News Releases
Azenta Reports Results of Second Quarter of Fiscal 2023 and Announces Business Realignment

BURLINGTON, Mass., May 9, 2023 /PRNewswire/ -- Azenta, Inc. (Nasdaq: AZTA) today reported financial results for the second quarter ended March 31, 2023.

                                 
     

Quarter Ended

Dollars in millions, except per share data

   

March 31, 

 

December 31, 

 

March 31, 

 

Change

     

2023

 

2022

 

2022

 

Prior Qtr

 

Prior Yr.

Revenue from Continuing Operations

   

$

148

 

$

178

 

$

146

 

(17)

%

 

2

%

   Organic growth ex-COVID impacts

                           

(2)

%

Life Sciences Products

   

$

59

 

$

90

 

$

54

 

(34)

%

 

10

%

Life Sciences Services

   

$

90

 

$

89

 

$

92

 

1

%

 

(3)

%

                                 

Diluted EPS Continuing Operations

   

$

(0.03)

 

$

(0.15)

 

$

(0.02)

 

nm

   

nm

 

Diluted EPS Total

   

$

(0.07)

 

$

(0.15)

 

$

28.28

 

nm

   

nm

 
                                 

Non-GAAP Diluted EPS Continuing Operations

   

$

(0.06)

 

$

0.12

 

$

0.12

 

nm

   

nm

 

Adjusted EBITDA Continuing Operations

   

$

(2)

 

$

12

 

$

19

 

nm

   

nm

 

 

 


 

 

Management Comments

"Second quarter results reflect a combination of solid progress on the Services side of the business offset by timing-related issues impacting performance in Products, most notably in B Medical. We are particularly encouraged by the results of the Genomics Services business, which included a sequential, broad based recovery in gene synthesis," stated Steve Schwartz, President and CEO. "B Medical continues to navigate variable timing in the final receipt of orders, however, we remain confident in the growth prospects of this business based on the notable projects on track to be completed."

"Today we also announced a business realignment, which we believe will best position the Company to meet the needs of our customers, and in turn, accelerate growth of the business. In conjunction with the realignment, we are in the process of streamlining our manufacturing operations around key centers of excellence. We expect to realize $15 million in annual cost reduction in addition to the previously announced cost saving initiative."

"We are keenly focused on driving profitable growth and remain committed to delivering shareholder value through our operations as well as through our capital deployment strategy. Since late November 2022 to date, we have repurchased roughly 15% of our outstanding shares and by the end of calendar year 2023 we expect to have applied a total of $1 billion to share repurchases."

Second Quarter Fiscal 2023 Results

In addition to reported and organic year-over-year percent changes, the Company has included the year-over-year percent changes of organic revenue ex-COVID which excludes the estimated revenue contribution from products delivered and services rendered to support COVID testing and research, and estimated constraints on the business due to disruptions in customer demand or the Company's ability to deliver in the COVID environment.

             

% Change Year over Year

Reported

 

Organic

 

Organic ex-COVID
impacts

 

Total Azenta Revenue

2

%

(8)

%

(2)

%

  Life Sciences Products

10

%

(21)

%

(2)

%

  Life Sciences Services

(3)

%

0

%

(2)

%

 

  • Revenue was $148 million, up 2% year over year and down 17% sequentially. Organic revenue declined 8%, which excludes a 3 percentage point headwind from foreign exchange and a 13 percentage point tailwind from acquisitions.
  • Organic revenue declined 2% excluding COVID impacts. The estimated COVID-related revenue was $3 million in the second quarter, including $2 million from B Medical, compared to $10 million in the prior year period, primarily reflecting the decline in sales of consumables for COVID testing.
  • Life Sciences Products revenue increased 10% year over year primarily due to the addition of B Medical. Acquisitions contributed $19 million to revenue in the quarter. Organic revenue declined 21% and was down 2% excluding COVID impacts.
    • The Products business, excluding B Medical, was primarily impacted by lower sales of consumables for COVID testing and continued destocking trends. Storage systems revenue grew 6% year over year in which, despite strong backlog, some planned installations were delayed due to customer facility readiness.  
    • B Medical reported revenue of $15 million in the quarter, lower than initially expected due to order delays. 
  • Life Sciences Services revenue declined 3% year over year, with organic revenue flat versus second quarter 2022 and down 2% excluding COVID impacts.
    • Sample repository solutions ("SRS") revenue increased 1% year over year as reported and increased 5% on an organic basis, excluding COVID impacts, led by double-digit growth in core storage.
    • Genomics revenue was down 4% year over year on a reported and organic ex-COVID basis, primarily reflecting the previously reported decline in the synthesis business over recent quarters. Synthesis was 12% lower year over year but provided a quarter-to-quarter expansion of 6% with strong indications of recovery. 

Summary of GAAP Earnings Results

  • Operating loss was $13 million. Gross margin was 35.9%, down 12.8 points year over year. Increased amortization and purchase accounting related to the B Medical acquisition drove approximately 4 points of the decline and the balance reflects impacts from weaker revenue mix and inflationary costs. Operating expense was $66 million, lower by $9 million year over year.  The decrease was driven by a $17 million reduction in the fair value of the contingent consideration related to B Medical, partially offset by additional operating structure of businesses acquired during the past year.
  • Other income included $10 million of net interest income versus $2 million in the prior year period.
  • Diluted EPS from continuing operations was ($0.03) compared to ($0.02) in the second quarter of fiscal 2022. Diluted EPS from discontinued operations was ($0.04) primarily due to the accrual of a liability related to a prior disposition. Total diluted EPS was ($0.07), compared to $28.28 one year ago.

Summary of Non-GAAP Earnings Results

  • Operating loss was $13 million. Operating margin declined 15.6 points year over year. Gross margin was 41.1%, down 8.5 points year over year, driven by weaker revenue mix and inflationary costs. Operating expense in the quarter was $74 million, up $12 million year over year driven primarily by the added structure of acquired businesses.
  • Adjusted EBITDA, which excludes stock-based compensation, was ($2.4) million, and Adjusted EBITDA margin was (1.6%), down 14.9 points year over year.
  • The Company recorded $1.5 million of restructuring charges related to the previously announced cost reduction actions. Net of investments, these actions are expected to provide a structural benefit to operating margin of approximately 2 points, equally split between gross margin and operating expense, in the second half of fiscal 2023.
  • Diluted EPS was ($0.06), compared to $0.12 one year ago.

Cash and Liquidity as of March 31, 2023

  • The Company ended the quarter with a total balance of cash, cash equivalents, restricted cash and marketable securities of $1.5 billion.
  • On February 2, 2023, the Company completed the acquisition of Ziath, Ltd., a leading provider of 2D barcode readers for life sciences applications for a cash purchase price of approximately $16 million, net of cash acquired.

Share Repurchase Program Update

  • On April 3, 2023 the Company completed its previously announced $500 million accelerated share repurchase ("ASR") program and on April 5, 2023 received final settlement of approximately 4 million shares for a total of approximately 10 million shares repurchased under the program.
  • Following completion of the ASR, the Company commenced open market share repurchases under a 10b5-1 program and is committed to repurchase another $500 million, bringing the total repurchase expected by the end of calendar year 2023 to $1 billion. This program is under its previously announced $1.5 billion share repurchase authorization.

Business Realignment Plan

  • The Company announced a realignment of the business to enhance its commercial strategy for accelerating growth and to enable additional profitability initiatives. The Company is forming three operational groups aligned with industry end-users and purchase decision-makers: Multi-Omics, Sample Management Solutions, and B Medical Systems.
    • All Multi-Omics resources will operate under a single structure that aligns scientists, marketing resources, and decision-making around the customer, with a full embodiment of the GENEWIZ heritage of "solid science, superior service."
    • SRS, Ultracold Systems and Consumables and Instruments resources will operate as a single business unit offering end-to-end sample management services and products.
    • B Medical will continue under its current management structure. 
       
  • The commercial sales organization will be unified but with dedicated leadership aligned with each of the business units. The sales structure includes strategic account management which will continue the cross-offering sales and support which has resulted in significant global enterprise relationships.
  • The new organizational structure is set to be effective October 1, 2023, as the 2024 fiscal year begins. 
  • In conjunction with the realignment, plans are also ongoing to integrate and streamline operations leveraging centers of excellence. In total, the Company expects to realize $15 million in annual cost savings from these actions by the end of the 2023 calendar year.  

Guidance for Third Quarter Fiscal 2023

The Company announced revenue and earnings guidance for the third quarter fiscal 2023.  Total revenue is expected to be in the range of $150 to $168 million. Life Sciences Services revenue is expected to be in the range of $87 to $97 million. Life Sciences Products revenue excluding B Medical is expected to be in the range of $42 to $50 million. B Medical revenue is expected to be approximately $21 million.

Non-GAAP diluted earnings per share is expected to be in the range of ($0.07) to $0.03. GAAP diluted earnings per share from continuing operations is expected to be in the range of ($0.29) to ($0.19).

Conference Call and Webcast

Azenta management will webcast its second quarter fiscal 2023 earnings conference call today at 4:30 p.m. Eastern Time. During the call, Company management will respond to questions concerning, but not limited to, the Company's financial performance, business conditions and industry outlook. Management's responses could contain information that has not been previously disclosed.

The call will be broadcast live over the Internet and, together with presentation materials referenced on the call, will be hosted at the Investor Relations section of Azenta's website at https://investors.azenta.com/events and will be archived online on this website for convenient on-demand replay. In addition, you may call 800- 926-9761 (US & Canada only) or +1-212-231-2919 for international callers to listen to the live webcast.

Regulation G – Use of Non-GAAP financial Measures

The Company supplements its GAAP financial measures with certain non-GAAP financial measures to provide investors a better perspective on the results of business operations, which the Company believes is more comparable to the similar analyses provided by its peers. These measures are not presented in accordance with, nor are they a substitute for, U.S. generally accepted accounting principles, or GAAP. These measures should always be considered in conjunction with appropriate GAAP measures. A reconciliation of non-GAAP measures to the most nearly comparable GAAP measures is included at the end of this release following the consolidated balance sheets, statements of operations and statements of cash flows.

"Safe Harbor Statement" under Section 21E of the Securities Exchange Act of 1934

Some statements in this release are forward-looking statements made under Section 21E of the Securities Exchange Act of 1934. These statements are neither promises nor guarantees but involve risks and uncertainties, both known and unknown, that could cause Azenta's financial and business results to differ materially from our expectations. They are based on the facts known to management at the time they are made. Other forward-looking statements include but are not limited to statements about our revenue and earnings expectations, our ability to realize margin improvement from cost reductions, the benefits we expect to realize from the planned realignment of our business, our ability to integrate acquired companies, our ability to improve or retain our market position, and our ability to deliver financial success in the future and otherwise related to future operating or financial performance and opportunities. Factors that could cause results to differ from our expectations include the following:  our ability to reduce costs effectively, the impact of the COVID-19 global pandemic on the markets we serve, including our supply chain, and on the global economy generally; the volatility of the life sciences markets the Company serves; our possible inability to meet demand for our products due to difficulties in obtaining components and materials from our suppliers in required quantities and of required quality; the inability of customers to make payments to us when due; price competition; disputes concerning intellectual property; uncertainties in global political and economic conditions; our ability to successfully invest the cash proceeds from the sale of our Semiconductor Automation business; and other factors and other risks, including those that we have described in our filings with the Securities and Exchange Commission, including but not limited to our Annual Report on Form 10-K, Current Reports on Form 8-K and our Quarterly Reports on Form 10-Q. As a result, we can provide no assurance that our future results will not be materially different from those projected. Azenta expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any such statement to reflect any change in our expectations or any change in events, conditions, or circumstances on which any such statement is based. Azenta undertakes no obligation to update the information contained in this press release.

About Azenta Life Sciences
Azenta, Inc. (Nasdaq: AZTA) is a leading provider of life sciences solutions worldwide, enabling impactful breakthroughs and therapies to market faster. Azenta provides a full suite of reliable cold-chain sample management solutions and genomic services across areas such as drug development, clinical research and advanced cell therapies for the industry's top pharmaceutical, biotech, academic and healthcare institutions globally.

Azenta is headquartered in Burlington, Massachusetts, with operations in North America, Europe and Asia. For more information, please visit www.azenta.com.

AZENTA INVESTOR CONTACTS: 

Sara Silverman
Head of Investor Relations & Corporate Communications
ir@azenta.com

Sherry Dinsmore
sherry.dinsmore@azenta.com

 

 

AZENTA, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

(In thousands, except per share data)

                         
 

Three Months Ended

   

Six Months Ended

 

March 31, 

   

March 31, 

 

2023

 

2022

   

2023

 

2022

                         

Revenue

                       

Products

$

51,917

 

$

49,449

   

$

137,715

 

$

95,318

Services

 

96,484

   

96,095

     

189,052

   

189,878

Total revenue

 

148,401

   

145,544

     

326,767

   

285,196

Cost of revenue

                       

Products

 

40,009

   

24,953

     

94,108

   

49,475

Services

 

55,156

   

49,766

     

105,558

   

97,852

Total cost of revenue

 

95,165

   

74,719

     

199,666

   

147,327

Gross profit

 

53,236

   

70,825

     

127,101

   

137,869

Operating expenses

                       

Research and development

 

8,520

   

6,896

     

16,056

   

13,381

Selling, general and administrative

 

73,339

   

67,915

     

165,891

   

128,626

Contingent consideration - fair value adjustments

 

(17,145)

   

600

     

(17,145)

   

600

Restructuring charges

 

1,499

   

122

     

2,961

   

295

Total operating expenses

 

66,213

   

75,533

     

167,763

   

142,902

Operating loss

 

(12,977)

   

(4,708)

     

(40,662)

   

(5,033)

Interest income

 

10,394

   

3,076

     

21,059

   

3,111

Interest expense

 

   

(1,555)

     

   

(2,010)

Loss on extinguishment of debt

 

   

(632)

     

   

(632)

Other income (expense)

 

(2,668)

   

(1,170)

     

(1,523)

   

(2,248)

Loss before income taxes

 

(5,251)

   

(4,989)

     

(21,126)

   

(6,812)

Income tax benefit

 

(3,260)

   

(3,173)

     

(7,900)

   

(7,853)

Income (loss) from continuing operations

 

(1,991)

   

(1,816)

     

(13,226)

   

(1,041)

Income (loss) from discontinued operations, net of tax

 

(2,936)

   

2,121,690

     

(2,936)

   

2,162,152

Net income (loss)

$

(4,927)

 

$

2,119,874

   

$

(16,162)

 

$

2,163,193

Basic net (loss) income per share:

                       

Income (loss) from continuing operations

$

(0.03)

 

$

(0.02)

   

$

(0.19)

 

$

0.01

Income (loss) from discontinued operations, net of tax

 

(0.04)

   

28.31

     

(0.04)

   

28.90

Basic net income (loss) per share

$

(0.07)

 

$

28.28

   

$

(0.23)

 

$

28.91

Diluted net income (loss) per share:

                       

Income (loss) from continuing operations

$

(0.03)

 

$

(0.02)

   

$

(0.19)

 

$

0.01

Income (loss) from discontinued operations, net of tax

 

(0.04)

   

28.31

     

(0.04)

   

28.77

Diluted net income (loss) per share

$

(0.07)

 

$

28.28

   

$

(0.23)

 

$

28.79

Weighted average shares used in computing net income per share:

                       

Basic

 

69,111

   

74,958

     

70,858

   

74,823

Diluted

 

69,111

   

74,958

     

70,858

   

75,145

 

AZENTA, INC.

CONSOLIDATED BALANCE SHEETS

(unaudited)

(In thousands, except share and per share data)

           
 

March 31, 

 

September 30,

 

2023

 

2022

           

Assets

         

Current assets

         

Cash and cash equivalents

$

667,365

 

$

658,274

Short-term marketable securities

 

513,651

   

911,764

Accounts receivable, net of allowance for expected credit losses ($7,696 and $5,162,
respectively)

 

167,960

   

163,758

Inventories

 

150,727

   

85,544

Derivative asset

 

1,278

   

124,789

Short-term restricted cash

 

4,021

   

382,596

Prepaid expenses and other current assets

 

80,732

   

132,621

Total current assets

 

1,585,734

   

2,459,346

Property, plant and equipment, net

 

215,301

   

154,470

Long-term marketable securities

 

266,176

   

352,020

Long-term deferred tax assets

 

490

   

1,169

Goodwill

 

790,494

   

513,623

Intangible assets, net

 

323,927

   

178,401

Other assets

 

67,692

   

57,093

Total assets

$

3,249,814

 

$

3,716,122

Liabilities and stockholders' equity

         

Current liabilities

         

Accounts payable

$

45,306

 

$

38,654

Deferred revenue

 

46,048

   

39,748

Accrued warranty and retrofit costs

 

5,380

   

2,890

Accrued compensation and benefits

 

27,632

   

41,898

Accrued income taxes payable

 

5,228

   

28,419

Accrued expenses and other current liabilities

 

83,050

   

78,937

Total current liabilities

 

212,644

   

230,546

Long-term tax reserves

 

1,720

   

1,684

Long-term deferred tax liabilities

 

70,104

   

64,555

Long-term pension liabilities

 

280

   

261

Long-term operating lease liabilities

 

57,137

   

49,227

Other long-term liabilities

 

12,702

   

6,463

Total liabilities

 

354,587

   

352,736

Stockholders' equity

         

Preferred stock, $0.01 par value - 1,000,000 shares authorized, no shares issued or outstanding

 

   

Common stock, $0.01 par value - 125,000,000 shares authorized, 82,609,256 shares issued and
69,147,387 shares outstanding at March 31, 2023, 88,482,125 shares issued and 75,020,256
shares outstanding at September 30, 2022

 

826

   

885

Additional paid-in capital

 

1,495,118

   

1,992,017

Accumulated other comprehensive loss

 

(38,870)

   

(83,916)

Treasury stock, at cost - 13,461,869 shares at March 31, 2023 and September 30, 2022

 

(200,956)

   

(200,956)

Retained earnings

 

1,639,109

   

1,655,356

Total stockholders' equity

 

2,895,227

   

3,363,386

Total liabilities and stockholders' equity

$

3,249,814

 

$

3,716,122

           

 

AZENTA, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(In thousands, except share and per share data)

   
                 
   

Six Months Ended

   
   

March 31, 

   
   

2023

 

2022

   

Cash flows from operating activities

               

Net income (loss)

 

$

(16,162)

 

$

2,163,193

   

Adjustments to reconcile net income to net cash provided by operating activities:

               

Depreciation and amortization

   

42,140

   

26,005

   

Stock-based compensation

   

6,096

   

7,230

   

Contingent consideration adjustment

   

(17,145)

   

600

   

Amortization of deferred financing costs

   

   

66

   

Amortization of premium on marketable securities and deferred financing costs

   

(5,284)

   

   

Deferred income taxes

   

(20,843)

   

11,054

   

Loss on extinguishment of debt

   

   

632

   

Purchase accounting impact on inventory

   

5,781

   

   

(Gain) loss on disposals of property, plant and equipment

   

31

   

(30)

   

Gain on divestiture, net of tax

         

(2,130,351)

   

Fees paid stemming from divestiture

   

   

(52,461)

   

Accounts receivable

   

23,925

   

(456)

   

Inventories

   

(11,504)

   

(55,033)

   

Accounts payable

   

(5,677)

   

(7,906)

   

Deferred revenue

   

3,625

   

5,215

   

Accrued warranty and retrofit costs

   

622

   

(198)

   

Accrued compensation and tax withholdings

   

(21,797)

   

10,875

   

Accrued restructuring costs

   

820

   

(113)

   

Other current assets and liabilities

   

(23,798)

   

(34,061)

   

Net cash (used in) provided by operating activities

   

(39,170)

   

(55,739)

   

Cash flows from investing activities

               

Purchases of property, plant and equipment

   

(21,705)

   

(44,326)

   

Purchases of technology intangibles

   

   

(4,000)

   

Purchases of marketable securities

   

(233,584)

   

(1,074,428)

   

Sales and maturities of marketable securities

   

728,171

   

3,710

   

Proceeds from divestiture, net of cash transferred

   

   

2,927,245

   

Net Investment hedge settlement

   

29,313

   

   

Acquisitions, net of cash acquired

   

(387,665)

   

   

Net cash provided by (used in) investing activities

   

114,530

   

1,808,201

   

Cash flows from financing activities

               

Proceeds from issuance of common stock

   

   

3,461

   

Payments of financing costs

   

   

(312)

   

Principal payments on debt

   

   

(49,725)

   

Common stock dividends paid

   

   

(7,494)

   

Payment for contingent consideration related to acquisition

   

   

(9,400)

   

Payment of finance leases

   

(230)

   

   

Stock repurchase

   

(500,000)

   

   

Withholding tax payments on net share settlements on equity awards

   

(4,906)

   

   

Net cash used in financing activities

   

(505,136)

   

(63,470)

   

Effects of exchange rate changes on cash and cash equivalents

   

60,355

   

(25,372)

   

Net decrease in cash, cash equivalents and restricted cash

   

(369,421)

   

1,663,620

   

Cash, cash equivalents and restricted cash, beginning of period

   

1,041,296

   

285,333

   

Cash, cash equivalents and restricted cash, end of period

 

$

671,875

 

$

1,948,954

   

Supplemental disclosures:

               

Cash paid for income taxes, net

   

35,286

   

20,782

   

Reconciliation of cash, cash equivalents, and restricted cash to the consolidated
balance sheets

               
     

March 31, 

   

September 30, 

   
     

2023

   

2022

   

Cash and cash equivalents of continuing operations

 

$

667,365

 

$

658,274

   

Short-term restricted cash

   

4,021

   

382,596

   

Long-term restricted cash included in other assets

   

489

   

426

   

Total cash, cash equivalents and restricted cash shown in the consolidated
statements of cash flows

 

$

671,875

 

$

1,041,296

   

 

Notes on Non-GAAP Financial Measures

Non-GAAP financial measures are used in addition to and in conjunction with results presented in accordance with GAAP and should not be relied upon to the exclusion of GAAP financial measures. Management adjusts the GAAP results for the impact of amortization of intangible assets, restructuring charges, purchase price accounting adjustments and charges related to M&A to provide investors better perspective on the results of operations which the Company believes is more comparable to the similar analysis provided by its peers.  Management also excludes special charges and gains, such as impairment losses, gains and losses from the sale of assets, certain tax benefits and charges, as well as other gains and charges that are not representative of the normal operations of the business. Management strongly encourages investors to review our financial statements and publicly filed reports in their entirety and not rely on any single measure.

 

                                     
   

Quarter Ended

   

March 31, 2023

 

December 31, 2022

 

March 31, 2022

       

per diluted

     

per diluted

     

per diluted

Dollars in thousands, except per share data 

 

$

 

share

 

$

 

share

 

$

 

share

Net loss from continuing operations

 

$

(1,991)

 

$

(0.03)

 

$

(11,235)

 

$

(0.15)

 

$

(1,816)

 

$

(0.02)

Adjustments:

                                   

Purchase accounting impact on inventory

   

2,912

   

0.04

   

2,869

   

0.04

   

   

Amortization of intangible assets

   

12,411

   

0.18

   

11,541

   

0.16

   

7,887

   

0.10

Restructuring related charges

   

1,499

   

0.02

   

1,462

   

0.02

   

122

   

0.00

Tariff adjustment

   

   

   

   

   

(486)

   

Merger and acquisition costs and
costs related to share repurchase

   

19

   

0.00

   

11,838

   

0.16

   

4,989

   

0.07

Contingent consideration - fair value adjustments

   

(17,145)

   

(0.25)

   

   

   

600

   

0.01

Rebranding and transformation costs

   

10

   

0.00

   

(65)

   

(0.00)

   

1,297

   

0.02

Indemnification asset release

   

   

   

(19)

   

(0.00)

   

   

Loss on extinguishment of debt

   

   

   

   

   

632

   

0.01

Tax adjustments (1)

   

56

   

0.00

   

(1,436)

   

(0.02)

   

(900)

   

(0.01)

Tax effect of adjustments 

   

(1,934)

   

(0.03)

   

(6,000)

   

(0.08)

   

(3,580)

   

(0.05)

Non-GAAP adjusted net income (loss)
from continuing operations

 

$

(4,164)

 

$

(0.06)

 

$

8,954

 

$

0.12

 

$

8,745

 

$

0.12

   Stock based compensation, pre-tax

   

3,991

   

0.06

   

2,226

   

0.03

   

5,549

   

0.07

   Tax rate

   

15

%

 

   

15

%

 

   

15

%

 

Stock-based compensation, net of tax

   

3,392

   

0.05

   

1,892

   

0.03

   

4,717

   

0.06

Non-GAAP adjusted net income
excluding stock-based compensation
- continuing operations

 

$

(772)

 

$

(0.01)

 

$

10,846

 

$

0.15

 

$

13,461

 

$

0.18

                                     

Shares used in computing non-GAAP
diluted net income per share

   

   

69,111

   

   

72,543

   

   

74,958

 

                           
     

Six Months Ended

     

March 31, 2023

 

March 31, 2022

         

per diluted

     

per diluted

Dollars in thousands, except per share data 

   

$

 

share

 

$

 

share

Net income (loss) from continuing operations

   

$

(13,226)

 

$

(0.19)

 

$

1,041

 

$

0.01

Adjustments:

                         

Purchase accounting impact on inventory

     

5,781

   

0.08

   

   

Amortization of intangible assets

     

23,951

   

0.34

   

15,933

   

0.21

Restructuring related charges

     

2,960

   

0.04

   

296

   

0.00

Tariff adjustment

     

   

   

(486)

   

(0.01)

Merger and acquisition costs and costs related to share repurchase

     

11,856

   

0.17

   

8,708

   

0.12

Rebranding and transformation costs

     

(55)

   

(0.00)

   

1,916

   

0.03

Indemnification asset release

     

(19)

   

(0.00)

   

   

Contingent consideration - fair value adjustments

     

(17,145)

   

(0.24)

   

600

   

0.01

Loss on extinguishment of debt

     

   

   

632

   

0.01

Tax adjustments (1)

     

(1,380)

   

(0.02)

   

(4,760)

   

(0.06)

Tax effect of adjustments

     

(7,934)

   

(0.11)

   

(6,225)

   

(0.08)

Non-GAAP adjusted net income from continuing operations

   

$

4,790

 

$

0.07

 

$

17,655

 

$

0.23

Stock-based compensation, pre-tax

     

6,217

   

0.09

   

9,007

   

0.12

Tax rate

     

15

%

 

   

15

%

 

Stock-based compensation, net of tax

     

5,284

 

$

0.07

   

7,656

   

0.10

Non-GAAP adjusted net income excluding stock-based
compensation - continuing operations

   

$

10,074

 

$

0.14

 

$

25,311

 

$

0.34

                           

Shares used in computing non-GAAP diluted net income per share

     

   

70,858

   

   

75,145

   

(1)

Tax adjustments during all periods include adjustments to tax benefits related to stock compensation. These adjustments are recognized in the period of vesting for US GAAP but included in the annual effective tax rate for Non-GAAP reporting. Tax adjustments for the quarter ended December 31, 2022, included a $1.3M increase to expense related to the exclusion of a benefit from an incentive tax rate change in China. Tax adjustments for the quarter ended March 31, 2022, include a $1.9M increase to expense related to the exclusion of allocations between continuing operations and discontinued operations.

 

                               
   

Quarter Ended

 

Six Months Ended

   

March 31, 

 

December 31, 

 

March 31, 

 

March 31, 

 

March 31, 

Dollars in thousands

 

2023

 

2022

 

2022

 

2023

 

2022

GAAP net (loss) income

 

$

(4,927)

 

$

(11,234)

 

$

2,119,874

 

$

(16,161)

 

$

2,163,193

Less: Income from discontinued operations

   

2,936

   

   

(2,121,690)

   

2,936

   

(2,162,152)

GAAP net (loss) income from continuing operations

   

(1,991)

   

(11,234)

   

(1,816)

   

(13,225)

   

1,041

Adjustments:

                             

Less: Interest income

   

(10,394)

   

(10,707)

   

(3,076)

   

(21,059)

   

(3,111)

Add: Interest expense

   

   

43

   

1,555

   

   

2,010

Add / Less: Income tax provision (benefit)

   

(3,260)

   

(4,640)

   

(3,173)

   

(7,900)

   

(7,853)

Add: Depreciation

   

9,549

   

8,640

   

5,316

   

18,189

   

10,524

Add: Amortization of completed technology

   

4,901

   

4,168

   

1,840

   

9,070

   

3,613

Add: Amortization of customer
relationships and acquired intangible assets

   

7,509

   

7,372

   

6,047

   

14,882

   

12,319

Add: Loss on extinguishment of debt

   

   

   

632

   

   

632

Earnings before interest, taxes,
depreciation and amortization - Continuing operations

 

$

6,315

 

$

(6,358)

 

$

7,324

 

$

(44)

 

$

19,175

 

                               
   

Quarter Ended

 

Six Months Ended

   

March 31, 

 

December 31, 

 

March 31, 

 

March 31, 

 

March 31, 

Dollars in thousands

 

2023

 

2022

 

2022

 

2023

 

2022

Earnings before interest, taxes, depreciation
and amortization - Continuing operations

 

$

6,315

 

$

(6,358)

 

$

7,324

 

$

(44)

 

$

19,175

Adjustments:

                             

Add: Stock-based compensation

   

3,991

   

2,226

   

5,549

   

6,217

   

9,007

Add: Restructuring related charges

   

1,499

   

1,462

   

122

   

2,960

   

296

Add: Purchase accounting impact on inventory

   

2,912

   

2,869

   

   

5,781

   

Add: Merger and acquisition costs and costs
related to share repurchase

   

19

   

11,838

   

4,989

   

11,857

   

8,708

Contingent consideration - fair value adjustments

   

(17,145)

   

   

600

   

(17,145)

   

600

Add: Tariff adjustment

   

   

   

(486)

   

   

(486)

Rebranding and transformation costs

   

10

   

(65)

   

1,297

   

(55)

   

1,916

Less: Indemnification asset release

   

   

(19)

   

   

(19)

   

Adjusted earnings before interest, taxes,
depreciation and amortization - Continuing operations

 

$

(2,400)

 

$

11,952

 

$

19,395

 

$

9,552

 

$

39,216

 

                                     
   

Quarter Ended

 

Dollars in thousands

 

March 31, 2023

   

December 31, 2022

   

March 31, 2022

 

GAAP gross profit

 

$

53,236

 

35.9

%

 

$

73,865

 

41.4

%

 

$

70,825

 

48.7

%

Adjustments:

                                   

Amortization of completed technology

   

4,901

 

3.3

     

4,168

 

2.3

     

1,840

 

1.3

 

Purchase accounting impact on inventory

   

2,912

 

2.0

     

2,869

 

1.6

     

 

 

Tariff adjustment

   

 

     

 

     

(486)

 

(0.3)

 

Non-GAAP adjusted gross profit

 

$

61,049

 

41.1

%

 

$

80,902

 

45.4

%

 

$

72,179

 

49.6

%

                                     

 

                         
   

Six Months Ended

 

Dollars in thousands

 

March 31, 2023

   

March 31, 2022

 

GAAP gross profit

 

$

127,101

 

38.9

%

 

$

137,869

 

48.3

%

Adjustments:

                       

Amortization of completed technology

   

9,070

 

2.8

     

3,613

 

1.3

 

Purchase accounting impact on inventory

   

5,780

 

1.8

     

 

 

Tariff adjustment

   

 

     

(486)

 

(0.2)

 

Non-GAAP adjusted gross profit

 

$

141,951

 

43.4

%

 

$

140,996

 

49.4

%

 

                                                                         
   

 Life Sciences Products

 

Life Sciences Services

   

Quarter Ended

 

Quarter Ended

   

March 31, 

   

December 31, 

   

March 31, 

   

March 31, 

   

December 31, 

   

March 31, 

 

Dollars in thousands

 

2023

   

2022

   

2022

   

2023

   

2022

   

2022

 

GAAP gross profit

 

$

14,284

 

24.3

%

 

$

32,980

 

36.8

%

 

$

26,290

 

49.0

%

 

$

38,952

 

43.5

%

 

$

40,885

 

46.1

%

 

$

44,535

 

48.4

%

Adjustments:

                                                                       

Amortization of completed technology

   

3,569

 

6.1

     

2,846

 

3.2

     

267

 

0.5

     

1,333

 

1.5

     

1,322

 

1.5

     

1,572

 

1.7

 

Purchase accounting impact on inventory

   

2,912

 

4.9

     

2,869

 

3.2

     

 

     

 

     

 

     

 

 

Tariff adjustment

   

 

     

 

     

 

     

 

     

 

     

(486)

 

(0.5)

 

Non-GAAP adjusted gross profit

 

$

20,765

 

35.3

%

 

$

38,695

 

43.2

%

 

$

26,557

 

49.5

%

 

$

40,285

 

45.0

%

 

$

42,207

 

47.6

%

 

$

45,621

 

49.6

%

 

                                     
   

 Life Sciences Products

 

Life Sciences Services

   

Quarter Ended

 

Quarter Ended

   

March 31, 

 

December 31, 

 

March 31, 

 

March 31, 

 

December 31, 

 

March 31, 

Dollars in thousands

 

2023

 

2022

 

2022

 

2023

 

2022

 

2022

GAAP operating profit (loss)

 

$

(16,402)

 

$

(3,798)

 

$

5,021

 

$

(4,877)

 

$

(4,612)

 

$

3,770

Adjustments:

                                   

Amortization of completed technology

   

3,569

   

2,846

   

267

   

1,333

   

1,322

   

1,572

Purchase accounting impact on inventory

   

2,912

   

2,869

   

   

   

   

Restructuring related charges

   

   

   

   

110

   

   

Other adjustment

   

102

   

1,413

   

   

   

   

Tariff adjustment

   

   

   

   

   

   

(486)

Non-GAAP adjusted operating profit (loss)

 

$

(9,819)

 

$

3,330

 

$

5,288

 

$

(3,434)

 

$

(3,290)

 

$

4,856

 

                                                       
   

Total Segments

 

Corporate

 

Total

   

Quarter Ended

 

Quarter Ended

 

Quarter Ended

   

March 31, 

 

December 31, 

 

March 31, 

 

March 31, 

 

December 31, 

 

March 31, 

 

March 31, 

 

December 31, 

 

March 31, 

Dollars in thousands

 

2023

 

2022

 

2022

 

2023

 

2022

 

2022

 

2023

 

2022

 

2022

GAAP operating profit (loss)

 

$

(21,279)

 

$

(8,410)

 

$

8,791

 

$

8,302

 

$

(19,274)

 

$

(13,499)

 

$

(12,977)

 

$

(27,684)

 

$

(4,708)

Adjustments:

                                                     

Amortization of completed technology

   

4,901

   

4,168

   

1,840

   

   

   

   

4,901

   

4,168

   

1,840

Amortization of customer relationships and acquired intangible assets

   

102

   

   

   

7,407

   

7,372

   

6,047

   

7,509

   

7,372

   

6,047

Purchase accounting impact on inventory

   

2,912

   

2,869

   

   

   

   

   

2,912

   

2,869

   

Restructuring related charges

   

110

   

   

   

1,389

   

1,462

   

122

   

1,499

   

1,462

   

122

Tariff adjustment

   

   

   

(486)

   

   

   

   

   

   

(486)

Rebranding and transformation costs

   

   

   

   

10

   

(65)

   

1,297

   

10

   

(65)

   

1,297

Other adjustment

   

   

1,413

   

   

230

   

(1,413)

   

   

230

   

   

Contingent consideration adjustment

   

   

   

   

(17,145)

   

   

600

   

(17,145)

   

   

600

Merger and acquisition costs and costs related to share repurchase

   

   

   

   

(211)

   

11,838

   

4,989

   

(211)

   

11,838

   

4,989

Non-GAAP adjusted operating profit (loss)

 

$

(13,254)

 

$

40

 

$

10,145

 

$

(18)

 

$

(80)

 

$

(444)

 

$

(13,272)

 

$

(40)

 

$

9,701

 

                         
   

Life Sciences Products

 

Life Sciences Services

   

Six Months Ended

 

Six Months Ended

Dollars in thousands

 

March 31, 

 

March 31, 

 

March 31, 

 

March 31, 

   

2023

 

2022

 

2023

 

2022

GAAP operating profit (loss)

 

$

(20,199)

 

$

9,208

 

$

(9,489)

 

$

10,071

Adjustments:

                       

Amortization of completed technology

   

6,415

   

471

   

2,655

   

3,142

Purchase accounting impact on inventory

   

5,781

   

   

   

Other adjustment

   

1,515

   

   

110

     

Tariff adjustment

   

   

   

   

(486)

Non-GAAP adjusted operating profit (loss)

 

$

(6,488)

 

$

9,679

 

$

(6,724)

 

$

12,727

 

                                     
   

Total Segments

 

Corporate

 

Total

   

Six Months Ended

 

Six Months Ended

 

Six Months Ended

Dollars in thousands

 

March 31, 

 

March 31, 

 

March 31, 

 

March 31, 

 

March 31, 

 

March 31, 

   

2023

 

2022

 

2023

 

2022

 

2023

 

2022

GAAP operating profit (loss)

 

$

(29,688)

 

$

19,279

 

$

(10,973)

 

$

(24,312)

 

$

(40,661)

 

$

(5,033)

Adjustments:

                                   

Amortization of completed technology

   

9,070

   

3,613

   

   

   

9,070

   

3,613

Amortization of customer relationships and acquired intangible assets

   

   

   

14,882

   

12,319

   

14,882

   

12,319

Purchase accounting impact on inventory

   

5,781

   

   

   

   

5,781

   

Restructuring related charges

   

   

   

2,960

   

296

   

2,960

   

296

Tariff adjustment

   

   

(486)

   

   

   

   

(486)

Rebranding and transformation costs

   

   

   

(55)

   

1,916

   

(55)

   

1,916

Merger and acquisition costs and costs related to share repurchase

   

1,624

   

   

10,232

   

8,708

   

11,856

   

8,708

Contingent consideration - fair value adjustments

   

   

   

(17,145)

   

600

   

(17,145)

   

600

Non-GAAP adjusted operating profit (loss)

 

$

(13,213)

 

$

22,406

 

$

(99)

 

$

(473)

 

$

(13,312)

 

$

21,933

 

The Company has referenced in the explanation of revenue the estimated impact of COVID. In addition to reported and organic year-over-year percent changes, the Company has included the year-over-year percent changes of organic revenue ex-COVID which excludes the estimated revenue contribution from products delivered and services rendered to support COVID testing and research, and estimated constraints on the business due to disruptions in customer demand or the Company's ability to deliver in the COVID environment.

                                                       
   

Life Sciences Products

 

Life Sciences Services

 

Azenta Total

   

Quarter Ended

 

Quarter Ended

 

Quarter Ended

   

March 31, 

 

March 31,

       

March 31, 

 

March 31,

       

March 31, 

 

March 31,

     

Dollars in millions

 

2023

   

2022

 

Change

 

2023

 

2022

 

Change

 

2023

 

2022

 

Change

 Revenue

 

$

59

 

$

54

 

10

%

 

$

90

 

$

92

 

(3)

%

 

$

148

 

$

146

 

2

%

Acquisitions/divestitures

   

19

   

 

(35)

%

   

   

 

%

   

19

   

 

(13)

%

Currency exchange rates

   

(2)

   

 

4

%

   

(2)

   

 

2

%

   

(4)

   

 

3

%

Organic revenue

   

42

   

54

 

(21)

%

   

92

   

92

 

%

   

134

   

146

 

(8)

%

Estimated impact of COVID

   

   

10

 

19

%

   

1

   

(1)

 

(2)

%

   

1

   

10

 

6

%

Organic revenue ex COVID

 

$

42

 

$

43

 

(2)

%

 

$

91

 

$

93

 

(2)

%

 

$

133

 

$

136

 

(2)

%

 

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SOURCE Azenta

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