Inotiv, Inc.

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.

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.

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.