TKNO - Earnings call transcript Q2 2022

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Operator

Good day, and thank you for standing by. Welcome to the Teknova Second 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. to conference like first to now Ms. speaker, would hand over the the I Michelmore. Sara

Sara Michelmore

Teknova's operator. make you, Earnings on Stephen Financial questions. Officer; With Thank to Teknova's Lowell, and Conference me Chief Chief Gunstream, then and are your Matt call who Great. today's Welcome remarks Call. XXXX will Teknova's Officer, and Executive prepared President Second Quarter take

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

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

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

Stephen Gunstream

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

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

the industry, customers Teknova’s Our research clinical cell across approximately, investing XX of demand. X,XXX with we with pipeline Already, believe therapy gene clinical for therapies and growing for purchasing and to need their a market a remains We outlook promising, us products for through today the current over those there custom stages of is early cell commercial growth and with high-quality in advance reagents. use target over grade custom provides as The clinical this significant for to regularly the potential interactions and/or with gene foundation are therapy production. strong development. therapies us and into development and the customers meet continue to solutions and validate XX grid

track million to Hollister, additional approximately the product During the capacity advance construction $XXX XXXX state-of-the-art in remains by our manufacture end us of operational facility California. of in capacity an be new on manufacturing to in the give increased QX, annually. we and revenue This our of existing will facility

begin We of expect later to to end activities fall. this complete the initial phase qualification build-out by of and our QX the

to critical been execute hires the our We whose our organization I build success. significantly required plan. all critical made continue have thank nearly has the growth will to dedication our past our to over continue to all to want year, Teknova and grown be associates we has of and

first the with our Lab also revenue XXXX During performances strong and in and QX, to have are achieved Essentials Clinical we pleased record half revenue portfolios. finished both of Solutions

now this across is we to portfolios. expect While both we lower-than-anticipated in a due see Essentials healthy purchases large of our the demand Lab Solutions XXXX. early-stage customer biopharma certain in our half our large and customers in of broader Clinical revenue base, second deferring continue to believe We part

in for biopharma report Early-stage these orders reflect to their may cell the and products. runway funding markets believe this to Specifically, market gene important do our company-specific cash customers products. that We actively faster challenges customer represent clinical customers, are grade and therapy in response managing environment. they capital near-term for extend end customers including perceived efforts an

opportunity greater bioprocessing peers, Our also exposure some us to of this but positions our in participate customer a significant than we segment be well to ahead. is believe growth what to

future. intention and who order have us in orders engaged those to are they our the with We expressed their have customers, deferred including from

development to critical support the as their they programs advance expect them continue We future to to success.

through have reagents belief for in novel XXXX our than fundamental reiterate accelerate unique liters X,XXX Teknova revised manufacture in our and with revenue I to ability are confident turnaround that ability times. volume we custom-made to growth less introduction help customers and While outlook, want of opportunity short the therapies our our to unchanged, our remains the we

for access Matt greater a to strategy will flow us Lastly, additional remains strong, positive sheet the and $XXX liquidity million growth that and need have raise discussion now cash we call in without to balance achieve to our than capital. enable the to execute financials. of our will hand over I

Matthew Lowell

million second afternoon, revenue with revenue from XXXX. increased Starting trailing of for revenue in and a highlights. transport basis, second strong quarter $X.X On everyone. of was XXXX, quarter Stephen, second the XX%. quarter excluding total Total the million good for revenue, XX-month Thanks, a XX% We $XX.X sample the results delivered XXXX. increase of

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

quality basis. commercial Solutions in a to the diagnostic. by trailing Our standards are a Good are on development XX-month or made of release custom products customers business therapy used order grow and Clinical clinical also or to Manufacturing according phase continues primarily GMP, or Practices,

higher basis. from XX-month Our million and active an Revenue second the increase trailing in on quarter, a average quarter growth was quarter, XX% revenue Clinical second Solutions strong per increase $X.X the a customer. the revenue in million was in to XX% attributable $X.X XXXX primarily of

We in the also observed of increase active customers. an number

was to in the second Gross Turning $X.X Gross from in margin second to the for the XX.X% up quarter, the $X.X compared million, quarter which profit of million income quarter of XXXX. XX.X% quarter the was of in statement. is second second XXXX XXXX.

a charge of primarily reserve the quarter were to costs and of compensation quarter million, headcount, recording XXXX of from the margin expenses the to compared $XX.X Higher second XXXX. and was million increased expenses. labor XXXX. to second marketing quarter second of gross costs Operating impact million $X.X margin stock-based expenses gross the related Excluding of in second transport an in in Operating excess quarter XXXX. additional for $X.X impacted sample the inventory, XX.X% overhead inventory related

We key members people of the invest critical the the to in success, long-term continue to sales marketing, addition to including our people and near teams. R&D, and IT and

for the XXXX was loss As million the company XXXX, Adjusted second million XXXX. of share EBITDA, the compared second or XXXX, of XXX for per $X.XX million the of December million June XXXX. negative a to second share, quarter XX, $X.X per second or Net net $X.X of compared of from quarter quarter for negative XXXX. to XX% diluted for $X.XX up quarter of non-GAAP loss XX, $X.X a measure, $X.X was had the associates, diluted

balance Capital of The new highlights. went and expenditure second flow quarter the towards million cash large sheet quarter for in to $XX.X of second compared quarter our the majority was in million, XXXX. in $X.X the spend facility. Now second

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

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

balance the sheet. to Turning

and in As $XX.X we of cash million gross had and in equivalents, June debt. XX, cash million XXXX, $XX.X

help be facility planned This million. amended on shared financing million it the at to and draw amount took by closing strategic a ensure end May, in I our the of capital to at of in We to quarter existing our organic we'll $XX May, the new to $X.X $X.X first increase will growth October. million $XX our drawing call, execute plan. credit under was an priority available we have additional As million domestic we a

Turning and to guidance revenue outlook. our XXXX

priority XX%. new GMP we our relative drive Concurrent of to our invest sample revenue prior Clinical in facility approximately revenue product least expect guidance XX% is we midpoint, million. categories, revenue the growth we to outlook, Essentials of Solutions of XXXX, assumes to respect pace strengthen our now opening future with while are and excluding and continue change guidance the $XX will growth Our new XX% approximately forecast, in support With the the transport. Lab this million $XX actively at of growth slowing capabilities. that revenue compared hiring demand, year-over-year as to areas to At of revenue

positioned well to strong Our our and balance Stephen. to turn capital. us capital needing sheet without raise is the growth and call with plan our execute flow the cash back are to I'll available facility, credit positive to coupled that, under achieve additional With we

Stephen Gunstream

Thanks, progress with Matt. opportunity are quarter Overall, our pleased for against made were in the accelerate and novel ability our growth customers introduction to custom-made we our The our to performance and unchanged, short second reagents fundamental help times. through the and strategic XXXX X,XXX remains priorities. we unique Teknova smaller with our of liters manufacture confident than ability therapies turnaround volumes we

Our strong, execute capital and to strategy. to our we we have sheet balance the remains need access growth

now questions. will We your take

Operator

first Cowen. Masucci comes Max with question line from [Operator our instructions] of the And

Your line is now open.

Stephanie Yan

is Thanks congrats and question on for great quarter. Stephanie a This for on taking Max. the Hi.

your Stephen, So question first guide. my on is

customers due range into both some of supporting provide low assumptions you're guidance taking to on early bridge what your and lowered launch ends how the biopharma to purchases. details just of us your Can stage high-end to guidance you more range? you the So

Stephen Gunstream

that, to Yes. Stephanie. talk to happy I'm Yes.

the we $XX As $XX range from just the to million. comments we you've lowered and heard million guidance changed made, to

I the environment that Looking higher or things reasonable external today, range affect whether we -- really the could here. the of the that XXXX. performance would in move towards the the that's feel at end we book a depends end on for lower say order range

environment. comments, believe we lot is of due the this in uncertainty markets As the we our to in a capital said

think if environment reason, but push that the some the in gets towards the larger would is, I resolved months. here the lower higher guess, in there coming I there we would be for out orders, reasonable range based So, how know of that what quarters. But be dependency over on And to is a we We have come a us would more of any the the if come several target the worsening that next is towards end, expected than expecting might range. on we say some what midpoint otherwise, now. in end

Stephanie Yan

That's helpful. on that. then Understood. And just a follow-up

on that So only your the confident deferred coming that biopharma clinical deferring from being solutions. in based they it but or the And like call. made sounds purchases customers sounds you're earlier and comments essentials like lab it you purchases are from the the early both

to custom the or So be be are products. for time purposes are additional are with for there color hear, for Are being not necessary I'd products deferring would they their Any curious programs product especially trials great. that seeing being. the halted deferred that running

Stephen Gunstream

No problem, Stephanie.

yet the So largely lab reagents. is customer clinical-grade agent in We've essentials a – in we these to preclinical for quite with bit not clinical And need remember, where from this we're do that in believe they them where side, phases, all had custom transient for nature. doing of perspective, do development a conversations we the customers.

and in customers, our believe we're early they're stage Solutions uncertainty the based of well, to which is point market. And exactly Clinical due that at largely where those so which not a saying, as on a timing, the are are it's which we sure combination basically in

And our work products our in with conversations are timing and them us. through. and their pushed so of are their excited with orders of continue all the a about both It's to conversation and of just belief those to until with matter but services actually those,

Stephanie Yan

then it. more. just in could And Got one helpful. I Thank if That's you. squeeze

or off your in and that you Clinical new Are want better GMP transitioning offerings right your So expected. offerings is Solutions, than customers bat? RUO GMP QX finding to than existing finding progressing the your expected, we are customers business are nicely GMP that came from your you higher

Stephen Gunstream

we say, I’d both. have

we customers an through. that have Matt the that of have we been but customers, pipeline also in time progressing mentioned have now some increase clinical So are total number that the as in those for in call,

for that seeing of get XX last to up are both customers kind need for forward. benefit these set them they this many customers been with case. the And in remember that six we we've to the are so of of And working scale the months going

kind all works, are pipeline time. and in over So of to the these that migrate

Stephanie Yan

all Understood. questions. taking Thanks, it. Got for my again

Stephen Gunstream

Thank you.

Matthew Lowell

you. Thank

Operator

Matt comes Blair. line Your with William next from question the Larew of

open. line now Your is

Matt Larew

Hey, Good afternoon.

you pieces together now last to the were little of many here Just beat ways. put trying larger obviously, beat several your two a peers bit because reported quarters, in

of what's space. both step down business going to be that year-to-date seem your guide pretty So the out the on, with with and

So can stage what base? tell customer customers biopharma your exposure us and early your customers, revenue percentage you is of the perhaps to by – both just of number excuse me, of percentage

Stephen Gunstream

We're not to general numbers little a bit in these going Matt. can of exact but things, I you to terms, the disclose talk

first believe -- I So at XXXX, if customer end we onboard the in GMP the we remember, reported our we company, XXXX. And you of have

Matthew Lowell

XXXX. that With

Stephen Gunstream

XXXX, And active end of XXXX. clinical reported at Sorry, then the we customers. XX

think total Clinical been basis, of Solutions to in has very clinical our revenue -- of of And trailing timing so X/X the at our those a be -- those when now becoming their on XX early pipeline. represents XX-month that take nature, the customers. have -- the look revenue about you about a stage can And onboarded by the if development you is

nature become medicine cell more here so, therapies transient believe strategy will we're and more my the a the growth And capital that you be our market remains resolve and the predictable believe there's to it's is to said we unchanged. are itself good We a I run now wave overtime absolutely kind call believe I gene that issue clarity as earlier that's that markets there. way in next timing guess gauge right of in to in we the these going in the and -- think here, and just capital therapy for -- long environment. of in exposure

Matt Larew

specific. Okay. of those you back XXXX? Matt guidance does are during do large the maybe more these indicated coming -- anything the any guidance, a the then deferred, on look have piece orders be assume And bit that orders -- that customers little any Does of customers these

Matthew Lowell

not of our No, out current XXXX. those is that -- deferred no. assumption We're are

to continuing we have. develop Of with business as always course, teams our we're

pipeline certainly at to that year. additional situation the in me, So, some we're on what quarter, be right coming there would be what come exactly full But some, year. at those be variable the back guidance But through excuse there's or in And right could XXXX. we I this output could are as midpoint delivered no, assumes the some, point. this Stephanie, that obviously there might options, see happening not there's the orders now, possibility in is mentioned static for see fairly this the now end of or we new assuming QX, there for depending that our with very orders there to obviously, earlier the range

Matt Larew

the finally, deferring obviously, been big prop some I'm less piece of is then are expenses. curious turnaround cash exchange value the And of facing that runway, historical Okay. the have just and short times about customers now thinking price sensitive. customers

you're may willing I'm to cut at the tolerate what the lead times from an you If conversations might cost. setting those and purchases curious how for deferred just expense competition, be they back? like them look longer with

Matthew Lowell

at that all. honest, come not be To has up

us products I more important loyal think But versus may cost that when the we base. time, think of the you have about cost think of be than customer the it's I quickly. very materials buying a their from much

they that forward. soon capital So and as drive have to their as want

soon the those of we've spoken placing us. be priority. timing time resolved, that as indicated essence has for And just this I is them orders one that they be as And will think with that a piece. with of and be is that them a will going to -- we gets every

Matt Larew

Okay. you. Thank

Matthew Lowell

Matt. Thanks

Operator

from Jake from Stephens. next question your comes line the And Johnson of

now open. line is Your

Jake Johnson

XXXX Maybe pushed questions element guidance. you looking about of there lose where in knows of have afternoon. where any kind orders general be some this on orders delay these kind have could we talked kind maybe XXXX versus Is from catch who kind how on I orders, orders this think out of more you of or like, as you what going year good of kind the is these do Thanks, of maybe just plus, of first, we out. next but of about a a these timing may you some up, preferred catch-up at a them? deferring look growth, a have losing to

Stephen Gunstream

Yeah.

have yet from these customers. It's a XXXX, customers. is first, this of through. So time. that perspective on we matter again, think is had obviously, not just have the I we'll do of over-and-over we're we where the guidance Like I conversations but with giving answer no. at lost and to said, they've point we And we're think their what priority a going And this in all indicated get of time,

transient likely do we nature. this a think So is

or opportunity see But the are are in right -- a driver build of market not, six then funnel. that think a that growth we're is also provide validation that XX that customers, cannot whether there XX and XXXX. as we of size perspective, at that and spot from We continuing So right? know, pipeline additional that that our and still lot portion you and I they customers moment. a Now efforts in release see the these say yet. course, is And I will providing that, of that to an others we a to from do small lot take backup We for therapy something market our gene months yet not to cell here know. in of still, a as and cannot overall a we're

Jacob Johnson

to then, And but you Can there? Clinical Thanks lumpy the kind maybe about apologize Okay. I talk lowered that essentials impact of some orders on things, of you talked Stephen. I Solutions you it. also being think side impacted you if for about lab the that already just segment, spoke the And outlook.

Stephen Gunstream

Sure, no problem.

scale of catalog side, underlying the a continues -- this pullback And the start different custom clinical time. bridge working because some and been side, at we're historically have piece significant now we again, larger necessarily that's That Lab for customers and that's a preclinical. United institution order side the Essential say, in up base in specific between, States. they the there's reagents where Life the Science on a the every It's major uncertainty than where what to the discovery period the growth the where exist are On of product get that institution and business, product to do side catalog on if Teknova of business they're there's for into to those giving seen. there in through

that deferred. why that's range is in a Essential so be could And Lab bit little that also things where

Jacob Johnson

current question That sense, then, we're about guess, And Okay. thinking kind I and makes in. last environment Stephen. ahead is of just the thinking

seen pulled kind on harder kind You've Clinical the in but customers Solutions, customers, your ability of of I on add some customers terms new just people Is to of in to line, thoughts get back in of winning spend, efforts guess, your new there? across there? existing particularly the finish it any change

Stephen Gunstream

Yeah.

increase I the we've as this offer moment. come them customers. timing market. those in not same. clear proposition We're But releasing call, value to like through. the we talk clinical what's to earnings when said, to indicated we is customer that Matt talk is of There an see the when So actually available remains obviously, orders in recognition And on we what and number those versus of about, total numbers do built at the the a those got

a not at not a So actually, we're of seen point. to going is to -- interested matter look, all moving in saying, be Teknova we're It's we time, someone going at at just time. this in point for have this to change

Jacob Johnson

for my Perfect. Thanks Stephen. question taking Okay.

Stephen Gunstream

Sure. Jacob. Thanks,

Operator

no are our queue, conference for this call. in participating. you all concludes further questions the there As Thank

a have day. pleasant And disconnect. now may You

Alpha Teknova (TKNO) 10 Aug 222022 Q2 Earnings call transcript