TECH - Earnings call transcript Q1 2018

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Operator

Good morning and welcome to the Bio-Techne Earnings Conference Call for the First Quarter of Fiscal Year 2018. At this time, all participants have been placed in a listen-only mode, and the call will be opened for questions following management's prepared remarks. I would now like to turn the call over to Mr. Jim Hippel, Bio-Techne's Chief Financial Officer. Please go ahead, sir.

James T. Hippel

Yeah. you us. thank and morning for joining Good

On Kummeth, Chief with me is Chuck this morning Executive the call Officer of Bio-Techne.

let begin, statement. we me our cover Before Safe briefly Harbor

during forward-looking be during Some The the as comments company's its company's could to result differ or XXXX call. made future the update SEC XX-K are any The of to and this information company's undertake identifies statements considered company's the does forward-looking materially The actual not as filings projected fiscal developments. conference available this expectations company new of as results Relations or of statements, made forward-looking a future in within on Investor from cause section. call well for other the website results. certain beliefs including XX-K the that statements events the may those any company's year factors

call, ongoing earlier are at over provide the now may under non-GAAP GAAP I'll measures press be available During Tables measures Bio-Techne Corporation Chuck. to the call comparable morning www.bio-techne.com. turn to measures issued release performance. to these business company's the used financial most the to this in pertinent website, information reconciling

Charles R. Kummeth

us morning, Thank good and Jim, Thanks, first you for for everyone. quarter joining our call. conference

All saw continued deliver saw organically plan. strategic encouraging, growth strong and category. established our market, well collectively note Within that our delivered in Europe geography in major the started broad-based life and growing fiscal way research finished and a instrument Biotechnology QX growth on also Protein the in categories. the double-digit both in both and acquisition executing in by from attention With to serve working. Europe low-teens. creating in was the year markets collaboration. X%. Europe, an company grew product the with product release, on both cross-selling reagent over leadership in unified subsidiary, this with the divisions experienced you results our As two We we QX with we academic solid and and our new loyal and region. in growth believe X% end Especially last regional most outstanding Europe, we on contribution along was Southern primarily press embarked with countries European growth on year, we to our XXXX, a just distributor growth quarter Platforms, organic year, BioPharma more science last of as The to organic broad-based our in model's

see reported nearly in quarter. APAC very of every the an at Europe, rest to in in level. have gratifying XX%. executing our In in region. proud we regional growth It's the grew am I region delivered broadly QX, XX% is a growing Japan Asia while again XX% way, as big experiencing in results. growth subsidiaries also QX. QX, one-up exceptional the leadership over As trying had to our outstanding of China, commercial teams are Western they of just other in and They over growth our of each brands

some we but as upward. pharma of U.S. academic still strong the BioPharma QX, as market larger time for modest on, still U.S. with are though the in not we of acceleration rates an saw with funding the growth academic Here low-single-digit reported projects was year Europe the we've markets. coincided the in now. U.S. end timing the and elsewhere. in is trend in started the gave release U.S., in which has mid-single-digit believe us BioPharma companies, seeing We stable long from seen We both that long-term the and in in academic uptick The widely project a been the market that our growth impacting NIH a is

for performance color on QX some division. Now, by our

Our growing category antibodies and product Biotech as Within and in the of XX%. categories reagent our high-single growing collectively Systems R&D Biotech's QX, growing Novus XX%. the digits around with ACD grew our growing X% excel X% continued a division north a to brand organically with core core in remarkable products, antibodies branded

and One key data of amount our expanding provide our antibody growth their before has been antibodies of strategies purchase. the capabilities making to the demand in vast performance researchers in our web that portfolio of investing order on

And the that strategy of and in Bio-Techne rate. anniversary QX this the year sales As division's months Biotech's being we part that of Cell means worth This last fruit. of ACD family. finally, August, organic of two past is most shown, included one-year the Advanced has bearing celebrated Diagnostics were growth

be technology. Biotech a continue relatively for The be the long it of RNA hybridization clinical complete integration just and its division, we've rest pathologists small won't year. still fiscal the of a transformative a in appreciate continue China of to still of rate growth yet. best by revenue We products the believe to ACD, for part small end with see ahead company are in at ACD the once tapped situ diagnostic especially started for XX% ACD's runway the long. full as for beginning ahead We is and markets the barely growth yet is Although

early the September. portfolio bolster our of with Trevigen Biotech to continued in We acquisition reagent

aspect sold developed supports antibodies an Having sales it and and We Trevigen own Organically, on familiar events on our cell products including growth these Drug having Trevigen's acquisition quarter. genotoxic line, the testing increasingly the XD robust understanding tuck-in new with cells, becoming such products years every Trevigen cultures, apoptotic for Bio-Techne making physiological to current cell Cultrex hundreds product to released and of drug models, important of to product on complement channels. through will innovation cells, to continue many DNA product study of and nice and our addition very cell is for the understand better are a action. portfolio. and we product tools process conducted an the sale us. behavior enable with damage Trevigen important is for focus be researchers cell vitality line portfolio. proteins

product like launched a highlight Panel, to different releases highlight new would assays. new a XX the leadership few and to QX, types. I simultaneously which our Performance measure Luminex a has in analytes quarter, This Discovery variety XL capability we Cytokine In sample that of

new a distinguish the with infected between In and grew will as produce antibodies Our immunoglobulin designed Cytokine virus growth co-circulate, interfering the and prior to will may following QX. we a And this and XX present the used to kit don't platform, for the of realize the approximately result. Plex runway fetal researchers virus assay the product interest, whether useful samples to are multiplex linked prior be for capture like Zika category that while request also September, in throughput we a of two dengue minutes. contribute XXxX persist understand is or Zika to analytes determine Zika the infected infections the in proprietary likelihood that false disorders different against The since September, proteins positive new this minimize recognize global viruses to proud measures XX Simple of future detect cartridge higher market meets of serum where are are virus, rapid false four launched an the can for with doubling immunoassay in current coupled customer be immunoassay be by products are with total research XX% assay XXxX testing viruses to we subsequent Ella This they market. of abnormalities. clearly immunoassay ease-of-use the Simple ELISA and XL a Ella a samples different virus particularly a base this assay of G the unique areas performing individuals not see cartridge, which of virus product cartridge. to released up that to new emerging throughput It infection, sample the Plex time of field. long our in simultaneously offered maintaining We design maintaining new double-digit need a to launches our we will to sensitivity such eliminate feature reagent other share. enable since platform the antibodies biology collected like positive. deliver while with could time XX% from solutions any Furthermore, Also for IgG and human that, test, neurological and measure samples more high immunoassays pre-treated continued expansion A anti-Zika of serum. in Zika the with Discovery,

of our grew the the way those Western, division's really to with better. quarter starting growth, Single-Cell with instrument. This categories, Ella, Plex Platforms. Western than growth is and growth All of XX% more academic Milo, sales, in Plex Single-Cell assays well, in organic Single-Cell over and dividends Simple now of organic Protein effort product both Simple of to multiplex is Western Western, now row Biologics, by over really Simple I'll the and in paying of in focused move XX% sales major already out A XXX%. and on six dedicated seven embrace growing Speaking four instrument Plex double-digit cartridge markets QX marking quarter, the U.S. XX% type seventh on executing a or with with are division Simple

still solutions times growth many approaching Protein are we product future. billion runway $X Thus, double-digit before, is X% we said well the for less have there than have into plenty As markets continued for the of share. and collectively Platforms

as strong of had customers categories, the products. three Next, lumpy especially decent glucose controls, is this the business, and Two OEM showing strong. for discussed OEM digits, major have our to-high-single past. demand Diagnostics in division growth the experienced nature in these quarter, with product end-user Chinese Business out is that mid- considering a our hematology of we

growth for the organic timing for short-term orders Diagnostic swing the continues However, of recorded their both to components division.

recall grew XX% very intermediate serve. there, to the long-term timing new to markets tough sales a of on no view was our the in You for change Diagnostics There in include expanding Europe pipeline way The this year. further this are so when Diagnostics to of expand and the to of orders funnel. these our remains with favorable, new in our project Plans division opportunities subsidiary their comp customers is QX drive with model will quarter division our prior-year this strong and more that division business.

last going comment last We've I would our our transparent the of in operating was initial quarter that and at headwind year. margin kind at QX. this of the the margin end first QX, year of would transaction, acquisition crossed the over margins. with of been impact had closed about ACD XXXX adjusted on company the on quarter what profitability explained total over in first fiscal the associated of last quarter in very past to be have like time into for which We the August to performance level Finally,

performance happy continues While year as plan call strategic of we the on scale. provides line headwinds experience to profitability be ownership profitability, margin to ahead year, year-on-year turn am into among provide This continue that I start report quickly quarter was in and more to operating Jim? our adjusted what great an will financial many it a its plan. ACD QX. execute margin of details ACD evidence Jim, the ACD over of proceed to last who will to XXX-basis-point quarter. to continued ACD more ahead of will more XX% in to achieving I our approximate to just the the first ramp will did the operating puts great as and a we due stub-period that, on how bottom we the for believe Overall, With company

James T. Hippel

quarter total while earn-out to $X.XX, the made segments. the $X.XX our on the liability decrease Thanks, compared to financial attributable performance, X% then for fair Chuck. ACD. to market QX our I'll financial to $X.XX Starting a overview in EPS The for prior of with was overall for I'll the of first increased some GAAP provide EPS year. was in GAAP EPS adjustment value adjusted company, three provide the an performance color and quarter each

payments geography, increases, growth company, all organic rate likelihood adjusted charges to these that and organic reported revenue is and with of well China's of our with mid-single nearly quarter, low-teens Biopharma's quarter digits, growth growing contribution contribution X%. both the up over digits. $XXX.X earnings. include in our references Fourth Biotech increases, from and the to growth increase earn-out rest while grew region the in growth our the occur mostly Diagnostics therefore, the costs as with Japan exclude segment. that excelled the in the strong the acquisition over for with was our growth as part organic sales which growing very X% also exclude was XX%. academia valuation Asia-Pac the in academia an market XX% in purposes. Management region from X% nearly U.S. segment from fair year-over-year, By reported the the brand liability on the payment with Europe's with GAAP P&L sales, Note QX by OEM XX% the extent, was of end as growth growth. acquisitions and as low-teens, to a Biopharma in value of As mid-single market reported and sales made foreign and, earn-out translation. XX%, million, XX%. acquisition-related a a lesser the first earn-out of and increasing favorable had our price other a paid exchange views XX% charge revenue quarter target reflected and change Western

the on year, mix. in was company gross Moving by QX, favorable the volume P&L. XX.X% and driven details from the leverage to adjusted Total approximately prior points of basis product margin XXX favorable

for year. by XX.X% August acquisition of to adjusted basis of QX the SG&A to XX.X%, last approximately last revenue, XXX basis adjusted driven points in The prior-year prior QX points period. was core extent, in from X.X% margin by helped margin a our gross higher year-over-year. XXX strategic the The down exchange revenue, basis Adjusted of Foreign of was growth. investments R&D decrease basis resulting and, points increase in was ACD expense was SG&A QX year a lesser made operating year. of XX in businesses support from XX than points

below is credit, million The Looking of as Other $XXX the rapid Ontario. FX of expense at was year. last a previous line transactional open ACD. cash higher current was prior-year expense interest Canadian our to due of with $XX,XXX was of income, the interest in of net replace of compared to QX the net expense only and QX acquisition last to from interest the $X.X fund operations operating $X.X well line compared to expense million quarter. current $XXX opened for year $X.X in numbers its million our in expense as higher August non-operating the caused our which to the dollar period to in credit accounts and The million, expense associated quarter rise was impact in in our by million,

of Our adjusted geographic effective of basis quarter the tax due rate to year in QX was XX.X%, points mix. last an XXX improvement first in

than terms capital, over at period shares million outstanding. out and In up the pay in less returning dividend, Average of $XX we diluted million paid to our X% year-ago XX.X were quarter. shares the continue

was quarter the cash balance operations million of capital to in Turning flow and investment from sheet. cash expenditures the was in first $XX.X generated $X.X our and million.

and, the acquisition the to Trevigen. quarter, CyVek earn-out approximately also M&A We lesser with a of made investment million the during $XX in associated extent,

sheet, ended investments. of a million quarter notable the available-for-sale short-term cash and in $XXX.X for balance with other As our we items

long-term million Our of at the end of QX at stood the $XXX.X from $X debt end million, QX. obligations down

Going remain pay-down. forward, capital dividend and our our M&A, opportunistic deployment debt priorities

acquisition ACD foreign the led revenue exchange from XX.X%, year, Now I'll million, year. the and basis operating of XXX reported contributed to the is by reported prior the our was million of performance ACD $XX.X to Adjusted in of lines. sales with QX contributed revenue points August organic starting business and discuss antibody segment. decrease year Acquisitions the prior a year-over-year. X% operating growth XX%. The growth, compared and three adjusted with higher increasing segments, last income Biotechnology product X%, X%, were was in due stub-period decrease margin segment for Biotech was QX $X to of our

Growth of impact the year-over-year segment. X,XXX income offset Adjusted major of volume Net improvement, $X.X strategic Turning were growth from by increase was prior-year in a with organic an mix adjusted to was prior Protein favorable year. of having currency operating product Protein of $XX.X Platforms increase all drove Strong leverage Platforms favorable XX% partially product million, million, QX and investments. representing an margin translation X%. and from XX.X%, the division in for operating broad-based sales lines the in points QX the period, regions. the for the basis over segment an

Moving on X% Diagnostics was our inorganic in with to segment, $XX QX prior year. reported revenue reported increasing million, the from growth

indicating glucose high-single-digit controls strong. markets and Our to short-cycle are growth, experienced end mid- hematology OEM businesses the controls

decrease However, basis the growth our product quarter, and of growth. margin In in and component for points overall breadth was year, XX% was the year. unfavorable the a XX.X%, segment large, both gave Adjusted from comp last business driven of difficult timing of was QX longer prior faced lumpier in and the markets division of a the to decrease our cycle for orders thus terms by operating lines. XXX summary, The mix. end product Diagnostic

fuel the to operating especially ownership basis last year, ACD expanded company's of profitability businesses Protein with contracted margins to prudently stub-period these in them Even investment, the of growth norm this invest lines. our and total from the forward. adjusted should ACD continue margin back year. in product to be but double-digit rapidly and We The business, the game-changing solely by going last XXX due points for operating Platforms

our forward, included will Going quarterly year-over-year baseline ACD comparison. be for XXX% in

remainder not the a the from for changed has ago. year view Our of quarter

expectations be changed. XXXX, regard saw not for have as in of the for out with overall organic earnings we in XXXX year the profitability With we the in our growth expected fiscal our company fiscal played consistent We call, to QX to year what expect year and QX. remainder last

ACD in Platforms, see will the be margin these the year-over-year contribution margin adjusted operating rapid the turn Gwen pressure line this expansion for year from businesses over to back and mix is call to businesses, overall for margins fastest relatively prepared than remainder average. growing prior comments. the we Protein While with the operating And lower of the company still to concludes open our questions. my fiscal to I'll company to Thus, expect flat that, to operating XXXX. continue That year some overall

Operator

Thank question Puneet first you. Leerink from our Partners. And we'll with Souda take

Puneet Souda

for taking guys. question. Thanks Hi, my

So, could a and companies on here. start for strong number been you Europe Chuck, a maybe of if it's one

especially sustainability and growth. the understand you're among different that growth there to trying seeing Just of segments the

Charles R. Kummeth

question. Puneet. for Sure, Thanks the

for on any year kind really a we've companies before pretty had year on strong reporting going a now of So there's other it.

So there. they're catching a little up bit

So to classified see as lot over continued We we've a it a to We've of they're really did little it. year ago and due off. changes paying a execution.

lot have in included, and us out to work Spain We Southern together, really get other of cross-learning and model countries, divisions bought our lot together. cross-selling, a We place. a a to full of others subsidiary distributor, allowed the working

And when grown, I now improved. that, about so force And you it'll of on now the we've more be ACD double. guess, consider top sales coming

we Germany, our mainly two overlaying think kind on that and with years all ago, timing had go a-year-and-a-half, that going is way Biopharma I of remains strong.

So, in erosion still. we're where good U.S., ELISA with very sales, Europe strong more here have in timing, with good assay project we the

and in business core both there think our strong in are there antibodies particular. I results reagents

forward all growth up there in is see honest, foreseeable over business teens double-digit, kind Novus that new future the It to growth. there. Protein to least at for XX% a And Platforms is a adds And of XX% grower, Europe. then, the so. going be is Our we

Puneet Souda

Okay. That's helpful.

one quick one So, ACD. on

You of and the that some diagnostic you're getting clinical into operations. highlighted

cost-conscious on labs of are us R&D Biopharma that those about how bit more from give And you of labs should operating could and more sense a a more we that? to in compared focused So, sensitivity. are little interested the more an perspective, margin think

the on given maybe margins improvements lastly, expecting is I part that could to already ACD a give then the fact that? of and continue improve, sense that So, And shouldn't you're flat, that overall margins, getting operating you operating itself? mean, of us we're it is company maybe now sense seen the that but in just the you've –

Charles R. Kummeth

Yeah. Sure.

– I small see of core mix because we'll So, rapidly offsetting first as the smaller that our they're their flat and back guess off, rising still are roughly I'll business. are to improvements the margin the businesses changes, go and

well, hockey-stick So, stated times It'll roughly flat. to of up it's years Jim has on three many out. kind as two

get because So year remain to this back we're so. change. strategic of But or roughly later, still on XX% so, a largely our plan flattish will the to mix

improve with business. And Now, we'd speak, if improvements throttling like we But this so heavily have it, strong their too. further continue basically to we're to could over-exceed we to on of plan, so quarter of that. this ahead results, see speak. to We're investing in basically

fall just how we kind want to through. see margin much pick So we can of

So lot from we wanted in a invest double-digit will to we're to but investment, a bought back business. There's over in trying to count when we heavily head range, mid-single-digit the (XX:XX) pick double be of roughly that already. because it

So, to again your Hard what so. question was fuel growing XX-plus-percent first rapidly. grower, on a And that?

Puneet Souda

Yeah.

the ACD the on there are clinical in Just you how labs, and now? and right penetrated diagnostic

Charles R. Kummeth

So largely the RNA scope still product. it's of

a have terms is but Leica, with an deal Leica very HPV in still we improved mix. and assay small motivated Now and it's the of out-selling, with

margin think strong. it'll analyze it not as platform far how think. grows companion I a don't really diagnostic, remain very very forward, But current will much and business an hard XX% to – gross business, make we than overall. we right but It's be into don't margins now this Going the lower it's off,

Puneet Souda

Okay.

James T. Hippel

there overall gross still to margin over be hit help scale Yeah. operating business small add will I'd might that, the of just what the margin, that the time. expand

Charles R. Kummeth

Leica. hit biggest from paying just The be may

we'll goes. how that see So

Puneet Souda

Thanks, it. Very helpful. Okay. Got guys.

Operator

And with we'll Dan to go next Arias Citi.

Daniel Arias

rest this model you're just on increased seeing Can or Platforms some side? the easier you're line of then XQ you. Thank like momentum from a that for relative penetration academic finding a where half. on touch in the with perspective? pretty pharma you next the morning. I it segment, quarter you the incremental you it headway little and customer's looks comps the you're year in strong that additional our then, back the Is Protein Good get And if are Hi. quarter. making Chuck, is at to in look

number any guess XX% reason why sustainable I be So this wouldn't forward going growth year? a

Charles R. Kummeth

we Well, going it's very forward. sustainable think

grower, and comp Where so a quarter, doing this weakest So, small over Biopharma next Simple to really the this Milo, them. to grow good as to XXX%, as the out, well with starting and looking not growth XX% Nice elated finally, The And all platform, we're – anymore. coming XXX% than business. as Biologics pointed off starting starting take our it. it's from? It's Single-Cell is quarter be also XX% see very less with for be small broad-based, but on you base. year, still one area us to and is academia. a But so it's a Plex well

think And nice best probably with the our we quarter track Simple on we're there. a was a in I and surprise while consumable-driven. So had Western

using And consumables hand growth So back the to and doing means machines, simply go category we we because go over that, the don't Once are but people the overall so. are well. have you Simple platform you Western, methodology. really in XX% a low-double-digit and in the that that growth love

So, to reason no grower why your very shouldn't growing point, foreseeable platforms XX%-plus exciting that And well. be see four I for extremely see are future. we at the to all

Daniel Arias

Got you.

and concentration. are with more And the how Diagnostics visibility line work that's finding I Obviously business, that are you is the just maybe on expectations revenue in segment. mean, a you bit now? there just then about right down the And a given more predictable? feeling inventory Okay. lumpy

Charles R. Kummeth

Yeah.

Daniel Arias

margin on line, segment, And I guess, you pricing, then, profitability just about be et the should curious there, glucose cetera? on just how of that given of things the some going thinking

Charles R. Kummeth

right. All

virtually in for platforms for all there's division four – on this quarter they plan us. First are that on different and

we Now, some accounts. continued have lumpiness of some

big good was And that's Marcos Marcos with not I had quarter. couple We numbers it were they're and was a actually which strong call quarter we particularly have We was account it's before weren't just just on $X just one And – situation. the last see XX%. a of to It's strong and were pretty the how are million. year, Jim XX% San wondering plan. looking San almost They up over the usual just of we business, in segments. delayed.

So a for them tough growth. pretty to quarter XX% this going be it's against comp

So, explains that kind that. of

San see year better. we Marcos to more one we fiscal filling. The are this overall, starting a these So, see looking reasons the deliver year, assets last and was bought year. pipeline tough It definitely we better a –

adding OEM are Asia Europe more It's and division a taking start those into in in do subsidiaries. U.S.-centric there's now We been people Asia we both in Europe, and of and can actually model the and kind now the and have in of pipe we here of up couple and lot coming in Americas, than people coming more here a and weeks better filling do ever deals, over this Europe. there And go support for we'll year.

accounts this coming supporting it this year. about talked of this category back track. on And that we've So we're really business in big the growing kind of all about are Europe get kind

comment better So, mid-single we I year forward. see be, going the and it year. margin digit And growth and think I'm this to year on to Jim it profile it'll have a where where we then is expect last going than be

James T. Hippel

Yeah.

San lumpiest, that On piece pieces our component to, of so margin business Diagnostic our business. the but the business Marcos of four side, has referred being of our contribution Chuck the it margin highest that the major also

quarter, high you lower one, it. shipment some When And you great there's so, pull-through there's get a a that. when suffer from from

piece hence the business. the in follow that of of kind the of margins lumpiness lumpiness the So,

of end were the the throughout how is year, by the would general of I rest That's last margin out year. play out this all as of they So how those they in about think orders how much for the should quarter. move pretty

Daniel Arias

just quarter? in many weather Okay. bps How think you Super. this sneak one? do Jim, one cost can you I the last

James T. Hippel

I On mean, a I top it's hundred the thousand. line, think few

Charles R. Kummeth

$XXX,XXX.

James T. Hippel

Yeah. $XXX,XXX.

Daniel Arias

Okay.

Charles R. Kummeth

from question you a expecting guys. math the did We

James T. Hippel

rate don't $X.X and largely the million between we stuff other academic. Rico, Irma Puerto About fair about have so. largely run million, in academia. and so. Harvey all exposure like $X.X Rico We a And in told, bench, But of at the Puerto It's it's it's do. lost amount people

Daniel Arias

guys. Thanks, good. Very Right.

Operator

And we'll Bank. go Deutsche with to Dan Leonard next

Dan Leonard

you. Thank

first Japan, much on as and environment performance classify of that So, much would how as in the execution? you end-market classify how would you question better

Charles R. Kummeth

focused Great only question. not We've one. really results, for we've been in Japan And we're had a years dismal but couple now. the

it's roaring So, about, happy at having XX% broad-based. that back really we're and pretty come back

last to and all, of the help execution had struggling distributor much. master each the them years of distributors been model you working that's because lot have little many really works can rationalizing how there. the too network you there. of other down fighting we've First And hundreds And we a model, a our know sub-dealers, Japanese dealers, of in of couple

we have then us that's pay and appear to second, starting that finding that to being year is as as everyone done more – rationalization it's this Japan last kind we long in does So released finally, funding do now that And well its else. last of and it off. way

We have instrument great products.

extremely well XX-plus-percent Our in instrument helping there at this is the quarter. company whole Japan, business the doing bolster whole category,

continues of a as move think I our the execution and it's in market combination So we business that reagents and nice hope well now. But a there.

Dan Leonard

appreciate that your have talked seeing you're I can about better some for you trends in for the of in lumpy the bit there follow-up, the elaborate then peers of Okay. folks business know is trends to on my market. Chuck, your a size than the bio-production you've rather market? And seem been and

helpful. that elaboration on any So, would be

Charles R. Kummeth

we've about that. And talked Yeah.

somewhere could that it's $XX $XX think we and between million bio-production. Now consider we million

ramping the our for majority Biologics is area, product bio-production, the our that a new the far softness seeing of instruments behind us not reporting and that rates build we on. news is up But good later. ever, it's others I growth base. into our up. hot more an strong being go actually and accelerating installed We're we're in the that as picking of consumables area, Biologics the as Now we'll know as are Maybe

it's deal. in where areas good feel that us, for it's nichey in a medias pretty big, and So, us. that for not not too, just We're and the big

as of So we're kind steady goes. she

Dan Leonard

Okay. Thank you.

Operator

go Amanda Murphy William we'll next And to Blair. with

Amanda L. Murphy

morning. Good Hi.

had just a I So question.

M&A out a and at with. laid have Analyst without one You your one targets, incremental few Day

Charles R. Kummeth

Yeah.

Amanda L. Murphy

out, off think stands that could I that it laid part business the today. $XXX the build also you so, sort of And you included that as of million synergies

check go just some do your kind you number. of opportunity that of say feel for acquisitions you've done seeing And the you so where I back examples you you're So to synergies, and from just that give to ask to about wanted ability to far? can how

Charles R. Kummeth

Well, back getting again, working. I are think, the to Europe synergies

which We synergies. is days, outstanding for pretty these Europe, and it's have from growth low-teens coming in anyone

I points together of are and to it's X full growth it's The X, be working. us think working extra and cross-selling giving teams honest.

XX% is and to can you thesis acquisition. because $XXX to away next track, all Our it against have four years I in in the on now. four years, We here – ago year got tell though, a million I I will some think hope and, York go remarks we've made right New blow the of sometime we we assume in we'll

I number, our think we'll is be But million that. goal, hopefully, on we're is else, and our ahead of So, don't anything we $XXX track. if do

Amanda L. Murphy

jumped I in comments had late, Yeah. little I know know made wanted some about the I on but BioPharma U.S. to just you – And bit then, a

around? feels as curious a such there's there's expectations the Any company to upcoming is dichotomy was QX, particularly getting how and like are U.S. to pharma, forward, think better? within the I any going sometimes. even your If it sign to budget be about So and same if Europe going between Because that that what for that flush? business quarter, calendar in

was there. just I curious So

Charles R. Kummeth

we're Well, flush, budget for PPD. that our sure. could should probably well budget hope against Yeah. happen. division, pretty especially a flushing. for with dichotomy always last that instrument our with I any We up confused agree That get we hopefully. We do year, with quarter you going won't weakest on given

modest in – our have okay. well, Biotech positive this ago the last say, it's Biopharma. We where project years as have we can can trend and pharma, But seem ago. see improvement. was in comments we two weaker division, or strong always a have back down, hoping for then we On but but timing don't so I I'm to were your commented to we're better the only others this it about transcript one and on didn't probably to a finish, be a doing year we up And generally end-of-calendar-year year. due strength year actually put comments on a a we

so. proving it Hopefully, continues. are as numbers well, itself our think I

in morning more further there's this if press, and the so pharma be right? consolidation it'll an there's obviously, on Now, good flying U.S., in the issue far, rumors so But us. for

Amanda L. Murphy

Okay. Thanks very much.

Operator

And Baird. with we'll Stent Emily go to next

Emily G. Stent

Hey, my guys. Thanks question. taking for

your are where can give are commercial you you those head And of ACD Platform being and count out? to teams? for you close Protein how as built terms us in all, fully update of to First an

Charles R. Kummeth

built we're nowhere we're and near fully Well, up, ramping. Okay.

and So people hiring. bought company, so or we're it that on we XX every we week crossing depends we're now – were roughly when

around we so. have and smattering think exact a officially that team any team, just And in their with until end people and there, as the XX%, XX-ish starting of probably it's that roughly the XXX to But quarter-end have get probably out month And is don't Europe by with going calendar now real pretty range. XXX think, XX-ish a to entire were place team. of built to we're XX% moving I people. every I actually U.S. good led plans consider experienced year. we're that Asia we finish and on add here the a ago, It's we getting year issues see we commercial in of that We'll well in to milestone forward in in the and

and to is at Bio-Techne and to Having they're milestone I've probably one part They're also months have a for hopeful. So with been terms the sought we're in and wanting on the wait They're here while it. ready honest. jazzed, to (XX:XX) of of would advanced most want get say be their a be They demanding challenging pretty to pretty them to XX of to this T-shirts. they get it. I has actually been done time different in team pretty in we've embracing acquisitions excited. all XX terms have

Emily G. Stent

the last for channel And performed Thanks. one Perfect. how then, Fisher me. quarter? business Can in you talk the about

Charles R. Kummeth

I expected. question Another

actually did middle pretty extension. So an in the we're finalizing negotiations of it But well. for

To always have of as be those. teams they as now So honest, well in not better they it's have probably of the do right? just years. one along a So couple gotten then,

improving with numbers them. up again always I I last that The the they how There's had happened But quarter. against pretty and and at of think that good channel. the go our good this mentioned the friends. We are take more issue closely things core better working quarter, were of personal slop does more divisions more business leadership and on more of better that. we're We're and measuring as getting also together. the and

know, Jim you one there time. As and we at worked others, I and have

we reason So we're there's hopeful. And can't along. very no get

So and I here both soon. good extensions business. as we'll signed for terms us the have grow we think our fair it's of And

not academia value, and and our that here offices growth. are I to other the wrong channel pretty we'll good train really Should have mean, do. a So, again, an I there's a the in have there, business. what think partner. good focused paid then procurement we they technical But being commanding it's value on, for this spot with out ourselves. it states. force amount. a good I'm in people we they really in really do stop of ever They're they They're terms which take They don't they of interested They building U.S. on university take it with in nothing army an having at very exorbitant great

So, do also couldn't about so. no challenging for there's reason it to a it, them that to front. against Not but is now, worry we go

Emily G. Stent

Great. Okay.

Charles R. Kummeth

Yeah.

As the have had when this U.S. in over in you I U.S. started remember, zero XX the we company, we now in and people sales

we're that's cell getting our to out have stronger strategy is bio-production, getting in we're but supplementing, it's assay assay because we're business, multiplex in culture. core specialists a quite need and our our helping our for So stronger getting them We lot. just there And in portfolio not also because larger.

just And If without and where them, so. have a we of to they need so probably XXX have people, stuff, of bigger don't getting supplement we'd we areas we're go lot needed to along lot so. a

Emily G. Stent

much. Great. Thanks so

Operator

Hewitt next go Matt we'll Craig-Hallum. with to And

Matthew G. Hewitt

strong Good quarter. morning, the gentlemen. Congratulations on

Charles R. Kummeth

Matt. Thanks,

Matthew G. Hewitt

A couple of questions.

new Is little of group one contract? some extensive people. see of or are with First, that then that sales training following that that within you turnover you've up know guys guess, churn the to within ongoing. maybe their maybe there structure the performance through less way a the go to a to would needing And tie group. metrics I Fisher I the challenges that with about in Fisher the on were was past the talked negotiations you

Charles R. Kummeth

XX have since full and saw once a really a their we corrected than a we different turnover, our still years people place going that's we that, Matt. service a in that at virtually on Well, update in two that that do when memory, that years strength. and and and very found softening and And they're to two training, learning we things, to great high process ago, depend a now year They've more we numbers webinars was had months in on. they technical

And carefully. we very watch tie we something is this So do things together.

days. working So commitments and people et co-play there in are together field, have the have to we where cetera,

those there. XXX-plus out and things army order-taking we people, that are on kinds technical mostly more rely the But So as people walking the all not we've of out done there well. account-refresh on

large very a (XX:XX) issue. our we're that's So technical sale

Matthew G. Hewitt

follow-up then from Okay. me. And a

Asia Pacific, work? maybe some as you. improve strong a market a was through just get CFDA quarter. Or the see very to starting of we or Japan, up of obviously continue Thank is frees little maybe to that to beginning pent-up Any bit? as the a should some starting is that that their funding bit sense China, little as whether demand of that is accelerate

Charles R. Kummeth

China, has of immunoassay don't the It's one demand. better comps I just of behind to there's reason the Japan, some this pent-up us, us. demand, it's we're in getting scandal, getting that's that off in pent-up think because for sure start coming are be. so. I any comps this Baidu will think, area and number behind And

very think I demand just just there extensive returned the I and Hangzhou from amazing, China. demand cities, just it's in well I other as a trip strong big is as think simply so. amazing, continued in

Matthew G. Hewitt

you. Thank Great.

Operator

Tim next Wells with Evans And Fargo. to we'll go

Tim C. Evans

dichotomy factors this and to kind Europe? U.S. that's in between macro the curious might on just get come be the might that I'm to we causing back your can Chuck, when normalize? reflections what and pharma Thanks. of they bigger

Charles R. Kummeth

companies. if know they're don't I I mean Yeah. they're different –

comes the fact and down like are versus to largely you've Mercks Pfizers that got for it European here, stuff companies et the and there think cetera. that over I Bayer

Novartis think did do sites here. a GSK consolidation. got they've and see as and I you of well, lot consolidating

should of And we're So honest, industry. that I not that be a bigger large compared be. how the lot don't there much big players we're just dichotomy to know our to not in And in companies There's the of mid-size like that. U.S., the of we play And whereas lot to. Europe biotech. U.S., Europe lot in we're not in in really biotech that bio-tech a a in there's

think that's So biggest the probably I difference.

Tim C. Evans

Thanks that. Okay. for

Charles R. Kummeth

it More about probably biotech than is. where big pharma honest. That's be to

Operator

to go next Knight Janney we'll with And Paul Montgomery.

Paul Richard Knight

West? making I going Can it mean, Are Chuck. on grower we than you ProteinSimple? be mean, happen? talk is XX% that's growth XX% XX% a what's is the there? to Hi, products, to to what it more number reagent, I that going

Charles R. Kummeth

north had in that's Simple have Yeah. Single-Cell we major much we bought This growing Jim seven which the as platform XXX-plus-percent. the platforms think I and purchased, quarters over of Well, of because And or division in had, it's ProteinSimple, where best have there also said, which Western CyVek that quarter both than well growing we we've the growing over a and is XXX%. the business a two is while, ProteinSimple, we're the Simple Milo, accelerating. more But we've are eight was just which and XX% that Plex Biologics we the balanced XX%. PPD

but some remember, we've think quarter guys. we to quarter, there, lowest with these the things in think was it's mid-teens that's I Three accomplished. fix ago, up two you coming as had mission over years years this I and quarter a had

XX% I as But it should we mentioned expect doing XX%, to to be So, and better be what XX% forward. record, for execution. than looking why look to should try pretty on safe. If ask earlier, manage is less isn't I be things don't XX-ish. XX% But Paul, anything we'll do moving good,

team the is So solid.

that team and the the XM they're strong as is Got there divisions the he in turnover at you know, on places, pretty on any And PPD firmly like least. much, is We the great we our closely front. worked The overall working all have commercial we had and was a leader haven't other have years and company probably as now division places it. that and much leader network other behind leaders executives but operational We come as here are in happy. strong leaders, three for in of very didn't about I'm team Thermo it's from three Bio-Techne have and great that talk and with the us the with the that very past Commercially, in well. Biotech going division shape.

So in out selling we PPD pieces And of the just solutions, definitely Biotech have vials, are and support a so. we not reps they mentioned iron XX they're earlier, have I of helping lot reps there. and on. cross-selling going And as

Paul Richard Knight

of then, up? quarter as was up academia, the wrapped pacing the it picking And

Charles R. Kummeth

say that. year, as better. been for I'd wouldn't I trend a say, it's the

So it's inflection improving, any isn't there I but say. wouldn't

Paul Richard Knight

Okay. Thank you.

Charles R. Kummeth

and ones as we obviously, the improved well quarter, affecting not everyone it's see we're and funding numbers I NIH it about only showing and numbers. up funding, that, part of talking this and – NIH of quarter think a think to about starting talked and And is talking so. in that's last on continued lot we're mean, I it. we it's to It's see follow I our

Operator

speakers I'd turn our there remarks. this And closing other no time. back questions things to like for at to are

Charles R. Kummeth

Well, and a we great of the year. right. this the first four hope All quarter, it's

We'll talk today. quarter. call next the Bye. to for thanks you So,

Operator

conference. That conclude participation. Thank today's you We your thank for does you, everyone.

James T. Hippel	Bio-Techne Corp.
Charles R. Kummeth	Bio-Techne Corp.
Puneet Souda	Leerink Partners LLC
Daniel Arias	Citigroup Global Markets, Inc.
Dan Leonard	Deutsche Bank Securities, Inc.
Amanda L. Murphy	William Blair & Co. LLC
Emily G. Stent	Robert W. Baird & Co., Inc.
Matthew G. Hewitt	Craig-Hallum Capital Group LLC
Tim C. Evans	Wells Fargo Securities LLC
Paul Richard Knight	Janney Montgomery Scott LLC

Bio-Techne (TECH) 31 Oct 172018 Q1 Earnings call transcript