BURLINGTON, Mass., May 8, 2024 /PRNewswire/ -- Azenta, Inc. (NASDAQ:AZTA) today reported financial results for the second quarter ended March 31, 2024. Quarter Ended Dollars in millions, except per share data March 31,  December 31,  March 31,  Change 2024 2023 2023 Prior Qtr Prior Yr. Revenue from Continuing Operations $ 159 $ 154 $ 148 3 % 7 %    Organic growth 7 % Sample Management Solutions $ 74 $ 79 $ 71 (6) % 4 % Multiomics $ 62 $ 63 $ 62 (1) % (0) % B Medical Systems $ 23 $ 13 $ 15 81 % 51 % Diluted EPS Continuing Operations $ (2.47) $ (0.28) $ (0.03) nm nm Diluted EPS Total $ (2.47) $ (0.28) $ (0.07) nm nm Non-GAAP Diluted EPS Continuing Operations $ 0.05 $ 0.02 $ (0.06) 102 % 184 % Adjusted EBITDA - Continuing Operations $ 9 $ 5 $ (2) 107 % 493 % Adjusted EBITDA Margin - Continuing Operations 5.9 % 3.0 % (1.6) % Management Comments"We saw continued momentum in the second quarter with strong organic revenue growth, and improved profitability as a result of our ongoing cost reduction and transformation initiatives," stated Steve Schwartz, President and CEO. "This marks our fourth consecutive quarter of positive free cash flow. And as noted during our Investor Day in March, we are confident in our position and the market opportunity which we are uniquely positioned to capture."  Second Quarter Fiscal 2024 Results Revenue was $159 million, up 7% year over year. Organic revenue, which excludes the impacts from foreign exchange, was also up 7% year over year, with a nominal benefit from foreign exchange tailwinds. The year-over-year revenue increase was attributable to higher B Medical Systems ("B Medical") and Sample Management Solutions revenues. The combined Sample Management Solutions and Multiomics business segments grew 2% on an organic basis. The Consumables and Instruments ("C&I") product line remained a headwind to growth in the second quarter, largely attributable to instruments softness. Excluding the C&I product line, organic revenue grew 9% year-over-year. Sample Management Solutions revenue was $74 million, up 4% year over year. Organic revenue grew 3%, mainly driven by continued strength in large-automated Store Systems and Sample Repository Solutions, partially offset by a year-over-year revenue decline in the C&I product line. Excluding the C&I product line, the segment grew 8% on an organic basis. Multiomics revenue was $62 million, flat year over year. Organic revenue grew 1% year over year, primarily driven by growth in Gene Synthesis services, partially offset by a year-over-year decline in Sanger sequencing revenue. B Medical Systems revenue was $23 million, up 51% year over year. Organic revenue grew 49% year over year. The better-than-expected revenue in the quarter was mainly due to the materialization of additional cold chain solution orders received during the period. Summary of GAAP Earnings Results Operating loss was $147 million. Operating margin was (92.3%), compared to (8.7%) in the second quarter fiscal year 2023. Gross margin was 39.8%, an improvement of 400 basis points year over year, mainly driven by higher revenue. Operating expenses were $210 million, up 218% year over year, and included a $111.3 million non-cash goodwill impairment charge related to the B Medical segment and a $4.7 million non-cash intangible asset impairment charge related to the discontinuation of the sample sourcing product offering (a product line within the Sample Management Solutions segment), as well as costs for restructuring and transformation. The year-over-year increase was driven by the goodwill and intangible asset impairments, transformation costs, and higher restructuring costs, partially offset by a prior year one-time non-cash benefit of $17 million related to the reversal of the fair value of B Medical contingent consideration. Other income included $9.6 million of net interest income versus $10.4 million in the prior year period. Diluted EPS from continuing operations was ($2.47) compared to ($0.03) in the second quarter of fiscal year 2023. Summary of Non-GAAP Earnings Results Operating loss was $6 million. Operating margin was (3.6%), an improvement of 530 basis points year over year. Gross margin was 44.3%, an improvement of 310 basis points year over year, mainly driven by higher revenue and operating efficiency. Operating expense in the quarter was $76 million, up 3% year over year, primarily driven by the year-over-year increase in stock-based compensation and higher commissions expense in B Medical which offset the benefit from cost reduction actions. Adjusted EBITDA was $9 million, and Adjusted EBITDA margin was 5.9%, an improvement of 750 basis points year over year. Diluted EPS was $0.05, compared to ($0.06) one year ago. Cash and Liquidity as of March 31, 2024 The Company ended the quarter with a total balance of cash, cash equivalents, restricted cash and marketable securities of $975 million. Operating cash flow was $8 million in the quarter. Capital expenditures were $7 million, and free cash flow (cash flow from operations less capital expenditures) was $2 million. Share Repurchase Program Update In the second quarter, the Company repurchased 1.2 million shares for $73.9 million under a 10b5-1 trading program. As of March 31, 2024, the Company repurchased 20.9 million shares of common stock for $1.025 billion under the 2022 Repurchase Authorization. In fiscal year 2024, the Company intends to 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 lowering revenue guidance for fiscal year 2024 while raising earnings guidance: Total revenue is now expected to be in the range of $659 to $671 million due to the timing of B Medical revenue. Total organic revenue in the range of down 1% to up 1% 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 $0.27 to $0.37. Conference Call and WebcastAzenta management will webcast its second 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, Participants may access the call using the following. online registration link. Registrants will receive confirmation containing dial in details and a unique conference call code for entry. Regulation G – Use of Non-GAAP financial MeasuresThe Company supplements its GAAP financial measures with certain non-GAAP financial measures to provide investors a perspective on the results of business operations, which the Company believes is 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. Certain amounts in the tables that supplement the consolidated financial statements may not sum due to rounding. All percentages are calculated using unrounded amounts. "Safe Harbor Statement" under Section 21E of the Securities Exchange Act of 1934Some 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. 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 SciencesAzenta, 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:  Yvonne PerronVice President, Financial Planning & Analysis and Investor Sherry   AZENTA, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (In thousands, except per share data) Three Months Ended Six Months Ended March 31,  March 31,  2024 2023 2024 2023 Revenue Products $ 59,017 $ 51,917 $ 112,410 $ 137,715 Services 100,117 96,484 201,041 189,052 Total revenue 159,134 148,401 313,451 326,767 Cost of revenue Products 41,658 40,009 78,496 94,108 Services 54,091 55,156 110,058 105,558 Total cost of revenue 95,749 95,165 188,554 199,666 Gross profit 63,385 53,236 124,897 127,101 Operating expenses Research and development 8,707 8,520 17,200 16,056 Selling, general and administrative 78,314 73,339 156,890 165,891 Impairment of goodwill and intangible assets 115,975 — 115,975 — Contingent consideration - fair value adjustments — (17,145) — (17,145) Restructuring charges 7,344 1,499 8,464 2,961 Total operating expenses 210,340 66,213 298,529 167,763 Operating loss (146,955) (12,977) (173,632) (40,662) Other income Interest income, net 9,565 10,394 19,646 21,059 Other income (expense), net 250 (2,668) 932 (1,523) Loss before income taxes (137,140) (5,251) (153,054) (21,126) Income tax benefit (260) (3,260) (450) (7,900) Income (loss) from continuing operations (136,880) (1,991) (152,604) (13,226) Loss from discontinued operations, net of tax — (2,936) — (2,936) Net loss $ (136,880) $ (4,927) $ (152,604) $ (16,162) Basic net loss per share: Income (loss) from continuing operations $ (2.47) $ (0.03) $ (2.72) $ (0.19) Loss from discontinued operations, net of tax — (0.04) — (0.04) Basic net loss per share $ (2.47) $ (0.07) $ (2.72) $ (0.23) Diluted net loss per share: Income (loss) from continuing operations $ (2.47) $ (0.03) $ (2.72) $ (0.19) Loss from discontinued operations, net of tax — (0.04) — (0.04) Diluted net loss per share $ (2.47) $ (0.07) $ (2.72) $ (0.23) Weighted average shares used in computing net loss per share: Basic 55,440 69,111 56,078 70,858 Diluted 55,440 69,111 56,078 70,858   AZENTA, INC. CONSOLIDATED BALANCE SHEETS (unaudited) (In thousands, except share and per share data) March 31,  September 30, 2024 2023 Assets Current assets  Cash and cash equivalents $ 353,491 $ 678,910  Short-term marketable securities 468,220 338,873  Accounts receivable, net of allowance for expected credit losses ($6,844 and  $8,057, respectively) 154,668 156,535  Inventories 122,351 128,198  Derivative asset 350 13,036  Short-term restricted cash 3,089 4,650  Prepaid expenses and other current assets 87,897 98,754 Total current assets 1,190,066 1,418,956 Property, plant and equipment, net 200,905 205,744 Long-term marketable securities 143,018 111,338 Long-term deferred tax assets 925 571 Operating lease right-of-use assets 69,662 66,580 Goodwill 681,140 784,339 Intangible assets, net 267,626 294,301 Other assets 10,155 3,891 Total assets $ 2,563,497 $ 2,885,720 Liabilities and stockholders' equity Current liabilities  Accounts payable $ 37,319 $ 35,796  Deferred revenue 38,323 34,614  Accrued warranty and retrofit costs 9,745 10,223  Accrued compensation and benefits 27,985 33,911  Accrued customer deposits 21,772 17,707  Accrued income taxes payable 10,706 7,378  Short-term operating lease liability 10,802 9,499  Accrued expenses and other current liabilities 46,347 61,800 Total current liabilities 202,999 210,928 Long-term tax reserves 377 380 Long-term deferred tax liabilities 62,267 67,301 Long-term operating lease liabilities 63,374 60,436 Other long-term liabilities 11,609 12,175 Total liabilities 340,626 351,220 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, 68,464,925 shares issued and 54,614,041 shares outstanding at March 31, 2024, 71,294,247 shares issued and 57,832,378 shares outstanding at September 30, 2023 681 713 Additional paid-in capital 999,333 1,156,160 Accumulated other comprehensive loss (41,728) (62,426) Treasury stock, at cost - 13,850,884 shares at March 31, 2024 and 13,461,869 shares at September 30, 2023 (223,820) (200,956) Retained earnings 1,488,405 1,641,009 Total stockholders' equity 2,222,871 2,534,500 Total liabilities and stockholders' equity $ 2,563,497 $ 2,885,720   AZENTA, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (In thousands) Six Months Ended March 31,  2024 2023 Cash flows from operating activities Net loss $ (152,604) $ (16,162) Adjustments to reconcile net loss to net cash provided by (used in) operating activities:  Depreciation and amortization 44,214 42,140  Impairment of goodwill and intangible assets 115,975 —  Non-cash write-offs of assets 6,966 —  Stock-based compensation 8,804 6,096  Contingent consideration adjustment — (17,145)  Amortization and accretion on marketable securities (2,084) (5,284)  Deferred income taxes (9,456) (20,843)  Purchase accounting impact on inventory — 5,781  Loss on disposals of property, plant and equipment 260 31 Changes in operating assets and liabilities: Accounts receivable 2,922 23,925 Inventories 7,975 (11,504) Accounts payable 936 (5,677) Deferred revenue 3,379 3,625 Accrued warranty and retrofit costs (714) 622 Accrued compensation and tax withholdings (6,153) (21,797) Accrued restructuring costs 1,454 820 Other assets and liabilities 12,913 (23,798) Net cash provided by (used in) operating activities 34,787 (39,170) Cash flows from investing activities Purchases of property, plant and equipment (18,746) (21,705) Purchases of marketable securities (345,447) (233,584) Sales and maturities of marketable securities 190,504 728,171 Net investment hedge settlement 1,476 29,313 Acquisitions, net of cash acquired — (387,665) Net cash provided by (used in) investing activities (172,213) 114,530 Cash flows from financing activities Payments of finance leases (386) (230) Withholding tax payments on net share settlements on equity awards — (4,906) Share repurchases (186,834) (500,000) Net cash used in financing activities (187,220) (505,136) Effects of exchange rate changes on cash and cash equivalents 4,721 60,355 Net decrease in cash, cash equivalents and restricted cash (319,925) (369,421) Cash, cash equivalents and restricted cash, beginning of period 684,045 1,041,296 Cash, cash equivalents and restricted cash, end of period $ 364,120 $ 671,875 Supplemental disclosures: Cash paid for income taxes, net 5,008 35,286 Reconciliation of cash, cash equivalents and restricted cash to the condensed consolidated balance sheets March 31,  September 30,  2024 2023 Cash and cash equivalents of continuing operations $ 353,491 $ 678,910 Short-term restricted cash 3,089 4,650 Long-term restricted cash included in other assets 7,540 485 Total cash, cash equivalents and restricted cash shown in the condensed consolidated statements of cash flows $ 364,120 $ 684,045   Notes on Non-GAAP Financial MeasuresNon-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, non-recurring costs related to the Company's business transformation initiatives 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 March 31, 2024 December 31, 2023 March 31, 2023 per diluted per diluted