On June 27, 2019 Avid Bioservices, Inc. (NASDAQ:CDMO) (NASDAQ:CDMOP), 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 fourth quarter and full year of fiscal 2019 ended April 30, 2019 (Press release, Avid Bioservices, JUN 27, 2019, View Source [SID1234539009]).
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Highlights Since January 31, 2019
"Fiscal 2019 was a fundamentally transformative year for Avid, as the team successfully achieved a number of critical goals. Most notably, we converted the losses and negative margins in fiscal 2018 into a sustainable position of financial strength," stated Rick Hancock, interim president and chief executive officer. "Based on our current backlog as well as forecasts from our customers, we believe the company will achieve sustainable growth going forward. Avid is stronger today than it has been at any point in the past.
"With respect to business development, the five new clients signed in late fiscal 2018 contributed significantly to revenue diversification in fiscal 2019. These projects substantially increased capacity utilization, which drove a meaningful improvement in margins during the year.
"Of particular note is the new business we continue to win from existing customers. While some of this business results from the expansion of current projects, many of these projects are completely new, requiring development and/or manufacture of a new molecule. These ‘repeat business’ wins are particularly valuable to Avid as each offers the opportunity for later stage and commercial production, they generally onboard very efficiently and as a result are more profitable, and they provide strong testimonials as to the quality of our work and product."
"Avid finished the year with a strong fourth quarter, growing revenue to $17.1 million while increasing gross margins to 21 percent," said Dan Hart, chief financial officer. "During the fourth quarter we generated $5.6 million in operating cash flow increasing our net cash and cash equivalents by $4.6 million to $32.4 million. Looking ahead, we are encouraged by the forecasted increase in demand which we expect to strengthen the company’s overall financial standing and position us for profitability."
Financial Highlights and Guidance
The company is providing revenue guidance for the full fiscal year 2020 of $64 million – $67 million (ASC 606).
Revenue was $17.1 million for the fourth quarter of fiscal 2019, a 146% increase compared to $6.9 million for the fourth quarter of last fiscal year. This increase is primarily due to growing demand from a more diversified client base. Revenue for the full fiscal year 2019 met guidance at $53.6 million, and was flat compared to full fiscal year 2018.
As of April 30, 2019, revenue backlog was approximately $46 million, the majority of which is expected to be recognized in fiscal year 2020.
Gross margin for the fourth quarter of fiscal 2019 was 21%, and gross margin for full fiscal year 2019 was 13%, both representing significant improvements compared to gross margins of negative 28% during the fourth quarter of fiscal 2018 and negative 5% for full fiscal year 2018. The improvements in gross margins for both fiscal 2019 periods were primarily attributed to our product mix, increased capacity utilization and a reduction in direct manufacturing costs.
Selling, general and administrative expenses ("SG&A") for the fourth quarter of fiscal 2019 were $3.6 million, or 21% of revenue, compared to $4.2 million, or 60% of revenue, for the fourth quarter of last year. For full fiscal year 2019, total SG&A expenses were $12.8 million, or 24% of revenue compared to $16.5 million last fiscal year, or 31% of revenue. The decrease in SG&A was primarily due to a reduction in payroll and related costs, legal fees and other professional consulting fees, and facility costs, which were partially offset by increases in bonuses related to certain achievement levels of corporate goals and stock-based compensation.
During the fourth quarter of fiscal 2019 we generated income from continuing operations of $0.2 million compared to a net loss from continuing operations of $6.1 million for the fourth quarter of fiscal 2018. Fiscal year 2019 loss from continuing operations was $5.1 million compared to a prior year loss from continuing operations of $20.6 million. The decrease during the full fiscal year was primarily due to reductions in both cost of revenues and SG&A resulting in higher profitability margins.
For the fourth quarter of fiscal 2019, the company recorded consolidated net loss attributable to common stockholders of $1.1 million or $0.02 per share, compared to a consolidated net income attributable to common stockholders of $1.6 million or $0.03 per share, for the fourth quarter of fiscal 2018. For full fiscal year 2019, the company recorded a consolidated net loss attributable to common stockholders of $8.9 million or $0.16 per share, compared to a consolidated net loss attributable to common stockholders of $26.5 million or $0.56 per share, for full fiscal year 2018. For both the fourth quarter and full fiscal year 2018, net income and loss were favorably impacted by the sale of the company’s legacy R&D assets to Oncologie, Inc. for $8.0 million and the associated discontinued operations.
Avid reported $32.4 million in cash and cash equivalents as of April 30, 2019, compared to $42.3 million on April 30, 2018.
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 Developments
Signed project expansion orders and new manufacturing projects related to new molecules with current clients during the fourth quarter of fiscal 2019 representing future revenue in the amount of $19.7 million.
Completed a second process validation campaign during fiscal 2019. Completion of a process validation campaign is a critical step in the regulatory product approval process, and is likely to result in future commercial production at Avid.
The first process validation campaign of fiscal 2020 is in progress.
Conference Call
Avid will host a conference call and webcast this afternoon, June 27, 2019, at 4:30 PM EDT (1:30 PM PDT).
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: View Source