I'm Andrew Cooper. I cover life science tools and diagnostics here at Raymond James. Happy to have you at the Raymond James Institutional Investor Conference. Happy to have the Azenta team with us today. I'm gonna pass it to CEO John Marotta just in a little bit for a presentation, and then he and I and CFO Lawrence Lin will be up here for a little bit of fireside chat as well.
With that, I'll pass it to John. Thanks for being here, and I'll kick it to you.
Andrew, thank you, and thank you to Raymond James for allowing us the opportunity to speak today. It's good to be with you all. Excited to share with you Azenta. If you're new to the story, I wanna share some insights. If you are not new to the story, wanna talk about where we are from a turnaround perspective. The normal safe harbor statements, you can read those at your leisure. Wanted to get you into the business and why we were excited to join the company. When we first came in in September of 2024, you know, we had learned about Azenta when I was in private equity and kinda did an outside in.
I said, "Well, this is an interesting business. There's a lot of opportunities in front of us." The first one is around the fact that we are in this ecosystem that matters a lot to our customers. We are in the top 20 pharmaceutical and biotech companies in the world. Our stores manage some of their most valuable assets, and our sample management solutions business supports some of their most valuable assets in terms of getting more throughput in research. We have a deep installed base. We have over 150 stores globally, and we've got thousands of instruments globally as well. That gives us the right to win and be front and center in terms of driving more share gains and driving more consumables in the business. I was pretty excited about that.
Third one is around above-market growth. I mean, we'll talk about our SAM in terms of where we're positioned right now, but we've got a lot of room to grow from a new product perspective, feet on the street, some price. We'll get into those, I'm certain, in the Q&A today with Andrew. The fourth one is around margin expansion. When we came into the business, this business was extremely heavy on G&A. Bluntly, I've never seen anything like that before. That got us pretty excited when we got underneath the business and the margin opportunity, where we had our resources in the company in the wrong areas. We're dynamic resource allocating those resources into growth investments in R&D and sales and marketing. We're on that journey, and we're excited to talk about that today in terms of where we are.
Last one is a financial profile and a business and a balance sheet that is pretty unique in the small midcap market. We get very excited about that. When you look at the stock price, about $12-$15 of our stock is cash today. About, you know, driving over the next three years in terms of driving performance in the business, around $250 million of free cash flow, we plan on driving. Doubling our EBITDA in the next three years. One has to scratch their head. I don't know what it's trading at today, if it's 8x to 10x , but it's a pretty good value for where we are right now. This is what attracted us to this business coming out of private equity. We're very excited about that.
Our SAM right now is about $6 billion. We're about 10% of the addressable market today. We will talk about how we wanna continue to drive share gains there and what we're doing around that. Azenta today is around a $600 million business. Last year, we grew about 3%. 55% of our revenue is around recurring revenue . We've got clear plans in terms of expanding that recurring revenue . Today, we do business in about 14,000 customers. One of three of our employees are a PhD. We do business in top 20 pharmaceutical companies in the world. Our revenue mix is about 55% is in pharm and biotech, and about 46% is in academic, medical, and government today.
We manage about 60 million samples globally. We touch and support over 1 billion of these samples, whether that be in a biorepository at their site with our instruments, our consumables, and our biorepositories. We're embedded in that, very intimate with our customers today. We have basically two business segments. The first one is in our sample management solutions. Think about this in terms of supporting R&D, but supporting it from a sample perspective, where we have a global biorepository footprint that is one of the largest in the world. We've got nine global repositories. We manage about 60 million samples. We have an automated solutions business. Think about this as our stores business, which manages at ultra-low temperatures of -90 degrees Celsius up to ambient or +4, -80, or -20 with robotics. Think about these as managing thousands to millions of samples.
These stores are what our customers put their most valuable assets in. If you look at a pharma or biotech company and what's on their balance sheet, we manage those in these stores. Think about it as the warehouse, the Amazon warehouse distribution center. We also support their management of those in automation with our C&I instruments, our consumables and instruments business. That is Those samples in managing them in an automated workflow. This is a clear trend right now in the market, and we're really excited to be at the epicenter of that. Moving over to our multiomics business, think about this in terms of reading and writing genes. The reading of genes is in next-gen sequencing, and we have 14 labs globally that support our customers. We have 4,000 dropboxes.
A dropbox, in your mind, I would think about us as the Cintas in life sciences or in the lab space. It's pretty unique in terms of having that broad footprint because you're closer to the customers there. Gene synthesis, we're writing of genes. Right now we have a very profitable business here. We do more complex genes than we do simple, and so it's a lower volume, very high margin business for us. All of this is underpinned by a digital ecosystem for our customers in which they can enjoy an experience that is in a proprietary ecosystem today, whether that be ordering or managing these samples remotely or on site, they can see all of their assets within our ecosystem. We're making investments here and we'll talk more about that later, I'm certain.
A lot of our strategic priorities are simple and back to the basics. You know, I think Azenta was a confused story for a number of years based on the fact that we bought a lot of companies. We had really centralized a lot of things. We've decentralized a lot of things. We'll talk about that later. Really what we wanna drive is clarity in the business, and that is starting with driving operational excellence, starting with quality and on-time delivery, starting with the customer, driving performance for the customer, driving gross margin improvements, and reinvesting that back into the business. We're reinvesting that in a number of areas. First is around our go to market. We have invested around 25 headcount this year in our go to market as we've restructured and taken out and simplified the organization at corporate.
Those go to market investments are in two areas, primarily the U.S., North America and Europe. We have now leaders that are specifically assigned to those regions and wake up every day to serve our customers. We're really focused around scaling biorepositories. The biorepository is a very attractive business. It's 90% reoccurring revenue, it's 55%+ gross margin, and we think there's an opportunity to expand our footprint there, specifically around M&A and specifically in the European theater in the U.K. Second is around regional synthesis. Because of BIOSECURE and what's going on geopolitically, we're well positioned to move a lot of our synthesis into the United States and Europe, and we're planning on doing that around automation specifically, but also some M&A activities that we have in our hands today.
Lastly is around technology and automated solutions, continuing to drive performance for our customers around this automated workflow and what we can do for them. This will be an area that is more focused on an organic investment, but there will be some M&A here. The organization is not quite ready for M&A in this area based on some operational issues that we're solving for. Capital deployment. We've got a balance sheet, about $550 million in cash. We deploy capital in four areas specifically. First is around gross margin and productivity improvement. Second is around growth investments, third is around M&A, and fourth is around buyback. We intend on using all four of those tools in our toolkit this year in driving performance financially. Where are we in the turnaround?
You know, when we came in, the prior management team we talked about, they talked about the fact that we had 13 IT systems, 39 legal entities. We had purchased around 15 companies, there was this centralization in a functionally aligned organization. We inherited that. We also inherited some on-time delivery issues and some quality issues. We'll be talking more about that as well in terms of how we're focused around solving a lot of those. We had a high cost base, so heavy G&A, resources in the wrong areas and we've started to redeploy those in the right areas. What we're excited about is having a highly differentiated portfolio and what we're doing about it. What we've done is very quickly, within about a month, we made the determination that we were gonna divest B Medical. We made that call pretty quickly.
We knew the company before we came in. We determined that it did not fit in the portfolio. We've divested that and we're on target to be closing at the end of the month here. We've redesigned the organization, where it's now not a functionally aligned organization. Corporate headquarters is very small, where all of our resources are into the businesses where they belong. R&D is into the business. Sales are in regionally. Marketing has investments. We're excited about what we've done there. We're reducing our G&A. We continue and will continue to do this. This is a way of life for the organization where we try and drive improvements through leveraging G&A and bringing that down over time. We move very quickly here. We quickly restructured about 300-350 headcount at corporate out.
We put a lot of those resources back into the business. We did another layer of restructuring Q1 of last year around October, November. We took another 40 headcount out of our SMS business. Since then, we have general managers that wake up now every day focused on our businesses. They're focused on stores and cryo, they're focused on our C&I business, and they're focused on SRS. We've now stripped out the bureaucracy. We've got good performance metrics into the organization. We'll talk more about these performance metrics in terms of what's important to us. The structure that we were looking at in terms of coming into the turnaround was the following is people, do we have the right people? We've now turned over much of the management team. We have the right people.
Do we have the right structure? We now have the right structure. We're focused on process and performance. Process meaning how are we managing this business actively? We now have monthly business reviews. We have standard KPIs in the business that help us drive performance. Those KPIs are the following. Two are customer-facing KPIs, quality and on-time delivery. You as a customer, that's what you care about when you purchase a product. We wanted to start to see how the customers were seeing us every single day. We implemented quality and on-time delivery metrics. I'll talk more about that. We had a lot of work to do there. We still have a lot of work to do there. Second is shareholder metrics. What's important? Top-line growth, operating margin expansion, working capital, free cash flow, and return on invested capital.
Those metrics are in each of the businesses. We manage those on a monthly basis. Lastly, employee metrics. What is our turnover and what is our employee, what we call internal fill, which is, are we promoting employees from the inside of the organization? All eight of those are now into the businesses. We can get good line of sight into the performance of the businesses today. Lastly, it's around bringing this culture of the Azenta business system, which is continuous improvement, which is making all of our operations better, driving gross margin improvements and driving the improvements we talked about that support performance. We're pretty excited about where we're headed right now. We've got a great company, great portfolio of businesses. We're breathing life back into that from an R&D perspective. We've got a great board to support it.
I'm very happy to be joining the board. It's one of the reasons I wanted to come here is we've got a high-performing board for a small mid-cap company. We're a leaner, much leaner organization in the business. That lean thinking allows decision-making at the lowest level of the organization. We say a lot of times those closest to the customer have the most credibility. So we've leaned the organization out. We're more nimble. We're able to react and drive more performance in the organization. We've invested a lot in R&D this year in sales and marketing. Those investments are gonna continue as we strip out our G&A. Some of that the shareholders will enjoy from a profit perspective. Other goes back into the business to drive more growth and performance.
We're gonna just continue that. That's not gonna be a project. That is just gonna be a way of life in the business going forward. Building this culture of the Azenta business system is, I think, very important for the future. I'll tell you one data point to help, where you always know, you know, turnarounds are challenging, but I'll tell you, our engagement scores have gone up this year, so we're excited. We're winning the hearts and minds of our team members and we're pretty excited. When you bring in the Azenta business system, they understand that they can solve some of the problems they haven't been able to do in the past. We're early in our operational excellence journey.
We'll talk more about that, I'm sure, Andrew, when we're in Q&A. I don't wanna spend a lot of time on this today. We're very excited about kind of where we are in the journey. We look at really two things from a growth perspective on our lean journey. First is around innovation. Are we funding that, and do we have the right roadmaps to support that? Our investments in R&D were anemic for a number of years. We're now putting that in. Product managers are front and center in the organization now and driving performance around our roadmaps. Very excited about how that team is performing and the roadmaps we have and the future products to come in 2027 and 2028. Commercial excellence, we talked about that in terms of repositioning the organization, making sure that we have our sales reps in the right areas.
Are they closest to our customers? We did not have that. We repositioned the entire organization there. Lastly, around driving gross margin improvement, manufacturing and back office operations. When you have as many IT systems as we've had, and then you implement an Oracle and a NetSuite, and you go back and forth, which we did, we have to optimize those and get those back where they need to be. That's in process right now. Our ABS team is doing a very good job of driving performance there.
Lastly, I want to leave you with just some early indicators for wins here. This was a slide we showed at our Investor Day in December. Improving quality. We talked about our stores complaints. We reduced those by 55%. We've got over 150 stores in the field. 18 of those stores had some quality issues. We're reducing that pretty quickly.
It's worth the investment. Customer satisfaction is worth it. We are driving that number down. Enhancing delivery. Our on-time delivery in our C&I business was around 15%, we've taken it from 15% up to 65%. We're gonna drive an improvement up to 95% this year. 90% some of those SKUs are in the system, they're working well. We're driving change here and effectuating change, customers are seeing it. I hear from customers all the time that they can see the changes being made. We're reducing our cost. Clearly, we wanna bring our G&A down, we're gonna continue to do that. We moved very quickly where we could, in other areas, we're moving slow because we did not wanna break the organization. There's a pacing that we're working with here.
Lastly, our working capital management. You can see the free cash flow coming into the business right now, which is new to Azenta, and we're thrilled about continuing on that journey and driving free cash flow. Over the next couple years, we plan on driving around $200 million-$250 million of free cash flow. I had committed to Andrew that I would be brief with my remarks. He said, "Let's go have a conversation and Q&A." Andrew, thank you.
No, that was great. We've got just the right amount of time here, so this is perfect. I'm gonna start with my normal last question. Because I think you're kinda champing at the bit to answer it, which is, what do you think investors are kinda missing the most in the market today when you look at where you see Azenta sitting and where the market is valuing it?
That's a tough one. A few things. I mean, if you look at what we're driving towards, I mean, first thing is, I think, $12-$15 of our stock price is cash. You know, we're trading around 8x-10x . You've got a great set of assets, great portfolio. We've got a lot of customer intimacy. We're driving a lot of free cash flow, around $200 million-$250 million. That's new to the organization. I think it's an underappreciated story around we were an old semiconductor business, now we're in life sciences. You know, do you sell freezers? You know, are you in the freezer business? I've heard that a lot. The answer is absolutely not. We sell highly complex robotics in a very, very cold environment where you're picking.
Electronics don't like the cold. I think it's an underappreciated story on where we fit in the ecosystem of pharma and biotech and how critical we are to their success. If you think about these units, we are in the basement of most all biotech and pharma companies. It's like the Amazon warehouse distribution center, where we're moving these products out so they can get more research out. It's an amazing place to be, and so that's part of it. That's very unique. In our sample management solutions, great business because we're touching millions of samples. You have a biorepository asset that's very attractive not only from a customer perspective and the value we bring them, but financially. It's 90% recurring revenue at 55%+ gross margin. Very attractive. We're gonna continue to expand on that.
You have this crown jewel sitting here that I think has been, excuse me, underappreciated. You move over to the multiomics business where, you know, I was scratching my head when I first joined the company. I said, "But does this, does multiomics, you know, does reading and writing make sense from a customer perspective?" The answer is absolutely. The more I got into this, the more got excited about it, that a customer now has one partner that they need to deal with in terms of reading and writing. Building on that, I think, is gonna be important. I think it's just underappreciated. I don't know, you know, coming out of the semi business, if we articulated that very well. Hopefully we're starting to do that.
I can tell you know, when our teams are out in the field and when we perform from a customer, from a product delivery perspective, customers love us.
That's perfect. Super helpful. Maybe touching on something you said in the presentation. I think back to results, the most recent results, I think you used the word reboot. I think you used the word reposition for a lot of the sales force in the presentation. Just kinda thinking about the commercial efforts, you know, where are you in that process of getting the footprint, the feet on the street, the right people that you want to be able to push forward? You know, what inning are we in and how do we think about, you know, the dividends that'll pay down the road?
Europe, we're eight to nine innings. I mean, we're through it. That team is performing very well. We were in Europe last week at our regional sales meeting. I mean, you talk about high performance. They're growing very nicely. They've repositioned all their sales reps where they need to be. Great leadership. Our North America, we were a bit behind in our SMS business, specifically around automated solutions. Joe came in around the summer, around July. He quickly came in, low performers, found another team to be on outside of the company. We've rehired. We've got good management now. We're seeing some of those efforts in terms of the results. They're in, you know, seven to eight. I think just last week, they hired their last two sales reps so early. We're getting through it. I mean, Joe's done a very good job there.
SRS, we had to reboot that whole org. We had a lot of sales reps coming out of COVID that weren't in the right areas. We had people in Iowa and Michigan and you get the point I'm trying to make. They weren't where our customers were, we wanted to reposition those individuals where our customers were and then we gotta get people in the field. We've got a new leader there. All that's in place. We went through all of that in the late summer, early fall. Okay? That's on the SMS side of the house. On the multiomic side of the business, we're hiring people there, Europe's in a better place. North America, we're in a bit of a reboot. We had. This is public.
We're in a lawsuit with Twist right now. They took some of our employees. We feel very good about where we are from a restricted covenant perspective. We're rebooting some of that right now. Those managers are in and the sales reps are in. They just came in and then we're still, we've still got a North America sales leader to bring in. We're almost there. Almost. I'd say inning six to seven there on a reboot.
Okay. Helpful. I wanna touch on one that I don't know if investors ask about a ton necessarily, 'cause we tend to focus on, you know, numbers, but ABS is something you, I think, are excited about putting in, and it's hard for us to really frame what it is concretely. I guess the question here is as you implement ABS, as you talk about these Kaizens and all the different things you're doing from that perspective, can you give some examples and talk about where it's showing up first and how that, you know, translates to some of the financials? Whether it's in multiomics versus SMS versus, you know, carving out some of the G&A.
Just a little bit of flavor for what that looks like in terms of the result that investors are probably looking to and thinking about more.
Sure. Feel free to jump in too, Lawrence. Here's the way I would think about it. ABS is around driving, operating, leverage, and gross margin. Ultimately if you get a customer a product faster, your free cash flow conversion cycle, you bring your lead time down, your cash flow conversion cycle gets much better. Okay? Where are we focused? I'll give you some examples. GENEWIZ. We came in and started implementing ABS in some where we were pretty inefficient in the business. We're looking at gross margins specifically. The team came in, I'll give you a few examples on Kaizens. We were delivering a product in 25 days to a customer. Unacceptable. They came in one week we got it down to nine hours. Okay? That's the power of a Kaizen.
You go in, you map the value stream out, you attack these big areas of inefficiency, you redesign a process. The first two days is unpleasant. Well, there's a little bit of excitement. Wednesday is like a very bad day for the teams because they don't feel like they can get through and break through, then Thursday, Friday, they break through and they fix whatever the issue is. They come up with it. Executives don't do that. We did that. Okay? It's going from nine hours to five. There's line of sight there. That impacts gross margin, that impacts revenue. We have specific deliverables that come out of that. Another one is on sample registrations.
When you've got a backlog on sample registrations and you're, you can't get to those for weeks, which was what we were doing, now we get to those in days. When you get them registered, revenue goes up. When you get more people working on a problem, gross margin improves. These are certain areas that we're attacking. We're, we only have a certain amount of resources, so we're going to the biggest problem areas. Quality was one of them. I gave you specifics around quality, around going from 15% to 65%. All of that is related to ABS. I don't know if you had anything else.
Yeah. Maybe around G&A, right? Perfect example is a couple weeks ago we ran a accounting close Kaizen. Well, you're going, as investors, well, why do I care? I mean, certainly John does because we want to make sure that we get the information dashboards in a timely basis. The preliminary outcome of that, we brought 20 individuals together, cross-functional team, and we sat for three, four days and talked about how do we improve it. Net- net, after the effort, we're gonna have a 35%-50% improvement. Overall, you know, over the long term, that will pay dividends not only in G&A, but more importantly the visibility to give us the time, really to act on, you know, running the business.
I mean, one of the things, Andrew, that is important is, so we, there was a decision made three years ago to outsource accounting, all accounting, ARAP, into a different country. Okay. We don't wanna do that. We wanna bring it back. In order to bring it back, you gotta know what the process is. You know, information management system's important. Our closes were not that happening that fast, so there was a lag in information. The team went at it and they map out the whole process. They figure out where the waste is, they get rid of it, and then they re-implement. We re-implemented this, and now we've dramatically decreased that time. We'll do that so there's a step change and then we'll go run another Kaizen to get another step change. That's ABS.
That's how you think about it. 'Cause a lot of companies will look at a problem and over time they'll try and improve it. We do it, do a Kaizen, you get a big incremental, you get a big step change in performance, you go at that performance for a while, and then you go do it again. That's ABS.
Perfect. There's a lot more I wanna ask to save it for the breakout downstairs 'cause we're out of time. Everybody, if you wanna follow us down to Amarante 1, we'll continue the conversation there. Thank you.
Very good. Thank you.
Thank you.
Good.