BioLife Solutions, Inc. (BLFS) on Q1 2021 Results - Earnings Call Transcript
Operator: Ladies and gentlemen, thank you for standing by, and welcome to the Q1 2021 BioLife conference. I would now like to hand the conference over to your host, CFO, Rod de Greef. Sir, please go ahead.
Rod de Greef: Thanks you ,John. Good afternoon, everyone and thank you for joining us for the conference this call to review the operating and financial results for the first quarter of 2021. Earlier this afternoon, we issued a press release, which summarizes our financial results for the three months ended March 31st.
Mike Rice: Thanks, Rod and good afternoon everyone. Thank you for joining our call. Joining Rod and me today is Dusty Tenney President and Chief Operating Officer. We're off to a strong start to 2021. So I'll get right to it. In Q1, we booked record revenue of nearly $17 million of 40% increase over Q1. Last year, we gained 80 new customers compared with the full year of 20, 20 strong count of 213 new customers. The team executed the dry product adoption across the portfolio, and to set the stage for a stellar 2021, we're making an initial increase to our revenue guidance for the full year of 2021, which Rod will speak to in a few minutes. We also expanded our leadership team with the promotions of Marcus Schulz to chief revenue officer. And Sir Aebersold is VP global human. Lastly, we strengthened our board with the addition of New Directors, Amy de Ross, and Rachel Ellingson. I'll make some comments about our three revenue platforms starting with media in Q1. We booked record media revenue of nearly $9 million, which was up 3% over the same period in 2020, a tough cop when we booked about 1.5 million in COVID-19 related safety stock orders, as far by buyer preservation, media. We gained at 16 new media customers, including Celsius therapeutics, galvanize therapeutics, hyper sell, and you know, biosis. and Zilliox.
Dusty Tenney: Sterling's ultra cold continues to realize significant market traction adding 29 new customers during the quarter totaling over 450 U LT freezer systems globally. Within these new customer footprints Catalent recently announced a global strategic partnership was Sterling ultra cold to establish energy efficient, cold chain capabilities for biologics and emerging modalities, including cell and gene therapies. Sterling's ultra low temperature freezer system is unique in the market as the only ULTs to provide the full range of ultra low temperatures between minus 20 and minus 86 C in a single system that can operate within any global location by simply changing a power cord. This is ideal for companies that have multiple biological storage, temperature requirements, enabling ultimate flexibility to deploy these systems virtually anywhere in the world.
Rod de Greef: 4 Thanks dusty. As we mentioned on our last call for 2021, we have streamlined our revenue reporting into three categories by a preservation media, which consists of all media sales, freezer and thought platform revenue, which includes the freezer and automated solid product lines and the bio storage platform, which includes rental revenue, as well as bio storage revenue resulting from our acquisition of size safe last October revenue for the first quarter, total $16.8 million representing a 39% increase over last year's first quarter revenue of $12.2 million sequentially. Total revenue was up 14% over last quarter, media revenue, total $8.9 million, which represents a modest 3% increase over the prior year. However, as we have previously discussed, we believe last year's Q1 media revenue included approximately $1.5 million of COVID related demand pull forward. So we estimate that a normalized year over year growth rate for media this quarter was approximately 25%. Revenue from the freezer and thought platform, totaled $ 4.8 million this quarter, or an increase of 59% compared to 2020 driven by strong freezer sales, including the shipment of our first high capacity rate freezer, which had a sales price slightly below $500,000. Our bio storage platform revenue total $3.1 billion compared to 438,000 last year. The increase in this revenue is primarily attributable to sales generated by our acquisition of size safe, which occurred in Q4 of last year. Our adjusted gross margin for the first quarter of this year was 55% compared with 64% last year, the decrease in adjusted gross margin for the quarter reflects the lower margin profile of the acquired product lines, which accounted for 47% of revenue this quarter, compared with 29% of revenue in Q1 of 2020 adjusted operating expenses for Q1 of 2021, total $8.8 million compared with $6.4 million in Q1 last year, the increase was primarily attributable to the inclusion of size safe operating costs this quarter, not in place in 2020 and secondarily to increase head count and stock-based compensation expense necessary support our overall growth. Our adjusted net income for the first quarter of 2021 was 478,000 or 1 cent per share compared with adjusted net income of 1.4 million or 6 cents per diluted share in the same period last year adjusted EBITDA for the first quarter was 2.8 million, which was basically flat compared with 2.9 million in the same period. Last year, it should be noted that both adjusted net income and adjusted EBITDA for Q1 of last year were positively impacted by approximately $1 million based on the flow-through of the COVID related media demand.
Mike Rice: Thanks rod. I'd like to summarize the key takeaways from Q1 and our rest of your outlook. We're off to a great start across the portfolio. Travel restrictions are lifting and we're back on the road, visiting customers and our sites to meet with team members. We expect 2021 to be an inflection year based on our Q1 results, a very strong Q2 so far, and our confidence in customer demand for our products and services throughout the rest of the year. The Sterling team continues to crush it for accounting on dusty to play a critical role integrating Sterling into buyer life. Now I'll turn the call back over to the operator to take your questions, John,
Operator: At this time, I would like to remind everyone, if you would like to ask a question,. First question is coming from the line of Chris Lin with Cowen
Chris Lin: Thanks for taking my questions. Hi, Chris, Mike and Mike. So microbiome Dusty, the number one question I received from investors today, concerns thoroughly specifically investors are asking how differentiated the ultra low temperature technology is and how difficult it will be for a competitor to enter this space. I know this was addressed that point during the last call and all of this call, but any increments with details you can provide would be appreciated.
Mike Rice: Dusty. Why don't you take that one?
Dusty Tenney: Okay, Chris. Thanks for the question and, and the representation of the share base there. I think there's a couple of things that I think are meaningful. One is really around the market and when you take a look at the ULP market, it's definitely growing mid to high single digit which is, you know, from, from our standpoint, a key attribute in terms of the investments that we're making to expand the portfolio.
Chris Lin: Okay. Thank you. Maybe, could you also just address how difficult would it be for a competitor to enter this space? So really just how long would it take you to develop this technology for, I guess, a larger competitor?
Dusty Tenney: Well, one is a realization that the technology that we have, which leverages Stirling is well protected with patents, there's patents have been brought into the BioLife portfolio. For someone to get into space and establish themselves, especially with the breadth of sales and distribution that we have on a global basis. That's a real tough part, Chris, to be quite honest. And by virtue of that, the ability to get into the market to be successful, is a real challenge, especially with the entrenchment that we have with a number of critical customers. One I highlight, of course, was Catalent with the global relationship that we recently just established.
Chris Lin: Great, very helpful. Just two more questions from me. And apologies if I missed this, but I think you increased Stirling revenue guidance by $5 million for the full-year. What's driving the upside?
Dusty Tenney: It's just Chris to fundamentally continued strong demand that we see coming down both in Q2 in the near-term, versus when we put out our guidance back in March. It's been stronger than expected. And that's expected to continue throughout the rest of the year.
Chris Lin: Okay, great. And last question. Mike, could you just help us unpack the media strings in a bit more detail? Is the growth they're being driven by the addition of new customers? Or is it due to existing customers increasing utilization as they progress through clinical trials?
Mike Rice: Yes, Thanks, Chris. Great question. I'm glad to provide some detail. It's both but seriously, the impact comes from existing customers that progress to clinical trials and need more media. And we're also acquiring new media customers and continue to do so at a really fast clip. They don't buy very much in the early phases or even in the preclinical phase, but we're capturing the market really well. But what's clearly the biggest factor is existing customers progressing through and needing more as their enrollment increases, as they advanced to later stages of development.
Chris Lin: Great, thanks for taking my question.
Mike Rice: Sure.
Operator: . Next question is coming from the line of Jacob Johnson from Stephens.
Jacob Johnson: Hey, good afternoon, Mike, Rod and Dusty.
Mike Rice: Hi, Jacob.
Jacob Johnson: Hey, I guess first question, maybe just on the sequential growth in the services segment, it looks like evo revenues picked up nicely, sequentially. They just confirm if that was the case, and any kind of color you want to talk about the growth in that segment?
Rod de Greef: Yes. So per my comments early on Jacob, we are trying to streamline the revenue categories, because when you look at both thaw and evo, right now, they're representing somewhere around less than 5% of total revenue. And when we plugged Stirling into the mix next quarter, it's going to even be smaller more like 2% or 3% of revenue. So to call that out as a separate line item is not something we're going to do, but what I can say is that there was some sequential growth on the evo side, but the bulk of the increase is the biostorage revenue from SciSafe that had a nice bump up. And we are seeing some strong growth and we have some pretty decent visibility as that unfolds. Because typically, there's -- there are contracts and pretty large ones that are signed with some pretty specific timelines associated with them in terms of when that revenue starts to kick in. So we're pretty confident and optimistic about that contribution this year.
Jacob Johnson: Okay, got it. Thanks for that Rod. And maybe one other question for you, Rod. Just if I look at the freezer and thaw segment, you did just shy of $5 million in revenues during the quarter. I think if I back out Stirling, you're doing, you're guiding to something like $15 million to $17 million for that segment for the year. Was there any kind of one-time benefit in the quarter? Or does -- I don't want to talk about specific product lines, but is there similar seasonality in this segment to the seasonality that that dusty outlined at Stirling?
Rod de Greef: Yes, I think we're going to see something similar in Q3 that that Dusty highlighted. I think, relative to Q1 here. Certainly, we had a strong quarter with just the core product line that the company has been selling now for some time. But as I mentioned, we introduced the high capacity rate freezer, which has a very high ASP nearing $0.5 million, and that's certainly, you don't have to sell many of those to have that positive impact on the revenue line.
Jacob Johnson: Okay, got it Rod. And then maybe just one big picture question for whoever wants to tackle it. Just, you put out this $250 million revenue goal in the next three or four years? Can you maybe talk about, and now you have these newly defined segments? How should we think about the growth profile of each of those segments to get to the $250 million goal? Should we assume they're all kind of growing similarly? Or should we expect, one or two of these segments to be kind of more important growth drivers as we look out three or four years?
Rod de Greef: Yes, rather than then get specific around growth rates. What I would say is this, Jacob, that when you look at the $250 million, right, we would expect just slightly over 50%. Now that we have Stirling on board, coming from the freezer and thaw product platform. About 30% would come from media, and 20% we would expect to go from to come in from storage that storage line.
Jacob Johnson: Got it? I should ask the question that way. Thanks for that Rod and congrats on the quarter.
Rod de Greef: You bet. Thank you, Jacob.
Mike Rice: Thanks Jacob.
Operator: Next question is from Thomas Flaten from Lake Street Capital.
Thomas Flaten: Good morning guys. Thanks for taking the questions.
Mike Rice: Hi, Tom.
Thomas Flaten: Just and I might be pushing a little bit here. But I know Mike, you've said that, you'd likely see expansion that commercial products in the 12 to 24 month window. You've got a couple products that meet that criteria. Do you -- is it too early from a small number of ends to really see if that thesis is bearing out in terms of multiple expansion in terms of product that you're selling to those commercial products?
Mike Rice: A bit still too early Thomas. Sure. I mean, we're in, five CryoStor using five approved therapies now. I mentioned, four more who could get approved in the next several quarters. I think the takeaway on our thesis there is that CryoStor or HypoThermosol they're used in so many customer clinical applications. And let's be fair about it, I mean, there's going to be probably serious attrition, if we're in several 100, we're not going to have 20 Tecartus all targeting the same specific form of cancer right. However, the market can support that. But nevertheless, we have so many shots on goal that we believe that over the next three to five years, if the FDA is doing what they say they're going to do to staff up and to fast track applications review, and that then we could see, we could actually see 10 to 20 new approvals each year starting in 2025. And we're in such a big number of those where there's tremendous upside for us on the media side alone.
Thomas Flaten: Great, and then to use someone else's phrase a slightly bigger picture question. As you look out at the universe of potential acquisition opportunities. Is there a skew product versus service? Or do you have a preference there? Or are you opportunistic across the board?
Mike Rice: Well, I think the immediate response is certainly opportunistic, if we can find consumable but disposable revenues with media like margins, of course, we're going to try to find those first. Those aren't growing or falling off trees, and there aren't that many of those that are left. Nevertheless, we do have some targets that could be meaningful for us. And we're active, so.
Thomas Flaten: Great. And then just one final one. I was caught up in taking notes. I was worried if Dusty if you could repeat the seasonality comments that you made in the prepared comments. I'm not sure I caught those properly.
Dusty Tenney: Yes, so, Thomas, the phraseology that I used there was really centered around the fact that in Q3 there is some level of slight offs, slight downward turn in the business flight, driven by the European summer holidays, but slightly offset by the U.S. government fiscal year-end spend. The second reference was really in Q4 and that's normally where we experienced the slight pickup just by virtue of the year-end capital spending.
Thomas Flaten: Excellent. Thanks so much. Congrats on the quarter, guys. Thank you.
Dusty Tenney: Thank you.
Mike Rice: Thank you.
Operator: Next question is from Mike Gokay, from KeyBanc Capital Markets.
Mike Gokay: To on the media any commercial stocking revenue in 1Q that was in preparation of the two commercial launches that were approved in 1Q, and then looking forward, baked in the guidance you're implying that pretty significant step up and growth and media. Can you just talk to the visibility of that? And I guess any numbers baked into the potential commercial approvals that you mentioned earlier on the call?
Mike Rice: Thanks, Mike. This is Mike. I’ll take the first one. Yes. So we would expect the companies that recently got approved to be meaningful customers for us in this calendar year, whether or not we're going to -- we can attribute their order flow for stocking or gearing up for commercialization. We're not going to get into that. But I would just leave my remark to say that they should be meaningful customers, meaningful revenue contributions with media. Rod you want to take the second part.
Rod de Greef: Yes, sure. Yes Mike, as we've talked about in the past, we have a pretty significant revenue concentration in the media business. And so the bulk of those customers we have supply agreements with, and they provide us with forecasts, which gives us some decent visibility, it's getting a little choppier over the last, say 24 months versus what it was before that. But nevertheless, it gives us some decent visibility. And then also customers are starting to get in the habit of actually some of the larger ones placing out through the balance of the year, which correspond to that forecast. So that, we have pretty good visibility on a chunk of that media business. Why we're pretty confident about where it is.
Mike Gokay: Great, thanks. And then, Dusty on the Stirling side. I guess, maybe run rating the first quarter revenue of $17.5 million that kind of gets you to $70 million for the full-year. But the overall guidance, I think, implies about $60 million, once it's run into the BioLife mix. Can you kind of talk to the dynamics of that. And then, incrementally, how much revenue was baked into the new Catalent announcement as well. Thanks, guys.
Dusty Tenney: Yes, so Mike, I -- if you take a look at the business profile, and I provide a little bit of guidance that sort of laid right into what Rod had provided to you on a linear basis, and I think the upside that we're seeing inside the business as a byproduct of the fact that we did see very strong demand in Q1. One would say that, things were over from a COVID perspective and to share some observations in relationship to what that look like in relationship to the total revenue. So given that as a construct and the continued effort in terms of build out of capabilities both in the research side, some level of COVID dynamics, that is continuing to spill over. And we're seeing that benefit come through by virtue of the bookings that we're seeing inside the business. And as a result, and that's again supported by the guidance. As Rod shared with a team, if you do linear extrapolate the Q1, even though again, we expect to see a little bit of a slight downturn, just by virtue of the categorization in Q3 on a linear basis, there's we're operating in that $60 million to $70 million range that you just noticed.
Mike Gokay: And was the driver of the upside of the guide on the Catalent announcement? Can you provide any color around that? Thanks.
Dusty Tenney: So from a Catalent perspective that was baked in as part of the guidance, they are expanding globally, and we've got an incredible relationship that has been a byproduct of some of the work that we've done over the last two or three years in building that relationship.
Mike Gokay: Perfect. Thanks for the time, guys.
Mike Rice: Thanks Mike.
Operator: Next question is from Carl Byrnes from Northland Capital Markets.
Carl Byrnes: Question and also congratulations on your progress.
Mike Rice: Thank you, Carl.
Carl Byrnes: Looking at media sales $8.9 million up 3% and I think $1.5 million was related to COVID safety purchases in 2020. And you'd mentioned the normalized number would have been up to approximately 25% on the year-over-year basis. So my question here is, has the impact from the COVID save the purchases in 2020 baked off at this point? And then I have a follow-up question.
Rod de Greef: Yes, I think that what we saw early on last year, when it happened, you might recall call that we were of two minds, we didn't know if it was a permanent safety stock that our customers were putting in place, or if was simply demand pull forward that would be result in reduced revenue throughout the rest of the year. I think at this point, we feel pretty confident to say that it was really demand pull forward and they used it throughout 2020 and the balance of 2020 was probably a little bit lower based on that pull forward. So we think that there's zero impact in Q1 of this issue of Q1 of this year. So from our perspective, it's behind us. But it does create this lumpiness. And we've talked about in the past that as we go forward through the year, in our view, the best way to try to calibrate the media growth rate is to look at the year-to-date number as again as we go through 2021. And I think that's going to be a better reflection, because it'll smooth out the sort of bumps that we've had in 2020.
Carl Byrnes: Got it. That's very helpful. And then also just a follow-up on Catalent expanded agreement. If I recall correctly, there was a commitment in addition to being preferred vendor of 100 feet freezers, I'm wondering if you're able to even quantify that spend and over what timeframe you would expect to garner it? Thanks.
Mike Rice: Yes, so we've got an agreement with Catalent and the specifics around the 100 is a byproduct of them actually getting their facilities in place. And at the time that their facilities are ready, we’ll be deploying those systems. So those have been earmarked, and again baked into our outlook, but most likely that will take place here over the over the back half of the year.
Carl Byrnes: Excellent. Thanks so much and congrats again.
Mike Rice: Thanks.
Operator: Next question is from Suraj Kalia from Oppenheimer.
Suraj Kalia: Good afternoon, everyone.
Mike Rice: Hi, Suraj.
Rod de Greef: Hi, Suraj.
Suraj Kalia: Hey, Dusty, so I just want to make sure for Stirling, we understand the incremental COVID related business. If I remember correctly from the last call, there was something between $10 million to $20 million was COVID related. Help us sort of get our arms around so that we can normalize on an ex-COVID basis once we come out of this?
Dusty Tenney: Yes, so Suraj, the framework and I'll just speak relative to my comments during the call here today as a framework, roughly about, I'd say about 20% to 25% of what we saw in the 17.5, we directly attributed to revenues that were targeted for COVID. So the math there, and the dynamics is roughly about $3 million to $4 million of that is what we experienced in Q1. As I mentioned before, there is sort of a declining focus now on COVID. So most of the bookings that we've experienced in Q1 were actually outside the COVID environment, we're actually seeing the market comeback in critical areas in the pharma and biotech. Some of the bio-banking dynamics that are taking place in the business, in the market, as well as even in clinical trials and studies where our products play an extremely important part. So at least from a guidance perspective, I can least share with you some perspectives on what we have reported here. But we’re seeing a decline in that dynamic that is actually being picked up by all the other specific market areas that we have targeted within the business.
Suraj Kalia: And specifically for Stirling, Dusty, would I be off in terms of directional range was that's still the incremental COVID contribution and I'm specifically asking about Stirling?
Dusty Tenney: Just a little bit, Suraj, it looks like you were about to say a number or a percent or something and we lost a line right then.
Suraj Kalia: Gentlemen, sorry, if my line is bad, can you hear me all right?
Dusty Tenney: Yes.
Suraj Kalia: Well, I was just asking about 10 to 20 really?
Dusty Tenney: What's the context?
Suraj Kalia: Hello.
Dusty Tenney: Suraj, could you hear?
Suraj Kalia: Sorry gentlemen, it looks like my line is bad. Mike, I'll take this offline. Mike, big picture, and I hope you all can hear me all right on the call. How should Mike revenues per customer is one of the metrics that we have always talked about in the past and I think that that has driven to a large part your acquisition strategy. Mike, can you give us directionally where we’re in terms of this specific metric and where we are headed, just given the cross selling efforts. Again, I hope you guys heard me, heard my question, right?
Mike Rice: Yes, we have the question, right on, Suraj. Well, now it's more complicated because we have more stuff to sell. We're still working to get much better visibility on how many customers in any given quarter by one, two, three, four or all five of the solutions. We had some modest increases sequentially from Q4 to Q1, not ready to start to publish it yet, because we're still refining the database and how we're going to present that or illustrated index or speak to it on conference calls, but it’s working. And I think the thing I'm most pleased about Suraj is that, we had that sequential increase, even in the Q1, COVID related travel restriction environment where we weren't seeing customers face to face. So we're obviously much more optimistic that now we can get on the road and visit customers that will accelerate the cross selling leveraging, will capitalize on this core media customer base and be able to transact with them for the other parts of the portfolio.
Suraj Kalia: Got it. And Rod, last question for you. And I'll hop back in queue, gross margins. Obviously, there was a step-up in incisive contribution, and gross margins took a take down. When Stirling starts flowing through in Q2 and beyond, how would you advise re-model for from a P&L perspective? Gentlemen, thank you for taking the questions.
Rod de Greef: Thanks, Suraj, you bet. On an adjusted basis, Suraj, there is going to be some dilution to the gross margin, just based on the fact that the Stirling operation has been running somewhere in the 32% to 34% range. So if you were to take our current blend, and then apply the percentage of revenue we expect from them, then you'd be getting an adjusted gross margin than that, that is lower than what it was. I think that we have talked about the fact that both at CBS and that CBS, we had a strong gross margin, probably record gross margin in Q1, in large part, thanks to the shipment of that one very large freezer that has significantly better margins than the rest of the product line. And then Dusty side, it’s Stirling, there's a path laid out to where there's going to be some significant margin improvement, as we march down through the year, particularly in Q4 and then further out into 2022. So, our expectations for margins, returning on an adjusted basis, back into sort of the five, with a five in front of it. We feel very confident that we'll get there. Still there, Suraj?
Mike Rice: John, why don't you queue up the call, the question from Marc Wiesenberger.
Operator: Certainly, we have Marc Wiesenberger from B. Riley Securities.
Marc Wiesenberger: Thanks. Good afternoon, appreciate taking my question. Over the medium-term, can you talk about the growth expectations for the liquid nitrogen freezers from CBS versus the Stirling product line? And maybe how the go to market strategies might differ and as Stirling looks to kind of get into the much lower temperatures around 180 degrees Celsius, how would that impact the Stirling or the CBS reserve demand potentially?
Mike Rice: Sure, Marc, really insightful questions. Thanks. So Dusty, why don't you speak to our integrated freezer platform sales team now that we've stitched these together, and all these folks now have an opportunity to compete for really any opportunity.
Dusty Tenney: Sure, Marc, so one of the biggest attributes, Stirling came on to as part of the BioLife business is that we have roughly about 15 direct selling resources complement of course with a strong distribution network that now is overlaid on top of all freezer sales. So those respective key stakeholders that we have within our sales organization, and now we're going to be selling both the Stirling line as well as the CBS line. The key thing here that I think you need to understand is that most of these customers are dealing with several different modalities in relationship to the research they're doing. Our freezers clearly focus on targeted therapies using blood, urine as an example, typically in the minus 80 regime, and the business of CBS is really focused on cells and tissues. And that's why those respective modalities ultimately offer up a very, very complementary approach in terms of how we think about our customers, because most of those customers are doing research now on all those various biological materials. And that gives us a natural extension to be talking with very similar customers that we either have business with inside Stirling or business within CBS, and the natural combination that exists. And as Mike sort of noted earlier on, I want to put note that now we have opportunities to actually sell to customers that are buying media, customers that are also buying some of the evo related products. So it really opens up some doors. But by virtue of having some critical mass now we can really get after it, from a market penetration standpoint, and leverage that go to market as a pathway to really strengthen the capabilities that we have in serving both ends of the biological spectrum between minus 20 and minus 196.
Mike Rice: And then Dusty, let's take part two, I think, Marc, the inference is, if in fact, Stirling running at minus 160, it can be commercialized, will that displace LN2 and I think the short answer is in situations where there's LN2 infrastructure, certainly not. But we'll have basically everything in the portfolio to offer whatever the customer needs.
Marc Wiesenberger: That’s correct.
Mike Rice: Yes, I think actually, it's complementary. It's not as if it would take away from the opportunities that CBS, there are places in the world today, Marc that have difficulty in getting LN2, it's not a renewable type of resource. And because of that, that opens up the opportunities and to be quite honest, in that particular space, in the mechanical space, there really isn't a level of competition that we believe, it would create any challenges in terms of us taking the Stirling Technology into cryogenic temperatures.
Rod de Greef: And then part three of Marc’s question was, are we prepared guys to speak to the various growth rates of LN2 versus mechanical, and we're not Marc, not at this time, and we have the freezer platform now, it's also including thoughts. So we're not even going to speak to the growth rates of the three portfolio platforms. So kept to that one.
Marc Wiesenberger: Got it, that was a lot of information, very helpful. Very nice announcement with the Catalent partnership, as CDMOs kind of continue to play a more prominent role in cell and gene therapy development and manufacturing. I'm wondering, can you talk to how you expect your relationship to evolve with Catalent and maybe more broadly, kind of what percentage of sales in the past did CDMOs maybe represent and over time, what percentage of sales could they come to represent?
Rod de Greef: Yes, good questions, Marc. If we were talking a couple of years ago, only about media, I can put my finger right in that number. And I can tell you media revenue from the various 10 or less CDMOs that were out there and in-play at the time, but now it's a lot more complicated. But we'll do a little research. And maybe we could follow-up with the call with you later on that, we've got scheduled if we can get our hands on it, if not, maybe some other time. But I think the takeaway is that, we fully expect to be able to replicate to some degree, the success we've had with this large CDMO, we're already selling at least one solution in the portfolio to all the CDMOs in the CGT space right now. And by dint of those relationships, and our ability to leverage our customer service, and corporate reputations, we’ll expect to try to replicate that to some degree, if not realize another CDMO that uses everything in the portfolio like Catalent does.
Marc Wiesenberger: Great, thanks. And then one last one. Could you potentially quantify the duplicative costs that will be taken out of the system throughout the year and kind of maybe the timeline for those rationalizations? Thank you.
Rod de Greef: No, I don't think we want to go there. And yet, we still have a lot of work to do. And Dusty is really all over that, what I can say though as a concrete example of a synergy from a CapEx perspective is on the SciSafe side. Gary is a user of the Stirling freezers. And so this year alone, in order to outfit the new location in Europe, that's being opened up right now. We're going to be saving approximately $2 million in CapEx by moving Stirling freezers in there versus buying from some other vendor.
Marc Wiesenberger: Very helpful, Rod. Thanks. Thank you.
Rod de Greef: You bet.
Operator: We don't have any questions at this time. Presenters, you may continue.
Mike Rice: Thanks, John. Thanks everyone for your interest in BioLife. It's clear, we've built a very special culture here that we're extending to our acquired companies. This team is totally customer focused, and that dedication is paying off as evidenced by our operating results. We're looking forward to sharing our Q2 results with you. Good night.
Operator: This concludes today’s conference call. Thank you all for participating. You may now disconnect.
