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spk03: Greetings. Welcome to Innotive Inc's fourth quarter fiscal 2021 financial results conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note, this conference is being recorded. I will now turn the conference over to your host, Devin Sullivan, Senior Vice President of the Equity Group. You may begin.
spk05: Thank you, Kyle, and good afternoon, everyone. Innative Inc.' 's fourth quarter fiscal 2021 financial results were released today after the market closed. A copy of the earnings release can be found in the investor section of the company's website at innativeco.com. As a matter of formality, I need to remind you that some of the statements that management will make on this call are considered forward-looking statements, including statements about the company's future operating and financial results and plans. Such statements are subject to risks and uncertainties that could cause actual performance or achievements to be materially different from those projected. Any such statements represent management's expectations as of today's date. You should not place undue reliance on these forward-looking statements, and the company does not undertake any obligation to update or revise forward-looking statements, whether as a result of new information, future events, or otherwise. Please refer to the company's SEC filings for further guidance on this matter. Management will also discuss certain non-GAAP financial measures in an effort to provide additional information for investors. The definition of these non-GAAP measures and reconciliation to the most comparable GAAP measures is included in the company's financial results press release and corresponding Form 8K. Joining us from the company this afternoon are Bob Leisure, President and Chief Executive Officer of Beth Taylor, Chief Financial Officer, and John Segarch, the Chief Strategy Officer. Bob will begin with some opening remarks, after which Beth will present a summary of the company's financial results. Then we will open the call for questions. Now it is my pleasure to turn the call over to Bob Leisure. Bob, please go ahead.
spk06: All right. Thank you, Devin. Good afternoon, everyone, and thank you for joining us today. Sorry we're a little delayed this month. Fiscal 2021 was really a transformational year for Innotube, reflecting our success. We expanded the existing operations and services, starting up new operations and services, acquiring strategic assets, raising capital, building really a very strong foundation for our future. And I'm very proud of our team and the results this quarter and this year. By broadening our suite of solutions and adding new talent to our team and achieving greater scale, We created an organization that is more comprehensively supports our clients' discovery and development objectives. Inits' expanded platform also presents us with significant opportunities to cross-sell solutions, drive revenue growth, and deliver improved operating margins. Inits have rapidly transformed this past year, but one constant that has played a key role in our success is our client service-oriented culture. I commend our growing team for the dedication to our customers looking to constantly improve and for making the appropriate short-term decisions to ensure that we thrive over the long run. To recap some of this year's notable milestones, I'll start with the expansion of our existing operations and services. At West Lafayette, Indiana facility, we expanded by barium capacity. In February, we received accreditation by the Association for Assessment and accreditation of the Laboratory Animal Care International. In St. Louis, we exercised our option to purchase the previously leased facility and have completed the first phase expansion of approximately 15,000 square feet, adding office archive and laboratory capacity. The St. Louis expansion gives us critical new technology and state-of-the-art laboratory capabilities to support our clients' needs in DMPK, cell and molecular biology, pharmacology, toxicology, and histopathology, helping extend our reach into earlier stages of drug discovery. We opened the newly constructed scientific laboratories in November of this year. At our Fort Collins, Colorado facility, we invested more than a million dollars over the last year to make improvements, expand capacity, and broaden our services. It's allowed us to more than double this business since it was acquired in November of 2019. In Evansville, Indiana, we recently initiated design planning for another expansion. We expect the design, build, and validation process to take approximately 24 months. In Boulder, Colorado, we acquired three companies, have now increased leased space by an additional 19,000 square feet adjacent to our existing sites to support the additional strong demand we are receiving for our discovery services. In Gaithersburg, Maryland, we invested in equipment and infrastructure to reduce bottlenecks and leased additional space. As a result, this business saw significant growth in the past 12 months, has more than doubled, almost tripled its sales capacity since its acquisition in 2019. Among our internal startups this past fiscal year, we initiated the development of new in-house enterprise-wide technology solutions for data and study management as an additional investment to help enhance the client experience. We also recruited notable industry experts to Intative to help accelerate the startup of new services, further reducing our outsourcing cost and enhancing our ability to deliver services as a fully integrated service provider. Examples include Dr. Adam Allback, who is spearheading our new veterinary clinical pathology offering, Dr. Kenneth Swartz, who is leading the development of our analytical capabilities to support biologics, biomarkers, cell-based analysis, and therapeutics. Dr. Nicolette Jackson, who's building out our medical device, histology, and pathology solutions. Dr. Gopala Krishna, who's overseeing our entry into the genetic toxicology space. Ty Spieth, who's leading our cardiovascular safety pharmacology business. And a team of experts to lead the development and growth and send data reporting or standard for the exchange of non-clinical data. These internal initiatives started to contribute to our underlying organic growth in the fourth quarter. In fiscal 2021, we also significantly changed the complexion of Innotiff through strategic acquisitions, starting with the purchase of Boulder, Colorado-based histotox labs and Boulder Biopaths in April and May. Histotox brought us strong expertise in tissue staining and quantitative image analysis, while Boulder Biopath added depth to our existing pharmacology and pathology enterprise, allowing us to further extend our market reach in early stage drug discovery. These acquisitions now comprise our Boulder, Colorado operations, and together delivered strong fourth quarter performances for Innotiff, contributing approximately $7.1 million of combined revenue corresponding to an annualized revenue run rate of approximately $28.4 million. Both companies' corporate cultures have proven to be highly compatible with ours, and each business has been integrating into its fold, performing ahead of our expectations. We're starting to see these tangible cross-selling benefits from these acquisitions as well. For example, we had the opportunity to integrate bioanalysis and pharmacokinetics, previously provided by Legacy Initive Sites, to the non-clinical service offerings provided by Legacy Boulder Biopath. We expect to reap similar benefits from our acquisition of Colorado-based Plato Biopharma, which we completed after the quarter ended, which brings us complementary in vivo pharmacology platform that we are weaving into our Boulder discovery operations. In July, we acquired genetic toxicology assets from Millipore Sigma's bioreliance portfolio, bolstering our efforts to develop in-house genetic toxicology capabilities, and we purchased first-class laboratory equipment and instrumentation, stock, consumables, bench work from a Tennessee-based lab services provider that ceased operations, advancing our efforts to build in-house biotherapeutic solutions. We recently signed a lease on a facility in Rockville, Maryland, and have initiated recruiting efforts to build the scientific and laboratory staff necessary to support this effort. In August, we acquired Missouri-based Gateway Pharmacology, which enhances our expertise in cardiovascular and renal pharmacology. Gateway Pharmacology dovetails well with our expanded St. Louis facilities, strategically positioning us for additional synergies. Finally, in September, we announced an agreement to purchase InVigo, a leading global provider of research models and services. The InVigo transaction closed after quarter end, so it did not contribute to our fourth quarter financial results. That said, we are very pleased about how well the two organizations are coming together. From a financial perspective, we expect the InVigo acquisition to be accretive to InVigo's EBITDA margins and earnings in the quarters to come. In InVigo, we have secured access to high-quality research models for the preclinical services offered by Initive and needed by our clients. This acquisition was once again a result of listening to and addressing our customers' concerns. Reflecting InVigo's deep animal husbandry expertise and services, 17 of its top 20 clients have been repeat customers for more than a decade. These incredibly durable customer relationships have supported 99% plus revenue retention rates at InVigo and will benefit our combined organization in the years to come. Moreover, we have identified excellent cross-selling opportunities with InVigo's global base of more than 2,550 clients. Clearly, InVigo brings us additional scale and expands our footprint in attractive new geographies such as the European market, Finally, and importantly, we benefit from an injection of additional talent. Our strong fourth quarter fiscal 2021 financial results reflect the successful execution of our strategic growth plan, with revenue nearly doubling year over year to $30.1 million, driven by approximately 47% internal growth and 53% external growth. Our adjusted EBITDA increased to 4.3 million from 156,000 during the same time period, demonstrating the underlying leverage in our business as we scale. As I noted earlier, in the fourth quarter and throughout the fiscal of 2021, we continue to make significant investments in our business through acquisitions, internal expansions, and embedded operational startups. Simultaneously, Across our organization, we have continued to make broad expansion investments in G&A, including our people, infrastructure, systems, and services. While our operating margins were temporarily depressed in the fourth quarter due to these growth-oriented investments, we expect to reap enhanced future growth and margins over the long run. We're pulling several levers to improve longer-term profitability, including making scalable investments, continuing to reduce outsourcing by bringing key capabilities in-house, driving cross-selling initiatives, taking advantage of purchasing opportunities, lowering client acquisition costs as a percent of revenue, leveraging existing direct fixed costs, and reducing corporate overhead as a percentage of revenue. In the fourth quarter, adjusted unallocated corporate G&A was approximately $3.2 million, or 10.5% of revenue, compared to 21.7% of revenue for the same period last year. And we expect to see this figure decline further as we continue to grow. Including InVigo, we are targeting long-term organic revenue growth in the high to single double digits, and EBITDA margins in the range of 18% to 22%. In the near term, we are optimistic for continued strong revenue growth based on a robust backlog, as well as anticipated contributions from recent acquisitions, internal expansions, and new services. We were pleased that after achieving strong revenue growth, we were able to report a book-to-bill ratio in the fourth quarter of of 1.77 times for our services business. We ended the quarter with a backlog of 81.4 million, up 31% compared to 62 million on June 30, 2021, up 86% from 43.8 million on September 30, 2020, indicating the current strength of our business. Fiscal 2021 has been a busy year, and we've accomplished quite a bit in a compact timeframe. But I believe the best is yet to come for our clients, employees, and shareholders. With that, I will turn the call over to Beth Taylor, our Chief Financial Officer, to discuss our fiscal 2021 fourth quarter and full year financial results in more detail. Beth, please go ahead.
spk02: Thanks, Bob. Good afternoon. Good afternoon. In the fourth quarter of fiscal 2021, our revenue increased 90.7% to $30.1 million from $15.8 million in the comparable prior year period, driven by internal growth of $6.7 million and incremental revenue contribution from Histotox Labs, Boulder Biopaths, and Gateway Pharmacology, which totaled $7.6 million. Service segment revenue in the fourth quarter of fiscal 2021 increased 93.3 percent to $29 million from $15 million in the comparable prior year period. Service gross margin increased to 34.2 percent in the fourth quarter of fiscal 2021 from 28.9 percent in the comparable prior year period, reflecting the greater utilization of recently expanded capacity. Product segment revenue increased 40.9% to 1.1 million in the fourth quarter of fiscal 2021 from $782,000 in the comparable prior year period, as instruments are used for a variety of research markets, including COVID-19 related research applications. And universities are working at a higher capacity in 2021 compared to the fourth quarter of 2020, which saw a greater impact from the COVID-19 pandemic. Product gross margin was 35.6% in the fourth quarter of fiscal 2021 compared to 36.6% in the comparable prior year period. Operating loss for the fourth quarter of fiscal 2021 totaled $3.4 million compared to an operating loss of $1.4 million in the prior year period, reflecting increased strategic investments in operating expenses to support future revenue growth including $4.2 million of incremental acquisition and integration costs, $747,000 of higher non-cash stock compensation expense, and $636,000 of higher startup costs. This quarter's growth-oriented investment in G&A includes recruiting and relocation expenses, higher compensation expenses, including non-cash stock compensation, and transaction costs related to the acquisitions of Histotox Labs, Boulder Biopath, Gateway Pharmacology, InVigo, and Plato Biopharma, the last two of which closed after quarter end. All combined, adjusted corporate unallocated G&A, much of which was growth-oriented, totaled approximately 10.5% of revenue in the fourth quarter of fiscal 2021, compared to approximately 21.7% of revenue in the fourth quarter of fiscal 2020. Our long-term objective is for unallocated corporate G&A to reach between 6% to 8% of revenue. I'd also like to point out that this quarter's selling expenses were higher compared to prior periods due to our increased book-to-bill ratio as we accrue commissions when we win awards prior to the recognition of corresponding revenue. Net income in the fourth quarter of fiscal 2021 totaled $9.4 million or six cents per diluted share compared to a net loss of 1.8 million or minus 16 cents per diluted share in the comparable prior year period. This quarter's reported figure benefited from 4.9 million related to the forgiveness of our PPP loan and a $8.4 million non-cash gain on fair value remeasurement of convertible notes. Adjusted EBITDA equals approximately $4.3 million in the fourth quarter of fiscal 2021 compared to $156,000 in the comparable prior year period. The bulk-to-bill ratio for the fourth quarter of fiscal 2021 was 1.77 times. We continued to build our infrastructure for growth, which included additional headcount, transaction and integration costs, and internal investments in new service offerings, technology, and systems. Our backlog at the end of the fourth quarter of fiscal 2021 was $81.4 million, up from $62 million on June 30, 2021, and up from $43.8 million on September 30, 2020. Briefly reviewing our full year fiscal 2021 results, total revenue increased 48.2% to $89.6 million, driven by $17.3 million of internal growth and incremental revenue contribution from Histotox Labs, Boulder Biopaths, and Gateway Pharmacology, totaling $11.8 million. Compared to the prior year period, fiscal 2021 gross margin expanded 350 basis points to 33.7%. Net income totaled $10.9 million versus a net loss of $4.7 million and adjusted EBITDA increased 223.5% to $9.3 million. Cash flow from operations during fiscal 2021 totaled $10.7 million compared to $1.3 million in the prior fiscal year. CapEx for fiscal 2021 totaled $12.5 million, which included investments in laboratory equipment to increase capacity at all locations, facility improvements at the Fort Collins location, and the purchase and expansion of our St. Louis facility. Our balance sheet on September 30, 2021 included cash and cash equivalents of $156.9 million and total long-term debt of $163.9 million. Our PPP loan totaling $4.9 million was forgiven during the quarter. And finally, we had a zero balance and $5 million of availability under our general line of credit and a $1.7 million balance on a $3 million equipment loan. Lastly, today we filed an 8 disclosing that management, together with the Audit Committee of the Board of Directors, concluded that we did not properly account for certain tax attributes related to our acquisition of Boulder BioPath in the third quarter of fiscal 2021. We intend to restate our historical financial results for the third quarter, making cert certain non-cash adjustments to increase the amount of goodwill and deferred tax liability recorded on the June 30, 2021 balance sheet by approximately $4.9 million and to reduce our valuation allowance recorded on the June 30, 2021 balance sheet while increasing income tax benefit in the statements of income for the three and nine-month periods ending June 30, 2021 by approximately $4.9 million. Therefore, our previously filed quarterly report for the period ended June 30, 2021 should not be relied upon. This adjustment improves profitability for the quarter ended June 30, 2021 from net loss of $2.3 million to net income of $2.6 million. In connection with this restatement, management has concluded that a material weakness exists in the company's internal control over financial reporting related to accounting for taxes for acquisitions that qualify as a stock acquisition for tax purposes. We have established a thorough remediation plan to address this weakness, which includes engaging with highly qualified tax advisors. Overall, we are very pleased with the direction our business is heading and feel confident in continuing to invest in our future. This includes our prepared remarks, and with that, operator, please open the call for questions.
spk03: At this time, we will be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start keys. One moment, please, while we poll for questions. Our first question is from Kyle Bowser with Collier Securities. Please proceed with your question.
spk01: Great. Thanks so much. Can you hear me okay? Yes, Kyle. Great. Thanks for all the updates. Just a phenomenal book to build here. Can you talk just in general terms about how maybe price inflation and or cross-selling with Histotox and Boulder Path influenced this strong book-to-bill quarter?
spk06: Well, the Boulder Biopath and Histotox acquisitions closed in May. So our sales cycle, probably what we did in May is, I think what happened this quarter was was in process well before we did to May. I think some of the results this quarter and some of the book to bill this quarter were things that had been in process 12 to 18 months and things we've been putting in place over the last 12 months, and it's not in the last four to five months. That being said, we may have had some short-term gains from some of the Boulder and Histotox clients, but I think it's more of an indication of a very strong demand, our ability to open up some capacity, our plans to open up further capacity, and existing customers continue to expand the amount of work that they place with us. I think that some of what Boulder Biopath and the integration of Boulder Biopath and Histotox are things that are going to continue to further drive us in the future, but I doubt if we saw as much in the last quarter because we closed those in May, and I think some of those things that we closed last quarter the larger projects wouldn't have been quoted in June and issued that quickly. So we are seeing some benefit, obviously, and we're seeing some benefit that will impact future quarters. But I don't know that it would have been that big that quickly. What was the second half of your question?
spk01: Oh, just how pricing might have influenced. Yeah. Yeah.
spk06: There has been, I think, some inflation. Over the summer, we saw, obviously, wage inflation take place that we addressed proactively and tried to address quickly as we saw it taking place. We have tried to pass through some of that. That being said, much of the results we had in Q4 were jobs that were quoted and won well before that inflationary period. I think it will, it probably, some inflation is obviously, and some price increase is definitely in the backlog as we look out. But, you know, we're looking at a six to nine month backlog. So it's not all of it would be in there, but there's going to be some inflationary pressure as a result of some of the price increases we saw that I think we've been able to pass through over the last three or four months.
spk01: Sure. No, got it. Appreciate that. And, and then on a pro forma basis for the combined company, how should we think about CapEx requirements, um, going forward in broad terms?
spk06: Well, we, I think we, uh, we have been, um, aggressive in trying to address our ability to move our company forward to prepare the company that's going to be the best company in 2024 and 2025 and leading drug discovery and development. Um, And we've also been very disciplined in how we view use of our capital. As long as we can continue to find really good returns, which we've been able to on some of the capital that we've invested, we don't need to see it right away. But as long as we can see long-term good returns, we're going to continue to be aggressive in investing. We've succeeded with that strategy, I believe, in our discovery and safety assessment business. at Initive and within Vigo. I believe that they probably have not as invested as aggressively as we have in the past. And so I think that there are some low-lying opportunities for some investments that can drive some pretty strong returns at Vigo in the future. So I think we'll be very disciplined, but we're looking forward to making some of those investments. And they're making some of them now as we speak. Some are Some are deferred maintenance issues, but a lot of them have very strong returns.
spk01: Got it. Appreciate it. And then just lastly, how are you looking at new M&A targets? Obviously, you had a very productive year for M&A. Are you looking to drive scale via geography? Are there other service areas that you think you can bring in-house? Yes. And then, you know, at what point does it make sense to evaluate clinical services, not preclinical? It's still a little early, but just kind of curious about your thoughts there. Thank you.
spk06: First of all, right now we are focused on the preclinical market. We're not focused on clinical services, although we do have some clients that ask us to do some clinical bioanalytical work as a small percent of overall revenue, and we've not really focused on the clinical market. And nor are we doing that today. I won't say never, but we are not doing that currently. As far as preclinical, you know, I think what's been key to our strategy has been scale. And you can see our existing sites, the ones that we bought, the importance that we've talked about, all of them doubling and tripling in size. And those scales bought significant enhanced margins as we leveraged direct costs. So we'll continue to look for opportunities that provide scale. And we've obviously been aggressive in acquiring services. And now I think we could even consider looking at opportunities that drive market share. So it's something that we've done quite a bit in our early years. We took the year 2019 and 20, we took about 12 months to as we really focus on our infrastructure. But we've become much stronger, I think, and I believe that I think the synergies that we can see from future acquisitions are probably much greater than they've ever been before. And so we're looking forward to continuing to look at opportunities and ways that we can grow our business.
spk01: Okay, got it. Thanks for all the updates, and congrats on the strong quarter. Thank you, Kyle.
spk03: Our next question is from Matt Hewitt with Craig Hallam Capital Group. Please proceed with your question.
spk07: Thank you for taking the questions, and what an amazing year. You guys accomplished a ton. Just a few questions. First off, regarding the integrations, and you spoke to this a little bit, but I'm curious, as you look at those integrations, is the primary benefit going to come via margin expansion or Or do you see a better or more important aspect of those integrations in the level of service and the quality and the timing of responses back to the customers? Is that the bigger opportunity within those integrations?
spk06: It's been all of the above. The acquisitions we've looked at, we've looked at, you know, improving margins from growing the acquisitions, and how can we invest in the companies that we've acquired to bring a scale and growth opportunities and be able to grow. Then we also acquire clients when we acquire these services, and we buy a lot of companies that are single-service oriented. And now we have all ID-enabling services under one roof, so we're able to take those clients and sell them all of our services. And that... that has helped grow our overall sales and helped a lot of our internal growth as we sell the clients we're acquiring all of our services. And then very importantly, when we have scaled up and started new services or acquire services, we inevitably then don't have to outsource as much or our client doesn't have to go to a third party. And when we can do that, we can control the timing much better and we can help accelerate the speed in which they can do the discovery and development work. So all three of those things are critical when we evaluate acquisitions. In addition, we're always very interested in obtaining talent. But when we look at acquisitions, it's important that we can see the opportunity that we can scale. We want to be able to add value to what we are buying. And then in addition, we look at how they can add value to our current customers and our other services. And that formula has worked extremely well for us, and I hope it continues to in the future.
spk07: That's very helpful. Thank you. Simply, I'm just curious, and I realize it's very early days, but regarding InVigo and some of the cross-selling opportunity there, what has been their initial response or feedback that you've been getting from some of their customers? Do you have anything anecdotally that you could point to as far as some initial wins on the cross-selling side?
spk06: We have had clients come to us now with their services that we have and ask us to quote and participate in their services and quoting their services. I don't have a numeric number for you or a number for you that can tell you how much that has been so far. But we're only four or five weeks into this. And We have, as you can see, a very robust backlog. At this point, at times, we are actually no quoting jobs. We have had so much activity. Our quoting level has ramped up significantly. I would tell you in the last four or five weeks, we have more than doubled just our client service group that is handling the quotes. So we have a significant amount of activity. And, you know, that's a great opportunity, great problem for us to have. And I'm really pleased that we've been able to retain some very talented people that we've been able to grow that. But, you know, for us, we want to be really client service oriented. And that means even returning timely if somebody asks you to quote. And we're ramping that up quickly to take advantage of all of the opportunities that are coming to us at the moment. But I don't have a numeric, anything for you right now that I can tell you what that is.
spk07: And that's okay. Anecdotally is fine. I realize it's early days. One last one from me regarding, you just touched on it a little bit there, but I think on the InVigo acquisition call that you hosted, you talked about one of the primary areas that you plan to invest in. One of the things that you think can continue to help you differentiate from peers is your quality of service. And to do that, you have to maintain your, the right level of employees. I'm curious, how is the hiring proceeded? Are you having success? And are there some areas that need a little bit more from a headcount perspective to meet your internal targets? Thank you.
spk06: Well, hiring over the last three or four years at any one time, we've had, if we have 500 people, I've noticed we have 50 openings. We had 1,000 people, we have 100 openings. Today we have 1,800 to 1,900 people. We probably have 200 openings. Hiring in this market for our company, for any company, and retention is hugely important. We've been very aggressive in our hiring, and we will continue to be. I am pleased with our ability to recruit. I think the InVigo and some of the things we've done over the last year in adding services, we've got some great talent, and that talent's been able to recruit additional talent. And, you know, it's very rewarding when we even now get calls, people calling us wanting to come be part of Innotive and what we're doing. So that being said, you know, we're always onboarding people. We're always looking for people. And, matter of fact, you know, the phone call I was on for 30, 40 minutes before we have this call today was all about what we're doing to enhance our ability to recruit, retain. and train our people. I think there's a high degree of awareness in our company and a great amount of time spent on that. It's a critical resource for us. If we're going to continue to grow and you see our backlog and you can see our book to bill, if we're going to continue to grow and we have a very aggressive infrastructure build-out and capital plan for next year, it's going to require people and we're going to need to be very aggressive in trying to recruit those people from the market to our company.
spk07: Got it. Thank you very much, and congratulations on your progress. Thank you, Matt.
spk03: Our next question is from Dave Windley with Jefferies. Please proceed with your question.
spk04: Hi. Good evening. Thanks for taking my question. Hi, Bob. In prior conversations, it was a little bit of a follow-up to Matt's question, but you had talked about kind of needing to have capacity in place before you thought you could really turn the sales force loose on the cross-selling opportunities that InVigo presents. And I thought that that capacity might have been a little bit physical capacity, but certainly was also that client service element that Matt touched on. Can you talk about, you mentioned that you doubled that group. Can you give, zoom out a little bit and give a little bit of a perspective on you know, kind of where you stand on capacity and your ability to kind of go full steam ahead against the opportunities that InVigo presents?
spk06: Hi, Dave, and I'll try to. When we reported last quarter, I believe we were 23 or 24 million, and this quarter is 30 million. But, you know, 20% growth, that's fairly large in one quarter. If you had asked me last quarter this time, did we have the ability to do 30 million in I probably would not have given that $30 million if it was even a capacity. So I'm very pleased by how fast we were able to bring on capacity. That being said, I think what we saw last quarter was what we could do. I couldn't have asked them to do much more. That's pretty good growth in one quarter. for a service-oriented regulated business that we're in. That being said, today I outlined we have got a lot of brick and mortar coming on board with leases that we've just recently entered into, I think, in Rockville and I think there's a 19,000 in Boulder. I would say that we're looking at leasing additional space and a further expansion, major expansion in Fort Collins. We're looking at buying property, possibly in Maryland. And we're looking at acquisitions and some acquisitions that may even have capacity. So we're going to probably continue to be very aggressive in ramping up that capacity. But what we saw last quarter was probably about what I think we could have done with the people we have. I think if you look back and look at our sales per person, it's another good indication. We're now achieving over 200,000 sales per person. If you go back a couple years ago, we were 140, which gave you an idea. We had a lot of capacity left. When we start going up to 200 and well over 200, 220, 230, then we're starting to use up a lot of that capacity that we were sitting on. So we will open up more capacity this quarter. We'll open up again next quarter. some more, and some of the new services are growing quickly. But, you know, I can't really tell you that we can, you know, it's not like we're going to all of a sudden double our capacity. Moving 20% a quarter is pretty, you know, I maybe would have said we could do 10. I'm not sure I would sit here and tell you 20% a quarter to open up is possible. But with acquisitions and some of the things we're doing, we've got some great opportunities, I would put it that way.
spk04: Excellent. I appreciate that answer. Another topic here around, again, that's been touched on a little bit around cross-selling. And you mentioned what I was going to touch on in IND enabling capabilities and having all of those in-house. And it does seem like a level of your cross-sell is to not have to outsource or not have to send the client to other vendors for services that would be part of a of a study package. And then the next level of out of cross selling might be capturing the client and some of your discovery businesses and pulling those through into some of your safety businesses. Are you able to do both of those now or is one the predominant kind of level of discussion with a client at this point?
spk06: We were able to do both of those. I also see we're seeing some of our safety and assessment customers now moving some of their discovery work to us. Okay. So it's happening across the board. But I'll give you an example. When we opened up Send Data Reporting, Send Data Reporting, if we were outsourcing it, we may be quoted 12 weeks And we don't make a lot of margin on that, outsourcing that. If we move in a house and a client now has a need to move quickly, we can get that down to four weeks or less. That's taking a lot of time just out of that one segment, just out of that reporting. That was critical. Same when we did safety pharmacology. So all of these things are significant benefits to our clients. And I would tell you that the acquisitions we've done and the services brought in are all really specifically listening to our clients. When I got here four years ago, you know, it's going to be about returning a phone call. It was by listening to our clients. All of our things that we're building in-house are listening to clients and their concerns about our timing. And I think that our team has done a good job of building those, in some cases even much faster than I thought. I think we saw revenue from a lot of the startups who did, you know, an in-house And we've not seen any revenue yet from our genetic toxicology startup that we're doing, but we could see some of that here in this quarter, and we'll see, I think, more next quarter. So these services are really ramping up, and not only are they ramping up, we're already expanding and growing them.
spk04: Last question for me around the labor inflation that you touched on. Is your ability to price that through pretty real-time, or is there a lag to like an annual repricing of rate cards and things like that?
spk06: Well, we have been able to, I think, pass on pretty real-time. First was making sure that we real-time increased the wages because there was a lot of pressure there over the summer for entry-level wages in particular. we can pass them on real time and the client's very understanding. Um, but when we're sitting on a six to eight month backlog, um, that backlog is already priced. Um, and it, you know, it, it, uh, it, it may be a previous rate. Um, but what we're closing today is, is closed at the increased pricing at one point last year. And, and even today we, we, uh, even for some research models, we were very careful to actually not even lock enterprise. It was almost like it was going to be market pricing at the time this study was placed because some of the cost of the research models were going up so quickly, specifically non-human primates. So we tried to do what we could to make sure we could protect our ability to pass through those costs.
spk04: Got it. I appreciate those answers. Happy holidays. Have a good evening.
spk06: Same to you, Dave. Thank you.
spk03: We have reached the end of the question and answer session, and I will now turn the call over to Bob Leisure for closing remarks.
spk06: All right. Thank you, everybody, for participating in our call this afternoon. Obviously, we're very pleased with the foundation we've set and really looking forward to 2022. Please reach out to our investor relations firm, the Equity Group, if you're interested in scheduling a follow-up call. We look forward to reporting back to you in February when we release our first quarter fiscal 2022 financial results. Have a good day, and thank you.
spk03: This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.
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