Azenta, Inc. (AZTA) Earnings Call Transcript & Summary

Good afternoon. This is Daniel Brennan, UBS Life Science Tools, Diagnostics, Pharma Services analyst. Thank you for being with us here on day 3 of the UBS Global Healthcare Conference virtually. Certainly pleased to be joined here in the afternoon with the management team of Brooks Automation. I believe management is going to walk through a presentation overviewing the business and providing an update on kind of trends. And then after that, I think we're going to have some time for Q&A. Please feel free, if you don't mind, if you're on the webcast, you could ask me questions virtually through the webcast, and I'll see a pop-up on the screen. We'll have some time at the end for that. So I think I'm going to hand it over to Steve Schwartz, President and CEO, who's going to kick it off, and then I think subsequent to that, Lindon Robertson, the EVP and CFO, is going to come in as well with some commentary. So with that, gentlemen, welcome, and thank you for being here.

Great. Dan, thank you, and thanks for the introduction, and thanks for the opportunity to be here. We've had a good session so far. We're really delighted to have a chance to present today. This is Steve Schwartz from Brooks Automation. Today, we're going to use an opportunity just to give you an update on the company, but specifically, the performance of the company, how we're managing in this environment as well. I'm going to refer to a deck that we posted today, and I'll give you page numbers as we turn through, so that you can follow along, please. The first, I will call your attention to the safe harbor statement on Slide 2. You can go to www.brooks.com for a more complete look. But obviously, we'll be making forward-looking statements, and I just want to state that upfront. But I turn you to Page 3, please. Today, we'll describe in a really dynamic environment how we're making great strides supporting industries in 2 very strong markets, semiconductor and life sciences. But we'll also give some extra color today, particularly as it relates to our performance during this period. But we're really enthusiastic both by the opportunities presented by these markets, but also how we're negotiating our way through during these days and making the most of this time to continue to extend our lead and to continue to push for very strong growth and the high performance in both of our tech sectors. If you turn to Page 4, I'll just give you a very quick highlight of the company. Today, we will talk mostly about life sciences. I'll give some color later about the opportunities that exist in the environment in Semiconductor Solutions. But I really call your attention to what's a very strong growth profile in a very strong dynamic markets. We showed in fiscal '19 -- we have a September 30 fiscal year-end. Fiscal '19, we had 24% growth, and this is following a 20-plus percent growth here, it's really the hallmark of the company. Our ability to take advantage of significant growth opportunities that come from both life sciences and semiconductor, and we're a global operation. So we have about 3,300 employees today, and we serve markets in more than 50 countries, but it's a very strong foundation. It's a very important part of the company that we operate in Asia as well as Europe and North America and anywhere that these market opportunities emerge. We're present. Our footprint in semi got us established there, and it allowed us a very smooth start as we've captured a significant portion of share in life sciences in each of the regions where we participate. I turn you to Slide 5. So -- and before I begin, I just wanted to give you a snapshot and talk a little bit about this COVID environment because it relates very specifically to Brooks and our status in this environment. First, I remind you that both segments that we participate in, both the Life Sciences segment and Semiconductor have been deemed essential operations, and we've continued to operate all through the March quarter and now into mid-May with minimal disruption to our ability to deliver and provide services. So we've had very minimal interruption, and we continue to go very strong. And it's the opportunity as an essential company and an obligation as an essential company to perform as we have. The fundamentals -- actually, even in this environment, the fundamentals remain strong. We have a very solid balance sheet. Lindon will give you some details and highlights about that later, but it gives us a lot of strategic flexibility. Our pipeline is still relatively active from an M&A standpoint. But it also gives us opportunity to continue to make investments to capture share and position in our markets. And indeed, we're making those investments so that we come out of this current environment, we'll be stronger than when we went in. Our momentum remains strong. I will mention that on our last earnings call, we talked about very strong performance in Semiconductor and Life Sciences. And this was despite some headwinds we had related to continuity of supply on the Semiconductor side. And in Life Sciences, we set records for a couple of the segments in our services business and yet we had some headwinds that were caused by the slowdown in the academic environment. We'll give you a little bit more color to performance today. But nonetheless, in the aggregate, momentum remains strong. And we're really pleased with the position that we have both in semi and in Life Sciences. And finally, and I highlight, we continue to maintain the investments about the growth of the business and the position that we have. We've made a conscious decision to make sure that we keep our team in place and intact. And we've been able to do that because of the balance sheet and because of the profitability position of the company. We've continued to accelerate development for market capture, and we've done that across Life Sciences and Semiconductor, and we really have a thrust and an emphasis on extending our leadership positions in both segments. I turn you to Page 6, just for a quick snapshot on recent history of the company. Very strong revenue growth over the past 4-year period, 18% CAGR. And from an operating standpoint, gross margin improvements across sectors and a tremendous increase in EPS. What keeps us enthused about the opportunities in front of us is that there's a lot more growth and profitability potential. And this is what keeps us coming to the work every day. We're just on a trajectory that we don't intend to let up on. On Slide 7, you can see the transformation, and this is a pictorial, if you will, of what's driven our growth. Over a 4-year period from 2015 to 2019, we almost doubled revenue. And you can see that the Life Sciences portion of the business has grown significantly. We've almost tripled the Life Sciences portion over the same period. At the same time, we grew the Semiconductor business. So although the revenue has grown tremendously, it hasn't been at the expense of Semiconductor. Rather, it's Semiconductor, very strong growth, and in addition, we've added the Life Sciences business. We focused there. We've made organic and inorganic investments, and we've driven the profitability profile of the business. We believe that we're still in the early innings of both of these opportunities, and we're really pleased with both the market position and the opportunities that we have now as a $800 million company, there are more opportunities open to us. The acquisition of GENEWIZ, the expansion in Life Sciences gives us more growth vectors. And it's from this position that we think we have more opportunities than we've ever had before. I will accelerate you now to Slide 9, and I'll talk about the first of the 2 strong platforms that we depend upon for our growth, starting with Life Sciences. For those of you who aren't so familiar with the company, I focus on what we do. We started as a company focused on the cold-chain of condition managing biological samples, so that we could ensure the high fidelity of samples, the location of samples, the amount in inventory, the consent management for customers in an environment where there are more than 2 billion samples stored for long-term use. There's a tremendous opportunity here and a very complex issue faced by pharmaceutical companies, research associations and academic institutions. And we -- our automators and managers of samples, we do this in automated systems, and we do it as an outsourced service to customers. At the same time, our services business is focused on the genomic analysis. And we've made a recent acquisition of GENEWIZ that's made us one of the world leaders in capability for the analysis of biological samples. And it's the combination of these 2 capabilities using very strong scientific capability and very strong technology capability that ensures that we don't just manage these samples, but we manage the information associated with them. And we think it's quite a unique value proposition that we're beginning to leverage now in the restructure of the company, which I'll mention in just a moment. You could see on the far right of Slide 9, tremendous revenue growth based on the blue bars, which were initial sample management business. The acquisition of GENEWIZ in the second month of fiscal 2019 put us on a run rate today where we're almost at a $400 million run rate, and we anticipate continued growth in this space as we go forward. On Slide 10, I give an example of the portfolio of the products and also a hint as to how we go-to-market with this new alignment of the company. Starting on the left side of the pie chart, you can see in the areas for the -- of the blue segments, what we call now Life Sciences products. And so this is all products associated with the management of the samples in the cold-chain. We have large automated stores and smaller cryogenic stores where we store a range of temperatures from room temperature, all the way down to minus 190 degrees C. So we start with basic samples, chemical compounds, biological samples and ultimately, cells and tissue at cryo temperatures. In the consumables and instruments, we have a formatting capability for the storage and management of the samples. And historically, we included the sample and repository solutions, which you can see at the bottom of the pie chart. We included that in the Sample Management. But just recently, on the 1st of April, we reorganized the Life Sciences business unit to include the sample and repository solutions, the outsourced Sample Management, if you will, into the GENEWIZ business. And the GENEWIZ entity includes Next Gen Sequencing, Sanger Sequencing and Synthesis. So the synergies associated with the high touch of the samples -- the outsourced management of the samples and the value that we can bring to those same customers for those same samples to form genomic analysis on them provides us with an enormous opportunity for synergies of the sales organization, synergies of the laboratory services and also the Sample Management. So now products. The Life Sciences Products business unit is about 35%. And the sample services business is 65% of the business. The thing that enthuses us the most here is we're running a business now that's a run rate of about $400 million. But we serve a market that's about $10 billion in size and growing at about 10%. So a market that's growing at about $1 billion per year provides us an enormous amount of opportunity, and we believe we're structured to best go after this beginning here in 2020. I move you quickly to Slide 11. There's an enormous growth vector that presents itself in the cell and gene therapy space. We identified this as an opportunity for the company some years ago, and we began our organic product development to be able to serve this market with ultra-cold storage of automated solutions. The GENEWIZ team has a large number of services they provide in the cell and gene therapy arena. We're combining these capabilities. We have more than 130 customers now. The growth rate was almost double from fiscal '18 to fiscal '19, and we're on about the same trajectory as we head into fiscal '20. We see a tremendous long-term opportunity here in the cell and gene therapy space. And it allows us to bring organic innovations to this space as it's quite new territory. But we're keenly focused on our ability to use both our engineering and scientific talents to bring new opportunities to this space. On Slide 12, we show a small sample of the customers who are among the most demanding customers in the Life Sciences space. We're proud of the fact that even a company of our size, serving this industry with about a $400 million business, we have more than 5,000 customers, and over the past 6 quarters, we've added more than 200 new customers per quarter. We have a very strong presence in the pharma and biotech space, but a tremendous number of opportunities, as we move to the right of this slide, and we move to academic and the government space. So names that you know, very strong brand recognitions for our products and services, and a tremendous opportunity for us as we continue to move forward and gain more share. I'll move you now to Slide 13, just to give you a brief update on the semiconductor business. And Lindon will give you a little bit more color from a target model and a financial perspective, but mostly to orient you to what we do. We are more than a robotics and automation company. We're focused on cleanliness, on yield, on the precise technologies that are necessary for the demands of a still rapidly growing semiconductor industry and technologies that are necessary for next generation capabilities. We're running a business that's at a run rate of just about $500 million per year. And we have very unique capabilities that we started out by building on a 40-year history, serving the semiconductor equipment industry, and we've parlayed that into extremely strong growth. In an industry for people in the Life Sciences space who aren't so familiar with semi, the reputation from a capital equipment standpoint is that it's a business that's at times cyclical. And indeed, in the fiscal '19 period, it was a down period for wafer fabrication equipment, and if you look at people who served that industry specifically, you'll see a revenue dip of somewhere in the range of 10% to 15% from 2018 to 2019, and yet we were able to sustain growth. And a lot of that -- and most of that is because of the particular portfolio that we have, the science that we bring to the next-generation technologies and strong growth -- strong continued growth in our market share position. So we won't claim that the business opportunity is not cyclical, but we will say that we have -- we intended, we declared that we would and indeed, we outgrew the semiconductor capital equipment space. And in the case of fiscal '19, we outgrew it by more than 10%. On Page 14, the important takeaway here is that the portfolio was made up of strong #1 positions for technologies that are required not just for current generations of semiconductor, but for next generations. And the important aspect of this business is when we win business in semiconductor, we typically know that we've won for products that will go to mass production 3 years from now. So today, we focus on designs and technologies that lead our customers' road maps, and when we have a design win, we typically go through a beta phase with the customer, and we're locked in from the standpoint of design. And then when volume production comes 2 or 3 years later, we already knew 2 or 3 years ago that we have that market position. And so when we talk about #1 positions here at a 7-nanometer technology node, 5-nanometer technology is now going into factories, and this is a business that we won years ago, and we're currently working to win 3-nanometer technology node designs, and those will become production capabilities in about 3 years. So we have a long-term look, a long-term focus. And a very strong investment to secure our future. But once we've secured it, we know what the next few years look like in semiconductor, and this is a pattern and a behavior that served us particularly well for the past decade, and it will continue to serve us well for the next decade. Finally, I'll take you to Slide 15. And in the very center portion of this slide, vacuum automation was the core business for the company for 20 years. Recently, we've expanded our capability in Contamination Control, so that we sell beyond the OEMs or equipment makers, and we expand into Contamination Control, which gives us a new customer set where we can sell our Contamination Control Solutions directly to the fab. It gives us closer touch points with the customer, a more immediate and a more close look, if you will, of the challenges that are coming, enables us to adapt our products that we sell to the device manufacturers and to the equipment manufacturers. And on the far right side, there's been an expanded opportunity related to what's called advanced packaging that is the complexity of the -- not just the semiconductor devices themselves, but the packages that allow us to put these things into very small form factors like a cell phone. There are advanced opportunities related to our automation solutions that have expanded our advanced packaging market. So even in a market that's been around and what seemed like a relatively mature market, we've been able to tap into secular growth drivers with very advanced technologies and continue to grow the semiconductor business in almost any capital equipment environment. So with that, I'll summarize the tremendous growth opportunity that exists. I'll have Lindon now, please, take you through the drivers here and how we sustain, not just the growth opportunity, but how we convert it to very strong profitability as we go forward. Lindon?

Thank you, Steve. So I take you to Slide 17, and we've been on this consistent strategy for a number of years. If you've seen me present before, you've seen us use these -- the same chart. It's inherent in everything we do to establish leadership in the markets we participate in. We have biased our investments toward Life Sciences, but not to the exclusion of semi. We have made investments and fine-tuned the portfolio there as well. And everything we do, we focus on margin expansion. And of course, we believe and we think we have a strong track record of deploying capital in a very balanced and disciplined fashion. What does this do for us going to 2022? If you look at Page 18. We put out a long-term model as we have for multiple years now, so that you can track what we intend to do and how we deliver against that. In this model, on the left side, you'll see the Life Science segment and then the Semiconductor and then the total as you can move across the page. In the Life Science business model, you can see that we're projecting to be over $0.5 billion in 2022. This would be a 16% growth rate from last year on a CAGR basis. I highlight and emphasize to you that our business modeling here is based on what we own today or at the time we put the model out. And we've done 1 acquisition, a small acquisition for RURO software since we announced this. They had about $5 million of revenue. So essentially, it's everything that we own today. And we will certainly do acquisitions that will be additional to this, but highlight to you the 16% growth in Life Sciences, gross margin targets, we're operating in that margin. Most recently, we crossed over the 45% range this last quarter to 45.8%. So I think the margin targets are really fair. And last year, just to highlight the progression, it was 42 -- in the 42% range. So that will enable us to take the operating margins up from single digit. Last year, a little bit less than 7%. In the most recent quarter, we were 8.5%, making progress, and we believe we'll be on track to hit the 15% to 18%. Semiconductor, quickly. It's a range because it is cyclical. We don't know if it will be a pure down year. But we do believe that it will be an approximate double-digit growth opportunity for us at 12% plus or minus. And again, margin targets that we believe are very reasonable. The track record, I'll show you in a moment, will point to this in the 42% to 44%. And with this growth, and just modest investment in our engineering capability, it will bring leverage from where we've been operating in the 14%, 15% level to the 20% to 22% level. So improvement on both businesses with leverage brings us to a respectable growth rate of a double-digit business, operating margins approaching the 20% level, and our ROIC focus is that it will be at the 13% level versus a traditional weighted average cost of capital has been assessed to be 10% to 11% in recent times. Since the crisis and the stock market has moved almost in solidarity, in many cases, the weighted average cost of capital has come down in that calculation. But think of it as a 10% to 11% on a traditional track. On the next page, you'll see this in numbers. And I highlight this page because the proof points of the track record over the recent years shows the growth, the gross margin expansion capabilities and the operating expense leverage that we gain as we grow. So as we look at the 2022 model, you'll see that we anticipate being better than $1.1 billion business. We have the leverage in the business model, producing an EBITDA down below, that's approximately double what we saw last year by 2022. And EPS in that $2 to $2.40 range. So these 2 pages are very connected to each other and very connected to what we're executing internally. I take you to Page 20. On the capital deployment, you would see that over the last 5 years, we deployed more than $1 billion, $1.2 billion. And our first priority is, of course, to feed our business organically with CapEx and organic growth investments. We then look at M&A capabilities, but we've also been very diligent in giving cash back to shareholders. So we have a dividend in place over the last 10 years. It started in 2011. And so now I'm going to go back to this biggest piece of the slice and just talk a little bit about the M&A. If you look at Page 21, you will see that in 2011, when we started down the path of investing in Life Sciences, we also started fixing the portfolio of Semiconductor. That meaning, we tuned it toward growth and margin expansion. And meanwhile, built quite a healthy Life Sciences business. So almost $950 million have been invested here. Some through divestiture in sourcing cash, but much of it is your own cash. And interestingly, we sit today with about $200 million of net cash on the balance sheet. So well fueled to do another step of investment as we move forward. I take you to the next page. We get a little more near-term focus, and you'll see that the guidance in this quarter, which I believe is a little bit unique that we provide guidance and much of the market did not. We see some stability here and while we were at $220 million this last quarter that we turned in, we're looking at $200 million to $215 million. So while it's modestly down in each business, has potential to be down. You'll notice that we didn't fall off the truck. So if we look back across the last 4 quarters, we're in a similar range. We see this as a temporary time period of stability before we return to growth, and we expect growth is around the corner. In the EPS guide here, you can see there's a wider range than what we normally provide. We are carrying some expenses and some of those investments to keep our team fully employed, even while we're a little bit slower in the revenue line. And we're continuing to make investment for the growth of the business, as Steve had highlighted. And then finally, I wrap up on Page 23. On the left side, it's very long term focus. I'm just highlighting what you've seen from Steve and myself our 2 strong markets that we participate, both deemed essential businesses for us, and we got leadership positions in both places, both Semiconductor and Life Sciences. In the financial model, I think you've seen that we've got the proof points, and we've got a model for the future that provides not just good growth, but really handsome leverage with it. We also have a deployment of capital record, producing incremental value as measured by your earnings per share, but also an incremental ROIC on a historical basis and being able to give handsome returns to the shareholders. On the right side, I'd just take a moment to pin back to those messages that Steve led with. And that is, during this time, certainly, it's challenging for all of us. Continuity is really strong inside both portions of our business, not just for us, but with our customers and with the vast majority of the market, continuity has continued. Fundamentals of the business remain quite strong. There are places that in this time period that we're waiting for the academics to return, but meanwhile, the bulk of the business is there in strength. So the fundamentals are there. We still hold the leadership, and we have the liquidity to handle the near-term bumps and even think about furthering our investments for the future. And then, of course, making those investments, we believe, takes us back toward those fundamentals that produce that 2022 model. So Dan, with that, we're going to stop with our prepared remarks and give you time to ask some questions, which we'll both be happy to chime in on.

Terrific. That was obviously really helpful to get level set on the past, the present and the future for Brooks. Maybe first question would just be on the Life Science business itself. I think on 1 of the 5 you lay out, I think, a $10 billion opportunity clearly, your penetration today is you're kind of scratching the surface there in terms of your revenue base. When we think about your ability to kind of penetrate that base, can you walk through a little bit of how much of that is simply just kind of having better products in the overall end market dynamic growth? How much of it's actually share gains? How much of it's actually maybe just a penetration basis, maybe a lot of this is being done by the sponsors themselves, and you're just kind of -- it's kind of maybe an outsourcing penetration opportunity? So kind of walk us through a little bit about maybe those aspects, penetration, share gains, market growth.

Yes. Sure, Dan. So I think you hit it on the tail end of your comments there. This is a model that's driven by outsource capability. We have a unique portfolio in the space. And today, when we get business, often, we'll take -- we'll assist a pharmaceutical company that might have thousands of freezers. And really, we have an ability to manage their samples in a more efficient, more effective way than they do. We can come in and help them with the management of their portfolio. We can prevent them from -- once we identify the samples they have in the locations, we could prevent them from going out to an open market and trying to acquire some samples that they already own, but don't know how to find. And so that's one. On the genomic analysis side, often, we can do the same thing rather than an internal facility where they have to prioritize the use of their own core capability, we can always accommodate overflow. We can provide unique studies and unique scientific analysis for them that they may or may not have the capability to do. We have 250 PhD and equivalent scientists around the world, who can help researchers from almost any size entity to get a result extremely fast and to get something done precisely that they'd otherwise have to figure out how to do themselves, while they're doing the rest of their work. So what we see is, we do compete, but we don't compete at the profile level. And the business that we win, the business that -- where we have a tremendous opportunity without even have to go butt heads with somebody who does an equivalent service is to help customers who are trending towards outsourcing and getting a really high-quality fast-turn service from Brooks and GENEWIZ and FluidX and the other brands that are in our portfolio.

Got it. So if I go back to Slide 10, which goes through the breakdown of the different pieces of the Life Science business. Maybe 2 questions here. One question would be, if we think across these different products and services you offer, are there any in particular that stand out as like this is -- like, these 2 or 3, this is really where we see, not that there's not great growth dynamics across the portfolio, but here's -- here are some areas that really offer outsized opportunity? And then B, how much of like a customer on either side, like -- are customers tending to take like a full suite of products if they're on the sequencing side or on the kind of the storage side? So maybe can you speak to a little bit about -- or does it typically happen, you begin to penetrate a customer with 1 product and you expand over time?

You bet. That's a really important question, I think. Because, Dan, we see a little bit of everything. But let me give you a little bit of history here. So GENEWIZ started -- I'll start on the right side of Slide 10, right at Sanger Sequencing. GENEWIZ was founded in 1999 as a company providing Sanger sequencing service. So they measure a gene in a really high-turn, high-quality environment. And as they expanded capability and added Gene Synthesis and Next Gen Sequencing, the same customers they served with the Sanger sequencing, they could -- they found that it was really sticky. The customer connections, the scientific knowledge, the ability to do more of the customers' work for them with a known entity proved to be very important and very sticky, actually. And so it began with Sanger customers doing other -- taking other services, buying other services from GENEWIZ, but as the company became more capable, as the company added more heft from a scientific standpoint and the ability to do more analysis and more consultation with customers, now we win -- for example, we'll win Next Gen Sequencing from a customer who is a first-time customer to GENEWIZ and we'll also provide them Synthesis services and Sanger. So now we have the touch points that go beyond Sanger. And when we do something for a customer, we can use that connection and that touch point to expand the business. Similarly, on the blue portion here on the product side, the customers that we've been with from -- when we initially stored their chemical compounds at minus 20 degrees C, when they started to store biological samples, we were the natural go-to from an automated storage standpoint. As they move to cell and gene therapy research, they're the same customers who purchase from us the cryogenic stores, and the consumables and instruments. So what we find is any customer connection provides opportunities for us to sell more capabilities to those customers. There are a number of customers. So we have 5,000 customers, but there are a number of the customers who buy every capability from us in some fashion. Some of them, however, are so large that they -- the people who buy large stores from us might have no bearing on the NGS sequencing, for example. But still, we're familiar with the customer, with the account structure, with our ability to penetrate. And we're working inside how do we begin to tie those things together to have an even higher value offering to some of these customers.

And then I'm sure you get this question, and I know you kind of went through the deck in both businesses. Obviously, very attractive for different reasons with both having attractive margins, actually semiconductors notably higher. But the rationale I have both businesses together, I'm sure there is a history, I'm sure there's a lot of kind of learnings across. But is there a strong strategic relationship to have the semi business longer term, if we look at 5 years together with the Life Sciences? Just kind of walk through where the key overlaps are between these 2 businesses that presumably the overall [ Brooks ] benefits from?

Yes. Thank you. And it's probably not clear for somebody who's new to the story. From a historical standpoint, when we started just as a -- hugely a semiconductor company, we had 2 core technologies, cryogenics that we used that for vacuum and control automation. And of course, we use that to move silicon wafers around. It allowed us to take those technologies to get into the automated cold store space to use those technologies and ultimately, to build our own products with the engineering talents that we had. Today, if you take a snapshot of it, the benefits are probably more financial. And of course, we leverage the costs of Lindon and myself and some of the core company capabilities across both businesses, but there's little -- there's a lot less strategic overlap, if you will. We still have the engineering talent and scientific talent that's fungible. But toward that end, a year ago in July of 2019, we divested of the cryogenic vacuum capability from the semiconductor side. We sold $200 million of semiconductor revenue for $675 million, and we put a significant part of those proceeds in the acquisition of GENEWIZ. And so today, the semiconductor is still a cash generator. There's still investment opportunities to make from semi, but we think we've been -- we think we've used the cash generated from the semiconductor business to help to grow this Life Sciences business. But indeed, as both businesses continue to grow, the synergies become less. And you could imagine that 5 years from now, indeed, the businesses might be separate or constructed in a different fashion. But we think to date, we've been able to add tremendous value by keeping these 2 capabilities inside the company.

Got it. That's fair. And then maybe 1 more kind of customer, I don't know, behavior or maybe a customer case study. When you go to a customer on your core storage business, and like you said, you're trying to convince a lot of these big customers that have a very maybe inefficient system, not nearly the same level of scale that you guys can achieve. Is there a very simple ROI that you can -- I mean presumably, there is, But I'm wondering to present to us as investors, the ROI, the pitch to this customer, the economic pitch? I'm sure there's a time management, time and distraction, you can convince them, "Hey, why are you doing this, let us do it for you?" But what's kind of the ROI pitch? And is it very clear or are there some cases where customers say, no, we're going to continue to do it ourselves because it's -- there's just a more efficient cost-effective way to do it internally?

Dan, it's a really clear ROI picture. What we're hoping to do anywhere on the opportunity around Life Science is to accelerate research faster either it's through the workflow or even more enhancement around the information of the sample-based assets that the customer has. And in some cases, where we're outsourcing the placement of those samples into our hands. It's in our hands, but often faster available to them than if they were managing it themselves. And again, a very fast look at the assets across their enterprise, where we're helping to consolidate the -- not just the physical asset but the information asset for them. And then on the sequencing space, the ROI becomes really clear for them because we have not just the fact that we have 250 scientists with advanced degrees, helping to consult and accelerate things at finer quality and readout capability and quality level, but we also have a superior delivery capability, and we have proprietary protocols, and we can achieve some clear reading of sequencing that nobody else can do that are quite challenging in the market under proprietary methods. So they don't have to invest in the critical mass of scientists that someone would have to do. So you've got that exactly right. And we can -- we focus that development that R&D, and we leverage the volume of equipment that we run at a better cost point as well. So it's a very clear ROI, depending on the engagement the customer sees it right away. And it becomes a very collaborative and often a cross-offering discussion where we can help them across the board.

Great. Well, I think we're at the top of the hour. So Steve and Lindon and I don't know if Mark is on the phone now, but I appreciate you guys joining the conference this year and hopefully, again, in the future. And thanks for the overview and the questions and hopefully, the audience found it was useful as well. So have a good rest of the day and a good rest of the week.

Thank you, Dan. We look forward to being able to sit with you again physically. So thank you.

Thank you, Dan.

Bye, Dan.