NOTV - Earnings call transcript Q1 2022

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Operator

Greetings. Welcome to Inotiv, Inc's First Quarter Fiscal 2022 Financial Results conference call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions]. is conference this note being recorded. Please now Kalle Ahl will turn the host, your to over of conference I The Group. Equity you. Thank

You begin. may

Kalle Ahl

you, in were inotivco.com. afternoon, Fiscal Thank of website the market good at Inc's can copy section And Quarter be of release First Company's found close. everyone. A XXXX, Investors today released Inotiv results earnings after the the financial Alex. the

not undertake of new Company matter. additional will measures press release, of and for in result or financial to the financial refer results, to GAAP to on management's in otherwise. on remind events, that As call that or you company's Such some not results further I provide filings and a to matter statements, to statements, future to different an non-GAAP statements guidance discuss Any the make on of and a from any measures Please undue effort forward-looking also and for update uncertainties does of the performance operating represent today's actual corresponding A projected. forward-looking reliance management comparable considered non-GAAP this X-K. Company's definition measures most need statements will about be as Company's you date, as investors. could this formality, information, are SEC information whether obligation the plans. statements Management expectations these and to are that subject place these the of should the reconciliation certain and including statements materially is achievements revise future or forward-looking included those risks Form statements cause such financial

call Chief Then the will Bob the Beth after Officer. company's results. and Beth this we'll remarks, which financial the Strategy Company Executive Sagartz, We'll questions. present Officer, Financial Leasure, Joining of for a Officer President and with begin opening open are John from some us Taylor, Chief Chief afternoon summary

pleasure Now to call my turn to the over Bob. it's

Bob Leasure

us afternoon you, fiscal really Kalle, good Thank with pleased and 'XX. joining way started to Thank the you today. We're for everyone. we've

into We a continued research very the building through strategic provider, our model preclinical Envigo. momentum acquisition services, a research while comprehensive highly Inotiv platform complementary adding

Our span assessment safety in transformative company was services, models or discovery we Full-Spectrum and Envigo our to over RMS. XXXX now two XXX of segments: employees also solutions employees we now and today. The and to grown from and DSA refer have as our which acquisition to XXXX research

revenue of on acquisition of Laboratory seeing. Plato's operations our and additional the 'XX integrated we're our new a reflecting revenue's In operation. toxicology, are Care. within evaluations two pro addition, areas [Indiscernible] We've extra Plato's approximately further integrated expertise biomarker in support forma XXXX order XXXX, capabilities. in of space Laboratory so Accreditation hepatic some complements the start October and for and to approach startup fiscal strong a segment and Plato pharmacology, discovery fiscal of collaboration in Genetic currently adds DSA pulmonary, of with Plato feet, locations Since $XXX.X brings of fiscal ongoing the measurements, of in-house BioPharma our systems Animal $XX therapies. investments in the functional Plato in a a ILS, adding and life year, leased XXXX, both a internal Boulder, physiological renal, with services. or at we've of our provides And acquisition scale. analysis we're our January sciences BioPharma drug cardiovascular, of Integrated suite IOS. including the Colorado XXXX, DSA synergistically DSA existing capabilities toxicology and by and purchase the to bolstered Laboratory can grown from million the to from our acquisition demand near approximately is vivarium Vigo lease of operating million. accredited essentially total Association through located histological MilliporeSigma’s of XXXX, segment the January research, and by Vivo systems portfolio. to of startups of that acquired talk our Which a square building of BioReliance accelerated few Assessment both XX,XXX facilities now Boulder immediate and genetic assets with we years and

in vicinity capacity toxicology, gained toxicology of further bioinformatics, quarters to we in vitro pathology, addition biology, located. expand facility. the talent Park, over gaining vivo Research additionally the in to Carolina 's where and molecular the is North toxicology ILS services, next ILS Triangle expertise to In in making and investments genetic computational access in excellent We're two

collaboration currently supporting least its Rockville Our we facility scale, our life center extra in developing sciences delivering while at some and capitalize biomarkers customer further together, achieve will expansion, this biomarker Working Synexa respective of space and Rockville, leased Inotiv construction. which excellence bases, is under a biotherapeutics and cross-selling recently GLP Maryland, services. pioneer on at at collaboration to our for with to biotherapeutic laboratory biomarker will establish site international in our comprehensive broaden expect and opportunities. Under

at including XXXX, laboratories the November molecular we which to cell opening St. continue make investments biology of facility, our We phase. modern internal of first in our Louis in business, the opened DSA DMPK

opening month. to phase next Second be is

are new We the to beginning capabilities benefits and see the capacity. of

our We future have augment systems and believe our people, operating investments these We to and invest margins will while for new service improving and continued enhance clients. technologies. growth infrastructure, in our

see we last approximately X.X% we for -allocated un to expect continue figure to first XX.X% climb the compared period revenue of or this year. corporate million same as $X grow. The And was revenue, of to quarter to G&A adjusted

strategic help HBP. in any research been Moving to supply, category time acquisition outstripping nonhuman the primates particularly industry strong our models. Inotiv demand when RMS our segment, a as leader At establish Envigo of in or a of has

purchase. Envigo the With

additional a concern common a growth addressing of bottlenecks service our platform established research and potential mitigated offerings. customers Just for new

and brings into [Indiscernible] our improved and and QX, to for in service and a fiscal scale and each our supply and we're both and view third creating performance. our products of to business, advantages Having RMS Pennsylvania, XXXX. speed-to-market, segments, facilities - and ORC is OBRC actions capacity to goals land is meaningful rabbit including growth with complementary investing business revenue a to Given center and to in operations our Texas market animal them driving contemporary listening HT 's Services, by of way location people, acres two and strategic to we comprehensive growth building needs on desire begin OBRC a areas, familiar of provide facilities brings Robertson We example, By services to base, high we of in will breeding RSI. high infrastructure two encouraging share closing welfare. customers, and businesses during to and a technologies, in meet the de of their well-positioned common scalable been oriented and the facility playing consolidate of January, expand control shareholders and boarding across opportunity entities to got employees, near the ourselves, and and with scale or and existing site touch Inc facility we'll Several operational customer's located desire Denver, consultative our build our to Envigo existing this leverage. and this customer respecting a production level scaling at RMS win, customers customers while our RMS and and in sites operating culture breeding customer offering business level or our resource primary customers. believe company. acquired consolidate RSI XXX OBLC RMS additional a and cross-selling and very service, expand to

option research We execution external in As successful become spanning a the areas, services. -clinical office of we a delivering where achieved mix continuing our entire versus number and programs primary the reflecting of greater an of customers, to XXXX, excellent longer of our in planning our strategy. first-quarter versus duration succeed handling growth internal increasingly the pre on provider these secondary we

by DSA $XXX.X and Looking of demand near-term RMS services as our of for ratio and million. DSA quarter-end book-to-bill X.XX remains illustrated our robust ahead, the backlog very DSA strong

Over XX%. our With to organic low to adjusted growth revenue high like and single are of the I'd range Chief we term, double-digits to turn target XX% long Beth the that, Officer. continuing it Taylor, to EBITDA the to to margins in over Financial

Beth Taylor

acquired a to contribution million Thanks, million on $XX.X quarter year afternoon. RMS of In revenue our revenue Fiscal comparable million in in was Bob. XXX.X% incremental by $XX.X a first from $XX.X which increased and prior DSA revenue XXXX. from Envigo, quarter reflected driven million November XXXX period, Good revenue. Xth, increase partial total of $XX.X RMS the the

million BioPATH, Gateway million Our $XX XX.X% revenue and Bolder incremental of year-over-year revenue higher service acquisitions growth. from DSA the driven to segment from grew service Labs, $X.X revenue of and internal $XX.X HistoTox by million BioPharma, of Plato Pharmacology,

products Envigo our any comparable XXXX, the this and have profit to of the million gross compared did the or RMS of from services. a revenue in In to RMS decrease of quarter gross the lower have or segment period. of We first increased the acquisition that of revenue in XX.X% our of to profit total DSA in million contributed of revenue percent Our service $X.X product a revenue business gross products fiscal IMS up and million prior this of starting to as our $XX.X prior-year million not $X.X quarter. as mix $XX.X revenue quarter. overall revenue, period. year of comparable XX% was The introduction reflects percent profit RMS revenue

which value acquisition In step-up the for profit amortization gross a RMS percentage of a X.X%. of the million X.X for negative inventory included profit non-cash addition, of gross of total on Envigo, the in impact has

XX.X% from amortization The year Labs, year-over-year of assets Boulder or segment BioPATH, of Gateway in $X.X expanded incremental DSA million percentage was to the primarily gross and million XX% excluding acquisitions utilization revenue. or DSA revenue BioPharma, in this of greater period. increase was recently prior compared on gross margins comparable revenue Our the of and is by driven higher profit capacity. DSA of $XX.X intangible Plato Pharmacology, HistoTox profit And

inventory. profit or revenue. again, And of Our was RMS amortization assets of XX.X% the value of million RMS segment $X.X the of step-up the gross amortization of intangible excluding

compensation plans this And RMS higher an costs Envigo costs increase of growth. with and $XX for additional to Envigo post-combination investments in in higher pandemic revenue future the our stock recognized sales related of loss offerings. the of marketing headcount, included the Operating commissions related income additional comparable the non-cash of connection traveled increase which For impacted an of and segment support $XX.X to in $XX,XXX included expense to million acquisition adoption teams higher selling the RSI, new G&A compensation of expenses in prior-year negatively eases, the $XX.X gross transaction, an stock due sales in increase and about reflecting equity Envigo startup Higher expense. $X.X period, to for increase investments in to Envigo sales due in more transaction to recruiting, in X.X%. compensation by expense, corporate totaled unallocated fiscal relocation million, in acquisitions expense an travel and profit awards, the as COVID-XX service the have XXXX first million million internal that operating in strategic PLAY-DOH, as and of quarter the compared

combined, of biotherapeutics, the comparable commissions and service loss compared that expenses were which diluted growth-oriented, offerings the negative first as I'd our laboratory internal XXXX. out or additional fiscal provide approximately corporate genetic in prior to in this diluted quarter of the shareholders new year to the a fiscal XX.X% continued investing we much All share pathology, first per of the due corresponding medical revenue increased capabilities net compared win solutions, recognition During the XXXX such unallocated a common accrue to fiscal quarter selling ratio, of toxicology. to of share G&A, of was prior to first book-to-bill compared revenue as quarter XXXX device revenue. $X.XX to Net adjusted approximately point per also negative orders periods or in period. totaled like to prior in totaled $X.XX $XXX,XXX quarter's of X.X% a of higher million, $XX we we in attributable to loss, quarter, when

XXXX the compensation value figure, non-stock reported above, connection $XX fiscal DSA XXXX impacted XX% first the notes or expense the Envigo of approximately quarter as of the a quarter's quarter million to to X.X% compared of fair convertible comparable This first and million times. our prior-year issued the plan in with acquisition The of in Adjusted ratio revenue period. for relating $XX.X post-combination $XX.X recognized remeasurement services business mentioned September EBITDA Envigo in book-to-bill by of of was in revenue loss $X.X equaled million of was X.XX in XXXX. or adoption million the fiscal on equity

build We continued our costs, transaction our and for and headcount, new growth, service new integration people, offerings, infrastructure and internal which to included investments additional systems, in technology.

the of and XXXX from was up million Our fiscal end million, up XX, the on backlog XX.X% first XXXX, XXX.X% $XX.X at $XX.X XX, from million December on XXXX. quarter of September $XXX.X

from be sheet the delayed balance to date $XX.X a which and facility zero agreement, term up million, cash principal original credit million. the was credit included a facility XXXX Xth, had cash of of XXXX. months as revolving Our balance December of amount available November the XXst, XX We to $XX a on loan $XX equivalents drawn in of and draw million

XXst, debt as million. December XXXX consolidated totaled $XXX.X of Our

Our and purchase existing to on we the business and confident operator questions. our continuing fund of ILS. January of concludes flows. call XXXX, incremental January term heading the and with remarks direction $XX of open filed XXXX, is brought invest million loans our This Monday, and with cash we pleased for loan Overall, purchase that, delayed be we are $XX term please amount we'll feel for sheet will in XXth, we draw million the the future. XXth, full On balance our Form-XX-Q the XXth, on prepared And to OBRC. February on under of borrowed our facility statement the provide in

Operator

this with Colliers. your At line will with Instructions] the we [Operator Thank conducting question-and-answer session. Please you. question. time, first comes question Kyle be a from Our Bauser proceed of

Q Kyle Bauser

Thanks acquisitions, with on recent again. starting the here the so Great. -- and and ILS much the specifically OBRC. some congrats of Maybe phenomenal so results

you they Just with situations were out. discussions for or curious a you radar companies the curious Were quickly to where been act your how how somehow those played say, had onto came and, about. able popped Just while? in it

A Bob Leasure

been historically supplier Envigo several a Inotiv years. in had OBRC for to or to

talking we'd Envigo announced. to the started deal closed to So or them being prior

forward. been our was our was maturing, revenue property strategy. alternatives sell, in force to We us a else looked an did breeding, So with They were board there our time. of boarding some anybody knew involved in for the we going that that able that's at we for been get our how get knowing to before our for It and opportunity complete boarding wanted were they and expand and that part other able agreement supplier, increasing We an Envigo, for expand could transaction. our -- customers. in Texas. involved. continue for works an source we A in services had to we idea increasing and And to building that being capability. And an had

will room it And for capacity services facility think some provide I current additional and synergistic So for some really customers. our us. and opens up that be our it Alice pleased for with

for out get and it going again something to the Envigo initiated And share as RSI internally. and prior existing capacity conversations They us deal an them, some company that had then that we to prior far our properly was to was it. we market closing. told a a us early with of that to had us we able them that struck with As They were and to October identified business capacity. transaction new They were those knew visits. of closing and about gain in the was opportunity

-- And we some one with the base utilize capacity. that the customer unutilized customer that making of before. we've sticky knew strategies about is scale, sure -- our we talked key So of which base is

burden there base going customer we acquiring add ons to not put - more So because somewhat too thought made I to they would it had. already sense us. to were And be much what

one it's able people pleased put of in of time lot been lot acquisitions a But team and of really got we've it's effort pleased work so So, -- to are -- results a the far. with But we've do. I'm the they has with and complete what some a group to I that really there at these, know and extraordinary still done.

Q Kyle Bauser

that turnaround, in business? and Great, it only given realize deal accretive. quick some I what other November, record so improvements certainly organizational opportunities to I your operating far are closed And And what have but structure? the in just so Envigo drive to been made highly here of wondering that early relates track was as synergies changes or

A Bob Leasure

out these weeks, we four, And weeks Envigo seven First the four do from We've those was but made and been a several or weeks. not million so at of five growing results, a holiday standpoint much really And leaders to results, it have are only three who year. in year-ago that don't is corporate to was it were $XXX only or pretty a that of there's But and in million Those process. changes interesting owned seven the $XX thing changes these sure being about weeks the company occurred, be aggressive, corporate end in that I company. identifying need Indego we've transforming culture. of the be other leaders. think, will in it's it some corporate company. $XXX or was the we up duplicate -- means unfortunately million it doing, is announced, was what And a weeks,

of million over rate run growing $XXX a at we're again. Now

[Indiscernible], than in be $XXX technologies a question. changes be and. and That bigger company $XXX company to a of Again, million. instead infrastructure further we're building million much So building a

some And skill sets.

coming that's additional together. pleased making things in some So you'll with us I see those And future. do team we've think the the been changes

think we're It to can forward the also this looking quick. But was last lot X-X a them do. seeing out testing what weeks. I'm in I team So

Q Kyle Bauser

Definitely that. -- wondering. then not. of That's lastly, And housekeeping kind Appreciate item. just

you just of kind kind of recent the acquisitions. these all including converts So a to can but of bit, kind current walk through provide and cash shares verify, you debt, basic and After outstanding. little levels

A Beth Taylor

that OBRC our slightly in lower from not level significant -- of expect the a is is million And We the basic around million end be week, would not we're expecting our million. Yeah. It cash last the reported million. will the we acquisition. term cash. then but for the quarter. then so proxy debt $XX currently current change fully $XX.X in that $XX.X down the $XX reported level loans the plus notes, current outstanding, And the diluted, million borrowed level, which by in receipts, And we convertible $XXX we including be shares strong around

Q Kyle Bauser

so another and Thanks congratulations Perfect. quarter on much great

A Beth Taylor

Thanks, Kyle.

Operator

question Matt your next line Please of Our Craig-Hallum. comes with Hewitt question. from the proceed with

Q Matt Hewitt

on talk think afternoon. first already seeing you're still of they acquired bit realize year? early recently strong the Congratulations course up the quarter. you Good a But the Maybe how that some and the those for over the synergies progress cross-selling about could properties. and could little of it's need you

A Bob Leasure

starting Yes, X, right cross-selling book-to-bill -- what probably we seeing building reports acquisitions to tell there's some the and expansion also don't long on but and lot Hewitt. in with we're on not we're --but of seeing we're small at is, fortunately, expand. new Obviously of that services in the the the relationships PLAY-DOH and do X.XX we're recent on models. the the for we're and the board cross-selling. selling And and get is discovery the mainly seeing a to by I capabilities moment, couldn't advantage a develop brought now, you get animal develop. metric Bolder of do I a and of I are taking so Louis. have the having our trouble and St. with and develop And you this that relationships revenue list

Q Matt Hewitt

walk That's positioned where little source maybe far the and because out great. those facing could today? you've I'm to challenges was where wondering pricing. Where a that maybe how bit on for the of yourself supply able And is maybe through you've it talk NHP where of stand the booked -- pre be point, that But others far some to and you if as customers, your even meet maybe as contracts? customers about you -pandemic? being how your issues? disruptions And have

Bob Leasure

the Yes. range. It's think market open big But a one I little X,XXX was -pandemic, at point, pre -- in probably question.

XX,XXX. I doubled doubled think it's every year, X,XXX, to

we'll double this think I see it again. year

we and probably But I -sold of now going have XXs that pre pricing all we to make we is in the for don't been that and been have cost have obviously spot and for a think sure lot there market want has in our the what away. coming year contracts we of with have we honor customers. see and Most the year of any available the pressure pressure.

And and synergies Will and some doing our So feed our significantly did, the what just be of some and we are margins be far. have. cost has transportations. increased we our has so well with There'll pricing. important with with what so synergies further

that think to condition customers I you or boarding, maturing, the there own and if their their of has services additional wanting will. result as own own breeding, some in their So terms now do a of

expand So we're make are available. going those sure those services, to

are So new rapidly. they're those services, expanding

the not overall is market been as that's going far on, just I believe something pandemic-related. condition, this As

ago. and that exporting I hit, don't saw happen coincide And any. that When to COVID bring started the point XX% they And with want to down producing. when a COVID can And occurred today they XX of it were export you years you trend when was China that it's a stopped ago ten see CDC can just think what was started years think started at trend trend they that I one exporting. but that hit. reports, did

supply on pressure biotherapeutics large and continues and demand has to the with therapy. that gene So selling increase the a put

but get many NHP's drugs for studies. to still of the of FDA going it's So to are them many their are require going approval,

trend changing don't I in years. see that the So, anytime next few

-- we market our share services capacity. have NHP up right now, a and continue [Indiscernible] So, I build think we'll our s. to good And

Q Matt Hewitt

Thank correctly, one. margin for this you Beth, maybe will adjusted, next I you up here that you. last Thank much. Is the quarter, product something you product that the helpful. of the to closer gross there. so Or starting increases might and the takes heard should for then be quarter? to out you've through it walking puts play and you of And if will, gross seen? have margin one the the really couple us If quarters, especially you. XX% does over that given been bounce this Thank for that how some price That's

A Beth Taylor

Yes, you are correct. will It will hit bit inventory. that would be closer to will for that step-up XX% that without a that be But amortization continue QX the of the non-cash amortization. little There after of not QX. more

Matt Hewitt

Got right. Thank it. much. so All you

A Beth Taylor

Thank you.

A Bob Leasure

Matt. you, Thank

Operator

Lake from Our with final question Please Street Markets. Takkinen of proceed with question. the line Capital your comes Frank

Q Frank Takkinen

have step-up Hi for to as Wanted that look Matt just there as to if into opportunity Bob, give an of contracts pricing Thanks what and pricing. on taking new with us come OBRC. color next I Indego of continue was over on some contracts questions. hoping couple Beth. well as just some for And you the little years different spilt my could line the in, expire now. right bit in contracts is like NHP hi more a the

A Bob Leasure

Hopefully, year. that have to -- reset suppliers, so of The But we the I been contracts be them we don't real we'll be probably rest also that. them our customers. haven't we And the our pricing our visit -- annually And set there. more 'XX fix talk even to have generally decision going feedback to get and continue -- and annually, we the they for able honor through we'll year a may pricing of on September, It's from be point. has we'll what it's been make that will in now have are in-person is is we -- said, anybody throughout -- suppliers open, I be -- place October good in to -- from and this the our lately. -- we're at when markets multiple year. them. we contracts pricing contracts to reset before we though this We'll right know year what as -- with what in the XXXX that will do to meet able closer

Q Frank Takkinen

just wanted then And --

A Bob Leasure

calendar year contracts. year Fiscal or

Q Frank Takkinen

Got it.

-- Okay. And then

A Bob Leasure

will, We the do on also great have extra some on coming available, in but capacity, accounted so a we spot have we we some sell deal market. market stock of some the extra we sell have for. If what have as we will

Q Frank Takkinen

Got it. That makes sense.

Just wanted a little research anecdotal you've to feedback? take pre of offering in market? get How view some broad change in been the to been the higher that wanted digesting hearing have has and this November. -clinical now models people industry you've suite full bit plus field the feedback since What this been been

A Bob Leasure

are well through. of place, on we've and DSA of buyer, to customers so able And been aware customers have able we're believe that assessment side. been Well, what's taking a our to pass all we've -- that all the side, a we're our of result, and I and been a user, as discovery and through. safety pass

or some and think increasing I colony, request contracts they're a supply, of us doing out breeding, So, which back. that their for now we'll their that can services. hearing in any they own do to of understand it's concerned the their it's where that think And own for about boarding, push start that's don't I'm I to some see here and resources boarding more so increase been or have business, problem part they is of right

I investments facilities worried about necessarily expand would order think they're services. I to worry And access some in I further time, more about our hear hear to making so more about I But their in we'll this be than supply say -- the at pricing.

Q Frank Takkinen

it. Got

sure just I'm Then about perfect. lot acquisition around comment from Obviously last the heard That's but right to right you isn't sitting on digest pipeline now, just your at that Okay. all? team a now. me. acquisition Can comments one

just update us front on that any provide So you great. can would be

A Bob Leasure

That's They're to corporate our on and to rewarding will them our your we of so. organization a be and of Well, to forward. for the on for And our and months, going continue team not our to an that what going team. part like through array again won't shown exit to looking and hope a that. digest us that's but But so our process. five And say, probably going up they forward. are grow it's And organization. continue And And of remain can to radar acquisitions. before. very very we be going build but of strategy growth, they corporate expanding we would team that right into internal acquisitions. don't that's some to than so we're really acquisition have for I four probably things ready that at look a have they like internally. to to be rewarding our and comment of over we been our calling, few I to people, now to or a are our internally. part very assets I've open move team, I'll growth as eye balance always really us continue like be last our obviously to reach we always And investment acquisitions part comment looking we we us. have with do employees anything constantly on like people on out see, viable continues to our go-forward But active. ability organization, would we this screens current necessarily we to really external more again, or with full-service facilities have we're part -- But to keep broader at potential forward, did I and strategy. What's

and calls take to continue at to we we those opportunities. look looking those forward So

Q Frank Takkinen

it. Got

congrats taking progress. Okay. stop there. I'll all questions the my and Thanks on for

A Bob Leasure

you. Thank

Operator

we gentlemen, of have and end Ladies question-and-answer for I to the turn session. reached Bob will the remarks. the now over Leasure closing call

Bob Leasure

our to Well, Equity day. the the The I transformation make results. to our our I'd all has they in day Please reporting call an Group, thank when in months. exceptional you interested fiscal really that involved financial if great quarter back of you're May to second In every that four over we Investor reach efforts a extraordinary forward occurred this firm, you out to in our month and a last company closing, to participating scheduling relations for employees Have afternoon. achieving follow-up look the six release and and to this XXXX thank call. everyone bring like

Operator

disconnect Thank concludes conference day. you may a wonderful today's participation you. have for you and time. this This your at your and lines Thank

Inotiv (NOTV) 11 Feb 222022 Q1 Earnings call transcript