Avid Bioservices Inc. (CDMO) 2025 Q1 Earnings Call Summary

Optimistic Highlights

• Strong Revenue Growth

Revenues for Q1 FY2025 were $40.2 million, a 6% increase from the same period last year.

• Record Backlog

The company ended the quarter with a backlog of $219 million, setting a new record high.

• New Business Signings

Signed $66 million in new project agreements, the highest since Q3 FY2023.

• Improved Margins

Gross profit for Q1 FY2025 was $5.7 million, with a 14% gross margin, up from 11% in the same period last year.

• Positive Adjusted EBITDA

Adjusted EBITDA for Q1 FY2025 was $3 million.

Pessimistic Highlights

• Increased Net Loss

Net loss for Q1 FY2025 was $5.5 million, compared to $2.1 million in the same period last year.

• Higher SG&A Expenses

SG&A expenses increased by 30% to $8.2 million, primarily due to higher compensation, benefits, and consulting fees.

• Decline in Cash Reserves

Cash and cash equivalents decreased to $33.4 million from $38.1 million at the end of April 2024.

Company Outlook

• Focus on Capacity Utilization

The company aims to fill remaining capacity, expecting increased revenues and stronger margins.

• Diversification of Customer Base

Continued efforts to attract large pharma clients and diversify the project pipeline from early stage to commercialization.

• Optimism for FY2025

The company is optimistic about the remainder of FY2025, driven by strong bookings and a robust backlog.

Q & A Highlights

• Q: Will the new bookings accelerate or decelerate your backlog burn rate over the next four to five quarters? (Sean Dodge, RBC Capital Markets)

A: Slightly more accelerating due to a better proportion of early phase clients, but not dramatically. (Nick Green)

• Q: Any more detail on the two PPQ campaigns won in the quarter? (Sean Dodge, RBC Capital Markets)

A: One is a commercial product outsourced from internal manufacture, and the other is a Phase 3 program from another CDMO. No second suppliers involved. (Nick Green)

• Q: Update on large pharma strategy and any changes in demand from these customers? (Unidentified Analyst, Stephens)

A: No changes in demand. Strategy is progressing roughly in line with expectations, though always aiming for faster progress. (Nick Green)

• Q: Update on cell and gene therapy demand? (Unidentified Analyst, Stephens)

A: Still behind traditional biologics in demand, with no significant catch-up yet. (Nick Green)

• Q: Thoughts on the BIOSECURE Act and its impact on customer behavior? (Matthew Hewitt, Craig-Hallum Capital Group)

A: Some customers are influenced by the act, but it's difficult to gauge the overall impact. (Nick Green)

• Q: Will the normal seasonality be less impactful this year due to new facilities? (Matthew Hewitt, Craig-Hallum Capital Group)

A: Not significantly different this year as maintenance is still required for new facilities. (Nick Green)

• Q: How much of the new orders were in the cell and gene therapy area? (Paul Knight, KeyBanc Capital Markets)

A: A small proportion, not material in the overall scheme. (Nick Green)

• Q: Update on Halozyme revenue trends and expectations for fiscal 2025? (Max Smock, William Blair)

A: Relationship remains strong, and the goal is to grow with Halozyme while diversifying the customer base. (Nick Green)

• Q: Expectations for adjusted EBITDA margin in fiscal 2025? (Max Smock, William Blair)

A: Expecting continued growth in EBITDA, though quarters can be lumpy. (Dan Hart)