Inotiv, Inc.

Please stand by. Your program is about to begin. If you need assistance during your conference today, please press star zero. Good day, everyone, and welcome to today's Innotive First Quarter Fiscal 2025 Earnings Conference Call. At this time, all participants are in listen-only mode. Later, you will have the opportunity to ask questions during the question and answer session. You may register to ask a question at any time by pressing star one on your telephone keypad. You may withdraw yourself from the queue by pressing star two. Please note this call may be recorded, and I will be standing by if you should need any assistance. It is now my pleasure to turn the conference over to Mr. Stephen Halper. Please go ahead, sir.

Thank you, Jess, and good afternoon, everyone. Thank you for joining today's quarterly call with NSF's management team. Before we begin, I'd like to remind everyone that some of the statements that management will make on this 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 expectation 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, including risks and uncertainties that could cause results to differ from forward-looking statements. Management will also discuss certain non-GAAP financial measures in an effort to provide additional information for investors. Definitions of these non-GAAP measures and reconciliations to the most comparable GAAP measures are included in the company's earnings release, which has been posted to the investor section of the company's website, www.initiv.com. And it's also available in the form 8K filed with the Securities and Exchange Commission. If you haven't obtained a copy of today's press release yet, you can do so by going to the investor section of Initiv's website. Joining us from the company this afternoon are Bob Leisure, President and Chief Executive Officer, and Beth Taylor, Chief Financial Officer. John Sagar's Chief Strategy Officer will join us for the question and answer portion of the call. Bob will begin with some opening remarks. Afterwards, Beth will present a summary of the company's financial results for our first fiscal quarter of 2025, and then we'll open the call for questions. It is now my pleasure to turn the call over to Bob Lee, our CEO.

Bob, please go ahead. Thank you, Steve, and good afternoon to everyone joining our call today. During the first quarter, we moved forward with many of our objectives, which included improving the company's liquidity position, reducing revenue volatility, continuing to focus on client satisfaction and client relationships, and continued integration efforts as one company. I'll spend a few minutes on our first quarter results and highlights. To enhance liquidity, our recent equity offering provided net proceeds of $27.5 million. We're very pleased with the investor interest in that company that's offering. The additional equity will help reduce liquidity risk going forward, allow us to continue to make long-term strategic decisions, provide additional stability. To reduce RMS volatility, we've expanded our NHB client base for calendar 2025 and pre-sold much of our NHB inventory, which we anticipate should deliver more consistent revenue streams. In addition, we also expect to continue to see an increase in our revenue from colony management services in calendar 2025, as we did in 2024, and we continue to invest in our NHP facilities in order to maintain this momentum. We continue to make progress integrating and improving our North American transportation distribution systems, which we bought in-house about a year ago. We believe this has helped to improve the client experience as well as our efficiency. Last quarter, we announced that we'd continue our site optimization program in North America for the RMS business, which included closing three additional sites, of which two are owned and one is leased, while expanding an existing leased location. We continue to execute on this initiative. This expansion is expected to be an approximately $5 million investment, and we intend to use 10 Improvement dollars along with proceeds from the sale of the two owned facilities to pay for this consolidation project. Once completed, we expect to be, which we expect to be at the end of fiscal 2026, we estimate approximately 4 to 5 million a year in cost savings from reduced repair and maintenance expense on facilities, lower cost of production along with improved service for clients while production capacity is expected to be unchanged. For the first quarter of fiscal 2025, total revenue was 119.9 million compared to 135.5 million in the first quarter of fiscal 2024, representing a decrease of 15.6 million or 11.5%. This decrease was mainly due to a 13.5 million reduction in the NHP revenue, which was driven primarily by pricing. The lower pricing and some lingering high-cost inventory again negatively impacted NHB margins during Q1 of fiscal 2025. In Q2 of fiscal 2025, we expect to see these margins improve compared to Q4 fiscal year 2024 and Q1 fiscal year 2025. DSA revenue decreased slightly. from 44.7 million in Q1 of fiscal 24 to 42.8 million in Q1 of fiscal 2025. While DSA operating margins have remained stable, the decrease in DSA revenue was mainly due to a decline in our discovery services revenue. We had a strong quarter for new DSA awards, which was partially offset by cancellations. We saw a continued trend of strong awards for our new safety assessment services that were added over the last two years. And we saw a 16% increase in discovery service awards in Q1 of fiscal 2025 versus Q1 of fiscal 2024. This was the first quarter of reported growth we saw for discovery service awards in the last two years. For the trailing 12 months, discovery service awards are still down 17% compared to the prior 12-month period. So, it's still too early to say whether this is truly a trend, but it is encouraging, and we believe that some of the changes we've made to our Discovery Services sales team, the marketing team, and their sales approach a year ago are beginning to have an important impact. Now, let me provide some comments on what we are seeing in the market today and some forward-looking thoughts on our different business segments. Going into calendar year 2025, we will continue to focus on process optimization, innovation, exceeding client expectations. We expect to see year-over-year revenue and adjusted EBITDA growth each quarter for the remainder of fiscal 2025, as well as reduced AHP revenue volatility as compared to fiscal 2024. In the DSA business, we are emphasizing growing our existing client base through cross-selling our broad portfolio of products and services and attracting new clients to gain market share. We believe the additional investments we've made in our sales team in 2024 and planned investments for 2025 will continue to benefit us in fiscal 2025 and 26. In the RMS segment, we've added new clients based on our NHP pre-sales, current purchase orders, and demand for quality management services, we are optimistic about our goals for increasing RMS revenue in calendar 2025. Overall, we remain confident going into 2025. We're also preparing for 2026 and 2027. The geopolitical and market condition, risk, and uncertainties will remain with us as they do for all companies. However, we are committed to building a business that will create value for our clients, employees, and our shareholders, and look forward to our future. I'll now turn the call over to Beth, who will provide a more detailed synopsis of NS's results for the quarter.

Thank you, Bob, and good afternoon, everyone. For the first quarter of fiscal 2025, total revenue was $119.9 million, compared to $135.5 million in the first quarter of fiscal 2024. This was a $15.6 million or 11.5% reduction in sales from the prior year's quarter. And as Bob said earlier, most of this reduction was a result of reduced NHP pricing in the U.S. within our RMS segment. RMS revenue for the first quarter of fiscal 2025 decreased $13.7 million, or 15.1%, compared to Q1 of fiscal 2024. As discussed earlier, the decrease in RMS revenue was due to the lower NHP-related product and service revenue, mainly as a result of a lower average selling price for NHPs in the U.S. We sold approximately the same number of NHPs in fiscal Q1 2025 compared to fiscal Q1 of 2024. However, the NHP average selling price in the U.S. in Q1 of fiscal 2025 was approximately 30.3% lower than in Q1 of fiscal 2024 and 1.6% lower than that in Q4 of fiscal 2024. We have indicated on previous conference calls that NHP sell prices declined from the highs we saw in Q4 of fiscal 2023 and the first half of fiscal 2024. The lower pricing and higher cost inventory again negatively impacted NHP margins during Q1 of fiscal 2025, and we believe RMS margins for the remainder of calendar 2025 should improve from here. GSA revenue in the fiscal 2025 first quarter was $42.8 million compared to $44.7 million in Q1 of fiscal 2024. The quarter-over-quarter decrease in GSA revenue was primarily driven by a decrease in Discovery Services revenue. Overall, net new GSA orders this quarter were $42.3 million versus $33.7 million last quarter and $63.8 million in Q1 of fiscal 2024. The conversion rate in the first quarter of fiscal 2025 was 32.8%, slightly up from 32.6% in the prior year period. The DSA cancellations and negative change orders in the first quarter of fiscal 2025 were approximately 54% higher compared to the prior year period, which had the lowest cancellations in the last two years. Cancellations in the trailing 12-month period were approximately 1% less than the prior period. The overall operating loss for the first quarter of fiscal 2025 was $15.5 million compared to an operating loss of $9.4 million in the first quarter of fiscal 2024, primarily due to lower NHP margins as previously discussed. Partially offsetting the decreases in NHP margins were decreases in restructuring costs, transportation costs, and costs related to sites closed in connection with our optimization plan. There were slightly lower DSA sales, which resulted in relatively flat DSA operating margins. Consolidated net loss attributable to common shareholders in the first quarter of fiscal 2025 totaled 27.2%. $6 million or a $1.02 loss for diluted share. This compared to consolidated net loss attributable to common shareholders of $15.4 million or 60 cents of loss for diluted share in the first quarter of fiscal 2024. In the first quarter of 2025, adjusted EBITDA was $2.6 million or 2.2% of total revenue compared to $9.6 million or 7.1% of total revenue for the first fiscal quarter of 2024. Non-GAAP operating income for our DSA segment in the first quarter was $7.1 million or 5.9% of total revenue compared to $6.9 million or 5.1% of total revenue in the last fiscal year's first quarter. As we continue to fill recently added capacity, we believe we will see margin improvement through operating leverage. The net book to bill ratio for DSA in the first quarter of fiscal 2025 was 1.01 times to 1. Our trailing 12 months book to bill was 0.87 times to 1. DSA backlog was $130.4 million at December 31st, 2024. compared to $129.9 million at September 30, 2024, and $152.3 million at December 31, 2023. In our RMS segment, non-GAAP operating income in the first quarter of fiscal 2025 was $9.4 million, or 7.9% of total revenue, compared to $16.9 million, or 12.5% of total revenue in the first quarter of fiscal 2024. Interest expense in Q1 of fiscal 2025 increased to $13.8 million from $11.4 million in the first fiscal quarter of 2024 due to an increase in interest rates, interest associated with the second lien note issued in September 2024, and periodic growth on our quality credit facility. Our balance sheet as of December 31st, 2024 included $38 million in cash and cash equivalent as compared to $21.4 million on September 30th, 2024. Our quarter in cash balance includes the net proceeds from our recent equity offering. Total debt net of debt issuance cost as of December 31st, 2024 was $396 million compared to $393.3 million on September 30, 2024. This includes $111.6 million of convertible notes as of December 31st, 2024 and our second lien note of $19.2 million. Net cash used in operations for the three months ended December 31st, 2024 was $4.5 million compared to cash used in operations of $6.5 million in the three months ended December 31st, 2023. In October of 2024, we entered into a third amendment with the seller of OBRC and extended the payable to January 27th, 2026. Capital expenditures in the first quarter of fiscal 2025 were $4.5 million, or approximately 3.7% of total revenue. The first quarter of fiscal 2024, capital expenditures were $5.6 million, or 4.1% of revenue. We expect to spend less than 4% of revenues for CapEx in fiscal 2025. With respect to guidance, as you know, we withdrew our fiscal 2024 financial guidance after we reported Q2 2024 results. While we continue to feel good about the progress we have made in recent quarters, we are not providing fiscal 2025 guidance at this time. As we have stated previously, we hope to provide guidance once we have greater clarity on the market and client demands. Needless to say, management has developed a comprehensive fiscal 2025 annual operating plan designed to continue to optimize our capital allocation and expense base and improve our operating results as discussed earlier. The plan forecasts compliance with the updated covenants under our latest amendment to the credit agreement entered into in September of 2024. And with that financial overview, we will turn the call over to our operator for questions.

Thank you. At this time, if you would like to ask a question, please press star one on your telephone keypad. You may remove yourself from the queue at any time by pressing star two. Once again, that is star one to ask a question. We'll go first to Frank Takanan with Lake Street Capital Markets.

Great, Bob, thanks for taking the questions. I was hoping to start with maybe a little bit more of an update around NHPs. I was hoping to kind of ask two parts to it. One, have we worked through some of the higher cost NHPs throughout the first quarter or do we still have some of that to work through in the remainder of the year? And then two, just any update from ordering patterns from customers would be good to hear as well.

Thanks. to calendar 25, we have worked through all the higher-cost NHPs at this point. So, I think that that is passed. As far as ordering batteries, we have significantly changed. We said we would do last February. We significantly changed our process this year. Last February, we went into the year without any real commitments, and we were selling most on the open market. It was still fairly volatile. And then people didn't want to, at that point, I weren't sure if we wanted to lock into commitments. Going into this year, you know, as prices normalized a little bit and stayed stable over the last two or three quarters, we do have more solid commitments for this year going into this year. We do know what people's expectations are. We can deliver, and they may move a week or two. We'll work with our customers. But what we also do now is we may sell them more so they can board them with us. So that gives us the ability to be a lot less volatile than we have. So I think we'll be a little more consistent. We can still see, as we have in prior years, things slip in the last, you know, between the quarters. If large shipments may take place, you know, slip from one a couple weeks or for one month to the next, which can shift some things through quarters. But for the most part, you know, as I look at our cash flow and our stability or volatility, we're going to be much less. And I think we're in a much better position going into this year. I think it'll be as significant as we get into Q2, Q3, and Q4 going into this year.

Okay, that's helpful. And I was hoping I could ask one about the site's development. I know it's a little bit challenging to predict exactly how it's going to go, but with the contemplation of Cambodia NHPs being no longer being able to be exported worldwide. How could that impact your dynamic? I realize it was pushed to the following year, but clearly there's some skepticism around that supply base. Maybe just talk through theoretically how that could impact the global NHP supply demand dynamic.

Well, actually Cambodia is an important part of the global supply base, and they're still exporting out of Cambodia I think in the range of 9,000 a year. So if you take that out of the global supply base, that puts a lot more pressure on what is available from the other existing supply bases. They did have a signing meeting this week. I think they pushed that decision off. They're going to revisit again probably in November of 25. But right now that's, you know, we were ready for, I would say we prepared for either event And we have a lot of contracts starting for this year on the sales side and the buyer side. And, you know, whatever those people choose to do, we will prepare for. I understand it's very important, but we can't control that. We need to be able to adapt. So we've worked very hard in the last two or three years to diversify the countries, diversify the people we work with, and to qualify additional suppliers. And we continue to maintain relationships. with farms in Cambodia. And we will comply with whatever they decide and adjust accordingly. But I'm very proud of the team we have, how they've adjusted. It's become much more agile. And I think it's, you know, our customers are looking for ways to reduce risk. And, you know, with that, you know, the business continues to evolve. We'll evolve with it.

Okay. Just last one for me, I was hoping you could help us out a little bit with maybe adjusted EBITDA cadence throughout the year. I heard the comment around staying in compliance with the covenants. But now that we're through some of the higher cost NHPs and expecting a gross margin lift, how should we expect that to flow into adjusted EBITDA for the fiscal second quarter ended March?

Well, I think what we'll see over the year, not giving guidance, but for us to hit those covenants, it's probably there, as some of you identified in your analyst reports, that we'll have to grow sales. And, you know, and we expect sales will grow year over year, and I think I alluded to that in my comments. So, seeing sales grow year over year, and having just seen that quarter that we finished have lower sales, you can, you know, you can pretty well see that we think that we will, We'll have a pretty good Q2, Q3, and Q4. I think if you also see that our original covenants, we are supposed to have a trailing 12-month EBITDA in December. Beth, I believe it's $1.5 million. That's trailing six months, two quarters with our covenant, 1.6. And we're coming out of this quarter at positive, I believe, closer to eight. You know, we're obviously ahead of where we thought we would be, and we're pleased with the results. And I think that the trailing nine months now going into March, I think our covenant has said, I believe it's 13.5, Beth? Yes. And so, you know, we're in pretty good shape. And as we look to the ginger quarters, we're fairly bullish compared to where we have come from. We have some, I think, great opportunities in front of us with what we have done. We have right-sized all of our facilities for pretty good economics. And that's something we've worked hard on the last two years. So we don't have to worry about as much. Other than the site consolidation, we have one in North America between a couple sites. We don't have to worry about brick and mortar and right-sizing. We've done a lot of the integration. And we started up some new services and expanded some sites. And, again, the DSA business, as those sites grow, we're going to see some significant margin improvement of those sites. So I'm excited to see those grow, and we saw good growth, as I just alluded to, in our TTI discovery services and some of the service, our startups, which I think will enhance, we'll see in the back half of this year. So I think we'll see some margin improvement, for sure, and we'll see some growth. on the back half of the year on the increase in sales and improving margins.

Once again, if you would like to ask a question, please press star 1 on your telephone keypad now. We'll move next to Matt Hewitt with Craig Callum Capital Group.

Good afternoon. Thanks for taking the questions. And maybe to follow up on one of the things you said earlier, Bob, you kind of noted how there tends to be some lumpiness, particularly at the end of quarters with NHP sales. Did you have any of that this quarter? Did any of those sales slip out of Q1 into Q2?

Yeah, we probably did. You know, we could have some next quarter. And, you know, that could swing, you know, three or four million in sales very easily. But, you know, Again, overall, if it's switched, it's plus four or five weeks. Last year, it could slip six months. We don't have anything like that. If it slips four or five weeks or six weeks even, we're okay with that. So, I'm not, you know, not really worried about that. Last year was a lot different market, I think, than what we see going into this year. Last year, people had inventory. They were reducing inventory. You know, this year we even have some deposits going in which back up some of those sales and orders. So, again, I think we'll see less volatility. And I think we're doing – hopefully we're doing a good job. This year one of the big differences was we had brick and mortar, we had integration, we had optimization, and we had volatility. This year we've taken a lot of that out. This year what we need to focus on is customer satisfaction and be very customer driven. We take every customer – We're small enough and agile enough. The rest of our business works very well. Economics are set up well right now. What we're doing, we have good people. You know, one of the things we didn't talk about, but, you know, last year we had some challenges between the DOJ issues and some of the things going on. And we probably had some customers that made very nervous in the bullets. And right now, you know, obviously they see some of those customers returning. I see our turnover as low as it's ever been. And that was a challenging year for our industry and for our business. And as others go through that, I'm really, really pleased with the lower turnover. Our management team has stayed together. It gives us a much better opportunity to do a great job for our customers. So, we're going to keep that customer focus, continue to bring them back, continue to make sure we keep our employees satisfied. And I think the business will take care of itself. No, we don't have all the tailwinds that we have going into a biotech funding that's up 20%, 30%, 40% right now. Nor are we expecting that. If that happens, that's great. But right now, we don't see that. We're not expecting that. But I still think we're going to grow in spite of that.

Got it. And then shifting gears a little bit, The book-to-bill and a couple of the other metrics have kind of been bouncing around a little bit. The one in particular that I wanted to mention was the cancellations. It seemed like the last couple of quarters you were seeing some improvement that those cancellations were declining, kind of getting back to a normalized level. It seems like that bounced back up here a little bit. Is that just a function of what's going on with pharma companies kind of reprioritizing pipelines and kind of, acting quicker on the fill-and-kill decisions, or is there some other reason that you saw that number elevated here in Q1?

Matt, I think we saw it elevated because we had one large project, which, you know, about $4 million that got canceled, and that's over $4 million, and that's significant to us. So we have large POs. If one project cancels, it's significant. And so one project can make a difference. And usually we don't have those large projects to cancel this quarter. We had an anomaly. We did have a large project that got canceled to throw that bill number down or it would have been positive. So, again, I'm not overly worried about it because, you know, I think that was one that we'll see every once in a while like that. But hopefully, you know, we don't have a lot of those out there typically. I think what you can take away is that We made a lot of change for sales organization a year ago on how we approach discovery, translational sciences, and even a little bit safety assessment. And seeing that the 14 and 15% growing awards for the three months Q1 in discovery, for me, is a pretty good green shoot. We're looking for that, you know, where we expect to go. But that's something that we've seen year-over-year decline for several years. And that's a pretty important business. It's very high-cost structure. We have a lot of leverage. There's an increase in sales. A lot of this can go to our large percent that goes to the bottom line. So I was encouraged, you know, although the cancellation was discouraging, I think I probably had more positive takeaways from the quarter than because I think that was a one-off, one large project that really drove that negative cancellation number up. Got it.

Got it. All right. One last one for me, and then I'll hop back into queue. But as you look at the remainder of this year, and given some of your success with some of the newer tests or services that have been rolled out here recently, do you envision rolling out some additional services over the course of this year, or is it more about just selling more of your existing portfolio? Thank you.

Matt, we'll continue to be very customer-driven. If our customers are looking for additional service and we're outsourcing what we feel that we can do a better job, we will consider that. Right now, we're not, you know, I want our focus to be on our customers and delighting and meeting and exceeding those expectations and really improving communication. I think we have, you know, a lot of good services. You know, we're going to We have a couple small add-ons that we're looking, but they're not going to be significant. They'll allow us to go to some sites and be a little more sophisticated. But they're not significant. We're buying new equipment or hiring people. What we're doing is we're training and making sure our people are trained to do these things and are willing to prove it. So they're not the new ones where I mean new brick and mortar, new technology. It's really training and expanding upon what we have in place.

Okay, great. Thank you.

Thank you, Matt.

Again, it was star one if you had a question. We will go next to David Winley with Jefferies.

Hi, good afternoon. Thanks for taking my questions. Wanted to understand the accounting revenue recognition cadence on pre-sales of inventory. Are these essentially commitments or is this a transaction that triggers rev rec in the first quarter when you pre-sell inventory?

No, we don't recognize any revenue until there's a transition of ownership. So we don't recognize revenue of orders when they come in. It's only after they are sold and the transaction is complete. So no, there's none of that that's been recognized.

So when you say you're pre-selling inventory, you have more orders in hand than you did entering last fiscal year, but those haven't materialized in sales.

That is correct. We have orders, signed orders, and we may have deposits, but not revenue recognition. Okay. And correspondingly, we also have probably more deposits out with our suppliers. So we have We have bought further in advance and we have sold further in advance.

Okay. And in the case of, so maybe invoking then the colony management services, if I understand correctly, the way you're saying that, I mean, I would guess that in those cases, the client has bought the animal and you're boarding them and title has changed hands. Is that right?

Yes. If we are boarding for, and then the Title has passed specifically. And we would be boarding.

Okay. Can you give me a sense of proportion? Like how much of your RMS revenue is, or first of all, I guess, colony management services are in RMS. Is that right? And then how much of RMS revenue might colony management services represent?

Thank you. Our calling management services for the RMS business, oh, I think it, you know, a couple years ago was 22. It may have been in the range of 17 million. And I don't think we've ever given these numbers before, but we can do it publicly. Last year was probably closer to 27 million, and I think we'll see that grow another 20% as we go forward. I think it's, you know, it's some customers and large pharma, and it's all about looking to make sure they reduce the risk by having HPs, but they may not have a place to store them, but they would like to buy it, make sure that they have access, and reduce their risk and their volatility. And so we need to make sure that we're setting up our business to be able to comply to help them reduce their risk also.

Do you have plenty of I don't know if the animals even have to be moved, but like for colony management, do you have to have a dedicated space? I presume this is in Alice, Texas, but do you have plenty of room to grow that business without kind of... We have plenty of acres.

And that's a very good question. We have about 700 acres down there. We've built up and invested quite a bit the last couple of years in and transportation and roads and water, sewer, hospitals, veterinary support, things that the infrastructure, you know, commissary, things that the infrastructure you need to have support for the colonies. Now we are building out brick and mortar places to do boarding and indoor outdoor facilities with improving heating and airflow and water and whatnot. We have been pretty much in full capacity for the last couple of years. And so, as we've been able to expand, we've been able to increase that revenue base. And so, that is where some of our expansion dollars are going this year. Understood.

On your .

We have 700 acres, another 700 acres. We're probably using about 250. Yeah.

Yeah. Yeah. On your NHP sourcing comments, so you're through the high-cost inventory, should we think of the move now to be kind of a step function down, or is it more of a glide path over the next couple of quarters to a lower cost level?

I think you see a step function. down because I think most of the higher cost NHPs are out and the pricing is set for next year. So I think we'll see that more of a step. And we'll see, you know, I think we'll see increase in sales each quarter. So we won't see, I think the margins could see improvement, but we'll see, I think that each quarter the sales may improve.

Okay. And then last one for me. I mean, it does sound like the DSA gross bookings were, you know, kind of meaningfully better sequentially, and then you have this one large cancellation. Can you talk to us about the mix of that? Like I'd love more color on, you know, what clients are those coming from and what type of services are they – wanting to engage you on. I think, if I remember correctly, your DSA business does not have a lot of NHP-related services, so I think you would tell me that it's mostly rodent studies, but I'd love any additional color on what kind of the profile of that improving bookings picture looks like. Thank you.

Well, our DSA backlog in customers are over 95, 96% biotechs. So that, you know, that's what we look for. As we've mentioned between large pharma and biotech, it is biotechs. We are getting, for some of the unique services we have, such as genetic top technology, some of our discovery work, we may see some increase in work from large pharma. But for the most part, it is is biotech-focused. As far as different, you know, service, I think we, again, some of the services that we've built up, the biotherapeutics and the genetic toxicology, we are seeing some, and ETS right now. We saw some pretty good awards last quarter. Those are unique. We have a good scientific team there. And those have been very helpful. Then I think there's the general safety assessment. The general safety assessment, again, we like to lead with science and work with customers. We identify them at the discovery stage, and that's starting to happen. But that probably is still fairly flat to down as far as because there's capacity in the market, and people don't need to still work that far in advance. We're also probably seeing an increasing amount, and some of those things I outlined, as blanket purchase orders come in. People want to move fairly quickly and gain their confidence. They've used this a little bit in the past, but now they're giving us more meaningful blanket purchase orders so we can move more quickly with them at work and then partner with them more than we have in the past. That's very encouraging. So I think for the commodity safety assessment, probably not as I think there's still flags and still, if we can leave with science, it's good. But if somebody has specialty services in science that we've been working on, we're probably seeing more growth. And again, as I said, discovering translational sciences would be nice for us to see that growth. Got it. That's very helpful. Thank you.

It appears we have no further questions at this time. I will now turn the program back over to Mr. Bob Leisure for any additional or closing remarks.

All right. Well, thank you, everyone, for joining today's call. We're very pleased with the events and results of this past quarter that have indicated and made progress towards reducing our revenue volatility, improving our cash flow, and liquidity, I think, going forward. We'll continue building Unitip as a high-tech, flexible provider with strong scientific capabilities that is focused on our clients' needs, positive environment for employees to have a career and grow, and generate positive returns for our shareholders. We'll continue to pay attention to the details Get better every day to 4 to 25. Thank you for your time today.

Thank you. Ladies and gentlemen, this does conclude today's program. We thank you for your participation. You may disconnect at any time.