HOLLISTER, Calif., March 11, 2024 (GLOBE NEWSWIRE) -- 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 fourth quarter and full year ended December 31, 2023.
“Our performance in 2023 validates the difficult but transformative changes we have made over the last twelve months,” said Stephen Gunstream, President and Chief Executive Officer of Teknova. He continued, “Our business has demonstrated its ability to withstand challenging market conditions, with signs of positive momentum, while realizing substantial cost reductions across the enterprise. These efforts, combined with a focus on the core of our strategy moving forward, will allow us not only to execute on our key business initiatives but also to be more agile and more responsive to our customers.”
Matt Lowell, Teknova’s Chief Financial Officer, added, “With our cost reduction program in place, we have lowered our Adjusted EBITDA break-even revenue to $50-55 million. Based on our revenue guidance and recent cost savings measures, we anticipate full-year free cash outflow of less than $18 million in 2024,” he explained.
Corporate and Financial Updates
Revenue for the Fourth Quarter and Full Year 2023
| For the Three Months Ended December 31, | For the Twelve Months Ended December 31, | |||||||||||||||
| (Dollars in thousands) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Lab Essentials | $ | 6,688 | $ | 6,934 | $ | 28,800 | $ | 31,772 | ||||||||
| Clinical Solutions | 879 | 772 | 6,738 | 8,445 | ||||||||||||
| Other | 300 | 185 | 1,146 | 1,203 | ||||||||||||
| Total revenue | $ | 7,867 | $ | 7,891 | $ | 36,684 | $ | 41,420 | ||||||||
Fourth Quarter 2023 Financial Results
Total revenue for the fourth quarter 2023 was $7.9 million, flat compared to $7.9 million in the fourth quarter 2022. Lab Essentials revenue was $6.7 million in the fourth quarter 2023, down 4% compared to $6.9 million in the fourth quarter 2022. Clinical Solutions revenue was $0.9 million, up 14% compared to $0.8 million in the fourth quarter 2022.
Gross profit for the fourth quarter 2023 was $1.3 million, compared to $2.1 million in the fourth quarter 2022. Gross margin for the fourth quarter 2023 was 17.0%, compared to 26.7% in the fourth quarter 2022. The decrease in gross profit percentage was driven primarily by increased overhead costs (owing to the completion of our new manufacturing facilities), which were partially offset by reduced headcount.
Operating expenses for the fourth quarter 2023 were $12.2 million, compared to $16.3 million in the fourth quarter 2022. Excluding the non-recurring charges of $0.3 million related to a loss contingency and the $2.2 million non-cash tradename impairment charge, both recorded in the fourth quarter 2023, and the non-cash long-lived asset impairment charge of $4.2 million recorded in the fourth quarter 2022, operating expenses were down $2.4 million. The decrease was driven primarily by reduced headcount and spending, in particular in professional fees.
Net loss for the fourth quarter 2023 was $10.7 million, or negative $0.26 per diluted share, compared to $13.3 million, or negative $0.47 per diluted share, for the fourth quarter 2022.
Adjusted EBITDA for the fourth quarter 2023 was negative $5.4 million, compared to negative $8.1 million for the fourth quarter 2022. Free Cash Flow was negative $3.1 million for the fourth quarter 2023, compared to negative $12.8 million for the fourth quarter 2022.
Full Year 2023 Financial Results
Total revenue was $36.7 million for the year ended December 31, 2023 (“2023”), an 11% decrease from $41.4 million for the year ended December 31, 2022 (“2022”). Lab Essentials revenue was $28.8 million in 2023, down 9% compared to $31.8 million in 2022. Clinical Solutions revenue was $6.7 million, down 20% compared to $8.4 million in 2022.
Gross profit for 2023 was $10.3 million, compared to $17.5 million in 2022. Gross margin for 2023 was 28.1%, compared to 42.2% in 2022. The decrease in gross profit percentage was driven primarily by the decrease in revenue and associated lower absorption of fixed manufacturing costs, and to a lesser extent by increased overhead costs (owing to the completion of our new manufacturing facilities), which were partially offset by reduced headcount.
Operating expenses for 2023 were $45.9 million, compared to $67.1 million in 2022. The decrease was primarily related to a one-time, $16.6 million non-cash goodwill impairment charge, coupled with reduced headcount and spending, in particular in professional fees.
Net loss for 2023 was $36.8 million, or negative $1.16 per diluted share, compared to $47.5 million, or negative $1.69 per diluted share, for 2022.
Adjusted EBITDA for 2023 was negative $19.2 million, compared to negative $21.9 million for 2022. Free Cash Flow was negative $26.6 million for 2023, compared to negative $55.5 million for 2022.
2024 Outlook
Teknova anticipates total revenue of $35 million to $38 million for the fiscal year ending December 31, 2024 (“2024”), which assumes roughly 10% growth in Lab Essentials and the remaining revenue from Clinical Solutions. The Company also anticipates free cash outflow of less than $18 million for 2024.
Upcoming Investor Conference Presentations
KeyBanc Capital Markets Life Sciences & MedTech Forum (Virtual)
March 19 - 20, 2024
Fireside Chat: 10:30 a.m. ET, Wednesday, March 20, 2024
Conference Call and Webcast
Teknova will host a webcast and conference call on Monday, March 11, 2024, beginning at 5:30 p.m. ET. Participants can access the live webcast on the Investor Relations section of the Teknova website and at this link: https://edge.media-server.com/mmc/p/qqayy3wz. To receive a PIN for dialing in, participants can register for the webcast via this link: https://register.vevent.com/register/BI6c01344c805a4906b6dc3b443dd64af3. 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.
Teknova defines Free Cash Flow as cash used in operating activities less 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, ongoing capacity expansion, new research and development products, prospects, including to achieve 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 uncertainties and factors, 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, the fact that the Company’s fourth quarter and year-end financial closing procedures, annual accounting procedures and adjustments, and annual audit of its financial statements are not yet complete; demand for Teknova’s products (including the potential delay or pausing of customer orders); Teknova’s assessment of fundamental indicators of future demand across its target customer base; Teknova’s ability to expand its production, commercial, and research and development capabilities; 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 lingering impacts of the COVID-19 pandemic and 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, 2022, 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, 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
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+1 831-637-1100
Media Contact
Jennifer Henry
Senior Vice President, Marketing
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+1 831-313-1259
| ALPHA TEKNOVA, INC. Condensed Statements of Operations (Unaudited) (In thousands, except share and per share data) | ||||||||||||||||
| For the Three Months Ended December 31, | For the Twelve Months Ended December 31, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Revenue | $ | 7,867 | $ | 7,891 | $ | 36,684 | $ | 41,420 | ||||||||
| Cost of sales | 6,532 | 5,781 | 26,388 | 23,944 | ||||||||||||
| Gross profit | 1,335 | 2,110 | 10,296 | 17,476 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | 1,311 | 1,870 | 5,567 | 7,737 | ||||||||||||
| Sales and marketing | 2,401 | 2,559 | 9,330 | 9,151 | ||||||||||||
| General and administrative | 6,024 | 7,442 | 25,450 | 28,298 | ||||||||||||
| Amortization of intangible assets | 288 | 287 | 1,148 | 1,148 | ||||||||||||
| Goodwill impairment | — | — | — | 16,613 | ||||||||||||
| Tradename impairment | 2,169 | — | 2,169 | — | ||||||||||||
| Long-lived assets impairment | — | 4,188 | 2,195 | 4,188 | ||||||||||||
| Total operating expenses | 12,193 | 16,346 | 45,859 | 67,135 | ||||||||||||
| Loss from operations | (10,858 | ) | (14,236 | ) | (35,563 | ) | (49,659 | ) | ||||||||
| Other (expenses) income, net | ||||||||||||||||
| Interest (expense) income, net | (440 | ) | 128 | (1,446 | ) | 213 | ||||||||||
| Other income, net | 338 | 19 | 755 | 55 | ||||||||||||
| Loss on extinguishment of debt | — | — | (824 | ) | — | |||||||||||
| Total other (expenses) income, net | (102 | ) | 147 | (1,515 | ) | 268 | ||||||||||
| Loss before income taxes | (10,960 | ) | (14,089 | ) | (37,078 | ) | (49,391 | ) | ||||||||
| Benefit from income taxes | (304 | ) | (795 | ) | (298 | ) | (1,923 | ) | ||||||||
| Net loss | $ | (10,656 | ) | $ | (13,294 | ) | $ | (36,780 | ) | $ | (47,468 | ) | ||||
| Net loss per share—basic and diluted | $ | (0.26 | ) | $ | (0.47 | ) | $ | (1.16 | ) | $ | (1.69 | ) | ||||
| Weighted average shares used in computing net loss per share—basic and diluted | 40,750,760 | 28,090,267 | 31,819,776 | 28,083,563 | ||||||||||||
| ALPHA TEKNOVA, INC. Condensed Balance Sheets (Unaudited) (In thousands) | ||||||||
| As of December 31, | As of December 31, | |||||||
| 2023 | 2022 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 28,594 | $ | 42,236 | ||||
| Accounts receivable, net | 3,948 | 4,261 | ||||||
| Inventories, net | 11,594 | 12,247 | ||||||
| Income taxes receivable | — | 22 | ||||||
| Prepaid expenses and other current assets | 1,524 | 2,374 | ||||||
| Total current assets | 45,660 | 61,140 | ||||||
| Property, plant, and equipment, net | 50,364 | 51,577 | ||||||
| Operating right-of-use lease assets | 16,472 | 19,736 | ||||||
| Intangible assets, net | 14,239 | 17,556 | ||||||
| Other non-current assets | 1,852 | 2,252 | ||||||
| Total assets | $ | 128,587 | $ | 152,261 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 1,493 | $ | 2,449 | ||||
| Accrued liabilities | 5,579 | 6,203 | ||||||
| Current portion of operating lease liabilities | 1,803 | 2,223 | ||||||
| Total current liabilities | 8,875 | 10,875 | ||||||
| Deferred tax liabilities | 919 | 1,223 | ||||||
| Other accrued liabilities | 102 | 191 | ||||||
| Long-term debt, net | 13,251 | 21,976 | ||||||
| Long-term operating lease liabilities | 15,404 | 18,111 | ||||||
| Total liabilities | 38,551 | 52,376 | ||||||
| Stockholders’ equity: | ||||||||
| Preferred stock | — | — | ||||||
| Common stock | — | — | ||||||
| Additional paid-in capital | 181,822 | 154,891 | ||||||
| Accumulated deficit | (91,786 | ) | (55,006 | ) | ||||
| Total stockholders’ equity | 90,036 | 99,885 | ||||||
| Total liabilities and stockholders’ equity | $ | 128,587 | $ | 152,261 | ||||
| ALPHA TEKNOVA, INC. Condensed Statements of Cash Flows (Unaudited) (In thousands) | ||||||||||||||||
| For the Three Months Ended December 31, | For the Twelve Months Ended December 31, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Operating activities: | ||||||||||||||||
| Net loss | $ | (10,656 | ) | $ | (13,294 | ) | $ | (36,780 | ) | $ | (47,468 | ) | ||||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||||||||
| Bad debt expense | — | (9 | ) | 21 | 25 | |||||||||||
| Inventory reserve | 193 | 519 | 323 | 697 | ||||||||||||
| Depreciation and amortization | 1,611 | 893 | 5,660 | 3,165 | ||||||||||||
| Stock-based compensation | 1,022 | 1,022 | 4,137 | 3,711 | ||||||||||||
| Deferred taxes | (309 | ) | (805 | ) | (304 | ) | (1,930 | ) | ||||||||
| Amortization of debt financing costs | 83 | 119 | 498 | 278 | ||||||||||||
| Non-cash lease expense | 51 | 73 | 137 | 329 | ||||||||||||
| Loss on disposal of property, plant, and equipment | 52 | 116 | 57 | 326 | ||||||||||||
| Goodwill impairment | — | — | — | 16,613 | ||||||||||||
| Tradename impairment | 2,169 | — | 2,169 | — | ||||||||||||
| Long-lived assets impairment | — | 4,188 | 2,195 | 4,188 | ||||||||||||
| Loss on extinguishment of debt | — | — | 824 | — | ||||||||||||
| Changes in operating assets and liabilities: | ||||||||||||||||
| Accounts receivable | 1,013 | 1,329 | 292 | 380 | ||||||||||||
| Contract assets | — | 667 | — | — | ||||||||||||
| Inventories | (319 | ) | (2,443 | ) | 330 | (7,550 | ) | |||||||||
| Income taxes receivable | — | 98 | 22 | 1,166 | ||||||||||||
| Prepaid expenses and other current assets | 935 | 1,147 | 241 | 64 | ||||||||||||
| Other non-current assets | 100 | (1,076 | ) | 400 | (2,072 | ) | ||||||||||
| Accounts payable | 175 | (397 | ) | (773 | ) | 572 | ||||||||||
| Accrued liabilities | 1,121 | (155 | ) | 1,936 | 188 | |||||||||||
| Other | (23 | ) | (21 | ) | (89 | ) | (82 | ) | ||||||||
| Cash used in operating activities | (2,782 | ) | (8,029 | ) | (18,704 | ) | (27,400 | ) | ||||||||
| Investing activities: | ||||||||||||||||
| Proceeds from sale of property, plant, and equipment | 197 | — | 197 | — | ||||||||||||
| Purchases of property, plant, and equipment | (312 | ) | (4,730 | ) | (7,934 | ) | (28,149 | ) | ||||||||
| Cash used in investing activities | (115 | ) | (4,730 | ) | (7,737 | ) | (28,149 | ) | ||||||||
| Financing activities: | ||||||||||||||||
| Proceeds from equity financing, net | (412 | ) | — | 22,503 | — | |||||||||||
| Repayment of long-term debt | — | — | (10,000 | ) | — | |||||||||||
| Proceeds from financed insurance premiums | — | — | 1,004 | — | ||||||||||||
| Repayment of financed insurance premiums | (300 | ) | — | (594 | ) | — | ||||||||||
| Proceeds from long-term debt | — | 5,000 | — | 10,135 | ||||||||||||
| Payment of debt issuance costs | (23 | ) | (21 | ) | (47 | ) | (172 | ) | ||||||||
| Payment of exit fee costs | — | — | — | (135 | ) | |||||||||||
| Payment of at-the-market facility costs | — | — | (395 | ) | — | |||||||||||
| Proceeds from exercise of stock options | — | 11 | 76 | 145 | ||||||||||||
| Proceeds from issuance of common stock under employee stock purchase plan | 114 | 150 | 252 | 294 | ||||||||||||
| Cash provided by financing activities | (621 | ) | 5,140 | 12,799 | 10,267 | |||||||||||
| Change in cash and cash equivalents | (3,518 | ) | (7,619 | ) | (13,642 | ) | (45,282 | ) | ||||||||
| Cash and cash equivalents at beginning of period | 32,112 | 49,855 | 42,236 | 87,518 | ||||||||||||
| Cash and cash equivalents at end of period | $ | 28,594 | $ | 42,236 | $ | 28,594 | $ | 42,236 | ||||||||
| ALPHA TEKNOVA, INC. Reconciliation of Non-GAAP Measures to the Most Comparable GAAP Measures (Unaudited) (In thousands) | ||||||||||||||||
| For the Three Months Ended December 31, | For the Twelve Months Ended December 31, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Net loss – as reported | $ | (10,656 | ) | $ | (13,294 | ) | $ | (36,780 | ) | $ | (47,468 | ) | ||||
| Add back: | ||||||||||||||||
| Interest (expense) income, net | (440 | ) | 128 | (1,446 | ) | 213 | ||||||||||
| Benefit from income taxes | (304 | ) | (795 | ) | (298 | ) | (1,923 | ) | ||||||||
| Depreciation expense | 1,323 | 606 | 4,512 | 2,017 | ||||||||||||
| Amortization of intangible assets | 288 | 287 | 1,148 | 1,148 | ||||||||||||
| EBITDA | $ | (8,909 | ) | $ | (13,324 | ) | $ | (29,972 | ) | $ | (46,439 | ) | ||||
| Other and non-recurring expenses: | ||||||||||||||||
| Stock-based compensation expense | 1,022 | 1,022 | 4,137 | 3,711 | ||||||||||||
| Severance pay and other termination benefits | — | — | 725 | — | ||||||||||||
| Goodwill impairment | — | — | — | 16,613 | ||||||||||||
| Tradename impairment | 2,169 | — | 2,169 | — | ||||||||||||
| Long-lived assets impairment | — | 4,188 | 2,195 | 4,188 | ||||||||||||
| Loss on extinguishment of debt | — | — | 824 | — | ||||||||||||
| Write-off of ATM Facility costs | — | — | 395 | — | ||||||||||||
| Loss contingency | 300 | — | 300 | — | ||||||||||||
| Adjusted EBITDA | $ | (5,418 | ) | $ | (8,114 | ) | $ | (19,227 | ) | $ | (21,927 | ) | ||||
| For the Three Months Ended December 31, | For the Twelve Months Ended December 31, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Cash used in operating activities | $ | (2,782 | ) | $ | (8,029 | ) | $ | (18,704 | ) | $ | (27,400 | ) | ||||
| Purchases of property, plant, and equipment | (312 | ) | (4,730 | ) | (7,934 | ) | (28,149 | ) | ||||||||
| Free Cash Flow | $ | (3,094 | ) | $ | (12,759 | ) | $ | (26,638 | ) | $ | (55,549 | ) | ||||
| Last Trade: | US$7.06 |
| Daily Change: | -0.05 -0.70 |
| Daily Volume: | 137,828 |
| Market Cap: | US$376.300M |
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