Azenta Reports Fourth Quarter and Full Year Fiscal 2023 Results, Ended September 30, 2023

13 Nov 2023
www.prnewswire.com
Financial StatementCell Therapy
Q4'23 reported revenue growth of 25% year over year and 2% on an organic basis
FY'23 reported revenue growth of 20% and down 1% on an organic basis
Q4'23 generated positive free cash flow for the second consecutive quarter
Fiscal 2024 organic revenue growth expected to be 5-8%
Committing to an additional $500 million in share repurchases in Fiscal 2024
BURLINGTON, Mass., Nov. 13, 2023 /PRNewswire/ -- Azenta, Inc. (Nasdaq: AZTA) today reported financial results for the fourth quarter and fiscal year ended September 30, 2023.
Management Comments
"We ended fiscal 2023 strong, delivering an impressive fourth quarter result amidst a still-challenging macroeconomic backdrop," stated Steve Schwartz, President and CEO. "We are proud of the progress that we have made in the second half of fiscal 2023 and intend to carry those initiatives into the next fiscal year. Our cost reduction programs are on track and our strategic investments in the sales force are showing early benefits. The momentum we're seeing across the business gives us confidence in our outlook for fiscal 2024, where we expect to achieve organic revenue growth of 5 to 8% coupled with continued margin expansion and positive free cash flow."
"Today we are also pleased to announce plans to repurchase an additional $500 million in fiscal 2024 under our existing share repurchase program. This initiative underscores our focus on driving long-term value for shareholders through disciplined capital deployment. We have a strong balance sheet position, and, even after this additional repurchase of shares, we will have ample liquidity, including roughly $500 million of cash available to be prudently allocated to enhance shareholder value, including continued strategic investment in our unique end-to-end sample management portfolio."
Fourth Quarter Fiscal 2023 Results
Revenue was $172 million, up 25% year over year and 4% sequentially. Organic revenue increased 2% year over year, which excludes the impacts from foreign exchange tailwinds of about 1 percentage point and 22 percentage points contribution from acquisitions. Excluding the Consumables and Instruments ("C&I") business, which declined 18% year over year and remains soft reflecting continued oversupply in the consumables market, organic revenue increased 6% year over year.
Life Sciences Products revenue was $82 million, up 70% year over year.
Revenue from businesses acquired during the past year was $30 million in the quarter, including $29 million from B Medical.
Organic revenue, which excludes the revenue from acquired businesses and impacts from foreign exchange, grew 3% mainly driven by strong growth in large-automated store systems, partially offset by continued softness in C&I. Excluding the C&I business, the products segment grew 21% year over year on an organic basis.
Life Sciences Services revenue was $90 million, up 1% year over year.
Organic revenue, which excludes foreign exchange impacts, grew 1% year over year.
Sample Repository Solutions grew 9% year over year on an organic basis. Genomics services organic revenue declined 2% year over year.
Summary of GAAP Earnings Results
Operating loss was $17 million. Operating margin increased 100 basis points year over year.
Gross margin was 39.5%, down 280 basis points year over year, driven by increased amortization and purchase accounting adjustments related to acquisitions.
Operating expenses were $85 million, up $12 million year over year primarily driven by the acquisition of B Medical.
Other income included $11 million of net interest income versus $10 million in the prior year period.
Diluted EPS from continuing operations was $0.05 compared to ($0.07) in the fourth quarter of fiscal 2022. Diluted EPS from discontinued operations was $0.01 compared to ($0.21) in the prior year. Total diluted EPS was $0.06, compared to ($0.28) one year ago.
Summary of Non-GAAP Earnings Results
Operating loss was $0.9 million. Operating margin decreased 200 basis points year over year.
Gross margin was 42.8%, down 110 basis points year over year. A lower B Medical margin was partially offset by cost reduction initiatives within operations and favorable product mix, namely in large-automated stores.
Operating expense in the quarter was $75 million, up $16 million year over year, primarily driven by the additional operating structure of businesses acquired during the past year, as well as investment in sales and research and development, net of cost reduction actions.
Adjusted EBITDA was $8 million, and Adjusted EBITDA margin was 4.6%, down 230 basis points year over year.
Diluted EPS was $0.13, compared to $0.16 one year ago.
Full Year Fiscal 2023 Results
Revenue for fiscal 2023 was $665 million, up 20% year over year. Organic revenue declined 1%, which excludes the impacts from foreign exchange headwinds of 2 percentage points and a 23-percentage point contribution from acquisitions. Excluding the C&I business, which declined 26% year over year and remains soft reflecting continued oversupply in the consumables market, the total business grew 5% year over year on an organic basis.
Life Sciences Products revenue was $305 million, up 53% year over year.
Revenue from businesses acquired during the past year was $127 million, including $113 million from B Medical.
Organic revenue declined 9% year over year, primarily driven by softness in the C&I business.
Life Sciences Services revenue was $360 million, up 1% year over year.
Organic revenue, which excludes foreign exchange headwinds, grew 3% year over year.
Sample Repository Solutions grew 6% year over year on an organic basis. Genomics services grew 1% year over year on an organic basis.
Summary of GAAP Results
Operating loss was $73 million. Operating margin decreased 650 basis points year over year.
Gross margin was 39.6%, down 640 basis points year over year, primarily due to increased costs in both segments, unfavorable mix in the Life Science Products segment, and the increased amortization and purchase accounting adjustments related to acquisitions.
Operating expense was $336 million, up $56 million year over year primarily driven by additional operating structure of businesses acquired during the past year, higher labor costs, and continued investment in the business, partially offset by an adjustment to the fair value of the contingent consideration related to B Medical and savings from cost reduction initiatives.
Other income included $44 million of net interest income versus $16 million in the prior year period.
Diluted EPS from continuing operations was ($0.19) compared to ($0.15) in fiscal 2022. Diluted EPS from discontinued operations was ($0.02) compared to $28.63 in fiscal 2022. Total diluted EPS was ($0.22), compared to $28.48 in fiscal 2022.
Summary of Non-GAAP Results
Operating loss was $15 million and operating margin was (2.3%), down 740 basis points year over year.
Gross margin was 43.8%, down 350 basis points year over year.
Operating expense was $307 million, up $72 million year over year, driven by the added structure of acquired businesses, increased labor costs, and strategic investments in the business, net of savings from cost reduction initiatives.
Diluted EPS for fiscal 2023 was $0.31, compared to $0.51 in fiscal 2022.
Adjusted EBITDA was $30 million and Adjusted EBITDA margin was 4.6%, down 670 basis points year over year.
Cash and Liquidity as of September 30, 2023
The Company ended fiscal year 2023 with a total balance of cash, cash equivalents, restricted cash and marketable securities of $1.1 billion.
Operating cash flow was $40 million in the quarter and $17 million for the full year. After adjusting for items related to the Semiconductor Automation business, sold in February 2022, adjusted operating cash flow was $54 million for fiscal 2023.
Capital expenditures were $10 million in the quarter and $39 million for the full year.
Free cash flow was $30M in the quarter and ($22) million for the full year. After adjusting for items related to the Semiconductor Automation business, adjusted free cash flow was $14 million for fiscal 2023.
Share Repurchase Program Update
In the fourth quarter, the Company repurchased 3.4 million shares for $166 million under a 10b5-1 trading program.
In fiscal 2023, the Company repurchased 17.5 million shares for $839 million through the combination of an accelerated share repurchase program and a 10b5-1 program.
As of November 10, 2023, the Company has repurchased a total of 19.4 million shares for $934 million under its existing $1.5 billion share repurchase authorization.
In fiscal 2024, the Company intends to repurchase an additional $500 million in shares utilizing the full capacity of the $1.5 billion share repurchase authorization.
Guidance for Continuing Operations for Full Year Fiscal 2024
The Company announced guidance for Fiscal 2024.
Total revenue is expected to be in the range of $696 to $718 million, reflecting total organic revenue growth in the range of 5% to 8% relative to Fiscal 2023.
Adjusted EBITDA margin expansion is expected to be approximately 300 basis points.
Non-GAAP diluted earnings per share is expected to be in the range of $0.19 to $0.29.
Conference Call and Webcast
Azenta management will webcast its fourth quarter and full year fiscal 2023 earnings conference call today at 4:30 p.m. Eastern Time. During the call, Company management will respond to questions concerning, but not limited to, the Company's financial performance, business conditions and industry outlook. Management's responses could contain information that has not been previously disclosed.
The call will be broadcast live over the Internet and, together with presentation materials referenced on the call, will be hosted at the Investor Relations section of Azenta's website at https://investors.azenta.com/events and will be archived online on this website for convenient on-demand replay. In addition, you may call 800- 757-9216 (US & Canada only) or +1-212-231-2939 for international callers to listen to the live webcast.
Regulation G – Use of Non-GAAP financial Measures
The Company supplements its GAAP financial measures with certain non-GAAP financial measures to provide investors a better perspective on the results of business operations, which the Company believes is more comparable to the similar analyses provided by its peers. These measures are not presented in accordance with, nor are they a substitute for, U.S. generally accepted accounting principles, or GAAP. These measures should always be considered in conjunction with appropriate GAAP measures. A reconciliation of non-GAAP measures to the most nearly comparable GAAP measures is included at the end of this release following the consolidated balance sheets, statements of operations and statements of cash flows.
"Safe Harbor Statement" under Section 21E of the Securities Exchange Act of 1934
Some statements in this release are forward-looking statements made under Section 21E of the Securities Exchange Act of 1934. These statements are neither promises nor guarantees but involve risks and uncertainties, both known and unknown, that could cause Azenta's financial and business results to differ materially from our expectations. They are based on the facts known to management at the time they are made. Other forward-looking statements include but are not limited to statements about our revenue and earnings expectations, our ability to realize margin improvement from cost reductions, and our ability to deliver financial success in the future and otherwise related to future operating or financial performance and opportunities. Factors that could cause results to differ from our expectations include the following:  our ability to reduce costs effectively, the impact of the COVID-19 global pandemic on the markets we serve, including our supply chain, and on the global economy generally; the volatility of the life sciences markets the Company serves; our possible inability to meet demand for our products due to difficulties in obtaining components and materials from our suppliers in required quantities and of required quality; the inability of customers to make payments to us when due; price competition; disputes concerning intellectual property; uncertainties in global political and economic conditions; our ability to successfully invest the cash proceeds from the sale of our Semiconductor Automation business; and other factors and other risks, including those that we have described in our filings with the Securities and Exchange Commission, including but not limited to our Annual Report on Form 10-K, Current Reports on Form 8-K and our Quarterly Reports on Form 10-Q. As a result, we can provide no assurance that our future results will not be materially different from those projected. Azenta expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any such statement to reflect any change in our expectations or any change in events, conditions, or circumstances on which any such statement is based. Azenta undertakes no obligation to update the information contained in this press release.
Azenta, Inc. (Nasdaq: AZTA) is a leading provider of life sciences solutions worldwide, enabling impactful breakthroughs and therapies to market faster. Azenta provides a full suite of reliable cold-chain sample management solutions and multiomics services across areas such as drug development, clinical research and advanced cell therapies for the industry's top pharmaceutical, biotech, academic and healthcare institutions globally. Our global team delivers and supports these products and services through our industry-leading brands, including GENEWIZ, FluidX, Ziath, 4titude, Limfinity, Freezer Pro, Barkey and B Medical Systems.
Azenta is headquartered in Burlington, Massachusetts, with operations in North America, Europe and Asia. For more information, please visit www.azenta.com.
AZENTA INVESTOR CONTACTS:
Sara Silverman
Head of Investor Relations & Corporate Communications
[email protected]
Sherry Dinsmore
[email protected]
Notes on Non-GAAP Financial Measures
Non-GAAP financial measures are used in addition to and in conjunction with results presented in accordance with GAAP and should not be relied upon to the exclusion of GAAP financial measures. Management adjusts the GAAP results for the impact of amortization of intangible assets, restructuring charges, purchase price accounting adjustments and charges related to M&A to provide investors better perspective on the results of operations which the Company believes is more comparable to the similar analysis provided by its peers.  Management also excludes special charges and gains, such as impairment losses, gains and losses from the sale of assets, certain tax benefits and charges, as well as other gains and charges that are not representative of the normal operations of the business. Management strongly encourages investors to review our financial statements and publicly filed reports in their entirety and not rely on any single measure.
SOURCE Azenta
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