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

Good afternoon. I'm David Saxon. I'm with the medtech research team here at Needham. Thanks for everyone joining us at the 24th Annual Needham Growth Conference. With me today is Azenta's CEO, Steve Schwartz; CFO, Lindon Robertson; and Director of Investor Relations, Sara Silverman. Regarding the format of this afternoon session, the Azenta team will go through a presentation, and then we'll finish up with some Q&A. So if anyone in the audience has any questions, you can submit it in the box on your screen if you're logged into the Needham Conference portal. Or you can e-mail me directly at [email protected], and I'll do my best to work them in. So with that, I'll turn it over to Steve.

David, thank you, and thanks, everyone, for joining today. We're really delighted to have a chance to be here at the Needham Growth Conference. For Lindon and I, it's always the best way to start the year, refresh ready, to always meet energetic and enthusiastic investors, so it's a really good opportunity for us. So we're really pleased to be here. And my understanding is for the 24th time consecutively, but this time as Azenta Life Sciences, a first for us. And Lindon and I will outline exactly what that means and the implications for us. Before we start though, just a quick reference to the safe harbor statement. We will be making forward-looking statements. And we call your attention for more detail to www.azenta.com for a more fulsome description of the safe harbor statement. Today, in our remarks, we'll talk a little bit about Azenta Life Sciences, a truly unique life sciences company. We'll spend time talking about the market drivers and how that impacts not just our near-term future, but what we see coming here for many years to come as a tremendous opportunity that we're aligned around to be able to address a tremendous value opportunity. We'll spend time on our differentiated solutions. And then Lindon will talk about the growth prospects ahead, what it means from a financial perspective and what our objectives are as we continue to deliver on really strong growth, a unique opportunity. First, just a snapshot for you of Azenta Life Sciences. We are now in the process of almost concluding the sale of the Semiconductor Automation business to Thomas Lee Partners. We anticipate that will close here in the first half of the year. But as a stand-alone life sciences company, we concluded our fiscal '21 at the end of September as $0.5 billion in revenue over the recent time frame, growing more than 20%, and most of that is organic growth. We're a $500 million profitable life sciences company. And uniquely, we're about to have a balance sheet that will have about $2.5 billion of net cash for us to put to use for continued growth. So we think a truly unique value proposition, a truly unique company, and we'll describe it to you in the remarks here this afternoon. But I think it's important to put it into context a little bit from where we've come as we didn't just drop down here and acquire our way into being a $500 million company. We've been at this for about a decade, and we started with the fundamental capabilities that we had in the Semiconductor business. We had 2 core critical technologies, one, automation and controlled environments, to be able to move silicon wafers in a very controlled environment, that we translated into the life sciences space, and we also had expertise in cryogenics, literally, the mechanical creation of ultracold. And these 2 technical capabilities, we could understand, were also valuable in a burgeoning life sciences space in the management of cold samples. And I think everybody understands the critical nature of handling samples in cold environments and even cryogenic environments, especially has been brought to fore in a COVID environment, in the vaccine space. But in and around any biological activity, cells tissue, those kinds of things, cryogenics and ultracold are critical. 10 years ago, we started with some acquisitions of some small automated cold store companies in the technologies that we knew particularly well. We acquired 3 companies. We advanced their capabilities to launch our own portfolio of automated cold stores to handle what became millions -- or hundreds of millions of biological samples. And in the process of learning the customer's workflow, we also acquired the largest stand-alone commercial bio-repository business called BioStorage Technologies to complete this workflow for on-site handling of samples and automated stores and the offsite archive storage of samples. Soon after the first 5 years in the business, we had $100 million life sciences business in and around the automated and manual storage of samples at ultracold temperatures. And as we learned the workflow for the customers, when we began to engage and participate, we understood that there was more value to be added in the management to these samples, including genomic services analysis, the interrogation of these samples that could add more value to the information that accompany these samples. Also labware, the storage and management of these softwares, the location of the samples and ultimately, employing a bioinformatics platform to deliver tremendous value to customers. We acquired GENEWIZ, which was a world-class genomic services-capable company. And over the next years, the next 5 years, we added $400 million in incremental revenue until the announcement we made at the second half of calendar '21 to separate the 2 businesses, to have Azenta Life Sciences as a stand-alone company and the sale ultimately of the Semiconductor Automation business. So it brings us today to a $0.5 billion company in life sciences and a chance to really launch in what we think is a tremendous opportunity ahead of us for the next decade of our position. Just some snapshots here. We're well positioned in key global life sciences markets. So wherever life sciences activities going on in any volume and in any critical nature, we have assets there. We have genomic services laboratories, 14 of them distributed around the world, sample and repository services located at key storage sites that give us logistics and operational capability. And we manufacture products at the various sites associated with acquisitions that we've made. But we have a global presence. We're particularly strong in North America and Europe, and we have a tremendous presence in Asia for the sourcing of capability, but also, in additional, to serve those rapidly growing markets. In terms of growth, we have a strong track record. We've been a 20% organic grower over the past couple of years. We've improved the operating performance of the company. We continue to take advantage of our scale and that provides tremendous leverage for us at a gross margin level, but as, in particular, as we deliver it at the earnings line. So we're on a strong growth path. We have scale now to take advantage of a highly leveraged model. And we'll continue to take advantage of the capabilities we've built, expand on our footprint, expand on the operational capabilities that we have in place and continue to drive high growth and profitability. And Lindon will address that in the remarks that he makes in a moment. So I'll introduce you briefly to the portfolio. We have a sample management value chain, and it starts with sourcing of samples, sometimes, the customers' collection on their own. Sometimes, we supplement their collections with samples that we will source for them. We format them, put them into traceable, trackable, highly protected formats. We store them. We manage the logistics, on-site, off-site. Wherever the customer needs to have their samples and knowledge of their samples, we can provide it. And we can deliver those samples to a particular location with ultra-high speed, and we have the ability to interrogate the samples to provide genomic analysis through Sanger Sequencing, Next Generation Sequencing and to be able to deliver through a highly capable data and informatics platform, the results that the customer needs, in an incredibly short period of time. So this value chain, across biological samples, is at the heart of what we do, in the value that we bring to our customers. In terms of market drivers, we're particularly enthusiastic about the opportunity that we have. We're heading toward a $10 billion market opportunity. We're the market leader in the spaces that we serve here, and we continue to outperform the market. So already a very healthy growth in the market environment, growing more than 10%. And we're a 20% grower. And the reason is our outperformance comes from the innovation, the innovations that we have in each of these spaces, so there's a tremendous growth in the area of genomics. Our cell and gene therapy capabilities are market leaders, and we're at the cutting edge of technologies that are driving a tremendous amount of growth in the genomic space. And we've been a 20% grower in the GENEWIZ platform of genomics for a 7-year period now. In the sample and repository services, there's a tremendous wave toward outsourcing of the management of samples, and we continue to provide world-class services there to capture an unfair share of that market. And there's a tremendous growth in ultracold stores. Most of those, most of the growth, the highest growth for sure, is coming from automated stores, where, far and away, we're the market leader. It's important to understand that across the entire spectrum of drug discovery, from research all the way through manufacturing and distribution, our sample and management services apply to each of these in -- particularly in each of these areas, but in somewhat different fashion. But we have services and product offerings across the entire spectrum of drug discovery, all the way through development. And we continue to make announcements every earnings call, where we talk about things that we've done on the research side, all the way to the distribution of manufactured products. So we continue to exploit all areas here with the portfolio that we have, and we do see tremendous growth opportunities in each of these major drug discovery segments. The drivers for the fundamentals of our business. So the sheer number of samples that are being collected and stored since the genome was sequenced in 2000, the number of biological samples has grown exponentially. And by our estimates, there are more than 2 billion biological samples stored cold around the world, and it continues to increase at approximately a 10% clip on an annual basis. Moreover, as the research goes from biological drug discovery, genomic analysis and into cell and gene therapy, the storage of these collections, they're not only larger and more complex, but the difficulty to manage these samples to ensure the high-fidelity nature of the samples at ultracold temperatures also becomes more complicated. And it's this complex challenge that pits our opportunity directly in the center of this growing market. In addition, the interrogation that we perform on these samples, the amount of research that we have in and around the cell and gene therapy space, allows us to enhance the capabilities on the genomics side, and it compounds the opportunity for the company. So more samples, more complex collections, more needs and opportunities for the interrogation of these samples, drives all of the vectors in the Azenta Life Sciences portfolio. So we believe we're strategically positioned to capture on the critical market trends. Already, half of R&D is outsourced. We're a tremendous capable -- tremendously capable outsourced provider of capabilities to the R&D space. We believe that over the next 5 years, the number of samples -- the size of sample collections that are outsourced will double once again. We have more than 250 advanced-degree scientists helping us to pursue the cell and gene therapy market. We are strategically positioned in this rapidly growing space, with technologies that are at the necessary leading edge of capability. And from a global standpoint, anywhere you find life sciences activity, you'll find Azenta installations and people serving customers on site and at our nearby laboratories. And finally, a note just about the differentiation that we have in our capabilities. We have a unique team. I mentioned the tremendous scientific talent that we have. We tailor the services, the capability, the use of our tools, around solutions that customers need. So we are fundamentally at the cutting edge of research, and we allow these solutions that we provide to customers, all the way through drug discovery. We positioned ourselves geographically and from a business process standpoint to provide samples to a customer in an incredibly short period of time as well as the data that we provide to customers in a very short cycle. We've constructed the business, the structure and the physical footprint to be able to deliver samples and data to customers faster than they can do it on their own. And finally, the broad product capability. We continue to add capabilities to the company as we learn the value-added workflow elements of the customers. We continue to add these capabilities to the company. And we've done a number of transactions that continue to increase both our capability and the, by acquisition, the capabilities that we bring to the company. I show one slide here and talk about the global customers, but it's the offerings that we bring to the customers that are most important. We serve all of the top 20 pharma companies with a tremendous value proposition from the elements that we bring to them. Most of the top 20 customers buy at least 7 of the different product and service lines from us, and we continue to expand that. The most important takeaway from this visual is that we excel from an operational standpoint, in the ability to deliver for customers, and we excel on a research standpoint. The scientific capability that we have, the amount of research that goes through our laboratories is immense. And when we look at operational capability, the ability to deliver and the research, we have a complete portfolio. And we have consistency in performance and ability at a very high level from the entire spectrum. And finally, on the product portfolio standpoint, we have services which represent about 60% of the offering, and this includes genomic services, Next Gen Sequencing, Sanger Sequencing. We're also the only company that will do sequencing and synthesis. And when we couple that with the Sample Repository Solutions business, we continue to see the overlap here of managing the samples and managing the measurements of the samples. And that's an opportunity for us, from a growth standpoint, to provide a unique solution to customers. On the product side, the formatting of samples, the storage of samples, the tracking, the automated systems that go in today represent products and services offerings to customers. But as we continue to evolve these capabilities, we continue to demonstrate what we're able to, to customers, these products and services will evolve to very strong solutions for customers, handling a very complex set of issues associated with the sourcing, the management, the storage, the tracking and the interrogation of samples. So we're going to continue to evolve this portfolio of our products and services into tremendously high-value solutions for our customers. But the elements exist in our go-to-market capabilities, and the demonstrations we have for customers are what are going to get us there. And finally, just to give you a look at the past, in particular as it relates to our future. Over the past 6 years, we've demonstrated tremendous growth from organic growth and from acquisitions that we've added to the company. I call your attention to 2 acquisitions, which, at the time, were transformative for the company. BioStorage Technologies in fiscal '16 increased substantially the amount of revenue for the company, but also changed our value proposition to customers in and along this value chain. And after the acquisition of BioStorage, where we put business process, we added capital for expansion, we converted that business into a tremendously high organic growth business at the foundation of the business that we have today. In fiscal '19, at the end of calendar '18, which is beginning of fiscal '19, we acquired GENEWIZ, the world-class genomics company that added a tremendous amount of value to us from the standpoint of increasing the value proposition to customers. Already a 20-plus percent grower when we added the capability to -- at the time it was booked, we increased the footprint, we increased the capability, we made strategic investments in the ability for GENEWIZ to continue to go out and capture what was a tremendous market opportunity. And that was transformative for us, in that we continued the organic growth. And we have a position now, a $500 million company, with a very solid foundation and a unique product and services platform. We spent $1 billion over this past 10-year period, putting ourselves into position. And we face a future now with the strongest portfolio we've ever had, with a global footprint ready to address this growing market and what's going to be a $2.5 billion war chest to put to work in and around the next phase of growth, attacking this tremendous opportunity. So we're delighted that we have a chance to speak with you today. Lindon will talk to you now about the future, from -- for how we go forward with Azenta Life Sciences.

Thanks, Steve. So we're going to zero in on the model going forward. We'll go right to our strategy, which remains consistent with the past years that brought us to today, focusing on leading in the spaces that we participate, investing on both the organic, obviously to have a robust model, but also strategic M&A, which is, as Steve just highlighted, we'll have quite a war chest for investment. And margin expansion is inherent in our business objectives as well as disciplines to zero in on that. But also as we look for M&A opportunities, we're looking for areas of growth and margin expansion. And then finally, balanced and disciplined capital deployment, we've done all of our acquisitions and investments significantly in the business with ROIC focus. So with this in mind, we'll give you a little color on some of the models that we have in place over a 3-year projection. And behind this, we give you a little context of where we've invested as well in the past, which I think is a good indicator for the future. In the operational CapEx, and generally -- in general, we found 6% to 8% of our revenue in the life sciences space has been adequate for supporting and actually robust in supporting our operational growth capacities, our footprint and advancing some of the developments in our capabilities. In the research and development, those capabilities have paid off with 4% to 6% being invested there, but also paid off in the proprietary capabilities that we've developed around, for example, the cryogenic automation that we had developed in the -190 spaces, unparalleled by anyone else. And also, proprietary solutions that we have in the genomics business are quite substantial in delighting our customers as well as retaining those relationships. We find this to be a very good payback for us. In the investments going forward, this isn't so much history because we've been a consistent generator of cash as a consolidated company prior to the divestiture. We have done M&A over the past that included not just acquisitions, but also some divestitures. Now we're separating the company, as Steve highlighted. As we close this, and we expect this to be in the coming months, early part of this year, so with $2.5 billion of net cash, the M&A is a keen focus. It always has been. So it doesn't change our behavior too much. But certainly, our aperture and appetite is larger, with $2.5 billion on the balance sheet. And I'll highlight that we shared at our Investor Day that we'll continue to pay the current dividend up until we do close the sale of the Semiconductor business. Once that closes, we will turn all focus of our cash toward the M&A. And so as you can read, the dividend, we discontinued after that as we changed the substantial makeup and focus of the company just slowly to Life Sciences. So with that, I provide you the 3-year target model. This is a discipline that we've had for many years, to give you visibility to where we're headed over the horizon. In this model, we show you the segments of our products and services, altogether providing a growth rate midpoint of about 18%. We described this in our Investor Day on November 16 of being 16% to 20% range. You can see how that breaks out, with products in the low teens of 12% to 16%, comprehending the fact that this past year, we did have roughly $50 million of COVID-related revenue. And it's not so clear to us that it will trail off, but at the low end of this range, the consumables business would take the bigger brunt of that. And so we provided some dampening effect as we expect that to occur in '22 here just at some level. And then on the Life Sciences side -- I'm sorry, the services side, 18% to 22%. This comprises our Sample Repository business as well as our genomics business. And so this is a consistent grower, certainly at the genomics end, which we have described to be at the higher end of 20% and above, in the Sample Repository, in the high-teens business. Now on a margin objective, the gross margins at this level would only be requiring flat to up 2 points in each of the segments, which this is very modest compared to the 4 points that we've gained just over the past year. We have comprehended some of the labor inflation that I think we are all seeing. But also, I will highlight that we're very responsible on the objectives we set out here earlier, early in the 3-year horizon, and we do have a history of updating our targets as we achieve these and perhaps can improve upon them. And we'll do that over the course of the 3 years as we have more visibility to higher levels. The key point here is the EBITDA margin, in total, going to 26% is well supported on both segment basis. And with roughly about 17% being seen this past year, you can see there's significant leverage we have with the growth as we go in through this 3-year model. And we'll give you a little more on that. But I would highlight that the EBITDA curve at this level, where our business, essentially 2 to 3 years ago was just a breakeven point, is now settled with a little more cost because we're separating the company, puts us back in a very sharp point of the curve for leverage. And you're going to see this leverage continue to accelerate as we move over the next 3 years. Highlight the ROIC at about 12% by 2024. And it's a good way of rounding out one key point of the entire model. This is based on what we own today. This does not comprehend the M&A. So the growth from the M&A would be on top of this in additional profits. And of course, ROIC has its own set of dynamics when you take on a new asset with goodwill. But we see this being significantly in excess of our weighted average cost of capital by that time based on what we own today. So with that, we'll go -- show some of the P&L structures, which I know many of you liked as for your models. I'll just draw out a simple point. That if you look at the 2021, the EBITDA of $86 million and earnings per share of $0.48, then you comprehend just a simple arithmetic that I've just laid out and we gave a little more on in our Investor Day, if you would like to refer to it, but by 2024, you're seeing approximate triple of the -- better than triple on the earnings per share and almost triple on the EBITDA. And I think the cash capabilities, we've had a really solid foundation as we built through the Life Sciences and before we decided to separate the business with keen focus. And I think this cash capability is going to continue to generate very strong balance sheet, in addition to the divestiture funds that we're starting the company with. So Steve highlighted that we had done $1 billion of investment. And I want to underscore this that this has been more than 10 transactions, always with the same eye, looking for strategy that's going to be complementary or adjacent to what we do. It's ROIC-focused in terms of a financial filter, in terms of what makes sense, what doesn't make sense financially. We look for ROIC to exceed weighted average cost of capital in about 5 years, perhaps 7, but we're looking for something that has continuity of growth and margin expansion, and that puts it nicely in contention with the multiples we might pay for it today. And so we found that this has garnered and -- governed our decisions very effectively. And I think this is why we've built such a handsome business that we have today, and we'll continue to use that same discipline. As we move through the quarters, I think it's always reassuring to see some of the momentum that we've had. You can see that as we came through our September quarter, with September 30 as our end of fiscal year, we're a September 30 company, our Q4 ended up at $137 million, about $0.12. We put guidance out for the December quarter to be $130 million to $140 million. And we highlighted that this has a range of growth just around 14% or 15% at the midpoint year-over-year, a little bit dampened, as I said earlier, on the high spike early last year, I should say, at the end of December last year, around the COVID-related revenue. So a little bit dampened start here, but still mid-teens. So we're quite proud of this, but we'll continue to see this accelerate, we think, ramp as we go across the year on growth rates. On the EBITDA, I will highlight this, as this would appear smaller than 17%, is because we're carrying more of the continuing operations cost that includes some of the staff before we separate. In other words, some of our corporate staff that will go with the Semiconductor business is still supporting our continuing operations as well. So as we separate, we'll pick up, as we've described previously, about 2.5 or 3 points of margin the day we separate, with the exclusion of those expenses. And so as you -- as I summarized, in total, we're looking at a $0.5 billion business already. In fact, if you take our midpoint, you would see here, we're $550 million run rate, so we're quickly headed to the next milestone, I believe, high growth -- high teens and profitable growth and cash capable already. So this is not something that is consuming cash as an investment and ongoing, but generating cash. And we have this very rich balance sheet with the divestiture of $2.5 billion and already a global platform that has been recognized as really a very unique asset, end-to-end cold chain management, with analytics attached to it, becoming more and more relevant and critical to our customers today that we serve. The earnings per share will more than triple, we believe, by 2024. And we're excited that while that is only based on what we own, that we can even add to that with this balance sheet of $2.5 billion investment. And so one more message and then I'll turn it over to you, David, for questions. I just want to highlight that in these days of the market's volatility, we have this complicating factor for us as a company that we recognize our identity is in change and inflects in the market. And we have legally taken on the name of Azenta as of December 1. We started talking about that in November at the Investor Day. And we are seeing exactly the volatility that the bankers describe these days. Hopefully, it's an opportunity for some. But as we move from being sometimes recognized as a semiconductor company, to a life science company, we're very excited about the future because it's a very unique and already greater than $0.5 billion profitable venture, with a lot of energy and fuel to add to them. So David, I'll turn it over to you for questions.

Well, thanks so much, Steve and Lindon. That was a super helpful overview. I guess to start, I do want to touch on COVID. I think in your prepared remarks, you called out $50 million you recognized last year. I think on the fourth quarter, fiscal fourth quarter call, cases were continuing to increase and you do benefit from testing. So I mean, is it fair to expect a sequential increase in the COVID-driven revenue you saw in the fiscal fourth?

David, I wouldn't be ready to point to an increase. I just won't comment on the expectations of the December quarter since we're at this odd time of between the closing of December 31 and the announcement. What I will reflect on are the comments that we made in the past 6 months, that being that we always expected that testing would have a very long tail on it. We saw in the last 2 quarters that we have reported on that, being the June and September quarter, we averaged about $10 million a quarter of consumable-related demand. The other line items were kind of puts and takes, but with $10 million a quarter, we expected to have a long tail on it for testing. And not terrific visibility for us, but I think, certainly, the COVID environment has sustained the demands on plastics. And so I don't have a reason to adjust those comments today.

Okay. That's fair. And then outside of C&I, what other headwinds and tailwinds are you seeing from COVID?

So a couple. Timing is always interesting. In the early days, we had seen timing in terms of store systems going in and out of, I should say, being pushed in and out on the calendar based on customers giving us access to their sites to help with the installation, to follow through on the installation. We were not very impacted and still have not seen substantial supply chain issues. So I wouldn't call that out. We all manage that. And I wouldn't say we're zero-free, but it's been very successful management by our teams on that front. But store system timing, we've had some vaccine management opportunities on top of the vaccines that we had already managed and have won contracts. And we certainly have seen the dips back in 2020 of Sanger and academics. But in '21, that leveled out in genomics, and synthesis is continuing to accelerate through that portion related to COVID. But nothing that we would say comes to compare much at all to the consumables that we've talked about, about $10 million a quarter.

Okay. Got it. And since we're running kind of short on time, I do want to skip ahead to the commercial model. You did talk about a change you're making at your recent Investor Day. So can you just give us a reminder of an overview of what that looks like and kind of how long you expect that transition to take?

Sure. So at the Analyst Day, we talked about -- we hired a Chief Commercial Officer, Linda De Jesus. And she's done a tremendous job of getting the organization structured around the value proposition of the offering. When we first put the company together and a lot of the acquisitions, we had sales distributed throughout in the products and the services elements. Now as we move toward a solution, the ability to manage key accounts, the ability to manage this value proposition across regions, the structure is taking place. So I would say that we're probably more than halfway in terms of the structure, and now, it's the behaviors and the training and the conditioning. But the value proposition to customers, we're getting the feedback from the customer that it's particularly strong. You'll see this continue to evolve over the next couple of years. But we're immediately now beginning to see traction in the benefit of having some key account coverage, where we have a more focused point position with customers and allow them, for example, to buy from Azenta rather than to buy from BioStorage or GENEWIZ or the automated stores division. So normal mechanics, things that are going on, but it's having a tremendous impact on -- the Azenta brand is having a tremendous impact on our ability to go to market. So it's in motion, but really under control, and we're starting to see good progress. And we'll report on that in subsequent calls as to how we're doing, but we've already seen some of the benefits. It's been a heavy lift, but really an important -- it's an important milestone for our company to get to the point where we can manage accounts and regions and critical capabilities like that.

Okay. And then maybe a higher-level question on your fiscal '24 targets. I mean can you just talk about the level of visibility you have in each of the 3 categories? I did imagine it's pretty high for SRS and cryo stores in the products category. So that's one. And then, number two, does the commercial model kind of change how much visibility you can have?

Yes. So for us, I'll start. David, the market growth, we think, is particularly strong. When we forecasted 3 years ago, what we thought the opportunity was going to be for the next 3 years, we did it based on the trajectory we were on at the moment, and we saw acceleration of that. We have the same feeling now, but we're going to be cautious in our guide. But when we see the portfolio that we have aligned on a particular trajectory that we're on, that's what gives us confidence in the outlook. But we think that the sample and repository services will continue at least on the pace that we're on. And the more capable we are, the more business we seem to be able to generate. On the genomics front, it's tougher to see out capabilities in terms of what the business will come in a particular day. But the fundamental capabilities we're building in we think are leading what the market requirements will be. So we have high confidence that the investments that we're making are going to stay out in front of the opportunities. And we are focused on gaining share. And that kind of capability that we've demonstrated over the years, we think that will continue to serve us well through the '24 horizon that we put in place.

Okay. Great. And then there were a few questions submitted, so I want to get to these in the last minute. One is on just what areas of the life sciences market you're looking to for M&A. And then, I mean, I'm guessing you're going to focus mostly on M&A, but there was a question about buybacks as well.

Yes. So I'll start with the first part, is in and around the space that we have, we think the market opportunity is tremendous. And so no one should expect that we're going to do something off on a new vector. There's just so much to be gained in and around a $10 billion market opportunity. So near adjacencies, if you will, in terms of sourcing, in terms of increasing and enhancing the size of the collections we have. And in terms of the genomic capabilities we can offer to customers for whom we perform a number of services today, there are adjacencies or some downstream capabilities that we believe we'll be able to bring to customers, and a lot of those will be done by acquisitions. So in and around this value chain is where everybody ought to expect that we'll continue to make those investments and put the capital to work. And Lindon, I'll let you address the buyback.

Yes. On the dividend policy, as I said, we would zero in on the opportunity to put dollars toward M&A investment. We do have a buyback authorization in place as a company for $50 million. And we've had it in place since, I believe, 2015 calendar year. The Board is always open to providing value back to the shareholder, but we haven't run out of places to make our -- place our investments. And we think the horizon is very rich with opportunity to put the cash to work. And that's our priority, is to build the capital value and the structure that we're managing. And -- but it doesn't preclude us from ever making those decisions in the future.

Okay. Well, with that, we're out of time. But thanks to both of you for joining, and I hope you have a productive schedule of investor meetings. Thanks so much.

It's great. Thanks a lot.

Thank you, David. Thanks very much.

Yes.