Q3 2023 Azenta Inc Earnings Call
Adult please continue to standby yours into financial results call will begin shortly we thank you for your patience. Please remain connected your call will begin shortly thank you.
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Greetings and welcome to the us into Q3, 2023 financial results.
During the presentation, all participants will be in a listen only mode.
Afterwards, we will conduct a question and answer session at that time. If you have a question. Please press the one followed by the four new telephone.
If at any time during the conference you need to reach an operator, Please press star zero.
As a reminder, this conference is being recorded Tuesday August eight 2023.
I'll now turn the conference over to Sarah Silverman head of Investor Relations.
Thank you operator, and good afternoon to everyone on the line today, we would like to welcome you to our earnings conference call for the third quarter of fiscal year 2023.
Our third quarter earnings press release was issued after the close of the market today and is available on our Investor Relations website located at investors daughters into Dotcom. In addition to the supplementary Powerpoint slides that will be used during the prepared remarks today.
I would like to remind everyone that during the course of the call we will be making a number of forward looking statements within the meaning of the private litigation Securities Act of 1995.
There are many factors that may cause actual financial results or other events to differ from those identified in such forward looking statements.
I would refer you to the section of our earnings release titled Safe Harbor statement, the Safe Harbor slide on the aforementioned Powerpoint presentation on our website and our various filings with the SEC, including our annual reports on Form 10-K, and our quarterly reports on Form 10-Q, we make no obligation to update these statements should future finance.
Data or events occur that differ from the forward looking statements presented today.
We may refer to a number of non-GAAP financial measures, which are used in addition to and in conjunction with results presented in accordance with GAAP.
We believe the non-GAAP measures provide an additional way of viewing aspects of our operations and performance, but when considered with GAAP financial results and the reconciliation of GAAP measures. They provide an even more complete understanding of the events business.
non-GAAP measures should not be relied upon to the exclusion of the GAAP measures themselves.
On the call with me today is our president and Chief Executive Officer, Steve Schwartz, and our Chief Financial Officer Lindon Robertson.
We will open the call with remarks from Steve on highlights of the third quarter, then lindon will provide a more detailed look into our financial results and our outlook for the fourth fiscal quarter of 2023.
We will then take your questions at the end of the prepared remarks with that I would like to turn the call over to our CEO Steve Schwartz.
Thank you Sarah good afternoon, everyone and thank you for joining us.
We're pleased to report on a solid third quarter with results that show a strengthening position across our business units that we believe will set us up to outgrow the market once again.
We've spoken to you over the past few quarters about our actions to reinvigorate growth in revenue and profitability and today. We're pleased to report meaningful results and evidence of strong traction.
We can say unequivocally that the steps we've taken were the right ones.
We restructured our go to market approach to align sales with customer decision makers and purchasing patterns.
We've recruited more incredible talent to our sales team and we're seeing results wherever we've added these targeted resources with.
We're substantially aligned to implement a new reporting structure, beginning October one, which we expect will significantly improve our operating efficiency, while better aligning our offerings to customer needs.
We've initiated two tranches a meaningful cost reduction since the start of the calendar year.
One is complete and the others on track to meet our committed objectives over the next three quarters.
These actions are improving our operating leverage while bolstering operations capability to meet any and all demand.
Today, We report on the status of these important initiatives, but before I do that it's in.
Noteworthy that in Q3, the combination of a return to growth and our cost reductions allowed us to demonstrate positive free cash flow for the first time as a standalone life Sciences company.
We're proud of this accomplishment and recognize it as an important milestone in our growth trajectory now.
Now, let's look at the business by segment.
In services, we delivered strong organic growth of 8% year over year.
<unk> was up 8% led by strength in next generation sequencing as well as continued strong growth and gene synthesis, where.
We're pleased by the performance of this business, especially in what's become a more challenging macro environment.
We've added roughly 20, new sales specialists, who are rapidly coming up to speed on our present the offerings and we'll continue to make targeted investments in the business, where we see opportunities for growth.
Gene synthesis delivered a second consecutive quarter of sequential improvement with 9% growth.
We're winning because of our ability to manufacture all manner of complex construct and deliver with exceptional speed.
We're confident that we're back to a sustainable growth pattern in our synthesis business and though we don't necessarily expect a linear path of growth from here. We do believe we've taken the right actions building our business for growth over the long term.
Our next generation sequencing business grew by double digits over last year.
We're ramping this business on the newest Illumina novo seek ex impact by our reveal platforms and our proteomics offering continues to advance as we look to remain at the forefront of technological advancement in the market.
This quarter, we also launched several new multi omics services, including AAV viral packaging and gene synthesis and plasmid easy in our next generation sequencing business, which provides efficient plasmid sequencing using Oxford <unk> technology.
In the sample repository solutions business, we grew 6% year over year led once again by double digit growth in storage.
We also announced that later this year, we'll be opening a new bio repository location in the greater Boston area. This 40000 square foot facility will be our second largest bio repository in terms of sample capacity after our flagship location in Indianapolis.
We measure relative size and adding square footage, but rather in the sample capacity that will be enabled by state of the art automation, which will define this highly differentiated capability.
We also announced our collaboration with the Lupus Research Alliance to support the advancements of Lupus research and discovery.
We're pleased to report that we've received initial samples for this partnership.
This project is notable as it reinforces once again, our ability to support customers in active trials, which in this case will start small in terms of collection size will grow and establish a healthy base of samples for us overtime.
Moving to the product segment as expected the products business declined 9% year over year on an organic basis, reflecting continued softness in the consumables business How's.
However, excluding the consumables and instruments business the rest of the products segment delivered 10% organic growth a.
A significant contributor to the growth was store systems, which grew 15% year over year, and 23% quarter over quarter, reflecting record performance in our large automated stores business stemming from the strong backlog, we have accumulated over the past few quarters, we expect to deliver another record quarter in Q4 as well.
Cryo stores revenue was essentially flat quarter to quarter as we continued to see some softness due to budget uncertainty.
The good news is that quarter to quarter, we're seeing an increase in our sales funnel, but it's just going to take longer to convert these opportunities into sales as compared to six to 12 months ago.
The dynamic in the sample management business continues to move toward a center.
With each quarter, we're changing the sample management landscape as we bring dependable automated sample management to a market that demands higher efficiency, better economics, and safer handling and connectivity to.
To more effectively manage precious biosamples assets, which by the way now measure in the billions of individuals samples around the world.
It's clear to us that over the coming years large scale manual freezer, France will be retired in favor of automated systems as the only means for safe sample handling and high volume sample management.
The increase in demand for large scale workflow automation is clear and we're uniquely positioned to support this paradigm shift.
Toward that end over the past eight quarters. We've won automated system orders that will add more than 60 million samples of automated sample storage capacity automation.
Automation for sample management at all temperatures, including Cryogenics is the future and we're ready to meet the market demands.
In consumables, we continue to see high levels of inventory at our customers and while this effect is temporary we have limited visibility into how long the channel may be slower.
That said, we're encouraged by what was a relatively strong quarter in our instruments business and our recent acquisition of <unk> is performing well.
From a sales or a good indicator that investments in workflow automation continue and as our instruments tend to be closely tied into our consumables. We expect that these sales will support future growth in consumables once inventory levels normalize.
Finally be medical provided $27 million of revenue and the team did a great job delivering on several additional cold chain solution orders that we received and shipped within the quarter.
We continue our business development activities to leverage <unk> Medical's geographic footprint in fast growing emerging markets in support of his enter capabilities in biological sample management we.
We remain confident of meaningful synergy opportunities over time.
Before we conclude the call I'll give you an update on our disciplined capital deployment strategy.
As of today, we've completed more than three fourths of the $1 billion share repurchase we announced in November last year, which has allowed us to retire approximately 20% of our outstanding shares to date, we're investing in new strategic capacity additions for which we see strong future demand and we have an exciting pipeline of new product and service offerings in development and we can.
Continue to evaluate a healthy pipeline of potential acquisition targets, which remains an important element of our growth strategy.
As I conclude my remarks, I want to emphasize the progress we've made and the strength of our execution this quarter or our topline performance and operational execution contributed to both EBITDA and EPS.
Encouraged by the positive results of our actions our team remains laser focused on sustaining this momentum as we move towards 2024.
<unk> stems from our incredibly strong portfolio of products and services combined with our balance sheet that will support continued growth in our existing markets.
Spansion into new geographies and innovation that will bring new markets into existence.
We thank you for your interest and support as we work to deliver value to our customers and shareholders.
And I will now turn the call over to Lindon.
Thank you Steve I'll now refer you back to the slide deck available on our website.
Turning to slide three for some highlights.
Third quarter revenue was $166 million.
Up 25% year over year and up 2% on an organic basis.
This reflects strong growth in each of the key areas of large automated store systems sample repository solutions and genomics.
The offsetting area of softness was in the consumables and instruments business, which continues to experience an oversupplied market.
Excluding the CNI business, our organic growth was actually up 8% year over year.
Our sales and marketing alignment actions are gaining traction and our customers continue to subscribe to the high value, we bring as a critical sample based solutions and multi omics solutions provider.
And I should highlight to be medical provided results above our prior guidance and above the prior quarter.
The higher level of revenue in the quarter combined with the recent cost actions. We have taken are showing through in the improvement in profitability.
non-GAAP earnings per share was 13 cents in the quarter and adjusted EBITDA was seven 8%.
We are now into our fourth fiscal quarter and when we get to the guidance section you will see this quarter will support revenue growth for the full fiscal year in the range of 17% to 20% year over year.
This includes a flat to down 4% organic projection.
If we exclude the soft C&I business the balance of the business is supporting organic growth of approximately 4% for the year led by strength in large automated stores and sample repository solutions more about the guidance later.
Now I would like to turn to slide four to take a deeper look at our results for the quarter.
As I already mentioned total revenue was $166 million up 25% year over year, and up 12% sequentially quarter to quarter.
Looking at the GAAP P&L on the left side SG&A expenses were higher year over year, driven primarily by operating structure, we added from acquisitions.
On a quarter to quarter basis. The SG&A expense increase was primarily driven by the $17 million decrease in the contingent consideration related to be medical that we took in Q2, we reduced the remaining $1 4 million of the earn out accrual in Q3.
Below the operating income line, we generated $11 million and net interest income this quarter following the similar trend of previous quarters.
GAAP earnings per share for continuing operations was a loss of four cents compared to a loss of three since last quarter.
Now looking over to the right at our non-GAAP results.
Most margin was 45, 6%, which was higher by four points versus second quarter with both segments showing improvement.
The margin benefit came from the cost reduction actions, the 12% higher revenue and certain nonrecurring cost adjustments in the products segment.
Operating expenses were $77 million up 2 million quarter to quarter.
The operating expense line also realized the benefit of the cost reduction actions, but was offset with higher revenue driven sales commissions would be medical and performance based compensation accruals.
On a year over year basis, operating expenses were up $20 million roughly $11 million of the $20 million year over year increase was related to the acquisitions. While the remainder was primarily driven by investments in sales and R&D net of the cost reduction actions.
non-GAAP earnings per share was <unk> 13 per share.
Adjusted EBITDA margin in the quarter was seven 8% as we once again see the leverage in the model as revenue increases and cost reduction actions are realized.
Now, let's turn it over to slide five for a review of our life Science products segment results.
Total segment revenue was $75 million for the quarter up 57% year over year, driven by acquisitions, which contributed $32 million in the quarter.
$27 million of the revenue from acquisitions was from being medical with solid delivery of the orders, we previously disclosed plus additional orders booked and shipped.
The product segment organic base business declined 9% C&I.
Our C&I business experienced continued headwinds in declined 27% year over year on an organic basis.
Rest of the business was up 10% on an organic basis led by a record quarter of large automated store system installations.
Products third quarter gross margin was 44, 9%.
The sequential improvement was supported by higher revenue, which drives improved cost absorption the benefit of the cost reduction initiatives and nonrecurring cost adjustments in the period.
These items resulted in adjusted EBITDA for the product segment of seven 8%.
Next please turn to slide six for a review of our services segment results.
The services segment generated third quarter revenue of $91 million, an increase of 7% year over year and 2% quarter to quarter.
The organic revenue for the quarter was up 8% with genomics up 8% and sample repository solutions growth of 6%. Once again led by double digit growth in core storage as we continue to accumulate samples stored.
The genomics business reported growth of 8% year over year, and 3% sequentially, reflecting a continued recovery in gene synthesis, which grew 9% compared to the second fiscal quarter and 6% year over year.
N G S was up 13% year to year.
We saw growth in every region compared to the prior year with China, showing the highest growth, albeit comparing against a period impacted by COVID-19 with market constraints in 2022.
The services business delivered 46, 1% gross margin down one point year over year, though up one point quarter to quarter.
Third quarter adjusted EBITDA margin for services was six 8% and improved one point sequentially.
Now, let's review isn't as balance sheet on slide seven.
As of June 30, we had $1 3 billion of cash restricted cash and marketable securities both short term and long term.
We have no debt outstanding.
We began a significant share repurchase in the first fiscal quarter committing to $1 billion to be returned to shareholders. In this fashion by the end of this calendar year.
Against that objective by the end of the third fiscal quarter, we had expanded $672 million year to date for 14 million shares and.
And since July one we have expanded another $92 million for 2 million additional shares.
We will keep you updated and can confirm we remain on track to complete the $1 billion buyback commitment by the end of this calendar year.
With the balance of the $1 billion in repurchases earmarked, we still have roughly a $1 billion cash available for deployment to operations investments and return to shareholders. Our track record and plans continue to underscore disciplined capital deployment for generating long term value for shareholders.
Let's turn to slide eight to address the current period cash performance.
Cash flow from operations was $17 million.
<unk> cash performance aligns with the improving profit performance.
Capital expenditures for the quarter was $8 million, resulting in free cash flow of $9 million.
Let's turn to the final slide for our guidance.
Our Q4 guidance reflects some makes a strong backlog and a softer market as highlighted by others in our space.
Fourth quarter revenue is expected to be in the range of $155 million to $173 million with a midpoint supporting growth of approximately 19% year over year on an as reported basis.
This reflects the medical confirmed orders of approximately $24 million and the balance of the business, excluding the medical to be up $1 million sequentially at the midpoint.
We expect the softness in C&I to continue and if we exclude C&I the fourth quarter organic revenue for the rest of the portfolio.
Specced it to be approximately 3% year over year at the midpoint.
We estimate foreign exchange to be a 1% tailwind in the revenue from acquisitions to be a tailwind of approximately $25 million or <unk> 18 points of growth.
We expect products revenue, excluding being medical to be in the range of 45 to 55 million.
Including be medical total product segment revenue is expected to be in the range of $69 million to $79 million. We expect services revenue to be in the range of $86 million to $94 million and adjusted EBITDA is anticipated to be approximately $2 9 million or approximately 5% margin.
Midpoint.
non-GAAP earnings per share is expected to be in the range of minus two to positive six hubs.
As we said previously the actions to achieve the first round of $20 million annualized cost reductions were implemented prior to Q3 and did affect our spend by $5 million in the quarter.
And we have made the investments we also outlined primarily in sales.
We had also announced the second phase of cost actions to support $15 million of additional annualized spending reduction by the end of the calendar year. This effort is underway and we expect to show those savings in our second fiscal quarter of 2024.
For the full year, we expect to deliver revenue growth in the range of 17% to 20% year over year and have narrowed our guidance range to $648 million to $665 million, which includes approximately $108 million from BD medical.
In closing we are encouraged by the progress we have made this quarter, we continue to drive toward further growth and profitability across the business and I expect to see further improvement as we move into the next fiscal year.
We have a strong balance sheet tremendous portfolio of best in class team and are serving the world's premier life science customers, enabling breakthroughs faster, we're winning and are committed to delivering long term sustainable value for shareholders I will now turn the call over to the operator for questions.
<unk>.
Thank you very much if he would like to register a question. Please press. The one followed by the four on your telephone you will hear a three two impromptu acknowledged that request. If your question has been answered and you would like to withdraw your registration. Please press the one followed by three.
And your first question will come from line of Jacob Johnson with Stephens. Your line is open.
Okay.
Alright.
This is hannah on for Jacob Thanks for taking the question.
Since you're realigning your segments and combining Srs and life science products can you remind us of the synergies between these two businesses and then Conversely, what does this mean for the effort around cross selling genomic services the FRS customers.
Sure Hi, Ken This is Steve.
Be glad to do that so on the sample management side as we continue to evolve the business from the repository standpoint, we see more and more.
<unk> really need to be automated. So this is a capability that we're bringing not just to the customers with automated source, but also to our own internal operations and when we go to approach a customer now we talked to them, but management in our asset management to their sample collections.
What happens is we likely will put automated stores onsite will take archival samples offsite and so the offering that we bring to them is a combination of the repository services and the automated stores that we have and so it's a natural without a breakpoint. It's a natural way that we can help them to perform asset management in a more.
Our effective way and also continues to drive the means by which we develop automated stores to manage workflows for customers. So this is a this is a natural evolution of the way the product and services portfolio was moving and it's a really appropriate time for us to get this aligned so that when we start fiscal 'twenty for these businesses.
And it's become one it's really a sample management play.
From the standpoint of our ability to sell the omics capability to these same customers.
As we build.
<unk> capability and knowledge across.
All makes business and across the sample management business.
The skill set that we've been developing where.
People have the ability to connect the customers too.
The people inside.
The end user customer who both managed samples and are responsible for a preliminary measurements. If you will on these samples and also the management of the clinical trial. So this is a natural one.
It requires a little bit different sales capability inside the company, but as we mentioned we've been adding sales resources that have these particular skills to help us do the cross sell so the cross sell has been effective it'll become more effective as we have specialists, who are able to connect both the sample management and <unk> capabilities and Youll see more of this.
We move into 2024.
Thanks, and then as it relates to China. It looks like you saw strong growth during the quarter can you just talk about some of the trends you're seeing in China.
Yes, so it's a little bit different from what we've been hearing from other companies.
The genomics capabilities in China have been strong they were strong in the third quarter and we are.
Going to play close attention to it but we've gotten off to a good start here in the fourth quarter as well from <unk>.
Strong growth in China, and so what I say strong growth Q.
Q3 growth was something close to 20% and we are seeing.
Really good momentum here.
As we start the fourth quarter as well.
Great. Thank you I'll leave it there.
Okay.
And your next question comes from line of David Saxon with Needham Your line is open.
Hello, Good afternoon. Thanks, so much for taking my questions and congrats on the quarter.
Steve maybe I'll start with the C&I part of the portfolio.
To hear how you're thinking about that recovery, if youre seeing any early signs.
22 stability in that part of the portfolio and then sorry for the multipart question here, but I think last quarter you said.
Destocking wasn't impacting all customers.
Has that changed at all.
And I'll have a follow up for London.
Yes, so David I wish I could tell you is different it's not it's pretty much the same there are customers.
I mean, we still have a healthy C&I business.
There is destocking that continues but there are customers.
That we're selling product to in the second quarter and again in the third quarter I think they've managed their inventory.
Not be so dramatically large so it's.
It's a similar situation indeed, we had expected that maybe we'd see.
<unk> seen the bottom from a destocking standpoint, although it's it's.
Still soft we're hopeful that we'll get out of this pretty soon so it's almost a similar environment as similar look that we had a quarter ago.
Still a healthy business, but we haven't seen the uptick that we would anticipate.
With that we will anticipate that customers will have once the inventory has been burned off.
Okay great.
And I guess, just a quick follow up to that Steve. So it doesn't sound like it's worsened at all is that correct.
Not not really David let me tell you one thing that was interesting for us a different dynamic the instruments business was strong in the quarter and we do see that as an indicator.
Automation continues.
The fact that there is continued.
<unk>.
Workflow automation being put into place and we think that's a harbinger for an opportunity for more and healthier consumables business as we move forward because our consumables are adapted precisely for the instruments that we put in place for automated workflows.
So we're anticipating that that's a good sign for us.
And we're hopeful that before we get out of 2023 that the business ultimately will pick up but we do guide is similar.
We do see a similar fourth quarter as we saw in the third quarter.
Okay Super helpful. Thanks for that Steve and then certain lending.
Just on the P&L EBIT that was pretty strong seven 8%.
I mean I get that you started to benefit from some of these cost reduction initiatives. It doesn't sound like you'll see the benefit.
That second phase until now.
Next.
Early next year.
Second quarter.
I guess why.
The fourth quarter, obviously implies some contraction why is that.
Any color on to kind of.
If that's conservatism or if you're pulling forward some investments. Thanks, so much.
Yes.
These are good questions. So on the EBITDA and the seven 8% in the quarter.
There is substantial performance improvement as we've highlighted in our remarks there was also a.
Cost adjustment in there that wont.
Reoccur going forward so.
Think of that as a couple of points of pressure.
A point and a half to two points of pressure and the results itself that won't reoccur, but setting that aside the performance Youre right. Its got a lot of momentum and it's exactly on the absorption that we get with revenue increases it's also.
C&I business, because it's a revenue and profit multiplayer, it's not what differentiates us.
It's a highly fragmented space.
We are glad we have it because it provides us additional revenue and profit leverage as markets are good but you know you get that when it comes down like it is at 24%.
We will continue to take.
Some leaning actions on that business as we as we head, but but with that said if you remove that our organic growth that's quite remarkably different than the rest of the market and this is where Steve.
I had emphasized in his remarks, we really believe that the marketing and sales sections and the value of our portfolio.
Across the other 90% is really standing out in the market and we couldnt be more pleased with how the markets accepting and taking it so.
I believe we're back on the 90% of the C&I, it's just going to take us while to work through that in the marketplace.
So David Thanks. Thank you for your questions I think they are spot on to the to the key items in the release so.
Great Yeah. Thanks for all the color.
Correct.
A quarter.
Yeah.
As a brief reminder to all to register for a question. It is one four on your telephone keypad. Your next question comes from the line of Vijay Kumar with Evercore ISI. Your line is open.
Hey, guys. Thanks for taking my question and congrats and good execution.
Steve maybe my first one here on <unk>.
Some of these numbers and markets.
Starting with the genomics.
And you mentioned gene synthesis on the service side up nine Mgs up 13.
Does it imply.
And the thing that was down so can you talk us through why <unk> was up 13 Sangamo stock down.
Is it engineers strength being driven by new products et cetera, any color on what's driving that.
And sort of.
Biopharma I think some of your peers.
Spoken about cautiousness on capital budgets.
Kidney cargo or bookings trends within within.
The storage business and be medical any any sensitivity from.
From a capex cautiousness.
Yeah. Thanks, Vijay Gosh, if that was the first one.
I'm curious how many questions you can reach right.
So a few things that you had it right so the synthesis business.
8% is we think a really healthy look for us two consecutive quarters of increase from where we'd been I think you recall, we had a downward trend and then I think we had issues to resolve from a delivery standpoint. So we feel we feel we're in a good position there.
Just to put some color on that we've seen a lot of aggressive price pressure.
In the synthesis business that we did not chase down.
And we had some delivery issues as we've been as we communicated to people, but we've resolved those we continue to deliver extremely high quality.
High speed and we do really complicated things for customers. So we're really confident about that the China business and synthesis has also been pretty healthy.
On the on the NGL business, a 13% growth.
Is it so I'll give you a couple of pieces there.
One is just strong across the board capability and Vijay also every once in a while when a project that allows us to have a good slug of Ngls.
Business in a particular quarter, followed by digestion from that same customer until they come back for another study, but we had a good solid growth period in Ngls and we continue to be healthy there, we're making investments on new tools continue to be aggressive about winning customer business and we anticipate that.
That will be investments that we make will allow us to continue to grow that business over the long term. The sanger business was flat. So just to give you an idea so sanger with zero. So when you put when you do the arithmetic there. Indeed Sanger was flat one of the things I will say as we announced.
<unk> EZ capability, where we do the measurement of the plaza in the NGL business and that was formerly some sanger.
Same customers, but the measurements that we're doing now they don't we don't put those into the Sanger business per se, we put some of those into the NGL business. It was relatively small so it's not a it's not a big swinger here, but when in the past when you've seen the sanger business grow.
Three and 4% year over year for us to have zero. There now we put a little bit of that what would have been otherwise.
Sanger growth into the into the NGL business.
And then if you could remind me the next question.
Sorry on the bookings on the capital side.
Steve just given some of your peers talking about cautiousness in Biopharma spending.
Yes.
So Vijay we saw flat on the cryo business just to give an idea so different from the past when we'd be on an upward trend. So.
Presume that's equivalent to some of the softness people are seeing.
In that regard and we're seeing again, we mentioned on prior calls there is business that we know.
Requires automated cryo for example, but some of those things have been delayed and so we're ready to greet anticipated growth at about this time of year. When we started the fiscal year.
To have it be flat is different from the plans that we had at the beginning so indeed, there is some softness there and some projects that we believe are just being delayed.
And as they come will be in.
We're in a position to win but that's what we're seeing on the large automated stores.
Pretty significant backlog, we see we see that business continuing to be very strong and so the cryo side flat large automated stores, we continue to see that business growing significantly and for the for the next few quarters, we will continue to.
Work to get the capacity of our factory up so we can deliver on time for customers, but if that business grows we're going to need to continue to make improvements in operational capability to make sure that we can deliver.
That's helpful, Steve and maybe a quick one here for Lindon I think b.
B medical outlook came up slightly I think at the midpoint. The base business is down slightly can you just talk us through your assumptions for base business into Q4.
So yeah.
If you look off of what we finished Q3.
Our base business is actually expected to be up about $1 million quarter to quarter and in our.
And our very specific.
Look at this and of course, there's a range around it we see services being flat to down a million in products being up.
And we still see.
A lot of deliveries ahead of us on the large automated stores.
So we.
We've got that business being relatively flat quarter to quarter, but up.
Just to touch over $1 million.
In the medical and our guide here of $24 million. This center I mean, it's a single number not a range around it.
It's based on the firm orders that we have scheduled in the quarter and.
And I would emphasize to everybody we've got a range of history here. So this in Q3, we were pleased that they were able to get almost $6 million above what we had projected at this time last quarter.
Booked and shipped in the previous quarters. It range from we had one quarter that was less than $2 million done in the final I'll say 50 days and in the other quarters, we're close to that 2% to $3 $4 million. So it range Q3 stood out as being $6 million.
So far in our short history with them that's been the.
Sandoz, So we'll look for.
$24 million to be a solid guide.
If we if we get more orders, we'll expect that to ship as well.
Understood. Thanks, guys.
Yeah. Thanks Vijay.
Your next question comes from the line of <unk> with B Riley Your line is open.
Congrats on a strong quarter.
Thank you for taking our questions.
I'm curious for the genomic services.
Comment on the recent flood in China has had an impact on the operation and demand in <unk> have a whole lot of questions.
So that's.
That's not been an aspect of.
Business impacts for us.
And.
I appreciate the very specific question.
We pay a lot of attention to China, just to remind people our genomics business has a significant operating center.
Suzhou, China has done tremendous for us in terms of not just the delivery.
Globally of gene synthesis, but also development of an unusual.
Successful business inside China.
Providing the services across Sanger, Ngls as well as synthesis on the ground in China.
As Steve mentioned.
Not only are we not seeing that impact that you asked about but we're not really seeing the softness that people have called out in China. So we're watching it.
But right now we're fairly bullish on China. So I appreciate the color.
Question.
Got it.
I'm glad to see the culture or the <unk>.
Both on Jansen.
Jan San Jose is the 9% under NJ rise, 13% I'm. Just curious can you provide more color on the market share whether you are gaining or losing market share in the genomic services sector and how.
How does that compare to your peers. Thank you.
Yes.
Tough one I would highlight to you that.
Mentioned in our remarks, China grew faster than the other areas.
We saw growth across each region and genomics and.
And I think if I look at total life Sciences space, we've seen a lot of announcements that have.
Numbers down, but the genomics space services space doesn't have a tremendous amount of publications that would highlight to us in this somewhat fragmented business, whether we able to gain share I do believe when you're in this level of growth.
Year over year high single digit you're in this particular.
Areas of the market, where we're we're seeing softness we're seeing challenges, but we're able to grow through it. We would anticipate we may be taken a little share, but it would be a little share based on the size of our business and the and the growth rates now.
Come back and ask me that question, when we get up into the teens double digits.
Have fun answering that question.
Got it thanks for taking our questions.
Okay.
And there are no further questions pending I'll turn the call back to Lindon Robertson for closing remarks. Thank you.
Yeah, we really appreciate everybody tuning in and the questions and always are insightful ones to help add color to our announcement, we couldnt be more delighted.
With the progress that the business has shown year to date, if you recall.
When we reported this time last year, we disappointed some people at that point, but since then I think our assessment our realignment of the business our focus on sales and marketing our investments have been what's been driving our results and we're seeing that momentum as I highlighted you take out the CNI.
Which is about 11% of our revenue. The other 90% is got handsome growth in a market the struggling a bit with that said.
We will continue down that path and we will continue to take some cost out as we've committed.
On the second phase to be done by the end of this year the calendar year that is and and.
And we look forward to giving you an.
Update and before that of course at the end of our fiscal year, which finished at September 30th. So we will see you, which traditionally comes in the first week or so of November so.
That report out so we look forward to seeing you on the Meanwhile, in some conferences, but thank you for tuning in today I appreciate it.
Yeah.
And that does conclude the conference call for today, we thank you very much for your participation NSE you. Please disconnect your lines.
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