Azenta Reports Results of Third Quarter of Fiscal 2023, Ended June 30, 2023

08 Aug 2023
www.prnewswire.com
Financial Statement
BURLINGTON, Mass., Aug. 8, 2023 /PRNewswire/ -- Azenta, Inc. (Nasdaq: AZTA) today reported financial results for the third quarter ended June 30, 2023.
Management Comments
"Our third quarter results reflect positive momentum in both organic revenue growth and profitability. Our go-to-market initiatives continue to gain traction while our cost reduction efforts are providing additional support to the bottom line," stated Steve Schwartz, President and CEO. "Notably, the leverage in the business model is evident again and we generated positive free cash flow in the quarter. We are encouraged by the progress in the business over the past quarter, and while macroeconomic factors remain challenging, we are confident in the unique value we bring to our customer partnerships across pharmaceutical, biotech, and academic institutions."
Third Quarter Fiscal 2023 Results
Revenue was $166 million, up 25% year over year and 12% sequentially. Organic revenue increased 2% year over year, which excludes the impacts from foreign exchange headwinds of less than 1 percent and the contribution from acquisitions of 24 percentage points. Excluding the Consumables and Instruments ("C&I") business, which declined 27% and remains soft reflecting continued oversupply in the consumables market, the total business grew 8% year over year on an organic basis.
Life Sciences Products revenue was $75 million, up 57% year over year.
Revenue from businesses acquired during the past year was $32 million in the quarter, including $27 million from B Medical.
Organic revenue, which excludes the revenue from acquired businesses and impacts from foreign exchange headwinds, declined 9% driven by the softness in C&I.  Excluding the C&I business, organic revenue grew 10% year over year driven by a record quarter in large automated store systems.
Life Sciences Services revenue was $91 million, up 7% year over year.
Organic revenue, which excludes the foreign exchange headwinds, grew 8% year over year.
Sample Repository Solutions grew 6% year over year on an organic basis, driven by growth in core storage services. Genomics services organic revenue grew 8% year over year, led by strength in Next Generation Sequencing and Gene Synthesis.
Summary of GAAP Earnings Results
Operating loss was $16 million. Gross margin was 41.0%, down 3.9 points year over year, primarily due to increased amortization and purchase accounting adjustments related to acquisitions. Operating expense was $84 million, up $19 million year over year.
Other income included $11 million of net interest income versus $5 million in the prior year period.
Diluted EPS from continuing operations was ($0.04) compared to ($0.09) in the third quarter of fiscal 2022. Diluted EPS from discontinued operations was $0.02. Total diluted EPS was ($0.02), compared to ($0.13) one year ago.
Summary of Non-GAAP Earnings Results
Operating loss was $1 million. Operating margin declined 4.0 points year over year.
Gross margin was 45.6%, down 0.7 points year over year, reflecting flat margin in Products and lower margin in Services.
Operating expense in the quarter was $77 million, up $20 million year over year driven significantly by 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 $13 million, and Adjusted EBITDA margin was 7.8%, down 2.6 points year over year.
Diluted EPS was $0.13, compared to $0.12 one year ago.
Cash and Liquidity
The Company ended the quarter with a total balance of cash, cash equivalents, restricted cash and marketable securities of $1.3 billion.
Operating cash flow was $17 million in the quarter. Capital expenditures were $8 million. Free cash flow was $9 million.
Share Repurchase Program Update
On April 3, 2023 the Company completed its previously announced accelerated share repurchase ("ASR") program and on April 5, 2023 received final settlement of 4 million shares for a total of 10 million shares repurchased under the $500 million ASR program. During the quarter, the Company repurchased 4 million additional shares for $172 million under a 10b5-1 program.
Subsequent to June 30, 2023 and as of August 8, 2023, the Company repurchased 2 million shares for $92 million under a 10b5-1 program.
As of August 8, 2023, fiscal year to date, the Company has repurchased a total of 16 million shares for $764 million and is on track to repurchase a total of $1 billion by the end of calendar year 2023.
Guidance for Fourth Quarter Fiscal 2023
The Company announced revenue and earnings guidance for the fourth quarter of fiscal 2023.  Total revenue is expected to be in the range of $155 to $173 million. Life Sciences Services revenue is expected to be in the range of $86 to $94 million. Life Sciences Products revenue excluding B Medical is expected to be in the range of $45 to $55 million. B Medical revenue is expected to be approximately $24 million.
Non-GAAP diluted earnings per share is expected to be in the range of ($0.02) to $0.06. GAAP diluted earnings per share from continuing operations is expected to be in the range of ($0.20) to ($0.12).
For the full year, the Company is narrowing its expectation for revenue to be in the range of $648 to $665 million, consistent with growth of approximately 17% to 20% year over year.
Conference Call and Webcast
Azenta management will webcast its third quarter 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- 954-0585 (US & Canada only) or +1-212-231-2927 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.
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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