Release Date: February 05, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Inotiv Inc (NASDAQ:NOTV) improved its liquidity position with a recent equity offering, raising $27.5 million.
• The company expanded its NHP client base and pre-sold much of its NHP inventory, aiming for more consistent revenue streams.
• Inotiv Inc (NASDAQ:NOTV) made progress in integrating and improving its North American transportation distribution systems, enhancing client experience and efficiency.
• The company expects year-over-year revenue and adjusted EBITDA growth each quarter for the remainder of fiscal 2025.
• Investments in sales teams and marketing are anticipated to benefit Inotiv Inc (NASDAQ:NOTV) in fiscal 2025 and 2026, with a focus on cross-selling and attracting new clients.

Negative Points

• Total revenue for the first quarter of fiscal 2025 decreased by 11.5% compared to the same period in fiscal 2024.
• NHP revenue declined by $13.5 million due to lower pricing and high-cost inventory, negatively impacting margins.
• DSA revenue decreased slightly due to a decline in discovery services revenue.
• Operating loss for the first quarter of fiscal 2025 was $15.5 million, compared to a $9.4 million loss in the first quarter of fiscal 2024.
• The company is not providing fiscal 2025 guidance due to market uncertainties and client demand clarity issues.

Q & A Highlights

• Warning! GuruFocus has detected 8 Warning Signs with NOTV.

Q: Have you worked through the higher cost NHPs, and what are the current ordering patterns from customers? A: (CEO) We have worked through all the higher cost NHPs. Ordering patterns have stabilized, and we have more solid commitments for this year compared to last year. We anticipate more consistent revenue streams with reduced volatility.

Q: How could the potential halt of NHP exports from Cambodia impact the global supply and demand dynamics? A: (CEO) Cambodia is a significant part of the global supply base. If exports stop, it will pressure other supply bases. We are prepared for either scenario and have diversified our supply sources to mitigate risks.

Q: Can you provide guidance on adjusted EBITDA expectations for the fiscal year? A: (CEO) While not providing specific guidance, we expect year-over-year sales growth and improved margins as we progress through the year. We are ahead of our original covenant expectations and anticipate positive EBITDA growth.

Q: Did any NHP sales slip from Q1 into Q2, and how does this affect revenue? A: (CEO) Yes, some sales slipped into Q2, which can shift revenue by a few million dollars. However, this is a short-term shift, and we expect less volatility compared to last year.

Q: What is the impact of cancellations on your book-to-bill ratio, and what caused the recent increase in cancellations? A: (CEO) We had a significant $4 million project cancellation, which impacted the book-to-bill ratio. This was an anomaly, and we are seeing positive trends in new awards, particularly in discovery services.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.