Standard BioTools Inc. Q1 2023 Earnings Call

Hello, and welcome to the standard Biotroph incorporated first quarter 2023 financial results conference call.

As a reminder, this conference is being recorded.

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

Thank you operator, good afternoon, everyone welcome to standard bio tools first quarter 2023 earnings conference call at the close of the market today standard bio tools released its financial results for the quarter ended March 31 2023.

During this call we will review our results and provide commentary on our financial and operational performance market trends and strategic initiatives presenting percent of bio tools today will be Michael egg Homes', Chief Executive Officer, and President and become drove Chief Financial Officer. During the call. We may make forward looking statements about events and circumstances have not yet.

Kurt including plans and projections for our business our outlook for 2023, and future financial results and market trends and opportunities. These statements are subject to substantial risks and uncertainties that may cause actual events or results to differ materially from current expectations are.

The forward looking statements in this call are based on information currently available to us and we disclaim any obligation to update these statements except as may be required by law during.

During the call. We will also present some financial information on a non-GAAP basis we.

We encourage you to carefully consider our results under GAAP as well as our supplemental non-GAAP information and a reconciliation between these presentations, which are disclosed in a table accompanying our earnings release. Please note that management will be referring to a slide presentation, including updated supplemental financial information within the webcast today and this presence.

Patients also posted on our website I would also like to note that the company will not be hosting a question and answer session. Following prepared remarks. During today's conference call I will now turn the call over to Michael Holmes, Our Chief Executive Officer, and President Michael.

Thank you Peter and good afternoon, everyone. We appreciate you joining us on the call today.

After closing to strategic transaction and then we had a new management team in place we are.

Off to a solid start to 2023, we posted year over year growth in core products and service revenues and margins and significantly lowered spending which reduced our cash burn by more than 50% from the fourth quarter of 2022.

Running our playbook and are committed to building. The next diversified life science tools company through industry, leading operational execution and scale building strategy.

The entire organization is committed to a lean culture based on spend about <unk> business systems or <unk> for short.

Want to recognize all our employees for their dedication focus and execution behind these early but encouraging results a lean culture is a common denominator and the team has fully embraced SBS, which we firmly believe will allow us to end the power tools to become a high performance organization.

In review of the quarter in the past 12 months, we've made tangible progress against our two first order priority as outlined when we took over the helm of the company just one year ago.

The first was to improve operating discipline and increase productivity to drive this business.

For the business and have worked hard since day, one across the board to improve quality and manufacturing execution sales efficiency N G&A spending while also improving our internal processes.

Most of this restructuring was executed last year, but some residual reductions in the first quota as we realized all European sales organization.

This also included a consolidation of our real estate footprint as previously discussed some operations moved to a market entree here facilities now have subleased, a total of 50 per cent of our south San Francisco footprint and are looking for further opportunities for consolidations.

Why we are pleased with his progress and where we are headed we are by no means done all kyson based approach commits us to continuous improvement there's always more that can be done and we have relentlessly getting after it.

Next to build a lead in company you need a stable cole and we believe we reached a much stronger place than where we started.

Today, the call products delivered tangible signals of stability and a sign of some moderate growth core product and service revenue in the quota was 24.3 million compared to 23.9 million a year ago.

The best part was the D sales came in at better margins with non-cash product and service margins at 69 per cent moving to what's R for quota target of 65% to 68%.

The margin increase was primarily driven by product mix pricing discipline and the benefits of all in the manufacturing initiatives.

And as I, just mentioned are operating Casper and was 800 million in the quota compared to 19.2 million into for quota with solving in a cash balance of $154.5 million at the end of the first quarter.

One can think of our business in three categories instruments consumables and services.

Our strategy is to have a portfolio of high quality high margin instruments that when installed with the right customers will enable great science and drive higher margin sticky with crying consumable sense service revenues.

With respect to our consumables and services over 75 per cent of our call product and service revenue in the first quarter or from DS recurring revenue sources. This is a key component the boat our businesses.

High value instruments drive high levels of recurring revenue in subsequent years.

If we are successful growing instrument revenues by extension, we will look for increased high margin recurring revenue the following year when the customers pull it up and running.

With that in mind, I would like to provide a bit more color onto to current business lines.

First I'll put the Omics business, which is on the path to healthy margins an increase in growth.

At 12 per cent, yeah, Oh, yeah, and the first quota.

Currently approximately 400 units in the field with more than $45000, an average wage and pull through per instrument per year.

To drive placements, we are launching new products, including last month's launch of our first new special imaging instruments and six year. The hype here in S. T. I at the American Association of Cancer Research annual meeting I pay an S. T. I is five times faster than our legacy system at 40 slots.

And contrast, with <unk> process that typically takes days to scan for a few slides.

S. T. I is also an input workflow dot approaches woke up user experience and with lack of Autofluorescence data to like resolution quickly expect it to become the standard for purely your papers for more than 20 protein markers.

We also launched another exciting product line that increases the utility and pull through on these instruments at 30 trademark a mouse immune profiling panel expanding our end to end solution to mouse and <unk> clinical research, which will further drive our technology is to stand at the name of your profiling.

We believe our site or flower cytometry technology is inherently advantage <unk> slow and to this point, we are heading to decipher meeting in Montreal later, this month, where we excited to showcase all capabilities and compare and quantify the advantages.

<unk> based approaches.

Turning to our genomics business elsewhere acknowledged when we started our current platform is more mature and as such we are focused on running it for profitability performance was in line with our expectations for this business after our product line rationalization and reduction of a head count.

This translated into a year on year decline of 12 per cent.

<unk> basis, and the first quota or go to market strategy now.

Emphasizes oriented partnerships and key accounts and with expect a positive <unk> and placement to maximize the right agent <unk>.

This lead us to a third priority, adding to our instruments reagents and services inorganic road.

And doing so.

In this modern prudent way, we can leverage our infrastructure and balance sheet and accelerate.

Scale Groat, and most importantly profitability or thesis is that down many innovative technologies, but few great companies that have been able to scale and build profitable businesses. We believe standup bio twos is well positioned especially in the current macro environment.

And provides a uniquely attractive chassis for us to consolidate such.

Such consolidation is central to our strategy and our value proposition resonates well with founders Dot I excited about potentially joining a company where they can have a meaningful impact stay tuned.

I want to reiterate that we know our mission.

We know we work for shareholders and I'm excited to share. This journey with you or I will now turn it over to Vikram overview of our financial the Salt Vikram.

Thanks, Michael [noise] and good afternoon, everyone.

As Michael noted we are pleased with our results for the first quarter delivering year over year growth and topline core product and service revenues and margins and significant improvement in cash flow from operations.

Let me begin with a review of revenue.

Total revenue for the quarter was $25.1 million Wild core product and service revenue was 24.3 million compared to 23.9 million in Q1 2022.

Gore product and service revenue excludes revenue from discontinued product, including COVID-19 related product and other revenue.

You're over here Gore revenue performance by segment was as follows.

<unk> revenue grew 12% to 15.2 million driven by recurring consumables and service revenues and genomics revenue declined 12% to $9.1 million driven by lower instrument revenue, partially offset by growth and consumables.

Overall regarding consumables in service revenue grew 12% year over year and represented 76% of our core revenue for the quarter compared to 69% in the year ago quarter.

Moving on now to our operating performance <unk>.

<unk> product and service module for the quarter expanded 567 basis points.

Relative to the fourth quarter of 20, 22% to 46.6% <unk>.

<unk> product and service margin, which excludes non-cash charges primarily for amortization of developed technology grew by 792 basis points in the same period.

Operating expenses in the first quarter decline sequentially by 11% to 28.7 million on the gab basis.

And by 16% to 25.4 million on a non-GAAP basis.

Which primarily excludes non-cash charges, but stock based compensation.

GAAP net loss for the quarter was 16.8 million compared to 76.3 million for Q1 last year.

non-GAAP net loss for the quarter was 8.9 million compared to 19.5 million for the year ago quarter <unk>.

<unk> measures exclude certain non operating a non-cash items and.

And reconciliation tables between our gap in non-GAAP measures are provided at the end of our earnings press release that was issued earlier today and in our earnings scarred presentation.

Moving on now to cash flow and the balance sheet net cash used an operating activities for the first quarter was 8.5 million down 10.7 million from $19.2 million in the fourth quarter of 2022.

In November 2022, we announced a 20 million dollar stock repurchase program.

Purchased approximately 1.25 million shares at a cost of two and a half million dollars in the first quarter.

Melissa repurchases through March 31st 2023 amounted to approximately 1.7 million shares at a cost of $3 million.

Ah repurchases, we're limited by our daily trading volume and applicable F. C C regulation.

Cash cash equivalents and short term investments $154.5 million at the end of the first quarter compared to 165.8 million at your in 2022.

And finally, turning to our business outlook for 2023.

Maintaining the guidance issued in February 2023.

We continued to expect core product and service revenue in 2023 to be flat moderately higher when compared to 2022.

You're targeting product and service margin of 52% to 55% in the gab basis, and 65% to 68% of non-GAAP basis in the fourth quarter of 2023.

Our margins can be variable from period to period, depending upon the achievement of benefits from our business improvement programs price realization and revenue mix.

The instruments conceivable then service have significantly different margin.

We continue to expect operating expenses of 180 million to 123 million in a gap basis.

And 102 million to 107 million in a non-GAAP basis.

Which primarily excludes approximately $13 million of non-cash dot based compensation charges.

And with that I conclude my remarks, I'll now turn the call over to Peter.

Thank you Vikram. This concludes our first quarter 2023 financial results call, we'd like to thank everyone for attending our call today, a replay of the call will be available on the Investor section of our website again, thank you for joining us today.

That's complaint today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

[music].

Okay.

[music].

[music].

[music].

Okay.

[music].

[music].

Mmm.

[music].

[music].

Ooh.

[music].