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

Fantastic. Thanks, everyone, for joining us this afternoon. Pleasure to have with us the team from Azenta. We have the CEO, Steve Schwartz. And we also have from the finance organization, Lindon Robertson, CFO; and Vandana Sriram, I think she runs [ her ] FP&A practice for them. And from Investor Relations, we have Sara Silverman. With that, Steve, Lindon and Sara and Vandana, thanks for taking the time this afternoon.

Thank you, Vijay.

Thank you, Vijay.

Great to be here.

Steve, we've done this for a number of years, and I remember 10 years ago when the business was a lot different, so it's very different now, it's amazing what the journey has been. I -- a lot of focus has been given on recent sort of the macro environment, lab activity, et cetera. But maybe just taking a step back, right, give us a high level, Steve, on your strategic vision for this business, right? And this transformation [ it's ] undergone and how -- and it's been a pretty methodical process for you guys, right? And just levels [ that ] give us a bigger picture on your vision for this business.

Yes. Sure, Vijay. Thanks. Thanks for the chance. We really, really appreciate it. And yes, you did -- we do go back a long way. So I'll -- Vijay, I'll start everybody really quickly. We -- we founded this life sciences business using core technologies from the semiconductor capital equipment business, where we started actually in 2010. We had automation that we could perform in a controlled environment. We move silicon wafers around. And we had cryogenic capability, where we could literally make cold using mechanical means. And these are 2 core technologies that we used and identified an opportunity in the life sciences space to handle cold biological samples. And we can understand that the market was increasing, the biological sample counts and the precious nature of these samples had to be stored cold and the complexity of this led us to the need for automation. And so we use those 2 technologies. We acquired some companies that gave us a market presence, and we reconstructed these automated cold stores using our technologies to build better products, that could satisfy the needs for really high volume and much colder temperatures because we went from chemical compounds to biological samples, and that became a foundation for the business. And as we began to satisfy these handling requirements in life sciences, we understood there were more opportunities to build out products to serve the management of these samples. And ultimately, we had an installed base of about 250 automated cold stores. And we recognize that our customers didn't just store samples in our automated cold stores, but they would put archive samples into bio repositories. And this management of this flow of samples that were precious on-site in automated stores and offsite for archive purposes that sometimes needed to traffic back and forth, gave us an opportunity to explore and managing these workflows of samples for the customers. And we acquired then 3 different bio repository companies to give ourselves the ability to manage samples on-site and offsite for customers. In doing so, we also understood that customers will often reach into a bio repository and perform genomic analysis on some of these samples. And so one of the things that we did was we paid close attention to this for a few years, and we understood that if we had genomics capability, we could also add to the value of the sample on behalf of the customer. And we acquired a world-class company in 2018. Just about 4 years ago now, we acquired GENEWIZ, which is a world-class genomics company doing next-generation sequencing, sanger sequencing and a very strong platform in gene synthesis. And Vijay, what that does is, it gave us an opportunity then to have a core capability that was really for us, the ability to manage samples critical, but not core for our customers. They needed to manage their millions or tens of millions in some instances now we think globally, there are billions of samples that are stored cold that need to be managed and tracked and interrogated from time to time. So we're really comfortable in this space, providing this critical, but not core capability for our customers, but something that's core for us. So we built a franchise to enable ourselves to track and manage these samples on behalf of customers and the build-out continued. So we understood sometimes customers will come to us and say, "I need to retrieve these kinds of samples, but I'm missing some. We acquired a company Trans-Hit Biomarkers that put us into the market of sourcing samples for customers. So rare disease types, very specific things, where we could bring these into this cold chain of condition on behalf of the customers and provide them a tremendous capability from sourcing all the way through interrogation of these samples. As we continue to look at other opportunities, we recognize the advent of cell and gene therapy, which required ultracold temperature. So biological activity stops around minus 136 degree C. So the ability to manage the same cold chain now below minus [ 80 ] and even below minus 136 degree C, enabled us to expand our cold chain capabilities using cryogenics, as the coolant. So using liquid nitrogen and coolant, we made automated cold stores to enable this cold chain now at [ 109 ] -- minus 190 degree C, and it put us in a position now to serve the cell and gene therapy market in addition to the normal biologics or chemical compound market.

That's a helpful perspective context on how the [ businesses last year ]. Just maybe building off of that, if I look at the more recent numbers, right, we had 18 months ago, a pretty bullish Analyst Day and since then, you've had a couple of macro sort of issues [ kind of operate ] whether it was China, perhaps lab activity slowing down, et cetera, and even the rebranding effort. But before we dive into that piece, when I just simplistically look at your guidance, right, Azenta lays out a guidance range and usually you guys come within the guidance range. It seems to be like a pretty realistic guidance you guys lay out. Just talk about the guidance philosophy and what drives that and how is [ intersects ] guidance?

Sure. Lindon, you maybe want to take from here?

Yes. So maybe put it in context, we just finished the year that provided 17% growth is a substantive number. I want to make sure I keep that in the context of reporting. I mean we provided 8% reported revenue, but in an organic 9%. But when you take out the COVID headwinds, which were pretty significant in our consumables business and particularly, ex-COVID, we provided a 17% growth capable company with results of 17%. So now as we go into the guidance that, that you've highlighted, is our guidance going forward, conservative is as strong, I think it's really fair. We're going to start up with high single-digit organic ex-COVID growth. And we're going to move through what we described through the year, through the low double-digits for the year, finishing with teens growth at the end of the year, higher teens. So now when we think about this, recognize that this is ex-COVID. And by the time we get to the second half, by the way, there's no COVID headwinds really to speak of in the compare. So that will start to show up as reported revenue, absent what FX does to us or for us. So I think that's a really representative trend that we have been able to demonstrate. And it's not so far off what we've discussed in the past by the time we get to the end of the year. We had talked about high teens in a model probably 1.5 years ago. In this past year, if you went back over the products business, we showed 13% ex-COVID on an organic basis. The services business was 18% for the year, finished a little bit lower, and that's where we had some gaps in the execution there that we saw in the summer months. But we saw some improvement in the fourth quarter. We have some reason to be encouraged by this. And so I think the track as we move forward through the year, Vijay, those organic growth rates will come. Perhaps importantly, I should highlight that they don't include the acquisitions that we added. So we put some capital to work toward the end of the year. We -- of course, we acquired Barkey that it provides a controlled rate automated thawing device heavily used in cell and gene therapy markets and with a really nice customer profile already and growing. And then more substantive in size is our B Medical acquisition that -- which closed the first days of October. And so that's new in this fiscal year. We anticipate that's going to grow about 25% on a comparative basis overall. On $130 million, we think it adds to our business. Let me highlight on a fiscal year basis, that $130 million had -- and this is information investor has been asking for. So it gives me a good opportunity to leverage this with you, Vijay. We would highlight that this last year, they had about $9 million of COVID and grew about 9% -- I'm sorry, $9 million relative to $27 million the previous year [ and showed ] when you removed that, they were growing about 27%. So with that said, that 25% growth continuing off of a lower COVID over the last 12 months is going to be pretty, I think, consistent performance of what they provided these last 12 months, and we're encouraged by that. The underdeveloped world has more needs, ex-COVID than what people have recognized and COVID actually set it behind in making the progress needed. Combined, we think there's opportunity there in this year to deliver those numbers and then also in the longer term to combine the strength of the 2 businesses.

And Steve, I mean, back to in the earning call -- earnings call, I think you mentioned there was a major rebranding issue as Azenta become standalone. There was some change in your go-to-market strategy, which perhaps impacted results. Is there any way to quantify what the impact was and what happened? You did mentioned it's been fixed. Fixed as in -- does it take time to recoup the momentum? Or are we back at a normalized run rate right now?

Yes. So Vijay, I think it takes us time to come back. But we have some -- it's also a little bit difficult to quantify. But if we look back 1 year ago, the company was really made up of the acquisitions that we've made in each of those -- each of those entities have their own dedicated sales force. When we rebranded as Azenta, we restructured as a company of our size and on the trajectory that we're on should have done. But what we recognized clearly is we lost some of those touch points. We -- to do any dilution for the genomics team, for example, selling to customers caused some disruption there. And Vijay, I think in past quarters, people will remember that we'd announced 300 or 400 new customers that we attached in a quarter, and those were one-on-one conversations, people winning over new business, and we did get away from that. So when we look at the results of some of this restructuring and the changing of responsibilities of people, we lost something there. And so when some of the customer capture dropped off, we could identify it clearly as a direct correlation to some of the changes that we implemented. So putting some of that back in, adding more technical team, so scientists or back selling to scientists, we think, is a good and necessary thing. It's also not something that we repair completely overnight, but we're starting to see the impact of it. So when we get a causal relationship like that, we understand that likely that was the cause of a lot of it, and we're putting that capability back. This is not overnight, but it's working so far.

And if I go back to some of the prior comments made by the team, Steve. There was a point when you noted look, there's been no customer share loss, but customer order sizes are certainly smaller. They're ordering lesser. Was that related to this go-to-market change? Or was that a separate issue?

So Vijay, I think if when -- having had time to dig back in, at the customer level, there may be 100 different people, who purchase from that customer. So when you do the arithmetic, you can get lower on a per customer base. But what it might mean actually is that of the [ 100, 90 ] still purchased and 10 didn't. And so that's the kind of thing. So we're really keen to make sure that, that's something we haven't lost. And I can't tell you that is exactly what it is because it's really tough to tease that out specifically. But the arithmetics all consistent, but this very specific behaviors likely are that we lost some touch points.

I see. Okay. And [ relating ] to that Steve, I think some of your peers have noted slowdown in Europe. China, which seems to be more specific to you guys. But before we get into China, [ sticking to] Europe, have you seen any change in environment either lab activity levels or amount of work that's being done?

Indeed, Europe is probably the slowest of our regions, Vijay. That's where we've got certainly opportunities, but indeed, we've seen the same thing. We've seen slower activity in Europe and China pretty robust. But in Europe without question, we're seeing what others have seen.

And this whole COVID dynamic, Steve, I know you've quantified the revenue contribution, $50 million. That stepped down last year, I think [ 22-ish].

Yes, right. That's right.

How -- I guess one of the questions I got from investors was how do we know that this is a COVID revenue, right? If it's a consumable piece? And could it perhaps have [ then ] used for base business and then now this could be a bigger headwind as we think about the outlook?

Yes. Maybe I'll comment on that. The way we track our COVID revenue internally, it's really -- it's not ledger perfect, but it is sales reviewed customer by customer, order by order. In other words, products and significantly consumable tubes are either very specific -- specifically ordered for COVID testing or an application that we know is going in for COVID. We did some PCR plates, as well for COVID and we knew those applications. And so there's some estimating, but it's largely specific order driven. Of course, on the services side, we provide some vaccine management and that picked up in COVID. We highlighted some significant contracts that came through. When we say that, it ended up being a couple of million orders, sometimes a little higher and sometimes a little bit less and starting to tail off on the vaccine management side. Those are big contributions that our company was able to make in the COVID environment, but we think we had a pretty good handle on it. Now a slight nuance that we factored in, in the early days and we used that [ precedence ], we continued it, and that is we did estimate headwinds in some cases, where we saw lockdowns really holding back significant customer sets in the genomic space, in particular. So we've continued to capture that as a headwind. That's the absence of revenue, which is a little bit different than which I know some peers do. But it's been really modest, call it, $2 million to $4 million a quarter at various times in the track record. By far, the $53 million dropping to $22 million is the capture of the consumables and largest part. And Vijay, I think connected to this question also dovetail to some of the fact points that I highlighted on B Medical because I know some in the industry have had an experience of acquiring and then being surprised by the COVID demands. We spent a fair amount of effort in the diligence of B Medical to understand how much of this might be COVID driven. And again, in 2022, they estimate that their COVID was $9 million in 2021, $27 million on our fiscal year basis, by the way. And that highlights the fact that as much as that came down, they still provided 3% growth on the numbers that they turn in, in our fiscal year, and we didn't own them, so it's a pro forma for us, but it's 3% for the fiscal year. 27% when you pull that out, again, and that dovetails back when we were talking about the guidance. With this, I think what to understand about the B Medical business is this driver of growth. There's a couple of facts that gave -- give us a lot of confidence. What's -- and we're focused on what's driving the growth, not the absence of or the -- and we spend a lot of time on the COVID, but we spent even more time on what's going to drive the growth ex-COVID.

I mean, that's helpful. Sorry, go ahead, Lindon.

Yes. I was just going to highlight that according to WHO, pre-COVID, there were 13 million children globally that had never received a single vaccination and the immunization effort around the world, 13 million during the COVID years expanded to 18 million. So that you didn't make progress, they got held up in the progress. And this is part of the challenge that is happening in Africa, in South America, in Southeast Asia. And this is the market that B Medical helps to address. And so projects have gained steam to try to turn that tide around. And then their metrics overall, they said the immunization rate has gone from 86% down to 81% that they've lost ground according to the WHO and UNICEF. So we see this as a driving force globally for the increase of vaccinations, as we've known it, and the fact that vaccinations are perhaps turning more to mRNA, we think there's also a future here, where our cold chain becomes even more vitally contributing to that environment. So we think this is an exciting space. I -- again, I think the COVID capture is pretty close. It's estimated. It's not ledger perfect, but we think it's pretty close.

That's maybe a related question to that Lindon is because when I look at gross margins prepandemic, right it was, I think, close to 44%, during the pandemic, we went up to 50% rate. So how much of that gross margin expansion came from these COVID revenues versus the base business or mix, that the mix change that dramatically. I think there are some questions here on what is the right go-forward gross margin trajectory?

I think it's an -- it's an astute question on how much was COVID. I'll highlight that there [ were ] 2 dynamics that perhaps you could correlate them with COVID either revenue levels or business effects. One, in the consumables business and products, as we highlighted, the $53 million going to $22 million substantively driven by consumables. It's a little higher than average in our product portfolio [ and ] margin contribution and the drop-through is pretty nice. And so as that revenue went up, that helped the products business. It was not the principal driver of margin enhancement over that time period. We got better margins on our systems as well, but it contributed nicely. And now when it came down, that is a principal factor in the loss of the leverage and absorption on the consumables space. So we do see a headwind in the products business that, that you're right to point out a COVID dynamic. On the services side, a little bit different dynamic. We did not hire very many resources, as we went through 2020 when everybody was locked down and the business drew down so much in the [ world ]. And by the time we came out of 2020 into 2021, the demand really came back robustly and we were in a catch-up in hiring. And a key -- a key must for us an imperative is to make sure that we have resources ahead of demand in each of our labs because if you're not able to turn around and solve the customers' demands, that's -- that gives them a reason to go somewhere else. And so we've always tried to keep cushion in there. We had -- we ran with much less cushion in 2021. We did this catch-up on hiring and that utilization now is more back to a normal. In addition, we suffered the inflationary pressures of labor inflation, which we've been talking about now for 1.5 years, 2 years. But we'll catch-up on some of that with pricing. But the utilization, I think, was back more to normal. Now on a forward looking, we highlighted in this first fiscal quarter, we expect to see a couple of points of improvement from the fourth quarter that we just turned in. I'm not ready to project further after that. We think that we're about 3 or 4 points light of that model that people have referenced in the past that we projected a couple of years ago. And I think this couple of points will make a difference to get us back towards that. We're not ready to declare, [ where ] we'll be back by the end of the year. We'll add color as we move through the year. But I think the more -- the first order leverage point for us is the top line over the operating expense and the EBITDA profile. And I know that's the key metric for us as we go forward. We'll be working on gross margins, for sure, though.

And just maybe one last question here, Lindon, on gross margins. So the 200 basis points of improvement versus Q4 level that would get us to [ close to like ] 46%, that's still [ above ] pre-pandemic, right? So this would be -- this is like a clean 46%. There is no COVID that -- like this is a real underlying gross margins, and this is sustainable, correct, that Q1 number?

That's our expectation. It really is. There's always a bit of mix there, and we're still in a slower environment on the consumables, I think, with some inventory stocking. And so as this mix is back, I think it's sustainable. Yes.

And Steve back over to you on, I know China came up, you called out sort of the ability to ship products out of China has been a major issue. And again, looking at the headlines here last 2 days, there's been some unrest in lockdowns, et cetera, in China. Is that an incremental headwind? And other companies haven't seen this level of disruption from China? Is that just the nature of where your -- where houses are, et cetera? Maybe shed some light on what's happening in China?

Sure. So early in our Q3, which is in April, we had the shutdown of our -- actually of our Suzhou operations, Vijay. So that was pretty significant. Shanghai has shut down. So it had an operational issue that we couldn't use the factory for a few days. And then major regions of customers were shut down. And I think we indicated it was about a $3 million impact, about $1.5 million from our inability to manufacture, about $1.5 million of customer demand that didn't come through. These days, we don't see that same impact. A few things are happening. So unless our -- unless our Suzhou facility was shut down, only specific sites or pockets would be impacted. Occasionally, an employee can't leave their apartment building, but mostly we can make up for that with other employees in the factory or the work from home anyway. So the implications these days have not been so noticeable. That said, it's an uncertain situation. So anything that happened right now, as long as our factory is going, and as long as it's building by building kind of operations, we're going to be in okay [ share ].

And gene synthesis, I think it was down [ 3% ] in full year [indiscernible] and that's your ability to ship products out of China. When can that resolve last year?

Yes. So we've made a lot of progress, Vijay, in terms of getting them out and giving the customers confidence back that we're going to meet their time lines. And so operationally, I think we made great strides. And so we're back in the saddle there. But it's -- again, if you disappointed a customer, you got to win them back a little bit. So -- but those issues -- we resolved them by another means, and I think the operations team did a great job to get that satisfied.

Have you started seeing any progress [ to you ] in terms of regaining customers. I think your competitor was making some noise about ship share gains?

Yes. I think any of our customers will -- they still know who we are. They identify with us. They know what to get from us. So we -- it's not -- these aren't losses for us to go get back. It's mostly getting those contacts, making sure that we're the ones, who are getting their business. So we feel pretty good about that. And yes, I think on any given day, Vijay, each of us take share from somebody else or a [ certain had a ] moment. But we're -- I think without question, the growth rates that we've been accustomed to that we -- not just that our customers, our investors that have been accustomed to, it's really incumbent upon us to get back there. For us to be a market grower with all the capability we have isn't up to our potential or capability nor what we've proved before. And so we want to get back significantly above market growth rate, and we're confident we'll be there.

And just given the guidance here, I would assume it's a slow start and then perhaps back half, maybe that market normalizes to you?

Yes. We're -- for sure, it's going to be a slow start, but the progress is -- the vector is in the right direction. And our goal is to get this back quarter-by-quarter, just keep making improvements. That's our target here. And Vijay, there's nothing -- the opportunity is huge, the capability is better than it's ever been. So there's nothing that should keep us from being a market outgrower again here pretty soon.

And maybe can we touch upon pricing, Steve. There's been some noise in the market about perhaps aggressive pricing, maybe more on the oligo side, perhaps not on gene synthesis side. Have you seen any impact or what's pricing in the industry like?

So on the oligo side, there are competitors, who have really great capability to do high-quality oligo pools at incredibly low cost. We're in the oligo business a little bit, Vijay, but it's mostly to make oligos that we use to manufacture -- that do DNA fragments and those kinds of capabilities for gene synthesis business. So it's a small portion of our business. From a pricing standpoint, it's always relatively competitive. The one thing I will tell you is, we were not aggressive in the price increases in some parts of our business because of the competitive nature of the environment. That's one. And also, we have some long contractual agreements that allow us always to have price increases that we can do periodically and under a certain regulation. And so we'll catch-up to that, but it will take us a little bit of time. So the pricing environment, I won't say, it hurt us particularly, but we also have not exercised that lever for a bunch of reasons, some competitive and some just contractually. But we're a little bit behind on that from the standpoint of making up for the inflationary effects without question.

And switching back to B Medical, Steve. It still is -- I know Lindon gave the numbers, the assumptions around what's driving the 25% growth, but it still feels like that's a last mile distribution, whereas Azenta is more in the central high-volume setting, right, with the high-end freezers, so I think that strategic rationale, people are still struggling. Maybe walk us through that how this transaction came about and why it makes sense for Azenta?

Sure. So Vijay, again, I think the most important part is the business that it is, is a really good business. It pencils out to be a tremendous business, good growth rates, gross margins that match the company at least. And it's in our business, in our cold chain business. Vijay, what we see is in the Western world, everybody is used to go into a clinic or go into a place, where you contribute a biological sample that has a tremendous impact on public health, on rare disease types, those kinds of things. In some of these fast-growing emerging markets, those facilities don't exist. And so it's these B Medical vaccine boxes that are distributed in the field, literally, you mentioned those as the collection sites opportunity. So the clinic goes to the patient, rather the patient goes to the clinic. So the fact that there are sites, where we can use that last mile of vaccine as the first mile for a return of a biological sample, we think provides a tremendous opportunity then to put some Azenta capabilities in country to create a bio repository with samples that are of known quality in a really harsh environment. So I could take a cold box out, administer a vaccine take a blood sample and use that same cold box to return to the solar-powered freezer in the village that will get picked up eventually by the vehicle that delivers the next vaccines to populate bio repository for research on an underrepresented population in countries of tremendous [ sales risks ], who are being held back because they don't have the high-quality bio samples to do that kind of work. So it's not a tomorrow, Vijay, but this is -- there's a tremendous amount of interest and momentum. And I think the thing that caution everybody is when people think about this business, they think about Africa, Africa is the continent, but country by country, in 54 countries, country by country, there are opportunities that are different country by country, more advanced research, more advanced investments in these countries, and we think it's a tremendous opportunity for a really good business in fast-growing emerging markets that, that, frankly, represent 40% of earth's population that we didn't have access to before. So we're keen to use the B Medical footprint, if you will, as local clinics and the means by which we can help countries collect these bio samples, and we know exactly what to do with the bio repository and researchers know just what to do with that. And we're really keen to build up that capability and to accelerate it because there's a tremendous interest to make sure that all of earth's population is represented, as we develop cures.

That's helpful perspective, Steve. I didn't think about this bio repository opportunity. Is that mostly a government initiative -- or do you feel that biopharma customers are expressing interest?

Both, Vijay. So you can imagine the strong interest and the need for a player in between to be a helper here, so.

And Lindon one for you. What was the B Medical's prepandemic revenue base, I think that's one where a lot of people have asked and because, again, back to this COVID, [ where is ] COVID versus base, I think there's some questions for B Medical.

I'm sorry, I want to make sure that you asked on the pre-COVID base.

Yes. Yes. What does fiscal '19 and fiscal '20 revenue base for B Medical. Was it still in the comparable range and this business is growing 20% off that base?

Yes. And sorry, Vijay, I don't have the '19 or '20 numbers to put out. But to be really clear, the '21 and '22 numbers is what I provided a little bit earlier. So I'll be real crystallized [ on this ] $105 million in our fiscal 2022 compared to $102 million in fiscal '21. And when you exclude the COVID, well, that would be 3% growth. When you exclude the COVID revenue, it's $96 million 2022 compared to $75 million and -- in 2021 or 27% growth. And we'll -- I believe that this is pretty reflective of the trajectory they've had over a period of time. When we acquired the business, I'll highlight and we still would hold this out to be our expectations, that we think this is a teens grower, a mid-teens grower. So right now, they're demonstrating capabilities ex-COVID to be up in the [ 20s ], but we think long term that this is a low to mid-teens grower.

And then Steve, capital deployment, we started the conversation with how the company has transformed over the past decade, right? That's why for me, like the $1 billion ASR [ was one ], the size and the pace of the buyback, it did catch my attention. I know markets can be dislocated when it comes to valuations, right? But could the capital perhaps have been used towards other interesting transactions? Just walk us through on the capital allocation policy and the timing of this ASR?

Sure. So Vijay, I remind everybody that 18 months ago, we were going to stand up 2 public companies. We separated Brooks Automation into a semiconductor automation company and a life sciences company. At that time, we were looking to get the balance sheet ready for example, to have a life sciences business with maybe $500 million of cash. And that was going to be pretty adequate for us. And we imagine that's how we launch forward. As things played out, we ultimately sold the automation business. We ended up with $2.5 billion on the balance sheet. So a really healthy number. And it opened our aperture, but it didn't necessarily create more opportunities in the marketplace. And so that's where we gave ourselves a year basically approximately a year to say, look, let's see how much of that cash we can put to use, but we want to make sure that we're advancing our road map strategically that it fits. And if we have uses for it, we'll put the money to work. And if we don't have use for it, we think it belongs to the shareholders and what we'll do is at another time will come forward. And Vijay, we knew B Medical and Barkey for many years. So these are companies we follow. We've been really close to them. And the fact that we were able to get both of those companies was tremendous allowed us to put about $0.5 billion of that to work. But frankly, we didn't have $1 billion or $1.5 billion or $2 billion opportunities that were consistent with what we could do, a lot of things to buy with $2 billion, but nothing that really fit the road map. And at the same time, we have what we believe was pretty dramatically undervalued stock. So that assessment led us to the fact that, look, we have an opportunity to have -- still have $500 million of cash. Some companies that we just brought in, good revenue growth, undervalued shares and an opportunity later if we're responsible stewards of the capital that we have to go back at another time to shareholders if we need to. And if a larger deal comes by that we'd be able to get that done. So all those things conspired to make that just the right thing and the right time for us. And we feel incredibly comfortable about the what the balance sheet looks like, what the neighborhood of the opportunities are. You can imagine when you got that much cash on your balance sheet, you're going to see every opportunity that's out there. So we don't think we're missing any. And we think it's just the right decision for this time. We're still going to be acquisitive, but we'll also -- we need to be smart about what it is that we're adding to the portfolio, which we think is unique and of tremendous value.

And maybe in the last minute or so here, Steve, how should we think about Azenta longer-term, right? I know the LRP model was pulled out. Should we see Azenta, as more of a double-digit top line company, which, by the way, that's at the high end of life science tools, are we being a little aggressive when we look at like teens kind of expectations for the company?

So Vijay, this is -- here's what we think and the trajectory we'll talk about. We store 60 million samples cold today out of opportunity that there are more than 2 billion samples that are stored cold. So we think the opportunity is just in the earliest phase and the momentum's building. In our large automated stores, we have installed capacity to hold about [ 0.5 million ] samples at customer locations. And we continue to see that business gaining momentum as well. So in general, we think this is a trend that's coming our way that companies are going to entrust a supplier to be able to manage those samples for them and to interrogate them. And Vijay, the major difference here is from the conversations we started many years ago, there wasn't a supplier, who was capable to handle tens of millions of samples at the time. So necessarily large biopharma and pharmaceutical companies had to keep their samples for themselves because they didn't have a means they could have single sample notification and tracking at any outsourced supplier. We built that capability and capacity and trust, and we think that momentum is beginning to build. So we think over a 5-years period, that we ought to be able to hit those growth rates. Is the ramp coming right now? Or is it going to be in the second year or third year? It's not easy to say, but we feel the momentum coming and nobody's backsliding. Once somebody makes that decision, they're all in. And so we just feel really confident that we've just begun to penetrate something with a unique world-class capability that's going to be something that -- just something to make sure we stay in front of and those are the investments that we're making right now.

Fantastic. I think with that [indiscernible] the end of time. Steve, Lindon, Vandana and Sara, thanks for the time this afternoon.

Perfect.

All right. Thanks, Vijay. Thanks, everyone.