Avid Bioservices(US:CDMO)2024-07-02 23:09Financial Data and Key Metrics Changes - Revenues for Q4 FY 2024 were $43 million, an 8% increase from $39.8 million in Q4 FY 2023, primarily due to increased manufacturing runs and process development services [7] - For the full fiscal year 2024, revenues were $139.9 million, a decrease of approximately 6% compared to $149.3 million in the prior year, attributed to fewer manufacturing runs and reduced process development services [13] - Gross profit for Q4 FY 2024 was $5.5 million (13% gross margin), down from $8.4 million (21% gross margin) in Q4 FY 2023; full fiscal year gross profit was $7.3 million (5% gross margin), compared to $31.5 million (21% gross margin) in FY 2023 [14][15] - The company recorded a net loss of $123.1 million ($1.94 per share) in Q4 FY 2024, compared to a net loss of $0.3 million ($0.01 per share) in Q4 FY 2023; for the full fiscal year, the net loss was $140.8 million ($2.23 per share) compared to a net income of approximately $0.3 million in the prior year [22][23] Business Line Data and Key Metrics Changes - The company signed multiple new project agreements worth $30 million in Q4 FY 2024, ending the quarter with a strong backlog of $193 million [25] - The gross margin for Q4 FY 2024 approximately doubled compared to Q3 FY 2024, indicating improved operational efficiency [11][36] Market Data and Key Metrics Changes - The company noted improvements in the biotech financial markets, which are expected to facilitate the advancement of previously deferred manufacturing programs [26] - The company has seen a growing interest in its newly completed facilities and expanded capabilities, which is expected to support revenue growth [33] Company Strategy and Development Direction - The company aims to achieve revenue guidance of $160 million to $168 million for FY 2025, representing a 17% growth year-over-year at the midpoint [33] - Avid has expanded its annual revenue-generating capacity from approximately $120 million in FY 2021 to over $400 million today, enhancing its ability to service both biotech and large pharma customers [34] - The company is focusing on increasing capacity utilization and improving margins through operational efficiency rather than cost-cutting measures [36] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for FY 2025, citing positive revenue momentum and a strong backlog as indicators of future growth [39] - The company is encouraged by the improving financial market for biotech companies and the trend of onshoring drug manufacturing back to the U.S. [39] Other Important Information - The company recorded a valuation allowance of $118.5 million against its deferred tax assets due to a net loss in FY 2024, impacting its income tax expense significantly [17][21] - The company has engaged EcoVadis to evaluate its sustainability practices, achieving a score of 56, placing it in the 62nd percentile globally [28] Q&A Session Summary Question: Fiscal '25 revenue guidance and backlog contribution - Management indicated that the revenue guidance for FY 2025 is not markedly different from previous years, with confidence in forecasting based on historical performance [41][43] Question: Bookings and new capacity interest - Management confirmed that interest in new capacity is converting into business, with ongoing PPQ campaigns indicating strong future demand [44][45] Question: Margin recovery strategies - Management stated that increased capacity utilization will primarily drive margin recovery, with a focus on operational efficiency rather than cost-cutting [46] Question: Capacity of CGT business and activity - The CGT portion of the business has a capacity of about $80 million, with increasing activity expected in the coming quarters [59] Question: Dynamics of the CDMO market - Management noted that high-quality late-phase commercial grade CDMO capacity is in relatively short supply, with increasing conversations around onshoring [64] Question: Inbound call cadence and market conditions - Management reported an increase in positive conversations and customer interest, driven by improving market conditions and onshoring trends [68][72] Question: Gross margins and revenue composition - Management indicated that larger runs from late-stage programs typically command higher margins, contributing to a gradual rebound in gross margins [73]