Azenta, Inc. Q1 FY2026 earnings call

• Operational excellence is driven by Azenta business system (ABS) guiding operations, with teams embracing continuous improvement. - Simplified and decentralized operating model supports faster decision-making. - Core growth investments in scaling biorepositories, regionalizing gene synthesis, and technology/automation are gaining traction. - Announced sale of B Medical, expected to close by March 31, sharpening focus on core portfolio and enhancing financial flexibility. - $250 million share repurchase authorization supports capital allocation strategy.

Sample Management Solutions (SMS) delivered revenue of $81 million for the quarter, flat on a reported basis and down 2% organically. Growth in biorepositories was offset by softness in automated stores and cryo. Consumables and instruments showed modest year-over-year growth. Multiomics revenue was $67 million, up 1% on a reported basis and flat organically. Next-generation sequencing and gene synthesis grew, but Sanger sequencing declined. Geographically, Europe and Asia performed strongly, while North America was softer.

• Reaffirms organic revenue growth for fiscal 2026 in the range of 3% to 5%. - Anticipates adjusted EBITDA margin expansion of approximately 300 basis points. - Expects second half of 2026 to accelerate as commercial investments and growth initiatives gain traction. - Targets over 30% year-over-year improvement in free cash flow generation.

• Macro conditions and capital spending uncertainty impacting bookings and revenue. - Government shutdown at end of calendar year causing timing shifts in orders. - Quality issues in automated stores projects leading to higher costs, with remediation efforts ongoing. - Softness in North America market due to macro-driven budget constraints and government shutdown impact. - Sanger sequencing decline from end market perspective and geopolitical instability.

Q: Talk about confidence in getting SMS margins back and EBITDA margin guidance.

A: John Marotta and Laurence Flynn discussed ongoing efforts to address quality issues, North America commercial reboot, and reiterated full-year guidance, emphasizing not managing on quarters but long-term turnaround.

Q: Expectations for top-line performance in 2Q and cadence from 2Q to 3Q?

A: Laurence Flynn stated second quarter likely to show uplift vs first quarter, with growth weighted to second half.

Q: Performance in US academic end market given NIH budgets flat?

A: John Marotta noted shift in NIH funding, government shutdown impact, and focus on pharma/biotech, with support for academic customers and Core Labs.

Q: Update on bundling and cross-selling?

A: John Marotta mentioned bundling within segments (e.g., multiomics one-stop shop, C&I instruments/consumables bundling) is progressing well.

Q: Capital deployment and share repurchase?

A: John Marotta stated they are pulling multiple levers including M&A and share repurchase, actively working on M&A and considering all capital allocation options.