Azenta Reports Results of Third Quarter of Fiscal 2023, Ended June 30, 2023

BURLINGTON, Mass., Aug. 8, 2023

Quarter Ended

Dollars in millions, except per share data

June 30,

March 31,

June 30,

Change

ARIVA.DE Börsen-Geflüster

Kurse

Azenta

52,18 $

+1,32%

2023

2022

Prior Qtr

Prior Yr.

Revenue from Continuing Operations

$

166

$

148

$

133

12

%

25

%

Organic growth

2

%

Life Sciences Products

$

75

$

59

$

47

27

%

57

%

Life Sciences Services

$

91

$

90

$

85

2

%

7

%

Diluted EPS Continuing Operations

$

(0.04)

$

(0.03)

$

(0.09)

(35)

%

59

%

Diluted EPS Total

$

(0.02)

$

(0.07)

$

(0.13)

67

%

82

%

Non-GAAP Diluted EPS Continuing Operations

$

0.13

$

(0.06)

$

0.12

nm

12

%

Adjusted EBITDA Continuing Operations

$

13

$

(2)

$

14

nm

(7)

%

Management Comments

"Our third quarter results reflect positive momentum in both organic revenue growth and profitability. Our go-to-market initiatives continue to gain traction while our cost reduction efforts are providing additional support to the bottom line," stated Steve Schwartz, President and CEO. "Notably, the leverage in the business model is evident again and we generated positive free cash flow in the quarter. We are encouraged by the progress in the business over the past quarter, and while macroeconomic factors remain challenging, we are confident in the unique value we bring to our customer partnerships across pharmaceutical, biotech, and academic institutions."

Third Quarter Fiscal 2023 Results

Revenue was $166 million, up 25% year over year and 12% sequentially. Organic revenue increased 2% year over year, which excludes the impacts from foreign exchange headwinds of less than 1 percent and the contribution from acquisitions of 24 percentage points. Excluding the Consumables and Instruments ("C&I") business, which declined 27% and remains soft reflecting continued oversupply in the consumables market, the total business grew 8% year over year on an organic basis.
Life Sciences Products revenue was $75 million, up 57% year over year.

Revenue from businesses acquired during the past year was $32 million in the quarter, including $27 million from B Medical.
Organic revenue, which excludes the revenue from acquired businesses and impacts from foreign exchange headwinds, declined 9% driven by the softness in C&I. Excluding the C&I business, organic revenue grew 10% year over year driven by a record quarter in large automated store systems.

Life Sciences Services revenue was $91 million, up 7% year over year.

Organic revenue, which excludes the foreign exchange headwinds, grew 8% year over year.
Sample Repository Solutions grew 6% year over year on an organic basis, driven by growth in core storage services. Genomics services organic revenue grew 8% year over year, led by strength in Next Generation Sequencing and Gene Synthesis.

Summary of GAAP Earnings Results

Operating loss was $16 million. Gross margin was 41.0%, down 3.9 points year over year, primarily due to increased amortization and purchase accounting adjustments related to acquisitions. Operating expense was $84 million, up $19 million year over year.
Other income included $11 million of net interest income versus $5 million in the prior year period.
Diluted EPS from continuing operations was ($0.04) compared to ($0.09) in the third quarter of fiscal 2022. Diluted EPS from discontinued operations was $0.02. Total diluted EPS was ($0.02), compared to ($0.13) one year ago.

Summary of Non-GAAP Earnings Results

Operating loss was $1 million. Operating margin declined 4.0 points year over year.

Gross margin was 45.6%, down 0.7 points year over year, reflecting flat margin in Products and lower margin in Services.
Operating expense in the quarter was $77 million, up $20 million year over year driven significantly by additional operating structure of businesses acquired during the past year, as well as investment in sales and research and development, net of cost reduction actions.

Adjusted EBITDA was $13 million, and Adjusted EBITDA margin was 7.8%, down 2.6 points year over year.
Diluted EPS was $0.13, compared to $0.12 one year ago.

Cash and Liquidity

The Company ended the quarter with a total balance of cash, cash equivalents, restricted cash and marketable securities of $1.3 billion.
Operating cash flow was $17 million in the quarter. Capital expenditures were $8 million. Free cash flow was $9 million.

Share Repurchase Program Update

On April 3, 2023 the Company completed its previously announced accelerated share repurchase ("ASR") program and on April 5, 2023 received final settlement of 4 million shares for a total of 10 million shares repurchased under the $500 million ASR program. During the quarter, the Company repurchased 4 million additional shares for $172 million under a 10b5-1 program.
Subsequent to June 30, 2023 and as of August 8, 2023, the Company repurchased 2 million shares for $92 million under a 10b5-1 program.
As of August 8, 2023, fiscal year to date, the Company has repurchased a total of 16 million shares for $764 million and is on track to repurchase a total of $1 billion by the end of calendar year 2023.

Guidance for Fourth Quarter Fiscal 2023

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