UNITED STATES

SECURITIES ANDAND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

~~FORM 10-Q~~

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~December 31, 2017,~~September 30, 2023, or

☐	☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 0-17272

BIO-TECHNE CORPORATION

(Exact name of registrant as specified in its charter)


Minnesota	41-1427402
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

614 McKinley Place N.E. Minneapolis, MN55413	~~(612)~~ (612) 379-8854
(Address of principal executive offices) (Zip Code)	(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Exchange Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	TECH	The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, ~~or a~~ smaller reporting company, or an emerging growth company. See the definitions of ~~"large~~“large accelerated ~~filer", "accelerated filer"~~ filer,” “accelerated filer,” “smaller reporting company,” and ~~"smaller reporting company"~~“emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Exchange Act Rule 12b- 2).☐ Yes ☒ No

At ~~February 2, 2018, 37,474,011~~November 1, 2023, 158,150,379 shares of the Company's Common Stock (par value $0.01) were outstanding.

Table of Contents

TABLE OF CONTENTS


		Page
PART I. FINANCIAL INFORMATION
		~~Page~~
~~PART I. FINANCIAL INFORMATION~~
Item 1.
~~Item~~ 1.	Condensed Consolidated Financial Statements (Unaudited)		1

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations		1520

Item 3.	Quantitative and Qualitative Disclosures about Market Risk		2227

Item 4.	Controls and Procedures	27

PART II: OTHER INFORMATION

Item 1.	Legal Proceedings	27

Item 4. 1A.	~~Controls and Procedures~~Risk Factors		2328

~~PART II: OTHER INFORMATION~~
Item 2.
~~Item~~ 1.	~~Legal Proceedings~~		24

~~Item~~ ~~1A.~~	~~Risk Factors~~		24

~~Item~~ 2.	Unregistered Sales of Equity Securities and Use of Proceeds		2428

Item 5.3.	~~Other Information~~Defaults Upon Senior Securities		2428

Item 6. 4.	~~Exhibits~~Mine Safety Disclosures		2428

Item 5.	~~SIGNATURES~~Other Information	28

25Item 6.	Exhibits	29

	SIGNATURES	32

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~ITEM~~ ~~1. FINANCIAL STATEMENTS~~

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

AND COMPREHENSIVE INCOME

Bio-Techne Corporation and Subsidiaries

(in thousands, except per share data)

(unaudited)

Quarter Ended

Six Months Ended

December 31,

December 31,

2017

2016

2017

2016

Net sales
$ 154,153 $ 131,807 $ 298,766 $ 262,388
Cost of sales
52,319 43,664 99,064 86,901
Gross margin
101,834 88,143 199,702 175,487
Operating expenses:

Selling, general and administrative
63,775 56,981 122,064 102,405
Research and development
13,911 13,281 27,459 26,046
Total operating expenses
77,686 70,262 149,523 128,451
Operating income
24,148 17,881 50,179 47,036
Other income (expense)
(2,417
)
(2,693
)
(5,480
)
(4,064
)
Earnings before income taxes
21,731 15,188 44,699 42,972
Income tax expense (benefit)
(27,116
)
7,721 (20,011
)
16,663
Net earnings
$ 48,847 $ 7,467 $ 64,710 $ 26,309
Other comprehensive income:

Foreign currency translation adjustments
1,524 (10,066
)
8,492 (13,301
)
Unrealized gain (loss) on available-for-sale investments, net of tax of $799, $(1,889), $5,375, and $(2,060), respectively
(8,582
)
6,778 (16,374
)
16,486
Other comprehensive (loss) income
(7,058
)
(3,288
)
(7,882
)
3,185
Comprehensive income (loss)
$ 41,789 $ 4,179 $ 56,828 $ 29,494
Earnings per share:

Basic
$ 1.30 $ 0.20 $ 1.73 $ 0.70
Diluted
$ 1.29 $ 0.20 $ 1.71 $ 0.70
Cash dividends per common share:
$ 0.32 $ 0.32 $ 0.64 $ 0.64
Weighted average common shares outstanding:

Basic
37,449 37,308 37,412 37,294
Diluted
37,926 37,478 37,816 37,475


	Quarter Ended
	September 30,
	2023		2022

Net sales	$	276,935	$	269,655
Cost of sales		91,744		90,060
Gross margin		185,191		179,595

Operating expenses:
Selling, general and administrative		105,331		99,375
Research and development		23,998		23,903
Total operating expenses		129,329		123,278
Operating income		55,862		56,317

Other income (expense)		(6,304)		47,399
Earnings before income taxes		49,558		103,716
Income taxes (benefit)		(1,435)		13,982
Net earnings, including noncontrolling interest		50,993		89,734
Net earnings attributable to noncontrolling interest		—		179
Net earnings attributable to Bio-Techne	$	50,993	$	89,555
Other comprehensive income (loss):
Foreign currency translation adjustments		(11,602)		(21,457)
Foreign currency translation reclassified to earnings with Eminence deconsolidation		—		119
Unrealized gains (losses) on derivative instruments - cash flow hedges, net of tax amounts disclosed in Note 8		(350)		4,695
Other comprehensive income (loss)		(11,952)		(16,643)
Other comprehensive income (loss) attributable to noncontrolling interest		—		(33)
Other comprehensive income (loss) attributable to Bio-Techne		(11,952)		(16,610)
Comprehensive income attributable to Bio-Techne	$	39,041	$	72,945

Earnings per share attributable to Bio-Techne⁽¹⁾:
Basic	$	0.32	$	0.57
Diluted	$	0.31	$	0.55

Weighted average common shares outstanding⁽¹⁾:
Basic		158,130		156,929
Diluted		161,940		162,172

⁽¹⁾Prior period results have been adjusted to reflect the four-for-one stock split effected in the form of a stock dividend on November 29,2022. See Note 1 for details.

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

CONDENSED CONSOLIDATED BALANCE SHEETS

Bio-Techne Corporation and Subsidiaries

(in thousands, except share and per share data)

December 31,
2017
(unaudited)

June 30,
2017

ASSETS

Current assets:

Cash and cash equivalents
$ 121,458 $ 91,612
Short-term available-for-sale investments
40,927 66,102
Accounts receivable, less allowance for doubtful accounts of $905 and $696, respectively
98,498 116,830
Inventories
68,280 60,151
Prepaid expenses and other
16,923 13,330
Total current assets
346,086 348,025
Property and equipment, net
138,461 135,124
Goodwill
589,101 579,026
Intangible assets, net
438,360 452,042
Other assets
43,414 44,002
Total assets
$ 1,555,422 $ 1,558,219
LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Trade accounts payable
$ 11,318 $ 16,856
Salaries, wages and related accruals
26,537 26,602
Accrued expenses
14,508 18,518
Deferred revenue
6,016 5,968
Income taxes payable
- 2,478
Contingent consideration payable
53,300 65,100
Total current liabilities
111,679 135,522
Deferred income taxes
74,103 120,596
Long-term debt obligations
362,500 343,771
Long-term contingent consideration payable
- 3,300
Other long-term liabilities
9,321 5,403
Shareholders' equity:

Common stock, par value $.01 per share; authorized 100,000,000; issued and outstanding 37,469,896 and 37,356,041, respectively
375 374
Additional paid-in capital
214,697 199,161
Retained earnings
839,564 799,027
Accumulated other comprehensive loss
(56,817
)
(48,935
)
Total shareholders' equity
997,819 949,627
Total liabilities and shareholders’ equity
$ 1,555,422 $ 1,558,219


	September 30,
	2023		June 30,
	(unaudited)		2023
ASSETS
Current assets:
Cash and cash equivalents	$	148,663	$	180,571
Short-term available-for-sale investments		—		23,739
Accounts receivable, less allowance for doubtful accounts of $4,920 and $4,738, respectively		204,570		218,468
Inventories		186,080		171,638
Other current assets		52,164		27,066
Total current assets		591,477		621,482

Property and equipment, net		231,683		226,200
Right of use asset		102,277		98,326
Goodwill		969,376		872,737
Intangible assets, net		578,971		534,645
Other assets		281,576		285,302
Total assets	$	2,755,360	$	2,638,692
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Trade accounts payable	$	28,084	$	25,679
Salaries, wages and related accruals		34,891		36,747
Accrued expenses		15,937		14,880
Contract liabilities		24,516		23,069
Income taxes payable		5,938		12,022
Operating lease liabilities - current		12,198		11,199
Contingent consideration payable		1,750		3,500
Other current liabilities		4,440		1,413
Total current liabilities		127,754		128,509

Deferred income taxes		83,134		88,982
Long-term debt obligations		440,000		350,000
Operating lease liabilities		97,332		93,766
Other long-term liabilities		9,394		10,919

Bio-Techne’s Shareholders’ equity:
Undesignated capital stock, no par; authorized 5,000,000 shares; none issued or outstanding		—		—
Common stock, par value $.01 per share; authorized 400,000,000; issued and outstanding 158,354,579 and 157,641,914 respectively		1,584		1,576
Additional paid-in capital		746,606		721,543
Retained earnings		1,327,572		1,309,461
Accumulated other comprehensive loss		(78,016)		(66,064)
Total Bio-Techne’s shareholders’ equity		1,997,746		1,966,516
Noncontrolling interest		—		—
Total shareholders’ equity		1,997,746		1,966,516
Total liabilities and shareholders’ equity	$	2,755,360	$	2,638,692

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Bio-Techne Corporation and Subsidiaries

(in thousands)

(unaudited)

Six Months Ended

December 31,

2017

2016

CASH FLOWS FROM OPERATING ACTIVITIES:

Net earnings
$ 64,710 $ 26,309
Adjustments to reconcile net earnings to net cash provided by operating activities:

Depreciation and amortization
31,038 29,250
Costs recognized on sale of acquired inventory
582 2,133
Deferred income taxes
(43,537
)
(4,384
)
Stock-based compensation expense
8,839 7,245
Fair value adjustment to contingent consideration payable
19,900 12,400
Other operating activity
1,556 (1,286
)
Change in operating assets and operating liabilities, net of acquisition:

Trade accounts and other receivables
18,636 (6,406
)
Inventories
(7,513
)
(2,497
)
Prepaid expenses
1,321 235
Trade accounts payable and accrued expenses
(4,736
)
5,248
Salaries, wages and related accruals
454 (256
)
Income taxes payable
(7,372
)
(138
)
Net cash provided by operating activities
83,878 67,853

CASH FLOWS FROM INVESTING ACTIVITIES:

Acquisitions, net of cash acquired
(10,644
)
(255,929
)
Proceeds from maturities of available-for-sale investments
6,563 1,592
Purchases of available-for-sale investments
(3,061
)
(1,625
)
Purchases of property and equipment
(11,608
)
(5,295
)
Purchase of equity investment
- (40,000
)
Net cash used in investing activities
(18,750
)
(301,257
)

CASH FLOWS FROM FINANCING ACTIVITIES:

Cash dividends
(23,946
)
(23,871
)
Proceeds from stock option exercises
6,699 2,105
Excess tax benefit from stock option exercises
- 305
Borrowings under line-of-credit agreement
25,000 368,410
Payments on line-of-credit
(6,000
)
(116,500
)
Payments of Contingent consideration
(35,000
)
-
Other financing
(2,157
)
(171
)
Net cash (used in) provided by financing activities
(35,404
)
230,278

Effect of exchange rate changes on cash and cash equivalents
122 (2,175
)
Net increase (decrease) in cash and cash equivalents
29,846 (5,301
)
Cash and cash equivalents at beginning of period
91,612 64,237
Cash and cash equivalents at end of period
$ 121,458 $ 58,936

Supplemental disclosure of cash flow information:
Cash paid for interest $ 3,630 $ 3,405
Cash paid for income taxes $ 27,873 $ 21,828


	Quarter Ended
	September 30,
	2023		2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings, including noncontrolling interest	$	50,993	$	89,734
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		28,540		26,641
Costs recognized on sale of acquired inventory		181		300
Deferred income taxes		(11,591)		(4,767)
Stock-based compensation expense		10,093		14,461
Fair value adjustment to contingent consideration payable		(1,750)		(100)
Gain on sale of CCXI investment		—		(37,176)
Fair value adjustment on available-for-sale investments		(283)		(911)
(Gain) loss on equity method investment		2,382		—
Gain on sale of Eminence		—		(11,682)
Leases, net		613		2,545
Other operating activity		182		(32)
Change in operating assets and operating liabilities, net of acquisition:
Trade accounts and other receivables, net		15,599		17,335
Inventories		(5,216)		(10,685)
Prepaid expenses		(2,572)		(2,760)
Trade accounts payable, accrued expenses, contract liabilities, and other		(2,695)		(1,401)
Salaries, wages and related accruals		(2,157)		(28,360)
Income taxes payable		(22,936)		2,939
Net cash provided by (used in) operating activities		59,383		56,081

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of available-for-sale investments		23,759		14,509
Purchases of available-for-sale investments		—		(14,500)
Proceeds from sale of CCXI investment		—		73,219
Additions to property and equipment		(13,592)		(9,556)
Acquisitions, net of cash acquired		(166,426)		(101,184)
Distributions from (Investments in) Wilson Wolf		2,149		—
Proceeds from sale of Eminence		—		17,824
Net cash provided by (used in) investing activities		(154,110)		(19,688)

CASH FLOWS FROM FINANCING ACTIVITIES:
Cash dividends		(12,654)		(12,545)
Proceeds from stock option exercises		14,394		11,950
Re-purchases of common stock		—		(19,562)
Borrowings under line-of-credit agreement		160,000		449,661
Repayments of long-term debt		(70,000)		(441,000)
Taxes paid on RSUs and net share settlements		(20,228)		(17,853)
Other financing activity		—		(2,457)
Net cash provided by (used in) financing activities		71,512		(31,806)

Effect of exchange rate changes on cash and cash equivalents		(8,693)		(11,897)
Net change in cash and cash equivalents		(31,908)		(7,310)
Cash and cash equivalents at beginning of period		180,571		172,567
Cash and cash equivalents at end of period	$	148,663	$	165,257

Supplemental disclosure of cash flow information:
Cash paid for income taxes	$	32,797	$	14,892
Cash paid for interest	$	4,506	$	3,409

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Bio-Techne Corporation and Subsidiaries

(unaudited)

Note 1. Basis of Presentation and Summary of Significant Accounting Policies:

The interim consolidated financial statements of Bio-Techne Corporation and subsidiaries, (the Company) presented here have been prepared by the Company and are unaudited. They have been prepared in accordance with ~~accounting~~accounting principles generally accepted in the United States of America and with instructions to Form 10-Q10-Q and Article 10 of Regulation S-X.S-X. They reflect all adjustments which are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. All such adjustments are of a normal recurring nature.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the Un~~ited~~United States of America have been condensed or omitted. These interim unaudited condensed consolidated financial statements should be read in conjunction with the Company's Consolidated Financial Statements and Notes thereto for the fiscal year ended June 30,~~2017,~~ 2023, included in the Company's Annual Report on Form 10-K10-K for fiscal ~~year~~ ~~2017.~~2023. A summary of significant accounting policies followed by the Company is detailed in the Company's Annual Report on Form 10-K10-K for fiscal ~~2017.~~2023. The Company follows these policies in preparation of the interim unaudited condensed consolidated financial statements.

AsDuring the quarter ended September 30, 2023, the Company operated under two operating segments, Protein Sciences and Diagnostics and Genomics. The operating segments the Company operated under were consistent with the Company's operating segments disclosed in the ~~June 30, 2017~~ Company's Annual Report on Form 10~~-K, during~~10-K for fiscal 2023.

At the ~~fourth~~ ~~quarter~~2022 annual meeting of ~~fiscal year~~ ~~2017,~~ ~~management identified certain errors related to purchase accounting items for the Advanced Cell Diagnostics (ACD) acquisition recorded during the~~ ~~first~~ ~~quarter of fiscal year~~ ~~2017.~~ ~~We concluded that these errors were~~ ~~not~~ ~~material to each~~shareholders of the ~~respective periods. However, we elected to report~~Company held on October 27, 2022, the ~~corrected amount for the~~ ~~fourth~~ ~~quarter of fiscal year~~ ~~2017~~shareholders approved an amendment and ~~revise the previously reported fiscal~~ ~~2017~~ ~~quarterly information in future filings to reflect the properly stated amounts. In accordance with ASC~~ ~~250,~~ ~~we have corrected the prior year financial statements herein.~~

Th~~e impact of this revision on our unaudited consolidated statement of earnings and comprehensive income was as follows:~~

Quarter Ended December 31, 2016

As Previously

Reported

Adjustment

As Revised

Cost of sales
$ 46,725 $ (3,061
)
$ 43,664
Selling, general and administrative
55,655 1,326 56,981
Other (expense) income
(2,607
)
(86
)
(2,693
)
Earnings before income taxes
13,539 1,649 15,188
Income taxes
7,226 495 7,721
Net earnings
6,313 1,154 7,467
Comprehensive income
3,025 1,154 4,179

Six Months Ended December 31, 2016

As Previously

Reported

Adjustment

As Revised

Cost of sales
$ 92,837 $ (5,936
)
$ 86,901
Selling, general and administrative
101,918 487 102,405
Other (expense) income
(3,921
)
(143
)
(4,064
)
Earnings before income taxes
37,666 5,306 42,972
Income taxes
15,071 1,592 16,663
Net earnings
22,595 3,714 26,309
Comprehensive income
25,780 3,714 29,494

~~The revisions had~~ no ~~impact to net cash provided by operating, investing, or financing activities. The impact of this revision to the individual line items within our unaudited consolidated statement of cash flows for the~~ ~~six~~ ~~months ended~~ ~~December 31, 2016~~ ~~was as follows:~~

Six Months Ended December 31, 2016

As Previously

Reported

Adjustment

As Revised

Costs recognized on the sale of acquired inventory
$ 8,069 $ (5,936
)
$ 2,133
Other operating (1)
123 (1,580
)
(1,286
)
Changes in salaries, wages and related accruals
(2,466
)
2,210 (256
)
Changes in income tax payable
(1,730
)
1,592 (138
)

(1)

~~Does~~ ~~not~~ ~~cross-foot due to the retrospective adoption of the cash flow presentation of employee taxes paid for shares withheld as part of ASU~~ ~~2016~~-09

~~Recently Adopted Accounting Pronouncements~~

In ~~March~~ ~~2016,~~ ~~the FASB issued ASU~~ ~~2016~~-~~09,~~~~Improvements to Employee Share-Based Payment Accounting~~~~. This standard includes provisions intended to simplify various aspects related to how share-based payments are accounted for and presented in the financial statements. We adopted this standard on~~ ~~July 1, 2017.~~ ~~The Company expects its reported provision for income taxes to become more volatile, dependent upon market prices and volume of share-based compensation exercises and vesting of options.~~

In ~~July~~ ~~2015,~~ ~~the FASB issued ASU~~ ~~2015~~-~~11,~~~~Simplifying the Measurement of Inventory~~~~. This provision would require inventory that was previously recorded using~~ ~~first~~~~-in,~~ ~~first~~-out (“FIFO”) to be recorded at lower of cost or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. We adopted this standard on ~~July 1, 2017.~~ ~~The application of this standard did~~ ~~not~~ ~~have significant impact on our financial statements.~~

~~Pronouncements Issued But~~ ~~Not~~ ~~Yet Adopted~~

In ~~May 2014,~~ ~~the FASB issued ASU~~ ~~No.~~~~2014~~-~~09,~~~~Revenue from Contracts with Customers~~. The standard provides revenue recognition guidance for any entity that enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of non-financial assets, unless those contracts are within the scope of other accounting standards. The standard also expands the required financial statement disclosures regarding revenue recognition. The new guidance is effective for us on ~~July 1, 2018.~~ ~~In addition, in~~ ~~March 2016,~~ ~~the FASB issued ASU~~ ~~No.~~~~2016~~-~~08,~~~~Principal versus Agent Considerations (Reporting Revenue Gross versus Net)~~~~, in~~ ~~April 2016,~~ ~~the FASB issued ASU~~ ~~No.~~~~2016~~-~~10,~~~~Identifying Performance Obligations and Licensing,~~ ~~and in~~ ~~May 2016,~~ ~~the FASB issued ASU~~ ~~No.~~~~2016~~-~~12,~~~~Narrow-Scope Improvements and Practical~~~~Expedients~~~~. These standards are intended to clarify aspects of ASU~~ ~~No.~~~~2014~~-09 ~~and are effective for us upon adoption of ASU~~ ~~No.~~~~2014~~-~~09.~~

~~The Company~~’s approach to implementing the new standard includes performing a detailed review of key contracts representative of its different businesses, and comparing historical accounting policies and practices to the new standard. The guidance permits ~~two~~ methods of adoption, retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the cumulative catch-up transition method). We will adopt the standards using cumulative catch-up transition method.

The Company is continuing to assess the impact on our consolidated financial statements by finalizing our location surveys, reviewing unique customer contract terms, and developing processes to manage the changes in the revenue recognition guidance and gather information for the required disclosures. The company expects this process will be complete during the ~~fourth~~ ~~quarter of fiscal year~~ ~~2018.~~ ~~A majority~~restatement of the Company’s ~~revenue arrangements are routine sales transactions, which generally consist~~articles of incorporation to increase the number of authorized shares of the Company’s common stock from 100,000,000 to 400,000,000. On November 1, 2022, the Company’s board of directors approved and declared a four-for-one split of the Company’s common stock in the form of a ~~single performance obligation~~stock dividend. Each stockholder of record on November 14, 2022 received three additional shares of common stock for each then-held share, which were distributed after close of trading on November 29, 2022. All share and per share amounts presented herein have been retroactively adjusted to ~~transfer promised goods or service. Therefore, based on our procedures performed to date it is~~ ~~not~~ ~~expected that application of the new guidance will have a material impact to the Company’s consolidated financial statements.~~

In ~~January 2016,~~ ~~the FASB issued ASU~~ ~~No.~~~~2016~~-~~01,~~~~Recognition and Measurement of Financial Assets and Financial Liabilities~~. The standard is intended to improve the recognition, measurement, presentation and disclosure of financial instruments. This ASU is effective using the modified retrospective approach for annual periods and interim periods within those annual periods beginning after ~~December 15, 2017,~~ ~~which for us is~~ ~~July 1, 2018.~~ ~~Early adoption is permitted. We do~~ ~~not~~ ~~expect the application of this standard to have a significant impact on our results of operations or financial position.~~

In ~~February 2016,~~ ~~the FASB issued ASU~~ ~~2016~~-~~02,~~~~Leases (Topic~~ ~~842~~), which amends the existing guidance to require lessees to recognize lease assets and lease liabilities from operating leases on the balance sheet. This ASU is effective using the modified retrospective approach for annual periods and interim periods within those annual periods beginning after ~~December 15, 2018,~~ ~~which for us is~~ ~~July 1, 2019.~~ ~~Early adoption is permitted. We are currently evaluating~~reflect the impact of the ~~adoption~~stock split.

Partially-owned consolidated subsidiary: On September 1, 2022, the Company completed the sale of ~~ASU~~ ~~2016~~-02 onits equity shares of Changzhou Eminence Biotechnology Co., Ltd. (Eminence) for approximately $17.8 million to a third party. Eminence was considered a variable-interest entity that was fully consolidated in our ~~consolidated~~ financial statements.

In ~~June 2016,~~ Prior to the ~~FASB issued ASU~~ ~~2016~~-~~13,~~~~Financial Instruments - Credit Losses (Topic~~ ~~326~~~~), Measurement~~sale, Eminence had revenue of ~~Credit Losses on Financial Instruments~~~~. The amendments in this update replace~~$2.0 million for the ~~incurred loss impairment methodology in current GAAP with~~first fiscal quarter of 2023 within our Protein Sciences segment. As a methodology that reflects expected credit losses. This update is intended to provide financial statement users with more decision-useful information about the expected credit losses. This ASU is effective for annual periods and interim periods for those annual periods beginning after ~~December 15, 2019,~~ ~~which for us is~~ ~~July 1, 2020.~~ ~~Entities~~ ~~may~~ ~~early adopt beginning after~~ ~~December 15, 2018.~~ ~~We are currently evaluating the impact~~result of the ~~adoption~~sale of ~~ASU~~ ~~2016~~-13the business, the Company recorded a gain of $11.7 million within the Other income (expense) line in the Condensed Consolidated Statement of Earnings.

Investments: In December 2021, the Company paid $25 million to enter into a two-part forward contract which requires the Company to make an initial ownership investment followed by purchase of full equity interest in Wilson Wolf Corporation (Wilson Wolf) if certain annual revenue or annual earnings before interest, taxes, depreciation, and amortization (EBITDA) thresholds are met. Wilson Wolf is a leading manufacturer of cell culture devices, including the G-Rex product line. The first part of the forward contract is triggered upon Wilson Wolf achieving approximately $92 million in annual revenue or $55 million in EBITDA at any point prior to December 31, 2027. During the quarter ended March 31, 2023, the Company determined that Wilson Wolf had met the EBITDA target. On March 31, 2023, the Company paid an additional $232 million to acquire 19.9% of Wilson Wolf.

Since the first part of the forward contract has been triggered, the second part of the forward contract will automatically trigger, and requires the Company to acquire the remaining equity interest in Wilson Wolf on ~~our consolidated financial statements.~~December 31, 2027 based on a revenue multiple of approximately 4.4 times trailing twelve month revenue. The second part of the contract would be accelerated in advance of December 31, 2027, if Wilson Wolf meets its second milestone of approximately $226 million in annual revenue or $136 million in annual EBITDA. If the second milestone is achieved, the forward contract requires the Company to pay approximately $1 billion plus potential consideration for revenue in excess of the revenue milestone.

In ~~January 2017,~~ ~~the FASB issued ASU~~ ~~No.~~~~2017~~-~~01,~~~~Clarifying the Definition of a Business~~. The standard revises the definition of a business, which affects many areas of accounting such as business combinations and disposals and goodwill impairment. The revised definition of a business will likely resultinvestment in ~~more acquisitions being~~Wilson Wolf is accounted for as ~~asset acquisitions, as opposed to business combinations. This ASU is effective for annual periods and interim periods for those annual periods beginning after~~ ~~December 15, 2017,~~ ~~which for us is~~ ~~July 1, 2018.~~ an equity method investment under ASC 323. The ~~amendments in this guidance are required to be applied prospectively to transactions occurring on or after the effective date.~~

In ~~May 2017,~~ ~~the FASB issued ASU~~ ~~No.~~~~2017~~-~~09,~~~~Scope of Modification Accounting~~~~. The standard provides guidance about which changes to the terms or conditions of a share-based payment award require modification accounting, which~~ ~~may~~ ~~result in a different fair value for the award. This ASU is effective for annual periods and interim periods for those annual periods beginning after~~ ~~December 15, 2017,~~ ~~which for us is~~ ~~July 1, 2018.~~ ~~The guidance is required to be applied prospectively to awards modified on or after the effective date. Historically, modifications to our share-based payment awards have been rare. As such, we do~~ ~~not~~ ~~expect the application of this standard to have a significant impact on our results of operations or financial position.~~

N~~ote~~ 2. ~~Selected Balance Sheet Data~~:

~~Available-For-Sale Investments:~~

~~The fair value of the Company's available-for-sale~~Company initially records its equity method investments at ~~December 31~~, ~~2017~~ ~~and~~ ~~June 30, 2017~~ ~~were~~ ~~$40~~.9 ~~million and~~ ~~$66~~.1 ~~million, respectively. The fair value~~the amount of the Company’s investment and adjusts each period for the Company’s share of the investee’s income or loss and dividends paid. Distributions from the equity method investee are accounted for using the cumulative earnings approach on the Consolidated Statement of Cash Flows. For the quarter ended September 30, 2023, there was $2.3 million of

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loss recorded on the Company’s Consolidated Statement of Earnings and Comprehensive Income related to the investment. The Company’s total investment of $252 million is included within Other assets on the Consolidated Balance Sheet.

Restructuring actions: Restructuring actions generally include significant actions involving employee-related severance charges, contract termination costs, and impairments and disposals of assets associated with such actions. Employee-related severance charges are based upon distributed employment policies and substantive severance plans. These charges are reflected in ~~ChemoCentryx, Inc (CCXI) decreased~~ ~~$21.7~~the quarter when the actions are probable and the amounts are estimable, which typically is when management approves the associated actions. Asset impairment and disposal charges include right of use assets, leasehold improvements, and other asset write-downs associated with combining operations and disposal of assets.

Fiscal Year 2023 Restructuring Actions:

Protein Sciences realignment

In December 2022, the Company informed employees it would undertake certain actions to strategically reallocate operations resources to high growth areas of the business. Additional actions were taken in June 2023 primarily related to the sales organization. The actions impacted a limited number of employees and are expected to be completed in the fourth quarter of fiscal 2024. As a result of the realignment, a pre-tax charge of $1.7 million ~~from~~ ~~$59.6~~ at related to employee severance was recorded in the Selling, general and administrative line of operating income within our Protein Sciences segment during the year ended June 30, ~~2017~~ 2023. Restructuring actions, including cash and non-cash impacts, are as follows (in thousands):


	Employee
	severance
Expense incurred in fiscal year 2023	$	1,677
Fiscal year 2023 cash payments		(762)
Fiscal year 2023 adjustments		(18)
Accrued restructuring actions balances as of June 30, 2023	$	897
Fiscal year 2024 cash payments		(707)
Fiscal year 2024 adjustments⁽¹⁾		89
Accrued restructuring actions balances as of September 30, 2023⁽²⁾	$	279

⁽¹⁾Fiscal year 2024 adjustments relate to ~~$37.9~~ ~~million at~~ ~~December 31, 2017.~~ the refinement of the accrual recorded in fiscal year 2023.

⁽²⁾The remaining ~~decrease was caused by~~balance as of September 30, 2023 relates to employee severance that is paid out over a one-year period.

QT Holdings Corporation (Quad)

In August 2022, the ~~maturities~~Company informed employees of $2.1 ~~million in corporate bond securities held by Advanced Cell Diagnostics (ACD) and~~ $1.4 ~~million in certificate~~our decision to close our QT Holdings Corporation (Quad) facility as part of ~~deposits held in China.~~a realignment of activities within our Reagent Solutions division. The ~~cost basis~~closure of the ~~Company's investment~~site was completed in ~~CCXI at~~ ~~December 31, 2017~~ ~~and~~ the fourth quarter of fiscal 2023. As a result of the restructuring activities, a pre-tax charge of $2.2 million was recorded within our Protein Sciences segment. The related restructuring charges for the year ended June 30, ~~2017~~ ~~was~~ ~~$29.5~~2023 were recorded in the income statement as follows (in thousands):


	Employee		Asset
	severance		impairment and other		Total
Selling, general and administrative	$	1,328	$	842	$	2,170



	Employee		Asset
	severance		impairment and other		Total
Expense incurred in the first quarter of 2023	$	1,328	$	842	$	2,170
Cash payments		(1,233)		(772)		(2,005)
Adjustments		(95)		(70)		(165)
Accrued restructuring actions balances as of June 30, 2023	$	—	$	—	$	—

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Recently Adopted Accounting Pronouncements

There were no accounting pronouncements adopted in the quarter ended September 30, 2023. Refer to the Form 10-K for accounting pronouncements adopted prior to June 30, 2023.

Note 2. Revenue Recognition:

Consumables revenues consist of specialized proteins, immunoassays, antibodies, reagents, blood chemistry and blood gas quality controls, and hematology instrument controls that are typically single-use products recognized at a point in time following the transfer of control of such products to the customer, which generally occurs upon shipment. Instruments revenues typically consist of longer-lived assets that, for the substantial majority of sales, are recognized at a point in time in a manner similar to consumables. Service revenues consist of extended warranty contracts, post contract support, and custom development projects that are recognized over time as either the customers receive and consume the benefits of such services simultaneously or the underlying asset being developed has no alternative use for the Company at contract inception and the Company has an enforceable right to payment for the portion of the performance completed. Service revenues also include laboratory services recognized at point in time.

We recognize royalty revenues in the period the sales occur using third party evidence. The Company elected the "right to invoice" practical expedient based on the Company's right to invoice a customer at an amount that approximates the value to the customer and the performance completed to date.

The Company elected the exemption to not disclose the unfulfilled performance obligations for contracts with an original length of one year or less and the exemption to exclude future performance obligations that are accounted under the sales-based or usage-based royalty guidance. The Company’s unfulfilled performance obligations for contracts with an original length greater than one year were not material as of September 30, 2023.

Contracts with customers that contain instruments may include multiple performance obligations. For these contracts, the Company allocates the contract’s transaction price to each performance obligation on a relative standalone selling price basis. Allocation of the transaction price is determined at the contracts’ inception.

Payment terms for shipments to end-users are generally net 30 days. Payment terms for distributor shipments may range from 30 to 90 days. Service arrangements commonly call for payments in advance of performing the work (e.g. extended warranty and service contracts), upon completion of the service (e.g. custom development manufacturing) or a mix of both.

Contract assets include revenues recognized in advance of billings. Contract assets are included within other current assets in the accompanying balance sheet as the amount of time expected to lapse until the company's right to consideration becomes unconditional is less than one year. We elected the practical expedient allowing us to expense contract costs that would otherwise be capitalized and amortized over a period of less than one year. Contract assets as of September 30, 2023 are not material.

Contract liabilities include billings in excess of revenues recognized, such as those resulting from customer advances and deposits and unearned revenue on warranty contracts. Contract liabilities as of September 30, 2023 and June 30, 2023 were approximately $25.8 million and $24.6 million, respectively. Contract liabilities as of June 30, 2023 subsequently recognized as revenue during the quarter ended September 30, 2023 were approximately $11.8 million. Contract liabilities in excess of one year are included in Other long-term liabilities on the consolidated balance sheet.

Any claims for credit or return of goods must be made within 10 days of receipt. Revenues are reduced to reflect estimated credits and returns. Although the amounts recorded for these revenue deductions are dependent on estimates and assumptions, historically our adjustments to actual results have not been material.

Taxes collected from customers relating to product sales and remitted to governmental authorities are excluded from revenue. Amounts billed to customers for shipping and handling are included in revenue, while the related shipping and handling costs are reflected in cost of products. We elected the practical expedient that allows us to account for shipping and handling activities that occur after the customer has obtained control of a good as a fulfillment cost, and we accrue costs of shipping and handling when the related revenue is recognized.

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The following tables present our disaggregated revenue for the periods presented.

Revenue by type is as follows (in thousands):


	Quarter Ended
	September 30,
	2023		2022
Consumables	$	224,547	$	216,430
Instruments		24,860		26,458
Services		21,454		21,445
Total product and services revenue, net	$	270,861	$	264,333
Royalty revenues		6,074		5,322
Total revenues, net	$	276,935	$	269,655

Revenue by geography is as follows (in thousands):


	Quarter Ended
	September 30,
	2023		2022

United States	$	159,105	$	155,431
EMEA, excluding United Kingdom		54,798		46,021
United Kingdom		12,449		11,702
APAC, excluding Greater China		17,351		17,465
Greater China		25,485		31,521
Rest of World		7,747		7,515
Net Sales	$	276,935	$	269,655

Note 3. Selected Balance Sheet Data:

Inventories:

Inventories consist of (in thousands):


	September 30,		June 30,
	2023		2023

Raw materials	$	84,739	$	84,551
Finished goods⁽¹⁾		106,539		92,474
Inventories, net	$	191,278	$	177,025

⁽¹⁾Finished goods inventory of $5,198 and $5,387 included within other long-term assets in the respective September 30, 2023 and June 30, 2023, consolidated balance sheet. The inventory is included in long-term assets as it is forecasted to be sold after the 12 months subsequent to the consolidated balance sheet date.

December 31,

June 30,

2017

2017

Raw materials
$ 25,401 $ 22,074
Finished goods
42,879 38,077
Inventories, net
$ 68,280 $ 60,151

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Property and Equipment:

Property and equipment consist of (in thousands):

December 31,

June 30,

2017

2017

Land
$ 6,270 $ 6,270
Buildings and improvements
167,486 158,495
Machinery and equipment
101,903 98,596
Property and equipment, cost
275,659 263,361
Accumulated depreciation and amortization
(137,198
)
(128,237
)
Property and equipment, net
$ 138,461 $ 135,124


	September 30,		June 30,
	2023		2023
Land	$	9,076	$	9,100
Buildings and improvements		245,161		245,302
Machinery and equipment		196,655		190,019
Construction in progress		21,769		15,491
Property and equipment, cost		472,661		459,912
Accumulated depreciation and amortization		(240,978)		(233,712)
Property and equipment, net	$	231,683	$	226,200

Intangible Assets:

Intangible assets consist of (in thousands):

December 31,

June 30,

2017

2017

Developed technology
$ 283,226 $ 276,959
Trade names
87,859 87,092
Customer relationships
207,230 204,243
Non-compete agreements
3,277 3,264
Patents
1,032 633
Intangible assets
582,624 572,191
Accumulated amortization
(144,264
)
(120,149
)
Intangible assets, net
$ 438,360 $ 452,042


	September 30,		June 30,
	2023		2023

Developed technology	$	674,274	$	616,311
Trade names		151,324		146,945
Customer relationships		214,601		213,878
Patents		3,985		3,815
Other intangibles		11,860		11,566
Definite-lived intangible assets		1,056,044		992,515
Accumulated amortization		(499,773)		(480,570)
Definite-lived intangibles assets, net		556,271		511,945
In process research and development		22,700		22,700
Total intangible assets, net	$	578,971	$	534,645

Changes to the carrying amount of net intangible assets for the ~~six~~ ~~months~~period ended ~~December 31, 2017~~ September 30, 2023 consist of (in thousands):



Beginning balance	$	452,042		$	534,645
Acquisitions		5,520			66,400
Other additions		586			433
Amortization expense		(22,675	)		(20,231)
Currency translation		2,887			(2,276)
Ending balance	$	438,360		$	578,971

The estimated future amortization expense for intangible assets as of ~~December 31, 2017~~ September 30, 2023 is as follows (in thousands):

2018
$ 22,887
2019
45,089
2020
44,385
2021
44,015
2022
42,263
Thereafter
239,721
Total
$ 438,360


Remainder 2024	$	60,132
2025		77,039
2026		73,092
2027		62,952
2028		59,308
Thereafter		223,748
Total	$	556,271

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Goodwill:

Changes to the carrying amount of goodwill for the ~~six~~ ~~months~~period ended ~~December 31, 2017~~ September 30, 2023 consist of (in thousands):

Biotechnology

Protein Platforms

Diagnostics

Total

Beginning balance
$ 254,930 $ 220,826 $ 103,270 $ 579,026
Acquisitions (Note 3)
5,991 - - 5,991
Currency translation
1,692 2,392 - 4,084
Ending balance
$ 262,613 $ 223,218 $ 103,270 $ 589,101


			Diagnostics and
	Protein Sciences		Genomics		Total
June 30, 2023	$	427,027	$	445,710	$	872,737
Acquisitions		—		102,560		102,560
Currency translation		(2,983)		(2,938)		(5,921)
September 30, 2023	$	424,044	$	545,332	$	969,376

We evaluate the carrying value of goodwill in the fourth quarter of each fiscal year and between annual evaluations if events occur or circumstances change that would indicate a ~~possib~~lepossible impairment. The Company performed a ~~quantitative~~qualitative goodwill impairment assessment for all~~three~~ of its reporting units during the fourth quarter of fiscal ~~year~~ ~~2017.~~ ~~The quantitative assessment indicated that all~~2023. No indicators of ~~the reporting units had substantial headroom as of~~ ~~June 30, 2017.~~

No ~~triggering events~~ impairment were identified ~~during the quarter ended~~ ~~December 31, 2017.~~ ~~There has been~~ no ~~impairment~~as part of ~~goodwill since the adoption of Financial Accounting Standards Board (“FASB”) ASC~~ ~~350~~ ~~guidance for goodwill and other intangibles on~~ ~~July 1, 2002.~~our assessment.

Other ~~Assets:~~assets:

Ot~~her Assets~~Other assets consist of (in thousands):

December 31,

June 30,

2017

2017

Investments
$ 40,385 $ 40,385
Other
3,029 3,617
Other assets
$ 43,414 $ 44,002

~~As of~~ ~~December 31, 2017,~~ ~~the Company had~~ ~~$43.4~~ ~~million of other assets compared to~~ ~~$44~~.0 ~~million as of~~ ~~June 30, 2017.~~ ~~Investments include a~~ ~~$40~~.0 ~~million investment in Astute Medical, Inc. made during the~~ ~~second~~ ~~quarter of fiscal year~~ ~~2017.~~ ~~This investment is accounted for under the cost-method as we own less than~~ ~~20%~~ ~~of the outstanding stock and we concluded that we do~~ ~~not~~ ~~have significant influence. Under the cost-method, the fair value is~~ ~~not~~ ~~estimated if there are~~ no ~~identified events or changes in circumstances that~~ ~~may~~ ~~have a significant adverse effect on the fair value of the investment.~~ No ~~such events or changes in circumstances were identified in the period ended~~ ~~December 31, 2017~~.


	September 30,		June 30,
	2023		2023

Investment in Wilson Wolf	$	251,644	$	255,857
Derivative instruments		17,491		16,857
Long-term inventory		5,198		5,387
Other		7,243		7,201
Other assets	$	281,576	$	285,302

Note 3.4. Acquisitions:

We periodically complete business combinations that align with our business strategy. Acquisitions are accounted for using the acquisition method of accounting, which requires, among other things, that assets acquired and liabilities assumed be recognized at fair value as of the acquisition date and that the results of operations of each acquired business be included in our consolidated statements of comprehensive income from their respective dates of ~~acquisition.~~acquisitions. Acquisition costs are recorded in selling, general and administrative expenses as incurred.

Fiscal year 2024 Acquisitions

~~Trevigen Inc.~~Lunaphore Technologies SA.

On ~~September 5, 2017~~ July 7, 2023, the Company acquired all of the ~~stock~~ownership interests of ~~Trevigen Inc.~~Lunaphore Technologies SA (“Lunaphore”) for ~~approximately~~ ~~$10.6~~$170.1 million, ~~net~~in a cash-free, debt-free acquisition. Lunaphore is a leading developer of ~~cash received.~~fully automated spatial biology solutions. The ~~Company has had a long-standing business relationship~~Lunaphore acquisition adds spatial biology instruments to Bio-Techne’s portfolio to accelerate our leadership position in translational and clinical research markets. The transaction was accounted for in accordance with ~~Trevigen as a distributor of its product line.~~ASC 805,Business Combinations. The goodwill recorded as a result of the acquisition represents the strategic benefits of growing the Company’s product portfolio and the expected revenue growth from increased market penetration. The goodwill is not deductible for income tax purposes. The business became part of the ~~Biotechnology reportable~~Diagnostics and Genomics operating segment in the firstquarter of fiscal ~~2018.~~year 2024.

~~Certain estimated~~ ~~fair values are~~ ~~not~~ ~~yet finalized~~The allocation of purchase consideration related to Lunaphore is considered preliminary with provisional amounts primarily related to the finalization of the working capital adjustment, current assets and ~~are subject to change, which could be significant.~~liabilities, equipment, intangible assets, certain tax-related amounts, and goodwill. The Company expects to finalize ~~these during fiscal year~~ ~~2018~~ ~~when our valuation models for acquired intangible assets are completed, including~~ the ~~determination~~allocation of ~~related estimated useful lives. Amounts for acquired inventory, intangible assets,~~purchase price within the one-year measurement-period following the acquisition. Net sales and ~~related deferred tax liabilities,~~operating loss of this business included in Bio-Techne's consolidated results of operations as of September 30, 2023were approximately $2.1 million and ~~goodwill remain subject to change.~~$7.3 million, respectively. The preliminary estimated fair values of the assets acquired and liabilities assumed as of the acquisition date and as of September 30,2023are as follows (in thousands):

Preliminary
Allocation at
Acquisition Date

Adjustments to
Fair Value

Updated Opening
Balance Sheet
Allocation at
December 31, 2017

Current assets, net of cash
$ 1,662 $ 1,662
Equipment and other long-term assets
154 (101
)
53
Intangible assets:

Developed technology
3,800 1,300 5,100
Trade name
1,400 (1,240
)
160
Customer relationships
1,900 (1,640
)
260
Goodwill
4,595 1,396 5,991
Total assets acquired
13,511 (285
)
13,226
Liabilities
92 295 387
Deferred income taxes, net
2,785 (590
)
2,195
Net assets acquired
$ 10,634 10 $ 10,644

Cash paid, net of cash acquired
$ 10,634 10 $ 10,644

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~~As summarized in the table, there have been adjustments totaling~~ ~~$1.4~~ ~~million to goodwill during the measurement period. These~~ ~~adjustments primarily relate to refinements made to acquired intangible asset cash flow models, and updates to opening balance sheet deferred tax~~



	Preliminary allocation at acquisition date and at September 30, 2023
Current assets	$	12,512
Equipment and other long-term assets		1,470
Intangible assets:
Developed technologies		60,300
Tradenames		4,900
Customer relationships		1,200
Goodwill		102,560
Total assets acquired		182,942

Liabilities		7,096
Deferred income taxes, net		5,768
Net assets acquired	$	170,078

Cash paid		166,426
Estimated net working capital payable		3,652
Net assets acquired	$	170,078

Tangible assets and liabilities ~~upon completion of the~~ ~~December 31, 2017~~ ~~income tax return.~~

~~Tangible assets~~ acquired ~~net of liabilities assumed,~~ were recorded at fair value on the date of close based on management's preliminary assessment. The purchase price allocated to developed technology ~~trade names,~~ and customer relationships was based on ~~management's~~management’s preliminary forecasted cash inflows and outflows and using a ~~relief-from-royalty and a multi-period~~multiperiod excess earnings method to calculate the fair value of assets purchased. The purchase price allocated to trade names was based on management's preliminary forecasted cash inflows and outflows and using a relief from royalty method. The amount recorded for developed technology is being amortized with the expense reflected in cost of goods sold in the Condensed Consolidated Statement of Earnings and Comprehensive Income. The amortization period for developed technology is estimated to be 14 years. Amortization expense related to ~~trade names, and~~ customer relationships is reflected in selling, general and administrative expenses in the Condensed Consolidated Statement of Earnings and Comprehensive Income. The ~~preliminary~~ amortization ~~periods~~period for ~~intangible assets acquired in fiscal~~ ~~2018~~ ~~are~~customer relationships is estimated to be 13 ~~years for developed technology,~~ 11 ~~years for customer relationships, and~~ ~~1.5~~ ~~years~~8 years. The amount recorded for trade ~~names.~~names is being amortized with the expense reflected in selling, general and administrative expenses in the Condensed Consolidated Statement of Earnings and Comprehensive Income. The amortization period for trade names ranges from 4 years to 8 years. The net deferred income tax liability represents the net amount of the estimated future impact of adjustments for costs to be recognized ~~upon the sale of acquired inventory that was written up to fair value and~~as intangible asset amortization, ~~both of~~ which ~~are~~ is not deductible for income tax ~~purposes.~~purposes, offset by the deferred tax asset for the preliminary calculation of acquired net operating losses.

Note 5

~~Note~~4.. Fair Value Measurements:

The Company’s financial instruments include cash and cash equivalents, available for sale investments, derivative instruments, accounts receivable, accounts payable, contingent consideration obligations, and long-term debt.

Fair value is defined as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. This standard also establishes a hierarchy for inputs used in measuring fair value. This standard maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use in valuing the asset or liability based on market data obtained from independent sources. Unobservable inputs are inputs that reflect our assumptions about the factors market participants would use in valuing the asset or liability based upon the best information available in the circumstances.

The categorization of financial assets and liabilities within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The hierarchy is broken down into three levels. Level 1 inputs are quoted prices in active markets for identical assets or liabilities. Level 2 inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs (other than quoted prices) that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable for the asset or liability and their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable. Level 3may also include certain investment securities for which there is limited market activity or a decrease in the observability of market pricing for the investments, such that the determination of fair value requires significant judgment or estimation.

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The following tables provide information by level for financial assets and liabilities that are measured at fair value on a recurring basis (in thousands):

	Total carrying value as of		Fair Value Measurements Using Inputs Considered as
	December 31, 2017		Level 1		Level 2		Level 3

										Total
										carrying
										value as of		Fair Value Measurements Using
									Balance Sheet Location	September 30,		Inputs Considered as
										2023		Level 1		Level 2		Level 3

Assets
Equity securities ⁽¹⁾	$	37,867	$	37,867	$	-	$	-

Exchange traded securities⁽¹⁾									Short-term available-for-sale investments	$	—	$	—	$	—	$	—
Derivatives designated as hedging instruments - cash flow hedges									Other assets		16,398		—		16,398		—
Derivatives designated as hedging instruments - net investment hedge									Other assets		1,093		—		1,093		—
Total assets										$	17,491	$	—	$	17,491	$	—

Liabilities
Contingent Consideration	$	53,300	$	-	$	-	$	53,300
Contingent consideration									Contingent consideration payable	$	1,750	$	—	$	—	$	1,750
Total liabilities										$	1,750	$	—	$	—	$	1,750


		Total
		carrying
		value as of		Fair Value Measurements Using
	Balance Sheet Location	June 30,		Inputs Considered as
		2023		Level 1		Level 2		Level 3

Assets
Exchange traded securities⁽¹⁾	Short-term available-for-sale investments	$	23,739	$	23,739	$	—	$	—
Derivative instruments - cash flow hedges	Other assets		16,857		—		16,857		—
Total assets		$	40,596	$	23,739	$	16,857	$	—

Liabilities
Contingent consideration	Contingent consideration payable	$	3,500	$	—	$	—	$	3,500
Total liabilities		$	3,500	$	—	$	—	$	3,500

Total carrying
value as of

Fair Value Measurements Using
Inputs Considered as

June 30, 2017

Level 1

Level 2

Level 3

Assets

Equity securities ⁽¹⁾
$ 59,616 $ 59,616 $ - $ -
Corporate bond securities ⁽¹⁾
2,057 - 2,057 -
Total Assets
$ 61,673 $ 59,616 $ 2,057 $ -

Liabilities

Contingent Consideration
$ 68,400 $ - $ - $ 68,400

(1)⁽¹⁾

~~Included in available-for-sale investments on~~During the ~~balance sheet~~

quarter ended September 30, 2023, the Company sold all of its outstanding shares of its exchange traded investment grade bond funds that it held at June 30, 2023. The cost basis and fair value of the Company’s exchange traded investment grade bond funds were $25.0 million and $23.7 million at June 30, 2023, respectively. Our available for sale securities are measured at fair value using quoted market prices in active markets for identical assets and are therefore classified as Level 1 assets.

Fair value measurements of derivative instruments

The Company utilizes forward starting swaps designated as a cash flow hedge on forecasted debt. The forward starting swaps reduce the variability of cash flow payments for the Company by converting the variable interest rate on the Company’s forecasted variable interest long-term debt to that of a fixed interest rate. Accordingly, as part of the forward starting swaps, the Company exchanges, at specified intervals, the difference between floating and fixed interest amounts based on a notional principal amount. The Company also uses a cross-currency swap contract to manage its exposure to foreign currency risk associated with the Company's net investment in its Swiss subsidiary.

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The following table presents the contractual amounts of the Company's outstanding instruments (in millions):


		September 30,		June 30,
Instruments	Designation	2023		2023
Forward starting swaps⁽¹⁾	Cash flow hedge	$	300	$	300
Cross-currency swap⁽²⁾	Net investment hedge		150		—

(1) In May 2021, the Company entered into a forward starting swap designated as a cash flow hedge on forecasted debt based on $200 million of notional principal. The effective date of the swap was November 2022 with the full swap maturing in November 2025. In March 2023, the Company entered into a forward starting swap designated as a cash flow hedge on forecasted debt based on $100 million of notional principal. The effective date of the swap was April 2023 with the full swap maturing in April 2025.

(2) In July 2023, the Company entered into a pay-fixed rate, receive-fixed rate cross-currency swap contract with a total notional amount of $150 million that was designated as a hedge to lock in the Swiss franc (CHF) rate for a portion of the Company's CHF net investment in its Lunaphore subsidiary in Switzerland. The objective of the hedge is to protect the net investment in the Company's CHF-denominated operations against changes in the spot exchange rates, on a pre-tax basis. The hedging instrument has four interim settlement dates, which will reduce the notional on the hedging instrument by $10 million at each interim date, and will reduce the notional to $110 million at maturity.

The pretax amount of the gains and losses on our hedging instruments and the classification of those gains and losses within our consolidated financial statements for the three months ended September 30, 2023 and September 30, 2022 were as follows (in thousands):


	(Gain) Loss Recognized in Accumulated Other Comprehensive Loss				(Gain) Loss Reclassified into Income
	Quarter Ended				Quarter Ended
	September 30,				September 30,				Location of (Gain) Loss
	2023		2022		2023		2022		in Income Statement
Cash flow hedges
Forward starting swaps	$	(1,587)	$	(4,376)	$	(2,539)	$	417	Interest expense
Net investment hedges
Cross-currency swap		(1,366)		—		(698)		—	Interest expense
Total	$	(2,953)	$	(4,376)	$	(3,237)	$	417

Gains or losses related to the net investment hedges are classified as foreign currency translation adjustments in the schedule of changes in Accumulated Other Comprehensive Income (“AOCI”) in Note 8, as these items are attributable to the Company’s hedges of its net investment in foreign operations. Gains or losses related to the cash flow hedges are classified as Unrealized gains (losses) on cash flow hedges in the schedule of changes in AOCI in Note 8.

Fair value measurements of contingent consideration

The Company has $1.8 million in contingent consideration recorded as of September 30, 2023, which is the fair value of contingent consideration related to the Asuragen and Namocell acquisitions. The Company is required to make contingent consideration payments of up to $105.0 million as part of the Asuragen acquisition agreement and up to $25.0 million as part of the Namocell acquisition agreement. As of September 30, 2023, the maximum payout for the Asuragen and Namocell agreements is $100.0 million as both Asuragen and Namocell did not achieve their respective December 31, 2022 revenue milestones.

The Asuragen contingent agreement is based on achieving certain revenue thresholds by December 31, 2023. The opening balance sheet fair value of the liabilities was $18.3 million, which was determined using a Monte Carlo simulation-based model discounted to present value. Assumptions used in these calculations are units sold, expected revenue, expected expenses, discount rate, and various probability

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factors. The contingent consideration related to Asuragen was $1.0 million and $2.0 million as of September 30, 2023 and June 30, 2023, respectively.

The Namocell contingent agreement is based on achieving certain revenue thresholds by December 31, 2023. The opening balance sheet fair value of the liabilities was $10.6 million, which was determined using a Monte Carlo simulation-based model discounted to present value. Assumptions used in these calculations are units sold, expected revenue, expected expenses, discount rate, and various probability factors. The contingent consideration related to Namocell was $0.8 million and $1.5 million as of September 30, 2023 and June 30, 2023, respectively.

The ultimate settlement of contingent consideration liabilities could deviate from current estimates based on the actual results of the financial measures described above. This liability is considered to be a Level 3 financial liability that is re-measured each reporting period. The change in fair value of contingent consideration for these acquisitions is included in general and administrative expense.

The following table presents a reconciliation of the liability measured at fair value on a recurring basis using ~~quoted market prices in active markets for identical assets and are therefore classified as Level~~ 1 ~~assets. We value our Level~~ 2 ~~assets using~~significant unobservable inputs ~~that are based on market indices of similar assets within an active market.~~ ~~All of our Level~~ 2 ~~assets have maturity dates of less than~~ ~~one~~ ~~year.~~(Level 3) (in thousands):


	Quarter Ended
	September 30,
	2023

Fair value at the beginning of period	$	3,500
Change in fair value of contingent consideration		(1,750)
Fair value at the end of period	$	1,750

The use of different assumptions, applying different judgment to matters that inherently are subjective and changes in future market conditions could result in different estimates of fair value of our securities or contingent consideration, currently and in the future. If market conditions deteriorate, we may incur impairment charges for securities in our investment portfolio. We ~~may~~ ~~also incur changes to our contingent consideration liability as discussed below.~~

~~In connection with the Advanced Cell Diagnostics~~ ~~(ACD) acquisition (fiscal~~ ~~2017~~~~), as well as the Zephyrus and CyVek acquisitions (fiscal~~ ~~2016~~~~), we are required to make contingent payments, subject to the entities achieving certain sales and revenue thresholds. The contingent consideration payments were up to~~ ~~$75~~.0 ~~million,~~ $7.0 ~~million and~~ ~~$35~~.0 ~~million related to the ACD, Zephyrus and CyVek acquisitions, respectively.~~ ~~The fair value of the liabilities for the contingent payments recognized upon each acquisition as part of the purchase accounting opening balance sheet totaled~~ ~~$78.5~~ ~~million (~~~~$37.0~~ ~~million for ACD,~~ ~~$6.5~~ ~~million for Zephyrus and~~ ~~$35.0~~ million for CyVek) and was estimated by discounting to present value the probability-weighted contingent payments expected to be made. Assumptions used in these calculation units sold, expected revenue, discount rate and various probability factors. The ultimate settlement of contingent consideration could deviate from current estimates based on the actual results of these financial measures. This liability is considered to be a Level 3 ~~financial liability that is re-measured each reporting period. The change in fair value of contingent consideration for these acquisitions is included in general and administrative expense.~~

~~As of~~ ~~June 30, 2017~~ ~~the remaining contingent consideration payments were up to~~ ~~$50~~.0 ~~million,~~ ~~$3.5~~ ~~million and~~ ~~$35~~.0 ~~million related to the ACD, Zephyrus and CyVek acquisitions, respectively. During the~~ ~~first~~ ~~quarter of fiscal~~ ~~2018,~~ ~~a cash payment of~~ ~~$35.0~~ ~~million was made towards to the contingent consideration liability relating to the CyVek acquisition. During the~~ ~~second~~ ~~quarter of fiscal~~ ~~2018,~~ ~~the Company determined that certain sales and revenue thresholds were met for ACD. The Company expects to make a~~ ~~$50.0~~ ~~million cash payment towards this liability in the~~ ~~third~~ ~~quarter of fiscal~~ ~~2018.~~

~~The following table presents a reconciliation of the liability measured at fair value on a recurring basis using significant unobservable inputs (Level~~ 3~~) for the~~ ~~six~~ ~~months ended~~ ~~December 31, 2017 (~~~~in thousands):~~

Quarter Ended

Six Months Ended

December 31, 2017

December 31, 2017

Fair value at the beginning of period
$ 40,900 $ 68,400
Payments
- (35,000
)
Change in fair value of contingent consideration
12,400 19,900
Fair value at the end of period
$ 53,300 $ 53,300

Fair value measurements of other financial instruments – The following methods and assumptions were used to estimate the fair value of each class of financial instrument for which it is practicable to estimate fair value.

Cash and cash equivalents, certificates of deposit, accounts receivable, and accounts payable – The carrying amounts reported in the consolidated balance sheets approximate fair value because of the short-term nature of these items.

Long-term debt – The carrying amounts reported in the consolidated balance sheets for the amount drawn on our line-of-credit facility and long-term debt approximates fair value because our interest rate is variable and reflects current market rates.

Note5. 6. Debt and Other Financing Arrangements:

~~In fiscal~~ ~~2017,~~On August 31, 2022, the Company entered into a revolving line-of-credit ~~facility~~and term loan governed by a Credit Agreement (the Credit Agreement) ~~dated~~ ~~July 28, 2016.~~ . The Credit Agreement provides for a revolving credit facility of ~~$400~~ ~~million,~~$1 billion, which can be increased byby an additional ~~$200~~$400 million subject to certain conditions. Borrowings under the Credit Agreement may be used for working capital and expenditures of the Company and its subsidiaries, including financing permitted acquisitions. Borrowings under the Credit Agreement ~~for base rate loans~~ bear interest at a variable ~~rate equal to the greater of (i) the prime commercial rate, (ii) the per annum federal funds rate plus~~ ~~0.5%,~~ ~~or (iii) LIBOR +~~ ~~1.00%~~ - ~~1.75%~~ ~~depending~~rate. The current outstanding debt is based on the ~~existing~~one-month Secured Overnight Financing Rate (SOFR) plus an applicable margin. The applicable margin is determined from the total leverage ratio of ~~Debt to Earnings Before Interest, Taxes, Depreciation~~the Company and ~~Amortization (as defined in the Credit Agreement).~~updated on a quarterly basis. The annualized fee for any unused portion of the credit facility is currently 2510 basis points.

The Credit Agreement matures on ~~July~~~~28,~~~~2021~~August 1, 2027 and contains customary restrictive and financial covenants and customary events of default. As of ~~December 31, 2017,~~ September 30, 2023, the outstanding balance under the Credit Agreement was ~~$362.5~~$440 million.

Note 7. Leases:

As a lessee, the company leases offices, labs, and manufacturing facilities, as well as vehicles, copiers, and other equipment. The Company recognizes operating lease expense on a straight-line basis over the lease term. Operating lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The discount rate

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used to calculate present value is Bio-Techne’s incremental borrowing rate or, if available, the rate implicit in the lease. Bio-Techne determines the incremental borrowing rate for each lease based primarily on its lease term and the economic environment of the applicable country or region. During the three months ended September 30, 2023, the Company recognized $1.2 million in variable lease expense and $4.5 million relating to fixed lease expense in the Condensed Consolidated Statements of Earnings and Comprehensive Income.

The following table summarizes the balance sheet classification of the Company’s operating leases and amounts of right of use assets and lease liabilities and the weighted average remaining lease term and weighted average discount rate for the Company’s operating leases (asset and liability amounts are in thousands):


			As of
			September 30,
	Balance Sheet Classification		2023
Operating leases:
Operating lease right of use assets		Right of use asset	$	102,277

Current operating lease liabilities		Operating lease liabilities - current	$	12,198
Noncurrent operating lease liabilities		Operating lease liabilities		97,332
Total operating lease liabilities			$	109,530

Weighted average remaining lease term (in years):				9.05

Weighted average discount rate (%):				4.21

The following table summarizes the cash paid for amounts included in the measurement of operating lease liabilities and right of use assets obtained in exchange for new operating lease liabilities for the three months ended (in thousands):


	Quarter ended
	September 30,
	2023
Cash amounts paid on operating lease liabilities	$	3,884

Right of use assets obtained in exchange for lease liabilities	$	7,923

The following table summarizes the fair value of the lease liability by payment date for the Company’s operating leases by fiscal year (in thousands):


	September 30, 2023
	Operating
	Leases
Remainder 2024	$	12,166
2025		15,927
2026		16,076
2027		13,448
2028		13,444
Thereafter		62,491
Total	$	133,552
Less: Amounts representing interest		24,022
Total lease obligations	$	109,530

Certain leases include one or more options to renew, with terms that extend the lease term up to five years. Bio-Techne includes the option to renew the lease as part of the right of use lease asset and liability when it is reasonably certain the Company will exercise the option. In addition, certain leases contain fair value purchase and termination options with an associated penalty. In general, Bio-Techne is not reasonably certain to exercise such options.

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Note 6.8. Supplemental Equity and Accumulated Other Comprehensive ~~Income:~~Income (Loss):

Supplemental Equity

The Company has declared cash dividends per share of $0.08 in the three months ended September 30, 2023 and 2022.

Consolidated Changes in Equity (amounts in thousands)


	Bio-Techne Shareholders
								Accumulated
				Additional				Other
	Common Stock			Paid-in		Retained		Comprehensive		Noncontrolling
	Shares	Amount		Capital		Earnings		Income(Loss)		Interest		Total
Balances at June 30, 2023	157,642	$	1,576	$	721,543	$	1,309,461	$	(66,064)	$	—	$	1,966,516
Net earnings							50,993						50,993
Other comprehensive loss									(11,952)				(11,952)
Common stock issued for exercise of options	633		6		12,877		(15,460)						(2,577)
Common stock issued for restricted stock awards	47		1		0		(4,768)						(4,767)
Cash dividends							(12,654)						(12,654)
Stock-based compensation expense					9,981								9,981
Common stock issued to employee stock purchase plan	33		1		2,093								2,094
Employee stock purchase plan expense					112								112
Balances at September 30, 2023	158,355	$	1,584	$	746,606	$	1,327,572	$	(78,016)	$	—	$	1,997,746


	Bio-Techne Shareholders
								Accumulated
				Additional				Other
	Common Stock			Paid-in		Retained		Comprehensive		Noncontrolling
	Shares	Amount		Capital		Earnings		Income(Loss)		Interest		Total
Balances at June 30, 2022	156,644	$	1,566	$	652,467	$	1,122,937	$	(75,200)	$	(759)	$	1,701,011
Net earnings							89,555				179		89,734
Other comprehensive loss									(16,762)				(16,762)
Reclassification of cumulative translation adjustment for Eminence to non-operating income									152		(33)		119
Elimination of noncontrolling equity interest from sale of Eminence											613		613
Share repurchases	(222)		(2)				(19,560)						(19,562)
Common stock issued for exercise of options	425		5		9,418		(11,428)						(2,005)
Common stock issued for restricted stock awards	45		0		0		(6,427)						(6,427)
Cash dividends							(12,545)						(12,545)
Stock-based compensation expense					14,364								14,364
Common stock issued to employee stock purchase plan	36		0		2,517								2,517
Employee stock purchase plan expense					97								97
Balances at September 30, 2022	156,928	$	1,569	$	678,863	$	1,162,532	$	(91,810)	$	—	$	1,751,154

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Accumulated Other Comprehensive Income

The components of other comprehensive income (loss) consist of changes in foreign currency translation adjustments and changes in net unrealized gains (losses) on derivative instruments designated as cash flow hedges. The Company reclassified $2.5 million, net of taxes, from accumulated other comprehensive income (loss)~~, net of tax, for~~ to earnings during the ~~six~~three months ended ~~December 31, 2017~~ ~~consists~~September 30, 2023.

The accumulated balances related to each component of other comprehensive income (loss) attributable to Bio-Techne are summarized as follows (in thousands):

Unrealized
Gains
(Losses) on
Available-
for-Sale
Investments

Foreign
Currency
Translation
Adjustments

Total

Beginning balance
$ 18,989 $ (67,924
)
$ (48,935
)
Other comprehensive income (loss)
(16,374
)
8,492 (7,882
)
Ending balance
$ 2,615 (59,432
)
$ (56,817
)


	Unrealized
	Gains		Foreign
	(Losses) on		Currency
	Derivative		Translation
	Instruments		Adjustments		Total
Balance as of June 30, 2023	$	12,862	$	(78,926)	$	(66,064)
Other comprehensive income (loss), before tax:
Amounts before reclassifications, attributable to Bio-Techne		1,587		(11,069)		(9,482)
Amounts reclassified out		(2,539)		(698)		(3,237)
Total other comprehensive income (loss), before tax		(952)		(11,767)		(12,719)
Tax (expense)/benefit		(602)		(165)		(767)
Total other comprehensive income (loss), net of tax		(350)		(11,602)		(11,952)
Balance as of September 30, 2023⁽¹⁾	$	12,512	$	(90,528)	$	(78,016)


	Unrealized
	Gains		Foreign
	(Losses) on		Currency
	Derivative		Translation
	Instruments		Adjustments		Total
Balance as of June 30, 2022 attributable to Bio-Techne	$	8,069	$	(83,269)	$	(75,200)
Other comprehensive income (loss), before tax:
Amounts before reclassifications, attributable to Bio-Techne		4,376		(21,457)		(17,081)
Amounts reclassified out		417		152		569
Total other comprehensive income (loss), before tax		4,793		(21,305)		(16,512)
Tax (expense)/benefit		98		—		98
Total other comprehensive income (loss), net of tax		4,695		(21,305)		(16,610)
Balance as of September 30, 2022⁽¹⁾	$	12,764	$	(104,574)	$	(91,810)

⁽¹⁾The Company had a net deferred tax liability of $4,145 and $3,921 as of September 30, 2023 and September 30, 2022, respectively.

Income taxes are not provided for foreign translation relating to permanent investments in international subsidiaries, but tax effects within foreign currency translation adjustments do include impacts from the net investment hedge.

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Note 7.9. EarningsPerShare:

The following table reflects the calculation of basic and diluted earnings per share ~~(in~~(in thousands, except per share amounts):


	Quarter Ended
	September 30,
	2023		2022
Earnings per share – basic:
Net earnings, including noncontrolling interest	$	50,993	$	89,734
Less net earnings (loss) attributable to noncontrolling interest		—		179
Net earnings attributable to Bio-Techne	$	50,993	$	89,555
Income allocated to participating securities		(8)		(26)
Income available to common shareholders	$	50,985	$	89,529
Weighted-average shares outstanding – basic		158,130		156,929
Earnings per share – basic	$	0.32	$	0.57

Earnings per share – diluted:
Net earnings, including noncontrolling interest	$	50,993	$	89,734
Less net earnings (loss) attributable to noncontrolling interest		—		179
Net earnings attributable to Bio-Techne	$	50,993	$	89,555
Income allocated to participating securities		(8)		(26)
Income available to common shareholders	$	50,985	$	89,529
Weighted-average shares outstanding – basic		158,130		156,929
Dilutive effect of stock options and restricted stock units		3,810		5,243
Weighted-average common shares outstanding – diluted		161,940		162,172
Earnings per share – diluted	$	0.31	$	0.55

Quarter Ended

Six Months Ended

December 31,

December 31,

2017

2016

2017

2016

Earnings per share – basic:

Net income
$ 48,847 $ 7,467 $ 64,710 $ 26,309
Income allocated to participating securities
(41
)
(7
)
(50
)
(22
)
Income available to common shareholders
$ 48,806 $ 7,460 $ 64,660 $ 26,287
Weighted-average shares outstanding – basic
37,449 37,308 37,412 37,294
Earnings per share – basic
$ 1.30 $ 0.20 $ 1.73 $ 0.70

Earnings per share – diluted:

Net income
$ 48,847 $ 7,467 $ 64,710 $ 26,309
Income allocated to participating securities
(41
)
(7
)
(50
)
(22
)
Income available to common shareholders
$ 48,806 $ 7,460 $ 64,660 $ 26,287
Weighted-average shares outstanding – basic
37,449 37,308 37,412 37,294
Dilutive effect of stock options and restricted stock units
477 170 404 181
Weighted-average common shares outstanding – diluted
37,926 37,478 37,816 37,475
Earnings per share – diluted
$ 1.29 $ 0.20 $ 1.71 $ 0.70

The dilutive effect of stock options and restricted stock units in the above table excludes all options for which the aggregate exercise proceeds exceeded the average market price for the ~~period~~.period. The number of potentially dilutive option shares excluded from the calculation was 1.64.1 million and ~~2.0~~4.5 million for the quarter ended ~~December 31, 2017~~ September 30, 2023 and ~~2016,~~ ~~respectively and~~ ~~1.7~~ ~~million and~~ ~~2.0~~ ~~million for the~~ ~~six~~ ~~months ended~~ ~~December 31, 2017~~ ~~and~~ ~~2016,~~2022, respectively.

Note8. 10. Share-based Compensation:

During the~~six~~ ~~months~~ quarter ended ~~December 31, 2017~~ September 30, 2023 and ~~2016,~~2022, the Company granted ~~1.0~~0.8 million and ~~1.1~~2.3 million stock options at weighted average grant prices of ~~$118.97~~$84.34 and ~~$107.4~~0$94.43 and weighted average fair values of ~~$21~~~~.58~~$28.58 and ~~$18.13,~~$29.65, respectively. During the ~~six~~ ~~months~~quarter ended ~~December 31, 2017~~ September 30, 2023 and ~~2016,~~2022, the Company granted ~~35,674~~268,961 and 64~~,931~~87,852 restricted stock units at a weighted average fair ~~values~~value of ~~$125.02~~$84.44 and ~~$109.36,~~$94.38, respectively. During the ~~six~~ ~~months~~quarter ended ~~December 31, 2017~~ September 30, 2023 and ~~2016,~~2022, the Company ~~granted~~ ~~20,106~~ ~~and~~ ~~23,965~~ ~~shares of~~did not grant restricted ~~at grant date fair values of~~ ~~$125.05~~ ~~and~~ ~~$104.94,~~ ~~respectively.~~

common stock shares.

Stock options for 70~~,069~~1,027,777 and ~~23,145~~660,120 shares of common stock with total intrinsic values of $2.8$54.3 million and ~~$1.0~~$41.1 million were exercised during the ~~six~~ ~~months~~quarter ended ~~December 31, 2017~~ September 30, 2023 and ~~2016,~~2022, respectively.

Stock-based compensation expense, inclusive of $5.0payroll taxes, of $11.1 million and ~~$4.1~~$15.1 million was included in selling, general and administrative expenses for the quarter ended ~~December 31, 2017~~ September 30, 2023 and ~~2016,~~2022 respectively. ~~Stock-based~~Additionally, the company recognized $0.2 million of stock-based compensation ~~expense~~costs in cost of ~~$8.8~~goods sold during the quarter ended September 30, 2023 compared to $0.3 million ~~and~~ ~~$7.2~~ ~~million was included~~ in ~~selling, general and administrative expenses for~~ the ~~six~~ ~~months ended~~ ~~December 31, 2017~~ ~~and~~ ~~2016,~~ ~~respectively.~~comparative prior year period. As of ~~December 31, 2017,~~ September 30, 2023, there was ~~$40~~.2$68.6 million of unrecognized compensation cost related to non-vested stock options, non-vested restricted stock units and non-vested restricted stock. The weighted average period over which the compensation cost is expected to be recognized is ~~2.5~~2.1 years.

In fiscal 2015, the Company established the Bio-Techne Corporation 2014 Employee Stock Purchase Plan (ESPP), which was approved by the Company's shareholders on October 30, 2014, and which is designed to comply with IRS provisions governing employee stock purchase plans. 800,000 shares were allocated to the ESPP. For ESPP, the Company recorded stock-based compensation expense of $0.1 million for the quarter ended September 30, 2023 and $0.1 million for the quarter ended September 30, 2022.

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Note 9.11. Other Income / (Expense):

The components of other income (expense) in the accompanying Statement of Earnings and ~~Comprehensive~~Comprehensive Income are as ~~follows:~~ follows (in thousands):

	Quarter Ended						Six Months
	December 31,						December 31,
	2017			2016			2017			2016

													Quarter Ended
													September 30,
													2023		2022
Interest expense	$	(2,331	)	$	(1,921	)	$	(4,574	)	$	(3,321	)	$	(4,893)	$	(3,790)
Interest income		68			89			144			138			890		433
Other non-operating income (expense), net		(154	)		(861	)		(1,050	)		(881	)
Total other income (expense)	$	(2,417	)	$	(2,693	)	$	(5,480	)	$	(4,064	)
Gain (loss) on investment⁽¹⁾														283		49,769
Gain (loss) on equity method investment														(2,290)		—
Other non-operating income (expense), net														(294)		987
Total other income (expense)													$	(6,304)	$	47,399

(1)

Primarily due to a $0.3 million gain on the sale of our exchange traded investment grade bond funds during the quarter ended September 30, 2023 compared to a $37.2 million gain on the sale of our ChemoCentryx investment and a $11.7 million gain on the sale of Eminence in the quarter ended September 30, 2022.

Note ~~10.~~12. Income Taxes:

The Company’s effective income tax rate ~~was (~~~~124.7~~~~) % and~~ ~~50.8%~~for the ~~second~~first quarter of fiscal ~~2018~~2024 and ~~fiscal~~ ~~2017,~~ ~~respectively and (~~~~44.8~~) 2023 was (2.9)% and ~~38.8%~~ ~~for the~~ ~~first~~~~six~~ ~~months~~13.5%, respectively, of ~~fiscal~~ ~~2018~~ ~~and fiscal~~ ~~2017,~~ ~~respectively.~~consolidated earnings before income taxes, inclusive of discrete items. The ~~changes~~change in the ~~company’s~~Company’s tax rate for the ~~second~~quarter ~~and~~ ~~first~~~~six~~ ~~months of fiscal~~ ~~2018~~ended September 30, 2023 compared to ~~second~~September 30, 2022 was driven by a mix of net income and timing of discrete items.

The Company recognized total net benefits related to discrete tax items of $13.6 million during the quarter ~~and~~ ~~first~~~~six~~ ~~months of fiscal~~ ~~2017~~ ~~are due primarily~~ended September 30, 2023, compared to ~~recording~~$7.8 million during the ~~items attributable to the new~~quarter ended September 30, 2022. Share-based compensation excess tax ~~legislation~~benefit contributed $10.4 million in the ~~U.S. as described below. Also included~~quarter ended September 30, 2023, compared to $8.3 million in the ~~2018~~ ~~effective tax rate is~~ quarter ended September 30, 2022. The Company recognized total other immaterial net discrete tax benefit of ~~$0.3~~$3.2 million ~~and~~ ~~$0.7~~in the quarter ended September 30, 2023, compared to $0.5 million ~~for the~~ ~~second~~ ~~quarter and~~ ~~first~~~~six~~ ~~months~~ of ~~fiscal year~~ ~~2018~~ ~~for the tax benefit of stock option exercises offset by a~~other immaterial net discrete tax expense of ~~$2.9~~ ~~million and~~ ~~$3.8~~ ~~million for the~~ ~~second~~ ~~quarter and~~ ~~first~~~~six~~ ~~months of fiscal~~ ~~2018~~ ~~related to the revaluation of contingent consideration, which is~~ ~~not~~ ~~tax deductible. Discrete tax expense for the~~ ~~second~~ ~~quarter and~~ ~~first~~~~six~~ ~~months of fiscal~~ ~~2017~~ ~~included~~ ~~$4.6~~ ~~million of expense related to the revaluation of contingent consideration.~~

On ~~December 22, 2017,~~ the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act makes broad and complex changes to the U.S. tax code which will impact our fiscal year ended ~~June30,~~~~2018~~ ~~including, but~~ ~~not~~ ~~limited to (~~1~~) reducing the U.S. federal corporate tax rate, (~~2~~) requiring a~~ ~~one~~~~-time transition tax on certain unrepatriated earnings of foreign subsidiaries that~~ ~~may~~ ~~electively be paid over~~ ~~eight~~ ~~years, and (~~3~~) accelerated~~ ~~first~~ ~~year expensing of certain capital expenditures. The Tax Act reduces the federal corporate tax rate from~~ 35 ~~percent to~~ 21 ~~percent effective~~ ~~January 1, 2018.~~ ~~Internal Revenue Code Section~~ 15 ~~provides that our fiscal year ended~~ ~~June 30, 2018.~~ ~~We calculated a blended corporate tax rate of~~ ~~28.1~~ ~~percent for fiscal year~~ ~~2018,~~ ~~which is based on a proration of the applicable tax rates before and after effective date of the Tax Act. The statutory tax rate of~~ 21 ~~percent will apply for fiscal~~ ~~2019~~ ~~and beyond.~~

~~The Tax Act also puts in place new tax laws that will impact our taxable income beginning in fiscal~~ ~~2019,~~ ~~which include, but are~~ ~~not~~ ~~limited to (~~1~~) creating a Base Erosion Anti-abuse Tax (BEAT), which is a new minimum tax, (~~2~~) generally eliminating U.S. federal income taxes on dividends from foreign subsidiaries, (~~3~~) a new provision designed to tax currently global intangible low-taxed income (GILTI), which allows for the possibility of utilizing foreign tax credits and a deduction equal to~~50 ~~percent to offset the income tax liability (subject to some limitations), (~~4~~) a provision that could limit the amount of deductible interest expense, (~~5~~) the repeal of the domestic production activity deduction, (~~6~~) limitations on the deductibility of certain executive compensation, and (~~7~~) limitations on the utilization of foreign tax credits to reduce the U.S. income tax liability.~~

~~Shortly after the Tax Act was enacted, the SEC staff issued Staff Accounting Bulletin~~ ~~No.~~~~118,~~ ~~Income Tax Accounting Implications of the Tax Cuts and Jobs Act (SAB~~ ~~118~~~~) which provides guidance on accounting for the Tax Act’s impact. SAB~~ ~~118~~ ~~provides a measurement period, which in~~ no ~~case should extend beyond~~ ~~one~~ ~~year from the Tax Act enactment date, during which a company acting in good faith~~ ~~may~~ ~~complete the accounting for the impacts of the Tax Act under ASC Topic~~ ~~740.~~ ~~In accordance with SAB~~ ~~118,~~ ~~the Company must reflect the income tax effects of the Tax Act~~ in the ~~reporting period in which the accounting under ASC Topic~~ ~~740~~ ~~is complete.~~quarter ended September 30, 2022.

~~To the extent that a company~~’s accounting for certain income tax effects of the Tax Act is incomplete, the Company can determine a reasonable estimate for those effects and record a provisional estimate in the financial statements in the ~~first~~ reporting period in which a reasonable estimate can be determined. If a Company cannot determine a provisional estimate to be included in the financial statements, the Company should continue to apply ASC ~~740~~ based on the provisions of the tax laws that were in effect immediately prior to the Tax Act being enacted. If a Company is unable to provide a reasonable estimate of the impacts of the Tax Act in a reporting period, a provisional amount must be recorded in the ~~first~~ ~~reporting period in which a reasonable estimate can be determined.~~

~~We have recorded a provisional~~ ~~net tax benefit of~~ ~~$33.5~~ ~~million related to the Tax Act in the period ending~~ ~~December 31, 2017.~~ ~~This provisional net benefit primarily consists of a net benefit of~~ ~~$37.0~~ ~~million due to the remeasurement of our deferred tax accounts to reflect the corporate rate reduction impact to our net deferred tax balances and a net expense for the transition tax of~~ ~~$3.5~~ ~~million.~~

~~Reduction in U.S. Corporate Rate: The Act reduces the U.S. federal statutory corporate tax rate to~~ ~~a blended~~ ~~28.1~~ ~~percent in fiscal year ending~~ ~~June 30, 2018~~ ~~and~~ 21 ~~percent for fiscal year ending~~ ~~June 30, 2019~~ and beyond. While we are able to make a reasonable estimate of the impact of the reduction in corporate rate, we are continuing to analyze the temporary differences that existed on the date of enactment, the temporary differences originating in the current fiscal year prior to ~~December 22, 2017,~~ ~~and the temporary differences we expect will reverse prior to~~ ~~June 30, 2018.~~

~~Transition Tax: The transition tax is a tax on the previously untaxed accumulated and current earnings and profits (E&P) of certain of our foreign subsidiaries as of~~ ~~December 22, 2017.~~ ~~In order to determine the amount of the Transition Tax, we must determine, in addition to other factors, the amount of post-~~~~1986~~ E&P of the relevant subsidiaries, as well as the amount of non-U.S. income taxes paid on such earnings. E&P is similar to retained earnings of the subsidiary, but requires other adjustments to conform to U.S. tax rules. We are able to make a reasonable estimate of the transition tax and recorded a provisional transition tax obligation of ~~$3.5~~ ~~million which theCompany expects to elect to pay, net of certain tax credit carryforwards, over~~ ~~eight~~ ~~years beginning in fiscal year~~ ~~2019.~~~~$0.3~~ ~~million of this liability is recorded as current with the remaining~~ ~~$3.2~~ ~~million classified as a long-term liability within our~~ ~~December 31, 2017~~ balance sheet. However, we are awaiting further interpretative guidance including information regarding state income tax implications and continuing to gather additional information to more precisely compute the amount of the transition tax. We expect that our estimate will be finalized in advance of the filing of our ~~June 30, 2018~~ ~~Form~~ 10~~-K.~~

~~Global intangible low-taxed income (GILTI): The Tax Act includes a provision designed to currently tax global intangible low-taxed income starting in fiscal~~ ~~2019.~~ ~~Due to the complexity of the new GILTI tax rules, we are continuing to evaluate this provision of the Tax Act, the application of ASC~~ ~~740,~~ and are considering available accounting policy alternatives to adopt to either record the U.S. income tax effect of future GILTI inclusions in the period in which they arise or establish deferred taxes with respect to the expected future tax liabilities associated with future GILTI inclusions. ~~In addition, we are awaiting further interpretive guidance in connection with the computation of the GILTI tax. For these reasons, we are~~ ~~not~~ ~~yet able to reasonably estimate the effect of this provision of the Tax Act.~~

~~As of~~ ~~June 30, 2017,~~ ~~our practice and intention was to reinvest the earnings in our subsidiaries outside of the U.S., and~~ no ~~U.S. deferred income taxes or foreign withholding taxes were recorded. As of~~ ~~December 31, 2017~~ ~~we continue to assert that we plan to reinvest these earnings. The transition tax noted above will result in the previously untaxed foreign earnings being included in the federal and state fiscal~~ ~~2018~~ taxable income. We are currently analyzing our global working capital requirements and the potential tax liabilities that would be incurred if the non-U.S. subsidiaries distribute cash to the U.S. parent, which include local country withholding tax and potential U.S. state taxation. Therefore, we are ~~not~~ ~~yet able to reasonably estimate the effect of this provision of the Tax Act and have~~ ~~not~~ ~~recorded any withholding or state tax liabilities.~~

~~We are also currently analyzing other provisions of the Tax Act that come into effect for tax years starting~~ ~~July 1, 2018~~ to determine if these items would impact the effective tax rate. These provisions include BEAT, eliminating U.S. federal income taxes on dividends from foreign subsidiaries, the new provision that could limit the amount of deductible interest expense, the limitations on the deductibility of certain executive compensation, and state tax implications of this federal tax legislation.

Note ~~11.~~13. Segment Information:

The Company's management evaluates segment operating performance based on operating income before certain charges to cost of sales and selling, general and administrative expenses, principally associated with the impact of partially-owned consolidated subsidiaries as well as acquisition accounting related to inventory, amortization of acquisition-related intangible assets and other acquisition-related expenses. The Protein Sciences and Diagnostics and Genomics segments both include consumables, instruments, services, and royalty revenue.

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The following is financial information relating to the Company's reportable segments (in thousands):

Quarter Ended

Six Months Ended

December 31,

December 31,

2017

2016

2017

2016

Net sales:

Biotechnology
101,411 85,953 $ 196,487 $ 172,740
Protein Platforms
29,388 21,548 54,028 41,121
Diagnostics
23,429 24,330 48,415 48,563
Intersegment
(75
)
(24
)
(164
)
(36
)
Consolidated net sales
154,153 131,807 $ 298,766 $ 262,388
Operating income:

Biotechnology
$ 46,210 $ 39,474 $ 90,813 $ 81,594
Protein Platforms
6,119 1,843 9,175 2,052
Diagnostics
3,777 5,801 9,606 12,104
Segment operating income
$ 56,106 $ 47,118 $ 109,594 $ 96,110
Costs recognized on sale of acquired inventory
(264
)
(789
)
(582
)
(2,133
)
Amortization of acquisition related intangible assets
(11,296
)
(11,627
)
(22,675
)
(21,815
)
Acquisition related expenses
(13,150
)
(12,056
)
(22,683
)
(15,588
)
Stock based compensation
(5,044
)
(4,055
)
(8,839
)
(7,245
)
Corporate general, selling, and administrative expenses
(2,204
)
(710
)
(4,636
)
(2,293
)
Consolidated operating income
24,148 17,881 $ 50,179 $ 47,036


	Quarter Ended
	September 30,
	2023		2022
Net sales:
Protein Sciences	$	204,655	$	199,949
Diagnostics and Genomics		72,797		69,904
Intersegment		(517)		(198)
Consolidated net sales	$	276,935	$	269,655

Operating income:
Protein Sciences	$	88,361	$	85,942
Diagnostics and Genomics		527		8,638
Segment operating income	$	88,888	$	94,580
Costs recognized on sale of acquired inventory		(181)		(300)
Amortization of intangibles		(19,851)		(19,283)
Impact of partially-owned consolidated subsidiaries⁽¹⁾		—		647
Acquisition related expenses and other		588		(297)
Stock based compensation, inclusive of employer taxes		(11,494)		(15,458)
Restructuring costs		(89)		(2,170)
Corporate general, selling, and administrative expenses		(1,999)		(1,402)
Consolidated operating income	$	55,862	$	56,317

~~Note~~ ~~12.~~ ~~Subsequent Events:~~

On ~~January 2, 2018,~~ ~~Bio-Techne acquired Atlanta Biologicals, Inc. and its affiliated company, Scientific Ventures, Inc for approximately~~ ~~$50~~ million. The transaction is financed through available cash on hand. Atlanta Biologicals fetal bovine serum (FBS) product line strengthens and complements our current tissue culture reagents offering and furthers our efforts to provide more complete solutions to our research customers~~. The purchase accounting for this acquisition is in progress.~~

On ~~February 1, 2018~~ ~~Bio-Techne acquired Eurocell Diagnostics SAS a company based in Rennes, France for approximately $~~~~7.5~~ ~~million. Eurocell sells directly~~⁽¹⁾Includes the quarterly results of the partially-owned consolidated subsidiary prior to the ~~laboratory markets in the French region as well as servicing the EMEA markets via~~sale of this partially-owned consolidated subsidiary to a ~~network~~third party

Note 14. Subsequent Events:

None.

Table of ~~distributors.~~ ~~The transaction was financed through cash on hand. The purchase accounting for this acquisition is in progress.~~

Contents

ITEM2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

The following management discussion and analysis (“MD&A”) provides ~~informati~~oninformation that we believe is useful in understanding our operating results, cash flows and financial condition. We provide quantitative information about the material sales drivers including the effect of acquisitions and changes in foreign currency at the corporate and segment level. We also provide quantitative information about discrete tax items and other significant factors we believe are useful for understanding our results. The MD&A should be read in conjunction with both the unaudited condensed consolidated financial information and related notes included in this Form 10-Q, and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended June 30, ~~2017.~~2023. This discussion contains various “Non-GAAP Financial Measures” and also contains various “Forward-Looking Statements” within the meaning of the Private Securities Litigation Reform Act of 1995. We refer readers to the statements entitled “Non-GAAP Financial Measures” and “Forward-Looking Information and Cautionary Statements” located at the end of Item 2 of this report.

OVERVIEW

Bio-Techne ~~Corporation~~ and its subsidiaries, ~~operate worldwide~~collectively doing business as Bio-Techne Corporation (Bio-Techne, we, our, us or the Company) develop, manufacture and sell biotechnology reagents, instruments and services for the research and clinical diagnostic markets worldwide. With our deep product portfolio and application expertise, we sell integral components of scientific investigations into biological processes and molecular diagnostics, revealing the nature, diagnosis, etiology and progression of specific diseases. Our products aid in drug discovery efforts and provide the means for accurate clinical tests and diagnoses.

The Company’s key business strategies for long-term growth and profitability continue to be geographic expansion, core product innovation, acquisitions and talent retention and development. As a Company, we are integrating consideration of greenhouse gas emissions and other environmental variables into our key business strategies. The Company also strives to innovate and improve all aspects of Bio-Techne’s operations, including reducing the environmental impacts of our manufacturing operations. As described in our Corporate Sustainability report, the Company is currently focused on establishing a baseline for emissions so that we can develop appropriate emission reduction targets, as well as reducing our environmental footprint through changes in packaging and shipping materials.

Consistent with ~~three reportable~~ ~~business~~the prior year, we have operated with two segments ~~Biotechnology,~~– our Protein ~~Platforms~~Sciences segment and our Diagnostics ~~all~~and Genomics segment – during the first quarter of ~~which service the life science~~fiscal 2024. Our Protein Sciences segment is a leading developer and ~~diagnostic markets. The Biotechnology reporting~~manufacturer of high-quality purified proteins and reagent solutions, most notably cytokines and growth factors, antibodies, immunoassays, biologically active small molecule compounds, tissue culture reagents and T-Cell activation technologies. This segment also includes protein analysis solutions that offer researchers efficient and streamlined options for automated western blot and multiplexed ELISA workflow. Our Diagnostics and Genomics segment develops and manufactures diagnostic products, including FDA-regulated controls, calibrators, blood gas and clinical chemistry controls and other reagents for OEM and clinical customers, as well as a portfolio of clinical molecular diagnostic oncology assays, including the ExoDx®Prostate (IntelliScore) test (EPI) for prostate cancer diagnosis. This segment also manufactures and sells ~~proteins, antibodies, immunoassays, flow cytometry products, intracellular signaling products, as well as biologically active chemical compounds used in biological~~advanced tissue-based in-situ hybridization assays (ISH) for research and ~~ACD’s~~ ~~in situ~~ hybridization detection products. The Protein Platforms reporting segment develops and commercializes proprietary systems and consumables for protein analysis. The Diagnostics reporting segment develops, manufactures and sells a range of controls and calibrators for various blood chemistry and blood gas clinical ~~instruments, as well as quality controls, diagnostic immunoassays and other bulk and custom reagents for the~~ ~~in vitro~~ ~~diagnostic market. The Diagnostics segment also provides bulk purified proteins, enzymes, disease-state plasmas, infectious disease antigens and processed sera to the clinical diagnostic industry.~~

use.

R~~ECENT~~RECENT ACQUISITIONS

A key component of the Company's strategy is to augment internal growth at existing businesses with complementary acquisitions.

On ~~September 5, 2017~~July 7, 2023, the Company ~~acquired Trevigen Inc.~~completed the acquisition of Lunaphore Technologies SA (Lunaphore) for ~~approximately $10.6~~$170.1 million ~~net of cash received.~~in a cash-free, debt-free acquisition. The ~~Company has had a long-standing business relationship with Trevigen as a distributor of its product line.~~Lunaphore acquisition adds spatial biology instruments to Bio-Techne’s portfolio to accelerate our leadership position in translational and clinical research markets. Refer to Note 4 for additional disclosure regarding the Company's recent acquisitions.

RESULTS OF OPERATIONS

Operational Update

Consolidated net sales increased ~~17% and 14%~~3% for the quarter ~~and six months~~ ended ~~December 31, 2017, respectively,~~September 30, 2023 compared to the same prior year ~~periods.~~period. Organic growth for the quarter ended September 30, 2023 was ~~14%~~2% compared to the prior year, with acquisitions contributing 1% to revenue growth and ~~11%~~foreign currency exchange having an immaterial impact.

Table of Contents

Consolidated net earnings attributable to Bio-Techne decreased to $51.0 million for the quarter ended September 30, 2023 as compared to $89.6 million in the same prior year period. Prior year net earnings attributable to Bio-Techne was favorably impacted by a non-recurring gain of $37.2 million on the sale of our ChemoCentryx investment and ~~six months~~a non-recurring gain of $11.7 million on the sale of our Eminence investment.

Net Sales

Consolidated net sales for the quarter ended ~~December 31, 2017, respectively,~~September 30, 2023 were $276.9 million, an increase of 3% compared to the same prior year ~~periods,~~period. Organic growth for the quarter ended September 30, 2023 was 2% compared to the prior year, with acquisitions contributing 1% to revenue growth and foreign currency ~~translation~~exchange having ~~a positive impact of 2%.~~

~~Consolidated net~~ ~~earnings increased 554% and 146%~~an immaterial impact. Organic growth for the quarter ~~and six months~~ ended ~~December 31, 2017, respectively, compared to the same prior year periods~~September 30, 2023 was primarily ~~due to the net tax benefit of $33.5 million related to the Tax Act~~driven by our ProteinSimple branded analytical solutions, Cell & Gene Therapy portfolio, Spatial Biology products, as well as our ExoDx Prostate cancer test, partially offset by broad weakness in the period ending December 31, 2017. This net benefit primarily consists of a net benefit of $37.0 million due to the remeasurement of our deferred tax accounts to reflect the corporate rate reduction impact to our net deferred tax balances and a net expense for the transition tax of $3.5 million.China.

Gross Margins

~~Net Sales~~

~~Consolidated net sales~~Consolidated gross margin for the quarter ~~and six months~~ ended ~~December 31, 2017 were $154.2 million and $298.8 million, respectively, increase of 17% and 14% from the same prior year periods. Organic growth for quarter and six months ended December 31, 2017~~September 30, 2023 was 14% and 11%, respectively. Reported net sales for the quarter and six months ended December 31, 2017 included growth from acquisitions of 1% and a positive impact from foreign currency translation of 2%.

~~Sales by geography f~~or the three months ended December 31, 2017 grew in mid-teens in the U.S., with strong growth in both the BioPharma and Academia end-markets. Europe organic sales growth was in the high-teens, with comparable contribution from both the BioPharma and Academic end-markets. China sales grew nearly 30% organically, with our Western brands growing 30%. Sales growth in Japan grew in the low-teens, while the rest of the Asia-Pacific region grew over 15%. For the six months ended December 31, 2017, sales in the U.S. grew in high-single digits, with strong growth in both the BioPharma and Academia end-markets. Europe organic sales growth was in the mid-teens, with comparable contribution from both the BioPharma and Academic end-markets. China sales grew over 20% organically, with our Western brands growing 30%. Sales growth in Japan grew in the mid-teens, while the rest of the Asia-Pacific region grew over 20%. Note that all references made to growth rates by region and end-market exclude OEM sales, which primarily occur in our Diagnostics segment.

~~Gross Margins~~

~~Consolidated gross margins for the quarter~~ ~~and six months ended December 31, 2017 were 66.1% and 66.8%, respectively,~~66.9% compared to ~~66.9%~~66.6% for the same prior year ~~periods. The decreases~~period. Under purchase accounting, inventory is valued at fair value less expected selling and marketing costs, resulting in reduced margins in future periods as the inventory is sold. Excluding the impact of costs recognized upon the sale of acquired inventory, stock compensation expense, amortization of intangibles, and impact of partially-owned consolidated subsidiaries, adjusted gross margin for the quarter ended September 30, 2023 was 71.3% compared to 70.9% for the quarter ended September 30, 2022. Fluctuations in consolidated gross margin and ~~six months ended December 31, 2017 were driven~~adjusted gross margin, as a percentage of sales, have primarily ~~by unfavorable~~resulted from changes in product mix. We expect that, in the future, gross margins will continue to be impacted by the mix of our portfolio growing at different rates as well as future acquisitions.

A reconciliation of the reported consolidated gross margin percentages,, adjusted for acquired inventory sold, ~~and~~ intangible amortization, stock compensation expense, and impact of partially-owned consolidated subsidiaries included in cost of sales, is as follows:

	Quarter Ended						Six Months Ended
	December 31,						December 31,
	2017			2016			2017			2016

													Quarter Ended
													September 30,
													2023		2022

Consolidated gross margin percentage		66.1	%		66.9	%		66.8	%		66.9	%	66.9	%	66.6	%
Identified adjustments:
Costs recognized upon sale of acquired inventory		0.2	%		0.6	%		0.2	%		1.0	%
Costs recognized upon sale of acquired inventory													0.0	%	0.1	%
Amortization of intangibles		3.9	%		3.5	%		4.1	%		3.1	%	4.3	%	4.1	%
Stock compensation expense - COGS													0.1	%	0.1	%
Impact of partially-owned consolidated subsidiaries⁽¹⁾													—	%	0.0	%
Non-GAAP adjusted gross margin percentage		70.2	%		71.0	%		71.1	%		71.0	%	71.3	%	70.9	%

~~Consolidated~~ ~~non-GAAP adjusted gross margins for~~⁽¹⁾Includes the ~~quarter~~quarterly results of the partially-owned consolidated subsidiary prior to the sale of this partially-owned consolidated subsidiary to a third party.

Selling, General and ~~six months ended December 31, 2017, were 70.2%~~Administrative Expenses

Selling, general and ~~71.1%, respectively, compared~~administrative expenses increased 6% to ~~71.0% for the same prior year periods. Consolidated non-GAAP adjusted gross margins~~$105.3 million for the quarter ended ~~December 31, 2017 were negatively impacted by unfavorable product mix.~~

~~Selling, General and Administrative Expenses~~

~~Selling, general and administrative expenses for the quarter and six months ended December 31, 2017 increased $6.8 million (11.9%) and $19.7 million (19.2%)~~September 30, 2023 from the same prior year ~~periods.~~period. The increase in expense was due to the Lunaphore acquisition and the timing of strategic growth investments.

The increase for the quarter and six months ended December 31, 2017 was driven by additional investments in global commercial resources and administrative infrastructure, including increased stock based compensation. The remaining increase was driven by additional acquisition-related expenses, including a $19.9 million change in the fair value of contingent consideration related to ACD, compared to a $12.4 million change in the fair value of contingent consideration for the same prior year period.

Research and Development Expenses

Research and development expenses remained consistent with the prior year at $24.0 million for the quarter ~~and six months~~ ended ~~December 31, 2017 increased $0.6 million (5%) and $1.4 million (5%) from~~September 30, 2023 due to the ~~same prior year periods.~~timing of strategic growth investments.

Table of Contents

Segment Results

Protein Sciences

~~Segment Results~~


	Quarter Ended
	September 30,
	2023			2022
Net sales (in thousands)	$	204,655		$	199,949
Operating margin percentage		43.2	%		43.0	%

~~Biotechnology~~

Quarter Ended

Six Months Ended

December 31,

December 31,

2017

2016

2017

2016

Net sales (in thousands)
101,411 85,953 $ 196,487 $ 172,740
Operating income margin percentage
45.6
%
45.9
%
46.2
%
47.4
%

~~Biotechnology~~’sProtein Sciences’ net sales for the quarter ~~and six months~~ ended ~~December 31, 2017 were $101.4~~September 30, 2023 was $204.7 million ~~and $196.5 million, respectively,~~ with reported growth of ~~18% and 14%~~2% compared to the same respective prior year ~~periods.~~ period. Organic growth for the ~~quarter~~segment was 2%, with foreign currency exchange having an immaterial impact. Segment growth was driven by ProteinSimple platforms and ~~six months ended December 31, 2017 were 14% and 10%, respectively, with acquisitions contributing 1% and currency translation having favorable impacts of 3% and 2%, respectively. Segment~~ growth in GMP proteins.

The operating margin was 43.2% for the quarter ~~and six months~~ ended December 31, 2017 was broad-based regionally, by region and by product, with Proteins, antibodies, and assays all contributing to growth. The ACD product category also contributed substantially, with over 40% growth for the quarter and six months ended December 31, 2017 that was driven by rapid research market adoption of its RNA-ISH technology.

O~~perating income margin for the quarter and six months ended December 31, 2017 was 45.6% and 46.2%, respectively,~~September 30, 2023 compared to ~~45.9% and 47.4% for~~43.0% in the ~~same~~comparative prior year ~~periods.~~period. The ~~decreases in~~segment’s operating ~~income~~ margin iswas relatively consistent with the ~~result of lower margin acquisitions made in this segment, namely ACD, unfavorable~~prior year with changes primarily due to product ~~mix, as well as additional investments in global commercial resources and administrative infrastructure.~~mix.

Diagnostics and Genomics

~~Protein Platforms~~


	Quarter Ended
	September 30,
	2023			2022
Net sales (in thousands)	$	72,797		$	69,904
Operating margin percentage		0.7	%		12.4	%

Quarter Ended

Six Months Ended

December 31,

December 31,

2017

2016

2017

2016

Net sales (in thousands)
29,388 21,548 $ 54,028 $ 41,121
Operating income margin percentage

20.8
% 8.6
%
17.0
%
5.0
%

~~Protein Platforms~~’Diagnostics and Genomics' net sales for the quarter ~~and six months~~ ended ~~December 31, 2017 were $29.4~~September 30, 2023 was $72.8 million, ~~and $54.0 million, respectively,~~ with reported growth of ~~36% and 31%~~4% compared to the same respective prior year ~~periods.~~ period. Organic revenue growth was flat for the first quarter of fiscal 2024, with acquisitions having a 3% impact and ~~six months ended December 31, 2017~~foreign currency exchange having a favorable 1% impact. Segment growth was ~~33% and 29%, respectively, with currency translation having favorable impact of 3% and 2%, respectively. For~~driven by the ~~quarter and six months ended December 31, 2017, growth~~Lunaphore acquisition.

The operating margin for the segment was ~~broad-based both by region and by product, with the Biologics, Simple Western, and Simple Plex product lines all contributing.~~

Operating income margin for the quarter and six months ended December 31, 2017 was 20.8% and 17.0%, respectively, compared to 8.6% and 5.0% for the same prior year periods. The increases in operating income margin were driven by strong volume leverage and operational productivity.

~~Diagnostics~~

Quarter Ended

Six Months Ended

December 31,

December 31,

2017

2016

2017

2016

Net sales (in thousands)
23,429 24,330 $ 48,415 $ 48,563
Operating income margin percentage
16.1
%
23.8
%
19.8
%
24.9
%

~~Diagnostics~~’ net sales for the quarter and six months ended December 31, 2017 were $23.4 million and $48.4 million, respectively, representing a decrease of 4% decrease from the quarter ended December 31, 2016. The lower sales were due to timing of large orders from OEM customers.

Operating income margin for the quarter and six months ended December 31, 2017 was 16.1% and 19.8%, respectively, compared to 23.8% and 24.9% for the same prior year periods. The decreases in operating income margin were driven by decreased volume leverage, margin mix of product sales and additional investments in facilities and administrative infrastructure.

~~Income Taxes~~

~~Income taxes~~0.7% for the quarter ended ~~December 31, 2017~~September 30, 2023 compared to 12.4% in the comparative prior year period. The segment’s operating margin was unfavorably impacted due to the acquisition of Lunaphore this year, strategic growth investments, and unfavorable product mix.

Income Taxes

Income taxes were at an effective rate of ~~(124.8)~~(2.9)% of consolidated earnings ~~before income taxes~~for the quarter ended September 30, 2023, compared to ~~50.8% to~~13.5% for the same ~~prior year period. Income taxes for the six months ended December 31, 2017 were at an effective rate of (44.8)% compared to 38.8% for the same~~respective prior year period. The ~~changes~~change in the ~~company’s~~Company’s tax rate for the ~~second~~ quarter ~~and first six months of fiscal 2018 compared to second quarter and first six months of fiscal 2017 were~~ended September 30, 2023 was driven by ~~the tax rate impact~~a mix of net income and timing of discrete of items, primarily due to the net tax benefit of $33.5 million related to the Tax Act in the period ending December 31, 2017. This net benefit primarily consists of a net benefit of $37.0 million due to the remeasurement of our deferred tax accounts to reflect the corporate rate reduction impact to our net deferred tax balances and a net expense for the transition tax of $3.5 million.

items.

The forecasted tax rate as of the ~~second~~first fiscal quarter of ~~fiscal 2018~~2024 before discrete items is ~~24.7%~~24.5% compared to the prior year forecasted tax rate ~~as of the second quarter of fiscal 2017~~ before discrete items of ~~28.1%~~23.5%. ~~The 3.4% reduction in the rate is due changes in the U.S. tax law under the Tax Cuts and Jobs Act of 2017 and jurisdictional mix of earnings.~~ Excluding the impact of discrete items, the Company expects the consolidated income tax rate for the remainder of fiscal ~~2018~~2024 to range from 24% to ~~26%~~28%.

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Net Earnings

Non-GAAP a~~djusted~~adjusted consolidated net earnings are as ~~follows:~~follows (in thousands):

Quarter Ended

Six Months Ended

December 31,

December 31,

2017

2016⁽²⁾

2017

2016⁽²⁾

Net earnings
$ 48,847 $ 7,466 $ 64,710 $ 26,309
Identified adjustments:

Costs recognized upon sale of acquired inventory
264 789 582 2,133
Amortization of acquisition intangibles
11,296 11,627 22,675 21,815
Acquisition related expenses
13,236 12,144 22,855 15,731
Stock based compensation
5,044 4,055 8,839 7,245
Tax impact of above adjustments
(4,244
)
(5,153
)
(8,644
)
(10,351
)
Tax impact of discrete tax items and other adjustments (1)
(35,589
)
(514
)
(35,941
)
(832
)
Non-GAAP adjusted net earnings
$ 38,854 $ 30,412 $ 75,076 $ 62,050
Non-GAAP adjusted net earnings growth
27.8
%
-7.4
%
21.0
%
-3.3
%

~~(1)~~

~~The fiscal 2018 non-GAAP adjusted net earnings~~ for the quarter ended December 31, 2017 have been normalized for the tax rate impact of the tax reform changes by recasting the first quarter results using the Company’s effective tax rate for the first six months of fiscal 2018.

~~(2)~~

~~The fiscal 2017~~ net earnings, costs recognized upon sale of acquired inventory, acquisition related expenses, and tax impact of above adjustments line items have been updated for the revisions discussed in Note 1. There was no impact to the total previously reported non-GAAP adjusted net earnings.


	Quarter Ended
	September 30,
	2023			2022

Net earnings before taxes - GAAP	$	49,558		$	103,716
Identified adjustments attributable to Bio-Techne:
Costs recognized upon sale of acquired inventory		181			300
Amortization of intangibles		19,851			19,283
Amortization of Wilson Wolf intangible assets and acquired inventory		4,208			—
Acquisition related expenses and other		(442)			678
Gain on sale of partially-owned consolidated subsidiaries		—			(11,682)
Stock based compensation, inclusive of employer taxes		11,494			15,458
Restructuring costs		89			2,170
Investment (gain) loss and other non-operating		(283)			(38,087)
Impact of partially-owned subsidiaries⁽¹⁾		—			(420)
Net earnings before taxes - Adjusted	$	84,656		$	91,416

Non-GAAP tax rate		22.0	%		21.0	%
Non-GAAP tax expense	$	18,615		$	19,197
Non-GAAP adjusted net earnings attributable to Bio-Techne⁽¹⁾	$	66,041		$	72,219
Earnings per share - diluted - Adjusted⁽²⁾	$	0.41		$	0.45

⁽¹⁾Includes the quarterly results of the partially-owned consolidated subsidiary prior to the sale of this partially-owned consolidated subsidiary to a third party.

⁽²⁾Prior period share and per share amounts have been retroactively adjusted to reflect the four-for-one stock split effected in the form of a stock dividend in November 2022.

Depending on the nature of discrete tax items, our reported tax rate may not be consistent on a ~~period to period~~period-to-period basis. The ~~Company~~Company independently calculates a non-GAAP adjusted tax rate considering the impact of discrete items and jurisdictional mix of the identified non-GAAP adjustments. The following table summarizes the reported GAAP tax rate and the effective ~~Non-GAAP~~non-GAAP adjusted tax rate for the quarter ended September 30, 2023 and ~~six months ended December 31, 2017 and December 31, 2016.~~September 30, 2022.

Quarter Ended

Six Months Ended

December 31,

December 31,

2017

2016

2017

2016

Reported GAAP tax rate
(124.8
%)
50.8
%
(44.8
%)
38.8
%
Tax rate impact of:

Identified non-GAAP adjustments
(14.2
%)
(23.6
%)
(11.0
%)
(9.7
%)
Discrete tax items and other adjustments (1)
163.7
%
3.4
%
80.5
%
1.9
%
Non-GAAP adjusted tax rate
24.7
%
30.6
%
24.7
%
31.0
%


	Quarter Ended
	September 30,
	2023		2022

GAAP effective tax rate	(2.9)	%	13.5	%
Discrete items	27.4		8.4
Impact of non-taxable net gain	—		1.6
Long-term GAAP tax rate	24.5	%	23.5	%

Rate impact items
Stock based compensation	(2.7)		(3.1)
Other	0.2		0.6
Total rate impact items	(2.5)	%	(2.5)	%
Non-GAAP adjusted tax rate	22.0	%	21.0	%

~~(1)~~

The fiscal 2018 non-GAAP adjusted net earnings for the quarter ended December 31, 2017 has been normalized for the tax rate impact of the tax reform changes by recasting the first quarter results using the C~~ompany’s effective tax rate for the first six months of fiscal 2018.~~

The difference between the reported GAAP tax rate and non-GAAP tax rate applied to the identified non-GAAP adjustments for the quarter ~~and six months~~ ended ~~December 31, 2017 as well as the quarter and six months ended December 31, 2016~~September 30, 2023 is primarily a result of discrete tax items, including the ~~discrete income~~ tax ~~expenses recorded for the revaluation~~benefit of ~~contingent consideration which is not tax deductible.~~stock option exercises.

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LIQUIDITY AND CAPITAL RESOURCES

~~As of~~ ~~December 31, 2017, cash~~Cash and cash equivalents and available-for-sale investments were ~~$162.4~~$148.7 million as of September 30, 2023, compared to ~~$157.7~~$204.3 million as of June 30, ~~2017.~~2023. Included in the available-for-sale-investments as of ~~December 31, 2017~~June 30, 2023 was the fair value of the ~~Company's~~Company’s investment in ~~ChemoCentryx, Inc. (CCXI)~~exchange traded investment grade bond funds of ~~$37.9~~$23.7 million. ~~The fair value~~During the first fiscal quarter of 2024, the ~~Company's CCXI~~Company sold its investment ~~at June~~and had no available-for-sale investments as of September 30, ~~2017 was $59.6 million.~~2023.

The Company has a ~~revolving line of credit~~line-of-credit governed by a Credit Agreement dated ~~July~~ ~~28, 2016.~~August 31, 2022 that will mature on August 1, 2027. This Credit Agreement amended and restated the Company’s previous credit agreement that was entered into on August 1, 2018 and would have matured on August 1, 2023. As of September 30, 2023, there is $560 million available on the line-of-credit. See Note 56 to the Condensed Consolidated Financial Statements for a description of the Credit Agreement.

The Company has remaining potential contingent consideration payments of up to ~~$50.0~~$100 million for the Asuragen and $3.5 million related to the ACD and Zephyrus, respectively. During the second quarter, the Company determined that certain sales and revenue thresholds were met for ACD. Cash payments totaling $35.0 million were made during the first six monthsNamocell acquisitions as of ~~fiscal 2018.~~September 30, 2023. The fair ~~values~~value of the remaining payments ~~are $50.0~~is $1.8 million ~~and $3.3 million, respectively,~~ as of ~~December 31, 2017.~~September 30, 2023.

During fiscal year 2022, the Company paid $25 million to enter into a two-part forward contract which requires the Company to purchase the full equity interest in Wilson Wolf if certain annual revenue or EBITDA thresholds are met. During the third fiscal quarter of 2023, Wilson Wolf met the required threshold for the first part of the forward contract. A payment of $232 million was made during the third fiscal quarter of 2023. The Company ~~expects to make a $50.0 million cash~~is currently forecasting the second option payment ~~towards the ACD~~of approximately $1 billion plus potential contingent consideration ~~liability in the third quarter of~~to occur between fiscal ~~2018.~~

2026 and fiscal 2028.

Management of the Company expects to be able to meet its cash and working capital ~~requirements~~requirements for operations, facility expansion, capital additions, and cash dividends for the foreseeable future, and at least the next 12 months, through currently available cash, cash generated from operations, and remaining credit available on its existing revolving line of credit.

Cash Flows From Operating Activities

The Company generated cash of ~~$83.9~~$59.4 million from operating activities ~~during~~in the first ~~six months~~quarter of fiscal ~~2018~~2024 compared to ~~$67.9~~$56.1 million ~~during~~in the first ~~six months~~quarter of fiscal ~~2017.~~2023. The increase from the prior year was primarily due to ~~decreases~~changes in the timing of cash payments on certain operating assets ~~driven by strong collections of trade accounts receivable~~ and ~~increases in operating liabilities, net of acquisitions.~~liabilities.

Cash Flows From Investing Activities

We continue to make investments in our business, including capital expenditures. ~~Cash paid for acquisitions was~~ lower during the first six months of fiscal 2018 compared to the first six months of fiscal 2017 with net cash paid of $10.6 million for the Trevigen acquisition during the first six months fiscal 2018 compared to $255.9 million for the ACD and Space acquisitions, which occurred during the first six months of fiscal 2017.

Capital expenditures for fixed assets for the first ~~six months~~quarter of fiscal ~~2018~~2024 and ~~2017~~2023 were ~~$11.6~~$13.6 million and ~~$5.3~~$9.6 million, respectively. ~~Capital expenditures for the first six months of fiscal 2018 were mainly for facility expansion as well as laboratory and computer equipment.~~ Capital expenditures for the remainder of fiscal ~~2018~~2024 are expected to be approximately ~~$11.7~~$44 million. Capital expenditures are expected to be financed through currently available funds and cash generated from operating activities. Expected additions in fiscal 2024 is related to increasing capacity to meet expected sales growth across the Company.

During the first fiscal quarter of 2024, the Company acquired Lunaphore Technologies SA for $166.4 million, compared to the acquisition of Namocell, Inc for $101.2 million, net of cash acquired, in the comparative prior year period. As noted in Note 4, purchase accounting for Lunaphore is still open and a net working capital adjustment payment of approximately $4 million is expected in the second quarter of fiscal 2024.

There were no sales of business in the first fiscal quarter of 2024. During the first fiscal quarter of 2023, the Company sold its remaining shares in Eminence, its partially-owned consolidated subsidiary, for $17.8 million.

During the first fiscal quarter of 2024, the Company sold its exchange traded investment grade bond funds for $23.8 million. In the first fiscal quarter of 2023, the Company sold its remaining shares in its investment in CCXI for $73.2 million.

During the first fiscal quarter of 2024, the Company received a $2.1 million tax distribution from its equity method investee. There were no comparable activities in the comparative period.

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Cash Flows From Financing Activities

During the first ~~six months~~quarter of fiscal ~~2018~~2024 and ~~2017,~~2023, the Company paid cash dividends of ~~$23.9~~$12.7 million and $12.5 million, respectively, to all common shareholders. On ~~February 6, 2018,~~October 31, 2023, the Company announced the payment of a ~~$0.32~~$0.08 per share cash dividend, or approximately ~~$12.0~~$12.6 million, will be payable ~~March 2, 2018~~November 24, 2023 to all common shareholders of record on ~~February 16, 2018.~~November 10, 2023.

Cash of $~~6.7~~$14.4 million and ~~$2.1~~$12.0 million was received during the first ~~six months~~quarter of fiscal ~~2018~~2024 and ~~2017,~~2023, respectively, from the exercise of stock options.

During the first ~~six months~~quarter of fiscal ~~2018,~~2024 and 2023, the Company made repayments of $70.0 million and $441.0 million, respectively, on its long-term debt balance. The Company drew ~~$25.0~~$160.0 million and $449.7 million under its revolving line-of-credit facility to fund its acquisition of Atlanta Biologicals Inc. and made repayments on the line-of-credit of $6.0 million. During the first six months of fiscal 2017, the Company paid the balance of its previous line-of-credit facility in an amount of approximately $116.5 million and drew $368.4 million under its new revolving line-of-credit facility to fund operations and its acquisition of ACD.

~~During~~ the first six months of fiscal 2018, the Company made $35.0 million in cash payments towards the CyVek contingent consideration liabilities. The Company made no payments towards contingent consideration liabilities during the first six months of fiscal 2017.

~~In accordance with the terms of~~ ~~the purchase agreement,~~ during the first quarter of fiscal ~~2018, the Company made the final $2.3 million payment for the Space acquisition. This payment is included within other financing activities.~~

~~OFF-BALANCE SHEET ARRANGEMENTS~~

~~The Company has no~~ ~~reportable off-balance sheet arrangements as defined in Item 303(a)(4) of Regulation S-K.~~

~~CONTRACTUAL OBLIGATIONS~~

2024 and 2023, respectively.

There were no ~~material changes outside~~share repurchases during the ~~ordinary course~~first quarter of ~~business~~fiscal 2024. During the first quarter of fiscal 2023, the Company repurchased $19.6 million in share repurchases included as a cash outflow within Financing activities.

During the first quarter of fiscal 2024 and 2023, the Company made $20.2 million and $17.9 million related to taxes paid on restricted stock units and stock options exercised through a net share settlement classified as financing activities.

During the first quarter of fiscal 2023, the Company made $2.5 million in other financing payments related to fees for the amended Credit Agreement. There were no such payments in the ~~Company's contractual obligations during the~~first quarter ~~ended~~ ~~December 31, 2017.~~of fiscal 2024.

CRITICAL ACCOUNTING POLICIES

The Company's significant accounting policies are discussed in the Company's Annual Report on Form 10-K for fiscal ~~2017~~2023 and are incorporated herein by reference. The application of certain of these policies requires judgments and estimates that can affect the results of operations and financial position of the Company. Judgments and estimates are used for, but not limited to, valuation of available-for-sale investments, inventory valuation and allowances, valuation of intangible assets and goodwill and valuation of investments in unconsolidated entities. There have been no significant changes in estimates in the ~~first~~ quarter ~~of fiscal 2018~~ended September 30, 2023 that would require disclosure nor have there been any changes to the Company's policies.

~~NON-GAA~~PNON-GAAP FINANCIAL MEASURES

This Quarterly Report on Form 10-Q, including ~~“Management~~’s“Management’s Discussion and Analysis of Financial Condition and Results of Operation” in Item 2, contains financial measures that have not been calculated in accordance with accounting principles generally accepted in the U.S. (GAAP). These non-GAAP measures include:

•

●Organic Growth

●Adjusted gross margin

•

●Adjusted operating margin

●Adjusted net earnings

•

●Adjusted effective tax rate

We provide these measures as additional information regarding our operating results. We use these non-GAAP measures internally to evaluate our performance and in making financial and operational decisions, including with respect to incentive compensation. We believe that our presentation of these measures provides investors with greater transparency with respect to our results of operations and that these measures are useful for period-to-period comparison of results.

Our non-GAAP financial measure of organic growth represents revenue growth excluding revenue from acquisitions within the preceding 12 months, the impact of foreign currency, as well as the impact of partially-owned consolidated subsidiaries. Excluding these measures provides more useful period-to-period comparison of revenue results as it excludes the impact of foreign currency exchange rates, which can vary significantly from period to period, and revenue from acquisitions that would not be included in the comparable prior period. Revenues from partially-owned subsidiaries consolidated in our financial statements are also excluded from our organic revenue calculation, as those revenues are not fully attributable to the Company. There was no revenue from partially-

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owned consolidated subsidiaries for the quarter ended September 30, 2023 due to the sale of Changzhou Eminence Biotechnology Co., Ltd. (Eminence) in the first quarter of fiscal 2023. Revenue from partially-owned consolidated subsidiaries was $2.0 million for the quarter ended September 30, 2022.

Our n~~on-GAAP~~non-GAAP financial measures for adjusted gross margin, adjusted operating margin, and adjusted net earnings, in total and on a per share basis, exclude stock-based compensation, the costs recognized upon the sale of acquired inventory, amortization of acquisition intangibles, ~~and~~ acquisition related ~~expenses.~~expenses inclusive of the changes in fair value of contingent consideration, and other non-recurring items including non-recurring costs, goodwill and long-lived asset impairments, and gains. Stock-based compensation is excluded from non-GAAP adjusted net earnings because of the nature of this charge, specifically the varying available valuation methodologies, subjection assumptions, variety of award types, and unpredictability of amount and timing of employer related tax obligations. The Company excludes amortization of purchased intangible assets, ~~and~~ purchase accounting adjustments, including costs recognized upon the sale of acquired inventory and acquisition-related expenses inclusive of the changes in fair value contingent consideration, and other non-recurring items including gains or losses on legal settlements, goodwill and long-lived asset impairment charges, and one-time assessments from this measure because they occur as a result of specific events, and are not reflective of our internal investments, the costs of developing, producing, supporting and selling our products, and the other ongoing costs to support our operating structure. Additionally, these amounts can vary significantly from period to period based on current activity.

The Company’s also excludes revenue and expense attributable to partially owned consolidated subsidiaries in the calculation of our non-GAAP financial measures as the revenues and expenses are not fully attributable to the Company.

The Company’s non-GAAP adjusted operating margin and adjusted net earnings, in total and on a per share basis, also excludes ~~stock based~~stock-based compensation expense, which is inclusive of the employer portion of payroll taxes on those stock awards, restructuring, gain and losses from investments, as they are not part of our day-to-day operating decisions (excluding our equity method investment in Wilson Wolf as it is certain to be acquired in the future) and certain adjustments to income tax expense. ~~Stock based compensation is~~Additionally, gains and losses from investments that are either isolated or cannot be expected to occur again with any predictability are excluded. Costs related to restructuring activities, including reducing overhead and consolidating facilities, are excluded ~~from non-GAAP adjusted earnings~~ because we believe they are not indicative of ~~the nature of this charge, specifically the varying available valuation methodologies, subjective assumptions, and the variety of award types.~~our normal operating costs. The Company independently calculates a non-GAAP adjusted tax rate to be applied to the identified non-GAAP adjustments considering the impact of discrete items on these adjustments and the jurisdictional mix of the adjustments. In addition, the tax impact of other discrete and non-recurring charges which impact our reported GAAP tax rate are adjusted from net earnings. We believe these tax items can significantly affect the ~~period-over period~~period-over-period assessment of operating results and not necessarily reflect costs and/or income associated with historical trends and future ~~results~~

results.

The Company periodically reassesses the components of our non-GAAP adjustments for changes in how we evaluate our performance, changes in how we make financial and operational decisions, and considers the use of these measures by our competitors and peers to ensure the adjustments are still relevant and meaningful.

Readers are encouraged to review the reconciliations of the adjusted financial measures used in management's discussion and analysis of the financial condition of the Company to their most directly comparable GAAP financial measures provided within the Company's consolidated financial statements.

FORWARD LOOKING INFORMATION AND CA~~UTIONARY~~CAUTIONARY STATEMENTS

This quarterly report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include those regarding the Company's expectations as to the effect of changes to accounting p~~olicies,~~policies, the amount of capital expenditures for the remainder of the fiscal year, the source of funding for capital expenditure requirements, the sufficiency of currently available funds for meeting the Company's needs, the impact of fluctuations in foreign currency exchange rates, and expectations regarding gross margin fluctuations, increasing research and development expenses, increasing selling, general and administrative expenses and income tax rates. These statements involve risks and uncertainties that may affect the actual results of operations. The following important factors, among others, have affected and, in the future, could affect the Company's actual results: integration of newly acquired businesses, the introduction and acceptance of new products, general national and international economic, political, regulatory, and other conditions, increased competition, the reliance on internal manufacturing and related operations, supply chain challenges, the impact of currency exchange rate fluctuations, ~~economic instability in Eurozone countries,~~ the recruitment and retention of qualified personnel, the impact of governmental regulation, maintenance of intellectual property rights, credit risk and fluctuation in the market value of the Company's investment portfolio, and unseen delays and expenses related to facility ~~improvements,~~construction and ~~the success of financing efforts by companies in which the Company has invested.~~improvements. For additional information concerning such factors, see the Company's Annual Report on Form 10-K for fiscal ~~2017~~2023 as filed with the Securities and Exchange Commission and Part II. Item 1A below.

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ITEM3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

~~As of~~ December 31, 2017, the Company held an investment in the common stock of CCXI. The investment was included in short-term available-for-sale investments at its fair value of $37.9 million. As of December 31, 2017, the potential loss in fair value due to a 10% decrease in the market value of CCXI was $3.8 million.

The Company operates internationally, and thus is subject to potentially adverse movements in foreign currency exchange rates. For the quarter ended ~~December 31, 2017,~~September 30, 2023, approximately ~~28%~~37% of consolidated net sales were made in foreign currencies, including ~~15%~~13% in euros, 4% in British pound sterling, 4%6% in Chinese yuan, 3% in Canadian dollars, and the remaining 5%11% in other currencies. The Company is exposed to market risk mainly from foreign exchange rate fluctuations of the euro, British pound sterling, the Chinese yuan, and the Canadian dollar, as compared to the U.S. dollar as the financial position and operating results of the Company's foreign operations are translated into U.S. dollars for consolidation.

M~~onth-end~~Month-end average exchange rates between the euro, British pound sterling, ~~euro,~~ Chinese yuan, ~~and~~ Canadian dollar, and Swiss franc which have not been weighted for actual sales volume in the applicable months in the periods, to the U.S. dollar were as follows:

	Quarter Ended				Six Months Ended
	December 31,				December 31,
	2017		2016		2017		2016

									Quarter Ended
									September 30,
									2023		2022
Euro	$	1.18	$	1.10	$	1.18	$	1.10	$	1.09	$	1.00
British pound sterling		1.33		1.52		1.32		1.28		1.26		1.17
Chinese yuan		0.15		0.15		0.15		0.15		0.14		0.14
Canadian dollar		0.81		0.75		0.79		0.76		0.74		0.76
Swiss franc										1.13		1.03

The Company's exposure to foreign exchange rate fluctuations also arises from trade receivables, trade payables and intercompany payables denominated in one currency in the financial statements, but receivable or payable in another currency. The effects ofof a hypothetical simultaneous 10% appreciation in the U.S. dollar from ~~December 31, 2017~~September 30, 2023 levels against the euro, British pound sterling, Chinese yuan and Canadian dollar are as follows (in thousands):

~~Decrease in translation of earnings of foreign subsidiaries (annualized)~~	$	3,~~523~~
~~Decrease in translation of net assets of foreign subsidiaries~~		~~38,907~~
~~Additional transaction losses~~		~~674~~


Decrease in translation of earnings of foreign subsidiaries (annualized)	$	5,623
Decrease in translation of net assets of foreign subsidiaries		82,608
Additional transaction losses		4,099

ITEM4. CONTROLS AND PROCEDURES

(a) Evaluation of disclosure controls and procedures.

The Company maintains disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)). The Company's management has evaluated, with the participation of its Chief Executive Officer and Chief Financial Officer, the effectiveness of the design and operation of its disclosure controls and procedures as of the end of the period covered in this Quarterly Report on Form 10-Q. The material weaknesses in internal control over financial reporting identified in connection with the Company's consolidated financial statements for the year ended June 30, 2017 and described in the Company's Annual ReportBased on Form 10-K for the year ended June 30, 2017 were not fully remediated as of December 31, 2017. Management has prepared a detailed action plan and continued on-going remediation efforts during the second quarter of fiscal 2018. However, further testing of the effectiveness of the Company's controls occurring during the remainder of fiscal 2018 is necessary to validate the completion of the remediation plan. Accordingly, based upon theirthat evaluation, ~~the Company's~~our Chief Executive Officer and Chief Financial Officer ~~have~~ concluded that, ~~the Company's~~as of September 30, 2023, our disclosure controls and procedures were ~~not effective as of December 31, 2017.~~effective.

(b) Changes in internal controls over financial reporting.

~~The~~ ~~Company commenced its on-going remediation efforts to address~~There were no changes in the ~~material weaknesses in~~Company's internal control over financial reporting ~~described in~~during the ~~Company's Annual Report on Form 10-K for~~first quarter of fiscal 2024 that have materially affected, or are reasonably likely to materially affect, the ~~year-ended June 30, 2017.~~

~~As previously announced, we acquired~~ ~~Trevigen on September 5, 2017. We have not fully evaluated any changes in~~Company's internal control over financial reporting associated with this acquisition and therefore any material changes that may result from this acquisition have not been disclosed in this report. We intend to disclose all material changes resulting from this acquisition within or prior to the time of our first annual assessment of internal control over financial reporting that is required to include this entity.reporting.

~~The results reported in this quarterly report include those of~~ ~~Trevigen.~~

PART II. OTHER INFORMATION

ITEM1. LEGAL PROCEEDINGS

As of ~~February 8, 2018,~~November 7, 2023, the Company is not a party to any legal proceedings that, individually or in the aggregate, are reasonably expected to have a material adverse effect on the Company's business, results of operations, financial condition or cash flows.

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ITEM1A. RISK FACTORS

~~There~~During the quarter ended September 30, 2023, there have been no ~~other~~ material changes from ~~the risk factors previously disclosed in the Company's Quarterly Report on Form 10-Q for the quarter ended~~ ~~December 31, 2017 and~~ the risk factors found in Part I, Item 1A, "Risk Factors," of the Company's Annual Report on Form 10-K for the year ended June 30, ~~2017.~~ 2023.

ITEM2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

~~There was no~~The Company’s repurchase plan approved by the Board on February 2, 2022, granted management the discretion to mitigate the dilutive effect of stock option exercises. The plan authorizes the Company to purchase up to $400 million in stock. No shares have been repurchased under the share repurchase ~~activity by~~plan in fiscal 2024. As of September 30, 2023, the Company ~~in the quarter ended~~ ~~December 31, 2017. The maximum approximate dollar value of shares that may yet be purchased~~had $260.8 million available to repurchase under ~~the Company's~~our existing ~~stock repurchase plan is approximately $125 million. The plan does not have an expiration date.~~plan.

ITEM 3. DEFAULT ON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

~~None.~~

~~ITEM~~ ~~6. EXHIBITS~~

~~See "exhibit index"~~ ~~following~~During the ~~signature page.~~

~~SIGNATURES~~

~~Pursuant to the requirements~~three months ended September 30, 2023, no director or officer of the ~~Securities Exchange Act~~Company adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement," as each term is defined in item 408(a) of ~~1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly~~ ~~authorized.~~Regulation S-K.

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ITEM6. EXHIBITS
EXHIBIT INDEX
TO
FORM 10-Q
BIO-TECHNE CORPORATION

Exhibit
Number

Description
3.1

Amended and Restated Articles of Incorporation of the Company--incorporated by reference to Exhibit 3.1 of the Company's 8-K dated November 1, 2022*

~~BIO-TECHNE CORPORATION~~

3.2
    ~~(Company)~~
~~Date:~~ ~~February 8, 2018~~
~~/s/ Charles R. Kummeth~~
     ~~Charles R. Kummeth~~
~~Principal Executive Officer~~
~~Date:~~ ~~February 8, 2018~~
~~/s/ James Hippel~~
     ~~James Hippel~~
~~Principal Financial Officer~~

~~EXHIBIT INDEX~~
TO
~~FORM 10-Q~~
~~BIO-TECHNE CORPORATION~~
~~Exhibit #~~
~~Description~~
~~3.1~~

~~Third~~Fourth Amended and Restated Bylaws of the ~~Company, incorporated~~Company--incorporated by reference to Exhibit 3.1 of the Company’s Form 8-K dated February 6, 2018*April 27, 2022*

~~10.1~~
4.1

Description of Capital Stock -- incorporated by reference to Exhibit 4.1 of the Company's Form 10-K dated August 23, 2023*

10.1**

Management Incentive Plan--incorporated by reference to Exhibit 10.13 of the Company's Form 10-K for the year ended June 30, 2013*

10.2**

Second Amended and Restated 2010 Equity Incentive Plan--incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K dated October 26, 2017*

10.3**

Form of Time Vesting Restricted Stock Award Agreement - incorporated by reference to Exhibit 10.3 of the Company's Form 10-K dated August 25, 2021*

10.4**

Form of Performance Vesting Restricted Stock Award Agreement - incorporated by reference to Exhibit 10.4 of the Company's Form 10-K dated August 25, 2021*

10.5**

Form of Time Vesting Restricted Stock Unit Award Agreement - incorporated by reference to Exhibit 10.5 of the Company's Form 10-K dated August 25, 2021*

10.6**

Form of Performance Vesting Restricted Stock Unit Award Agreement - incorporated by reference to Exhibit 10.6 of the Company's Form 10-K dated August 25, 2021*

10.7**

Form of the Time Vesting Performance Unit Award Agreement - incorporated by reference to Exhibit 10.7 of the Company's Form 10-K dated August 25, 2021*

10.8**

Form of Performance Vesting Performance Unit Award Agreement - incorporated by reference to Exhibit 10.8 of the Company's Form 10-K dated August 25, 2021*

10.9**

Form of Time Vesting Incentive Stock Option Agreement - incorporated by reference to Exhibit 10.9 of the Company's Form 10-K dated August 25, 2021*

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Exhibit
Number
Description
10.10**

Form of Performance Vesting Incentive Stock Option Agreement - incorporated by reference to Exhibit 10.10 of the Company's Form 10-K dated August 25, 2021*

10.11**

Form of Employee Non-Qualified Stock Option Agreement - incorporated by reference to Exhibit 10.11 of the Company's Form 10-K dated August 25, 2021*

10.12**

Form of Director Non-Qualified Stock Option Agreement for Second Amendment and Restated 2010 Equity Incentive Plan - incorporated by reference to Exhibit 10.2 of the Company's Form 8-K dated October 26, 2017*

10.13**

Employment Agreement by and between the Company and Charles Kummeth - incorporated by reference to Exhibit 10.11 of the Company's Form 10-K dated September 7, 2017*

10.14**

Form of Employment Agreement by and between the Company and Executive Officers of the Company other than the CEO --incorporated by reference to Exhibit 10.12 of the Company's Form 10-K dated September 7, 2017*

10.15**

Form of Amendment No. 1 to Executive Employment Agreement – incorporated by reference to Exhibit 10.15 of the Company’s Form 10-Q dated May 11, 2020*

10.16

Amended and Restated Credit Agreement by and among the Company, the Guarantors party thereto, the Lenders party thereto, and BMO Harris Bank N.A., as Administrative Agent, dated August 31, 2022--incorporated by reference to Exhibit 10.1 of the Company's Form 8-K dated September 7, 2022*

10.17**

Form of Indemnification Agreement entered into with each director and executive ~~officers~~officer of the Company**Company - incorporated by reference to Exhibit 10.1 of the Company's Form 10-Q dated February 8, 2018*

10.18**

Bio-Techne 2020 Equity Incentive Plan – incorporated by reference to Exhibit 10.1 of the Company’s Form 8-k dated November 3, 2020*

10.20

Form of Director Non-Qualified Stock Option Agreement – incorporated by reference to Exhibit 10.2 of the Company’s Form 8-k dated November 3, 2020*

10.21**

Form of Employee Non-Qualified Stock Option Agreement (Global) – incorporated by reference to Exhibit 10.3 of the Company’s Form 8-k dated November 3, 2020*

10.22**

Form of Performance Vesting Cash Unit Agreement– incorporated by reference to Exhibit 10.4 of the Company’s Form 8-k dated November 3, 2020*

10.23**

Form of Performance Vesting Incentive Stock Option Agreement– incorporated by reference to Exhibit 10.5 of the Company’s Form 8-k dated November 3, 2020*

10.24**

Form of Performance Vesting Restricted Stock Agreement– incorporated by reference to Exhibit 10.6 of the Company’s Form 8-k dated November 3, 2020*

10.25**

Form of Performance Vesting Restricted Stock Unit Agreement– incorporated by reference to Exhibit 10.7 of the Company’s Form 8-k dated November 3, 2020*

10.26**

Form of Time Vesting Incentive Stock Option Agreement– incorporated by reference to Exhibit 10.8 of the Company’s Form 8-k dated November 3, 2020*

10.27**

Form of Time Vesting Cash Unit Agreement– incorporated by reference to Exhibit 10.9 of the Company’s Form 8-k dated November 3, 2020*

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Exhibit
Number
Description
10.28**

Form of Time Vesting Restricted Stock Agreement– incorporated by reference to Exhibit 10.10 of the Company’s Form 8-k dated November 3, 2020*

10.29**

Form of Time Vesting Restricted Stock Unit Agreement– incorporated by reference to Exhibit 10.11 of the Company’s Form 8-k dated November 3, 2020*

10.30**

Employment Agreement by and between the Company and Kim Kelderman – incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K dated October 19, 2023*

21

Subsidiaries of the Company - incorporated by reference to Exhibit 21 of the Company's Form 10-K dated August 23, 2023*

31.1

~~Certificate~~Certification of Chief Executive Officer pursuant to ~~section~~Section 302 of the ~~Sarbanes Oxley~~Sarbanes-Oxley Act of 2002

31.2

~~Certificate~~Certification of Chief Financial Officer pursuant to ~~section~~Section 302 of the ~~Sarbanes Oxley~~Sarbanes-Oxley Act of 2002

32.1

Certification of Chief Executive Officer pursuant to ~~section~~Section 906 of the ~~Sarbanes Oxley~~Sarbanes-Oxley Act of 2002

32.2

Certification of Chief Financial Officer pursuant t~~o section~~to Section 906 of the ~~Sarbanes Oxley~~Sarbanes-Oxley Act of 2002

101

The following financial statements from the Company's Quarterly Report on Form 10-Q for the quarter ended ~~December 31, 2017,~~ September 30, 2023, formatted in Inline Extensible Business Reporting Language ~~(XBRL)~~(iXBRL): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Earnings and Comprehensive Income, (iii) the Condensed Consolidated Statements of Cash Flows, and (iv) Notes to the Condensed Consolidated Financial Statements.

104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
*     Incorporated by reference; SEC File No. 000-17272
**   Management contract or compensatory plan or arrangement

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

BIO-TECHNE CORPORATION

(Company)

Date: November 7, 2023

/s/ Charles R. Kummeth

Charles R. Kummeth

Principal Executive Officer

Date: November 7, 2023

/s/ James Hippel

James Hippel

Principal Financial Officer
~~________~~
* ~~Incorporated by reference; SEC File No. 000-17272~~
** ~~Indicates management contract or compensatory plan, contract or arrangement.~~

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	December 31, 2017 (unaudited)			June 30, 2017
ASSETS
Current assets:
Cash and cash equivalents	$	121,458		$	91,612
Short-term available-for-sale investments		40,927			66,102
Accounts receivable, less allowance for doubtful accounts of $905 and $696, respectively		98,498			116,830
Inventories		68,280			60,151
Prepaid expenses and other		16,923			13,330
Total current assets		346,086			348,025
Property and equipment, net		138,461			135,124
Goodwill		589,101			579,026
Intangible assets, net		438,360			452,042
Other assets		43,414			44,002
Total assets	$	1,555,422		$	1,558,219
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Trade accounts payable	$	11,318		$	16,856
Salaries, wages and related accruals		26,537			26,602
Accrued expenses		14,508			18,518
Deferred revenue		6,016			5,968
Income taxes payable		-			2,478
Contingent consideration payable		53,300			65,100
Total current liabilities		111,679			135,522
Deferred income taxes		74,103			120,596
Long-term debt obligations		362,500			343,771
Long-term contingent consideration payable		-			3,300
Other long-term liabilities		9,321			5,403
Shareholders' equity:
Common stock, par value $.01 per share; authorized 100,000,000; issued and outstanding 37,469,896 and 37,356,041, respectively		375			374
Additional paid-in capital		214,697			199,161
Retained earnings		839,564			799,027
Accumulated other comprehensive loss		(56,817	)		(48,935	)
Total shareholders' equity		997,819			949,627
Total liabilities and shareholders’ equity	$	1,555,422		$	1,558,219

2018	$	22,887
2019		45,089
2020		44,385
2021		44,015
2022		42,263
Thereafter		239,721
Total	$	438,360