AZTA - NASDAQ

Greetings, and welcome to the Azenta Q2 2025 Financial Results. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded, Wednesday, May 7, 2025. I will now turn the conference over to Yvonne Perron, Vice President, FP&A, and Investor Relations.

Thank you, operator, and good morning to everyone on the line today. We would like to welcome you to our earnings conference call for the second quarter of fiscal year 2025. Our second quarter earnings press release was issued before the open of the market today and is available on our Investor Relations website located at investors.azenta.com, in addition to the supplementary PowerPoint slides that will be used during the prepared remarks today. Please note that effective the first fiscal quarter of 2025, the results of B Medical Systems are treated as discontinued operations. 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 Litigation Securities Act of 1995. There are many factors that may cause actual financial results or other events to differ from those identified in such 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 make 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 is our President and Chief Executive Officer, John Marotta; and our Executive Vice President and Chief Financial Officer, Lawrence Lin. We will open the call with remarks from John, then Lawrence will provide a detailed look into our financial results and our outlook for fiscal year 2025. We will then take your questions at the end of the prepared remarks. And with that, I would like to turn the call over to our CEO, John Marotta.

Thank you, Yvonne. Good morning, everyone, and thank you for joining us today. I would like to start by providing an overview of our performance in the quarter, then moving to commenting on the broader macro environment, and devote the remainder of my opening comments to discussing the significant operational progress we have made this quarter, while providing some tangible examples of what we have been up to and the opportunities we see. We are pleased to announce that we delivered a solid second quarter and that the positive momentum we saw starting this fiscal year continued. On a year-over-year basis, organic revenue grew 6%, and adjusted EBITDA margin expanded by 400 basis points. Revenue in Multiomics grew 3% on an organic basis, with the strength of Next Gen Sequencing. In Sample Management Solutions, revenue grew 8% on an organic basis, where we saw growth in Consumables and Instruments, Product Services, as well as Sample Storage. Despite the uncertainty of the broader macro picture, we remain committed to our full year 2025 guidance of organic revenue growth between 3% and 5%, and adjusted EBITDA margin expansion of 300 basis points. Regarding B Medical, the sale process is ongoing, and we believe the transaction remains on track to be announced in the second half of the fiscal year 2025. Lawrence will go into more details on the financials. The last several months have presented us with an uncertain and evolving macro environment, including tariffs, funding headwinds for U.S. academic research, and rising geopolitical tensions. In response to these developments, our executive team continually evaluates the impact we anticipate to our business line, and we meet weekly to monitor, assess, and counteract any issues. We have supplemented our understanding by reaching out to over 100 customers and asking them a set of standardized questions that we track to understand how the macro uncertainty impacts them and better understand what Azenta can do to be a great partner. Based on our assessments to date, we believe the impact from the recently announced reductions of NIH funding levels will result in approximately 1% headwind to our revenues. We’ve immediately put in place countermeasures such that this reduced revenue will have near zero impact on our EBITDA. We’ve also analyzed recently announced tariffs and have similarly identified countermeasures to negate the margin risk. Given the operational improvements we have made in the business, we are pleased that despite these impacts, we are able to reaffirm our guidance today. More broadly, while the uncertain macro environment presents challenges, we are grateful to be in a position where we can capitalize on the considerable opportunities we anticipate. Given we can serve as a lower cost outsourcing solution, we believe we can help alleviate pressures on our customers and we are already seeing examples of this play out. We also benefit from having $540 million of cash on our balance sheet, representing nearly $12 per share of cash having no debt outstanding and from generating meaningful free cash flow in the first half of the fiscal year. From this position of financial strength, we are starting to see interesting potential tuck-in acquisitions become available, a trend which we expect to continue or possibly even accelerate if business conditions remain challenging for subscale companies. We are actively evaluating potential acquisitions of high quality assets that would naturally fold into our core business and would help us accelerate revenue growth and margin expansion. We are also investing in our digital capabilities to enhance our e-commerce platforms. This will improve our data analytics and insights allow for more targeted marketing and enhance the customer experience, while maximizing conversion. Importantly, we will maintain an exceedingly high bar when deploying capital. We are keenly aware of the power of buybacks, especially given our undervalued stock price and should our current valuation disconnect persist we remain open to buying back our own stock. However, our North Star through all of this will always be long-term value creation to our shareholders. I would like to now focus on the remainder of my comments on the significant strides we have made in driving operational excellence. We’re focused on reducing complexity and simplifying how we create long-term value. As I mentioned in the first quarter, we started rolling out the Azenta Business System. I’m excited to announce Will Simmons has joined us as Vice President of the Azenta Business Systems to lead the development and execution of ABS. Will brings a wealth of experience in implementing lean methodologies, enhancing problem-solving capabilities and ensuring alignment to our strategic goals. In the second quarter, we held daily management boot camps with our operating company leadership teams to train them in the fundamentals of daily management, including how to implement and effectively use it. In addition, we held ABS awareness sessions for employees globally, offering sessions designed to introduce lean principles, daily management, and problem-solving. These sessions introduce the concepts of eliminating waste, improving processes, enhancing collaboration. We are creating a lean culture and mindset, sparking curiosity, and creating momentum. We will learn through practice and application. We are not striving for perfection. We’re requiring progress. The business system model will harness our talented people, unify our culture and drive our performance. Over the first 6 months, we have structurally realigned the organization to operate more effectively and support future growth. In the first quarter, we executed our corporate restructuring. And in this quarter, we completed both operating company restructurings. Our objectives were to right-size our G&A functions, shift centralized resources into the operating companies to provide clarity and accountability, address spans and layers, realign to strategic locations. We restructured almost 10% of our workforce and are reinvesting in R&D, sales, marketing, and product management resources to maximize our customer and market focus. Invest in staffing open sales territories, expand regional capabilities, and accelerate organic growth, and begin our new product development investment. Our global organization redesign is substantially complete, and we can now focus on growth and productivity. We remain hyper focused on our customer-facing performance metrics, quality and on-time delivery. While we’ve seen improvement, we are not where we need to be and are taking decisive action to close the gap. As an example, in February, we completed a Kaizen at one of our manufacturing facilities to reduce the quote to delivery cycle time. We’ve seen the initial improvement with further actions underway to reach our target. The team is now using highly effective tools to help them visualize the manufacturing process, identify issues, and quickly take corrective action. As an organization, we are being programmatic in how we spend our time. We are prioritizing on-time delivery and products and services quality, which will lead to higher customer satisfaction, gross margin improvements, indirect cost savings, and lower inventory. The impact on profitability will be immediate, while improvements in customer satisfaction will help fuel organic growth over time. The second Kaizen held in the quarter was our sample repository business focused on simplification of order-to-cash process to shorten the cycle time and improve process quality. Through the process, we identified the need for greater standardization and enhanced system capabilities to streamline our billing process. Additional workshops and Kaizens are already planned to continue this work. The third Kaizen was in GENEWI

Thank you, John, and good morning, everyone. As I approach 6 months as CFO, I’m more excited than ever to be part of this great company. I’ve spent my time deeply learning how the business operates, getting to know and listening to our global teams, our customers, and our shareholders. I visited with our teams in Europe, Asia, and the U.S. We have a talented team that is highly committed to meeting the needs of our customers and to our purpose of enabling breakthroughs faster. In a dynamic and uncertain macro environment, our teams are executing with agility and focus. I’ve learned that our customers value our deep expertise and our differentiated products and services. I am confident in the strength and capabilities of our core businesses. We are well-positioned for success with a winning formula. Last quarter, I’ve highlighted several opportunities to strengthen our financial performance by simplifying operations, leveraging technology, and building our core capabilities. We’ve since taken meaningful steps forward, as an example, a regional sales team partnered with our data analytics group to integrate product, funnel, and operational data, unlocking insights into end markets, territories, and customer behavior. This enabled us to reallocate marketing and sales efforts towards higher potential pharma and biotech targets. It’s a scalable approach we plan to replicate across other regions. We’ve also sharpened our focus on working capital discipline that will drive stronger cash conversion to support our growth strategy. We’ve put tighter teams in place to address acute needs and are identifying key pain points and root causes to streamline our processes. We’ve identified the appropriate KPIs to measure performance and controls. These actions have led to improvements, but there are still more work to be done. The team is energized by the tangible result. These early wins reinforce our confidence in the broader transformation we’ve undertaken and our objective of continuous improvement. While we remain focused on near-term execution, these efforts are equally important in setting a strong foundation for sustainable long-term value creation. Now on to the financial results. As a reminder, the results we are referring to today, unless otherwise noted, exclude B Medical Systems, which is now reported under discontinued operations. In the quarter, we recorded a non-cash loss on assets held for sale of $24 million on B Medical. We believe the transaction remains on track to be announced in the second half of fiscal 2025. During the second quarter, we achieved solid performance across our operating units with notable 6% year-over-year organic revenue growth. This strong execution, despite ongoing macroeconomic headwinds, demonstrates the resilience of our business and ability to outperform in down cycles. The results also highlight the breadth and relevance of our portfolio as we continue to meet evolving customer needs in an uncertain environment. At the same time, our initiatives to drive efficiency and cost discipline are gaining momentum, contributing to margin improvement and strengthening our foundation for long-term shareholder value creation. To supplement my remarks today, I will refer to the slide deck available on our website. Turning to Slide 3 for a few highlights. Second quarter revenue totaled $143 million, reflecting a 5% year-over-year increase on a reported basis and 6% on an organic basis. Both our Sample Management Solutions and Multiomics segments achieved year-over-year revenue growth. Key drivers include continued momentum in Next Generation Sequencing, Consumables and Instruments, and Sample Storage, along with strong performance in Clinical BioStores and Product Services. Non-GAAP EPS for the quarter was $0.05. Adjusted EBITDA margin was 10% for the quarter, reflecting a solid margin expansion of approximately 400 basis points year-over-year. This marks another sequential step forward in our ongoing efforts to enhance profitability. The improvement reinforces the sustained benefit of our transformation and our continued focus for driving efficiency and operating leverage across the business. Free cash flow was $7 million for the quarter, driven primarily by working capital with lower accounts receivable and higher accounts payable. We ended the quarter in a strong position with $540 million in cash, cash equivalents and marketable securities. Now, let’s turn to Slide 4 to take a deeper look at our results in the quarter. Total revenue was $143 million representing growth of 5% reported and 6% organic. In the second quarter, non-GAAP gross margin was 47.5%, up 130 basis points year-over-year. The improvement is largely a result of higher revenue, favorable sales mix and operational efficiencies. Adjusted EBITDA margin in the quarter was 10%, up 400 basis points year-over-year. Again, non-GAAP EPS was $0.05 per share. With that, let’s turn to Slide 5 for review of our segment results, starting with Sample Management Solutions, or SMS. SMS revenue was $80 million for the quarter, up 8% year-over-year on both a reported and an organic basis. Growth was driven by strong performance in both Sample Repository Solutions and Core Products, with key contributors including Consumables and Instruments, Product Services, Clinical BioStores, and Sample Storage. This growth was partially offset by year-over-year declines in automated stores, primarily due to the timing of orders. We feel confident with the full year revenue given the help with our stores backlog. Cryostores were also down year-over-year, reflecting softer demand in markets closely tied to cell and gene therapy. SMS second quarter non-GAAP gross margin was 49.7%, up 340 basis points year-over-year, driven by higher revenue, payroll sales mix, operational efficiencies, and the impact of certain non-recurring items recorded in the same period last year. Turning next to the Multiomics segment. Multiomics delivered revenue of $64 million, with a growth of 2% on a reported basis and 3% on an organic basis. The growth was primarily driven by Next Generation Sequencing, which grew 20% year-over-year and has now shown price stabilization for the 4th consecutive quarter, alongside continued double-digit volume growth. Key large deals continue to contribute to strong year-over-year gains, particularly in North America and Europe. Despite a challenging macro and geopolitical environment, China continues to show strength with 5% organic revenue growth. Gene Synthesis revenue declined 10% year-over-year, largely driven by a difficult comparison against 13% growth in Q2 2024, which benefited from a one-time surge in orders from large pharma customers. As a reminder, Q2 2024 marked our strongest performance since Q3 of 2022. We saw continued softness in North America, which we are actively monitoring. There was a general slowdown driven by delays and committed projects from a few key pharma customers. We saw an 18% year-over-year decline in Sanger Sequencing consistent with the continued transition across the industry towards newer sequencing technologies. Encouragingly, Plasmid-E

Thank you, sir. [Operator Instructions] First, we will hear from David Saxon at Needham. Please go ahead, David.

Great. Good morning, John and Lawrence. Thanks for taking my questions. I have a couple on the guidance. So first half organic growth is tracking closer to the top-end of the guidance. Comps get easier as we move into the back half. You talked about this 1% impact from funding. But, I wanted to just ask how we should think about the cadence of growth in the back half versus the first half? Is maintaining the bottom-end of the guide more reflective of just the uncertain macro? Or are there any specific dynamics you see playing out that kind of currently would be a risk to growth outside of the funding portion? And then lastly, can you talk about the currency assumptions in the back half? And then I’ll just have one follow-up. Thanks.

David, good morning. It’s good to be with you. So listen, we’re holding our guidance. We’ve cleared the 1% risk on NIH. We’ll get into that more, I’m certain today. But, I’ll let Lawrence walk through sequentially how we view this.

Yeah. Hey, David. Look, in total, the 2025 quarterly revenue profiles shouldn’t be significantly different than prior years. So, I think, we should use a similar profile. The first half of 2025 was a touch ahead of last year. But, we expect the third and fourth quarter generally be in line with prior years regardless of kind of the NIH and the macro we’re seeing it in the similar pattern. As we look at EBITDA, adjusted EBITDA was almost $28 million, which leaves us about $38 million in the second half of the year. The $10 million acceleration is going to be driven by a combination of revenue drop through that we’re going to see in the second half of the year. Just a little bit more color, a lot of times our stores volume will happen in the back end of the year, it’s usually when our customers want to see it. And then the realization of partial year savings from restructuring that we talked about in the first quarter. Hopefully, that’s helpful.

Yeah. That is super helpful. Thanks for all that. And really appreciate all the color on kind of the macro and all those details. I’ll probably leave some follow-ups on that to the other folks. But I wanted to ask about the SMS leadership transition earlier in April. Any color around kind of that departure and whether you’re looking internally or externally for new leader? Thanks so much.

Yeah, you bet. We want to thank first and foremost, David, for his contributions to the company. He’s been here quite a long time, and there’s a personal situation that we’re solving for there. Secondly, I’m jumping in directly in running that business. I mean, SRS and SMS is really the crown jewel of the company, so we’re rolling our sleeves up and getting real deep into that business, effectively looking at that business from the lens of specifically the biorepositories, separate from C&I and separate from Stores and Cryo, those are different businesses, different go-to-markets, but the value prop to the end users in terms of how we manage biological assets is still the same. That ecosystem works really well together. So, we’re excited about rolling our sleeves up there, and moving that business in the right direction.

Great. Thank you.

You bet.

Next question will be from Vijay Kumar at Evercore. Please go ahead, Vijay.

Hey, guys. Congrats on the nice execution here. Maybe, John, first question for you on the NIH 1% headwind, which I guess you’ve made some comments in the past, hey, this could be as high as 2% during the conference season. So, just walk us through the assumptions behind the 1% headwind. Is it all coming in the back half and where is the offset coming from?

Sure. You bet. So, first off, I want to be clear. I mean, we have countermeasured this risk and exposure completely. And so what it is, is we’re about 20% of our global revenue comes from the academic end market. And so, what we did is the team went out, we had about 30 conversations in that end market with a lot of the academic customers, and we’ve been able to kind of understand how they’re thinking about things. We’ve also pivoted the organization specifically around pharma and biotech to offset that. We’ve run a number of sales initiatives. The team has done an outstanding job of countermeasuring that risk right now. There were a number of hits we took, Vijay. First was around kind of this NIH indirect funding cap. Then you had the China Illumina restricted listing. Then you had China tariffs. We had steel and aluminum, and there was potential asset freezes in China. What we did around that was we set up a geopolitical war room kind of early around biosecure to understand that, and how the company could countermeasure some risk there. And then these other headwinds started to come in. We rolled those into the geopolitical war room and we’ve been having specific conversations around each of those going forward. I’m very confident in the level of detail we have around that. I can give you details even to the specifics of the bill of materials around steel and aluminum tariffs. I mean, we’re that detailed around this as an organization. I’m really pleased with what the team has done here to countermeasure our risk there, but we’ve cleared that, Vijay. We’ve cleared it nicely. Yeah.

Maybe to add, Vijay. Look, I think the NIH funding issue presents an opportunity for Azenta, too, right? Talked a bit about this in the past. Our belief is that these actions will force less efficient core labs to close or scale back and shift to outsourcing. We’re in active discussion with several cores in terms of outsourcing options. I think there’s a lot of opportunity here to win some share in this space. So, there is significant opportunity for Azenta.

That’s helpful comments. Maybe one on free cash and margins. Free cash performance first half was quite impressive. Is that a sustainable number and sort of related on the margins here? First half execution is coming well above your annual plan of 200 basis points. I think back half implied as maybe just 100 basis points of margin expansion hit the guidance. So, is that step down on margin expansion first half or second half contemplating tariff? And what is the total tariff impact if so?

Yeah, let me take the free cash flow item first. So as you know, second quarter free cash flow was about $7 million full year right now, excluding B Medical or year-to-date is $26 million. What does that comprise of? It’s really driven by primarily from lower AR, improved billings, especially around our Stores projects and higher AP. Net-net, it’s really when you look at, it’s really around better working capital execution. However, in the first quarter, there was a bit of upside in terms of a tax refund that generated. What I will say is, I think right now from a cash flow perspective, we’re really optimistic and we’re still holding to kind of our LRP target of $100 million in free cash flow and feel pretty confident about that. As to your second point around adjusted EBITDA, the short answer is our guidance contemplates some of the tariff impact. As John mentioned, from a top-line perspective, we’ve offset some of the challenges there. And that step down is generally, as you know, we had some stock comp and bonus releases in the back end of last year. And that’s going to create a bit of a comp issue and unevenness to our EBITDA. But, we are still holding to the 300 basis point guidance.

Understood. Thanks, guys.

You bet. Thank you, Vijay.

Next question will be from Paul Knight at KeyBanc. Please go ahead, Paul.

Hi, John. As you’ve gone through this Azenta Business System rollout, are you set now with the salesforce structure, right? That’s kind of been fluctuating in the past. I’m sure you’re fixing it. Where are you with that aspect of ABS?

Sure. You bet. Thanks for the question, Paul. Listen, we’re early in our growth journey here with ABS. I mean, the first thing we did was get our structural go-to-market in place. And so, we have aligned the organization regionally now. I think it’s to our benefit. We’re seeing a regional go-to-market model, instead of this global one, where we’ve aligned it regionally. We had a number I shared with you early on that, we had a number of open territories. We have filled most of those now, and we’re investing now in ABS. So, the team is driving more rigor around what do you need to do to win in a short sales cycle model versus a long sales cycle model? How do we drive performance in each of those? One being more activities based, one being more funnel based and deal by deal opportunity based. I’m pleased with the progress right now, early innings, Paul. But we’re investing here, and we’re driving some rigor around that specifically. I mean, I think the numbers are 24-headcount that we’re going to be investing in, specifically, in sales globally. So, we’re pleased about that.

And you mentioned the crown jewels being SRS and SMS and a pretty impressive 8% organic growth rate. The biologic market probably grows around there. Do you think that’s kind of the long-term growth rate potential for those businesses?

No. We don’t think we’re reaching our full potential. What you can expect is we want to come out with what that plan looks like over the coming years in the Investor Day. We’re going to have in the latter half of this year and give you a more clear-eyed view of that. But the short answer is no, we’re not even close to reaching our full potential.

And then lastly, China is actually an innovator now in biotech. Is China, in your view, at risk due to the China-U.S. dialogue? Or is it really a legit discovery market for you at this juncture?

It’s a great market for us. I mean, one of the things – let me answer the question just directly first. So, our business in China, we’re growing 5% when our peers’ multinationals are down dramatically. Our Gene Synthesis is up 8% in that market. Okay. It goes back to the comment I made around specifically this regional go-to-market. Our businesses behave very local and regional. And so, we quickly pivoted to that in Q4, calendar Q4, or Q1 and Q2, we quickly made those changes, and the teams have done a nice job. Our China business shows up very much like a local China company. And we want to keep it that way. There are certain things we’re doing in Europe that are centered to Europe, same thing with the U.S., and it’s working right now, but more to come on it, Vijay [ph]. We’re very confident with what we’re doing in the China market.

Okay. Thank you.

Sorry. My apologies, Paul.

No problem.

Yeah.

Next question will be from Matt Stanton at Jefferies. Please go ahead, Matt.

Thanks. Maybe just to pick up there on Gene Synthesis. You talked about it was down the quarter, but tough double-digit comp there last year. Can you just give a little more color in terms of trends, either customers, academic versus biopharma in the quarter or by geography? Sounds like Americas was maybe a little bit softer. And then any change in your expectations here for the year? I know you left Multiomics overall unchanged at mid-single, but any color in terms of how tariffs could impact the GENEWI

No change in how we’re thinking about the business. What we’ve seen is in pharma, specifically, in our large pharma partners, there was kind of a bit of a pause on some large programs that they had for our synthesis business specifically. And what do I mean by that? There’s been a lot of restructuring in pharma and in R&D. And, specifically, we’ve seen some turnover with some PIs and just some general pausing there. So, we think we’re through that. Actually, we’re seeing some green shoots lately to get us back on trend in the early days of this quarter. So, we’re pleased with what we’re seeing right now. I think that’s being cleared and lifted. April bookings look real good at this point, but no change on our view in GENEWI

Yeah. Thanks. And then maybe one on capital deployment. John, in your script, you noted kind of the balance sheet optionality, over $500 million of cash on the balance sheet. I think you’ve been pretty clear since you joined in terms of your preferences for capital deployment and maybe the share repurchase towards the bottom-end. But it sounds like maybe just given where shares are, you’re a little more open to that. So, I guess, talk about kind of framework of how you balance buyback versus other actions and, obviously, others in the space are talking about dislocation and balance sheet firepower. So just talk about kind of where your funnel sits today. And I think one of the big focuses for you going back to when you started was just revamping and building the M&A muscle. So maybe just an update in terms of where you and the team sit from the funnel, but also the muscle to be able to execute and integrate on some of these tuck-in deals you noted. Thanks.

You bet. When it comes to preference, I mean, our preference is to drive long-term shareholder value. And we do that through the four levers of capital deployment. First being around gross margin and productivity; second around growth initiatives, that’s commercial and R&D; third is around M&A; and then fourth is around buyback. And so, we look at them all holistically in terms of driving that value. There’s no bias to one or the other. The bias is, right now, the opportunities around M&A, I think, are becoming more clear to us. In certain areas, there’s some actionability right now, and we’re pretty excited about that. We’re always open to buybacks. I think, as a Board, we have these conversations very openly as a Board in terms of how we’re thinking about it. But if you look at of levers one, two, and three, the opportunities in front of us are there. They’re real, the returns are real, and we’re excited about pulling those levers. But, we’re always open to buybacks. I mean, I think when you’re going into uncertain times, which we are, and we’re looking at the global macro. I mean, we do business outside of B Medical in over nearly 50 countries. And so, it’s not lost on us what’s going on globally. We look at that. We look at again those three levers. And we’re in a very, very strong position because of our balance sheet, and we’re going to be disciplined around whatever levers we are pulling, we’re going to make sure that those returns are there. And I think that’s a departure from the past. I mean we’re going to be very disciplined around that. With Lawrence coming in in the Board, of course, in general, kind of that general oversight there. But, we also have our value creation committee that we’ve implemented, very much kind of like a private equity type of monthly cadence meeting that we have various board members on that. And so, this is always a part of the conversation that we’re having right now. So, again, we understand what levers we can pull. We’re having conversations around those. And, I think, levers one, two, and three make a lot of sense right now.

Okay. Appreciate it. Thank you.

Sure.

[Operator Instructions] Next question will be from Brendan Smith at TD Cowen. Please go ahead, Brendan.

Great. Thanks for taking the questions, guys, and congrats on the quarter. Maybe just a couple of quick ones from us. I know you’ve touched on this a little bit, but I wanted to ask if you have any sense or have had any conversations with customers over the last quarter that might suggest any potential order pull forward to get ahead of or around tariffs this year? And if you’re kind of seeing or you might expect certain segments within your revenue streams to appeal that maybe more than others. And then really just, I know, you also touched on this a little bit within Multiomics. You spoke to some nice price stabilization on NGS and in the market in China. But, I guess, just wondering if you can expand on a bit on some of the NGS ordering trends a little more broadly, just anything that you’re seeing that you would call out, how you’re thinking about that growth opportunity, maybe just over the medium-term, if you just notice any particular shifts in customer priorities, what are you thinking is especially prime to compete? Thanks.

Sure. You bet. Thank you, Brendan. Let me go to the customer insights. So, about a month or so ago, we got all of our commercial leaders on a call and started a weekly cadence of reaching out to nearly 100 customers. We asked them four standard questions. We wanted to gain insights into how they were thinking about the macro. All of the headwinds that we’ve talked about, they’re facing as well, so we wanted to understand this from their perspective. And it was at every level of the organization, executive level down to individual contributor. Also, it was very cross functional. And so, it was in R&D, it was in procurement, it was in supply chain, it was in finance, it was at the executive ranks. We took all of that data in, and there were a number of themes that came out of that. What was clear to us is quality matters right now in this environment in terms of who they’re partnering with. Outsourcing opportunities are probably in front of us more than we thought they were. And so, what we heard was we’re looking at more outsourcing opportunities. We get excited about that. You heard Lawrence talk about that. Even in the core labs, the academics, because of the headwinds there, there’s more opportunities coming to us. But even in pharma and biotech, that was underappreciated. The diversification of supply chain risk, where our portfolio sits today, where our site sits today. How is that supply chain secure versus others? Again, well-positioned. So, these insights were really helpful, and we kept that cadence going for a number of weeks. We brought that in. And, again, it was all around quality, the delivery of the product or service, and the cost. And so, we’re pleased with where we’ve pivoted the organization to kind of take – for us to position the organization to take advantage of those needs that our customers currently have based off of the macro dislocation. Let me talk about NGS. So NGS, I mean again, no change in terms of how we view the end market right now and the demand side of it. But if anything, it goes back to the original comments we had around these customer insights. I mean, they’re looking for partners that are giving them a competitive advantage internally, and that’s the quality of our service, the delivery of our service, which we’ve also been able to really stand high on, and then lastly, the cost of that. The insights I gave you around customers directly correlates to how we view NGS. It’s no change. And we’re just going to continue to do what we’re doing. If anything, we may see a little bit of an increase in outsourcing here to my prior point, but all-in-all, feel pretty bullish on where we are right now with that team.

Got it. Super helpful. Thanks, guys.

You bet.

And, at this time, it appears we have no further questions. I would like to turn the call back over to Mr. Marotta.

Very good. Thank you. And first off, thank you for joining us. We’re really pleased to deliver a strong second quarter and very well positioned to continue to deliver performance here to create value for our shareholders. We’re excited about the journey we’re on, and I want to thank our 3,000 employees that make Azenta very special. It’s good to be with you this morning, and thank you again.