Avid Bioservices(CDMO) - 2024 Q3 - Quarterly Results

Executive Summary and Corporate Highlights Avid Bioservices reported third-quarter fiscal 2024 revenue of $33.8 million, achieved a record-high backlog of $206 million, completed its Cell and Gene Therapy (CGT) facility, and subsequently refinanced its debt, extending maturity to 2029 Q3 FY2024 Key Metrics | Metric | Value | Source | | :--- | :--- | :--- | | Revenue | $33.8 Million | Q3 FY2024 | | Net New Business | $41 Million | Q3 FY2024 | | Record Backlog | $206 Million | As of Jan 31, 2024 | - Completed a three-year expansion program with the grand opening of the Cell and Gene Therapy (CGT) manufacturing facility in January 2024, increasing the company's total estimated annual revenue-generating capacity to approximately $400 million[2][21][23] - Subsequent to the quarter's end, the company completed an offering of $160 million in 7.00% Convertible Senior Notes due 2029, using the proceeds to repurchase and repay its 2026 notes, thereby extending its debt maturity[4][9] - The company's 10-Q filing was delayed due to a required restatement of financial statements from October 2022 to October 2023, necessary to reclassify the 2026 Notes from long-term to short-term liabilities following a note acceleration event[4] Financial Performance Analysis For the third quarter of fiscal 2024, revenues decreased by 11% year-over-year to $33.8 million, leading to a significant drop in gross profit to $2.4 million (7% margin) and a net loss of $6.0 million, while full-year revenue guidance of $137 million to $147 million was maintained Revenue Performance (in millions) | Period | FY2024 | FY2023 | Change | | :--- | :--- | :--- | :--- | | Q3 Revenue | $33.8 | $38.0 | -11% | | Nine Months Revenue | $96.9 | $109.5 | -11% | Profitability Analysis (in millions) | Metric | Q3 FY2024 | Q3 FY2023 | Nine Months FY2024 | Nine Months FY2023 | | :--- | :--- | :--- | :--- | :--- | | Gross Profit | $2.4 (7% margin) | $9.8 (26% margin) | $1.8 (2% margin) | $23.1 (21% margin) | | Operating Income (Loss) | $(4.0) | $2.7 | $(17.4) | $2.8 | | Net Income (Loss) | $(6.0) | $(0.2) | $(17.6) | $0.6 | - The decrease in gross margin was attributed to fewer manufacturing runs, a reduction in process development services for early-stage customers, and increased costs related to capacity and capability expansions[25] - Selling, General and Administrative (SG&A) expenses decreased by 10% in Q3 and 6% in the first nine months of FY2024, primarily due to lower compensation and consulting fees[25] - The company maintained its full fiscal year 2024 revenue guidance of $137 million to $147 million[24] Operational Developments and Business Outlook Operationally, Avid achieved a record-high backlog of $206 million, with a strategic shift towards later-stage programs, and the completion of the new CGT facility positions the company for growth in new market segments - The revenue backlog reached a record $206 million, an increase of 17% from $176 million in the same quarter last year[7][22] - The company's pipeline is increasingly weighted toward later-stage programs, which enhances medium to long-term growth prospects due to a higher probability of regulatory approval and commercial revenue[5] - The completion of the CGT facility marks the final step in a three-year expansion, dramatically increasing service offerings and revenue-generating capacity[2][23] - The company is poised to benefit from tailwinds in multiple CDMO markets and believes it is well-positioned to realize its strategic objectives and achieve sustainable profitability[1] Financing and Cash Position As of January 31, 2024, Avid held $30.7 million in cash and cash equivalents, and subsequently executed a significant financing transaction by issuing $160 million of new convertible notes due in 2029, using $146.1 million to repurchase and repay existing 2026 notes, effectively extending its debt maturity profile - Closed an offering of $160 million in 7.00% Convertible Senior Notes due March 1, 2029[9] - Used $146.1 million of the net proceeds to repurchase and repay its 1.250% Exchangeable Senior Notes due 2026[9] - Cash and cash equivalents were $30.7 million as of January 31, 2024, compared to $38.5 million on April 30, 2023[51] Consolidated Financial Statements (Unaudited) This section provides the unaudited condensed consolidated financial statements for Avid Bioservices, Inc. as of and for the periods ended January 31, 2024, including the Statements of Income (Loss), Balance Sheets, and a reconciliation of GAAP to non-GAAP financial measures, offering a detailed view of the company's financial position and performance Condensed Consolidated Statements of Income (Loss) This section presents the unaudited condensed consolidated statements of income (loss), detailing revenues, gross profit, operating income, and net income for the specified periods Condensed Consolidated Statements of Income (Loss) (Unaudited, In thousands, except per share) | Description | Three Months Ended Jan 31, 2024 | Three Months Ended Jan 31, 2023 | Nine Months Ended Jan 31, 2024 | Nine Months Ended Jan 31, 2023 | | :--- | :--- | :--- | :--- | :--- | | Revenues | $33,815 | $38,018 | $96,936 | $109,467 | | Gross profit | $2,383 | $9,825 | $1,818 | $23,089 | | Operating income (loss) | $(3,999) | $2,718 | $(17,384) | $2,769 | | Net income (loss) | $(6,006) | $(247) | $(17,649) | $594 | | Net income (loss) per share - Basic & Diluted | $(0.09) | $(0.00) | $(0.28) | $0.01 | Condensed Consolidated Balance Sheets This section provides the unaudited condensed consolidated balance sheets, presenting the company's assets, liabilities, and stockholders' equity as of the specified dates Condensed Consolidated Balance Sheets (Unaudited, In thousands) | Description | January 31, 2024 | April 30, 2023 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $30,708 | $38,542 | | Total current assets | $103,589 | $112,451 | | Total assets | $455,227 | $451,567 | | Liabilities and Stockholders' Equity | | | | Total current liabilities | $222,887 | $215,146 | | Total liabilities | $275,057 | $262,398 | | Total stockholders' equity | $180,170 | $189,169 | | Total liabilities and stockholders' equity | $455,227 | $451,567 | Reconciliation of GAAP to Non-GAAP Financial Measures This section provides a reconciliation of the company's GAAP financial measures to non-GAAP measures, including adjusted net income, adjusted EBITDA, and free cash flow, for enhanced performance analysis Reconciliation of GAAP to Non-GAAP Measures (Unaudited, In thousands) | Description | Three Months Ended Jan 31, 2024 | Three Months Ended Jan 31, 2023 | Nine Months Ended Jan 31, 2024 | Nine Months Ended Jan 31, 2023 | | :--- | :--- | :--- | :--- | :--- | | GAAP net income (loss) | $(6,006) | $(247) | $(17,649) | $594 | | Adjusted net income (loss) | $(5,070) | $3,970 | $(11,326) | $6,702 | | Adjusted EBITDA | $(1,117) | $7,367 | $(4,297) | $15,440 | | Free cash flow | $(801) | $(18,244) | $(16,417) | $(68,447) | Ancillary Information This section contains important supplementary information for investors, explaining the company's use of non-GAAP financial measures, including standard forward-looking statements disclaimers, and details about its business as a contract development and manufacturing organization (CDMO) - The company uses non-GAAP financial measures (e.g., adjusted net income, adjusted EBITDA, free cash flow) for operational decision-making and to evaluate period-to-period comparisons[12][29] - The report contains forward-looking statements regarding projected revenue, profitability, and strategic objectives, which are subject to risks and uncertainties, and the company disclaims any obligation to update them[15][39] - Avid Bioservices is a dedicated CDMO with 30 years of experience, providing a comprehensive range of services from process development to commercial manufacturing of biologics[38]