EX-99.1 2 tkno-ex99_1.htm EX-99.1 EX-99.1

Exhibit 99.1

 

img201297901_0.jpg

 

Teknova Reports Third Quarter 2024 Financial Results

 

Third quarter 2024 total revenue was $9.6 million, up 17% over the same quarter prior year

Company lowers 2024 total free cash outflow outlook to less than $16 million

Company reaffirms 2024 revenue guidance of $35-38 million

 

 

HOLLISTER, Calif., November 7, 2024 – Alpha Teknova, Inc. (“Teknova” or the “Company”) (Nasdaq: TKNO), a leading producer of critical reagents for the discovery, development, and commercialization of novel therapies, vaccines, and molecular diagnostics, today announced financial results for the third quarter ended September 30, 2024.

 

“Our year-on-year double-digit revenue growth in the third quarter gives us confidence that we have put Teknova on track for long-term success,” said Stephen Gunstream, President and Chief Executive Officer at Teknova. “We believe the difficult decisions we made to reduce expenses and raise modest amounts of capital, while retaining our core strategy, are now beginning to bear fruit. We remain confident that we’ll finish the back half of 2024 with double-digit revenue growth and look to build on this momentum as we enter 2025.”

 

“During the third quarter of 2024, we continued to deliver improved results on several key metrics over the second quarter of 2024, as we again managed our operating expenses and capital expenditures to plan. We typically see revenue soften in the fourth quarter, primarily due to fewer business days, and are thus maintaining our full-year outlook of $35-38 million of revenue while lowering our free cash outflow outlook from less than $18 million to less than $16 million,” explained Matt Lowell, Teknova’s Chief Financial Officer.

 

Corporate and Financial Updates

Third quarter 2024 total revenue of $9.6 million was up 17% compared to $8.2 million in the third quarter 2023
Total cash and short-term investments were $31.7 million and gross debt was $12.1 million at the end of the third quarter 2024
Recorded $2.8 million in non-recurring, non-cash charges related to the disposal of expired inventory and write down of excess inventory created in the second half of 2022 when we increased production in anticipation of persistent high demand. Excluding this $2.8 million charge, gross margin would have been 29.8% in the third quarter 2024

1

 


Revenue for the Third Quarter and Year-to-Date

 

 

 

For the Three Months Ended September 30,

 

 

For the Nine Months Ended September 30,

 

(Dollars in thousands)

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Lab Essentials

 

$

7,161

 

 

$

7,274

 

 

$

22,065

 

 

$

22,112

 

Clinical Solutions

 

 

1,964

 

 

 

597

 

 

 

5,247

 

 

 

5,859

 

Other

 

 

451

 

 

 

298

 

 

 

1,168

 

 

 

846

 

Total revenue

 

$

9,576

 

 

$

8,169

 

 

$

28,480

 

 

$

28,817

 

 

Third Quarter 2024 Financial Results

 

Total revenue for the third quarter 2024 was $9.6 million, up 17% compared to $8.2 million in the third quarter 2023. Lab Essentials revenue was $7.2 million in the third quarter 2024, largely unchanged from $7.3 million in the third quarter 2023. Clinical Solutions revenue was $2.0 million in the third quarter 2024, up 229% compared to $0.6 million in the third quarter 2023.

Gross profit for the third quarter 2024 was $0.1 million, compared to $1.5 million in the third quarter 2023. Gross margin for the third quarter 2024 was 0.9%, compared to 18.0% in the third quarter 2023. The decrease in gross profit percentage was attributable to a $2.8 million in non-recurring, non-cash charges related to the disposal of expired inventory and write down of excess inventory created in the second half of 2022 when we increased production in anticipation of persistent high demand. Excluding this $2.8 million charge, gross margin would have been 29.8% in the third quarter 2024, resulting in an increase in the gross profit percentage primarily driven by higher Clinical Solutions revenue coupled with reduced headcount.

 

Operating expenses for the third quarter 2024 were $7.5 million, compared to $10.2 million in the third quarter 2023. Excluding the non-recurring charges of $0.4 million recorded in the third quarter of 2023 and related to the write-off of at-the-market facility costs, operating expenses were down $2.3 million. The decrease was driven primarily by reduced headcount and spending, in particular on professional fees.

Net loss for the third quarter 2024 was $7.6 million, or negative $0.15 per diluted share, compared to $10.2 million, or negative $0.34 per diluted share, for the third quarter 2023.

Adjusted EBITDA for the third quarter 2024 was negative $5.0 million, compared to negative $5.5 million for the third quarter 2023. Excluding the $2.8 million charge, Adjusted EBITDA would have been negative $2.2 million. Free Cash Flow was negative $2.4 million for the third quarter 2024, compared to negative $5.4 million for the third quarter 2023. A full reconciliation of these non-GAAP measures to the most comparable GAAP measures is included at the end of this release.

 

Reiterates 2024 Outlook

 

Teknova is reiterating its fiscal 2024 outlook for revenue while lowering its anticipated free cash outflow. The Company continues to anticipate total revenue of $35 million to $38 million for the fiscal year ending December 31, 2024 (“2024”), which now assumes roughly 2% growth in Lab

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Essentials. The Company lowers anticipated free cash outflow from less than $18 million to less than $16 million for 2024.

 

Upcoming Investor Conference Attendance

 

Stephens Annual Investment Conference (Nashville, TN)

Wednesday, November 20, 2024

 

Conference Call and Webcast

 

Teknova will host a webcast and conference call on Thursday, November 7, 2024, beginning at 5:30 p.m. Eastern Time. To access the live webcast, listeners can log onto the call from the Investor Relations section of the Teknova website or by using this link. If you would like to participate in the call, please register for the webcast here to receive a unique PIN number and dial-in information. The webcast will be available for replay on the Company’s website approximately two hours after the event.

 

About Teknova

 

Teknova makes solutions possible. Since 1996, Teknova has been innovating the manufacture of critical reagents for the life sciences industry to accelerate the discovery and development of novel therapies that will help people live longer, healthier lives. We offer fully customizable solutions for every stage of the workflow, supporting industry leaders in cell and gene therapy, molecular diagnostics, and synthetic biology. Our fast turnaround of high-quality agar plates, microbial culture media, buffers, reagents, and water helps our customers scale seamlessly from RUO to GMP. Headquartered in Hollister, California, with over 200,000 square feet of state-of-the-art facilities, Teknova’s modular manufacturing platform was designed by our team of scientists, engineers, and quality control experts to efficiently produce the foundational ingredients for the discovery and commercialization of novel therapies.

 

Non-GAAP Financial Measures

 

This press release contains financial measures that have not been calculated in accordance with U.S. generally accepted accounting principles (GAAP). Teknova uses the following non-GAAP financial measures in assessing the performance of its business and the effectiveness of its business strategies: (a) Adjusted EBITDA and (b) Free Cash Flow.

 

Teknova defines Adjusted EBITDA as net loss adjusted for interest income (expense), net, provision for (benefit from) income taxes, depreciation expense, amortization of intangible assets, and stock-based compensation expense. Adjusted EBITDA reflects further adjustments to eliminate the impact of certain items, including certain non-cash and other items that Teknova does not consider representative of its ongoing operating performance.

 

3

 


Teknova defines Free Cash Flow as cash used in operating activities plus purchases of property, plant, and equipment.

 

Teknova provides Adjusted EBITDA and Free Cash Flow in this press release because Teknova believes that analysts, investors, and other interested parties frequently use these measures to evaluate companies in Teknova’s industry and that such measures facilitate comparisons on a consistent basis across reporting periods. Teknova also believes such measures are helpful in highlighting trends in Teknova’s operating results because they exclude items that are not indicative of Teknova’s core operating performance. Investors should consider non-GAAP financial measures in addition to, and not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP. The non-GAAP financial measures presented by Teknova may be different from the non-GAAP financial measures used by other companies.

 

A full reconciliation of these non-GAAP measures to the most comparable GAAP measures is included at the end of this release.

 

Forward-Looking Statements

 

Statements in this press release about future expectations, plans, and prospects, as well as any other statements regarding matters that are not historical facts, may constitute “forward-looking statements.” These statements include, but are not limited to, statements relating to Teknova’s anticipated total revenue, including our expectations for 2024 revenue and free cash outflow guidance, expected growth in Lab Essentials and Clinical Solutions, and other statements about Teknova’s business prospects, including about the Company’s profitability, strategy of managing operating expenses, and long-term growth strategy. The words, without limitation, “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” “would,” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these or similar identifying words. These forward-looking statements are based on management’s current expectations and beliefs and are subject to risks and uncertainties, all of which are difficult to predict and many of which are beyond Teknova’s control and could cause actual results to differ materially and adversely from those described in the forward-looking statements. These risks and uncertainties include, but are not limited to, demand for Teknova’s products (including the potential delay to or pausing of customer orders); Teknova’s assessment of fundamental indicators of future demand across its target customer base; Teknova’s cash flows and revenue growth rate; Teknova’s supply chain, sourcing, manufacturing, and warehousing; inventory management; risks related to global economic and marketplace uncertainties, including those related to the conflicts in Ukraine and the Middle East; reliance on a limited number of customers for a high percentage of Teknova’s revenue; potential acquisitions and integration of other companies; and other factors discussed in the “Risk Factors” section of Teknova’s most recent periodic reports filed with the Securities and Exchange Commission (“SEC”), including in Teknova’s Annual Report on Form 10-K for the year ended December 31, 2023, and subsequent Quarterly Reports on Form 10-Q filed with the SEC, all of which you may obtain for free on the SEC’s website at www.sec.gov. Although Teknova believes that the expectations reflected in its forward-looking statements are reasonable,

4

 


Teknova does not know whether its expectations will prove correct. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof, even if subsequently made available by Teknova on its website or otherwise. Teknova does not undertake any obligation to update, amend, or clarify these forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required under applicable securities laws.

 

Investor Contact

Matt Lowell

Chief Financial Officer

matt.lowell@teknova.com

+1 831-637-1100

 

Media Contact

Jennifer Henry

Senior Vice President, Marketing

jenn.henry@teknova.com

+1 831-313-1259

 

5

 


ALPHA TEKNOVA, INC.

Condensed Statements of Operations

(Unaudited)

(In thousands, except share and per share data)

 

 

 

For the Three Months Ended September 30,

 

 

For the Nine Months Ended September 30,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Revenue

 

$

9,576

 

 

$

8,169

 

 

$

28,480

 

 

$

28,817

 

Cost of sales

 

 

9,486

 

 

 

6,697

 

 

 

23,377

 

 

 

19,856

 

Gross profit

 

 

90

 

 

 

1,472

 

 

 

5,103

 

 

 

8,961

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

627

 

 

 

1,397

 

 

 

2,165

 

 

 

4,256

 

Sales and marketing

 

 

1,640

 

 

 

2,412

 

 

 

4,763

 

 

 

6,929

 

General and administrative

 

 

4,968

 

 

 

6,138

 

 

 

17,832

 

 

 

19,426

 

Amortization of intangible assets

 

 

287

 

 

 

287

 

 

 

861

 

 

 

860

 

Long-lived assets impairment

 

 

 

 

 

 

 

 

 

 

 

2,195

 

Total operating expenses

 

 

7,522

 

 

 

10,234

 

 

 

25,621

 

 

 

33,666

 

Loss from operations

 

 

(7,432

)

 

 

(8,762

)

 

 

(20,518

)

 

 

(24,705

)

Other expenses, net

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

(141

)

 

 

(791

)

 

 

(558

)

 

 

(1,006

)

Loss on extinguishment of debt

 

 

 

 

 

(824

)

 

 

 

 

 

(824

)

Other income, net

 

 

 

 

 

233

 

 

 

 

 

 

417

 

Total other expenses, net

 

 

(141

)

 

 

(1,382

)

 

 

(558

)

 

 

(1,413

)

Loss before income taxes

 

 

(7,573

)

 

 

(10,144

)

 

 

(21,076

)

 

 

(26,118

)

(Benefit from) provision for income taxes

 

 

(8

)

 

 

9

 

 

 

(50

)

 

 

6

 

Net loss

 

$

(7,565

)

 

$

(10,153

)

 

$

(21,026

)

 

$

(26,124

)

Net loss per share—basic and diluted

 

$

(0.15

)

 

$

(0.34

)

 

$

(0.47

)

 

$

(0.91

)

Weighted average shares used in computing net loss per share—basic and diluted

 

 

51,821,395

 

 

 

29,956,930

 

 

 

44,520,132

 

 

 

28,810,068

 

 

6

 


ALPHA TEKNOVA, INC.

Condensed Balance Sheets

(Unaudited)

(In thousands)

 

 

 

As of September 30,

 

 

As of December 31,

 

 

 

2024

 

 

2023

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

6,145

 

 

$

28,484

 

Short-term investments, held -to-maturity

 

 

25,546

 

 

 

 

Accounts receivable, net

 

 

4,605

 

 

 

3,948

 

Inventories, net

 

 

7,674

 

 

 

11,594

 

Prepaid expenses and other current assets

 

 

1,960

 

 

 

1,634

 

Total current assets

 

 

45,930

 

 

 

45,660

 

Property, plant, and equipment, net

 

 

46,715

 

 

 

50,364

 

Operating right-of-use lease assets

 

 

16,558

 

 

 

16,472

 

Intangible assets, net

 

 

13,378

 

 

 

14,239

 

Other non-current assets

 

 

1,518

 

 

 

1,852

 

Total assets

 

$

124,099

 

 

$

128,587

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

975

 

 

$

1,493

 

Accrued liabilities

 

 

4,373

 

 

 

5,579

 

Current portion of operating lease liabilities

 

 

1,843

 

 

 

1,803

 

Current portion of long-term debt

 

 

2,528

 

 

 

 

Total current liabilities

 

 

9,719

 

 

 

8,875

 

Deferred tax liabilities

 

 

867

 

 

 

919

 

Other accrued liabilities

 

 

30

 

 

 

102

 

Long-term debt, net

 

 

10,857

 

 

 

13,251

 

Long-term operating lease liabilities

 

 

15,358

 

 

 

15,404

 

Total liabilities

 

 

36,831

 

 

 

38,551

 

Stockholders’ equity:

 

 

 

 

 

 

Preferred stock

 

 

 

 

 

 

Common stock

 

 

1

 

 

 

 

Additional paid-in capital

 

 

200,079

 

 

 

181,822

 

Accumulated deficit

 

 

(112,812

)

 

 

(91,786

)

Total stockholders’ equity

 

 

87,268

 

 

 

90,036

 

Total liabilities and stockholders’ equity

 

$

124,099

 

 

$

128,587

 

 

7

 


ALPHA TEKNOVA, INC.

Condensed Statements of Cash Flows

(Unaudited)

(In thousands)

 

 

 

For the Three Months Ended September 30,

 

 

For the Nine Months Ended September 30,

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(7,565

)

 

$

(10,153

)

 

$

(21,026

)

 

$

(26,124

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

Bad debt expense

 

 

5

 

 

 

13

 

 

 

61

 

 

 

21

 

Inventory reserve

 

 

3,339

 

 

 

97

 

 

 

4,235

 

 

 

130

 

Depreciation and amortization

 

 

1,671

 

 

 

1,622

 

 

 

4,933

 

 

 

4,049

 

Stock-based compensation

 

 

760

 

 

 

1,035

 

 

 

2,900

 

 

 

3,115

 

Deferred taxes

 

 

(8

)

 

 

9

 

 

 

(52

)

 

 

5

 

Accrued interest income on short-term investments

 

 

(118

)

 

 

 

 

 

(118

)

 

 

 

Amortization of debt financing costs

 

 

103

 

 

 

205

 

 

 

291

 

 

 

415

 

Non-cash lease expense

 

 

46

 

 

 

55

 

 

 

140

 

 

 

86

 

Loss on disposal of property, plant, and equipment

 

 

 

 

 

5

 

 

 

49

 

 

 

5

 

Long-lived assets impairment

 

 

 

 

 

 

 

 

 

 

 

2,195

 

Loss on extinguishment of debt

 

 

 

 

 

824

 

 

 

 

 

 

824

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

  Accounts receivable

 

 

(13

)

 

 

(402

)

 

 

(718

)

 

 

(721

)

  Contract assets

 

 

 

 

 

1,050

 

 

 

 

 

 

 

  Inventories

 

 

(26

)

 

 

453

 

 

 

(315

)

 

 

649

 

  Income taxes receivable

 

 

 

 

 

22

 

 

 

 

 

 

22

 

  Prepaid expenses and other current assets

 

 

(1,356

)

 

 

(1,736

)

 

 

(943

)

 

 

(694

)

  Other non-current assets

 

 

128

 

 

 

78

 

 

 

334

 

 

 

300

 

  Accounts payable

 

 

(41

)

 

 

414

 

 

 

(430

)

 

 

(948

)

  Accrued liabilities

 

 

1,040

 

 

 

2,049

 

 

 

(724

)

 

 

815

 

  Other

 

 

(24

)

 

 

(22

)

 

 

(72

)

 

 

(66

)

    Cash used in operating activities

 

 

(2,059

)

 

 

(4,382

)

 

 

(11,455

)

 

 

(15,922

)

Investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

Purchases of short-term investments

 

 

(25,428

)

 

 

 

 

 

(25,428

)

 

 

 

Proceeds from sale of property, plant, and equipment

 

 

 

 

 

 

 

 

125

 

 

 

 

Purchases of property, plant, and equipment

 

 

(331

)

 

 

(972

)

 

 

(558

)

 

 

(7,622

)

    Cash used in investing activities

 

 

(25,759

)

 

 

(972

)

 

 

(25,861

)

 

 

(7,622

)

Financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from equity financing, net

 

 

15,141

 

 

 

22,915

 

 

 

15,104

 

 

 

22,915

 

Repayment of long-term debt

 

 

 

 

 

(10,000

)

 

 

 

 

 

(10,000

)

Proceeds from financed insurance premiums

 

 

385

 

 

 

1,004

 

 

 

385

 

 

 

1,004

 

Repayment of financed insurance premiums

 

 

(163

)

 

 

(294

)

 

 

(572

)

 

 

(294

)

Payment of debt issuance costs

 

 

 

 

 

 

 

 

(25

)

 

 

(24

)

Payment of at-the-market facility costs

 

 

 

 

 

 

 

 

 

 

 

(395

)

Proceeds from exercise of stock options

 

 

4

 

 

 

 

 

 

4

 

 

 

76

 

Proceeds from issuance of common stock under employee stock purchase plan

 

 

 

 

 

 

 

 

81

 

 

 

138

 

    Cash used in financing activities

 

 

15,367

 

 

 

13,625

 

 

 

14,977

 

 

 

13,420

 

Change in cash, cash equivalents, and restricted cash

 

 

(12,451

)

 

 

8,271

 

 

 

(22,339

)

 

 

(10,124

)

Cash, cash equivalents, and restricted cash at beginning of period

 

 

18,596

 

 

 

23,841

 

 

 

28,484

 

 

 

42,236

 

Cash, cash equivalents, and restricted cash at end of period

 

$

6,145

 

 

$

32,112

 

 

$

6,145

 

 

$

32,112

 

 

8

 


ALPHA TEKNOVA, INC.

Reconciliation of Non-GAAP Measures to the Most Comparable GAAP Measures

(Unaudited)

(In thousands)

 

 

 

For the Three Months Ended September 30,

 

 

For the Nine Months Ended September 30,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Net loss – as reported

 

$

(7,565

)

 

$

(10,153

)

 

$

(21,026

)

 

$

(26,124

)

Add back:

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

(141

)

 

 

(791

)

 

 

(558

)

 

 

(1,006

)

(Benefit from) provision for income taxes

 

 

(8

)

 

 

9

 

 

 

(50

)

 

 

6

 

Depreciation expense

 

 

1,384

 

 

 

1,335

 

 

 

4,072

 

 

 

3,189

 

Amortization of intangible assets

 

 

287

 

 

 

287

 

 

 

861

 

 

 

860

 

EBITDA

 

$

(5,761

)

 

$

(7,731

)

 

$

(15,585

)

 

$

(21,063

)

Other and non-recurring expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

760

 

 

 

1,035

 

 

 

2,900

 

 

 

3,115

 

Severance pay and other termination benefits

 

 

 

 

 

 

 

 

1,287

 

 

 

725

 

Long-lived assets impairment

 

 

 

 

 

 

 

 

 

 

 

2,195

 

Loss on extinguishment of debt

 

 

 

 

 

824

 

 

 

 

 

 

824

 

Write-off of at-the-market facility costs

 

 

 

 

 

395

 

 

 

 

 

 

395

 

Loss contingency

 

 

 

 

 

 

 

 

73

 

 

 

 

Adjusted EBITDA

 

$

(5,001

)

 

$

(5,477

)

 

$

(11,325

)

 

$

(13,809

)

 

 

 

For the Three Months Ended September 30,

 

 

For the Nine Months Ended September 30,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Cash used in operating activities

 

$

(2,059

)

 

$

(4,382

)

 

$

(11,455

)

 

$

(15,922

)

Purchases of property, plant, and equipment

 

 

(331

)

 

 

(972

)

 

 

(558

)

 

 

(7,622

)

Free Cash Flow

 

$

(2,390

)

 

$

(5,354

)

 

$

(12,013

)

 

$

(23,544

)

 

9