TKNO - Earnings call transcript Q1 2024

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Operator

Good day, and thank you for standing by. Welcome to Teknova's First Quarter 2024 Financial Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.I would now like to hand the conference over to your first speaker today, Jennifer Henry, Senior Vice President of Marketing. Please go ahead.

Jennifer Henry

Thank you, operator. Quarter Conference First Teknova's to XXXX Call. Earnings Welcome to remarks are Teknova's Matt a President me make Teknova's on Chief reminder, Gunstream, call today's prepared will who and business events uncertainties of we are the With differ. that the and forward-looking regarding subject during your or Stephen Executive that for expectations to call, this and make Financial and may Officer, company, then statements actual cause and the take results those Chief risks including goals financial questions.As Lowell, performance Officer;

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

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

Stephen Gunstream

vaccines thank our Good quarter and XXXX for novel their joining customers a and us reagents you, We we turnaround life healthier with overall direct was molecular than customers encouraged were X% growth first by X% cash versus strong of saw driven specifically customer prior XX% year of Solutions.We with products is Thank diagnostics you, sciences of a perspective, set producer high-quality advance XXXX with of call. Clinical and industry improvement Teknova short lives.We XX% of XXXX revenue the and that that start in Jen. accelerate a customer as everyone, discovery also of longer, afternoon, first no times, that more diverse quarter they for from representing for to live line our with therapies, with our revenue. earnings leading XXXX EBITDA scale help growth sequential to the agents outflow will From we expectations. a quarter fourth commercialization. revenue revenue, our people introduction or manufacture can million $X.X and with adjusted in critical over had

at the on we a capital benefits told, solid seeing our to our provide on in already executing within for the customers of indicator control commercialization. migrate the from All count of expenditures, their we Clinical from confident we've will XXXX.In providing plan remain $XX ahead positive perspective. million $XX to full level, therapies details year a cost and towards our customer as XXXX. our but for efforts top a increase, high line, performance Our started addition are long-term management the Matt revenue Solutions cost operating first to more quarter million continues guidance these

million year, EBITDA prior are or a million full outflow we guidance the Our adjusted well. beat was quarter and executing $X.X to a our improvement of top quarter first cash expect $XX meet over line year.Operationally, for with revenue, we similar

Our delivered in different weeks are new a new example, custom January, processes Xx of X weeks new be of research The able important, substantially facility, months.As than time, successful work rapid the in to buffers We customers facility than placed custom an quarter clinical customer customer with to bag. also that grade less enabling for equipment were the with believe capabilities. deliver allowed to respect on We and to from first orders first-time custom XX regularly customer Most reagents this quality is in needed its new large turnaround in number now is revenue completed and order. other and of in more single-use generating suppliers state-of-the-art we system instead launch faster trials we the particularly the our market. purpose-built of in quarter or order, XXXX. schedule.This when onboarded receive the of products the fourth reagents to compared clinical a management to proved keep quarter nearly combination than the our

Therapy serotypes, Stabilizer. filtration American AAV-Tek titer in capsid when launched throughout multiple the proprietary of AAV-Tek our shown AAV to the yields of testing we stabilizing AAV latest a purification Meeting This Annual we the increase and in reagent. week, have protects XX% formulation Gene AAV the our Cell up processes.After Society using last at product the the solutions, First, & downstream

customizable minimum providing quantities. We access short high-quality also order with times turnaround buffers exceptionally no and launched first-of-its-kind Build-Tek, a configurator custom to

I Ultimately, instead leveraging multiple is by will I'd during in this focus to ship science time Build-Tek matter to spending a research days.We this use, of of needed custom advancing believe modular products leading and a a stabilization configurator with and seeing years. the couple are Recent such moment our buffers manufacturing take biotech enable to customization increased has Our believe in quoting easy platform, is capital, provide been we past design funding iterative experiments. the allows what like their on a over development indicators environment stage mixing process biotech as positive of focused very early my with challenging more support forward. on market and improvements, view engagement previously own on going a of of scientists evolving. preserving buffers.Finally, customers to our outlook how optimistic combined the

revenue Given market a the to indicators we lag about strong think more typically that industry had environment changes XXXX.In between these X-quarter see and we point summary, we towards levels funding start positive a in early recognition, in year. a

financials. years over position in couple will talk over progress we of the we long-term are the call past to and made believe We are excited through about the for success.I to hand have Matt the now

Matthew Lowell

of and everyone. XX% was the we year, Stephen. the increase financial Thanks, for first increase for quarter of perspective Manufacturing compared Overall, development but Essentials the million, primarily to customers X% Essentials' or components Solutions slight each of of fourth first increase too, both standards Results in in the first Practices in consistent the XXXX, have of a in XXXX attributable therapeutic of a and by Lab decline results to market the Essentials' customer.Notably, customer. of Only a Solutions in the the at made are XXXX. modest Notably, revenue was XXXX.Clinical the was the quarter Research million by products.Lab of million customers Lab seen number was diagnostic afternoon, seen first XXXX. the $X.X increase first here quarter XXXX a manufacture sequentially. are a revenue of to Use XXXX. in prior The from in first were an revenue in an used $X.X the of $X.X revenue we quality Good similar products. compared and Solutions we've revenue million Solutions and by Clinical from include an revenue customers to average number catalog Good in delivered number revenue X% of the Clinical as for quarter products of inputs Lab Clinical million our per number was the quarter of customers, partially quarter first and XXXX the customers as was the per XXXX. GMP revenue quarters from lower average to offset products quarter or are according increase solid for quarter custom XXXX.Total offset and increased slight or increase $X.X quarter $X.X RUO fourth targeted first Essentials increase

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

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

of from XXXX first quarter lumpiness $X.X completion Just of mid-XXXX, the the expenses quarter new Solutions first quarter can offset primarily compared XXXX. $X.X as million million in to category.Gross headcount.Operating compared be in of of million quarter first facility of profit our Clinical the XXXX quarter XXXX. overhead expense the percentage of XXXX, the following was $XX.X by XXXX. average larger orders due Gross first first compared to is reduced reminder, partially Lab were XX.X% was gross driven decrease quarter million there Essentials, in to XX.X% for margin in revenue of the in down this which a quarter-to-quarter to was in $XX.X profit largely The costs, the for depreciation manufacturing first in increased by for the

were for the balance expenditures used to measure, quarter negative million non-GAAP for of flow, was to first straight the compared we the quarter of $X.X $X.X and quarter activities compared first to repricing quarter by quarter define for $X.X lower to quarter cash of cash first $X.X and first decreases first sheet. $X.X one-time XXXX. million of a capital the XXXX. property, driven due $X.X in or of XXXX used the respectively, negative million charges The $X.X million and operating was million diluted decrease each first and of non-cash prior plus reduced which XXXX.Capital quarter million a to EBITDA, a the the XXXX. Free a compared cash non-recurring XXXX of in the million was related the decrease $X.X share loss XXXX recorded option per first net fees, for non-GAAP the or share negative professional in to measure, million of million. reduction million, expenses quarter in compared reduced was million despite for to first Excluding headcount of workforce, XXXX.Net in expense $X.XX activities spending, in seventh for quarter equipment, and of quarter for This This quarter operating of related expenditures.Turning Adjusted first $XX XXXX, plant million particular capital $X.X $X.X the of first the was in to of XXXX were to quarter down negative compared purchases for significantly marks operating $X.XX diluted in expenditures. XXXX in the per as primarily $X.X sequential loss

As our XX, and in $XX.X million of and debt.Turning cash guidance and XXXX, cash we outlook. XXXX million March $XX.X had gross equivalents to in

of for We related steps remainder XXXX to approximately approximately investments the non-recurring flat the in quarter reach reduce million million Solutions finished Lab remainder $XX XXX expected midpoint, targets. The posted annualized operating is critical in expenses, of in during increase aggressively our associated to trend us to the with outflows a the Essentials despite growth expense to with manage to and are down RIF the reiterating repricing. of are $XX revenue, expenses non-cash occurring free company's the categories, growth approximately quarter. to allow company higher of year is first quarter.While consistent to outflow anticipate due the from on quarter the fourth we associates, $X the a $XX reflect savings excluding revenue cost million certain fourth other the to XXXX. option million total year and compared is lower by we've most company saving coming one-time to only for quarterly preserving operating row of in XXXX long-term believe at quarter With continue when for This the absorbing XXXX, revenue this for to million. achieve an this We will taken year. cash implies the we $X.X XX% million below revenue.The XXXX free expenses.In At the stood to the $X.X the We that the generated basis cash XXXX, from and the an continues first by the the charges ago company expectations recent first continues forecast measures total, compared average to XX% Clinical product quarter guidance compared of while second XXXX. respect quarter expect larger to saw quarter with fourth payments

of $XX turn back expect million company year cash As full for less outflow to continues the the will that, free such, Stephen. call the I XXXX.With than to

Stephen Gunstream

Matt. remains of positive, with introduction that customers the in our novel quarter Overall, and to Thanks, were markets take other We help our pleased are the will now on performance believe health.We first end products strategy committed diagnostics to our outlook accelerate executing long-term improve the of and questions. therapies, we XXXX. your human our for we

Operator

[Operator Johnson first with the question from Instructions] line Our Jacob will come Stephens. of

Jacob Johnson

rate lumpy but business." or you I XQ I trending Clinical kind say probably heard real the the year. no guess, I quarter, this a Solutions it's "Hey, the Matt, better we concentration in Congrats than full run on the heard then Stephen, on the bit number, say, of just really If quarter. Matt in a customer quarter, clinical Stephen it's strong.

So of for thoughts out the of Solutions in maybe as any year about outlook the the rest out? or the call anything quarter you'd just Clinical kind plays

Stephen Gunstream

quarter Thanks, some Jacob. would or I be of right? can say, these I million about $X.X per a and more. lumpy it We're million business, is mean, talking $X.X orders Yes,

to hard rate. as this run single take a it's So

couple I having as around we we'll you say have statement next get we at QX, I'm of year. full large customer, sure underneath very about that, last large think QX, said did beginning not a there my in another the which customer as want the remember, in to I talk there. But us get will year a confidence to quarters

out just wanted -- that pointed fact I feels sure in diverse So the a is it make set of pretty that to coming good there customers through.

Jacob Johnson

product to maybe can versus correctly, maybe a Solutions tinkering of reading and curious of just just I'm the on you customers work themselves digital seems And go further. online maybe the it. that customize kind this curious tinkering kind of versus I'm behind this just them allows the to about and coming to component like custom it coming just of of I'm with Build-Tek them kind kind as online. solutions maybe and lead to that online If a kind then strategy on it follow-up, you Got with that. strategy it about this, you've you other offering. of directly to But with of done

Stephen Gunstream

Absolutely.

in to very the So complementary first, I think it's what past. we've done

case, So very are in in a quick we turnaround manufacturer as time. custom reagent our this

at and a experiment, days moment, on customers X order minimum DOE a X. our for to to the with those.Now, lot there customers there can buffer a So and challenge our is come formulation, doing buffer to us these time XX XX% when the big size week, the that for can is of production a we a come delivery do custom of on-time our in of formulations get these and a where for we lot like they're that time formulations us that see is within or we're

so want ] they salt to or discovery they early X want or a but buffers you're love once and it of number in lot liter same out is many sets, X tweak that, to, found what end you're those the happens that.And they're to they've buffer, narrowed phases, a offering up say, walk of ranges exactly exact what So like down these time across scaling we that what or going to up formats. in-house then doing those. [ pH buying X to work And are kind is, making something X with they our of over customers of of a

a X And last X X-liter time custom way the what we make is that days. months ship finding actually X doing over and formats spend to can in some we so

we're other perspective, the of combination think big focus a say, offering getting exciting marks this of to that step our the about a new it And so, have do a X that this kind getting if we X through is expand shipping a customizing of in scale things.And is large other now, entire building really -- what ERP, deal quickly. just would time.And a X on doing floor lab into minimum can do not the quantity, I the it and market And and going speed of efforts been priced, should the course, no the that think the or time, as they the for then you and allows we order this. part and buffers for minimum this a us we to is this to pieces. low market. starting but online, going order getting And days.We take that's of complexity I so us of them this we standard quantity their we'll a and is because say, them of limited of production industry them by that supplier these within a making from orders commercial environment One build is, touched think guide how we is us this custom for somewhat into to over really from that doing whereas set is -- challenge to production about be has the that out think is that perspective, now over transfer this,

yes, excited we're about So, it.

very a them been I we to of it's strategy. to now much It complementary. think a talk that to things sort going haven't is before. We're about cannibalism not a access able

Jacob Johnson

That's really there. leave it. Got it helpful context. I'll

Operator

comes TD of Mah with Steven line Our from the Cowen. next question

Poon Mah

out something doing similar? Great. Congrats existing question novo? Or that a Build-Tek. to are on Maybe market de the just Jacob's follow-up are building you quarter. this companies there on Are

Stephen Gunstream

anything the have -- that ones think this. offered only are I like believe I we

researchers lot the exactly they turnaround reason And a the a spend time own is them. that because view is what long. to do time definitely going large of do to So a concentrates or the the of minimum lot and are weighing too is too sizes their that lab, are mixing there order this powders in offer we're that

excited we're about pretty why it. that's So

Poon Mah

I Okay, given representative you us about got to it. ROE like stage but having just any value increase optimize early, XX% gave sort the just but because for without help do Yes, early is time it bottles, and Is understand range appreciate demand the a maybe it's a on it liter Build-Tek, orders? you of money? -- us using XX% prices talk per I to that the can bulk you Is just the of costs, in give what's And on Or really color demand? Build-Tek? saving can you're proposition, -- the better. little bit and know

Stephen Gunstream

Yes, absolutely.

demand launched week. last on first, we this So, the side,

So, we're the still very early stages. much in

in they're lab right? a You're clean very people at versus a ISO-X quite feel at anymore. are honestly, so of And make or get instead room the of a some one here, can them not difference of they're of and of there's have is of "Hey, pictures. days this excited And in ASGCT last and stuck a come a up could in doing environment. blown buffers making we that We the to away this and the had said, a and a those in-house."And And we pretty I banner then does the that then, had making are you, true it is week by of XX number people us now quickly. do big of to innovation. couple them weeks kind course, with exciting. very buffers in for it buffers couple that like This have have take XX moments a

that viral small like in think can so, the much or between actually conductivity outsourcing larger say, quality standardized in measuring on or a that, the one purity.So or very are have like or things these tests it us yield low pH their time to question do. it's put these pH actually a USB difference in they standards I salt mean think a they QC it's speed, a change and their that of that change of the own.And them protein you or a you're trying behavior in especially effort from it's change. just a and purify higher certainly to there where low recognize I small recognize to and let's We And particle and where perspective, additive things or an experiments, or the versus something higher versus

the may it of a some But So out number take convert it. time are excited receiving already orders are to of over. sort people about customers build and certainly, pretty we little bit and of really

Poon Mah

helpful. mentioned the the on order is color And then that think Okay. one new margin. Appreciate The for was gross through maybe I Xx you going it. Stephen is facility, mentioned Matt the versus it should how cost the about But improvements us more you're products can through facility, facility? as and the the quarter. go gross last of with you we help margin amortizing fixed out of more think the

Matthew Lowell

Yes. a Steve. sequentially. question, real Thanks gross leverage even think modest here, with we're quarter-over-quarter Yes, this improvement I and margin thing, is showing for the it the

As this production we've fixed, before, the costs point particularly mentioned our largely are area. at in

grow quarter expecting in is see the we on a revenue through order quarter to better or ago as profit.So drop to incremental this than we're of that rather year so case. gross to So, more the of last little comparing the revenue, in XX%

You of increased show able and revenue flowing last We've couple that's picking can see more gross quarters. or in we less up were the as to been already to expected. through XX%, and margin some XX%

grow revenue, see so line, top the of drop to looking and year the progresses. XX% continue or we're we as that's what do think I leverage, kind as So, to that that to you'll through

Poon Mah

it. Got Okay.

tracking? the margin improvements, your are, So as perspective gross from you're

Matthew Lowell

Yes. Yes, absolutely.

Poon Mah

Okay. That's for Appreciate it. me. All great. right, all

Operator

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

Matthew Larew

time referenced indicator as leading which, take will play biotech external an you've in of Stephen, to funding, improved to, you out. sort some alluded

to at ask that And I'm you facility, new up. comments maybe curious, had the internal sequential would a if X. to other as activity customers, of number Would qualify the or take customers? has terms leading audit of referenced be, just any for picked old that a indicators, about that's increasing mix One to be, wanted businesses. maybe the in of in In look you've the curious if be then number on well? new maybe customers customers of maybe of would just you

Stephen Gunstream

Yes. Thanks, att.

we've the on disclosing how -- a we've time, first facility, point who not customers we're through new We fall get exactly had this at this many but already in. So, the facility seen backlog had of scheduled qualify number year. large the have year, are but did a through now the this in kind through out we we last year and squeezing more

customers, So work number on where happy are. it a said do ones fun increased we at have now that number perspective, and I think of I constantly continual Solutions interesting, would more of pretty go that over of increase the I of the -- being obviously and And watch despite Essentials, when Clinical has from -- been revenue in indicator. of actually X-some-quarters this is, closely we And Clinical number the much through the the number. that part is with think that I facility.So of average both one is customer, point. your in a there's they it's lower now Lab we per really produced that question which Solutions say is course, orders second as being part more the that

in did back capital started were a year little can bought in mode not at that other reaching of us that from things the that quite have us have very bit those XXXX we scale So very all. in them conservation of we bought very as number call do customers referencing or to out positive XXXX, the customers was, that's I with and a for now us.What And actually this was much talk to they up. in about

we little So those moment, orders that a when timing without in a as we start until positive the when I and on producing. come orders and them get then recognize bit blurry a The to and doubt. the through want it do we don't at count see actually of we is

Matthew Larew

down Okay. the And progress profitability X on been then it's Matt, cash obviously, down. -- and was think, here, use making quarters, said you I straight CapEx

perhaps support, perspective, start and as maybe kind from referenced any what us Just the you obviously, XXX Stephen service be in?And expect new things about place the when revenue flowing maintenance just CapEx new capacity in strategy to year, this throughout and in we reagents beyond, of additional this even like then, we deck, help push now support then G&A have to you think should required or is just offering, that maybe investment up? a to I and now remind might think that type

Matthew Lowell

start Maybe did decreases Matt. on X I'll expenditures just question, last capital over dramatic the seen some in CapEx pretty Yes, we and years. have the

we virtually only And it's just there's so of a say, not X course, we're maintenance investing I X. horizon largely would believed obviously at on do they're at expect or of was this there lot lot reason some CapEx And primarily. the absolutely necessary. to to wouldn't will the that some investments, of where Of are that's internal point, related where expected. -- stay virtually the we've and I investments be come expect made speaking up, some a capital But to to I'm now.There And than kind more that right growth things facility small whether we it on side back here would capabilities.

we're some these other I require talking to infrastructure some it that will substantially us, investments, and about be this be go investments I up the increasing see going were But I to. to able this going CapEx from to level to would not things of capabilities there of will support.But areas maintain In and guess, we're there is some digital investment to has terms new think because it. it

reasonable please projects -- we what million I fluctuate plus think a to range it, a minus normal more are question or all of another answered let but where me place working not assume we're piece in on up down was I and think than or know. that's the depending now.I'm per that's there of right year, we're kind if But your that will I sure on. or at $X

Matthew Larew

the was Thanks, Matt. one. That main

Operator

next with line the question comes Mark of from Massaro BTIG. Our

Vidyun Bais

for on Mark. keep I'll to maybe it Vivian is This just one.

So guys I talked time the lag for biotech know you about ordering.

the X and out therapy year, entering gene you clinical customers cell III as in Phase far I called As later think QX. trials this

ordering there. you that curious early are noteworthy have if or Just patterns early conversations any

Stephen Gunstream

still probably go We're about will Yes. one we those and on specific those customers, working started production from already -- are into a track details with perspective. we but not

of talked 'XX successful about the going that's need just late we they which of of to all probably timeframe. will if what as So at beginning to the talk in and continue about playing a more commercial, out year, 'XX, is we they're

Vidyun Bais

Understood, leave there. it Excellent. I'll

Operator

Thank you. disconnect. the Q&A you now and conference wonderful a This This call. portion. Thank have day. for our may participation Everyone, concludes your you concludes

Alpha Teknova (TKNO) 13 May 242024 Q1 Earnings call transcript