand.

Okay. But, again, everyone that’s made announcements, we have relationships with, and certainly, we’ll be letting them know that we’re we’re that we’re there

Conor McNamara, Life Science Tools and Diagnostics Analyst, RBC Capital Markets: to help. Okay. And so once they hit the order book, I think your time from order to to revenue is six six months Yes.

Jason Garland, CFO, Repligen: Typically, right, you know, if we get in, you know, for a given, you know, order book, about a third of them get delivered in the same quarter, the the third of them get delivered the next quarter, and then, you know, the the the final third over the next, you know, two to two to three. Okay.

Conor McNamara, Life Science Tools and Diagnostics Analyst, RBC Capital Markets: Happens pretty quickly. Yeah. Alright. And on capital deployment, you’re going back to 2017, I think you’ve done 13 deals since then, a lot of small tuck ins that, you know, help build out the full suite of offerings. But is, you know, what’s maybe talk to me about your appetite for a larger deal.

And is there a specific area that, you know, you just kind of look at everything and like, gosh, I wish we were here versus, you know, you’re to continue in that tuck in side? How should we think about your M and A strategy?

Jason Garland, CFO, Repligen: Well, look, I’ll start with our our M and A strategy is is the same. It’s consistent. You know, we’re first looking for differentiated products, innovation, you know, a company that that if if if they join with us, we can add value either commercially or through r and d or technology or product development, you know, and then again, looking for some level of accretion, hopefully, at the bottom and the and the top line and the bottom line, it might be one or the other, you know, and but we’ve also recognized that many of the plays we have have made have taken time to really come to fruition. So, you know, we’re looking at a funnel that that is looking for those criteria. There’s you know, we’ve been clear about sort of the gaps we have in the bio, you know, processing workflow.

You know, it’s the bioreactor, it’s the cell culture media, it’s the viral filtration that we don’t have place. So those certainly become an area that we’re looking for. But at the same time, there’s a lot more we could do within the other spaces to, you know, create even more robust offerings. A lot of it’s about the timing of what’s available and and what we’re looking for and and kind

Conor McNamara, Life Science Tools and Diagnostics Analyst, RBC Capital Markets: of taking all those into play. Okay. And is it would you say that adding to revenue growth is more important than adding, you know, margin?

Jason Garland, CFO, Repligen: I think it’s the balance, right? I think that we recognize I mean, look at the ATF discussion we had and and the acquisition we did years ago. It’s taken it takes time. And so we won’t, you know, look we won’t throw away or pass a great opportunity if there’s distance, but I’d you know, ideally, I’d love to find both. One that that adds the top line growth and isn’t dilutive for too long.

Okay.

Conor McNamara, Life Science Tools and Diagnostics Analyst, RBC Capital Markets: Yeah. Great. Well, we’re just about out of time. I will say you lucked out last year. I made you do a Rubik’s cube up This year, was planning to put up a Jenga set for you.

We’re gonna have a Jenga, but we ran out time. Flowers are here. So you dodged a bullet. Congratulations. But thanks for your time.

Thanks for joining us, and thank you, everyone. Thanks, Scott.

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