- Earnings call transcript Q3 2022

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Operator

Good day, and thank you for standing by. Welcome to the Teknova Third Quarter 2022 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. to President conference of like Henry, to now Vice Senior Marketing would hand over the Jennifer I at Teknova. ahead. go Please

Jennifer Henry

Thank and and your Financial Chief Officer, third then Teknova's Officer; and With take call Welcome will Teknova's earnings Executive Stephen operator. Chief Lowell, are President call. today's me make quarter Teknova's questions. Gunstream, who Matt conference on you, XXXX to prepared remarks

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

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

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

Stephen Gunstream

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

reduce the Our grade and to from our turnaround to time short enables clinical to with ability times research customers discovery custom impact. clinical solutions manufacture

which attractive quarter, large by growth the our suited. were We from biology customers well custom base. are to orders see healthy received across performance reagents end in we broader high-growth liquid this markets customer growth custom-made our and revenue As demand demonstrated encouraged spaces biopsy continue we our to synthetic for

quarter. in particularly demand did gene of and expected, a our see cell which negatively revenue customers, early-stage the impacted softening from As biopharma we therapy, our in

this we what optimistic However, to current be believe remain market headwinds. we despite about

of During modular QX, state-of-the-art we advanced the new our facility. construction manufacturing

validation mid-XXXX. ultimately to for manufacture of of by the continue This million track the meet the operational demonstrating products for and an work $XXX research approximately end-to-end we producing first to facility, the functionality sale on wet GMP-grade very of facility remains goal After fully will to will capacity [ph] to opening the product XXXX end be revenue our completed successfully us we fact, when the activities in platform. give utilized. by grade on our additional manufacturing of production In run

On the for R&D gene interest out access an to with Last products therapy the development. participate. front, Mesa, novel great numerous streamline We're downstream pipeline. intended Meeting two already in Cell seeing month new both our we product advancing at we customers have introduced made annual the Gene & to products early progress reaching process on program

help challenges In addition, to Quality earlier we bio Water chain address based today, on product supply WFI processing. customer in announced line new critical a demand,

some guidance. to the about what specific heading hires have the continue We significantly optimistic who XXXX. potential coming growth trends are on of critical deferrals and grown customers offering, an all plan years. since dedicate of biopharma and whose long-term on anticipating to want public this associates Teknova give orders our execute our will to QX to required the want We early-stage thoughts has of will onboarded we dedication in and Matt the directional recent our from our provide in But nearly all I on our large are critical thank has success. the to been remain some segment. I update over - comments into be seeing despite we we of

while late customers, these orders we mid have to next deferred with including begin pipeline that additional revenue engage may generate with to to those a strong establishing opportunities who believe continue year. We of

in offset we a limited continue other expect by For biopharma several we markets. however, early-stage from the headwind be purchases, which quarters, to next growth anticipate to partially

new planned our investments of our teams, to our building are X recent that have our made have certification commercial and the marketing anticipated period the on the commercially will we focused we and reagents year to over we XXXX, pipeline. Heading facility next years. has commercial accelerated mid of prepared investment business into scale completed X-year [ph] next expand critical GMP to produce With a

expenditures base going decline expense operating in result, anticipate moderate a forward. a in capital increases we and As our in comparatively our significant XXXX

hand to committed to are creating I profitability. for strategic growth, investment Matt capital value a of for also allocation shareholders will balances through that discussion the a call to over the path ensuring financials. for now future while We

Matthew Lowell

XX% Thanks, everyone. the Total On XX-month excluding results delivered million third We was of the the of XXXX. for total period. basis, transport XXXX, million the third increased revenue, $XX.X solid good XXXX. quarter XX% third XX-month from for Stephen, revenue in prior sample quarter revenue afternoon, quarter of $X.X and a over trailing a increase

additional small XXXX our or of growth. rates, longer products XX we market good diagnostic. latter this active both and million XX a in Essentials product contributed trailing and part of a increase quarter, the customer reminder, increase in the launched custom the quality XXXX an we base in or the Given and urgent a practices, compared product. revenue are XX% to prior the third made and By need for Lab to million our products. clinical to large catalog revenue a and Several Solutions months sample market growth variability trailing period. commercial per in research the of Clinical according to for from or months quarter. was by metric active or number used potential manufacturing last COVID-XX primarily standards XX-month this custom XX% Teknova are GMP, manufacture release basis. in a track increase our way or to to revenue the believe on orders phase growth the and is overall useful performance third some both and address the Lab drive $X.X quarter include customers strong only, orders the transport targeted Essentials RUO, over growth of at products tests, large no in customers use development the the XX-month Revenue average are $X.X therapy reflected of revenue revenue

XX% $X.X Clinical third in third from million of revenue Our on XX-month XX% the trailing a in a basis. and increase was quarter Solutions XXXX $X.X decrease the million a quarter,

Even in compared XX of active XX-month increased the the prior period. has the the quarter, customers number as down was last revenue months to in

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

performed margin of due quarter impairment XXXX quarter Additional higher which drove decline gross million interim during resulting well the that primarily capitalization of in marketing expense third onetime compensation quarter the recorded stock-based a charge impairment Teknova's $XX.X market costs, of third goodwill and declined the and quarter increased of testing goodwill charge. the therefore, to $XX.X to The of a headcount fully in non-cash labor as during $XX.X the resulted stock XXXX, impaired, were company, price Operating additional costs. the $X.X in The quarter in XXXX. therefore, headcount, was third third of the expenses to million company's primarily market as common significantly for determined expenses in compared goodwill third Operating XXXX. million and million XXXX.

share $X.XX onetime $X.XX the range XX% quarter majority Adjusted marks expenditure to new third company towards quarter and quarter a third operating share for of excluding third impairment to of XXXX third of went $XX.X $X.X Capital the highlights. EBITDA, spend June XXXX, of September compared or or was net third but in for loss quarter was quarter as the associates, million cash compared December XXX quarter up in XXXX. XXX to On million of expenses of of million sheet for loss for of to million, the the the in charge. measure, non-GAAP diluted $XX from balance the The negative XXXX. $XX XXXX, Net diluted $X.X As per compared This million third the $X.X million from $X.X which per XXXX. XX, associates facility. the between XXXX. quarter the flow third XXXX XX, down our million consecutive in had of $X.X million was the XX, and negative quarter third

the negative prior the third expenditures quarter compared decrease non-GAAP in compared will a provided QX, facility. and have to activities, production measure, and plant year Free in EBITDA great continue in primarily also production by period to significant This or was expenditure. the adjusted due end cash make million as which we XXXX. we define related to of the to increase $X.X capital equipment, negative to By majority incurred flow, our the We purchases quarter in third new was in the of lower current operating capital a cash investments less $XX.X facilities. used property, million of of

balance the to Turning sheet.

we our our XXXX equivalents, excuse me, outlook, outlook to outlook. XXXX, and and - had XX, revenue XXXX turning $XX.X $XX.X cash for to million in And million gross guidance September in of debt. and As our cash turning XXXX

the and At to Lab million. Our guidance to updated $XX is XX% approximately million expect of lines, business growth this revenue as revenue sample least guidance XXXX, compared of XX%. Clinical to Stephen. revenue $XX approximately transport. I'll assumes XX% midpoint, call excluding we revenue to year-over-year the of Solutions growth at that, turn [ph] growth respect With back Essentials With now

Stephen Gunstream

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

conduct you. Thank comes the At William first We this line time, Larew questions. will question-and-answer of with will Matt session. the Our we question [Operator Blair. now from your Instructions] take

Your open. now line is

Unidentified Analyst

[ph] on Martin Larew. Sam for Matt

little briefly to What made And If And one that bit you you increases? hiring through have hiring a seen you to the has to control that along impact you the see you speak And impacted on the been speak were have it you inflation about inflation? mentioned not, gross Just in to previously, about strategy? company changes I early able any Thanks. XXXX, be know margin touched it pass a that. have might how costs. in fourth you quarter call. do price although successfully from question. impacting you on little margins? just know your how Can slowing costs labor too

Stephen Gunstream

hand price customers to it to and Matt. so then do I'll inflation an Maybe through thus able cost we and start far. do pass the you From perspective, to increases have our on off been Okay.

cost, of remember other have materials through. can our to You we majority as are in of labor cost well, of itself that most there the which overhead have do we not and pass

monitoring we a So we're we see inflation and comment us, at a do as not very headwind point. sure ready although this are QX XXXX for closely as on sort we to go not watch I'm this of it going-forward forward.

Matthew Lowell

Yeah.

I the cost But part we've just your of hiring my the got market, our hiring say, question - with I hiring, of through think certainly, to just quarters, been costs. from also Sam, our adding grow several related there inflation would we've if as correctly. capabilities. other your I been the people labor that with and to respect also tight last has to perspective, been

both had factors impacted. of those we've So

trend we down slowed were nonetheless. we have seeing the net headcount decision wasn't as where inflation driven actually are with hiring That a total a the earlier We we're but the per to basis. what se. I the it a by remarks, business, down indicated And on compared in my year. quarter-to-quarter is in just seeing on we're It's necessarily

Stephen Gunstream

to add that. I So to want just quick, real Sam.

holding side, million. hiring that We plan. X million execute growth critical to that last for the quarters, to heard the OpEx the about we believe entire talk hires the we need On $XX Matt $XX have you

So gives of of that managing business the you kind going an how forward. we're indication

Unidentified Analyst

guys. Thank it. Appreciate you,

Operator

Thank conclude does program. This Thank the in you today's all for Instructions] you. your conference. [Operator participation

You may now disconnect.

Alpha Teknova (TKNO) 13 Nov 222022 Q3 Earnings call transcript