Azenta Inc at Stephens Investment Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Jacob Johnson - Stephens Inc - Analyst : With that said, John, I think this is your first conference appearance. You just had your first earnings call as CEO. And like I said, Lawrence, I'm not sure you've had a cup of coffee at the company quite yet. So I think maybe we'll start with, if you guys want to kind of introduce yourselves, your background, I think, you guys both go way back with each other as well. And any other opening comments you want to make and then, I'll start peppering you with some more questions.

Question: Jacob Johnson - Stephens Inc - Analyst : All right, thanks guys. So I want to spend a good amount of time on kind of operating philosophy and strategy, but maybe John, we'll start with -- you just reported 4Q 2024 earnings. I think probably the biggest thing in that press release you talked about on the call was, simplifying the business and step one seemingly was to divest the B Medical. So maybe just start there on kind of as you came into this portfolio fresh eyes, what was the thinking behind divesting B Medical? And that may have some follow up on that.

Question: Jacob Johnson - Stephens Inc - Analyst : Maybe follow up on that. So 12 months to get it out. Just how should we think about the timing of it and then probably you may not want to answer it. But I'll try B Medical's out of our forward numbers but we don't know kind of how much cash you're going to get for it. I think Azenta bought it for $418 million in 2022. Any way to frame up how much of that investment you think you could recoup?

Question: Jacob Johnson - Stephens Inc - Analyst : Okay. All right. So let's talk operating strategy. You reference your time at Danaher and they've got, you mentioned DBS. I think on the call, you mentioned kind of lean principles. Can you just talk about the opportunity to implement that kind of operating philosophy that is [in there]?

Question: Jacob Johnson - Stephens Inc - Analyst : Yeah, yeah. I already have a few follow ups. Maybe I want to start with one that you mentioned on the call that we were talking about before this started. You emphasize going from eight incentive comp plans to one. I've never run a company. Why does that matter? How does that change incentives internally and what does it mean externally for stakeholders?

Question: Jacob Johnson - Stephens Inc - Analyst : Yeah. We'll get to that here. I still have a couple of follow-ups. You said that Azenta was heavily matrix previously. What do you mean by that?

Question: Jacob Johnson - Stephens Inc - Analyst : So maybe the follow up there too, I mean, Danaher runs a whole or operating company strategy. And the way you're kind of talking about things SMS and multi-omics, is that kind of how you view the world? And that's where this matrix stuff matters is those are kind of two standalone businesses that are now responsible for that P&L, is that the right way to think about it?

Question: Jacob Johnson - Stephens Inc - Analyst : Maybe one follow-up on that kind of your view of corporate role. It sounds like it's to support those, I would assume, it's to support those kind of holding companies and then your job, big job is to allocate capital across the two of them. Is that fair?

Question: Jacob Johnson - Stephens Inc - Analyst : And then just two other phrases or words you threw out high junka and standard work. What are those?

Question: Jacob Johnson - Stephens Inc - Analyst : And then going back, I think you used the phrase competing for capital. How do you think about capital allocation buybacks which you just concluded a big one M&A, organic investments, just any preference given you do have the one good thing. The one good thing you do have is a bunch of cash on the balance sheet. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 20, 2024 / 7:00PM, AZTA.OQ - Azenta Inc at Stephens Investment Conference

Question: Jacob Johnson - Stephens Inc - Analyst : So you mentioned we have to earn the right to do M&A. How should we be thinking about the timing of M&A? It seems like you want to implement a lot of these efforts before you start thinking about it. How long should we think about these efforts taking before you could start to look at something?

Question: Jacob Johnson - Stephens Inc - Analyst : And then I just kind of on the operating philosophy, you know, you talked about lean principles. It seems like there's going to be opportunities on the margin side of things and to streamline operations. But it's interesting as I think about Danaher's DBS, which don't have the longest history with but, I think it started with lean principles and something they've added over time is kind of growth initiatives. So I'm just curious, kind of how you think about the evolution of implementing that operating structures. We think about margin expansion and then maybe growth opportunities.

Question: Jacob Johnson - Stephens Inc - Analyst : Yeah, maybe on that Lawrence, as we think about the cost opportunities, I heard John mentioned gross margins, I would assume probably OpEx opportunities. How do you think about margin expansion on those two pieces of it?

Question: Jacob Johnson - Stephens Inc - Analyst : I just think it kind of longer term or qualitatively kind of how you're thinking, is there more opportunity on the OpEx side or risk margin side or is it all of the above?

Question: Jacob Johnson - Stephens Inc - Analyst : Okay, perfect. I guess maybe last question on kind of the strategy, you know, you've alluded to it, you've got some new board members and you've got a new value creation committee. So beyond kind of what we just talked about John, and what you're trying to implement, what is the board in this committee focused on as we think about longer-term strategy?

Question: Jacob Johnson - Stephens Inc - Analyst : Maybe I'll pause there if anybody in the audience has a question on kind of the strategy if not -- Unidentified Participant So what is the value creation we sell here? Your focus is on top-line cost (multiple speakers).

Question: Jacob Johnson - Stephens Inc - Analyst : Just to repeat it for anybody listening to the webcast. The question is the focus of the committee, top-line growth margin, expansion, capital allocation, and margins of focus in the near term.

Question: Jacob Johnson - Stephens Inc - Analyst : Yeah, the question is for anybody listening. The question is, do you have the systems in place to kind of measure this performance or anything to implement on that side of things?

Question: Jacob Johnson - Stephens Inc - Analyst : Well, maybe we got a couple of minutes left and there was a question earlier about pushback from investors. So maybe I want to ask you on maybe two specific businesses that have been kind of topical for investors. So maybe John, I think I asked you this on the earnings call, but I think it's worth revisiting. A lot going on in the freezer market in recent years. Sentiment for investors isn't exactly enthusiastic on that business as a whole. You just talk about, given you came from Panasonic, who I think has freezers. Just how differentiated is a technology. How do you view that business and maybe the broader SMS business?

Question: Jacob Johnson - Stephens Inc - Analyst : Freezers or stores. Not freezers. It's going to take (multiple speakers).

Question: Jacob Johnson - Stephens Inc - Analyst : That's helpful. Just in the last couple of minutes. I think the other area of investor focus over the last year which is, you have synthesis products coming out of China. I think there are concerns around bio-secure now, maybe around tariffs. You talked about last quarter, adding capacity in the US for synthesis because of demand. Can you just talk about that decision?

Question: Jacob Johnson - Stephens Inc - Analyst : Well, speaking of time, I think we're at time and I know it was a great 45 minutes, John and I'm pretty sure we could get another 45 minutes. But John, Lawrence, thank you guys, for being here. Really appreciate it.