Inotiv, Inc. Q4 FY2024 earnings call

• Fourth quarter was productive; achieved goals and positioned for 2025.
• RMS made progress in North American transportation/distribution, completed site consolidation, saw increase in NHPs sold in Q4.
• DSA revenue and operating income decreased y-o-y due to study mix and discovery service revenue, but flat q-o-q.
• Operated to drive efficiency, reducing G&A expenses.
• Emphasize growing existing customer base via cross-selling, attracting new customers.
• RMS optimistic for reduced volatility in 2025, added new NHP customers, expanded supply base, and plans site optimization in U.S. to reduce expenses.
• DSA had net new orders ahead of prior year pace despite industry pressure.

For the fiscal 2024 fourth quarter, total revenue was $130.4 million. The RMS segment had revenue of $85.8 million in Q4 2024, down 5.2% compared to Q4 2023. DSA revenue in Q4 2024 was $44.6 million, flat compared to Q3 2024 but down from Q4 2023. For the 12 months ended September 30, 2024, RMS revenue was $310.6 million (-19.8% y-o-y) and DSA revenue was $180.1 million (-2.7% y-o-y). In Q4 2024, NHP sold more than doubled from Q3, but selling higher cost NHP inventory impacted margins. RMS non-NHP business plans to initiate site optimization to reduce expenses, and DSA had net new orders ahead of prior year pace by ~5% despite industry price pressure.

Withdrew fiscal 2024 financial guidance. Not providing fiscal 2025 guidance at this juncture; hope to provide once market/clarity on customer demand. Developed comprehensive 2025 operating plan to optimize capital allocation/expense base and improve operating results, forecasting compliance with credit agreement covenant.

• Geopolitical market conditions pose uncertainties.
• Biotech industry conservative spending and reduced funding in prior years impact clients' R&D spending.
• NHP inventory of higher cost items impacted margins in 2024 and will affect Q1 2025 margins.
• Volatility in RMS NHP business and DSA study mix and discovery service revenue.

Q: Clarifying question on gross margins in NHPs. Any quantification of headwind?

A: Beth mentioned Q4 2024 margin percentage and dollars were about half of normal. Bob noted moving higher cost inventory was necessary.

Q: Comment on 2025 NHP business, contracted business, inventory commentary?

A: Pre-sold more NHPs to new and existing customers in 2025, colony management services growing 20%-25% annually. Expect more consistent demand cycle, with some margin pressure in Q1 2025 but normalized base after that.

Q: Adjusted EBITDA margins target?

A: Bob believes 18%-22% target is reasonable midterm, but recovery in industry needed. Site optimizations, diet enrichment business, U.K./Europe operations, transportation cost reductions, and DSA business improvements contribute to this outlook.

Q: Growth in 2025, pricing, and margin expectations?

A: Expect growth in all areas (NHPs, diet/bedding/enrichment, U.S./U.K./Europe, possibly DSA). Pricing mainly volume-driven in NHP business. RMS gross margins expected to improve in 2025, with margin pressure in Q1 2025 but stronger performance thereafter.