Avid Bioservices Q4 2024 Earnings Call Transcript

Quartr
Provided by Quartr
July 2, 2024

There are 10 speakers on the call.

Operator

by, and welcome to the Advit Bioservices 4th Quarter Fiscal Year 20 24 Financial Results Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Tim Bruns, Advanced Investor Relations.

Operator

Please go ahead, sir.

Speaker 1

Thank you. Good afternoon and thank you for joining us. On today's call, we have Nick Green, President and CEO Dan Hart, Chief Financial Officer and Matt Kwikniak, Avid's Chief Commercial Officer. Today, we will be providing an overview of Avid Bioservices' contract development and manufacturing business, including updates on corporate activities and financial results for the quarter fiscal year ended April 30, 2024. After our prepared remarks, we will welcome your questions.

Speaker 1

Before we begin, I'd like to caution that comments made during this conference call today, July 2, 2024, will contain certain forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 concerning the current belief of the company, which involves a number of assumptions, risks and uncertainties. Actual results could differ from these statements and the company undertakes no obligation to revise or update any statement made today. I encourage you to review all the company's filings with the Securities and Exchange Commission concerning these and other matters. Our earnings press release includes discussion of certain non GAAP information. You can find our earnings press release, including relevant non GAAP reconciliations on our corporate website atavidbio.com.

Speaker 1

With that, I will turn the call over to Nick Green, Avid's President and CEO.

Speaker 2

Thank you, Tim, and thank you to everyone participating today via webcast. The Q4 of fiscal 2024 was a high point for the company. We generated the highest quarterly revenues in Abbott's history, meeting our current revenue expectations for the year. We also signed multiple new project agreements and we continue to see positive signs in the broader business environment, which bodes well for the business development in the year ahead. In operations, our additional capacity is being put to good use.

Speaker 2

New projects in all of our facilities are being onboarded. And as a result, our gross margin for quarter 4 is approximately double what reported for quarter 3. While rebuilding our margins will take time, we are pleased to see this movement in the right direction as new bookings remain strong and capacity utilization increases. Matt and I will provide additional details on business development and operations for the period following an overview of our Q4 fiscal year 2024 financial results. And for that, I'll turn the call over to Dan.

Speaker 3

Thank you, Nick. Before I begin, in addition to the brief financial overview I'll provide on the call today, additional details on our financial results are included in our press release issued prior to this call and in our Form 10 ks, which was filed today with the SEC. I'll now provide an overview of our financial results from operations for the quarter fiscal year ended April 30, 2024. Revenues for the Q4 of fiscal 2024 were $43, 000, 000 representing an 8% increase as compared to revenues of $39, 800, 000 recorded in the same prior year period. The increase in revenue for the Q4 as compared to the same prior year period was primarily due to increases in the mix and scale of manufacturing runs and process development services primarily associated with the onboarding of new programs.

Speaker 3

For the 2024 full fiscal year, revenues were $139, 900, 000 a decrease of approximately 6% compared to $149, 300, 000 in the same prior year period. The decrease in revenues for the fiscal year ended April 30, 2024 compared to the same prior year period was primarily attributed to fewer manufacturing runs, a reduction in process development services primarily from early stage programs and by a reduction of revenue for changes in estimated variable consideration under contract where uncertainties have been resolved. Gross profit for the Q4 of fiscal 2024 was $5, 500, 000 or 13 percent gross margin compared to $8, 400, 000 or 21 percent gross margin in the Q4 of fiscal 2023. Gross profit for the 2024 full fiscal year was $7, 300, 000 or 5 percent gross margin compared to a gross profit of $31, 500, 000 or 21 percent gross margin for the 2023 full fiscal year. The decrease in gross profit for the Q4 and fiscal year ended April 30, 2024, compared to the same prior year periods was primarily driven by fewer manufacturing runs, partially offset by increases in the mix and scale of manufacturing runs, a reduction of process development services and an increase in costs related to expansions of both our company's capacity and technical capabilities.

Speaker 3

Gross profit during the fiscal year ended April 30, 2024 was also impacted by a reduction of revenue for changes in estimated variable consideration under a contract where uncertainties have been resolved, a terminated project related to the insolvency of 1 of our company's smaller customers and a delay in the ability to recognize revenues of a customer product pending the implementation of a process change. SG and A expenses for the Q4 of fiscal 2024 were $6, 800, 000 a decrease of 10% compared to $7, 600, 000 recorded in the Q4 of fiscal 2023. SG and A expenses for the 2024 full fiscal year were $26, 000, 000 a decrease of approximately 7% compared to $27, 900, 000 recorded in the same prior year period. The decrease in SG and A for both the Q4 and the fiscal year ended April 30, 2024, compared to the same prior year periods was primarily due to decreases in compensation and benefit related expenses, facility expenses and consulting fees. Income tax expense for the Q4 of fiscal 2024 was $117, 900, 000 an increase as compared to $900, 000 in the Q4 of fiscal 2023.

Speaker 3

Income tax expense for the 2024 full fiscal year was $113, 800, 000 an increase as compared to $1, 300, 000 for the prior year period. During the Q4 of fiscal 2024, we recorded a valuation allowance of $118, 500, 000 against our deferred tax assets. We recognize deferred tax assets to the extent that we believe these assets are more likely than not to be realized. On a periodic basis, management assesses the available positive and negative evidence to estimate whether sufficient future income will be generated to permit use of the existing deferred tax assets. In making such a determination, we consider all available positive and negative evidence.

Speaker 3

A significant piece of the objective negative evidence evaluated was the net loss in fiscal 2024 resulting in a net cumulative loss incurred over the 3 year fiscal period ended April 30, 2024. A significant contributor to the loss has been the cost associated with our strategy to expand our available capacity and add technical capabilities over this 3 year period, which included an increase in incremental costs associated with increased labor, facility costs and depreciation, cumulating into a net loss in fiscal 2024. On the basis of this evaluation, as of April 30, 2024, evaluation allowance of $118, 500, 000 has been recorded to recognize the portion of the deferred tax asset that is more likely than not to be realized. The amount of the deferred tax asset considered realizable, however, could be adjusted in the future quarters if objective positive evidence in the form of cumulative income and additional weight is given to subjective evidence such as our projections for growth. During the Q4 of fiscal 2024, the company's net loss was $123, 100, 000 or $1.94 per basic and diluted share compared to a net loss of $300, 000

Speaker 2

or $0.01 per basic and

Speaker 3

diluted share for the Q4 of fiscal 2023. For the 2024 full fiscal year, the company recorded a net loss of $140, 800, 000 or $2.23 per basic and diluted share as compared to the net income of approximately $300, 000 or $0.00 per basic and diluted share during the same prior year period. Excluding the income tax provision recorded due to our valuation allowance of $118, 500, 000 recorded during the Q4 of fiscal 2024, the company's adjusted net loss was approximately $4, 600, 000 or $0.07 per basic and diluted share for the quarter and an adjusted net loss of $22, 300, 000 or $0.35 per basic and diluted share for the full fiscal year 2024. Our cash and cash equivalents on April 30, 2024 were $38, 100, 000 compared to 38 $5, 000, 000 on April 30, 2023. This concludes my financial overview.

Speaker 3

I'll now turn the call over to Matt for an update on commercial activities during the quarter year.

Speaker 4

Thanks, Dan. During the Q4, the company signed multiple new projects spanning a wide range of capabilities capping off a successful year for our commercial team. With new project agreements of $30, 000, 000 during the period, we ended the quarter and fiscal year with a strong backlog of $193, 000, 000 For the fiscal year 2024, we not only added a significant number of new projects to our production pipeline, but we added multiple new customers as well. This includes the addition of another big pharma customer during the year. While the sales cycle for big pharma business takes time, we are actively engaged in discussions with other pharma companies and optimistic with respect to these potential opportunities.

Speaker 4

In addition, we are beginning to see improvements in the biotech financial markets overall, which we are hopeful will allow for advancement of manufacturing programs that were deferred by drug developers due to cash conservation strategies implemented last year. With respect to building Avid's visibility and positive reputation in the industry, we recently chose EcoVadis, 1 of the most trusted providers of business sustainability ratings to assist the company in not only evaluating our supply chain, but also ourselves. The EcoVadis assessment evaluates 21 sustainability criteria across 4 core themes environment, labor and human rights, ethics and sustainable procurement and more than 125, 000 companies globally have been rated by EcoBattis. The core themes are not only important to Avid, but also our employees as well as other stakeholders, including investors and customers. The company was delighted to have earned a score of 56 from EcoVadis, placing the company in the 62nd percentile globally, which recognizes the culture and values of the business.

Speaker 4

Equally important, this exercise has enabled the business to identify areas of improvement and we look forward to continuing Avid's journey of continuing to make our impact on those with whom we interact a more and more positive 1. In conclusion, despite facing some challenging headwinds in the market during the year, our team continued to perform and deliver. Today, Avid has the largest and most diverse customer base than at any point in its history. Our production pipeline is the largest and most valuable ever and our backlog remains strong going into the year ahead. We are pleased with the performance of our commercial team in fiscal 2024 and look forward to the new opportunities we anticipate in fiscal 2025.

Speaker 4

This concludes my overview of commercial activities. I will now turn the call back over to Nick for an update on operations and other achievements during the quarter year.

Speaker 2

Thanks, Matt. Fiscal 2024 was a challenging but validating year for Avid. There's no doubt that the status of the financial markets impacted our results and most notably the first half. There is also no doubt that we recovered extremely well during the balance of the year, achieving an upward trend with higher revenues during the second half, ending with quarter 4 revenues of $43, 000, 000 the highest in the company's history. Given this momentum combined with our strong backlog, we are looking ahead to a promising 2025 and providing 2025 full fiscal year revenue guidance of between $160, 000, 000 $168, 000, 000 representing a 17% growth year over year at the midpoint.

Speaker 2

Supporting our optimism is the growing interest we've seen in our newly completed facilities and expanded capabilities. In late fiscal 2023, we unveiled our completed mammalian cell facilities expansion. And during fiscal 2024, the company completed and launched its new cell and gene therapy manufacturing facility. With the completion of this 3 year construction program, as well as the associated capital expense, the company has dramatically expanded its capacity and technical capabilities and increased the company's annual revenue generating capacity from approximately $120, 000, 000 annually in fiscal 2021 to more than $400, 000, 000 today. The enhancements and and expansion not only allow Avid to better service new and existing biotech customers, but importantly enable the company to address the needs of large pharma as well.

Speaker 2

The expanded addressable market and improvements in the broader business environment have resulted in an increase in the larger and later stage programs in our production pipeline. With respect to capacity, our utilization is expected to increase as we onboard and execute new programs in both our mammalian and CGT facilities. As we've discussed in prior quarters, this expected increase in utilization should improve our margins, and we are pleased to see an approximate doubling of our gross margin in quarter 4 as compared to quarter 3 of this year. We expect the capacity utilization will further increase in connection with a series of ongoing PPQ campaigns for several of our late phase customers. And while the execution of a PPQ campaign is only the beginning of a 1 to 2 year journey toward commercial approval and subsequent manufacture, We are pleased to be partnering in so many of these late phase programs, which we anticipate will contribute to the future stability and growth of the business.

Speaker 2

In closing, I wish to highlight the company's resilience and execution in the face of difficult market environment. We end the year in a position of strength with positive revenue momentum building, particularly in the second half of fiscal 20 24, continued new business wins and line of sight to margin expansion. We recorded our highest ever quarterly revenue of $43, 000, 000 in quarter 4, logged our highest record backlog of $206, 000, 000 in quarter 3, and ended the year with double our gross margin in Q4 as compared to Q3 of the year. We are encouraged by the improving financial market for biotech companies along with the continued trend of on shoring of drug manufacturing back to the U. S.

Speaker 2

This concludes my prepared remarks for today, and we can now open the call for questions. Operator?

Operator

Certainly. 1 moment for our first question. And our first question for today comes from the line of Sean Dodge from RBC Capital. Your question please.

Speaker 5

Yes, thanks. Good afternoon. Maybe, Nick, just starting with the fiscal 2025 revenue guidance, with all the shifts in mix of late stage versus early stage that you've been signing, can you give us a sense of high level what proportion of that $160, 000, 000 to $168, 000, 000 to $168, 000, 000 is expected to come from your existing backlog and maybe how that compares to previous years? With some of your comments around growing interest in your new capacity. It sounds like a lot more of that guidance is kind of dependent on stuff that you intend on signing in the year.

Speaker 5

Is that true? Or do you have kind of similar coverage ratios that $160, 000, 000 to $168, 000, 000 that you had before?

Speaker 2

I don't have the number off the top of my head, Sean, but I would say that it's not markedly different. I think the confidence that we've had over the forecasting for the last 4 years, obviously, the 1st 2 quarters last year, we're bit down on that. But apart from that, I think it's come out pretty much where we expected. And I think that's probably a reasonable measure of the amount booked versus to get or go get that we saw in those periods as well.

Speaker 5

Okay. And then just around the bookings, so you mentioned growing interest you've been seeing in the newly completed capacity. I guess, is there any more color you can give on that? And then maybe any timelines on when you think that interest will begin to convert into sign new business?

Speaker 2

I mean, it's converting already. I mean, we've completed or in the final stages of completing the 2nd PPQ campaign in the new facility, which is incredible when you think that it's only been opened just for a year, so or just over a year. So we've done numerous batches in there. But as you know, time between doing the PPQ campaign and ultimately getting the commercial volume. Obviously, you've got to complete the campaign.

Speaker 2

You've got to that data is then going to be taken by the client, converted into a filing with the FDA approval. And hopefully, that ends up with a commercial product and then you start commercial revenues on there. So if I had a way of speeding that process up, I'd be a very wealthy man. But the fact that we've already completed 2, we've got a range of those that we're continuing to do going forward, it bodes really well for filling that capacity.

Speaker 5

Okay, great. And then you mentioned, kind of increasing capacity utilization certainly helping with margins. Aside from that, is there anything else that you can do or are doing at this point to help with a margin recovery?

Speaker 2

I think it is generally, frankly, the utilization of the capacity as we obviously see. I think at the midpoint, we highlighted guidance is 17% growth. That increased utilization of that facility will certainly improve the margins as long as we execute efficiently. I think in light of filling the facility, I don't think it's a cost cutting exercise to try to improve margin in the short term, which is the right strategy. So obviously, we're always cost conscious, but we're trying to facilitate growth.

Speaker 2

So I would say the vast majority of the margin impact will come out of improved utilization and some efficiency in the way that we do things, but not necessarily cost cutting to try to get to just margins for the sake of margin as it were.

Speaker 5

Great. Thanks again for the time.

Speaker 2

Thank you, Sean.

Operator

Thank you. And our next question comes from the line of Jacob Johnson from Stephens. Your question please.

Speaker 6

Hey, good afternoon everybody. Maybe, Nick, just going back to bookings again, I think $30, 000, 000 in the quarter is maybe a little bit lighter than we would have expected. But But this is maybe a couple of months old and obviously a lot of things going on in the end markets this year that you play in. So I'm just curious, are there any other metrics or any other maybe anecdotes you could share just on what you're seeing on the business development side? You mentioned you're seeing some things in the market that bode well for future business development.

Speaker 6

So is there anything else you can flush out there for us? Yes.

Speaker 2

I mean, I think we've said this on numerous occasions, Jacob, which is quarter by quarter back bookings can be fairly erratic. I've always been a proponent of the long term trend. I think we saw good growth in our backlog last year, and I anticipate seeing that going forward into the future year or into this current year, should I say. Certainly, in terms I think, Matt alluded to it in terms of the pipeline behind the backlog. We see positive dynamics in that area, customer interests, the amount of on shoring.

Speaker 2

We certainly see an easing in the financial markets for biotech. So being very frank, if I go back over the last couple of years, last year, I was sat here looking at finishing a really good year and looking at a tough year ahead of us, which took the shine off of fiscal 2023. As we sit here today, there's no question about it. Fiscal 2024 was a tough year, but sat here with much more optimism looking forward into almost every aspect of the market and the dynamics there. And obviously, it always takes time in the pharma industry to convert conversations to orders.

Speaker 2

But from what we can see at this moment in time, we're feeling pretty good about fiscal 2025 and also what that could mean for 2020 6 and forward.

Speaker 6

Got it. That's helpful. And maybe sticking with business development, I think Matt mentioned you picked up another large pharma customer in FY 'twenty 4. Can you just update us on how that large pharma strategy is going?

Speaker 2

Yes. Again, I think Matt has mentioned it. I have mentioned it before. It's a slow process, obviously, to get into big pharma. Looking at key suppliers, people they can trust.

Speaker 2

Obviously, 1st and foremost, they don't just throw anybody on there. So it's normally a matter of displacing somebody else unless there's a specific need. So you could be doing all the right things and still not jumping on that list. But all the indicators, all the interaction, the number of customer visits, quality audits, interactions and proposals that we're being asked look at and things like that have been very strong and very positive. And we keep picking them up.

Speaker 2

It may only be in singles at the moment, but I feel that that's a part of the marketplace that we're exposing that we haven't been able to capitalize on in the past that we will be capitalizing on in the future. So feeling good about where that's going as well as the biotech sector. So it's not 1 or the other, it's both.

Speaker 6

Got it. I'll leave it there.

Speaker 1

Thanks for taking the questions. Thanks.

Operator

Thank you. And our next question comes from the line of Paul Knight from KeyBanc. Your question please.

Speaker 7

Hi Nick. What's the capacity of the CGT portion of the business? And how is inquiry or business activity there developing?

Speaker 2

Yes. So the capacity of that's about $80, 000, 000 of the €400, 000, 000 or so that we've got. In terms of interest and activity in that area, I think it continues to be where we've seen it in the past. It's lagging the mammalian by a few months, probably a quarter, maybe a quarter and a half, but certainly picking up. I think we've seen some very encouraging signs in the last quarter in terms of interactions with clients, customer visits.

Speaker 2

And so again, it's I would the best way I could categorize it is about 4 or 5 months behind them and Merly inside, but picking up nicely, which we started to see that pick up in, I would say, November, December last year in the mammalian side. And that's continued all the way through. So kind of back in the sort of January, February sort of where we were then. And I think you started to hear some optimism in my tone and my comments around that time in the mammalian side.

Speaker 7

And then the process development was what in the quarter? And what's your read from that process development number?

Speaker 2

Yes. I mean PD, I do see the activity on a day to day basis. The revenues don't always reflect the the activity, but I can see what's going through there. It can vary quite enormously depending on the type of project that's coming in. Some late phase programs need very little because they've already been well developed where they were before and therefore don't really need a lot of PD activity.

Speaker 2

In other cases, they're not so well developed and we have to do a lot of polishing to get them up to speed and ready for PPQ. So it can fluctuate, but just looking at what I've seen in the PD area and the level of activity we're seeing, that's looking very positive at the moment. And I think we'll see or I expect to see a jump in that throughout this year, which again, it's very project dependent there.

Speaker 7

We hear that the CDMO capacity is still fairly tight. So what do you feel about that dynamic in the industry? Or is it really your customers need capital?

Speaker 2

I think there's obviously there's 1 thing between customers getting funded, but then there's also them spending that funding. So I mean, if you've been short of money for quite a while, I don't think you're necessarily just because you get some, you don't immediately rush out and spend it all. But I think that capacity and certainly in I would say the sort of what I would call a high quality late phase commercial grade CDMO capacity is in relatively short demand short supply, should I say. I would say that the market is again picking up, but it's the speed at which these transactions go. We're seeing more and more conversations around on shoring.

Speaker 2

But again, we've all heard of BioSecure and drivers like that, but that doesn't I don't expect to see that turning up in backlog probably until the 2nd or Q3 this year. That's not to say that none of it would turn up in there, but hopefully meaningful amounts would take a little bit longer to come through.

Operator

Okay. Thanks. Thank you. And our next question comes from the line of Matt Hewitt from Craig Hallum. Your question please.

Speaker 8

Maybe first up continuing on the business development front. Could you talk a little bit about the cadence of inbound calls and the conversations you're having since Q4 into Q or from Q3 fiscal Q3 into Q4 even to current day, have you seen an increase? Is that because of the on shoring in the BioSecure Act? Or is it tied more to just a better sense around the funding environment? Any additional metrics that you could provide there would be helpful.

Speaker 2

Yes. Thanks for the question. It is definitely up for sure. I think we are seeing a more positive outlook in terms of our customers and that obviously is leading to more positive conversations. We don't give actual metrics on our pipeline behind the backlog, but I can say that that is continuing to grow.

Speaker 2

The source of those is varied. I would say not all clients are telling you straight off the bat that they're transferring from onshore, offshore to onshore. But obviously, as you get deeper and deeper into the conversation, that becomes more and more apparent. So what we see isn't always a perfect mirror into what's actually happening. But there is increasing amounts of on shoring, I think, increasing amounts of early phase programs being coming out there in terms of opportunities from biotech.

Speaker 2

Obviously, we already just talked about signing another big pharma. So I would have to say that outside inflation reduction and interest rates coming down, pretty much all the indicators for the vast majority of this calendar year, I think, have been generally positive. And so I think that's seen you see that in our guidance for next year and in our general optimism, I think, for the future as we sit today.

Speaker 8

Got it. And then maybe once a separate comment or question regarding gross margins. With some of the increased opportunities on in the later stage, I would think that those contracts tend to be larger runs and should help boost or help the gross margins rebound maybe

Speaker 3

a little bit

Speaker 8

quicker on similar size type revenues. Is that a fair assessment? Or is there something else that would cause kind of a more gradual rebound in the gross margins? Thank you.

Speaker 3

Thanks for the question, Matt. Yes, I mean typically they are larger runs because there's more effort going into those runs, which do command a slightly higher margin. But I think on a blended basis, margins will be fairly similar as far as the run of margins and how those margins come through as an incremental with the revenue load. As you can see for the Q4 with the approximately 27% increase in revenues from the Q3 that we nearly doubled our gross margin. So that proves that it proves the model in providing incremental margin as we increase the top line, which I think that's the metric that we had look at going forward.

Speaker 8

Got it. Thank you. Yes.

Speaker 2

Thanks, Max.

Operator

Thank you. And our next question comes from the line of Max Schmitt from William Blair. Your question please.

Speaker 5

Hey, good afternoon guys.

Speaker 9

Thanks for taking our questions. Maybe just following up on Sean's question and trying to get at it a different way here. So backlog was essentially flat year over year, but your guide for 2025 calling for about 17% revenue growth at the midpoint. Can you just help us bridge the gap between those 2 data points, especially in light of your comment earlier about not needing to go out and win more work this year than you would in a typical year. And maybe it would be helpful just to hear what you think you have to hit in terms of growth in net bookings this year to support your top line outlook for fiscal 2025?

Speaker 2

Yes. So I mean, I think 1 of the things that we suffered from in prior periods, Max, has been obviously an expanding backlog in terms of the period of time to recognize revenue. But as I've kind of alluded to in the past is that if a PPQ campaign, for argument's sake, takes 15 months and you booked all PPQ campaigns, once you hit 15 months, it no longer expands any further. So you can only go so far. So as you start to introduce earlier phase business or even maintain the mix, then you get more drop through from your revenue from your backlog into your revenue.

Speaker 2

So I think that largely explains the dynamic that you see there. And then obviously, in terms of the forecast going forward, I mean, I don't actually comment on the amount booked versus to go get. I've articulated that it's in a similar field, but it also in terms of the confidence, there are a lot of things that create confidence. So we can be having negotiations going on for 6 or 7 months before it or even longer in some cases before it actually appears in a booking. So it doesn't have to be in bookings.

Speaker 2

It doesn't even have to be in backlogs for us to be having a view of what's coming in on the go get as it were.

Speaker 9

Okay. Makes sense. On margins, you talked a lot about rebuilding margins. And just thinking about the incremental drop through to maybe give us a sense for some sort of target for adjusted EBITDA this year. Is it reasonable just to take the margins in 4Q as a baseline and then think about I think in the past we've talked about a 40% to 60% incremental drop through on revenue.

Speaker 9

Is that a reasonable way to think about margins here in fiscal 2025?

Speaker 3

I think it's a start, Max. Clearly, we'll still have some full year items coming through our costs, such as depreciation. Depreciation is probably going to go up somewhere around 40%, 45% over fiscal 2024. So that's going to eat away at some of the margin though it's not a cash component of the margin. So, I still like the 40% to 60% fall through, but I think we've just kind of surpassed as you saw from Q3 to Q4.

Speaker 3

If we maintain those levels, I would imagine the margin will be plus or minus where we ended in the Q4. But as we continue to grow that top line, then we'll start to see more of that margin fall through.

Speaker 9

Sorry, Dan, just to confirm, when you're saying you'd expect to see margins kind of in line with the Q4, are you saying that if revenue comes through like you expect this year on a total basis for the year like 9% adjusted EBITDA margin like you posted in the Q4, that's a reasonable target for fiscal 2020 5?

Speaker 3

5? Let's talk in gross margins. Okay. Not necessarily in line, but it will be plus and minus kind of where we ended in the 4th quarter. We typically don't guide to the EBITDA margin.

Speaker 9

Got you. And then maybe just last 1 for me on revenue composition. Can you give us an update on Halozyme growth this year and then growth from non Halozyme customers? And then how you're thinking about growth from each of those 2 major buckets here moving forward? And also a reset on how much revenue is coming from Halozyme in total for 2024 would also be helpful.

Speaker 2

I think from my expectation, vast majority of the growth going into fiscal 'twenty 5 will come from other sources as it has done frankly last year. So we've continued to grow and diversify the business and that continues to drive the growth in the business.

Speaker 9

Understood. Thanks for taking our questions.

Operator

Thank you. This does conclude the question and answer session of today's program. I'd like to hand the program back to Nick Green, President and CEO for any further remarks.

Speaker 2

Thank you, operator, and thank you to everyone participating on today's call. As we look ahead to fiscal 2025, we are encouraged by multiple indicators, including our revenue momentum and backlog. And we believe we are well positioned to generate cash from operations during the year. We thank our customers for their trust and partnership, our investors for their continued support and we wish to recognize our exceptional employees who continue to drive our success. I thank you again for participating today and for your continued support of Avid Bioservices.

Operator

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.

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Key Takeaways

  • We generated record Q4 revenue of $43 M, an 8% year-over-year increase, and our consolidated gross margin doubled sequentially from Q3 to Q4 as capacity utilization rose.
  • We completed major capacity expansions in both mammalian and cell & gene therapy manufacturing, raising our annual revenue capacity from ~$120 M in fiscal 2021 to over $400 M today.
  • We provided fiscal 2025 revenue guidance of $160 M–$168 M, implying ~17% growth year-over-year on the back of a strong $193 M backlog and improving biotech funding conditions.
  • During Q4 we signed $30 M in new project agreements and added another large pharma customer, leaving us with the largest and most diverse customer base and production pipeline in company history.
  • For fiscal 2024 we saw a 6% revenue decline to $139.9 M, gross margin compress to 5% from 21% prior year, and recorded a net loss of $140.8 M including a $118.5 M deferred tax valuation allowance.
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Earnings Conference Call
Avid Bioservices Q4 2024
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