Avid Bioservices, Inc. (NASDAQ:CDMO), a dedicated biologics
contract development and manufacturing organization (CDMO) working
to improve patient lives by providing high quality development and
manufacturing services to biotechnology and pharmaceutical
companies, today announced financial results for the first quarter
ended July 31, 2023.
Highlights from the Quarter Ended July
31, 2023, and Other Events:
"The first quarter was a continuation of the
trajectory established during fiscal 2023. During the period, we
continued to successfully navigate what has been a challenging
financing environment for our customers, as our revenues and
backlog remained strong, and our commercial team continued to win
new projects. Fortunately, Avid has continued to attract and sign
later clinical stage and commercial business during the period,
which has the potential to add significant upside in the medium to
longer term,” stated Nick Green, president and CEO of Avid
Bioservices.
“On the operational front, our recent mammalian
capacity expansions are now online, and we are pleased with the
market interest in our new capabilities and capacity, and the
impact this is also having on our later-stage project portfolio. In
addition, we continue to make progress with the buildout of our
cell and gene therapy facility. We remain on track to bring this
new capability online by the end of the third quarter of calendar
2023, at which time our state-of-the-art facilities will have a
revenue-generating capacity of up to $400 million annually.”
Financial Highlights and
Guidance
- The company is reiterating revenue
guidance for full fiscal year 2024 of between $145 million and $165
million.
- Revenues for the first quarter of
fiscal 2024 were $37.7 million, representing a 3% increase over
revenues of $36.7 million recorded in the prior year period. The
increase was primarily attributed to an increase in manufacturing
revenues from late-stage programs.
- As of July 31, 2023, the
company’s revenue backlog was $189 million, representing an
increase of 20% compared to $157 million at the end of the same
quarter last year. The company expects a growing portion of its
backlog will extend beyond a year.
- Gross profit for the first quarter
of fiscal 2024 was $4.1 million (11% gross margin), compared to a
gross profit of $9.1 million (25% gross margin) for the first
quarter of fiscal 2023. The decrease in gross margin during the
three months ended July 31, 2023, as compared to the prior year
period was primarily driven by costs related to ongoing expansions
of both the company’s capacity and technological capabilities. This
included adding staff and associated overhead, including
depreciation expense, that will provide critical capacity for near
and medium-term growth. Margins during the current quarter were
also impacted by a terminated project relating to the insolvency of
one of the company’s smaller customers and a delay in the company’s
ability to recognize the revenues of one product pending the
implementation of a process change.
- Selling, general and administrative
expenses for the first quarter of fiscal 2024 were $6.3 million,
largely consistent with $6.4 million recorded for the first quarter
of fiscal 2023.
- During the first quarter of fiscal
2024, the company recorded a net loss of approximately $2.1 million
or $0.03 per basic and diluted share, as compared to net income of
$1.6 million or $0.03 per basic and $0.02 per diluted share for the
first quarter of fiscal 2023.
- Avid reported $24.9
million in cash and cash equivalents as of July 31, 2023,
compared to $38.5 million as of April 30, 2023.
More detailed financial information and analysis
may be found in Avid Bioservices’ Quarterly Report on Form 10-Q,
which will be filed with the Securities and Exchange
Commission today.
Recent Corporate
Developments
- The company’s commercial team
signed multiple new orders during the first quarter of fiscal 2024,
totaling approximately $36 million net. These orders span from
process development to commercial manufacturing.
- The company remains on track to
launch its cell and gene therapy CGMP manufacturing suites by the
end of the third quarter of calendar 2023.
Statement Regarding Use of Non-GAAP
Financial Measures
The company uses certain non-GAAP financial
measures such as non-GAAP adjusted net income, free cash flow, as
well as adjusted EBITDA. The company uses these non-GAAP financial
measures for financial and operational decision making and as a
means to evaluate period-to-period comparisons. The company
believes that they provide useful information about operating
results, enhance the overall understanding of its operating
performance and future prospects, and allow for greater
transparency with respect to key metrics used by management in its
financial and operational decision making. These non-GAAP financial
measures exclude amounts that the company does not consider part of
ongoing operating results when planning and forecasting and when
assessing the performance of the organization and its senior
management. The company computes non-GAAP financial measures
primarily using the same consistent method from quarter to quarter
and year to year, and may consider whether other significant items
that arise in the future should be excluded from its non-GAAP
financial measures.
The company reports non-GAAP financial measures
in addition to, and not as a substitute for, or superior to,
measures of financial performance prepared in accordance with U.S.
generally accepted accounting principles (GAAP). These non-GAAP
financial measures are not based on any comprehensive set of
accounting rules or principles, differ from GAAP measures with the
same names, and may differ from non-GAAP financial measures with
the same or similar names that are used by other companies. The
company believes that non-GAAP financial measures should only be
used to evaluate its results of operations in conjunction with the
corresponding GAAP financial measures and encourages investors to
carefully consider its results under GAAP, as well as the
supplemental non-GAAP information and the reconciliations between
these presentations, to more fully understand its business.
Non-GAAP net income (loss) excludes stock-based
compensation; business transition and related costs including
corporate initiatives into new business activities such as
severance and related expenses; non-cash interest expense on debt;
and other income or expense items and is adjusted for income taxes.
Adjusted EBITDA excludes non-cash operating charges for stock-based
compensation, depreciation, and amortization as well as
non-operating items such as interest income, interest expense, and
income tax expense or benefit and is adjusted for income taxes. For
the reasons explained above, adjusted EBITDA also excludes certain
business transition and related costs. The company also uses
measures such as free cash flow, which represents cash flow
provided by or (used in) operations less cash used in the
acquisition and disposition of capital.
Additionally, non-GAAP net income (loss) and
adjusted EBITDA are key components of the financial metrics
utilized by the company’s compensation committee to measure, in
part, management’s performance and determine significant elements
of management’s compensation. The company encourages investors to
carefully consider its results under GAAP, as well as its
supplemental non-GAAP information and the reconciliation between
these presentations, to more fully understand its business.
Reconciliations between GAAP and non-GAAP financial measures are
included at the end of this press release.
Webcast
Avid will host a webcast this
afternoon, September 7, 2023, at 4:30 PM EDT (1:30
PM PDT).
To listen to the live webcast, or access the
archived webcast, please
visit: https://ir.avidbio.com/investor-events.
About Avid Bioservices, Inc.
Avid Bioservices (NASDAQ:CDMO), an S&P
SmallCap 600 company, is a dedicated contract development and
manufacturing organization (CDMO) focused on development and CGMP
manufacturing of biologics. The company provides a comprehensive
range of process development, CGMP clinical and commercial
manufacturing services for the biotechnology and biopharmaceutical
industries. With 30 years of experience producing biologics, Avid's
services include CGMP clinical and commercial drug substance
manufacturing, bulk packaging, release and stability testing and
regulatory submissions support. For early-stage programs the
company provides a variety of process development activities,
including cell line development, upstream and downstream
development and optimization, analytical methods development,
testing and characterization. The scope of our services ranges
from standalone process development projects to full development
and manufacturing programs through
commercialization. www.avidbio.com
Forward-Looking Statements
Statements in this press release, which are not
purely historical, including statements regarding Avid
Bioservices' intentions, hopes, beliefs, expectations,
representations, projections, plans or predictions of the future,
are forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. The forward-looking
statements involve risks and uncertainties including, but not
limited to, the risk the company may experience delays in engaging
new customers, the risk that the company may not be successful in
executing customers projects, the risk that changing economic
conditions may delay or otherwise adversely impact the realization
of the company’s backlog, the risk that the company may experience
technical difficulties in completing customer projects due to
unanticipated equipment and/or manufacturing facility
issues which could result in projects being terminated
or delay delivery of products to customers, revenue
recognition and receipt of payment or result in the loss
of the customer, the risk that one or more existing customers
terminates its contract prior to completion or reduces or delays
its demand for development or manufacturing services which could
adversely affect guided fiscal 2024 revenues, the risk that
the completion of the cell and gene therapy facility
may be delayed, may cost more than
anticipated or may not increase revenue generating
capacity by the amounts contemplated, the risk that expanding into
a new biologics manufacturing capability may distract senior
management’s focus on the company’s existing operations, the risk
that the company may experience delays in hiring qualified
individuals into the cell and gene therapy business, the risk that
the company may experience delays in engaging initial customers for
the cell and gene therapy business, and the risk that the cell and
gene therapy business may not become profitable for several years,
if ever. Our business could be affected by a number of other
factors, including the risk factors listed from time to time in our
reports filed with the Securities and Exchange
Commission including, but not limited to, our annual report on
Form 10-K for the fiscal year ended April 30, 2023, as well as
any updates to these risk factors filed from time to time in our
other filings with the Securities and Exchange Commission. We
caution investors not to place undue reliance on the
forward-looking statements contained in this press release, and we
disclaim any obligation, and do not undertake, to update or revise
any forward-looking statements in this press release except as may
be required by law.
AVID BIOSERVICES, INC.CONDENSED CONSOLIDATED STATEMENTS OF
INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)(Unaudited) (In
thousands, except per share information)
|
|
Three Months EndedJuly 31, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
Revenues |
|
$37,726 |
|
|
$36,692 |
|
Cost of revenues |
|
|
33,626 |
|
|
|
27,575 |
|
Gross profit |
|
|
4,100 |
|
|
|
9,117 |
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
Selling, general and administrative |
|
|
6,263 |
|
|
|
6,382 |
|
Total operating expenses |
|
|
6,263 |
|
|
|
6,382 |
|
|
|
|
|
|
Operating income (loss) |
|
|
(2,163) |
|
|
|
2,735 |
|
Interest expense |
|
|
(775) |
|
|
|
(518) |
|
Other income (expense), net |
|
|
258 |
|
|
|
50 |
|
Net income (loss) before income
taxes |
|
|
(2,680) |
|
|
|
2,267 |
|
Income tax expense (benefit) |
|
|
(587) |
|
|
|
703 |
|
Net income (loss) |
|
$(2,093) |
|
|
$1,564 |
|
Comprehensive income
(loss) |
|
$(2,093) |
|
|
$1,564 |
|
|
|
|
|
|
Net income (loss) per
share: |
|
|
|
|
Basic |
|
$(0.03) |
|
|
$0.03 |
|
Diluted |
|
$(0.03) |
|
|
$0.02 |
|
|
|
|
|
|
Weighted average common shares
outstanding: |
|
|
|
|
Basic |
|
|
62,838 |
|
|
|
61,905 |
|
Diluted |
|
|
62,838 |
|
|
|
63,333 |
|
AVID BIOSERVICES, INC. CONDENSED CONSOLIDATED BALANCE
SHEETS(Unaudited) (In thousands, except par value)
|
July 31,2023 |
|
April 30,2023 |
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$24,898 |
|
|
$38,542 |
|
Accounts receivable, net |
|
16,209 |
|
|
|
18,298 |
|
Contract assets |
|
14,454 |
|
|
|
9,609 |
|
Inventory |
|
40,866 |
|
|
|
43,908 |
|
Prepaid expenses and other current assets |
|
1,892 |
|
|
|
2,094 |
|
Total current assets |
|
98,319 |
|
|
|
112,451 |
|
Property and equipment,
net |
|
182,299 |
|
|
|
177,369 |
|
Operating lease right-of-use
assets |
|
42,374 |
|
|
|
42,772 |
|
Deferred tax assets |
|
114,238 |
|
|
|
113,639 |
|
Other assets |
|
4,757 |
|
|
|
4,473 |
|
Restricted cash |
|
350 |
|
|
|
350 |
|
Total assets |
$442,337 |
|
|
$451,054 |
|
LIABILITIES AND STOCKHOLDERS’
EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$22,813 |
|
|
$24,593 |
|
Accrued compensation and benefits |
|
4,667 |
|
|
|
8,780 |
|
Contract liabilities |
|
33,019 |
|
|
|
37,352 |
|
Current portion of operating lease liabilities |
|
1,262 |
|
|
|
1,358 |
|
Other current liabilities |
|
2,296 |
|
|
|
1,626 |
|
Total current liabilities |
|
64,057 |
|
|
|
73,709 |
|
Convertible senior notes,
net |
|
140,888 |
|
|
|
140,623 |
|
Operating lease liabilities,
less current portion |
|
45,370 |
|
|
|
45,690 |
|
Finance lease liabilities,
less current portion |
|
1,424 |
|
|
|
1,562 |
|
Total liabilities |
|
251,739 |
|
|
|
261,584 |
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
Preferred stock, $0.001 par
value; 5,000 shares authorized;no shares issued and outstanding at
respective dates |
|
— |
|
|
|
— |
|
Common stock, $0.001 par
value; 150,000 shares authorized;63,111 and 62,692 shares issued
and outstanding at respective dates |
|
63 |
|
|
|
63 |
|
Additional paid-in
capital |
|
623,445 |
|
|
|
620,224 |
|
Accumulated deficit |
|
(432,910) |
|
|
|
(430,817) |
|
Total stockholders’ equity |
|
190,598 |
|
|
|
189,470 |
|
Total liabilities and stockholders’ equity |
$442,337 |
|
|
$451,054 |
|
AVID BIOSERVICES, INC.ITEMIZED RECONCILIATION
BETWEEN GAAP AND NON-GAAP FINANCIAL MEASURES(Unaudited) (In
thousands)
|
Three Months Ended July 31, |
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
GAAP net income (loss) |
$(2,093) |
|
|
$1,564 |
|
Stock-based compensation |
|
2,343 |
|
|
|
1,897 |
|
Non-cash interest expense |
|
339 |
|
|
|
260 |
|
Income tax effect of
adjustments |
|
(751) |
|
|
|
(474) |
|
Adjusted net income (loss) |
|
($162 |
) |
|
$3,247 |
|
|
|
|
|
GAAP net income (loss) |
$(2,093) |
|
|
$1,564 |
|
Interest expense, net |
|
479 |
|
|
|
434 |
|
Income tax expense (benefit) |
|
(587) |
|
|
|
703 |
|
Depreciation and
amortization |
|
2,649 |
|
|
|
1,590 |
|
Stock-based compensation |
|
2,343 |
|
|
|
1,897 |
|
Adjusted EBITDA |
$2,791 |
|
|
$6,188 |
|
|
|
|
|
GAAP net cash used in operating
activities |
$(278) |
|
|
$(5,034) |
|
Purchase of property and
equipment |
|
(14,114) |
|
|
|
(6,924) |
|
Free cash flow |
$(14,392) |
|
|
$(11,958) |
|
|
|
|
|
Contacts:
Stephanie Diaz (Investors)
Vida Strategic Partners
415-675-7401
sdiaz@vidasp.com
Tim Brons (Media)
Vida Strategic Partners
415-675-7402
tbrons@vidasp.com
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