Azenta (AZTA) Q4 2026 Earnings Call Transcript

DATE

Wednesday, Nov. 11, 2026

CALL PARTICIPANTS

• Vice President, FP&A and Investor Relations - Yvonne Perron
• Interim President and Chief Executive Officer - Dr. Martin Madaus
• Executive Vice President and Chief Financial Officer - Lawrence Lin
• President of Multiomics - Trey Martin

TAKEAWAYS

• Revenue -- $167 million in the fourth quarter, representing 2% organic growth.
• Sample Management Solutions Revenue -- $94 million in the fourth quarter, growing 4% organically due to momentum in biorepositories and the Consumables & Instruments business.
• Multiomics Revenue -- $73 million in the fourth quarter, representing a 1% organic decline resulting from the timing of a $3 million order pulled forward into the previous quarter.
• Fiscal Year 2027 Revenue Guidance -- $648 million to $660 million, representing organic growth of 3% to 5%.
• Adjusted EBITDA Margin -- 11.6% in the fourth quarter, reflecting strength in recurring revenue businesses and a favorable portfolio mix.
• Fiscal Year 2027 Adjusted EBITDA Margin Guidance -- expansion of 200 to 250 basis points, inclusive of a 100-basis-point dilutive impact from recent strategic investments.
• Restructuring Savings -- $11 million in annualized savings expected from Multiomics labor and footprint actions announced in Oct. 2026.
• SynPlexity Acquisition -- $15 million base purchase price in cash, adding ultra-high throughput pooled gene synthesis capabilities to the Multiomics segment.
• Elegen Licensing Agreement -- $32 million to $71 million in aggregate capital deployment planned for cell-free DNA synthesis technology.
• Share Repurchases -- $118 million for 4.4 million shares repurchased during the full fiscal year.
• Cash and Marketable Securities -- $506 million as of Sept. 30, 2026, with no debt outstanding.
• Free Cash Flow Guidance -- improvement of approximately 25% for the full fiscal year 2027 compared to 2026.
• Sanger Sequencing Impact -- reducing Multiomics segment organic growth by 4 percentage points and total company growth by 2 percentage points.
• Quality Remediation Costs -- approximately $6 million for the full fiscal year related to remediation and rework in the Automated Stores business.
• Sample Management Solutions Guidance -- mid-single-digit organic growth for fiscal year 2027, supported by the U.K. Biocentre ramp.
• Multiomics Guidance -- low-single-digit organic growth for fiscal year 2027 as new genomic workflows offset legacy service declines.
• China Revenue Growth -- 23% for the full fiscal year 2026, demonstrating strong demand in the region.
• Full Year Operating Loss -- $174.7 million, primarily reflecting a $149 million non-cash goodwill impairment charge.

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RISKS

• Madaus stated that the Automated storage business faced headwinds in 2026, "reflecting both customer capital constraints and execution challenges."
• Lin warned that "Sanger sequencing declined, reflecting the longer-term technology and market transition we have discussed previously," noting that the segment remains a headwind for the Multiomics business.
• Lin indicated that the first quarter of fiscal year 2027 outlook is "balanced by the timing of larger customer orders and other revenue phasing," which may impact near-term results.

SUMMARY

Azenta, Inc. (NASDAQ:AZTA) reported fourth quarter revenue of $167 million and issued fiscal year 2027 guidance targeting organic revenue growth of 3% to 5%. Management reported that performance in the second half of fiscal year 2026 improved compared to the first half, driven by commercial execution and strength in the Sample Repository Services business. The company announced strategic investments in Elegen and SynPlexity to expand its gene synthesis capabilities and participate in AI-enabled drug discovery markets. Management stated that fiscal year 2027 will focus on scaling recurring revenue businesses and implementing restructuring actions to expand Adjusted EBITDA margins by 200 to 250 basis points.

• Madaus noted the ongoing transition in the Multiomics segment, stating, "The replacement of Sanger sequencing by other technologies we offer now continued in Q4, particularly in North America."
• Trey Martin indicated that AI is driving demand for experimental validation, noting, "those digital antibody designs still need to be built, tested, and validated experimentally to move the models forward."
• The company plans to launch two new product lines for Automated Stores at the end of fiscal year 2027 to support standardization and modularity.
• Lin noted that excluding the decline in legacy Sanger sequencing, core growth for the Multiomics business would be 4 percentage points higher than reported.
• Management expects free cash flow to be negative in the first quarter of fiscal year 2027 due to the timing of capital investments and restructuring-related cash outlays.
• Trey Martin reported that the geographic diversity of Multiomics remains a strength, with China delivering 23% growth during fiscal year 2026.

INDUSTRY GLOSSARY

• Automated Stores: Large-scale robotic systems designed for the ultra-low temperature storage and retrieval of biological samples.
• Cell-free DNA synthesis: A technology used to produce DNA sequences without using living cells, designed to accelerate research workflows.
• Gene Synthesis: The chemical construction of DNA sequences used in drug discovery and biotechnology applications.
• Multiomics: A biological analysis approach that integrates multiple data sets, such as genomics and proteomics, to study complex biological systems.
• Next Generation Sequencing (NGS): High-throughput DNA sequencing technology that allows for the rapid analysis of large genomic data sets.
• Sample Repository Services (SRS): A business unit providing outsourced storage, management, and logistics for biological and chemical samples.
• Sanger sequencing: A legacy method of DNA sequencing that is being progressively replaced by faster, high-throughput technologies.

Full Conference Call Transcript

Operator: Greetings, and welcome to Azenta Fourth Quarter 2026 Fiscal Financial Results. [Operator Instructions] As a reminder, this conference is being recorded, Wednesday, November 11, 2026. I will now turn the conference call over to Yvonne Perron, Vice President, FP&A and Investor Relations.

Yvonne Perron: Thank you, operator, and good morning, and welcome to everyone joining us today. We would like to welcome you to our earnings conference call for the fourth quarter of fiscal year 2026. Our fourth quarter earnings press release was issued yesterday after market and is available on our Investor Relations website located at investors.azenta.com in addition to the PowerPoint slides and supplementary information that will be used during the prepared remarks today. I would like to remind everyone that during the course of the call, we will be making a number of forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

These forward-looking statements include statements regarding our fiscal 2027 outlook, strategic initiatives, and recently announced transactions. Actual results may differ materially from those expressed or implied by those forward-looking statements. I would refer you to the section of our earnings release titled Safe Harbor Statement, the safe harbor slide on the aforementioned PowerPoint presentation on our website, and our various filings with the SEC, including our annual reports on Form 10-K and our quarterly reports on Form 10-Q. We undertake no obligation to update these statements should future financial data or events occur that differ from the forward-looking statements presented today.

We may refer to a number of non-GAAP financial measures, which are used in addition to and in conjunction with results presented in accordance with GAAP. We believe the non-GAAP measures provide an additional way of viewing aspects of our operations and performance, but when considered with GAAP financial results and the reconciliation of GAAP measures, they provide an even more complete understanding of the Azenta business. Non-GAAP measures should not be relied upon to the exclusion of the GAAP measures themselves. On the call with me today are Interim President and Chief Executive Officer, Dr. Martin Madaus; our Executive Vice President and Chief Financial Officer, Lawrence Lin; and Trey Martin, our President of Multiomics.

We will begin the call with opening remarks from Martin and Trey, followed by Lawrence, who will provide a detailed review of our financial results and our outlook for fiscal year 2027. We will then take your questions at the end of the prepared remarks. With that, I would like to turn the call over to our Interim CEO, Dr. Martin Madaus.

Martin Madaus: Thank you, Yvonne, and good morning, everyone. Thank you for joining us. In August of this year, I assumed the role of Interim President and Chief Executive Officer after the departure of the previous CEO. We closed fiscal 2026 with good progress towards improving the business. The second half was significantly better than the first. Our goal is to deliver consistent performance quarter after quarter. For fiscal year 2027, we will convert opportunity into sustained growth and stronger operational performance. During Q4, we continued to drive the business forward without delay and advanced several major in-flight improvement initiatives impacting revenue and bottom-line growth. I am pleased to tell you that our Q4 2026 revenue came in slightly better than expected.

We're now seeing improvements in booking trends across the business. Expanded commercial coverage and a stronger operating focus have contributed to better execution for our opportunities. Now the highlights for Q4 are another quarter of double-digit year-over-year growth in the Sample Repository Services and the Consumables & Instruments businesses, improved performance across selected sequencing services, and continued growth in Gene Synthesis within Multiomics. We also took decisive restructuring actions to improve operating efficiency and return capital to shareholders through our stock repurchase program. These accomplishments in the face of many changes speak volumes about the committed leadership we have at Azenta. Now 3 months into my role as Interim CEO, I can clearly see a path to a higher-performing organization.

So what does that mean specifically? We have a solid market leadership position in the SRS business, and there are market segments where we can be more successful to drive more profitable revenue growth. The focus is on commercial expansion. In the C&I business, we have differentiated capability in several market segments, and we can achieve more with commercial execution and also with new products. Both are within our control. Our stores business has faced a market pullback and quality issues, but the products we offer are competitive and needed in the market. This created a drag on the SMS business performance in 2026 on both revenue and profitability.

Now we're seeing that product quality is improving, booking trends are better, and we'll be launching 2 new product lines at the end of fiscal year 2027, that are expected to support future growth. Our overall focus is straightforward. The top 3 priorities are profitable revenue growth, consistent execution of our initiatives, and targeted cost control to drive market expansions. Now let me briefly speak about the Multiomics business, also called GENEWIZ. Following Trey Martin's arrival in April, we moved quickly to address organizational gaps and refocus the service offerings on high-growth sequencing services and Gene Synthesis, allowing us to better manage the transition away from the declining Sanger sequencing segment to other offerings.

The difference between the first half of fiscal 2026 and the second half has been impressive. We are still in the middle of the Multiomics business evolution, but we saw encouraging booking trends in Q4. We recently announced 2 strategic deals in the Gene Synthesis space, which are intended to expand our participation in the growing AI-enabled drug discovery market and build a more competitive growth platform across our global lab network. So let me turn now to our fiscal 2026 performance, and Lawrence will provide the detailed financial review later. For fiscal 2026, organic revenue grew 2% with an adjusted EBITDA margin of 9.4%.

Revenue exceeded our latest outlook, while profitability was broadly in line with our most recent guidance. Importantly, performance improved in the second half, giving us a better momentum as we enter now fiscal year 2027. The improvement reflects better commercial execution, stronger performance in North America Multiomics, and progress against several of the operational actions we put in place during the year. Sample Management Solutions delivered low-single-digit organic growth, supported by the strength in our much faster-growing recurring revenue businesses, which are biorepositories and Consumables & Instruments. Automated Stores faced major headwinds in 2026, mainly from constrained customer capital spending. Multiomics also delivered low-single-digit organic growth above our outlook.

While performance was uneven during the year, we saw significant improvement in the second half in North America as the actions we took to strengthen execution began to produce results. China delivered another strong year, and Europe also performed well, demonstrating the value of our global presence and our ability to apply different commercial and operating approaches across the geographies. Azenta has a leadership position in Sample Repository Services with profitable recurring revenue from our core storage business. We continue to expand our biorepositories business through high customer focus, deep workflow integration, and our ability to expand into new end markets. Automated storage remains an important business with strong competitive products and attractive long-term opportunity.

Fiscal 2026 performance was below our expectations, reflecting both customer capital constraints and execution challenges. Our assessment indicates that the issues we experienced in 2026 can be solved. We are cautiously optimistic now based on much better booking trends and also improvements in our quality metrics. Multiomics represents one of Azenta's compelling near- and long-term growth opportunities. Our Synthesis business is performing well with particular strength in China and continued solid performance in Europe. GENEWIZ's scientific expertise, our global reach, and established customer relationships provide a strong platform for expansion into adjacent genomic workflows. The replacement of Sanger sequencing by other technologies we offer now continued in Q4, particularly in North America.

Under Trey's leadership, we have launched a comprehensive effort to address those challenges and reposition GENEWIZ towards faster-growing, higher-value genomic discovery and clinical workflows. Our objective is clear: to strengthen GENEWIZ's competitive position, return Multiomics to a sustainable and consistent growth, and build a more scalable, profitable business. Our approach has 3 components for that. First, we are creating a stronger operating foundation. The restructuring of the U.S. laboratory footprint will create a leaner, more focused model designed to improve capacity utilization and profitability. It also provides a more scalable platform for introducing new genomic offerings while maintaining our commitment to quality and turnaround time. Second, we are adding differentiated capabilities.

Our agreement with Elegen expands our position in rapid high-purity DNA synthesis, while the acquisition of SynPlexity adds ultra-high throughput pooled gene synthesis. Together, these capabilities are intended to move GENEWIZ into faster-growing, higher-value parts of the genomic discovery workflow. And third, we will use GENEWIZ's established scientific expertise, our customer relationships, and our global commercial infrastructure to bring these capabilities to market and scale them effectively. We believe that this combination of a stronger operating model, differentiated technology, and our global commercial reach can position GENEWIZ as the broader partner across the genomic discovery workflow.

I will now turn this over to Trey Martin, the President of Multiomics, to explain how Elegen and SynPlexity strengthen our position across the genomic discovery workflow and how we plan to bring these capabilities to customers. Trey brings more than 30 years of industry experience. Trey is an elite executive with a proven track record of bringing novel gene synthesis technologies to market, notably at Integrated DNA Technologies at Danaher.

William Martin: Thank you, Martin, and good morning, everyone. As Martin described, we are strengthening the foundation of Multiomics while expanding GENEWIZ into higher-value areas of genomic discovery. Elegen's proprietary technology strengthens the DNA build step. Under our exclusive licensing agreement, which is subject to specified rights and exceptions, GENEWIZ plans to manufacture and commercialize products using Elegen's cell-free DNA synthesis platform. By producing high-purity DNA without the conventional cloning step, this technology is designed to simplify the customer workflows and address a key bottleneck to accelerate the move from digital design to discovery testing. SynPlexity adds a complementary capability, the ability to produce thousands of full-length gene designs in parallel.

This proprietary gene synthesis technology allows researchers to explore large design spaces in a single library, moving beyond the traditional gene-by-gene workflows and into very high-throughput, low-cost discovery applications. These capabilities further position GENEWIZ to participate in the rapidly growing use of AI-enabled drug discovery workflows. AI is increasing the number and complexity of biological designs researchers can evaluate, but those digital antibody designs still need to be built, tested, and validated experimentally to move the models forward. GENEWIZ connects the AI-generated designs with the wet lab through synthesis, sequencing, and validation, helping customers accelerate the design, build, test, learn cycle.

The new technologies from Elegen and SynPlexity come at a perfect time when the market is showing strong demand for gene and antibody synthesis products due to the accelerating investment in AI-enabled drug discovery. We believe they will further position GENEWIZ as a competitively differentiated player in the space. Our top priority is to integrate, fully commercialize the consolidated portfolio, and scale these technologies globally. Importantly, we are not building the commercial platform from the ground up. GENEWIZ already has the scientific expertise, customer relationships, and established channels needed to bring these offerings to market. These new investments will initially strengthen our position in North America with the potential to scale across our global network.

Fiscal 2027 will be a year of implementation, scale-up, and early commercialization of these products as we integrate the new capabilities and expand customer adoption.

Martin Madaus: Thank you, Trey. The reshaping of Multiomics reflects our broader approach across Azenta: strengthen the operating foundation, invest where we have a differentiated advantage, and scale those opportunities through disciplined execution. Entering fiscal 2027, our focus shifts from the actions we have taken to the performance we are expected to produce. So our priorities are very clear. First, deliver more consistent and predictable performance through stronger forecasting, pipeline conversion, project execution, and accountability. Second, accelerate sustainable organic growth by scaling our recurring revenue business and advancing our highest priority commercial product and digital initiatives. Third, execute the Multiomics repositioning, improve Automated Stores performance, and successfully ramp our U.K. Biocentre business.

Fourth, expand profitability and cash generation while continuing to invest for growth. Our fiscal outlook 2027 is a significant step-up over 2026. It's largely built on a more productive and higher-performing organization, driving revenue growth and profitability. In my role as Interim CEO, I focused on stabilizing the organization, setting priorities, and completing organizational restructurings that were underway. With that behind us, I'm very optimistic that our execution will be better and more consistent. For fiscal 2027, we expect organic revenue growth of 3% to 5%. Sample Management Solutions growth will be supported by biorepositories and Consumables & Instruments, the U.K. Biocentre ramp, and improved Automated Stores performance.

Multiomics growth will be driven by NGS, incremental contributions from selected sequencing services, and new applications and newer genomic workflows, while we begin the initial commercialization of Elegen and the integration of SynPlexity. Sanger sequencing remains a headwind in 2027, but much smaller compared to 2026. We expect adjusted EBITDA margin to expand approximately 200 to 250 basis points, driven by gross margin improvements, operating leverage, restructuring benefits, and productivity, while we continue to invest into the business. To conclude, fiscal 2027 is about consistent execution and accelerating performance. We have strengthened the foundation of the company, established clear actions to improve execution and profitability, and are investing behind differentiated opportunities that can drive sustainable growth.

We enter fiscal 2027 with confidence in our strategy, urgency around execution, and a clear focus on creating long-term shareholder value. With that, I'll turn it over to Lawrence to review our financial results and provide additional details on our fiscal 2027 outlook.

Lawrence Lin: Thank you, Martin. I'll begin with our fourth quarter and full year financial results, review segment performance, discuss our balance sheet and capital allocation activities, and then provide an update on our outlook for fiscal 2027. To supplement my remarks today, I will refer to the slide deck available on our website. Turning to Slide 4. Let's look at the highlights from the quarter and full year. Fourth quarter revenue was $167 million, up 5% as reported and 2% organically, with SMS organic growth of 4% and Multiomics down 1%.

For fiscal 2026, revenue was $622 million, up 5% as reported and 2% organically, exceeding the high end of our guidance range, primarily due to stronger-than-expected Multiomics activity in the fourth quarter. For the full year, on an organic basis, SMS grew 2%, led by Sample Repository Services and C&I, while Multiomics grew approximately 1%, led by Next Generation Sequencing and Gene Synthesis. These gains were partially offset by continued weakness in Automated Stores and Sanger sequencing. Adjusted EBITDA was $19.4 million in the fourth quarter, representing an 11.6% margin. For the full year, adjusted EBITDA was $58.3 million, within our most recent guidance range with a margin of 9.4%.

Full year profitability benefited from continued strength in our recurring revenue businesses, favorable portfolio mix, and costs and restructuring actions implemented during the year. These benefits were partially offset by continued investments in commercial capabilities, marketing and product development, and other strategic growth initiatives. Profitability was also impacted by lower volumes and operating leverage in Automated Stores and Sanger sequencing, as well as quality remediation activities. Non-GAAP EPS for the fourth quarter was $0.28 and $0.48 for the full year, which included the benefit from the reversal of stock-based compensation expense related to our former Chief Executive Officer's vested awards. Free cash flow was $12 million in the fourth quarter, supported by improved working capital and higher deferred revenue.

For the full year, free cash flow was $27 million, below our expectations, primarily reflecting lower working capital performance and higher capital expenditures. Cash flow generation remains a high priority while we continue to invest in the business. We ended the quarter and the year with $506 million in cash, cash equivalents, restricted cash, and marketable securities. During the quarter, we received repayment in full of the $35 million secured vendor loan related to the sale of B Medical Systems, which closed on July 1, 2026. With this repayment, our receipt of the entire $63 million cash purchase price was completed.

Additionally, during the fourth quarter, we repurchased approximately 2.1 million shares for $68 million under our existing share repurchase authorization, reflecting our confidence in the long-term value of the business. For the full fiscal year, we repurchased approximately 4.4 million shares for $118 million. As of September 30, 2026, approximately $132 million remained available under the repurchase program. Now let's turn to Slide 5 to take a deeper look at our results in the quarter. Total revenue was $167 million, up 5% reported and 2% organically, with a nominal impact from foreign exchange and a $4.5 million contribution from UKBC. Sample Management Solutions generated revenue of $94 million, increasing 9% on a reported basis and 4% organically.

Performance was again led by sustained momentum in biorepositories and C&I, including strong instruments performance, reflecting the durability of these recurring revenue businesses and continued commercial execution. This strength was partially offset by lower Automated Storage revenue, reflecting the impact of softer bookings in prior periods and the timing of project conversion. Importantly, bookings improved in the fourth quarter, providing a stronger backlog entering fiscal 2027. U.K. Biocentre also contributed $4.5 million of reported revenue during the quarter with increased processing activity supporting its sequential performance. Multiomics revenue was $73 million, flat on a reported basis and down 1% organically, exceeding our initial expectations, supported by stronger bookings, particularly in North America.

Multiomics performance improved significantly in the second half with organic revenue shifting from approximately 1% year-over-year decline in the first half to approximately 4% growth in the second half. Within the portfolio, Gene Synthesis grew, led by continued momentum in China, while we also saw strength in other sequencing services, including clinical sequencing. Sanger sequencing declined, reflecting the longer-term technology and market transition we have discussed previously. Adjusted gross margin for the quarter was 47.2%, up 50 basis points year-over-year. The improvement was driven primarily by stronger Multiomics profitability, reflecting improved operating leverage, favorable mix, and the benefits of cost actions.

The improvement was partially offset by lower volumes and unfavorable fixed cost absorption in Automated Stores, continued pressure in Sanger sequencing, and quality remediation costs. Turning to Sample Management Solutions. Adjusted gross margin was 48.9% for the quarter, down 40 basis points year-over-year. The decline primarily reflected lower volumes and unfavorable fixed cost absorption in Automated Stores, together with quality remediation costs. These pressures were partially offset by growth and favorable mix in our recurring revenue businesses, including biorepositories and C&I. Within Automated Stores, we incurred less than $1 million in quality-related remediation costs during the quarter, bringing the full year total to approximately $6 million.

Multiomics adjusted gross margin improved approximately 150 basis points year-over-year to 45.1%, driven primarily by improved operating leverage, favorable mix, and the benefits of cost actions. These benefits were partially offset by continued margin pressure in Sanger sequencing and regional mix. Next, let's turn to Slide 6 for a review of the balance sheet. As I mentioned, we ended the year with $506 million in cash, cash equivalents, restricted cash, and marketable securities. We had no debt outstanding. Capital expenditures were approximately $10 million in the quarter, primarily supporting automation, capacity, and technology initiatives across the business.

Before turning to our fiscal 2027 outlook, I want to provide some financial context on the actions we have taken to reposition the Multiomics business. The restructuring actions announced in October are expected to generate approximately $11 million of annualized savings once substantially complete, which we expect around the end of our second fiscal quarter of 2027. These savings are incremental to the approximately $7 million of annualized savings associated with the actions initiated earlier in fiscal 2026. The benefits are expected to build progressively through the year. In October, we announced the acquisition of SynPlexity and an exclusive license agreement with Elegen, subject to specified retained rights and exceptions to expand our Gene Synthesis portfolio into a high-growth market.

For SynPlexity, we paid $15 million in cash with up to an additional $10 million of contingent consideration. For Elegen, we expect aggregate capital deployment under agreement of approximately $32 million to $71 million. Depending on future equipment purchases and whether we exercise our option, exercisable between 12 and 18 months after signing to convert the license to a perpetual license for $25 million plus any unpaid license fees subject to the license terms. Strategically, the investments add complementary capabilities to our Gene Synthesis portfolio.

SynPlexity adds high-throughput gene library capabilities that broaden our participation in discovery workflows, while Elegen is intended to expand our position in rapid high-purity DNA synthesis and, combined with our existing infrastructure and commercial engine, we believe these investments will support a substantial growth in Gene Synthesis over the longer term. Fiscal 2027 will be primarily an integration, scale-up, and early commercialization year, and our outlook incorporates the associated investment in commercialization and customer adoption. We are funding the initial investments from cash on hand and expect revenue contributions to ramp progressively over the course of the year. Taken together, these actions expand our participation in differentiated higher-value genomic workflows. Turning to guidance on Slide 8.

For fiscal 2027, we expect total reported revenue in the range of approximately $648 million to $660 million, representing organic growth of approximately 3% to 5% year-over-year. This outlook reflects an acceleration in organic growth with the high end of our revenue outlook, including potential contributions for Elegen and SynPlexity. Fiscal 2027 is expected to be primarily a year of integration, scale-up, and commercialization of these capabilities. At the segment level, we expect Sample Management Solutions to deliver mid-single-digit organic growth. We expect continued strength in Sample Repository Services, supported by the recurring nature of biorepository activities and continued growth in Consumables & Instruments, reflecting healthy demand across the installed base and improved commercial execution.

We also expect Automated Stores to return to modest growth. Our backlog provides good visibility into the year, although project timing and conversion remains important considerations. In Multiomics, we expect low-single-digit organic growth. Continued growth in Next Generation Sequencing and Gene Synthesis, together with incremental contributions from selected sequencing services and new applications is expected to more than offset continued pressure in legacy Sanger sequencing services. At the company level, growth is also expected to benefit from modest price realization and the commercial product and digital initiatives underway across the organization. These include improved sales force productivity and coverage, new product launches, digital customer acquisition, and commercial enablement tools.

From a profitability perspective, we expect adjusted EBITDA margin to expand by approximately 200 to 250 basis points year-over-year. This improvement is expected to be driven by gross margin expansion, operating leverage, and the benefits of our footprint optimization, restructuring as well as productivity and automation initiatives. Our outlook includes approximately 100 basis points of expected dilution associated with the Elegen agreement and SynPlexity acquisition. As mentioned, the expected savings from our restructuring actions will build progressively during fiscal 2027. Our guidance incorporates those benefits as well as the investments required to integrate and commercialize the new Multiomics capabilities.

These benefits are expected to be partially offset by normal compensation increases and continued investment in commercial execution, R&D, product development, and digital capabilities. This is an important element of our fiscal 2027 framework. The actions we are taking to simplify the cost structure and improve productivity allows us to reinvest selectively in priority growth areas, while still delivering margin expansion. Finally, we expect full year free cash flow to improve by approximately 25% relative to fiscal 2026, supported by earnings expansion and continued operating discipline, while deploying capital investment for growth. Taken together, our fiscal 2027 outlook reflects stronger organic growth, margin expansion, and improved cash generation.

Importantly, it is driven primarily by actions within our control: strengthening commercial execution, improving productivity, simplifying the operating model, and investing selectively in differentiated growth opportunities. Before I close, I want to provide some additional perspective on the expected phasing of the year. For the first quarter, we expect organic revenue growth of approximately 3% to 4%, and adjusted EBITDA margin expansion of approximately 100 basis points to 150 basis points versus first quarter 2026. Our first quarter outlook reflects continued momentum in key growth areas, balanced by the timing of larger customer orders and other revenue phasing with margin expansion also reflecting the initial investments in Elegen and SynPlexity.

We expect free cash flow to be negative in the first quarter, primarily reflecting the timing of capital investments, restructuring-related cash outlays, and Multiomics integration and commercialization investments. We anticipate cash generation to improve over the remainder of the year. As we move through the year, we expect growth and profitability to strengthen, supported by commercial pipeline conversion, increasing restructuring benefits, and continued execution of our productivity initiatives. This expected phasing is incorporated into our full year outlook. As we enter fiscal 2027, we are focused on delivering stronger financial performance, realizing the expected savings, integrating and commercializing our new capabilities, reinvesting selectively in priority growth areas, and delivering stronger organic growth, meaningful margin expansion, and improved cash generation.

We believe this framework positions Azenta to deliver more consistent, profitable growth and create sustainable long-term value. This concludes our prepared remarks, and I will now turn this over to the operator for questions.

Operator: [Operator Instructions] Your first question is from David Saxon from Needham.

David Saxon: Congrats on the nice quarter here. I wanted to double-click on Multiomics, specifically the North America business. I think fiscal fourth quarter lost a big order to fiscal third quarter. So the stability there was nice to see. So can you just double-click there, what's driving that stability given the order kind of came out of the fourth quarter? How much of that is driven by improved execution given some of the recent commercial investments versus some market demand kind of firming up? And then what's assumed in that Multiomics low-single-digit guide around the North America business stability? Or does that return to growth? And then I'll have a follow-up.

William Martin: Okay. Yes. Thanks, David. We did mention there was a large order pull forward from Q4 into Q3, which benefited Q3. But as you said, Q4 had sustained performance. We've seen that generally. You can look at some of the larger public company proxies for next-gen consumables and see a nice steady continued improvement there, frankly, as we lap the 1-year anniversary of shutdown. So we saw continued execution. You mentioned, I think, appropriately, the initiative to expand commercial significantly across all the businesses at Azenta. We've been using the term seasoning. A couple of quarters under their belt and the reps start to really gain momentum, and we've been pleased to see that sustained as well.

So really, all of those things were factors. The continued execution, the seasoning of the sales folks. And I'll point also to our geographic diversity as a strength, as certain markets have had different issues. It's been really great to be able to take advantage of markets that are growing while you're dealing with headwinds in other markets. The NGS issue, as you said, was particularly a U.S. phenomenon in Q2. But all of those things have been factors for the recovery.

Lawrence Lin: And David, it's Lawrence. Maybe I'd just add something around the 2027 guide for Multiomics at a low-single-digit rate. One of the things I think is worth noting that shows kind of what Trey has been talking about is excluding the significant headwind from our legacy Sanger business, our core growth for the Multiomics business would be 4 points higher and then certainly 2 points higher for Azenta, to give you a little bit more color.

David Saxon: Okay. That's super helpful. And then hopefully, this isn't a super unfair question, but just wanted to get a temperature check on the company's commitment to the LRP. Certainly, it seems like you're on track for that, I guess, extended fiscal '29 timeline. But any components of the LRP, whether it's on the top line or bottom line that you feel better or worse about relative to kind of earlier in fiscal '26 when it was extended?

Martin Madaus: Yes. This is Martin. Our focus is really on '27 and delivering against the commitments that we laid out for this year. Certainly, we see opportunities beyond that for improved commercial execution across the different core businesses. But we are, at this point, really focused on 2027, and also the quarter-to-quarter consistency continuing what we've done in the last quarter, many more quarters and then delivering on a really good '27. That's what we're really focused on.

Operator: Your next question is from Matthew Stanton from Jefferies.

Matthew Stanton: Maybe for Trey, I appreciate some of the color on the deals. I guess can you just talk about a little bit more what has to happen as you integrate these? You have the license agreement, a small tuck-in existing Gene Synthesis business. Like just operationally, as we think about layering these in and when they can start to show up in revenue, can you talk about that a little bit more? And then also you noted the ability to make you more competitive in the U.S. I think this has been an area that's historically been more challenging on the Gene Synthesis side. Just what gives you confidence in the ability to compete more competitively there?

And then also any -- I know it's very early, but just any early feedback from customers since you've announced these deals within the existing GENEWIZ footprint?

William Martin: Yes. Great. Thank you, Matt. When GENEWIZ was founded 27, almost 28 years ago in New Jersey, there were 2 primary strategic differentiators for the company. One was the overnight Sanger sequencing and the other was the, I'll call it, the traditional cloning workflow in Gene Synthesis. We remained very strong in the traditional cloning workflow, which recently has been augmented by the gene to antibody program, which was well-timed, of course, for this surge of activity all around AI-enabled drug discovery. What we were missing, honestly, is a significant part of the addressable market, which shows up not in the traditional E. coli cloned workflow, but in the fragment market.

So fragments are also synthetic DNA, double-stranded, but they tend to be used disproportionately in antibody discovery workflows and in genome engineering and protein engineering at large. So that was a product. We had a few products, but the technology deal, specifically the Elegen deal gives us the opportunity to participate in that, I'll say, half of the market to double our addressable. And that's going to be significant because the call points for those products are the same as the call points for the traditional E. coli cloning market. And then SynPlexity is another layer on top of that. So this is a newer workflow. It does exist in the market today, but it's quite new.

And this is going from N1 or a plate, say, of 96 or 384 fragments or plasmids to a pool of thousands of discrete double-stranded DNA sequences, which can be used in multi- to megaplex experiments. If we think about it on a frame of data per dollar, the SynPlexity pools will allow us to reach levels of scale and levels of cost efficiency for the customers that are not available in the 2 markets I previously mentioned.

But really, you need all 3 to support the entire drug discovery framework, because as people refine their models, as they go from leads to hits, as they scale, our traditional workflow is going to kick in and help people scale up compounds of interest. So it's really important to have all 3 elements, I'd say, in that market, and these deals bring both of those additional layers to us.

Martin Madaus: Maybe one more comment on the commercial side. These are small companies that have products in the market. So they're kind of validated with the customer. Our task is to integrate these companies, scale it up and commercialize, and that will happen in 2027, and that's what we included in our guidance. We think the conditions are good for us. They help us. It's a good allocation of capital. It's slightly dilutive, but it will be positive in the second year. So I think that meets our M&A criteria. But with the expertise that we have and the ability to scale this up, we think this will have a positive impact already in this fiscal year.

Matthew Stanton: Great. Appreciate that. And then maybe just going back to the Multiomics guide, Lawrence, low-singles and then you have the headwind from Sanger, so kind of mid-singles excluding that. Anything to call out just between NGS and Gene Synthesis are both kind of going to be in that mid-single-digit range in terms of the guide for the year? And then also within Multiomics, China has been really strong in 4Q overall in '26, I think up over 20% for both periods. Just talk about durability or visibility into China demand trends built into that Multiomics guide for '27 here.

Lawrence Lin: Yes, Matt, good to hear your voice here. So when we look at NGS and Synthesis, certainly, what we're seeing in terms of the momentum in fourth quarter and what Trey mentioned around the bookings, positive booking trends will continue. So contemplated in our guide is kind of what we are seeing certainly in the last 4 or 5 weeks, but in the fourth quarter. So that is good. In terms of China, and I'll let Trey opine a little bit more on it. We certainly have been seeing double-digit growth for a while. As I've mentioned in prior calls, we've got a really strong commercial team and the demand is there.

Maybe, Trey, do you want to add any additional color?

William Martin: Yes. Thanks, Lawrence. I mentioned a little bit earlier that the geographic diversity of the Multiomics segment is a real strength. For example, we had 23% growth in China for China for fiscal '26. So we're able to participate in different markets and as they differentiate, frankly. So there are product line movements, market movements. I like our diversification in that way.

Operator: Your next question is from Mac Etoch from Stephens.

Steven Etoch: Maybe building off of Matt's question around the Multiomics additions there and specifically on SynPlexity. I just was curious how you view the value of stepping into that part of the discovery workflow compared to your legacy Multiomics business, specifically in terms of the customer base pricing and margin profile? And then I'll have a follow-up as well.

William Martin: Yes. The customer base I mentioned before, there's a real call point synergy here. So the global sales team for Multiomics increased over 20% year-over-year. And that traditional workflow I mentioned before that we've been in for almost 3 decades, the customers are largely the same. There are some new customers, new primarily technology-based companies that are coming into the space, driving the wet lab connection that we talked about in the prepared remarks. But largely, the call point synergy is exactly the same. And your second question was around margin profile. I've been in this industry, as Martin mentioned, for, I'll just say, 3 decades and leave it at that because time keeps ticking.

But there has always been this concept, I mentioned it earlier, data per dollar. There's always been that concept in synthetic DNA that people look to do as broader research panel as they can, get as much data for dollar as they can. There's always been pressure in this market. It was very important as we looked at, honestly, dozens of opportunities, and we settled on these 2 that we looked for opportunities that would have near-term accretive margins as we grow and take advantage of the new market segments.

Steven Etoch: I appreciate the color there. And then, Lawrence, maybe one for you. Just talk about the EBITDA bridge. FY '27 guidance calls for 200 to 250 basis points of margin expansion. It looks to be inclusive of those Elegen and SynPlexity deals. There are some onetime factors in FY '26, the Automated Storage work, the reserve build, the consulting charge, et cetera. Can you just help us bridge the underlying 300 to 350 basis points expansion, meaning what rolls off versus what continues into next year?

Lawrence Lin: Yes. So you can think of the bridge component in 3 to 4 key areas here for, let's call it, the midpoint of the 225-basis-point improvement year-over-year. So let's take first, volume and mix is going to generate roughly 300 basis points improvement. So that means, obviously, the growth, but also kind of the fixed cost leverage that we're starting to see that has shown up really in the third to fourth quarter. Secondly, there's about 400 basis points of improvement, and it's broken by a couple of things. Half of that is associated with the restructuring we called out, the $11 million of Sanger footprint rationalization coupled with the earlier restructuring that occurred in Multiomics in the year.

That's about half of the 400 basis points. The remaining portion is associated with some of the optimization, productivity, and automation that we've been putting into place. Give you an example, we've invested last year in automating some of our China labs. And certainly, that's going to read through this year. Additionally, in our biorepositories, we've automated portions of our registration, and that is going to be a tailwind. Now this is all reduced by a couple of areas. One, we talked about 100-basis-point dilution related to Elegen and SynPlexity as we commercialize and ramp up manufacturing, really positive. We have the chassis for this.

We just have to do some tweaks in the year to make it work, as Trey and Martin mentioned. And then last but not least, there's a portion, which is roughly the 400 basis points associated with growth initiatives. And just to clarify, in terms of math, in the productivity number is the quality kind of pickup year-over-year.

Operator: Your next question is from Vijay Kumar from Evercore.

Vijay Kumar: My first one was on these 2 deals that you announced, Elegen and SynPlexity. I was just browsing through the website. It feels like maybe these technologies have a lower cost per base pair versus the incumbent. Am I thinking about the right way that you now have a competitive cost advantage in the marketplace? Am I looking at apples-to-apples comparison here? And any IP issues that we need to be thinking about your freedom to operate in the market?

Martin Madaus: Maybe I can start, and then I'll hand it over to Trey. When we looked at the technologies available, we certainly looked at the cost opportunity here for these new technologies. Always important when you have these technologies entering new market that you can bring it eventually to a cost competitive position, so we can achieve our margin and profitability targets overall. And I think these 2 technologies give us the opportunity to create that. Is that available right away from the get-go? Well, we will see. I mean we will definitely work towards that goal. We think we can get there. And Trey, maybe you can explain how you view this on a product level basis.

William Martin: Yes. So thanks, Martin. The 2 product lines are different from the 2 technology investments. I mentioned the fragment market before, which is a fast growth segment for the overall DNA synthesis market. That really is addressed by the Elegen technology, but differentiated in their virtual cloning, which gives us super high-quality fragment, which we think will have several useful places in the market. But as we mentioned before, all of these were assessed not only for their differentiated capability and, of course, IP position, but also cost competitiveness.

And again, where I keep mentioning data per dollar, the gene pools, I think, have an opportunity, the SynPlexity acquisition, which does include, to your point, a nice IP stack with it, and certainly FTO. It brings an opportunity to really meaningfully move the needle on the data per dollar question, which is particularly of interest for the surging part of the market in AI model development for drug discovery. So you're, I think, reading it correctly that we think we have some IP differentiated, some performance differentiated, and some cost differentiated technologies here in the stack. But as Martin said, they are earlier stage.

So we jumped right on integration right away, and we're working to globally commercialize these through our now expanded global commercial network to take advantage of the technologies that we've invested in.

Vijay Kumar: That's helpful. And then maybe my follow-up here on -- Martin, I think you mentioned booking trends have improved. It looks like end markets have improved. Last year, you mentioned capital spend was constrained amongst customers. Has that changed? What is driving this improved bookings? And any way to quantify or put that into context on what improved bookings mean?

Martin Madaus: Yes. We've seen improved booking trends in the last quarter across the board, and that is particularly pronounced in Automated Stores, because that business in the previous quarters was impacted by really delays in capital spending. So we see some capital spending from customers being freed up, which is good. These are large bookings, as you know. And so that puts us in a position that we basically have very good visibility for the bookings in Automated Stores for 2027. Basically, we have those. Now we need to execute them. There's some timing question always, but we're very -- that's why we're very confident that this business will recover. We've seen it also in C&I, continued trend.

And that's a combination of slightly better market, but just better execution, more commercial impact, particularly in North America. And we see a continued trend in our SRS business, also good bookings. That's a bit more stable business, but there are a lot of activities in the pharmaceutical market, other markets where you can see, yes, people are investing, so that drives additional market opportunity for us. And I think we covered Multiomics.

Operator: Your next question is from Matthew Parisi from KeyBanc Capital Markets.

Matthew Parisi: This is Matthew Parisi on for Paul Knight at KeyBanc Capital Markets. Congrats on the quarter. You might have touched upon this, but I just want to double click. Within Multiomics, Next Generation Sequencing has been a strong grower over the last few quarters. However, it declined low-single digits this quarter. I was wondering if you could kind of just dive into that a bit more on what drove the decline?

Lawrence Lin: I'll take that. Matthew, good to hear from you. So there's 2 factors for that. So one, we had a timing issue. We had about a $3 million order that actually came in earlier than anticipated into the third quarter versus the fourth. And then when you look at kind of when you bubble up to Multiomics as a whole, Q4 last year and really the last 2 years have been kind of double-digit growers and so they kind of hit the record. So we had a bit of a soft comp -- a hard comp issue, pardon me. That's really why the numbers underlying were negative.

William Martin: Yes. I think I mentioned before that we had a Q2 dip that was a big -- Q3 was a big recovery for it and the sustainment was important. But as Lawrence mentioned, Q4 fiscal '25 was a blowout record quarter. I will add that we have seen bookings improvement even from the level we're at. So we feel confident in the recovery of the NGS subsegment.

Matthew Parisi: Yes, that's really helpful. And then just one more. You mentioned new products in SMS. I was just wondering if you could talk a bit more about those products and when you would expect them to launch in '27.

Martin Madaus: Yes. This is Martin. We have 2 new products for the Automated Stores planned probably at the end of 2027. And these are small stores, I mean, ultra-low temperature, and then what we call modular stores, and the modular stores will help us to standardize our offering and simplify how we go to market. I think the real impact for these products will be in 2028. But we're confident that these products will launch. They work. We just have to make them and then roll them out.

Operator: Your next question is from Brendan Smith from TD Cowen.

Brendan Smith: Congrats on the quarter. I appreciate all the kind of AI color as it pertains to Multiomics here and also in Q&A and kind of just what to watch for there. I guess I wanted to ask how we should also think about the impact on SMS as well. I mean, presumably, if folks are kind of leveraging AI, iterating through more designs, placing more orders. Is it fair to assume that would naturally feed through to more samples requiring storage over time, interest in Automated Stores, I guess, purely on a volume level. Is that kind of the right way to think about the cross read-through?

And I guess if so, it seems like maybe that would come kind of after this initial push on Multiomics. So just any color on how you're seeing the timing there and potential revenue impact that you can expect for SMS over the next couple of years?

Martin Madaus: SMS is certainly benefiting from overall production development of pharmaceuticals, and we see that trend to be strong and to continue, particularly in the United States, where we see expansion of facilities based on the success of certain molecules. So we participate in that. And we see that also to some degree in Europe. So that continues. So there's more of an indirect effect. I think given that AI-enabled drug discovery is much more upstream, if there are more molecules going into clinical and then full-scale production, I think you will see a delayed effect.

But overall, these are 2 good trends that will impact particularly SRS business and, to some degree, the stores as well, because we hope through the improved AI drug discovery workflows, more molecules will enter the clinical stage development, which is the research business, which will be helped, we can capture that in SRS, and in Multiomics. And then once it moves production, we have services for production samples. And so I think overall, the long-term trends are good for these businesses.

Operator: There are no further questions at this time. I will now hand the call back over to Dr. Martin Madaus for closing remarks.

Martin Madaus: Thank you, operator. As we close the call, I want to emphasize that we understand that our stakeholders expect from us consistent execution, accelerating performance, and measurable progress against our commitments. Our priorities are very clear. Our teams are aligned. Now it's time to deliver. We look forward to updating you on our progress throughout the year. Thank you again for joining us today.

Operator: Thank you. Ladies and gentlemen, the conference has now ended. Thank you all for joining. You may now disconnect your lines.

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