Teknova(TKNO) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenue for the full year of 2024 was $37.7 million, a 3% increase from$ 36.7 million in 2023, with adjusted growth of 11% when excluding a large clinical solutions order from 2023 [9][25] - Free cash outflow improved from $26.7 million in 2023 to$ 13.5 million in 2024, significantly better than initial guidance of $18 million [11][24] - Net loss for the full year of 2024 was$ 26.7 million or $0.57 per diluted share, compared to a net loss of$ 36.8 million or $1.16 per diluted share in 2023 [34] Business Line Data and Key Metrics Changes - Revenue from catalog reagents, which represented approximately 60% of total revenue, grew low single digits in 2024, with a 7% growth in the second half compared to the same period in 2023 [13] - Custom biopharma revenue grew about 40% in 2024, with a robust growth of approximately 25% when excluding a new therapeutic customer [16] - Clinical Solutions revenue was$ 7.1 million for the full year of 2024, a 5% increase from $6.7 million in 2023, with a 76% increase when excluding a large order from 2023 [27] Market Data and Key Metrics Changes - The company supported 48 clinical customers in 2024, up from 34 in 2023, with 39 of these being biopharma-related [8][17] - Sales to biopharma customers represented approximately 25% of total revenue in 2024, with 27% of total revenue coming from cell and gene therapy-related companies [15][66] - The company expects mid-single-digit growth in catalog business for 2025, reflecting stabilization in the market [20] Company Strategy and Development Direction - The company aims to expand its product portfolio through collaborations and acquisitions over the next 12 to 24 months, focusing on enhancing operational and commercial scale [22][43] - The strategy includes maintaining a focus on biopharma and custom products while managing operating expenses effectively [40] - The company is optimistic about achieving at least 15% growth in custom products sold to biopharma accounts despite current macroeconomic uncertainties [21] Management's Comments on Operating Environment and Future Outlook - Management noted a cautious environment among customers, particularly smaller biotech firms, leading to delayed orders and reduced budgets [51] - The company anticipates 2025 to be a recovery year, with expectations of returning to historically typical growth rates by 2026 [20][39] - Management expressed confidence in the long-term outlook for the end market and the company's ability to execute its strategy [45] Other Important Information - The company reported a significant reduction in operating expenses, down to$ 33.4 million in 2024 from $45.9 million in 2023, driven by reduced headcount and spending [33] - Capital expenditures for 2024 were$ 1.1 million, a decrease from $7.9 million in 2023, indicating a focus on cost management [35] - The company has amended its credit facility, extending the maturity date to March 2030 and increasing liquidity by$ 4 million [42][43] Q&A Session Summary Question: Observations on customer behavior and budget changes - Management noted a recent softening in customer orders, particularly among smaller biotech firms, with some customers delaying orders from Q1 to Q2 [51][52] Question: Composition of new customer pipeline - Most new customers are in preclinical or phase one stages, with successful conversions from phase two customers possible [56] Question: Any large one-time orders expected in 2025 - Management indicated no significant one-time orders are anticipated for 2024, but acknowledged potential revenue lumpiness due to customer order variability [58][61] Question: Updated number of cell and gene therapy customers - The company now supports over 100 total cell and gene therapy customers, with 27% of total revenue derived from this segment [66] Question: Revenue phasing for 2025 - The first quarter of 2025 is expected to be the lowest, with a gradual increase in revenue through Q2 and Q3, followed by a potential decrease in Q4 due to fewer business days [70][71] Question: Revenue ramp for new clinical customers - It typically takes about a year to a year and a half for new clinical customers to reach spending levels comparable to more mature customers [79] Question: Pricing changes for reagents - The company implemented mid-single-digit price increases for its products at the beginning of the year [82]