On September 7, 2023 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, reported financial results for the first quarter ended July 31, 2023 (Press release, Avid Bioservices, SEP 7, 2023, View Source [SID1234634982]).
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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: View Source