Azenta, Inc 10-Q for FY2022 Q3

Azenta, Inc. (AZTA)

10-Q 2022-08-09 For: 2022-06-30

Added on April 09, 2026

About this 10-Q

Azenta, Inc filed this 10-Q on August 9, 2022, covering the quarter ended June 30, 2022 (FY2022 Q3).

Headline figures

Quarter ended June 30, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $132.74M; up 2.8% from $129.09M a year earlier
Net loss: $9.57M; compared with net income of $39.17M a year earlier
Diluted EPS: -$0.13; compared with $0.53 a year earlier

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☒	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

	For the quarterly period ended: June 30, 2022

	OR

☐	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934


Delaware	04-3040660
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	AZTA	The Nasdaq Stock Market LLC


Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☐

	PAGE NUMBER

PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets as of June 30, 2022 and September 30, 2021 (unaudited)	3
Consolidated Statements of Operations for the three and nine months ended June 30, 2022 and 2021 (unaudited)	4
Consolidated Statements of Comprehensive (Loss) Income for the three and nine months ended June 30, 2022 and 2021 (unaudited)	5
Consolidated Statements of Cash Flows for the nine months ended June 30, 2022 and 2021 (unaudited)	6
Consolidated Statements of Changes in Stockholders Equity for the three and nine months ended June 30, 2022 and 2021 (unaudited)	7
Notes to Consolidated Financial Statements (unaudited)	8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	35
Item 3. Quantitative and Qualitative Disclosures About Market Risk	50
Item 4. Controls and Procedures	51
PART II. OTHER INFORMATION
Item 1. Legal Proceedings	52
Item 1A. Risk Factors	52
Item 6. Exhibits	52
Signatures	53


	June 30,		September 30,
	2022		2021


Assets
Current assets
Cash and cash equivalents	$	1,474,189	$	227,427
Marketable securities		709,063		81
Accounts receivable, net of allowance for expected credit losses ($4,326 and $4,318, respectively)		150,274		119,877
Inventories		81,213		60,398
Prepaid expenses and other current assets		160,557		58,198
Current assets held for sale		—		311,385
Total current assets		2,575,296		777,366
Property, plant and equipment, net		154,596		130,719
Long-term marketable securities		312,027		3,598
Long-term deferred tax assets		1,926		10,043
Goodwill		464,885		469,356
Intangible assets, net		160,691		186,534
Other assets		53,296		58,068
Non-current assets held for sale		—		183,828
Total assets	$	3,722,717	$	1,819,512
Liabilities and stockholders' equity
Current liabilities
Accounts payable	$	34,576	$	42,360
Deferred revenue		33,132		25,724
Accrued warranty and retrofit costs		2,524		2,330
Accrued compensation and benefits		44,279		33,183
Accrued restructuring costs		169		304
Accrued income taxes payable		7,095		8,711
Accrued expenses and other current liabilities		73,152		103,537
Current liabilities held for sale		—		128,939
Total current liabilities		194,927		345,088
Long-term debt		—		49,677
Long-term tax reserves		1,681		1,973
Long-term deferred tax liabilities		44,286		13,030
Long-term pension liabilities		698		705
Long-term operating lease liabilities		46,719		45,088
Other long-term liabilities		6,620		6,173
Non-current liabilities held for sale		—		32,444
Total liabilities		294,931		494,178
Commitments and contingencies (Note 16)
Stockholders' equity
Preferred stock, $0.01 par value - 1,000,000 shares authorized, no shares issued or outstanding		—		—
Common stock, $0.01 par value - 125,000,000 shares authorized, 88,451,223 shares issued and 74,989,354 shares outstanding at June 30, 2022, 87,808,922 shares issued and 74,347,053 shares outstanding at September 30, 2021		885		878
Additional paid-in capital		1,990,281		1,976,112
Accumulated other comprehensive income		(38,493)		19,351
Treasury stock, at cost - 13,461,869 shares at June 30, 2022 and September 30, 2021		(200,956)		(200,956)
Retained earnings (accumulated deficit)		1,676,069		(470,051)
Total stockholders' equity		3,427,786		1,325,334
Total liabilities and stockholders' equity	$	3,722,717	$	1,819,512


	Three Months Ended				Nine Months Ended
	June 30,				June 30,
	2022		2021		2022		2021

Revenue
Products	$	42,688	$	44,169	$	138,006	$	131,864
Services		90,047		84,918		279,925		244,900
Total revenue		132,735		129,087		417,931		376,764
Cost of revenue
Products		24,090		23,603		73,565		69,183
Services		49,045		43,053		146,897		129,915
Total 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)		(9,847)
Interest income		6,822		409		9,933		503
Interest expense		(2,101)		(477)		(4,111)		(1,485)
Loss on extinguishment of debt		—		—		(632)		—
Other income (expenses), net		630		(1,651)		(1,617)		(263)
Income (loss) before income taxes		278		(2,602)		(6,533)		(11,092)
Income tax provision (benefit)		7,293		(760)		(560)		(4,620)
Loss from continuing operations		(7,015)		(1,842)		(5,973)		(6,472)
(Loss) income from discontinued operations, net of tax		(2,555)		41,008		2,159,597		95,414
Net (loss) income	$	(9,570)	$	39,166	$	2,153,624	$	88,942
Basic net (loss) income per share:
Loss from continuing operations	$	(0.09)	$	(0.02)	$	(0.08)	$	(0.09)
(Loss) income from discontinued operations, net of tax		(0.03)		0.55		28.84		1.29
Basic net (loss) income per share	$	(0.13)	$	0.53	$	28.76	$	1.20
Diluted net (loss) income per share:
Loss from continuing operations	$	(0.09)	$	(0.02)	$	(0.08)	$	(0.09)
(Loss) income from discontinued operations, net of tax		(0.03)		0.55		28.84		1.29
Diluted net (loss) income per share	$	(0.13)	$	0.53	$	28.76	$	1.20
Weighted average shares used in computing net income per share:
Basic		74,989		74,296		74,879		74,195
Diluted		74,989		74,296		74,879		74,195


		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	88,450,083	$	885	$	1,986,796	$	(7,398)	$	1,685,649	$	(200,956)	$	3,464,976
Shares issued under restricted stock and purchase plans, net	1,140		—		—		—		—		—		—
Stock-based compensation	—		—		3,485		—		—		—		3,485
Net investment hedge currency translation adjustment	—		—		—		41,956		—		—		41,956
Foreign currency translation adjustments	—		—		—		(70,179)		—		—		(70,179)
Changes in unrealized gains on marketable securities, net of tax	—		—		—		(2,898)		—		—		(2,898)
Actuarial loss, net of tax effects of $7	—		—		—		26		—		—		26
Net income	—		—		—		—		(9,570)		—		(9,570)
Other	—		—		—		—		(10)		—		(10)
Balance June 30, 2022	88,451,223	$	885	$	1,990,281	$	(38,493)	$	1,676,069	$	(200,956)	$	3,427,786

Balance March 31, 2021	87,755,666	$	878	$	1,959,619	$	22,637	$	(516,152)	$	(200,956)	$	1,266,026
Shares issued under restricted stock and purchase plans, net	2,932		—		—		—		—		—		—
Stock-based compensation	—		—		6,086		—		—		—		6,086
Common stock dividends declared, at $0.10 per share	—		—		—		—		(7,431)		—		(7,431)
Foreign currency translation adjustments	—		—		—		4,003		—		—		4,003
Actuarial losses, net of tax effects of $2	—		—		—		(21)		—		—		(21)
Net income	—		—		—		—		39,166		—		39,166
Balance June 30, 2021	87,758,598	$	878	$	1,965,705	$	26,619	$	(484,417)	$	(200,956)	$	1,307,829

Balance September 30, 2021	87,808,922	$	878	$	1,976,112	$	19,351	$	(470,051)	$	(200,956)	$	1,325,334
Shares issued under restricted stock and purchase plans, net	642,301		7		3,454		—		—		—		3,461
Stock-based compensation	—				10,715		—		—		—		10,715
Common stock dividends declared, at $0.10 per share	—		—		—		—		(7,494)		—		(7,494)
Net investment hedge currency translation adjustment	—		—		—		49,081		—		—		49,081
Foreign currency translation adjustments reclassed out of accumulated other comprehensive income related to discontinued operations	—		—		—		(16,567)		—		—		(16,567)
Foreign currency translation adjustments	—		—		—		(85,160)		—		—		(85,160)
Changes in unrealized gains on marketable securities, net of tax	—		—		—		(5,306)		—		—		(5,306)
Actuarial loss, net of tax effects of $27	—		—		—		108		—		—		108
Net income	—		—		—		—		2,153,624		—		2,153,624
Other	—		—		—		—		(10)		—		(10)
Balance June 30, 2022	88,451,223	$	885	$	1,990,281	$	(38,493)	$	1,676,069	$	(200,956)	$	3,427,786

Balance September 30, 2020	87,293,710	$	873	$	1,942,850	$	21,919	$	(551,072)	$	(200,956)	$	1,213,614
Shares issued under restricted stock and purchase plans, net	464,888		5		2,578		—		—		—		2,583
Stock-based compensation	—		—		20,277		—		—		—		20,277
Common stock dividends declared, at $0.30 per share	—		—		—		—		(22,287)		—		(22,287)
Foreign currency translation adjustments	—		—		—		4,720		—		—		4,720
Actuarial losses, net of tax effects of $4	—		—		—		(20)		—		—		(20)
Net income	—		—		—		—		88,942		—		88,942
Balance June 30, 2021	87,758,598	$	878	$	1,965,705	$	26,619	$	(484,417)	$	(200,956)	$	1,307,829



	Three months ended June 30,				Nine Months Ended June 30,
	2022		2021		2022		2021
Revenue
Products	$	-	$	171,674	$	244,962	$	433,964
Services		-		14,588		19,468		40,710
Total revenue		-		186,262		264,430		474,674
Cost of revenue
Products		-		96,784		141,165		248,288
Services		-		7,509		11,159		19,250
Total cost of revenue		-		104,293		152,324		267,538
Gross profit		-		81,969		112,106		207,136
Operating expenses
Research and development		-		12,795		18,486		35,497
Selling, general and administrative		480		18,058		30,622		49,998
Restructuring charges		-		-		-		126
Total operating expenses		480		30,853		49,108		85,621
Operating (loss) income		(480)		51,116		62,998		121,515
Other income, net		-		26		-		(1,300)
(Loss) gain on divestiture		(990)		-		2,560,384		-
(Loss) income before income taxes		(1,470)		51,142		2,623,382		120,215
Income tax provision		1,085		10,134		463,785		24,801
Net (loss) income from discontinued operations	$	(2,555)	$	41,008	$	2,159,597	$	95,414


		September 30, 2021
Assets
Cash and cash equivalents	$	45,000
Accounts receivable, net		142,256
Inventories		110,735
Other current assets		13,394
Total current assets of discontinued operation	$	311,385

Property, plant and equipment, net	$	32,058
Long-term deferred tax assets		3,167
Goodwill		81,477
Intangibles, net		44,468
Other assets		22,658
Total long-term assets of discontinued operation	$	183,828

Liabilities
Accounts payable	$	68,074
Deferred revenue		7,141
Accrued warranty and retrofit costs		6,081
Accrued compensation and benefits		18,144
Accrued Income Taxes		11,702
Accrued expenses and other current liabilities		18,014
Total current liabilities of discontinued operation	$	129,156

Long-term tax reserves		2,356
Long-term deferred tax liabilities		6,548
Long-term pension liabilities		5,490
Long-term operating lease liabilities		15,425
Other long-term liabilities		2,625
Total long-term liabilities of discontinued operation	$	32,444


			Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Losses		Gains		Fair Value
June 30, 2022:
U.S. Treasury securities and obligations of U.S. government agencies	$	536,322	$	(2,981)	$	93	$	533,434
Bank certificates of deposits		6,341		(45)		—		6,296
Corporate securities		372,922		(4,009)		159		369,072
Municipal securities		112,621		(334)		1		112,288
	$	1,028,206	$	(7,369)	$	253	$	1,021,090
September 30, 2021:
Bank certificates of deposits	$	30	$	—	$	—	$	30
Corporate securities		3,624		—		—		3,624
Municipal securities		—		—		—		—
Other debt securities		25		—		—		25
	$	3,679	$	—	$	—	$	3,679



	Life Sciences		Life Sciences
	Products		Services		Total
Balance, at September 30, 2021		110,138		359,218		469,356
Adjustments		(4,422)		(49)		(4,471)
Balance, at June 30, 2022	$	105,716	$	359,169	$	464,885


	June 30, 2022						September 30, 2021
			Accumulated		Net Book				Accumulated		Net Book
	Cost		Amortization		Value		Cost		Amortization		Value
Patents	$	1,226	$	1,077	$	149	$	1,242	$	1,002	$	240
Completed technology		74,361		37,029		37,332		75,527		32,383		43,144
Trademarks and trade names		424		56		368		424		33		391
Non-competition agreements		681		391		290		681		249		432
Customer relationships		249,277		126,725		122,552		253,486		111,159		142,327
Other intangibles		220		220		—		246		246		—
	$	326,189	$	165,498	$	160,691	$	331,606	$	145,072	$	186,534


2022	$	6,121
2023		30,845
2024		27,354
2025		22,574
2026		19,435
Thereafter		54,362
	$	160,691


	June 30, 2022			September 30, 2021
Operating Leases:
Operating lease right-of-use assets	$	50,748		$	49,650

Accrued expenses and other current liabilities	$	5,919		$	5,254
Long-term operating lease liabilities		46,719			45,088
Total operating lease liabilities	$	52,638		$	50,342

Finance Leases:
Property, plant and equipment, at cost	$	2,252		$	2,252
Accumulated amortization		(2,252)			(2,105)
Property, plant and equipment, net	$	-		$	147

Accrued expenses and other current liabilities	$	2		$	360
Other long-term liabilities		(10)			(10)
Total finance lease liabilities	$	(8)		$	350

Weighted average remaining lease term (in years):
Operating leases		11.63			11.33
Finance leases		-			0.53

Weighted average discount rate:
Operating leases		4.02	%		3.90	%
Finance leases		0	%		4.87	%



	Amortized
	Cost			Fair Value
Due in one year or less	$	711,599	$	708,895
Due after one year through five years		313,633		309,221
Due after five years through ten years		—		—
Due after ten years		2,974		2,974
Total marketable securities	$	1,028,206	$	1,021,090


	Operating Leases
2022	$	2,048
2023		7,797
2024		6,356
2025		5,909
2026		5,830
2027		5,634
Thereafter		34,301
Total future lease payments		67,875
Less imputed interest		(15,237)
Total lease liability balance	$	52,638


	June 30,		September 30,
	2022		2021
Inventories
Raw materials and purchased parts	$	35,594	$	27,644
Work-in-process		5,855		4,787
Finished goods		39,764		27,967
Total inventories	$	81,213	$	60,398


Activity -Three Months Ended June 30, 2022
Balance						Balance
March 31,						June 30,
2022		Accruals		Costs Incurred		2022
$	2,491	$	663	$	(630)	$	2,524

Activity -Three Months Ended June 30, 2021
Balance						Balance
March 31,						June 30,
2021		Accruals		Costs Incurred		2021
$	2,182	$	858	$	(703)	$	2,337

Activity -Nine Months Ended June 30, 2022
Balance						Balance
September 30,						June 30,
2021		Accruals		Costs Incurred		2022
$	2,330	$	1,875	$	(1,681)	$	2,524

Activity -Nine Months Ended June 30, 2021
Balance						Balance
September 30,						June 30,
2020		Accruals		Costs Incurred		2021
$	2,211	$	1,671	$	(1,545)	$	2,337


		Time-Based	Stock	Performance-
	Total Units	Units	Grants	Based Units
Nine months ended June 30, 2022	231,696	94,429	49,063	88,204
Nine months ended June 30, 2021	346,172	162,842	14,683	168,647


		Weighted
		Average
		Grant-Date
	Shares	Fair Value
Outstanding at September 30, 2021	1,088,652	$	47.35
Granted	231,696		103.00
Vested	(555,513)		41.50
Forfeited	(223,821)		39.51
Outstanding at June 30, 2022	541,014		93.96


	As of June 30, 2022
	Less than 1 Year		Greater than 1 Year		Total
Remaining Performance Obligations	$	35,662	$	28,010	$	63,672


			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	$	330,546	$	330,546	$	—	$	—
Available-for-sale securities		1,021,090		417,059		604,031		—
Foreign exchange contracts		32		—		32		—
Net investment hedge		65,814		—		65,814		—
Total assets	$	1,417,482	$	747,605	$	669,877	$	—
Liabilities:
Foreign exchange contracts		294		—		294		—
Total liabilities	$	294	$	—	$	294	$	—


	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


	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	%


Exhibit No.		Description

3.1		Agreement on the Sale and Transfer of Shares, dated as of June 7, 2022, by and among Azenta Germany GmbH, Thomas Barkey, Swissfinity I Beteiligungs and Christian Barkey (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed on June 8, 2022).
31.01		Certification of the Company’s Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.02		Certification of the Company’s Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32		Certification of the Company’s Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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.


	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)


/S/ STEPHEN S. SCHWARTZ
Stephen S. Schwartz
Chief Executive Officer

Date: August 9, 2022


/S/ LINDON G. ROBERTSON
Lindon G. Robertson
Executive Vice President and Chief Financial Officer

Date: August 9, 2022



	Dated: August 9, 2022		/S/ STEPHEN S. SCHWARTZ
			Stephen S. Schwartz
			Director and Chief Executive Officer
			(Principal Executive Officer)

	Dated: August 9, 2022		/S/ LINDON G. ROBERTSON
			Lindon G. Robertson
			Executive Vice President and
			Chief Financial Officer
			(Principal Financial Officer)