Avid Bioservices(US:CDMO)2022-09-07 01:57Financial Data and Key Metrics Changes - Revenues for Q1 fiscal 2023 were $36.7 million, a 19% increase from $30.8 million in the prior year period, primarily driven by increased manufacturing revenues [9] - Gross margin for Q1 fiscal 2023 was 25%, down from 37% in Q1 fiscal 2022, impacted by increased costs associated with business growth and facility expansions [10][11] - Net income for Q1 fiscal 2023 was $1.6 million or $0.03 per basic share, compared to $6.3 million or $0.10 per basic share in Q1 fiscal 2022 [13] - Adjusted EBITDA for Q1 fiscal 2023 was $6.2 million, a 5% sequential increase over Q4 fiscal 2022 [13] - Cash and cash equivalents as of July 31, 2022, were $115.1 million, down from $126.2 million on April 30, 2022 [13] Business Line Data and Key Metrics Changes - The commercial team signed $41 million in new project orders during the quarter, contributing to a record backlog of $157 million, a 43% increase from $110 million at the end of Q1 fiscal 2022 [16] - The company is expanding its process development capabilities for both mammalian and cell and gene therapy businesses, with expectations for new capabilities to come online in Q1 calendar 2023 [6][24] Market Data and Key Metrics Changes - The company is focusing on leading biotechnology regions in North America, expanding outreach and presence in these key markets [17] - The backlog contains no COVID-related business, indicating a shift towards more stable project agreements [16] Company Strategy and Development Direction - The company is in the midst of a broad expansion of facilities and capabilities to attract new customers and support existing ones [21] - The strategy includes enhancing analytical and process development capabilities, which are essential for onboarding new clients [45] - The company aims to maintain high-quality standards and timely delivery to strengthen its market position [41] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, citing strong demand and a solid backlog, despite potential pressures on margins due to ongoing expansions [27][29] - The company anticipates a temporary impact on margins due to increased costs associated with staffing and facility expansions, but expects margins to improve as capacity is filled [27][39] Other Important Information - The company is relocating its corporate office to a larger space in the Myford facility, which will consolidate operations and administrative teams [28] - The company is preparing for annual maintenance shutdowns in Q2, which will temporarily reduce available capacity [28] Q&A Session Summary Question: Impact of biotech funding slowdown on bookings - Management noted a typical summer slowdown but indicated improved performance compared to prior years, with strong issuance rates [31] Question: Visibility on fiscal 2023 guidance - Management affirmed that the outlook for the full year remains on track, with a good start to the year and increased backlog [32][33] Question: Business development trends in cell and gene therapy - Management confirmed the signing of the first client for the new cell and gene therapy capabilities and ongoing discussions with other parties [36] Question: Factors driving new customer wins - Management attributed success to proactive investment in capacity, quality track record, and timely delivery of products [41] Question: Size and future plans for the sales team - The sales team currently consists of four members, with no immediate plans for further expansion [43]