Alpha Teknova, Inc. (NASDAQ:TKNO) Q4 2022 Results Conference Call March 15, 2023 5:00 PM ET Company Participants Jen Henry - Senior Vice President of Marketing Stephen Gunstream - President & Chief Executive Officer Matt Lowell - Chief Financial Officer Conference Call Participants Joseph Flanagan - Cowen Matt Larew - William Blair Hannah Hefley - Stephens Operator Thank you for standing by, and welcome to Teknova's Fourth Quarter and Full Year 2022 Financial Results Call. At this time, all participants are ...

PART I. FINANCIAL INFORMATION [Condensed Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Condensed%20Financial%20Statements%20(Unaudited)) Net loss significantly increased in Q3 and nine months 2022 due to a **$16.6 million** goodwill impairment, with cash and assets declining and liabilities rising Condensed Statements of Operations Highlights (in thousands) | Metric | Q3 2022 | Q3 2021 | Nine Months 2022 | Nine Months 2021 | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | $10,692 | $9,392 | $33,529 | $26,783 | | **Gross Profit** | $4,770 | $4,263 | $15,366 | $12,642 | | **Goodwill Impairment** | $16,613 | $0 | $16,613 | $0 | | **Loss from Operations** | $(22,954) | $(3,888) | $(35,423) | $(7,241) | | **Net Loss** | $(22,474) | $(3,251) | $(34,174) | $(6,156) | | **Net Loss Per Share** | $(0.80) | $(0.12) | $(1.22) | $(0.51) | Condensed Balance Sheet Highlights (in thousands) | Metric | Sep 30, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | **Cash and cash equivalents** | $49,855 | $87,518 | | **Total Current Assets** | $70,067 | $101,204 | | **Goodwill** | $0 | $16,613 | | **Total Assets** | $160,272 | $166,511 | | **Total Liabilities** | $48,276 | $23,308 | | **Total Stockholders' Equity** | $111,996 | $143,203 | - Net cash used in operating activities increased to **$19.4 million** for the nine months ended Sep 30, 2022, from **$6.0 million** in the prior year period, primarily due to a higher net loss[129](index=129&type=chunk)[131](index=131&type=chunk)[132](index=132&type=chunk) - Net cash used in investing activities increased to **$23.4 million** from **$10.1 million** year-over-year, driven by purchases of property, plant and equipment[129](index=129&type=chunk)[133](index=133&type=chunk)[134](index=134&type=chunk) - Net cash from financing activities was **$5.1 million**, primarily from long-term debt proceeds, a significant decrease from **$110.8 million** in the prior year which included IPO proceeds[129](index=129&type=chunk)[136](index=136&type=chunk)[137](index=137&type=chunk) [Note 1. Nature of the Business](index=10&type=section&id=Note%201.%20Nature%20of%20the%20Business) Alpha Teknova provides critical reagents for biopharmaceutical products, manufacturing under Research Use Only (RUO) and Good Manufacturing Practice (GMP) standards - The company provides critical reagents for biopharmaceutical products, including drug therapies, vaccines, and molecular diagnostics[27](index=27&type=chunk) - Teknova manufactures products in both Research Use Only (RUO) and the more stringent Good Manufacturing Practice (GMP) categories, holding an ISO 13485:2016 certification since 2017[29](index=29&type=chunk) [Note 3. Revenue Recognition](index=11&type=section&id=Note%203.%20Revenue%20Recognition) Revenue is recognized upon goods transfer, with total revenue for the nine months ended September 30, 2022, reaching **$33.5 million**, primarily from Lab Essentials and Clinical Solutions in the United States Revenue by Business Line (in thousands) | Business Line | Nine Months 2022 | Nine Months 2021 | | :--- | :--- | :--- | | Lab Essentials | $24,838 | $20,440 | | Clinical Solutions | $7,673 | $4,354 | | Sample Transport | $6 | $1,035 | | Other | $1,012 | $954 | | **Total Revenue** | **$33,529** | **$26,783** | Revenue by Geographic Region (in thousands) | Geographic Region | Nine Months 2022 | Nine Months 2021 | | :--- | :--- | :--- | | United States | $32,489 | $25,890 | | International | $1,040 | $893 | | **Total Revenue** | **$33,529** | **$26,783** | [Note 8. Goodwill and Intangible Assets, Net](index=13&type=section&id=Note%208.%20Goodwill%20and%20Intangible%20Assets%2C%20Net) An interim goodwill impairment test in Q3 2022, triggered by stock price decline, resulted in a full **$16.6 million** impairment charge, reducing goodwill to zero - A significant decline in the company's common stock price and market capitalization triggered an interim goodwill impairment test in Q3 2022[51](index=51&type=chunk) - The company determined that its goodwill was fully impaired and recorded an impairment charge of **$16.6 million** during the three months ended September 30, 2022[55](index=55&type=chunk) - As of September 30, 2022, the carrying amount of goodwill was reduced to zero from **$16.6 million** at the end of 2021[51](index=51&type=chunk) [Note 10. Long-Term Debt, Net](index=15&type=section&id=Note%2010.%20Long-Term%20Debt%2C%20Net) As of September 30, 2022, net long-term debt increased to **$16.9 million** from **$11.9 million** at year-end 2021, under a credit facility with MidCap Financial Trust - In May 2022, the company entered into an Amended and Restated Credit and Security Agreement with MidCap for a **$57.135 million** credit facility[59](index=59&type=chunk)[60](index=60&type=chunk) Long-Term Debt, Net (in thousands) | Component | Sep 30, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Long-term debt | $17,135 | $12,000 | | **Long-term debt, net** | **$16,878** | **$11,870** | [Note 15. Subsequent Events](index=18&type=section&id=Note%2015.%20Subsequent%20Events) On November 8, 2022, the credit agreement was amended to replace LIBOR with SOFR, increase the exit fee to **7%**, and reduce the TTM net revenue covenant for December 31, 2022, to **$38.0 million** - On November 8, 2022, the credit agreement was amended, replacing the LIBOR-based interest rate with a SOFR-based rate effective December 1, 2022[77](index=77&type=chunk) - The amendment reduced the trailing twelve-month net revenue covenant for the period ending December 31, 2022, from **$42.5 million** to **$38.0 million**[77](index=77&type=chunk) - The exit fee on the term loan was increased from **5% to 7%** of the total aggregate principal amount[77](index=77&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=19&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Revenue grew in Q3 and nine months 2022, but operating losses widened significantly due to a **$16.6 million** goodwill impairment and increased expenses, impacting liquidity [Results of Operations](index=20&type=section&id=Results%20of%20Operations) Q3 and nine-month 2022 revenue increased, but operating losses significantly widened due to a **$16.6 million** goodwill impairment and surging operating expenses Q3 2022 vs Q3 2021 Revenue by Product (in thousands) | Product Category | Q3 2022 | Q3 2021 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Lab Essentials | $9,470 | $7,195 | $2,275 | 31.6% | | Clinical Solutions | $919 | $1,690 | $(771) | (45.6)% | | Sample Transport | $0 | $73 | $(73) | (100.0)% | | **Total Revenue** | **$10,692** | **$9,392** | **$1,300** | **13.8%** | Nine Months 2022 vs 2021 Revenue by Product (in thousands) | Product Category | Nine Months 2022 | Nine Months 2021 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Lab Essentials | $24,838 | $20,440 | $4,398 | 21.5% | | Clinical Solutions | $7,673 | $4,354 | $3,319 | 76.2% | | Sample Transport | $6 | $1,035 | $(1,029) | (99.4)% | | **Total Revenue** | **$33,529** | **$26,783** | **$6,746** | **25.2%** | - The company ceased production of Sample Transport medium in 2021 due to a decline in market demand for COVID-19 testing and an increase in market supply[92](index=92&type=chunk)[107](index=107&type=chunk) - A goodwill impairment charge of **$16.6 million** was the primary driver of the significant increase in operating loss for both the three and nine-month periods ended September 30, 2022[99](index=99&type=chunk)[103](index=103&type=chunk)[116](index=116&type=chunk) [Liquidity and Capital Resources](index=25&type=section&id=Liquidity%20and%20Capital%20Resources) Cash and cash equivalents significantly decreased to **$49.9 million** by September 30, 2022, due to operating activities and capital expenditures, requiring potential future financing - As of September 30, 2022, the company had **$49.9 million** in cash and cash equivalents and **$57.7 million** in net working capital[120](index=120&type=chunk) - A significant use of cash is the construction of a new manufacturing, warehouse, and distribution facility in Hollister, California[120](index=120&type=chunk)[121](index=121&type=chunk) - In November 2022, the company amended its credit agreement, replacing LIBOR with SOFR, increasing the exit fee to **7%**, and reducing the TTM net revenue covenant for Dec 31, 2022, to **$38.0 million**[126](index=126&type=chunk) - Management believes existing liquidity sources are sufficient to fund requirements for at least the next 24 months, but acknowledges that additional financing may be needed to execute its business strategy[127](index=127&type=chunk)[128](index=128&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=28&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Alpha Teknova is not required to provide quantitative and qualitative disclosures about market risk - As a smaller reporting company, Alpha Teknova is not required to provide quantitative and qualitative disclosures about market risk[143](index=143&type=chunk) [Controls and Procedures](index=28&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of September 30, 2022, having remediated a prior material weakness and implemented a new ERP system - Management concluded that disclosure controls and procedures were effective as of September 30, 2022[146](index=146&type=chunk) - A previously identified material weakness in the financial close and reporting process for complex transactions was remediated as of March 31, 2022[147](index=147&type=chunk)[148](index=148&type=chunk)[150](index=150&type=chunk) - During the quarter ended September 30, 2022, the company implemented a new enterprise resource planning (ERP) system to enhance internal controls and support business scaling[149](index=149&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=30&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently a party to any material legal proceedings, though it may become involved in ordinary course legal matters - As of the report date, the company is not a party to any material legal proceedings[154](index=154&type=chunk) [Risk Factors](index=31&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks including a history of operating losses, a **$16.6 million** goodwill impairment, customer and supplier dependence, restrictive debt covenants, and 'controlled company' governance - The company has a history of operating losses, including a net loss of **$22.5 million** in Q3 2022 and **$34.2 million** for the first nine months of 2022, and may not achieve or maintain profitability[156](index=156&type=chunk) - A significant goodwill impairment charge of **$16.6 million** was recorded in Q3 2022 due to a decline in market capitalization, and future impairments of intangible assets are possible[252](index=252&type=chunk) - The business is dependent on a limited number of customers, with those accounting for over **10%** of revenue representing **42%** of total revenue in Q3 2022[179](index=179&type=chunk) - The company is a 'controlled company' under Nasdaq rules due to THP's majority ownership, which exempts it from certain corporate governance requirements, such as having a majority-independent board[300](index=300&type=chunk) - The Amended Credit Agreement contains restrictive covenants that could limit operational flexibility, and failure to comply could lead to acceleration of debt[297](index=297&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=68&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no unregistered sales of equity securities in the reported period, and the planned use of IPO proceeds has not materially changed - There were no unregistered sales of equity securities in the reported period[352](index=352&type=chunk) - The planned use of proceeds from the IPO has not materially changed from what was disclosed in the final prospectus[353](index=353&type=chunk) [Other Information](index=68&type=section&id=Item%205.%20Other%20Information) On November 8, 2022, the company amended its credit agreement, replacing LIBOR with SOFR, increasing the exit fee to **7%**, and reducing the TTM net revenue covenant to **$38.0 million** - On November 8, 2022, the company amended its Credit Agreement with MidCap[357](index=357&type=chunk) - The amendment replaced the LIBOR-based interest rate with a SOFR-based rate, increased the exit fee to **7%**, and gave lenders discretion over a **$10.0 million** borrowing tranche for H1 2023[358](index=358&type=chunk)[359](index=359&type=chunk) - The minimum net revenue requirement for the twelve months ending December 31, 2022, was reduced from **$42.5 million** to **$38.0 million**[360](index=360&type=chunk)

Q3:2022 Financial Results Slide Supplement Nasdaq: TKNO November 9, 2022 TEKNOVA Today's Agenda 2 1. Welcome 2. Business Highlights & Updates — Stephen Gunstream, President and CEO 3. Financial Results — Matt Lowell, CFO 4. Q&A Forward-looking Statements and Use of Non-GAAP Financial Measures Statements in this presentation about future expectations, plans and prospects, as well as any other statements regarding matters that are not historical facts, may constitute "forwardlooking statements." These stateme ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-40538 ALPHA TEKNOVA, INC. (Exact name of registrant as specified in its charter) Delaware 94-3368109 ( State or other jurisdiction of incorporation or organization) 2451 Bert Dr. ...

Financial Performance - Revenue for the three months ended March 31, 2022, was $11.1 million, an increase of $2.1 million or 22.8% compared to $9.1 million for the same period in 2021[79]. - Operating loss for the three months ended March 31, 2022, was $5.8 million, compared to an operating loss of $0.8 million for the same period in 2021, representing a 605.7% increase in loss[80]. - Gross profit for the three months ended March 31, 2022, was $5.3 million, with a gross profit margin of 48.0%, down from 55.4% in the same period in 2021[89]. - Clinical Solutions revenue surged to $3.8 million for the three months ended March 31, 2022, a 255.9% increase from $1.1 million in the same period in 2021[85]. - Revenue from U.S. customers was $10.8 million for the three months ended March 31, 2022, representing 97.1% of total revenue, up from 96.0% in the same period in 2021[87]. - Revenue from international sales was $0.3 million for the three months ended March 31, 2022, down from $0.4 million in the same period in 2021, representing 2.9% of total revenue[88]. Expenses - Total operating expenses for the three months ended March 31, 2022, were $11.2 million, a significant increase of 91.2% from $5.9 million in the same period in 2021[90]. - Research and development expenses increased to $2.0 million for the three months ended March 31, 2022, a rise of 187.6% compared to $0.7 million for the same period in 2021[90]. - General and administrative expenses rose to $7.3 million for the three months ended March 31, 2022, a 75.3% increase from $4.2 million in the same period in 2021[92]. - The company ceased production of sample transport medium due to declining market demand, resulting in revenue of only $6, compared to $0.9 million in the same period in 2021[86]. Cash Flow and Financing - Net cash used in operating activities for Q1 2022 was $5.2 million, compared to a net cash provided of $2.4 million in Q1 2021[108][110]. - Net cash used in investing activities was $5.9 million for Q1 2022, primarily for purchases of property, plant, and equipment[112]. - The company entered into a credit facility of $27.0 million, consisting of a $22.0 million term loan and a $5.0 million working capital facility[98]. - As of March 31, 2022, the outstanding balance on the term loan was $12.0 million, with no drawdown on the revolving loan[99][101]. - The company expects to maintain sufficient liquidity to fund operations for at least the next 24 months, but may seek additional financing[107]. Regulatory and Compliance - The company qualifies as an "emerging growth company" under the JOBS Act, allowing it to take advantage of certain reporting exemptions until it no longer qualifies[118]. - The company is also classified as a "smaller reporting company," which permits it to utilize scaled disclosures until specific market value or revenue thresholds are met, such as a market value of $250 million or annual revenues exceeding $100 million[119]. - The company can present only two years of audited financial statements due to its smaller reporting company status, reducing its financial data obligations[119]. - The company is exempt from the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, which simplifies compliance[119]. - The company will remain an emerging growth company until it reaches total annual gross revenues of $1.07 billion or more, among other criteria[120]. - The company has not disclosed any recent accounting pronouncements that may impact its financial position in the current report[121]. - As a smaller reporting company, the company is not required to provide quantitative and qualitative disclosures about market risk for this reporting period[122]. Taxation - The benefit from income taxes for Q1 2022 was $0.4 million, an increase of 117.6% compared to $0.2 million in Q1 2021, primarily due to an increase in operating loss[94]. Capital Expenditures - The company is constructing a new manufacturing facility in Hollister, California, which is expected to be a significant use of cash over the next 6 to 12 months[97]. Working Capital - As of March 31, 2022, the company had $79.3 million in net working capital, including $76.5 million in cash and cash equivalents[95]. - The credit agreement requires a minimum revenue of $37.5 million by December 31, 2022, increasing to $51.5 million by December 31, 2025[102].

Q1 2022 Financial Results Slide Supplement Nasdaq: TKNO May 11, 2022 Today's Agenda 2 1. Welcome 2. Business Highlights & Updates — Stephen Gunstream, President and CEO 3. Financial Results — Matt Lowell, CFO 4. Q&A Forward-Looking Statements and Use of Non-GAAP Financial Measures Statements in this presentation about future expectations, plans and prospects, as well as any other statements regarding matters that are not historical facts, may constitute "forwardlooking statements." These statements include, ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO Commission File Number 001-40538 ALPHA TEKNOVA, INC. (Exact name of registrant as specified in its charter) Delaware 94-3368109 (State or other jurisdiction of ...

Financial Data and Key Metrics Changes - Total revenue for Q4 2021 was $10.1 million, with a full year revenue of $36.9 million, representing a 31% year-over-year growth excluding Sample Transport [18] - Q4 revenue excluding Sample Transport was $9.6 million, a 26% increase from $7.6 million in Q4 2020, and $35.4 million for the full year 2021, a 31% increase from $27 million in 2020 [18] - Gross profit for Q4 2021 was $5.0 million, down from $5.6 million in Q4 2020, with a gross margin of 49.2%, down from 54.8% year-over-year [22] - Net loss attributable to common stockholders for Q4 2021 was $3.6 million, or $0.13 per diluted share, compared to a net income of $0.1 million, or $0.03 per diluted share in Q4 2020 [24] Business Line Data and Key Metrics Changes - Lab Essentials revenue grew 28% year-on-year to $27.2 million for the full year 2021, driven by an 18% increase in average revenue per active customer [12][20] - Clinical Solutions revenue grew 41% year-on-year to $6.8 million for the full year 2021, with active clinical customers increasing from 12 in 2020 to 22 in 2021 [12][21] Market Data and Key Metrics Changes - The company transitioned several accounts from solely purchasing catalog reagents to also purchasing custom research or GMP reagents, particularly in the cell and gene therapy customer base, which grew to approximately 80 accounts [13] - The company exited 2021 with the largest order book in its history, indicating strong market demand [13] Company Strategy and Development Direction - The company is focused on aggressive investments in 2022 to solidify its foundation for future growth, including increasing production capacity and building out commercial and marketing teams [15] - The new GMP manufacturing facility in Hollister, California is expected to be operational by the end of 2022, with an annual production capacity of $150 million [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth trajectory for 2022, projecting total revenue between $44 million and $48 million, representing a growth rate of approximately 30% at the midpoint [27] - The company anticipates continued investment in capacity expansion and marketing, with expectations of EBITDA breakeven by early 2024 [52] Other Important Information - The company reported a significant increase in operating expenses due to investments in personnel and public company costs, with operating expenses for Q4 2021 at $9.7 million compared to $4.8 million in Q4 2020 [23] - Free cash flow for Q4 2021 was negative $10.5 million, primarily due to lower adjusted EBITDA and increased capital expenditures [26] Q&A Session Summary Question: Revenue cadence and seasonality - Management indicated that there is no particular seasonality to the business, expecting a ramp in revenue throughout the year, with some lumpiness in clinical solutions [33] Question: Drivers of gross margins - Management noted that Q4 gross margin was higher than anticipated due to increased revenue performance, but expected margins to decrease in 2022 due to investments in the new facility [35] Question: Clinical solutions demand visibility - Management expressed confidence in clinical solutions demand based on discussions with new customers and their onboarding as GMP customers [39] Question: Sales team effectiveness - Management highlighted traction in customer engagement and growth in active clinical customers, indicating positive impacts from the sales team [57]

Company Overview - Teknova is a leading provider of research and clinical-grade reagents, supporting drug discovery, development, and production[6] - The company has a strong competitive position with expertise in custom reagent manufacturing and short turnaround times[6] - Teknova produces bioprocessing tools for cell & gene therapy, creating a breakthrough growth opportunity[6] - The company has over 3,000 active customers[7,27] Financial Performance - Trailing Twelve Months (TTM) core revenue was $33.4 million[7] - TTM core growth was 37%[7] - Clinical (GMP) TTM growth was 71%[7] - Total revenue increased by 41% year-over-year[53] - Q3 2021 total revenue was up 5% year-over-year, or 26% excluding Sample Transport[71] Cell & Gene Therapy Market - The global cell & gene therapy market is expected to grow from $2.3 billion in 2020 to $45.4 billion in 2026, a 64% CAGR[29] - Teknova is a supplier to more than 65 leading cell & gene therapy organizations[40] - 62% of Teknova's accounts are in the research & discovery phase[42] Investments and Future Targets - The company is investing to support rapid growth to revenue of $100 million+[45] - Teknova is expanding production capacity five-fold[49] - The target model includes sustainable 25%+ revenue growth, 65%+ gross margin, and 25-30% adjusted EBITDA margin[66]

Company Overview - Teknova is a leading provider of research and clinical-grade reagents, supporting drug therapies, vaccines, and diagnostics[7] - The company has a strong competitive position with expertise in custom reagent manufacturing and short turnaround times[7] - Teknova produces bioprocessing tools critical to cell & gene therapy, creating a breakthrough growth opportunity[7] - The company has infrastructure in place to support growth, including investments in capacity expansion, marketing, sales, and R&D[8] - As of September 30, 2021, Teknova's TTM core revenue was $33.4 million with 37% TTM core growth, excluding $3.6 million of non-recurring Sample Transport revenue[9] - Clinical (GMP) TTM growth was 71%[9] Cell & Gene Therapy Market - The global Cell & Gene therapy market is expected to grow from $2.3 billion in 2020 to $45.4 billion in 2026, representing a 64% CAGR[31] - Teknova's portfolio addresses complex needs across the gene therapy production workflow[32] - Teknova is already a supplier to more than 65 leading Cell & Gene therapy organizations[41] Financial Performance - Total revenue increased by 41% year-over-year[54] - Total revenue of $33.4 million, excluding Sample Transport, increased by 37% year-over-year[54] - Clinical Solutions growth was strong, up 71% year-over-year[54]