TKNO - Earnings call transcript Q1 2022

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Operator

Good day, and thank you for standing by. Welcome to the Teknova First Quarter 2022 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. now today, hand Ms. would to conference I speaker your Instructions] like the to over [Operator Sara Michelmore. Ms. floor the Michelmore, is yours.

Sara Michelmore

today's Earnings Great. be to Thank Officer Call. will XXXX updates highlights Chief welcome want Gunstream, On Conference followed everyone to provide President you, Teknova's First Executive operator. and call, Stephen I and Teknova's business Quarter Lowell, results outlook. update will an company's XXXX to and After remarks, Teknova's conclude happy on Financial prepared who Officer, questions. Chief Matt your provide by will financial the we review take the we

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

change these the of to factors update which release the as obligate company's comments itself commit views, are more in the concerning issued other new or today company company's forward-looking information does a the statements, SEC. with in and law. or events including risk various and press could required earlier is these filings Today's except factors, fully they current company the future not information, the Additional as reflect described by result

performance results the company's management can financial believes evaluating effectiveness in Additionally, strategies. measures the GAAP of business that -- and non-GAAP on to company's the financial GAAP its results, addition provide insight meaningful

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

Stephen Gunstream

leading times turnaround in afternoon, and scale is with for joining Good short Sara. the reagents that and us earnings where from you, quarter accelerate there reagents and molecular discovery critical and therapies, you, for We vaccines of customer first introduction to This Thank manufacture gene exemplified a are liters. high-quality than volumes agents for less they novel and positioned everyone significant provider X,XXX thank call. diagnostics. Teknova with our our of products is their cell custom-made therapy, commercialization. to is a as customers need advance best drug

gene impact. manufacture to ability Our to clinical-grade and time rapidly the discovery solutions from enables customers cell therapy to our clinical bioprocessing reduce custom

are custom and research to current to clinical solutions with demand. growing industry, and continue the interactions potential for high-quality Our the investing and the grade validate we customers across need meet aggressively

Teknova building on our As team execute areas, strategic we and top this our across depth as we remains part XXXX all talent of the in investment, breadth bringing of functional priority to long-term are initiatives. a

custom at and the XX% active for revenue Lab well increase to for order catalog Essentials, as see Essentials in strong are least and and total strategic Lab business we Transport. we demand on all to of as both has we our of continue the million XXXX, deliver Solutions year strong our past critical QX dedication customers number Sample excluding active start confident to products associates full-year the In target growth year, of for over a as on We to strong been whose in to a $XX.X I revenue progress per a as significantly basis. grown Clinical Solutions Underlying to full-year strong we the has was track trailing demand growth XX% our remain average XX-month posted and our and quarterly lines, thank Clinical our was our the will be continue and record and want meaningful revenue orders. large in quarter customer Lab against success. made was organization revenue of number very delivered Our priorities. Essentials. in

to base Solutions growth now customer Clinical for least at We revenue the continue grow deliver full-year. XX% and expect to

progress meaningful on made also priorities. investment our We

to state-of-the-art operational new on worth be by advanced First, XXXX of capacity capacity enhance investments we provide approximately to end existing products and facility in California. in This Hollister, track to will the our our manufacture made is and million construction the revenue annually. on $XXX facility

success. manufacturing increase online and our capabilities bring before in our production strategic opens; associated pleased to the our by operations. financials. now to hand new for First, between that that growth. near drive year-end; and Second, finance, and $XX to our and million $XX against I our with will marketing long-term Sample focused deliver the and a on build for facility the capacity and We a bringing efficiency build our million, teams in to will of marketing, is new the This the at midpoint, excluding remain Transport; our long-term second greater organization aggressive second, new sales, rate R&D, personnel new facility discussion performance the we quality the XX% the develop year to we made to revenue Matt and improve and call included foundation plan demand strengthen third, our investment than over cell products out to company's current growth gene plan. lastly, will future Overall, of following therapy priorities: continue in we've and talent bioproduction. commercial by quarter our help ensure and the progress XXXX across are company to into our

Matthew Lowell

is afternoon, of increase XX% and for results of We of from Thanks, the of quarter And the in revenue, $XX.X Transport the first increase $X.X quarter the everyone. excluded, of million Total a quarter good On first revenue increased XXXX. was strong Sample trailing revenue in XXXX, XX-month total XXXX. delivered million $XX.X first XXXX in quarter million the a of excluding to Transport when Stephen, first million XXXX. for XX% first quarter an $X.X compared Sample basis, XX%. to

is revenue quarter $X.X custom both longer and XX% million the the growth the of and the reminder, in and million products. Given trailing metric for no overall the for at Essentials catalog company. Transport launched XXXX rates, a product basis. some Sample marketed By to base in drive and believe in Essentials to Only are revenue XX-month COVID-XX Lab Lab in need quarter, large of track small a targeted include useful products the Teknova Research of latter our way the part increase and we our product was by revenue variability additional tests, months RUO the market growth. to orders a is the our XX address trailing or first first XXXX Use increase growth $X.X from potential X% a urgent on

catalog As timing given revenue size for our relative see some order fluctuation to the we products. compared quarter-to-quarter and shipment those custom grow, business to of will continues orders

according the Clinical full-year. a to Good this or business the are Solutions or in made diagnostic. release and Manufacturing expect for standards by GMP, therapy XX% of approximately continue to development or are primarily customers We products commercial growth used in Practices, quality clinical phase

of least XXXX $XX.X from company increased in quarter quarter. as marketing, in delivered growth Solutions were at XXXX revenue expenses people critical capabilities to making long-term We million our its increase first first million million, of expenses Operating for lower was growth. business continue Gross current million $X.X and the success, XX-months of we XXXX is first for of $X.X in of The Operating support quality finance, reflects compared to $X.X sales and increase orders in Revenue the associated capacity was the revenue first Our invest first a higher to and million was an quarter compared manufacturing $X.X XXXX. of which in quarter Clinical costs we quarter including for and very addition to of in of was strong large XX% first the is full-year. the first operations quarter gross margin Solutions long-term number key XX% the revenue near of during $X.X in from R&D, our the with million Clinical now the in and the investments of XXXX. a Gross expect XX.X% first quarter profit the members XXX% as down the to teams. XXXX. margin XX.X% the in expected to the a the on quarter quarter trailing quarter, the basis. in revenue

March had As company XX, of XXXX, XX% up XX, from December XXX XXXX. the associates,

also the new first quarter in XXXX of compared new in quarter for share quarter operating was quarter quarter compared for for per loss XXXX. associated first loss the EBITDA, towards the $X.XX a $X.XX as of public million negative the $X.X of applicable expenditure the quarter of first first the requirements. quarter majority had XXXX. The went of the measure $X.X and in XXXX per the in quarter Adjusted our million to compared We to company with compared first XXXX. quarter breakeven diluted million $X.X to of of was Net or net diluted for costs substantial non-GAAP $X.X a of first $X.X XXXX or first first first XXXX million Capital meeting of the facility. share was to million spend

We investments facilities. our also current production to in continue make

the ahead non-GAAP in to Free which provided are cash decrease used and to to we of cash less activities, adjusted to quarter primarily by in flow, or significant instead operating demand increase expenditures. purchases compared are measure, to to of custom EBITDA quarter negative receive in weeks equipment, million our of first was This the and curve the a We customers XXXX. their capital able in as property, products define capacity compared million committed a building in of the prior-year negative ensure was first $X.X months. plant $XX.X due lower period

balance Turning sheet. to the

we plan. amended we financing March our under capital in As credit in $XX.X In cash million. by $XX growth our cash facility the existing This May to we debt. million XXXX, had new XXXX, million the $XX.X organic available equivalents our $XX amount and helps credit ensure execute million facility and have domestic to increase will gross XX, of to

XXXX of the quarter results confidence to to and guidance low the our the outlook. full-year revenue raise Strong us revenue give Turning outlook. end first XXXX

excluding XXXX, to growth to Sample Transport. is the revenue greater of this million. and Clinical million expect $XX approximately XX% to Essentials to least Our compared guidance $XX XX% of At XX% assumes continue compared midpoint, growth we revenue new Lab at to Solutions respect compared than XXXX. categories, With revenue of revenue product XXXX to as guidance growth

While investment year of I another guidance that the we have not on for giving and specific provided not we future XXXX will growth our reiterate our expected be spend, will foundation are aggressive as strengthened plans.

will continue new another invest of facilities I'll be also facility significant balance and to investments in XXXX. in sales, make in our and With across current investments expansion We the in G&A cost capacity turn call other Stephen. the marketing, assets the expect to back capital will that, year as to fund we of fixed and This of R&D.

Stephen Gunstream

XXXX are we we Overall, strategic quarter the performance priorities. Thanks, pleased made with our have and our first against Matt. progress

questions. will take now your We

Operator

Instructions] Thank of question [Operator William Matt from comes Larew And first you. our Blair.

Your line open. is

Matthew Larew

early companies and you customer environment, in sentiment guys. of sort to Hey some softness business business. good with GMP the ask cases your first sit your I has backdrop amid biotech market more lot Lab with behavior of a fairly Essentials and in obviously upstreaming funding room about morning wanted with stage

guide. So just to behavior of forward-looking this couple the you've Just a great curious either hear months, seen constant or pipeline? over ordering how be past any from what of rationalization

Stephen Gunstream

Great, Matt. thanks,

demand. order So any just not we see that by saying slowdown start in I the think do

So expect. the that And in custom interest And to I bit think we're a seeing that, in there's growth that we of seeing quite that's the in we're to still our think GMP change nothing fact, and pipeline near-term. us allows that in going our products. that

Matthew Larew

clear. and Loud

on the side. Solutions Second would just be Clinical

strength of us in those mentioned You if maybe couple from? anything the Curious and gene terms the pulled were where the of in. active then coming give of and got And therapy customer anything can kind or anticipated out a base on growth of quarter to us forward? orders frame the in side larger cell help you just the came

Matthew Lowell

size one Yes. in I Clinical that given of at time, the the different Maybe point a we'll across Solutions, particularly I'll variety this orders take in our just see business, Matt. levels. Yes. of first, mean

ordering customers just quantity. some have while smaller that may that larger then us starting been with have a a are in have And We customers be with us we that a quantity. that are for ordering

So these fall a QX, natural and as I we There are same couple would just of the in case say fluctuations larger see, in of results and led that this had patterns. order the that ones you can quarter, here. to are

behind land think it's that and particular in this just where just ebb don't I flow QX, reason being the So in any things there's strong quarter. and natural

made not as here, we that we to would continue. level So we've comments in expect reiterated just the

than confident have greater XX% QX Clinical with in that. still outlook we're And Solutions, the and of strong in a but the so next full-year we're did happy growth, for we the quarter,

Matthew Larew

Okay. call. be, would I think, last the the then last on one And

talked hand end very of hear online to Hollister the with had the You demand XX/X the good track, from to year. about flex the coming and strong the alluding capacity not customers on comfortable Stephen and you you're continued until being but but on to obviously, ability shifts,

and So at ahead facility expectations this the customer with your the feel line of with comfortable being capacity you sort of the to ability meet time year. demand later

Stephen Gunstream

correct. Yes, that's

right the some year, end adding we're So comfortable that guidance that meet the rolling automation for still demand. facility to provided online is really with to of we that of addition, the we extra very at year that have well now, shifts coming and the new the the out these in tracking

Matthew Larew

great. strong That's Okay. quarter. Congrats on another

Stephen Gunstream

Thanks, Matt.

Matthew Larew

you. Thank

Operator

Thank you.

Our Max next of question Masucci comes from Cowen.

Your line is open.

Stephanie Yan

Thanks taking a Max. And This is quarter. congrats for on questions. on for my Stephanie great

one First your on sales force.

quarter? promotional to to commercial as and new the growth organically at have and should by public I'm efforts? So call customers RUO how organization? products And since your and coming any the any years, about portion by you next offerings shift this driven your the your growth we from made to marketing have you sales added two from soft Or additions over think being outbound looking GMP-grade driven customized to efforts out trajectory

Stephen Gunstream

thanks, Great, Okay. Stephanie.

you continue Jennifer So Vice to first, our this the on sales from made we They've hired those commercial those Ken December lot organization. out build to begun our Senior a organization. we've Commercial President force, the And build many see, organizations, Chief number and of XX%. is count and out we November, yes, of Officer, Marketing, as are of Henry. In up commercial head progress, can that of actually Gelhaus, in

We expect year the this start for our it opens. demand order end driving in to function of have up those as and facility the by full teams building to new

nothing So with we're we're almost progress good start here. making Obviously, really building there. from to

to start those to takes kind with that to of up. that customers. custom bit And there it go stock your time taking GMP once onboarding next course, of question So through some you is pipeline a to ramp migration, we mentioned in of as from customers, time

versus it of we On same. see one migration, the the actually the outbound

to when GMP. focused the A we're be already. customers, since have a obviously, those of in call large of in in the United outbound you the United migrating stock then catalog those work and products us. the towards will starting see the see account in the those we major over and accounts, of shift move vast States accounts X,XXX Solutions that from almost aside Clinical buying customers So they now we of And what custom active to every it lot States are on we majority are set or

and clarity provides answers there. that a hopefully, little So

Stephanie Yan

of focusing and helpful. base group or that customer biopharma on for any Is is you out segments to specific growth if customer base, type, diagnostic and the subsegments biotech, color. your and tools were And from your then you companies. it. describe -- by these would seeing Got within biotech how the growth Thanks That's breaking of you're there biopharma? like CMOs/CDMOs,

Stephen Gunstream

Yes.

we internally. the So We details, broader that obviously, those don't a with at look share public. take

the there's growth. majority is I However, sector the driving that say not of will particular one

most diagnostics, across see tools seeing and mid-size growth underlying strong board. the We like for CDMOs/CMOs, you board small And life this the we pharma, across do we are biotech, science said, the molecular part. service, and

Stephanie Yan

more helpful. Got And That's one it. me. for

Solutions this you nice delivered model remarks, mentioned you your additional visibility the quarters? our some into have coming do a on quarter. larger So commented beat come any you versus I the in revenues on know if orders quarter. prepared you large Clinical this delivered to orders you And that Apologies but

Stephen Gunstream

free Matt I'll to in. chime feel and Maybe start,

basis. visibility We have an annual from

the challenge the are in the the of orders really -- have quarter of which we these business, think fall is volume of which whether some fall as part they're in. size size -- I actually of they

customers in delivered. very time the want they Some about specific those which are

kind exact But from we've an we And so an a from guidance from in that and predicting of business. it's flow provided. annual the are quarter-to-quarter see basis, confident underlying strong basis, a lumpy

Matthew Lowell

add about just there as in to spread saying, mentioned past, customer Clinical for this the by is that that. on of types within business I'll we Yes. us, Solutions the

Some on been basis, a customers an than are as said, still us quantities Stephen us in to the annual that early we mature that's bit smaller with longer. that ordering going for know have particularly focused XX-months and And with and increase we are Clinical smooth more ago. of we when period, of have to year on trailing a compared is the number number what the in customers, perspective, an customer seen a again the From with Solutions customers, out. active

timing there, these -- is for to of number predict these the but progressing a are orders things difficult So of reasons.

Stephanie Yan

questions. my and understood. Congrats thanks it, taking for Got again

Matthew Lowell

Stephanie. Thanks,

Operator

Johnson [Operator Our from next Stephens. of Jacob Instructions] you. Thank comes question

open. is line Your

Jacob Johnson

guys nice on Hey good congrats and quarter. afternoon

signal have orders. to you a some why free there. your these onto and through you stop in come this if their you therapy, that positive Just of maybe onboarding the there you platforming is clinical can customers as color large Is or customers sign I to mean, one other of see trial products? process? moving Is kind on a don't these to some kind that give or and want orders feel more comment, any larger

Stephen Gunstream

We said, But do challenging quarter for orders and positive, from it's that perspective. it's very CMOs look, like be predicting clearly of can ordering down like are -- customers these thanks start I And larger lumpiness moving But we and we right? seeing pipeline from come that. the things when some quarter-to-quarter through. Thanks, a that. think are

from clinical. as think from the end year, we're a up, the another cell So accustomed we right, customers, at not the pipeline bit calendar get reported total gene of I and annual started it's but that of those migrating migration catalog metrics our that only has we And therapy actually to to to little for of refrain going basis that. giving until gone

Jacob Johnson

Essentials, Lab And the of just Or Perfect. quarter, just segment just revenue still a of on year? visibility accelerating tough maybe the for growth the for into Okay. on kind year. for pretty touch comp? a modestly growth the this looking of Was up the then also kind but robust in that that segment you're in balance in

Stephen Gunstream

pretty in the products, some Lab it's custom a the say Essentials But demand a catalog we're just the change of in it also both, at we're million, orders the right, confident which has are I'd guidance products, orders flow hundreds And when order from Yes, previous starting hundreds the of of a sense. But a approximate standpoint we thousands XX% we of base given the remember the bit on can tough around through comp the a those tens to $X look and Lab average is thousands, in that that see that year those average in Essentials. the growth. that significant what the and thousands. those in from on we've impact of that's say includes in little we're is revenue

good us. looking business underlying still that to So is

Jacob Johnson

question, And clear clarification. pretty think just for domestic a expansion, just this facility you're kind organic of then is last The Okay. that I credit investments.

pulse M&A? in And on not assume will I'll just used the outlook current to then fair M&A also be So for for environment? maybe take the this your

Matthew Lowell

us, course, intended that facility, This our they Yes, We'll where giving organic And at a present economic expansion we we're and the to evaluate depending domestic of the that's we That's what that or opportunities the out done capital say additional themselves. access have like make that. anything to add is, that the can pleased, of that else to really capital. as of make continue we is completely we're credit for not need of that address growth on the capital need for we'll since to right. may sure M&A. plan. conditions we for that want the we But about of stepping organic to time. opportunity, sure get this regardless strong growth possibility And us

we're with really have happy to that our lender. So concluded

Stephen Gunstream

And I'll just touch the… on

Jacob Johnson

questions. the taking for thanks Perfect,

Sorry, Stephen.

Stephen Gunstream

I on very touch we strategic interested, plan our here. still are adjacent or into mentioned, matches good very that going that that a that of Jacob. just to putting that can has Matt whether have globally We're be was fit to sort we investments a as be strong the that that we're together infrastructure and in M&A that products front, fit expansion organic initiatives,

looking. there, but doesn't we've that mean stopped So that pretty selective

Jacob Johnson

thanks Got taking it, the questions. for

Stephen Gunstream

Jacob. Thanks,

Operator

do call. you today's the for all This queue. And see participating. I conference not speakers, Thank questions you. will any in more Thank conclude

You pleasant may have disconnect, now a day. and

Alpha Teknova (TKNO) 15 May 222022 Q1 Earnings call transcript