Earnings call transcript Q4 2022

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Operator

Thank you for standing by, and welcome to Teknova's Fourth Quarter and Full Year 2022 Financial Results 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]

I would now like to hand the call over to Senior Vice President of Marketing, Jen Henry. ahead. go Please

Jen Henry

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

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

information SEC. earlier included in today, Additional various described the issued are factors they Company's Company fully more the these concerning and in risk the press with is the release filings

views, the by Company update not itself reflect change information, its except Company's could forward-looking new of commit required comments as does and events law. result the or factors, statements, to future current which obligate or other a Today's as

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

GAAP During included non-GAAP which will this non-GAAP of use measures financial certain to Teknova's issued posted call, is www.sec.gov/edgar. of release Reconciliations results. measures at therefore of are that press in our afternoon, the financial we we to this and website

financial slide as It non-GAAP Investor website to be section Company that Please companies. today's only named accessed this on today's prepared supplement These non-GAAP Teknova's and has to remarks. in may by superior also can a prepared financial other with a accompany for used be posted of as from Non-GAAP on supplemental a presentation financial to should advised webcast. the deck and or considered Relations the be similarly measures always measures not as in financial substitute differ GAAP. measures accordance measures

I call will over the Stephen. now And turn to

Stephen Gunstream

the vaccines positioned and quarter of and joining lives. of everyone, Jen. leading fourth for longer, as call. Teknova is advance therapies, with accelerate life earnings industry to Thank are a us thank the custom our We full to and turnaround Good and reagents year to will you, discovery people their live sciences novel products afternoon, producer for for help customers XXXX you, reagents critical scale diagnostics with manufacture times they commercialization. our from healthier molecular short high-quality introduction that

effectively plan. presented I'm scientific capacity position Company in and we XXXX, for accelerated excellence, report expansion, a In sustainable, pleased strategy innovation. to growth that through executing commercial to we are to the that investments

new our research-grade end GMP on manufacturing operational became production for modular is mid-XXXX. the facility First, state-of-the-art at of production for by track XXXX and

automated including modernized highly In will the give the us system updated utilized. introduction supporting fully product the business new capacity of when addition, equipment. ERP plus to existing We believe an years manufacturing a deliver our these investments million annual to in for revenue and approximately we've $XXX scale infrastructure quality come, our system, reagent to infrastructure

commercial investment. hired what sales commercial onboarded our from report fully operational pleased the GMP-grade marketing reagents. automated demand Salesforce.com, e-commerce marketing as an and engine. back-end perspective, of driving and have associates custom and Sales processes including for implementation marketing systems been and are such and already two I'm at representatives Second, field the Teknova in beginning now and I XXXX, to was are first we of and dedicated a

purchased GMP-grade custom These XXXX. our XX% to represent GMP-grade revenue. custom compared into our custom gene Today, our and/or Early products. and/or clinical accounts XX demonstrate customers annual annual approximately and Of XX of therapy those, XXXX. compared cell in XX% today therapy in who our generated revenue of gene approximately our and solutions purchase of cell than XX% ability XXX catalog to customers reagents reagents is from customers and indicators to move more our now

Lastly, a collaboration access program arrangement we pipeline. today, the with access note, of to development, products product with an two part In which on Sartorius, we several we customers purification science we help AAV intended customers early international novel Separations, program. our On QX, life the Sartorius the now that great front, have in their introduced our announced new process gene improve made group, for related and is therapy our enrolled have advancing BIA one of early processes products. to progress R&D streamline downstream

what provide in will on trends but of want some give and the I are the some specific update Matt market guidance, on to see anticipating XXXX. continue in an our comments we we thoughts on to

With new certification the positioned of reagents of have commercial this our believe recent strategic middle for we teams, expand well the to we in anticipated our investments marketing and GMP-grade the facility are made produce growth. and we to future year

by with next associated headwinds however, For optimistic growth we remain markets. the other be several demand long-term of to we expect potential anticipate quarters, about limited offset early-stage biopharma continued customers, we in the partially early-stage biopharma. Nevertheless, which from

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

I Matt discussion call hand to a the will of now the for over financials.

Matt Lowell

were Results year everyone. the in fourth and prior anticipated the for Stephen, challenges than quarter as XXXX Thanks, lower good given markets. afternoon, of

full the XXXX. However, year for results we solid delivered of

revenue for XXXX, for million quarter reminder, in full the $XX.X for XX% launched XXXX year. to product quarter an the million A of million Transport need from Sample of $X.X $X.X and $X.X excluding fourth tests, was XXXX latter quarter XXXX longer or Sample part in fourth full of address the the COVID-XX of increase and no product. $XX.X urgent XX% million the $XX.X the for manufacture from and decline for million, the Teknova Transport. the way of the year we XXXX Total fourth the was a Revenue year XXXX, for market million

RUO $X.X in revenue fourth the or research only, X% market, a products the fourth $X.X quarter, Essentials million XXXX. in and both products. increase of Essentials are custom Lab and use include million was the quarter from catalog targeted Lab at

XX% million, from year XX% to for Growth average driven in Essentials a and $X,XXX increase the the customer full in was to a customers the of revenue For was full million full X% XXXX. increase Lab the active per by year X,XXX. for increase a active year, $XX.X $XX.X revenue number the

in Clinical are quarter, the as a manufacture therapeutic development products revenue diagnostic Practices, Solutions GMP, products. the standards XX% Manufacturing or XXXX. customers of by in million fourth our decrease of quarter from Solutions are to primarily or and and fourth million made according used inputs Good in Clinical and components $X.X was the quality $X.X

full million, the $X.X XX% Solutions full $X.X was Clinical year, increase the revenue XXXX. For from year a million for

in XX from revenue our grew revenue We $XXX,XXX. adding Clinical XXXX. Average new XXXX increased active in customers, active XX to by per to customer in Solutions growing customers X% XXXX

purchase as customer up We increase their volumes. over time to they ramp per expect revenue

this mix affected by metric However, less. can of be customers clinical newer the order who typically

to Just orders as Lab revenue a to be the due compared Clinical Essentials, category. quarter-to-quarter can larger Solutions average lumpiness there in this reminder, in

On fourth XXXX $X.X full XXXX, was million down the $XX.X revenue XX.X% full for compared for of for in to for XX.X% the is and million Gross of compared fourth year the XXXX quarter year year year of was of quarter which the XXXX revenue the full the million the XXXX in to $XX.X $X.X of for margin XXXX. profit and Gross to XX.X% income million in XXXX, fourth full the which is the XXXX. fourth from quarter quarter from XX.X% down statement.

revenue gross decline costs, higher in primarily labor resulted full in significantly also fourth and quarter fourth the XXXX. the which headcount Lower quarter margin of drove impacted both the Additional in XXXX. year

due impairment related marketing headcount, and to for the quarter fourth million fourth of compared for to $X.X the fourth $X.X recorded to the quarter expenses and $XX.X million expenses the of additional long-lived as year XXXX of to XXXX million were to a increased XXXX. XXXX compensation Operating well onetime full year compared for million for quarter as $XX.X costs. the XXXX for stock-based noncash charge expense million the Operating full fourth during assets of quarter $XX.X 'XX primarily

impairment for additional XXXX. to $X.X million the during the headcount, stock-based due long-lived fourth the recorded onetime operating related of full XXXX, charges, quarter year as expenses expense costs were $XX.X to a third primarily XXXX Ongoing marketing recorded and the due million of quarter impairment charge assets to a charge compensation Operating well noncash goodwill increased including during up costs.

impairment a the completed our manufacturing related to attractive of XXXX In decided cease the longer equipment, to quarter of XXXX, market primarily budgeting charge assets segment these Company, and onetime capabilities Company carrying further fourth we $X.X our therefore, development a process the related we the million result, serving best machinery noncash as a and facility. considered use and certain no recoverability of for value new long-lived reviewed finalize The recorded assets. these suited and as the of to of the

million fourth compared XXXX. $XX.X million diluted per million share net $X.XX year XXXX full EBITDA was quarter $X.XX of XXXX. for for million the quarter year XXXX the Adjusted million $X.X or Net diluted $X.XX to the was the $X.X for of loss for for XXXX $X.X for non-GAAP to $X.XX fourth full loss for or negative net compared EBITDA, fourth or per the fourth negative Net year was a loss full million negative XXXX. share the million full a the $XX.X share of share to $X.X Adjusted diluted negative of diluted compared $X.X loss XXXX. quarter a XXXX quarter the $XX.X per was or compared of per to measure, million year for

expenditure balance not construction year in to XXXX for the same full new Capital highlights. compared substantially although $XX.X for to $X.X facility were $XX.X production went $X.X expect for the XXXX to some in We to fourth the of majority with compared the facility to XXXX. produce the sheet and expenditures cash quarter quarter quarter Capital production of level for XXXX. were facility. million the of the are fourth million On million construction still towards spend capital GMP-grade year make of the complete, of products. now do there moderate flow qualification full is million XXXX new The of of the expenditures associated completing XXXX investments our fourth

operating and equipment, measure, cash flow, compared XXXX million XXXX activities, $XX.X Free and to and expenditures as primarily cash compared to used year due we of by both a higher for quarter $XX.X full capital fourth prior year negative was quarter cash to million for fourth negative XXXX. was year property, to compared for the for in purchases full for year non-GAAP decrease which the in the Free full significant XXXX. XXXX. the plant define XXXX This in of the million activities period or $XX.X was million quarter fourth used increase flow $XX.X for operating negative provided year the the full less a cash

balance the to sheet. Turning

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

XXXX our On to outlook.

providing respect to XXXX. we Solutions midpoint, in XXXX This to product XXXX. to flat revenue growth revenue XXXX. and roughly Clinical Clinical are growth million of the We this to expect compared includes XX% as forecast to $XX grow revenue X% Essentials of from Solutions compared compared between Lab to customer total the million. Lab that products approximately will guidance revenue product a XXXX, assumes shift significant a category At guidance assumption to XX% Essentials to $XX categories, be With to

believe to to in the the enacted we a of that business commercially the over are revenue, our measures XXXX, years. third costs. operationally contain investments prepared several we In since five We completing seen quarter two-year slowdown of response has have planned to scale next period and strategic

that savings. will nonrecurring capital reduction the We of anticipate of flat annualized resulted charges. a into force lower generate XXXX, in million. what February approximately workforce for costs The XXXX, the we expenditures our $X.X and reported first and going completed $X.X quarter operating related we significantly XX% approximately excluding million compared onetime to expenses Notably, affected in in XXXX reduction to of approximately XXXX in when in severance year full

XXXX. through shareholders to path Therefore, the balances for future cash also value of capital ensuring investments allocation $XX negative creating that growth flow approximately while to are targeting strategic committed are for We for million free we profitability.

to execute position to us our comfortable addition hand, on available needed under have investments liquidity are make our we In strategy. facility. growth we In funds additional sum, allows our that cash to credit

With back I the will Stephen. that, call to turn

Stephen Gunstream

help health. fourth our outlook executing quarter human therapies, committed we XXXX Thanks, Matt. Overall, to we to strategy we made progress improve our were of with our are year pleased performance products customers that and the introduction on our markets full for priorities. end remains against novel strategic The and other accelerate our and positive, diagnostics and long-term the

We will take your now questions.

Operator

Joseph Cowen. from question line Instructions] Flanagan of [Operator first the comes Our of

please, question Joseph. Your

Joseph Flanagan

This taking for is Joe Thank on for question. the Max.

quarter amount XX% it's came QX. really XX% saw a ahead encouraging but Just was first you wide the is on model, what it decent down to Clinical Solutions, of to year-over-year, And similar growth in range. but that pretty a guidance our

in this So in in first is range. growth low I the confidence giving takes of to you the what to And guess, here -- XXXX? high the fact or are from is get us that end of the return puts and some

Stephen Gunstream

Thanks, really sure think three aspects From different a make to confidence start Matt, I there's Joe. and, in. I'll jump here. perspective,

there been out have acceptance our in in forward. customers, and is, with the we're moving new are first customers now funding, operating of as has where such people amount normal funds when working The and talk funding the they there of they I a we think to

piece comments of have second said from organization, going. up purchases. commercial migrating we in XX-month and with in terms large there's a moment opportunity space, that engage customers and a with the very ago, that cycle is we and us a marketing a and their in a now The see of as full that, there small we time And start up part the we're our are getting then that scaling we and about

for to entire we And business. half as the is we said, like the funnel, look see return the that XX% so we plus our back when where back feel we at that,

Matt Lowell

to And add -- purchasing from remarks, are is valid, significant products that this we which all to I'll have I a that mentioned is very in Clinical just comment, my that customer Lab Solutions. moving Essentials

transition part Clinical accustomed that the clinical have Clinical catalog from business, Solutions. moving consistent of do the which strategy our of is with we and good Solutions So our happening, for customers to our business

these further we're the on might we us that give those dependency that some timing I to variation of particular, expect of And of clinical course, of back said, would half larger Stephen in anticipating what the lumpy due coming say of in sort when what orders. some is there orders in to will year,

feel the that good business range provided. that that's XXXX. behind So reasoning some about do going we But we into

Joseph Flanagan

quantify could much you've seen last And great of really picking of if to environment of a or And maybe about the larger Great. funding amount quarters. I the hear curious quantify up. that the the thing? you two the was how trickle could deferrals back roughly just more like in into half versus XXXX

Stephen Gunstream

Yes.

pull of that that. those. out guided we had We exact call, actually the some size back customers. therapies push-outs of as numbers QX as these half of as to were strong And first do is in some down things of reducing a I as very half aren't XXXX. number far type think and that deferrals X I seeing if of our of those of and you well remember these many going what the But for like say we then And the can

has But of norm for like of a investment. continues for in said, I area that space, kind these cell very therapy of the area and many funding the I the now to exciting particular, gene been, in new really customers. think be is primarily

going at much And to that new moment we're norm, here. this so and think as is it's the not right the deferrals I so from now, build

Operator

you. Thank

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

Matt. Your line is open,

Matt Larew

outlook, is then or be Essentials any sort sense for And Could of excluding with give customer first growth there bit than of lighter a half others historicals, maybe what Lab it you second obviously, you seems even what in us for the You would are to that outlook space conservative but a that shifting? embedded your dynamics? both, in sort seeing be characterized. because half have the customers referenced

Matt Lowell

Lab And you're Essentials referring the to Matt? piece, specifically

Matt Larew

That's right, Yes. Matt.

Matt Lowell

Essentials growth we're in think for numbers giving the Yes. obviously. related without think I the more to specific Good. for that. like respect this a I you -- But would rate not would Lab growth Yes, that Yes. normalized customer, exact Lab the Thanks see look question. rate with customer, what that the Essentials with to

Of would tough comparisons the in just the of general, level are course, of saw in the some XXXX particular first we in year. having given in XXXX, say, I to activity that more compared half we

for kind difficult So adjusted I think on comp, that basis a look that of with Lab Essentials historical would the norms in line on fairly basis.

Stephen Gunstream

customers, And they migrate clinical. a just add to those to catalog of Matt. custom here, color Many from little

is lumpiness historical custom those of some that number. so in And

Matt Larew

year-over-year. Okay. just about I And flat then referenced the obviously, thinking you OpEx, mean,

think moving of solutions, into On sort But clinical now new the brought obviously, you which I increased help. gross the and towards competing should weighting online. factors volume that given facility margin side, capacity you're

So we have be. like was fourth thought quarter, it I would think would

expect So can margin some maybe throughout year? you to the us evolve how you give sense for just gross

Matt Lowell

be one. I'll that sure. Yes, happy to take

sure, going is the the opening result impacted margin new gross now. of For as you mentioned, significantly to by facility Matt, be

last reminder, $XX we that P&L. to facility on million the we into over roll two depreciation the and to close through out a costs starting are those years, spent As

Some started the quarter in last of costs fourth year. those of

Others will this be the of coming course on year. during

revenue first I part low today to the fact in be of gross year providing range. might And the based XXXX that seeing of picture particularly say expect in as year. second would the improves on of kind revenue, and of in the that improvement in the year the that outlook XXs you expect, I So versus the the -- the second the here half half as for margins and updated would our we're for year,

Operator

Thank you.

next Johnson of Jacob comes from Stephens. question Our

please, question Your Jacob.

Hannah Hefley

how about growth with in you'll Could This continuing to and for business? out you the taking the of is balance in business talk on costs invest just Hannah Jacob.

Stephen Gunstream

we our need have managed we the to at Hannah. make that long costs that growth Obviously, sure sure, path drive this, as our forward to Yes, we look we term.

And a here is so everything balance.

in make done at XXXX we've our we put high manage for sacrificing And position sure any what capital, not we've make to scale did the but through forward. what see can for so is same areas those that to XXXX And in our is going of a costs ourselves business, in what to aspects. long-term we strategy we're growth you we not our the and reduced sure the growth back we're cutting time,

Matt Lowell

in in have very to the about to were we had investments like I'd made on just little invested at some we we last force and where and that since that areas where research careful reduction will went as expect those month I we as possible returns through as marketing process, we that add the comments sales in look naturally that be affecting the be providing and development. those and February return,

to we there cut generally savings. the back those take investment said there, which cost you growth do what where to But board. future balance Hannah, look areas, actions cut maintaining exactly other to achieve and of across areas that and So, to could did minimal versus in costs afford made we the changes in is we've

Hannah Hefley

how Right. about interest to talk there? facility to new been now of Are leading up indicators there And terms point the in customer and just any has in can you demand running? it's that

Stephen Gunstream

to solutions is larger And customers a for clinical around material. to everyone facilities this significant And so that really in is want understands of new facility would now product. So, then research-grade And the production our doing many manufacture new facility. right you new their just it these manufacturing the certified effort. GMP actually efforts product -- up for is are

in facility. they that the is of So, audits that do timing coming with getting for when to us, start their done

at been the through commercialization. recognize a handful site that, do is the have letting of or engaging is to I they of and seen That way part go be And know are on is and trials facility and with necessary through clinical the the on desire customers, can coming, customers strategy there this encouraged interest our to that's that think all commercial and company they have site. look them have that extremely them when these said, that I that think definite to

Operator

Stephen this the I'd to call like to Gunstream At Sir? for turn remarks. back closing time, over

Stephen Gunstream

and year XXXX investor thank us at with look conference. you the We you for call. you Thank our for to Great. next joining full earnings forward connecting

Operator

for conference you today's concludes call. participating. This Thank

You may now disconnect.

Alpha Teknova (TKNO) 15 Mar 232022 Q4 Earnings call transcript