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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | |
For the quarterly period ended: | |
OR | |
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the transition period from __________ to _________
Commission File Number
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of | (I.R.S. Employer |
incorporation or organization) | Identification No.) |
(Address of principal executive offices)
(Zip Code)
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
☒ | Accelerated filer | ☐ | |
Non-accelerated filer | ☐ | Smaller reporting company | |
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date, August 7, 2022: common stock, $
AZENTA, INC.
Table of Contents
2
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
AZENTA, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)
(In thousands, except share and per share data)
| June 30, |
| September 30, | |||
2022 | 2021 | |||||
Assets |
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Current assets |
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Cash and cash equivalents | $ | | $ | | ||
Marketable securities |
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Accounts receivable, net of allowance for expected credit losses ($ |
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Inventories |
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Prepaid expenses and other current assets |
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Current assets held for sale | — | | ||||
Total current assets |
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Property, plant and equipment, net |
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Long-term marketable securities |
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Long-term deferred tax assets |
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Goodwill |
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Intangible assets, net |
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Other assets |
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Non-current assets held for sale |
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Total assets | $ | | $ | | ||
Liabilities and stockholders' equity |
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Current liabilities |
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Accounts payable | $ | | $ | | ||
Deferred revenue |
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Accrued warranty and retrofit costs |
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Accrued compensation and benefits |
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Accrued restructuring costs |
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Accrued income taxes payable |
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Accrued expenses and other current liabilities |
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Current liabilities held for sale | — | | ||||
Total current liabilities |
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Long-term debt | — | | ||||
Long-term tax reserves |
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Long-term deferred tax liabilities |
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Long-term pension liabilities |
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Long-term operating lease liabilities | | | ||||
Other long-term liabilities |
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Non-current liabilities held for sale | — | | ||||
Total liabilities |
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Commitments and contingencies (Note 16) |
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Stockholders' equity |
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Preferred stock, $ |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated other comprehensive income |
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Treasury stock, at cost - |
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Retained earnings (accumulated deficit) |
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Total stockholders' equity | | | ||||
Total liabilities and stockholders' equity | $ | | $ | | ||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
3
AZENTA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(In thousands, except per share data)
Three Months Ended | Nine Months Ended | ||||||||||||
June 30, | June 30, | ||||||||||||
| 2022 |
| 2021 |
| 2022 |
| 2021 |
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Revenue |
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Products | $ | | $ | | $ | | $ | | |||||
Services |
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Total revenue |
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Cost of revenue |
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Products |
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Services |
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Total cost of revenue |
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Gross profit |
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Operating expenses |
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Research and development |
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Selling, general and administrative |
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Restructuring charges |
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Total operating expenses |
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Operating loss |
| ( |
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Interest income |
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Interest expense |
| ( |
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Loss on extinguishment of debt |
| — |
| — |
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Other income (expenses), net |
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Income (loss) before income taxes |
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Income tax provision (benefit) |
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Loss from continuing operations |
| ( |
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(Loss) income from discontinued operations, net of tax |
| ( |
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Net (loss) income | $ | ( | $ | | $ | | $ | | |||||
Basic net (loss) income per share: |
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Loss from continuing operations | $ | ( | $ | ( | $ | ( | $ | ( | |||||
(Loss) income from discontinued operations, net of tax |
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Basic net (loss) income per share | $ | ( | $ | | $ | | $ | | |||||
Diluted net (loss) income per share: |
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Loss from continuing operations | $ | ( | $ | ( | $ | ( | $ | ( | |||||
(Loss) income from discontinued operations, net of tax |
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Diluted net (loss) income per share | $ | ( | $ | | $ | | $ | | |||||
Weighted average shares used in computing net income per share: |
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Basic |
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Diluted |
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The accompanying notes are an integral part of these unaudited consolidated financial statements.
4
AZENTA, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(unaudited)
(In thousands)
Three Months Ended | Nine Months Ended | ||||||||||||
June 30, | June 30, | ||||||||||||
| 2022 |
| 2021 |
| 2022 |
| 2021 |
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Net (loss) income | $ | ( | $ | | $ | | $ | | |||||
Other comprehensive (loss) income, net of tax: |
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Foreign currency translation reclassification adjustments included in income from discontinued operation (Note 2) | — | — | ( | — | |||||||||
Net investment hedge currency translation adjustment, net of tax effects of $ | | — | | — | |||||||||
Foreign currency translation adjustments |
| ( |
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| ( |
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Unrealized loss on marketable securities, net of tax effects of $( |
| ( |
| — |
| ( |
| — | |||||
Actuarial gains, net of tax effects of $ |
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Total other comprehensive (loss) income, net of tax |
| ( |
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| ( |
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Comprehensive (loss) income | $ | ( | $ | | $ | | $ | | |||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
5
AZENTA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(In thousands)
Nine Months Ended |
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June 30, | ||||||||
| 2022 |
| 2021 |
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Cash flows from operating activities |
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Net income | $ | | $ | | ||||
Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation and amortization | | | ||||||
Stock-based compensation |
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Amortization of deferred financing costs and unrealized gains/losses on investments |
| ( |
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Deferred income taxes |
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Loss on extinguishment of debt |
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| — | ||||
(Gain) loss on disposals of property, plant and equipment |
| ( |
| — | ||||
Gain on divestiture, net of tax | ( | | ||||||
Adjustment to the gain on divestiture of semiconductor cryogenics business, net of tax | — | | ||||||
Fees paid stemming from divestiture | ( | — | ||||||
Taxes paid stemming from divestiture | ( | — | ||||||
Changes in operating assets and liabilities, net of acquisitions and divestiture: |
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Accounts receivable |
| ( |
| ( | ||||
Inventories |
| ( |
| ( | ||||
Prepaid expenses and other assets |
| ( |
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Accounts payable |
| ( |
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Deferred revenue |
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| ( | ||||
Accrued warranty and retrofit costs |
| ( |
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Accrued compensation and tax withholdings |
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Accrued restructuring costs |
| ( |
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Accrued expenses and other |
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Net cash (used in) provided by operating activities |
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Cash flows from investing activities |
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Purchases of property, plant and equipment |
| ( |
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Purchases of technology intangibles | ( | — | ||||||
Purchases of marketable securities |
| ( |
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Sales and maturities of marketable securities | | | ||||||
Proceeds from divestiture, net of cash transferred |
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| — | ||||
Acquisitions, net of cash acquired |
| — |
| ( | ||||
Net cash provided by (used in) investing activities |
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Cash flows from financing activities |
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Proceeds from issuance of common stock |
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Principal payments on debt |
| ( |
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Payments of finance leases | ( | ( | ||||||
Payment for contingent consideration related to acquisition | ( | — | ||||||
Common stock dividends paid |
| ( |
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Net cash used in financing activities |
| ( |
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Effects of exchange rate changes on cash and cash equivalents |
| ( |
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Net increase (decrease) in cash, cash equivalents and restricted cash |
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Cash, cash equivalents and restricted cash, beginning of period |
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Cash, cash equivalents and restricted cash, end of period | $ | |
| $ | |
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Reconciliation of cash, cash equivalents, and restricted cash to the consolidated balance sheets | ||||||||
June 30, | September 30, | |||||||
2022 |
| 2021 | ||||||
Cash and cash equivalents of continuing operations | $ | | $ | |||||
Cash and cash equivalents included in assets held for sale | — | | ||||||
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Total cash, cash equivalents and restricted cash shown in the consolidated statements of cash flows | $ | | $ | | ||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
6
AZENTA, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
(unaudited)
(In thousands, except share data)
Common | Accumulated | |||||||||||||||||||
Common | Stock at | Additional | Other | |||||||||||||||||
Stock | Par | Paid-In | Comprehensive | Accumulated | Treasury | Total | ||||||||||||||
Shares | Value | Capital | Income | Deficit | Stock | Equity | ||||||||||||||
Balance March 31, 2022 |
| | $ | | $ | | $ | ( | $ | | $ | ( | $ | | ||||||
Shares issued under restricted stock and purchase plans, net |
| | — |
| — | — | — | — |
| — | ||||||||||
Stock-based compensation |
| — | — | |
| — |
| — |
| — |
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Net investment hedge currency translation adjustment | — | — | — | | — | — | | |||||||||||||
Foreign currency translation adjustments |
| — |
| — |
| — |
| ( |
| — |
| — |
| ( | ||||||
Changes in unrealized gains on marketable securities, net of tax |
| — |
| — |
| — |
| ( |
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| — |
| ( | ||||||
Actuarial loss, net of tax effects of $ |
| — |
| — |
| — |
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| — |
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Net income |
| — |
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| ( |
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Other | — | — | — | — | ( | — | ( | |||||||||||||
Balance June 30, 2022 |
| | $ | | $ | | $ | ( | $ | | $ | ( | $ | | ||||||
Balance March 31, 2021 |
| | $ | | $ | | $ | | $ | ( | $ | ( | $ | | ||||||
Shares issued under restricted stock and purchase plans, net |
| | — |
| — | — | — | — |
| — | ||||||||||
Stock-based compensation |
| — | — | |
| — |
| — |
| — |
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Common stock dividends declared, at $ |
| — |
| — |
| — |
| — |
| ( |
| — |
| ( | ||||||
Foreign currency translation adjustments |
| — |
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| — |
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Actuarial losses, net of tax effects of $ |
| — |
| — |
| — |
| ( |
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| — |
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Net income |
| — |
| — |
| — |
| — |
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Balance June 30, 2021 |
| | $ | | $ | | $ | | $ | ( | $ | ( | $ | | ||||||
Balance September 30, 2021 |
| | $ | | $ | | $ | | $ | ( | $ | ( | $ | | ||||||
Shares issued under restricted stock and purchase plans, net |
| | |
| | — | — | — |
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Stock-based compensation |
| — | |
| — |
| — |
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Common stock dividends declared, at $ |
| — |
| — |
| — |
| — |
| ( |
| — |
| ( | ||||||
Net investment hedge currency translation adjustment | — | — | — | | — | — | | |||||||||||||
Foreign currency translation adjustments reclassed out of accumulated other comprehensive income related to discontinued operations | — | — | — | ( | — | — | ( | |||||||||||||
Foreign currency translation adjustments |
| — |
| — |
| — |
| ( |
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| ( | ||||||
Changes in unrealized gains on marketable securities, net of tax |
| — |
| — |
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| ( |
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Actuarial loss, net of tax effects of $ |
| — |
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Net income |
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| — |
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Other | — | — | — | — | ( | — | ( | |||||||||||||
Balance June 30, 2022 |
| | $ | | $ | | $ | ( | $ | | $ | ( | $ | | ||||||
Balance September 30, 2020 | | $ | | $ | | $ | | $ | ( | $ | ( | $ | | |||||||
Shares issued under restricted stock and purchase plans, net |
| |
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| | — | — | — | | ||||||||||
Stock-based compensation |
| — | — | |
| — |
| — |
| — |
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Common stock dividends declared, at $ |
| — |
| — |
| — |
| — |
| ( |
| — |
| ( | ||||||
Foreign currency translation adjustments |
| — |
| — |
| — |
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| — |
| — |
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Actuarial losses, net of tax effects of $ |
| — |
| — |
| — |
| ( |
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| — |
| ( | ||||||
Net income |
| — |
| — |
| — |
| — |
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| — |
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Balance June 30, 2021 |
| | $ | | $ | | $ | | $ | ( | $ | ( | $ | | ||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
7
AZENTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
1. Nature of Operation
Azenta, Inc. (“Azenta”, or the “Company”) is a leading global provider of life science sample exploration and management solutions for the life sciences market. The Company supports its customers from research to clinical development with its sample management, automated storage, and genomic services expertise to help bring impactful therapies to market faster.
Discontinued Operations
In the fourth quarter of fiscal year 2021, the Company entered into a definitive agreement to sell its semiconductor automation business to Thomas H. Lee Partners, L.P. (“THL”). The Company determined that the semiconductor automation business met the “held for sale” criteria and the “discontinued operations” criteria in accordance with Financial Accounting Standard Boards (“FASB”) Accounting Standards Codification (“ASC”) 205, Presentation of Financial Statements, (“FASB ASC 205”) as of September 30, 2021. Results related to the semiconductor automation business are included within discontinued operations. Please refer to Note 3, “Discontinued Operations” for further information about the discontinued businesses. The Consolidated Balance Sheets and Consolidated Statements of Operations, and the notes to the Consolidated Financial Statements were restated for all periods presented to reflect the discontinuation of the semiconductor automation business in accordance with FASB ASC 205. The discussion in the notes to these Consolidated Financial Statements, unless otherwise noted, relate solely to the Company's continuing operations.
On February 1, 2022, the Company completed the sale of the semiconductor automation business for $
Risks and Uncertainties
The Company is subject to risks common to companies in the markets it serves, including, but not limited to, global economic and financial market conditions, fluctuations in customer demand, acceptance of new products, development by its competitors of new technological innovations, risk of disruption in its supply chain, the implementation of tariffs and export controls, dependence on key personnel, protection of proprietary technology, and compliance with domestic and foreign regulatory authorities and agencies.
Throughout the pandemic, the Company’s operations have not been significantly interrupted as the Company has adapted to having required employees on site and the balance of employees mostly working from home. The Company has followed government guidance in each region and has implemented the U.S. Centers for Disease Control and Prevention social distancing guidelines and other best practices to protect the health and safety of the Company’s employees. The COVID-19 pandemic has not had a substantial negative impact on the Company’s financial results and a portion of this impact has been mitigated by the Company’s realignment of resources to satisfy incremental orders related to virus research and vaccine development and commercialization. Future impacts on the Company’s financial results are not fully determinable, as the full impact of the pandemic on the economy and markets which the Company serves is as yet unknown, but will be dependent, in part, on future variants of the virus and vaccine effectiveness against these variants and new or prolonged government responses to the pandemic. The Company’s financial results will also depend on variables including reduced demand from its customers, the degree that the supply chain may be constrained which could impact its delivery of products and services and the potential negative impact on its operations if there is an outbreak among the Company’s employees, as well as the amount of incremental demand caused by research and treatments in the areas of COVID-19 or related threats.
8
2. Summary of Significant Accounting Policies
Principles of Consolidation and Basis of Presentation
The accompanying Consolidated Financial Statements include the accounts of the Company and its majority-owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). All intercompany balances and transactions have been eliminated in consolidation. The Company applies the equity method of accounting to investments that provide it with the ability to exercise significant influence over the entities in which it lacks controlling financial interest and is not a primary beneficiary.
In the opinion of the Company, the accompanying unaudited consolidated financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of its financial position as of June 30, 2022, and its results of operations for the three months and nine months ended June 30, 2022, and 2021, and cash flows for the nine months ended June 30, 2022, and 2021. The consolidated balance sheet at September 30, 2021 was derived from audited annual financial statements but does not contain all of the footnote disclosures from the annual financial statements
Certain information and footnote disclosures normally included in the Company’s annual consolidated financial statements have been condensed or omitted and, accordingly, the accompanying financial information should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K filed with the United States Securities and Exchange Commission for the fiscal year ended September 30, 2021 (the “2021 Annual Report on Form 10-K”). The accompanying Consolidated Balance Sheet as of September 30, 2021 was derived from the audited annual consolidated financial statements as of the period then ended.
Use of Estimates
The preparation of unaudited consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited consolidated financial statements, as well as the reported amounts of revenue and expenses during the reporting period. Significant estimates are associated with recording accounts receivable, inventories, goodwill, intangible assets other than goodwill, long-lived assets, derivative financial instruments, deferred income taxes, warranty obligations, revenue over time, and stock-based compensation expense. The Company assesses the estimates on an ongoing basis and record changes in estimates in the period they occur and become known. Actual results could differ from these estimates.
The full extent to which the COVID-19 pandemic will directly or indirectly impact the Company’s business, including results of operations and financial condition will depend on future developments that are highly uncertain. This includes results from new information that may emerge concerning COVID-19 and any actions taken to contain or treat COVID-19, as well as the economic impact on local, regional, national and international customers and markets. The Company has made estimates of the impact of COVID-19 within its financial statements and there may be changes to those estimates in future periods.
Foreign Currency Translation
Certain transactions of the Company and its subsidiaries are denominated in currencies other than their functional currency. Foreign currency exchange gains (losses) generated from the settlement and remeasurement of these transactions are recognized in earnings and presented within “Other income (expenses), net” in the Company’s Consolidated Statements of Operations. Net foreign currency transaction and remeasurement gains were $
9
The determination of the functional currency of the Company’s subsidiaries is based on their financial and operational environment and is the local currency of all of the Company’s foreign subsidiaries. The subsidiaries’ assets and liabilities are translated into the reporting currency at period-end exchange rates, while revenue, expenses, gains and losses are translated at the average exchange rates during the period. Gains and losses from foreign currency translations are recorded in “Accumulated other comprehensive income” in the Company’s Consolidated Balance Sheets and presented as a component of comprehensive income in the Company’s Consolidated Statements of Comprehensive Income.
The semiconductor automation business had foreign operations which had a cumulative translation adjustment balance of $
Derivative Financial Instruments
The Company has transactions and balances denominated in currencies other than U.S. dollars. Most of these transactions or balances are denominated in Euros, British Pounds and a variety of Asian currencies. The Company enters into foreign exchange contracts to reduce its exposure to currency fluctuations. The arrangements typically mature in three months or less and they do not qualify for hedge accounting. Net gains and losses related to these contracts are recorded as a component of “Other income (expenses), net” in the accompanying unaudited Consolidated Statements of Operations and are as follows for the three and nine months ended June 30, 2022 and 2021 (in thousands):
Three Months Ended | Nine Months Ended | ||||||||||||
June 30, | June 30, | ||||||||||||
| 2022 |
| 2021 |
| 2022 |
| 2021 |
| |||||
Realized gains (losses) on derivatives not designated as hedging instruments | $ | | $ | ( | $ | | $ | ( | |||||
The fair values of the forward contracts are recorded in the accompanying unaudited Consolidated Balance Sheets as “Prepaid expenses and other current assets” and “Accrued expenses and other current liabilities”. Foreign exchange contract assets and liabilities are measured and reported at fair value based on observable market inputs and classified within Level 2 of the fair value hierarchy described below due to a lack of an active market for these contracts.
10
Hedging Activities
On February 1, 2022, the Company entered into a cross-currency swap agreement to hedge the variability of exchange rate impacts between the United States dollar and the Euro. Under the terms of the cross-currency swap agreement, the Company notionally exchanged approximately $
This cross-currency swap is marked to market at each reporting period, representing the fair values of the cross-currency swap and any changes in fair value are recognized as a component of Accumulated other comprehensive items, net, on the Statements of Comprehensive Income. Interest accrued on the cross-currency swap is recorded within Interest Income on the Consolidated Statements of Operations. For the three and nine months ended June 30, 2022, the Company recorded a gain of $
Fair Value Measurements
The Company measures certain financial assets and liabilities, including cash equivalents, available for sale securities, accounts receivable, accounts payable, and derivative instruments at fair value. FASB ASC 820, Fair Value Measurement and Disclosures, establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Available for sale securities and derivative instruments are measured at fair value based on quoted market prices or observable inputs other than quoted market prices for identical or similar assets or liabilities. The carrying amounts of cash equivalents, accounts receivable and accounts payable approximate their fair value due to their short-term nature.
Accounts Receivable, Allowance for Expected Credit Losses and Sales Returns
Trade accounts receivable do not bear interest and are recorded at the invoiced amount. The Company maintains an allowance for expected credit losses representing its best estimate of expected credit losses related to its existing accounts receivable and their net realizable value. The Company determines the allowance based on a number of factors, including an evaluation of customer credit worthiness, the age of the outstanding receivables, economic trends, historical experience and other information over the payment periods. The Company reviews and adjusts the allowance for expected credit losses on a quarterly basis. Accounts receivable balances are written off against the allowance for expected credit losses when the Company determines that the balances are not recoverable. Provisions for expected credit losses are recorded in “Selling, general and administrative” expenses in the Consolidated Statements of Operations. The Company determines the allowance for sales returns based on its best estimate of expected customer returns. Provisions for sales returns are recorded in Revenue in the Consolidated Statements of Operations. The Company does not have any off-balance-sheet credit exposure related to its customers.
Leases
The Company has operating leases for real estate and non-real estate and finance leases for non-real estate. The classification of a lease as operating or finance and the determination of the right-of-use asset (“ROU asset”) and lease liability are determined at lease inception. The ROU asset represents the Company’s right to use an underlying asset for the lease term and the lease liability represents the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, an incremental borrowing rate is used based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. Lease terms may include options to extend or terminate the lease
11
when it is reasonably certain that the option will be exercised. Lease expense is recognized on a straight-line basis over the lease term.
The Company’s lease agreements may contain lease and non-lease components. Non-lease components primarily include payments for maintenance and utilities. Fixed payments for non-lease components are combined with lease payments and accounted for as a single lease component which increases the amount of the ROU asset and liability.
The ROU asset for operating leases is included within “Other assets” and the ROU asset for finance leases is included within “Property, plant, and equipment, net” in the accompanying unaudited Consolidated Balance Sheets. The short-term lease liabilities for both operating leases and finance leases are included within “Accrued expenses and other current liabilities” in the accompanying unaudited Consolidated Balance Sheets. The long-term lease liabilities for operating leases and finance leases are included within “Long-term operating lease liabilities”, and “Other long-term liabilities”, respectively, in the accompanying unaudited Consolidated Balance Sheets.
Recently Issued Accounting Pronouncements
In November 2021, the FASB issued Accounting Standards Update (“ASU”) 2021-10, Government Assistance (Topic 832) – Disclosures by Business Entities about Government Assistance. The amendment in this ASU requires disclosures to increase the transparency of transactions with a government accounted for by applying a grant or contribution accounting model by analogy, including (1) the types of transactions, (2) the accounting for those transactions, and (3) the effect of those transactions on an entity’s financial statements. This ASU is effective for annual periods beginning after December 15, 2021. The Company will
Recently Adopted Accounting Pronouncements
In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. ASU 2021-08 requires an entity to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Accounting Standards Codification (“ASC 606”), Revenue from Contracts with Customers. Under current GAAP, an acquirer generally recognizes such items at fair value on the acquisition date. The ASU is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted. The standard should be applied prospectively to business combinations occurring on or after the effective date of the amendments. The Company
In October 2020, the FASB issued ASU 2020-10, Codification Improvements. The amendments in this ASU represent changes to clarify certain ASCs, correct unintended application of guidance, or make minor improvements to certain ASC that are not expected to have a significant effect on current accounting practice or create a significant administrative cost to most entities. ASU 2020-10 is effective for annual periods beginning after December 15, 2020 and interim periods within those annual periods, with early adoption permitted. The amendments in this ASU should be applied retrospectively. This ASU will not affect the Company's consolidated financial statements or disclosures. The Company
In August 2018, the FASB issued ASU 2018-14, Disclosure Framework — Changes to the Disclosure Requirements for Defined Benefit Plans, which amends ASC 715 to add, remove, and clarify disclosure requirements related to defined benefit pension and other postretirement plans. The amendments require additional disclosure for the weighted-average interest crediting rates, a narrative description of the reasons for significant gains and losses, and an explanation of any other significant changes in the benefit obligation or plan assets. The amendment removes disclosure requirements for accumulated other comprehensive income expected to be recognized over the next year, information about plan assets to be returned to the entity, and the effects of a one-percentage-point change on the assumed health care costs and the effect of this change in rates on service cost, interest cost, and the benefit obligation for postretirement health care benefits. The ASU is effective for fiscal years ending after December 15, 2020. Early adoption is permitted. The ASU does not amend the interim disclosure requirements of ASC 715-20. The Company
12
this ASU in the first quarter of fiscal . There is no significant accounting impact on the Company’s consolidated financial statements and related disclosures as a result of the adoption of this ASU.
In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes (Topic 740), which removes certain exceptions to the general principles in Topic 740 and improves consistent application of and simplifies GAAP for other areas of Topic 740 clarifying and amending existing guidance. This ASU is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2020. Early adoption is permitted. The Company
Other
For further information with regard to the Company’s significant accounting policies, please refer to Note 2 “Summary of Significant Accounting Policies” to the Company’s consolidated financial statements included in the 2021 Annual Report on Form 10-K.
3. Discontinued Operations
Disposition of Semiconductor Automation Business
On September 20, 2021, the Company entered into a definitive agreement to sell its semiconductor automation business to THL. On February 1, 2022, the Company completed the sale of the semiconductor automation business for $
In connection with the closing of the sale, the Company and THL entered into a transition services agreement, to which both the Company and THL will provide each other with certain transition services related to finance and accounting, information technology, human resources, compliance, facilities, legal and research and development support, for time periods ranging from to
During the fourth quarter of fiscal 2021, the Company determined that the semiconductor automation business met the criteria to be classified as a discontinued operation and, as a result, its historical financial results are reflected in the Company’s financial statements as a discontinued operation, and assets and liabilities were classified as assets and liabilities held for sale.
13
The following table presents the financial results of discontinued operations with respect to the semiconductor automation business (in thousands).
Three months ended June 30, | Nine Months Ended June 30, | ||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||
Revenue |
|
| |||||||||||
Products | $ | - | $ | | $ | | $ | | |||||
Services | - | | | | |||||||||
Total revenue | - | | | | |||||||||
Cost of revenue | |||||||||||||
Products | - | | | | |||||||||
Services | - | | | | |||||||||
Total cost of revenue | - | | | | |||||||||
Gross profit | - | | | | |||||||||
Operating expenses | |||||||||||||
Research and development | - | | | | |||||||||
Selling, general and administrative | | | | | |||||||||
Restructuring charges | - | - | - | | |||||||||
Total operating expenses | | | | | |||||||||
Operating (loss) income | ( | | | | |||||||||
Other income, net | - | | - | ( | |||||||||
(Loss) gain on divestiture | ( | - | | - | |||||||||
(Loss) income before income taxes | ( | ||||||||||||
Income tax provision | | | | | |||||||||
Net (loss) income from discontinued operations | $ | ( | $ | | $ | | $ | | |||||
On July 1, 2019, the Company sold its semiconductor cryogenics business. During the three and nine months ended June 30, 2021, the Company recorded a $
The following table presents the significant non-cash items and capital expenditures for the discontinued operations with respect to the semiconductor automation business that are included in the Consolidated Statements of Cash Flows (in thousands):
Three months ended June 30, | Nine Months Ended June 30, | ||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||
Depreciation and amortization | $ | - | $ | | $ | - | $ | | |||||
Capital expenditures | $ | - | $ | | $ | | $ | | |||||
Stock-based compensation | $ | - | $ | | $ | | $ | | |||||
14
The carrying value of the assets and liabilities of the discontinued operations with respect to the semiconductor automation business on the Consolidated Balance Sheets as of September 30, 2021 was as follows (in thousands):
September 30, 2021 | |||||||||||||
Assets | |||||||||||||
Cash and cash equivalents | $ | | |||||||||||
Accounts receivable, net | | ||||||||||||
Inventories | | ||||||||||||
Other current assets | | ||||||||||||
Total current assets of discontinued operation | $ | | |||||||||||
Property, plant and equipment, net | $ | | |||||||||||
Long-term deferred tax assets | | ||||||||||||
Goodwill | | ||||||||||||
Intangibles, net | | ||||||||||||
Other assets | | ||||||||||||
Total long-term assets of discontinued operation | $ | | |||||||||||
Liabilities | |||||||||||||
Accounts payable | $ | | |||||||||||
Deferred revenue | | ||||||||||||
Accrued warranty and retrofit costs | | ||||||||||||
Accrued compensation and benefits | | ||||||||||||
Accrued Income Taxes | | ||||||||||||
Accrued expenses and other current liabilities | | ||||||||||||
Total current liabilities of discontinued operation | $ | | |||||||||||
Long-term tax reserves | | ||||||||||||
Long-term deferred tax liabilities | | ||||||||||||
Long-term pension liabilities | | ||||||||||||
Long-term operating lease liabilities | | ||||||||||||
Other long-term liabilities | | ||||||||||||
Total long-term liabilities of discontinued operation | $ | |
Acquisition within the Semiconductor Automation Business
On
The allocation of the consideration included $
The Company applied variations of the income approach to estimate the fair values of the intangible assets acquired. The completed technology was valued using excess earnings method and the customer relationships was valued using distributor margin method, both of which have a useful life of
15
The Company has included the financial results of the acquired operations within income from discontinued operations on its Consolidated Statements of Operations. The goodwill and intangible assets are tax deductible.
The Company did not present a pro forma information summary for its consolidated results of operations because such results were immaterial.
During the three months ended March 31, 2022, and prior to the completion of the sale of the semiconductor automation business, the Company exercised an option acquired with the Precise acquisition, to purchase certain technology assets for $
4. Marketable Securities
The Company invests in marketable securities that are classified as available-for-sale and records them at fair value in the accompanying unaudited Consolidated Balance Sheets. Marketable securities reported as current assets represent investments that mature within one year from the balance sheet date. Long-term marketable securities represent investments with maturity dates greater than one year from the balance sheet date.
Unrealized gains and losses are excluded from earnings and reported as a separate component of “accumulated other comprehensive income, net of tax” in the accompanying unaudited Consolidated Balance Sheets until the security is sold or matures. Gains or losses realized from sales of marketable securities are computed based on the specific identification method and recognized as a component of Other income (expenses), net in the accompanying unaudited Consolidated Statements of Operations. There were insignificant sales of marketable securities for the three and nine months ended June 30, 2022 and 2021.
The following is a summary of the amortized cost and the fair value, including accrued interest receivable as well as unrealized holding gains (losses) on the short-term and long-term marketable securities as of June 30, 2022 and September 30, 2021 (in thousands):
|
| Gross |
| Gross |
| |||||||
Amortized | Unrealized | Unrealized | ||||||||||
Cost | Losses | Gains | Fair Value | |||||||||
June 30, 2022: |
|
|
|
|
|
|
|
| ||||
U.S. Treasury securities and obligations of U.S. government agencies |
| $ | | $ | ( | $ | |
| $ | | ||
Bank certificates of deposits | | ( | — | | ||||||||
Corporate securities | | ( | | | ||||||||
Municipal securities |
| | ( | |
| | ||||||
$ | | $ | ( | $ | | $ | | |||||
September 30, 2021: |
|
|
|
|
|
|
|
| ||||
Bank certificates of deposits | $ | | $ | — | $ | — | $ | | ||||
Corporate securities | | — | — | | ||||||||
Municipal securities |
| — | — | — |
| — | ||||||
Other debt securities |
| | — | — |
| | ||||||
$ | | $ | — | $ | — | $ | | |||||
16
The fair values of the marketable securities by contractual maturities at June 30, 2022 are presented below (in thousands):
Amortized | ||||||||
| Cost | Fair Value | ||||||
Due in one year or less | | | ||||||
Due after one year through five years |
| |
| | ||||
Due after five years through ten years | — | — | ||||||
Due after ten years |
| |
| | ||||
Total marketable securities | $ | | $ | | ||||
Expected maturities could differ from contractual maturities because the security issuers may have the right to prepay obligations without prepayment penalties.
The Company reviews the marketable securities for impairment at each reporting period to determine if any of the securities have experienced an other-than-temporary decline in fair value. The Company considers factors, such as the length of time and extent to which the market value has been less than the cost, the financial condition and near-term prospects of the issuer, the Company’s intent to sell, or whether it is more likely than not it will be required to sell the investment before recovery of its amortized cost basis. If the Company believes that an other-than-temporary decline in fair value has occurred, it writes down the investment to its fair value and recognizes the credit loss in earnings and the non-credit loss in accumulated other comprehensive income or loss. Securities in an unrealized loss position as of June 30, 2022 were $
5. Acquisitions
The Company recorded the assets acquired and liabilities assumed related to the following acquisitions at their fair values as of the acquisition date, from a market participant’s perspective. While the Company uses its best estimates and assumptions as part of the purchase price allocation process to value the assets acquired and liabilities assumed on the acquisition date, its estimates and assumptions are subject to refinement. Fair value estimates are based on a complex series of judgments about future events and uncertainties and rely heavily on estimates and assumptions. The judgments used to determine the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives, can materially impact the Company’s results of operations. The finalization of the assignment of fair values will be completed within one year after the respective acquisition date.
The Company did not present a pro forma information summary for its consolidated results of operations for the acquisitions completed because such results were immaterial.
Abeyatech LLC
On
17
Trans-Hit Biomarkers, Inc.
On
6. Goodwill and Intangible Assets
Goodwill represents the excess of net book value over the estimated fair value of net tangible and identifiable intangible assets of a reporting unit. Goodwill is tested for impairment annually or more often if impairment indicators are present at the reporting unit level. If events occur or circumstances change that would more likely than not reduce fair values of the reporting units below their carrying values, goodwill will be evaluated for impairment between annual tests. No triggering events indicating goodwill impairment occurred during the nine months ended June 30, 2022. Please refer to Note 8, Goodwill and Intangible Assets to the Company's consolidated financial statements included in the 2021 Annual Report on Form 10-K for further information on the goodwill impairment testing performed during fiscal year 2021.
The Company performs its annual goodwill impairment assessment on April 1st of each year. In accordance with ASC 350, Intangibles-Goodwill and Other, the Company initially assesses qualitative factors to determine whether the existence of events or circumstances indicates that it is more likely than not that the fair value of a reporting unit is less than its carrying value. If the Company determines, based on this assessment, that it is more likely than not that the fair value of the reporting unit is less than its carrying value, it performs a quantitative goodwill impairment test by comparing the reporting unit’s fair value with its carrying value. An impairment loss is recognized for the amount by which the reporting unit’s carrying value exceeds its fair value, up to the total amount of goodwill allocated to the reporting unit. No impairment loss is recognized if the fair value of the reporting exceeds its carrying value.
During the quarter ended June 30, 2022, the Company completed the annual goodwill impairment test for each of its reporting units, including the Life Sciences Products reporting unit within the Life Sciences Products segment, and the Life Sciences Services reporting unit within the Life Sciences Services segment. Based on the test results, the Company determined that no adjustment to goodwill was necessary. The Company conducted a qualitative assessment for both the Life Sciences Services and Life Sciences Products reporting units. The Company determined that it was more likely than not that their fair values were greater than their carrying values. As a result of the analysis, the Company did not perform the quantitative assessment for these reporting units, and therefore, did not recognize any impairment losses.
The changes in the Company’s goodwill by reportable segment since September 30, 2021 are as follows (in thousands):
|
|
| |||||||
Life Sciences | Life Sciences | ||||||||
Products | Services | Total | |||||||
Balance, at September 30, 2021 |
| |
| |
| | |||
Adjustments |
| ( |
| ( |
| ( | |||
Balance, at June 30, 2022 | $ | | $ | | $ | | |||
During the nine months ended June 30, 2022, the Company recorded a goodwill decrease of $
18
The components of the Company’s identifiable intangible assets as of June 30, 2022 and September 30, 2021 are as follows (in thousands):
June 30, 2022 | September 30, 2021 | |||||||||||||||||
Accumulated | Net Book | Accumulated | Net Book | |||||||||||||||
| Cost |
| Amortization |
| Value |
| Cost |
| Amortization |
| Value | |||||||
Patents | $ | | $ | | $ | | $ | | $ | | $ | | ||||||
Completed technology |
| |
| |
| |
| |
| |
| | ||||||
Trademarks and trade names |
| |
| |
| |
| |
| |
| | ||||||
Non-competition agreements | | | | | | | ||||||||||||
Customer relationships |
| |
| |
| |
| |
| |
| | ||||||
Other intangibles | | | — | | | — | ||||||||||||
$ | | $ | | $ | | $ | | $ | | $ | | |||||||
Amortization expense for intangible assets was $
Estimated future amortization expense for the intangible assets for the remainder of fiscal year 2022, the subsequent four fiscal years and thereafter is as follows (in thousands):
2022 | $ | | |
2023 |
| | |
2024 |
| | |
2025 |
| | |
2026 |
| | |
Thereafter |
| | |
$ | |
7. Debt and Line of Credit
On October 4, 2017, the Company entered into a $
The deferred financing costs were accreted over the term of the loan using the effective interest rate method and are included in “Interest expense” in the accompanying unaudited Consolidated Statements of Operations.
During the nine months ended June 30, 2022, the weighted average stated interest rate paid on all outstanding debt was
On February 1, 2022, the Company completed the sale of its semiconductor automation business and used $
19
8. Leases
The Company has operating leases for real estate and non-real estate and finance leases for non-real estate in North America, Europe, and Asia. Non-real estate leases are primarily related to vehicles and office equipment. Lease expiration dates range between 2022 and 2042.
The components of lease expense were as follows (in thousands):
Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||
Operating lease costs | $ | | $ | | $ | | $ | | |||||||
Finance lease costs: | |||||||||||||||
Amortization of assets | | | | | |||||||||||
Interest on lease liabilities | - | | | | |||||||||||
Total finance lease costs | | | | | |||||||||||
Variable lease costs | | | | | |||||||||||
Short-term lease costs | | | | | |||||||||||
Total lease costs | $ | | $ | | $ | | $ | | |||||||
Supplemental balance sheet information related to leases is as follows (in thousands, except lease term and discount rate):
June 30, 2022 | September 30, 2021 | ||||||||||||||
Operating Leases: | |||||||||||||||
$ | | $ | | ||||||||||||
$ | | $ | | ||||||||||||
Long-term operating lease liabilities | | | |||||||||||||
Total operating lease liabilities | $ | | $ | | |||||||||||
Finance Leases: | |||||||||||||||
Property, plant and equipment, at cost | $ | | $ | | |||||||||||
Accumulated amortization | ( | ( | |||||||||||||
$ | - | $ | | ||||||||||||
$ | | $ | | ||||||||||||
Other long-term liabilities | ( | ( | |||||||||||||
$ | ( | $ | | ||||||||||||
Weighted average remaining lease term (in years): | |||||||||||||||
Operating leases | |||||||||||||||
Finance leases | - | ||||||||||||||
Weighted average discount rate: | |||||||||||||||
Operating leases | % | % | |||||||||||||
Finance leases | % | % | |||||||||||||
20
Supplemental cash flow information related to leases was as follows (in thousands, unaudited):
Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||
Cash paid for amounts included in measurement of liabilities: | |||||||||||||||
Operating cash flows from operating leases | $ | $ | $ | | $ | ||||||||||
Operating cash flows from finance leases | - | | | | |||||||||||
Financing cash flows from finance leases | | | |||||||||||||
ROU assets obtained in exchange for lease liabilities: | |||||||||||||||
Operating leases | $ | $ | $ | | $ | ||||||||||
Future lease payments for operating and finance leases as of June 30, 2022 were as follows for the remainder of fiscal year 2022, the subsequent five fiscal years and thereafter (in thousands):
Operating Leases | |||||||||||||||
2022 | $ | | |||||||||||||
2023 | | ||||||||||||||
2024 | | ||||||||||||||
2025 | | ||||||||||||||
2026 | | ||||||||||||||
2027 | | ||||||||||||||
Thereafter | | ||||||||||||||
Total future lease payments | | ||||||||||||||
Less imputed interest | ( | ||||||||||||||
Total lease liability balance | $ | | |||||||||||||
As of June 30, 2022, the Company did not have significant leases that have not commenced or not recorded in the accompanying unaudited Consolidated Balance Sheets.
9. Income Taxes
The Company recorded an income tax provision of $
In the period ended June 30, 2022, the Company did not include the U.S. business in the computation of the estimated annual effective rate. We have utilized the discrete effective tax rate method, as allowed by Accounting Standards Codification (“ASC”) 740-270-30-18, “Income Taxes – Interim Reporting to calculate the interim income tax provision. The U.S. tax benefit was computed discretely on a year-to-date basis. The taxable loss from continuing operations in the U.S. would have driven significant volatility in the estimated annual effective tax rate. Considering the level of pre-tax income forecasted in the year, small changes in the forecast for the remainder of the year would change the estimated annual effective tax rate substantially. The Company concluded that calculating the tax provision for the U.S. discretely was a more appropriate reflection of the year-to-date tax provision as of June 30, 2022.
The Company recorded an income tax benefit of $
21
benefit on loss from operations during the period and $
During March 2021, the United States enacted the American Rescue Plan Act of 2021 (“Act”). The company evaluated the legislation included in the Act in relation to income taxes and determined that income tax provisions included in the Act do not have a material impact on its income tax provision.
The Company evaluates the realizability of its deferred tax assets by tax-paying component and assesses the need for a valuation allowance on a quarterly basis. The Company evaluates the profitability of each tax-paying component on a historic cumulative basis and a forward-looking basis while performing this analysis. The Company maintains a U.S. valuation allowance related to the realizability of certain state tax credits and state net operating loss carry-forwards, as well as a valuation allowance against net deferred tax assets on certain foreign tax-paying components as of June 30, 2022. On February 1, 2022, the Company completed the sale of its semiconductor automation business that resulted in a taxable gain primarily recognized in the U.S. During the second quarter of fiscal year 2022, the Company recorded a reduction to its valuation allowance for the utilization of deferred tax assets that were previously expected to expire. The benefit of this valuation allowance reversal was recorded in income from discontinued operations in the amount of $
The Company maintains liabilities for uncertain tax positions. These liabilities involve judgment and estimation and are monitored based on the best available information. The Company recognizes interest related to unrecognized tax benefits as a component of the income tax provision or benefit. The Company recognized $
The Company is subject to U.S. federal, state, local and foreign income taxes in various jurisdictions. The amount of income taxes paid is subject to the Company’s interpretation of applicable tax laws in the jurisdictions in which it files.
In the normal course of business, the Company is subject to income tax audits in various global jurisdictions in which it operates. The years subject to examination vary for the U.S. and international jurisdictions, with the earliest tax year being
22
10. Other Balance Sheet Information
The following is a summary of accounts receivable at June 30, 2022 and September 30, 2021 (in thousands):
June 30, | September 30, | ||||||
| 2022 |
| 2021 |
| |||
Accounts receivable | $ | | $ | | |||
Less allowance for expected credit losses |
| ( |
| ( | |||
Accounts receivable, net | $ | | $ | | |||
The following is a summary of inventories at June 30, 2022 and September 30, 2021 (in thousands):
| June 30, |
| September 30, | ||||
| 2022 |
| 2021 |
| |||
Inventories |
|
|
|
|
|
| |
Raw materials and purchased parts |
| $ | |
| $ | | |
Work-in-process |
| |
| | |||
Finished goods |
| |
| | |||
Total inventories |
| $ | |
| $ | | |
Reserves for excess and obsolete inventory were $
At June 30, 2022 and September 30, 2021, the Company had cumulative capitalized direct costs of $
The Company establishes reserves for estimated costs of product warranties based on historical information. Product warranty reserves are recorded at the time product revenue is recognized, and retrofit accruals are recorded at the time retrofit programs are established. The Company’s warranty obligation is affected by product failure rates, utilization levels, material usage, service delivery costs incurred in correcting a product failure and supplier warranties on parts delivered to the Company.
23
The following is a summary of product warranty and retrofit activity on a gross basis for the three and nine months ended June 30, 2022 and 2021 (in thousands):
Activity -Three Months Ended June 30, 2022 | ||||||||||
Balance |
|
|
| Balance | ||||||
March 31, | June 30, | |||||||||
2022 | Accruals | Costs Incurred | 2022 | |||||||
$ | | $ | | $ | ( | $ | | |||
Activity -Three Months Ended June 30, 2021 | ||||||||||
Balance |
|
|
| Balance | ||||||
March 31, | June 30, | |||||||||
2021 | Accruals | Costs Incurred | 2021 | |||||||
$ | | $ | | $ | ( | $ | | |||
Activity -Nine Months Ended June 30, 2022 | ||||||||||
Balance |
|
|
| Balance | ||||||
September 30, | June 30, | |||||||||
2021 | Accruals | Costs Incurred | 2022 | |||||||
$ | | $ | | $ | ( | $ | | |||
Activity -Nine Months Ended June 30, 2021 | ||||||||||
Balance |
|
|
| Balance | ||||||
September 30, | June 30, | |||||||||
2020 | Accruals | Costs Incurred | 2021 | |||||||
$ | | $ | | $ | ( | $ | | |||
11. Stock-Based Compensation
The Company may issue to eligible employees options to purchase shares of the Company’s stock, restricted stock and other equity incentives which vest upon the satisfaction of a performance condition and/or a service condition. In addition, the Company issues shares to participating employees pursuant to an employee stock purchase plan, and stock awards and deferred restricted stock units to its directors in accordance with its director compensation program.
The stock-based compensation expense for restricted stock units for continuing operations was $
The information included within the remaining note is on a total company basis, and includes amounts related to our discontinued operations.
The following table reflects the total stock-based compensation expense recorded during the three and nine months ended June 30, 2022 and 2021 (in thousands):
Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||
| 2022 |
| 2021 |
| 2022 |
| 2021 |
| |||||
Restricted stock units | $ | | $ | | $ | | $ | | |||||
Employee stock purchase plan |
| |
| |
| |
| | |||||
Total stock-based compensation expense | $ | | $ | | $ | | $ | | |||||
The fair value of restricted stock units is determined based on the number of shares granted and the closing price of the Company’s common stock quoted on the Nasdaq Stock Market on the date of grant. For awards that vest based on
24
service conditions, the Company recognizes stock-based compensation expense on a straight-line basis over the requisite service period. For awards that vest subject to performance conditions, the Company recognizes stock-based compensation expense ratably over the performance period if it is probable that performance condition will be met and adjusted for the probability percentage of achieving the performance goals. The Company makes estimates of stock award forfeitures and the number of awards expected to vest. The Company considers many factors in developing forfeiture estimates, including award types, employee classes and historical experience. Each quarter, the Company assesses the probability of achieving the performance goals. Current estimates may differ from actual results and future changes in estimates.
The Company grants restricted stock units that vest over a required service period and/or achievement of certain operating performance goals. Restricted stock units granted with performance goals may also have a required service period following the achievement of all or a portion of the performance goals. The following table reflects restricted stock units, including stock awards, granted during the nine months ended June 30, 2022 and 2021:
|
| Time-Based |
| Stock |
| Performance- | ||
Total Units | Units | Grants | Based Units | |||||
Nine months ended June 30, 2022 |
| |
| |
| |
| |
Nine months ended June 30, 2021 |
| | |
| |
|
Time-Based Grants
Restricted stock units granted with a required service period typically have
Stock Grants
The stock awards granted to the members of the Company’s Board of Directors include stock awards and deferred restricted stock units.
Certain members of the Board of Directors have elected to defer receiving their annual stock awards and related quarterly dividends until they attain a certain age or cease to provide services as the Company’s Board members. Stock awards granted in fiscal years 2022 and 2021 were vested as of the respective grant dates.
Performance-Based Grants
Performance-based restricted stock units are earned based on the achievement of performance criteria established by the Human Resources and Compensation Committee and approved by the Board of Directors. The criteria for performance-based awards are weighted and have threshold, target and maximum performance goals.
Performance-based awards granted in fiscal year 2022, 2021 and 2020 allow participants to earn
25
Restricted Stock Unit Activity
The following table summarizes restricted stock unit activity for the nine months ended June 30, 2022:
|
| Weighted | |||
Average | |||||
Grant-Date | |||||
Shares | Fair Value | ||||
Outstanding at September 30, 2021 |
| | $ | | |
Granted |
| | | ||
Vested |
| ( | | ||
Forfeited |
| ( | | ||
Outstanding at June 30, 2022 |
| | | ||
The weighted average grant date fair value of restricted stock units granted during the three months ended June 30, 2022 and 2021 was $
As of June 30, 2022, the unrecognized compensation cost that are expected to vest is $
Employee Stock Purchase Plan
The Company maintains an employee stock purchase plan that allows its employees to purchase shares of common stock at a price equal to
26
12. Earnings per Share
The calculations of basic and diluted net income per share and basic and diluted weighted average shares outstanding are as follows for the three and nine months ended June 30, 2022 and 2021 (in thousands, except per share data):
Three Months Ended | Nine Months Ended | ||||||||||||
June 30, | June 30, | ||||||||||||
| 2022 |
| 2021 |
| 2022 |
| 2021 |
| |||||
Loss from continuing operations | $ | ( | $ | ( | $ | ( | $ | ( | |||||
(Loss) income from discontinued operations, net of tax |
| ( |
| |
| |
| | |||||
Net (loss) income | $ | ( | $ | | $ | | $ | | |||||
Weighted average common shares outstanding used in computing basic earnings per share |
| |
| |
| |
| | |||||
Dilutive restricted stock units |
| — |
| — |
| — |
| — | |||||
Weighted average common shares outstanding used in computing diluted earnings per share |
| |
| |
| |
| | |||||
Basic net income per share: |
|
|
|
|
|
|
|
| |||||
Loss from continuing operations | $ | ( | $ | ( | $ | ( | $ | ( | |||||
(Loss) income from discontinued operations, net of tax |
| ( |
| |
| |
| | |||||
Basic net (loss) income per share | $ | ( | $ | | $ | | $ | | |||||
Diluted net (loss) income per share: |
|
|
|
|
|
|
|
| |||||
Loss from continuing operations | $ | ( | $ | ( | $ | ( | $ | ( | |||||
(Loss) income from discontinued operations, net of tax |
| ( |
| |
| |
| | |||||
Diluted net (loss) income per share | $ | ( | $ | | $ | | $ | | |||||
During the nine months ended June 30, 2022, restricted stock units of
13. Revenue from Contracts with Customers
Disaggregated Revenue
The Company disaggregates revenue from contracts with customers in a manner that depicts how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. The following is revenue by significant business line for the three and nine months ended June 30, 2022 and 2021(in thousands):
Three months ended June 30, | Nine months ended June 30, | |||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||
Significant Business Line | ||||||||||||||
$ | | $ | | $ | | $ | | |||||||
| | | | |||||||||||
| | | | |||||||||||
Total | $ | | $ | | $ | | $ | | ||||||
Contract Balances
Accounts Receivable, Net. Accounts receivable represent rights to consideration in exchange for products or services that have been transferred by the Company, when payment is unconditional and only the passage of time is required
27
before payment is due. Accounts receivable do not bear interest and are recorded at the invoiced amount. The Company maintains an allowance for expected credit losses representing its best estimate of probable credit losses related to its existing accounts receivable and their net realizable value. The Company determines the allowance for expected credit losses based on a number of factors, including an evaluation of customer credit worthiness, the age of the outstanding receivables, economic trends, historical experience and other information through the payment periods. Accounts receivable, net were $
Contract Assets. Contract assets represent rights to consideration in exchange for products or services that have been transferred by the Company, when payment is conditional on something other than the passage of time. These amounts typically relate to contracts where the right to payment is not present until completion of the contract or the achievement of specified milestones and the value of the products or services transferred exceed this constraint. Contract assets are classified as current. Contract asset balances which are included within “Prepaid expenses and other current assets” on the Company’s Consolidated Balance Sheet, were $
Contract Liabilities. Contract liabilities represent the Company’s obligation to transfer products or services to a customer for which consideration has been received, or for which an amount of consideration is due from the customer. Contract assets and liabilities are reported on a net basis at the contract level, depending on the contracts position at the end of each reporting period. Contract liabilities are included within “Deferred revenue” on the Company’s Consolidated Balance Sheet. Contract liabilities were $
Remaining Performance Obligations. Remaining performance obligations represent the transaction price of unsatisfied or partially satisfied performance obligations within contracts with an original expected contract term that is greater than one year and for which fulfillment of the contract has started as of the end of the reporting period. The aggregate amount of transaction consideration allocated to remaining performance obligations as of June 30, 2022 was $
As of June 30, 2022 | |||||||||
Less than 1 Year | Greater than 1 Year | Total | |||||||
Remaining Performance Obligations | $ | | $ | | $ | | |||
Cost to Obtain and Fulfill a Contract
The Company capitalizes sales commissions when incurred if they are (i) incremental costs of obtaining a contract, (ii) expected to be recovered and (iii) have an expected amortization period that is greater than one year. As part of the Company’s cumulative effect adjustment upon the initial adoption of ASC 606, incremental costs associated with obtaining a contract were capitalized and have been classified as deferred commissions within the Company’s Consolidated Balance Sheet. These amounts primarily relate to sales commissions and are being amortized over a
28
14. Segment and Geographic Information
Operating segments are defined as components of an enterprise that engage in business activities for which discrete financial information is available and regularly reviewed by the chief operating decision maker in deciding how to allocate resources and to assess performance. The Company’s Chief Executive Officer is the Company’s chief operating decision maker.
The Company operates in
The Life Sciences Products segment provides automated cold sample management systems for compound and biological sample storage, equipment for sample preparation and handling, consumables, and instruments, that help customers manage samples throughout their research discovery and development workflows. The segment’s product offerings include automated cold storage systems, cryogenic storage systems, consumables and instruments and the associated services business for these products.
The Life Sciences Services segment provides comprehensive sample management programs, integrated cold chain solutions, informatics, as well as sample-based laboratory services to advance scientific research and support drug development. The segment’s service offerings include sample storage, genomic sequencing, gene synthesis, laboratory processing services, laboratory analysis, biospecimen procurement services and other support services which are provided to a wide range of life science customers, including pharmaceutical companies, biotechnology companies, biorepositories and research institutes. Our Sample Repository Solutions business is a global leader in sample and material storage and management and provides a full suite of reliable cold and ultra-cold chain solutions.
The Company considers adjusted operating income, which excludes charges related to amortization of completed technology, the acquisition accounting impact on inventory contracts acquired, restructuring related charges and other special charges, such as impairment losses, as the primary performance metric when evaluating the business.
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The following is the summary of the financial information for the Company’s reportable segments for the three and nine months ended June 30, 2022 and 2021 (in thousands):
Three Months Ended June 30, | Nine Months Ended June 30, | |||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||
Revenue: |
|
|
|
|
|
| ||||||||
Life Sciences Products | $ | | $ | | $ | | $ | | ||||||
Life Sciences Services |
| |
| |
| |
| | ||||||
Total revenue | $ | | $ | | $ | | $ | | ||||||
Operating loss: |
|
| ||||||||||||
Life Sciences Products | $ | | $ | | $ | | $ | | ||||||
Life Sciences Services |
| |
| |
| |
| | ||||||
Reportable segment adjusted operating income | | | | | ||||||||||
Amortization of completed technology | | | | | ||||||||||
Amortization of other intangible assets | | | | | ||||||||||
Restructuring charges | | — | | | ||||||||||
Tariff adjustment | — | — | ( | | ||||||||||
Other unallocated corporate expenses | | | | | ||||||||||
Total operating loss | ( | ( | ( | ( | ||||||||||
Interest income | | | | | ||||||||||
Interest expense | ( | ( | ( | ( | ||||||||||
Loss on extinguishment of debt | — | — | ( | — | ||||||||||
Other income (expenses), net | | ( | ( | ( | ||||||||||
Income (loss) before income taxes | $ | | $ | ( | $ | ( | $ | ( | ||||||
| ||||||||||||||
Assets: | Life Sciences Products | Life Sciences Services | Total | |||||||||||
June 30, 2022 | $ | | $ | | $ | | ||||||||
September 30, 2021 |
| | |
| | |||||||||
The following is a reconciliation of the Company’s reportable segments’ segment assets to the corresponding amounts presented in the accompanying unaudited Consolidated Balance Sheets as of June 30, 2022 and September 30, 2021 (in thousands):
| June 30, |
| September 30, | |||
2022 | 2021 | |||||
Segment assets |
| $ | |
| $ | |
Cash and cash equivalents, restricted cash, and marketable securities |
| |
| | ||
Deferred tax assets |
| |
| | ||
Other assets | | | ||||
Assets held for sale |
| — |
| | ||
Total assets | $ | | $ | | ||
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Revenue from external customers is attributed to geographic areas based on locations to which customer orders are shipped. Net revenue by geographic area for the three and nine months ended June 30, 2022 and 2021 (in thousands) are as follows:
Three Months Ended June 30, | Nine Months Ended June 30, | |||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||
Geographic Location: | ||||||||||||||
North America | $ | | $ | | $ | | $ | | ||||||
Europe | | | | | ||||||||||
China | | | | | ||||||||||
Asia Pacific/ Other | | | | | ||||||||||
Total | $ | | $ | | $ | | $ | | ||||||
Revenue for the United States comprises
15. Significant Customers
The Company had no individual customer that accounted for 10% or more of its consolidated revenue for each of the three and nine months ended June 30, 2022 and 2021. There was no customer that accounted for more than 10% of the Company’s accounts receivable balance as of both June 30, 2022 and September 30, 2021.
16. Commitments and Contingencies
Tariff Matter
In fiscal year 2021, as part of the Company’s continued integration of GENEWIZ, which was acquired in November 2018, the Company initiated a review during first quarter of fiscal year 2021, with the assistance of a third party consultant, of the transaction value that the Company has used to calculate tariffs on inter-company imports of samples shipped from its GENEWIZ business. As a result of the third-party review and in light of a new interpretation surrounding the valuation method used to calculate the estimated transaction value, the Company revised its estimate of the tariffs owed as a result and recorded a liability of $
Purchase Commitments
At June 30, 2022, the Company had non-cancellable commitments of $
Contingencies
The Company is subject to various legal proceedings, both asserted and unasserted, that arise in the ordinary course of business. The Company cannot predict the ultimate outcome of such legal proceedings or in certain instances provide reasonable ranges of potential losses. The Company may also have certain indemnification obligations pursuant to claims made under the definitive agreement it entered into with Edwards Vacuum LLC (a member of the Atlas Copco Group) in connection with the Company’s sale of its semiconductor cryogenics business in the fourth quarter of fiscal year 2018. However, as of the date of this report, the Company believes that none of these claims will have a material adverse effect on its consolidated financial position or results of operations. In the third quarter of fiscal year 2020,
31
Edwards asserted claims for indemnification under the definitive agreement relating to alleged breaches of representations and warranties relating to customer warranty claims and inventory. The Company cannot determine the probability of any losses or outcome of these claims including the amount of any indemnifiable losses, if any, resulting from these claims at this time, however, the Company believes that none of these claims will have a material adverse effect on its consolidated financial position or results of operations. If the resolution of these claims results in indemnifiable losses in excess of the applicable indemnification deductibles and indemnification escrow established under the definitive agreement, Edwards would be required to seek recovery under the representation and warranty insurance Edwards obtained in connection with the closing of the transaction. The Company believes that any indemnifiable losses in excess of the applicable deductibles and indemnification escrow established in the definitive agreement would be covered by such insurance. If Edwards is unable to obtain recovery under its insurance, however, it could seek recovery of such indemnifiable losses, if any, directly from the Company. In the event of unexpected subsequent developments and given the inherent unpredictability of these matters, there can be no assurance that the Company’s assessment of any claim will reflect the ultimate outcome, and an adverse outcome in certain matters could, from time to time, have a material adverse effect on the Company’s consolidated financial position or results of operations in particular quarterly or annual periods.
17. Fair Value Measurement
The fair value measurement guidance establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The following levels of inputs may be used to measure fair value:
Level 1 Inputs: Quoted prices in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset and liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 2 Inputs: Observable inputs other than prices included in Level 1, including quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 Inputs: Unobservable inputs that are significant to the fair value of the assets or liabilities and reflect an entity’s own assumptions in pricing assets or liabilities since they are supported by little or no market activity.
The Company measures certain assets, including the cost and equity method investments, at fair value on a nonrecurring basis when they are deemed to be other-than-temporarily impaired. The fair values of these investments are determined based on valuation techniques using the best information available, and may include quoted market prices, market comparable, and discounted cash flow projections. An impairment charge is recorded when the cost of the investment exceeds its fair value and this condition is determined to be other-than-temporary.
32
Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis
The following tables summarize assets and liabilities measured and recorded at fair value on a recurring basis in the accompanying Consolidated Balance Sheets as of June 30, 2022 and September 30, 2021 (in thousands):
Fair Value Measurements at Reporting Date Using | ||||||||||||
|
| Quoted Prices in |
|
| Significant | |||||||
Active Markets for | Significant Other | Unobservable | ||||||||||
June 30, | Identical Assets | Observable Inputs | Inputs | |||||||||
Description | 2022 | (Level 1) | (Level 2) | (Level 3) | ||||||||
Assets: |
|
|
|
|
|
|
|
| ||||
Cash equivalents | $ | | $ | | $ | — | $ | — | ||||
Available-for-sale securities |
| |
| | |
| — | |||||
Foreign exchange contracts |
| |
| — |
| |
| — | ||||
| |
| — |
| |
| — | |||||
Total assets | $ | | $ | | $ | | $ | — | ||||
Liabilities: |
|
|
|
|
|
|
|
| ||||
Foreign exchange contracts | | — | | — | ||||||||
Total liabilities | $ | | $ | — | $ | | $ | — | ||||
Fair Value Measurements at Reporting Date Using | ||||||||||||
|
| Quoted Prices in |
|
| Significant | |||||||
Active Markets for | Significant Other | Unobservable | ||||||||||
September 30, | Identical Assets | Observable Inputs | Inputs | |||||||||
Description | 2021 | (Level 1) | (Level 2) | (Level 3) | ||||||||
Assets: |
|
|
|
|
|
|
|
| ||||
Cash equivalents | $ | | $ | | $ | — | $ | — | ||||
Available-for-sale securities |
| |
| — |
| |
| — | ||||
Foreign exchange contracts |
| |
| — |
| |
| — | ||||
Total assets | $ | | $ | | $ | | $ | — | ||||
Liabilities: |
|
|
|
|
|
|
|
| ||||
Foreign exchange contracts | | $ | — | | — | |||||||
Acquisition-related contingent consideration | | — | — | | ||||||||
Total liabilities | $ | | $ | — | $ | | $ | | ||||
Cash Equivalents
Cash equivalents consist of money market funds and are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices in active markets.
Available-For-Sale Securities
Available-for-sale securities primarily consist of municipal securities, bank certificate of deposits and U.S. government backed securities, and as such are classified as Level 1. Investments classified as Level 2 consist of debt securities that are valued using matrix pricing and benchmarking because they are not actively traded. Matrix pricing is a mathematical technique used to value securities by relying on the securities’ relationship to other benchmark quoted prices.
Foreign Exchange Contracts
Foreign exchange contract assets and liabilities are measured and reported at fair value based on observable market inputs and classified within Level 2 of the fair value hierarchy due to a lack of an active market for these contracts.
33
Net Investment Hedge
Net investment hedge assets is measured and reported at fair value based on observable market inputs and classified within Level 2 of the fair value hierarchy due to a lack of an active market for these contracts.
Acquisition-related Contingent Consideration
Acquisition-related contingent consideration is measured and reported at fair value using the real options method based on the unobservable inputs that are significant to the fair value and classified with Level 3 of the fair value hierarchy. The amount is contingent based on the acquired business’ performance for the twelve-month period ending December 31, 2021. Please refer to Note 5, “Acquisitions” for further detail. Changes in the fair value of contingent consideration resulting from a change in the underlying inputs are recognized in results of operations until the arrangement is settled.
Financial Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
During the three months and nine months ended June 30, 2022 and 2021, the Company did not record any material other-than-temporary impairments on financial assets required to be measured at fair value on a nonrecurring basis.
18. Subsequent Event
On
On
34
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The Management’s Discussion and Analysis of Financial Condition and Results of Operations, or MDA, describes principal factors affecting the results of our operations, financial condition and liquidity as well as our critical accounting policies and estimates that require significant judgment and thus have the most significant potential impact on our unaudited consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. Our MDA is organized as follows:
| ● | Overview. This section provides a general description of our business and operating segments as well as a brief discussion and overall analysis of our business and financial performance, including key developments affecting the Company during the three and nine months ended June 30, 2022 and 2021. |
| ● | Critical Accounting Policies and Estimates. This section discusses accounting policies and estimates that require us to exercise subjective or complex judgments in their application. We believe these accounting policies and estimates are important to understanding the assumptions and judgments incorporated in our reported financial results. |
| ● | Results of Operations. This section provides an analysis of our financial results for the three and nine months ended June 30, 2022 as compared to the three and nine months ended June 30, 2021. |
| ● | Liquidity and Capital Resources. This section provides an analysis of our liquidity and changes in cash flows as well as a discussion of available borrowings and contractual commitments. |
You should read the MDA in conjunction with our unaudited consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q. In addition to historical information, the MDA contains forward-looking statements that involve risks and uncertainties. You should read “Information Related to Forward-Looking Statements” below for a discussion of important factors that could cause our actual results to differ materially from our expectations.
Sale of the Semiconductor Automation Business
In the fourth quarter of fiscal year 2021, we entered into a definitive agreement to sell our semiconductor automation business to Thomas H. Lee, Partners, L.P., or THL, for $3.0 billion in cash subject to customary adjustments. In connection with the planned divestiture of the semiconductor automation business and our continued focus on our life sciences businesses, we changed our corporate name from “Brooks Automation, Inc.” to “Azenta, Inc.” and our common stock started to trade on the Nasdaq Global Select Market under the symbol “AZTA” on December 1, 2021.
On February 1, 2022, we completed the sale of our semiconductor automation business for $2.9 billion in cash, subject to working capital and other customary adjustments. Net proceeds from the sale are expected to be $2.5 billion, net of estimated taxes payable. Since our founding in 1978, we had been a leading automation provider and partner to the global semiconductor manufacturing industry. With the completion of the sale of the semiconductor automation business, we no longer serve the semiconductor market. The semiconductor automation business has been classified as a discontinued operation and, unless otherwise noted, this MDA relates solely to our continuing operations and does not include the operations of our semiconductor automation business.
Impact of the COVID-19 Pandemic
We have implemented business continuity plans designed to address the COVID-19 pandemic and minimize the disruption to ongoing operations. Since the beginning of the COVID-19 pandemic in March 2020, however, our business has been impacted at various times by reduced demand for services from customers experiencing lockdowns and quarantines, travel restrictions impacting our ability to service our products, supply chain constraints, increased competition for talent, and governmental mandates at times constraining our employees’ ability to work at our facilities. Since the beginning of the COVID-19 pandemic in March 2020, however, our business has been impacted at various times by reduced demand for services from customers experiencing lockdowns and quarantines, travel restrictions impacting our ability to service our products, supply chain constraints, increased competition for talent, and governmental mandates at times constraining our employees’ ability to work at our facilities. Recently, during the third quarter ended June 30, 2022, we experienced a two-week facility closure in Suzhou, China as a result of local
35
government protocols and mandates. As we expect the pandemic to continue to evolve, we will continue monitoring and assessing the effects of the COVID-19 pandemic on our business. However, we cannot at this time accurately predict what effects these conditions will ultimately have on our operations due to uncertainties relating to variants of the virus, vaccine effectiveness against the variants, the duration of any future outbreak and the pandemic itself, and the length of the travel restrictions and business closures imposed by the governments of impacted countries. Our financial results will also depend on variables including reduced demand from our customers, the degree that the supply chain may be constrained which could impact our delivery of products and services and the potential negative impact on our operations if there is an outbreak among our employees, as well as the amount of incremental demand caused by research and treatments in the areas of COVID-19 or related threats.
Information Related to Forward-Looking Statements
This Quarterly Report on Form 10-Q contains statements that are, or may be considered to be, forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995, as amended, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. All statements that are not historical facts, including statements about our beliefs or expectations, are forward-looking statements. These statements may be identified by such forward-looking terminology as “expect,” “estimate,” “intend,” “believe,” “anticipate,” “may,” “will,” “should,” “could,” “continue,” “likely” or similar statements or variations of such terms. Forward-looking statements include, but are not limited to, statements that relate to our future revenue, margins, costs, earnings, profitability, product development, demand, acceptance and market share, competitiveness, market opportunities and performance, levels of research and development, the success of our marketing, sales and service efforts, outsourced activities, operating expenses, anticipated manufacturing, customer and technical requirements, the ongoing viability of the solutions that we offer and our customers’ success, tax expenses, our management’s plans and objectives for our current and future operations and business focus, our ability to retain, hire and integrate skilled personnel, the impact of the COVID-19 pandemic on our operations and results, including as a result of local mandates, any prolonged lock downs, or series of temporary closures, our ability to identify and address increased cybersecurity risks, including as a result of employees working remotely, the expected benefits and other statements relating to our divestitures and acquisitions, including sale of the semiconductor automation business and the semiconductor cryogenics business, the adequacy, effectiveness and success of our business transformation initiatives, our ability to continue to identify acquisition targets and successfully acquire and integrate desirable products and services and realize expected revenues and revenue synergies, our adoption of newly issued accounting guidance, the levels of customer spending, our dependence on key suppliers or vendors to obtain services for our business on acceptable terms, including the impact of supply chain disruptions, general economic conditions, the sufficiency of financial resources to support future operations, and capital expenditures. Such statements are based on current expectations and involve risks, uncertainties and other factors which may cause the actual results, our performance or our achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include the Risk Factors which are set forth in our Annual Report on Form 10-K for the fiscal year ended September 30, 2021, or the 2021 Annual Report on Form 10-K, filed with the U.S. Securities and Exchange Commission, or SEC, on November 24, 2021, as updated and/or supplemented in subsequent filings with the SEC, including under Item 1A “Risk Factors” in Part II of our Quarterly Report on Form 10-Q for the quarter ended December 31, 2021 as filed with the SEC on February 9, 2022 or the First Quarter Form 10-Q, and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022 as filed with the SEC on May 16, 2022, or the Second Quarter Form 10-Q. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof and are based on information currently and reasonably known to us. We do not undertake any obligation to release revisions to these forward-looking statements to reflect events or circumstances that occur after the date of this Quarterly Report on Form 10-Q or to reflect the occurrence or effect of anticipated or unanticipated events. Precautionary statements made herein should be read as being applicable to all related forward-looking statements wherever they appear in this Quarterly Report on Form 10-Q. Any additional precautionary statements made in our 2021 Annual Report on Form 10-K should be read as being applicable to all related forward-looking statements whenever they appear in this Quarterly Report on Form 10-Q.
Unless the context indicates otherwise, references in this Quarterly Report on Form 10-Q to “we”, “us”, “our” and “the Company” refer to Azenta, Inc. and its consolidated subsidiaries.
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OVERVIEW
We are a leading global provider of life science sample exploration and management solutions for the life sciences market. We support our customers from research to clinical development with our sample management, automated storage, and genomic services expertise to help our customers bring impactful therapies to market faster. We understand the importance of sample integrity and offer a broad portfolio of products and services spanning across the life cycle of samples from procurement and sourcing, automated storage platforms, genomic services and a broad range of consumables, informatics and data software, and sample management solutions. Our expertise and leadership positions make us a trusted partner to pharmaceutical, biotechnology, and life sciences research institutions globally. In total, our life sciences business employs approximately 2,900 full-time employees, part-time employees and contingent workers worldwide and have sales in approximately 80 countries. We are headquartered in Chelmsford, Massachusetts and have operations in North America, Asia, and Europe.
In the life sciences sample management market, we utilize our core technology competencies and capabilities in automation and cryogenics to provide comprehensive bio-sample management solutions to a broad range of end markets within the life sciences industry. Our offerings include automated ultra-cold storage freezers, sample storage containers, instruments which assist in the workflow of sample management, genomic services and both on-site and off-site full sample management services. We expect the life sciences sample management market to remain one of our principal markets for our product and service offerings and provide favorable opportunities for the growth of our overall business. Over the past several years, we have acquired and developed essential capabilities required to strategically address the sample management needs across multiple end markets within the life sciences industry.
Our life sciences portfolio includes products and services that we acquired to bring together a comprehensive capability to service our customers’ needs in the sample-based services arena. We continue to develop the acquired products and services offerings through the combined expertise of the newly acquired teams and our existing research and development resources. We believe our approach of acquisition, investment, and integration has allowed us to accelerate our internal development and that of the acquired entity, significantly decreasing our time to market.
We have also strengthened and broadened our product portfolio and market reach by investing in internal product development. We expect to continue investing in research and development and making strategic acquisitions with the objective of expanding our offerings in the life sciences market.
Within our Life Sciences Products segment, we have developed and continue to develop automated biological sample storage solutions for operating in ultra-low temperature environments. We have a complete line up of automated stores from ambient temperatures to -190°. Our BioStore’s ™ unique design allows controlled temperature storage down to -80°C with the industry’s highest throughput of sample retrieval.
Within our Life Sciences Services segment, our genomics services business advances research and development activities by gene sequencing, synthesis, editing and related services. We offer a comprehensive, global portfolio that has both broad appeal in the life sciences industry as well as enable customers to select the best solution for their research challenge. This portfolio also offers unique solutions for key markets such as cell and gene therapy, antibody development, and biomarker discovery by addressing genomic complexity and throughput challenges. Our sample repository solutions business is a global leader in sample storage and management, and provides a full suite of reliable cold and ultra-cold chain solutions.
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Business and Financial Performance
Our performance for the three and nine months ended June 30, 2022 and 2021 are as follows:
Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||
Dollars in thousands | 2022 | 2021 | 2022 | 2021 | |||||||||
Revenue | $ | 132,735 | $ | 129,087 | $ | 417,931 | $ | 376,764 | |||||
Cost of revenue |
| 73,135 |
| 66,656 |
| 220,462 |
| 199,098 | |||||
Gross profit |
| 59,600 |
| 62,431 |
| 197,469 |
| 177,666 | |||||
Operating expenses | |||||||||||||
Research and development |
| 6,515 |
| 5,489 |
| 19,895 |
| 15,813 | |||||
Selling, general and administrative |
| 58,133 |
| 57,825 |
| 187,361 |
| 171,648 | |||||
Restructuring charges |
| 25 |
| - |
| 319 |
| 53 | |||||
Total operating expenses |
| 64,673 |
| 63,314 |
| 207,575 |
| 187,514 | |||||
Operating loss |
| (5,073) |
| (883) |
| (10,106) |
| (9,848) | |||||
Interest income |
| 6,822 |
| 409 |
| 9,933 |
| 503 | |||||
Interest expense |
| (2,101) |
| (477) |
| (4,111) |
| (1,485) | |||||
Loss of extinguishment of debt | — | — | (632) | — | |||||||||
Other income (expense), net |
| 631 |
| (1,651) |
| (1,617) |
| (263) | |||||
Loss before income taxes |
| 279 |
| (2,602) |
| (6,533) |
| (11,092) | |||||
Income tax benefit (provision) |
| 7,293 |
| (760) |
| (560) |
| (4,620) | |||||
Loss from continuing operations | $ | (7,014) | $ | (1,842) | $ | (5,973) | $ | (6,472) | |||||
Income from discontinued operations, net of tax |
| (2,555) |
| 41,008 |
| 2,159,597 |
| 95,414 | |||||
Net income | $ | (9,569) | $ | 39,166 | $ | 2,153,624 | $ | 88,942 | |||||
Three Months Ended June 30, 2022 Compared to Three Months Ended June 30, 2021
Results of Operations – Revenue increased 3% as compared to the prior fiscal year period driven by a 6% increase in our Life Sciences Services segment, partially offset by a 3% decrease in our Life Sciences Products segments. Gross margin was 44.9% for the three months ended June 30, 2022, as compared to 48.4% for the corresponding period of the prior fiscal year. Operating expenses increased $1.4 million compared to the three months ended June 30, 2021, driven by increases in both research and development expenses and selling, general and administrative expenses. We reported an operating loss of $5.1 million for the three months ended June 30, 2022, as compared to operating loss of $0.9 million for the corresponding prior fiscal year period due to a decrease in gross profit and operating expenses. Loss from continuing operations was $7.0 million as compared to $1.8 million for the three months ended June 30, 2021. During the three months ended June 30, 2022, we recorded a $2.6 million net loss from discontinued operations.
Nine Months Ended June 30, 2022 Compared to Nine Months Ended June 30, 2021
Results of Operations – Revenue increased 11% as compared to the prior fiscal year period driven by both our Life Sciences Services and Life Products segments which increased 16% and 3%, respectively. Gross margin was 47.2% for both the nine months ended June 30, 2022 and 2021. Operating expenses increased $20.1 million compared to the nine months ended June 30, 2021, driven by increases in both research and development expenses and selling, general and administrative expenses. We reported an operating loss of $10.1 million for the nine months ended June 30, 2022, as compared to an operating loss of $9.8 million for the corresponding prior fiscal year period due to an increase in operating expenses. Loss from continuing operations was $6.0 million and $6.5 million, respectively, for the nine months ended June 30, 2022 and 2021. During the nine months ended June 30, 2022, we recorded a net gain on the sale of our semiconductor automation business of $2.1 billion, which is included within net income from discontinued operations.
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June 30, 2022 Compared to September 30, 2021
Cash Flows and Liquidity - Cash and cash equivalents and restricted cash as presented on our Consolidated Statements of Cash Flows is on a total company basis and were $1.5 billion as of June 30, 2022 compared to $285.3 million as of September 30, 2021. The increase of $1.2 billion was attributable to $2.9 billion of cash inflows related to the sale of our semiconductor automation business, partially offset by $431.6 million of taxes paid related to the sale of the automation semiconductor business, cash outflows for the net change in operating assets and liabilities of $83.7 million, $1.5 billion related to purchases of marketable securities, $59.7 million for capital expenditures, $1.0 million related to the acquisition of technology intangible assets and financing activities of $64.3 million. Financing activities include $49.7 million for the extinguishment of debt and $10.4 million related to the payments of acquisition related contingent consideration. The effects of foreign exchange reduced our cash balance by $99.0 million. The net proceeds from the sale of the semiconductor automation business was approximately $2.5 billion after payment of taxes and other expenses.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our unaudited consolidated financial statements are prepared in accordance with Generally Accepted Accounting Principles, or GAAP. The preparation of the interim consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to revenue, intangible assets, goodwill, inventories, income taxes, and stock-based compensation. We base our estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances. We evaluate current and anticipated worldwide economic conditions, both in general and specifically in relation to the semiconductor and life science industries, that serve as a basis for making judgments about the carrying values of assets and liabilities that are not readily determinable based on information from other sources. Actual results may differ from these estimates under different assumptions or conditions that could have a material impact on our financial condition and results of operations.
For further information with regard to our significant accounting policies and estimates, please refer to Note 2, Summary of Significant Accounting Policies in the Notes to the unaudited consolidated financial statements included in Item 1 Consolidated Financial Statements of this Quarterly Report on Form 10-Q and in the Notes to our audited consolidated financial statements included in Part II, Item 8 “Financial Statements and Supplementary Data” in our 2021 Annual Report on Form 10-K.
Recently Issued and Adopted Accounting Pronouncements
For a summary of recently issued and adopted accounting pronouncements applicable to our unaudited consolidated financial statements, please refer to Note 2, Summary of Significant Accounting Policies in the Notes to the unaudited consolidated financial statements included in Item 1 Consolidated Financial Statements of this Quarterly Report on Form 10-Q.
RESULTS OF OPERATIONS
Please refer to the commentary provided below for further discussion and analysis of the factors contributing to our results from operations for the three and nine months ended June 30, 2022 as compared to the three and nine months ended June 30, 2021.
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Revenue
Our revenue performance for the three and nine months ended June 30, 2022 and 2021 is as follows:
Three Months Ended June 30, | Nine Months Ended June 30, | |||||||||||||||||||
Dollars in thousands | 2022 | 2021 | % Change | 2022 | 2021 | % Change | ||||||||||||||
Life Sciences Products | $ | 47,369 | $ | 48,625 | (3) | % | $ | 150,861 | $ | 146,520 | 3 | % | ||||||||
Life Sciences Services | $ | 85,366 | $ | 80,462 | 6 | % | $ | 267,070 | $ | 230,244 | 16 | % | ||||||||
Total revenue | $ | 132,735 | $ | 129,087 | 3 | % | $ | 417,931 | $ | 376,764 | 11 | % | ||||||||
Three months ended June 30, 2022 compared to three months ended June 30, 2021
Revenue increased 3% driven by a 6% increase in our Life Sciences Services segment, partially offset by a 3% decline in our Life Sciences Products segment during the three months ended June 30, 2022 as compared to the corresponding prior year period.
Our Life Sciences Products segment revenue decreased 3% driven by decreased demand for our consumables and instruments; partially offset by increased revenue in our automated cold sample management systems.
Our Life Sciences Service segment revenue increased 6% driven by increased revenue in both our sample repository solutions and genomics services businesses. Sample repository solutions revenue increased 19% due to growth in our storage services. Genomic services revenue increased 1% due to an increase in our Next Generation Sequencing, or NGS, business.
Revenue generated outside the United States was $44.8 million, or 34% of total revenue, for the three months ended June 30, 2022, as compared to $46.2 million, or 36% of total revenue, for the corresponding period of the prior fiscal year. No individual customer that accounted for more than 10% of our consolidated revenue for the three months ended June 30, 2022 or 2021.
Nine months ended June 30, 2022 compared to nine months ended June 30, 2021
Revenue increased 11% driven by increases in both our Life Sciences Products and our Life Sciences Services segments during the nine months ended June 30, 2022 as compared to the corresponding prior year period.
Our Life Sciences Products segment revenue increased 3% driven by increased revenue in our automated cold sample management systems and infrastructure services, partially offset by a decrease in demand for our consumables and instruments.
Our Life Sciences Service segment revenue increased 16% driven by increased revenue in both our sample repository solutions and genomics services businesses. Sample repository solutions revenue increased 22% due to growth in our storage, logistics services, informatics and sample procurement services. Genomic services revenue increased 14% due to an increase in demand across all service lines.
Revenue generated outside the United States was $134.6 million, or 32% of total revenue, for the nine months ended June 30, 2022, as compared to $142.4 million, or 38% of total revenue, for the corresponding period of the prior fiscal year. No individual customer that accounted for more than 10% of our consolidated revenue for the nine months ended June 30, 2022 or 2021.
The COVID-19 pandemic has had varying impacts on our business for the three and nine months ended June 30, 2022. We estimate that the COVID-19 pandemic had a positive net impact of approximately $1 million and $13 million,
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respectively, on our revenue for the three months ended June 30, 2022 and 2021 and approximately $21 million and $39 million, respectively, on our revenue for the nine months ended June 31, 2022 and 2021.
Operating Loss
Our operating income performance for the three and nine months ended June 30, 2022 and 2021 is as follows:
Three Months Ended June 30, | Nine Months Ended June 30, | |||||||||||||
Dollars in thousands | 2022 | 2021 | 2022 | 2021 | ||||||||||
Revenue: |
|
|
|
|
|
|
|
| ||||||
Life Sciences Products | $ | 47,369 | $ | 48,625 | $ | 150,861 | $ | 146,520 | ||||||
Life Sciences Services |
| 85,366 |
| 80,462 |
| 267,070 |
| 230,244 | ||||||
Total revenue | $ | 132,735 | $ | 129,087 | $ | 417,931 | $ | 376,764 | ||||||
Operating income: |
|
|
|
| ||||||||||
Life Sciences Products | $ | 2,216 | $ | 5,060 | $ | 11,895 | $ | 16,492 | ||||||
Life Sciences Products adjusted operating margin | 5 | % | 10 | % | 8 | % | 11 | % | ||||||
Life Sciences Services | $ | 2,251 | $ | 5,774 | $ | 14,997 | $ | 18,316 | ||||||
Life Sciences Services adjusted operating margin | 3 | % | 7 | % | 6 | % | 8 | % | ||||||
Segment adjusted operating income | $ | 4,467 | $ | 10,834 | $ | 26,892 | $ | 34,808 | ||||||
Total segment adjusted operating margin | 3 | % | 8 | % | 6 | % | 9 | % | ||||||
Amortization of completed technology | 1,811 | 2,173 | 5,424 | 6,200 | ||||||||||
Amortization of acquired intangible assets | 5,745 | 7,396 | 18,064 | 21,657 | ||||||||||
Restructuring charges | 23 | — | 319 | 53 | ||||||||||
Tariff adjustment | — | — | (486) | 5,414 | ||||||||||
Other unallocated corporate expenses | 1,961 | 2,148 | 13,677 | 11,332 | ||||||||||
Total operating loss | $ | (5,073) | $ | (883) | $ | (10,106) | $ | (9,847) | ||||||
Total operating margin | (4) | % | (1) | % | (2) | % | (3) | % | ||||||
Three months ended June 30, 2022 compared to three months ended June 30, 2021
We reported an operating loss of $5.1 million during the three month period ending June 30, 2022, compared to an operating loss of $0.9 million in the prior fiscal year period. The increase in operating loss was due to a decrease in gross profit of $2.8 million and an increase in operating expenses of $1.4 million. Within operating expenses, research and development expenses increased $1.0 million and selling, general, and administrative expenses increased $0.3 million.
Life Sciences Products segment adjusted operating income decreased $2.8 million and adjusted operating margin decreased 5.7 percentage points compared to the prior fiscal year period. The decrease in adjusted operating income was driven by a decrease in gross profit of $1.8 million and higher operating expenses of $1.0 million. Adjusted operating income for our Life Sciences Products segment excludes charges for amortization related to completed technology of $0.3 million and $0.4 million for both the three months ended June 30, 2022 and 2021. Please refer to Note 14, “Segment Information” in the Notes to the unaudited consolidated financial statements included in Item 1 Consolidated Financial Statements of this Quarterly Report on Form 10-Q.
Life Sciences Services segment adjusted operating income decreased $3.5 million and adjusted operating margin decreased 4.5 percentage points compared to the prior fiscal year period. The decrease in adjusted operating income was driven by higher operating expenses of $2.2 million and a decrease in gross profit of $1.3 million. Adjusted operating income for our Life Sciences Services segment excludes charges for amortization related to completed technology of $1.6 million and $1.7 million for the three months ended June 30, 2022 and 2021, respectively. Please refer to Note 14, “Segment Information” in the Notes to the unaudited consolidated financial statements included in Item 1 Consolidated Financial Statements of this Quarterly Report on Form 10-Q.
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Nine months ended June 30, 2022 compared to nine months ended June 30, 2021
We reported an operating loss of $10.1 million during the nine month period ending June 30, 2022, compared to an operating loss of $9.8 million in the prior fiscal year period. The increase in operating loss was due to an increase in operating expenses of $20.0 million; partially offset by an increase in gross profit of $19.8 million. Within operating expenses, selling, general, and administrative expenses increased $15.7 million, and research and development expenses increased $4.1 million. Restructuring charges increased $0.3 million. Operating income for the nine months ended June 30, 2021 included $5.4 million of cost accrued for tariff liabilities on intercompany import activity in fiscal years 2016 through 2020 and $0.7 million of tariff liabilities related to activity during the three and nine months ended June 30, 2021. During the nine months ended June 30, 2022, upon the completion of an independent study, we recorded a benefit of $0.5 million related to the accrual for the fiscal years 2016 through 2020, as described above.
Life Sciences Products segment adjusted operating income decreased $4.6 million and adjusted operating margin decreased 3.4 percentage points compared to the prior fiscal year period. The decrease in adjusted operating income was driven by higher operating expenses of $7.1 million; partially offset by an increase in gross profit of $2.5 million. Adjusted operating income for our Life Sciences Products segment excludes charges for amortization related to completed technology of $0.7 million and $1.0 million for the nine months ended June 30, 2022 and 2021, respectively. Please refer to Note 14, “Segment Information” in the Notes to the unaudited consolidated financial statements included in Item 1 Consolidated Financial Statements of this Quarterly Report on Form 10-Q.
Life Sciences Services segment adjusted operating income decreased $3.3 million and adjusted operating margin decreased 2.3 percentage points. The decrease in adjusted operating income was driven by an increase in operating expenses of $14.0 million, partially offset by an increase in gross profit of $10.6 million and excludes charges for amortization related to completed technology of $4.7 million and $5.2 million for the nine months ended June 30, 2022 and 2021, respectively. Adjusted operating income also excludes a benefit of $0.5 million and a charge of $5.5 million, respectively for the nine months ended June 30, 2022 and 2021 related to tariff charges for the fiscal years 2016 through 2020, as described above. Please refer to Note 14, “Segment Information” in the Notes to the unaudited consolidated financial statements included in Item 1 Consolidated Financial Statements of this Quarterly Report on Form 10-Q.
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Gross Margin
Our gross margin performance for the three and nine months ended June 30, 2022 and 2021 is as follows:
Life Science Products | Life Science Services | Azenta Total | ||||||||||||||||||||||
Three Months Ended June 30, | Three Months Ended June 30, | Three Months Ended June 30, | ||||||||||||||||||||||
Dollars in thousands | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||
Revenue | $ | 47,369 | $ | 48,625 | $ | 85,366 | $ | 80,462 | $ | 132,735 | $ | 129,087 | ||||||||||||
Gross profit |
| 21,026 |
| 22,655 |
| 38,573 |
| 39,772 |
| 59,600 |
| 62,431 |
| |||||||||||
Gross margin | 44.4 | % | 46.6 | % | 45.2 | % | 49.4 | % | 44.9 | % | 48.4 | % | ||||||||||||
Adjustments: | ||||||||||||||||||||||||
Amortization of completed technology |
| 251 |
| 432 |
| 1,560 |
| 1,742 |
| 1,811 |
| 2,174 | ||||||||||||
Tariff adjustment | — | — | — | (83) | — | (83) | ||||||||||||||||||
Adjusted gross profit | $ | 21,277 | $ | 23,087 | $ | 40,133 | $ | 41,431 | $ | 61,411 | $ | 64,522 | ||||||||||||
Adjusted gross margin | 44.9 | % | 47.5 | % | 47.0 | % | 51.5 | % | 46.3 | % | 50.0 | % | ||||||||||||
Life Science Products | Life Science Services | Azenta Total | ||||||||||||||||||||||
Nine Months Ended June 30, | Nine Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||||||||||
Dollars in thousands | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||
Revenue | $ | 150,861 | $ | 146,520 | $ | 267,070 | $ | 230,244 | $ | 417,931 | $ | 376,764 | ||||||||||||
Gross profit |
| 70,006 |
| 67,232 |
| 127,475 |
| 110,431 |
| 197,469 |
| 177,666 |
| |||||||||||
Gross margin | 46.4 | % | 45.9 | % | 47.7 | % | 48.0 | % | 47.2 | % | 47.2 | % | ||||||||||||
Adjustments: | ||||||||||||||||||||||||
Amortization of completed technology |
| 722 |
| 985 |
| 4,702 |
| 5,215 |
| 5,424 |
| 6,200 | ||||||||||||
Tariff adjustment | — | — | (486) |
| 5,414 | (486) |
| 5,414 | ||||||||||||||||
Adjusted gross profit | $ | 70,728 | $ | 68,217 | $ | 131,691 | $ | 121,060 | $ | 202,407 | $ | 189,280 | ||||||||||||
Adjusted gross margin | 46.9 | % | 46.6 | % | 49.3 | % | 52.6 | % | 48.4 | % | 50.2 | % | ||||||||||||
Three months ended June 30, 2022 compared to three months ended June 30, 2021
Total gross margin increased 3.5 percentage points to 44.9% compared to the prior three month fiscal year period driven by decreased gross margin in both our Life Sciences Products segment and our Life Sciences Services segment.
Life Sciences Products segment gross margin decreased 2.2 percentage points. The decrease was primarily driven by the mix of products sold in our consumables and instruments business, one time inventory adjustments and higher logistics costs. Cost of revenue included $0.3 million and $0.4 million of charges for amortization related to completed technology for the three months ended June 30, 2022 and 2021, respectively. Excluding the impact of the amortization of completed technology, margins decreased 2.6 percentage points during the three months ended June 30, 2022, as compared to the corresponding period of the prior fiscal year.
Life Sciences Services segment gross margin decreased 4.2 percentage points driven by decreased gross margin in both the genomic services business and sample repository solutions business. The decrease in the genomic services business was due to the impact of lower sales as well as mandated COVID related measures in China that reduced customer orders and production at our Suzhou, China location. The decrease in gross margin in the sample repository solutions business is mainly driven by higher labor costs in the storage solutions business. Excluding the impact of the amortization of completed technology, Life Sciences Services margins decreased 4.5 percentage points during the three months ended June 30, 2022, as compared to the corresponding period of the prior fiscal year.
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Nine months ended June 30, 2022 compared to nine months ended June 30, 2021
Total gross margin increased 0.1 percentage points to 47.2% compared to the prior nine month fiscal year period driven by decreased gross margin in our Life Sciences Services segment; partially offset by an increase in gross margin in our Life Sciences Products segment.
Life Sciences Products segment gross margin increased 0.5 percentage points. The increase was primarily driven by cost reduction initiatives within our automated storage systems business and increased productivity. Cost of revenue included $0.7 million and $1.0 million, respectively, of charges for amortization related to completed technology for the nine months ended June 30, 2022 and 2021. Excluding the impact of the amortization of completed technology, margins expanded 0.3 percentage points during the nine months ended June 30, 2022, as compared to the corresponding period of the prior fiscal year.
Life Sciences Services segment gross margin decreased 0.2 percentage points driven by the sample repository solutions business, partially offset by an increase in gross margin in the genomic services business. The decrease in gross margin in the sample repository solutions business primarily related to increased employee related costs within our storage solutions business. The increase in the genomic services gross margin was primarily driven by $6.1 million accrued for tariff liabilities during the nine months ended June 30, 2021 as discussed in the “Operating Income (Loss)” section above, as compared to the nine months ended June 30, 2022, in which we recorded a benefit of $0.5 million related to the accrual for the fiscal years 2016 through 2020 based on the results from an independent study. Excluding the impact of the amortization of completed technology and the tariff adjustment, margins decreased 3.3 percentage points during the nine months ended June 30, 2022, as compared to the corresponding period of the prior fiscal year due to higher labor costs and the product mix in our sample repository solutions business.
Research and Development Expenses
Our research and development expense for the three and nine months ended June 30, 2022 and 2021 is as follows:
Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||
Dollars in thousands | 2022 | 2021 | 2022 | 2021 | |||||||||||
Life Sciences Products | $ | 3,314 | $ | 2,724 | $ | 10,543 | $ | 7,422 | |||||||
Percent Revenue | 2.5 | % | 2.1 | % | % | 2.5 | % | 2.0 | % | ||||||
Life Sciences Services | $ | 3,200 | $ | 2,765 | $ | 9,352 | $ | 8,391 | |||||||
Percent Revenue | 2.4 | % | 2.1 | % | 2.2 | % | 2.2 | % | |||||||
Total research and development expense | $ | 6,514 | $ | 5,489 | $ | 19,895 | $ | 15,813 | |||||||
Percent Revenue | 4.9 | % | 4.3 | % | 4.8 | % | 4.2 | % | |||||||
Research and development expenses for the three months ended June 30, 2022 increased $1.0 million as compared to the three months ended June 30, 2021, driven by a $0.6 million increase in our Life Sciences Products segment and a $0.4 million increase in our Life Sciences Services segment. Research and development expenses for the nine months ended June 30, 2022 increased $4.1 million as compared to the three months ended June 30, 2021, driven by a $3.1 million increase in our Life Sciences Products segment and a $1.0 million increase in our Life Sciences Services segment. The increase for the three and nine months ended June 30, 2022, in Life Sciences Products was driven by continued investment in automated stores, cryogenic stores, and instruments. The increase for the three and nine months ended June 30, 2022, in Life Sciences Services was primarily related to continued development of our services lines.
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Selling, General and Administrative Expenses
Our selling, general and administrative expenses for the three and nine months ended June 30, 2022 and 2021 is as follows:
Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||
Dollars in thousands | 2022 | 2021 | 2022 | 2021 | |||||||||||
Life Sciences Products | $ | 15,746 | $ | 15,284 | $ | 48,289 | $ | 44,298 | |||||||
Percent Revenue | 11.9 | % | 11.8 | % | 11.6 | % | 11.8 | % | |||||||
Life Sciences Services | $ | 34,677 | $ | 32,892 | $ | 107,342 | $ | 94,318 | |||||||
Percent Revenue | 26.1 | % | 25.5 | % | 25.7 | % | 25.0 | % | |||||||
Corporate | $ | 7,710 | $ | 9,649 | $ | 31,730 | $ | 33,032 | |||||||
Percent Revenue | 5.8 | % | 7.5 | % | 7.6 | % | 8.8 | % | |||||||
Total selling, general and administrative expense | $ | 58,133 | $ | 57,825 | $ | 187,361 | $ | 171,648 | |||||||
Percent Revenue | 43.8 | % | 44.8 | % | 44.8 | % | 45.6 | % | |||||||
Total selling, general and administrative expenses increased $0.3 million and $15.7 million, respectively, for the three and nine months ended June 30, 2022 as compared to the three and nine months ended June 30, 2021, driven by increases in both our segments and an increase in unallocated corporate expenses.
Within our segment expenses discussed below, we allocate certain corporate general and administrative expenses including costs related to shared corporate functions which include finance, information technology, human resources, legal, executive, governance, logistics and compliance. In total, corporate general and administrative expense allocated to segments decreased $1.5 million for the three months ended June 30, 2022, due to lower variable compensation expense and increased $4.6 million for the nine months ended June 30, 2022, due to staffing and labor cost increases to support the standalone Life Sciences company.
Life Sciences Products segment selling, general and administrative expenses increased $0.5 million and $4.0 million, respectively, for the three and nine months ended primarily related to higher allocated costs.
Life Sciences Services segment selling, general and administrative expenses increased $1.8 million and $13.0 million, respectively, for the three and nine months ended June 30, 2022 related to investments in the commercial organization and lab support personnel. In addition, bad debt expense was higher for the nine months ended June 30, 2022 due to a reversal that occurred in the first fiscal quarter of 2021.
Unallocated corporate expenses decreased $1.9 million for the three months ended June 30, 2022 as compared to the comparable prior year period primarily due to lower merger and acquisition costs and costs related to the separation of our company as well as lower amortization of intangible assets. During the fourth fiscal quarter of 2021, we impaired tradename intangibles due to the rebranding of our company. Partially offsetting these decreases were charges related to transformation and rebranding efforts during the three months ended June 30, 2022, which were not present in the prior fiscal year period. Unallocated corporate expenses decreased $1.3 million for the nine months ended June 30, 2022 as compared to the comparable prior year period, primarily due to lower merger and acquisition costs and costs related to the separation of the Company as well as lower amortization of intangible assets. These decreases were partially offset by costs related to transformation and rebranding efforts, which were not present in the prior fiscal year period.
Restructuring Charges
Restructuring charges increased by less than $0.1 million and $0.3 million, respectively, for the three and nine months ended June 30, 2022 as compared to the three and nine months ended June 30, 2021. The three and nine months ended June 30, 2022 includes charges for actions taken related to the transformation of our business. Costs savings from these actions are expected to be realized in future periods.
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Non-Operating Income (Expenses)
Interest income – We recorded interest income of $6.8 million and $9.9 million, respectively, for the three and nine months ended June 30, 2022, as compared to $0.4 million and $0.5 million, respectively, for the corresponding periods of the prior fiscal year. The increase in interest income in the three and nine month periods ended June 30, 2022 as compared to the same periods in the prior fiscal year is due to interest earned on the proceeds from the sale of the semiconductor automation business, including interest accrued on a net investment hedge, during the three and nine month periods ended June 30, 2022. Please refer to the Derivative Instruments section of Note 2, “Summary of Significant Accounting Policies” in the Notes to the unaudited consolidated financial statements included in Item 1 “Consolidated Financial Statements” of this Quarterly Report on Form 10-Q.
Interest expense – During the three and nine months ended June 30, 2022 we recorded interest expense of $2.1 million and $4.1 million, respectively, as compared to $0.5 million and $1.5 million, respectively, during the corresponding periods of the prior fiscal year. Interest expense for the three and nine months ended June 30, 2022, is primarily related to interest on cash held in one of our German subsidiaries that is denominated in EUR, which carries a negative interest rate. Interest expense for the three and nine months ended June 30, 2021, is primarily related to interest expense on our term loan. The term loan was settled on February 1, 2022 using the proceeds from the sale of the semiconductor automation business.
Other income (expenses), net – We recorded other income of $0.6 million for the three months ended June 30, 2022 and we recorded other expense of $1.6 million for the nine months ended June 30, 2022, as compared to other expense of $1.7 million and $0.3 million, respectively, for the three and nine months ended June 30, 2021. The change for the three months ended June 30, 2022 as compared to the corresponding prior fiscal year period is primarily due to foreign exchange gains. The change for the nine months ended June 30, 2022 from the corresponding prior fiscal year period is primarily due to foreign currency exchange losses.
Income Tax Provision / Benefit
We recorded an income tax provision of $7.3 million for the three months ended June 30, 2022 and income tax benefit of $0.6 million during the nine months ended June 30, 2022. The tax provision for the three months ended June 30, 2022 was primarily driven by a true-up of the effective tax rate on a year-to-date basis. These changes were the result of fluctuations in expected global income from operations. The tax benefit for the nine months ended June 30, 2022, was driven by the pre-tax loss and a $4.6 million discrete stock compensation windfall benefit for tax deductions that exceeded the associated book compensation expense. The tax benefit for the nine months ended June 30, 2022, was partially offset by a $0.7 million charge to increase the deferred tax liability to reflect a change in the blended state income tax rate that results from the sale of the semiconductor business assets.
We recorded an income tax benefit of $0.8 million and $4.6 million, respectively during the three and nine months ended June 30, 2021. The tax benefit for the three months ended June 30, 2021, was primarily driven by the benefit on loss from operations during the period and $ 1.5 million overall benefit from multiple releases of unrecognized tax benefits and accrued interest due to the status of limitation expirations. The tax benefit for the nine months ended June 30, 2021, was further increased by a $2.0 million discrete stock compensation windfall benefit for tax deductions that exceeded the associated book compensation expense.
Discontinued Operations
Discontinued operations for the three and nine months ended March 31, 2022 and 2021 include our semiconductor automation business. In the fourth quarter of fiscal year 2021, we entered into a definitive agreement to sell our semiconductor automation business to THL for $3 billion in cash, subject to net working capital and other adjustments. On February 1, 2022, we completed the sale of our semiconductor automation business to THL for $2.9 billion in cash, subject to net working capital and other adjustments. Net cash proceeds from the divestiture are expected to be $2.5 billion after estimated taxes payable. The nine months ended June 30, 2021 include an adjustment recorded in the first fiscal quarter of 2021 to our previously recorded gain on sale from our semiconductor cryogenics business, which was completed on July 1, 2019.
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Revenue from discontinued operations was $264.4 million for the nine months ended June 30, 2022, we did not have revenue from discontinued operations for the three months ended June 30, 2022. Revenue from discontinued operations was $186.3 million and $474.7 million, respectively, for the three and nine months ended June 30, 2021. Net loss from discontinued operations was $2.6 million for the three months ended June 30. 2022 and net income from discontinue operations was $2.2 billion for the nine months ended June 30, 2022. Net income from discontinued operations was $41.0 million and $96.6 million, respectively, for the three and nine months ended June 30, 2021. Net income from discontinued operations for the three and nine months ended June 30, 2022 includes the net gain on the sale of the semiconductor automation business of $2.1 billion. The income from discontinued operations only includes direct operating expenses incurred that (1) are clearly identifiable as costs being disposed of upon completion of the sale and (2) will not be continued by our company on an ongoing basis. Indirect expenses which supported the semiconductor automation business and which remained as part of the continuing operations, are not reflected in income from discontinued operations.
LIQUIDITY AND CAPITAL RESOURCES
We believe that we have adequate resources to satisfy our working capital, financing activities, debt service and capital expenditure requirements for the next twelve months. The current global economic environment, including the uncertainty related to the COVID-19 pandemic, make it difficult for us to predict longer-term liquidity requirements with sufficient certainty. We may be unable to obtain any required additional financing on terms favorable to us, if at all.
The discussion of our cash flows and liquidity that follows stated on a total company consolidated basis and excludes the impact of discontinued operations.
Overview of Cash Flows and Liquidity
Our cash and cash equivalents, restricted cash and marketable securities as of June 30, 2022 and September 30, 2021 consist of the following (in thousands):
| June 30, 2022 |
| September 30, 2021 |
| |||
Cash and cash equivalents | $ | 1,474,189 | $ | 227,427 | |||
Restricted cash | 12,047 | 12,906 | |||||
Cash and cash equivalents and restricted cash | 1,486,236 | 240,333 | |||||
Short-term marketable securities |
| 709,063 |
| 81 | |||
Long-term marketable securities |
| 312,027 |
| 3,598 | |||
$ | 2,507,326 | $ | 244,012 | ||||
Cash, cash equivalents and restricted cash | $ | 1,486,236 | $ | 240,333 | |||
Cash and cash equivalents included in assets held for sale |
| — |
| 45,000 | |||
$ | 1,486,236 | $ | 285,333 | ||||
Our cash and cash equivalents, restricted cash and marketable securities were $2.5 billion as of June 30, 2022. As of June 30, 2022, we had cash, cash equivalents and restricted cash of $1.5 billion, of which $1.1 billion was held outside of the United States. If these funds are needed for the United States operations, we would need to repatriate these funds. As a result of changes in U.S. tax legislation, any repatriation in the future would likely not result in U.S. federal income tax. During the quarter ended September 30, 2021 we repatriated foreign cash to the U.S. in planning for the sale of the discontinued operation and recognized all related tax costs. Aside from these actions, our intent is to reinvest the remaining foreign cash outside of the United States and our current operating plans do not demonstrate a need to repatriate these funds for our U.S. operations. We had marketable securities of $1.0 billion and $3.7 million as of June 30, 2022 and September 30, 2021, respectively. Our marketable securities are generally readily convertible to cash without a material adverse impact.
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Nine Months Ended June 30, 2022 Compared to Nine Months Ended June 30, 2021
Overview
Cash Flows and Liquidity - Cash and cash equivalents and restricted cash as presented on our Consolidated Statements of Cash Flows is on a total company basis and were $1.5 billion as of June 30, 2022 compared to $285.3 million as of September 30, 2021. The increase of $1.2 billion was attributable to $2.9 billion of cash inflows related to the sale of our semiconductor automation business, partially offset by $431.6 million of taxes paid related to the sale of the automation semiconductor business, cash outflows for the net change in operating assets and liabilities of $83.7 million, $1.5 billion related to purchases of marketable securities, $59.7 million for capital expenditures, $1.0 million related to the acquisition of technology intangible assets and financing activities of $64.3 million. Financing activities include $49.7 million for the extinguishment of debt and $10.4 million related to the payments of acquisition related contingent consideration. The effects of foreign exchange reduced our cash balance by $99.0 million. The net proceeds from the sale of the semiconductor automation business was approximately $2.5 billion after payment of taxes and other expenses.
Divestiture and Extinguishment of Debt
On February 1, 2022, we completed the sale of our semiconductor automation business for $2.9 billion in cash, subject to net working capital and other adjustments. Net cash proceeds from the divestiture are expected to be $2.5 billion after estimated taxes payable and other items, such as closing costs. Upon closure of the sale on February 1, 2022, we utilized $49.7 million of proceeds to extinguish outstanding debt related to our term loan. We also terminated our revolving line of credit, which had no borrowings outstanding. As of June 30, 2022, we have no outstanding debt on our balance sheet.
Operating Activities
Cash flows from operating activities can fluctuate significantly from period to period as earnings, working capital needs and the timing of payments for income taxes, restructuring activities and other operating charges impact reported cash flows.
Cash outflows from operating activities of $475.7 million for the nine months ended June 30, 2022, resulted from net income of $2.2 billion, adjusted to exclude the effect of non-cash operating adjustments of $2.1 billion which includes $2.1 billion on the net gain on sale of the semiconductor automation business, transaction fees paid related to the sale of $52.5 million; partially offset by a usage of cash from changes in our net operating assets and liabilities of $83.7 million, primarily driven by increases in inventory for both the continuing operations and discontinuing operations business and increased in accounts receivable and prepaid expenses and other assets; partially offset by an increase in accrued expenses and other liabilities and accrued compensation. Additionally, the company paid $431.6 million in cash taxes related to the sale of the semiconductor automation business during the nine months ended June 30, 2022.
Cash flows from operating activities of $122.7 million for the nine months ended June 30, 2021, resulted from net income $88.9 million, adjusted to exclude the effect of non-cash operating charges of $60.0 million, partially offset by an increase in net operating assets of $26.2 million. The net increase in operating assets and liabilities consisted primarily of increases in accounts receivable and inventory, partially offset by increases to accrued expenses and other liabilities, accrued compensation and accounts payable.
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Discontinued operations contributed $2.2 billion and $95.4 million of net income to the nine months ended June 30, 2022 and 2021, respectively. Net income from discontinued operations for the nine months ended June 30, 2022 includes a gain on the sale of the semiconductor automation business of $2.1 billion.
Investing Activities
Cash flows provided by investing activities consist primarily of proceeds from divestitures, cash used for acquisitions, capital expenditures and purchases of marketable securities as well as cash proceeds generated from sales and maturities of marketable securities. Cash provided by investing activities was $1.8 billion during the nine months ended June 30, 2022 and included $2.9 billion of proceeds from the sale of the semiconductor automation business, net of cash transferred; partially offset by cash outflows for the purchase of marketable securities of $1.5 billion, capital expenditures of $59.7 million, and the acquisition of technology intangible assets of $4.0 million. Cash used in investing activities was $128.8 million during the nine months ended June 30, 2021, and included capital expenditures of $34.6 million and acquisitions of $92.4 million.
Financing Activities
Cash outflows for financing activities were $64.5 million during the nine months ended June 30, 2022 which primarily consisted of cash outflows of $49.7 million to extinguish the term loan, $10.4 million for the payments of acquisition related contingent consideration and $7.5 million related to dividend payments. Cash used in financing activities was $21.4 million during the nine months ended June 30, 2021, which primarily consisted of cash outflows for cash dividend payments of $22.3 million.
China Facility
In April 2019, we committed to construct a facility in Suzhou China, to consolidate the multiple locations in Suzhou, China related to the genomics business and provide infrastructure to support future growth. The facility is being constructed in two phases. During the third fiscal quarter of 2022, we completed the construction of phase one of the facility. The total cost transferred from construction in progress at June 30, 2022, was $42.4 million, which included $7.1 million of costs incurred for the nine months ended June 30, 2022.
Capital Resources
Term Loan and Line of Credit
On October 4, 2017, we entered into a $200.0 million term loan with Morgan Stanley Senior Funding, Inc., JPMorgan Chase Bank, N.A. and Wells Fargo Securities, LLC pursuant to the terms of a credit agreement with the lenders. The term loan was issued at $197.6 million, or 98.8% of its par value, resulting in a discount of $2.4 million, or 1.2%, which represented loan origination fees paid at the closing.
On February 1, 2022, we settled the Term Loan using proceeds from the sale of the semiconductor automation business as discussed above.
The Company also maintained a revolving line of credit with Wells Fargo Bank, N.A. and JPMorgan Chase Bank, N.A. that provided for a revolving credit facility of up to $75.0 million. On February 1, 2022, we also terminated the revolving line of credit, which had no borrowings outstanding.
Share Repurchase Program
On September 29, 2015, our Board of Directors approved a share repurchase program for up to $50.0 million worth of our common stock. The timing and amount of any shares repurchased will be based on market and business conditions, legal requirements and other factors and repurchases may be commenced or suspended at any time at our discretion. There were no shares repurchased under this program during the nine months ended June 30, 2022 and there have been no shares repurchased under this program since its inception.
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Contractual Obligations and Requirements
At June 30, 2022, we had non-cancellable commitments of $78.6 million, comprised primarily of purchase orders for inventory of $65.0 million, information technology related commitments of $13.1 million, and China facility commitments of $0.4 million.
Off-Balance Sheet Arrangements
As of June 30, 2022, we had no obligations, assets or liabilities which would be considered off-balance sheet arrangements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to a variety of market risks, including fluctuations in foreign currency exchange rates and changes in interest rates affecting investment return on our cash and cash equivalents, restricted cash and short-term and long-term investments.
Interest Rate Exposure
Our cash and cash equivalents and restricted cash consist principally of money market securities that are short-term in nature. At June 30, 2022, our total short-term and long-term investments were $1 billion, consisting mostly of short term Treasury securities, highly rated corporate debt securities and other debt securities. At June 30, 2022, we had $7.4 million amount of securities in an unrealized loss position. A hypothetical 100 basis point change in interest rates would result in an approximate $8 million increase in interest income earned during the nine months ended June 30, 2022.
On February 1, 2022, in connection with the completion of the sale of its semiconductor automation business, the Company used $49.7 million of the cash proceeds from the sale of the semiconductor automation business to extinguish the total remaining outstanding balance of its term loan. The Company also closed its revolving credit facility of which had no borrowings. During the nine months ended June 30, 2022, we incurred cash interest expense of $0.7 million on the term loan. The term loan had a variable interest rate which subjected us to interest rate risk. Our primary interest rate risk exposure resulted from changes in the short-term LIBOR rate, the federal funds effective rate and the prime rate.
Currency Rate Exposure
We have transactions and balances denominated in currencies other than the U.S. dollar. Most of these transactions or balances are denominated in Euros, British Pounds and a variety of Asian currencies. Sales in currencies other than the U.S. dollar were approximately 37% and 42% of our total sales, respectively, during the nine months ended June 30, 2022 and 2021. These sales were made primarily by our foreign subsidiaries, which have cost structures that substantially align with the currency of sale.
In the normal course of our business, we have liquid assets denominated in non-functional currencies which include cash, short-term advances between our legal entities and accounts receivable which are subject to foreign currency exposure. Such balances were approximately $88.4 million and $119.4 million, respectively, at June 30, 2022 and September 30, 2021, and related to the Euro, British Pound and a variety of Asian currencies. We mitigate the impact of potential currency translation losses on these short-term intercompany advances by the timely settlement of each transaction, generally within 30 days. We also utilize forward contracts to mitigate our exposures to currency movement. We incurred foreign currency gains and losses of $1.9 million and $7.3 million during the nine months ended June 30, 2022 and 2021, respectively, which related to the currency fluctuation on these balances between the time the transaction occurred and the ultimate settlement of the transaction. A hypothetical 10% change in foreign exchange rates at June 30, 2022 and 2021 would result in an approximate change of $0.1 million and less than $2.7 million, respectively, in our net income during the nine months ended June 30, 2022 and 2021.
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Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures. As of the end of the period covered by this report, and pursuant to Rules 13a-15(e) and 15d-15(e) under the Exchange Act, the Company’s management, including our chief executive officer and chief financial officer, has concluded that our disclosure controls and procedures are effective.
Change in Internal Controls. There were no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
We are subject to various legal proceedings, both asserted and unasserted, that arise in the ordinary course of business. We cannot predict the ultimate outcome of such legal proceedings or in certain instances provide reasonable ranges of potential losses. However, as of the date of this Quarterly Report on Form 10-Q, we believe that none of these claims will have a material adverse effect on our consolidated financial condition or results of operations. In the event of unexpected subsequent developments and given the inherent unpredictability of these legal proceedings, there can be no assurance that our assessment of any claim will reflect the ultimate outcome and an adverse outcome in certain matters could, from time to time, have a material adverse effect on our consolidated financial condition or results of operations in particular quarterly or annual periods.
Item 1A. Risk Factors
You should carefully review and consider the information regarding certain factors that could materially affect our business, consolidated financial condition or results of operations set forth under Item 1A. Risk Factors in our 2021 Annual Report on Form 10-K as updated under Part II, Item 1A. Risk Factors in our First Quarter Form 10-Q and our Second Quarter 10-Q. There have been no material changes from the risk factors disclosed in our 2021 Annual Report on Form 10-K, First Quarter Form 10-Q and Second Quarter Form 10-Q. We may disclose changes to risk factors or additional factors from time to time in our future filings with the SEC.
Item 6. Exhibits
The following exhibits are included herein:
Exhibit No. |
| Description |
3.1 | ||
31.01 | ||
31.02 | ||
32 | ||
101 | The following material from the Company’s Quarterly Report on Form 10-Q, for the quarter ended June 30, 2022, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) the unaudited Consolidated Balance Sheets; (ii) the unaudited Consolidated Statements of Operations; (iii) the unaudited Consolidated Statements of Comprehensive Income; (iv) the unaudited Consolidated Statements of Cash Flows; (v) the unaudited Consolidated Statements of Changes in Stockholders Equity; and (vi) the Notes to the unaudited Consolidated Financial Statements. The instance document does not appear in the Interactive Data File because XBRL tags are embedded in the iXBRL document. | |
104 | Cover Page Interactive Data File (formatted as iXBRL and contained in Exhibit 101). | |
* | Certain schedules and exhibits have been omitted from this Exhibit pursuant to Item 601(a)(5) of Regulation S-K. Azenta, Inc. will furnish a copy of any omitted schedule or exhibit to the U.S. Securities and Exchange Commission or its staff upon request. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
AZENTA, INC. | |
Date: August 9, 2022 | /s/ Lindon G. Robertson |
Lindon G. Robertson | |
Executive Vice President and Chief Financial Officer | |
(Principal Financial Officer) | |
Date: August 9, 2022 | /s/ Vandana Sriram |
Vandana Sriram | |
Vice President-Finance and Corporate Controller | |
(Principal Accounting Officer) |
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