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spk_0: it laboratory systems and january two thousand twenty two a new collaboration with snacks the life sciences and january of two thousand twenty two and so ongoing investments in internal start ups and capabilities photo via farmer provides or the as a segment with in vivo pharmacology research drug discovery expertise and the areas of cardiovascular renal pulmonary and have paddick therapies plato's and a great have approached functional physiological measurements stuff is logical evaluations and biomarker analysis compliments our existence with services fighters located near a boulder colorado discovery operations he played on boulder operations are now both operating synergistically and we're adding additional least space the both locations hours for strong demand we're currently say integrated laboratory systems or i or less brings or the say segment immediate scale genetic toxicology building on the genetic toxicology it required in two thousand twenty one from know for cygnus by realize portfolio we've essentially accelerated by a few years or in inhouse can talk start up with acquisition of iowa us which adds to least soldiers with total fifty thousand square feet including a wide variance that is credited by the association for settlement and accreditation of laboratory animal care in addition to gaining expertise genetic toxicology and vivo in in vitro toxicology apology the molecular biology bio informatics the computational toxicology services we gain access to excellent talents in the vicinity of fortune on his research triangle park or iowa is located for making further investments are the next two quarters additional expand capacity and i'll ask a soul a collaboration with next the life sciences was there was the center of excellence for biotherapeutics biomarkers at a recently least facility in rockville maryland which is currently under construction i did as clever collaboration to biomarker pioneers and actual further it's international expansion at least lavatory space and our cell site while supporting initiative and developing and delivering comprehensive glp biomarker and by therapeutic services working together we'd start to to scale brown nose that the customer bases and capitalize on cross oh and opportunities we continue to make internal investments and are the as a business including opening of the modern day and became so molecular biology lavatories or st louis facilities which we opened in november two thousand twenty one of the first phase certain basic the opening next month we're beginning to see the benefits of new capabilities the best we have continue to invest more people are infrastructure and do systems technologists legally these investments will augment future growth and enhance operating margins are improving service for our clients the first quarter adjusted unallocated corporate gnh was partially seven million or eight point three percent of revenue compared to sixteen point two percent of revenue for the same period last year and we expect see this figure decline has continued to grow moving to our our him as segments are strategic acquisition of indigo help establish to this a leader and research models at a time when strong industry demand has been outstripping supply particularly particularly any category nonhuman primates or in each piece with the indigo purchase mitigated potential research bottlenecks addressing a common concern of our customers and establish a new growth platform for additional service offerings given his view and our desire to scale the arm as business we acquired two complimentary businesses in january for hit by a resource center or of the or see and the rap breeding and supply business of roberts and services for hard as pie o b or c n h p facility is located on five hundred acres of land near and it is existing private facility can texas and brings mean for opportunity to expand and each the boarding and breeding capacity to our are in their customers having been a customer of be or see ourselves we're very familiar with will be our seas high level of service an animal welfare our side brings additional rabbit customers and market share to a mess and will consolidate his production and to existing facilities during two thousand twenty two we believe are a mess is well positioned for revenue growth improved operational performance by way of example and fiscal que three will begin close and to indigo sites and consolidate their operations to the third location in denver pennsylvania grading scale advantages at the site level driving operating leverage but several common goals that our actions cross both segments including listening to our customers and desire to provide them with a high touch consulting come consulted service building a comprehensive offering to meet our customers' needs to control speed the market scaling our business strategic growth areas cross services and products to expand customer base respecting employs customers and shareholders were encouraging their culture point one and and investing and people technologies and infrastructure facilities to build a contemporary scale the company as we succeed in these areas could bring it increasingly become a customer's primary research provider versus a secondary option for work and are handling a greater number of longer duration programs spending the entire preclinical continuance forces delivering of services we achieved an excellent mix of internal and external growth in the first quarter of two thousand twenty two reflecting the successful execution of our strategy looking ahead near term demand for idea sake and harness services remains very robust as illustrated by the as a strong foot the bill ratio of one point seven eight and a quarter and the as a backlog hundred and four point six million dollars over the long term we are continuing to target organic revenue growth to the high single blow double digits and adjusted the the door margins and the range of eighteen to twenty percent
spk_1: without a like to turn over tibet taylor chief financial officer
spk_2: thanks dad good afternoon in the first quarter of fiscal two thousand and twenty two our total revenue increased three hundred and seventy point four percent to eighty four point two million dollars from seventeen point nine million dollars in the comparable prior year period driven by a fourteen point nine million dollar increase india a revenue and fifty one point four million of incremental rms revenue rms reflected a partial quarter contribution from in go which was fired on november fifth two thousand and twenty one
spk_1: our s a segment revenue grew eighty three point two percent year over year to thirty two point eight million dollars driven by ten million dollars of incremental service revenue from the acquisitions of his the top flat folder file path gateway pharmacology and plato bio pharma
spk_3: and four point nine million of higher service revenue from internal growth our acquisition of in veto contributed forty five point one million a product revenue and sixteen three million dollars of service revenue to our rms segments is quarter we did not have any rms revenue in a comparable
spk_2: or year period
spk_1: in the first quarter of fiscal two thousand twenty two or total gross profit increased to nineteen point three million dollars or twenty two point nine percent of revenue and that was up from five point nine million dollars or thirty three percent of revenue in the comparable prior year period
spk_2: the decrease in the gross profit as a percent of revenue the the introduction of rms products fill our overall business next starting this quarter rms products have lower gross profit as a percent of revenue compared to the essay services in addition tony false profit included noncash amortization for a step up in the value of rms inventory of three point seven million for the acquisition of envy go which has a negative impact on the gross profit percentage of four point four percent
spk_3: rds a segment gross profit excluding amortization of the intangible assets was trump point two million or thirty seven point two percent as the us a revenue and this is compared to five point nine million dollars or thirty three percent as the essays revenue in the compare
spk_2: rebel prior year period
spk_1: the year over year increase in gross profit percentage was primarily driven by fire margin on incremental revenue from the acquisitions of his such as flab older bio pass gateway pharmacology and plato bio pharma and greater utilization of recently expanded capacity
spk_4: or rms segment gross profit excluding amortization of the intangible assets was seven point one million dollars or thirteen point eight percent of armor revenue
spk_2: and again the aren't the amortization of the step up of value of inventory of three point seven million for the acquisition of in vigo negatively impacted the rms segment gross profit like four point four percent operating loss in the first quarter of fiscal two thousand and twenty two totaled thirty three point six million dollars compared to operating income of fourteen thousand dollars in the comparable prior year period reflecting higher noncash thought compensation expense of twenty three point eight million dollars which included twenty three million of post combination start compensation expense recognized in connection with the in vivo transaction and that related to the adoption of the in vivo equity plan and prior strategic investment in unallocated corporate dna to support additional future revenue growth
spk_1: and this included additional headcount recruiting and relocation expense
spk_2: higher compensation expense transaction costs related to the acquisition of plato and vigo in our a sigh an increase in cells commission's due to higher cells awards an increase in selling expenses due to an increase in travel as our sales and marketing teams have traveled more as the covered nineteen pandemic cheeses and an increase in start up costs for and trial investments and new service offerings during the quarter we continued investing in a child capabilities to provide additional service offerings such as laboratory solutions medical device that solidly biotherapeutics and genetics toxicology all combined adjusted corporate unallocated dna much of which was growth oriented total approximately eight point three percent of revenue and the first quarter of fiscal two thousand and twenty two compared to approximately sixteen point two percent of revenue and the first quarter of fiscal two thousand and twenty one i'd also like to point out that this quarter selling expenses were higher compared to prior periods due to our increased book the bill ratio as we crew commission when we were new orders prior to the recognition of corresponding revenue net loss attributable to common shareholders in the first quarter of fiscal two thousand and twenty two totaled eighty eighty three million dollars or a negative three dollars and ninety three cents per diluted share compared to a net loss of three hundred and sixty six thousand dollars or a negative three
spk_1: for diluted share in the comparable fire year period this quarter's reporters figure and prince and above was impacted by post post combination on thought compensation expense recognize in connection with the in vivo acquisition
spk_5: of twenty three million relating to the adoption of the illegal equity plan and a fifty six point seven million dollar loss unfair value we measure month of the convertible notes issued in september two thousand and twenty one
spk_2: adjusted ebitda equaled approximately ten point one million dollars or twelve percent of revenue in the first quarter of fiscal two thousand and twenty two compared to one point four million dollars or seven point eight percent of revenue in the comparable prior year period the book to build ratio for our the essay services business in the first quarter of fiscal two thousand and twenty two was one point seven eight times we continue to build our infrastructure for growth which included additional headcount transaction and integration costs and internal investments in our people news service offerings new systems and technology or backlog at the end of the first quarter of fiscal two thousand and twenty two was one hundred and four point six million dollars or twenty eight point five percent from eighty one point four million dollars on september thirty two thousand and twenty one and up a hundred and thirty point nine percent from forty five point three million dollars on december thirty first two thousand and one
spk_1: or balance sheet as of december thirty first two thousand and twenty one included cash and cash equivalent of forty two point four million dollars
spk_2: we had a zero balance on a fifteen million dollar revolving credit facility and a delayed drop trombone facility in the original principal amount of thirty five million available to be gone up to eighteen months from the date of the credit agreement which with november fifth two thousand and twenty one out of consolidated debt as of december thirty first two thousand and twenty one totaled two hundred and sixty point six million dollars our forms and you will be filed on monday february fourteenth and will provide the balance sheet and statement of cash flows on january ten two thousand and twenty two we brought the full amount under our existing thirty five million dollars delayed draw term loan facility to fund the purchase of i'll left and on january twenty seventh two thousand and twenty two we brought on incremental term loans of forty million dollars for the purchase of oh rc overall we are pleased with the direction or business is heading and we felt confident and continuing to invest in our teacher
spk_6: this concludes are prepared remarks and with that operator please open the call for questions thanks you at this time we'll be conducting a question and answer session if you'd like to ask a question please press star one on your telephone keypad apart from a simple indicate your one is in the question to you you may press star to if you'd like to remove your question from the que the participants using speaker equipment and may be necessary to pick up your hands up before pressing the star keys
spk_7: our first question comes on the line of kyle bouncer with paul years please city with your question
spk_8: three think so much grandson that's phenomenal results here again
spk_7: tom baby started with
spk_0: some of the recent acquisitions so specifically i o s o b or c just kind of curious how are those came about were were these situations where you are able to quickly action save popped on your radar somehow or had you been in discussions with the companies for was curious how played out hobby are seated historically been a supplier two and two beagles are too it is for several years so we'd start talking to them prior to this figure deal closed or announced so that worked for some time spoiler strategies will use it so there was not to continue building or services or and expand our borders dollars boards for breeding boarding from the truth for for for customers with kids it's been an increase in revenue source for digital beam increasing force going forward we looked at or other alternatives or we could expand or those or property taxes period knowing knowing her supplier we we can have had an idea that they wanted to so we're able to get involved for anybody else to get boulders agreements with us and we were able to complete the transaction so really pleasing it opens up some capacity force congress and or or to your researchers the group or current health facility and provides additional room for services from for customers as far as the purpose or that was completed in go get identical prior to us closing told us about it some the issue those conversations with of it's citizens you know to were able to strike a deal with them gunfire probably closing transaction and we knew that there was something that we had capacity internally they were going to get out of the business and was not been forced to gain market share in you some of our existing to burst so what about you strategies is is scale current making sure utilize on you lost the vs and we needed a customer base somebody is sticky customer base with us to talk about before so acquiring customer base from their made sense to us and it is i thought it would it would not be too much more a burden because they were going to be somewhat at odds what we already had so
spk_7: you know i notice a lot of the acquisitions at one time since we've we've been able to complete these and i'm really pleased with what he was done but it is a good group of people students from extraordinary efforts and ruthless with the results so far with it's
spk_0: still work to do agreed certainly highly creative and and i realize that vigo the only close in early november but given your track record of quick turnarounds was just wondering what sort of changes or improvements hidden made so far as it relates to this biggest organizational and operate structure and ten and what if what his mother
spk_9: trees here to to drive synergy snap business
spk_0: first of these results and these results we we only have only begun seven weeks and others seven weeks three weeks for holiday weeks so you search for on for five weeks of relate to do to do much at the end of the year but with a pretty aggressive i think and transforming the corporate culture with made several changes and curb and identifying through the the leaders will be and from a corporate standpoint and unfortunately that means that come some you know we don't need duplicate corporate leaders those changes on have occurred or been announced her and process and it's to the other thing that is it is interesting is that a year ago and it was a fifty million dollar company growing up be a hundred nine dollar company and and he goes sure what was doing that it was about three hundred nine dollar company now now where to run rate of over five hundred million dollars that you know growing again so you know it's a building a company the one hundred nine graf zeppelin coffee be much bigger than five hundred billion the debt that requires question again for the changes in infrastructure and technologies and and some skillset so we've been making those changes pleased with his with a team that's coming together and as a group your seeks do
spk_7: did some additional things in the future so
spk_10: and i'm i'm looking for to sing with with his team can do
spk_7: but i also a were testing about quick is a dumb lot less just last night for five weeks
spk_11: definitely not appreciate that and and just lastly housekeeping i don't have that said just kind of wondering so you kind of walk through the little then but dad just to verify five can you provide kind of the current cash levels and dead including converts and dad basic shares out
spk_2: standing after kind of all these recent acquisitions
spk_12: yeah we have
spk_13: yeah i find and cast level and is is the i finally found that forty two million level
spk_2: i'm so we expect how strong we receive received so we're not expecting a significant change in cash and it will not be lower for the end of the quarter in our crime that level the ten and sixty million reported plus the forty million in term loans
spk_14: that we borrowed for the l b or c an acquisition
spk_7: and then they say that shares currently outstanding which were reported in the process last week around twenty four point eight million
spk_15: and then fully deluded including the convertible notes
spk_6: the would be around thirty point five million
spk_0: perfect take thanks so much in congratulations on another great quarter thanks kyle our next question comes on the line of matt he went with craig on i'm pleased to see the question good afternoon congratulations on the strong quarter armor if maybe first stop and i realize that cellar with the surface recently acquired properties like could you talk a little bit about across owning synergies that you're seeing already in are you think those could progress over the course of the year yes i wish i don't have a metric for your next on across selling have to buy them by the book to go one point seven eight to one we're not having trouble selling or services at the moment and and so but we do get i do get reports of the out across the line and we're seeing a a lot right now in the discovery
spk_16: in the small animal models
spk_0: and we're seeing that develop in nursing relationships developed a good day with revenue has been done in there's a long list of relationships that are starting to develop and expand and unfortunately you know this is also taking advantage of some the new capabilities a brought on board with plato and and boulder acquisitions and with a recent expansion in singles that that's great to an arm nhp pricing arm and what if he could try to walk through may be aware that was pre pandemic where it is today and and maybe talk a little bit about how you position yourself on t to kind of be the source for your customers were others or maybe facing challenges because of the supply disruptions and and issues with off know kind of where you stand or on that point he knows where he is being able to to meet customers and and maybe even how far out you've kind of book some of those contracts
spk_17: yes
spk_0: ah to load the question that and and i think prepared damage at one point that the of market was probably three thousand range or think it's doubled career doubled to six twelve i think this year we'll see a double again i think in the spot market is probably in the twenties now and done and we don't see this going away most of what we have coming in for the year have available for the or have been pre sold my honor actually of honor and he contracts the way we have with older customers that down there has been obviously a lot of cost pressures and pricing pressure so or cost of inclusion of way and so house to house prices and our margins are at it you're doing well so far adobe some synergy so for congested with for the with some the working for the transportation's to be further synergies with with feed what we have so and i think they're additional services now that as a result of are the conditions in terms of some customers wanting to do their breeding or their own boarding and and are maturing if he will so we're going to expand the services make sure those available so those deserves nicer search spreading rapidly as far as as are the overall market conditions a i believe this is something that's been going on not just pandemic related i think it's a trend it first started ten years ago and you bring down the city reports but you can see that at one point china was exporting ninety percent of what they producing and today they don't export any and that was a trend that started ten years ago it and start a the started just when when cold it is go with it did happen coincide with when they start exports so as pull out a large the pressure on the supply and and the demand continues to increase with biotherapeutics and soldier therapy so it's still
spk_16: so many the drugs
spk_0: can we get of the approval of many of them are going to require and each piece for their studies so
spk_2: in of i don't see that trend changing anytime in the next few years so will continue to build up or services or capacity and done right now i think we've we have it a good market share of habit of in a speech that's that's really helpful thank you so much and then maybe one last one best is my be ah for you thank you for kind of walking through the the product gross margin and and the puts it takes their if i did you correctly that the
spk_16: adjusted if you will our group product gross margin should have been something closer to seventeen percent
spk_18: for the quarter will it's kind of
spk_6: will it bounce up to that here starting this quarter or how does that kind of play out over the next couple course express a given some of the price increases that you seen thank you
spk_19: yes you are correct and it would be closer to that seventeen percent without that noncash amortization and there will be a little bit more of set amortization that will head to to for and for the step up of inventory
spk_0: that and that will not continue after to got it or it take you so much thank you he met our final question comes from the line of frank pack in in with like three capital markets pleased to see the question a bomb a thanks to my questions want to continue on from line on that the h p pricing was hoping you could just give us a little bit more color and to what some of the contracts look like right now and if there is a an opportunity just to as contracts expire in new contracts come and have some ah step up and pricing over the next couple years with the different spot in deal as well as or brc the contractions our contracts or journalists even though we may have multiple your contracts for from our suppliers they set reset pricing enjoy and so are we will be surprising in elite also with our customers so i don't know that anybody has a a real did fix on worth two thousand twenty three pricing is at this point we'll we'll talk to our suppliers and
spk_19: well we'll make that decision probably under the closer the september october of this year and where with it's can be twenty three when when we get more feedback from them
spk_0: playing the markets over the yeah travel be open will be able to visit them and him a person for that and spender am able to do that way but damn we have a single continued honor what we have their in will we haven't place right now is will be through the rest the year it accountant not gonna just want some fiscal year to got down to your couch contracts added okay and then we as a may also have little more so we do have some we sell on the stock market that in every other facets extra available we will sell some on the spot market but a great deal but we have are coming in is accounted for gonna look authentic sense just wanted to take a little bit higher view and wanted to get some anecdotal feedback you've been hearing in the field now that you've been offering that the full suite preclinical plus research models since november what has been just broad industry feedback how of people then digesting this this change in the market well we were on the ds a sites a week were where a buyer and and the user kinda scary entities as fuck and we've been a all of our customers are well aware of what's taking place and as a result would enable pass that true i blew over customers have been able facts that's true
spk_19: say to understand it's part of doing business that and i'll take it's been a problem for for any of us that i don't peering out here push back and i'm more concerned about their supply which is increasing some of the request for boarding or breeding
spk_0: and boarding contracts that they can i'm starting at that around colony for their own resources and that's i think see some increase in services and so we'll be making some further investments in our facilities and order to expand their services that a deck that into more worried about it this time i would say i hear more worry about access to supply then i hear about necessarily that the prices okay as perfect man just last one for me
spk_20: can you comment on acquisition pipeline at all it's absurd your comments about it is a lot to digest right now but i'm sure that the the acquisition team isn't sitting around right now such as any any update on that front you can provide us with be great
spk_0: well where are we really don't comment on go forward acquisitions i've always felt very open that we're expanding internally and end it oh that's obviously very bad for us to continue to grow internally and as i as rob boys like to see if there's no from facilities and different arbroath that we are constantly looking at extra acquisitions i would say with our growth over the last for five months we'll probably shown up on more radar screen and you did before and we can look it up probably broader array of potential assets and acquisitions going forward but does this is i want i will come in a thing going forward that were always can remain active don't have to balance that again with our team and our billion dollar per per corporate team and are they ready to release our digestion continue to move forward
spk_19: but we we i keep around the few things server and done
spk_6: and we we will continue to do so
spk_0: and i hope that's convince be part of our percentage and again or corporate team and acquisitions and or people they like that and them and what's really rewarding for sure now as we have some people reach out to us and and they like to be part of organization they're looking for an exit strategy or to be part of a full service organizations
spk_21: and it's very rewarding have been called to be an awful would like to be part of your organization no not necessarily going on and going through a process
spk_22: so
spk_6: will we continue to take those goals and move on look for the you're looking at those opportunities
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