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

Good morning, everyone, and welcome to the 2021 Brooks Automation Investor Day featuring Azenta Life Sciences. My name is Sara Silverman, and I'm the Head of Investor Relations. We're thrilled to have you all with us today in what we believe is an incredibly exciting time for our Life Sciences business. Before we get started, I'd like to cover a couple of housekeeping items. On your screen, you'll see our safe harbor statement. Throughout the course of today's presentation, we will be making certain forward-looking statements, and we make no obligation to update these statements in the future. In addition, we will be referring to certain non-GAAP measures, and the most closely related GAAP measures will be found in the appendix of this presentation. All these materials will be available on our Investor Relations website. With that, I'll turn to the agenda. And we've got a great agenda today, including 2 question-and-answer sessions. Throughout the course of the event, if you have any questions, please submit them in the chat or send them directly to me at [email protected]. With that, I think we're ready to get started. I'll turn things over to the Chief Financial Officer, Lindon Robertson, for some additional welcome remarks.

All right. Thank you, Sara. And it is so exciting to be here with you today, and we appreciate your time investment to spend it with us. We couldn't be more excited to bring to you a new company profile, transitioning from our Brooks Automation into our Azenta Life Sciences company. To lead us through this, of course, you're going to hear from our CEO, Steve Schwartz. But the really nice thing about today is we get to pull the curtains back and the leadership team comes out and spends more time with you beyond Steve and myself. It's really exciting for us because Robin Vacha has been with us for many years. In fact, he came out of the semiconductor business as the Senior VP of Supply Chain over 1.5 years ago as we restructured the business around products and services and life sciences. And he's been running the entire products business for the last 1.5 years. So all of the successes, all of the growth achieved, all of the margin expansion, which you probably already know about but you'll hear about from Robin, is really attributed to his leadership. And then we'll have the services business explained to you by Dr. Sarah Eckenrode, Sample Repository Solutions business. Sarah has been with our business for 16 years, including the many years with GENEWIZ. And prior to taking the Sample Repository Solutions leadership role, she was leading the Sanger-based business inside GENEWIZ. And so in her leadership capacity, she's had a unique impact on bringing the science into the Sample Repository Solutions even deeper but also the integration from our genomics analysis business and our sample repository offerings that we present to our customers with a much more integrated phase. And then you're going to hear from Dr. Ginger Zhou. Ginger also has been with us for 10 years, including the experience with the GENEWIZ business as we acquired it. Ginger was, at that time, leading the Next Generation Sequencing business, going from the infancy into surpassing all of the other subsegments in size and acceleration of the NGS business space. And since April 2020, at that same time when we realigned products and services, she began leading all of the GENEWIZ and now the genomics analytics business. And then after a Q&A session and a short break in the middle, we're going to hear from Linda De Jesus. Now Linda De Jesus is our new Chief Commercial Officer, joined us at the beginning of this calendar year. Now frankly, I think of her as one of our best acquisitions this year. It's been transformative in the way that she has moved so quickly to bring a brand face of Azenta Life Sciences together around all of our many offerings, help our customers to see them in total and at the same time, start to work -- go to work on the integration of our commercial front and building on the synergies that -- or potential that are now being realized under her leadership. And then at the end, you'll be stuck with me again. I'll address the financial roll-up, what it all adds up to in terms of our future horizon. And as we have done in the past Investor Days, we're going to show you a very clear horizon of 3-year growth, which I think presents a transformative trajectory of results for the future. So with that, I want to thank you again for joining us today. And I'm going to transition now to a brief video and then hand it over to our President and Chief Executive Officer, Steve Schwartz. [Presentation]

Hello, everyone, and welcome. We're delighted to have you here with us today as we introduce Azenta Life Sciences. Before we begin, I'd like to just give you an idea about the company by stating our purpose. We enable impactful breakthroughs and therapies to market faster, and we're very comfortable in our role as enablers, enabling our customers to truly change the world. Also, the means by which we go about it is important to us. For as long as the company has been in existence, we've been responsible corporate citizens, and we are focused on advancing our impact around the globe. The thing that I will say is, especially as a CEO, the nature of conversations that have transpired over the past couple of years where we talk about corporate responsibility, about our environmental impact, about the social obligations that we have as a company, the conversations are more frequent and they're a little bit louder and they belong at all places in the company. And we're delighted to have this as a capability, and it's something that we're proud of in our behaviors around the world. I will say that in 2020, we launched our first corporate responsibility report, and within a week, we'll have another report out that gives an update on the progress that we've made over the year. But it's important to note that we treat this as an opportunity to express who we are not as a compliance obligation but rather a chance to report on the things that are important to us as a company and to the employees in the company as we live our purpose not just for our customers but in our communities around the globe. Now I'm pleased to introduce Azenta, a truly unique life sciences company. We're $0.5 billion in revenue, growing at a tremendous growth rate, and we're profitable. This combination of capabilities, we believe, is unique among life sciences companies. We have a global footprint of employees serving the worldwide life sciences industry. And to add to the unique position, we have a potential for $2.5 billion on the balance sheet that will come at the close of the sale of semiconductor business, which we anticipate sometime in the first half of 2022. So a little bit of history is important to understand how we got to this position and the history that we have as we launch as Azenta Life Sciences. 10 years ago, we served the semiconductor capital equipment industry exclusively. We had 0 life sciences business but we possess 2 core technologies: one, the robotic automation of handling critical samples in a controlled environment; and the other one was the mechanical creation of cold. We had thermal capability to generate ultra-cold temperatures, cryogenic temperatures mechanically. We used these 2 core technical capabilities to address a nascent industry in and around the life sciences space, and that was the automated handling of biological samples. The market was just beginning to grow. The market was quite fragmented. There were a number of automated storage companies in the market. We acquired some of those. And then we employed our own technical and engineering expertise to recreate the entire portfolio and develop market-leading products and technologies to serve this automated cold store market. As we gained experience in the customer and how the customer manage samples in their workflow using our automated stores, we also understood that the samples that the customer was finished with would sometimes go to archive either because they wanted to use them at a later time or because they had archival requirements for 7 or 10 or 17 years to preserve samples that they had been working on. So we understood that we could add value to this workflow by handling samples on site and off site and the traffic back and forth by managing what we call the cold chain of condition. So we acquired an outsourced biorepository company. The largest stand-alone private company was BioStorage Technologies. We acquired that company. And by the time we ended fiscal '16, we're at $100 million business in Life Sciences. So because of our presence along this workflow, we began to understand the other things that the customer did to add value to those samples. The first was they would do genomic analysis and aliquoting various lab processes on the storage samples. And at the time, we understood this to be a critical capability, and we acquired GENEWIZ, a world-class genomics company, to continue to add more value to the samples. They had a business in their own right, but we understood along this value chain that in addition to the storage and management of the samples, we could also provide genomic services. Similarly, we understood that customers would not just rely on their own collections but often they needed to source samples from another location or for a particular disease type. And this sourcing of samples was something that we believe we can provide expertise to and put it into this value chain. In doing so, we acquired Trans-Hit Biomarkers as a sourcing capability for the company. What we have today is a very strong portfolio of capability. Over the subsequent 5 years, we added more than $400 million of revenue, and it brings us today to being Azenta Life Sciences. This important 10-year history of experience and expertise is what puts us in a position with a very powerful portfolio that we bring to market today as Azenta. So let's say just a little bit about our portfolio, which we simplify here in terms of the workflow, from sample sourcing to formatting to the management of the samples in the cold chain. Ultimately, it's the interrogation and the very precise measurement by GENEWIZ with a very powerful bioinformatics platform to add value to customers going from source to data. And it's this value chain that enables customers to bring breakthroughs to market faster. Moreover, this value chain is exhibited in all phases of development. From research and discovery to preclinical and clinical, all the way through to manufacturing and distribution, the capabilities that we bring are for all facets of the drug discovery process. So this strategic portfolio is critical. It adds tremendous value to customers, and it addresses large and attractive markets. The most critical driver of all this is the sheer number of samples that are collected. For about the last 20 years, there's been an enormous increase in the storage and handling and management of biological samples. These are samples that are historically stored cold. And where we had very few 20 years ago, today, there are more than 2 billion samples stored cold on earth. And some estimates go up as high as 5 billion samples. And what that means is every year, hundreds more -- hundreds of millions more samples are added into this value chain. Moreover, as the science continues to advance and we move towards cell and gene therapies, the complexity of managing these samples and the myriad genomic measurement techniques compound this so that the challenge for a customer increases exponentially. But it's exactly where we placed Azenta, to be able to deal with this problem for customers on a global basis. Moreover, the market continues to come our way. We've established a portfolio to be positioned exactly in the direction the market is going. More than 50% of R&D budgets are now outsourced, and we are a critical outsourced services provider to the biopharma industry. We forecast that over the next 5 years, the number of samples in biorepositories will once again double. Most importantly and in a really exciting way, the cell and gene therapy market is critical. It's a nascent market with more than 1,000 different entities working on discoveries in cell and gene therapy. Our products -- and you'll hear from each one of the general managers. The fastest growing part of any of our business is what we do in cell and gene therapy. From complex constructs that we can read in the genomic space, from the cryogenic handling of samples in the product space and from an SRS standpoint, the ability to manage these cell lines and manufacture product in cryogenic temperatures all relate to the opportunities that exist in cell therapy. And with 30 locations around the world, we are -- everywhere life sciences is performed, you're going to find Azenta Life Sciences. So you can understand why we're enthusiastic about our opportunity. We are a $500 million company looking at a $10 billion market. There's nothing but opportunity here for us. Moreover, it's a fast-growing market, and the key to our outgrowth is the places where we participate are the fastest segments of this market. Storage of samples is growing, automated storage is growing faster. Genomics is growing, the cell and gene therapy interrogations are growing even faster. And from an SRS standpoint, the repository services, the number of collections continues to increase. The number of samples that are outsourced continues to increase. But what's increasing most is the single sample storage location that we provide in our SRS business. So we're enthusiastic about the growth prospects that exist, and we believe we're targeted exactly at the highest growing segments of the market, which brings us to our outlook. We have invested in a portfolio that's set for the future. We can see the markets coming our way. We have high confidence in the tremendous growth opportunity that exists in this organic portfolio. 3 years from now, we will be firmly above $800 million in revenue. We plan to triple earnings per share. Because of the leverage built into our model, we use EBITDA as a surrogate. This is a strong cash-generating business. So the prospects ahead are great. The visibility we have is very clear to how we'll deliver this kind of performance over the next 3 years. Normally, in my presentation, I'd be handing the presentation over to the next speaker, but there's more. We talk about the uniqueness of Azenta, and there's even more than this organic capability that's in our portfolio today. Uniquely, we have significant capital to deploy. We're about to have more than $2.5 billion on the balance sheet, which gives us unique and different opportunities. And it's not to change our path, but rather to accelerate our future, to bring our future in closer. We have a history of value creation, and we intend to use the same methodology as we go forward to create more value. And I'll talk about that just for a moment here. At Azenta, we have a value-creation methodology, and you'll see similar things at almost every company, organic investment and M&A. But I want to explain a little bit differently what we do at Azenta and why that's important to us and how it's been successful for us over the past decade and how we plan to go forward. The #1 priority for us as a company when we make investment is organic growth, a new discovery, a new innovation, a new capability that we bring to customers and also capacity expansion to serve the market share gains that we're making. So easiest decision for us to make and the highest payback. M&A is on everyone's strategic road map as well. Over the past 10 years, we've made 14 acquisitions, and each one has contributed significantly to the company, both from a profitability standpoint and to enhance the growth profile that we're on. But we have a different methodology. We apply one more lens. Once we get out a pencil and we determine that the deal will be accretive in a reasonable amount of time and financially that it makes sense, what's also important for us is we look at this value chain that we bring to customers, that we'll sustain high growth from the acquisition and that it will contribute meaningfully along the value chain. So to give an example, when we assess an acquisition, sometimes the acquisition won't be at a growth rate that is suitable for the company, but we know that by putting engineering or science or sales capital or just business process, that we'll be able to enhance the growth rate and have it meet the requirements of the company and be a high-value contributor at the growth rates that we anticipate. It's this extra lens that we apply which is critical and has served us particularly well. As an acquirer, we're disciplined. We have an ROIC hurdle that has got to be above the weighted average cost of capital in a reasonable amount of time. And we have tremendous experience doing integration. We are excellent in integration. We have strong muscle memory here, and we're built as a company to be able to identify and evaluate acquisition targets and then bring them into the company smoothly and effectively. I'd give an example here. We have a strong track record of growth, both by organic and inorganic capabilities. And you could see here -- the purple bars show the organic growth of the company over a 6-year period, but I call your attention to 2 of the acquisitions we made, which, at the time we made them, were transformative. In fiscal '16, we acquired the outsourced biorepository company, BioStorage Technologies. At the time, it was transformative for the company. They had a good foundation, a good strong customer base and the ability to grow but not necessarily the capital or the wherewithal to grow at the speed that we thought they could. We made investments in people, in the sales force and certainly in the expansion capability. From that point forward, BioStorage contributed strong growth to the company on an organic basis. And you'll hear from Sarah Eckenrode today, who is now responsible for SRS, the Sample Repository Services business, this reinvigorated growth continues here in 2021 and into the future. We had some tuck-ins in between the BioStorage acquisition and GENEWIZ. In 2019 -- actually, today is an auspicious day. 3 years ago today, we closed on the acquisition of GENEWIZ. So in 3 years -- 3 years ago today, we brought GENEWIZ into the company. We had genomics services capability. At the time, this was also a transformative acquisition. And different from other businesses that we've acquired in the past, we knew clearly how GENEWIZ would contribute. And they had been a 20% grower over the 5 years history before we acquired them. They had a 20% CAGR. And the issue was how would we bring them into the fold, how would we continue their growth and how would we fund the capabilities there. Well, in just the past 3 years, with the 13 locations of GENEWIZ, we've expanded capacity significantly in more than half of those locations. We've been able to help the company to add scientists, to add equipment, to add footprint and capability to satisfy the tremendous demand they've developed. But more importantly, we've made investments in research and development for them to generate the next innovations and capabilities that are going to fuel our future. So with this as a backdrop and with this as a history, it's important to note to grow this company at this speed, to get to $500 million, we spent $1 billion of invested capital. We invested in R&D. We invested in acquisitions. And we're really proud of what we've achieved here with $1 billion. But we stand here at the edge of a tremendous opportunity. We've never had a platform this strong. We have a complete value chain of capabilities to build upon, and we have $2.5 billion of cash to put to work to bring our future in. So naturally, I think everyone wants to know, "What are you going to do with $2.5 billion?" Well, let me tell you what we won't do with $2.5 billion. We're a $500 million company against a $10 billion market opportunity. We're going to stay close to this value chain. There's so much opportunity for us from an investment standpoint, from a development standpoint to capture opportunities here at this value chain or in near adjacencies. So we plan to stay close here. You won't see us off on an odd tangent or a side vector that's not related to what we do today. As I mentioned, the #1 priority for us from an investment standpoint is always organic. And in each of these major subsegments of the value chain, we see opportunities to continue to invest in new products and new services and new capability and new capacity to meet the very strong demand that we have. From an inorganic standpoint, we have a slightly different approach. We've just entered the sample sourcing business, and we understand, in a very fragmented market, the success we've had so far today with Trans-Hit Bio. They've been the beneficiaries, as have we, of their incorporation into Azenta and the power that we bring. And there are opportunities for us to continue to bring other sourcing capabilities into the company, both to build mass and to build capability and to bring very unique solutions to our customers. On the genomics and analytics services side, we have tremendous scientific capability. So we often think that there's not much that we couldn't develop on our own, but we have partnerships with companies who perform various services for us, and we think they may be acquisition targets for us. And we also have the ability to consider near adjacencies to add capabilities in and around the genomic services. And finally, on a monthly basis, we handle millions of samples, and we measure millions of samples. The amount of potential data value that comes through the company on a daily basis is -- gives us the reason to have more attention around the informatics and the value we're going to bring not just to customers but also to our internal operations. So you'll see us looking around at different opportunities from an informatics standpoint to increase value and increase profitability at the company. So not to skip over the sample formatting and storage and automation, but we're very capable technologists and engineers. We have top-of-class capabilities on the products that we offer in those segments and in the biorepository services. We have a number of opportunities that are available to us in a COVID environment that M&A opportunities have just been approached differently but they still abound. It's a vibrant market with plenty of target opportunities. We'll continue to employ our value-creation methodology. But we're active and we're active in every segment in every space, and we're encouraged by what we see as potential additions to Azenta. The one thing I'll also say though is when you have $2.5 billion, our aperture is wider. The appetite we have is a little bit bigger. The opportunities we can consider are larger and there are more of them. And when we think about how to bring those into the company, we're really encouraged by the environment that exists today and the potential that we have as a company. All of this potential, this market opportunity, the portfolio that we hold, the cash balance that we have to deploy really sets us up to drive above-market growth. But I have to say this 10-year history with every product that we developed, with every innovation that we made in genomics, with every customer that we capture, with every acquisition we made, each of those milestones positions us for today, for this moment right now. We're a $540 million company with growth prospects well beyond 2024. We have high growth rates. We are a cash generator, and we're profitable. And all that gives us high confidence about our ability to deliver on pretty aggressive 2024 objectives. In addition, we have a strong balance sheet with a management team that knows just how to put that to work and how to bring value to shareholders and to customers. And for the first time in our history, we have the strongest platform we've ever had. And the ability to bring these acquisitions onboard with a $2.5 billion capability is something that enthuses and excites us, and I hope you can feel it as you hear all the presenters go on today. So with that, you're about to hear from the general managers who are going to bring this business home. So you'll hear enthusiasm from them. You'll hear about their prospects and how they add up to this opportunity and maybe then a little bit more. You'll hear from Linda De Jesus, the Chief Commercial Officer, how this gets wrapped and bundled and brought to customers as Azenta Life Sciences. And then Lindon will bring it home with a strategic look and an operational focus on how that rolls up financially for us and what the prospects are as a company. And you'll understand that there's tremendous enthusiasm behind all that we're about to do. So we thank you for your time. We thank you for the attention today. Thanks for being with us today. And I'm delighted to turn the presentation over to Robin Vacha, the Senior Vice President and General Manager of the Azenta Life Sciences Products Group.

Thank you, Steve, and good morning, everyone. It's my pleasure to be here and present to you today the exciting path forward for the Azenta Life Sciences products segment, where we're focused on sample management technology that enables scientific breakthroughs. I'll talk through several topics today, starting with the business today, where we have an unrivaled platform in a really strong market. The products segment has already built a strong business, and we're just getting started. Fiscal year 2021 revenue was $200 million. 63% of this was consumables and instruments, which is a stand-alone business, but also very tightly aligned with our automated storage systems, which when combined with the supporting service represents 37% of our overall revenue. Our installed base capacity is 500 million samples, 0.5 billion. We have systems installed throughout the world. And together with our customers, we touch tens of millions of samples every day. As a testament to this, we currently have over 2,000 active customers, and it's these customers that have put us in a great position in what we estimate to be a $4 billion market. The market is $4 billion today but growing 5% to 10% year-over-year. More importantly, we are concentrating on higher growth parts of this market and in particular, the automated storage systems, which we estimate is growing at 15% year-over-year. And we see continued momentum. R&D investment is growing. Our automation is solving customers' problems. And precision medicine is requiring a whole new set of capabilities. So right now, we are at 5% share in a really large market and positioned to outpace the overall market. Our product portfolio provides complete sample management solutions. Our automated stores serve all aspects of the life science industry, including traditional pharma, biologics and cell and gene. Our consumables and instruments are focused on sample format. This includes sample tubes, PCR product lines and controlled rate freezing. And importantly, our service capabilities are a critical part of our full solution portfolio. This includes traditional service like preventative maintenance and upgrades, but also high value-add services such as sample reformatting; for example, when you need to move a sample from a plate to a tube. Together, we protect sample integrity and accelerate the pace of research. But what makes our products really unique is that our technology excels in the most difficult applications. Let's start with small molecule or compound management. Here, our customers have very large collections, millions and millions of chemical compounds, and what they need is high throughput. Our robotic automation delivers the speed and reliability our customers need to accelerate their research. As we move into biologics, DNA, RNA, we start to operate at lower and lower temperatures, negative 20 degrees Celsius or negative 80 degrees Celsius. This is where automation becomes increasingly difficult. It's simply harder to automate at very cold temperatures, and we are very good at it. If we move into cell and gene, it's a whole new ball game. Now our customers are operating at cryogenic temperatures, negative 196 degrees Celsius. This is where we really shine. We excel at a very difficult task of automation at cryo temperatures. Across each of these applications, our consumables and instruments provide critical sample formatting solutions. Now I'd like to show you a short video that will provide you some insights into the scale and technology of our automated storage systems. [Presentation]

They are beautiful machines. I have 2 case studies to further make this real for you. This first case study is how to manage a complex sample collection. I'm sure many of you receive a little plastic tube in the mail. You spit into it, and you sent your DNA off to a consumer genomics company like ancestry.com or 23andMe. So here's the situation. How do those companies handle tens of millions of samples coming from all over the world that need to be formatted, stored and most importantly, retrieved again? Our solution, the Azenta full ecosystem. It begins with the BioStore automated storage system. You can see a picture of one on the right. There are over 40 people standing in front of it. But it's not just the store. We also provide the sample tubes, the formatting instrumentation and reformatting service. Most importantly, automation is what allows our customers to unleash the value of their collection. In this case, it also enabled a new business model. You can retrieve that 1,2 you need from a collection of 50 million. With Azenta, it's no longer just a needle in a haystack. If our first example was about a complex collection, the second example is about protecting high-value assets. As I'm sure many of you saw in April of this year, the New York Times run an article about how Pfizer manufactures their COVID-19 vaccine. Step 1 of the process is pull DNA from cold storage. So here's the situation. How do you protect and store your master cell lines at cryogenic temperatures? These are some of the most valuable assets a company can own. Again, Azenta provides a complete solution. It starts with our BioStore III Cryo. It's pictured in the New York Times article on the right. But it also includes our CryoPod transport module and advanced software module that manages access and security. And this is not a COVID-specific example. The COVID-related master cell line is stored in the system, but there can be thousands of master cell lines stored for different applications in each unit. Next, let's talk through what's driving growth in the products segment. There are 3 growth drivers: sample collections are growing; cell and gene therapy solutions are accelerating; and the one I'm most excited about, the Azenta ecosystem is creating new opportunities. First, sample collections are growing in both size and complexity. If you go back 20 or 30 years, drug discovery was all about chemical compounds, millions and millions of different chemicals. When the human genome project was completed in the early 2000s, we saw new investments in biologics. No one got rid of their chemical compounds. They simply added to the collections with biologics. This created a new source of samples and more complexity. More recently, we have seen increased investment in cell and gene research. Now we have samples connected to specific individuals and many times, multiple samples for each individual. It is here where the complexity really changes and where our automation really accelerates the pace of research for our customers. The second growth driver is cell and gene solutions are accelerating, and we are just at the beginning of therapy approvals. We've been building our installed base since 2016, and our technology is a critical enabler for cold chain management. As therapies are approved, we are positioned to ramp with the cell and gene industry. Finally, let me give you 2 examples of how the Azenta ecosystem is creating new opportunities. First, let me connect our automated stores and our sample repository services. Sometimes customers need to manage their complex collection at their own site. In this case, our automated stores are the right solution. Sometimes the customer needs more flexible capacity or has capital limitations. In this case, our repository solutions are the right answer. In reality, most customers need both of these solutions, either at different times or in different places. Azenta is always the right partner. For the second example, let me connect our genomic services and our automated storage. Our genomic services creates a very tight customer bond at the early stages of drug development. At the same time, our automated storage creates a very tight customer bond at the clinical manufacturing phases. Together, we're always part of the discussion, and Azenta is always the right partner. So let's move forward to our focus on continued growth. Over the last 2 years, we've achieved 30% growth year-over-year. This was partly due to a COVID tailwind in our C&I business, but we are positioned to grow from this spot and will outperform the market through 2024 with estimated 14% growth year-over-year. Even more impressively, we've already expanded EBITDA margins by 26 points over the last 2 years, and we will continue to drive profit expansion through 2024. So if you put this into our 2024 model, you see a revenue range of $280 million to $310 million, continued gross margin expansion with a range of 47% to 49% and continued EBITDA margin expansion with a range of 20% to 24%. In summary, our technology is differentiated. Sample collections are growing and need our automation. Cell and gene is ramping. And we have a proven track record of profitable growth. We have the right technology in the right markets with strong execution. So thank you, everyone, for listening. It's been a great pleasure to give you an update on the exciting path forward for Azenta Life Sciences products segment. I'll now pass it over to Dr. Sarah Eckenrode, who will introduce you to our services segment.

Thank you, Robin, for the introduction. It's truly a pleasure to be here today to talk to you about Azenta Life Sciences services. Along with my colleague, Dr. Ginger Zhou, we'll be jointly presenting the agenda today. I've been with Azenta for a little over 16 years now, and I joined through the GENEWIZ acquisition almost 3 years ago. I'm going to first walk you through an overview of our Life Sciences services segment with a market update and business overview. I'll then take a deeper dive into our Sample Repository Solutions business before handing it off to Ginger to take you through our genomic services business. Ginger then is going to conclude with our overall Azenta Life Sciences services financial outlook. Azenta Life Sciences services goal is to help accelerate basic research all the way through to enabling our biotech and pharma clients to bring medicines to market faster. We do this by providing unique solutions in both the genomics and the services -- repository services business. On the left-hand side, you'll see a breakdown of our services business. Ginger oversees 72% of the business in the genomic solutions. I oversee 28%, our Sample Repository Solutions part of the business. And on the right-hand side, you'll see some combined services business metrics. Our combined fiscal year 2021 revenue was $314 million. We brought this in through 22 different global sites and serviced 6,700 customers. Our combined $314 million business is well positioned in a $3 billion global growth market. On the left-hand side, you'll see the combined services business CAGR. But I want to draw your attention to the individual business line segments. You can see that most of them are in double digits. And Ginger and I fully expect that all of our businesses will outpace the market. This growth is driven by an increase that we see in outsourcing, an increase in our biopharma R&D spend as well as an increasing need for the novel solutions that our genomics and repository businesses provide to the life sciences community. Now let's take a deeper dive into the Sample Repository Solutions business. I'm going to walk you through our comprehensive portfolio and then tell you about a few of our key differentiators and how we separate ourselves from the market. Our Sample Repository Solutions business is made up of comprehensive sample and repository solutions portfolio. At the foundation is our strong storage business. We then look to find where are our clients' pain points, what do they need to help them move their life cycle sample management through the full cycle. We found they needed sample sourcing. They also needed some great cold chain transport, and they needed a great software platform to manage that sample life cycle. We took all of these, our storage, sample sourcing, the transport and our informatics solution, and we bring them to the customer site. We apply our sample management expertise at the customer's facility. This entire portfolio makes up 20% -- 28% of our services portfolio. I want to key in on our strong foundation, and that is an annuity-like storage business that brings in reoccurring revenue for years. What this is based on or why clients need to store their samples for so long is based on the purpose of the sample. And we're going to cover 3 of those purposes today. The first is the need to retain samples for future use. This potential future use comes from our clients collecting samples in their current studies. With the correct informed consent, they can store those samples up to 25 years to use for future studies. Next, there's a portion of samples that need to be saved as regulatory retains. These regulatory retains can be stored for up to 7 years. And finally are the active trial samples themselves. These active trial samples can be used immediately or stored for up to 3 years. This pie chart represents the current breakdown of the samples that Azenta is storing today. 20% of our samples are tagged as active trial samples, 20% of our samples are tagged as regulatory retains and 60% of our samples are for that potential future use. And a fun fact is that the samples that have been stored in Azenta the longest to date were collected 17 years ago. Now let's talk about some key differentiators for the Sample Repository Solutions business. We're going to talk about our unrivaled retrieval speed, our expertise in sample management and finally, our broad capability set. The first key differentiator I want to highlight is our unrivaled retrieval speed. And you may ask why is this important. I have a great example for you. We had a biopharma company that was in the process of submitting to the FDA. They had half of their samples stored with Azenta and half of their samples stored with a central laboratory. When they got this notice from the FDA, they needed to get back or retrieve 2,500 samples from each of us. Azenta got the notification at 11 a.m. on a Friday, and within the same day, we had half of those samples shipped out for deliveries to the client that Saturday. They started their experiments. We had the other half delivered to them at the beginning of the week. And within a week, they had their experiments completed and submitted back to the FDA. The central lab took 8 weeks to get those same samples back to them. And this is why the service that Azenta provides really helps enable our clients to bring their solutions or their drugs to market faster. We have unrivaled retrieval speed due to the 8 repository locations we have across the globe that allows us to give regional support with centralized scalability. The second differentiator I would like to cover with you is how we bring our sample management expertise to the customer site. I want to use an ongoing case study to illustrate this point. We had a large pharma company come to us, and their challenge was they needed to rapidly catalog and reduce their on-site samples. In fact, they had to take 6 different sites and combine them into 1 site, leading to reduction of their overall freezer fleet by 90%. They didn't have a centralized sample management system, and they also wanted to reduce their carbon footprint. How Azenta helped is we came in and we took all of our key capabilities and applied them at the customer site. We deployed our logistics specialists to this site. We helped our clients rationalize their samples, what they wanted to keep, what they wanted to store offsite with Azenta and what they needed to discard. Our on-site specialists then inventoried and consolidated all these samples. And we're -- and we know that we'll be able to reduce their overall carbon footprint by 9,000 metric tons of CO2 emissions by reducing their on-site fleet of freezers, all of this while allowing our client to have global visibility of their samples and quick retrieval of their samples. The last differentiator we're going to discuss is our broad capability set that we are continuing to expand. Upon that strong storage business, as I said, we're always looking for ways to help our customers overcome pain points. One of those is with sample sourcing. Our clients need to get access to the samples that they need and when they need them. We were able to acquire a company a little over a year ago who has expertise in this field. We now have scientists that are able to work with our customers to identify what samples they need in both prospective and retrospective sample collections and get them to our clients from our sample suppliers. I already talked to you about how we bring our sample management expertise to the customer site. Finally, I want to talk to you about drug product management. When you have a clinical trial, each clinical trial needs to have a drug or therapy administered. Our expertise has been in collecting those samples and keeping those samples safe. As our drug discoveries become more sophisticated, we need to become more sophisticated with how we handle those drugs and therapies. I'm sure most of you have heard about the COVID vaccines with this new mRNA vaccine development. These vaccines need to be stored at minus 40 degrees Celsius. And Robin has also talked about our cell and gene therapy. These therapies are at the cryogenic temperatures of minus 196 degrees Celsius and need to be handled in liquid nitrogen. Now that these therapies are getting into the range where Azenta excels, we not only want to help our clients keep their clinical samples safe but deliver those drug therapies to our clients as well. Now let's talk about some key growth differentiators. There's 2 that I'm going to cover: one that centers around the increased outsourcing that we're seeing and the next is how we're investing in ourselves and expanding our capabilities. We've seen a strong powerful drive that's leading to increased outsourcing in the overall market today. What's driving this is just the sheer number of samples that are being generated in life sciences field. As you can see on the right-hand side, and this is also a fact that Steve had mentioned in his beginning presentation, our customers are starting to outsource more of their samples. And we expect to see this number of samples being outsourced to double in the next few years. With that increased number of samples that need to be managed, an increased need to do this, develop drugs at a more cost-effective manner and also to bring those drugs to market faster, that need for outsourcing continues to grow. The second growth driver that I want to talk to you about is investment in ourselves as well as developing those expanded offerings that will propel our current and future growth. We're investing in ourselves to build or transform our repository process. Managing those samples is critical, and we're going to continue to invest and use automation to do it more profitably. Next, we've seen a deficit in the ability to manage life cycle management using software. We acquired a company that has a great platform for us to use. We're using that platform to manage our own samples. At the same time, this platform is commercially available for our customers. As we find ourselves selling more and more of this platform to our customers, we see a great opportunity to take the platform that they have and connect it to our platform, adding convenience to our clients as well as cost savings to ourselves. And finally, I'll talk to you about synergies across Azenta Life Sciences. Both Robin and after this, Ginger are going to talk to you about how we're integrating our business more seamlessly. One of the examples that Robin gave you was around our auto stores. These auto stores can hold millions of samples at the client site, but they don't always know how to use them well. The sample repository business has sample management expertise. We can bring this to the client, either helping them use an auto store or manage their own fleets, to sending those samples off-site. We have a unique combination across the sample life cycle management that none of our competitors can touch. Finally, we're also trying to expand more into the active trial business. As we expand in the active trial business, these are the clients that need our genomics services solutions. As we build that customer base, we can help provide a great base for our genomics services to sell to. That combined portfolio that we have across Azenta Life Sciences can truly drive our current growth and future growth. In summary, Sample Repository Solutions business is a strong annuity business that has significant market potential. We have an unmatched customer value in our strong, solid storage foundation that has quality storage, unrivaled sample retrieval, all with global sample traceability. We built on this with value-added services in sample sourcing, transport and data management or software offerings, all that we can bring directly to the client site. This is built on a foundation that we're continuously improving and investing in to generate profitable growth. We're so excited about what the Sample Repository solutions business can bring now and in the future. I would now like to turn this over to my colleague, Dr. Ginger Zhou, who is the General Manager for our Genomics Solutions business. She's going to walk you through the genomics services solutions side of the business.

Thank you, Sarah. Good morning, everyone. Welcome. It's my pleasure to discuss Azenta genomics with all of you today. I'll start from genomics current status and conclude by providing 3-year business outlook for overall Azenta services. Let's step into genomics today. Azenta is genomics powerhouse. We are specialized in sequencing and synthesis solutions. On sequencing, we have 2 major lines of business: Sanger Sequencing and Next Generation Sequencing solutions. Sanger Sequencing technology has been industry gold standard for about 40 years. NGS has been one of the major market growth drivers for the past decade since this technology is used for constructing DNA from scratch. In recent couple of years, synthesis has become essential for gene therapy and mRNA vaccine markets. This is because research in both markets start from synthesized DNA. In addition, we also have amazing scale. Here's one example to demonstrate our scale. In 2021, we've generated 4,700 terabytes of data. How big is the data size? If you use Netflix video time as a comparison, 4,700 terabytes is equivalent to 2 million Netflix movie hours. Thus, we are a solution-based genomics provider with tremendous scale. Now let's look at the growth trajectory. On the left is our genomics revenue growth trend for the past decade. We have been doubling our growth every 3 years. And consistently, we outpace market growth. On the right, it shows our customer type distribution. We have strategically built a wide and balanced customer base up to date. There are more than 4,000 institutions in our database using our services. We have great customer stickiness. The first customer who started to use our services 20 years ago is still with us today. I often get questions from the audience. [ Why do ] your customers value your services the most? Here are the key differentiators that made our unique position in genomics market. Let me add more color to each. We are a team of genomics experts with 20 years of experiences running genomics business. We design unique solutions to meet market demand. Here is a case study which demonstrated one of our many unique solutions. This proprietary solution is called AAV solution. It is addressing cell and gene therapy market need. Let me go a little bit deeper on science to explain. AAV is a commonly used viral vector in cell and gene therapy studies. It is injectable to humans, so ensuring safety by obtaining full visibility of AAV sequence is crucial. However, AAV is not the easiest vector to be sequenced in the world. It has challenging structure called hairpin structure. The DNA isn't a straight line. It has curves and turns like a hairpin. So standard industry approach, which is shown on the left screen, cannot sequence through the hairpin regions. The chemistry starts in the middle of the sequencing. The novel chemistry mix that we developed overcome the limitation of the standard approach. In result, on the right, our technology provides full visibility to previous unreadable regions, thus improves safety measurement for all studies that use AAV vector for gene therapy. We're also differentiated by providing unmatched speed and convenience to our customers. We have the largest sample pickup location network in genomics market. Our customers can easily drop their samples to any of our 2,500 pickup locations within walking distance. Our sophisticated carrier network will pick up the samples on a daily basis and distribute them among any of our 14 regional labs. Our lab processes the samples upon receiving. Results are available for our customers for as fast as 24 hours. We also have more than 400 advance degree scientists. They are regionally based and support customers with local languages. These scientists help customers to design fit-for-purpose solutions, provide project consultation, help with data interpretation and available to support our customers whenever they have any questions. That industry-leading speed and convenience in combination with solutions and supported by genomics expertise position us strongly in genomics market. Next key differentiator is access to samples. Let me explain. Often, our genomics customer takes months, even years to store samples through biobanks, hospitals, clinical sites to get the right samples, good quality ones and samples with clinical metadata. It has been a pain point for our customers. Marrying sample sourcing capability in Sarah's business with genomics solutions, leveraging our 150 collection partners and our 60 million store examples, together, we shorten customer waiting time, for example, to get ready to start their genomics study. So the combination of domain expertise, unique solutions, unmatched speed and convenience plus sample sourcing capabilities uniquely position us in genomics market. Forward-looking, it's all about growth. Here are genomics key growth drivers. Let me provide more color to each. We are well positioned in large, fast-growing genomics market. In 2021, our addressable market is about $2 billion. It is expected to reach $4 billion in 2025. The most important key growth driver is wider adoption of genomics applications. This is along with technology maturation. And this naturally drive research funding towards genomics market. In addition, our sourcing trend continues. As I mentioned earlier, genomic solutions require domain expertise and a significant amount of infrastructure investment. This combination drive outsourcing model, especially to providers with economics of scale. Next, we have been very actively localizing our solutions and services by expanding footprint in key growth regions. On the slide, it showed some of our recent expansion projects, either just completed or ongoing. The regional footprint expansion brings us closer to our customers. and enable us capturing market share faster. The third key growth driver is leveraging Azenta ecosystem to offer more complete solutions and cross-sell to overall Azenta customer base. Here is an example to show how powerful it is. One of our storage customers in Sarah's business from international top 10 pharmaceutical company has need for genomic solutions. So we went in, worked with the customer side by side, designed fit-for-purpose solution, leveraging cutting-edge single-cell approach with comprehensive bioinformatics analysis. In return, our solution for the single case translated to $3 million incremental genomics revenue. In addition, our combined solution increased the customer convenience by working with 1 vendor and strengthened the relationship by adding more touch points. In summary, we have 20 years of deep domain knowledge and track record for rapid growth. We are differentiated and uniquely positioned in a large, fast-growing market. We're stronger in genomics market with Azenta full capability and customer base. We expect Azenta genomics to continue the rapid growth trajectory. Now let me provide our business outlook. With the growth drivers discussed by Sarah and me, on the right is our 3-year target financial model for overall Azenta services. We project to continue the rapid growth trend with 18% to 22% CAGR for the next 3 years. We will reach more than $0.5 billion revenue by 2024. We'll continue our profitable growth trajectory. Leveraging our fast growth, our EBIT margin will reach 28% to 30% by 2024. Overall, for Azenta services, we are well positioned in a very large and fast-growing market. We have a strong track record with a differentiated one-of-the-kind business model. Our engine for growth is stronger with overall Azenta portfolio. We have the right team, right resources and the right market for us to execute our strategies. We have amazing opportunities ahead of us. With that, thank you, everyone, for your time and attention. Next will be our first Q&A session.

Hello there, everyone. You're joined by all of us together, the leadership team here in Chelmsford, for a question-and-answer session. So it's been a productive morning. Certainly, there are a lot of questions. So we'll be glad to take questions. I want to introduce Linda De Jesus, who you'll hear from in just a moment. She's at the table with us. And also want to take a moment to explain, we are together in a room, we are not distanced like we normally are. Each of us has tested negative for COVID in the last 24 hours and each of us is vaccinated. So we're in a safe environment here, specifically to be able to answer questions in a format that will work for you. So with that, we're really pleased to begin to take the first question, operator.

Great. So we have Paul Knight from KeyBanc.

Yes. I'll start with a couple. We could -- I'm sure others behind me will have a bunch, too. Starting with the genomic services business, you have a data interface. Is it proprietary software? Those customers seem sticky. What is it that makes it -- gives it that level of stickiness? Is it the massive amount of data requiring special software? If you could talk about kind of the moat, barriers to entry in the genomic sequencing side of the business?

Thank you for the question. Let me address your question. For genomics, the data -- for genomics data we produce, it does require specialized and very high domain expertise to the [ client's background ] to analyze the data. So our customers, that's one of the stickiness that we can create with our customers, because we do have the specialty to analyze the big data for data mining, data interpretation and data just overall applications for our customers which our customer doesn't have enough power, computer power or enough physical like computing like strength. And also, their -- our customers' domain expertise not like in bioinformatics. That's one point that we have the stickiness with our customer.

And then second and last question for now would be on the sample storage business. Investors are frequently asking, what's the duration of your contracts in sample storage? And do they typically go beyond their contracted period for those samples?

Sure. I'm happy to answer that question. For the sample storage, our MSAs with our clients don't actually expire. Once they have a price list with us, they can store however long they need to store. So we have our clients that store, like I said, anywhere from 2 to 3 years on average, up to 17 years and beyond. So we keep on renewing that relationship with them on a regular basis.

We have Vijay Kumar from Evercore.

This is a pretty informative need. One maybe a high level for you, Steve. Your revenue guidance here for 2024, the midpoint of $840 million, that's implying a CAGR of 18%. It's 9% above [ 3 ]. Is this all organic? Or do you have some M&A baked into those numbers?

Yes. Thanks, Vijay. It's good to see you. By the way, so all of this is organic growth. This is from the current portfolio that we have today, and it's consistent with the growth rates we've had over the past years and we're really confident, just because of the market position and the opportunity to grow in the portfolio that we've assembled, we address the highest growth segments of the marketplace. And we're confident that that's achievable, and it's 100% organic from today's portfolio.

Maybe on the last point, Steve, what is the visibility? Because when I look at your life science peers, no one's doing high teens organic CAGR. I mean some of it perhaps is the base, right, 500 is [ estimate ] smaller versus some of your larger life science peers. Is this an inflection in end markets because of the pandemic, mRNA, cell and gene therapy areas? Or I mean is 17%, 18%, that's a big number. So I'm curious what visibility you have and -- given these revenue targets?

Yes, Vijay, it's aggressive indeed. But the way we look at it is, in addition to the foundation, Robin Vacha addressed it, chemical compounds, then biologics and then cell and gene therapy. The sheer volume of sample growth continues to build, and it's compounding. So we take full advantage of that. And we also have offerings on top of that capability that we believe allow us not just to grow with that market that's already a double-digit grower, but to gain share in the process. I think you heard from Sarah and Ginger, the ability to continue to gain share. So we're on a strong growth environment, which we believe is in the 10% to 12% growth and to capture share above that, we think is a reasonable bet that 18% is a reasonable expectation for the business that we have today, and it's consistent with the way we've approached the market. Each of the last couple of quarters we announced capturing 300 new customers. Each of those generally start small and as we're as we continue to serve those customers over the years, they give us more and more business, and it really helps to compound the really strong growth we've demonstrated.

That's helpful perspective, Steve. Maybe if I could squeeze one last one in. I was curious on your sample in genomic services, perhaps this is more for Ginger. Your gross margin outlook, I think you're looking at almost flattish, right, 3 years. The EBITDA margin is up -- I mean, that's almost doubling up close to 30%. Is this all just scale leverage? I mean you built the facilities, you have the scale. And as you grow in your revenues, is that what's driving margins? Or I'm curious on how you get to these kinds of margin targets?

Yes. Let me help out on the modeling side of this on the leverage equation because on the GENEWIZ business, the revenue growth is at -- a little bit at the higher end of the 18% to 22% range in Sarah's business is a little bit lower in both within those ranges. So the scale, as highlighted, the gross margins is expected to be flat to up 2% as she highlighted. And so the leverage is coming out of the operating expense structure. And we're facilitating with nice investments, and we're prepared to put additional investments, obviously, in as we see these growth rates. But all of the leverage is coming I should say, modestly from gross margin, but substantially from the operating expense structure.

And I would assume this OpEx structure, Lindon, you have pretty good visibility on the cost structure?

Yes, actually, we do. So the cost structure substantially has the labor equation of the services business, but also reagents and then the depreciation from the equipment that we use. And we have the lab space that we continuously readdress in terms of expansion requirements for capacity. And so the cost equation is pretty solid for us.

Fantastic. Those were some pretty impressive targets, pretty excited for you guys.

We have Jacob Johnson from Stephens.

Thanks for all the content everybody. Maybe just starting on SRS. Can you just talk about some of the bolt-on deals you've done at that business? Maybe specifically Trans-Hitter (sic) [ Trans-Hit ], it kind of seems like that's top of mind this morning. Are you talking about how the sample sourcing capabilities supplement the SRS business? And then maybe for Steve, just is that an area where you could broaden your capabilities at some point?

Sure. I'm happy to answer that for you. For the bulk -- the bulk or the larger deals that we're trying to do, those are really starting to take traction. I know we've had our -- in the past, it's been a little up and down for the storage business, but being able to align our additional resources like the sample sourcing, like the addition of the informatics platform that we have, has really made us attractive to the market to pull all that together under 1 company. So I think that's really given us a lot of traction with those bulk deals that we're bringing in. And for sample sourcing, we're still continuing to look at those synergies between how we can get the clients the samples they need, where we can store them, how we can get them to genomic services. So those sample life cycles really coming together with the addition of sample sourcing. So hope I answered your question there.

That's great. And then not -- maybe not to leave Robin out of this. 12% to 16% growth in life science products. I guess I'd be curious how that would compare with the C&I portfolio versus the storage systems, if you could?

Sure. So we see growth in both the C&I and the automated store segments of the business. C&I just had a phenomenal year over the last year or 2 years. So it's grown over 70% over the last year or so. It's going to continue to grow. But going forward, over the 2024 model, C&I has probably grown 5% to 10%, and automated storage is growing between 20% and 30%. So future growth is more focused on the automated storage here through 2024, but continued growth in C&I as well.

We have David Saxon from Needham.

Great. Well, thanks for putting this on, this has been super helpful. I guess a higher-level question maybe for Steve or Lindon. A common theme throughout each of the speakers has been about this ecosystem. So I was just wondering if there's any way to size that opportunity? How many customers are using services from multiple categories? And maybe what's the growth you're seeing in that customer segment?

Yes. So David, thanks for the question. I'll start. And actually, you'll hear from Linda De Jesus next -- as the next speaker, she'll present to you how we go forward as Azenta Life Sciences. But I will comment that of the top 10 customers on a revenue base, 8 of those customers use at least 8 of the products and services of the company. So already, there's a tremendous installed capability, if you will, but our go-to-market approach is going to change appreciably to help us to leverage the capability that we bring to customers and also to present a united front and a value proposition different from what we've done in the past that's been a little bit more fragmented. So the breadth of our product offerings across our customer base is actually quite substantial. And the means by which we transform this to make it a higher value proposition for the customer and the means by which we approach them is something that we're changing now as Azenta Life Sciences. Linda, I don't know if you have anything you want to add or ...

Yes. No, absolutely. I think, as Steve mentioned, many of our top customers are already buying from us with the discrete portfolios that we have. What is really unique now that we're integrating under 1 company is, one, it enables to drive the share of wallet across the entire value stream that we provide to our customers. Second is enabling us to be much more application and market segment focused. So we can actually integrate our portfolio to provide complete workflow solution for our customer, which will really improve their operational efficiency.

Great. And then my second question is for either Robin or Lindon. I think I heard 5% to 10% in C&I over the planning period. You guys have benefited a lot from COVID-driven demand. So I'd be curious what's baked into that? I guess, maybe 5% to 10% doesn't sound like a whole lot. So maybe you can confirm that. And then the gross margin, 47% to 49%, kind of same question, how much of the C&I is baked into that? And are you expecting favorable mix going forward?

Sure. Let me take that. On the growth rates of C&I at 5% to 10%, [ baked into ] the revenue from COVID has been higher in the past, say, 1 year ago, we were hitting about $14 million, $15 million in C&I. The last couple of quarters, we were steady at about $10 million. And we do foresee that this could be a long tail on that. The 5% to 10% call it high single-digit growth rate that's factored into the model reflects some unit growth but not an absence of growth. So we're seeing growth from other areas in C&I. And we've been a bit guarded against what would happen if that $10 million a quarter started to tail off. So that's the -- I wouldn't call it conservatism, but just guarded numbers that we put into the model for C&I. To the degree that there could be longer tail and upside there, that will be helpful to us. In terms of the margin structures, I would highlight that weaker -- steady margins from the automated stores, C&I does help us in the mix. However, on the growth engine side, in the cryo store business, we're seeing really good growth over the next horizon to 2024, and that is bringing strong value to our customers and good margins to us as well. So I think the margin structure, to the degree that C&I picks up, obviously, that would be a little bit of upside to the overall mix perhaps, but we're seeing a nice steady mix also from the stores in the B3 trial, the automated cryo space.

We have Craig Ellis from B. Riley.

Craig, if you're speaking, we're not hearing you on this end, perhaps you're on mute. I'm not sure. So moderator, perhaps we cycle on to the next question and maybe Craig can tune back in with us.

Great. So we're going to call on Patrick Ho from Stifel.

Thanks for the so far to date. Azenta appears to have a really strong foundation -- hello?

Yes. Patrick, we're hearing you fine. Please go ahead.

I'm sorry about that. Yes. So you guys have a really strong foundation in place for the company. You talked about outsourcing being a very favorable trend for both of our business segments. Can you comment from a big picture perspective, whether you have the current foundation in place or you need to make a lot of investments, whether organic or inorganically to kind of enhance that leverage to kind of foster the outsourcing trend that you're seeing across both businesses?

Let me address the structure and then perhaps I'll turn it to Steve and our general managers to talk about the growth on the revenue front and on the investments for growth. But on the capacity to support the outsourcing. If you think about the sample repository solutions where people are -- our customers are outsourcing an extension of moving their assets really to us and put on our capital. Our space, our freezers, our automated storage facilities. So in that case, I generally described this as a bit of a variable CapEx model. It's a very strong warehouse structure with redundant power and cooling, but then we put in row of some manual freezers just in time to catch those samples. So in other words, we may order freezers 10 or 20 at a time. Now we've also -- have put in automation into our structure. So that adds a touch of capital, but high efficiency to our model. So that also is well utilized as it goes in. So in that context, I would not see a step function change necessarily in capital to invest for the outsourcing capacity. On the genomics side, it's very similar. We add space, but we -- and we add genomic analysis tools and gene synthesis space and lab investment. But again, we expand that at the rate to stay ahead of utilization and demand. And so in that equation, you generally won't see a step function change. I will highlight to you, we've been very vocal at sharing, very transparent at sharing that in China, we're putting up a building in China, which will displace lease buildings. So you can think of that as a change in CapEx, but that's about halfway through now, and we'll finish that in the early months of -- and move in, in the early months of calendar '22. But that's not so much a capacity jump, although it provides an incremental space for growth in the next 2 years. But it's more about displacing the lease spaces and providing that capacity to grow. Now on the growth equation and the expense for the customer front, we are feeding the business with the right SG&A to facilitate growth. And I always emphasize to our teammates that we will -- we don't -- while we operationalize these numbers, we operationalize them in budgets. We refer to them as guardrails. We're going to ramp these as quickly as the market responds, and we'll continue to invest on that front as well. So Steve, if you want to add anything on this.

Yes. Patrick, I'll add just a little bit. The capabilities we provide, we know to be critical, but not core for our customers necessarily. And we have a unique position as being at the leading edge of science on the cryogenic technologies on the business model we have for storage. With each and every customer, we learn something new about complex DNA extraction, about a read on a complex sequence, on the cryogenic handling of a particular sample type or a business model that suits a customer: we apply those learnings to the next and the next customer. So we continue to enhance the capability we have, the value proposition that we bring to customers by virtue of the fact that we're serving almost 10,000 different customers. So this is an important capability, and it continues to build leverage for us as we go into the future. So we're confident in our ability to continue to add value to the portfolio we have -- will be enough to sustain growth. There are capabilities that we'll see along the way that we might add by acquisition to continue to bolster the value of the offering that we bring, but we have adequate -- [ form adequate ] capability right now to serve the market in a very unique way.

Great. That's helpful. Maybe as a quick follow-up for Robin. I think automated storage has always been a value proposition for customers but costs have always been an issue compared to kind of manual freezers that are currently used. Can you discuss what's the key driver that will, I think, finally shift customers more to automated solution? Is it just the number of samples? Is it the cost efficiencies in automated storage? What's going to be that final, I guess, inflection point that drives more automated storage use?

Thanks for the question. I think we're really focused on the size of the sample collections and the additional complexity to those collections. So as sample collections grow and grow, just the ability to customers to handle themselves or to handle them through pure manual processes, it just doesn't work anymore. So as our customers convert to automation, we see it over and over and we get better and better case studies of what they can actually do with their sample collection. And as one customer actually puts in one of our large automated stores, sees the benefits, starts talking to other people in the industry. It keeps growing over and over where they can say, hey, I can collect -- I can find that one tube I need or I can actually treat thousands of tubes without running throughout my entire campus, opening up freezers and looking through them all. So I think as sample collections grow and the complexity grow, in addition to the cell and gene, where we really need a tight linkage between the sample and person, and you can't mess it up, right? You need a tight linkage between what the sample is and who that came from. As that complexity grows, automation is what's providing the solution for our customers.

We now have a question from the audience. This is a question for Ginger. Given GENEWIZ's current capabilities, do you see the company potentially expanding in CRO type of services, think antibody discovery, cell line development, et cetera? Also, can you characterize the competitive landscape in markets like North America versus China? And what are those expected relative growth rates in those geographies?

Yes. Thank you for the question. I'll start from our capabilities. We have existing capabilities that build on top of our -- the platform we built in years to provide to our customers the convenience like [ number of ] pickup locations. And we deployed all of our solutions on it, including existing center and NGS technology, but also the new technology we have been catching up with the market pretty closely, trying to stay ahead of the market pretty closely. We are onboarding new capabilities such as better packaging or such as antibody production. And we are gradually growing into a more -- gradually building our more complete value chain to meet the customer demand. And for the second question about the growth in different regions, our largest -- right now, our largest region with the revenue composition will be China and U.S. And then Europe and Japan, the rest of the world, will be our growth driver for the next -- for the years to come. And we invested significantly in these key regions and deployed unique solutions in these 3 key regions to upend market -- to upend regional market share, accelerate the growth regionally. And the growth rates in each region is all double digits, if not more, and in China and in Europe, and in Japan is more just very fast growth trajectory at the moment.

Great. And we have another question from the audience. This is a question for Robin. On cryo consumables, the world today is characterized by extremely heterogeneous samples. This creates a problem for analytical platforms downstream. What is the trajectory towards standardization? What cooperations you have with equipment vendors and how can BRK penetrate this market with strong share going forward, reducing complexity and making life easier for everybody?

This is exactly the model that we've been trying to put in place with the Azenta sample tubes, the Azenta PCR product lines and our automated storage system. So we already work closely with a lot of customers to actually standardize their labware to actually enable their own workflows and [ for ] the most part, they automate their workflows whether it be liquid handling or something else, but also automate the storage of their samples. So every time I sell a store, every time the team actually brings a store, has a conversation with the customer, we're talking about the sample formatting needs and how the sample formatting can actually solve their automation problems as well as their workflow efficiency. So that's exactly what our portfolio that we put together is doing right now and we're continuing to do.

So at this time, I believe that's the last of the questions for this moment. We'll take about a 5-minutes break and be able to rejoin you. Linda De Jesus is the next speaker. You've heard this morning about a strategic intent of a very powerful portfolio... [Audio Gap] [Break]

Today, I'm excited to share with you the new integrated commercial approach we're bringing to Azenta. Let's start with the strong foundation we're building on. When I joined the company early this year, I was impressed by the unique capabilities of Azenta, especially the type of customers we serve. We truly serve an impressive roster of global clients. And you can see some quick facts here on who we serve, including many of the top life science institutions across different industries, from pharmaceutical to medical research centers to academic. Many people are not aware that, in fact, every 1 of the top 20 pharmaceutical biotech companies are our customers. And we take a long-term view with our customer relationships due to the nature of our services and products. We have grown our client base significantly over the years. Many of our customers have been with us since the early 2000s, and we're still supporting them today. So where do we have a presence? Azenta is a global company with locations and commercial infrastructure well balanced across the world. So what makes us successful? Over the years, we keep our focus on our customers with innovation and expertise that's impactful to our customers across therapeutic areas. Now let's talk about a customer of ours in the pharmaceutical space with complex in-line antibody library. Azenta is uniquely positioned to support them from sample collection and management to using our market-leading next-generation sequencing and sample analysis. Now keep in mind that we have one of the fastest turnaround times on the market. With our data management platform, our customer can get information and have full visibility of their samples at all times. Now let's talk about how we are going to market differently. We have integrated our organization from our company brand to our commercial approach and how we are supporting our customers with our portfolio into one unified approach. You will see us slowly transition our legacy company and product brands to integrate under one Azenta. This will enable our customers to know our complete capabilities and portfolios. We're also making significant transformation to our commercial organization so that we become much more customer-centric, make it simpler for our customers to transact with us. We do this by having one point of contact for each customer and building on local customer relationships and capabilities in each of the region. With a unique offering, we're integrating our portfolio to be worthful and customer application specific to support across therapeutic markets. Recently, I met up with a long-term customer of mine who's been leading the translational and precision medicine department at one of the top medical institutions. This group has been a customer of ours for many years for our discrete offerings, from our genomic services to our sample sourcing and some of our consumable with the 2D tubes. When we started talking about the newly integrated Azenta company, and I shared with him our full capabilities, I can see that his eyes lit up. It was clear to him that no one else can offer what we do. Knowing the breadth of our capabilities and our expertise, Azenta is able to simplify the program management for the clinical studies in a major way by reducing costs, improving efficiency, so that they can focus on accelerating scientific progress. Now how are we transforming our commercial organization that is different than before? You can see here a summary of the changes. However, let me just touch on 2 examples. First, our go-to-market. We have streamlined our sales and marketing organization so that it's easier for a customer to do business with us. We use multiple sales reps going into the same account, sometimes talking to the same customer, representing multiple business lines. We now created one single point of contact, backed by a team of technical experts and sales specialists. This is a significant change that would help our customers to improve their operations, streamline their transactions from multiple vendors to one. Now when it comes to our marketing, we're also implementing digital transformation to modernize and automate our marketing capabilities. We're still in the early phase, but in some of our recent marketing activities, we are already seeing improvement in our customer social engagement and our click to open rate, which is a way for us to measure our effectiveness. We've seen double the metrics from historical and on par with industry best practices. So with all the transformation underway, let us turn to our strategy for the future. We have 3 key growth strategies that you can see here. I will touch on each one of them. First, we're deepening our client relationship with a new customer-centric model. We're elevating our enterprise partnership with some of our top customers to ensure that we understand and align our support with their long-term initiatives. Let me give you an example of how we can do that now as an integrated Azenta organization. One of our top biopharmaceutical customer in Europe who recently got excited when we informed them that we're integrating our organization under one Azenta brand. Before we used to engage with this customer on a transactional level, with each business line acting almost independently. We're now discussing different business partnership models where they can focus on accelerating therapeutic development, while relying on our expertise around the whole value stream across the specimen lifespan. From procuring and sourcing niche samples that are not available through normal clinical trial pathways, all the way through our genomic services and analytics, they can add value to their samples. They're seeing tremendous opportunities to simplify as we can support their research and development all the way to the clinical groups and across the biological departments and medicinal departments. This is the true key differentiator of Azenta. The second strategy is really leveraging Azenta's comprehensive portfolio to provide stage appropriate solution to each of the market segments. We can use cell and gene therapy here as an example. In this case, most of the organization in this industry are still in early phases. In fact, of the thousands of cell and gene therapy organizations, over 88% of them are still in preclinical, Phase I or Phase II stages. At these early stages, these companies are faced with complex challenges from product characterization to [ coaching ] logistics and supply chain distribution. Our cell and gene therapy customers recognizes Azenta's unique value we offer to their scaling programs. Our unique combination of advanced genomics, automated cryogenic storage and global sample management solutions are helping them to create scalable solutions, supporting each stage as they advance through the translational life cycle. Now turning to our third strategy. We're capitalizing on our existing global footprint and making strategic investments to expand our market reach. In the Asia Pacific region, we have expanded our dealer network by 10x to accelerate our market reach. And we have also upgraded and trained our commercial team to be laser-focused on strategic growth market segments in an expanding customer base, with a strong focus in supporting biopharma and clinical industry markets, while maintaining a solid core business in compound management, biobanking and biospecimen. In Europe, where we have been consistently growing over the years, we have accelerated our commercial investment to strengthen our growth expansion. So in closing, this is truly an exciting time for Azenta Life Sciences as we are set to accelerate our growth. We're investing in high-growth markets, bringing in a newly integrated commercial approach, as I have outlined, and expanding our market reach by focusing on life science hubs in key global regions. And we're just beginning. With that, I'm happy to turn this over to our Chief Financial Officer, Lindon Robertson.

Okay, you're back with me. We're going to go into the financial overview. Before I do, I just comment, the speakers that you've seen today, it's like getting a real tour of our business globally. And it always gets me enthusiastic to think about it. I hope that you've had the same impression listening to each of them. What they've all presented to you adds up and makes up what I'm about to show you in both in the results and in the objectives looking forward. So first, I'm going to look back at a track record of a team that delivers value enhancement. And then we're going to spend time talking about what capital allocation looks like in a life science business. And of course, we're going to show you the 2024 model and the compelling growth for profit that lies ahead. First, looking back at 2019, you've seen a business that's truly changed dramatically. 4% top line growth has added almost $200 million to a business that was just over $300 million just 2 short years ago. 8 points of gross margin combined with that has brought leverage and added 13 points of EBITDA margin to the business. But let's pause on this point and look at the customer line expansion. The customer line expansion really embodies the expansion of the business and the future. We've grown from 7,000 to over 8,700 customers that we serve on a daily basis. And when we think about this, we think that's resonating not just with us inside Azenta, but clearly in the market outside and promise for future growth going forward. So when we look back at 2019, we recognize that we're in a very different place today. And if you've been with us, we think that you also are in a very different place with the enterprise value that has accelerated. In fact, in 2019, we showed this picture. And we would say, at that time, we were very proud of this, and you were very happy as many of you spoke up and let us know that you were not only happy, but you were supporting us into the future. 10x the enterprise value expansion was remarkable. And it only took us a decade to get there. But we're not done, right? So let's add 2 more years since then, and you see that the chart really had to be shrunken down to fit the curve, the steepness of the curve going into today. So we've added over $6 billion of enterprise value just in the last 2 short years. And it correlates nicely with the transformative growth curve that Steve showed, and you can almost picture his curve, right? The first 5 years at going from 0 to $100 million and the second 5 years going from $100 million to $500 million. It's remarkable, and here's the key. It's a continuous transformation. We're not finished. Now the earnings profile is new today. And if you were with us last week as we did our earnings presentation, you got a glimpse of the 2021 actuals. But let me put it in perspective. The revenue growth of 24% and the gross margin that we've already spoken of, 42% going to 50%, are familiar from our life science business when we were total Brooks Automation. Now in continuing operations profile, you take the G&A structure and you put it just on the stand-alone business as a continuing operations, and you would imagine that if we looked like that in '19 and '20, these are the actuals. It shows a breakeven point in 2020 and a breakthrough earnings year of 2021 of $0.48. What's key is that the growth and the 8-point gross margin has brought the leverage for accelerating earnings and we see that continuing into the future. Now of course, with earnings comes cash. And it's the cash capability that we built into this business that made a turning point this year for standing up Azenta as a life science company stand-alone. The capability to propel the growth in R&D, the sales investments that we needed as well as the CapEx to support the organic growth of the business was very clear to us as we came from '20 into '21 and gave us tremendous confidence to go down this path of separating the companies. In fact, we could even afford to start to think about feeding some of its own M&A capability just out of the cash generation. But with that said, we have this extra special prize that as we did the divestiture, we can add $2.5 billion to the balance sheet in the coming months. So let's pause on this for a second. I've talked about a financial profile that has high growth, expanding margins, high leverage. It's already profitable, and it's generating cash, and it's got a balance sheet that's really fueled for the future. It's really a unique and special life science company in the public markets. So let's take a moment to look at what we've done with our cash in the past and the track record that we've achieved. Steve showed this chart earlier, so I'll remain brief in my remarks, but a 40% compounded growth over the last 6 years is quite remarkable. It's contributed from both the organic growth of the business, but also the transformative acquisitions. Each of these have contributed handsomely. But if I just take a moment to highlight the transformative nature of the largest acquisitions, BioStorage and GENEWIZ, I think it would not only resonate on the customer front, but also on the business model that we've built. BioStorage, for example, increased our reach from a couple of hundred to a few hundred customers. But internally, in our financial model, added a recurring revenue nature business, where we have millions of samples in the freezer last month that we built out, and we're going to build them on again this month and the month after, as that continues to build on itself -- and brought tremendous stability to our services business. As we stepped into the GENEWIZ business and we acquired that, we brought with the thousands of customers, increased their reach to the market and increase their relevance to every customer that was touching us along the portfolio that we had to offer. So with that, I've touched on a portfolio point: we've accumulated many pieces, and we built a portfolio unlike anybody else that's in the market. If you look at it, break it down services and products, it's a 60-40 split today. On the services side, the sequencing and synthesis business truly contributes to the analytics of what a lab at a customer would like to accomplish but can depend more resiliently and reliably on the critical resources that we've accumulated and built and also make use of the proprietary technologies that we've developed. The sample repository solutions, as I said, has millions of samples that we care for every day. Keep in mind, these are some of the most valuable research assets that a company has. And they trust us with them, both inside our storage, but also in the handling and movement between us and their facilities and the third parties that they deal with in the testing environment. Now if you move to the product side, we have focused and tuned our portfolio toward automation and the cryogenic capabilities required in today's markets. It's a remarkable capability that stands alone. Many customers have the experience of the manual freezer environment where you put samples on a freezer shelf, but you don't have the connectivity and the automation for the throughput, and you don't have the connectivity to the software that our automation provides. Now touching on the financial capabilities of this as well, there's a key point. That recurring revenue that's in the sample repository solution also shows up in the consumables. The consumables is very much like a subscription business. We don't literally have a subscription, but a customer once they begin buying the consumable format for their projects, they continue to do so. They just don't stop. They don't change platforms or formats of those consumables when they are in the middle of a project. And on the automated cold store front, we've built a nice service business that Robin's touched on earlier. And that's a recurring revenue in itself. And when you think about the growth engine of the B3 cryo system and the prevalence that it's beginning to have, and we think the momentum they have, they will continue to build out an expanding business with a follow-on service business behind it. So having touched on the financial model. Perhaps this is a good segue to move forward and start looking at what capital allocation looks like in a life science company. But let's look first at a little bit of history, which I think is indicative of the future of what we will do with capital. First, in the operational CapEx over the last 2 to 3 years, we spent 6% to 8% of our revenue on the operational side of the business, supporting it with freezers, analytical equipment and lab and storage build-out of space. In addition to that, we have spent another 3 points on a building strategy in China, but I don't put that in the category of operational. It's really a real estate strategy to replace some lease buildings and to provide extensive growth capacity there. So once we're through that, I think we'll be back to the 6% to 8%. In the research and development space, we continuously reinvest 4% to 6% of our growing revenue stream into the R&D, primarily in the area of product advancement that Robin spoke about in both cryogenics and automation as well as in the GENEWIZ business or genomic analytics business, we're developing proprietary technologies, some protocols to help ourselves in our own labs, but often deliver incremental value that a customer cannot break through to see the clarity of the sequencing information. So now let's look at the investment. This is more about the future of a life science business, a little bit different than a semiconductor-based business. We have $2.5 billion anticipated to be on our balance sheet in the coming months of the next calendar year. But also, we have a robust industry of opportunities to apply that cash to. We have a pipeline that's rich on the M&A front. And of course, we'll feed our business on the organic side but this M&A front with the pipeline is really tremendous. So with that in mind, I do want to update you on our dividend practices. In the past, we've paid a consistent dividend over many years, and we'll continue to do so up until the time we have closure of the divestiture of the semiconductor business. At that time, our priorities will shift solely to the Life Science focus. And in that situation, we're going to take every dollar we have with an aim toward reinvesting it for the accumulating capital value for our business and for the shareholders. And we are highly confident in our ability to bring you the returns that are optimized in that fashion. Now how do we approach the M&A that we evaluate? We've done much in the past that gives you a very clear signal of what we'll do in the future. With over $1 billion invested to build this growth engine that we have, I can tell you that when we approach each opportunity, the very first filter is the strategic fit, is it relevant to what we're already doing. If it doesn't, we're not going to go there. And then we apply a financial lens to it that says, can we see the growth and the value expansion on a continuous basis that supports an ROIC within a window of 5, perhaps 7 years and does that bring back the returns on a high confidence basis back to the shareholders? Now this window that we look through, this lens that we look through has a really nice framing effect of that if you pay too much for a business, but you're not able to commit high growth, it won't clear the hurdles. And so this is very clear to us as, having served us so well over the past decade, that the ROIC is our primary focus for the continuation of the business growth. In fact, the ROIC performance of the business gives you a good view of the transformational steps that we've taken that I highlighted on previous charts of growth. If you think about this in the 3 chapters, I first want to highlight the one common factor that continuously across the years, the trajectories up into the right, always incrementing for incremental value. In 2016 and 2019, we made some key decisions that reset the ROIC, but always up and to the right from those points. So in 2016, we restructured our business, took significant cost out, took some restructuring charges that reduces the numerator of the returns. And then meanwhile, we acquired the BioStorage business adding significant assets to the denominator. And so you reset your ROIC at a lower rate than it had been running. But we promised to you in our target setting that we would exceed the weighted average cost of capital by the time we reported out in 2019, and in fact, we exceeded it over the next 2 years in advance of that objective, hitting 14%. But the next transformative step came when we acquired GENEWIZ. Again, our largest acquisition to date, added $450 million of assets to the balance sheet in the denominator. And in doing so, we also divested of the semiconductor cryopump business for $675 million, which helped to fund that acquisition of GENEWIZ. And so we removed, again, some profit from the numerator, set ourselves up for faster growth in both businesses, adding the GENEWIZ business to the Life Science. And in doing so, we accelerated our target, again, looking forward toward a target objective to exceed the weighted average cost of capital. Now in 2021, I would be showing you results that exceeded that significantly if we had not started on our project of another transformation. So we are taking on some costs in '21 that depleted this about 3 points. And so we've exceeded our target again a year early on ROIC. And here we are again, dividing the company, separating on the Life Science stand-alone basis and the 2022 does not have a number on it because it still has a half year of the semiconductor assets, and we don't know exactly when the profit will stop going into the numerator. Key point here is we report everything as it sits on a GAAP basis, and you could see the transformation in 3 steps. And what we're here to tell you today is that we see the 2024 targets that we'll talk to you in a moment about, takes us again above our weighted average cost of capital to an objective of 12% by 2024. Again, continuous transformation, always looking upward and to the right on the chart, and this is where we continue to head. So now let's talk about the growth that supports those objectives. First, I'll pause and just remind you of our strategy that has served us so well in the past years and will continue to guide us. First, we're going to extend our leadership in core markets. That is our focus to continue to build our business on each of our core markets. In the investment side, we're going to feed both on organic growth and strategic M&A, but I will emphasize that the models that we're showing today are based on just the organic growth capabilities. In other words, based on everything that we own today, we're not counting into our models what we might acquire going forward. And of course, we'll keep in focus, the need to -- for margin expansion, and we'll deploy the same discipline that has served us well with the ROIC focus for investments. So let me take you first one more stopping point of proof points. The last model that we provided in 2019 started with a -- began with a starting point in FY '19 with the business that was about $300 million in revenue and gross margins of 42%. At that time, we set objectives that many of you thought were aggressive. It looked like 16% compounded growth out to 2022. It's going to get us to over $500 million of revenue and the gross margin, I said would get up to 45% to 48%. Now remember this is from 42%. So this is 3 to 6 points of gross margin expansion. And I would say it's a fair statement that some of you questioned whether we'd be able to achieve that. We had high confidence because we saw our capabilities, and we saw the logic of the leverage in the model. And in fact, as we roll through '20 and '21, we hit those objectives a year early. And I want to emphasize, this is the life science sub elements of the same model that we reported on hitting the model a year early as a total Brooks Company. And so to say one more time, both the total Brooks, but each piece of the Brooks Company achieved those targets a year early. The revenue reached nearly to the $500 million, the gross margin exceeded the range, went to 50%, so well ahead of the 45% to 48% objective we set. And as we said, we're here today to now describe 2024 model, which is built on similar logic and fundamentals. The business models that the General Manager showed you today do provide the summary of an 18% business in total. In total, the Brooks Company, the objectives are 16% to 20% revenue growth over the next 3 years on a compounded growth basis. And the leverage of the business will take us to approximately a 26% EBITDA margin, and that is only a milestone. We'll pass through that where we have confidence, but that's only a milestone of what 2024 can see. And again, the ROIC will exceed the weighted average cost of capital significantly. We believe it will go to 12%. I'll comment the weighted average cost of capital has varying views based on how you calculate it, but most of the banks that we talk to look to 8% to 10% being our Life Sciences weighted average cost of capital once the company is traded for a while. In the Life Science Products business, Robin talked to you about getting the business to approximately $300 million. I'll remind you, this is a 12% to 16% growth rate. The gross margin is approximately flat to up 2 points at 47% to 49%. Similarly, on the services side, Ginger summarized the model, it's 18% to 22% growth rate getting you to over $500 million of revenue. And again, it's flat to plus 2 points on the gross margin line. Now both of these businesses will see significant leverage from their beginning points in 2021 and get to these EBITDA margins you see on the page in the low 20s in the products business and in the high 20s, approaching 30% in the services business. I think it's always helpful to show a picture of this because I think the fundamental of what we're rolling out is not just believable, but really reasonable objectives for investing. The 24% growth that we've seen over the last 2 years is only now 18% in the next 3 years. It's not because we're setting our sights lower, it's because we believe that this is a balanced growth rate going forward from this time frame, and it's a responsible objective for building a model on. Of course, as we overachieve this, we'll make the investments to strive higher. On the leverage side, look at the gross margin objectives that I've set in this model. In the last 1 year, we picked up 4 points of gross margin, nearly 4 points. In the next 3 years, I'm only counting on flat to 2 points in each of the business and in overall. So this is a very modest margin objective. And we're contemplating in this that we are currently seeing a little bit of cost pressure in the labor markets, we're seeing that our business has reached to the 50%, and we're being, I believe, prudent in rolling out a model that will continue to strive for gross margin expansion, but we believe the 50% to 52% is prudent for the modeling over this 3-year period. On the operating expense side, we picked up 4 to 5 points of leverage out of operating expense over the last year above the investments that we've made, and we're only looking for 8 to 10 points over the course of the next 3 years. Now I have a dotted line on here that shows a pro forma for you. In the recent earnings announcement, I highlighted 250 basis points is in our structure and in our 2021 results that are really only related to the fact that we're still managing in a continuing operations transition. That being, I have some G&A structure that is servicing our total corporate mission of managing discontinued ops as well as continuing operations and the accounting guidance requires that to keep those in the results. But we have a clear pencil around those numbers, and we see a 250 basis points falling off as soon as we close the deal. So the very first step down into the dotted line comes with the closure of the deal. In reality, this is only 5 to 7 points of additional operating expense productivity over the next 3 years compared to the 4 points that I got just in the past 1 year. Now that all adds up to leverage to the bottom line. So 9-point expansion going from 17% as we reported with continuing operations or 7 points, if you want to take the pro forma numbers and take the 250 basis points out of that. That 7 to 9 points is going to drop through to the 2024 model. Again, growth that is more modest than what our recent experience has been, gross margin that is more modest than what our recent experience has been and investments that support the growth of the business. This is what you get, a business that grows to a 25% to 27% EBITDA margin. When you put that in a full earnings profile, that EBITDA that is generated comes up to $200 million to $240 million, which many see as a surrogate for a cash metric. And in the earnings per share, you can see now why the earnings is more than tripling going into 2024. So let me summarize the financial model that we have built and gained confidence in. First, it starts with size and scale of a $0.5 billion business. It's growing fast, it comes with profit and additional leverage for additional profits of the future. It's generating cash already on its own, and we'll continue to expand its cash capability. And I've demonstrated that we have the track record of responsible capital deployment, which will serve us well going into the future. Here's the key point. We do indeed have a unique business model in a public stand-alone life sciences company that is unlike anything else out in the market. So with that said, let me go back to the summary, as you saw in Steve's presentation today and saw proof points on each of the steps through the speakers today. We have the $0.5 billion business out of 2021 with high-growth capability through '24. In fact, it's high teens in our business model and demonstrated capabilities above that, profitable growth with cash generation and what some would say are aggressive targets, but what I would emphasize are very reasonable and feasible objectives to gain confidence in. So what makes us really special is the balance sheet that comes with this capability. $2.5 billion to build on the platform as we have it today to make it even more robust, more relevant and to gain more mind share of the customers we serve today and those customers that will come our way. So with this, I present to you a very solid and unique Life Sciences company, and I thank you for all of the attention that you've given us today. You might think that, that's the last step of our presentation before Q&A. But we do have a very exciting announcement to share with you. The final step in our transition is to let you know that our company name will officially change from Brooks Automation to Azenta. It's Azenta, Inc. with a ticker symbol of AZTA, and we really believe that the capabilities that the general managers today and we have outlined bring something to the customer front that has never been seen before. And we believe, similarly, it brings something to the market that investors have never seen before. High growth, high leverage, high cash capability, strong balance sheet and opportunities that are robust in adding to the value of the company. So with that, we want to say, once again, thank you for spending the time with us, and we're excited now to bring the team to the table to take the Q&A session live and interacting with all of you today.

Okay. We're back with the group, and we're ready for another session of Q&A. We really appreciate everyone's time today, again, and stayed through all the prepared remarks, which are now finished. So we're going to wrap up now with the Q&A. But we're here to take questions. And so Victoria, we're ready for the first question.

Great. So we're going to go to Craig Ellis from B. Riley, Craig?

Can you hear me?

We can, Craig. It's great to hear. Sorry for those difficulties earlier this morning.

Fantastic. Yes, we had some ghosts in the machine on this end, so I apologize for that. I wanted to start just by thanking everybody for excellent presentations this morning. It was very helpful to get deeper into the new Atenza (sic) [ Azenta ] business. So Steve, I wanted to start with one for you. It was helpful to get your framework on how you're looking at potential inorganic growth targets. But the question is really on pacing and the help you might be able to provide on how things might unfold given that the company has an extensive integration history, a tried and true model, how quickly and what are the factors that would determine the company's pace as it moves forward with M&A, large or small?

Yes, Craig, thanks a lot. We're -- well, we've been active. So even in a COVID environment, as I mentioned, we've been meeting with companies looking at new capabilities to bring. And again, this is, as Lindon mentioned, we'll be disciplined in our approach going forward. But we think there are a number of opportunities that exist for us to bring into the company. And in 2022, likely we'll start to see these come into the company. So we're encouraged about the opportunity. We think we have a much clearer vision now in terms of the kinds of things that we can add on to the capability in the company. And as I mentioned, we have a platform that will make it easier for us to perform integration because we have a strong genomics platform, sourcing, SRS and products business unit, and it's a complete portfolio. So almost any area along this value chain we can bring something in and have easier access, certainly to the company and amaze by which we bring it on. So we're encouraged. The balance sheet is really healthy, as you know. But the types of companies that we can consider to bring are encouraging for us, and we're really active at this moment. Of course, nothing we can talk about from a specific deal standpoint. But in 2022, you'll see us begin to add more capabilities to the company.

That's helpful. I'll ask the second question to Lindon. Lindon, and I'll ask it at the risk of getting the cart a little bit before the horse. So it was helpful to get the capital allocation framework from you. But the question is if the right deal were to come along down the road, would the company consider using leverage as part of its balance sheet and capital structure to make the right deal happen? Said differently, are you committed to just cash on the balance sheet or would you consider potentially levering up?

Craig, I love the question because it gives me an opportunity just to reflect on the -- not just the company's thinking, but also give a better reflection on just a really strong Board of Directors guidance that we have. We keep our apertures wide open. And so leverage, we're not adverse to taking on debt if we see the opportunity that's transformative for the right returns or right value. And we're not adverse to equity-based deals, stock-based deals. So the apertures are wide open for transformative opportunities like that. The key is we're going to stay on relevance, we're going to stay on value for the shareholders.

Makes a lot of sense. And then if I could, before dropping back into the queue, Robin, I wanted to ask a capabilities question with the products business. So if we think about the capability of the business horizontally, there's obviously a lot more automation that's happened over time. And so the first part of the question is, what's next there? And what do you feel like you need to add? And then there's a vertical question with products because as we see increasingly complex environments, it seems to beg increasingly robust software capability that sits on top of those products. And where do you think this is now there and where can it go?

Sure. So I think in the path forward, we'll follow the trend that we've had over the last several years. Our focus has been on R&D in the cryogenic space. So we're really uniquely positioned in the cryogenic space and in the negative 80 space where it's actually really quite difficult to automate. We'll continue to sell them to the compound management, but that market is not growing nearly at the same pace of the biologics and cell and gene. So I think the focus will be on the R&D in the colder spaces, in BioStorage and cell and gene. And then your software question is a good one because it's really important some of that we're really good at. So our software development is all internal. We have captured software teams in both the product side and in the repository side, and we bring them together. And what you see is we create a really powerful ecosystem of customers hold tens of millions of samples in the stores I provide them. And then our repository services also host tens of millions of samples that we do an off-site storage and our software capabilities, both on the product side and the repository side. It's going to give a customer full view of their collection which is really unique and really powerful and quite frankly, I think what the customers are really valuing as we move forward here.

We have Paul Knight from KeyBanc.

Lindon, could you talk to the COVID benefit in the September quarter? What are your expectations for COVID tailwinds or headwinds in fiscal year '22?

Yes. So in the September quarter, we highlighted that the principal impacts were in the consumable space again, and it was about $11 million in consumables. And when I say that, we have modest impacts on other parts of the business, some positive and very little negative number. But for example, we help manage the vaccines. That has grown into a broader value proposition that the market has accepted. You've seen us take on some other businesses as well as in vaccine management outside of COVID. So I think that's a good example of how things have resonated and perhaps accelerated our visibility -- or the visibility of our value proposition in the market. Now as we go forward, again, consumables continues to be a longer tail on the testing market. And we're not -- I've always said and continue to say, we don't have great visibility to when this may go up or down. However, what we've seen is that it seemed to have stabilized over the last couple of quarters at approximately $10 million, where it was a bit higher in previous quarters prior to that. And we're foreseeing that the testing space seems to be actually expanding with surveillance type testing and for example, all of us did the test this morning to validate that we are good with our social distancing this morning, just another safety check. And I think more and more workplaces, venues, entertainment, travel, everybody is going to be doing the testing. So we think that the equation on consumables probably isn't going to trail off quickly, if at all. But we did mute our growth rates a bit on the consumables into the high single digits.

And Steve, when you look at the future now of Brooks including M&A and share gain, who do you view as your competitors? Is it really organizations that still want to do it themselves and how do you feel about capable in this burgeoning era of more and more biologics?

Yes. So we think that the value proposition we bring allows us to do the kinds of things that customers used to do themselves and the level of complexity that's come forward. It really allows them to get higher level of service, higher level of capability from us probably in a time faster than they could do it on their own. So we think the market continues to come to us, and we're continuing to build more capability inside the company to have an even higher value proposition for them. So indeed, we think that we are a more capable supplier than the customers themselves and we're going to continue to build on this position and add more capabilities to the company.

We have Jacob Johnson from Stephens.

Maybe Lindon, just first, on the path to the 2024 targets, you're not guiding to 2022 today. But as we think about the path to 2024, you're coming off a strong year in 2021. Should we assume that growth maybe in 2022 is kind of at the low end of the 16% to 20% growth you're guiding to over the next couple of years? And then maybe towards the high end as you get into 2023? Or any way to kind of think about the cadence from 2021 to 2024 in terms of organic growth?

I think that windage is a fair assessment. However, it wouldn't vary it too deeply. It's not that we put a hockey stick at the end of this growth curve. But we're still seeing ourselves in the high double digits generally in the coming year. What we have highlighted in the current quarter guidance, as an example, we're in the mid-double digits at the midpoint of being around 14%, 15% growth. And so we're giving that element. So what you've assessed is appropriate. As we move through this year, we think it continues to pick up.

Got it. And then maybe for Steve or Linda. Steve, I think at your last Investor Day, you talked about some changes to your sales team at SRS. One, just how has that effort gone in the last couple of years? And then two, maybe just for Linda, I think you touched on maybe some changes to your go-to-market strategy in your presentation. Can you just elaborate on kind of your vision from a sales effort going forward?

Sure. Thanks, Jacob. Yes. So I'll be glad to start. From the SRS perspective, I think over the past 5 quarters, we've announced 2 very significant large pharma company contracts, people bringing outsourcing their sample collection stuff. These are measured in millions. So these are substantial decisions that are changing the way that those companies have their samples managed. And for us, this is transformative. And we talked about those kinds of things as targets for us when we were together at the Analyst Day 2 years ago, and indeed, those will come to the floor. So we think the traction is good. We think the momentum is exactly what we'd anticipated, and we're going to continue to see more of those kinds of wins as we go forward.

Okay. Now I'll speak to from a commercial front, right? So enable for us to serve our customer, some of the examples that Ginger mentioned, we made a lot of changes in the past, I would say, 9 months or so within the company. We actually integrated our commercial organization, both in sales and marketing function. So from the marketing front, as I alluded to earlier, it enabled us to have an integrated portfolio approach that really speak to the whole value stream that Steve talked about earlier today. On the sales front, we are integrating our commercial organization. So as I mentioned, having the one sales of contact in each country and region, they enable our customers to interact with us and representing a cost portfolio. So that as larger companies come to us, going from previously ordering discrete items from us, they're able to now see the whole value stream so that we give them a complete sample management solution from whether it's sourcing all the way to on-site/offsite storage to genomic analysis and more value to them. And most importantly, Robin just mentioned the software capability, where we actually do provide data back to them for the samples that they have. So lots of changes. So the team is actually quite excited in the last few months.

We have David Saxon from Needham.

I have one on M&A and one on margins. On M&A, I was just wondering if you could share any more specificity around the adjacencies you find attractive and complementary to your current platform? And then kind of how you're thinking about valuation in the market and kind of the size of the targets you might be targeting?

Sure, David. I'll be glad to reiterate. I can't add too much to what we brought already. But we do believe on this value chain at both ends, on the sourcing end and from a genomics and informatics standpoint. We think there are opportunities there, but mostly to drive value for the customer and to enhance the capability of our offering on the sample management, the automated systems and the consumables and instruments is a really strong engineering company. We think those will be tuck-ins because a lot of that product development we can do on our own. So we do see a number of opportunities. Valuations are particularly high. But again, we have advantages as a company and the size of the deals and the nature of the deals that we do, there are intangibles that we can bring to some of these private companies to allow them to perform differently and maybe to have a different kind of advantage to be part of Azenta. So we're encouraged by the opportunities by the marketplace and certainly by what we see that will enhance value for the Azenta customers.

Great. And then maybe for Lindon on margins. I mean you're targeting to exit fiscal '22 at 24% adjusted EBITDA. So that's kind of implying 100 basis points improvement annually to the midpoint of fiscal '24 target. So should we think about that being somewhat linear? Or does this new commercial model have any impact on that? Any color there would be helpful.

Let me clarify just to make sure it's heard correctly. So what we've indicated is after we established a stand-alone business that we would exit 2022 with 22% adjusted EBITDA margins in the fourth quarter. And this is coming from a point in time today where we're continuing to carry some continuing operations overhang. In other words, we've got people on our corporate structure helping to manage both over -- going forward, Life Science business and overseeing the corporate oversight of the discontinued operations and the accounting guidelines requires us to carry that. So we'll shed that pretty quickly when the divestiture closes. We'll get to a 22% EBITDA by the end of the fourth quarter. And then from there, the leverage equation that I outlined will get us up into the right toward that 26% up by 2024. Now in terms of the change in the commercial equation, we've taken all of this into account, both in our G&A structure that's on our business. But certainly, for the integration that Linda is helping to bring to our sales team. And the IT investments as well that helps to integrate the sales team with our customers. So we've afforded those investments. And those of you who've been with us for a while also would know that we had been on a project for the last 2 years to move our ERP systems of Life Sciences all onto one platform. So that's been underway for a while. It's running really well on track to our expectations and the investment equation is supported in these models, Dave. So I appreciate your question.

We have Patrick Ho from Stifel.

Maybe as a follow-up for Steve or Lindon, in terms of the sales process. Obviously, with the leverage on both ends in terms of products and your services business, what's the typical -- or how do you look at the sales cycle for your overall business? Is this something that will vary depending if it starts on the product side or on the services side? Or is there kind of a mean or average time in terms of the sales process of gaining customers on board?

Yes, I'll start and then I'll let Steve chime in. First, the sales cycle -- the makeup of our sales, some of it is very transactional and some of it is very much infrastructure investment from our customers. So if you think about the transactional, much of this, like I said, well, consumables, for example, it's not a subscription, but it's a continuous buy from those customers once they start using our formats. And they don't like to change those formats. So that's very transactional. It doesn't require a tremendous amount of sales, but we do apply customer care to make sure we have the reliability we're there when they need us. Certainly, we do sell through a channel as well on that side of the business. So I would say that's the highest transactional. Then if you move upstream, the GENEWIZ or genomic analysis business, also it's highly transactional day-to-day with special -- a lot of care inside our company for the individual customers. So again, you wouldn't think of this as a long lead time sale but it is a relationship and a reliance on our service capability with the scientists inside our genomic analysis. So it's continuously feeding that equation. If I go up to the longer sales cycle, go to the automated stores, for example, this could be a long-planning session with the -- on the customer side. They're looking at dedicating space in their building to put in infrastructure that will require some tower and cooling perhaps. And for somebody who hasn't done it, it's a longer cycle. For someone who has done it, which large pharma often has multiples of ours at each of their R&D sites, they have a planning path that makes this much quicker. But some of our customers, we may be talking to them for 6 months to a year in the planning stage. And then we will roll very quickly and guide and hold their hand as they do this project. Then finally, on the SRS side. These start with relationships and they build, and we've seen those cell cycle sometimes take some thoughtful time with customers over a series of months, but we've also seen some large customers come to the table and make decisions to go with our infrastructure offerings on -- when I say ours, I mean, off-premise to them, but on our premises in a pretty quick order and then it becomes a transition to revenue as they consider what's required to perhaps move freezers or libraries of samples or to start the projects to flowing into our premises. So that could be a series of months. So what I've described, Patrick, you start with transactional, it's very short. It's very moment oriented, and we know we have to be ready and be available at that moment to be able to confirm delivery. And on the other side, we are doing consultative sales that can be a few months in terms of an automated store.

Great. And then so my follow-up question, several of you on the panel have a lot of semiconductor experience, so you know how the business model runs there. As we look at the new target model for the Life Sciences business, maybe for you, Lindon, specifically from an OpEx standpoint, what are the key levers there? Because, again, on the semiconductor side, a lot of it is R&D. You try to always have to continue to invest. How do you look at the OpEx levers on the Life Sciences business? And also on the gross margin line, given that it's 50% to 52%, you're going to be adding people, obviously, as you grow. But what are some of the key offsets there?

Yes. It's a really good question, Patrick. And we do have a core central operating expense structure. R&D, as you said, this is 4% to 6%, as I highlighted in recent years, and we continue to expect to fund that level of investment, mostly centered around our products team as well as our genomic analysis team as they develop their proprietary technologies and protocols. But you're exactly right that the SG&A structure, this is different than the semi space that we've managed for so many years as well. And I've always described it this way. It's a massive market, many, many endpoints. Even within a customer, we will have up to -- into the hundreds of TIs that might have authority to buy from us in terms of genomic analysis. And so the touch point, the investment requires an engine of IT capability for interfacing, in some cases, customer care that helps to adjust centrally and to make sure that we're satisfying on a continuous basis. And then that relationship that you actually drew out in that earlier question on how long the sales cycle may be. So some of this incurs expansion, and we certainly are investing in geographic expansion as well as the markets for individual customers. But much of it is leverageable in -- through the central spending. And so inside that approximate 8-point leverage that I described in the operating expense, I have allowed for substantial SG&A in a very big picture. It's not -- if I took the '21 SG&A, compared it to '24, '24 is not 50% bigger, but it's close to it and so -- in dollars. So it's a pretty good level of investment. We've learned over the years that in Life Sciences, we make sure, one, that we don't run out of capacity. And secondly, we continue to feed the sales equation to meet the customers where we need to meet them. So investment, I think, is well structured and afforded but that core capability is leverageable for us.

We have Vijay Kumar from Evercore.

I did have one on the new sales model, one point of contract. I'm curious is there any impact to sales force? I understand the bigger picture logic with how these accounts get split up, et cetera. Is there any potential for sales disruption?

Yes, I'll take that one. Vijay, thank you for the question. It's a very reasonable question as we drive some transformation to our customer-facing team. The way we went about the wing is really a balanced approach. There are certain regions we actually brought in strong leaders that's able to talk from a portfolio capability standpoint, from a solution standpoint. Within the actual individuals within the team, the way we managed it is within the regions, we have smaller geography, having that one, what we call account management structure, very similar to many other companies that you're familiar with and they're supported by a team of technical specialists, whether it's in the automated storage business that Robin leads or genomic business that Ginger or an the sample repository business that's there. So essentially think about that way, right, within a small geography, one of the rep is becoming that one point of contact. They're still supported by the existing individuals within the team. So we try to kind of balance that customer relationship, especially on the highly technical capabilities that we want to make sure we retain those talents while streamlining the transaction process.

Understood. And then one related to that, are you guys hearing anything on labor shortages in your customer base? There's a lot of focus on automation. I'm just curious, is there some shift in the market where your customers are feeling pain points and you guys would come in and serve them better?

Yes, Vijay, I think we're seeing that indeed. I think everybody feels the pinch. The labor issues exist across all the industry. I suspect that some of the momentum that's coming our way, particularly in the sample management and the things that our customer currently does on-site, we suspect that, that this is one more factor that's pushing some of these things that were at the edge our way. So indeed, it's an issue. We haven't heard that specifically as the cause, but likely one more factor to tip it in our direction.

Maybe if I add to it, Steve. Vijay, if I can follow up with some of the customer trends that we've seeing where we're seeing tremendous leverage in terms of our capabilities we bring to the market is certainly in Life Sciences with all the dynamics, right? The labor talent has been a challenge for everyone across. What we are seeing increasing trend is our customer in the Life Sciences market really wanting to focus their resources and talent in the discovery research space, which really give us a unique position because they want to rely on our expertise to basically outsource a sample management or some of the genomic services. So it's actually really interesting. We're seeing that more and more coming from customers for that partnership style.

Got you. That's helpful perspective. And Steve, as a follow-up to that. Is there some industry metrics on where we are on this outsourcing penetration curve? If I look at CROs as an example, right, do you have a sense on that market size and how penetrated you guys are?

Vijay, we don't actually. But I can tell you that even from a CRO standpoint, even some of our sample repository services business is coming from what used to be done at CRO. So it's just -- there's a general trend towards efficiency, towards speeding up the discovery process and elements of that, that relate to the kinds of things that we do continue to come our way. And it's always as a factor of -- sometimes it's cost, but mostly it's about the efficiency and the precision with which we can do things, so they allow the discoveries faster. So I don't have the means by which to quantify other than the outsized market growth. You asked a question earlier this morning, those are the kind of things that are driving outgrowth from our standpoint compared to the size of the market, and we think that's really consistent with our critical role here.

That's helpful, Steve. And maybe one last one for Lindon. The $2.5 billion of cash available, what's the math to get to $2.5 billion, Lindon? Is that the accumulative free cash and a certain amount of leverage levels and when can we expect the Form 10 for the stand-alone company?

So that's a rounded number. Actually, what we've said is in excess of $2.5 billion would be available. So we have about $200 million of net cash on our balance sheet currently available to us going forward. And we expect about $2.4 billion in net proceeds from the divestiture. So we'll start, absent other expenditures, $2.6 billion. As I highlighted in 2021, it was a stand-alone estimate. But while we were not at $100 million, we're approaching that threshold of being able to generate that level of cash. Of course, I also outlined the CapEx guidance for the year, $60 million, $75 million including the China building. Think of it as $40 million, $50 million excluding that. So in that range, we'll use a portion of that cash generated, but we do think we net some additional cash for investment for the business. So we feel really good about cash capability standing on its own. We feel extra good having $2.5 billion or $2.4 billion from the proceeds of the sale to put to work, and we're excited to do that.

We have a question from the audience, and this is a question for Lindon. Are you able to provide your expected tax rate for the outlook as you have in the past?

Yes. Actually, it's a good question. I know some of you are filling in models. So in the outlook for 2024, the longer range. We're using about 18% to 23% as a range on a non-GAAP basis. And that will have variability certainly as income increases some of the -- to street have a little bit less of an impact. So 18% to 23% would be the range. If you're using 21%, I think you're in a good spot. So yes, thank you. Thanks for the question.

And we have Craig Ellis from B. Riley.

What I wanted to do is dig into one of the points that I thought was really powerful that was made in multiple presentations and it related to recurring revenue. So what I was hoping to do is start with a question for Sarah. Sarah, you profile the business as having 3 affinity groups, one with a 25-year revenue life and other with a 7-year revenue life and other with a 3-year revenue life, and so the weighted average there is about 16 years. And the question is through the forecast period that was addressed today, what will happen with that 16-year weighted average life? Will it stay about the same or will it elongate or what's your expectation?

So it all depends on, again, the purpose of the sample when it's coming in. But as we expand out the number of samples that we're collecting, we do anticipate they're still going to need to store them for that amount of time. So I think it's going to at least stay the same, if not get longer as we proceed. And we keep on adding value to those samples, and we want to get them earlier and earlier in the chain so that we can keep them for longer. So that's our purpose is to make sure that we're getting those samples as close to them coming out of the clinic as we can and keep them in our repository longer and make sure that they can use them more efficiently with our added -- value-add services.

That's really helpful. And then the second part of the question is really a question for Lindon and maybe even in part to Steve. And it's this. So if we look at what Robin conveyed with 14% recurring revenue in his business and then Sarah and Ginger potentially at 61% of the business being recurring. We have almost 75% of the business that could be characterized as recurring in nature. So Lindon, is that the way you'd characterize it? And then the follow-on question is really to what extent does the recurring attribute come into play as the executive team and the Board evaluate M&A.? Is that 75% recurring something that we should expect to be somewhat maintained or managed toward? Or is it less of a consideration and other things?

Craig, I love the way you asked the question because attributing that recurring nature to all of our services business, I think it's very much a complement in that we do have extreme loyalty in terms of the genomic analysis and in the SRS business. On my own part, on a financial model, I don't attribute all of it to being recurring in terms of an annuity like what I do attribute is the portion of the SRS business that is samples in the freezers. I attribute to consumables in the product side and then also the service -- post-warranty service that Robin has built. When you add all of that up, it's approximately 35% of our total revenue and that has been getting stronger over time. And we expect -- in fact, I think Robin has done a lot of success in building more of a plus warranty service business behind his products, which has been great to see and Sarah's growth curve is taking us higher in that business as well. So -- but while genomics isn't what I would count as recurring in terms of putting it in one [ form ] or the other, we have found tremendous loyalty and continuous -- not just contractual, but continuous buying from those customers. In terms of the M&A side, what I would highlight is we don't necessarily put that filter on what we would look to acquire. But when we see it, we highly value them. And I will tell you that in the SRS business as we have acquired additional storage repository businesses over the recent years after buying BioStorage, that's an easy one for us to do in terms of sorting what's of value. In other words, we're not looking to buy storage space for freezes. We're looking to help customers manage sample-based inventories. And in that case, that's a recurring nature, and we love that, and it's got great ROIC when we put our pricing on it. So those are great business. But we would not -- we don't constrain ourselves to just recurring revenue.

And we have a final question from Jacob Johnson from Stephens.

Just -- we've gone thus far, we haven't talked about cell and gene therapy, and it's clearly a focus area for you guys and something you guys have mentioned. But I just want to ask kind of how much of your business mix can shift towards the cell and gene therapy market from where you are today, kind of organically? And then how important is maybe M&A to accelerate that?

So Jacob, actually, we really appreciate this question. I'm going to put each of the general managers on the thought very quickly because they'll tell you just very briefly the drivers from their standpoint on cell and gene therapy, and then I'll wrap up from an M&A standpoint. So maybe we'll start with Sarah.

Sure. Thanks, Steve. From the repository business, what we found is we really can help with the distribution of those cell and gene therapies. So you're catching it on the delivery end to the clients themselves. So being able to store that manufactured drug product safely and get it out to the sites where they need it is where the sample repository business can really shine. I'll turn it over to Ginger to talk about the related upstream of that.

Okay. Jacob, I'm very happy you asked the question because personally and with the team and with group in genomics, we are very excited about new opportunities coming in from cell and gene therapy market. And to me, genomics is a more upstream discovery and naturally, cell and gene therapy like it means, requires genomics solutions and the services we built already. So naturally, like any upstream discovery, we're pretty dominant right now. We're tracking about 550 institutions that have cell and gene therapy programs. And currently up to date, we probably like have 150-ish institutions using our services already. So leveraging our -- like continue to build these new capabilities on top of what we already have and also leveraging total center capabilities as a full service portfolio, I expect like we will capture -- will penetrate the market faster and further our grow in cell and gene therapy on genomics side.

And then I'll finish up, Jacob. Good question. Cell and gene customers are my favorite customers because they're doing really difficult things, and they're doing really difficult things at cryogenic temperatures, and we're really good at that. So it's the highest growth part of my portfolio by far. So we expect cell and gene to be growing 30% -- in their cryo applications, 30% to 40% year-over-year. So they continue to do really difficult things. I've carved out a really powerful niche in our engineering capabilities in that cryogenic space, and it's really a match made in heaven for us. So we're really excited about the growth in cell and gene, and you're going to see our business grow as those therapies get approved. And most importantly, they go from research into actual manufacturing and delivery.

And Jacob, just from an M&A standpoint, a couple of things. The cell and gene therapy portfolio that we hold today is from 6 years of development on the cryogenic space on the products and in the sample repository services space. The -- so we have an organic capability that we'll continue to build upon. But in the genomics space, this is where you can image there are capabilities that Ginger's team has that we can continue to grow, and there may be ways to get to some of those capabilities faster through M&A. So the primary opportunities we have from cell and gene therapy M&A standpoint will be in and around the genomics space.

Jacob, thank you very much. And thank you, everyone, for joining us today. This is going to bring an end to the Q&A. Let me just highlight to you that we just couldn't be happier that you spent the day with us. We've got approaching 3,000 employees globally and it's growing all of the time. And we couldn't be more proud of them, and we want to say thank you to each of them for what they've contributed to build the business. And I want to give a special thanks to the general management team here for spending the day with us, which is where Steve and I spent more time with the investor front all the time. It's great to have the general management here. With this said, what we've described today, high-growth business, margin expansion, profitable already, leverageable for additional profit, generating cash on its own, $2.5 billion and more on the balance sheet to come in the early months of next year and an M&A front that is quite exciting, attractive, robust and developing all of the time, and so the future just couldn't be more exciting for us, and we hope that you find it the same way. And as we practice these sessions, as we have now for the past decade, this I believe is my fourth or fifth one, and we do it in the same fashion, we put a 3-year model out to you, we track ourselves to this. We enjoy doing this because it holds us in regard for you. And we look forward to talking to you in the days to come, the quarters to come as we track our success against these things we've talked to you about today. So thank you very much for your interest. I want to come back one more time to one of the pieces of news we shared today. On December 1, we'll officially change the name of the company. We love the fact that our legacy has been with Brooks Automation, but we're excited that on December 1, the name will change to Azenta Incorporated. Azenta is an exciting place for Life Sciences. We believe we'll partner to all life science companies doing research and cell and gene-based endeavors. And we couldn't be happier on December 1 to become Azenta, a life science company that's truly unique. So thank you, everyone, for joining us today.