CDMO - Earnings call transcript Q4 2021

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Operator

Good day, ladies and gentlemen and welcome to the Avid Bioservices Fourth Quarter Fiscal 2021 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time.

As a reminder, this conference call may be recorded. I would now like to hand the conference over to Tim Brons of Avid's Investor Relations Group. ahead. go Please

Tim Brons

Commercial overview April contract development afternoon of today's will Good CEO; you joining our remarks, Compton, XXth, updates XXXX. business, and for results welcome for Hart, will Bioservices' and Thank we activities we and have On After Chief Timothy corporate and financial call, Financial Avid your and the Today Nick an us. we Chief be you. Officer; thank Officer. manufacturing including Green, providing Dan on quarter questions. ended prepared President

you update the With made Actual the I'd to this differ XXXX which company, revise made Avid's Exchange will today. Before to results from Green, statements the of company uncertainties. we Securities begin, number current matters. the these obligation like no a certain involves concerning Litigation Commission, encourage call contain call the turn caution within assumptions, could XXth, belief that CEO. these June I review Nick of Securities President risks comments and meaning and and of statements, concerning or Act and Private statement any during filings the today, the of forward-looking conference Reform will and undertakes with to other all that, to the I over Company's of XXXX,

Nick Green

on manufacturing. relatively having and huge and on dialed the In Thank are execution early via with to coming team you, has and you Tim. focus been made Since to to results short a almost a multiple Board to those of who commercial in projects year clients a on thank development, spanning the able who has everyone today webcast. amount been ago, new way stage delighted time, achievements successfully And participating I've brought the date. and

of expansions of to for operational culminating Myford balance solid growth in of for have sheet margins delivery increased well consecutive with services as four quarters. in combined are has enabled backlog. profitability business, demand us analytical. These all significantly in for additional a foundation as offerings laying Furthermore, downstream revenues, terms top-line core future this the The the growing as We upstream, the a strengthened for throughput capabilities facility. the and invest high phased our driven strong within our such ongoing has our

Tim We are more an capabilities well and our within details I as our core might our as and I'll businesses, we also on our further operations call of for solutions assessing additional objective that, Dan. the where financial opportunities both fourth development results. and growing and existing will the base. And an provide adjacent turn business and/or synergistic providing customer enhance to better our to business following and overview broaden over of with quarter

Dan Hart

Nick. you, Thank

now on XXX% addition year today brief revenues full financial $XX.X prior were of increase quarter and our in year begin, quarter I which of fiscal filed Form fourth the period. was our fiscal prior fiscal than are provide Before which fourth issued I'll million, the overview this in the quarter, financial operations release financial 'XX an more I'll call to full results for fourth quarter fiscal 'XX representing today April overview, recorded XX-K, the the during for doubled Revenues ended XXXX. $XX.X and provide XXth, from on the our million during year of a included additional details our the with and press fourth SEC. in call to results our

scope 'XX growth for and for in-process The prior primarily 'XX the period. well fiscal XX% fourth of the number a fourth margin in year For of 'XX, million increases the million, full Gross 'XX. fourth of revenues $XX.X manufacturing were were revenue quarter an the for both $XX.X full due year the margin year to of and number revenues increase during negative a fiscal XX% as fiscal to quarter of gross increase fiscal projects to completed the XX%, the compared period. as and in the quarter in as process increase runs, was development the significant of compared in

related While our achieved previously fiscal disclosed QX important recorded margins were the QX in margins it non-operations note QX with factors, such revenues strengthened adjustments. and and that is 'XX, gross of and QX no to

full and of 'XX compared the and recorded margin strength Gross quarter year period. million respectively the the model. of of for 'XX XX% a fiscal fourth increase compared periods. which in the fourth fourth from quarter X% expenses margins, year year to and quarter revenues The the gross margin this $X.X fiscal to were XX% for of XX% the during our both higher reason, For increase our of XX%, demonstrates manufacturing 'XX growing of quarter was and business were fourth we million, in fiscal during the increase process fiscal an SG&A of believe third were $X.X efficiencies 'XX. of leverage significant the full Total primarily the development quarter prior the

payroll increases full SG&A $XX.X fourth quarter expenses costs, stock-based fiscal compared full in year SG&A primarily due year $XX.X increase were 'XX, were compensation. fiscal million, to in XX% increases million including in the prior related year. and during to the For an 'XX The the

During stockholders. Series quarter to completely to $X.X operations was This to of the in redeemed one-time which the recorded its E resulted of and Avid redemption income shares as reduction Convertible the unrelated attributable million, charge, common Stock. fourth 'XX, a Preferred net outstanding

fourth As or for we approximately a basic fourth $X.XX as to $X.X quarter a of loss of and share of diluted share of loss net net $X.X stockholders to stockholders and compared common quarter million attributable 'XX. or attributable per million recorded a to for the per $X.XX diluted consolidated fiscal common fiscal 'XX, basic the result,

a had However, basic net when income quarter $X.XX of diluted would attributable fourth preferred we fiscal 'XX. and the adjust approximately share stock during per of recorded stockholders Avid for to redemption the common XXX,XXX or one-time charge,

basic $X.X 'XX. common For loss 'XX, $XX.X $X.XX of company stockholders to million attributable or $X.XX net the share attributable net common of fiscal million diluted the full and to for share a year per and fiscal consolidated per compared or consolidated recorded diluted a stockholders basic income to

Excluding and the share the one-time year we for recorded and stock redemption approximately charge, diluted to preferred per would attributable million of have $X.XX stockholders basic fiscal respectively common full 'XX. income or net $X.X $X.XX

of as equivalents the increase increase April and the of cash primarily The factors. cash $XX prior in year. fiscal the 'XX were an an $XXX.X third due is increase end end following cash and from million over and the fiscal from XXth, cash quarter Our of to $XXX.X the million of million, of equivalents prior end of the the year

First, the $XX.X year, operations $XX.X which of in during generated from fiscal million was million fourth quarter. the generated

proceeds discussed XX.X% significantly capped redemption to of The $XX.X $XX.X proceeds annually proceeds Stock. call use $X.X quarter net phased million will such was redeem proceeds proceeds net any the to equity payment general stock million with payments, save remaining from underwritten used convertible notes. interest to We our raised notes investments our we such portion $XX.X expansion to the Series preferred net for investment April our from approximately acquisitions raised We into senior capital approximately offering the fourth approximately of may other to sheet our during all follow-on balance million our approximately quarter this businesses us during XX of corporate which on solutions our transactions finally, two offering, in commitments our use dividend no combined the purposes. facility or or net fund in annual and financing use however And outstanding at of million and technologies and complement million facility the for net X.XX% for business. although expansions. a proceeds of and the our that of in Convertible in strengthens enter third convertible of time. note E purchase Secondly, $XXX.X acquisition also Preferred intend of the previously have our working

'XX, fiscal full I'll an million. were Tim to development the on for facility over turn 'XX anticipate update quarter. expansions. an million million the spending year overview. discussed This year $X.X $XX now my on previously to business Our expenditures fiscal We for call primarily concludes capital $XX during financial the activities for achievements additional our and

Tim Brons

was Fiscal XXXX Dan. Avid, capped strong fourth great you, year a by a Thank for quarter.

these team orders, development The to During signing on manufacturing. the business multiple will business work $XX orders the expand process million. brought new new fourth from quarter, of all the projects, development for totaling and customers approximately areas commercial new

During million during as company signed fiscal $XXX orders business for fiscal XXXX, to million $XX compared new the XXXX. approximately

the developed for manufacturer since XXXX that the to the monoclonal recently the now ZYNLONTA, by quarter to Therapeutics. will activities In include as cancer Avid approved addition, manufacturing clinical and end, announced portion products provided manufacturing ADC to of ZYNLONTA. antibody a ADC commercial manufacturing for we'll expand serve commercial relationship treatment has support Avid our the we humanized subsequent services of to development

and of and clinical the ultimately relationship is value manufacturing. evolving expanding them an Our early development bring customers, commercial of stage for with ADC opportunity the illustration excellent the which with

to to clinic the have we worked as the and very are pleased commercial ADC forward We through efforts. advanced alongside ZYNLONTA look supporting they

XXXX fiscal approximately the backlog increase year. year over at end a on-boarded of backlog The end XXXX, we fiscal prior $XX fiscal the significant a at million, the year total the eight increase dramatic approximately million was $XXX a compared the fiscal of of For new prior customers, the year. to of

by of current expect We most backlog to end fiscal recognize the of the XXXX.

with optimistic expansion on projections that grow we estimates, further regarding facility and well been exceptionally has spend our align customer our opportunity to demand. to Based we our the timed ahead, remain Looking believe business. market growing ongoing

are that I'll our our and present, capacities. hand overview is we Nick. pre-booking expanded the concludes fact, my the over to business BD In team actively call to now back development pleased This report

Nick Green

close areas are four fiscal to out address a like we and Thank you, Tim. forward year. I to look XXXX as new would key There

needs. past, our with the currently Avid dwell by process both of of as year the increased months. recognize capacity available result underway clinical manufacture. me delivered we eight Fiscal brings in proceeding of of fiscal to tremendous performance XX capacity provide with new short-term a the brought I an we built a the adjusted to in the many near the new approximately Revenues attributes $XX The want of the business operational XX%, the raised approach, observations. X% of second during from and over and of an of in four zero important commercial two-phased quarters XXXX, shortly followed expansions product be expansion in am of delighted business. board, bring online the don't million navigate EBITDA I maybe While past it's inspections as significant to so increase team from think or heritage This aspect almost year record on thereafter I was company's and XXXX. more profitability on clients team business with of capacity were to the say growth will plan. for future, more from capacity generated strengthen of XXX top which clients this, in successfully that bonus our this XX% our million, if approvals offerings and the to the Gross a than FDA adequate able sheet. took debt Cash exceeded to the revenues. also to $XX onboard increased margins that successfully than to ensure net On million operations Company are needed balance form their clients and proceeds two and the capacity consecutive are calendar to XX%. $XXX year and clear of to This equity existing completed larger our the we

quarter Looking to our Myford back shutdowns with moving Myford planned and annual expansion we the necessary are historically to are X operations. weeks connect to forward, fiscal the our year, two. This back Phase maintenance accommodate of Myford the quarter to fiscal while Franklin for existing in three, first tie-ins

of XX all and which forward we look thanks our XXXX, supporting healthy fiscal efforts backlog, between expected the the million. believe that we months feel XX% we to this to arriving and expect we financial the As revenues of million the past those XX% factors the come have 'XX, a as were influence to out In crisis team, in over to of a COVID-related supports of of we guidance, growth have of or at $XXX year $XXX into so. we business number potential cognizant BD or this

prices pharma unreliable. the the and placed is key and lead availability supplies not The first of of but extended resulted The been also only chain. in on supply many or key COVID becoming sector increasing, of the the times impact have demands materials

throughout remains been as the manage able this avoided last into year, impact to and we've any a year this the XXXX. While concern enter year financial business, on have we

our prior and our our note guidance on delivery [ph] actions position my of anticipate guide hope the go, that we are capacity. expansions, allied the previously six last efficiency to will and milestone, out that a clearly To are expectations year the we on be and growth although year, when last you progress we we through as in that we year's we shutdown diligently much regarding to these timely this Myford will the on be result of better will -- the positive. course, Secondly, as communications some progresses, where we throughout which encroaching year, is will a of will improving the year. Phase programs, these our headroom provide of on end, With some feel additional Throughout as be in worked months with X impact for we October. come key estimated this stand currently of schedule, we a

on earlier equally of and of reliable, XX can by experienced, generated value positive preferred believe, partner. bring mentioned months year rounds, substantial financial the derived by during needs flows field Not business, customers number growing from but actually redemption XXXX, the balance that a we XXXX past approximately and other in high we financing as of to would of the the a the with strengthened sheet result, been and during year quality only value the cells, biologics. the financial business mammalian with in We customer million a as demonstrated adjacencies the Finally, $XXX has centric shares successful exit two cash the hand. cash as

we now as opportunities, Operator? and remain in currently are call at remarks are evaluation for while evaluating juncture, believe to we questions. reputation offering continue concludes field a of this we We process our the biologics we our for of to the there open of number there out phase, prepared synergistic opportunities This broaden in the today build in for outsourcing. my the can Avid

Operator

Instructions] comes the first Capital. of Dodge [Operator line Our Sean question from from RBC

open. line Your is now

Thomas Kelliher

Thanks in the you guess you're your for is off of questions. of Kelliher some on you work? the this many now? just, Thomas development would earlier start later consider afternoon, stage for good Hey, with stage Sean. customers commercial the versus right pipeline would characterize potential working many I to How that taking guys a to how are programs on? How go

Tim Brons

entire question, early coming Yes, this Yes, far But Tim, optimism well lifecycle as an I'm the throughout [ph]. the it's Thomas say our are future to we I'd sorry, was phase, phase maintain on Sean. late thanks that, towards and opportunities the the weighted those for and to between I more about of is mixed optimistic would the really pipeline. of say we nice is phase organization, really opportunities new is pinned pipeline hold early those which it because as as in. programs.

Dan Hart

Yes, the phase. probably we phase, by phase, terms in [ph] actually spread XX% XX/XX of earlier it break don't later individual roughly is clinical -- roughly down

Thomas Kelliher

to to Is have pieces going here expanded to you'll to the fill in it more development. And bookings. been then team capacity? have know you all guys upcoming the past that it's you year Okay, all investment that seems the or you. the pretty Thank one business that's more -- team on I place sounds and on good. there reflected need the make over like much

Nick Green

obviously anticipate and by today place we well you've numbers heard they're in of very performing to year. teams the don't next on-board know anymore the fiscal needing in the I the and team Yes, BD

Thomas Kelliher

from Okay, that me. sounds all That's you. Thank good.

Nick Green

Thanks, Tom.

Operator

Thank you.

question next from Knight KeyBanc. comes from Paul the of Our line

now is line Your open.

Paul Knight

roll how out quarters? you? up terms closures Hey, rollout how will down that and in are putting into that to the facility the mentioned talk -- Could you this of of year you

Nick Green

of I running. mean we've splitting tried in Yes, keep facility -- the to terms always the two, the

initially, a always back phased So afterwards with as shutdown comes then had coming Myford we've up. Franklin Franklin and on

thing we end both in with there'll two and that years, two. same think same I three -- I only be this three somewhere is in to say, the quarters, weeks. quarter of the all is, the past typically order up difficult across shutdowns an it's So effect. year, impact last The quarter come quarter in whereas It the mean

would that and split stage into analysis of it. I give off a that this I can detailed without of previous in of each is in best down just So at really you've the for kind probably proxy take getting seen quarters

Paul Knight

okay. regarding Sure, in prior COVID have Nick? was this I in bit any And a benefit? there little quarter, any you backlog, quarter, know the

Nick Green

in sure, enormous there any four. I'm four in so amount not if quarter is actually quarter

think the I So is no. answer to that

Paul Knight

could talk all, Okay. pretty industry on that? you tight is at what's is read shortening as the in your timeline still market the And conditions the capacity

Nick Green

still we cases about seeing and certainly where thing good see of they assess, my It's -- short concerned inflow to looking a healthy people times. they are we're for competition tell I we a lead hear whether always but bit would of capacity capacity. follow, think a me Yes, I'm sure, weren't of still wouldn't of RFPs are difficult

have I to take because a started a -- therapeutics is of there there for least a I'm away we inputs there, been back lack of hope COVID terms indication, I certainly those the typical that as we we that, supply, and always without capacity nothing been the that at of come to even is of in impact and I'm seen all has lot sure waiting -- see sort we capacity still out the significantly some when the go obviously we see we now life eased view will that that we sort of going are looking pre-COVID, as through the sure. masks. industry whole. COVID, we're plenty sure of of of the take away has away COVID I've profile. comes We opportunities might suggest that demand is to through as hope and So, if other the the seen have -- to forward are think for there, an there's out issue of

Paul Knight

it. Got

Okay, thank you.

Operator

Thank you.

line of next the Craig-Hallum comes Our from Hewitt question Matt Capital. from

is now line open. Your

Unidentified Analyst

on this Hewitt. for guys, Lucas Hi is Matt [ph]

I should questions speed couple thinking are Just for be expansions of guess, once a in here. those, of the about just I ramp complete, the mean, general terms? how the we production

Nick Green

Yes, question. This the Lucas, and thanks Nick. is for

will that. expansion we to to on it So, there on to I four. The remarks the as is an earlier in of terms -- it's to come we're come bring first million if an if brings we that's opposed it's going 'XX around as can as everything Obviously, of feel online. of capacity. in October was opportunity come cement able as really that of to out I for sort that calendar doing do mean exactly we that, calendar to going in my And shutdown, be when clearly when 'XX $XX And we there accelerating to the planning into were. alluded moment opportunity is that quarter

terms at to to Tim stage on to the will it this we will up, operational. If it. Xst, if of into as certainly give little filling we bit making booking you we do so. all to, maybe And of $XX that us that we'd dates, are more upside it $XX every It of but able least million, whether say book take a January be -- be when north in obviously the effort we of be when it's difficult at that, fully get million roughly gives alluded

Unidentified Analyst

up needs all into helpful. of or the that Thanks. once of guess And That's then fall given step really complete place, expansions cost to we what I that take should the are expecting SG&A, hiring is goods sold? be in

Nick Green

continue SG&A No, grow. guided months There's to a don't I headwind nine trained in bit in we if ahead we of as six to to terms continue the of little we have to grow a and people always there as online need -- of of in business the sort over know it terms and to GMP in the in months to them next increase get is because XX of little a coming XX were. in frankly ready the bringing capacity personnel

have that headwind. we do So

Some that goods, into of comes comes but some it of also cost of into SG&A.

Unidentified Analyst

much. That's very all thank Okay, had. I you

Nick Green

Lucas. Thanks,

Operator

Thank you.

line Jacob comes question next Our from of Stephens, Johnson Inc. from the

Your open. line now is

Unidentified Analyst

Hey for guys, this Mason Jacob. on [ph] is

Just particular could specific 'XX a me. how Are the the from pace any guide, be projects this Starting should any ones year? think in we about quick of lumpy that few with there activity quarters?

Nick Green

guiding We're quarters. the not on

a immediately always terms a know area what stand I I obviously think don't the of going the a from that it's break, the as market that's But little of in outside you've out highlighted overly run sort that. quarters. -- but seen it's not get we I shutdowns, lumpiness Christmas to through anything actually of down we but of whole the of bit, to tends would continue you prior our major but impact just of guess as little bit market

as that So now. that expecting we're right fair Dan? here sit nothing Is exceptional we

Dan Hart

Yes.

Unidentified Analyst

of about year-over-year of existing themselves? any it or up, think growth, color that as the customers Got existing it. customers mainly sort scaling with growth, driver projects it customer growth new XXXX, in the we programs is And is main on new

Nick Green

is probably the the of all above. best think that to answer I

additional clinical clients the continue success we extent we've all last can clinical clients. that their And in moving as the new commercial see clients four seen working from existing those revenues, increasing We continue four then other; year in got growth, their our and to coming continue modalities all from new in of clients where well. expect clients on see board, forecast to commercial all -- to try four one phase new that we've business and see of to increase -- would programs demands moving demands to to this year clients coming but business

Unidentified Analyst

Got thanks. me. from it That's it,

Nick Green

Thanks, Jacob.

Operator

hand you. remarks. for the would to Thank to closing back like I time, over call this Nick any At Green

Nick Green

thank everybody like to for many that Thank their position financial the you, forward you thank during performance our to to today's lie opportunities for operational ahead operator. and In that of with 'XX, to excitement closing, as the exceptional call. I'd look And us participating And result. employees brought strength. a all on fiscal I

Our for team remains the and unwavering everybody And am and key thank for I call support grateful success again to their participating and the your continued dedication our on you professionalism. to Bioservices. of Avid

Operator

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

You may now disconnect.

Avid Bioservices (CDMO) 30 Jun 212021 Q4 Earnings call transcript