Avid Bioservices(CDMO) - 2025 Q2 - Quarterly Report

Financial Performance - Revenues for the second fiscal quarter ended October 31, 2024, were $33.5 million, an increase of 32$8.1 million compared to the same period in the prior year[119] - Revenues for the six months ended October 31, 2024, were $73.7 million, an increase of approximately$10.5 million, or 17%, compared to $63.1 million for the same period in 2023[142] - Gross loss for the three months ended October 31, 2024, was$2.0 million, improving from a gross loss of $4.7 million in the same period last year[134] - Gross profit for the six months ended October 31, 2024, was$3.7 million, representing a 5% gross margin, compared to a gross loss of $0.6 million (negative 1$12.6 million, compared to an operating loss of $11.2 million in the same period last year[136] - Operating loss for the six months ended October 31, 2024, was$15.1 million, an increase of $1.7 million compared to a loss of$13.4 million in the same period in 2023[146] - Interest expense increased to $3.3 million for the three months ended October 31, 2024, up approximately$2.4 million from the prior year[137] - Interest expense rose to $5.7 million for the six months ended October 31, 2024, compared to$1.7 million for the same period in the prior year, reflecting an increase of approximately $4.1 million[147] - Other income (expense), net, was an expense of$1.5 million for the three months ended October 31, 2024, compared to income of $0.1 million in the same period last year[138] - Other income (expense), net, was an expense of$2.1 million for the six months ended October 31, 2024, compared to income of $0.4 million for the same period in the prior year, a decrease of$2.5 million[148] - The company recorded no income tax benefit for the three months ended October 31, 2024, compared to a tax benefit of $2.4 million in the same prior year period[139] Backlog and Future Revenue - The company ended the quarter with a backlog of approximately$220 million, up from approximately $199 million at the end of the same quarter in fiscal 2024[119] - As of October 31, 2024, the company's backlog was approximately$220 million, an increase from approximately 193 million as of April 30, 2024[171] - The company anticipates a significant portion of its backlog will be recognized as revenue over the next five fiscal quarters, but it is subject to risks such as customer cancellations and supply chain delays[171] Expenses and Costs - Selling, general and administrative (SG&A) expenses increased to 10.6 million, a rise of 61% or 4.0 million compared to the prior year[135] - SG&A expenses increased to 18.8 million for the six months ended October 31, 2024, up $5.9 million, or 46$12.8 million in the prior year[144] Cash and Capital Expenditures - As of October 31, 2024, the company had cash and cash equivalents of $33.4 million, which is expected to be sufficient to fund operations for at least the next 12 months[151] - Net cash provided by operating activities for the six months ended October 31, 2024, was$314,000, a decrease of $5.7 million compared to$6.0 million for the same period in 2023[154] - The company anticipates capital expenditures of approximately $5 million to$7 million during fiscal 2025[164] Merger Agreement - The company entered into a Merger Agreement on November 6, 2024, with Space Finco, Inc., which will result in the company becoming a wholly owned subsidiary[120] - On November 6, 2024, the company entered into a Merger Agreement, which includes customary covenants regarding the conduct of its business prior to the closing of the Merger[165] - The company may terminate the Merger Agreement if the Merger is not consummated by May 6, 2025, with a possible extension to November 6, 2025[167] Accounting Policies and Market Risks - There were no significant changes in the company's critical accounting policies during the six months ended October 31, 2024[168] - The company has made estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses based on historical experience[168] - There were no material changes in the market risks described in the company's Annual Report on Form 10-K during the six months ended October 31, 2024[172] Growth Strategy - The company aims to increase its operating profit margin to best-in-class within the industry as part of its growth strategy[117]