Azenta(US:AZTA)2025-05-07 13:32Financial Data and Key Metrics Changes - Organic revenue grew by 6% year over year, with adjusted EBITDA margin expanding by 400 basis points [7][26][28] - Total revenue for the second quarter was $143 million, reflecting a 5% year-over-year increase on a reported basis and 6% on an organic basis [27][29] - Non-GAAP EPS for the quarter was $0.05, with adjusted EBITDA margin at 10% [28][29] Business Line Data and Key Metrics Changes - Sample Management Solutions (SMS) revenue was $80 million, up 8% year over year, driven by strong performance in sample repository solutions and core products [30] - Multiomics revenue was $64 million, with a growth of 2% on a reported basis and 3% on an organic basis, primarily driven by next-generation sequencing, which grew 20% year over year [31][32] Market Data and Key Metrics Changes - North America experienced a general slowdown, with an 18% year-over-year decline in Sanger sequencing, while China showed strength with 5% organic revenue growth [34][32] - The company noted a decline in gene synthesis revenue by 10% year over year, attributed to a difficult comparison against a strong prior year [33] Company Strategy and Development Direction - The company is focused on operational excellence and reducing complexity through the Azenta Business System, which aims to enhance problem-solving capabilities and align with strategic goals [12][13] - There is an emphasis on potential tuck-in acquisitions to accelerate revenue growth and margin expansion, alongside investments in digital capabilities [11][12] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the uncertain macro environment, including NIH funding cuts and geopolitical tensions, but expressed confidence in the company's ability to counteract these challenges [9][10] - The company reaffirmed its full-year guidance for organic revenue growth between 3% and 5% and adjusted EBITDA margin expansion of 300 basis points [36][37] Other Important Information - The company has $540 million in cash and cash equivalents, with no debt outstanding, positioning it well for potential acquisitions and capital deployment [11][36] - A non-cash loss of $24 million was recorded on assets held for sale related to B Medical Systems, which is now treated as discontinued operations [25] Q&A Session Summary Question: Guidance and Growth Cadence - Management indicated that the guidance remains unchanged despite a 1% impact from NIH funding, with expectations for the second half of the year to align with prior years [41][44] Question: NIH Funding Headwind - The company has implemented countermeasures to mitigate the 1% headwind from NIH funding, with a focus on outsourcing opportunities as less efficient labs may close [52][57] Question: Free Cash Flow and Margins - Free cash flow performance was strong, and the company remains optimistic about achieving its long-term target of $100 million in free cash flow [58][60] Question: Sales Force Structure - The company is early in the rollout of the Azenta Business System and has aligned its sales force regionally to improve performance [65] Question: Gene Synthesis Trends - Management noted a pause in large programs from pharma partners but observed positive trends in bookings for the current quarter [78][80] Question: Capital Deployment Preferences - The company is open to various capital deployment strategies, including M&A and share buybacks, with a focus on long-term shareholder value [84][86]