Azenta (AZTA) Q2 2025 Earnings Call May 07, 2025 08:30 AM ET Company Participants Yvonne Perron - VP - Financial Planning & Analysis and Investor RelationsJohn Marotta - President & CEOLawrence Lin - Executive VP & CFOVijay Kumar - Senior Managing DirectorPaul Knight - Managing Director Conference Call Participants David Saxon - Senior AnalystMatthew Stanton - AnalystBrendan Smith - Director & Senior Analyst Operator Greetings and welcome to the Azenta Q2 twenty twenty five Financial Results. During the pre ...

Azenta (AZTA) Q2 2025 Earnings Call May 07, 2025 08:30 AM ET Speaker0 Greetings and welcome to the Azenta Q2 twenty twenty five Financial Results. During the presentation, all participants will be in a listen only mode. Afterwards, we will conduct a question and answer session. As a reminder, this conference is being recorded Wednesday, 05/07/2025. I will now turn the conference over to Yvonne Perron, Vice President, FP and A and Investor Relations. Speaker1 Thank you, operator, and good morning to everyone ...

© 2025 Azenta, Inc. • All rights reserved 1 Conference Call Fiscal Second Quarter 2025 Financial Results May 7, 2025 1 Safe Harbor Statement "Safe Harbor" Statement under the U.S. Private Securities Litigation Reform Act of 1995; certain matters in this presentation, including forecasts of future demand and future Company performance, are forward-looking statements that are subject to risks and uncertainties that could cause actual results to materially differ, either better or worse, from those projected. ...

[Financial Highlights](index=1&type=section&id=Financial%20Highlights) Azenta reported strong Q2 FY2025 results with revenue from continuing operations increasing 5% and adjusted EBITDA growing 75% year-over-year [Q2 FY2025 Performance Summary](index=1&type=section&id=Q2%20FY2025%20Performance%20Summary) Azenta reported strong Q2 FY2025 results with revenue from continuing operations increasing 5% and adjusted EBITDA growing 75% year-over-year Q2 FY2025 Key Financial Metrics (Continuing Operations) | Metric | Q2 2025 (Mar 31, 2025) | Q2 2024 (Mar 31, 2024) | YoY Change | Q1 2025 (Dec 31, 2024) | QoQ Change | | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | $143M | $136M | +5% | $148M | -3% | | Organic Growth | 6% | - | - | - | - | | Diluted EPS (GAAP) | $(0.40) | $(0.29) | -36% | $(0.21) | -93% | | Non-GAAP Diluted EPS | $0.05 | $0.06 | -23% | $0.08 | -43% | | Adjusted EBITDA | $14M | $8M | +75% | $13M | +7% | | Adjusted EBITDA Margin | 10.0% | 6.0% | +400 bps | 9.0% | +100 bps | - Management highlighted the resilience of the company's portfolio and the dedication of its teams, emphasizing a healthy balance sheet and strong cash position that allows for continued investment in long-term growth plans[4](index=4&type=chunk) - The financial results of B Medical Systems are treated as discontinued operations following the company's announcement of its intention to pursue a sale[2](index=2&type=chunk) [Financial Performance](index=1&type=section&id=Financial%20Performance) The company demonstrated improved financial performance in Q2 FY2025, driven by revenue growth, gross margin expansion, and reduced operating losses across key segments [GAAP Earnings Results - Continuing Operations](index=1&type=section&id=GAAP%20Earnings%20Results%20-%20Continuing%20Operations) GAAP revenue from continuing operations increased 5% year-over-year, with improved gross margin and a narrowed operating loss due to lower expenses GAAP Revenue by Segment (YoY) | Segment | Q2 2025 Revenue | YoY Growth | Organic Growth | | :--- | :--- | :--- | :--- | | Sample Management Solutions | $80M | +8% | +8% | | Multiomics | $64M | +2% | +3% | | **Total Revenue** | **$143M** | **+5%** | **+6%** | - Gross margin increased to **45.9%** from **44.5%** YoY, an improvement of **140 basis points**, attributed to higher revenue, favorable sales mix, and operational efficiencies[7](index=7&type=chunk) - Operating expenses decreased by **3%** YoY to **$82 million**, mainly due to lower R&D expenses and the non-recurrence of a **$4.7 million** intangible asset impairment charge recorded in Q2 2024[7](index=7&type=chunk)[8](index=8&type=chunk) [Non-GAAP Earnings Results - Continuing Operations](index=2&type=section&id=Non-GAAP%20Earnings%20Results%20-%20Continuing%20Operations) Non-GAAP results show significant operational improvement with adjusted operating loss narrowing, adjusted EBITDA growing 75%, and margin expanding 400 basis points Q2 FY2025 Non-GAAP Performance (YoY) | Metric | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Adjusted Operating Margin | (0.4%) | (3.2%) | +280 bps | | Adjusted Gross Margin | 47.5% | 46.2% | +130 bps | | Adjusted EBITDA | $14M | $8M | +75% | | Adjusted EBITDA Margin | 10.0% | 6.0% | +400 bps | | Non-GAAP Diluted EPS | $0.05 | $0.06 | -16.7% | - Adjusted gross margin improved by **130 basis points** YoY, driven by higher revenue, favorable sales mix, and operational efficiencies[10](index=10&type=chunk) - Adjusted operating expenses increased **2%** YoY to **$69 million**, primarily due to higher selling, general, and administrative expenses, partially offset by lower R&D costs[10](index=10&type=chunk) [Segment Performance](index=1&type=section&id=Segment%20Performance) Sample Management Solutions drove growth with 8% organic revenue increase, while Multiomics grew 3% led by Next Generation Sequencing - Sample Management Solutions organic revenue grew **8%** YoY, driven by higher revenues in Sample Repository Solutions and Core Products, especially in Consumables and Instruments, Sample Storage, Clinical Stores, and Product Services[7](index=7&type=chunk) - Multiomics organic revenue grew **3%** YoY, primarily due to growth in Next Generation Sequencing, partially offset by a year-over-year decline in Sanger Sequencing and Gene Synthesis[7](index=7&type=chunk) [Financial Position and Outlook](index=3&type=section&id=Financial%20Position%20and%20Outlook) The company maintains a strong liquidity position and reiterates its fiscal year 2025 guidance for organic revenue growth and adjusted EBITDA margin expansion [Cash and Liquidity](index=3&type=section&id=Cash%20and%20Liquidity) Azenta maintained a robust liquidity position with **$540 million** in cash and equivalents, generating **$14 million** in operating cash flow - The company ended the quarter with a total cash, cash equivalents, restricted cash, and marketable securities balance of **$540 million**[17](index=17&type=chunk) Q2 FY2025 Cash Flow Summary | Metric | Amount | | :--- | :--- | | Operating Cash Flow | $14M | | Capital Expenditures | $7M | | Free Cash Flow | $7M | [Fiscal Year 2025 Guidance](index=3&type=section&id=Fiscal%20Year%202025%20Guidance) Azenta reiterated its FY2025 guidance, projecting 3% to 5% organic revenue growth and approximately 300 basis points of adjusted EBITDA margin expansion - The company reiterated its guidance for fiscal year 2025[17](index=17&type=chunk) - Total organic revenue is expected to grow in the range of **3% to 5%** relative to fiscal 2024 - Adjusted EBITDA margin expansion is expected to be approximately **300 basis points** relative to fiscal 2024[17](index=17&type=chunk) - The company does not provide forward-looking guidance on a GAAP basis due to the inherent difficulty in accurately forecasting various adjusting items[11](index=11&type=chunk) [Consolidated Financial Statements (Unaudited)](index=5&type=section&id=Consolidated%20Financial%20Statements%20(Unaudited)) This section provides the unaudited consolidated statements of operations, balance sheets, and cash flows for the specified periods [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) Presents unaudited consolidated statements of operations for the three and six months ended March 31, 2025 and 2024, detailing revenues, costs, and net loss [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) Provides unaudited consolidated balance sheets as of March 31, 2025 and September 30, 2024, outlining assets, liabilities, and stockholders' equity [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Contains unaudited consolidated statements of cash flows for the six months ended March 31, 2025 and 2024, showing cash flows from operating, investing, and financing activities [Non-GAAP Reconciliations](index=8&type=section&id=Non-GAAP%20Reconciliations) This section provides detailed reconciliations of GAAP financial measures to their non-GAAP counterparts, including net income, EBITDA, gross profit, and operating income [Reconciliation of GAAP to Non-GAAP Net Income](index=8&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Net%20Income) Provides detailed reconciliation of GAAP net loss from continuing operations to non-GAAP adjusted net income, including adjustments for amortization and restructuring [Reconciliation of GAAP Net Loss to Adjusted EBITDA](index=10&type=section&id=Reconciliation%20of%20GAAP%20Net%20Loss%20to%20Adjusted%20EBITDA) Reconciles GAAP net loss from continuing operations to Adjusted EBITDA, adjusting for stock-based compensation, restructuring, and non-recurring costs [Reconciliation of GAAP to Non-GAAP Gross Profit](index=10&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Gross%20Profit) Details reconciliation of GAAP gross profit to non-GAAP adjusted gross profit for the total company and by segment, primarily adjusting for amortization and transformation costs [Reconciliation of GAAP to Non-GAAP Operating Income (Loss) by Segment](index=13&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Operating%20Income%20(Loss)%20by%20Segment) Provides reconciliation of GAAP to non-GAAP operating income (loss) by segment, including adjustments for amortization, transformation, and restructuring charges [Reconciliation of GAAP to Organic Revenue](index=15&type=section&id=Reconciliation%20of%20GAAP%20to%20Organic%20Revenue) Presents reconciliation of reported GAAP revenue to organic revenue, showing currency exchange rate impact for both segments and the total company

Core Insights - The company reported a total revenue of $143 million for the quarter ended March 31, 2025, reflecting a 5% increase year-over-year, driven by growth in Sample Management Solutions and Multiomics [2][7] - The diluted EPS from continuing operations was $(0.40), compared to $(0.29) in the same quarter of the previous year, indicating a significant loss [2][24] - The company has a strong cash position with total cash, cash equivalents, and marketable securities amounting to $540 million as of March 31, 2025 [14] Financial Performance - Revenue from continuing operations was $143 million, down 3% from the previous quarter but up 5% year-over-year [2][7] - Organic revenue growth was 6% year-over-year, with Sample Management Solutions revenue at $80 million, up 8% year-over-year [2][7] - Adjusted EBITDA for continuing operations was $14 million, with an adjusted EBITDA margin of 10.0%, an improvement of 400 basis points year-over-year [2][7] Management Commentary - The CEO highlighted the company's strong performance amidst a challenging macroeconomic environment, emphasizing the resilience of the portfolio and the commitment of the teams [3] - The management expressed confidence in the company's positioning and disciplined operations while navigating uncertainties [3] Cash Flow and Guidance - Operating cash flow for the quarter was $14 million, with capital expenditures of $7 million, resulting in free cash flow of $7 million [14] - The company reiterated its revenue guidance for fiscal year 2025, expecting total organic revenue growth in the range of 3% to 5% compared to fiscal 2024 [14]

Company Overview - Azenta, Inc. (Nasdaq: AZTA) is a leading provider of life sciences solutions globally, facilitating faster market access for impactful breakthroughs and therapies [3] - The company offers a comprehensive range of reliable cold-chain sample management solutions and multiomics services, focusing on drug development, clinical research, and advanced cell therapies [3] - Azenta operates under several industry-leading brands, including GENEWIZ, FluidX, Ziath, 4titude, Limfinity, Freezer Pro, and Barkey [3] Financial Announcement - Azenta will announce its fiscal second quarter 2025 earnings on May 7, 2025, before the market opens, covering the period that ended on March 31, 2025 [1] - A conference call and live webcast to discuss the financial results will take place on the same day at 8:30 a.m. Eastern Time, accessible via the Azenta website [2] - A replay of the conference call will be available starting at 8:30 a.m. ET on May 8, 2025 [2] Operational Footprint - Azenta is headquartered in Burlington, Massachusetts, with operational presence in North America, Europe, and Asia [4]

Core Insights - Azenta, Inc. published its annual Environmental, Social, & Governance (ESG) report, emphasizing its commitment to ESG priorities and showcasing accomplishments for the fiscal year ending September 30, 2024 [1][2] ESG Achievements - The company achieved a ~20% reduction in Scope 1 & 2 Greenhouse Gas emissions (market-based) compared to 2022, while sourcing over 60% of its electricity from renewable sources [6] - Launched the BioArc™ Ultra product for large-scale, eco-friendly sample storage, advancing sustainable innovation [6] - Established the Azenta PRISM LGBTQIA+ Employee Resource Group (ERG) to promote inclusivity and support for a diverse workforce [6] - Rolled out the Azenta THRIVE platform to enhance employee well-being and engagement, providing access to professional training through LinkedIn Learning® [6] - Strengthened sustainable procurement efforts by training 100% of the global buyer team on sustainable sourcing and evaluating the ESG performance of over half of its Tier 1 suppliers by spend in partnership with EcoVadis® [6] Company Overview - Azenta, Inc. is a leading provider of life sciences solutions, facilitating faster market access for breakthroughs and therapies [3] - The company offers a comprehensive suite of cold-chain sample management solutions and multiomics services for pharmaceutical, biotech, academic, and healthcare institutions globally [3] - Azenta is headquartered in Burlington, MA, with operations across North America, Europe, and Asia [4]

Company Overview - Azenta, Inc. is a leading provider of life sciences solutions globally, facilitating the faster market introduction of impactful breakthroughs and therapies [2] - The company offers a comprehensive suite of reliable cold-chain sample management solutions and multiomics services, catering to drug development, clinical research, and advanced cell therapies [2] - Azenta operates under several industry-leading brands, including GENEWIZ, FluidX, Ziath, 4titude, Limfinity, Freezer Pro, and Barkey [2] Upcoming Events - Lawrence Y. Lin, Executive Vice President and Chief Financial Officer of Azenta, will participate in the Virtual KeyBanc Capital Markets Healthcare Forum on March 19, 2025, with a presentation starting at 10:30 am ET [1] - The live webcast of the event will be accessible through the Azenta investor relations website, and a replay will be available after the event [1] Global Presence - Azenta is headquartered in Burlington, Massachusetts, with operational reach across North America, Europe, and Asia [3]

Company Overview - Azenta, Inc. (AZTA) is currently experiencing significant activity in the options market, particularly with the Dec. 19, 2025 $22.5 Call option showing high implied volatility, indicating potential for a major price movement [1] - The company is ranked 2 (Buy) in the Medical Info Systems industry, which is in the top 22% of the Zacks Industry Rank [3] Analyst Insights - Over the past 60 days, one analyst has raised earnings estimates for the current quarter, increasing the Zacks Consensus Estimate from 8 cents per share to 9 cents [3] - The high implied volatility in options trading suggests that traders are anticipating a significant price movement for Azenta shares, which could indicate an upcoming event that may lead to a rally or sell-off [2][4] Trading Strategy - Options traders often seek out options with high implied volatility to sell premium, a strategy that captures decay and benefits if the underlying stock does not move as much as expected by expiration [4]

Revenue and Profitability - Revenue for the three months ended December 31, 2024, was $147.5 million, a 4% increase from $141.7 million in the same period of 2023[142] - Gross profit for the same period was $68.7 million, resulting in a gross margin of 47%, up from 44% year-over-year[143] - The Multiomics segment revenue increased by 5.7% to $66.3 million, driven by growth in Next Generation Sequencing and Gene Synthesis services[150] - The Sample Management Solutions segment revenue rose by 2.8% to $81.2 million, supported by growth in Sample Repository Services and Core Products[149] - Total revenue for the company increased to $147.5 million in Q4 2024, up from $141.7 million in Q4 2023, reflecting a growth of 4.9%[157] - Adjusted gross profit for the company was $70.2 million in Q4 2024, compared to $63.6 million in Q4 2023, reflecting an increase driven by operational efficiencies[158] Operating Performance - Operating loss for the three months ended December 31, 2024, was $11.4 million, an improvement from a loss of $16.2 million in the same period of 2023[142] - Loss from continuing operations was $9.4 million for the three months ended December 31, 2024, compared to a loss of $7.2 million in the prior year[143] - Sample Management Solutions segment reported operating income of $1.6 million for Q4 2024, compared to an operating loss of $1.5 million in Q4 2023, with an operating margin increase of 380 basis points to 1.9%[155] - Multiomics segment operating loss improved to $3.4 million in Q4 2024 from a loss of $4.3 million in Q4 2023, with an operating margin increase of 175 basis points to (5.1)%[156] - Adjusted operating income for Sample Management Solutions was $2.3 million in Q4 2024, compared to an adjusted operating loss of $0.6 million in Q4 2023, with an adjusted operating margin of 2.9%[155] - The Multiomics segment's adjusted operating loss was $2.5 million in Q4 2024, an improvement from an adjusted operating loss of $3.3 million in Q4 2023, with an adjusted operating margin of (3.8)%[156] Expenses and Costs - Research and development expenses decreased to $6.4 million from $7.3 million year-over-year[142] - Total operating expenses increased to $80.0 million from $78.0 million, primarily due to higher selling, general, and administrative expenses[142] - Selling, general and administrative expenses rose to $73.2 million in Q4 2024, an increase of $3.3 million compared to $69.9 million in Q4 2023, primarily due to higher stock-based compensation[161] - Gross margin for Sample Management Solutions improved to 46.9% in Q4 2024, an increase of 482 basis points from 42.1% in Q4 2023[158] - Restructuring charges decreased to $0.4 million in Q4 2024, down from $0.8 million in Q4 2023, due to reduced activity in cost-saving initiatives[162] Cash Flow and Financial Position - Cash and cash equivalents, restricted cash, and marketable securities totaled $503.4 million as of December 31, 2024, with stockholders' equity at $1.7 billion[169] - Net cash provided by operating activities was $30.6 million for the three months ended December 31, 2024, significantly up from $13.8 million in 2023, aided by increased revenue and a tax refund[171] - The company had no outstanding debt as of December 31, 2024[172] - Non-cancellable commitments amounted to $50.1 million as of December 31, 2024, including $36.0 million for inventory purchases[173] International Revenue and Currency Impact - Revenue generated outside the United States was $54.0 million, accounting for 37% of total revenue, compared to $51.6 million or 36% in the prior year[152] - Sales in currencies other than the U.S. dollar represented approximately 37% of total sales for the three months ended December 31, 2024, compared to 27% in 2023[176] Other Income and Taxation - Interest income decreased to $4.3 million for the three months ended December 31, 2024, down from $10.0 million for the same period in 2023, due to reduced investments in marketable securities[163] - Other income increased to $1.2 million for the three months ended December 31, 2024, compared to $0.5 million for the same period in 2023, primarily from foreign exchange gains[164] - Income tax expense was $3.6 million for the three months ended December 31, 2024, up from $1.4 million in the same period in 2023, driven by profits in foreign jurisdictions[165][166] Discontinued Operations - Revenue from discontinued operations was $17.6 million for the three months ended December 31, 2024, compared to $12.6 million in 2023, with a loss of $3.9 million in 2024 versus $8.5 million in 2023[167] Strategic Initiatives - The company is pursuing a sale of its B Medical Systems business to focus on core segments and drive revenue growth[136] Interest Rate Sensitivity - A hypothetical 100 basis point change in interest rates would result in a $1.3 million change in interest income for the three months ended December 31, 2024[175]