Alpha Teknova Inc (TKNO) 2024 Q4 法說會逐字稿

Thank you for standing by, and welcome to Teknova's fourth quarter and full-year 2024 earnings conference call. (Operator Instructions).

I would now like to hand the call over to Jennifer Henry, Senior Vice President of Marketing. Please go ahead.

Thank you, operator. Welcome to Teknova's fourth quarter and full-year 2024 earnings conference call. With me on today's call are Stephen Gunstream, Teknova's President and Chief Executive Officer; and Matt Lowell, Teknova's Chief Financial Officer, who will make prepared remarks and then take your questions. As a reminder, the forward-looking statements that we make during this call, including those regarding business goals and expectations for the financial performance of the company, are subject to risks and uncertainties that may cause actual events or results to differ. Additional information concerning these risk factors is included in the press release the company issued earlier today, and they are more fully described in the company's various filings with the SEC. Today's comments reflect the company's current views, which could change as a result of new information, future events or other factors, and the company does not obligate or commit itself to update its forward-looking statements, except as required by law.

The company's management believes that in addition to GAAP results, non-GAAP financial measures can provide meaningful insight when evaluating the company's financial performance and the effectiveness of its business strategies. We will therefore use non-GAAP financial measures of certain of our results during this call. Reconciliations of GAAP to non-GAAP financial measures are included in the press release that we issued this afternoon, which is posted to Teknova's website and at www.sec.gov/edgar. Non-GAAP financial measures should always be considered only as a supplement to and not as a substitute for or as superior to financial measures prepared in accordance with GAAP. The non-GAAP financial measures in this presentation may differ from similarly named non-GAAP financial measures used by other companies.

Please also be advised that the company has posted a supplemental slide deck to accompany today's prepared remarks. It can be accessed on the Investor Relations section of Teknova's website and on today's webcast.

And now I will turn the call over to Stephen.

Thank you, Jen. Good afternoon, and thank you, everyone, for joining us for our fourth quarter and full-year 2024 earnings call.

I am very pleased with the progress we made in 2024. Teknova is in a better position than ever to deliver on the plan we laid out in 2021 that we believe will generate long-term sustainable growth. We continue to execute on our growth strategy. In 2024, we supported 48 clinical customers, up from 34 at the end of 2023, a 41% annual increase. We recognized $37.7 million in total revenue.

When adjusted to exclude revenue from a single large clinical solutions order of $2.7 million in 2023, total revenue growth was 11%. Revenue from sales to cell and gene therapy-related customers increased from 23% in 2023 to 27% in 2024. We maintained our service levels to customers despite reduced head count and launched three new offerings in 2024, Build-Tek, Express-Tek, and RUO+. Each of these offerings improved the customer experience while also adding to our top and bottom lines. We aggressively managed our operating expenses, which we reduced by $8.1 million in 2024 compared to 2023, excluding nonrecurring charges.

We finished the year with a total cash outflow of $13.5 million, substantially better than our initial guidance of $18 million. We also raised additional capital in July, increasing our confidence that we will become cash flow positive without additional funding.

Before we dive into the details around our 2024 performance, I would like to take a moment here to thank all past and present Teknova associates for putting us in a position of strength as we look to 2025 and beyond. Our associates' ability to execute on our strategy while reducing cost is a testament to the culture and commitment we have here at Teknova.

Now I want to provide more color than in years past about our performance by product type and end market. Teknova is a leading supplier of both research and clinical-grade catalog and custom reagents. Our catalog business supports research and discovery across the entire life science community by providing over 1,400 SKUs of commonly used reagents. These reagents are a cornerstone to basic molecular and cellular biology experiments, which is why about 3,000 customers use our products annually.

In 2024, catalog reagents represented approximately 60% of our total revenue. While we grew low single digit in this segment in 2024, we exited the second half of the year with 7% growth compared to the second half of 2023, which we believe reflects an improvement in the general R&D funding environment and strong commercial and operational execution internally. The diversity of our end markets we serve and the lack of customer concentration with no direct catalog customer representing more than 4% of total catalog revenue in 2024 provides not only an entry point for our faster-growing custom products, but also a stable and predictable foundation for us as we execute on our growth strategy.

The remaining 40% of our revenue is generated from custom research or clinical-grade reagents that are manufactured to a customer specification and other nonproduct revenue related primarily to services and shipping. Our ability to quote, manufacture, QC, and ship custom products in weeks instead of months is a critical differentiator for us in the market. Our largest end market for these custom products is biopharma, which includes sale to large pharma, small and midsized biotech including cell and gene therapies, and CDMOs. We believe this segment reflects our exposure to the bioprocessing end market.

Sales to these customers represented approximately 70% of custom revenue and 25% of our total revenue in 2024. The remaining custom revenue is from reagents predominantly sold to the life science tools and diagnostics customers and other end markets such as academic institutions, animal health, and agriculture. The performance of our custom biopharma business demonstrates the progress we have made in executing on our growth strategy. In 2024, this segment grew about 40% compared to 2023, attributable in part to the onboarding of a new therapeutic clinical customer. But excluding that new customer, our growth was still robust at approximately 25%.

Of the 48 total clinical customers we served in 2024, 39 were biopharma-related, and of those, 23 were cell and gene therapy related. We often support many or all the therapies in a customer's pipeline. Based on our own analysis, we believe we now support at least 50 therapies in preclinical trials, 10 therapies in Phase 1 trials and three therapies in Phase 2 or later trials. As a reminder, based on our market research, we expect revenue per therapy to increase on average approximately 30-fold as the therapy moves from Phase 1 to commercialization.

For the remainder of the revenue generated from custom reagents, those associated with accounts outside of biopharma, 2024 was a challenging year. First, we had a large single order from a diagnostics company in 2023 that made for a difficult year-on-year comparison. In addition, a few of our larger life science tools companies in the sequencing and spatial genomics segments ordered significantly less than in the prior year. Looking ahead, we believe many of these account-specific headwinds will subside.

Taking these product and market segments together, we still expect 2025 to be a recovery year, and we are optimistic that the market will return to more historically typical rates of growth as we enter 2026. We expect to see mid-single-digit growth in our catalog business this year, considering the market's recent stabilization and that we have little to no direct exposure to NIH or tariff-related policies. We also believe custom reagents in the life science tools and diagnostics segment will grow mid-single digits given our recent conversations with these customers and a more favorable year-on-year comparison.

Regarding the custom products we sell to biopharma accounts, while we exited 2024 with momentum, we believe uncertainty in the current macro environment has caused some of our customers to delay orders and others to reduce their annual budgets. We are nonetheless confident that we will achieve at least 15% growth in this segment. Therefore, we believe our guidance for revenue growth of 7% at the midpoint fairly reflects the current overall market environment and the specific end markets we serve.

Lastly, we believe there is an opportunity over the next 12 to 24 months to expand our product portfolio through collaborations and acquisitions. While we have spent the past couple of years investing in infrastructure, systems, and scalability, numerous other companies have focused on developing novel products and technologies. By working closely with these companies, we believe we can expand our product portfolio and geographic footprint. The combination of our operational and commercial scale with our collaborators' novel products and technologies creates a great opportunity to drive additional topline growth and margin expansion over the longer term.

In summary, while we still expect 2025 to be a recovery year, we are confident in our strategy, ability to execute, and capital runway.

I will now hand the call over to Matt to talk through the financials.

Thanks, Stephen and good afternoon, everyone. I am pleased with our financial performance in 2024.

As Stephen mentioned, we finished the year with momentum, delivering 17% and 18% year over year of revenue growth in the third and fourth quarters respectively. And we significantly improved free cash outflow from $26.7 million in the full year 2023 to $13.5 million for the full year 2024.

On to revenue. Total revenue for the fourth quarter 2024 was $9.3 million, an 18% increase from $7.9 million for the fourth-quarter 2023 and $37.7 million for the full-year 2024, a 3% increase from $36.7 million for the full-year 2023. When adjusted to exclude revenue from a single large clinical solutions order of $2.7 million in 2023, total revenue growth was 11% in 2024.

Lab Essentials products are targeted at the research use only or RUO market and include both catalog and custom products. Lab essentials revenue was $6.8 million in the fourth quarter 2024, a 2% increase from $6.7 million in the fourth quarter 2023. Slight increase in lab essentials revenue in fourth quarter 2024 was attributable to an increased number of customers, partially offset by lower average revenue per customer.

For the full year, lab essentials revenue was $28.9 million in 2024, consistent with $28.8 million in 2023, driven by an 8% increase in the number of customers to 3,045 that was somewhat offset by a 7% decrease in the average revenue per customer to $9,486.

Clinical solutions products are made according to good manufacturing practices, or GMP, quality standards and are primarily used by our customers as components or inputs in the development and manufacture of diagnostic and therapeutic products. Clinical solutions revenue was $1.9 million in the fourth quarter of 2024, a 110% increase from $0.9 million in the fourth quarter of 2023. The increase in clinical solutions revenue in the fourth-quarter 2024 was attributable to an increased number of customers, partially offset by lower average revenue per customer. For the full year, clinical solutions revenue was $7.1 million in 2024, a 5% increase from $6.7 million in 2023. Excluding revenue of $2.7 million from a single large order in 2023, clinical solutions revenue was up 76% in 2024.

We added clinical solutions customers in 2024, growing from 34 customers in 2023 to 48 that spend more than $5,000 annually. Average revenue per customer in 2024 decreased 25% to $148,000. We expect revenue per customer to increase over time as customers ramp up their purchase volumes when they move through clinical trial phases. However, this metric can be affected by the addition of newer clinical customers who typically order less. Just as a reminder, due to the larger average order size in clinical solutions compared to lab essentials, there can be more quarter-to-quarter revenue lumpiness in this category.

Looking at the income statement. Gross profit for the fourth quarter of 2024 was $2.1 million compared to $1.3 million in the fourth quarter 2023 and $7.2 million for the full-year 2024 compared to $10.3 million for the full-year 2023. Gross margin was 23.0% in the fourth-quarter 2024, which is up from 17.0% in the fourth-quarter 2023 and 19.2% for the full-year 2024, which is down from 28.1% for the full-year 2023.

The increase in gross profit percentage for the fourth-quarter 2024 was primarily driven by higher clinical solutions revenue, coupled with reduced head count, partially offset by increased overhead costs. The decrease in gross profit percentage for the full-year 2024 was primarily driven by the $2.8 million nonrecurring noncash charge related to the disposal of expired inventory and write-down of excess inventory created in the second half of 2022, as discussed in the prior quarter.

Excluding the impact of this charge, gross margin would have been 26.5% for the full-year 2024. The decrease in gross profit in 2024 was also driven by increased overhead costs, largely depreciation expense following the completion of our new manufacturing facility in 2023, which were partially offset by reduced head count.

Operating expenses for the fourth-quarter 2024 were $7.8 million compared to $12.2 million for the fourth-quarter 2023. Excluding the nonrecurring charges of $0.3 million related to a loss contingency accrual and the noncash trade name impairment charge of $2.2 million in the fourth quarter of 2023, operating expenses were down $2.0 million. The decrease was driven primarily by reduced head count and spending, in particular, in professional fees.

Operating expenses for 2024 were $33.4 million compared to $45.9 million in 2023. Excluding the nonrecurring charges of $1.4 million for the full-year 2024 and $5.8 million for the full-year 2023, operating expenses decreased $8.1 million. The decrease was driven by reduced head count and spending primarily on professional fees and insurance, partially offset by increased stock-based compensation expense related to the stock option repricing as well as facility costs.

At the end of fourth quarter 2024, we had 173 associates compared to 211 a year prior. Net loss for the fourth-quarter 2024 was $5.7 million, or $0.11 per diluted share, compared to a net loss of $10.7 million or $0.26 per diluted share for the fourth quarter 2023. Net loss for the full-year 2024 was $26.7 million or $0.57 per diluted share compared to a net loss of $36.8 million or $1.16 per diluted share for the full-year 2023.

Adjusted EBITDA, a non-GAAP measure, was negative $3.2 million for the fourth quarter of 2024 compared to negative $6.0 million for the fourth quarter of 2023. Adjusted EBITDA for the full-year 2024 was negative $14.5 million compared to negative $19.8 million for the full-year 2023. Excluding the $2.8 million inventory charge, adjusted EBITDA would have been negative $11.7 million in 2024.

To cash flow and balance sheet highlights. Capital expenditures for the fourth quarter 2024 were $0.6 million compared to $0.3 million for the fourth-quarter 2023. Capital expenditures for the full-year 2024 were $1.1 million compared to $7.9 million for the full-year 2023.

Free cash flow, a non-GAAP measure, which we define as cash provided by or used in operating activities, less purchases of property, plant, and equipment, was negative $1.5 million for the fourth quarter 2024 compared to negative $3.2 million for the fourth-quarter 2023. Free cash flow for the full-year 2024 was negative $13.5 million compared to $26.7 million for the full-year 2023. This decrease compared to prior periods for both the quarter and full year was due to lower cash used in operating activities and a decrease in capital expenditures.

Note that for the financial period in 2025, we are changing the definition of free cash flow to cash provided by or used in operating activities plus cash provided by or used in investing activities. This definition better aligns with our current reporting method for short-term investments.

Turning to the balance sheet. As of December 31, 2024, we had $30.4 million in cash, cash equivalents, and short-term investments, and $12.1 million in gross debt. For 2025 outlook, we are providing 2025 total revenue guidance of $39 million to $42 million. At the midpoint, this implies 7% revenue growth compared to 2024. While we saw a nice rebound in 2024 from our biopharma customers, we believe 2025 is another recovery year.

There remains cautiousness across some of our customer base, which we believe is related to macroeconomic uncertainty, particularly as it relates to the rate of capital flowing into the sector. The low end of our range assumes these headwinds worsen and the high end assumes some easing.

As we have indicated before, due to the high percentage of fixed costs associated with our operations, we estimate that each additional dollar of revenue drops through at a marginal cash rate of approximately 70%, with some variability year to year. We expect to see gross margins in the high 20s percentage range in 2025 compared to a normalized mid-20s percentage range in 2024.

The company posted operating expenses, excluding nonrecurring charges, below $8 million for the third quarter in a row. That reflects steps we took during 2024 aimed at reducing operating expenses, which resulted in total cost savings of $8.1 million, excluding nonrecurring charges in 2024 compared to 2023. We believe that we are appropriately sized at operating expenses of approximately $8 million per quarter, allowing us to moderately increase our investment in sales and marketing to position ourselves for the market recovery. At this spending level, we continue to expect to achieve adjusted EBITDA positive in the range of $50 million to $55 million in annualized revenue.

The company saw a reduction in free cash outflow during the fourth quarter 2024, both sequentially and versus prior year. This is the lowest free cash outflow since first quarter 2021. Once again, the company is pleased to report that free cash outflow for the full-year 2024 of $13.5 million was significantly below our most recent guidance of less than $16 million. As we turn to 2025, the company expects free cash outflow to be less than $12 million.

We are also pleased to announce the amendment and extension of our credit facility. First and foremost, we have reset the maturity date of the credit facility to March 2030 with no scheduled repayment of principal for the next three years. However, we are increasing the principal amount on our term loan to $13.2 million, representing a $1.1 million increase rather than paying cash at closing for the exit fee owed to our lender. Through covenant changes, we have effectively increased our liquidity by $4 million, giving us additional cash runway.

In conclusion, we're excited about the future and the company's competitive positioning in the market with attractive fundamentals and believe there is significant margin expansion potential when topline growth accelerates.

With that, I'll turn the call back to Stephen.

Thanks, Matt.

Overall, we were pleased with our fourth quarter and full-year 2024 performance and the progress we made against our strategic priorities. We believe the long-term outlook for our end markets remains positive, and we are committed to executing on our strategy to help our customers accelerate the introduction of novel therapies, diagnostics, and other products that improve human health.

We will now take your questions.

(Operator Instructions) Matt Larew, William Blair.

Stephen, I wanted to focus on the comments you made around softening into the beginning of the year. You alluded to perhaps some conservative customer budgets, delayed purchases. Is that something that February relative to January, you saw the softening moving into the first part? And then was this really regardless of customer designation, meaning large biopharma or small biotech? Or has the change in behavior mostly been within those cash burn biotechs?

So I would say, yes, it's a little bit more recent that we're continuing to see this. It is a -- the phenomenon we've seen for the last couple of years where some customers are very excited in December, like we've talked about, left with a lot of momentum. January still felt pretty good, but then you started to hear about, well, maybe we'll order that in Q2 instead of Q1 type of conversations. That said, of course, we still -- we still believe in that 15% growth I mentioned in Biopharma in the script here.

So there's still some companies out there that are very positive, but I think there's still some others that are trying to figure out in this environment, what that's going to mean for them in terms of their capital runway. So it's not all bad, but it is definitely peaking up a little bit more in this through late January, February timeframe.

We are seeing it more in the smaller companies, I would say. I think large pharma, we're still seeing pretty good pieces, and the catalog business continues to do fairly well. Now we have very little academic exposure there, as you know, but it's really more in maybe some life science tools and small, mid-sized biotech that are more in a tougher situation with regard to capital raise.

Okay. You gave some numbers around on the clinical side, where your own customers are with respect to preclinical Phase 1 and Phase 2 and beyond. I understand the progression of that is in large part dependent on your customers' clinical success. But I was curious maybe if you could help us with what is the composition of your new customer pipeline look like? Is it all on the preclinical side, or are you having opportunities to win business in the clinical stages as well?

Yeah. Obviously, as we get further down that pipeline, it's much harder to convert business. We have been successful moving a Phase 2 or later customer therapy over to us and then expanding within that pipeline to get the remaining therapies that they're working on, particularly around the downstream processing, which covers preclinical all the way through Phase 2.

So it can be done. It's a 12- to 18-month process, and it requires work on both sides to make that happen. Most of our new customers are coming either preclinical or Phase 1. And so that is where we typically attract them. And we continue to see that go up despite them rationalizing some pipelines over the last couple of years and some difficult macro environments. But I think we are able to convert these customers given the platform.

Okay. And then just last one would before Matt. Obviously, you had the large clinical solutions order in '23 that you were comping in '24. Just as we're thinking about '25, any kind of large onetime-ish things to be aware of from '24?

No, I wouldn't highlight anything in particular in 2024. I'd just say generally, with the business of our scale, I mean, we are going to have times when there's lumpiness in the revenue in clinical solutions and even in lab essentials where we have some of our custom orders and larger customers there.

But, no, I think really was that one in particular was so large that it warranted calling out and, of course, it was disclosed in our filings. But I don't see anything so large like that to call out, but there will at times be some lumpiness.

Yeah. I think it's fair to say that in 2024, as a whole, we didn't have any single customer representing more than 4% of our total revenue. But to Matt's point, around $1 million can shift a quarter, and that obviously has a big impact.

Matthew Parisi, KeyBanc Capital Markets.

This is Matt Parisi on for Paul Knight at KeyBanc. I believe you mentioned on the call, but I was sure if you could just say it again, provide the number -- the updated number of cell and gene therapy customers. And then if you could provide any insight to how many of the newly approved cell and gene therapies you are involved with or any -- the total commercial cell and gene therapies you are involved with?

Yeah. So we said on the call that now 27% of our total revenue is made up of cell and gene therapy-related companies. And that includes, obviously, their discovery work revenue as well as their sort of clinical trial work, so catalog custom and our clinical solutions products. We also had 23 clinical customers in that category.

We now support it -- it will be updated in the slide deck as well, where you'll see that over 100 total cell and gene therapy customers. As of this point in time, we are not supporting any commercialized cell and gene therapies. If you remember, we really started down this pathway in 2021, and those have not migrated through, but that is obviously the strategy here is to get these customers in and go down that pipeline.

And then one other one would be if you could just move around the modeling if you could provide some detail on the phasing for revenues in 2025, and if we should expect the usual seasonal phasing throughout the year?

Yeah. I'll make this comment about 2025. I do expect the first quarter to be the lowest quarter of the year, probably similar to the year-ago quarter, maybe a little bit below that. And that's in part due to some of the reasons that Stephen was just talking about. There's always some lumpiness in there, but also the current market environment, but we're confident in the full-year guidance.

So I would expect to see from Q1 at the low point, moving up Q2 and then into Q3. And then per our usual seasonality, might expect a little bit less in Q4 just because of the fewer business days, which impacts the catalog part of our business in particular. So Q1, the lowest kind of progressing up Q2, Q3, and maybe a little less in Q4, all getting us in that 39% to 42% range.

Mark Massaro, BTIG.

Maybe a two-parter. I understand that the revenue per customer declines as newer customers come on board, new customers typically order less than more mature customers. Can you give us a sense for how long it typically takes a new clinical customer to reach a similar level of a more mature customer? And then the second part of that, has there been any changes to any of the pricing of the reagents? I assume it has been flat to slightly up, but I just wanted to check on that.

Sure, Mark. So on the revenue ramp, I'll just give you from a sales cycle perspective, right? We typically engage with the customer, present to them our capabilities. And then there's a process of where they come, visit the facility, and then a quick little validation piece, and I say quick, but quick for us could be a couple of months of work to get them to validate that we can manufacture the product the way that they're looking for us to make. And then -- we're then very much dependent on their trial timelines, right?

So what we've seen is some customers come in pretty early, spending the tens of thousands of dollars, and then it takes about a year to a year and a half to really get it ramped up to the hundreds of thousands of dollars to give you that kind of perspective. And of course, every customer varies a little bit, but that kind of gives you an idea.

On the pricing side, yeah, we do -- we do annual price increases, and it's based on our portfolio, how unique each product is in the space, and the market pricing. And so we go through that process, and we've implemented a new pricing for our entire catalog product as well as new algorithms for our custom pricing, and we did that at the beginning of the year.

Okay. And any chance that you could try to quantify what the price increases were? Were they consistent with general levels of inflation? Or is there any additional color you could provide?

Yeah, sure, Mark, about mid-single-digit increase on average overall.

Yeah. Okay. That makes sense. And then I think I heard you talk about your 2025 guidance bakes in, if I heard correctly, mid-single-digit growth among, I think, some of your diagnostics customers. Did I hear that correctly?

And is it safe to say that that might be the fastest-growing segment relative to perhaps the cell and gene therapy customers that may be under more pressure from a capital markets perspective? It would just be helpful to get a sense of also how you're thinking about the sequencing in spatial space.

Yeah, absolutely. So let me break it down for you. On the catalog side, which represents 60% of our business, we believe mid-single digit. We exited the year, as you heard me say, with 7% growth in the back half of 2024. We're thinking this year, it will be in the mid-single digits there.

Life science tools, diagnostics, difficult year-on-year comparison, some challenges just with a few accounts. We think we're over that now, but I do believe it will still be mid-single digits as some of these one -- some of these companies are still struggling to ramp up a bit.

And then the fastest-growing segment is the biopharma, the custom biopharma, which we think represents the bioprocessing segment. And yes, we're seeing some headwinds. But remember, we grew 40% last year. And so we believe this is more of a 15% growth in 2024 given the current macro environment, right? And so the bookends of our guide is things get worse versus things get better.

Yeah, that makes sense. And then maybe one more. Should we -- you might have mentioned it, should we assume flat head count and flat commercial organization?

I would say generally so, Mark. As I mentioned, we are going to tweak up the commercial investment a little bit this year, and it won't be head count-driven. There may be a couple of headcounts here and there. But by and large, as we've communicated in the past, we believe the infrastructure we have in the company, including our operating expenses and the head count associated with that is generally where we need it to be right now as a company. So we're not looking to grow there.

It's more just a one-off type of thing. So I would say, yes, generally flat, although not precisely. There could be a couple here and there.

Matt Hewitt, Craig-Hallum.

Maybe first up, I was hoping we could dig in a little bit more on the market commentary. As you listen to earnings calls over the past few weeks, the bioprocessing sector, in particular, commentary has been pretty healthy saying that in 2026, everyone expects the market to get back to where it has been historically. It sounds like you're calling for a similar, but maybe things have changed here over the past few weeks. Am I hearing that correctly?

I think -- we'll put it this way, right? We're basically saying that we'll grow in the 15% range in that bioprocessing segment, which I think is probably similar to some of the peers. I still don't think we're back to what was historically normal rates of growth in that space. And if that happens, we think we could grow more like we did in 2024, right? We grew 40%.

We were coming into the end of the year feeling pretty good about where we sat with those customers, and then we did see some slippage. So it is more recent, Matt, that we're starting to see things -- some of these orders that we would have expected in Q1 get pushed to Q2, that sort of thing. So yes. Does that help?

Yes, it does. And then maybe a little bit of an off question versus your comments earlier that you're really not impacted by NIH funding and tariffs and whatnot. But there has been some discussion about implementing a 25% tariff on drugs that are imported to the US. How would that impact your business? I think you're largely a domestic provider, but is there a chance that you could potentially see some double dipping where maybe your customers that were manufacturing OUS, say, you know what, we need to shift this production to the US and therefore, the products that we have been ordering before, we now have to actually order a second round of those. Is that possible? Or am I thinking too far afield on that?

It's certainly possible. First, I would say, yes, on the NIH side, 4% of our sales are related to academic institutions, of course, which are not all funded by the NIH, so pretty limited exposure there. Around 95% of our sales are domestic, and we manufacture everything here in the United States. So we're relatively insulated from that perspective. Now if we believe things are being brought more onshore here, we -- some of those 48 customers, clinical customer support are CDMOs.

And if they get more busy, then we will likely get more busy, and that could be an opportunity for additional growth. So I think it's possible there. I haven't really thought about the double dipping piece. I guess we'd have to wait and see.

Thank you. And that is all the time we have for Q&A today. This concludes today's conference call. Thank you for participating. You may now disconnect.