Brooks Automation, Inc. Aktie

Greetings, and welcome to Azenta's Q2 2026 Fiscal Financial Results. [Operator Instructions] As a reminder, this conference is being recorded, Wednesday, May 6, 2026.

I will now turn the conference over to Yvonne Perron, Vice President, FP&A and Investor Relations. Please go ahead.

Thank you, operator, and good morning to everyone on the line today. We would like to welcome you to our earnings conference call for the second quarter of fiscal year 2026.

Our second quarter earnings press release was issued yesterday after market and is available on our Investor Relations website located at investors.azenta.com in addition to the supplementary information and PowerPoint slides that will be used during the prepared remarks today.

Please note that, effective the first fiscal quarter of 2025, the results of B Medical Systems are treated as discontinued operations.

I would like to remind everyone that during the course of the call, we will be making a number of forward-looking statements within the meaning of the Private Litigation Securities Act of 1995. There are many factors that may cause actual financial results or other events to differ from those identified in such forward-looking statements.

I would refer you to the section of our earnings release titled Safe Harbor Statement, the safe harbor slide on the aforementioned PowerPoint presentation on our website and our various filings with the SEC, including our annual reports on Form 10-K and our quarterly reports on Form 10-Q. We make no obligation to update these statements, should future financial data or events occur that differ from the forward-looking statements presented today.

We may refer to a number of non-GAAP financial measures, which are used in addition to, and in conjunction with, results presented in accordance with GAAP. We believe the non-GAAP measures provide an additional way of viewing aspects of our operations and performance, that when considered with GAAP financial results and the reconciliation of GAAP measures, they provide an even more complete understanding of the Azenta business. Non-GAAP measures should not be relied upon to the exclusion of the GAAP measures themselves.

On the call with me today is our President and Chief Executive Officer, John Marotta; and our Executive Vice President and Chief Financial Officer, Lawrence Lin. We will open the call with remarks from John, then Lawrence will provide a detailed look into our financial results and our outlook for fiscal year 2026. We will then take your questions at the end of the prepared remarks.

With that, I would like to turn the call over to our CEO, John Marotta.

Good morning, everyone, and thank you for joining us today for our second quarter earnings call. Candidly, we are not satisfied with our second quarter results. Overall, second quarter organic revenue was down 3% and adjusted EBITDA margin of 5.4% did not meet our expectations.

While our teams remain disciplined and are delivering progress in key areas, there have been execution-related shortfalls within our control, and we are addressing them with urgency. At the same time, we are operating in a more cautious prolonged demand environment, particularly in North America, where customer spending and research funding remain constrained.

Within that context, we saw continued growth in Multiomics in Europe and in Asia. In addition, sample repository solutions, product services and consumables and instruments delivered sustained growth, reflecting the strength of our recurring revenue offerings. This performance reinforces the durability of these parts of our portfolio and their role in supporting more consistent results over time.

Turning to specific drivers of the second quarter performance. In Multiomics, while both Europe and Asia Pacific volumes remained strong, performance was driven by softer demand across key end markets in North America and competitive pressure, resulting in lower volumes and reduced fixed cost absorption.

In Sample Management Solutions, we remain pleased with sample repository solutions performance that remains strong, delivering solid growth and reinforcing the value of our recurring revenue service-based model as did product services and consumables and instruments. This was offset at the segment level by continued softness in automated and cryogenic store systems that reflected a more pronounced step-down in capital-related demand.

With respect to the automated stores quality issues, there are 3 remaining stores where remediation is progressing, but is taking longer than anticipated. The scope of the quality issues has not changed, and now we expect the remaining work to be completed by the end of the third quarter.

As a result of these pressures, we have revised our full year fiscal 2026 outlook and have taken a cautious approach to assessing our pipeline as order conversion remains less predictable. The life sciences funding environment remains measured with ongoing variability in academic and government-related funding flows, including NIH-related activity as well as more selective capital deployment across biotech and pharma customers.

We now expect organic revenue to range from down 2% to up 1% year-over-year, reflecting a prolonged period of constrained capital deployment for larger automated stores and cryo investments, as well as continued demand softness in Multiomics in North America.

Adjusted EBITDA is expected to range from down approximately 125 basis points to flat year-over-year, reflecting the impact of lower volumes. Importantly, we continue to invest in targeted growth and productivity initiatives as part of our broader transformation agenda.

In a lower volume demand environment like this, operational inefficiencies and execution gaps become more visible and have a greater impact on results. We are addressing these gaps to ensure that the business is structurally efficient, scalable and positioned to deliver higher and more consistent performance over time with greater precision, stronger discipline and clear accountability.

While these challenges impact our near-term results, they reinforce the need for the work already underway to transform Azenta. Since I joined the company, we've undertaken decisive steps to structurally reposition the business for improved performance. These actions include leadership changes, organizational redesign, deployment of the Azenta Business System to strengthen operational rigor and a more disciplined long-term assessment of portfolio performance and growth investments.

Operational excellence remains central to how we run the business, and we're seeing tangible results from the Azenta Business System. In our consumables and instruments business, on-time delivery has improved significantly from approximately 15% to 70%, reflecting stronger execution and greater reliability for our customers.

In Multiomics, we're also driving meaningful improvements in turnaround times. With our Lightning RNA-Seq offering, we've reduced turnaround time from roughly 20 days to 5 days, which is the fastest turnaround time currently available in the market and a meaningful differentiator for our customers that just launched. These gains are being driven through Kaizen in structured problem solving as well as daily management systems. ABS positions us to deliver more consistent, high-quality performance.

In 2025, our focus was on reshaping Sample Management Solutions. Today, SMS has a more stable operating base and a stronger foundation for execution. In 2026, we've shifted our focus to Multiomics, where we are actively executing a comprehensive transformation of the business in addition to addressing the demand softness through targeted commercial actions.

As this work has progressed, we have gained more clarity as to what is required to strengthen execution and drive sustainable performance. We are excited that Trey Martin has joined Azenta as the President of the Multiomics business to lead this transformation, advancing our gene synthesis regionalization and technology strategy, strengthening commercial discipline and driving structural improvements.

Trey brings over 30 years of experience leading and scaling life sciences businesses, most recently as CEO and Board member of Maravai LifeSciences, with prior senior leadership roles at Danaher, including President of Integrated DNA Technologies, where he drove global expansion, strong commercial execution and sustained double-digit growth. Trey is exceptionally well positioned to lead the next phase of our Multiomics strategy. I'm confident in his ability to lead us forward.

Trey and his team are working to accelerate progress across key initiatives. This includes reviewing our site and laboratory footprint to optimize the hub-and-spoke model and rightsize the cost structure, strengthening commercial excellence with a greater focus on high-value workflows, improving pipeline conversion and disciplined execution of commercial opportunities, driving operational productivity by accelerating ABS deployment and implementing the technology and infrastructure to strengthen our competitive positioning.

This is not an incremental change, but rather a structural overhaul of the Multiomics platform. While we navigate this environment, we continue to deliver strong free cash flow and maintain a solid balance sheet with significant financial flexibility to support our strategy. Our capital allocation framework remains disciplined and unchanged. Our priorities are investing in productivity and gross margin improvement, driving organic growth through R&D and go-to-market capabilities, pursuing disciplined and strategic M&A and returning capital to shareholders when appropriate.

In March, we announced the acquisition of the UK Biocentre Limited, and the integration is progressing as planned. The acquisition strengthens our ability to deliver end-to-end life cycle solutions in the U.K., a leading life sciences research epicenter, while expanding our presence in Europe by establishing the UK Biocentre as a European-wide operational hub to support pharmaceutical, biotechnology, academic and public health customers across the region.

The acquisition is aligned with our biorepository expansion strategy and further strengthens our leadership in sample-based and biorepository solutions. Integration priorities include hiring key commercial resources, accreditation and operational readiness. This acquisition demonstrates our commitment to investing behind our highest conviction long-range plan initiatives.

We also recently provided an update on the previously announced B Medical transaction. As of March 27, 2026, we were informed by the counterparty that it had not yet secured the required financing to complete the transaction by the expected closing date of March 31. The agreement remains in place and continues to be subject to customary closing conditions, including financing. We are actively evaluating potential paths forward while the counterparty continues its financing process. We will provide updates as appropriate.

As previously announced, we continue to evaluate the timing of execution under our $250 million share repurchase authorization, reflecting our commitment to disciplined capital deployment and shareholder value creation.

To close, given the guidance reset this year, we have decided to push out the long-range plan we outlined at our Investor Day in December of 2025 by 1 year from 2028 to 2029. The same financial targets remain, and we believe that the market opportunities, strategic priorities and value creation framework are strong.

I want to emphasize our confidence in the long-range plan anchored in the strength of our portfolio and our ability to expand our recurring revenue base that supports more consistent and durable performance. Across the organization, we are operating with greater focus, stronger discipline and higher accountability and clear execution priorities.

With that, I'll turn the call over to Lawrence to walk through the financials.

Thank you, John, and good morning. I'll begin with our Q2 2026 fiscal results and the key financial drivers, then cover segment performance, our balance sheet and updated fiscal 2026 guidance.

Today's results exclude B Medical Systems, which continue to be classified as discontinued operations unless otherwise noted.

During the quarter, we recorded an additional $6 million noncash loss related to assets held for sale. As communicated during the quarter, the transaction has not yet closed and remain subject to financing and customary closing conditions. In the quarter, we recorded a goodwill impairment charge. As part of our annual goodwill impairment assessment, we recorded noncash impairment charges of $112.4 million for Multiomics and $36.6 million for Sample Management Solutions, both reflected in GAAP operating expenses.

This was driven by a combination of factors, including the sustained decline in our stock price, the decrease in our near-term outlook and a more uncertain macroeconomic and geopolitical environment, which together reduced the estimated fair value of the units below its carrying value.

To supplement my remarks today, I will refer to the slide deck available on our website. Turning to Slide 3. Total reported revenue was $145 million, up 1%, including $1 million from UKBC. Excluding UKBC and the impact of foreign exchange, revenue was down 3% organically.

Second quarter performance came in below our expectations and reflect continued divergence across our segments with softness in Multiomics driven by lower volumes in North America and a decline in Sample Management Solutions, driven primarily by lower volumes in capital-intensive automated and cryogenic store systems. This was partially offset by strong growth in sample repository solutions, reinforcing the strength of our recurring revenue offerings.

Non-GAAP EPS for the second quarter was a loss of $0.04. Adjusted EBITDA margin was 5.4%, down 320 basis points year-over-year, primarily reflecting lower volumes across the portfolio and reduced fixed cost absorption leading to gross margin pressures as well as store quality rework costs and an increase in inventory reserves.

Free cash flow, including B Medical, was $5 million in the quarter, driven by improvements in working capital and higher deferred revenue. We ended the quarter with $565 million in cash, cash equivalents and marketable securities. This provides continued financial flexibility to invest in the business, pursue strategic opportunities and return capital to shareholders over time.

Now let's turn to Slide 4 to take a deeper look at our results in the quarter. Total revenue was $145 million, up 1% reported, and down 3% organically, with a 3% impact from foreign exchange and 1% from the UKBC acquisition.

Multiomics performance reflected lower volumes driven by softer demand and increased competitive intensity in North America. Within Sample Management Solutions, results were supported by continued strength in biorepositories but was negatively impacted by ongoing softness in capital equipment demand, reflecting more cautious customer capital spending behavior.

Turning to gross margin. We delivered 44.3% for the quarter, down 110 basis points versus the prior year. The decline was primarily driven by lower North America volumes, which reduced fixed cost leverage as well as a noncash inventory charge and approximately $2 million of quality costs associated with automated storage rework, which was in line with our expectations.

While the quality issues are largely behind us, we expect to have some additional costs in the third quarter. We have put changes in place to improve quality and reliability. We've restructured the engineering team into 3 teams: new product development, current projects and sustaining in order to drive clear accountability in the R&D organization.

As we discussed at Investor Day, we are transitioning from highly customized systems to a more modular product strategy that enables configurable and quality control solutions. In parallel, we have strengthened execution leadership by hiring an experienced project manager with a background in large-scale complex programs, bringing additional discipline, structure and visibility to execution.

Adjusted EBITDA was $7.8 million or 5.4% of revenue, down 320 basis points year-over-year. The decline was primarily driven by 120 basis points of pressure in Multiomics from lower volumes and gross margin compression as well as down 360 basis points from investments in sales, product marketing and R&D to support future growth.

These impacts were partially offset by 80 basis points benefit in Sample Management Solutions, reflecting additional pressure from storage quality rework and inventory reserve and lower volumes, offset by the favorable impact of an accounting adjustment. Lastly, there was a benefit of 80 basis points from other income.

Importantly, while we continue to take actions to optimize and rightsize our cost structure, we are committed to our growth investments to support long-term growth and strengthen our competitive positioning. Again, non-GAAP EPS was a loss of $0.04 per share.

With that, let's turn to Slide 5 for a review of our segment quarterly results, starting with Sample Management Solutions or SMS. Sample Management Solutions delivered revenue of $81 million for the quarter, up 2% on a reported basis and down 3% organically.

Biorepository solutions, which is roughly 40% of the SMS segment, delivered high single-digit growth, reflecting focused commercial execution and the benefits of the strategic emphasis placed on this business over the past year.

Consumables and instruments delivered modest year-over-year growth supported by steady demand across the installed base. The segment was impacted by external factors with lower capital spending, which impacted orders in automated and cryogenic store systems, resulting in a low double-digit decline in core products.

Gross margin for Sample Management Solutions was 47.4%, up 40 basis points versus the prior year. The result reflected headwinds from lower volumes, store quality rework and an inventory reserve, which were more than offset by the benefit of an accounting adjustment as well as improved biorepository margin.

Turning next to the Multiomics segment. Multiomics revenue for the quarter was $64 million, flat on a reported basis and down 2% organically, reflecting a decline in global Sanger and lower volumes in North America, driven by softer demand and increased competitive intensity.

Next-generation sequencing grew mid-single digits and gene synthesis delivered mid-single-digit growth, supported by continued oligo demand in China. Europe and Asia Pacific continue to perform well, supported by strong execution and commercial initiatives. In North America, we are focused on improving commercial execution and driving more target engagement across key markets as we move through the remainder of the year.

Multiomics non-GAAP gross margin was 40.2%, down 300 basis points year-over-year. The decline was primarily driven by lower fixed cost absorption and unfavorable regional mix, reflecting reduced volumes in North America and the resulting loss of operating leverage.

This was partially offset by more stable performance in Europe and Asia, though not sufficient to fully offset the pressure from lower North America volumes. We are taking targeted cost actions to better align our cost structure.

Next, let's turn to Slide 6 for a review of the balance sheet. As I mentioned, we ended the quarter with $565 million in cash, cash equivalents and marketable securities. We have no debt outstanding. Capital expenditure for the quarter was approximately $7 million, reflecting continued investment in automation, capacity expansion and technology to support scalable growth.

Turning to guidance on Slide 8. We are updating our fiscal 2026 guidance to reflect first half performance trends and what we are seeing in the market. We expect the total reported revenue to be in the range of approximately $603 million to $621 million, including the contribution of UKBC. On an organic basis, we expect revenue to range from a decline of approximately 2% to a growth of up to 1% compared to the prior guidance of 3% to 5% growth.

We expect adjusted EBITDA margin to range from down approximately 125 basis points to flat year-over-year compared to prior expectations of approximately 300 basis points expansion, excluding UKBC. This is driven by continued pressure due to lower volumes and the loss of fixed cost leverage.

Free cash flow is expected to improve between approximately 10% to 15% year-over-year compared to prior expectations of approximately 30% improvement. The low end of the range reflects continued softness in Multiomics in North America and in the capital-intensive products within Sample Management Solutions, while the high end reflects a modest increase in demand in North America, additional order closures for stores and cryo and incremental revenue pull-through.

At the segment level, we now expect Sample Management Solutions to grow approximately low single digits organically versus prior expectation of mid-single-digit growth and Multiomics to decline in mid-single digits versus prior expectations of low single-digit growth.

Looking ahead to the second half of the year, I'll offer some directional color to help frame the cadence of performance. In the fiscal third quarter, we expect organic revenue to grow low single digits. For the fiscal fourth quarter, we expect organic revenue to decline low single digits. If you recall, fiscal fourth quarter of 2025 was a record revenue quarter and presents a tough comparison.

From a profitability standpoint, we expect adjusted EBITDA margins to improve sequentially with margins moving into the low double-digit range in Q3 and then stepping up more meaningfully in Q4, reflecting the combined impact of volume recovery, cost actions and second half seasonality.

In closing, while we are updating our full year fiscal outlook to reflect the current demand environment, we remain focused on disciplined execution and operational control across the business. We are taking the necessary actions to align our cost structure and to improve the performance across both segments.

Importantly, we remain confident in the long-term fundamentals of our markets and in our ability to achieve improved performance over time, supported by the progress we continue to make across the organization.

As John mentioned, given the guidance reset this year, we have decided to push out the long-range plan we outlined at our Investor Day in December 2025 by 1 year from 2028 to 2029. The same financial targets remain, and we believe that the market opportunity, strategic priorities and value creation frameworks are strong.

This concludes my prepared remarks. I'll pass the call to John for a few closing remarks.

To close, we are encouraged by the continued strength and resilience of the reoccurring revenue base of our portfolio. We are taking decisive actions to strengthen commercial and operational execution and drive more consistent and improved performance. We are also pleased with the progress of the UK Biocentre acquisition and look forward to the opportunities ahead of this strategic action.

Finally, we remain disciplined in our capital allocation, continuing to invest to drive organic growth through R&D and go-to-market capabilities, pursuing disciplined and strategic M&A and returning capital to shareholders when appropriate.

With that, operator, we're ready to open the line for questions.

[Operator Instructions] The first question comes from David Saxon with Needham.

Maybe I'll just ask one on fiscal second quarter. So I would love to understand kind of the cadence you saw throughout the quarter? Like how did things start off? How they progressed? Were there any meaningful orders or customers that got slipped or pushed out? Just trying to understand the exit velocity as we go into the fiscal second half.

Yes. David, good to hear from you. Maybe why don't we kind of start with what we saw in Q1 really quickly and then walk to Q2, right? So in Multiomics, what we saw in Q1 was bookings were slow in North America. As a reminder, Multiomics in North America is roughly 50% of the revenue for the segment. This was attributable to the October shutdown and the NIH funding delay. We had key sales leaders and sales reps that are no longer in the company that created a bit of a commercial gap. Now Europe and APAC performed well, and we thought these were transitory events.

So now let's step into Q2 for Multiomics. We expected several dynamics to improve as the quarter progressed. In North America, the first 2 months, we saw improved bookings demand. Our month 3 spike seasonality just did not materialize. Usually, you see a pretty big hockey stick in terms of demand.

On a commercial execution perspective, we saw rep productivity, but we still saw gaps. As you know, we brought in several new reps, but there were still commercial execution challenges.

When you look at the competitive dynamic, particularly in North America, it really did intensify in the quarter, particularly in gene synthesis. Now on the bright side, as I mentioned earlier, Europe and APAC continue to perform, and this is really isolated to a North America issue in Multiomics, okay?

Now let me pivot to SMS. So what did we see in Q1? We saw slow bookings in stores and cryo. A lot of these capital-intensive products, we were seeing pushouts. Positive note, biorepository were high single-digit growth. C&I was low single-digit growth in the quarter.

When we move into the second quarter, while we had really good visibility in our capital equipment pipeline by opportunity, we did not see these order conversions in the quarter. Let me give you a couple of examples.

One, we had a multimillion dollar cryo deal with a biotech firm that got pushed out. Secondly, we had a multimillion dollar automated governance store that got pushed out. We haven't lost these orders, but they're just now delayed. Timing issues such as these -- funding delays or site readiness has really caused us to get these items pushed out through the balance of the year.

But again, positively in the quarter, biorepositories were high single-digit growth. C&I was low single-digit growth. We just really had some challenges around our capital-intensive products. And as I mentioned earlier, these lower volumes I just described really create this loss leverage with our existing cost infrastructure. So hopefully, that provides enough -- the color you're looking for, David.

Yes. That was helpful. And then I guess just in terms of some of the initiatives you've already put in place, like pricing in SRS, I think you have some pricing coming through in C&I after that backlog is kind of worked through. You have -- moving to more modular systems on the storage side. Like, I guess the question is when do we start to see the benefit of that? And as you think about the cadence over the fiscal '29 LRP now, zooming out, like how should we think about the trajectory over that period?

Yes, David, thank you for the question. Let me start with the '29 LRP and kind of get us back anchored into our IR Day. If you look at the total SAM, you're talking about a $6 billion SAM. Let's go kind of strategic vector by strategic vector and get us kind of anchored back into that.

So in our biorepository business, it's nearly about $1 billion business at mid- to high single digit. We're well positioned there because there's a number of growth drivers there. So ultracold, you've got good research volumes coming out in terms of the sheer volume of samples. There's a lot of emphasis around productivity, more therapeutics coming out and those sorts of things. That's a key market driver, and we're well positioned there. We're going to continue to invest behind that. So that gives us some confidence around our LRP certainly.

Second is around gene synthesis. So that's north of $1 billion. That market is growing double digit in certain areas. And this is an area that we are investing behind, clearly with bringing Trey in. We certainly have to do a little more work on the cost side to get this business better positioned. Now what's driving that double-digit growth? Cell and gene therapy. A lot more research and therapeutics are driving the gene synthesis market, and we're investing behind that.

And thirdly is our automated solutions. So that's north of $1 billion, growing at mid- to high single digits. We are investing clearly around small stores and modules. Well, what's the growth driver in that end market as well? Everything is moving to ultracold and cold. We're well positioned there. The number of assets that are in the field right now going from thousands to millions, people want to automate that. And so the stores, automated stores and automated cryo units are kind of the epicenter of all of that. There is a clear push for productivity and a clear push around cell and gene therapy and the investments behind that.

That gives us the confidence around our LRP because we're holding our growth investments in there specifically. We could dramatically improve our margins today if we came off of some of those growth investments. And I realize also we've got some room to improve forecasting, both internally and externally here.

But I've got some confidence around this, specifically around our LRP, hopefully, you're going to see some more detail coming out around our external -- around how we're looking at things externally in terms of the earnings supplement that was put out, that's going to continue here. And then internally, we've got our GMs in place. And certainly, we've got our finance leads in place in each of the businesses as well. So there's people waking up every day to drive performance in these businesses in these strategic areas, and they've got the finance leads that are in place as well.

Yes, that earnings supplement is super helpful. So looking forward to that going forward.

Thank you for the feedback.

The next question comes from Matt Stanton with Jefferies.

Maybe a 2-parter on the reset. So Multiomics going from low singles to down mid-singles. Maybe just talk a little bit more about what you saw. I think you talked about competitive pressure. I think you guys have been hiring 20, 25 people on the commercial side. Are you saying those are no longer a tailwind for the back half of the year? I guess, what changed, to help us bridge the guide down on Multiomics here?

And then maybe, John, just stepping back on the LRP reset. I mean, if you're going to touch that less than 6 months later from the Investor Day, why not maybe revisit the numbers to derisk those if you're going to push it out here? Was there any consideration to move any of the numbers either on the margin or the growth side to help derisk that bridge from, call it, flat growth this year to high singles now in '29?

You bet, Matt. Thanks for the question. So both Lawrence and I will give you some color here. So let's talk about Multiomics. I mean we had clearly kind of a human capital reboot in North America right now in North America sales. We had some folks that left and then BD. We've added headcount in all of the regions right now. And where you can see there are bright spots right now from a growth perspective and double-digit growth is clearly in Europe and China right now. So those teams are performing well.

Where we've got -- where we're kind of going back at things in North America is, in fact, we think there's still a tailwind there in NGS. We've got to do a little more work around gene synthesis in North America. There's some competitive dynamics that are going out on there that Trey is going to be coming in and we're going to be solving for.

And then lastly, in the North America business, we've talked about this is from a structural point of view. We've got 14 labs. We're going to be rethinking that business, I can tell you, specifically around Sanger and how we drive performance going forward.

Regarding the -- I'll touch on the LRP, then I'm going to hand it over to Lawrence here. Regarding the LRP, we did think about -- clearly think about what the revenue profile looks like over time. And we really went into the plan detail by detail, looking at the waterfall of the plan, the phasing by years.

We've kept nearly $20 million of growth investments in the business right now. And that's where we're coming down. It was one of the reasons I wanted to share kind of how we view the market in biorepository, gene synthesis and automated solutions. Those are mid- to double-digit growers across all 3 of those right now.

We're holding our growth investments, and we've got conviction around that plan over the 3 years that we outlined. And more importantly, seeing those growth investments through gives us the confidence around this phase shift in the program right now. The opportunity is clearly still in front of us. And we've got to go get that.

I mean I think it's one of the things that I continue when I say were guiding us annually. That's what I mean by that, is this opportunity is still in front of us, and we're investing behind that with the numbers that I just shared with you.

Lawrence, do you want to talk about some of the numbers around Multiomics?

Yes. In terms of guidance, Matt, when you look at the overall guide, right, as I mentioned earlier, the low end of the range of down 2% on revenue really just going to reflect the greater softness in Multiomics in North America. And then really, when you look at the plus 1% is we reflect a slight pickup in overall Multiomics North America bookings. Again, Europe and APAC continues to be strong for us in the Multiomics business. Certainly, there's -- to John's point, there's a bit of a reset around the commercial engine in North America, and we've accounted for that in our low-end guide to derisk it.

And then maybe just a little bit of cleanup. So B Medical, I appreciate the update. I mean, how do we think about the scenarios from here? So the time line was the end of March, that you guys are continuing to work through it. I mean, do we expect a resolution sooner rather than later? And then, Lawrence, can you just help us -- how long can you keep this in discontinued ops in the scenario where it needs to come back into continuing ops? Any chance you can kind of remind us of what the margin profile of that asset is today?

Sure. I'll take the first part of the question, and Lawrence can take the second. So right now, where we sit, we feel pretty good about where we are. We're getting weekly updates from the team right now. Yes, there was a financing delay, it's certainly outside of our control. A lot of things going on in that part of the world right now, specifically in some of the end markets that they serve. And so I think the team is back on track. We've had direct conversations with the banks, and we've got more conviction on that close right now.

Yes, Matt, in terms of if there is a need to reconsolidate, that would happen at the next quarter point, June 30.

And anything you'd say on just margins if that does happen in that scenario?

Yes, we'll evaluate that, and we'll provide an update if that happens. But like John says, we feel confident that this will close.

The next question comes from Mac Etoch with Stephens.

Maybe just to start, following up on some of the Multiomics conversation that you've already had. Margins have been under pressure, growth expectations are coming down for this fiscal year. But can you just unpack how much of the margin pressure is really driven by those temporary factors like utilization versus the more structural dynamics and how that informs your confidence in the recovery and in the LRP as well?

Yes, Mac, thanks for the question. So as we look at the overall guide for the year around Multiomics, around leverage, for the year, it's about $14 million in terms of loss leverage. 80% of that is related to Multiomics. Now what I will say is we've taken actions in the second quarter, and we've done partial restructuring that will yield $7 million of annualized savings and $3 million in year.

As John mentioned earlier, we're also evaluating currently the rooftops in labs. So let me give you a little bit more color. When we look at the overall fixed cost in the business, there's just too much cost. There is 14 labs that were built to support a much larger Sanger footprint than the demand environment supports today. So with the sustained lower volumes, this has really created pressure on profitability.

Appreciate that. I guess just a follow-up on that. How is the -- how are these efforts kind of factored into your updated LRP? I know you're just pushing it out by a year, and there's not really any update between the different segments. But in terms of -- anything in terms of like a gating factor between the year or FY '26, '27, '28 might be helpful for our context.

Yes. I think it's a great question. Certainly, when we look at the overall confidence in LRP, right, that's why we're kind of holding to those targets.

Mac, it's all contemplated in the phase shift to the LRP.

The next question comes from Vijay Kumar with Evercore.

I guess my first one is, big picture, when you look at rest of life science tools space, we've generally seen stable [ A&G ] end markets, stable capital environment. So when you talk about end markets, when you talk about capital constraints, bookings in North America for gene synthesis, right, there seems to be a disconnect between what we're hearing from peers versus trends Azenta is seeing. How much of this is Azenta company-specific versus market issues in your mind? And when you think about back half, what is the guide assuming? Are you assuming current market environment that Azenta is facing sustains in the back half? Or are you assuming further deterioration in your end markets?

Sure. It's a fair question, Vijay, and thank you for that. So let's unpack it first from an end market perspective. If you look at our North America GENEWIZ business, really, the headwinds we've seen is we had a commercial reboot. That's on us in terms of the human capital side. And so that's first thing there.

Second thing is we did make some commercial investments, and we've got some execution shortfalls in that. Again, that's on us. Around the end market and what we're seeing in our pharma, biotech and academic customers, a lot of the performance issues we're seeing is really based on what's called this [ PC&S ] business. Think about that as a specialty CRO. And so it's large project-related revenue. It's very similar to our POC business in stores and our capital equipment business in cryo.

So we've got -- there is a funnel -- a weaker funnel than we had because of some of the human capital turnover that I've talked about. The biggest driver in North America is, of course, related to Azenta-specific, and that is our Sanger business. I mean that is declining 17%. It's been a big issue for us internally. We are going to be solving for that.

And so on balance, I would say, of the number of items I've talked about, I would say, on balance, about 60% to 70% are Azenta-specific, Vijay, and we're going to be solving for those. We've got plans in place. One of the things we've got with Trey coming in, we're very excited about his grip on the business just 4 weeks into the business here today. So that's the way I would think about GENEWIZ specifically in North America.

If we unpack stores and cryo business, these are big-ticket items. I mean there's this -- right now, we're seeing pharma and biotech kind of investing in small pockets here and there. But remember, these are big-ticket CapEx. And so that is -- right now, I mean, when we review the funnel, we're looking at that, and we've got a good grip on that funnel. We've got a good grip in terms of the competitive dynamics. We're not seeing any share loss here. This is just a pushout.

It's -- our interpretation of that is there is -- is pharma going to continue to invest? Where are they going in bioprocessing? They're clearly doing that. With this reshoring thing, are they going to move more dollars over there? Or are they going to put that into R&D and some of these large stores? It's a bit of a mixed bag right now. And I think that is really around end markets. I don't view our performance in stores as an Azenta-specific issue at this point in time, if we're just calling it down the middle as we see it, Vijay.

Cryo, we had some new salespeople. We had some commercial reboot in North America. I think we were clear when Joe came in, he's got to rebuild our North America sales organization. He's done that. So on balance, Vijay, I would call it, on cryo, a bit of a 60-40, 60 being an end market, meaning a lot of the funnel, and we go project by project on these large CapEx deals. A lot of that's been pushed out. 40%, I would say, is this commercial reboot when Joe was coming in and rebuilding our North America business.

So on balance, that's how I would look at unpacking the big issues in the business, and specifically, what is Azenta-related and what is end market-related.

Do you want to talk about forecast, Lawrence?

Look, Vijay, when we contemplated the overall guide, the low end of the revenue range, we believe the plan is largely derisked, right? Importantly, we've really taken a conservative posture to the outlook and paired it with cost actions and operational discipline that John talked about. And that's why we believe that the revised guidance is appropriately balanced with realism and execution focus.

Understood. And maybe, John, on some of those comments you made on human capital, sales force issues. What is the plan for fixing these issues, right? Do you have the personnel in place? Or do you need to hire people? And how do you track productivity? Is that like 6 months from now where we should see a turn in some of these businesses?

Yes. So on the human capital side, we have a North America leader in GENEWIZ, with Trey coming on board, he's going to be bringing in a leader for North America and Multiomics. And we're excited to bring about new talent into the business and with Trey being here and his -- very clearly his grip on the gene synthesis business. He spent many, many years there. And so we're excited about bringing in the right talent to go drive performance there.

That was a gap for us for, basically, Q1 and Q2. That's on us. We've got really good sales reps in place right now. We've got really good regional managers in place right now. And so we're driving performance there. We track productivity clearly. Ramp time is 6 to 9 months in that business right now. I think there's some room for improvement around -- specifically around NGS. I think we're more confident in that area. We're building more capabilities in our gene synthesis business, and we've got to go solve for cost issues in Sanger. And we've got the right people now with Trey in place to go do that. I hope that helps, Vijay.

The next question comes from Paul Knight with KeyBanc.

John, you were talking about the reorg of the automated stores group into 3 groups. And did I read it correctly that the automated stores technology is kind of a new footprint, a more reliable footprint? It seems to have always had some issues before you even. So is that -- what I understood there is, is this a new kind of way of producing and selling and servicing the stores product?

Yes. So let me pull us back and discuss how we're thinking about stores in general. Let me just touch on the quality side of it first and how that's informing us in terms of what you're talking about in terms of restructuring, how we restructured that business in general.

So when we came into the business, we had 18 stores quality issues, 18 of those stores did not work in the field. We're down to 3 right now -- 2 customers, 3 stores. And nothing's changed in terms of the quality issues that we've got to remediate and more importantly, the time frame to go do that. We're going to be lapping that this next quarter here in terms of trend and how we're more attacking the general dynamics around quality and the bespoke nature of our current portfolio there.

So we -- when we came into the business, there was over 100-and-some quality tickets. I would -- I'm very pleased with the fact that the team -- and these are minor issues, but the team is down to around a handful, meaning 20-some. And so part of the bespoke nature of this is you've got some service gaps that were occurring in the business. I'm very pleased with the team in terms of how we've addressed these. More importantly, our customers are thrilled about that. It's been a good investment for the company.

Okay. So what are we going to do about it going forward here? Customers clearly want these products. We don't see share loss with any of these quality issues at all, bluntly. And secondly, it's what do we want to go do going forward? When you're in a mid- to high single-digit business, there was a gap -- there's a gap in our portfolio. What's the gap? Small modulated stores, one; two, these larger stores that are highly configurable, meaning you've got standard modules that are off the shelf right now.

That goes to the point around restructuring our R&D group, which was to your question, Paul, and that is that R&D group now is waking up every day -- one part of that group wakes up on new product innovation. The second part of that group wakes up every day and they work on the POC part of that business. And then the third one is sustaining engineering, and they're working around existing quality issues in the field, what we call PPV, price performance variance, which is around procurement and then value-add value engineering. That's what they're waking up every day and doing.

Now let's talk about the timing of this, okay? The timing of implementing all of this was Q1. We put our general managers in the business in Q1 in automated stores and cryo. That's Jeff. We put Michael in C&I in that business to drive performance there. And then Alex in the biorepository business. All of those general managers came in, in that November-December time frame. So they're getting more clarity around the business clearly. And then our financial leads are coming in there, too.

So we think we're going to have more of a grip on the business just from an execution of the road map, but more importantly, how we're driving forecasting in the business. I know we've got a little work to do internally forecasting and more importantly, externally forecasting here.

So all of that to say, structurally, Paul, I think we're in a much better place in how we're driving that going forward in automated stores. Thanks for the question.

Sure. And then last, on Multiomics. Is Sanger -- obviously, you want to change the roof -- the rubber roofs. But is Sanger moving into other next-gen techniques that are longer read length? Is that -- does it imply less Sanger in the future, more next-gen in the future?

Sure. What is going on in the Sanger business is you've got technology disintermediation, okay? Is Sanger ever going to go away? No. But there's a shift, a clear shift to the ONT Oxford Nanopore Technology, which we also offer, okay? We've got thousands of dropboxes globally. We've got a big commercial footprint here.

Bluntly, we were on our heels in terms of bringing the new technology into GENEWIZ. We're now on our front feet in doing that. I think with Trey coming on board, we're going to get more aggressive in this technology conversion. That lends us to the fact that we've got to then rightsize the Sanger business, but also meeting our customer needs with the right balance of Sanger.

If you look at a Multiomics business competitively differentiated, having gene synthesis on the writing side of genes and then next-gen sequencing, including Sanger and Oxford Nanopore is strategic. And so we need the right balance of having NGS, Sanger and ONT in the business to drive a synthesis strategy here. Trey is the one that is really well positioned to do that. And all of that right now, Paul, we're on our front feet to go do.

The next question comes from Brendan Smith with TD Cowen.

I appreciate all the color here on North America versus other regions. And maybe just following up kind of on that last question. I guess even really from a priority basis, you mentioned some of the GENEWIZ dynamics in North America, but I know we've even seen, for example, some AI-driven demand for some of these tools from biotech and pharma starting to crop up here. So I guess I'm really just wondering how you kind of see Azenta's competitive opportunity in sequencing versus synthesis and maybe if one ultimately makes more sense to kind of really lean into first, just kind of order of operations from here over the next few months.

Sure. I mean if you look at what we talked about in IR Day in terms of you've got gene synthesis north of $1 billion end market growing double digit, very high margins, we have that in our hands today, and we're executing well, specifically in that in Europe and in China. Where we think that there is room to improve in our strategy is up-indexing us from a technology perspective, specifically in North America and kind of what we outlined in our strategy is this decentralized up-indexing from a technology perspective. We think there's a lot of room there.

The evidence of that, Brendan, is clearly in bringing Trey in. In order to execute our strategy, you got to have the right person to do it. He's a clear expert here. And so, for our strategy, we need to have both in terms of reading and writing of genes.

Going to your question around AI, this is an area that I think you're going to hear more from us in as the strategy starts to evolve around gene synthesis up-indexing us from a technology and a double-digit growth perspective and getting us more on our front foot there. We're pretty excited about that.

We do have bioinformatics internally. We do -- we are investing in that specifically. I mean, that's in our hands today. I think you're going to see some more partnerships and some more things around our inorganic activities around that specifically. But I hope that helps, Brendan.

We have reached the end of the question-and-answer session. And I will now turn the call over to John Marotta for closing remarks. Please go ahead.

Very good. Thank you, operator. To close, I want to recap on a few things. First, I want to emphasize our confidence in the strategic priorities as outlined in our Investor Day: scaling our biorepositories, advancing our gene synthesis technology and our new product innovation and automated solutions. We're really focused on getting the portfolio centered around those 3 areas and increasing our recurring revenue focus.

As I've stated, we're not satisfied with our results, and we have some work to do to transform Multiomics and stabilize our performance. I'm confident on our team's ability to do so and the new leadership we brought in to help us do that.

I want to thank our employees and our shareholders for their support and their commitment to Azenta. Thank you very much.

Thank you. This concludes today's conference call. You may now disconnect your lines. Thank you for your participation.

Hello, and welcome. My name is Jenny, and I will be your conference facilitator today for Azenta's Acquisition of Uk Biocentre Acquisition Call. [Operator Instructions] As a reminder, this conference call is being recorded today, Tuesday, March 10, 2026.

I will now turn the conference call over to Yvonne Perron, Vice President, FP&A and Investor Relations.

Good morning, everyone, and thank you for joining us. As you know, last week, we announced that Azenta entered into a definitive agreement to acquire Uk Biocentre. The press release and a presentation to accompany today's call are available on the Investor Relations section of our website. Joining me today are John Marotta, President and Chief Executive Officer; and Lawrence Lin, Chief Financial Officer, who will discuss the strategic rationale for the transaction and provide additional details. Before we begin, I will briefly refer you to the safe harbor statements included in the presentation, which outline important information regarding forward-looking statements and the use of non-GAAP financial measures.

With that, I'll turn the call over to our CEO, John Marotta.

Good morning, everyone, and thank you for joining us today. I'll use the first portion of our time discussing the strategic rationale behind our acquisition of the Uk Biocentre and how this transaction expands our global footprint, scales our biorepository operations, reinforces our position as a trusted partner to the life sciences industry and strengthens our long-term profitable growth outlook. Then we will open it up for Q&A.

I'll start by sharing how excited I am to welcome the Uk Biocentre into the Azenta portfolio and family. Its operational excellence, automation capabilities and deep management expertise make it an outstanding long-term strategic fit for Azenta. This acquisition is fully aligned with the capital allocation strategy we outlined at Investor Day.

Uk Biocentre is one of the world's largest automated biorepositories, strategically located and positioned to support future growth without incremental capital investment. The U.K. is one of the world's largest leading life sciences research hubs at the forefront of genomics, precision medicine and long-term population studies, supported by sustained public investment, strong regulatory frameworks and close collaboration between public and private sectors.

To support this research, Uk Biocentre has established itself as a critical and trusted partner, supporting the research programs in the region. Its capabilities in high throughput sample processing, automated biobanking and long-term cold storage are purpose-built for large-scale multiyear studies that require reliability, consistency and scientific rigor. Uk Biocentre will continue operating under its own brand and identity, maintaining its reputation of high quality and operating excellence. Uk Biocentre has storage capacity of over 30 million samples and solely uses Azenta's BioArc automated quad banks and will be deploying the 16 million capacity BioArc Ultra later this year to further advance its automated and high throughput capacity.

The biorepository uses our standardized Azenta FluidX tubes to enable seamless and efficient processing. The biorepository is state-of-the-art with automation-first infrastructure. Importantly, Uk Biocentre is located within the Golden Triangle, the key research corridor connecting London, Oxford and Cambridge. This places it at the heart of the U.K. life sciences ecosystem near top academic institutions, pharma and biotech activity and provides excellent proximity to our other U.K.-based operations.

With this strong foundation in place, let me walk through the strategic rationale and value creation for bringing the Uk Biocentre into Azenta and how the combined capabilities will deliver long-term growth and operational synergies. First, the Uk Biocentre allows us to meaningfully strengthen our presence in Europe, not only from a geographical standpoint, but in terms of relevance and the embeddedness within the region's most important research ecosystems. This brings us closer to local customers and decision-makers, creating a strong European hub. It also positions us to expand into new markets to vitally serve a growing demand for our pharma and biotech customers.

Second, we have strong operational and automation synergies. UKBC's operations are already aligned with Azenta standards, which allows us to immediately scale throughput and increase efficiency without disruptive ramp-up time. Third, the UKBC offers a national infrastructure that is difficult to replicate. They are a trusted operator for U.K. government research programs, providing predictable, high-volume sample processing and storage. This combination of reputation, a strong management team, capabilities and a program connectivity would take years to build organically.

Finally, this acquisition combines UKBC's operational excellence with Azenta's commercial expertise and pharma-biotech relationships. By bringing together their proven capabilities and our global commercial engine, we create a full-service, high-value platform. In short, the acquisition of Uk Biocentre strengthens Azenta's end-to-end lifecycle sample solutions, expands our European footprint and creates a platform for scalable sample management and research support. By bringing the Uk Biocentre into the Azenta portfolio, we deepen long-term strategic customer relationships, grow reoccurring sample storage revenue across academia and government, and accelerate the growth of new and existing customers in pharma and biotech.

I'll hand the call over to Lawrence to talk through the financials.

Good morning, everyone. Thank you, John. As disclosed in our press release, we paid GBP 20.5 million for Uk Biocentre, net of cash and inclusive of up to GBP 1.8 million in contingent consideration upon the completion of certain milestones. The transaction was fully funded from cash. Uk Biocentre operates the same fiscal year as Azenta. And for the fiscal year ended September 30, 2025, Uk Biocentre generated GBP 15.3 million in revenue, which was down year-over-year. The decline largely reflects the timing of large research program phases driven by lower sample processing related to the Our Future Health programme.

In 2027, we see a clear opportunity to build on this research foundation driven by expected extension of the program and the associated increase in volume from new participants and enrollees. In addition, growth from targeted commercial investments, particularly within the pharma and biotech sectors, will help diversify the customer base and accelerate growth in the region. We expect to have these sales investments in place by the end of fiscal 2026.

While we anticipate 2026 to be dilutive to adjusted EBITDA by approximately 35 basis points, we expect it to be accretive in 2027 and 2028, driven by volume growth and operating leverage from the levers I just discussed. We believe the financial profile of Uk Biocentre is fully aligned with the capital deployment criteria we outlined at Investor Day. The acquisition reinforces our strategic focus on high-quality, scalable recurring revenue assets.

And now, we'll turn the call over to the operator for questions.

[Operator Instructions] Your first question is from David Saxon from Needham.

I just wanted to ask quickly on modelling. I mean, Lawrence, you talked about the GBP 15.3 is down year-on-year. I guess what's kind of a realistic revenue contribution number we should think about for your -- the remaining fiscal '26? And then how should we think about the go-forward kind of revenue and cost synergy opportunities? I know it's dilutive this year, but would love any color on maybe the magnitude of potential accretion to organic growth and margins.

Yes. Let me start with some of the synergies, David, and I'll come back to your modelling question. One of the things that is important to note, fiscal '25 and fiscal '26 really is going to represent a snapshot in time. It doesn't really represent the full potential. The current run rate is well below our installed capacity. So I would say, looking at fiscal '24, kind of that GBP 20 million to GBP 21 million range is probably where this will be at a normalized level. When you look at synergies, our assumptions around synergies are mainly around revenue. So let me be more helpful.

For revenue, it's really broken down into 3 opportunities. In the area of pharma -- sorry, in the area of government and academic, we have a tailwind in this area since UKBC is a trusted partner to the government. We expect to see the volumes for the OFH programme Phase 2 in our processing business to pick up in fiscal 2027. And again, to be helpful, that's going to be -- puts us closer to this normalized revenue level that you saw in fiscal 2024.

Secondly, in around pharma and biotech, we will leverage Azenta's commercial engine and pharma and biotech relationships on top of adding additional commercial headcount this year. This will really help us diversify the customer's base and accelerate commercial growth in the U.K. while creating additional pull-through for our automation and our consumables.

We've been working on and expect to have resources in place by the end of fiscal 2026. And this will really help us balance the revenue mix between -- mix towards really higher reoccurring, high-margin storage products. And then last but not least, on the revenue synergies, as John mentioned, UKBC will become the anchor tenant for Azenta products in Europe, really integrating with our German biorepository to generate additional cross-border business. We have an excellent management team at UKBC, led by Tony Cox, which will help us grow in region.

Your next question is from Paul Knight from KeyBanc.

Regarding the BioArc Ultra, this seems like it could be category killer for vertical refrigeration units. So will you really have BioArc Ultra for your sites exclusively and not allow even competitors to have access? So can you kind of frame up how BioArc Ultra really should give you a competitive edge?

Paul, it's John. Good to be with you. So a couple of things to think about. I mean, we -- our stores business, we don't differentiate a competitor versus not in terms of who we sell to and why we sell to them. I think the one thing that is important here is that the BioArc Ultra and our stores gives us the customers' high throughput or access to their samples at a very fast pace from an archival perspective.

So being more specific, in biorepositories, you have archival type of storage, which is low. You're not accessing those samples at a high rate. There's medium and then there's high, which is where the stores come into play. Clearly, our biorepositories have all 3 of those, and that's the way we're continuing to set this up.

Today, UKBC does have ULTs on site, but that's again for these archival or low-touch samples that are needed from a customer perspective. So it's all -- really all 3 we look at in terms of our biorepositories. We're not going to constrain any sales in terms of our competitors or someone wanting access to this type of technology. It does give us a competitive advantage on the cost side. And I think that, that's got to be pretty clearly articulated from us, and we're going to continue to do that, gives us a cost-leading position.

If you look at the levers around driving value to our customers around customer intimacy, where we're spec-ed into the workflows and then what is our cost-leading position, where is our cost position. And we're in a cost-leading position because of our automated workflows, the vertical integration on consumables and then you have the stores and automation on the stores, which is kind of the epicenter for this high throughput automation tailwind that's occurring in the industry right now. So I hope that helps, Paul.

Your next question is from Vijay Kumar from Evercore.

This is Kevin on for Vijay. Just one on U.K. Data Center historically being a customer. What was their revenue contribution historically? And what will be the net incremental revenues from the transaction, so revenues, excluding intercompany eliminations?

Kevin, first, UKDC was one of Azenta's best customers, and that's another reason why we love this business. They have 7 automated stores and leverage our FluidX tubes to create a really complete automated solution for their customers. To answer your question, we don't break out the specifics here, but really just to give you a couple of items. So the manufacturing and installation of the BioArc Ultra is largely complete. It should be online in April or May time frame. Any impact on revenue will be prospective and not a retrospective adjustment. In terms of consumables, we will see roughly half a year of purchases converted to internal purchases. This was included in our transaction valuation and the impact has been contemplated.

Your next question is from Mac Etoch from Stephens.

Just one for me. I guess you, Lin, kind of answered this already, but it sounds like the incremental CapEx, I just want to get a sense of how much is required to scale the site as you finish out the deployment on the BioArc Ultra?

Yes. In terms of CapEx, Mac, the great news here is like today, UKBC has about 30 million samples of capacity which right now has about -- they're at 40% utilized. So we don't see much requirement for CapEx, and that's kind of why there's been a lot of capital efficiency acquiring really this established platform. So on top of that, this capacity really provides meaningful headroom to grow and scale the business without requiring additional investment here. And it really opens up the aperture for us to really go gain additional revenue from pharma to biotech as we talked about.

Your next question is from Brendan Smith from TD Cowen.

Maybe just piggybacking off an earlier question, and I wanted to make sure I heard you correctly. Can you maybe just expound a bit on the additional kind of OpEx you expect to make this year into the UKBC? Or I guess, really to bring it up online, I heard you about the CapEx side of the conversation, but if you could maybe provide a bit more color on how we should expect -- how much we should expect really from kind of an OpEx standpoint here and how we should think about the cadence of that over the next few quarters?

Yes, Brendan, great question. So generally, the investment we're going to put in place starting in fiscal '26 is really around sales reps to help on the pharma biotech side here, and that roughly, we're going to bring in around 4 reps. That's generally the -- all the OpEx that we're going to bring in. One of the things around cost synergies and operating leverage is really, again, the existing UKBC capacity allows us to really get higher throughput at the same operational cost and drive margin expansion without much headcount or structural changes. And really, when you look at kind of the middle of the P&L, we're really going to be leveraging additional Azenta automation know-how around the front end of the storage process such as registrations. So from an OpEx and really kind of expenses, it's really purely commercial investment upfront.

There are no further questions at this time. Please proceed with the closing remarks.

Very good. Thank you, everyone, for attending today's call. We are very excited about the team's continued performance around M&A, and we're very excited to welcome UKBC to the Azenta portfolio and family of companies. Thank you again, and have a good day.

Thank you. Ladies and gentlemen, the conference has now ended. Thank you all for joining. You may all disconnect your lines.

Greetings, and welcome to Azenta Q1 2020 Financial Results. [Operator Instructions] As a reminder, this conference is being recorded, Wednesday, February 4, 2026. I will now turn the conference over to Yvonne Perron, Vice President, FP&A and Investor Relations.

Thank you, operator, and good morning to everyone on the line today. We would like to welcome you to our earnings conference call for the first quarter of fiscal year 2026. Our first quarter earnings press release was issued before the open of the market today and is available on our Investor Relations website located at investors.azenta.com in addition to the supplementary PowerPoint slides that will be used during the prepared remarks today.

Please note that effective the first fiscal quarter of 2025, the results of B Medical Systems are treated as discontinued operations. I would like to remind everyone that during the course of the call, we will be making a number of forward-looking statements within the meaning of the Private Litigation Securities Act of 1995.

There are many factors that may cause actual financial results or other events to differ from those identified in such forward-looking statements. I would refer you to the section of our earnings release titled Safe Harbor Statement, the safe harbor slide on the aforementioned PowerPoint presentation on our website and on our various filings with the SEC, including our annual reports on Form 10-K and our quarterly reports on Form 10-Q.

We make no obligation to update these statements should future financial data or events occur that differ from the forward-looking statements presented today. We may refer to a number of non-GAAP financial measures, which are used in addition to and in conjunction with results presented in accordance with GAAP.

We believe the non-GAAP measures provide an additional way of viewing aspects of our operations and performance, but when considered with GAAP financial results and the reconciliation of GAAP measures, they provide an even more complete understanding of the Azenta business. Non-GAAP measures should not be relied upon to the exclusion of the GAAP measures themselves.

On the call with me today is our President and Chief Executive Officer, John Marotta; and Executive Vice President and Chief Financial Officer, Lawrence Lin. We will open the call with remarks from John, then Lawrence will provide a detailed look into our financial results and our outlook for fiscal year 2026. We will then take your questions at the end of the prepared remarks. With that, I would like to turn the call over to our CEO, John Marotta.

Thank you, Yvonne. Good morning, everyone, and thank you for joining us today for our first quarter earnings call. As we start fiscal 2026, I want to acknowledge the focus, discipline and execution our teams continue to demonstrate across Azenta. Their commitment to serving our customers and continuously improving how we operate is central to our momentum and is driving meaningful progress across the business. Because of their efforts, we are entering the year well positioned for continued success.

Together, we are building a stronger, more agile and high-performing Azenta. As I have said before, our turnaround continues, and it will not be a straight line, no turnaround is. After establishing a stronger organization and structural foundation last year, we are accelerating efforts to streamline processes and elevate performance. While macro conditions remain mixed, we entered the year with a much stronger foundation, clear accountability and a sharper strategic focus. This is the playbook for a successful turnaround, and I am confident in the path we are taking.

Our priorities for 2026 are clear: embed operational excellence throughout the organization, accelerate growth and expand margins and the strategic and disciplined capital deployment. These are the pillars that will drive Azenta to outperform the market and deliver long-term value creation for our customers, employees and our shareholders. In the first quarter, organic revenue declined in line with our expectations, down approximately 1%. As we discussed last quarter, our outlook incorporated continued uncertainty in the macro environment, particularly around capital spending in academia and government funding, and those dynamics largely played out as anticipated.

From a market perspective, conditions remain uneven. Capital spending decisions continue to be cautious across parts of the life sciences ecosystem. We see positive momentum across Europe. And while the U.S. is still slow, we are cautiously optimistic with improvement in the capital markets as well as renewed M&A activity. Bookings during the quarter were impacted by weak capital spending and the government shutdown at the end of the calendar year. While this is causing timing shifts, we expect these orders to be recognized in the future quarters and do not anticipate it to impact the full year results.

Over the coming months, we expect greater clarity around government and academic funding, which we believe will offer greater stability across end markets broadly. 2026 is shaping up to be a transitional year for the life sciences sector with macro conditions and sentiment being mixed, yet the underlying industry tailwinds remain consistent. Last year, we demonstrated Azenta's ability to deliver on our commitments even in a challenging environment, proving that we can execute with discipline and precision.

These strengths provide a solid foundation as we advance our turnaround initiatives this year. We anticipate acceleration in the second half of 2026 as delayed approvals are processed, capital investment ramps and our growth investments begin to take hold. Importantly, the current environment highlights why Azenta is the partner of choice for life sciences customers navigating complexity and change.

Our differentiated solutions and deep expertise uniquely position Azenta to help our customers optimize operations, accelerate innovation and manage resources more effectively. We are the trusted partner for organizations seeking scale, reliability and differentiation with an expert team that knows the science, understands the workflows and delivers results for our customers.

The combination of expertise, technology and operational discipline enables Azenta to turn challenges into opportunities. Operational excellence is the engine behind everything we do. The Azenta Business System continues to guide how we operate, driving measurable improvements in on-time delivery, quality and productivity across operations, commercial and support functions. During the quarter, we advanced ABS deployment through Kaizen's daily management routines and problem solving that are taking root.

Teams across the organization are embracing a continuous improvement mindset, proactively identifying opportunities and shaping solutions that enhance efficiency and execution company-wide. ABS is not just a set of processes. It's a differentiator for Azenta, enabling sustainable, scalable operational excellence that supports both growth and margin expansion and reinforces our ability to deliver for our customers and our shareholders alike.

We also continue to benefit from the simplified and decentralized operating model implemented last year. Clearer accountability at the operating company level supports faster decision-making and more disciplined execution. Productivity gains are being reinvested in line with our priorities, including commercial excellence, innovation and customer-facing capabilities.

Our core growth investments in scaling biorepositories, regionalizing gene synthesis and investing in technology and automation are gaining traction. During the quarter, we announced the definitive agreement for the sale of B Medical, which is expected to close on or before March 31. This transaction further sharpens our focus on our core portfolio of differentiated solutions and enhances our financial flexibility, supporting our strategic approach to future capital allocation.

Combined with the $250 million share repurchase authorization announced at Investor Day, these actions reflect our ongoing commitment to delivering value to our shareholders while strategically deploying capital. Let me cover a bit more on the first quarter performance and our full year outlook. As expected, on a year-over-year basis, organic revenue declined approximately 1%.

Within multiomics, next-generation sequencing and gene synthesis showed growth, reflecting continued customer demand for advanced workflows and the value of our differentiated solutions. In Sample Management Solutions, we saw solid growth in biorepositories, demonstrating strong execution and sustained customer adoption, while our automated solutions line remained under pressure, particularly in stores due to ongoing budget constraints.

As I've said, turnarounds are never linear and may be lumpy. In the quarter, we faced higher costs in automated stores on late-stage projects related to quality issues that remain from last year. We are working closely with our customers to make it right and expect to lapse these issues post the second quarter. In multiomics, we experienced regional mix dynamics with softness in North America leading to lab inefficiency.

We are taking decisive actions to address these pressures. We expect margins to improve as we progress through the second half of the year and execute on the transformation of our company. Lawrence will go into more detail on our quarterly financial performance.

Lastly, as you know, we do not guide quarterly. Our operating rhythm in the businesses to drive performance is monthly. Yes, our job just got harder. And looking ahead, we are committed to our full year 2026 guidance of 3% to 5% organic revenue growth and adjusted EBITDA margin expansion of approximately 300 basis points. While macro conditions remain mixed, we view 2026 as a transitional year for the sector, and we are confident that our initiatives, including the revamped commercial engine, strong leadership and disciplined execution will gain traction as the year progresses.

With that, I'll turn it over to Lawrence to walk through the financials in more detail.

Thank you, John, and good morning. I'll begin with our Q1 2026 fiscal results and the key financial drivers, then cover segment performance, our balance sheet and fiscal 2026 guidance. Today's results exclude B Medical Systems, which is classified in discontinued operations, unless stated otherwise.

During the quarter, we recorded an additional $10 million noncash loss related to assets held for sale. As communicated in December, we expect the sale to close on or before March 31, 2026. To supplement my remarks today, I will refer to the slide deck available on our website.

Turning to Slide 3. Total revenue was $149 million, up 1% reported and down 1% organically with a 2% headwind from foreign exchange. Results reflect mixed performance across the portfolio with strong growth in biorepositories and next-generation sequencing, partially offset by softness in our capital-intensive businesses.

Overall, these trends are consistent with our initial expectations for the quarter and reflect the impact of the continued uncertainty in the macro environment. Non-GAAP EPS for the first quarter was $0.09. Adjusted EBITDA margin was 8.5%, down approximately 230 basis points year-over-year, impacted by pressures in gross margin.

Despite this, we remain confident in the opportunity for margin expansion in 2026 and beyond. We are focused on leveraging disciplined cost management while optimizing operations as we continue transforming the company. Free cash flow, including B Medical, was $15 million for the quarter, driven by increased customer deposits and deferred revenue, partially offset by usage in working capital.

We ended the quarter in a strong financial position with $571 million in cash, cash equivalents and marketable securities, an increase of $25 million quarter-to-quarter. This provides us with the flexibility to deploy capital and return value to our shareholders as we progress through 2026. In December 2025, our Board approved a $250 million share repurchase authorization. We remain committed to maintaining financial flexibility to support disciplined strategic capital deployment that drives long-term value creation.

Now let's turn to Slide 4 to take a deeper look at our results in the quarter. Total revenue was $149 million, up 1% reported and down 1% organically with a 2% headwind from foreign exchange. Multiomics was supported by next-generation sequencing, which contributed to year-over-year growth as well as gains in gene synthesis, which was partially offset by continued softness in Sanger sequencing. Within Sample Management Solutions, growth in biorepositories and consumables and instruments was offset by a decline in automated stores and cryo.

Overall, these trends are consistent with our expectations, reflecting macro uncertainty. Turning to gross margin. We delivered 44.1% for the quarter, down 360 basis points versus the prior year. The decline was primarily due to underutilized lab capacity driven by lower North America volumes, coupled with additional costs related to rework on several automated storage projects. Despite these headwinds, we continue to make meaningful progress on our ABS efficiency initiatives that positions us well for margin expansion over time.

Adjusted EBITDA was $13 million, representing an 8.5% margin, a contraction of approximately 230 basis points, driven by the gross margin pressures I just described. Our operational transformation and disciplined cost management journey continues as evidenced in the $5 million decline in SG&A year-over-year and more importantly, in G&A. Again, non-GAAP EPS for the first quarter was $0.09 per share.

With that, let's turn to Slide 5 for a review of our segment quarterly results, starting with Sample Management Solutions or SMS. Sample Management Solutions delivered revenue of $81 million for the quarter, flat on a reported basis and down 2% organically. Growth in biorepositories demonstrated strong momentum with early wins in our commercial growth initiatives.

This growth was partially offset by expected softness in automated source and cryo due to slower bookings from macro-driven budget constraints. Consumables and instruments delivered modest year-over-year growth, reflecting steady demand and the ongoing contribution of these products to the overall portfolio.

Turning to gross margin for Sample Management Solutions. We delivered 45.4% for the quarter, down 370 basis points versus the prior year. The decline was primarily driven by higher rework costs incurred on automated stores projects and the negative impact of a nonrecurring item. The incremental automated stores cost stems from quality issues that we have been addressing through targeted efforts with our customers.

We expect our remediation efforts to be completed by the end of the second quarter and to incur a full year estimated impact between $3 million to $5 million. Turning next to the multiomics segment. Multiomics revenue for the quarter was $67 million, up 1% on a reported basis and flat organically. Next-generation sequencing continues to benefit from strong customer demand.

Gene Synthesis growth was supported by strong oligo demand in China. These gains were offset by continued weakness in Sanger sequencing, which declined meaningfully compared to last year. Geographically, Europe and Asia performed strongly, supported by our commercial initiatives and improved execution, with China continuing to perform well with 26% organic growth.

North America was softer, reflecting macro-driven budget constraints and the temporary disruption from the government shutdown, which impacted customer activity during the quarter. Multiomics non-GAAP gross margin was 42.6%, down 350 basis points year-over-year, driven by regional mix and loss leverage from lower North America sales volume.

Next, let's turn to Slide 6 for a review of the balance sheet. As I mentioned, we ended the quarter with $571 million in cash, cash equivalents and marketable securities. We had no debt outstanding. Capital expenditures for the quarter were approximately $6 million, reflecting continued investment in automation, capacity expansion and technology to support scalable growth.

Turning to guidance on Slide 8. We are reaffirming our guidance for fiscal 2026 with organic revenue growth expected in the range of 3% to 5%. Multiomics is projected to deliver low single-digit growth, while Sample Management solution is anticipated to contribute mid-single-digit growth. We continue to expect the second half of the year to accelerate as our commercial investments and growth initiatives gain traction.

On the profitability front, we are also reaffirming our target of approximately 300 basis points of year-over-year adjusted EBITDA margin expansion, driven by continued operational efficiencies, disciplined cost management and scalable operating leverage as well as over 30% year-over-year improvement in free cash flow generation.

Overall, we remain optimistic about the year's progression and committed to the full year outlook. In closing, we remain encouraged by the progress of our growth initiatives and operational improvements. As we move through fiscal 2026, we remain confident that the strategic priorities outlined at Investor Day provide a clear road map to drive sustainable, profitable growth and long-term value creation for our shareholders.

This concludes our prepared remarks, and I will now turn the call over to the operator for questions.

[Operator Instructions] And your first question will be from David Saxon at Needham.

So I wanted to start on the gross margin. So maybe can you talk about just your level of confidence in getting the SMS margins back to where you want them to be? What's in your control versus impacted by maybe customer dynamics?

And then just on the growth -- sorry, EBITDA margin, you reiterated the 300 basis points of margin expansion here. I guess what's your level of confidence that the GM OM mix is going to be 200 and 100 basis points. OpEx looks like it was below what we were modeling. So does OpEx drive more of the 300 basis points this year?

Yes, David, good to be with you. Thanks for the question. So let me just pull us back for a second around what's happened since our Investor Day and just kind of talk through that. This will kind of lead into some of the answers to your question. So Azenta specific developments, I would think about a few things. This product mix and geo mix causing some of those margin headwinds.

Overall, I think the portfolio met expectations. Product performance, is not a known issue. And this is not a new issue for us in terms of the quality of stores. We can get into the details of that. We had 18 stores that we had some quality issues. We're starting to lap some of those. We've got only a few more that we've got to continue to go and solve for.

A lot of this has been more noticeable this year due to the -- due to what we've been flagging with the investor community around softness on the first half. So less of those tailwinds there. And then lastly, Azenta specific developments is kind of this North America reboot commercially, both in multiomics and SMS.

We have been -- we're way ahead on our reboot in Europe, in the Middle East, in parts of APAC, North America lags in certain areas. That's really kind of an update there. End market-wise, listen, slower than expected in North America, government shutdown impact, that was pretty -- it's pretty well understood right now. Sanger continues to slide from an end market perspective, and you've got some geopolitical instability. I think in terms of our confidence, we're continuing to reiterate our guidance for the full year.

What I can tell you is, yes, our job just got harder on the margin line, but that's our job. We're pulling some hard levers here, and we're going to continue to do that. We've been very clear that we're not managing this business on the quarter. We're not going to do that within the 3 years of our turnaround that we've signaled very strongly at our Investor Day. So we're confident.

And I'll let Lawrence get into those particulars of that, David, but thanks for the question.

Yes, David, this is Lawrence. Maybe let's just talk a little bit about Q1 and give you a bit of a breakdown. So as you know, adjusted EBITDA was $12.7 million in the first quarter or about 8.5%, which was down $3.3 million versus prior year. So broadly, the decline of the components of the decline were $2 million related to the storage quality issues that John talked about. Really, we anticipate these quality issues to be fixed by end of Q2.

Secondly, there's about $1 million related to some of the lab inefficiencies that we saw, particularly in North America. As you saw from a top line perspective, we met kind of what we expected, but certainly, the mix was leaning towards Asia than North America. So certainly, that impacted some of our lab efficiency in the region.

And then lastly, there was about $700,000 in nonrecurring charges related to inventory adjustments. So when you look at that, those are kind of the broad strokes of the Q1 decline. One -- what I'd say is particularly around your question on the mix on the overall profitability in the model, we still hold firm that gross profit would be around this 200 basis points in the GP side and 100 basis points. And when you think about that, that's going to generally stem from half related to sales volume.

As we talked about in Investor Day, there's a second half ramp. We've always tried to telegraph that we are fully aware that the first half would be softer than kind of our traditional phasing just because we are kind of putting all this growth investments in place. So again, we're still holding to the $200 million on gross profit, $100 million because of volume, ABS, lean productivity really kind of taking hold and then price.

Okay. That was super helpful. And then my follow-up was just on capital spending in that academic and government group. I guess, can you characterize the conversations you've had with customers in those segments during the quarter and just level of confidence that, that will improve and how that will drive North America demand and growth?

Sure, David. No, listen, great conversations with those -- that end market in terms of customers. I think we -- so from a European perspective, really, really a lot of momentum in Europe and the Middle East in that sector. In the U.S., I will tell you, there's a lot of green shoots. I mean, I think the back half, we still feel bullish on that. And the conversations we're having with our academic and government customers are confirmatory at this point. So good momentum there in North America specifically.

Next question will be from Matt Stanton at Jefferies.

Maybe just to go back to the second half ramp you guys talked about. I think you talked about for the acceleration in the back half, improvement in the approval process, capital spending ramp and then growth investments.

Can you just talk about level of comfort or visibility into some of those key drivers? And then on the gross margin side, I think you said $3 million to $5 million was tied to some of these quality issues that will largely be done at the end of 2Q. So that implied the absence of that headwind in the back half is kind of a 100 basis point plus step-up alone to gross margin. Just want to make sure I have that clear.

Sure. Let me just give you some context around capital spending. Again, we're feeling pretty confident that North America is coming back. We do think this is a back half story. When we talk to our customers and more importantly, our sales team, we are driving a lot of conversations with our sales team at a high frequency.

They're feeling pretty bullish right now and a lot of the programs we're working on, specifically in C&I instruments and stores, we continue to gain some momentum there. In terms of growth investments, as you know, our growth investments are specifically in feet on the street, innovation, some productivity gains and just driving performance in those areas. We continue to ring-fence those investments.

We are not coming off of those. We think that as a part of our -- the transformation in the next few years, getting these growth investments now is going to be pretty meaningful, specifically in R&D and innovation. I'm pleased with where the teams are in terms of where these investments have been made, our hiring around that and more importantly, driving to the road maps that the teams have on the product side. So pleased around that.

Let Lawrence talk about the second half ramp and give you some of the specifics there.

Yes. Matt, so when we look at overall EBITDA for the year in the -- the growth to the 300 basis points, it's $22 million incremental year-on-year. And particularly, we talked a bit about -- with Dave about this kind of 200 basis points, 100 basis points -- 200 basis points in gross margin, 100 basis points in OpEx. When you look at the gross margin mix, it's driven by the sales volume. Half of it is going to be sales volume, what John just talked about, right?

As our sales reps, particularly in North America starts to ramp in the second half of the year, usually -- we brought in north of 25 reps. And usually, they take about 3 to 6 months to ramp. So that's kind of in our calculus. The other component in there is around ABS and productivity. Some of these topics we covered at Investor Day, right? We are having Kaizen events in our labs as well as our shop floors and manufacturing. And that's about 35% of the overall GM improvement. So volume is 50. ABS is about 35%.

And then certainly, we talked a bit about last earnings call is about our price initiatives. That makes up the rest of the gross margin improvement. And that price improvement is particularly focused around SRS and our C&I businesses. We've put those in place really at the start of the calendar year, and that really starts to ramp in the second half of the year.

Next question will be from Mac Etoch at Stephens.

Maybe just a follow-up. I appreciate the color on the back half ramp. But just given the performance in 1Q, can you give us a sense of your expectations for top line performance in 2Q? And then maybe your expectations around the cadence from 2Q to 3Q?

Yes. So when we look at the second quarter, certainly, we've talked -- first, let me step back and say, look, we're really not guiding quarterly. But when we look at overall revenue ramp, right, again, it's weighted in the second half of the year. And those are really the components there. So you'll probably see an uplift versus the first quarter. But certainly, a lot of what we're going to see in terms of growth is in the second half.

Yes, Mac. I mean, we can be helpful and give you some detail. But again, I just want to continue to reiterate the fact that we're just not going to manage this business quarterly. We are taking a longer-term view on it. And our growth investments continue around sales, marketing and R&D. That's going to continue to ramp nicely, going to drive that gross margin improvement over time.

We got to get some more volume in here. And then I think once North America comes online, we're going to be clicking on all cylinders. We're not right now, but that's the journey. I mean that's part of a turnaround. So we'll be helpful there when we connect here later.

Did you have a follow-up, Mac?

I appreciate -- I'll leave it there for now.

Next question will be from Vijay Kumar at Evercore.

This is Mackenzie on for Vijay. First one, I know you've called out the government shutdown impact in the quarter. But I was just wondering if you could speak to U.S. academic a little bit more broadly. And specifically, how are you thinking about performance in this end market, given that it seems like NIH budgets will be flat in 2026?

Yes. So in general, I think what we're seeing is a shift in some of the where the dollars are moving to in terms of universities based on larger projects. I mean we're seeing a little bit of that. The customer base we have right now, with the government shutdown, we saw some of the larger programs just frankly, just standing still.

And so there was no movement around that. That's been freed up. And so we're now supporting some of those programs. I think in general, things are settling down. There's a clear shift in where that NIH funding is going right now, and we're just continuing to support those programs.

On balance, the team is really highly focused on pharma and biotech. I mean we've always been highly focused on that. I think we continue to do that over time. We're always supporting our academic customers and the universities. We think that there's an opportunity specifically with the pressure on core labs and driving productivity on core labs. We think that our multiomics business is well positioned to continue to support the core labs and the pressure on getting more research out, getting more data out. And so we're doing that right now. We feel pretty good about that.

I think that's going to continue on, Mackenzie, but thank you for the question.

That's super helpful. And just to follow up on that. You talked a little bit about your pharma and biotech customers. What are you seeing from these end markets right now? Is pharma continuing to accelerate and your peers have talked a little bit more about seeing some positive sentiment from biotech customers. Are you also seeing something similar? Or what should we expect in the latter half of the year?

We are. What I would characterize that end market is there's more clarity there than last year. What do I mean by that? A lot of restructuring, a lot of -- there was uncertainty around what programs were going to continue and what programs were going to -- they were going to double down on and invest behind. I think we've got our team and the conversations we're having from those customers is clarity. Here's what we're doing. We're moving forward in this direction. And we're clearly seeing that in most of the segments in our business.

[Operator Instructions] Next question will be from Andrew Cooper at Raymond James.

Maybe just one more kind of nitty-gritty on some of the extra costs here on gross margin. So you called out the $3 million to $5 million, that's 50 to 80 basis points or so. Where do you think you can find some of the offset there to achieve the 300 basis point expansion? And I know you talked about the job being harder, but where are some of those places that you're looking to find that little bit of extra room or pull it a little bit forward from fiscal '27? And how do we think about kind of what that looks like?

Yes, Andrew, thanks for the question. So a couple of things that we have in our favor. And John is right. Our job got a little bit harder, but we're certainly pulling additional levers. And let me be more helpful on that. Certainly, as we see the second half increase in volumes, particularly around North America, generally, we'll get a better mix. That's number one.

Secondly, around ABS and productivity, certainly, areas like Kaizen events in the lab and manufacturing, we've actually seen some really good results preliminary that we expect to read through. Other areas such as automation in our biorepositories are being accelerated to help us look at some recoveries. The one thing I would say, and I step back is that one of the things we did in fiscal 2025 was to put managers, general managers in place of these businesses. And that's really helped us get laser-focused on operations and optimizing processes.

One more -- 2 more items, I think we're addressing, I think, more acutely is around our fixed cost in our Sanger business. And then finally, in really accelerating opportunities around indirect cost savings. Some of the workshops we run in the last couple of weeks have actually been yielding meaningful opportunities for us to attack it. So certainly, these have always been in our portfolio of levers to optimize our margin. But with some of the -- particularly the quality issue, we've really started to accelerate these initiatives.

Okay. Great. And then maybe just a little bit kind of higher level one. in the past and at the Investor Day, you've talked about the notion of leveraging bundling a little bit more and kind of cross-selling within segments as opposed to necessarily across. Just would love a little bit of an update there. I know it's a noisy end market environment kind of across the board right now. But how have those conversations gone as you talk about trying to drive kind of more of that breadth of portfolio at an individual customer level?

Sure, Andrew. So what I would say from a customer perspective, a lot of that bundling is basically within the segments, okay? So let me be more helpful. Specifically around kind of -- let's go from a multiomics perspective, the one-stop shop is really important to customers where they can -- we can read and write genes for them specifically. that bundling is going very well.

I mean, from a customer perspective, it's ease of use. We're working on more -- we've made more investments specifically around UX and UI to make that journey a little easier for customers to bundle using our e-commerce platform. So that -- those investments are in flight. Where we continue to see a lot of strength is in our C&I business, continue to bundle instruments and consumables there. We're also seeing bundling with our stores. I mean, if you look at these stores, some of them are 2 million to 10 million sample opportunities.

Our customers are using our consumables with those. We see high attachment rates and service. So I think the teams have done a really nice job in bundling within the segments. That is where our focus is because there's so much opportunity there. We don't want to confuse the organization and bundle really across the segments right now.

There is an opportunity in academic and medical there, but it's an opportunity that we think we will solve in different ways. But right now, commercially, we're focused in the segments. Similar with SRS, our biorepository business, that team has done an excellent job of bundling more product solutions for our existing customers. As you know, we do a really -- we've got high market share in active clinical trials, and we're doing a lot in manufactured product and some other areas right now.

So I'm very pleased with this. I mean, our breadth and our ability to continue to solve some of these issues for our customers where they want to do business with -- what's clear to me is pharma and biotech, they're consolidating suppliers, but they want to do business with partners that are high quality, give them a fair price, but give them a broader reach of products and solutions, and we're clearly meeting those needs right now. So I hope that helps, Andrew.

Next is a follow-up from Matt Stanton at Jefferies.

One on capital deployment. I think the message prior was like you're unlikely to do deals before B Medical was completed. Now that that's set to hopefully close here shortly, the agreement is in hand. Maybe, John, just talk a little bit about actionability of the funnel. Any more color on size of deals? And I know historically, share repurchases have been kind of down the pecking order for capital deployment. But with the $250 million authorization out there post the Analyst Day, any shift in appetite around repurchases?

Yes, Matt. So a couple of things to think about. We are constantly comparing what we talked about before is our 4 levers for capital deployment around gross margin productivity, growth, specifically M&A and share repurchase. All of our 3 levers we always compare to buybacks. And we're going to be pulling all these -- all 4 of these levers throughout this journey in the next few years.

I can tell you that. And in terms of actionability, we are very busy around M&A right now specifically, and we're very excited about what is in our hands right now. We're going to continue to put our capital to work in this area. But again, I think you're going to see us pull all 4 of these levers. I've mentioned this before, but it's worth repeating. We want our investors to come away and say, "Hey, listen, these guys are good operators. They've got a grip on the business." Yes, there's not a lot of linearity to turnarounds, but we understand it. They're calling balls and strikes and they're very straightforward about the journey we're on, on the operating side.

On the capital allocating side, we also want our investors to come away and say, "Hey, they're very thoughtful capital allocators. They understand how this works." And we're always looking at those returns versus share repurchase. last point on it is I think you're going to see us pull all 4 of those levers.

Next question will be from Paul Knight at KeyBanc.

As you remediated these automatic stores QC issues, and I think it's what's 2 left out of 18, are these permanent fixes? Was there a commonality of what you saw? And so is this kind of behind us now?

Yes. Paul, good to hear from you. A thoughtful question. So a couple of things to think about. I mean, we have been really dealing with this issue since we started, okay? When we started getting the business, we weren't meeting our customers' needs, 18 stores issues. So that's the last few years of sales we've had these problems in.

And bluntly, if you're not delighting your customers, what are we here to do? So we attack this head on. All 18 of the stores, understanding what were our offsets, what do we have to countermeasure and how do we go out and delight our customers. So we've been spending a lot of money around that. I've been personally meeting with our customers, all of them around these stores. So that was the first thing is, what was the specific issue? How do we go solve that real time for our customers and get them operational.

The second is how -- what is the permanent fix in which we're doing this from a design perspective. I can tell you, we've got great R&D teams, okay? So what were -- what was the issue ultimately? We had too much demand. The teams were being stretched, and we weren't structurally aligned around serving our customers. What do you have to do there?

First thing is structurally align yourself to go win for the customer. One is around new product development. Two is around POC. That business is a POC business, percentage of completion; and three, around sustaining engineering. We have restructured that R&D team where we have teams that wake up every day around MPD, MPI, POC separately in sustaining engineering, okay? That was the big step that we've made. There are some tweaks on the design side. All of that has been implemented.

And I'm pleased to say that moving forward here, ADS has really helped us specifically around getting line of sight on this POC, getting us more in control and going out and delighting our customers and putting our best foot forward. So we've done that. We are lapping that.

Listen, there's always a cost of poor quality, whether that is you delay your NPI projects, whether you are not meeting the customers' needs from a brand perspective, but we have gone in and we're meeting those customers where they are today. I personally met with them. And it just is part of the turnaround journey, Paul, but I'm very, very pleased at how the team has responded. I mean that's the mark of a good organization. It's how do you respond this adversity? How are the customers understanding this?

And are you making it right? And the bottom line is we're doing that right now. So we're lapping it. Some of these have taken more time than we expected, but we've got a grip on that right now, and there's clear line of sight there. So hopefully, that helps, Paul.

Yes. Last question would be Sanger is down, but what was the growth of NextGen? And is the increasing accuracy of NextGen really one of the reasons why Sanger finally is maybe shrinking as a part of market?

Yes. This Sanger -- we've been talking about Sanger for a while. I'd rather not, but let's address it. So the next-gen Plasmid-EZ, I mean, that is a mid-single-digit grower for us. I mean we're doubling that size of that business. We told the team and we invested heavily behind it, said this shouldn't be a hobby for us.

We have a broad footprint, 4,000 -- we've got 4,000 dropboxes globally. We should have been investing in this earlier. We are now very heavily, and we're growing it nicely. So we're doubling our growth there. That's one part of it. Sanger, as you know, I mean, I have to tell you, Paul, I've been out, talked to a lot of customers. I talked to a lot of our sales reps. We're triangulating in on this. It's not going away.

There's a clear need from an end market perspective and a customer perspective with Sanger. Then the question is, where is the bottom and how do you rightsize your cost structure. Bottom line is we don't know where the bottom is yet in Sanger, but we are rightsizing our cost structure around that.

So I would tell you that's more on the come. But in general, we're well aware of what's going on in Sanger and more importantly, we're more focused around growth in terms of that Plasmid-EZ to offset that. I'll tell you, the team has done a nice job there. It was an area bluntly where when we came into the business last year, I said, what's going on here? We need to be investing heavily here, and we've done that.

Next question will be fromBrendan Smith at TD Cowen.

Maybe just first, actually on the regionalization of multiomics and NGS services. How should we maybe think about impact to margins there relative to kind of what you're doing in biorepositories and automated stores just over the next couple of quarters, especially in the context of your commentary on margin expansion this year? Really just trying to kind of understand the relative pushes and pulls, I guess, across segments as you're restructuring. And then I have a follow-up.

Sure, Brendan. Always good to hear from you. So Lawrence can get into the particulars around this. But we -- all of that's forecasted, good line of sight into what we want to do there from a regionalization perspective, specifically around synthesis. I mean we're very pleased with our -- how we are moving into that strategy right now and executing on that strategy. I think you're going to be hearing more about that in the coming months.

Our gross margin, we make -- we do well. I mean that's a 65-plus gross margin product category for us. Yes, we're seeing some North America share loss in Synthesis, but we're also seeing some traction in certain areas right now in North America. So there's a bit of an offset right now, specifically. I think you're going to see gross margin improving in certain areas because of our automation investments, but some of the technology side that we've got in our hands as well. So more to come on that specifically.

Yes, Brendan, certainly, really pleased with what the China team is doing. But when you look at kind of the dynamic of Asia and North America, they're lower margins in total for multiomics. As we talked about, certainly, we've got a North America sales team reboot here that certainly will read through in the second half year. So you're going to see a significant ramp in North America, which really does translate to a higher gross margin profile overall.

Great. And actually, you just took a question off my mouth. Just on the NGS strength in China. I think you noted 26% organic growth there, if I'm not mistaken. So can you just quickly maybe give us a sense of what you're seeing that's kind of underpinning that and if you expect kind of growth at that rate to continue over '26?

You bet. Biotech and pharma are -- I mean, they're really -- we're seeing a lot of momentum in that segment. We've always been well positioned because of our China for China brands, go-to-market, very regional. We show up. I mean, our China team is fantastic. If you look at kind of the framework that we look at in our business in general, it's people, structure, process and performance. That team is hitting on all cylinders. And so you're seeing that read through on the results right now.

Of course, in other regions, it's a mixed bag right now because we're in the turnaround. But our China team shows up really well with our customers in pharma and biotech. A lot of investment going into those end markets right now. As you know, geopolitically, I think, and we've shared this with you all separately, but I think it merits a broader comment here publicly. Where I think geopolitically, there's a lot of focus around kind of 5G, 6G, quantum, AI and semi, biotech and life sciences, we're also seeing that read through. And China is very much investing behind that life sciences and biotech sector, and that's where our team shows up really, really well.

Ladies and gentlemen, at this time, we have no other questions registered. So I would like to turn the call back over to CEO, John Marotta.

Very good. Thank you all. And first off, I want to thank the team as always. I mean nothing gets done without our team showing up every single day, and we're really proud of the direction we're going in and our leaders here as well as our individual team members. I want to thank you for joining our earnings call today.

In summary, we're continuing the work we're doing in the company-wide turnaround and transformation. This is an important journey we're on, and we're very excited about creating long-term shareholder value over the next few years. Thank you again.

Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. And at this time, we do ask that you please disconnect your lines. Enjoy the rest of your day.

Good afternoon, and welcome to Azenta's Investor Day 2025, I'm Yvonne Perron. I'm the Head of FP&A and Investor Relations at Azenta. Thank you for joining us, whether you're here in person in the room and participate -- and got to participate in the tour this afternoon or you're joining via webcast, we truly appreciate your time, your interest in Azenta's strategic outlook and our long-range growth plans.

As many of you saw, firsthand this morning, how we serve our customers. We serve our customers to enable breakthroughs faster. And if you couldn't join us on the tour this morning, that's okay, we're going to bring you along on this journey as we have the discussion this afternoon. Just a few housekeeping items to cover. If you could please take a moment and silence your cell phones, your mobile devices.

In addition, today, we will be discussing non-GAAP measures, forward-looking statements. and we make no obligation to update these statements should facts or circumstances change. Please review the 8-K that we filed with the presentation just a bit ago, these materials are also available on the Investor Relations website.

In addition, I'll just refer you back to our latest Form 10-K and prior Form 10-Q filings for relevant information. Just stepping through our agenda quickly. Our President and CEO, John Marotta, will walk you through Azenta's strategy. Then you'll hear from Alex Esmon and Ginger Zhou, our key business leaders on the respective business priorities for sample management solutions and for Multiomics GENEWIZ. And then our CEO, Lawrence Lin, will discuss our financial outlook and importantly, our capital allocation strategy. Following John's wrap up, we'll take a short break, and then we'll move into Q&A and we'll probably handle that for about 30 minutes. Thank you.

And with that, I am thrilled to turn the presentation over to our President and CEO, John Moratta.

Thank you, Yvonne. Good afternoon, everyone. It's good to be with you. I'm excited to share the future of Azenta and where we're taking the company. On behalf of our 3,000 employees, I want to welcome you to Indianapolis. I hope you enjoyed the tour and the passion that our employees have every day to serve our customers.

As I stated, my background, I've spent the last couple of years in private equity, Patient Square Capital. Proud of that, I was at KKR ran an operating company for them called PHC Group, which was Panasonic Healthcare. Before that, I met Lawrence, our CFO at Danaher Corporation in 2016. And then before that, I was in medical devices. So I've spent a lot of my career in pharmaceuticals, medical devices and life sciences. If you leave here with nothing today, I want you to leave with these five things.

First, Azenta is in a very unique position. We have a number of opportunities in front of us. The first is top line growth, outperforming the market. The second is margin expansion. And an opportunity around margin expansion that does not rely on that growth. Third, is we have a balance sheet to deploy capital for M&A and other opportunities in front of us. We are a category leader in a very niche set of product lines. You saw some of that in the trade, and we have an opportunity to continue to expand on that with our growth investments. Third, we have an installed base. We have hundreds of stores and vaults in the field. We have thousands of our instruments that handle our samples and help our customers manage their samples.

In GENEWIZ, we have 4,000 drop boxes that give our customers an ecosystem to do business with us. We are a one-stop shop at that company. Four, gross margin improvement and operating leverage. You're starting to see free cash flow come into the business in this last year, and you're going to see that advance. Fifth, we're an incredible value. We're north of 10x EBITDA, $12 of our stock price is cash. We're going to generate $250 million of cash in the next couple of years, doubling our EBITDA and exiting 2028 double digit. We're pretty excited.

In the small mid-cap market in life sciences tools, there's not another company that has that opportunity. We've got a $6 billion addressable market. We outgrew that last year in a very challenging market. We're going to continue that trend. We have a lot of momentum going into 2026. What's driving that momentum? A lot of that momentum is driven by The Tools revolution. In the last 10 to 15 years, there has been a boom in new tools coming out, serving researchers. The output of that is data. and our world data is samples. Those are customer samples. We help them manage that.

That data in those samples is really important, sometimes more important than a gigabyte of data, the physical specimens. So there's $350 billion a year spent in research, pharma, biotech, government, NIH, other government entities in China, as well as Western Europe. We support that. There's a clear trend to outsourcing. 50% of that spend is used for outsourcing today. Our customers in pharma and biotech want to do business with less suppliers that are more strategic. Azenta fits within that.

Hopefully, you saw a lot of that today at the bio repository, and that will continue. We talked about the output of data. There's 24 billion samples today that need cold storage or automation. Specifically around automation, about $6 billion of that needs cold. But all of that needs automation. There's a clear trend right now in moving into automation.

Lastly, 50% of the FDA therapeutics that come out today need cold storage and/or support from automation. Azenta is at the epicenter of these trends from compounds to samples to therapeutics. Azenta today, we're a $600 million company. Last year, we grew 3%. We-- about 55% of our revenue is reoccurring, we have 14,000 customers globally. We are in the top 20 pharmaceutical and biotech companies in the world and one in three of our employees are either scientists or engineers that help support our customers every day. This is an important point. We'll talk about that later.

Today, we do about 60% of our business in the U.S., about 25% in Europe. And you can see on the screen about 10% in China. 55% of our business today taps into pharma and biotech. The other is in academic, medical universities or government. I joined the company in September of last year. Couldn't be more excited about joining the company. I was kind of scratching my head wondering what we have in front of us.

What I discovered was we have a great portfolio. That ecosystem is like no other. It's proprietary to us. We have a culture of employees that care. They want to serve our customers. We can do a lot with that. So you have to ask yourself what happened with prior year's performance in an undermanaged asset? What have we done to change that paradigm in the company? What we've done today is, we moved from a functionally aligned organization that was very centralized to a decentralized organization. We did that quickly.

We restructured the business. We now have accountable general managers in all of our businesses, clear line of sight in terms of P&Ls that are highly accountable. We have regional leaders commercially. They're solely centered around driving performance in the regions closest to the customer. Operational excellence through the Azenta business system is a way of life. It is no longer a project. We are redirecting resources from G&A and moving those into high-growth areas of the business around R&D, sales and marketing. Criteria around that is high-margin reoccurring revenue. The teams have clear accountability around product road maps that move us in the direction of that.

Our product managers are now in front and center in the organization. It's one of the most important roles we have in the company. We are selectively investing in these products today. This year, a lot of the growth investments came in. We're pretty excited about that. You could probably feel some of the energy today in today's tour around a lot of these growth investments, and you saw those today.

Lastly, we're tapping into a lot of the pharma and biotech profit pools. We are laser-focused on serving the most sophisticated customers in the world that will have impact on patients globally. Let me get into the business. We have two segments. First, is our sample management solutions. As you saw today, we have our -- in the tour of the advanced bio repository, we have a broad footprint in our bio repositories. Alex is going to go into that.

Our automated solutions makes up our stores or vaults and our C&I instruments and consumables. This is how our customers handle their samples today. We help them manage that. Multiomics or GENEWIZ. We have a very unique company here. Today, we read and write. And specifically, we're a one-stop shop for our customers. We have a broad footprint. We can scale that, 14 labs globally. All of this supports R&D throughout the world for the customers that I just shared with you.

We have a proprietary digital ecosystem that is in our multiomics business in GENEWIZ and in our SMS business. Our customers enjoy a user experience that is unlike no other. We're making investments here as well. It's important to note that this ecosystem is like no other. There is not another private company or a public company that has an ecosystem to serve our customers today like this. What do I mean by that?

And our automated storage and integrated solutions, we have the tools that customers can do this on their own or they can use our off-site by repositories and get the same experience. This is critical. You talk to one of our customers today that reiterated that. The clear trend in R&D is they want their dollars to go further in research. This ecosystem supports that. We mentioned our proprietary LIM system, LIM system and other systems that allow our customers to see in virtually into our facilities or the same experience within theirs.

Lastly, we talked about reading and writing of genes. In the center is our employees. This is important. Our employees are experts in the industry that our customers want to tap into to do their work. It's vital that they're able to speak to our employees about how to optimize and do things much more efficiently than they would have access to with other competitors. This ecosystem you saw come to life in our advanced biorepository tour today.

Again, this workflow is consistent in pharma, biotech, whether you're in research at a medical center in an academic center. Our product lines support this type of workflow. We're investing behind this today. I want you to take my word for it. I want you to hear from our customers. You heard that today from one of them. It's unsolicited. I get to speak to a lot of customers, and it gives me great pride personally to be able to support technology and innovation in biotech and pharmaceuticals to make society better. They need us and we need them. And it's a great partnership.

Now that we talked about what we do as a company, I want to move us into the strategy and where we're going. It should be no surprises here. This is pretty basic, this framework. It's important we get back to the basics in this company. We do the basics well. Those companies that do the basics well win. We'll talk more about how we do that with ABS. I'm going to go into each of these in particular and give you some examples as to how we're driving performance here.

Driving operational excellence. It is not a project. This is a way of life in the organization. How do we get better with less? The teams have done a really good job of optimizing the organization. We just gotten started. Reinvesting, taking those profits and investing them back into the business. We're reinvesting in three areas.

First is scaling our biorepositories. Second is around regionalization of gene synthesis. Third, technology and automated solutions, continuing to invest in this. And lastly, redeploying our capital from a very disciplined perspective. It's going to be critical to this organization. We're pretty fortunate to have a balance sheet. We'll talk about that as well. What does operational excellence mean? We define it and here's our criteria.

The Azenta business system led by Will Simmons, you got to meet Will on today's store. We're lucky to have him. He's done this many times. It's a culture. It's not a set of tools. We think about it in three areas. First, how do you drive lean, manufacturing, back office efficiency you reinvest that back into growth. We reinvest growth in two areas.

First is around R&D and product innovation. Again, we talked about clear road maps there. I'm going to give you some examples of each of these as we go on today. Commercial excellence. It begins with the restructuring of our commercial teams in which we now have leaders in each of the regions that wake up every day to serve locally to those organizations. I often say in commercial teams, your strategy is executed where your sales reps show up every day. It's really important. We know where our teams are going and who they're calling on.

Let me give you some early successes. Again, Will joined in about 9 months ago, we're early in our operational excellence journey, but we've seen some great wins to date. Some of these KPIs, you see on the screen, these are a few. We measure a lot more than that. These are customer facing. What matters most to a customer, quality. We weren't putting our best foot forward in our stores business. We decreased complaints by 55%, and we're still going. Our on-time delivery for customers, we were able to drive performance of 30% for on-time delivery in this, and we're not done.

Reducing costs. We talked about this many times on investor calls, very heavy in G&A. This is an area we've moved fast in certain areas, and we need to move slow in others. We're very thoughtful about this. We decreased our G&A by 3%. We're going to move to 10% reinvest that back into the business. Lastly, working capital. Lawrence is going to talk more about that today. This is an area we've seen improvement in our DSO, we were able to decrease that by 10 days.

Let's talk about growth. We're not going to be able to cut our way to growth. We've got to reinvest that. We're doing it in three areas. First is scaling our biorepositories, both geographically and a broader set of products that we're going to be offering our customers in terms of what we store in our biorepositories. You saw some of that today in the advanced power repository tour. Again, we're just getting started here. This regionalizing of gene synthesis, biosecure has been a hangover. We have clear line of sight into bringing synthesis in the United States and Western Europe.

Third, continuing to invest around our automated solutions and our technology here. It's critical. Our customers want to continue to do more around automation to drive productivity from an R&D perspective. We're going to continue to support that. What are some examples of a go-to-market optimization?

Again, early here. We talked about the restructuring of our go-to-market teams regionally. We're continuing to invest in our direct selling. We invested this year around 25 headcount here, and we're going to continue to do that. We have the right to win in certain markets, and we're laying the groundwork to do that. Again, early.

Sales bundling. Our teams are very focused around bundling products in these operating companies, automated solutions with stores and biorepositories. Separately, with our multiomics business with GENEWIZ and bundling solutions there, there's not -- there's not another company that can do that. Downstream marketing. We need to do a better job of communicating with our customers locally. We're investing here. Lastly, price optimization. I know Lawrence will talk about this as well. We have a clear opportunity here to share value with our customers in all of our businesses.

Let's talk about capital allocation. It's kind of a hot topic here at Azenta. We're going to be very disciplined. This is going to be a departure from the past. We pulled four levers for capital allocation: one, around productivity and gross margin improvement. Lawrence and I often joke, if companies were traded on gross margin, the world would be a better place. We're going to drive gross margin improvements through capital allocation and through ABS.

Organic growth. It's important we reinvest in R&D and sales and marketing. We've just started doing that. Third is around M&A. What we have in our hands is very exciting. We have a robust funnel and we're active with that funnel today. We're very excited about deploying capital here. And lastly, and equally is a share buyback.

Today, we authorized a $250 million share buyback, and we're going to use that as a tool in our toolkit today. I want you to walk away today understanding that this management team is an effective group of operators, and we're also prudent and disciplined capital allocators. What's the criteria for M&A?

This is an area that we needed to improve on. Company made 15 acquisitions. We didn't put our best foot forward on two of those. We're going to continue to drive performance in this area with a clear set of criteria. That's what you see here. Lawrence will come in later to talk about what is the financial output of these in terms of what we expect to read through on the P&L and more importantly, from a stock performance perspective.

Strategy cannot get executed without a capable team. I am humbled to lead Azenta in the next phase of our journey. This team is amazing. You saw a lot of those individuals in the advanced biorepository tour, A lot of them are here today. I'm humbled to be a part of this team. A lot of these individuals are new, but some of them are not. They were buried in the bowels of the organization. And when we restructured, a lot of these individuals were promoted to leadership roles. It's very exciting for me personally to be able to do that.

Not only do you have to have an effective management team, you have to have a great Board, and we're fortunate to have an incredible Board for a small and mid-cap company our size. I want to recognize Bill Cornog, is here in the audience. Bill is one of our board members, former KKR partner. Every one of these Board members brings a very unique perspective to the organization. It pushes us as a management team to be the best we can for our customers, for our employees and our shareholders. This is important to the investment in this company.

Why would you want to invest in Azenta? As I stated, we have an unmatched product line and ecosystem today to support our customers. Very unique to the organization. This ecosystem is very unique. We have a deep installed base. We can continue to drive recurring revenue and expand our SAM through that. Third, continuing to drive above-market growth. This is an area we're very excited about. It's a story that's top line and bottom line, and more importantly, driving these G&A efficiencies and reinvesting that back into the business.

Lastly, we are coming from a place of a very strong foundation. We have a balance sheet like no other, and we're going to put that to work. High return on capital. That's our charge. We're excited about the journey ahead. I want to introduce you to Alex Esmon. Alex is running our SRS business. Alex? Thank you.

Thank you very much, John, and good afternoon, everybody. It's wonderful to see you. Thank you for being here. For those of you that were able to join us for the tours today, I hope that you're carrying a lot of energy from that. The energy that we carry every day as we look at our teams perform and how they're serving our customers. So we're really excited about you being here.

As John said, my name is Alex Esmon. I'm the Vice President, General Manager for the Sample Repository Services business. I have been with Azenta for about 3 years now. I came from Thermo Fisher Scientific, where I was for 17 years. Before that, I did my PhD in Molecular Biology at University of Missouri and then I did my postdoctoral work at the University of North Carolina, Chapel Hill. So thank you for being here today. It's wonderful to see you.

I get the distinct opportunity today to brag on a great team. You got to meet some of them today. This team is incredible. And it's full of individuals that care immensely about the journey that we're making for our customers. And I'm humbled that I get to represent them and that I get to brag on them today. What they do is incredible.

As John said, if there are just a couple of things that I want you to walk away with today from what I'm going to talk to you about. It's really three key things. Number one, we have deep expertise. John talked about this. We have deep expertise in understanding what our customers need and in the value of their assets, sometimes almost even more than they do.

Number two, we are integrating our Azenta business system into everything we do. We are finding opportunities to remove waste from our processes, to add more value to our customers and more value internally as well. Number three, that deep expertise that we have enables us to know where to invest our money in smart ways. What are the bets we're going to place and how are we going to go into the future.

So with that in mind, I'd like to do a brief overview of our business. Sample Management solutions today is about a $325 million business. We have the privilege of being an end-to-end biologic and therapeutic asset manager for our customers. We want to continue and we will continue to be a leader in this area for our customers.

A couple of things from this slide. I'm not going to read all the numbers for you. But if I explain this business very straightforwardly, sample management solutions has two components, as John talked about, our automated solutions business and our biorepository business. Our automated solutions business has over -- we have over 10,000 pieces of instrumentation and/or vaults in the field supporting our customers every day. That's millions of people being supported through our products every day.

On the repository side of our business, we have over 80% of our revenue is recurring. We have sticky relationships with customers that last for a long time. And we are embedded in 20 of the 20 top pharma and biotech companies in the world. They trust us every day. And that trust is growing. So we are a very strong partner for our customers.

So as I walk now into our markets, John gave a really nice summary of our markets. If we specifically look at our SMS focused markets. We have about a $3 million -- $3 billion, pardon me, addressable market. We have about 11% of that today. There's three key things that I want you to take away.

Number one, there's a massive increase happening in the preclinical space in spend. We see it happening from public and private funds. This increase in spend is also having an impact on the number of clinical trials that are happening. More clinical trials means more samples, more samples means more data, more breakthroughs. We are incredibly well positioned to support our customers through these breakthroughs. Third, as John spoke about, our customers are looking at going deeper with partners they trust, we are incredibly well positioned. Again, 20 of the top 20 pharma biotech companies, we have strong relationships with and growing. So we are incredibly well positioned for all of these market tailwinds.

Now if my passion hasn't come through yet for this business, then this is the slide where it's really going to come through strong. This is where I'm going to brag on our teams. Why do I believe and why should you believe that we can attain what we're going -- what we say we're going to attain?

Number one, I'm going to go trusted reputation. We have over 85 global compliances, licensures and standards that we meet within our business to support our customers' work every day, and that's growing. We're always looking at ways that we can grow that. What do our customers need us to do and who do they need us to be to support them with quality and reliability?

Number two, we know what we're doing. We have deep expertise, as John spoke about. No one can do what we do because no one has the depth of knowledge that we have on serving our customers, the way we serve them and how we serve them. From our Chief Scientific Officers through our entire organization, we have a breadth of knowledge and expertise that is unmatched and unrivaled.

Number three, we have automation capabilities that are over 3 decades in the making. We have been in the market serving our customers for over 30 years. That's 10 years older than my kids, right? It's incredibly exciting every day to get to be a part of this team and to see how we bring this to bear for our customers. It's easy to make a freezer. It's a little bit harder to make a freezer that goes to minus 80. It's really hard to make a freezer that is at minus 80, but it's also in an automated environment. Doing things that not anyone else can do. Our teams can do that. And they've been doing it, and they will continue to do it and innovate in that area.

Number four, data. Data, the backbone of all of these samples is data. The data that's generated, how we manage that data and how we carry that for our customers and manage their assets and the data that goes along with it. This is why we are well positioned. These are our true competitive advantages that we have that are sustainable, serving our customers.

So I'm now going to talk to you about how we're going to focus on driving operational excellence. As John teed this up, we're looking at really three pillars. I'm going to talk to you about this first one of driving operational excellence. What are we doing in SMS? We are actively implementing our Azenta business system throughout our structures. You are -- many of you were at the Indi site today. You saw our daily management boards. You saw our Kaizen funnel. You saw our value stream maps. You saw all the nuts and bolts of what it means to make a lean transformation to make this journey. And make no mistake, we are early in this journey. But we've already seen some positive results coming from the journey we're making. And we are highly confident that that's going to continue.

This is a cultural change from the top down. Everybody is invested in this. I participate in Kaizen events almost on a monthly basis. We are shoulder to shoulder with our team working through these -- the ABS transformation that we're making. As I was at Thermo for 17 years, I'm familiar with process improvement. It's a part of who I am and it's a part of who our team is.

So next, I'm going to talk to you about how we're reinvesting for profitable growth. What are we going to -- how are we going to focus? Well, number one, in our biorepositories. Really two key areas.

Number one, we're going to continue to grow our off-site sample storage solutions. What does that mean? That means that we're going to get to 100 million samples stored. And we're going to do it in about 4 years. How are we going to do it? We're going to grow our footprint. We're going to maximize our space. We're going to introduce innovations into the storage space, which allow us to optimize the footprints we have, and we're going to position new footprints globally in new regions. We're incredibly excited about this.

Number two, we're going to scale our customer on-site solutions. We have teams that are incredibly well positioned to grow our customer on-site solutions, 3x in the next 3 years. So we're going to manage our customers' assets in our walls, and we're going to manage our customers' assets in their walls. This is a competency that we have that our customers value us for.

Now how are we going to invest in our automated solutions side of SMS? Number one, we're going to elevate our digital experience. We are going to enable our products as a true ecosystem of products, which share a user experience that is unified across the products that provides a better experience for our customers, and we're going to introduce e-commerce solutions, which will allow us to serve our customers faster, more effectively. This will be especially impactful for our consumables and instrumentation business.

Number two, we're going to evolve our leadership in automation. We're already really good at automation. It makes me smile every day. We're going to get better. And we're going to take our customer to even better places than we take them today. What do I mean by that? Has anybody ever built a LEGO set? Just show hands. Anybody ever played with LEGOs? It's okay. Oh, that's great. My son built a 5,000 piece set like last weekend while I was gone, and it was amazing.

What does he have to do if he wants to make that a 5,500 piece set? You just add more LEGOs. You just keep building. Why? Because LEGOs are modular. You just click them together and build and go. It's easy. Our stories need to be easy. Our vaults need to be easy to configure, to scale, to build, install and our customers to use them effectively. And in the future, when they want to slightly change what they need, we can enable that through the modularization of that product.

The second thing we're going to do from an automated solution perspective is introducing new products. Not everybody needs a vault that is huge. Some people need something that is just more point of use, smaller, especially in the clinical space. We're going to introduce that into our portfolio. So I'm going to leave you with a customer story that illustrates how we have served customers and will continue to serve customers as SMS.

We had a pharma top 5 customer who was in a nonoptimal space with nonoptimal processes that were highly manual, that was introducing massive amounts of risk into their business and not enabling them to come to market fast with the breakthroughs that they needed. They came to us for solutions and what did we do?

We brought the entire scope of SMS to bear for that customer. Our BioWorks, our CryoWorks, our services, our product services, our logistics services, our storage services. Every piece is a part of the solution we offer to that customer. And what was the result? The result was they were able to derisk their business, to go faster and to enable true business continuity. We helped them manage their problems. We removed waste from their work. We help them make the journey that we are making as a business. It's incredibly exciting.

So, I'm going to go back to my 3 points at the beginning. We have passionate experts who know how to support our customers and we do it with quality and reliability. Number two, embedding the Azenta Business System into SMS and into these businesses is going to remove waste, improve our value and enable us to serve our customers even better. And number three, because we have this knowledge of our customers, it means that we are positioned to make the right strategic decisions about where we're going to make our investment and how we're going to grow. Thank you so much for the opportunity to speak to you today. Thank you for your attention.

I now get the opportunity to turn the floor over to Ginger Zhou, who is our Senior Vice President for our Multiomics and GENEWIZ business. Thank you so much.

For those we haven't met with each other. This is Ginger. You're looking at Ginger. I'm President of GENEWIZ. I'm a trained molecular biologists with a PhD degree. And before I join my first industrial job, I did 2 years of research in Yale University. I have a very long tenure with GENEWIZ, 14 years as 2025. So I know the business inside out.

Before joining GENEWIZ, with all the research background, I was a GENEWIZ customer for a few years. So we're [ managing ] in with the business, I always carry two lenses, customer lens and the supplier when managing the business. It's really beneficial for me when I think about the business of how to add value to our customers. So I'm very happy to have the opportunity today to share with everybody about my thoughts, my view about in current, very highly dynamic market environment, why GENEWIZ business is resilient, where the growth is coming from and how to achieve those growth.

All right. The scope I just mentioned, being summarized by three key messages: the resilience coming from a unique position. GENEWIZ is a category of 1. Category of 1 is uniquely positioned with nearly 3 decades of know-how, multiomics experiences with trusted brand. And also, it's exceptional convenience and speed we built throughout the years really rising very well with our customers. The third, to make it very resilient in this market is diversified portfolio. We are the only one actually in the market specialized on both sequencing and [ senses ] solutions with the breadth of the solutions we offer to our customers.

So the second message is the second and third [ conscontinued ] growth. The second message is leveraging the newly built in muscle, Azenta business system, me, as one person, I'm not [ adds ] like 10-year Alex to have 70 years of process improvement, but I have my own experience in last year, and this is very powerful, too. To simplify it, it drives strong execution and the efficiency gain. There are so many opportunities once you knew how to utilize the tools [ to ].

So this -- the second message is leveraging our Azenta business system to drive efficiency gain, which equivalent to profit profitable growth. And the third message is where we invest with other profitable again from the efficiency. Three areas: GENEWIZ [ regionalization ] we truly believe it is one of our key growth drivers for the next few years, and we are going to bring it to U.S. -- expand to U.S. and commercial intensity to have a better reach to our customers, and then enriched portfolio.

Enriched portfolio by bringing more cutting-edge technologies to enrich, strengthen our one-stop shop position to our customers. So three key messages.

Now let's dive in. Resilience. I'm going to dive each individual resilience. How to -- where the growth is coming from and how to gain the growth. This is where the resilience has starts. It's who we are. nearly 3 decades of reputable brand of scientific expertise and know-how in multiomics field. We are only one in a market specialized with [ reading ] genes and underwriting genes.

Reading genes through sequencing technologies and the writing genes [ serosynstatic ] technologies. Our work anchored with our mission. And our mission is accelerate discovery by providing high quality, reliability and innovative solutions to our customers. That's how we anchor our work.

In addition, exceptional scale, exceptional scale. I really wish I had the opportunity to host everybody in one of the GENEWIZ side so that you can see the scale. But today, by talking about it, I have to get how from everybody use [ liver ] imagination about the scale. So I use two examples.

On the left, on the sequencing side, last year, 2025, we produced 15 petabytes data. What is 15 petabytes data? How big, how small, okay? Imagine, 15 petabytes data, the size equivalent to more than 7 million, 2 hours Netflix movies, more than $7 million. That's the size of data we [ Pam ] power last year. How many of you can finish 7 million movie like in this generation in this life? It's initially impossible. That's the amount of data we pump out.

On the right, on the synthesis side, the same. 425 million nucleotide we see since last year. Imagine each nucleotide equivalent to 1 centimeter. We tie them up. The height is reaching month average 480 types. That's how big size and scale we're operating today. While scale matters, scale equivalent to quality, consistency, capability to capability and the capacity, right? So that's how we operate and what we built in the last 26 years?

Now let's see what we achieved with what we built in 2025, revenue size is a little bit over than $0.25 billion. And we have a very broad customer base. More than 120,000 end-users from 800 institutions. And on the bottom of the panels, we have diversified portfolio on both sequencing and the Synthesis solutions. And we have very balanced regional reach and market reach to our customers. What's even more powerful of this business and the model is customer stickiness. More than 70% of the revenue are from is from returning customers.

This is why it's so resilient, shows so resilient. And you may have a question, why? Why GENEWIZ? Why customers have such big stickiness with GENEWIZ and such high loyalty. Here's why. Trusted brand, exceptional speed and convenience, one-stop shop. I trusted brand. You're looking at me, right? I start to use GW services since my first college like research project. That's years or years back. And I represent many of our customers, and we offer the tools that they can start -- essential tools, they can start with early research. So many of our customers grow with the brand and it's a trusted brand to our customers with 3 decades of reputation and know-how and the exceptional convenience to our customers, okay?

This one example, as John mentioned, one example is we carry the largest sample pickup network among our peers in this market. More than 4,000 example pickup locations right outside of research lab. So researcher, every day, they just work, work, and drop the sample right outside the door. And for us, we have very [indiscernible] system to pick the [indiscernible] up every day and distribute it among all of our sites depending on where it makes sense through overseas system and produce data very fast and give customer back data or like product.

An exceptional convenience, this is why customers feel okay. so easy to do business with GENEWIZ. The third one, one-stop shop, true one-stop shop. True one-stop shop specialized on both synthesis and the sequencing solutions. If you really look into the market, you cannot find anyone else specialize on both. This is know-how. It has to be know-how and run both scale at both like at this level, okay?

A quick data. More than 50% of our customers ordering both synthesis and the sequencing solutions from us. That's the stickiness that stickiness. So I bring it all together, why GENEWIZ business is resilient in any type of market, is a strong foundation in this great business model. Trusted brand exceptional convenience and speed that we built throughout the years, one-stop shop on both sequencing senses and a suite of multiomics solutions and in combination of quality, reliability, good deliverables and run at the scale, and we have a large customer base, but also a very diversified portfolio plus good penetration in each region.

All this together to make GENEWIZ a very strong resilient business, model and no one does what we do and how we do it. Category 1, unique position, right? We talk about -- I'm very proud in the last 14 years, so we get better and better in terms of how we are and how we do it.

So next, I'm going to move to where the opportunity coming from in this highly dynamic market, right? On the left, three on my left, is $3 billion addressable market we're playing with -- we're playing in and with less than 10% of share. This market, in the past [indiscernible] growing super fast, exceptional fast. So our share is less than 10%, a huge runway ahead of us to gain share.

On the right, current dynamics, what I observe driving outsourcing trend. A few examples First, end market, pharma biotech, what the consensus, right? Spending costs on CapEx and capital investment. And operational efficiency, use less to do more. Think where it drives the direction. And the second is researcher and the user. We have 120,000 users, and we are growing.

So end user with the cost to be improved for these multiomics technologies, especially the highly sufficed complicated ones, the technologies. The researchers do have better accessibility to those technologies that provide better data insights to them, right? And the third one is AI. The buzz word AI, what does it mean to us? AI, to me, is for better data insights, better insights through analytics. And it reached the bar very high on data quantity and the quality, very important for AI to work. And we are here to generate a big amount of data every day with a good, reliable quality to our customers. So altogether, A lot of opportunities ahead of us for us to continue to grow and gain share from the market.

Now I'm going to share with you how, right? This goes back to -- we have a Azenta overall strategy structure and that's like fit very well. Two levers. Operational excellence, operational efficiency to drive profit from leveraging the muscle new, new muscle, Azenta new business system and also invest in top line growth, invest in three areas: GENEWIZ sense regionalization, commercial intensity and a one-stop shop, okay? [ Jensens ] regionalization. [ Genesis ] is a very high profit business for us. And we're very good at the breadth of solution [ antisense ], and we -- our plan is to invest and bring it expanded in United States in North America to be closer to our customers. to have better delivery speed and to meet local demand, okay, in the next few years, and we're under executing. This key initiative today.

Second is commercial excellence. Imagine the big market for us to tap in commercial excellence actually like more feet on street, enable us to be better -- to have a better reach to our customers or potential customers. Especially in those under development and under penetrated market or like regions. Digital. Digital, as Alex mentioned, digital is very important to us. digital transformation, e-commerce type of platform, enable our customers to be even more -- to do business even more coming in with us. More seamless like order to cash, order to invoice management workflow, right? So digital transformation.

The third key initiative is portfolio expansion. We continue to look into the technologies, build our muscle in terms of bringing more cutting edge complicated or like better multiomics technologies to provide better data insights to our customers, especially in high-growth areas, right? So in summary, clear strategic initiatives where we are going to invest and very strong acquisition, leveraging Azenta business system and drive profit in the journey.

Altogether, very confident to continue to drive growth and profitable growth, okay? This is a [indiscernible] I already talked to me, I would say, Ginger, you are so passionate. Why are you, you're so passionate, right? If you talk to my team, we are just like a team of like, very passionate about what we do, very proud about what we do? Why is that?

It's not only about knowing how to win, how to grow. It's more about as a signed as background. It's more about real impact to people's life. That excites me every day have a real impact, I can see it. So a quick example, a case study. This is a customer the customer working on childhood disease that lead to blindness. Customer is planning Phase I clinical trial. Encounter the challenges. They have a very long gene, 120 base pair gene, and they need to sequence the , they need to have resolution to understand what other sequences in order to make critical decisions. traditional technology not is just too hard to sequence through.

So customer [indiscernible] for help, [indiscernible] know-how and using -- utilizing laundry sequencing technology. We were able to help customers to develop the IC and achieved 99.8% of accuracy on the sequences. And this 100% enable customers to make critical decisions with the resolution visibility on each nucleotide on that 1200 long gene. So we added the IC clinical usage as well. As of today, this Phase I clinical trial is ongoing.

And in addition, along the journey, we become naturally become the first provider in the industry to offer this as a commercial provider to like many more customers who have similar needs. So this is why we are so passionate about what we do every day because we can make people's live better being part of the solution for this generation, next-generation generations to come is benefit to society.

That's why the team is so engaged and passionate about what we do wrap up my conversation. Business resilience how we grow, where to grow and how we grow, right? Business -- three messages coming back, category of one, uniquely position in the market and driving profitable growth through strong acquisition and efficiency gain, leveraging our entire business system and invest in three key initiatives: three areas. [ Genesis ] regionalization to North America and in Europe and enrich our portfolio by bringing more technologies, leveraging us know-how and commercial intensity commentary intensity.

With that overall altogether, I mean, me personally believe and have confidence that [ gene ] continue to be a strong contributor to Azenta's future success on both top line and the profitability. Right.

With that, that concludes my conversation. I know everybody cannot wait for listening to the financials. So I welcome CFO, Mr. Lawrence Lin to the stage. Thank you.

Thank you, Ginger. Well, my name is Lawrence Lin, and I'm the Chief Financial Officer at Azenta. I just want to start first by thanking everyone for joining us today. Really great to see everyone's space live here.

Maybe just a quick aside on my background. I spent about 20-some years in the public arena, 18 at Danaher. And most recently, I spent about 4 years in private equity with a couple of operating companies owned by KKR. And through those experiences, I got the opportunity really to spend time helping businesses around financial rigor.

M&A integration and most importantly, operational efficiency utilizing lean tools. And during my time, and John mentioned this at Danaher, I got the opportunity to meet John. And Don and I are partnered now for almost 10 years, working on growing businesses in a lot of cases, turning around businesses that had good bones, but just needed an injection of leadership and process improvement.

And so a little over a year ago, John gave me a call, and he talked to me about kind of what you all heard today, the opportunity at Azenta. And I jumped at the chance. There's no other company like Azenta with the profile financial profile that exists. And so I'm excited to be part of this journey and thrilled to talk to you about the financial future of Azenta.

I'm going to spend a few slides here recapping some of what you've heard today because I think it's important, but through my lens, and then we'll talk about the financials. So a couple of key messages I'd like to impart. The foundation of Azenta is strong. And getting stronger. There's momentum building across the organization, and we're leaning into that with a clear strategy and an operational road map. We see significant margin upside here.

Now the opportunity doesn't need a recovery from a macroeconomic perspective. We have the levers within our control to control our destiny financially. A big part of that opportunity is tied to expense discipline. And process improvement that will impact favorably gross margin and G&A. This is really just the start of our flywheel here.

And last but not least, we're proactively managing the portfolio with a focus on optionality and value accretive capital deployment, all of which is supported by our strong balance sheet and cash flow. So when I joined the organization a little over a year ago, I saw strength, but also opportunities to take this business to the next level. We have a differentiated product portfolio, the depth and breadth of our talent here is extraordinary.

Whether that's in our biorepositories, our GENEWIZ labs or in Gene Synthesis. Our customers rely on us every single day. So what we've been doing in the last year. We've been laying the foundation. John mentioned this, but it's worth repeating. We've moved restructure from a corporate to an operating company model, we put general managers in place in all our products.

The general managers have a P&L now that provides them visibility, but most importantly, accountability. We've enabled our sales force through putting sales leadership regionally to be closer and meet where the customers are. And lastly, we've changed our compensation structure. We've taken the complexity out.

Now everyone is focused on growth, profitability, working capital free cash flow. John mentioned this, but it's worth repeating, we're getting back to basics here, right? So now we're pivoting to growth. And we've identified a couple of areas here on the slide. I'll touch on a couple of.

One of them is we're early innings on sales bundling. We've talked about this. We have consumables that have a fairly low attachment rate to our automated vault, existing ones and future ones. We've got opportunities in service. We've got opportunities and gene was for sales funding, significant untapped potential there. From an operational excellence perspective, we've really just touched the tip here of the beginning. We've executed on low-lying fruit. So there's significant runway ahead. So the upside is this. While this work isn't easy, it's highly achievable. I am confident these initiatives will deliver meaningful improvement in our financial performance.

So let's talk about the top line. John touched on the three growth vectors, Ginger and Alex add in more detail. But again, it's worth recapping here. First, we're going to scale our biorepositories, our advanced biorepositories. We're going to add capacity to our existing biorepositories. We're going to expand geographically. We're going to increase our automation. And we're going to provide more options for on-site and off-site storage for our customers.

Additionally, we're investing in future technology here. To really round out our portfolio. Alex talked about the standard vaults that will be modular. Why is that important? Because it's going to create quality and speed. Additionally, we're going to round out our portfolio. Alex talked about the smaller vaults that we're going to offer. These two items will really start to read through in the back end of our long-range plan, but we're investing now.

Secondly, Ginger talked about Gene Synthesis. We're regionalizing our Gene Synthesis business. What does that mean? We're putting U.S. production in place. That will provide speed of delivery and we will be closer to our customer. On top of that, we are adding feet on the street that specialize solely on gene synthesis. That's important, and we're doing that now.

And finally, we're pursuing technologies on automation to solve customer pain points and to provide quality, delivery and cost to our customers' cost savings. These three growth vectors are not only compelling, but also highly actionable, and we expect them to allow us to grow above market.

So I'm super excited about our growth opportunities here, but I'm equally thrilled about the margin opportunity here. It's clear we have significant upside potential here to get us to an EBITDA percentage that is more competitive with our life science peers.

As we've discussed in length, we're optimizing our G&A. Early innings, we're trying to drive better operating leverage. So when I look at G&A, there's many opportunities for improvement. So we're going to leverage the Azenta business system. And let's just double click into that. How is that going to happen? We're going to evaluate all the processes from finance, HR, legal. We're going to leverage technology where possible, and we're also going to reduce are dependence on outside services. lots of opportunity, and we're in early innings.

Secondly, we talked a bit about our price optimization strategy. John touched on it. We talked about it a few weeks ago at our earnings call. We started with SRS and C&I. And John mentioned this, we've got room to run here. We'll be evaluating all our other businesses throughout the long-range plan. Where I'm super excited about is, again, the ABS tools on how we're going to be able to drive operational efficiency and gross margin enhancements across our manufacturing, our labs and our back office.

We started what we call Lighthouse Sites earlier in the year. And so we picked a couple of sites in SMS to really start deploying those lean tools. And John showed some of the examples of our early wins. I think of it from my lens, what is the business system. The lean tools are really just driving common sense rigorously, reducing or removing complexity and embracing simplicity. The power, if you've never had a chance to sit down in a workshop or a Kaizen, it's extraordinary to see the power of a cross-functional team get together to solve a problem in 3 to 5 days. We have some untapped talent potential knowledge that we're now embracing with our employees. The individuals at the biorepositories, the labs, the back office, they know what's the opportunities, we're just tapping into that potential.

And finally, we're expanding again our automation solutions to enhance our productivity, whether our customers utilize our automated vaults in their facilities or they outsource to our advanced biorepositories, we see improvement to delivery and costs both for the customer, but for also Azenta.

Similar to the revenue drivers, these opportunities are not only actionable, but well within our control, and I'm confident that these initiatives will deliver meaningful improvement in our financial performance. So as profitability has improved, so has our free cash flow. The team has been laser-focused on lowering costs, taking out the low-lying fruit.

And similarly, around working capital, just tapping some of the easy wins here already. You saw that witness from the slide around DSO down 10 days. And also, we're remaining -- from a CapEx perspective, highly diligent. Actions will continue going forward. So look, we have $546 million in cash, and we expect to generate between $200 million and $250 million in cash through cumulatively through the long-range plan. And we have really four levers at our disposal. First is driving productivity and gross margin. That's really the beginning of our flywheel, right? Then it's growth. You see it today. We're investing in our SRS Gene Synthesis business.

In M&A, we are closely aligning to our strategic filters that John showed, and then natural criteria, they'll show you in the next slide. And then around the share repurchase today, you saw that we authorized $250 million share repurchase program. We've been actively engaging the Board on capital allocation priorities. And authorizing $250 million was the right thing to do.

Now more to come here around when we initiate those purchases but certainly it's something we evaluate all the time. So let me double-click into the M&A criteria. John already spoke about our financial filters. Let me talk a bit about our financial filters. I want to highlight again that we're going to be incredibly diligent about our financial criteria. We want our M&A targets to check as many of these boxes as possible. While each deal will have its unique financial profile, our goal is to pursue acquisitions that have a strong organic growth potential in their own right, which can be further enhanced by revenue synergies with Azenta.

Secondly, we want these acquisitions to have to be margin accretive within a short period of time or offer clear margin potential in the future. From an ROIC perspective, we want to see double-digit ROIC within 3 to 5 years, as well as cash accretion. So generally, again, our focus is on tuck-in acquisitions here, and we believe we have a strong pipeline of potential opportunities that meet both our strategic and financial filters.

So let's get to the numbers. We talked a bit about our 2026 guidance a few weeks ago and earnings. And we discuss the underlying assumptions for those targets. I won't be repeating them today at this time, except to note that there has been no change to our expectations of our targets for 2026.

Now on to the long-range plan. Today, you've heard about the strategy and the bright future ahead. Let me round this out with financial prospects for the company. From a revenue perspective, we expect to generate revenue between $700 million to $750 million at the end of 2028 organically. This will provide a compound average growth rate of between 6% and 8%. Nearly 2/3 of that revenue is expected to be reoccurring in nature. This will really provide us the ability for stability and resilience as we tap the profit pools of biotech and pharma. Third, we expect to at least double EBITDA to the range of $120 million to $150 million reflecting a healthy 18% to 20% EBITDA margin.

And lastly, we talked about, we expect to generate between $200 million to $250 million in free cash flow, which will provide us significant optionality for value-accretive deployment. So the bottom line is this. We believe these targets represent a very balanced, but substantial source of value creation for our shareholders, and we are committed to delivering on this plan.

So let's talk about the components of our revenue growth. We're making investments low. And we're confident on delivering on this plan. What you can see here is we have multiple levers that we're pulling for growth. We're aiming for singles and doubles here. Certainly, there's a ramp towards 2028 as we're just really setting the stage now on our new product investment and ramping up the initiatives in SRS and Gene Synthesis.

So let me put a finer point on this by walking you through the years here. Let's go backwards. I talked about this a bit, but again, worth repeating. Fiscal year 2025, we set the stage. We put GMs in place. They're now accountable. We have product managers. We've empowered our product managers to drive the business, and we've regionalized the sales team.

As you walk into now, fiscal 2026, we've added feet on the street for our initiatives, and we are forward investing in R&D. On top of that, we've optimized price. The feet on the street and the price optimization, you'll see start to bear fruit in the second half of fiscal 2026. When you get to fiscal 2027, you'll see the full ramp of that investment that we put in place.

On top of that, you'll start seeing the new products start to launch at the back end of fiscal 2027. This culminates in fiscal year 2028, where we start seeing the full ramp during the 3-year performance period of all the initiatives that we've talked about today. Again, we believe these growth targets represent a balance but substantial source of creation for our shareholders, value creation for our shareholders.

So as I mentioned earlier, we're not just focused on growth. That's super important. We're focused on profitable growth. First and most importantly, again, Azenta is going to at least double EBITDA over the LRP. We're targeting to move our gross margins above 50% during this period. When we look at this, how are we doing this? Through volume mix, recurring revenue, our recurring revenue is traditionally higher margins than our fleet average. When you look at productivity, our business system is going to enable us to yield efficiencies in our biorepositories, our labs, our manufacturing locations.

When you double-click into G&A and procurement, let's talk about procurement for a second. In direct materials, we're early days here in direct materials. We've just revamped our procurement team to focus on key opportunities. We're streamlining our supply chain. We're standardizing purchases where possible. From an indirect spend optimization, Again, we're early innings. We have significant opportunities in standardizing purchases, G&A and in gross margins and also really looking at outside services. We've got a whole lineup of workshops through fiscal 2026 just to look at indirect spend.

So overall, you can see from the slide here, at the upper end of what we're looking at for adjusted EBITDA, our assumption is to prove adjusted EBITDA by 300 basis points annually with 2/3 of that coming from gross margin, and 1/3 coming from OpEx. The OpEx is slightly lower because we are continuing to flywheel to reinvest in growth.

And lastly, I'll wrap up where I started. By reiterating that, we're truly building from a foundation of strength. And secondly, Azenta is poised to drive meaningful profitability even as we continue to reinvest for growth. And while we continue to do the first two, we have significant potential to deploy capital effectively for the shareholders. So we're really excited about the future. We're committed to exceptional performance strategically, operationally and financially.

Once again, thank you for your time today and your interest in Azenta. And I hope you join us for our journey. And with that, I'll turn the floor back to John.

Excellent. Thank you, Lawrence. Pretty excited, as you can see. We've got a bright future ahead of us. Let me reiterate why we think this is a good investment.

First, is around our niche product categories and proprietary ecosystem that nobody has in life sciences tools and diagnostics, whether that is in the public market or private markets. Second is around our ability to scale -- continue to scale from our installed base. As Alex stated, we have thousands of instruments in the field today. We have a lot of opportunities around bundling and continue to expand on that installed base. Third is around above-market growth, continuing to drive outperformance to the market. It's been a challenging market in life sciences, but we're outperforming, and we're going to continue that momentum.

Around margin expansion opportunity, it's pretty rare in the small mid-cap market that you have top line growth opportunities, margin expansion opportunities and capital allocation opportunities. We have all three in our hands today. We're very excited about that. We are coming from a place of financial strength. We have a balance sheet, we have a management team to execute on high returns on our invested capital.

I'll leave you with this. You've got a management team that cares and it's going to be focused on execution and driving performance for our customers, for our employees and our shareholders. You also have a group of 3,000 employees that care every single day. And a lot of that you saw today. That's a big reason to invest in Azenta.

With that, I want to hand the mic over to Yvonne. She's going to give us some instructions on what's next. Yvonne?

Great. Thank you so much. Well, I hope you all are as excited as I am after hearing that. Thank you to the management team for sharing a lot of the growth opportunities as well as margin opportunities that lay ahead. So we'll take a 10-minute break. Let me just check watch. Let's try to be back here at 2:35, if that works. And then we'll start the Q&A. And I'm sure that's the most interesting part of what you all are looking forward to. So thank you so much.

[Break]

We're super excited to get started with our Q&A session. So we have our panel back up on the stage. So for those in the room, we have folks stationed over here to the side. So if you have a question, please just raise your hand. And they'll bring the mic to you. [Operator Instructions] So with that, why don't we just get started?

David Saxon from Needham. Can you hear me? Yes. Great. Well, thanks so much for hosting today. It's been super interesting and hopeful. So my first question is just around kind of the two business units as they stand today. I mean, the company has tried in the past to cross-sell across the two businesses. So what's your view on that potential over the LRP? I guess like -- do you have the commercial model ready today to execute that? Or is that kind of stage 2 or 3?

Thanks for the question. The way I would think about the two businesses is more around we're tapping into the outsourcing trends and less about the synergies between the two businesses. I think it's been a distraction for the company. in the past. And I think the way we're viewing it today is really we're focused on driving performance within those businesses. There's more potential in driving focus around commercial bundling within those than there is on cross-selling.

Now, I don't want to minimize that. Our -- in our biorepositories today, we send about 1% to 2% over from our bio repositories into multiomics today. If you look at the trends around that, Europe is in -- they rely more on their bio repositories for some of the testing than the U.S. does. Maybe it gets there in 3 to 5 years, but it's not an area of focus for us in particular. It is not a -- it's not contemplated as part of the long-range plan either, David.

Great. And then just on capital allocation, maybe for Lawrence. First, just a quick update on Medical, if you could? And then the initiatives around expanding biorepositories and the footprint there, like what amount of CapEx does that require? I think you're around like 6% of sales in '25, like where does that go over the LRP? And like how far does that get you in, I guess, expand expansion?

Yes. I'll take the CapEx question, and then I'll pass it to John on B Medical. For CapEx, you're right, David. We have about 6% to 7% right now contemplated in our fiscal 2026 model. And that's similar profile to fiscal 2025. What I would expect to see in the fiscal 2027 to 2028 is that will moderate closer to about, I'll call it, 3% to 4%.

B Medical, we're on target by the end of the year.

Mac Etoch from Stephens. I'll reiterate David's comments on the quality of the presentation here today. Just a follow-up on the SRS business. Can you just remind us of the number of samples you currently have in storage? And what portion of those would be considered active? And then can you just give us or refresh us a little bit about the economics around storage versus transaction?

Sure. 60 million samples today. The activity of those are you referring to how many times we retrieve those?

Yes. Like what portion of samples are retrieved frequently versus the...

It depends on the life of the sample. So if it's newer, meaning years 1 through 3, we're very active in retrieving those typically is what the data says. All right. Economics of that is very attractive, as you know, with 80% recurring. Our contract life is 7 to 25 years. It's very attractive. We call it kind of the eighth wonder of the world in our business right now.

We're going to continue to invest in that. But that's the way I would look at it. If you think about this, you got to think about biorepositories from archival versus high throughput and retrieval. We have all of those capabilities in our hand today, and we're going to look to optimize both segments of that.

Appreciate the color there. And just looking at the presentation, I think you highlighted 100 million samples by 2030 versus 60 million a day. So I think that would suggest low double-digit growth for that business. versus what I think was probably mid-single-digit growth over the last couple of years. Alex, I appreciate your comments and all the growth opportunities in front of you. But can you maybe dive into how you plan on reaccelerating that growth moving forward?

Sure. Do you want to talk about organic potential and I can speak too.

Yes, absolutely. So thank you for the question and remembering the numbers. That's great. we're really excited about our growth potential here. What we're looking at is the diversification of what we store and how efficiently we store it within our space, right?

And so it's also deepening those relationships that we have with those existing customers on their new studies, on their new trials. So going deeper, as we talked about kind of with the outsourcing trends that we're seeing and with the market tailwinds that we're seeing, those relationships that we have are going to go deeper and become even wider, right? And so the capability and the ability that we have to tap into more sample pools and more opportunity is just increasing with those relationships that we have. And it's going to allow us to pull in more faster.

So maybe one thing to add Mac here. Certainly, when you do the math on the volume, that may not contemplate the price. So we are going to grow at a higher pace than what you just mentioned.

Right now, Mac, from a -- we talked about organic opportunities. We also look at some inorganic opportunities we have in hand, specifically in our biorepositories today.

Matt Stanton from Jefferies. Maybe just to zoom in on two of the buckets on the revenue bridge. First, the growth initiatives you talked about, biorepositories, digital gene synthesis. Can you just talk about your confidence in line of sight into some of these bigger areas of that bucket and then any investments needed? And then also on new product introductions, it sounds like that's more of a late '27, '28 story. But with the focus on C&I and multiomics. Just talk about some of the items you're most excited about and what you and the team are doing differently today versus prior around R&D?

Sure. Let me talk about our road maps, specifically in C&I in stores and AutoCryo. Our investments in R&D have been anemic the last few years. We've now started to aggressively invest in R&D. So new product development, of course, Lawrence talked about that is going to be coming later on.

C&I specifically, it's around workflow optimization and handling samples and increasing throughput for our customers. So you saw some of the instrumentation today in the biorepositories. We're coming out with next gen of that. Again, very anemic in terms of our investments in the past, the teams are really excited about those investments. They're in now.

Stores in cryo, Automated Cryogenic and automated vaults and stores is really hard. So we've got decades of capabilities there, and we're investing behind this pretty rapidly. One of the things you saw is there's -- why are we doing that? The amount of data that's coming out in research is physical in nature because companies are wrestling with the fact that do they want to store gigabytes of data? Do they want to store samples? Because they don't even know what's in a lot of those samples today. And so what we see is the need to continue to invest behind this.

We're doing that in modular stores, smaller stores, a lot of those auto crowd units, we're really excited about continuing to invest in there. We haven't invested in a very long time from that perspective, we're the market leader. And then C&I and around some of the tubes. So if you have to think about this, if you've ever been in an Amazon warehouse.

Our stores and vaults are like warehouses. So it's warehouse management systems for our customers. Standardizing the boxes or the units in those, meaning the vessels, the samples is really important. We're investing behind consumables as well.

I would expect all of that, as well as on GENEWIZ, there's a lot of other services we invest behind in terms of being a one-stop shop because our customers want to do business with one partner at a fair price, and that's what they're continuing to do there.

In SRS, it's expanding those product capabilities in which we offer different solutions for. In SRS, we do have other services that you saw in the lab today with transportation and those sorts of things, we're investing behind that as well. So I hope that gives you a good sense of where we're investing.

Matt, maybe just to add to one of the things that's unique about Azenta, we have the capacity to not only invest, but also generate almost 300 basis points of adjusted EBITDA. And so certainly, we're -- we have the ability to utilize get the productivity, as well as really optimize G&A. So I think that's important.

And then on the regionalization of gene synthesis, maybe just a bit more color in terms of investment required here timing and cadence is that in-flight now? And then I guess just a little more on how that helps you. It feels like you have a pretty good line of sight and confidence around meeting local demand, improving turnaround times. But just talk a little bit more around the the initiatives there? And then Lawrence, maybe if you could just talk to about being able to protect the margin structure as you move capacity into the U.S. and into Europe, as well on Gene Synthesis?

So Gene Synthesis specifically is really around automating that complex segment. About 80% of that can be automated today. That's in our hands today. And the 20% you need some know-how for. So that's really important in terms of how we're investing behind synthesis. We're really excited about this. We do very well in our synthesis business. It's a very high margin for us. We're very profitable, and we're going to continue to invest behind that.

Yes. Part of that CapEx that we talked about is exactly what John talked about, right, is being able to automate a lot of the processes as we regionalize into the U.S. The other portion that I may not have touched on, and it's important is we spent a lot of time on the business system Kaizens and workshops and SMS in fiscal 2025. We are just starting that at the labs. So the combination of automation and optimization of the labs is still something that's still to come.

This is Mackenzie here for Vijay Kumar, Evercore ISI. First question, I know you talked a little bit about pricing and you've already implemented a few strategies. I was just wondering, could you talk about over the LRP, what areas are you targeting first? And any like quantitative color or any sort of details on how you might approach customers or different segments with your strategies?

Yes, certainly. Nice to meet you, Mackenzie. For fiscal 2026, we talked about C&I and SRS. And as you all know and John talked about, particularly in SRS, we have contracts between 7 and 25 years.

Now what's important here is a lot of that contract, we really did not optimize or take advantage of those contracts, meaning they have pricing built in. So certainly, now with some of the process improvements we're taking, there's certainly opportunities there.

Additionally, as you look at C&I, there's certainly those options as well. we instituted a price increase in October in our consumables and instruments. As I mentioned during kind of like the prepared slides, we are certainly looking at all the other businesses and looking at what is possible. But again, to John's point, this is a shared equity around what is one equal to the customer, but also advantageous to Azenta.

That's helpful. And second question, I think Lawrence, you also mentioned that you plan to at least double EBITDA. I was just wondering like are there any levers to the upside? And how are you thinking about maybe bracketing what that could look like by the end of your LRP?

Yes, certainly. And I touched briefly on it. But I think if I would look back and let's take fiscal 2026 as an example, right? 2/3 of that opportunity in margin expansion is going to come from our gross margin. And that's with ABS, that's through just direct material, just again, basic blocking and tackling. We're not -- we're not doing anything sophisticated here, but just focusing, right? And then 1/3 is going to be around optimization of G&A. And that similar profile should go through the balance of the LRP.

Now I think, like I said earlier, the macroeconomics, anything outside all this opportunity around margin is well within our control.

Could I squeeze in one quick other question. On the multiomics, I know you said you're also planning to expand into like new modalities. Could you talk a little bit more about where you plan to expand as far as like proteomic single cell is somewhere you're focused from like an M&A perspective? And is this customer driven? Or is this really focused on like internal research you guys have been doing?

So I'll let Ginger talk about that, but let me tee it up. So it's a bit of both. I mean it's always based on customer demand, of course. Right now, we have all of that in our hands from an organic perspective.

Yes, the area we're going to invest and spend. As you mentioned, the proteomics leg is very excited like a market area that customers -- customer like has more demand than before and you can provide better data than before data insights for customers to do their research. Proteomics, single cell space show and cell gene therapy like market or product engineering. These are the areas -- these are the areas we're going to invest and increase our per volume to provide better data insights for our customers.

Matt Parisi from KeyBanc Capital Markets. Regarding the scaling of biorepositories, the biorepositories, you would be targeting more regional one-off sites or there be more grouping -- a smaller grouping portfolio buyer postrider you'd be like looking into?

Right now, our lens -- are you speaking organically or inorganically?

Inorganically.

Right now, we are really -- we take our view of expansion in biorepositories is with kind of the following lens. First is around this hub and spelt, okay? As you know, we've got a big hub here in Indianapolis. We think there's a big opportunity to expand that into the West Coast and have a hub out on the West Coast. We also think there's opportunities in Europe as well. We've got a facility in Germany today, and we're going to continue to expand that in Europe. It's a bit of both in all candor. So that's the way I would think about it.

Sure. Brendan Smith from TD Cowen. Maybe just one high level on M&A. I appreciate all the color for kind of the criteria you're looking for. Do you have kind of a goal or expected cadence over the next few years? Is this one or two deals a year or something like that? Or is it really more opportunistic when it comes to timing of all this? And maybe I'll take my next one for Ginger after.

We struggled with sharing our thoughts on this because we didn't really want to box ourselves in for obvious reasons. Because I think the organization has got -- we've got to get our legs underneath us from an M&A perspective, and we've got to get credibility back from a market perspective here. And so, one of the reasons we're not sharing kind of what that cadence looks like is we don't want to be forced into capital deployment. We want to be very thoughtful about how we're deploying capital in the four areas that we spoke of directly, Brendan.

Maybe, Brendan, just to touch on the size and scope. Look, we've got 60 possible targets in our pipeline, and it's significant. And certainly, they're all in different stages. But to John's point, right, like we will be opportunistic where we can. But certainly, there is a robust pipeline.

If I can squeeze another one in just on the Multiomics segment. So you guys. I appreciate the market breakdown color. I think you had 23% Gene Synthesis versus 77% sequencing. And then actually within Synthesis, I think it's a 9% blended market share in the -- excuse me, with sequencing together. So, I guess the first question is really, is that 23.77 so this is seeing? Is that kind of your sweet spot? Is that where you think that's optimal for you guys to be operating at? Do you want to go up or down in either segment?

And then do you have any kind of additional clarity on that, is that blended 9% between the two, do you have a sense of where you fall in sequencing market share versus in synthesis market share and kind of the same question, if that makes sense?

Let me give you some color around how we think about it, and then I can hand it over to Ginger in terms of how we're expanding in those areas. So we want to continue to grow our synthesis business. It's highly profitable for us. It is biological manufacturing, and we want to continue that. And we're pretty excited about the investments we're making around that specifically. The uniqueness of multiomics is the fact that we do have sequencing. And so we do have Sanger, Sanger is never going to go away. We spent a lot of time with our customers, and it is declining, yes, but it's not going to go away because there is a need for it in the market. We're going to continue to invest in sequencing. Our customers want to see more of that and offering other ancillary services around it. That gives us the ability to continue to invest in synthesis. I would expect that to grow over the coming years.

Yes. Just a couple of things to add. [indiscernible] of gene synthesis right now versus sequencing, which is like 2/3 or sets of the total pie. To me, possible growth. I cannot predict like what percentage or in the letter, but you hear our excitement about expanding our synthesis because it's a highly profitable business for us. We have a lot of opportunities in the United States. We hear from customers I got a lot of customer excitement about regionalization. They have approach to -- they have accessibility to synthesis locally. So I'm really looking forward to growth, but I couldn't project the percentage because sequencing [indiscernible] as well. 90% breakdown, but both. I don't have the exact breakdown, but both is just like in this market, as I mentioned, both will grow and our sequencing over right now.

I'll take one from the webcast. So John, this one's for you, please. Could you provide some additional color on the types of opportunities that make the most sense in this current business environment in terms of M&A?

Sure. Thank you for the question. And there's really three areas in which we see a lot of opportunity. And first is around biorepositories and scaling our biorepositories. We've talked about that but we have in our hands today is organic and inorganic. We're very excited about our inorganic opportunities there.

Second is around really in synthesis. There is some opportunities in our hand around synthesis from a technology perspective and from a business perspective. We're also pretty excited about those. We have both. We sit on both sides of that, organic investments in inorganic. The third one is around our automated stores. And a lot -- I would say the lion's share of that specifically is organic. Inorganically, the way we view on the automated solutions business is there are some instruments out there and some consumables that we're pretty excited about from an inorganic perspective. It's less so on the store side and more so in the C&I, high-margin products, high returns. Our lens there is continue to invest in recurring revenue, high margin and high returns in those areas.

Great. Thank you, John. Any questions in the room? Other additional questions that you'd like to?

Matt Parisi again. With the shift in sequencing from Sanger to NGS, what would be the ideal mix that Azenta is targeting? And that would be like mix of Sanger to NGS kind of like -- so leaking back into like a margin for the multiomic business within the sequencing.

Let us come back to you specifically on what that breakdown looks like, but let me just speak at a high level. We're now kind of viewing -- we viewed Sanger as kind of this separate part of our business. I would think about we're putting Sanger into sequencing because plasma Easy is in that right now.

Our Plasma easy business has doubled, and it's growing rapidly, eclipse the decline of Sanger. And so it's been really important for us to take -- really, we pushed the teams pretty hard and said, "Let's stop making it. This is no longer a hobby. Let's build a business around this. And so we've done that specifically in plasma easy. That's the way I would look at it from a high level. In terms of the numbers, let us come back to you on that. We'll do that one on one. Okay.

We're getting close to time. Any final questions in the room? David?

Zack [ Rosen ] from Stifel Bryant. I was just curious if you could give more of a ballpark of the opportunity that you couldn't address like in the U.S. business for synthesis before you regionalize is it a $20 million opportunity that customers were like, hey, unless you're here, I won't do it, just so I can understand why you're so excited about that as a growth driver.

Yes. I think a lot of this is underpinned by a lot of the geopolitical dynamics right now. And we're not quantifying it publicly. But I can tell you, we view the opportunity as substantial, which is why we're investing behind it. If you think about the other players in synthesis today, we're very profitable, and we've protected that margin.

We've protected that margin because we're -- we have the ability to synthesize in highly complex sequences as well as simple. And so we're a lower-volume, higher-margin business. And we want to continue to invest behind that. I think exactly the opportunity is pretty substantial for us. I think the Board sees it that way. The management team sees it that way, and we're pretty excited around investing behind it.

Great. So I think that's going to wrap up the Q&A session. I want to thank everybody for putting questions out there. But John, maybe pass it back to you for some final thoughts?

Sure. We're thrilled you're here and you're interested in Azenta. I hope that we were able to clarify the opportunity with the company, our product portfolio, and more importantly, a management team that's going to execute against that. Thank you again for your time. We really appreciate it.

Greetings, and welcome to the Azenta Q4 2025 Financial Results. [Operator Instructions] As a reminder, this conference is being recorded Friday, November 21, 2025.

I will now turn the conference over to Yvonne Perron, Vice President, FP&A and Investor Relations.

Thank you, operator, and good morning to everyone on the line today. We would like to welcome you to our earnings conference call for the fourth quarter of fiscal year 2025. Our fourth quarter earnings press release was issued before the open of the market today and is available on our Investor Relations web located at investors.azenta.com in addition to the supplementary PowerPoint slides that will be used during the prepared remarks today. Please note that effective the first fiscal quarter of 2025, the results of B Medical Systems are treated as discontinued operations.

I would like to remind everyone that during the course of the call, we will be making a number of forward-looking statements within the meaning of the Private Litigation Securities Act of 1995. There are many factors that may cause actual financial results or other events to differ from those identified in such forward-looking statements. I would refer you to the section of our earnings release titled Safe Harbor Statement, the safe harbor slide on the aforementioned PowerPoint presentation on our website, and our various filings with the SEC, including our annual reports on Form 10-K and our quarterly reports on Form 10-Q. We make no obligation to update these statements should future financial data or events occur that differ from the forward-looking statements presented today.

We may refer to a number of non-GAAP financial measures, which are used in addition to, and in conjunction with, results presented in accordance with GAAP. We believe the non-GAAP measures provide an additional way of viewing aspects of our operations and performance, but when considered with GAAP financial results and the reconciliation of the GAAP measures, they provide an even more complete understanding of the Azenta business. Non-GAAP measures should not be relied upon to the exclusion of the GAAP measures themselves.

On the call with me today is our President and Chief Executive Officer, John Marotta, and our Executive Vice President and Chief Financial Officer, Lawrence Lin. We will open the call with remarks from John, then Lawrence will provide a detailed look into our financial results and our outlook for fiscal year 2026. We will then take your questions at the end of their prepared remarks.

With that, I would like to turn the call over to our CEO, John Marotta.

Thank you, Yvonne Perron. Good morning, everyone, and thank you for joining us today. As we reflect on fiscal 2025, I want to begin by recognizing our Azenta employees around the world. Their dedication, resilience and unwavering focus on our customers and our purpose, enabling breakthroughs faster have been the driving force behind our successes to date.

At the start of the year, we set out to refocus the organization, put the customer at the core of everything we do, to simplify how we operate, to improve execution, and to build a company positioned for durable, profitable growth and long-term value creation. We've made considerable progress, but we have also recognized we have more to do, which excites us about the road ahead.

The opportunities in front of us are significant. We're energized by the potential to deepen our impact, sharpen our execution and continue delivering for our customers, our employees and our shareholders. We've created a simpler, more accountable organization through the implementation of the Azenta Business System, ABS, which is the framework for how we operate. It brings together lean principles, daily management routines and structured problem solving. This year, we trained teams and conducted Kaizens in manufacturing, commercial and support functions and delivered measurable improvements in quality, on-time delivery and overall productivity.

These results are just the start. What's most meaningful is the cultural shift and momentum. Operational excellence is no longer just a goal. It's embedded in how our teams work every day. Employees are identifying inefficiencies and driving change from the ground up. We have simplified our structure. We have moved from a complex centralized model to one that empowers our operating companies with clear accountability and a greater agility. Decision-making is now faster, closer to the customer and grounded in data and outcomes. We've reinvested savings in line with our growth priorities, innovation, sales, marketing and product management. These changes are making Azenta a more growth focused and efficient company.

The strength of our balance sheet with over $0.5 billion in cash, cash equivalents and marketable securities gives us the financial flexibility to invest with discipline across 4 strategic levers driving productivity, accelerating organic growth, returning capital to shareholders through share repurchases, and pursuing targeted tuck-in M&A. We will have clear accountability for outcomes, reinforcing our commitment to value creation and operational excellence.

We remain well positioned to invest for our future while delivering sustainable returns and creating long-term value. In fiscal 2025, we achieved 3% core growth and delivered meaningful margin expansion of 310 basis points. Beyond our financial results, we took decisive steps to reshape our commercial organization, with the right leadership in place and expanded field presence, and a sharpened go-to-market targeting. We're well positioned to serve our customers and accelerate our growth trajectory. It's important to recognize that all of this took place amid a volatile and uncertain macro backdrop, characterized by softer academic and NIH funding, shifting biopharma priorities and ongoing geopolitical uncertainty.

Yet through these challenges, Azenta demonstrated its resilience. Our differentiated portfolio delivers critical solutions that uniquely support our customers, ranging from sample management of irreplaceable assets to automated product workflows, warehouse and inventory optimization, and comprehensive testing of samples and data that underpin life sciences research and production. We're confident not only in our ability to navigate volatility, but to capitalize on it. This environment has also created opportunities as customers look to do more with less, they are consolidating partners, outsourcing noncore operations, and investing in automation and digital workflows. All areas where Azenta is positioned to lead.

We're seeing new partnership discussions emerge precisely because of our reputation for expertise, quality, reliability and execution. Our customers are looking for partners they can trust and Azenta is that partner. As we look ahead to fiscal 2026, we are entering the year from a position of strength, although macroeconomic uncertainty continues to persist, we have reshaped the organization, instilled a culture of accountability and continuous improvement, and set a strong operational foundation. Our priorities are clear. Continue to deliver core growth and margin expansion, embed the Azenta business system deeper across the organization to further improve our operational discipline and productivity, and to deploy capital optimally in a disciplined approach.

We anticipate core revenue growth between 3% to 5% and expected adjusted EBITDA margin expansion of 300 basis points and higher free cash flow generation as we scale our operational improvements. With a leaner structure, growth initiatives, enhanced ABS discipline, and a strong balance sheet, we believe we're positioned to outperform the market. Next month, we will host our Investor Day where we will outline the next phase of the Azenta journey, including our multiyear growth strategy, long-term financial framework and capital deployment priorities. We look forward to sharing how our strategy positions us for profitable growth and value creation. We are a stronger company today operationally, culturally and strategically, and we are confident in the path ahead.

With that, I'll turn the call over to Lawrence for a detailed review of our financial results.

Thank you, John, and good morning, everybody. I'll start by sharing with you our fourth quarter and full year fiscal 2025 results, then discuss our segments, provide an update on our balance sheet, and then close with guidance for fiscal 2026. But first, I want to take a moment to echo John's comments.

Fiscal 2025 was truly a pivotal year for Azenta. As we close the year, we're encouraged by the internal business momentum and excited to carry that progress forward into fiscal 2026. The results we are discussing today exclude B Medical Systems, which is reported in discontinued operations unless otherwise noted. In the fourth quarter, we recorded an additional noncash loss on assets held for sale of $4 million on B Medical. We believe the transaction remains on track to be announced in calendar 2025.

To supplement my remarks today, I will refer to the slide deck available on our website. We'll begin on Slide 4 with a few highlights. Fourth quarter revenue was $159 million, up 6% year-over-year on a reported basis, and up 4% organically with Multi-Omics delivering a record quarter. Fiscal year 2025 revenue was $594 million, which was up 4% on a reported basis, and up 3% organic, despite a macro environment that became more challenging as the year progresses. Strong performance in next-generation sequencing, clinical [ bile ] source, sample repository solutions and consumables and instruments contributed meaningfully to these results.

Non-GAAP EPS for the fourth quarter was $0.21, and was $0.51 for the full year. I'm pleased to report an adjusted EBITDA margin of 13% in the fourth quarter, and 11.2% for the full year, representing expansion of approximately 230 basis points in Q4 and 310 basis points for the full year. These results reflect the continued benefits of our operational turnaround and disciplined cost execution, delivered in the face of a challenging macro environment. We believe we have meaningfully more margin expansion potential and are confident we can achieve it while also accelerating our top line growth.

Free cash flow, including B Medical, was a usage of $6 million for the quarter, driven by the timing of revenue and project-related milestone billing. For the full year, free cash flow was $38 million, a notable improvement of $26 million year-over-year, driven by improvements in working capital. Excluding B Medical, we ended the year in a strong financial position with $546 million in cash, cash equivalents and marketable securities, providing us with the flexibility to invest in growth initiatives and return value to shareholders over time. We closed fiscal 2025 with a healthier, more efficient business, sustained operational momentum and the financial strength to invest in our growth priorities.

Now let's turn to Slide 5 to take a deeper look at our results in the quarter. Total revenue of $159 million represented a 6% growth on a reported basis, and 4% on an organic basis. As I already mentioned, Multi-Omics delivered a record quarter. Solid contributions from next-generation sequencing, automated stores and sample storage were the primary driver of growth that helped offset softness in other areas of the portfolio.

In the fourth quarter, non-GAAP gross margin was 46.7%, down 20 basis points year-over-year. The modest decline was driven by performance in Multi-Omics, partially offset by favorable product mix, gains from operational efficiencies and improved cost execution, mainly in sample management solutions. Overall, the net impact was limited, demonstrating the resilience of our business amid a challenging macro environment. Adjusted EBITDA was $21 million, representing 13% margin, expanding both year-over-year and sequentially. This improvement reflects the leverage from our cost actions and our disciplined focus on operational performance. Again, non-GAAP EPS was $0.21 per share. Overall, these results underscore consistent progress towards our profitability objectives, driven by improved efficiency, disciplined cost management and stronger execution.

With that, let's turn to Slide 6 for a review of our segment quarterly results, starting with Sample Management Solutions, or SMS. SMS revenue was $86 million for the quarter, up 2% reported and flat organically. The performance reflects softness in cryogenic stores driven by slower bookings due to ongoing customer budget constraints and a tough compare to last year's record quarter. Consumables and Instruments performed well both year-over-year and quarter-to-quarter. While both automated stores and sample storage grew, customers continue to delay CapEx decisions due to macroeconomic uncertainty. SMS fourth quarter non-GAAP gross margin was 49.3%, up 180 basis points year-over-year as a result of a favorable shift in product mix and improved operational execution and cost [ metric ].

Turning next to the Multi-Omics segment. Multi-Omics delivered record revenue of $73 million in the quarter, the highest ever for the segment, representing 11% growth on a reported basis and 10% organic growth. Continued strength in next-generation sequencing was the primary driver with sequencing volume rising 50% year-over-year. We saw a strong performance across all geographies, aided by large deals in Europe that contributed to the record quarterly revenue.

Despite macro and geopolitical headwinds, our team continues to outperform in China, posting 17% organic growth for the quarter. Encouragingly, gene synthesis revenue grew low single digits year-over-year, achieving the highest quarterly revenue in 2025, driven by strong demand in China and continued wins in [ oligo ] production. We continue to actively monitor the macro environment where customers are reprioritizing projects and remapping pipelines.

Sanger sequencing revenue declined low double digit year-over-year, consistent with trends we've discussed in prior quarters, though the pace of decline moderated in the quarter. Revenue growth in Plasmid-EZ [indiscernible] [ Oxford Nanopore ] based solution remains strong and continues to largely offset the decline in traditional Sanger revenue. Multi-Omics non-GAAP gross margin for the fourth quarter was 43.7%, down 260 basis points year-over-year. The decline was primarily driven by product mix and lower volume in Sanger sequencing and gene synthesis.

Now let's turn to Slide 7 for a review of the balance sheet. We ended the year with $546 million in cash, cash equivalents and marketable securities, excluding B Medical. We had no debt outstanding. This strong liquidity position provides us with the strategic flexibility to invest in growth initiatives, support operational needs and maintain a disciplined capital allocation framework. Capital expenditures for the quarter were approximately $8 million, reflecting continued investment in automation, capacity expansion and technology to support scalable growth.

Turning to guidance on Slide 9. For fiscal 2026, we anticipate organic revenue growth in the range of 3% to 5%. Multi-Omics is expected to deliver low single-digit growth, while Sample Management Solutions is expected to contribute mid-single-digit growth. Our guidance reflects continued uncertainty in the macro environment, particularly around capital spending as well as moderated growth in next-generation sequencing as volumes normalize. Based on these factors, we expect a slower start in the first half of the year and anticipate first quarter revenue to decline approximately 1% to 2% year-over-year. We expect the second half of the year to accelerate as our commercial investments and growth initiatives game traction giving us confidence in our full year guide.

On the profitability front, we are targeting approximately 300 basis points of year-over-year adjusted EBITDA margin expansion, driven by continued operational efficiencies, disciplined cost management and scalable operating leverage. We expect to improve free cash flow generation by over 30% year-over-year. We look forward to sharing more information about our growth priorities and longer-term financial and capital allocation framework at our Investor Day in December. We will outline how these strategic initiatives position Azenta for sustainable, profitable growth and most importantly, value creation.

In closing, we are pleased with our performance in fiscal 2025. we reshaped the company structure, strengthened our operational foundation and generated strong financial results, despite a challenging macro environment. The progress we've made positions us well for fiscal 2026.

This concludes our prepared remarks, and I will now turn the call over to the operator for questions.

[Operator Instructions] Your first question comes from David Saxon with Needham.

Congrats on the quarter. So maybe I'll start with guidance. So 3% to 5% growth, I guess, what do you think the market is going at this point? And then the decline in fiscal first quarter, down [ 1 to 2 ], what's driving that across businesses or even product categories?

And then I think you'll lap the NIH funding dynamics in the fiscal first half. So would love to hear what's baked into guidance in terms of that impact. And then I'll have a follow-up.

Sure. You bet, David, good to be with you, and thank you for the questions. Let's talk about the macro and then I'll hand it over to Lawrence to get into the numbers.

But a lot of what we're seeing is the slowdown on capital expenditures. That's continued to impact our stores in cryo. And we're seeing some green shoots around that, particularly in the EU and seeing less traction in U.S. right now. There's some booking softness of course. The government shutdown from last month is really weighing on some of the guidance. The way to think about it is that midpoints for -- and that contemplates some deterioration in the macro on the low end. On the upper side, it's just a slow gradual improvement over the year.

Regarding what we think the market is doing. We think the market is 1% to 2%. We're still an outgrowth story and that's kind of how our view of this is shaping up for '26. One thing to note is we're not focused on the first quarter, the first half. We're focused on delivering the year like we were this year, and that's really what the teams are laser focused on.

Yes, David, this is Lawrence. So let me give you a little color on 1Q. And really, John has touched on it a little bit, but a couple of things to inform our view, right? So the macro slowdown, the CapEx really will continue to impact our automated storage business in cryo, right? As John mentioned, we are seeing some green shoots in Europe, but right now, not seeing much traction in the U.S. currently.

The second is really the government shutdown, right? Overall, we were down about 45 days. John and I have heard from our customers that new grant reviews and approvals were paused during that time. And so it's going to take a bit of time to work through that through the system. So we don't expect this to impact the full year, obviously, but some of these bookings will push out to future quarters.

As far as the proportion of the impact on the negative growth, I would say the macro slowdown on CapEx was about 2/3, and about 1/3 is related to government funding.

Okay. That's super helpful. And then the follow-up, I guess, is just on SMS growth for the year. So mid-single digits, you just talked about some weakness in stores and cryo. So I guess, last quarter, you talked about the C&I backlog was like 2.5x annual sales. So maybe if you could -- can we get an update there? Like how much of that is driving your confidence in the mid-single-digit growth? And then how are you thinking about SRS for the year?

Yes. Look, I think we've -- for C&I, we feel really good about kind of where we are. Some of the things that you'll see that inform why our SMS is mid-single digit is -- and John and I talked a bit about really reinvesting in commercial in fiscal 2025, we did that in GENEWIZ. What you're seeing in fiscal '26 is we've put in a commercial engine, new leadership. And right now, they're putting investments to work on feet on the street. That's one. So that's going to read through across all our SMS business lines.

Now to talk a little bit about SRS. We expect robust growth in SRS, really through two things, right? You'll see that our commercial engine really starts to move. We just put a new leader in place. Additionally, there is -- and we talked a bit about this. We have an initiative in SRS, particularly to optimize our price. And that's going to read through starting in -- at the end of fiscal -- sorry, at the end of the first quarter. So those are two major components.

And why we feel really good about SRS is really -- we've seen actually recently, our commercial leaders closed two meaningful big deals in the areas of manufactured and bulk compounds.

Your next question comes from Mac Etoch with Stephens.

We may be having an issue with Mac right now. Let's go to -- Mac, are you -- there we go. Yes Mac?

Apologies. Sorry about that. You think I'd be able to find you. As you highlighted, the macroeconomic backdrop is a little bit challenged, specifically around capital equipment. But I'd love to just get an update on what you're seeing across your various customer bases at this point?

Sure. We're seeing pharma. Of course, we're tapping into the profit pools of pharma and biotech right now. We're seeing strength in pharma. So there's spending going on there. There's some repositioning around projects in pharma right now with some of the restructuring that was going on, some of the projects were put on hold. We're seeing some of that get on stock at this point in time. So there's clarity around that. That means there's clarity with our Multi-Omics business in terms of what we're supporting from a testing perspective, from a synthesis perspective.

We're seeing some investments and some clarity around optimization in biotech. Biotech is holding tight right now in terms of CapEx more so than pharma. And then we're seeing -- we were seeing a little bit more clarity in the academic and the government side, but that really -- that really started to slow down with this government shutdown. But all in all, it's more of a pharma story at this point in time.

I appreciate the color there. And then in terms of Multi-Omics, the low single-digit guide. I think that's, I think, roughly in line with what people were expecting. But can you just parse out the various aspects that are contributing to that expectation for the year?

Sure, you bet. More around the macro side, and I'll hand it over to Lawrence on the numbers. But on the macro, it's really this normalization on NGS. So past the technology curve, price normalization, volume normalization, those sorts of things. That's really what we're looking at from a Multi-Omics perspective. Why don't you give some color on the numbers?

Yes. Look, Mac, first off, we are really pleased with our fourth quarter results for Multi-Omics. The team did a great job. Let's talk specifically a bit about Multi-Omics. A couple of things to note. And John alluded to this is, what you're going to see around Multi-Omics, in particular, NGS, is a bit of this normalization. So we expect NGS through the year to be roughly mid-single digits.

As you may recall, we've kind of lapsed this price challenge in the prior year. We saw a lot of volume pick up. So seeing the double-digit number in fiscal 2025, you'll see that really kind of normalize back to mid-single-digit growth. Again, we feel really good about what the team has been doing particularly around the NGS space.

Your next question comes from Andrew Cooper with Raymond James.

Maybe first, a similar one to one that was just asked. But on the SMS side of the house in terms of that 3% to 5% growth, and maybe calling back -- or sorry, mid-single-digit growth, and then maybe calling back to the comment on optimizing price for fiscal '26. Can you give a little bit of a framework for how you think about each of the segments? And then how much is price contributing when we think about that mid-single-digit goal versus volume on an apples-to-apples basis?

So just in terms of the portfolio durability with SRS specifically, I mean you're looking at contracts of 7 to 25 years, extremely stable, reoccurring revenue is in the 90% range in that part of our portfolio. And so we do have contractual obligations around price in particular. So a lot of strength in that. We really have not taken advantage of that in the past, and we're starting to do that now going forward in terms of sharing the value with our customers in terms of what we deliver.

Lawrence, do you want to talk about the -- can you give some of the color on this?

Yes, absolutely. Let's start with SMS. Look, we've talked a bit about the slower start for the first quarter and first half on capital expenditures on stores and cryo. We expect this to pick up in the second half of the year. When you look at C&I, the team continues to do well. As you probably know, we're specked into the workflows, right? There's a bit of the speed bump around the government shutdown, but overall, we expect to see this continue to be a very good business for us.

Around SRS, again, John talked about a lot of the long-term contracts. We've got a new leader in place that's done a spectacular job. Like I mentioned earlier, we've won two pretty big deals in manufactured and compounds, and feel pretty good about kind of what we're seeing early on in fiscal '26.

Now let's talk a little bit more on Multi-Omics. We touched on NGS. Gene synthesis, we had -- we've seen some favorability coming out of the fourth quarter. We think this area is stabilizing nicely. And then on Sanger, look, this is still slow. We are seeing that Plasmid-EZ is offsetting that loss there. And I think that's going to be a trend that continues.

I think you asked -- the other question was around price. Look, we've talked a bit -- a little bit about this kind of price optimization. Where we're seeing our ability to optimize on price is two areas. C&I, and then in SRS. And let me kind of double-click into SRS.

One of the examples we're seeing historically in this business is we were constrained by our systems to deploy contracted, meaning it's built into our customers' contracts. We were not able to really deploy this effectively annually. The team has already done a good job and through the business system, streamline that process. Really, those are really the key areas that I referred to around price optimization.

Okay. Helpful. And then maybe one, John, you mentioned some of these moves to enable some of the different components of the business to make decisions closer to the customer. I guess maybe frame that relative to a history where I think there was some siloed aspects of operations that really needed to come together and get integrated a little bit more.

So how do we balance those two sort of ideas and comments, and would love the framing of how they fit together in context of that 300 basis points of margin that I think is encouraging in a 3% to 5% top line environment?

Of course, sure, sure. Happy to. So I think this is really important in terms of our go-to-market and how we're aligning the organization from a product line P&L perspective, and really having general managers and product managers aligned around these specific segments. We optimize and get synergies where it makes sense. And so we're moving from this very functionally aligned, central -- centrally aligned organization to a decentralized model. And you have that specifically built around, as I stated, around these product lines and these product managers. And so we've got general managers specifically in place now in all of the businesses. So that's the first step in this. And there's clarity around that in the organization. And more importantly, it's putting R&D back into the businesses. Product management into the businesses. Sales and marketing back into the businesses.

And then you have this regional go-to-market model where SRS, we've got a leader in SRS, but we also have specific leaders around better storage management. And we've got a clear expert that's leading that right now. We've got clarity around our go-to-market and who's leading that. All of those individuals are new in their roles.

In C&I, and in [ stores in cryo ], very similar where we have a regional go-to-market model. The team is doing a great job by our European leader who is there now, and we just hired a new U.S., or North American leader as well, doing a great job. So out with customers all the time. The decision-making is at the point of impact regionally now. And so that's really -- it's really given the organization a lot of clarity.

Similar to GENEWIZ and our Multi-Omics business, we moved to a regional go-to-market model. And it's working, and we're seeing a lot of green shoots around that specifically. So the point is, is there's more credibility, the closer you are to the customer, and we've really structured the organization around that. The synergies are around the systems, reporting systems, management information systems. We've really streamlined that. That makes a lot of sense to do that. But from an operating structure, we always talk about people structure process. Our structure is extremely nimble right now because it's very aligned around these product categories, where you've got clarity around your R&D road maps and those sorts of things and then there's regional go-to-market model. So I appreciate the question. Thank you for that.

Your next question comes from Vijay Kumar with Evercore ISI.

Congrats on a nice [indiscernible] here. Maybe, John, on the macro comment that you're making on CapEx and the shutdown impact. We haven't heard that from some of your other life science tools peers. So curious on the trends that you're seeing, maybe just elaborate on that? And what are you assuming for the segments here in Q1 to get to the [ minus 1 to minus 2 ]?

Sure. So we're seeing strength in the outsourcing trends, of course, because they want to outsource and partner with experts. And that's continuing. But where the pause in the softness was specifically around some projects with NIH and those sorts of entities that we do business with. People were just hitting the pause button right now through the government shutdown. We're starting to see kind of that being lapped, but this was an impact in the last 45 days. So a real impact to the organization. Mostly weaker in Multi-Omics.

Lawrence, do you want to give some color on it?

Yes. Look, I think on the first quarter, kind of the CapEx and then around the government shutdown. You'll see on the CapEx, obviously, that's weaker from a negative growth perspective in SMS, right? And then around the government shutdown, it's lean, to John's point, more on the Multi-Omics segment. There's a little bit in our C&I. But again, really, we still see that the full year, we are super bullish about kind of where we're going to land. Normally, Vijay, we really don't guide quarterly. Our teams, John and I, are really focused on hitting the year. But -- and then we still kind of come in to that.

Vijay, one other comment I would note. We went out -- recall when -- the beginning of the year, there was a lot of headwinds around government funding, NIH, in particular, some of the tariffs. We went out to over 100 customers and had a lot over 100 data points directly from them on what they were seeing. That gave us a lot of confidence around guiding in terms of this 1% headwind we were seeing in our business. And a lot of our peers at the time we're calling 20% issues around these headwinds, we were calling 1%. There was a little bit of a disbelief in that, but we felt confident because we had the data.

We have the data right now around this, in particular, around [ VOC ]. I mean we are out with our customers. This regional go-to-market model allows us to get real-time data from our customers on what they're seeing in region, around specific programs in which we were supporting, and/or are supporting. So that gives us the clarity there regarding our point of view on it.

That's helpful, John. And maybe one related on, I guess, [ Larry ], on the phasing. Looks like back half needs to be 6 or 6 plus. I guess that confidence in the back half acceleration, Larry, how are you thinking about EPS for the year? I know you gave the EBITDA margin expansion. How should we think about any below the line items, and what should EPS be?

Yes. Look, I think if you look at how we're less than 50% of our full year revenue falls in the first half of the year. So generally, you're right. We feel really good about the second half of the year, Vijay. And why is that, right?

We -- as we mentioned, we've really invested in feet on the street, particularly in SMS in starting this year. We put in almost 20 commercial heads and GENEWIZ earlier -- in mid fiscal 2025. On top of the price we talked about, that's all going to read through in the second half of the year. So we've got pretty good line of sight around that.

In terms of EPS. Look, our EPS is going to be better, right? And so it's roughly -- it's roughly about $0.50 and [ 16 to 18 ] of other income similar to 2025.

Sorry, if I may, one more, Larry. If margins are up 300 basis points, right? Is there some below-the-line impact? Like why is EPS flattish year-on-year?

Yes. So EPS is going to be greater than $0.50. So we -- I guess maybe clarify that. [ Really sure ] your question, Vijay.

Vijay, the way to think about -- the way to think about how we look at value here is if you pull back and take a look at the way we're looking at value right now, we're trading at 10x EBITDA, and we think we're undervalued right now. $12 of our stock is cash. And so we're focused around driving that margin expansion on the EBITDA line right now, and that's pretty important to us in terms of how we look at economic value. We do not typically guide on the EPS line, right?

Yes. And so, I mean, we expect it to be better than $0.50.

Your next question comes from Brendan Smith with TD Cowen.

This is Jacqueline on for Brendan. Congrats on the quarter. Maybe just doubling down on some of your expectations on timing for the potential M&A deals or tuck-ins over the year. What areas are you kind of looking to pursue in the near term? And how has the macro environment shifted your expectations on both when and where to acquire?

Sure. Our focus around M&A has been pretty consistent, and that is on -- in regards specifically to tuck-ins and how we look at it. So just to reiterate on how we look at capital allocation.

First is around growth opportunities in capital allocation. So what are we doing to support our growth initiatives from an R&D perspective, sales and marketing perspective, gross margin and productivity improvements. Third is around tuck-ins, in M&A. And fourth is around specifically share buyback.

So parking on the M&A side, it's really expanding our core business. So the criteria around that is going to be specifically around SRS, expanding our scale in that space. We're really bullish about our targets there and what our M&A funnel looks like.

Second is around our automated solutions and driving some M&A around C&I and stores specifically. And then third, around synthesis and how we're investing around synthesis. So I would think about those 3 areas in which we're looking at M&A. I would think about '26 as being our year of of executing on that, specifically. '25 was really this reset, building a stable foundation to be able to absorb those type of acquisitions right now. So that's the focus in those areas specifically.

That's very helpful. And then maybe just one more. Double clicking on the automated stores, which seems to be on the upswing. How should we think about the near- and long-term expectations for both the performance and customer spend of that line? And how contributive do you expect it to be in the future for rev growth in that SMS segment?

Sure. [indiscernible] consistent with the past. I mean, when the macro starts to come back, I think you're going to see more strength in that segment. But we're also investing a lot in R&D in that segment in particular. And so that, we won't see that read through until '27, '28. We'll talk more about this in our long-term -- in our long-range plan in Indianapolis in December, on our Investor Day. We'll get into the particulars of this, and we'll give you some more detail on it.

But listen, we're investing behind this. We are not in the freezer business. We're in automated solutions business. And what that means is you have highly, highly complex electronics in a cold environment in some applications for our customers. That's cryogenic. There's a lot of tailwinds around cryogenic cold storage because of cell and gene therapy and the moves being made there. I mean 50% of the therapeutics coming out that are coming through FDA right now need ultra cold or cold. And so we feel like we're well positioned, and we're going to continue to position our product portfolio to enjoy those tailwinds. We'll get into that, of course, in Indianapolis.

Your next question comes from Paul Knight with KeyBanc.

Congratulations on the quarter. I'm kind of hopping on to that same topic of stores. What do you think that market growth rate is? And I guess you're saying, too, that that's you're, probably, biggest area for rolling up that part of the marketplace. So what do you think market growth is, and relative to [indiscernible] 10% biologic sales? Is that any kind of a proxy? And then again, is this the key M&A [ spot ]?

Always an insightful question. So you basically kind of link the two, which is the way we like to think about it from an automated solutions perspective. [ Stores in cryo ], we think, are low single digit right now. We're not in some of the veterinarian space that some of our peers are in cryogenic. So we don't enjoy some of the vaccine tailwinds that are going on right now.

What matters is, is when you've got an installed base that we have right now of hundreds of the biological stores, plus the attachment rate of our consumables which is increasing. I mean that business is really performing for us very nicely. And so you've got this attachment rate that's driving this data. The data output right now and the tools revolution is driving data. In our space, in our business, that is physical specimens, okay? And so we see that read through with the attachment rate of our consumables and sample tubes. And that's pretty important here. Got a 100% attachment rate on the service side. And you've got -- we're driving more attachment rate on the C&I side.

So to summarize, stores in cryo, low single in our segment of the market, and we're still an outgrowth story based on us capturing market share, and then you've got these attachment rates on C&I. I will tell you -- I mean I'm so proud of our team and what they were able to deliver last year in a really tough macro. And we saw that across all of the segments of our business. And in some of the areas that were challenged, the team needed to pull back and work on some things operationally and we were able to do that. But we're also executing nicely on a lot of our attachment rates and installed base.

C&I specifically, we have tens of thousands of instruments out there. And so our attachment rates, we're working on that specifically and you're seeing that read through as well. But it's a mixed story in terms of how we look at it. I hope that helps, Paul.

There are no further questions at this time. I will now turn the call over to John for closing remarks.

Excellent. Well, in summary, we entered '26 as a stronger company operationally and commercially and culturally. I want to thank again, our employees and our customers and our shareholders. We're excited about the road ahead, and we will certainly see you at Investor Day in December. Thank you again.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.

Greetings, and welcome to the Azenta Q3 2025 Financial Results. [Operator Instructions] As a reminder, this conference is being recorded, Tuesday, August 5, 2025.

I would now like to turn the conference over to Yvonne Perron, Vice President, FP&A and Investor Relations. Please go ahead.

Thank you, operator, and good morning to everyone on the line today. We would like to welcome you to our earnings conference call for the third quarter of fiscal year 2025. Our third quarter earnings press release was issued before the open of the market today and is available on our Investor Relations website located at investors.azenta.com in addition to the supplementary PowerPoint slides that will be used during the prepared remarks today. Please note that effective the first fiscal quarter of 2025, the results of B Medical Systems are treated as discontinued operations.

I would like to remind everyone that during the course of the call, we will be making a number of forward-looking statements within the meaning of the Private Litigation Securities Act of 1995. There are many factors that may cause actual financial results or other events to differ from those identified in such forward-looking statements. I would refer you to the section of our earnings release titled Safe Harbor Statement, the safe harbor slide on the aforementioned PowerPoint presentation on our website and our various filings with the SEC, including our annual reports on Form 10-K and our quarterly reports on Form 10-Q. We make no obligation to update these statements should future financial data or events differ from the forward-looking statements presented today.

We may refer to a number of non-GAAP financial measures, which are used in addition to and in conjunction with results presented in accordance with GAAP. We believe the non-GAAP measures provide an additional way of viewing aspects of our operations and performance, but when considered with GAAP financial results and the reconciliation of GAAP measures, they provide an even more complete understanding of the Azenta business. Non-GAAP measures should not be relied upon to the exclusion of the GAAP measures themselves.

On the call with me today is our President and Chief Executive Officer, John Marotta; and our Executive Vice President and Chief Financial Officer, Lawrence Lin. We will open the call with remarks from John, then Lawrence will provide a detailed look into our financial results and our outlook for fiscal year 2025. We will then take your questions at the end of the prepared remarks.

And with that, I would like to turn the call over to our CEO, John Marotta.

Thank you, Yvonne. Good morning, everyone, and thank you for joining us today. As we continue to navigate an uncertain and dynamic macro environment, one thing remains crystal clear. Azenta's core capabilities make us the partner of choice for our customers now more than ever. Whether it's navigating funding constraints, supply chain complexities or market uncertainties, our commitment to operational excellence, innovation and customer centricity enables us to remain a trusted ally.

In times of uncertainty, it's our deep expertise and capabilities that sets us apart and ensures we continue to deliver value where it matters most. We are uniquely positioned to help our customers thrive, and we are committed to enabling breakthroughs faster regardless of the challenges the broader environment may present.

On the call today, I'll start by providing an overview of our business progress and our financial performance and then share some comments on the broader macro environment and relevant considerations before turning the call over to Lawrence for the financial review.

Despite the ongoing macro challenges, our focus has not wavered. We remain guided by our North Star of long-term value creation, and our operational turnaround is moving us in the right direction. The structural realignment of our organization is allowing us to operate more effectively, reduce G&A costs and redeploy critical resources into the operating companies so the decisions can be made closest to the customer.

We're also advancing our key growth priorities, which include: one, strengthening commercial excellence by expanding regional capabilities and alignment, staffing opening sales territories and investing in feet on the street; two, funding product management resources to drive innovation and tighter alignment to customers' needs; and three, investing in R&D to bring forward new and transformative solutions to our customers to accelerate growth.

The foundation for all that we do is rooted in the Azenta Business System. ABS provides the structure and discipline to support and fuel growth through operational excellence and will be a competitive advantage for us. The business system model will harness the full potential of our talented team, unify our culture and drive our performance. We're reshaping the company for long-term profitable growth, efficient working capital management and sustained value creation, all in service of enabling breakthroughs faster.

In the fiscal third quarter, we saw clear pockets of strength with growth in next-gen sequencing, sample storage and product services. Consistent with the broader life sciences tool space, these areas of our business with the most stable and reoccurring revenue streams performed well. This strong performance was partially offset by core products revenue weakness as customers were forced to contend with ongoing funding and investment constraints and broader policy and macro uncertainty.

Importantly, we have a very robust products funnel. Based on our customers' interactions, we believe that our underlying demand is strong and that the order acceleration is a matter of timing. Against this muted macro backdrop, adjusted EBITDA margin expanded by 260 basis points year-over-year, a testament to our execution and cost discipline. We remain committed to our full year 2025 guidance of organic revenue growth between 3% to 5% and adjusted EBITDA margin expansion of 300 basis points.

Our geopolitical war room remains actively assessing and responding to external developments, quantifying potential impacts and working purposefully through countermeasures. Our customer outreach initiative, which began last quarter remains a priority. Each week, we receive direct feedback from our team on what they hear from customers and how Azenta can be a better partner. This enables us to react and adjust in real time.

Consistent with our prior view, we continue to estimate the reductions in NIH funding levels will result in approximately 1% headwind to the full year 2025 revenue. Countermeasures are in place. We believe that the tariffs have a nominal impact on our adjusted EBITDA. The turbulent and changing tariff landscape is challenging to navigate, and we continue to seek alternative supply chain sources and balanced and reasonable cost-sharing options. Thanks to the operational improvements we have made in the business, we are pleased we are able to reaffirm our guidance today despite these impacts.

More broadly, we are in a strong position to capitalize on the considerable opportunities we anticipate will materialize from this dynamic environment. We believe we are a valuable outsourcing solution that can also help alleviate the cost pressures for our customers, and we are already seeing this play out. For example, we recently negotiated a new MSA with a core lab where our service offering will deliver to the customer both reduced costs and improved service quality. We anticipate seeing more of these opportunities. Elsewhere, we are seeing green shoots in our stores and instruments products given the robustness of our funnel.

We remain in a strong financial position with $550 million in cash on our balance sheet equivalent to $12 per share of cash, no outstanding debt and meaningful free cash flow generation. We will prioritize investment opportunities across key levers, which are gross margin productivity, organic growth offerings, inorganic growth through strategic tuck-in M&A and repurchasing our stock. Our M&A funnel is robust, and we see a healthy pipeline in high-quality strategic tuck-in opportunities that we believe can help to accelerate revenue growth and profitability.

As we previously mentioned, we are planning to host an Investor Day later this calendar year to update the investor community on what we achieved and our outlook for our business. Details of this event will be released in the next couple of months. I'm proud of the work our team does each day to partner with our customers. I remain excited and confident about Azenta's ability to deliver long-term sustainable value to our customers, our employees and our shareholders.

With that, I'm pleased to turn the call over to Lawrence. Thank you.

Thank you, John, and good morning, everyone. I'll first take you through an overview of our company-wide results before providing you with some more color on our segment performance and then wrap up with details on our balance sheet and full year guidance. As a reminder, the results we are referring to today, unless otherwise noted, excludes B Medical Systems, which is reported within discontinued operations. In the third quarter, we recorded an additional noncash loss on assets held for sale of $69 million on B Medical. We believe the transaction remains on track to be announced in calendar 2025.

To supplement my remarks today, I will refer to the slide deck available on our website. We'll begin on Slide 3 for a few highlights. Third quarter revenue totaled $144 million, flat year-over-year on a reported basis and down 2% on an organic basis. Strength in next-generation sequencing, growth in sample storage and solid contributions from clinical biostores and product services helped offset softness in other areas of the portfolio.

Non-GAAP EPS for the quarter was $0.19. Adjusted EBITDA margin was 12.3% for the quarter, which represents expansion of approximately 260 basis points year-over-year. This improvement highlights the continued progress of our operational turnaround efforts and the benefit of increased efficiency and cost discipline. While profitability drivers varied across segments, our overall margin expansion demonstrates our ability to execute in a challenging environment and reinforces our commitment to building a stronger, more scalable business. Year-to-date, adjusted EBITDA expanded 350 basis points year-over-year.

Free cash flow was $15 million for the quarter, including B Medical, driven primarily by improved working capital with a significant reduction in accounts receivable. We ended the quarter in a strong position with $550 million in cash, cash equivalents and marketable securities.

Now let's turn to Slide 4 to take a deeper look at our results in the quarter. Total revenue of $144 million represented flat growth on a reported basis and a decline of 2% on an organic basis. In the third quarter, non-GAAP gross margin was 48.5%, higher 180 basis points year-over-year. The improvement is largely a result of favorable sales mix, operational efficiencies and improved cost execution. Adjusted EBITDA was $18 million and adjusted EBITDA margin was 12.3%. Margin expanded both year-over-year and sequentially.

With that, let's turn to Slide 5 for a review of our segment results, starting with Sample Management Solutions or SMS. SMS revenue was $78 million for the quarter, down 4% year-over-year on a reported basis and down 6% on an organic basis, primarily due to softer bookings for cryo and timing delays in our automated stores product line. This reflects customers pushing out orders as they delay larger capital investments amid ongoing budget constraints and internal realignment.

Consumables and instruments was also down year-over-year, primarily due to a large order that shifted into the fourth quarter and a slowdown in instrument bookings. The segment was supported by growth in sample storage, along with strong year-over-year performance in product services and clinical biostores. These product lines continue to demonstrate solid execution and customer engagement and highlight the benefit of diversification in our portfolio. SMS third quarter non-GAAP gross margin was 53.6%, up 760 basis points year-over-year, reflecting a favorable shift in product mix and improved operational execution and cost management.

Turning next to the Multiomics segment. Multiomics delivered revenue of $66 million, up 4% on a reported basis and up 3% on an organic basis. Growth was led by continued momentum in next-generation sequencing, where pricing has stabilized and volume is growing at sustained double-digit rates. Performance was further aided by large customer deals, particularly in Europe. Despite macro and geopolitical headwinds, China remains a strong market for us, posting 10% organic growth in the quarter.

Gene Synthesis revenue declined high single digits year-over-year, reflecting continued softness among key pharma accounts. The decline was primarily driven by delays as some customers adjusted time lines in our reprioritizing projects and internal resource alignment. Sanger Sequencing revenue declined mid-teens year-over-year, consistent with trends we've discussed in prior quarters as the industry continues to transition towards newer sequencing technologies.

Plasmid-EZ, our Oxford Nanopore-based solution, continues to gain traction with revenue growth remaining strong and well ahead of last year's levels. This momentum is helping to offset the decline in traditional Sanger revenue, and we remain on track for Plasmid-EZ to substantially balance that impact over the full year.

Multiomics non-GAAP gross margin for the third quarter was 42.6%, down approximately 500 basis points year-over-year. The decline was primarily driven by product mix and lower volume in Sanger Sequencing and Gene Synthesis as well as the impact of certain nonrecurring items in the quarter.

Next, let's turn to Slide 6 for a review of the balance sheet. We ended the quarter with $550 million in cash, cash equivalents and marketable securities, excluding B Medical. We had no debt outstanding. Capital expenditures for the quarter were $11 million as we continue to invest for growth and scale in our Sample Management Solutions and Multiomics business.

Turning to guidance on Slide 8. As you saw in our press release, we are reaffirming our full year 2025 organic revenue growth guidance of 3% to 5%. Previously, we anticipated low single-digit growth in Multiomics and mid-single-digit growth in SMS. While our overall outlook remains unchanged, we now expect Multiomics to grow in the mid-single digits and SMS to grow in the low single digits, reflecting evolving customer dynamics and the impact of budget constraints on product purchasing time lines. We are also reaffirming our commitment to 300 basis points of adjusted EBITDA margin expansion year-over-year.

To close, our performance this quarter highlights our differentiated portfolio, improving operational execution and a hard-working team unified around long-term value creation priorities. We are committed to delivering on our full year objectives and to advancing the initiatives that will position Azenta for sustainable long-term growth.

This concludes our prepared remarks, and I will now turn the call over to the operator for questions.

[Operator Instructions] Your first question comes from David Saxon from Needham.

So I'll have one on guidance and then one product-related question. So for guidance, fiscal '25 guide implies a step-up here in the fiscal fourth quarter. So outside of the easier comp, I guess, what are you seeing across the businesses that give you the confidence in that step-up? And then would love your early thoughts on how you're thinking about fiscal '26. You started '25 at 3% to 5% and have maintained it throughout the year. So is that a good way to think about fiscal '26? Or any puts and takes we should consider, particularly around the funding environment? And I'll have one follow-up.

Sure. David, it's Lawrence. Good to be with you. Let's start with kind of the fourth quarter. So as you know, third quarter year-to-date, our organic revenue grew at 3% year-to-year. To hit the 4% midpoint, there's a step-up in the fourth quarter north of $15 million. So we'll need to generate about $160 million in revenue in the quarter. A couple of things that are giving us really the positive momentum we expect, right? There's momentum, as you can see, in NGS stores. Additionally, as we look at our stores backlog on hand, we have sufficient amount in the fourth quarter. Additionally, as you look at C&I demand, we had some of these orders that I mentioned during the -- earlier that were pushed into the fourth quarter. We've actually seen that shift, and that was a significant order. So those are a couple of big items that really move us and give us confidence about the fourth quarter.

Additionally, one of the things that we've seen, a large amount of momentum is our improving on-time delivery around our SMS business. John and the team there has really done a tremendous effort in order to just kind of increase our on-time delivery. We'll see the fruits of that labor really kind of flow through in the fourth quarter. Ultimately, David, it's about execution and really looking at ensuring we can basically get to these numbers week-to-week and ensuring execution. So that's on the fourth quarter.

In terms of kind of the outlook for 2026, really, what we mentioned earlier is we're really committed to the IR Day numbers that we had in our LRP, which are 5% to 8% CAGR. As I mentioned, at the end of -- close to end of the calendar 2025, we'll have another Investor Day and update everyone on the numbers.

Okay. Great. That's helpful. And then I guess, on SMS, specifically core products, talked about weakness there. So how much of that is due to order timing versus order cancellations? Are you seeing any cancellations or just -- it's really just orders being pushed out due to customer resource allocation?

David, it's John here. We're not seeing any cancellations at this time. Most of this is just pharma and around capital equipment pausing on some of the capital equipment purchases consistent with the rest of the market.

Your next question comes from Mac Etoch from Stephens Inc.

This is Hannah on for Mac. I just had one question on Gene Synthesis headwinds that you were talking about some softness from key pharma accounts. What do you think is kind of causing this softness? And do you expect these timing issues to resolve? Could you just like elaborate a little bit more on what you're seeing and when you expect this to improve?

Yes. Hannah, good to be with you. We're seeing just a bit of softness around projects coming in from pharma right now in synthesis. We are seeing some of that kind of get on -- coming on stock here in Q4. We're seeing a little green shoots around that right now. But I think we remain pretty consistent on this. This is just a timing issue in North America.

Your next question comes from Vijay Kumar from Evercore.

Maybe going back to this implied Q4. I think your comment suggests Q4 should be up mid-singles, maybe up around 5% organic. What was the -- I guess, can you quantify the order pushout in Q3 that gives you visibility on that 5%? And how are you thinking about the segments, SMS versus Multiomics in Q4?

Vijay, it's Lawrence. Look, I think one thing I failed to mention is seasonally, Q3 to Q4, we always step up. Last year, you saw about a $7 million step-up. The factors I mentioned earlier in the call at the top of the Q&A around MGS momentum, stores and then kind of this large order around C&I going out in the fourth quarter really make up the remaining difference. That's why we feel confident about what we've got looking at fourth quarter, but obviously, we've got to execute.

The other thing, I think one of the things to mention, especially around our SMS business and one of the key things is the strength of our funnel. Usually, I know we don't really talk about this, we talk about backlog, but what we've seen in our funnel has been tremendous. For instance, in one of our -- in our C&I business, we're seeing that it is about 2.5x our revenue. So to John's point earlier, there's significant pent-up demand. We expect a lot of this to kind of peter out through the fourth and then subsequently into the first quarter.

Understood. And maybe, John, for you on leadership. When you look at the leadership changes you made, any -- I guess, any new leadership, sales leadership, which perhaps contribute to maybe the order book cleaning up, which explains 3Q to Q4. I'm curious how leadership changes impacted the business.

Vijay, good to be with you. Insightful question. We've got a few things going on commercially that we're pretty excited about. We do have new commercial leadership in North America. As you know, we split out the regions and have gone to a regional model instead of a global model commercially. I think we're seeing green shoots around that. Our sales leaders are out in the field with customers. We're pretty excited about that. Personally, I've spent a lot of time with our customers last quarter. We're very excited, and we do really well when we're in front of our customers, candidly.

Secondly, around just sales leadership in general. So Joe just joined us in North America. But other than that, I think we've got our -- I'm sorry, in SRS, we've got new sales leadership in SRS. So Albert, who was running our corporate sales organization, has moved over to SRS. He's well known in the industry. And he actually grew up in the SRS business and our biorepository business. So we're really excited about him taking the reins there right now.

Understood. Maybe if I could squeeze one more in. Your comments around M&A funnel seems constructive, positive. I'm curious what areas are you looking at, John? Would this be on the product side or service side or anything software related? It looks like both revenue accretion and margin accretion seem like key criteria for targets.

The way I would think about our M&A funnel right now is I would think about really us kind of minding our knitting and sticking with our core. And that's specifically around our biorepositories, automation and how we think about that. We, of course, are evaluating opportunities in the Multiomics business as well. But in general, that's the way I would think about it. I would think about it being accretive and us being very disciplined around these assets in terms of making sure that they're within our core or near product line extensions is the way I would think about it, just back to the basics here in M&A.

Your next question comes from Brendan Smith from TD Cowen.

Key areas you would highlight that may see more meaningful strength in terms of spending trends across end markets?

I'm sorry -- we missed the first part of your question. Apologies.

Yes, no worries. I'm sorry about that. So I just wanted to double-click on the funnel that you mentioned earlier in the Q&A. How much visibility do you have stretching out over the near term? And are there any areas you would highlight that may seem like they might have more meaningful strength in terms of spend trends across end markets?

Yes. Our funnel specifically -- this goes back to Vijay's question and Jacqueline, a follow-on to this that you're asking specifically around the strength of commercially in our funnel. The teams have done a really good job of reviewing our deals on a weekly basis. We're going very deep into those geographically. Specifically, we've got good visibility in the capital equipment side of the business right now. Everything -- the message is pretty clear, no cancellations on orders.

But in terms of the funnel, there's been no competitive pressure. I mean, there's always competitive pressure, but we're not seeing misses or losses in the funnel based off of a competitive dynamic. It's just the timing of these in terms of where pharma is right now on capital expenditures. And that's really the message around the funnel. But I'm very pleased with the team's visibility and command of where the funnel is, where we are in the process of driving those deals to close, specifically in the SMS products business.

That's very helpful. Just to fit one more in. Could you remind us somewhat the ideal buyer profile you're looking for, for the B Med divestiture? And I guess we have updates to timing in the near term.

Sure. We've been pretty consistent around B Medical. We were surprised at how much demand we had gotten on the process. We're very pleased with where the process is today. Your buyer set is anywhere from private equity to strategics. And again, pretty pleased on where we are. We see no reason we shouldn't be hearing about where we are in the coming months.

Your next question comes from Andrew Cooper from Raymond James.

Maybe I just want to dive in a little bit on the SMS margin dynamics. Can you give a little bit of color as to how much of that is really mix oriented with some of the timing dynamics you talked about versus how much is structural cost out that are helping there because you did kind of outperform a number pretty materially on that line.

Yes, Andrew, good to speak with you. For the SMS margin, we were up 760 basis points in the quarter. Generally, I would say a large component is going to be mix, right, with favorable mix towards the consumables items. The one thing I would say is, on top of that, we had really good improvements in gross margin, particularly around stores execution and just generally in the overall cost management that was driven by a lot of the restructuring we talked about.

Andrew, a couple of things on this. I mean you're seeing -- you're starting to see the kind of the fruits of ABS, the Azenta Business System, come to life here around productivity and efficiency. That team has done a really good job of bringing in the business system around specifically that gross margin line and getting some pick up there. So we're pleased with that, very pleased with that.

Okay. Helpful. And then maybe just in terms of looking at fiscal 4Q and some of the step-up here, I mean, what's your visibility today? And can you help us think about the comfort level knowing that, yes, you have the timing dynamic that helps you. You have the backlog, but we've seen this quarter a little bit of that backlog push out. So how comfortable are you with that kind of low single digits and the step-up in SMS in particular, in 4Q relative to kind of sitting here the first week of August and what you know you have in hand?

Look, Andrew, I feel good about kind of where we are, kind of the things we talked about with the seasonal aspect of the step in the third to fourth quarter, coupled with the items we just talked about with kind of the visibility on the stores backlog, what the positive momentum we're seeing in NGS. And ultimately, look, it's about execution, and we're meeting with the teams weekly to ensure that we can kind of land the fourth quarter.

[Operator Instructions] Your next question comes from Matt Stanton from Jefferies.

Maybe on NGS, can you just put a finer point on the high double-digit growth you saw in the quarter? What exactly did NGS do in 3Q? I know you said volume was double digits and pricing stable, but maybe a finer point on the trends there in the quarter. And then I think prior, you had noted a potential tailwind here from some of the challenges on the A&G side with funding, especially in core labs and indirect funding. Maybe just talk a little bit more on kind of any traction you're seeing there as folks maybe look to outsource or move some of that volume elsewhere and the durability of that tailwind to your business over time?

Again, I think the story around NGS is one around sales execution. The teams have done a really good job of partnering with core labs, in academic and in pharma right now, both. We're very pleased with how that team is executing commercially. It's -- again, it's a testament to -- we're starting to see the Azenta Business System kind of come to life, specifically around targeting customers and driving deals through into the business and just delivering value to our customers.

Around A&G, I mean, there's a bunch of opportunities that we continue to see. I mean we were pretty consistent with our point of view around NIH funding and that being a 1% headwind. We continue to maintain that point of view. As we said, we were -- we're on with the team in terms of a weekly war room. We've pushed that out to a different frequency now. We're getting -- the team has got a good grip on where we are in terms of funding and how we can meet the needs where there's some pressure on that. We don't -- we continue to see these outsourced opportunities.

And Matt, I think right now, there's 2 dynamics. In academic and government, there's a clear point of view around -- they're looking for high-quality partners at this point in time. In pharma, what we're seeing is less kind of shrinking the amount of partners they would like to have and going to make sure that they're partnering with businesses that are putting on-time delivery and quality at the forefront of their needs. And Azenta has been at the top of the list. I mean I've had a lot of personal conversations with a lot of our big pharma customers, and that's been -- that's come over and been made crystal clear to us. So that's really around NGS and A&G there.

And maybe to go to something you touched on in the opening remarks, you talked about the 3 areas of growth, I think, for both product management and on the R&D side, you noted innovation. Maybe just give us an update on kind of how you're feeling about the innovation pipeline and cadence? And then when could we start to potentially see some of these products in area of innovation you're putting dollars and time into start to show up and contribute to the top line? Is that '26? Or is it a bit beyond that?

Yes. We'll come back to you clearly on when we're going to start to see a lot of that come through the -- and show through the P&L. But let me speak to the -- let me give you some specifics, in particular, around product management and the road map and how we're thinking about things in R&D. So R&D, you're going to see those investments. You're seeing some of those investments come in now. You're going to see more of those come in next year. We're really pleased at how the team is getting more disciplined around R&D from an NPI perspective, a sustaining perspective in our POC business specifically. Our C&I business, we've got to breathe new life into that business. We haven't invested in that for quite some time. We're very excited about the investments that were coming in with that.

Product management, the teams are working their road maps. We've seen some early indications on that. We're really pleased with how product management is looking at the road map in terms of voice of customer, what our customers need and want, and how we can meet their needs. Again, this is around our innovation engine with Azenta Business System. Our team is really -- our business system team is really supporting those product managers right now and the growth of the business. I'm very excited about where we're going to be able to take things.

When we did the review of product management, it was clear to myself and the leadership team that was in the room that we have underinvested in these businesses for a long time, and we're really excited about. Again, going back to what we said from day 1 here was we've got to put our resources in the right area, and it's not in G&A. It needs to be in R&D, product management and sales and marketing. And we're really pleased about what the '26 budget is shaping up to look like to make sure that those investments are there. Again, we want to do what we say we're going to do here, and I think you're going to see that read through. Thanks, Matt.

If I could just sneak one more in for Lawrence. On the pushout in the C&I orders, it sounds like it shipped here in 4Q. Any more color just on what that was? Was it like a couple of million dollars or something?

Yes. Look, it was a couple of million, and it just literally shipped in July. So hopefully, that helps.

Your next question comes from Matthew Parisi from KeyBanc.

This is Matthew Parisi on for Paul Knight. I want to congratulate on the great quarter. I have a question around the NIH funding. You mentioned a 1% headwind. And I was just wondering if there's going to be like possibly -- we could expect less of a headwind due to the update that we've seen that funding is actually going to be going up now in the quarter or for 2026?

Yes. Matt, thanks for the question. Pretty consistent with our point of view. I mean we were -- that was being pressure tested bluntly last quarter. We had done a lot of homework around this to understand this. And with the recent news of -- on July 31, it was very positive. That was the Senate appropriations, bipartisan, 1% step-up, consistent with what we've been hearing in the field. I think you're seeing a lot of grants coming through more around the chronic disease space. We'll see what happens in the house, but we remain pretty bullish on where things are going to be from an NIH perspective next year.

Again, our team, we're -- that team in Multiomics and GENEWIZ, we're able to pivot in pharma or in academic supporting both. I think the team has done a nice job there. Around this indirect on 15%, our business is typically not impacted on that. We think with the direct research dollars going in and the need to -- the need for more data to come out, which is in samples, and those samples either get interrogated by our Multiomics business or we help support those assets in the SMS business, either way, we're well positioned to support that 1% step-up.

There are no further questions at this time. I will now turn the call over to management for closing remarks. Please go ahead.

Very good. Thank you. I want to thank all of our associates and what they do every day to advance the long-term and profitable growth of Azenta, how they work each day to enable breakthroughs faster for our customers and our shareholders. Thank you all. We really appreciate it.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.