BURLINGTON, Mass., Feb. 7, 2024 /PRNewswire/ -- Azenta, Inc. (Nasdaq: AZTA) today reported financial results for the first quarter ended December 31, 2023.

Quarter Ended Dollars in millions, except per share data December 31,  September 30,  December 31,  Change 2023 2023 2022 Prior Qtr Prior Yr. Revenue from Continuing Operations $ 154 $ 172 $ 178 (10) % (13) % Organic growth (15) % Sample Management Solutions $ 79 $ 82 $ 75 (3) % 5 % Multiomics $ 63 $ 61 $ 61 3 % 3 % B Medical Systems $ 13 $ 29 $ 42 (57) % (70) % Diluted EPS Continuing Operations $ (0.28) $ 0.05 $ (0.15) (690) % (79) % Diluted EPS Total $ (0.28) $ 0.06 $ (0.15) (591) % (79) % Non-GAAP Diluted EPS Continuing Operations $ 0.02 $ 0.13 $ 0.12 (80) % (80) % Adjusted EBITDA - Continuing Operations $ 5 $ 8 $ 12 (43) % (62) % Adjusted EBITDA Margin - Continuing Operations 3.0 % 4.6 % 6.7 %

Management Comments "First quarter results came in ahead of expectations as we continued to deliver against our objectives on the top and bottom line," stated Steve Schwartz, President and CEO. "We have made good progress on our cost reduction initiatives and are seeing the benefits of these actions. This quarter marked our third consecutive quarter of positive free cash flow. Even in a softer market environment, we remain positive about our position as we move through fiscal 2024, and we believe that the actions we have taken over the past several months will allow us to continue to outgrow the market."

First Quarter Fiscal 2024 Results

Revenue was $154 million, down 13% year over year. Organic revenue declined 15% year over year, which excludes the impacts of foreign exchange tailwinds of 1% and a 1% contribution from acquisitions. The year-over-year revenue decline was mainly attributable to lower B Medical Systems ("B Medical") revenue. The combined Sample Management Solutions and Multiomics business segments grew 2% on an organic basis. In addition, the Consumables and Instruments ("C&I") business remained a headwind to growth in the first quarter on a year-over-year basis. Excluding B Medical and C&I, revenue grew 5% on an organic basis. Sample Management Solutions revenue was $79 million, up 5% year over year.

Organic revenue, which excludes the impacts from foreign exchange and revenue from acquisitions, grew 1%, driven by continued strength in large-automated Store Systems and Sample Repository Solutions, partially offset by a year-over-year decline in the C&I business. Excluding the C&I business, the segment grew 9% on an organic basis. Multiomics revenue was $63 million, up 3% year over year.

Organic revenue grew 2% year over year, primarily driven by growth in Gene Synthesis and Next-generation sequencing services, partially offset by a year-over-year decline in Sanger sequencing revenue. B Medical Systems revenue was $13 million, down 70% year over year.

Organic revenue declined 71% due to lower order volume in the quarter compared to the prior year, primarily attributable to timing of orders.



Summary of GAAP Earnings Results

Operating loss was $27 million. Operating margin was (17.3%), down 180 basis points year over year.

Gross margin was 39.9%, down 160 basis points year over year primarily due to product mix in B Medical, as well as increased amortization costs. Operating expenses were $88 million, down 13% year over year, driven by the impact of cost reduction actions implemented in fiscal year 2023, lower bad debt expense, decreased corporate expenses related to the accelerated share repurchase and governance-related costs, and lower commissions expense in B Medical. Other income included $10 million of net interest income versus $11 million in the prior year period. Diluted EPS from continuing operations was ($0.28) compared to ($0.15) in the first quarter of fiscal year 2023.

Summary of Non-GAAP Earnings Results

Operating loss was $9 million. Operating margin was (5.6%), down 560 basis points year over year. Excluding B Medical, operating margin was (3.0%), up 160 basis points year over year.

Gross margin was 43.5%, down 190 basis points year over year, primarily due to product mix in B Medical. Operating expense in the quarter was $76 million, down 6% year over year, primarily driven by the impact of cost reduction actions implemented in fiscal year 2023, lower bad debt expense, and lower commissions expense in B Medical. Adjusted EBITDA was $5 million, and Adjusted EBITDA margin was 3.0%, down 370 basis points year over year. Diluted EPS was $0.02, compared to $0.12 one year ago.

Cash and Liquidity as of December 31, 2023

The Company ended the quarter with a total balance of cash, cash equivalents, restricted cash and marketable securities of $1.1 billion. Operating cash flow was $26 million in the quarter. Capital expenditures were $12 million, and free cash flow was $15 million.

Share Repurchase Program Update

In the first quarter, the Company repurchased 2.3 million shares for $113 million under a 10b5-1 trading program. In fiscal year 2024, the Company intends to repurchase an additional $500 million in shares, which will complete the full capacity of the $1.5 billion share repurchase authorization announced in November 2022.

Guidance for Continuing Operations for Full Year Fiscal 2024

The Company is reiterating revenue and earnings guidance for fiscal year 2024:

Total revenue is expected to be in the range of $696 to $718 million, reflecting total organic revenue growth in the range of 5% to 8% relative to fiscal year 2023. Adjusted EBITDA margin expansion is expected to be approximately 300 basis points. Non-GAAP diluted earnings per share is expected to be in the range of $0.19 to $0.29.

2024 Investor Day

As previously announced, the Company will host an Investor Day on Thursday, March 14, 2024 in New York City. The event will feature presentations from members of the executive leadership team outlining the Company's strategy and vision. A live webcast of the event will be available on the Investor Relations section of Azenta's website at https://investors.azenta.com/events beginning at 9:00 AM ET and concluding at approximately 12:00 PM ET. A replay of the audio webcast will be available on the website after the conclusion of the event.

Conference Call and Webcast Azenta management will webcast its first quarter fiscal 2024 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- 926-5171 (US & Canada only) or +1-212-231-2906 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, 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 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 multiomics 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. Our global team delivers and supports these products and services through our industry-leading brands, including GENEWIZ, FluidX, Ziath, 4titude, Limfinity, Freezer Pro, Barkey, and B Medical Systems.

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
[email protected]

Sherry Dinsmore
[email protected]

AZENTA, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

(In thousands, except per share data) Three Months Ended  December 31,  2023 2022 Revenue Products $ 53,393 $ 85,798 Services 100,924 92,568 Total revenue 154,317 178,366 Cost of revenue Products 36,838 54,099 Services 55,967 50,402 Total cost of revenue 92,805 104,501 Gross profit 61,512 73,865 Operating expenses Research and development 8,493 7,536 Selling, general and administrative 78,576 92,552 Restructuring charges 1,120 1,462 Total operating expenses 88,189 101,549 Operating loss (26,677) (27,685) Other income Interest income, net 10,081 10,665 Other, net 682 1,145 Loss before income taxes (15,914) (15,875) Income tax benefit (190) (4,640) Net loss $ (15,724) $ (11,235) Basic net loss per share  $ (0.28) $ (0.15) Diluted net loss per share  $ (0.28) $ (0.15) Weighted average shares used in computing net loss per share: Basic  56,709 72,543 Diluted 56,709 72,543

AZENTA, INC.

CONSOLIDATED BALANCE SHEETS

(unaudited)

(In thousands, except share and per share data) December 31,  September 30, 2023 2023 Assets Current assets Cash and cash equivalents $ 702,923 $ 678,910 Short-term marketable securities 281,212 338,873 Accounts receivable, net of allowance for expected credit losses ($7,465 and 
$8,057, respectively) 155,926 156,535 Inventories 127,184 128,198 Derivative asset — 13,036 Short-term restricted cash 4,792 4,650 Prepaid expenses and other current assets 110,764 98,754 Total current assets 1,382,801 1,418,956 Property, plant and equipment, net 210,628 205,744 Long-term marketable securities 61,962 111,338 Long-term deferred tax assets 1,341 571 Goodwill 800,166 784,339 Intangible assets, net 290,229 294,301 Other assets 77,187 70,471 Total assets $ 2,824,314 $ 2,885,720 Liabilities and stockholders' equity Current liabilities Accounts payable $ 40,237 $ 35,796 Deferred revenue 34,813 34,614 Accrued warranty and retrofit costs 10,047 10,223 Accrued compensation and benefits 33,368 33,911 Accrued customer deposits 23,432 17,707 Accrued VAT payable 24,033 20,595 Accrued income taxes payable 13,228 7,378 Accrued expenses and other current liabilities 56,462 50,704 Total current liabilities 235,620 210,928 Long-term tax reserves 369 380 Long-term deferred tax liabilities 65,865 67,301 Long-term operating lease liabilities 66,479 60,436 Other long-term liabilities 12,317 12,175 Total liabilities 380,650 351,220 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, 69,180,281 
shares issued and 55,718,412 shares outstanding at December 31, 2023, 
71,294,247 shares issued and 57,832,378 shares outstanding at September 30, 2023 692 713 Additional paid-in capital 1,045,427 1,156,160 Accumulated other comprehensive loss (26,784) (62,426) Treasury stock, at cost - 13,461,869 shares at December 31, 2023 and September 30, 2023 (200,956) (200,956) Retained earnings 1,625,285 1,641,009 Total stockholders' equity 2,443,664 2,534,500 Total liabilities and stockholders' equity $ 2,824,314 $ 2,885,720

AZENTA, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(In thousands) Three Months Ended  Three Months Ended December 31,  2023 2022 Cash flows from operating activities Net loss $ (15,724) $ (11,235) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 21,866 20,181 Stock-based compensation 3,202 2,105 Amortization and accretion on marketable securities (704) (3,104) Deferred income taxes (7,317) (6,325) Purchase accounting impact on inventory  — 2,869 Loss on disposals of property, plant and equipment 266 17 Changes in operating assets and liabilities: Accounts receivable 2,830 (12,141) Inventories 4,542 (5,923) Accounts payable 3,457 4,952 Deferred revenue (321) (59) Accrued warranty and retrofit costs (554) 504 Accrued compensation and tax withholdings (979) (14,015) Accrued restructuring costs (90) 1,139 Other assets and liabilities 15,957 (5,985) Net cash provided by (used in) operating activities 26,431 (27,020) Cash flows from investing activities Purchases of property, plant and equipment (11,919) (12,842) Purchases of marketable securities — (166,374) Sales and maturities of marketable securities 110,316 607,205 Acquisitions, net of cash acquired — (371,633) Net cash provided by investing activities 98,397 56,356 Cash flows from financing activities Payments of finance leases (198) (91) Withholding tax payments on net share settlements on equity awards (2) (4,629) Share repurchases (112,953) (500,000) Net cash used in financing activities (113,153) (504,720) Effects of exchange rate changes on cash and cash equivalents 12,501 49,941 Net increase (decrease) in cash, cash equivalents and restricted cash 24,176 (425,443) Cash, cash equivalents and restricted cash, beginning of period 684,045 1,041,296 Cash, cash equivalents and restricted cash, end of period $ 708,221 $ 615,854 Supplemental disclosures: Cash paid for income taxes, net 2,599 7,291 Reconciliation of cash, cash equivalents, and restricted cash to the condensed consolidated balance sheets December 31,  September 30,  2023 2023 Cash and cash equivalents of continuing operations $ 702,923 $ 678,910 Short-term restricted cash  4,792 4,650 Long-term restricted cash included in other assets 506 485 Total cash, cash equivalents and restricted cash shown in the condensed consolidated statements of cash flows $ 708,221 $ 684,045

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 and share repurchases 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 December 31, 2023 September 30, 2023 December 31, 2022 per diluted per diluted per diluted Amounts in thousands, except per share data  $ share $ share $ share Net income (loss) from continuing operations $ (15,724) $ (0.28) $ 2,806 $ 0.05 $ (11,235) $ (0.15) Adjustments:  Amortization of completed technology 5,627 0.10 4,769 0.08 4,168 0.06 Purchase accounting impact on inventory — — 927 0.02 2,869 0.04 Amortization of other intangible assets 6,862 0.12 7,481 0.13 7,372 0.10 Rebranding and transformation costs 41 0.00 (15) (0.00) (65) (0.00) Restructuring and restructuring related charges 1,120 0.02 804 0.01 1,462 0.02 Merger and acquisition costs and costs
related to share repurchase (1) 4,321 0.08 1,767 0.03 11,838 0.16 Indemnification asset release — — — — (19) — Tax adjustments (2) 1,858 0.03 (6,691) (0.11) (1,436) (0.02) Tax effect of adjustments  (2,688) (0.05) (4,379) (0.07) (6,000) (0.08) Non-GAAP adjusted net income from 
continuing operations $ 1,417 $ 0.02 $ 7,469 $ 0.13 $ 8,954 $ 0.12 Stock based compensation, pre-tax 3,202 0.06 (715) (0.01) 2,226 0.03 Tax rate 12 % — 15 % — 15 % — Stock-based compensation, net of tax 2,818 0.05 (608) (0.01) 1,892 0.03 Non-GAAP adjusted net income excluding 
stock-based compensation - continuing 
operations $ 4,235 $ 0.07 $ 6,861 $ 0.11 $ 10,846 $ 0.15 Shares used in computing non-GAAP diluted net income per share — 56,709 — 59,692 — 72,543

(1)  Includes expenses related to governance-related matters. (2)  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, 2023, exclude the impact of recording valuation allowance adjustments against U.S. deferred taxes in the amount of $0.7M. Tax adjustments for the quarter ended December 31, 2022, include a $1.4M increase to expense related to the exclusion of allocations between continuing operations and discontinuing operations.

Quarter Ended December 31,  September 30,  December 31,  Dollars in thousands 2023 2023 2022 GAAP net income (loss) $ (15,724) $ 3,375 $ (11,235) Less: Income (loss) from discontinued operations — 569 — GAAP net income (loss) from continuing operations (15,724) 2,806 (11,235) Adjustments: Less: Interest income, net (10,081) (11,329) (10,665) Add / Less: Income tax (benefit) expense (190) (8,443) (4,640) Add: Depreciation 9,377 9,891 8,640 Add: Amortization of completed technology 5,627 4,769 4,168 Add: Amortization of other intangible assets 6,862 7,481 7,372 Earnings before interest, taxes, depreciation and amortization - 
Continuing operations $ (4,129) $ 5,175 $ (6,360)

Quarter Ended December 31,  September 30,  December 31,  Dollars in thousands 2023 2023 2022 Earnings before interest, taxes, depreciation and amortization - 
Continuing operations $ (4,129) $ 5,175 $ (6,360) Adjustments: Add: Stock-based compensation 3,202 (715) 2,226 Add: Purchase accounting impact on inventory  — 927 2,869 Add: Restructuring and restructuring related charges 1,120 804 1,462 Add: Merger and acquisition costs and costs related to share repurchase(1) 4,321 1,767 11,838 Less: Rebranding and transformation costs 41 (15) (65) Adjusted earnings before interest, taxes, depreciation and amortization - 
Continuing operations $ 4,555 $ 7,943 $ 11,970

(1) Includes expenses related to governance-related matters.

Quarter Ended Dollars in thousands December 31, 2023 September 30, 2023 December 31, 2022 GAAP gross profit  $ 61,512 39.9 % $ 68,034 39.5 % $ 73,865 41.4 % Adjustments: Amortization of completed technology 5,627 3.6 4,769 2.8 4,168 2.3 Purchase accounting impact on inventory  — — 927 0.5 2,869 1.6 Non-GAAP adjusted gross profit $ 67,139 43.5 % $ 73,730 42.8 % $ 80,902 45.4 %

Sample Management Solutions Multiomics Quarter Ended Quarter Ended December 31,  September 30,  December 31,  December 31,  September 30,  December 31,  Dollars in thousands 2023 2023 2022 2023 2023 2022 GAAP gross profit $ 33,272 42.1 % $ 38,296 46.8 % $ 32,035 42.5 % $ 28,471 45.4 % $ 26,808 43.9 % $ 27,716 45.4 % Adjustments: Amortization of completed technology 816 1.0 867 1.1 429 0.6 1,039 1.7 1,211 2.0 1,215 2.0 Non-GAAP adjusted gross profit $ 34,088 43.1 % $ 39,163 47.9 % $ 32,465 43.0 % $ 29,510 47.1 % $ 28,019 45.8 % $ 28,931 47.4 %

B Medical Systems Segment Total Quarter Ended Quarter Ended December 31,  September 30,  December 31,  December 31,  September 30,  December 31,  Dollars in thousands 2023 2023 2022 2023 2023 2022 GAAP gross profit $ (231) (1.8) % $ 2,930 10.0 % $ 14,114 33.7 % $ 61,512 39.9 % $ 68,034 39.5 % $ 73,865 41.4 % Adjustments: Amortization of completed technology 3,772 30.0 2,691 9.1 2,523 6.0 5,627 3.6 4,769 2.8 4,168 2.3 Purchase accounting impact on inventory — — 927 3.1 2,868 6.9 — — 927 0.5 2,869 1.6 Non-GAAP adjusted gross profit $ 3,541 28.1 % $ 6,548 22.3 % $ 19,506 46.6 % $ 67,139 43.5 % $ 73,730 42.8 % $ 80,902 45.4 %

Sample Management Solutions Multiomics B Medical Systems Quarter Ended Quarter Ended Quarter Ended December 31,  September 30,  December 31,  December 31,  September 30,  December 31,  December 31,  September 30,  December 31,  Dollars in thousands 2023 2023 2022 2023 2023 2022 2023 2023 2022 GAAP operating (loss) profit $ (1,723) $ 4,992 $ (3,476) $ (4,489) $ (4,502) $ (4,481) $ (8,181) $ (7,153) $ (454) Adjustments: Amortization of completed technology 816 867 429 1,039 1,211 1,215 3,772 2,691 2,523 Purchase accounting impact on inventory — — — — — — — 927 2,869 Amortization of other intangible assets 51 51 48 — — — — — 1,365 Other adjustment — — — (1) — — — (1) — Non-GAAP adjusted operating (loss) profit $ (856) $ 5,910 $ (2,998) $ (3,451) $ (3,291) $ (3,265) $ (4,409) $ (3,537) $ 6,303

Total Segments Corporate Total Quarter Ended Quarter Ended Quarter Ended December 31,  September 30,  December 31,  December 31,  September 30,  December 31,  December 31,  September 30,  December 31,  Dollars in thousands 2023 2023 2022 2023 2023 2022 2023 2023 2022 GAAP operating (loss) profit $ (14,393) $ (6,663) $ (8,411) $ (12,284) $ (9,964) $ (19,274) $ (26,677) $ (16,628) $ (27,684) Adjustments: Amortization of completed technology 5,627 4,769 4,167 — — — 5,627 4,769 4,168 Purchase accounting impact on inventory  — 927 2,869 — — — — 927 2,869 Amortization of other intangible assets 51 51 1,413 6,811 7,430 5,959 6,862 7,481 7,372 Rebranding and transformation costs — — — 41 (15) (65) 41 (15) (65) Restructuring charges — — — 1,120 804 1,462 1,120 804 1,462 Merger and acquisition costs and costs related to share repurchase (1) — — — 4,321 1,767 11,838 4,321 1,767 11,838 Other adjustment (1) (1) — — — — (1) (1) — Non-GAAP adjusted operating (loss) profit $ (8,716) $ (917) $ 38 $ 9 $ 22 $ (80) $ (8,707) $ (896) $ (40)

(1) Includes expenses related to governance-related matters.

Sample Management Solutions Multiomics B Medical Systems Azenta Total Quarter Ended Quarter Ended Quarter Ended Quarter Ended December 31,  December 31,  December 31,  December 31,  December 31,  December 31,  December 31,  December 31,  Dollars in millions 2023 2022 Change 2023 2022 Change 2023 2022 Change 2023 2022 Change Revenue  $ 79 $ 75 5 % $ 63 $ 61 3 % $ 13 $ 42 (70) % $ 154 $ 178 (13) % Acquisitions/divestitures 1 — (2) % — — — % — — — % 1 — (1) % Currency exchange rates 1 — (2) % — (0) % 1 — (2) % 2 — (1) % Organic revenue $ 76 $ 75 1 % $ 63 $ 61 2 % $ 12 $ 42 (71) % $ 151 $ 178 (15) % Azenta logo (PRNewsfoto/Azenta) Cision

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