Repligen (RGEN) Q2 2026 earnings call transcript

Thank you, operator, and welcome everyone to our 2026 Second Quarter Report. On this call, we will cover business highlights and financial performance for the three month period and in June 30th, 2026, and we'll provide financial guidance for the full year of 2026. Joining us on the call today are Replagant's President and Chief Executive Officer, Olivier Lio, and our Chief Financial Officer, Jason Garland. As a reminder, the forward-looking statements that we make during this call, including those regarding our business goals and expectations for the financial performance of the company, are subject to risk and uncertainties that may cause actual events or results to differ.

Additional information concerning risks related to our business is included in our quarterly reports on Form 10Q, our annual report on Form 10K, and our current reports, including the Form 8K that we are filing today, and other filings that we make with the Securities and Exchange Commission. Today's comments reflect management's current views, which could change as a result of new information, future events, or otherwise. The company does not apply or commit itself to update forward-looking statements, except as required by law. During this call, we are providing non-gapped financial results and guidance unless otherwise noted. Reconciliations of GAP to non-gapped financial measures are included in the press release that we issued this morning, which is posted to Repligions website and on SCC.

gov, along with our earning supplemental, which is posted to Repligions website. Adjust the non-gapped figures in today's report include the following, organic revenue and or revenue growth, cost of goods sold, gross profit, and gross margin, operating expenses, including R&D and S&A, income from operations and operating margin, other income or expense, tax rate on pre-tax income, net income, diluted earnings per share, EBITDA, adjusted EBITDA, and adjusted EBITDA margin. These adjusted financial measures should not be viewed as an alternative to GAP measures, but are intended to best reflect the performance of our ongoing operations.

With that, I'll turn the call over to Olivier.

Thank you, Jacob. Good morning, everyone, and welcome to our 2026 second quarter code. Once again, we delivered excellent results in the second quarter. Our team executed at a high level, driving 12% reported gross, which translated to 13% organic gross and 460 basis points of adjusted operating margin expansion. Reflecting on our first-half results and with our increased conviction in the full-year outlook, we are raising our organic revenue growth and adjusted EPS guidance. At the midpoint, this represents a full one-person increase to our organic growth expectations and 5 cents to adjust the DPS. In addition to our excellent first-half results, we see several reasons for our increased confidence in our end markets and revenue outlook.

First, the positive-order momentum that emerged late in the first quarter carried into the second quarter, including an improvement in ATF-order trends. Second, while capital equipment revenue remains muted, we saw a sequential step up in orders and won another important RSP. Year over year, our funnel remains very healthy and we are increasingly convinced that capital equipment taps will open further in the not-too-distant future.

And finally, emerging biotech grew high teens, even against a high comparison. A clear sign is customer base is recovering in a sustainable manner and we are seeing the translation of an improving funding environment. In the second quarter, we delivered 204 million of revenue driven by healthy, recurring revenue growth across our broad portfolio. Proteins led the way with an impressive 50% growth, while analytics demand remain extremely strong with 30% plus growth in the quarter. Consumables, including proteins, grew high teens, while services grew over 20%. Capital equipment revenue was stable between Q1 and Q2, and we saw a significant sequential pickup in orders, though revenues declined slightly year over year. Still, our capital equipment revenue grew high single digits in the first half.

Across geographies, a pack led the way with approximately 40% revenue growth, while North America was also strong in the high teens.

The growth in a pack highlights the fact our win-de-go-rated strategy continues to create opportunities across the region, and we are pleased to see strong growth from both Biopharma and CDMOs in the region. Our strong first half margin expansion continues to reflect our discipline operational execution. We continue to be balanced in investing for future growth, while managing cost and driving real operational efficiencies in our manufacturing operations. As a result, we remain on track to achieving our target for 30% adjusted a bit damaging by 2030. In short, our base business remains very strong, as highlighted by 13% organic growth in the second quarter.

Our second quarter growth was in part driven by the multiple new product innovation we launched in analytics and proteins in recent years. This is enabling us to outpace market growth.

The definitive agreement to acquire bio-life as an exciting new growth vectors. This financially-accretive equation fast-tracks our CELSA IP strategy. I will provide additional thoughts around our strategy for shortly, but first, some more details on the quarter.

Looking at our performance by end-market, CDMO growth remains strong. Biopharma revenue was essentially flagged with strengths in North America and Asia, which both grew at least high teens, offset by a difficult prior year comparison in Europe.

OEM and integrators were accredited to growth driven by strengths in free management and proteins. As mentioned earlier, emerging biotech revenues grew high teens, which is important, as we are now lapping our return to growth last year. We remain encouraged by growth from his customer base and our optimistic will see a continued recovery given funding trends remain robust. New modalities grew 9% experienced the impact of a certain gene therapy headwind.

Importantly, this was the best quarter since the first quarter of 2025, and we saw strong sequential increase across all modalities. We continue to see growth in CELSA IP and also in gene therapy when excluding that specific headwind.

Moving to our strategy update, we recently completed our annual strategic planning process. Looking back on our 2025 plan, we made great progress on our strategic initiatives, including but not limited to launching multiple innovating products, adding great talent to our team, and expanding our margin.

Our recently launched transformation office is positioned to start delivering promising business improvements. This year's plan focused on refining our same long-term goals, including outpacing market growth, advancing our digital and services capabilities, and accelerating growth in Asia-Pacific. We would highlight three areas of heightened focus in this year's track plan.

First, we recently launched our integrated solution strategy. We believe NAR is the right time to launch this initiative given the upcoming ongoing opportunities. This team will focus on cross-selling our entire A2D offering under a formal integrated solution team.

While our tier-count team has focused on setting our full suite of solutions, our integrated solution initiative will further this proactive efforts to increase speed and professionalism while also engaging more directly with engineering firms. We will initially focus our efforts on ADCs and other new modalities. In particular, with your coming equation of bio-life, we'll expand the scope of solution we can offer to the self-radi market.

Second, our team is increasing its focus on product lifecycle management. This effort works to continuously innovate our product portfolio to best address customer needs while ensuring the transition to a greater solution is a frictionless process. We've seen sizable benefit from this initiative with our solo VPS plus a great cycle and we intend to run a similar playbook elsewhere in our portfolio.

Third, the definitive agreement to acquire bio-life based on our strong momentum and commitment to use compelling M&A to drive a creative growth doubled down in high growth markets and create more robust customer solutions. Bio-life abstracts our self-therapy leadership by adding a differentiated portfolio of products serving this rapidly growing end market.

Following last week's announcements, we received some questions about our interest and view of the self-therapy market. From our analysis of the biologic landscape, it's clear that self-therapy represents a meaningful portion of our customers' focus and investment with this modality representing nearly a quarter of their clinical pipeline. In our extensive due diligence, we spend time with third-party advisors evaluating the opportunities and risk of this end market.

The analysis increases our conviction in the long-term growth of this industry while helping us to gain comfort around potential risks like further development of individual therapies.

A recent white paper from the Alliance for Regenerative Medicine showcased a 170% increase in U. S. treatment centers and a 740% increase in cell and gene therapy U. S. claim from 2018 to 2025. This highlights a growing volume from these modalities.

The equation of bio-life will enhance our offering for these end markets and provide us with additional opportunities for organic and inorganic growth. It adds a deeply and better than a highly trusted platform to our portfolio led by its bio-preservation media which supports 18 commercial therapies. We believe the future combination of our companies will bring important benefits to customers by expanding our robust offering of self-therapy workflow solutions.

Finally, the transaction is financially compelling. It's a creative to our top-line growth, our adjusted margin, and adjusted EPS. We see at least 20 million euro of synergies and five cents of adjusted EPS accretion in your one which grows to at least 30 million and 25 cents respectively in your two.

Before I turn the call over to Jason, I'll provide some more detail on our front-side level performance. I will note that all references to our 20-26 expectations are on a reported basis. Starting with filtration, revenue grew slightly on a reported basis in the quarter driven by consumable demand, including fluid management and statute cassettes, offset by the sale of poly-man and the previously disloded gene therapy headwind. Consistent were our expectations, ETF and system demand were muted at this quarter. As I previously mentioned, we are encouraged by the recent pick-up in orders that will start fueling 2027 backlog for both of these product categories. We continue to expect filtration growth of roughly missing on digits.

Turning to chromatography, revenue grew low double digits, lapping out stronger quarter last year. This was again driven by growth in office columns with continual growth from CDMO and biopharma customers. In particular, we continue to see significant fractions with large scale columns where units have grown 18% in the first half. We continue to expect chromatography growth of 20% plus for the full year. We had a fair nominal quarter in proteins with 50% growth, again driven by strengths across our portfolio.

We are excited about the portfolio of capabilities with a sample in our protein franchise. It's encouraging to see how strategy play out in financial results, and we remain focused on sitting opportunities across our protein offerings. With a strong first half performance and visibility into continued momentum in the second half, we now expect protein growth in the mid-10th of the year. For analytics franchise, I don't know the strong quarter with 30% plus growth, including strengths across consumables, services, and capital equipment. The solo VPA plus a great cycle highlights the tangible benefit of our product lifecycle management strategy, but it's important to note we are seeing broad strengths in our downstream analytics business.

We continue to believe our digitization strategy is well positioned for where the industry is going. Given momentum in downstream demand and the growing contributions throughout the year from our upstream analytics offering, we now expect analytics growth of at least 25%.

Before I hand over the call over to Jason, I wanted to reiterate that we are very pleased with our second quarter resource and our continued momentum in the business. We delivered 13% organic growth in the second quarter. Our team continues to execute effectively on our strategic priorities, our pacing market growth, while expanding margin, which enabled us to increase our full year outlook. These are incredibly exciting times that we pitch in, and we look forward to welcoming the BioLite team upon deep growth.

Now, I'll turn the call over to Jason for the financial highlights.

Thank you, Olivier, and good morning, everyone. Today, we are happy to share our excellent financial results for the second quarter of 2026. These results in an improving environment have increased our conviction in our 2026 outlook, and with that, we are raising our full year guide. I look forward to sharing the details shortly. Before we discuss the quarter, let me highlight that unless otherwise noted, all financial measures discussed reflect adjusted non-GAP measures.

As shared in our press release this morning, we delivered strong second quarter revenue of $204 million. This is a reported year-over-year growth of 12%, or 13% growth on an organic basis, which excludes the impact of acquisitions, divestitures, and foreign exchange. The previously announced sale of PolyMEM was a one-point headwind to reported growth, while foreign currency was also a slight headwind. For clarity, we did receive tariff refunds in the quarter that were a slight headwind to both reported and organic growth.

As Olivier provided details on our product franchise performance, I'll share more color on our regional performance. Starting with quarterly revenue mix, North America represented approximately 51% of our total, represented approximately 17%. North America grew high teens driven by strength across our franchises and customer base. Amaya declined mid-single digits with strength in analytics, offset by a difficult prior year comparison. Asia-Pacific grew a standout 40%, driven by strong growth in pharma and CDMOs, supported by continued strength in China.

Transitioning to profit and margins, our strong first half margin expansion continues to reflect our disciplined operational execution. Second quarter adjusted gross profit was $110 million, and adjusted gross margin was 53.9%. This was 280 basis points of margin expansion versus last year. The year-over-year increase was driven primarily by volume leverage, pricing execution, and favorable product mix, all of which more than offset inflation. Tariffs were a modest benefit to our margins in the second quarter. Our full year guidance now assumes minimal impact from tariffs.

Continuing through the P&L, our adjusted income from operations was $34 million in the second quarter, up 55% year-over-year on a reported basis. This translated to an adjusted operating margin of 16.7% in the second quarter, which was an increase of 460 basis points year-over-year on a reported basis, including a 40 basis point benefit from the sale of PolyMEM.

Adjusted EBITDA was $43.8 million in the quarter, or 21.4% adjusted EBITDA margin. Underlying our adjusted operating income margin expansion in the quarter was strong operating leverage, achieved with a modest adjusted OPEX growth of 6% on a reported basis, and 8% excluding the impact from the PolyMEM sale and foreign currency. We have remained prudent in our spending and have taken a measured approach to headcount additions in the first half. To help explain the sequential decline in OPEX and lower year-over-year growth, the quarter was also helped by a transient benefit related to employment compensation costs that were favorable relative to our expectations.

We do not expect this benefit to recur in the second half, and therefore we anticipate OPEX to step up sequentially in the third quarter, driven by spending levels more consistent with the first quarter. In addition, given recent trends, we do plan to make some investments in the second half of the year to support growth in 2027. We will remain thoughtful about balancing investments in the business and expanding margin.

Moving to the bottom line, adjusted net income was $31 million, a 45% year-over-year increase. Our second quarter adjusted effective tax rate was 21.5%, and we now expect it to trend towards the lower end of our prior guidance of 22 to 23%. Adjusted fully diluted earnings per share for the second quarter was $0.54 compared to $0.37 in the same period in 2025, or an increase of 46%. We continue to see strong earnings conversion from our robust revenue growth.

Finally, our cash, cash equivalents, and marketable securities position at the end of the second quarter was $810 million of $25 million sequentially from the first quarter. This was driven by $33 million of strong cash flow from operations, primarily offset by $5 million of CAPEX in the quarter. We remain focused on optimizing our working capital to drive improved free cash flow. I will now outline the improved outlook in our adjusted financial guidance. For clarity, our guidance does not include any assumed impact from bio-life, as the transaction is expected to close in the fourth quarter, following necessary and customary approvals. As Olivier mentioned, we are raising the midpoint of our revenue guidance.

We are now guiding 813 to 834 million of revenue, or 824 million at the midpoint. This represents 10% to 13% reported growth, or 10.5% to 13.5% organic, which is an increase of a full percentage point of organic growth at the midpoint versus our prior guidance. This assumes a couple million dollars of foreign currency tailwind, offset by approximately one point of headwind from the sale of our polymer operations we announced last quarter. From a franchise perspective, our reported growth of 10 to 13% assumes roughly mid-single-digit growth infiltration, greater than 20% growth in chromatography, proteins growth of mid-teens, and 25% plus growth in analytics. We continue to expect 110 to 160 basis points of gross margin expansion for the year.

That said, with our strong first half results, we are raising our adjusted operating income guidance to a range of 128 to 134 million dollars, and our adjusted operating margin guidance of 15.7 to 16%. This implies 190 to 220 basis points of operating margin expansion.

Moving through the income statement, we continue to assume 19 million dollars of adjusted other income, while we now assume a tax rate of approximately 22% as mentioned earlier. Putting this together, we expect adjusted fully diluted earnings per share to be between two dollars and three cents and two dollars and nine cents. This is up 32 to 38 cents versus 2025, or up 20% at the midpoint. The midpoint reflects a five cent increase from our prior guidance.

For visibility to the remaining quarterly cadence, we expect Q3 revenue dollars to increase slightly sequentially. As we highlighted last quarter, we continue to expect Q3 to be the lowest adjusted gross margin quarter for the year. We expect adjusted gross margins to decline sequentially and year-over-year, as mixed can have an impact in a given quarter. Subsequently, fourth quarter margin will benefit from volume leverage. As I mentioned, we expect underlying third quarter effects to return to levels more consistent with Q1, though it will be higher in total as we expect to make modest investments in the back half of the year to support future growth.

The investments will be focused in sales and R&D, and continuing to support our fifth for growth journey, particularly in IT. As a result, we see third quarter operating margin fairly consistent with third quarter of the prior year. As a quick update, we have seen continued progress in our dedicated transformation office. We continue to develop and implement plans to drive incremental margin expansion, and we'll soon be leveraging the detailed integration playbook developed by the transformation team for BioLife following the transaction closing.

As it relates to cash, we expect CAPEX spend to continue being approximately three to four percent of two thousand twenty six revenue. As we wrap up the call, Olivia and I want to thank our Repligine teammates for delivering an exceptional first half of two thousand twenty six. Last week's announcement of our definitive agreement to acquire BioLife marks an important step forward in our journey. It fast tracks our cell therapy strategy and opens a compelling new growth factor for Repligine. We are energized by the momentum across our business and remain firmly focused on executing our strategic priorities.

With that, I will turn the call back to the operator to open the line for questions.

Yeah, good morning, Matt, Olivia here. Yep, no absolutely good question. And thanks for asking it. We are obviously very happy about how order developed over the last several months. You probably remember we said we saw really nice order improvement over the end of quarter one, and this has kept on going for all of quarter two, which was really great. And it's from pretty much across the board in terms of orders, in terms of our different franchises. That's why we came to the conclusion. It's really the right time to increase our guidance for the full year, knowing like we are on our end of July, and we've got much better visibility for the full year.

So that's why we decided to move to 10.5 to 13.5, midpoint at 12% growth, which happens to be exactly what we had during the first time in organic growth of 12%. Meaning in order to deliver the midpoint of the new guidance, we don't need any acceleration at all. And then just quickly going through the franchises, obviously you mentioned incredible performance on protein, but also on process analytics and chromatography, I want to say. So the only one that has not been doing fantastic this year is filtration. And that was just totally expected, because all of the headwind we talked about are all happening in filtration. Okay, thanks.

Yeah, good morning, Daniel. So honestly, it was really expected that capital equipment cells would be muted for us in Q2. I want to say like for the first half, our sales of capital equipment are a high single digit. But what was really more important for us was to see order really picking up very significantly sequentially. Now, book two billion quarter two was really significantly above one. So what's important is we want a second RSP. Remember, we said we would start to have a seat at the table. And of last year, that is the second one, number three, on each way, we should get confirmation within the next few weeks, probably. So we are starting to build a really nice backlog for 27.

And we were really excited about that. I mean, some of it might come towards the end of this year, but probably mostly towards the beginning of next year, which is going to set us up for a risk on the 27 on the equipment side.

Yeah, good morning, Casey. I'll start by answering the question on protein and then I let Jason comment on the margin side. So yeah, you said it rightly. I mean, it was an incredible quarter for us on the protein side with growth around 50%. It's really what was driven by strength across the entire portfolio. And remember, a couple of years ago or so, we said we had to pivot our protein strategy completely after losing two of our big OEM deal at that point. And the strategy we've put in place is just playing out in a marvelous manner. And it being a little bit more detailed. I mean, we've received strength from three different side on the protein side.

First of all, our year in partnering with pure light is doing extremely well. They had a very strong performance in Q2 and we're so happy to partner with them. But also on our own ligand slash raising custom development, the Avitite portfolio, we had a tremendous quarter as well. And then finally on growth factors as well, what was a very strong quarter. So it's really pretty much across the entire protein portfolio that we've experienced a very nice growth, which is why we decided to increase the guide to mid teens for the full year versus low double digits before. And on margin, I let Jason answer.

Yeah, good morning, Casey. So first, let me just highlight and thank the team for such a strong execution that we've been delivering on margin expansion. And so we've had a really strong first half both at the gross margin level and at the operating margin level. When I take a step back, I think we've improved our visibility and we can make faster, smart decisions. The manufacturing team is delivering, we're achieving that price, getting volume leverage, and we've been very balanced in our overall OPEX management in terms of making sure that we're investing in the future for growth and our fit for growth journey, as well as again driving that margin expansion. You know, you saw that we raised our operating margin guide via another 25 bibs.

That was after 25 bibs in the first quarter. So now we're guiding for a full just north of 200 basis points of margin expansion year over year. So really, really excited to see that momentum going. Again, there is a dynamic first half to second half that you called out. The OP margin will be slightly lower in the in the second half. And some of that's driven by the OPEX that you referenced. But frankly, again, we didn't change the OPEX guide, raised the top line. And so we see that that operating leverage falling through. The second half OPEX that we've called out is going to be a step up right from a run rate. So the third quarter will step up a couple million from two queue.

And then fourth quarter will step up similarly again. And as I highlighted on the call, we'll be really doubling down a little bit our investments in sales. We've talked about certainly our investments in Asia, some of the technical selling resources we have, the integrated solutions team that we're building, and then also in R&D. So again, but I would put in context that even with that growth in the quarters, OPEX will still be up really only high single digits year over year. And again, being less than our top line growth, that's how we achieve that leverage. Gross margin just to address that quickly. No change in the year. So again, continuing to see that traction. There is, so I'll say more of a change first half versus second half at the gross margin line than we see at operating margin.

And that's primarily driven by MIEX, right? We probably had about a full point of expansion in the first half on the MIEX we saw. We're still calling to about a neutral MIEX impact for the year. So that of course implies that the second half is going to be the other direction. But again, we've been really happy with what the team has been executing and we'll continue our journey on margin expansion.

Yeah, good morning, Dan. Thanks for your question. Yeah, it's very much depending from customer prepared nets. I mean, and that's as you can imagine, particularly the case for capital equipment, where when you get orders for specific capital equipment investment, you have to make sure that the plan is ready to accommodate delivery of those equipment. So it's mostly the case for capital equipment. It can be the case sometime for consumable as well. It's a little bit more rare, but that's definitely also sometimes the case where some people like to order the consumable 6 to 12 to 12 months in advance, but it's mostly applicable for capital equipment for sure.

Thank you.

Yeah. Thanks for your question, Brendan. Good morning. Yeah. Well, of course, as you heard, we had only a slight revenue growth for filtration in Q2, which by the way was written by pre-strong-free management and fact sheet cassette business. Well, what was really encouraging for us was the pickup we've seen in ATF and equipment orders toward the end of the quarter. And then you just said it very rightly. I mean, all of our 2026 headwind happened to be in filtration, unfortunately. I mean, it started obviously with the gene therapy program that we faced issue with a year ago now, exactly. Then we mentioned being of the year we had the two headwind on the ATF customer side, one managing its inventory, the other one being delayed implementing the new sites.

And now on top of it, we saw the Polymen business, which also impacts the reported growth. So we probably will see some impact from those headwind in Q3. And we expect like it should start to normalize somewhat in Q4. And what I'm trying to read to say here is we remain very excited about 2027. The growth of both of these that exist across that entire portfolio just to be very specific on ATS. In the first half of 2026, we've won more new program slash customer than we did in the first half of 2026. And in fact, by mid of May already, we had reached the level we reached by the end of June of 2025.

So it's really a much higher number, which we know is going to set us up for being back to growth very nicely on the ATF side from 27 on the world and for the next several years. So that's where we are. We catch up guidance roughly mid single digit. Again, if you look at all of these headwinds we have, they are piling to almost high single digit. So that's a big game changer obviously for this year. And most of these are temporary as I already mentioned.

Morning Puneet here. I think I heard three questions. So I will answer probably the first two and anyway, we wouldn't comment too much on 27 at this point. But as far as APAC is concerned, yeah, it was a fantastic quarter. I mean, the 40% growth in the quarter. Well, what was really good, it was across all of Asia. I mean, it was not only China, but as you say, very rightly, we have a huge focus on China. China is a great turnaround for us this year. I mean, first half China grew more than 60% which were very, very delighted about. But the rest of Asia did very well. And as far as watch franchises, it's pretty much across the board, really.

I would say maybe out of the four, the one that might be a little bit less important right now in Asia is protein, but really filtration, chromatography and process analytics are really the three critical franchises for us in Asia. As far as China is concerned, I mean, we are very ambitious about the country. As you know, our OEM partnership is advancing as expected. We're hoping to be up and running by beginning of next year to start manufacturing a lot of our filters in China for China. And the reason why we're so bullish about China is about 30% of any clinical trial in the world are happening in China. And they are leading the pack on product line by specifics, antibody drug conjugate, cell therapy.

I mean, believe it or not 40% of the funnel of cell therapy worldwide is taking place in China. So really, that's about the Asia piece. As far as onshoring is concerned, I mean, I would say, I mentioned we want to second RSP and probably on the way to win the third one very soon. I mean, we see a lot of opportunities that are coming out desk and we're really obviously very optimistic. We'll see some 27 revenues coming out of this. What I think is really important if you want to hear from me is the reason why we're putting in place that integrated solution team right now is to enable us to tackle those opportunities better and better.

I mean, you don't you don't answer a big RSP, a big answering opportunity the same way you're answering a small bits and pieces of equipment here and there. And that's something our team has got some good past experience with. And that we're really building right now to make sure we're capable to turn around. So it's type of offering in a very professional manner. And then adding as much services and potentially as much consumable as possible into those bigger parties. So I think we are going to be extremely well set for those opportunities that we see coming more and more and that should really benefit us currently from 27 non-worlds here.

Hey, good morning Anna. Yeah, I mean, obviously we see a lot of reason why we decided to increase our guidance for the full year. First of all, our incredible execution in the first half. Again, we did have a 12% organic margin earlier. No need for any specific acceleration to deliver the midpoint of the new guidance here. So we have increasing expectations for protein and analytics in particular, which is why we increase guidance for those two specific businesses. Now, Anna, come your question about what could make it going to the upper hand or to the lower hand. I mean, and I let me start with the lower hand staff, which would really imply softness in the industry, which we are absolutely not seeing today.

In fact, you heard me saying what has been really interesting for us to watch in quarter two is to see, first of all, the emerging biotech business growing again, high teens for this quarter in a row of tremendous growth on the emerging biotech side, which now means it's a real pattern because a comp were much higher. And it means indeed the money is starting to really reach those people and everybody, everybody in the biopossing industry starts to benefit from it. And then the other stuff that I was really happy about was new modality, because we all knew beyond obviously the headwind we had on that specific gene therapy program. I mean, it was a little bit of a soft environment for new modality as well.

And to see new modality growing close to 10% year over year, and having a very strong book to build ratio as well, make us feel like we start to see a real rebound on that side, which as you know, is something we have huge potential tailwind coming out of that. So in terms of market segment, great improvement both on the emerging biotech, but also on the new modality side. And in terms of our product line, obviously big hopes to see a protein process analytics enabling us to deliver even more than what we've seen so far. And to talk about where what could bring us to the upper hand of the bracket we have, which is what we're hoping to achieve.

Obviously, I mean, it could really be a big swing factor. I mean, we've seen a nice rebound toward the end of quarter two. This is being confirmed with early orders in quarter three. I mean, that could be really helping us to be more towards the upper hand of the bracket than the midpoint of so on. So that kind of the overall situation where we are very optimistic about this promising year for us.

Yeah, good morning, Matt. Great question. I mean, I think I mentioned a few times already. Like we did not really have a seat at the table earlier. I mean, and very simple because we built that portfolio of equipment over the years. I mean, it's literally only a year ago that we started to have not only our HES equipment, but we had also our downstream TFF, downstream chromatography, and more recently our mixing offering as well. So now we would say we've got almost 80% of whatever large scale hardware requirements customers have when they go for expansion. So not only now we have a seat at the table, but at the same time, as you know, we started to pair some of our hardware with our PAT technologies to give our customers really a chance to run their processes.

They're manufacturing with much more intelligence than before. And that's definitely a big game changer and a big advantage. We have that big benefits we are providing to our customers. So you can call it potentially market share shift or you can call it people looking for different solutions than they were looking for before, because we are the only one really being capable to offer those inline technologies. Mostly one today, but we're working on adding two more that will be available probably sometime in 27 or 28. So that's really us having a seat at the table, us bringing new solutions for customers and us professionalizing the way we answer those answers with the integrated solution team we're putting in place right now.

So we actually had a tariff refund in the quarter. So it actually ended up being a good guide to margin, to your point or pressure, to revenue. So it was about a million dollars of revenue headwind. We literally got the refunds in the last day of the quarter. Now I will note that even with that million dollar revenue headwind, we did not adjust that from our organic growth rate. So again, if that hadn't happened, we would have been about, call it 50-bits higher growth rate, both on an organic and on a reported basis. In terms of the cost of goods sold, I'll say associated with the refund. So that was a margin good guy in the quarter.

When I think about the total year, I think when we, in February, we shared that we thought tariffs would be about a 50-point headwind for us. So with some of this refund, that will certainly be lower. It will still be a slight headwind for us overall, but not as quite as much as the 50-bit. So that won't repeat as both the pressure point in the second half of revenue or a good guy in the second half for margin. So I think we've got it dialed in what we know. Now you see the news as well where, you know, tariffs get headlines weekly, so we'll continue to monitor that. But we've built all that into our guide right now.

Hey, good morning, Mike. Appreciate your question. I mean, we've always been very transparent about the trend we're seeing in our business, which is the reason why as soon as we heard about the potential headwind we had on the ATF side, we talked about it. And we had two of them. I mean, one of them was a customer that told us here, we have a pretty significant inventory and you're probably not going to see the color of any order in the whole of 2025, sorry, in the whole of 2026, you're going to see it probably coming back in 27. And then the other one just told us, hey, and finally, our site will not be ready before the end of 2026.

So from that point of view, you're not going to see the color of consumable orders this year. So as soon as we see it, we just mention it. I mean, I like to do what we say. And then that's why we've delivered those 12 quarters in a row of meeting or bidding expectation. This being said, it's very difficult for me to say what was what was that mentioned is connected to ours. I mean, I don't know. All I can say is if anything from our side, we've seen improvement in our business since we heard about those headwind being of the era.

Good morning, Matt. So let me start with the first question on market growth for protein. So here, it's a great question. By the way, I think you need to look at different subsegment of the protein market because where you think about products like ligand, ratings on the one side and probably to a certain extent, some of the growth factors on the other side, you would say growth has been, well, let me start maybe first with rating and ligand. I think here we've always said market growth is anywhere between eight and 10%. It's fair to assume like people are starting to get better and better at using those products. So probably slowly but surely that market has been going more toward the lower hand of that bracket than the higher hand.

But then on the other side for upstream, you've got protein like growth factors, cytokines, where they are definitely benefiting a lot lately from these very high cell density processes that are becoming more and more common. So I think you need to really speed that market between those two sub-market rating on one side and then probably a stream of growth factors and cytokine on the other side because I think growth factor of cytokine has a potential to really grow more towards the low teens if not mid teens over the next several years. And then if we look at our own business, I mean, yeah, we are a bit of a newcomer in the field. We have incredible great traction right now.

I mean, between a year ago and this year, I have to say what we've seen changing a lot is a year ago, people were mostly coming to us for new modality, custom ligand, custom resin in that field of new modality now in the last 12 months, we've seen a lot of customers coming to us to for much broader range of products that might have been on the market for several decades and where they realized here, we will never got the chance to re-get the state of the art product to really purify our products in a much more productive manner. So I think we have a very sustainable growth in front of us on the protein side.

In fact, I think the best is still to come because we are still mostly into a clinical early phase or let's say switching from an existing commercial product to a new one and where people are still running those validation batches and so on. So I really do believe we have an incredible way forward to tell we know on the protein side.

Yeah, good morning Subu. So I mean, I just said earlier, really on the protein side, we are really becoming broader than just focusing on new modalities. I mean, yes, we've had numerous successes on new modality. I mean, we launched an AV-8 or an AV-9 reasons that have gotten critical traction right now. I mean, we hear from customers that are the best on the market right now. But beyond new modality, we are working on multiple products that are going into more established products that have been on the market for a long time. Obviously, excluding monoclonal antibody, where we work exclusively with our friend from pure light. And then in terms of chromatography, yeah, you're right. I mean, we somehow analytics and protein have been doing so well in due to like, we don't even talk so much about chromatography.

But chromatography grew again, low double digits in the quarter, quarter to of last year was our highest quarter of the year. And we had incredible growth in quarter two of last year. So comp were very high. I mean, we keep on winning a lot of new customers, both pharma and CDMOs. And I feel like today, compared to a couple or even three years ago, when I joined the company, I mean, it sounds like people are really realizing they want to switch towards using prepack color more and more in the future. And the good news, it's only a small fraction of the entire market that is using prepack color. And so we seem to have a lot of traction behind us for the next several years here on that side.

Thank you so much. And thanks again for joining us today, for that earning quarter to session. We're obviously very pleased with our performance at quarter and our continued momentum in the business. Our teams continue to execute very efficiently on all of our strategic priorities, which is why we continue to outpace market growth and expand margin at the same time. So last week at Ripley Gen was incredibly exciting with the announcement on the bio live side, our team is very energized. And we look forward to catching up with many of you very soon. Thanks.