Avid Bioservices(US:CDMO)2023-06-21 22:52Financial Data and Key Metrics Changes - For the full fiscal year 2023, revenues reached $149.3 million, a 25% increase from $119.6 million in the prior year [54] - Gross margins for Q4 fiscal 2023 were 21%, down from 22% in Q4 fiscal 2022, and for the full fiscal year 2023, gross margins were 21%, compared to 31% in fiscal 2022 [7][54] - Total SG&A expenses for Q4 fiscal 2023 were $7.6 million, a 29% increase from $5.9 million in Q4 fiscal 2022, and for the full fiscal year, SG&A expenses were $27.9 million, a 32% increase from $21.2 million in the prior year [8] Business Line Data and Key Metrics Changes - The company recorded fourth quarter bookings of $55 million, leading to a record high backlog of $191 million, a 25% increase from $153 million at the end of fiscal 2022 [19][63] - Late-phase projects, defined as Phase 3 and PPQ campaigns, increased by approximately 34% during fiscal 2023 [82] Market Data and Key Metrics Changes - The biotech sector is shifting focus towards later-phase projects, which tend to take longer but have a higher probability of regulatory approval, thus stabilizing future revenue [19][20] - The company anticipates that the increase in late-phase projects will lead to more Biologics License Applications (BLAs) being filed, enhancing future commercial revenues [21] Company Strategy and Development Direction - The company plans to complete its cell and gene therapy expansion by the end of Q3 2023, with an estimated cash requirement of approximately $30 million for expansion-related capital expenditures in fiscal 2024 [9] - The company aims to leverage its reputation as a reliable commercial-grade partner to capitalize on medium to long-term market fundamentals [59] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns about the short-term uncertainty due to reduced funding for early-phase projects, which may impact the speed of attracting new customers [15] - The guidance for fiscal 2024 has been broadened to $145 million to $165 million, reflecting the anticipated slower growth [15] Other Important Information - The company has completed its mammalian expansions and is on track to launch CGMP manufacturing services for cell and gene therapy by the end of Q3 2023 [71] - Cash and cash equivalents as of April 30, 2023, were $39 million, down from $126 million a year prior [70] Q&A Session Summary Question: Can you provide a split of the backlog between commercial, late-stage, and early-stage projects? - Management did not have the exact split available but acknowledged the increase in late-stage projects [16][17] Question: What is the definition of late-stage projects, and what proportion do they represent? - Late-stage projects include Phase 3 and beyond, but management did not provide a specific proportion of the business [18] Question: What is the outlook for margins in fiscal 2024 given the larger cost base? - Management indicated that margins will be impacted by increased fixed costs and depreciation from expansions, but they expect long-term margin improvement as capacity utilization increases [37][95] Question: How much more capital expenditure is planned for fiscal 2024? - The company plans to spend approximately $30 million on expansion-related capital expenditures in fiscal 2024 [43] Question: What is the state of the balance sheet and cash flow outlook? - Management expressed confidence that cash from operations will fund the business, with the option to draw from a revolver if necessary [97]