TKNO - Earnings call transcript Q3 2021

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Operator

Good day and thank you for standing by. Welcome to the Teknova Third Quarter 2021 Financial Results conference call. At this time, all participants are in listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to your first speaker today, Sarah Mitchell. you. Thank ahead. go Please

Sarah Mitchell

Matt welcome the today's third Chief call business happy results. your followed will operator, who take Financial conference review to remarks, will Executive XXXX we call. provide financial by updates and On Stephen we highlights Teknova’s, to you, Chief quarter Officer conclude Teknova’s After earnings Officer Lowell, prepared Thank questions. Gunstream, be Teknova’s, will

goals uncertainties including and Forward-Looking the that make those Statements performance regarding call, the or to business cause for As are a reminder, events of expectations during we to financial that the subject this differ. actual results company risks may and

to described concerning Company could various information, other filings in press Additional risk comments future included is with release the these or its SEC. GAAP or results, the factors, issued in and the which and Company’s Company’s when to the that addition the measures itself law. in the by today of as views, of Today's Company’s current management and the company result forward-looking obligate new financial evaluating events, fully believes the information earlier The non-GAAP effectiveness does commit except required reflect change performance, business Company’s factors more statements provide update strategies. insight a meaningful as are can not financial these

use for, today's therefore only as not to we to with the differ supplemental accompany non-GAAP may certain non-GAAP deck slide which of will prepared accessed non-GAAP should financial be Stephen. section Please advised, and be to that measures and is measures be we other similarly and afternoon, as for presentation named measures over remarks considered webcast. measures this in of in Reconciliations financial Teknova’s prepared has measures that press and call, website, Teknova’s are financial company measures accordance posted today's www.sec.gov/edgar. on through Non-GAAP supplement financial financial the GAAP. used to non-GAAP can on website The included of this posted of results. by a this from substitute companies. GAAP I relations at financial to will a the in its During website, turn that, call always investor with should release And our the a

Stephen Gunstream

of example, bioprocessing our turnaround customers discovery commercialization. to To reduce and customer third discovery, Thank therapies, Teknova with cell the quarter a clinical drug discovery short Good is an and you you, novel than agents significant clinical therapy, critical joining leading of to manufacture custom impact. Sarah. molecular XXXX cell for for to afternoon, We time of gene production short provider everyone smaller you solutions liters customers the and earnings to there in with able turnaround drug quality are made diagnostics. enabled thank call. our reagents vaccines, high gene give is us that buying in a from times from and grade reagents and for supports scale development need and custom are therapy

in particularly several We demand and energized and space. I prospects. potential conferences of and and quality solutions. high members believe a last participated I been high months, with custom industry market these team customers the therapy the there of have Over met other by have number events gene for cell interactions, various our and in is

industry and that needs supply reinforced in including validated strongly to the the Our our quick discussions our have capabilities, meet chain. turnaround, our thinking critical meet

broader growth segment. to customers well-positioned market as are their or through development therapies products benefit from in and one, pipelines, We advance clinical overtime; their our the two

our place in infrastructure have We to outlook. the near-term support today

and by investing R&D. are the company commercial Our excellence for we in progress capacity good balance and growth making sheet is long-term positioning expansion, strong in

continue in have our of has critical I XXX and to to whose we want will our on the dedication be Lastly, plus been place associates, all team our to vision. thank to execute success.

to the priorities. we quarter, pleased made our on well commercially progress our and business investment report to third meaningful performed Moving that updates. in I'm

our total media million as revenue million, First, transport the $X.X QX quarter was excluding XXXX. in $X.X to compared sample XX% up third of

Second, five we operational end capacity Hollister, facility new fold. on advanced which our production manufacturing XXXX, construction state-of-the-art when increase by California, of the in will GMP at

also capacity at We existing and made our efficiency improvements facilities.

our that areas talented and in invest to continue to success. long-term near are we Third, critical

manufacturing we example, the R&D our For automation support build process out. in quarter, and facility new expanded third to the engineering change

by our science to life and background for operations, Becton formally expanded the with him at Dickinson as fit ideal for business from and we roles responsible hires BD of makes Vice joining who and Ken service most Jenn customers. in was where global his outside some solutions but will the the companies, management, proven in was of the to also he order both against and of organization. in experience Jenn Ken that, we Ken a look Biociences. talent, encouraged are clinical will I'm plan. marketing iPhone perspective tech Gelhaus, is of key Google, unit highest to building to our part. customer environments including past an in led forward specialist and at new Teknova eBay, wanted third has biggest marketing technology who commercial success. a Sciences our of and someone of BD our organizations Overall, We worked to two the businesses have them the announced creative has sales, the the intentional for the Teknova. adjusting complex and product have industry excited Chief roles at teams. our fresh would together the Company to the we made recently the on course, Officers quarter thinking industry, I at our in building top has Ken Jenn role. strategic comes commercial be role today, team, commercial I Facebook, our is leading performance Commercial Senior this welcome adept President our commercial brand launches leadership team original to and Jenn as Hiring progress thrilled Henry, with and Ken bring with significant join Life lead want Marketing. Teknova Finally, and Apple. who future I and at we contributing serve to at and

will the discussion the financials. remainder hand to over will continue to the the year, remain support and now execution Looking be opportunities. our through laying to consistent the I we and growth call priorities on laser-focused long-term our of of Matt for foundation

Matthew Lowell

delivered good We the third afternoon, quarter and strong results everyone. in XXXX. of Stephen Thanks,

quarter Let's XXXX. was start million a X% $X.X revenue increase for with Total revenue. $X.X the the third from in quarter of million,

mentioned, quarter in Steven quarter revenue of media the XXXX. $X.X the excluding $X.X million, As from third XXXX of transport increase third for a million simple was XX%

launched a media for reminder, the latter Teknova to part quarter a the second As urgent transport COVID-XX in need of the XXXX tests. product address of

or million, consider revenue Research catalog market increase media the from of and XX% our sales revenue non-recurring are higher custom revenue Lab or in product the year-over-year development. both the and are are Essentials under products products we average in or therapies transport and per commercial Lab targeted seeing and of a Only customers from While to in phases ongoing at X.X include RUL a is are customer. X.X products third Essentials Use both that Clinical And be clinical quarter use Good quality the quarter targeted we was standards of strategy. driven was solutions products. Manufacturing XXXX. sequentially. million and the for GMP by not made Revenue growth and Practices by part

Our revenue third in XX% a X.X of XXXX. in from Clinical the X.X million, Solutions million quarter was quarter the increase

larger can to be the due Clinical to average reminder, quarter and revenue there category. lumpiness a in orders As quarter this Solutions,

particularly underlying are performance with which tailwinds production. and light in the tough Solutions Clinical COVID-XX associated to an quarter, We comparisons vaccine quarter prior our kit pleased year from of increase in benefited growth testing XX% with this

to customer report within that XX-months. new in defined We that previous grew ordered adding customers Solutions the Clinical QX, as are we active a revenue pleased by our

We expect in the to clinical revenue initial per average activity will these even lower as solutions over their new revenue same periods. customers customer time attributable to buying grow contributed

expenses the statement, XXXX, profit to for XXXX. was third margin X.X the and in critical X.X higher by continued with driven planned to primarily for near in increase quarter million was of costs quarter of compared was from overhead current expenses to the as its Gross higher is gross third third increased manufacturing million which million long-term capacity compared in XX.X% Operating X.X success. making the the gross and in talent an the growth. income the X.X manufacturing the to to XX.X% quarter that Operating capabilities investments quarter invest and XXXX. quarter million to in is quarter quarter were support down company in in The our reflecting profit Turning decrease we the expenses. in labor in associated long-term

corporate, pleased teams. are We and strength Company’s have commercial to the bench to R&D added

and and other as substantial public internal to continue with on initiatives have requirements. hiring increase Also, operational operating on associated company our costs meeting progress We new make a good generally to applicable capabilities. we

million or X.X per to X.X over attributable compared for As The net Adjusted XX% quarter third million quarter stockholders share, for the associates, EBITDA, $X.XX to million measure compared for million third quarter of loss to the to up XXXX. of for the per XXXX. was stockholders XXX $X.XX share the common quarter the company attributable of was X.X X.X a net quarter XXXX. of had negative common third income non-GAAP end, from quarter positive or the

flow. facilities, in quarter Now the the new previous the current X.X year, as X.X of balance R&D in in million spend majority the our a facility, was GMP in third few manufacturing million and the and lab. to our compared quarters cash our about in quarter same XXXX investments was expenditure production sheet of quarter notes prior Capital

was I million manufacturing months. EBITDA flow, increase the was to XXXX. for quarter and the X.X the adjusted expenditures free year instead our negative third lower our non-GAAP significant measure are receive period to their quarter anticipated custom compared of cash for compared to due to increases capital and building positive front customers million of in decrease ensure able to are previously. We mentioned demand the in to of on prior X.X This weeks future related infrastructure capacity and products committed Adjusted in

million Turning and cash had million XX equivalents, balance September and of debt. gross XXXX to sheet, in XX, in the we cash as XX

fiscal for our comments net us make strong growth few puts a to invest Our as position, balance for the in of our wanted we XX XX% continue to long-term QX, to I core through the about in of our year cash revenue business. performance of growth confident outlook we strong given XXXX. achieve are million in a our ability end target revenue revenue the year, our of

and interest customers are is our experience the We continue marketing, to scale R&D. and call We further custom revenue point the good to strong fourth believe expectations order their aggressive in expansion, at the current quarter, sales turnaround will the we to continue back quarter, capacity our products. investment I order volume advantage customer serve comfortable the with products as Stephen. quarter. to and competitive we on in fourth With solidify that, for turn consensus our necessary short times will in flow. In investments in this intend And our

Stephen Gunstream

Thanks, Matt.

progress We our year this on are the to very our have shareholders. commitment happy in made delivering we with

to and plan the We finish long-term strategic market our competitive investments advantage confident in are phases we to our executing strengthen all are making even position support the today in year our further. are growth strong. on and near the will I’m good that of

and will to novel vision Lastly, questions. Operator. customers strategic we execute therapies. have on now we need open the to and call and the enable I develop up team our commercialize our for vaccines

Operator

of line Larew [Operator Instructions] Blair. William from question the first Our comes of Matt

now line Your open. is

Unidentified Analyst

Hey [Max] our is Matt. for Congrats on (Ph) thanks on quarter, actually guys. questions. It another taking and strong for

at us the So I size pipeline and fourth customer number an that but have ready give update think of to you and leading could about which over you can therapy the solutions, your customers the broadly just grade IPO, working you more cell products of talked next were with potentially And year base the appreciate that you in quarter, your due formulations. you the G&P around time are or the how to give clinical be on gene companies, custom guidance aren't of there, ordering XX quite XX% ordering of two. then you

customers, seeing is is there from fall clinical the your added and any therapy cell in And the those that quarter Just in that customers are an then the can way gene it you update we wondering, just Stephen, based figures? bucket. get you comments assume demand around fair around on to that solutions

Stephen Gunstream

Okay. Great, thanks.

disclosing can a very for point not as strong we at growth say the this in the this that, and see see, generally of are Yes. to follow point with number coming flow well just, pipeline, seeing we and custom of in new order volume customers question you is clinical other at is in from trends of And our solutions we up we that accounts. customers I good our gene are trend future. evidence on that ordering we those as joining that. both I inline consider you business. is of will a that So, But the that think have point say new had seen And cell order number quarters, Max therapy of yes, time, can that expected also that something the and the around we coming over in, products, customers the business just time, accounts, at as past maybe this of percentage additional to

per the Essentials in Lab customer business. We an average increased have revenue

So, that also is the we business the essentially with making. very lab happy progress are

Unidentified Analyst

Yes, don't certainly. want I that.

don't on commentary. that go. Essentials to but focus appreciate clinical the I Another solutions business, the want Lab I business

level, as a chains big have supply high quarter. Just been follow-up, theme mean, at I a a this that

of I ask as that is are quarter? are experiencing chain know you in And levers overnight on in directly to So, just work tightness you then supply most, any in levers might couple if mean, to and maybe those have wanted to have of expanding day thought if coming the a facility adding obviously, there the see concern or what not given are pull achievable in terms tight like impact And results switching there the so, market. seems I labor more did week any pressure pressure. XXXX, online given levers seven about in you have can and But related near-term. a to just be production that in some talked market the you that, past that capacity and of the new that you labor those increase the ago? employees months as it

Stephen Gunstream

Sure. No problem.

supply on So a certainly the it challenge chain the side is at moment.

raw our there And some for customers, our move We internal teams, have think, I well have been materials secondary with closely them successful where as challenge. is been we working to both very to options as in a of the very doing that.

know our So, them. can customers don't what very and for and able do situation. managed have impressed managing very, to it performance I'm happy there and impact with both that difficult perspective, to from were an can internally we deliver well exactly make I we with but that, I sure our with say

On we so new the operational be our facility piece, XXXX. right, end with by will the facilities

in investing as also are current hours, We mentioned. is that our in you facilities, labor

being ability culture the competitive. I public and us think about talent And to our labor making here, from is organization other recruit is then of the challenge the But, that we the have are set capacity the execute into the not it of have progress course company, perspective, is a vision of just significant it to we and up part hours. company, a awareness We benefits a very probably able from given found and there.

which increases from as I new well production apply output in, engineering, both invested to the have process as We as will a perspective. said, as automation, well in of in facility to drive

Unidentified Analyst

on congrats Got again and it, the great. Thanks quarter.

Stephen Gunstream

Thanks.

Matthew Lowell

Thanks.

Operator

of of line the from Ji comes question Nam BTIG. Sung next Our

now line is Your open.

Sung Ji Nam

questions and Hi on the thanks the congrats quarter. for taking

quick of ones. couple a Just

given so there the cell therapy market, are overall Delta the asked just was seeing. It of but is gene are hear Salesforce seeing again, for we levels globally, with regions around what kind of starting kind country curious Max the seeing, even and of are just about if lot as and lot are you what a I what environment, the was a the to the from chain in you of And interest markets supply potentially well market, and and end maybe going of customers kind variants just as up about issues, For others. recent curious was like? coming the and demand about you your also like kind and biopharma to rates the certain were customer your of both kind also sounds the of might of curious base, access me, and activity look normalizing just normalizing your access near-term and to, kind outlook curious

Stephen Gunstream

leave in our financial not outcome And similar But the adjust for also I sooner. opportunities, from to challenges foresee do are affected QX. products are are our will that And where I of their as Delta challenges allow deliver our the Matt. chain to that get supply from to packaging some raw supply we say processes, will customers chain believe we these we consider the say I planned I QX. to we can some changing able variants materials, them also outlook business and has to able manufacturing

believe a a to are we so great position from during actually this supply perspective. we I are in that particularly challenging And chain deliver time,

Matthew Lowell

last And we sample seeing not product impact impact that, any just that Delta the from we I variant, was impacted country. a transport the a really been And lockdown this have. to not really already material the financial perspective, I year add from just across are when like will mean, we is there line saw certainly from

of stays our that there this product also other and of us that moment the terms business, as that, obviously. impacting level rest But nothing line. fairly We way is you have and at mentioned already revenue it than low for the that in see, was of can quarter, in

Sung Ji Nam

Matt. is And then for just Great. my follow-up

of saw And the you and mentioned gross actually that guys up investments decline of you kind the was I'm of is investments carry forward? sequentially. incremental if about that figure are terms before, in terms out will? level to in to margins, if I trying wondering, but it just this you have your talked year-over-year, In went you plans that forward, there are going just additional

Matthew Lowell

we on of inventory taken out a Sung in significant sample that for the just that rather folks reporting I question the, a Ji. gross point significant Well have Good have impact remind QX, fairly with impairment would reserved, Yes. did that our first all, business transport did margin.

if keen So And sure making to remarks, it have QX, still capabilities expect we those fast and serve come down. our turnaround our pointed it and sequentially out that very that we for best as are capacity in the you from a making adjust customers compare QX, on be was to in to have investments we with time they I ample able us. to are

So continue margin gross I expect to be would levels. these to at

As and the build we continue make future to investments those basically. for

Sung Ji Nam

much. so you Great. Thank

Matthew Lowell

Thank you.

Operator

Our line comes Johnson question from Jacob next Stephen. the of of

Your line is now open.

Unidentified Analyst

well, some presentations chromatography they for step [Mack] your at My a on This industry guys. recent to of Can Hey, where talk efficiency? you how about is seem quick you just the Jacob. viral help question on congrats manufacturing demand vector you conferences, try focus on vectoring the can and but and manufacturing. from quarter and can much chromatography process and for this viral processes, the optimize your buffer as

Stephen Gunstream

Sure.

as that our making vector vector that I is the in purification believe for therapeutic highly very formulation one antibody not work custom speaking, of well the it lot touch the part purification, internally, process. a final production maybe significant process And and it. which chromatography So some what we is on you does comes from a there optimization. of and monoclonal on the will viral as seeing having of inefficiencies to there process, are we is viral where own are based AABs, for is we Generally processes every these require a purifications similar similar that pier about same reagents for need a believe

help need that we perspective XXXX that us our scientific to expertise less our building phase. an through that faster that or see multiple customers in bioproduction custom believe on manufacturing from on for a process in a within than are are product there we so and And entire development time custom process focused that that that as way liters. of But scale steps opportunity all

can accelerate vision sooner? how our there so we And trials into is do development process really clinical get that we them so

Unidentified Analyst

this initially Thank Can talk Commercial well. morning, Great. congrats news be as on Ken that Also you. the on will Chief about also what hiring you focused Officer on?

Stephen Gunstream

Absolutely.

leaders first continue in very in field, that obviously I execute joining and our doubt building Becton science has the Ken their of He Well, on revenue his done Jenn this out at areas. out driving we course two have respective to vision excited So without then Ken worked both accounts BD. with on the about, base Danaher Teknova. Ken a and with of are past, and will entire And have laid growth. and team. same drive the and commercial really customer to first this Dickinson, focus These leveraging

deliver Ken we focused to our products quality highest to quickly. on will making and be the so sure perspective commercial are customers on And continue executing operating a

Unidentified Analyst

guys. Great. you, Thank

Matthew Lowell

you. Thank

Operator

There are Thank this and no at call. questions for time, conference you participating. today's this concludes further

may now You disconnect.

Sarah Mitchell	Investor Relations
Stephen Gunstream	Chief Executive Officer
Matthew Lowell	Chief Financial Officer
Max Masucci	Cowen
Sung Ji Nam	BTIG
Jacob Johnson	Stephens

Alpha Teknova (TKNO) 12 Nov 212021 Q3 Earnings call transcript