Inotiv(US:NOTV)2025-02-06 00:48Financial Data and Key Metrics Changes - For the first quarter of fiscal 2025, total revenue was $119.9 million, a decrease of $15.6 million or 11.5% compared to $135.5 million in the first quarter of fiscal 2024 [12][19] - The operating loss for the first quarter of fiscal 2025 was $15.5 million, compared to an operating loss of $9.4 million in the first quarter of fiscal 2024 [23] - Consolidated net loss attributable to common shareholders was $27.6 million or a $1.02 loss per diluted share, compared to a net loss of $15.4 million or $0.6 loss per diluted share in the first quarter of fiscal 2024 [24] Business Line Data and Key Metrics Changes - RMS revenue decreased by $13.7 million or 15.1% compared to Q1 of fiscal 2024, primarily due to lower NHP-related product and service revenue [20] - DSA revenue decreased slightly from $44.7 million in Q1 of fiscal 2024 to $42.8 million in Q1 of fiscal 2025, driven mainly by a decline in Discovery Services revenue [13][21] - The DSA backlog was $130.4 million at December 31, 2024, compared to $152.3 million at December 31, 2023 [26] Market Data and Key Metrics Changes - The average selling price for NHPs in the U.S. in Q1 of fiscal 2025 was approximately 30.3% lower than in Q1 of fiscal 2024 [20] - The net book to bill ratio for DSA in the first quarter of fiscal 2025 was 1.01 times, with a trailing 12-month book to bill of 0.87 times [25] Company Strategy and Development Direction - The company aims to enhance liquidity and reduce revenue volatility through expanded NHP client base and pre-sold inventory [9] - Continued focus on process optimization and client satisfaction is emphasized, with expectations for year-over-year revenue and adjusted EBITDA growth for the remainder of fiscal 2025 [16][17] - The company is preparing for 2026 and 2027 while acknowledging ongoing geopolitical and market risks [18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about reducing NHP revenue volatility and improving margins in the upcoming quarters [12][21] - The company is committed to building a business that creates value for clients, employees, and shareholders, despite uncertainties in the market [18] - Management noted that they have worked through higher-cost NHPs and expect more stable pricing moving forward [34] Other Important Information - The company raised $27.5 million from a recent equity offering to enhance liquidity [8] - Interest expense increased to $13.8 million in Q1 of fiscal 2025 from $11.4 million in the same period of fiscal 2024 due to rising interest rates [26] Q&A Session Summary Question: Update on NHPs and ordering patterns - Management confirmed that they have worked through higher-cost NHPs and have more solid commitments for the year, leading to reduced volatility [34][36] Question: Impact of Cambodia NHP export restrictions - Management acknowledged the importance of Cambodia in the global supply base and stated they are prepared for various outcomes while diversifying suppliers [40][42] Question: Adjusted EBITDA expectations for Q2 - Management expects sales to grow year-over-year, which should positively impact adjusted EBITDA in the second quarter [45][52] Question: Cancellations and their impact - A significant cancellation of a large project was noted as a reason for elevated cancellation rates, but management remains optimistic about overall trends [65][67] Question: Revenue recognition on presales of inventory - Revenue is only recognized upon the transition of ownership, not at the time of presale [76][78] Question: Proportion of Colony Management Services in RMS revenue - Colony Management Services revenue was approximately $27 million last year, with expectations for 20% growth moving forward [84] Question: NHP sourcing and pricing expectations - Management anticipates a step function down in pricing as higher-cost NHPs are cleared from inventory [94] Question: DSA bookings and client engagement - The DSA business is primarily focused on biotech clients, with an increase in unique services and blanket purchase orders noted [97][101]