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 fourth quarter
and full fiscal year, ended April 30, 2022.
Highlights from the Quarter and Fiscal
Year Ended April 30, 2022, and Other Events:
“We made considerable progress during fiscal
2022. During the year, we achieved revenue of $120 million,
representing a doubling of revenues recorded in fiscal 2020.
Notably, Q4 fiscal 2022 was the eighth consecutive quarter of
operational profitability for the company. The company signed net
new project orders for $155 million in fiscal 2022, leading to a
backlog of $153 million; Avid’s largest backlog to-date. Supporting
this growth, as well as that which we anticipate in the coming
years, our facilities and service expansions continue to proceed
according to plan,” stated Nick Green, president and chief
executive officer of Avid Bioservices.
“Our momentum in fiscal 2022 was driven in part
by the exceptional performance of our enhanced commercial team.
Over the last six months, we expanded the sales teams for both our
mammalian and our cell and gene therapy businesses. We also
expanded our business operations team to best support our growing
project pipeline. This new organization has had great success,
highlighted by the fact that it signed the same number of new
projects in the second half of fiscal 2022 as signed in all of
fiscal 2021.
“During the period, our facilities and service
expansions continued to advance on a timeline that will allow us to
meet the demand of existing customers that are expanding their
manufacturing work with us as well as our newest and prospective
customers. With respect to our 53,000 square foot cell and gene
therapy facility, we recently completed the first phase of a
two-phase construction plan, opening our new analytical and process
development laboratories eight months to the day after we announced
our intention to expand into the cell and gene therapy business.
Construction of the CGMP suites for our cell and gene therapy
facility, the second phase of this expansion, remains on track and
those manufacturing suites are expected to come online in
mid-calendar 2023. The expansion of our Myford facility, which
houses our mammalian operations, is also being constructed in a
two-phase process. As reported last quarter, the company completed
the first phase with the opening of a new downstream suite. The
second phase of this project is focused on the Myford South
facility and is on track to come online at the beginning of
calendar year 2023, which at our current growth rate will be
ideally timed to provide much needed capacity for fiscal 2024.
“Finally, we are delighted to announce a further
expansion of our process development capacity for our mammalian
cell business. Once complete at the end of this calendar year,
these new suites will double our current process development
capacity which came online in October of 2019. This new line will
significantly increase capacity at the front-end of our mammalian
cell business, which is critical to the efficient on-boarding of
new clients. It is expected that this expansion will cost
approximately $6 million, and upon completion, will have the
potential to generate approximately $20 million in additional
revenue capacity.
“Given the growth momentum achieved during
fiscal 2022, our significant year-end backlog, and the increase in
demand anticipated during fiscal 2023, we are pleased to announce
revenue guidance for fiscal 2023 of between $140 and $145
million.”
Financial Highlights and
Guidance
- The company is providing revenue
guidance for fiscal 2023 of $140 million to $145
million, a 17% - 21% increase over fiscal 2022.
- Revenues for the fourth quarter of
fiscal 2022 were $31.2 million, representing a 13% increase
compared to $27.6 million recorded in the prior year period. The
increase in revenues for the quarter can primarily be attributed to
an increase in the scope of in-process and completed manufacturing
runs and an increase in process development revenues primarily
associated with services provided to new customers as compared to
the prior year period. For the 2022 full fiscal year, revenues were
$119.6 million, a 25% increase compared to $95.9 million in the
prior year period. The increase in revenues for the 2022 full
fiscal year, as compared to the prior year period can primarily be
attributed to an increase in the number and scope of in-process and
completed manufacturing runs, unutilized reserved capacity fees,
and process development revenues.
- As of April 30, 2022, revenue
backlog was $153 million, representing a net increase of 30%
compared to $118 million at the end of fiscal 2021. The company
expects to recognize the majority of this backlog during fiscal
2023.
- Gross margin for the fourth quarter
of fiscal 2022 was 22%, compared to a gross margin of 29% for the
fourth quarter of fiscal 2021. Factors impacting the gross margin
for the quarter were primarily from increases in costs associated
with the growth of our business and our facility expansions
including compensation and benefit expenses as well as increases in
facility and related expenses, partially offset by higher revenues
during the period. Gross margin for the 2022 full fiscal year was
31%, consistent with 31% for the prior year period.
- Selling, general and administrative
expenses (“SG&A”) for the fourth quarter of fiscal 2022 were
$5.9 million, an increase of 17% as compared to $5.1 million
recorded for the fourth quarter of fiscal 2021. The increase in
SG&A for the fourth quarter was primarily due to higher
compensation and benefit expenses as well as increased facility and
related expenses. For the 2022 full fiscal year, SG&A expenses
were $21.2 million as compared to $17.1 million for the prior year.
The increase in SG&A during the 2022 full fiscal year was
primarily due to compensation and benefit expenses, facility and
related expenses, advertising costs and legal and accounting
fees.
- During the fourth quarter of fiscal
2022 we recorded a non-cash income tax benefit of $115 million, or
$1.63 per diluted share, due to release of our valuation allowance
recorded against the company's deferred tax assets (DTAs). The
company previously maintained a valuation allowance on its DTAs
until there is sufficient evidence to support the reversal of all
or some portion of these allowances. On a periodic basis, the
company reassesses the valuation allowance of its DTAs, weighing
all positive and negative evidence, to assess if it is
more-likely-than-not that some or all of the company's DTAs will be
realized. As of the fourth quarter of fiscal 2022, the company has
demonstrated profitability and cumulative pretax income as well as
forecasting revenue growth. After assessing both the positive and
negative evidence, the company determined that it was
more-likely-than-not that its DTAs would be realized and released
the valuation allowance related to federal and state DTAs as of
April 30, 2022.
- For the fourth quarter of fiscal
2022, the company recorded net income attributable to common
stockholders of $115.6 million or $1.87 per basic and $1.65 per
diluted share, as compared to a net loss attributable to common
stockholders of $2.7 million or $0.04 per basic and diluted share,
for the fourth quarter of fiscal 2021. For the 2022 full fiscal
year, the company recorded net income attributable to common
stockholders of $127.7 million or $2.08 per basic
and $1.84 per diluted share, compared to net income
attributable to common stockholders of $3.3 million
or $0.06 per basic and diluted share, for the 2021 full
fiscal year. Excluding the non-cash income tax benefit of
$115.0 million recorded during the fourth quarter of fiscal 2022,
the company’s net income attributable to common stockholders was
approximately $600 thousand or $0.01 per basic and diluted share
for the quarter, and $12.7 million or $0.21 per basic and diluted
share for the full fiscal year 2022.
- The company reported $126.2
million in cash and cash equivalents as of April 30, 2022
compared to $169.9 million as of the prior fiscal year ended April
30, 2021.
More detailed financial information and analysis
may be found in Avid Bioservices’ Annual Report on Form 10-K, which
will be filed with the Securities and Exchange
Commission today.
Recent Corporate Developments
- The company’s commercial team
signed multiple new project orders during the fourth quarter,
totaling approximately net $44 million. For the 2022
full fiscal year, the company signed new project orders totaling
approximately net $155 million. These projects span all areas of
the business, from process development to commercial
manufacturing.
- The company continues to make
progress with both the Myford South expansion, as well as the
construction of its new dedicated cell and gene therapy facility.
The company currently expects to complete the second phase of its
Myford South expansion, which includes both upstream and downstream
CGMP manufacturing suites, during the first quarter of calendar
2023. With respect to the cell and gene therapy business, the
company brought its process and analytical development capacity
online in mid-June 2022. The company remains on track to bring the
CGMP manufacturing suites online in mid-calendar 2023. Please visit
the Avid website Facilities page for more information about the
company’s expansions and videos documenting progress
(https://avidbio.com/expansion-updates/).
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 our operating
performance and future prospects, and allow for greater
transparency with respect to key metrics used by management in our
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 our senior
management. The company computes non-GAAP financial measures 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 our 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 our results of operations in conjunction with the
corresponding GAAP financial measures, and encourages investors to
carefully consider our results under GAAP, as well as the
supplemental non-GAAP information and the reconciliations between
these presentations, to more fully understand our business.
Non-GAAP net income excludes stock-based
compensation; business transition and related costs including
corporate initiatives into new business activities such as our
expansion into viral vectors for the cell and gene therapy sector
of the market and other costs directly associated with such
activities, and severance and related expenses; non-cash interest
expense on convertible senior notes for the accretion of the
issuance costs associated with our convertible senior notes; and
other income or expense items. 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. 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 from
operations less cash used in the acquisition and disposition of
capital.
Additionally, non-GAAP net income 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
included at the end of this press release.
Conference Call
Avid will host a conference call and webcast
this afternoon, June 29, 2022, at 4:30 PM EST (1:30
PM PST).
To listen to the conference call, please dial
(877) 312-5443 or (253) 237-1126 and request the Avid
Bioservices conference call. 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 29 years of experience producing monoclonal
antibodies and recombinant proteins, 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 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 that the ongoing COVID-19
pandemic will adversely affect our or our customers’
business and operations, the risk the company may experience
delays in engaging new clients, the risk that the company may not
be successful in executing client projects, the risk that the
company may experience technical difficulties in completing client
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 2023 revenues, the risk that
the completion of the second phase the of
the Myford expansion and/or 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 segment may distract senior
management’s focus on the company’s existing operations and/or its
current expansion of the Myford facility, the risk that the company
may experience delays in hiring qualified individuals into the
viral vector business, the risk that the company may experience
delays in engaging initial customers for the viral vector business,
and the risk that the viral vector 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, 2022, 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.CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME(In
thousands, except per share information) |
|
|
|
|
|
Three Months EndedApril 30, |
|
Twelve Months EndedApril 30, |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
$ |
31,226 |
|
|
$ |
27,606 |
|
|
$ |
119,597 |
|
|
$ |
95,868 |
|
Cost of revenues |
|
24,242 |
|
|
|
19,463 |
|
|
|
82,949 |
|
|
|
66,561 |
|
Gross profit |
|
6,984 |
|
|
|
8,143 |
|
|
|
36,648 |
|
|
|
29,307 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative |
|
5,915 |
|
|
|
5,055 |
|
|
|
21,226 |
|
|
|
17,064 |
|
Total operating expenses |
|
5,915 |
|
|
|
5,055 |
|
|
|
21,226 |
|
|
|
17,064 |
|
Operating income |
|
1,069 |
|
|
|
3,088 |
|
|
|
15,422 |
|
|
|
12,243 |
|
Interest expense |
|
(555 |
) |
|
|
(1,160 |
) |
|
|
(2,680 |
) |
|
|
(1,164 |
) |
Other income (expense), net |
|
73 |
|
|
|
63 |
|
|
|
(81 |
) |
|
|
133 |
|
Net income before income
taxes |
|
587 |
|
|
|
1,991 |
|
|
|
12,661 |
|
|
|
11,212 |
|
Income tax benefit |
|
115,011 |
|
|
|
— |
|
|
|
115,011 |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
Net income |
$ |
115,598 |
|
|
$ |
1,991 |
|
|
$ |
127,672 |
|
|
$ |
11,212 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income |
$ |
115,598 |
|
|
$ |
1,991 |
|
|
$ |
127,672 |
|
|
$ |
11,212 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series E preferred stock
accumulated dividends |
|
— |
|
|
|
(1,211 |
) |
|
|
— |
|
|
|
(4,455 |
) |
Impact of Series E preferred
stock redemption |
|
— |
|
|
|
(3,439 |
) |
|
|
— |
|
|
|
(3,439 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable
to common stockholders |
$ |
115,598 |
|
|
$ |
(2,659 |
) |
|
$ |
127,672 |
|
|
$ |
3,318 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share
attributable to common stockholders: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
1.87 |
|
|
$ |
(0.04 |
) |
|
$ |
2.08 |
|
|
$ |
0.06 |
|
Diluted |
$ |
1.65 |
|
|
$ |
(0.04 |
) |
|
$ |
1.84 |
|
|
$ |
0.06 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares
outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
61,761 |
|
|
|
60,927 |
|
|
|
61,484 |
|
|
|
58,222 |
|
Diluted |
|
70,394 |
|
|
|
63,142 |
|
|
|
70,474 |
|
|
|
59,426 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AVID BIOSERVICES, INC.CONSOLIDATED BALANCE
SHEETS(In thousands, except par value) |
|
|
|
|
|
April 30,2022 |
|
April 30,2021 |
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
126,166 |
|
|
$ |
169,915 |
|
Accounts receivable, net |
|
20,547 |
|
|
|
18,842 |
|
Contract assets |
|
5,369 |
|
|
|
6,112 |
|
Inventory |
|
26,062 |
|
|
|
11,871 |
|
Prepaid expenses |
|
1,879 |
|
|
|
1,064 |
|
Total current assets |
|
180,023 |
|
|
|
207,804 |
|
|
|
|
|
Property and equipment, net |
|
92,955 |
|
|
|
37,455 |
|
Operating lease right-of-use
assets |
|
36,806 |
|
|
|
18,691 |
|
Deferred tax assets |
|
115,082 |
|
|
|
— |
|
Other assets |
|
4,627 |
|
|
|
1,210 |
|
Restricted cash |
|
350 |
|
|
|
350 |
|
Total assets |
$ |
429,843 |
|
|
$ |
265,510 |
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
9,504 |
|
|
$ |
9,257 |
|
Accrued compensation and benefits |
|
8,418 |
|
|
|
8,794 |
|
Contract liabilities |
|
53,798 |
|
|
|
50,769 |
|
Current portion of operating lease liabilities |
|
2,969 |
|
|
|
1,355 |
|
Other current liabilities |
|
1,072 |
|
|
|
761 |
|
Total current liabilities |
|
75,761 |
|
|
|
70,936 |
|
|
|
|
|
Convertible senior notes,
net |
|
139,577 |
|
|
|
96,949 |
|
Operating lease liabilities, less
current portion |
|
37,886 |
|
|
|
19,889 |
|
Finance lease liabilities, less
current portion |
|
2,093 |
|
|
|
— |
|
Total liabilities |
|
255,317 |
|
|
|
187,774 |
|
|
|
|
|
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; 61,807 and 61,069 shares issued and outstanding at
respective dates |
|
62 |
|
|
|
61 |
|
Additional paid-in capital |
|
605,841 |
|
|
|
637,534 |
|
Accumulated deficit |
|
(431,377 |
) |
|
|
(559,859 |
) |
Total stockholders’ equity |
|
174,526 |
|
|
|
77,736 |
|
Total liabilities and stockholders’ equity |
$ |
429,843 |
|
|
$ |
265,510 |
|
|
|
|
|
|
|
|
|
|
AVID BIOSERVICES, INC.ITEMIZED
RECONCILIATION BETWEEN GAAP AND NON-GAAP FINANCIAL
MEASURES(Unaudited)(In thousands) |
|
|
|
|
|
Three Months EndedApril 30, |
|
Twelve Months EndedApril 30, |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net income (loss)
attributable to common stockholders |
$ |
115,598 |
|
|
$ |
(2,659 |
) |
|
$ |
127,672 |
|
|
$ |
3,318 |
|
Stock-based compensation |
|
2,028 |
|
|
|
1,100 |
|
|
|
7,380 |
|
|
|
3,854 |
|
Business transition and related
costs |
|
1,376 |
|
|
|
123 |
|
|
|
3,147 |
|
|
|
343 |
|
Non-cash interest expense |
|
264 |
|
|
|
916 |
|
|
|
1,030 |
|
|
|
916 |
|
Income tax benefit |
|
(115,011 |
) |
|
|
— |
|
|
|
(115,011 |
) |
|
|
— |
|
Preferred stock accumulated
dividends |
|
— |
|
|
|
1,211 |
|
|
|
— |
|
|
|
4,455 |
|
Impact of preferred stock
redemption |
|
— |
|
|
|
3,439 |
|
|
|
— |
|
|
|
3,439 |
|
|
|
|
|
|
|
|
|
Adjusted net income |
$ |
4,255 |
|
|
$ |
4,130 |
|
|
$ |
24,218 |
|
|
$ |
16,325 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net income (loss)
attributable to common stockholders |
$ |
115,598 |
|
|
$ |
(2,659 |
) |
|
$ |
127,672 |
|
|
$ |
3,318 |
|
Depreciation and
amortization |
|
1,420 |
|
|
|
913 |
|
|
|
4,480 |
|
|
|
3,453 |
|
Interest expense |
|
555 |
|
|
|
1,160 |
|
|
|
2,680 |
|
|
|
1,164 |
|
Other (income) expense, net |
|
(73 |
) |
|
|
(63 |
) |
|
|
81 |
|
|
|
(133 |
) |
Stock-based compensation |
|
2,028 |
|
|
|
1,100 |
|
|
|
7,380 |
|
|
|
3,854 |
|
Business transition and related
costs |
|
1,376 |
|
|
|
123 |
|
|
|
3,148 |
|
|
|
343 |
|
Income tax benefit |
|
(115,011 |
) |
|
|
— |
|
|
|
(115,011 |
) |
|
|
— |
|
Preferred stock accumulated
dividends |
|
— |
|
|
|
1,211 |
|
|
|
— |
|
|
|
4,455 |
|
Impact of preferred stock
redemption |
|
— |
|
|
|
3,439 |
|
|
|
— |
|
|
|
3,439 |
|
|
|
|
|
— |
|
|
|
|
|
Adjusted EBITDA |
$ |
5,893 |
|
|
$ |
5,224 |
|
|
$ |
30,430 |
|
|
$ |
19,893 |
|
|
|
|
|
|
|
|
|
GAAP net cash provided by operating
activities |
$ |
612 |
|
|
$ |
17,860 |
|
|
$ |
9,465 |
|
|
$ |
31,182 |
|
Purchase of property and
equipment |
|
(24,566 |
) |
|
|
(4,147 |
) |
|
|
(56,411 |
) |
|
|
(9,864 |
) |
|
|
|
|
— |
|
|
|
|
|
Free cash flow |
$ |
(23,954 |
) |
|
$ |
13,713 |
|
|
$ |
(46,946 |
) |
|
$ |
21,318 |
|
|
|
|
|
|
|
|
|
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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