Q1 2022 Standard BioTools Inc Earnings Call

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Greetings and welcome to the standard Biofuels, Inc. First quarter 2022 financial results Conference call. At this time all participants are in a listen only mode. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad as a reminder, this conference is being recorded.

It is now my pleasure to introduce your host Peter Denardo Investor Relations. Thank you. Mr. Dinardo, you may begin.

Thank you operator, good afternoon, everyone welcome to standard bio tools first quarter 2022 earnings conference call at the close of the market today standard buyout tools released its financial results for the quarter ended March 31 2022. During this call. We will review our results and provide commentary on our financial and.

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Presenting for standard buyout tool today will be Michael egg home, Phd Chief Executive Officer, and President and Vikram jog, our CFO during the call. We will make forward looking statements about events and circumstances that have not yet occurred including plans and projections for our business future financial results and market trends and opportunities.

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Examples include statements about expected financial performance strategic initiatives acquisition strategy market trends product releases customer demand collaborations and partnerships and revenue expectations. These statements are subject to substantial risks and uncertainties that may cause actual events or results to <unk>.

Defer materially from current expectations.

Information on these risks and uncertainties and other information affecting our business and operating results is contained in our annual report on Form 10-K for the year ended December 31, 2021, as well as our other filings with the SEC. The forward looking statements on this call are based on information currently available to us and say.

Andrew Bio tools disclaims any obligation to update these forward looking statements, except as may be required by law.

During the call. We will also present some financial information on a non-GAAP basis non-GAAP information is not prepared under a comprehensive set of accounting rules and should only be used to supplement an understanding of the company's operating results as reported under U S. GAAP.

We encourage you to carefully consider our results under GAAP as well as our supplemental non-GAAP information and the reconciliation between these presentations.

Reconciliations between GAAP and non-GAAP operating results are presented in a table accompanying our earnings release, which can be found in the investors section of our website.

Please note that management will be referring to a slide presentation within the webcast today and this presentation is also posted on our website.

As a reminder, I would also like to note that due to the equipment April of New management team members, who are focused on completing a 90 day assessment. Following the closing of a $250 million strategic capital infusion. The company will not be hosting a Q&A session. Following prepared remarks during today's conference call.

I will now turn the call over to Vikram jog, our CFO vikram.

Thanks, Peter and good afternoon, everyone before turning to our first quarter financial results I would like to note that we have posted this presentation, including updated supplemental financial information on our websites.

I will review the performance of our business units and geographic regions. Michael will then discuss our growth strategy going forward.

Let me begin with a review of our financial and geographic highlights for the first quarter of 2022.

Total revenue for the quarter was $26 $5 million as compared to $32 8 million for Q1 2021.

The year over year decline was primarily driven by lower COVID-19 revenue.

Based product and service revenue, which excludes COVID-19 testing revenue and other revenue was $23 9 million approximately 2% lower than a year ago.

Our first quarter results were impacted by our pending and now closed strategic capital infusion transaction.

This process created some disruptions in our U S sales force and with an impediment to growth. Moreover.

Moreover, our business continued to be adversely impacted by Covid related disruptions, primarily in the APAC region, which is covered in the next slide.

Mass cytometry product and service revenue of $13 5 million for the quarter was down 4% compared to the first quarter Im trying to retrench from oil.

Revenue from the same top XD instrument, which was launched in mid 2021 was more than offset by lower sales of legacy Hyperion and Helios instruments. Please note that in April we launched <unk>, plus our new high Plex spatial imaging system with lower limits of detection as well as improved sampler.

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These microfluidics product and service revenue, which excludes COVID-19 testing revenue was $10 4 million basically unchanged year over year.

We're encouraged by the early adoption of a new biomarker X instruments and our own ink OEM partnership remains an important growth driver offsetting weakness in other microfluidics consumables.

COVID-19 revenue of $2 $3 million declined by 65% relative to $6 5 million reported for Q1 2021.

Other revenue, which consists of NRI grants and license revenue was $1 $4 million nor year over year due to the completion of certain NRA and development contracts in 2021.

Partially offset by an increase in license revenue, resulting from a litigation settlement.

We believe our based product and service revenue, excluding COVID-19 and other revenue and the appropriate indicator of our top line performance.

Now looking at first quarter revenue compared to the prior year period from a regional perspective.

<unk> revenue was $12 9 million down 30% year over year, driven almost entirely by non COVID-19 testing and NRT and grant revenues.

The base business in the Americas was unchanged year over year.

EMEA revenue was $8 6 million down 6% year over year, primarily driven by lower mass cytometry instrument revenues changed.

Changes in foreign exchange rates reduced the year over year growing by approximately four percentage points.

Negative impact of the conflict in Ukraine on the European economy and related funding headwinds together with Covid related pressures in public health care systems remain challenges for growth in this region.

Asia Pacific revenue decreased 3% to $5 million, primarily due to lower microfluidics consumables revenues.

We experienced challenges in this region from Lockdowns, such as those widely publicized in China and travel restrictions and disruptions.

In Japan, we were also affected by the diversion of government funding for research instruments or other purposes.

Moving now to our operating performance I will focus my comments on non-GAAP results, which excludes certain nonrecurring and noncash items. Please note that the reconciliation tables between our GAAP and non-GAAP measures provided at the end of our earnings press release that was issued earlier today and in this presentation.

non-GAAP net loss was $19 5 million compared to a non-GAAP net loss of $11 1 million for the first quarter of 2021.

The increased net loss for the first quarter of 2020 due over the first quarter of 2021 was driven primarily by lower total revenue and lower product and service margin.

non-GAAP product and service margin was 58, 5% for the first quarter down from 66, 4% for the same period a year ago.

This was primarily driven by unfavorable product mix and to a lesser extent by lower factory utilization.

non-GAAP operating expenses were $35 1 million compared to $34 1 million for the first quarter of 2021, the increase versus the year ago period was primarily driven by one time costs related to the strategic capital infusion transaction that closed in early Q2 2022.

Moving on now to cash flow and the balance sheet.

Cash and cash equivalents and restricted cash at the end of the first quarter totaled $31 million compared with $29 5 million as of December 31, 2021.

Immediately following the completion of the strategic cash infusion by casting capital in banking Global on April four 2022, our cash cash equivalents and restricted cash balance was $256 $2 million before transaction costs.

Operating cash burn was $15 6 million during the quarter, an increase of approximately $2 7 million compared to the first quarter of 2021. The increase in cash burn was primarily due to higher operating losses, partially offset by favorable working capital changes relative to the first quarter of 2000.

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Financing cash flows during the quarter were $18 1 million, including $25 million of proceeds from a bridge loan and repayment of advances under our revolving line of credit of $6 8 million.

Following the completion of the strategic capital infusion transaction the outstanding balance under the bridge loan was converted into shares of series B preferred stock.

Accounts receivable days sales outstanding were 53, compared with 43 days at the end of the fourth quarter of 2021.

This concludes my remarks in the quarter I'll now turn the call over to Michael.

Thank you Vikram Hello, everyone I'm proud to be speaking with you today, as president and Chief Executive Officer <unk> <unk>.

This will just one month ago, how there is a focus most of my comments on our ambition and strategic priorities sustained upon choice going forward.

And our first quarter 2022 marked the completion of the Companys strategic evaluation process, which culminated in the closing of a $250 million capital infusion from leading life science investors testing capital and buy consult on in April .

While the closing of this transaction marked a major milestone as Vik mentioned financial performance for the first quarter was disappointing and adversely affected by related disruptions in our U S sales force.

Also experienced continued COVID-19 related disruptions, particularly in APAC.

Taking immediate steps to address the operational issues with new leadership, including the recent appointment of Jimmy Davis as Chief Commercial officer.

Mindful of are upon us and it's lastly, we now embark on a new chapter of focused execution and growth in 2022 will serve as the foundation, which we will build upon.

To Mark our new beginning we changed our name to standup actuals to reflect our ambition to become an essential solutions provider to the life science industry. We have an ambitious goal for the company and our vision is to become a top quartile life Science Research <unk> company in three to five years.

Tim this by offering our customers best in class tools that the company status status and that will close.

Our strategy to realize this vision has three pillars.

First we will prioritize revenue growth by focusing our efforts to compete in growing market segments, where we believe we have a could have a competitive advantage specifically, we will focus on servicing more customers in translational and clinical research.

We will significantly improve our operating discipline by implementing best in class processes to manage expenses and increase productivity. So we can create more value for all stakeholders.

Third we intend to expand our product offerings for our customers with strategic capital allocation to acquire complementary assets that allow us to leverage our infrastructure.

And now let me to elaborate on each of these strategic priorities.

Our power IC number one is revenue growth and we believe mass cytometry.

Helped drive up our new instrument sites Opex teeth for high parameter flow cytometry addresses some of the key barriers to adoption for our mass cytometry technology in the past as expressed by our customers specific size of <unk> increases throughput integrates new sandal introduction automation and post <unk>.

To resolve and reduces total cost of ownership.

It is particularly valuable to translational and clinical research and across the pharmaceutical and biotechnology sectors.

Our new Hyperion imaging system office resources, Steve understanding of disease and response to treatment two.

Critical challenges in realizing the full transformative potential of disciplined marketable technology, reducing the time to answer key biological questions and detecting important biomarker that I expressed that loan that was the Hyperion imaging system is designed to solve these challenges with faster time to resolve.

Lower limit of detection than our prior imaging system.

Believe taipan, plus will improve our competitive position in the growing high plex imaging market and will continue to invest to make our imaging instruments more competitive importantly, so both high program at our flow cytometry and imaging, we will invest in improving our consumable offerings also.

Known as menu expansion to better address our customers' needs.

Improving consumable pull through per instrument.

Leading all aspects of mass cytometry beyond new Chief Commercial officer, Jeremy Davies, Jeremy brings more than two decades of business leadership, driving commercial and operational improvements with world class manufacturing businesses and associated service centers across the globe.

Microfluidics as our legacy business and our objective is to focus the business and make it profitable in the short term.

We're currently launching our new <unk> instrument, which integrate Juno and biomarker Ht instruments into a single platform.

Adding an expansive set of sample to answer capabilities on a versatile.

Scalable transformative genomics and proteomics platform.

Deeper into the lifestyles ecosystem, including large farmer emerging biotech and diagnostic companies and abroad.

<unk> service provider network, we're already seeing encouraging adoption of our site of <unk> and disarm a biotech segments at the end of the first quarter 200 clinical trials were underway using cytotechnology.

NSAID discuss what we're going to do is also important to highlight how we're going to do things because it would be foundational to create value for all stakeholders, we will embark on a journey of continuous improvement for <unk>.

We will begin that journey with the standard Biofuels business system Sps a systematic approach to business operations based on leap mythologies used by the highest performing organizations in the world. One key aspect of this approach is that we focus on processes instead of work and leverage problem solving to close process.

We will use SBS to improve our operating discipline as we optimize our cost structure.

Rollout training and Sps in the upcoming weeks, leading this cultural transformation will be our senior Vice president of Sps Mona at both say, yet <unk> season continuous improvement leader with experience with customer operations human resources and product management to drive organizational transformation.

As standard tools, if you want to be a leading provider for biological research. This particular farmer customers and translational in clinical research. This requires we have a broad product offering along the workflow to meet their needs. Accordingly, our third priority is to return to expand our product offerings Mister <unk>.

<unk> capital allocation to acquire compliments of assets that allows us to leverage existent infrastructure, we haven't lost fondle of potential acquisitions identified today, which will develop relationships cultivated over decades, our focus will be on acquisitions that our technology.

There is have immediate revenue potential and has synergies with the company's existing infrastructure.

Incoming management team has significant experience in completing successful acquisitions as such we will be strategically and financially disciplined and our M&A approach, we intend to be active in the M&A market, particularly given the current market dynamics, we're seeing an increase in opportunities and we can.

Tell you that we are actively engaged in evaluating various assets, which we are excited about.

During the next 90 days, we will find this strategy and finalize our tactical plan to executed.

After completing this process and at the appropriate time, we look forward to providing additional details to the financial community. I also look forward to meeting you at various investment events and of course I look forward to lead an outstanding team as we embark on our transformation journey.

Confident that our toolset will indeed accelerate pretzels and human health.

I will now turn the call or to Peter.

Thank you Michael This concludes our first quarter 2022 financial results call, we'd like to thank everyone for attending our call today, a replay of this call will be available on the investors section of our website good afternoon everyone.

This concludes today's teleconference. You mean disconnect your lines at this time. Thank you for your participation.

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