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

Good afternoon, and welcome to Azenta's Investor Day 2025, I'm Yvonne Perron. I'm the Head of FP&A and Investor Relations at Azenta. Thank you for joining us, whether you're here in person in the room and participate -- and got to participate in the tour this afternoon or you're joining via webcast, we truly appreciate your time, your interest in Azenta's strategic outlook and our long-range growth plans. As many of you saw, firsthand this morning, how we serve our customers. We serve our customers to enable breakthroughs faster. And if you couldn't join us on the tour this morning, that's okay, we're going to bring you along on this journey as we have the discussion this afternoon. Just a few housekeeping items to cover. If you could please take a moment and silence your cell phones, your mobile devices. In addition, today, we will be discussing non-GAAP measures, forward-looking statements. and we make no obligation to update these statements should facts or circumstances change. Please review the 8-K that we filed with the presentation just a bit ago, these materials are also available on the Investor Relations website. In addition, I'll just refer you back to our latest Form 10-K and prior Form 10-Q filings for relevant information. Just stepping through our agenda quickly. Our President and CEO, John Marotta, will walk you through Azenta's strategy. Then you'll hear from Alex Esmon and Ginger Zhou, our key business leaders on the respective business priorities for sample management solutions and for Multiomics GENEWIZ. And then our CEO, Lawrence Lin, will discuss our financial outlook and importantly, our capital allocation strategy. Following John's wrap up, we'll take a short break, and then we'll move into Q&A and we'll probably handle that for about 30 minutes. Thank you. And with that, I am thrilled to turn the presentation over to our President and CEO, John Moratta.

Thank you, Yvonne. Good afternoon, everyone. It's good to be with you. I'm excited to share the future of Azenta and where we're taking the company. On behalf of our 3,000 employees, I want to welcome you to Indianapolis. I hope you enjoyed the tour and the passion that our employees have every day to serve our customers. As I stated, my background, I've spent the last couple of years in private equity, Patient Square Capital. Proud of that, I was at KKR ran an operating company for them called PHC Group, which was Panasonic Healthcare. Before that, I met Lawrence, our CFO at Danaher Corporation in 2016. And then before that, I was in medical devices. So I've spent a lot of my career in pharmaceuticals, medical devices and life sciences. If you leave here with nothing today, I want you to leave with these five things. First, Azenta is in a very unique position. We have a number of opportunities in front of us. The first is top line growth, outperforming the market. The second is margin expansion. And an opportunity around margin expansion that does not rely on that growth. Third, is we have a balance sheet to deploy capital for M&A and other opportunities in front of us. We are a category leader in a very niche set of product lines. You saw some of that in the trade, and we have an opportunity to continue to expand on that with our growth investments. Third, we have an installed base. We have hundreds of stores and vaults in the field. We have thousands of our instruments that handle our samples and help our customers manage their samples. In GENEWIZ, we have 4,000 drop boxes that give our customers an ecosystem to do business with us. We are a one-stop shop at that company. Four, gross margin improvement and operating leverage. You're starting to see free cash flow come into the business in this last year, and you're going to see that advance. Fifth, we're an incredible value. We're north of 10x EBITDA, $12 of our stock price is cash. We're going to generate $250 million of cash in the next couple of years, doubling our EBITDA and exiting 2028 double digit. We're pretty excited. In the small mid-cap market in life sciences tools, there's not another company that has that opportunity. We've got a $6 billion addressable market. We outgrew that last year in a very challenging market. We're going to continue that trend. We have a lot of momentum going into 2026. What's driving that momentum? A lot of that momentum is driven by The Tools revolution. In the last 10 to 15 years, there has been a boom in new tools coming out, serving researchers. The output of that is data. and our world data is samples. Those are customer samples. We help them manage that. That data in those samples is really important, sometimes more important than a gigabyte of data, the physical specimens. So there's $350 billion a year spent in research, pharma, biotech, government, NIH, other government entities in China, as well as Western Europe. We support that. There's a clear trend to outsourcing. 50% of that spend is used for outsourcing today. Our customers in pharma and biotech want to do business with less suppliers that are more strategic. Azenta fits within that. Hopefully, you saw a lot of that today at the bio repository, and that will continue. We talked about the output of data. There's 24 billion samples today that need cold storage or automation. Specifically around automation, about $6 billion of that needs cold. But all of that needs automation. There's a clear trend right now in moving into automation. Lastly, 50% of the FDA therapeutics that come out today need cold storage and/or support from automation. Azenta is at the epicenter of these trends from compounds to samples to therapeutics. Azenta today, we're a $600 million company. Last year, we grew 3%. We-- about 55% of our revenue is reoccurring, we have 14,000 customers globally. We are in the top 20 pharmaceutical and biotech companies in the world and one in three of our employees are either scientists or engineers that help support our customers every day. This is an important point. We'll talk about that later. Today, we do about 60% of our business in the U.S., about 25% in Europe. And you can see on the screen about 10% in China. 55% of our business today taps into pharma and biotech. The other is in academic, medical universities or government. I joined the company in September of last year. Couldn't be more excited about joining the company. I was kind of scratching my head wondering what we have in front of us. What I discovered was we have a great portfolio. That ecosystem is like no other. It's proprietary to us. We have a culture of employees that care. They want to serve our customers. We can do a lot with that. So you have to ask yourself what happened with prior year's performance in an undermanaged asset? What have we done to change that paradigm in the company? What we've done today is, we moved from a functionally aligned organization that was very centralized to a decentralized organization. We did that quickly. We restructured the business. We now have accountable general managers in all of our businesses, clear line of sight in terms of P&Ls that are highly accountable. We have regional leaders commercially. They're solely centered around driving performance in the regions closest to the customer. Operational excellence through the Azenta business system is a way of life. It is no longer a project. We are redirecting resources from G&A and moving those into high-growth areas of the business around R&D, sales and marketing. Criteria around that is high-margin reoccurring revenue. The teams have clear accountability around product road maps that move us in the direction of that. Our product managers are now in front and center in the organization. It's one of the most important roles we have in the company. We are selectively investing in these products today. This year, a lot of the growth investments came in. We're pretty excited about that. You could probably feel some of the energy today in today's tour around a lot of these growth investments, and you saw those today. Lastly, we're tapping into a lot of the pharma and biotech profit pools. We are laser-focused on serving the most sophisticated customers in the world that will have impact on patients globally. Let me get into the business. We have two segments. First, is our sample management solutions. As you saw today, we have our -- in the tour of the advanced bio repository, we have a broad footprint in our bio repositories. Alex is going to go into that. Our automated solutions makes up our stores or vaults and our C&I instruments and consumables. This is how our customers handle their samples today. We help them manage that. Multiomics or GENEWIZ. We have a very unique company here. Today, we read and write. And specifically, we're a one-stop shop for our customers. We have a broad footprint. We can scale that, 14 labs globally. All of this supports R&D throughout the world for the customers that I just shared with you. We have a proprietary digital ecosystem that is in our multiomics business in GENEWIZ and in our SMS business. Our customers enjoy a user experience that is unlike no other. We're making investments here as well. It's important to note that this ecosystem is like no other. There is not another private company or a public company that has an ecosystem to serve our customers today like this. What do I mean by that? And our automated storage and integrated solutions, we have the tools that customers can do this on their own or they can use our off-site by repositories and get the same experience. This is critical. You talk to one of our customers today that reiterated that. The clear trend in R&D is they want their dollars to go further in research. This ecosystem supports that. We mentioned our proprietary LIM system, LIM system and other systems that allow our customers to see in virtually into our facilities or the same experience within theirs. Lastly, we talked about reading and writing of genes. In the center is our employees. This is important. Our employees are experts in the industry that our customers want to tap into to do their work. It's vital that they're able to speak to our employees about how to optimize and do things much more efficiently than they would have access to with other competitors. This ecosystem you saw come to life in our advanced biorepository tour today. Again, this workflow is consistent in pharma, biotech, whether you're in research at a medical center in an academic center. Our product lines support this type of workflow. We're investing behind this today. I want you to take my word for it. I want you to hear from our customers. You heard that today from one of them. It's unsolicited. I get to speak to a lot of customers, and it gives me great pride personally to be able to support technology and innovation in biotech and pharmaceuticals to make society better. They need us and we need them. And it's a great partnership. Now that we talked about what we do as a company, I want to move us into the strategy and where we're going. It should be no surprises here. This is pretty basic, this framework. It's important we get back to the basics in this company. We do the basics well. Those companies that do the basics well win. We'll talk more about how we do that with ABS. I'm going to go into each of these in particular and give you some examples as to how we're driving performance here. Driving operational excellence. It is not a project. This is a way of life in the organization. How do we get better with less? The teams have done a really good job of optimizing the organization. We just gotten started. Reinvesting, taking those profits and investing them back into the business. We're reinvesting in three areas. First is scaling our biorepositories. Second is around regionalization of gene synthesis. Third, technology and automated solutions, continuing to invest in this. And lastly, redeploying our capital from a very disciplined perspective. It's going to be critical to this organization. We're pretty fortunate to have a balance sheet. We'll talk about that as well. What does operational excellence mean? We define it and here's our criteria. The Azenta business system led by Will Simmons, you got to meet Will on today's store. We're lucky to have him. He's done this many times. It's a culture. It's not a set of tools. We think about it in three areas. First, how do you drive lean, manufacturing, back office efficiency you reinvest that back into growth. We reinvest growth in two areas. First is around R&D and product innovation. Again, we talked about clear road maps there. I'm going to give you some examples of each of these as we go on today. Commercial excellence. It begins with the restructuring of our commercial teams in which we now have leaders in each of the regions that wake up every day to serve locally to those organizations. I often say in commercial teams, your strategy is executed where your sales reps show up every day. It's really important. We know where our teams are going and who they're calling on. Let me give you some early successes. Again, Will joined in about 9 months ago, we're early in our operational excellence journey, but we've seen some great wins to date. Some of these KPIs, you see on the screen, these are a few. We measure a lot more than that. These are customer facing. What matters most to a customer, quality. We weren't putting our best foot forward in our stores business. We decreased complaints by 55%, and we're still going. Our on-time delivery for customers, we were able to drive performance of 30% for on-time delivery in this, and we're not done. Reducing costs. We talked about this many times on investor calls, very heavy in G&A. This is an area we've moved fast in certain areas, and we need to move slow in others. We're very thoughtful about this. We decreased our G&A by 3%. We're going to move to 10% reinvest that back into the business. Lastly, working capital. Lawrence is going to talk more about that today. This is an area we've seen improvement in our DSO, we were able to decrease that by 10 days. Let's talk about growth. We're not going to be able to cut our way to growth. We've got to reinvest that. We're doing it in three areas. First is scaling our biorepositories, both geographically and a broader set of products that we're going to be offering our customers in terms of what we store in our biorepositories. You saw some of that today in the advanced power repository tour. Again, we're just getting started here. This regionalizing of gene synthesis, biosecure has been a hangover. We have clear line of sight into bringing synthesis in the United States and Western Europe. Third, continuing to invest around our automated solutions and our technology here. It's critical. Our customers want to continue to do more around automation to drive productivity from an R&D perspective. We're going to continue to support that. What are some examples of a go-to-market optimization? Again, early here. We talked about the restructuring of our go-to-market teams regionally. We're continuing to invest in our direct selling. We invested this year around 25 headcount here, and we're going to continue to do that. We have the right to win in certain markets, and we're laying the groundwork to do that. Again, early. Sales bundling. Our teams are very focused around bundling products in these operating companies, automated solutions with stores and biorepositories. Separately, with our multiomics business with GENEWIZ and bundling solutions there, there's not -- there's not another company that can do that. Downstream marketing. We need to do a better job of communicating with our customers locally. We're investing here. Lastly, price optimization. I know Lawrence will talk about this as well. We have a clear opportunity here to share value with our customers in all of our businesses. Let's talk about capital allocation. It's kind of a hot topic here at Azenta. We're going to be very disciplined. This is going to be a departure from the past. We pulled four levers for capital allocation: one, around productivity and gross margin improvement. Lawrence and I often joke, if companies were traded on gross margin, the world would be a better place. We're going to drive gross margin improvements through capital allocation and through ABS. Organic growth. It's important we reinvest in R&D and sales and marketing. We've just started doing that. Third is around M&A. What we have in our hands is very exciting. We have a robust funnel and we're active with that funnel today. We're very excited about deploying capital here. And lastly, and equally is a share buyback. Today, we authorized a $250 million share buyback, and we're going to use that as a tool in our toolkit today. I want you to walk away today understanding that this management team is an effective group of operators, and we're also prudent and disciplined capital allocators. What's the criteria for M&A? This is an area that we needed to improve on. Company made 15 acquisitions. We didn't put our best foot forward on two of those. We're going to continue to drive performance in this area with a clear set of criteria. That's what you see here. Lawrence will come in later to talk about what is the financial output of these in terms of what we expect to read through on the P&L and more importantly, from a stock performance perspective. Strategy cannot get executed without a capable team. I am humbled to lead Azenta in the next phase of our journey. This team is amazing. You saw a lot of those individuals in the advanced biorepository tour, A lot of them are here today. I'm humbled to be a part of this team. A lot of these individuals are new, but some of them are not. They were buried in the bowels of the organization. And when we restructured, a lot of these individuals were promoted to leadership roles. It's very exciting for me personally to be able to do that. Not only do you have to have an effective management team, you have to have a great Board, and we're fortunate to have an incredible Board for a small and mid-cap company our size. I want to recognize Bill Cornog, is here in the audience. Bill is one of our board members, former KKR partner. Every one of these Board members brings a very unique perspective to the organization. It pushes us as a management team to be the best we can for our customers, for our employees and our shareholders. This is important to the investment in this company. Why would you want to invest in Azenta? As I stated, we have an unmatched product line and ecosystem today to support our customers. Very unique to the organization. This ecosystem is very unique. We have a deep installed base. We can continue to drive recurring revenue and expand our SAM through that. Third, continuing to drive above-market growth. This is an area we're very excited about. It's a story that's top line and bottom line, and more importantly, driving these G&A efficiencies and reinvesting that back into the business. Lastly, we are coming from a place of a very strong foundation. We have a balance sheet like no other, and we're going to put that to work. High return on capital. That's our charge. We're excited about the journey ahead. I want to introduce you to Alex Esmon. Alex is running our SRS business. Alex? Thank you.

Thank you very much, John, and good afternoon, everybody. It's wonderful to see you. Thank you for being here. For those of you that were able to join us for the tours today, I hope that you're carrying a lot of energy from that. The energy that we carry every day as we look at our teams perform and how they're serving our customers. So we're really excited about you being here. As John said, my name is Alex Esmon. I'm the Vice President, General Manager for the Sample Repository Services business. I have been with Azenta for about 3 years now. I came from Thermo Fisher Scientific, where I was for 17 years. Before that, I did my PhD in Molecular Biology at University of Missouri and then I did my postdoctoral work at the University of North Carolina, Chapel Hill. So thank you for being here today. It's wonderful to see you. I get the distinct opportunity today to brag on a great team. You got to meet some of them today. This team is incredible. And it's full of individuals that care immensely about the journey that we're making for our customers. And I'm humbled that I get to represent them and that I get to brag on them today. What they do is incredible. As John said, if there are just a couple of things that I want you to walk away with today from what I'm going to talk to you about. It's really three key things. Number one, we have deep expertise. John talked about this. We have deep expertise in understanding what our customers need and in the value of their assets, sometimes almost even more than they do. Number two, we are integrating our Azenta business system into everything we do. We are finding opportunities to remove waste from our processes, to add more value to our customers and more value internally as well. Number three, that deep expertise that we have enables us to know where to invest our money in smart ways. What are the bets we're going to place and how are we going to go into the future. So with that in mind, I'd like to do a brief overview of our business. Sample Management solutions today is about a $325 million business. We have the privilege of being an end-to-end biologic and therapeutic asset manager for our customers. We want to continue and we will continue to be a leader in this area for our customers. A couple of things from this slide. I'm not going to read all the numbers for you. But if I explain this business very straightforwardly, sample management solutions has two components, as John talked about, our automated solutions business and our biorepository business. Our automated solutions business has over -- we have over 10,000 pieces of instrumentation and/or vaults in the field supporting our customers every day. That's millions of people being supported through our products every day. On the repository side of our business, we have over 80% of our revenue is recurring. We have sticky relationships with customers that last for a long time. And we are embedded in 20 of the 20 top pharma and biotech companies in the world. They trust us every day. And that trust is growing. So we are a very strong partner for our customers. So as I walk now into our markets, John gave a really nice summary of our markets. If we specifically look at our SMS focused markets. We have about a $3 million -- $3 billion, pardon me, addressable market. We have about 11% of that today. There's three key things that I want you to take away. Number one, there's a massive increase happening in the preclinical space in spend. We see it happening from public and private funds. This increase in spend is also having an impact on the number of clinical trials that are happening. More clinical trials means more samples, more samples means more data, more breakthroughs. We are incredibly well positioned to support our customers through these breakthroughs. Third, as John spoke about, our customers are looking at going deeper with partners they trust, we are incredibly well positioned. Again, 20 of the top 20 pharma biotech companies, we have strong relationships with and growing. So we are incredibly well positioned for all of these market tailwinds. Now if my passion hasn't come through yet for this business, then this is the slide where it's really going to come through strong. This is where I'm going to brag on our teams. Why do I believe and why should you believe that we can attain what we're going -- what we say we're going to attain? Number one, I'm going to go trusted reputation. We have over 85 global compliances, licensures and standards that we meet within our business to support our customers' work every day, and that's growing. We're always looking at ways that we can grow that. What do our customers need us to do and who do they need us to be to support them with quality and reliability? Number two, we know what we're doing. We have deep expertise, as John spoke about. No one can do what we do because no one has the depth of knowledge that we have on serving our customers, the way we serve them and how we serve them. From our Chief Scientific Officers through our entire organization, we have a breadth of knowledge and expertise that is unmatched and unrivaled. Number three, we have automation capabilities that are over 3 decades in the making. We have been in the market serving our customers for over 30 years. That's 10 years older than my kids, right? It's incredibly exciting every day to get to be a part of this team and to see how we bring this to bear for our customers. It's easy to make a freezer. It's a little bit harder to make a freezer that goes to minus 80. It's really hard to make a freezer that is at minus 80, but it's also in an automated environment. Doing things that not anyone else can do. Our teams can do that. And they've been doing it, and they will continue to do it and innovate in that area. Number four, data. Data, the backbone of all of these samples is data. The data that's generated, how we manage that data and how we carry that for our customers and manage their assets and the data that goes along with it. This is why we are well positioned. These are our true competitive advantages that we have that are sustainable, serving our customers. So I'm now going to talk to you about how we're going to focus on driving operational excellence. As John teed this up, we're looking at really three pillars. I'm going to talk to you about this first one of driving operational excellence. What are we doing in SMS? We are actively implementing our Azenta business system throughout our structures. You are -- many of you were at the Indi site today. You saw our daily management boards. You saw our Kaizen funnel. You saw our value stream maps. You saw all the nuts and bolts of what it means to make a lean transformation to make this journey. And make no mistake, we are early in this journey. But we've already seen some positive results coming from the journey we're making. And we are highly confident that that's going to continue. This is a cultural change from the top down. Everybody is invested in this. I participate in Kaizen events almost on a monthly basis. We are shoulder to shoulder with our team working through these -- the ABS transformation that we're making. As I was at Thermo for 17 years, I'm familiar with process improvement. It's a part of who I am and it's a part of who our team is. So next, I'm going to talk to you about how we're reinvesting for profitable growth. What are we going to -- how are we going to focus? Well, number one, in our biorepositories. Really two key areas. Number one, we're going to continue to grow our off-site sample storage solutions. What does that mean? That means that we're going to get to 100 million samples stored. And we're going to do it in about 4 years. How are we going to do it? We're going to grow our footprint. We're going to maximize our space. We're going to introduce innovations into the storage space, which allow us to optimize the footprints we have, and we're going to position new footprints globally in new regions. We're incredibly excited about this. Number two, we're going to scale our customer on-site solutions. We have teams that are incredibly well positioned to grow our customer on-site solutions, 3x in the next 3 years. So we're going to manage our customers' assets in our walls, and we're going to manage our customers' assets in their walls. This is a competency that we have that our customers value us for. Now how are we going to invest in our automated solutions side of SMS? Number one, we're going to elevate our digital experience. We are going to enable our products as a true ecosystem of products, which share a user experience that is unified across the products that provides a better experience for our customers, and we're going to introduce e-commerce solutions, which will allow us to serve our customers faster, more effectively. This will be especially impactful for our consumables and instrumentation business. Number two, we're going to evolve our leadership in automation. We're already really good at automation. It makes me smile every day. We're going to get better. And we're going to take our customer to even better places than we take them today. What do I mean by that? Has anybody ever built a LEGO set? Just show hands. Anybody ever played with LEGOs? It's okay. Oh, that's great. My son built a 5,000 piece set like last weekend while I was gone, and it was amazing. What does he have to do if he wants to make that a 5,500 piece set? You just add more LEGOs. You just keep building. Why? Because LEGOs are modular. You just click them together and build and go. It's easy. Our stories need to be easy. Our vaults need to be easy to configure, to scale, to build, install and our customers to use them effectively. And in the future, when they want to slightly change what they need, we can enable that through the modularization of that product. The second thing we're going to do from an automated solution perspective is introducing new products. Not everybody needs a vault that is huge. Some people need something that is just more point of use, smaller, especially in the clinical space. We're going to introduce that into our portfolio. So I'm going to leave you with a customer story that illustrates how we have served customers and will continue to serve customers as SMS. We had a pharma top 5 customer who was in a nonoptimal space with nonoptimal processes that were highly manual, that was introducing massive amounts of risk into their business and not enabling them to come to market fast with the breakthroughs that they needed. They came to us for solutions and what did we do? We brought the entire scope of SMS to bear for that customer. Our BioWorks, our CryoWorks, our services, our product services, our logistics services, our storage services. Every piece is a part of the solution we offer to that customer. And what was the result? The result was they were able to derisk their business, to go faster and to enable true business continuity. We helped them manage their problems. We removed waste from their work. We help them make the journey that we are making as a business. It's incredibly exciting. So, I'm going to go back to my 3 points at the beginning. We have passionate experts who know how to support our customers and we do it with quality and reliability. Number two, embedding the Azenta Business System into SMS and into these businesses is going to remove waste, improve our value and enable us to serve our customers even better. And number three, because we have this knowledge of our customers, it means that we are positioned to make the right strategic decisions about where we're going to make our investment and how we're going to grow. Thank you so much for the opportunity to speak to you today. Thank you for your attention. I now get the opportunity to turn the floor over to Ginger Zhou, who is our Senior Vice President for our Multiomics and GENEWIZ business. Thank you so much.

For those we haven't met with each other. This is Ginger. You're looking at Ginger. I'm President of GENEWIZ. I'm a trained molecular biologists with a PhD degree. And before I join my first industrial job, I did 2 years of research in Yale University. I have a very long tenure with GENEWIZ, 14 years as 2025. So I know the business inside out. Before joining GENEWIZ, with all the research background, I was a GENEWIZ customer for a few years. So we're [ managing ] in with the business, I always carry two lenses, customer lens and the supplier when managing the business. It's really beneficial for me when I think about the business of how to add value to our customers. So I'm very happy to have the opportunity today to share with everybody about my thoughts, my view about in current, very highly dynamic market environment, why GENEWIZ business is resilient, where the growth is coming from and how to achieve those growth. All right. The scope I just mentioned, being summarized by three key messages: the resilience coming from a unique position. GENEWIZ is a category of 1. Category of 1 is uniquely positioned with nearly 3 decades of know-how, multiomics experiences with trusted brand. And also, it's exceptional convenience and speed we built throughout the years really rising very well with our customers. The third, to make it very resilient in this market is diversified portfolio. We are the only one actually in the market specialized on both sequencing and [ senses ] solutions with the breadth of the solutions we offer to our customers. So the second message is the second and third [ conscontinued ] growth. The second message is leveraging the newly built in muscle, Azenta business system, me, as one person, I'm not [ adds ] like 10-year Alex to have 70 years of process improvement, but I have my own experience in last year, and this is very powerful, too. To simplify it, it drives strong execution and the efficiency gain. There are so many opportunities once you knew how to utilize the tools [ to ]. So this -- the second message is leveraging our Azenta business system to drive efficiency gain, which equivalent to profit profitable growth. And the third message is where we invest with other profitable again from the efficiency. Three areas: GENEWIZ [ regionalization ] we truly believe it is one of our key growth drivers for the next few years, and we are going to bring it to U.S. -- expand to U.S. and commercial intensity to have a better reach to our customers, and then enriched portfolio. Enriched portfolio by bringing more cutting-edge technologies to enrich, strengthen our one-stop shop position to our customers. So three key messages. Now let's dive in. Resilience. I'm going to dive each individual resilience. How to -- where the growth is coming from and how to gain the growth. This is where the resilience has starts. It's who we are. nearly 3 decades of reputable brand of scientific expertise and know-how in multiomics field. We are only one in a market specialized with [ reading ] genes and underwriting genes. Reading genes through sequencing technologies and the writing genes [ serosynstatic ] technologies. Our work anchored with our mission. And our mission is accelerate discovery by providing high quality, reliability and innovative solutions to our customers. That's how we anchor our work. In addition, exceptional scale, exceptional scale. I really wish I had the opportunity to host everybody in one of the GENEWIZ side so that you can see the scale. But today, by talking about it, I have to get how from everybody use [ liver ] imagination about the scale. So I use two examples. On the left, on the sequencing side, last year, 2025, we produced 15 petabytes data. What is 15 petabytes data? How big, how small, okay? Imagine, 15 petabytes data, the size equivalent to more than 7 million, 2 hours Netflix movies, more than $7 million. That's the size of data we [ Pam ] power last year. How many of you can finish 7 million movie like in this generation in this life? It's initially impossible. That's the amount of data we pump out. On the right, on the synthesis side, the same. 425 million nucleotide we see since last year. Imagine each nucleotide equivalent to 1 centimeter. We tie them up. The height is reaching month average 480 types. That's how big size and scale we're operating today. While scale matters, scale equivalent to quality, consistency, capability to capability and the capacity, right? So that's how we operate and what we built in the last 26 years? Now let's see what we achieved with what we built in 2025, revenue size is a little bit over than $0.25 billion. And we have a very broad customer base. More than 120,000 end-users from 800 institutions. And on the bottom of the panels, we have diversified portfolio on both sequencing and the Synthesis solutions. And we have very balanced regional reach and market reach to our customers. What's even more powerful of this business and the model is customer stickiness. More than 70% of the revenue are from is from returning customers. This is why it's so resilient, shows so resilient. And you may have a question, why? Why GENEWIZ? Why customers have such big stickiness with GENEWIZ and such high loyalty. Here's why. Trusted brand, exceptional speed and convenience, one-stop shop. I trusted brand. You're looking at me, right? I start to use GW services since my first college like research project. That's years or years back. And I represent many of our customers, and we offer the tools that they can start -- essential tools, they can start with early research. So many of our customers grow with the brand and it's a trusted brand to our customers with 3 decades of reputation and know-how and the exceptional convenience to our customers, okay? This one example, as John mentioned, one example is we carry the largest sample pickup network among our peers in this market. More than 4,000 example pickup locations right outside of research lab. So researcher, every day, they just work, work, and drop the sample right outside the door. And for us, we have very [indiscernible] system to pick the [indiscernible] up every day and distribute it among all of our sites depending on where it makes sense through overseas system and produce data very fast and give customer back data or like product. An exceptional convenience, this is why customers feel okay. so easy to do business with GENEWIZ. The third one, one-stop shop, true one-stop shop. True one-stop shop specialized on both synthesis and the sequencing solutions. If you really look into the market, you cannot find anyone else specialize on both. This is know-how. It has to be know-how and run both scale at both like at this level, okay? A quick data. More than 50% of our customers ordering both synthesis and the sequencing solutions from us. That's the stickiness that stickiness. So I bring it all together, why GENEWIZ business is resilient in any type of market, is a strong foundation in this great business model. Trusted brand exceptional convenience and speed that we built throughout the years, one-stop shop on both sequencing senses and a suite of multiomics solutions and in combination of quality, reliability, good deliverables and run at the scale, and we have a large customer base, but also a very diversified portfolio plus good penetration in each region. All this together to make GENEWIZ a very strong resilient business, model and no one does what we do and how we do it. Category 1, unique position, right? We talk about -- I'm very proud in the last 14 years, so we get better and better in terms of how we are and how we do it. So next, I'm going to move to where the opportunity coming from in this highly dynamic market, right? On the left, three on my left, is $3 billion addressable market we're playing with -- we're playing in and with less than 10% of share. This market, in the past [indiscernible] growing super fast, exceptional fast. So our share is less than 10%, a huge runway ahead of us to gain share. On the right, current dynamics, what I observe driving outsourcing trend. A few examples First, end market, pharma biotech, what the consensus, right? Spending costs on CapEx and capital investment. And operational efficiency, use less to do more. Think where it drives the direction. And the second is researcher and the user. We have 120,000 users, and we are growing. So end user with the cost to be improved for these multiomics technologies, especially the highly sufficed complicated ones, the technologies. The researchers do have better accessibility to those technologies that provide better data insights to them, right? And the third one is AI. The buzz word AI, what does it mean to us? AI, to me, is for better data insights, better insights through analytics. And it reached the bar very high on data quantity and the quality, very important for AI to work. And we are here to generate a big amount of data every day with a good, reliable quality to our customers. So altogether, A lot of opportunities ahead of us for us to continue to grow and gain share from the market. Now I'm going to share with you how, right? This goes back to -- we have a Azenta overall strategy structure and that's like fit very well. Two levers. Operational excellence, operational efficiency to drive profit from leveraging the muscle new, new muscle, Azenta new business system and also invest in top line growth, invest in three areas: GENEWIZ sense regionalization, commercial intensity and a one-stop shop, okay? [ Jensens ] regionalization. [ Genesis ] is a very high profit business for us. And we're very good at the breadth of solution [ antisense ], and we -- our plan is to invest and bring it expanded in United States in North America to be closer to our customers. to have better delivery speed and to meet local demand, okay, in the next few years, and we're under executing. This key initiative today. Second is commercial excellence. Imagine the big market for us to tap in commercial excellence actually like more feet on street, enable us to be better -- to have a better reach to our customers or potential customers. Especially in those under development and under penetrated market or like regions. Digital. Digital, as Alex mentioned, digital is very important to us. digital transformation, e-commerce type of platform, enable our customers to be even more -- to do business even more coming in with us. More seamless like order to cash, order to invoice management workflow, right? So digital transformation. The third key initiative is portfolio expansion. We continue to look into the technologies, build our muscle in terms of bringing more cutting edge complicated or like better multiomics technologies to provide better data insights to our customers, especially in high-growth areas, right? So in summary, clear strategic initiatives where we are going to invest and very strong acquisition, leveraging Azenta business system and drive profit in the journey. Altogether, very confident to continue to drive growth and profitable growth, okay? This is a [indiscernible] I already talked to me, I would say, Ginger, you are so passionate. Why are you, you're so passionate, right? If you talk to my team, we are just like a team of like, very passionate about what we do, very proud about what we do? Why is that? It's not only about knowing how to win, how to grow. It's more about as a signed as background. It's more about real impact to people's life. That excites me every day have a real impact, I can see it. So a quick example, a case study. This is a customer the customer working on childhood disease that lead to blindness. Customer is planning Phase I clinical trial. Encounter the challenges. They have a very long gene, 120 base pair gene, and they need to sequence the , they need to have resolution to understand what other sequences in order to make critical decisions. traditional technology not is just too hard to sequence through. So customer [indiscernible] for help, [indiscernible] know-how and using -- utilizing laundry sequencing technology. We were able to help customers to develop the IC and achieved 99.8% of accuracy on the sequences. And this 100% enable customers to make critical decisions with the resolution visibility on each nucleotide on that 1200 long gene. So we added the IC clinical usage as well. As of today, this Phase I clinical trial is ongoing. And in addition, along the journey, we become naturally become the first provider in the industry to offer this as a commercial provider to like many more customers who have similar needs. So this is why we are so passionate about what we do every day because we can make people's live better being part of the solution for this generation, next-generation generations to come is benefit to society. That's why the team is so engaged and passionate about what we do wrap up my conversation. Business resilience how we grow, where to grow and how we grow, right? Business -- three messages coming back, category of one, uniquely position in the market and driving profitable growth through strong acquisition and efficiency gain, leveraging our entire business system and invest in three key initiatives: three areas. [ Genesis ] regionalization to North America and in Europe and enrich our portfolio by bringing more technologies, leveraging us know-how and commercial intensity commentary intensity. With that overall altogether, I mean, me personally believe and have confidence that [ gene ] continue to be a strong contributor to Azenta's future success on both top line and the profitability. Right. With that, that concludes my conversation. I know everybody cannot wait for listening to the financials. So I welcome CFO, Mr. Lawrence Lin to the stage. Thank you.

Thank you, Ginger. Well, my name is Lawrence Lin, and I'm the Chief Financial Officer at Azenta. I just want to start first by thanking everyone for joining us today. Really great to see everyone's space live here. Maybe just a quick aside on my background. I spent about 20-some years in the public arena, 18 at Danaher. And most recently, I spent about 4 years in private equity with a couple of operating companies owned by KKR. And through those experiences, I got the opportunity really to spend time helping businesses around financial rigor. M&A integration and most importantly, operational efficiency utilizing lean tools. And during my time, and John mentioned this at Danaher, I got the opportunity to meet John. And Don and I are partnered now for almost 10 years, working on growing businesses in a lot of cases, turning around businesses that had good bones, but just needed an injection of leadership and process improvement. And so a little over a year ago, John gave me a call, and he talked to me about kind of what you all heard today, the opportunity at Azenta. And I jumped at the chance. There's no other company like Azenta with the profile financial profile that exists. And so I'm excited to be part of this journey and thrilled to talk to you about the financial future of Azenta. I'm going to spend a few slides here recapping some of what you've heard today because I think it's important, but through my lens, and then we'll talk about the financials. So a couple of key messages I'd like to impart. The foundation of Azenta is strong. And getting stronger. There's momentum building across the organization, and we're leaning into that with a clear strategy and an operational road map. We see significant margin upside here. Now the opportunity doesn't need a recovery from a macroeconomic perspective. We have the levers within our control to control our destiny financially. A big part of that opportunity is tied to expense discipline. And process improvement that will impact favorably gross margin and G&A. This is really just the start of our flywheel here. And last but not least, we're proactively managing the portfolio with a focus on optionality and value accretive capital deployment, all of which is supported by our strong balance sheet and cash flow. So when I joined the organization a little over a year ago, I saw strength, but also opportunities to take this business to the next level. We have a differentiated product portfolio, the depth and breadth of our talent here is extraordinary. Whether that's in our biorepositories, our GENEWIZ labs or in Gene Synthesis. Our customers rely on us every single day. So what we've been doing in the last year. We've been laying the foundation. John mentioned this, but it's worth repeating. We've moved restructure from a corporate to an operating company model, we put general managers in place in all our products. The general managers have a P&L now that provides them visibility, but most importantly, accountability. We've enabled our sales force through putting sales leadership regionally to be closer and meet where the customers are. And lastly, we've changed our compensation structure. We've taken the complexity out. Now everyone is focused on growth, profitability, working capital free cash flow. John mentioned this, but it's worth repeating, we're getting back to basics here, right? So now we're pivoting to growth. And we've identified a couple of areas here on the slide. I'll touch on a couple of. One of them is we're early innings on sales bundling. We've talked about this. We have consumables that have a fairly low attachment rate to our automated vault, existing ones and future ones. We've got opportunities in service. We've got opportunities and gene was for sales funding, significant untapped potential there. From an operational excellence perspective, we've really just touched the tip here of the beginning. We've executed on low-lying fruit. So there's significant runway ahead. So the upside is this. While this work isn't easy, it's highly achievable. I am confident these initiatives will deliver meaningful improvement in our financial performance. So let's talk about the top line. John touched on the three growth vectors, Ginger and Alex add in more detail. But again, it's worth recapping here. First, we're going to scale our biorepositories, our advanced biorepositories. We're going to add capacity to our existing biorepositories. We're going to expand geographically. We're going to increase our automation. And we're going to provide more options for on-site and off-site storage for our customers. Additionally, we're investing in future technology here. To really round out our portfolio. Alex talked about the standard vaults that will be modular. Why is that important? Because it's going to create quality and speed. Additionally, we're going to round out our portfolio. Alex talked about the smaller vaults that we're going to offer. These two items will really start to read through in the back end of our long-range plan, but we're investing now. Secondly, Ginger talked about Gene Synthesis. We're regionalizing our Gene Synthesis business. What does that mean? We're putting U.S. production in place. That will provide speed of delivery and we will be closer to our customer. On top of that, we are adding feet on the street that specialize solely on gene synthesis. That's important, and we're doing that now. And finally, we're pursuing technologies on automation to solve customer pain points and to provide quality, delivery and cost to our customers' cost savings. These three growth vectors are not only compelling, but also highly actionable, and we expect them to allow us to grow above market. So I'm super excited about our growth opportunities here, but I'm equally thrilled about the margin opportunity here. It's clear we have significant upside potential here to get us to an EBITDA percentage that is more competitive with our life science peers. As we've discussed in length, we're optimizing our G&A. Early innings, we're trying to drive better operating leverage. So when I look at G&A, there's many opportunities for improvement. So we're going to leverage the Azenta business system. And let's just double click into that. How is that going to happen? We're going to evaluate all the processes from finance, HR, legal. We're going to leverage technology where possible, and we're also going to reduce are dependence on outside services. lots of opportunity, and we're in early innings. Secondly, we talked a bit about our price optimization strategy. John touched on it. We talked about it a few weeks ago at our earnings call. We started with SRS and C&I. And John mentioned this, we've got room to run here. We'll be evaluating all our other businesses throughout the long-range plan. Where I'm super excited about is, again, the ABS tools on how we're going to be able to drive operational efficiency and gross margin enhancements across our manufacturing, our labs and our back office. We started what we call Lighthouse Sites earlier in the year. And so we picked a couple of sites in SMS to really start deploying those lean tools. And John showed some of the examples of our early wins. I think of it from my lens, what is the business system. The lean tools are really just driving common sense rigorously, reducing or removing complexity and embracing simplicity. The power, if you've never had a chance to sit down in a workshop or a Kaizen, it's extraordinary to see the power of a cross-functional team get together to solve a problem in 3 to 5 days. We have some untapped talent potential knowledge that we're now embracing with our employees. The individuals at the biorepositories, the labs, the back office, they know what's the opportunities, we're just tapping into that potential. And finally, we're expanding again our automation solutions to enhance our productivity, whether our customers utilize our automated vaults in their facilities or they outsource to our advanced biorepositories, we see improvement to delivery and costs both for the customer, but for also Azenta. Similar to the revenue drivers, these opportunities are not only actionable, but well within our control, and I'm confident that these initiatives will deliver meaningful improvement in our financial performance. So as profitability has improved, so has our free cash flow. The team has been laser-focused on lowering costs, taking out the low-lying fruit. And similarly, around working capital, just tapping some of the easy wins here already. You saw that witness from the slide around DSO down 10 days. And also, we're remaining -- from a CapEx perspective, highly diligent. Actions will continue going forward. So look, we have $546 million in cash, and we expect to generate between $200 million and $250 million in cash through cumulatively through the long-range plan. And we have really four levers at our disposal. First is driving productivity and gross margin. That's really the beginning of our flywheel, right? Then it's growth. You see it today. We're investing in our SRS Gene Synthesis business. In M&A, we are closely aligning to our strategic filters that John showed, and then natural criteria, they'll show you in the next slide. And then around the share repurchase today, you saw that we authorized $250 million share repurchase program. We've been actively engaging the Board on capital allocation priorities. And authorizing $250 million was the right thing to do. Now more to come here around when we initiate those purchases but certainly it's something we evaluate all the time. So let me double-click into the M&A criteria. John already spoke about our financial filters. Let me talk a bit about our financial filters. I want to highlight again that we're going to be incredibly diligent about our financial criteria. We want our M&A targets to check as many of these boxes as possible. While each deal will have its unique financial profile, our goal is to pursue acquisitions that have a strong organic growth potential in their own right, which can be further enhanced by revenue synergies with Azenta. Secondly, we want these acquisitions to have to be margin accretive within a short period of time or offer clear margin potential in the future. From an ROIC perspective, we want to see double-digit ROIC within 3 to 5 years, as well as cash accretion. So generally, again, our focus is on tuck-in acquisitions here, and we believe we have a strong pipeline of potential opportunities that meet both our strategic and financial filters. So let's get to the numbers. We talked a bit about our 2026 guidance a few weeks ago and earnings. And we discuss the underlying assumptions for those targets. I won't be repeating them today at this time, except to note that there has been no change to our expectations of our targets for 2026. Now on to the long-range plan. Today, you've heard about the strategy and the bright future ahead. Let me round this out with financial prospects for the company. From a revenue perspective, we expect to generate revenue between $700 million to $750 million at the end of 2028 organically. This will provide a compound average growth rate of between 6% and 8%. Nearly 2/3 of that revenue is expected to be reoccurring in nature. This will really provide us the ability for stability and resilience as we tap the profit pools of biotech and pharma. Third, we expect to at least double EBITDA to the range of $120 million to $150 million reflecting a healthy 18% to 20% EBITDA margin. And lastly, we talked about, we expect to generate between $200 million to $250 million in free cash flow, which will provide us significant optionality for value-accretive deployment. So the bottom line is this. We believe these targets represent a very balanced, but substantial source of value creation for our shareholders, and we are committed to delivering on this plan. So let's talk about the components of our revenue growth. We're making investments low. And we're confident on delivering on this plan. What you can see here is we have multiple levers that we're pulling for growth. We're aiming for singles and doubles here. Certainly, there's a ramp towards 2028 as we're just really setting the stage now on our new product investment and ramping up the initiatives in SRS and Gene Synthesis. So let me put a finer point on this by walking you through the years here. Let's go backwards. I talked about this a bit, but again, worth repeating. Fiscal year 2025, we set the stage. We put GMs in place. They're now accountable. We have product managers. We've empowered our product managers to drive the business, and we've regionalized the sales team. As you walk into now, fiscal 2026, we've added feet on the street for our initiatives, and we are forward investing in R&D. On top of that, we've optimized price. The feet on the street and the price optimization, you'll see start to bear fruit in the second half of fiscal 2026. When you get to fiscal 2027, you'll see the full ramp of that investment that we put in place. On top of that, you'll start seeing the new products start to launch at the back end of fiscal 2027. This culminates in fiscal year 2028, where we start seeing the full ramp during the 3-year performance period of all the initiatives that we've talked about today. Again, we believe these growth targets represent a balance but substantial source of creation for our shareholders, value creation for our shareholders. So as I mentioned earlier, we're not just focused on growth. That's super important. We're focused on profitable growth. First and most importantly, again, Azenta is going to at least double EBITDA over the LRP. We're targeting to move our gross margins above 50% during this period. When we look at this, how are we doing this? Through volume mix, recurring revenue, our recurring revenue is traditionally higher margins than our fleet average. When you look at productivity, our business system is going to enable us to yield efficiencies in our biorepositories, our labs, our manufacturing locations. When you double-click into G&A and procurement, let's talk about procurement for a second. In direct materials, we're early days here in direct materials. We've just revamped our procurement team to focus on key opportunities. We're streamlining our supply chain. We're standardizing purchases where possible. From an indirect spend optimization, Again, we're early innings. We have significant opportunities in standardizing purchases, G&A and in gross margins and also really looking at outside services. We've got a whole lineup of workshops through fiscal 2026 just to look at indirect spend. So overall, you can see from the slide here, at the upper end of what we're looking at for adjusted EBITDA, our assumption is to prove adjusted EBITDA by 300 basis points annually with 2/3 of that coming from gross margin, and 1/3 coming from OpEx. The OpEx is slightly lower because we are continuing to flywheel to reinvest in growth. And lastly, I'll wrap up where I started. By reiterating that, we're truly building from a foundation of strength. And secondly, Azenta is poised to drive meaningful profitability even as we continue to reinvest for growth. And while we continue to do the first two, we have significant potential to deploy capital effectively for the shareholders. So we're really excited about the future. We're committed to exceptional performance strategically, operationally and financially. Once again, thank you for your time today and your interest in Azenta. And I hope you join us for our journey. And with that, I'll turn the floor back to John.

Excellent. Thank you, Lawrence. Pretty excited, as you can see. We've got a bright future ahead of us. Let me reiterate why we think this is a good investment. First, is around our niche product categories and proprietary ecosystem that nobody has in life sciences tools and diagnostics, whether that is in the public market or private markets. Second is around our ability to scale -- continue to scale from our installed base. As Alex stated, we have thousands of instruments in the field today. We have a lot of opportunities around bundling and continue to expand on that installed base. Third is around above-market growth, continuing to drive outperformance to the market. It's been a challenging market in life sciences, but we're outperforming, and we're going to continue that momentum. Around margin expansion opportunity, it's pretty rare in the small mid-cap market that you have top line growth opportunities, margin expansion opportunities and capital allocation opportunities. We have all three in our hands today. We're very excited about that. We are coming from a place of financial strength. We have a balance sheet, we have a management team to execute on high returns on our invested capital. I'll leave you with this. You've got a management team that cares and it's going to be focused on execution and driving performance for our customers, for our employees and our shareholders. You also have a group of 3,000 employees that care every single day. And a lot of that you saw today. That's a big reason to invest in Azenta. With that, I want to hand the mic over to Yvonne. She's going to give us some instructions on what's next. Yvonne?

Great. Thank you so much. Well, I hope you all are as excited as I am after hearing that. Thank you to the management team for sharing a lot of the growth opportunities as well as margin opportunities that lay ahead. So we'll take a 10-minute break. Let me just check watch. Let's try to be back here at 2:35, if that works. And then we'll start the Q&A. And I'm sure that's the most interesting part of what you all are looking forward to. So thank you so much. [Break]

We're super excited to get started with our Q&A session. So we have our panel back up on the stage. So for those in the room, we have folks stationed over here to the side. So if you have a question, please just raise your hand. And they'll bring the mic to you. [Operator Instructions] So with that, why don't we just get started?

David Saxon from Needham. Can you hear me? Yes. Great. Well, thanks so much for hosting today. It's been super interesting and hopeful. So my first question is just around kind of the two business units as they stand today. I mean, the company has tried in the past to cross-sell across the two businesses. So what's your view on that potential over the LRP? I guess like -- do you have the commercial model ready today to execute that? Or is that kind of stage 2 or 3?

Thanks for the question. The way I would think about the two businesses is more around we're tapping into the outsourcing trends and less about the synergies between the two businesses. I think it's been a distraction for the company. in the past. And I think the way we're viewing it today is really we're focused on driving performance within those businesses. There's more potential in driving focus around commercial bundling within those than there is on cross-selling. Now, I don't want to minimize that. Our -- in our biorepositories today, we send about 1% to 2% over from our bio repositories into multiomics today. If you look at the trends around that, Europe is in -- they rely more on their bio repositories for some of the testing than the U.S. does. Maybe it gets there in 3 to 5 years, but it's not an area of focus for us in particular. It is not a -- it's not contemplated as part of the long-range plan either, David.

Great. And then just on capital allocation, maybe for Lawrence. First, just a quick update on Medical, if you could? And then the initiatives around expanding biorepositories and the footprint there, like what amount of CapEx does that require? I think you're around like 6% of sales in '25, like where does that go over the LRP? And like how far does that get you in, I guess, expand expansion?

Yes. I'll take the CapEx question, and then I'll pass it to John on B Medical. For CapEx, you're right, David. We have about 6% to 7% right now contemplated in our fiscal 2026 model. And that's similar profile to fiscal 2025. What I would expect to see in the fiscal 2027 to 2028 is that will moderate closer to about, I'll call it, 3% to 4%.

B Medical, we're on target by the end of the year.

Mac Etoch from Stephens. I'll reiterate David's comments on the quality of the presentation here today. Just a follow-up on the SRS business. Can you just remind us of the number of samples you currently have in storage? And what portion of those would be considered active? And then can you just give us or refresh us a little bit about the economics around storage versus transaction?

Sure. 60 million samples today. The activity of those are you referring to how many times we retrieve those?

Yes. Like what portion of samples are retrieved frequently versus the...

It depends on the life of the sample. So if it's newer, meaning years 1 through 3, we're very active in retrieving those typically is what the data says. All right. Economics of that is very attractive, as you know, with 80% recurring. Our contract life is 7 to 25 years. It's very attractive. We call it kind of the eighth wonder of the world in our business right now. We're going to continue to invest in that. But that's the way I would look at it. If you think about this, you got to think about biorepositories from archival versus high throughput and retrieval. We have all of those capabilities in our hand today, and we're going to look to optimize both segments of that.

Appreciate the color there. And just looking at the presentation, I think you highlighted 100 million samples by 2030 versus 60 million a day. So I think that would suggest low double-digit growth for that business. versus what I think was probably mid-single-digit growth over the last couple of years. Alex, I appreciate your comments and all the growth opportunities in front of you. But can you maybe dive into how you plan on reaccelerating that growth moving forward?

Sure. Do you want to talk about organic potential and I can speak too.

Yes, absolutely. So thank you for the question and remembering the numbers. That's great. we're really excited about our growth potential here. What we're looking at is the diversification of what we store and how efficiently we store it within our space, right? And so it's also deepening those relationships that we have with those existing customers on their new studies, on their new trials. So going deeper, as we talked about kind of with the outsourcing trends that we're seeing and with the market tailwinds that we're seeing, those relationships that we have are going to go deeper and become even wider, right? And so the capability and the ability that we have to tap into more sample pools and more opportunity is just increasing with those relationships that we have. And it's going to allow us to pull in more faster.

So maybe one thing to add Mac here. Certainly, when you do the math on the volume, that may not contemplate the price. So we are going to grow at a higher pace than what you just mentioned.

Right now, Mac, from a -- we talked about organic opportunities. We also look at some inorganic opportunities we have in hand, specifically in our biorepositories today.

Matt Stanton from Jefferies. Maybe just to zoom in on two of the buckets on the revenue bridge. First, the growth initiatives you talked about, biorepositories, digital gene synthesis. Can you just talk about your confidence in line of sight into some of these bigger areas of that bucket and then any investments needed? And then also on new product introductions, it sounds like that's more of a late '27, '28 story. But with the focus on C&I and multiomics. Just talk about some of the items you're most excited about and what you and the team are doing differently today versus prior around R&D?

Sure. Let me talk about our road maps, specifically in C&I in stores and AutoCryo. Our investments in R&D have been anemic the last few years. We've now started to aggressively invest in R&D. So new product development, of course, Lawrence talked about that is going to be coming later on. C&I specifically, it's around workflow optimization and handling samples and increasing throughput for our customers. So you saw some of the instrumentation today in the biorepositories. We're coming out with next gen of that. Again, very anemic in terms of our investments in the past, the teams are really excited about those investments. They're in now. Stores in cryo, Automated Cryogenic and automated vaults and stores is really hard. So we've got decades of capabilities there, and we're investing behind this pretty rapidly. One of the things you saw is there's -- why are we doing that? The amount of data that's coming out in research is physical in nature because companies are wrestling with the fact that do they want to store gigabytes of data? Do they want to store samples? Because they don't even know what's in a lot of those samples today. And so what we see is the need to continue to invest behind this. We're doing that in modular stores, smaller stores, a lot of those auto crowd units, we're really excited about continuing to invest in there. We haven't invested in a very long time from that perspective, we're the market leader. And then C&I and around some of the tubes. So if you have to think about this, if you've ever been in an Amazon warehouse. Our stores and vaults are like warehouses. So it's warehouse management systems for our customers. Standardizing the boxes or the units in those, meaning the vessels, the samples is really important. We're investing behind consumables as well. I would expect all of that, as well as on GENEWIZ, there's a lot of other services we invest behind in terms of being a one-stop shop because our customers want to do business with one partner at a fair price, and that's what they're continuing to do there. In SRS, it's expanding those product capabilities in which we offer different solutions for. In SRS, we do have other services that you saw in the lab today with transportation and those sorts of things, we're investing behind that as well. So I hope that gives you a good sense of where we're investing.

Matt, maybe just to add to one of the things that's unique about Azenta, we have the capacity to not only invest, but also generate almost 300 basis points of adjusted EBITDA. And so certainly, we're -- we have the ability to utilize get the productivity, as well as really optimize G&A. So I think that's important.

And then on the regionalization of gene synthesis, maybe just a bit more color in terms of investment required here timing and cadence is that in-flight now? And then I guess just a little more on how that helps you. It feels like you have a pretty good line of sight and confidence around meeting local demand, improving turnaround times. But just talk a little bit more around the the initiatives there? And then Lawrence, maybe if you could just talk to about being able to protect the margin structure as you move capacity into the U.S. and into Europe, as well on Gene Synthesis?

So Gene Synthesis specifically is really around automating that complex segment. About 80% of that can be automated today. That's in our hands today. And the 20% you need some know-how for. So that's really important in terms of how we're investing behind synthesis. We're really excited about this. We do very well in our synthesis business. It's a very high margin for us. We're very profitable, and we're going to continue to invest behind that.

Yes. Part of that CapEx that we talked about is exactly what John talked about, right, is being able to automate a lot of the processes as we regionalize into the U.S. The other portion that I may not have touched on, and it's important is we spent a lot of time on the business system Kaizens and workshops and SMS in fiscal 2025. We are just starting that at the labs. So the combination of automation and optimization of the labs is still something that's still to come.

This is Mackenzie here for Vijay Kumar, Evercore ISI. First question, I know you talked a little bit about pricing and you've already implemented a few strategies. I was just wondering, could you talk about over the LRP, what areas are you targeting first? And any like quantitative color or any sort of details on how you might approach customers or different segments with your strategies?

Yes, certainly. Nice to meet you, Mackenzie. For fiscal 2026, we talked about C&I and SRS. And as you all know and John talked about, particularly in SRS, we have contracts between 7 and 25 years. Now what's important here is a lot of that contract, we really did not optimize or take advantage of those contracts, meaning they have pricing built in. So certainly, now with some of the process improvements we're taking, there's certainly opportunities there. Additionally, as you look at C&I, there's certainly those options as well. we instituted a price increase in October in our consumables and instruments. As I mentioned during kind of like the prepared slides, we are certainly looking at all the other businesses and looking at what is possible. But again, to John's point, this is a shared equity around what is one equal to the customer, but also advantageous to Azenta.

That's helpful. And second question, I think Lawrence, you also mentioned that you plan to at least double EBITDA. I was just wondering like are there any levers to the upside? And how are you thinking about maybe bracketing what that could look like by the end of your LRP?

Yes, certainly. And I touched briefly on it. But I think if I would look back and let's take fiscal 2026 as an example, right? 2/3 of that opportunity in margin expansion is going to come from our gross margin. And that's with ABS, that's through just direct material, just again, basic blocking and tackling. We're not -- we're not doing anything sophisticated here, but just focusing, right? And then 1/3 is going to be around optimization of G&A. And that similar profile should go through the balance of the LRP. Now I think, like I said earlier, the macroeconomics, anything outside all this opportunity around margin is well within our control.

Could I squeeze in one quick other question. On the multiomics, I know you said you're also planning to expand into like new modalities. Could you talk a little bit more about where you plan to expand as far as like proteomic single cell is somewhere you're focused from like an M&A perspective? And is this customer driven? Or is this really focused on like internal research you guys have been doing?

So I'll let Ginger talk about that, but let me tee it up. So it's a bit of both. I mean it's always based on customer demand, of course. Right now, we have all of that in our hands from an organic perspective.

Yes, the area we're going to invest and spend. As you mentioned, the proteomics leg is very excited like a market area that customers -- customer like has more demand than before and you can provide better data than before data insights for customers to do their research. Proteomics, single cell space show and cell gene therapy like market or product engineering. These are the areas -- these are the areas we're going to invest and increase our per volume to provide better data insights for our customers.

Matt Parisi from KeyBanc Capital Markets. Regarding the scaling of biorepositories, the biorepositories, you would be targeting more regional one-off sites or there be more grouping -- a smaller grouping portfolio buyer postrider you'd be like looking into?

Right now, our lens -- are you speaking organically or inorganically?

Inorganically.

Right now, we are really -- we take our view of expansion in biorepositories is with kind of the following lens. First is around this hub and spelt, okay? As you know, we've got a big hub here in Indianapolis. We think there's a big opportunity to expand that into the West Coast and have a hub out on the West Coast. We also think there's opportunities in Europe as well. We've got a facility in Germany today, and we're going to continue to expand that in Europe. It's a bit of both in all candor. So that's the way I would think about it.

Sure. Brendan Smith from TD Cowen. Maybe just one high level on M&A. I appreciate all the color for kind of the criteria you're looking for. Do you have kind of a goal or expected cadence over the next few years? Is this one or two deals a year or something like that? Or is it really more opportunistic when it comes to timing of all this? And maybe I'll take my next one for Ginger after.

We struggled with sharing our thoughts on this because we didn't really want to box ourselves in for obvious reasons. Because I think the organization has got -- we've got to get our legs underneath us from an M&A perspective, and we've got to get credibility back from a market perspective here. And so, one of the reasons we're not sharing kind of what that cadence looks like is we don't want to be forced into capital deployment. We want to be very thoughtful about how we're deploying capital in the four areas that we spoke of directly, Brendan.

Maybe, Brendan, just to touch on the size and scope. Look, we've got 60 possible targets in our pipeline, and it's significant. And certainly, they're all in different stages. But to John's point, right, like we will be opportunistic where we can. But certainly, there is a robust pipeline.

If I can squeeze another one in just on the Multiomics segment. So you guys. I appreciate the market breakdown color. I think you had 23% Gene Synthesis versus 77% sequencing. And then actually within Synthesis, I think it's a 9% blended market share in the -- excuse me, with sequencing together. So, I guess the first question is really, is that 23.77 so this is seeing? Is that kind of your sweet spot? Is that where you think that's optimal for you guys to be operating at? Do you want to go up or down in either segment? And then do you have any kind of additional clarity on that, is that blended 9% between the two, do you have a sense of where you fall in sequencing market share versus in synthesis market share and kind of the same question, if that makes sense?

Let me give you some color around how we think about it, and then I can hand it over to Ginger in terms of how we're expanding in those areas. So we want to continue to grow our synthesis business. It's highly profitable for us. It is biological manufacturing, and we want to continue that. And we're pretty excited about the investments we're making around that specifically. The uniqueness of multiomics is the fact that we do have sequencing. And so we do have Sanger, Sanger is never going to go away. We spent a lot of time with our customers, and it is declining, yes, but it's not going to go away because there is a need for it in the market. We're going to continue to invest in sequencing. Our customers want to see more of that and offering other ancillary services around it. That gives us the ability to continue to invest in synthesis. I would expect that to grow over the coming years.

Yes. Just a couple of things to add. [indiscernible] of gene synthesis right now versus sequencing, which is like 2/3 or sets of the total pie. To me, possible growth. I cannot predict like what percentage or in the letter, but you hear our excitement about expanding our synthesis because it's a highly profitable business for us. We have a lot of opportunities in the United States. We hear from customers I got a lot of customer excitement about regionalization. They have approach to -- they have accessibility to synthesis locally. So I'm really looking forward to growth, but I couldn't project the percentage because sequencing [indiscernible] as well. 90% breakdown, but both. I don't have the exact breakdown, but both is just like in this market, as I mentioned, both will grow and our sequencing over right now.

I'll take one from the webcast. So John, this one's for you, please. Could you provide some additional color on the types of opportunities that make the most sense in this current business environment in terms of M&A?

Sure. Thank you for the question. And there's really three areas in which we see a lot of opportunity. And first is around biorepositories and scaling our biorepositories. We've talked about that but we have in our hands today is organic and inorganic. We're very excited about our inorganic opportunities there. Second is around really in synthesis. There is some opportunities in our hand around synthesis from a technology perspective and from a business perspective. We're also pretty excited about those. We have both. We sit on both sides of that, organic investments in inorganic. The third one is around our automated stores. And a lot -- I would say the lion's share of that specifically is organic. Inorganically, the way we view on the automated solutions business is there are some instruments out there and some consumables that we're pretty excited about from an inorganic perspective. It's less so on the store side and more so in the C&I, high-margin products, high returns. Our lens there is continue to invest in recurring revenue, high margin and high returns in those areas.

Great. Thank you, John. Any questions in the room? Other additional questions that you'd like to?

Matt Parisi again. With the shift in sequencing from Sanger to NGS, what would be the ideal mix that Azenta is targeting? And that would be like mix of Sanger to NGS kind of like -- so leaking back into like a margin for the multiomic business within the sequencing.

Let us come back to you specifically on what that breakdown looks like, but let me just speak at a high level. We're now kind of viewing -- we viewed Sanger as kind of this separate part of our business. I would think about we're putting Sanger into sequencing because plasma Easy is in that right now. Our Plasma easy business has doubled, and it's growing rapidly, eclipse the decline of Sanger. And so it's been really important for us to take -- really, we pushed the teams pretty hard and said, "Let's stop making it. This is no longer a hobby. Let's build a business around this. And so we've done that specifically in plasma easy. That's the way I would look at it from a high level. In terms of the numbers, let us come back to you on that. We'll do that one on one. Okay.

We're getting close to time. Any final questions in the room? David?

Zack [ Rosen ] from Stifel Bryant. I was just curious if you could give more of a ballpark of the opportunity that you couldn't address like in the U.S. business for synthesis before you regionalize is it a $20 million opportunity that customers were like, hey, unless you're here, I won't do it, just so I can understand why you're so excited about that as a growth driver.

Yes. I think a lot of this is underpinned by a lot of the geopolitical dynamics right now. And we're not quantifying it publicly. But I can tell you, we view the opportunity as substantial, which is why we're investing behind it. If you think about the other players in synthesis today, we're very profitable, and we've protected that margin. We've protected that margin because we're -- we have the ability to synthesize in highly complex sequences as well as simple. And so we're a lower-volume, higher-margin business. And we want to continue to invest behind that. I think exactly the opportunity is pretty substantial for us. I think the Board sees it that way. The management team sees it that way, and we're pretty excited around investing behind it.

Great. So I think that's going to wrap up the Q&A session. I want to thank everybody for putting questions out there. But John, maybe pass it back to you for some final thoughts?

Sure. We're thrilled you're here and you're interested in Azenta. I hope that we were able to clarify the opportunity with the company, our product portfolio, and more importantly, a management team that's going to execute against that. Thank you again for your time. We really appreciate it.