TECH - Earnings call transcript Q4 2022

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Operator

Good morning, and welcome to the Bio-Techne Earnings Conference Call for the Fourth Quarter of Fiscal Year 2022. 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.

During our Q&A session, please limit yourself to one question and a follow-up. I would now like to turn the call over to David Clair, Bio-Techne's Vice President, Investor Relations and Corporate Development. Please go ahead.

David Clair

you us. thank and morning, for joining Good

On Kummeth, Hippel, Chief with me Chief are Chuck this morning Executive Officer Bio-Techne. the of call Financial Officer; and Jim

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

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

issued in on we information I company's conferences. over look to upcoming non-GAAP connecting forward comparable turn the Separately, During Wells provide of Healthcare We used GAAP to to September. at performance. Chuck. Fargo, now will these to to are at these www.bio-techne.com. be presenting ongoing may the business the measures Stanley with at Bio-Techne available in Baird and Conferences Morgan will you call many be Corporation call, financial Tables release most morning measures press reconciling the earlier pertinent this measures the website

Chuck Kummeth

we billion exceeded had as XXXX tremendous quarter XX% fiscal for XX% our organic for milestone fourth full year. joining growth as conference important of China. for revenue were time since cap execution In in longer team year in finish Thank impact of X.X COVID-related to growth extremely face dynamic this Thanks, corporate Dave call. strong surpassed for the us in actually you an history. most XXXX joined we where I fiscal the and our for of good company the XXXX, the our faced first and quarter the the comp our $X shutdown delivered expected fiscal billion than the results organic the our I'm of a we everyone. These proud challenging in global environment. fourth in a the delivered has We morning, strong

quarter incredibly with tools consecutive quarter genomic markets. setting we ExoDx workflow XX% include proteomic, Some necessary instrument business, the tests. in as the and diagnostics our in to solutions spatial drive traction portfolio, fastest under diagnostic and growing biology to over penetrated the continued our double-digit of and and We well-positioned of for quarter. portfolio, delivered discoveries some life improve Ongoing gene cell record healthcare. the our prostate seventh science and continue ultimately growth another as our the In products well consecutive for remain deliver highlights biologics return therapy scientific in strength growth initiatives to

challenges. all navigating are we discuss with successfully let's environment inflationary dealing the briefly we Given these are how

with of maintain As biological higher material these have line input gross nature do a and where reminder, of is mix we to have but our more averages. Approximately approximately corporate modest consumables encouragingly given margins tend costs. XX% revenue in XX% costs instrumentation their still sales raw are our

lever to price pull strategically and portfolio this will our increases We going including continue implementing to to have been offset forward. costs, rising our exposure labor, throughout

to we of signs to of the talent market an appear individuals and made team corporate quarter. team some over attract quarters XXX Speaking over progress additions are of labor, and initiatives in we retain labor strengthen added is recent in our we members. technical encouragingly, net XXXX, were faced we headwinds commercial, across to human at have These fiscal the levels. we significant organization capital grown In XXXX the the the Bio-Techne as and in improving all subsiding. be seeing to headcount team

to going encouraged forward. initiatives we We as I'm execute recent our hire the on strategic continue with front. will growth very this progress And

year. the both growth the a the In in upper starting let's we exception Now and our revenue and strong with very global note performance the year. on in this of Europe, we specifics grew the finished for discuss end quarter experienced the quarter fiscal the our a North perspective, our American China, we markets. grew mid-teens fiscal teens of our because both quarter, geographies for and with From geographies robust across

For I'd team. the recognize relentless the to like China, first efforts of

all be of the our in academic look for China we of market work, June one Sales be in the return to the end the back as hub serves initial year. research in fiscal quarter, Once being June reagents our we our several These literally fiscal To nice to base ensure lasted to revenue geography. important to returning to for our digits in successfully revenue China a the based that the to mid-single permitted and The the strong were organic to longer to Chinese in both digits remain proteomic historical is we in reopening Shanghai forward trajectory and over for our bounce performance quarter. companies our this Overall, and and to begin in community as deemed the especially saw large dedicated to lockdowns Once in encouraging the and single a digits for again, the were tools cities. back distribution the increased COVID-related expected team upper low-single market quarter our petitioned critical growth market globally process business. XX% declined able biology started products facility. very biopharma These China end growing XXXX. spatial the strong allowed warehouse were country. Our our than products. customers, lived analytical supplying with base research we reagents, in

signs academic seeing in our U.S. continued of are market. improvement end We

spatial research outlays solutions. biology increased benefiting are clarity, As tools, budget research analytical on and our and reagents, NIH spending proteomic

starting with Now our fiscal we our by quarter, XX% the for discuss organically growth for let's segment the sciences grew where year. and protein XX% platform

we the and During advanced our quarter, initiatives. therapy cell gene

workflow continue media our the solutions development to technology deliver trials. As to solutions and clinical necessary reagents progress therapy and

turn derivatives into clinical get cells or to we type. these This induced they highlight in significant products the workflows. I'd activity, background, called emerging medicine Stem growth are is and their garnering application or like which therapy enabling to the repair response unique as be tissues. driving Before numbers, regenerative differentiate med, into regenerative leverages cells that in disease investment cell our any is stem medicine dysfunctional to technologies can trial in promote regen injured or of cell an

for tissue sparking value portfolio repair, cell increased muscle, including across treatment activity nerve and of therapy cells healing pancreatic, cure and stem example, products. our potential This is chronic instruments technologies use diabetes, as cells. diseases spinal cord For conditions injury, and chronic blood This and functionality heart, reagents, to products including a activity demand and wound found has BioPharma many spatial and robust media, others. assays,

meds biotechniques support our for matrix important includes cytokines, tailwind provides establishing an including cell influencing and med only also regen as that as and Our structural activities. regen acting is role XX organization XX adhesion, scaling products, these Disinterest from portfolio for proliferation, these cells proteins are available in are a by play key to in GMP that significant migration tissue differentiation.

and Our XXX% cell contributors therapy gene matrix in are to significant our quickly burgeoning portfolio products becoming increased of over and the quarter business.

to our for Specifically GMP manufacturing we protein our additional facility. GMP GMP state-of-the-art protein dedicated during the quarter, business transitioned proteins two

Following demand. capacity to and Overall, are now at our gene these current latest forecasted products, for XXXX. and five fiscal increased we this GMP facility over proteins portfolio of launches, new scale the therapy meet technologies manufacturing XX% and solutions necessary in cell

research XXXX. our Now our for road the as proteins of reputation teens let's discuss reagents broad again, execution targeted introductions, antibodies. quarter our and low product catalog and including fiscal and market marketing RUO the strategy for reagent research teens above mid brand portfolio growth performance increased our Once new of

compared year, increase for and way all size delivers speed immunology, increasing our targeted legacy growth the protein During high Maurice the a for Maurice This of its Separately, demand the were as quarter the above CDMO as platform teens speed Journal stages team analysis of to analytical delivered protein bioprocess comparability across control. therapy multi-company growth in proteomic year. the the where predecessor a for excellent showed oncology We published the to high-resolution and turbo, with customers. the biologics of This quality XX% lead the platform cartridge. and electro branded launch fiscal we including antibodies strengthening the and marks research CRO, XX% approximately dramatically this Maurice's cartridge and freezes reagent ICEX. study of systems instrument in enabling XXXX cartridges, protein R&D as quarter. immune consecutive of Once areas new small to development recently well molecules, continue our mid-teens of XXX% degradation. strong quarter Shifting full gene throughput tools our SDS again, we including growth see seventh improved higher therapeutics, to and purity the regulated and portfolio added fiscal new proteins, core

and companies to system. in our comparability the to prior Maurice transition legacy have offers as generation upgrading, help Multiple we launched this and increased compared background, ICEX system in As which portfolio. functionality Maurice anticipate XXXX we study Maurice the eventually between customers next biopharma these instrument will ease-of-use requested to and data ICE

is to Our to and speed Simple western number growing publications resonates Western the of citing continues when utilization ease-of-use manual simple Simple solutions data. and methods evident Western Western end looking as of biopharma and both with This awareness users. of gain the portfolio share, academic automated blot at reproducibility compared

first fighting as of end the continued XX% over and positioned of for an this technology, the Western our growing we of technology of increase were there XXXX. are growth cumulative We during a publications the Simple leading believe view acceptance forward. the publications As of calendar half XXXX for going representing indicator quarter,

and for in fiscal quarter, Our Simple for year. the Western the increased high-teens business the the in mid-teens

additions in release. development continued XXX and from for flex experience host as automated cell Ella [indiscernible] adoption cell strong characterization, proteins assay QC customers therapy aminoassay simple recent and We AV drive for platform to process our both perforin gene demand and a

gene we increased CGT selling anticipate XX% fact, expand fiscal accounts our the as customers and during leveraging by workflow In in number Ella menu additional interest that is offering. growing to their from year we continue over the therapy of relevant

our discovery, the the the of company we and Namocell, During with addition with antibody the markets addressed and gene and biology cell instruments single genomics, latest sorting currently consumables proprietary and high a leading and cell acquisition development, rare Namocell's instruments engineering, in several quarter, market. of dispensing family line therapy, cell growth synthetic to instruments isolation. including announced cell consumables cell two cell

we under Namocell's relatively July technology it this have to integration business talented progressing X, small umbrella. acquisition biotech is While is the We quickly, today, closed are on work initial growing and this and and excited nicely. team is

business this a the acid digits finished for the year low grew year. Lastly, kit amino and on double fiscal note business strong the our quarter as very both

In addition lab to or recognized developing to partner being of this assays partners designate increasingly demand run healthy as are Luminex for choice for we for our ELISA the test LDT. kits,

agreement of we panel experience Biosciences immunoassay combines bladder advanced quality cancer a to diagnostic over to reagents years experience panel. solution based create biotechniques Nanogens industry This nanogens, high and strategies. powerful Luminix manufacturer example, treatment multiplex XX of with recently bladder oncuria as an diagnostic the leading announced cancer For exclusive

Next, where fiscal grew the our in year. full X% by and discuss we revenue segments genomic let's quarter diagnostics XX% and for the organically

ACD from translational of year-over-year Spatial the to continues as biology academic Our quarter spatial and detection fortified fostered in the branded in largest impact research. as identification transition single enable shutdown. technology North growth double-digit a our an impact the market China business the the sensitive to highly comp and American remains resolution to improving challenging leadership the of spatial teams and quantification biology returned our with business biology commercial biomarker cell global capabilities discovery

species. milestone the During unique for achieved our biology facial scope RNA a market we situ significant portfolio XXX across hybridization in our leading over probes quarter, XX,XXX businesses in

announced Papilloma to Human in neck with also of leadership launch probe high-risk occupied use to III high CE-IVD of the cancer patients identification to to biosystems automated risk team with our territories expectations on forward business BOND for U.S. for for stainer Leica assay HPV, in and the We ISH sales RNAscope academic drive place use in market aid Virus head improve. the the HPV our this continue

growth biology spatial our in in improvement steady rates the expecting are We coming quarters.

Moving our molecular to diagnostics on division.

former in ambassador a Baltimore prerequisite ExoDx or the significant held a as with prostate increasing quarter. request start turn, Association Separately, follow diagnostics presentation Cal including drove which tests PSA May, Jr, from Let's “Iron Contractor, National six to local up Zone in initial the Lewis ExoDx for traffic, which in in a was improving to for journey. conference initiatives The our forum of marketing or delivered for Urological of tests, ongoing office Administrative for test, The a LCD. was ExoDX who benefit is traditional Medicare had reconsideration and testing American known volumes and the player X our in quarter presentations. public prostate meeting a EPI AUA decision testing environment record diagnostic Ripken, a a growth, as XX% This a strong part physician great Government well the continued office Services also progress combined physician visits, including for team prostate as year-over-year digital the or our Man, cancer row. of our business broke prostate test which presence an posters, EPI our improving test. Cal Orioles remains second following volume Exosome the volume advocate drove highlight This our [indiscernible] with as quarterly Scientific diagnostics a coverage almost with also at partnership two levels

guidelines. Cancer align we reminder, or existing NCCN made to Comprehensive a National significant the a As Network progress have getting LCD with

genetic drove tool. are Asuragen growth remain, our reconsidered remove Although as the differences the forward traction for portfolio We initial of encouraged limitations kits, Continuing its to the if LCD. had these a patients our following most for a as great and test prostate the final key of as for the the enabling biopsy. meeting, looking who controls LCD a does reimburse of issuance repeat ExoDX not prostate Europe opening demand quarter. surveillance importantly well over current screening test ExoDX usage the or prostate diagnostic electro or If would as in use LCD a of negative successful, had few electrodiagnostic, XX% quarter in of carrier previously

In addition geographic the business Asuragen continued product pipeline for ongoing positioned forward. to rich a expansion, the has going growth

share which in The patients reagents, for set gains the continues trends return office trend clinical probably business and a is tests, forward. our of Finally, going doctor's leadership morning clinical and growth pipeline additional in for saw partners our office is and diagnostics the steady reagents business issued coming for diagnostic stage to plan full press Most reagents demand the growth hematology years. for release our within driving our the this of quarter. the visit controls opportunities demand announcing sparking chemistry two sustainable OEM improving transmission you in patient a

to a continue member of Following and intend Board CEO XXXX, Directors. the Bio-Techne, conclusion serve to the to of is our the of retire I fiscal of plan as

Board built I incredibly replacements. an potential that talented leaders have the internal of results as strong tenure, could and bench driven serve my During

when has and already of Over for science the leading Bio-Techne my strategic And candidates sector same well. that profile the two search organic to leadership XXXX have product external company. With replacement and diagnostics a and will Jim. leading begun plan One The you has a caliber timeframe accelerating to attract in life execute of share. the Bio-Techne during there potential profitability high next we directly diagnostics news no the will call hottest board's to at into extremely over grown as update doubt that, and is growth I portfolio, our research with tools in beyond. I'll positioned a a certain, years continue our pass now to team is thing aimed over under scientific areas some strong is

Jim Hippel

year some the fiscal our total overall $X.XX I financial performance overview adjusted on QX you, for X% the will thoughts was with year. some performance and the financial performance and fourth details of increase versus one of Chuck. company year ahead. segments Thank give on our the an provide XXXX then ago, EPS each over provide fiscal $X.XX Starting quarter of additional last of

adjusted in impacted EPS quarter. for to prior the GAAP minus year. The negatively quarter compared in EPS $X.XX exchange the basis GAAP the the was EPS $X.XX of Foreign XX% increase on our by or for year-over-year driver X% year. $X.XX in unrealized XXX.X reported in million was on QX biggest losses an investments a ChemoCentryx revenue basis. organic an was in the on prior and XX% increase

revenue Foreign to exchange growth. had X% impact unfavorable of translation an

of revenue a and XXXX increase XX% For on basis. fiscal year the X.X was basis an an on reported organic full billion, XX%

exchange stable had acquisitions and X% an impact a of translation Foreign unfavorable had of X%. impact

gross favorable the Moving the to on was Adjusted by year, the prior in decrease in increase increase QX details basis The XXX the in compared of due prior to the in was the SG&A forward, for offset we and quarter SG&A gains partially revenue, mix was XX.X% growth XX.X% a commercial operating XX.X%, by of was year. prior going building in The made a from resulting business adjusted and in period. position exchange. progress year to the XX.X% for was to The points company to impact compared team while adjusted X% R&D margin P&L, technical company total foreign talent. the X.X% the of in including primarily to compared of productivity QX quarter was adding the driven margin prior QX XX.X% expense year. of in revenue

prior the Excluding year. exchange, of foreign was in the with approximately margin line impact operating adjusted

XX, decrease XX margin For of XX.X%, points year basis year-over-year. full a the operating adjusted was fiscal year

X.X to million, operating our interest continued The million was below expense bank in decrease prior debt. year was the X.X a of numbers decreasing net compared due to at period. QX reduction our income, Looking

'XX. at end After of quarter exchange an in together approximately debt recently add the the expense to completed non-operating fiscal primarily of the for to approximately foreign XXX first income in million pooling with bank floating related year, our for in quarter expected sheet cash of to stood prior the quarterly million was credit of X.X million. which, expense quarter the balance arrangement. XXX.X adjusted million acquisition we the the is our QX year to Our down in the interest interest million draw MSL line existing in impact compared as X.X X.X did higher reflecting rate Other our

For GAAP from reporting, investment ChemoCentryx. other non-operating unrealized our losses income includes in

further was the year and down Moving the tax P&L, adjusted QX XX.X%. rate for our effective fiscal full in

Turning in return million and million. XXX.X investment was was our We way XX.X during in capital by flow million to average finished in the dividends. outstanding. quarter, and million in operations of XX.X XX.X Also stock diluted with capital of capital, of we buybacks cash the expenditures shareholders QX, from quarter cash and million generated net to returned shares XX.X

finished with position debt year. position sale short-term a investments, very our the fiscal sheet million at net in cash keeping QX XXX negligible strong in balance and for available end Our the of

Next I'll the XX%, growth XX%. with revenue reporting Organic starting segment performance X%. segment. with having sales exchange sciences XXX segment QX with of the impact million, our was foreign reported unfavorable for were reported an of discuss the protein increasing

broad instrument assay the platforms. and and the reagent all based growth was very Within nearly segment

gene cell XX%. solutions and increased workflow therapy Our portfolio of over

teens. a the XX.X%, the increased in and Operating is consumables volume of XXX partially impact to exchange excluding than margin productivity in protein sciences favorable support of branded the the reagents for by the And segment growth. gains and offset instruments basis future our of proteomics simple leverage year-over-year decrease research Our owned impact more with RUO strategic points upper protein investments subsidiaries consolidated and low-teen. grew foreign

growth were Turning X% as foreign the digits was segment, to to sales the biology single unfavorable branded genomics Within revenue increased segment, and Organic and with an exchange diagnostics impact. the spatial for XX.X growth X% ACD the diagnostics double-digit increasing the this in portfolio returned reported quarter. low reported QX business reagents million having X%. segment

anticipate we With the fortified rates our in biology spatial going business in improved leadership growth commercial team forward.

second as diagnostics XX% Exosome record. XX% almost quarterly period, test revenue test cancer For increased prior volume counts representing year prostate to increased consecutive compared the the

and We and are continued proposition value volume and encouraged marketing anticipate with patients resonates as our strategy improvement payers. the physicians, with trend

to operating mix impact The Moving basis the compared at XXX the core margin CAGR businesses on 'XX year margin favorable and future than remained a our lesser decrease foreign past of across growth product the decreased in prior organic more has a by investments XX.X%, growth. operating of drive years. and to exchange offset company's the teens segment’s strong, baseline, summary, year. as the consistently in to diagnostics leverage volume In to extent pre revenue genomics been using COVID the momentum points of the fiscal the impact reflects segment the couple and low

biopharma end very still our As the market strong. fourth quarter is demonstrated,

We raise are of difficult portion funding. to keeping a conditions close watch this on the market current the smaller given new end biotech capital

least with in a However, kits the the many fiscal the we have expect to enable improving diagnostic 'XX academic our that fiscal with market tests rapid growth. franchise, end same RNA we at we organic a in year to Add products quiver to CAGRs gold we the as surge from double-digit seeing academic will commercial now 'XX. us fiscal and arrows spatial believe team our growth in are to penetrate and epi standard we 'XX, year biopharma markets further rate double-digit growth the and staffed this, our see and biology achieve with fully in scope year our compared

Of currently expect X% our fiscal where foreign stand, course, for to growth rates a year they exchange we reported exchange 'XX. headwind with foreign

of margin as as contribution the we anticipated a more By by become negative a year on operating will offset our foreign year margin closed reach of the much the for and recently QX basis should year less impact headwind by progresses. Namocell full X% gradually in 'XX adjusted impact will time Both negative year-over-year likely acquisition as and on this be rates However, exchange have of fiscal XXX we acquisition. the and partially The be severe fiscal margin headwinds entering thus of right expect our and year year the prepared year concludes of fiscal approximately 'XX, the track year-over-year to call quarter fiscal basis the And to finished offset XX% expansion, of turn fourth core XXX margin questions. That on we line end 'XX, 'XX. 'XX points operating these with margin fiscal my that, year improvement comments. back target achieve operator for our with adjusted open the by I'll to the points. over Namocell,

Operator

[Operator SVB Thank Instructions] question from comes you. first proceed. Please Securities. Our Souda Puneet with

Puneet Souda

Thanks, Hi. the Yes. for question. Jim, Chuck. thanks taking

congrats despite first solid print challenges. here, So of all, on a China the

So done maybe mid-teens it's you've which in phenomenal billion growth, all, say profile first in or is fair and portfolio the I think it's and Chuck margin. operating $X.X given that transformation to job that XX% is in reflecting a of the transition, mean, a I top-line off

industry. So that's, life the see tools I across great science mean, just to

and talk retiring, you but sort just So billion walk organization us what I went maybe mean, $X this us through, 'XX. FY target decision wish of to I by today. you overall want to maybe a have into I of mean, the about

cell into gene more therapy. pivoting You're and

So 'XX? are organization what overall you excited thinking potentially, happen to in But to by order target deliver how there's FY lot to about the about. be needs a that

Chuck Kummeth

for coming sure. the start so doing, growth, the we'll And keep giving it's a year. year for guidance they doing here we our XX% of hell be a we're think, double-digit usual, mild had what I with range man,

billion cycle sure, with [indiscernible], we're of and here, going the we XX% need domain therapy been over know, extremely the into year, we team it. to all picked be I've right, that areas As confident getting our X last who there XXXX, end years we've last doing that. the hot The at in been be gene and up the for in we're to to hit has we're particular. by more of you XX And of is, ever strong cell almost retirement building guys knowledge a the

is bench the set. So

younger XX Jim here, Jim's me. years course, is Of than

look with well. go to here talked their and glide runway the solid long a as two-year a here. They've candidates board internally, got doing And that. some as already fiduciary they'll will as So, about we're duty, well path do externally

the close till time, to going anyway. hopefully intend and I nothing there's our Board the from to on out overnight by be then I'm we'll So here. be forward of X billion And

it'll when I'm has person thinking worried the from when replacing a I XXX% tenure, from take doing me, person can it about be more to or started me so Xx kind runway then half that So and my have we growth billion I'm replacing that about of one tools more billion stronger and in share markets see science in we're the in we're the going to serve, forward fantastic billion between low so. and problem and X.X as, the a we in XX company this pawns we even life diagnostic all no and making market leader an

Puneet Souda

rate ratio update what for us check of you talk of to great. that was timeline acquisition. also that, target your just on sort the you does can business with about and you run sort M&A there. have a the how sort potential then we your look and wanted targets nearing Jim prospects with maybe that valuations? both just or And That's given position of Wilson for leverage of And Maybe that once leverage closed? ratio -- the think at any how you, should out cash there, as change the deal And current

Chuck Kummeth

cash debt position been never for a level. our in stronger for we've and Well,

that to here, So But XX%. end takes of we the before expect calendar consummate the our we're definitely fully the deal first year of tranche hunting.

option them. gave the that less upfront million, $XXX for we So

for about going little or strong but growth is going $XXX forward, it. already for world And So look can year excellent we're Jim to peers I've but million track, pretty be more before, here. on our facto so the M&A. Namocell a spot a It's standard, that. do customers, our across great off the to steady, and we as to talk they're have then to de this XXX XXX in you sitting mentioned taken cash an because at is also nothing And leverage certainly And going well. is get we're impeding

Jim Hippel

I'll still XX. will going the with before, the meantime, add, be is the net We're we we've and did or I three just MSL by will And operating a for do, cash to Puneet, we pretty North end not we've an issue. in hear the the -- turn. as an setting one flow assuming year, of zero, much June some be Yes, said time up And powder so of less issue. we're comfortable powder the very as right acquisition. not at the we'll deals, debt probably just got of mean, calendar end of We to up regenerate

Operator

next from Stephens. proceed. comes with Our Please question Johnson Jacob

Jacob Johnson

Hey, you've Chuck thanks. that over last all you're for another accomplished and stuck think quarters. Good the and congrats the of announcement years seven on with retirement on still couple us morning I

On be portfolio, end doesn’t some continue of kind strong, about of thoughts your about, a financing, to of eye that any mentioned Jim key just slowdown keeping you talk we was like you biopharma maybe the talk you just market, how then segments. but as just view signs an see Sunday. sound guys from And we sluggish, think are your there? And can any about impacting market activity on the This in you biopharma end are see it. if

Chuck Kummeth

soft around better that, growth we near of and July year are are north finished kind forward, the lot quarter in teens. finished haven't it's We quarter sure. we've us gets is keeps high in that any year-on-year. for of U.S. for we single much because to I for too But markets. as from biopharma again, answer looking our and U.S. degradation very July. -- of than and it mentioned, as past, a taking of in academia XX% the of first think where is growth and and the the anyway, We the different now in kind a do strong Europe everyone, Yes, hard in looking digit trickling, for the seen tired traveling our and kind this time. it's people off

of so markets are biopharma, still peers and I some and a usually July we'll time are but see the mean, asking like make things the year seeing this of is year. see going fine this make it’s more But time so. them most So one same about anyway, now, I right softest What We'll hard like some seen too our see. that. But think about in continuing the we areas, kinds concerned And strong not to doing of I especially for you've the it's we like of August. statement that of kind things know pay momentum our really think statements. yet. Anyhow we're of of we're biotech. you see we'll in specifically exosome, or about that, the are into there, month

Jim Hippel

the I thing low adds mind add would that Jacob business our only there, The reagents dollar instrumentation is is, productivity. relatively and in that keeping core

that first kind instrumentation. there to the they're is if any in items going high our and low capital So of add slowdown long cost expenditure still continue we'll our usually it's their reagents see as they need and biotech, at value as experiments, do in

us. for lower risk I think is the So

Chuck Kummeth

Yes.

Operator

Our next proceed. question Stifel. Arias Please from comes with Dan

Dan Arias

you guys. questions. may double-digit CAGR Analyst outlined morning, return around XX. long-term on Thanks have of right for at The that Chuck is XX% Good the the to mid Good at ACD. Day be you there. growth I growth the a year. see for

that relatedly, for Have complete into necessary how that trajectory for think hiring fiscal as how highlighted able business? you've this point? there? you And of So the XX growth been at fits do the to Jim, that portfolio, you then much

Chuck Kummeth

hiring. not Yes. last both because I change can cover much in from it's quarter

more. year to lost ago, salespeople, a we're sale. for of North full And year, of that's we XX done our back will like giving also of to we quarters, leadership the recovered people is a we're strength, in is on drift lot front, only literally there. leadership couple things and return were the months, equity And had promised helped It's and the and hiring we fantastic. technical very for we the lot. six sales soft I which going to from. because away a here. make at changes. other past, We've a new been initiatives, mentioned XX we're the in This I've like a back which on So we're teens There's a of

we in domain in area knowledge. the very this strong So these very, field are their in people have

quarter at So it's for replacement and we've not an themselves. now results full a situation. been there overnight But strength showing are

a U.S. Europe, too. behind is cycle. That's little the business there longer same Europe to service I'd is sales say And So a this in component thing a

we're get And busy to which in track trying so as well, that strong back on we're seeing improvement.

think translational, much there. out, we our of we've discovery discoveries, And a lot pathology. billion having we And model. we're thesis translational, this to well. new I our Remember, in And as haven't is think crack still got on got like platform is we're coming. future, from the automation done coming products to there's XX%, pathology this $X are we So we

kind a guns should So XXX to million is behind of saying north our hit it we business, here of million XX%. and is be this $XXX stand

pretty continues platform. largest we to now. out So right the there spatial were be. is bullish It It business on this

out trying the we understand add and we're but you there to addressing target where don’t that if be I So louder that are. the to want Jim. more, we we're get more about leader any know and be

Jim Hippel

No.

well it’s think, I said.

Operator

next with Schulte comes Baird. Catherine from proceed. Our Please question

Catherine Schulte

for hoping Hi, could China. [indiscernible] And a glad little echo a in you. comments longer bit you but get on with guys. earlier Thanks more give you're about the Was I little the we what color seeing questions. will

I saw lockdowns, bench. customers think to the after returned COVID you initial stocking the some once

happen first quarter? to that So expecting is something your fiscal in you're

Chuck Kummeth

we it last year came that And record a back. we weak surprised And super how is that quarter, and of kind of all XX. year, redoing restocking industry the COVID, amazing had the all fast off occurred, this Coming and had north we're in everyone still surge China the experiments.

this looking though is we're growth the $XXX base. For we in of still engine, forward, a north XX% million even see now year,

are some October. here. all it coming the on. back stocking here academic in I are back of after be elections there'll of turning think until the lot a There woods not I we're institutions think don't on online that out

an we're months quarter course, are lift We snap a impact. we soft is concerns can't And a coming pretty going have down back there, well. continual near be. And out of warehouse to back still be knew not in yet, for be all there's China. shut three would So just our It very and The And for bullish, flat. was us. Shanghai. any of in we -- two was it's see don't

So that affected all of China for us.

And so as think I the our that's rest news long the we open of for serve country. as good keep China for how rest warehouse of the here, we

build will we our way So back.

year. very hook bullish it. And very this another for for plan they're strong the off on coming Letting

Catherine Schulte

those over Great. could little growth what acquisition, do I expect hoping few next was more we there the And the margins the talk a how years? rates you Namocell to trend and about are and

Chuck Kummeth

of for been This they in kind had a market. We've until we team are laser four their to fantastic the years Yes. really waiting talking asset. is this system a two

for well. a it's of picks it that if are, a a can really about as digit it lot you are selling therapy, have hotcakes. a slow a really They And cell are best-in-class they I number, cytometry away of lot going about kind is it's in at already the center And cell know, markets, cell drawing solution And sorting, that Now gene counts and affect they and not you ideas of talk three number. as market significant. at just different board as but like well. rates, applications. dead it's in growth this which a good mean, definitely isolation instrument

smart So off in and China. IP, good running it’s people, a already fantastic team,

and is As ongoing we've for fantastic, And a again, retention matter been fact, integration friendlies is years. started. of

a thesis, think based we science terms kind on so into kind our And running IP. application of I kind So ground of fits in came strong of the this the just of we've and been up. to integration. on It's strong see have hit us this it for be thrilled we're and been that coming you'll waiting, and team years. pick we a platform we major get to and excited that And the in investments board, have this it’s

Operator

[Operator Group. Instructions] from Our Alex Please next with Nowak proceed. Capital Craig-Hallum question comes

Alex Nowak

just full overall range maybe the strength, the session. science back hoping morning, in Good maybe of growth high everyone. not speak Q&A a of Great. year, projects. to coming expectations you kind got new but got about in more a recovering, cell for the it's fiscal I'm growth And online, the therapy gene talked China this We life as couple still could business. to crosscurrents. funding we we We questionable got environment then the

year, the throughout So growth throughout just this how this cadence you thinking about year?

Chuck Kummeth

Yes.

keep still out QX, China's with you as I go posted range. fully on, we a really softer get player little year range to business, don't to we'll mid-teens we But being that situations better. up forward going have out tests. we'll we little you better This percent and little now, up, a was tough and slowing, we in a get continue. We we're aggressive and turns for is XX% counteracting know, there, not strong, a start other it’s of over is quarterly. they give XX-ish double-digit that us light expect quarter organic possible But still like and things And was little in other about this aren't to do mentioned, we Comps, something you our softer So then as these real you year QX, is a XX But and like forward. like do the did. an asking are as coming and see. plan is guidance, which Alex, it kind year, lighting a last as very we just we better. least a to in But us the [ph] more we XXXX test guys in exo. of for think tremendous we'll this don't with XX% that comps that growth, growth [exo] much probably mean, But

all their quarter. We coming here time going soon pretty as it. are methodology killing the going It's an to to We've got to the reconsideration this have past there for for it's TAM accrual We're occurred time just that not really if reoccurrence. a going taken double and that us. in it's that And is XX,XXX be waiting to well, off. tests the us are allow out

And that groove. in of the about is upside it's $XXX back We the in Spatial in range. already million so And lot spatial. business just a there. talked there's

strong, So not we're more it's ahead see to do. growth never bullish long it biopharma, point, rates, as And is, going it's XX% is at our kind us we year core this but stays of we amazing get proteomics double-digit and mid-teens material. and of still an than as where

Alex Nowak

helpful. That's Namocell. to then Okay. Understood. going And back

I was think in clearly here, lacking in just Techne system. hindsight cell separation

other and now What I and think cell tools the gene therapy useful rest into for with outlined and you too. space, of portfolio? the critical tuck as could for that's other just to you bag of there gene the areas, combine what be therapy, But survey kind as the other cell out and products

Chuck Kummeth

freezes tier there process guess, pretty areas analysis and that'll call Wilson capitalize Wolf things may yet. to cryopreservation certainly all may we into sense. that we'll we're the going QC workflow. care in to which then need. might with we'll of as the ready say right we're of Wolf, Wilson And us got platform. complete [indiscernible] to thing either this, grow to they're, this much which now coming we there to done our that getting I JV. market, naturally we're we Obviously, to is make I be But closed be a doing our acquire every a are I proteins. upstream There's a bio ready darn it’s creates really they've They've we one. for and really starting being getting think now is scale they've think not is well there to traction doesn't will now, this our Q, fantastic complete. tools stronger as bulk wouldn't type out take them on we're stuff left partner. with bags probably that work and it's bioreactor And counting we place for strong going more a as we some with for cell and And the right. trend area. year. that system and side instrumentation, that haven't obviously as have needs, more or of instrument itself, a direction, of I an while, the do have But out as Well, all first the different. not right one factor close come XX a been where with need lot as the be ready there would right the say be it There under been in the then and processing market the if that only like but out make really There something into [indiscernible] have the long-term, than And scale on explore limiting and And proteins customers,

Operator

Citi. Donnelly next Please comes proceed. with Patrick from question Our

Patrick Donnelly

Hey, guys, for for guidance. Jim, you thanks maybe taking one questions. on the the

margin, some the the just should exos ramp both Can And the levers, side, the stuff, on how talking side. of accrual supply inflation, the just talk of bps chain XQ. mentioned key Chuck Just about rate you between we then about the about directions expansion kind that year. throughout pricing, exit think in of XXX

maybe So moving we there think and should XX. about pieces talk about how throughout just margins the

Chuck Kummeth

Sure.

up key our year, mentioned investments a last back carryover his the you regards in And when the in successful acquisition. half points we comments, part year XXX expansion were roughly opening had if first particularly basis XXX early mentioned, have in holding getting XXX in the basis the a half it’s they look on where to entirely exit going of contraction that would with the than year year, half suggest we of of as, Chuck people. and Namocell are going that headwinds the quarter to behind FX have to declined, the very impact, of almost severe we're first and that as by in in to basis they So we're FX worse our the the way with year, staff And points of will because QX in more points year. of as well for driven and kind the full the are the back year,

half then expect impact of of the improves back to that as be the So where back to the our to we expansion carryover get throughout before productivity a operational will FX that year. more addition But severe exit year, in of the we helps. combination that's Hopefully getting fully in year. the staffed,

Patrick Donnelly

maybe think on way kind announcement any, the the the two allocation deals any do to of on guys helpful. And about you're That's set? wouldn't or a allocation years, two capital the given congrats of capital just there of is then, what's in strategy, kind between the and this leaving, one because on morning period Chuck, kind reason you this In quick Yes. next years. the

Chuck Kummeth

And good now. But in shopping. there thinking the Not going of kind mentioned to of to our mean have the as going be always we well north we'll summer We're I have over the mean, We to years, XXX-ish. I middle year is we're of is happens. earlier, hard. out this contrary, probably out for right a powder hunting quite the strong. is be EBITDA, work we're two cashflow two see what years going with, pretty Jim to XXX, And are. And plenty

million But guess, for any a angles tuck-in can't all they looking pops, So -- open and pick be IPO we're stuff year up now looking we're mom around to And and may to I so we're lot and bigger good ideas, too. I think thinking of this two that we're we're of all a those and science life are deals. revenue, XX all a sciences. our kind This stronger divisions that always We're connected, a shareholders across I've synergistically will right? at a divisions anything makes that company being company. across these makes in sense for and XX-division and company, be segments. five said the once $X

more no we've dividend Don't see our or thinking bullish about, thesis capital major It's first. at is we buybacks been about increases. M&A and us So look change as primarily M&A. allocation never and our in

Operator

comes next from KeyBanc. Our question Paul proceed. Please with Knight

Paul Knight

one ProteinSimple sounds are forward be fabulous that's while, back the a the change, business Congratulations that and on Chuck. in it Hi, for like instrumental and the looking was it'll did you of so on you what earlier on it you. The share runway looking getting they back and your thoughts of today part of very kind transforming ahead that of particular on and ProteinSimple obviously growing that in acquisitions market. have terms

Chuck Kummeth

Yes, a have lot, and platforms, did $XX $XXX business, than making we And then I output. brand which within XXXX, an not IP, a the talked other And seven XX% But great the it's we today, years that a it And everything was it runway money. snatched they the margins. it's a to think, all million it's mean, can back we now. things the of sure. IPO deal eve instrument year six, Ella over going it. we we facilities, completing from as can was business million a new XXX(k) we're three platform, pretty quickly got an add back platform, triple Well, we it's and we've business have across manufacturer on more the of process, major making about,

well lots protein over in share is five taking And keep years, as way diagnostics testing, of platform it's a as us. of I a than ever discovery be we surprising is mean, more in behind just of seven XX% an capsid amazing than with row the it. as HPLC in quarters thought. care that'll runway, be has this growth. So well, sleeper much purity, biologics that'll crazy And in thing got which growth. point ahead still Western pretty But more now, it

be have positions it'd I unit. will board and leave can't thinking that be out no sure other million in And on this two to look it's the going it there's So, And be and of it'll to to was about it I years, I why valuable. move XXX-ish, I'm at obviously, really time unit business kind over stuff here, and to or instruments now, reason right other a someday. so. the fun platform If add billion-dollar dollar

it. paid think I we So for XXX million

an there. the We which been of amazing last is flow and Fed setback the bottoms cetera, range. first, value over guess, you done, positive, than don't But we're X X.X billion-ish a roughly chunk seeing the creation finally, an overall in billion and to cetera, we But better our as here, that we're very in -- XX. years, we're ours. a were XX quality think probably conviction I find et there'll to is be today, return, with all I've I biggest see it's little there quality et asset because the market the been So

Paul Knight

Or Yes. DX And like would what sector? you acquirer be Chuck, my in the assets thoughts an be diagnostics, diagnostic question, to seems of getting are future? that last on would on the your traction, exosome be

Chuck Kummeth

Yes.

with there. going about came and other pick it's after we'll wonderful. areas. us helped as merging we're not going what been a from to the they want company flow. we say focused that's never the Asuragen going sense, professionals up, really curing the Right returns, unit want because As over and experience, And has we have we've our there's team, competition, do, of of that The worth been on, to low-end lighting you related It won't an never. that heavy to don't is there a to in in it's these we'll lots opportunity we're experience And new where difficult to we lit expertise, of that's And where but and kind closely infectious usually up, don't really the -- in they're difficult say something very, bold a solid statements are those amazing, see, Asuragen But they've realms, means be be, good I'm cancer want on for neuroscience, business just science, a of and immensely. it accelerating. we barriers this it's the And as to with be want no of assay and lots leverage here. across research things diseases to team tumor that don't diagnostics Exosome. This which fit XX or was put oncology, in oncology, recall, years’ entry. of hard And very on need growth assets, well in in we focused division charge in now probably right board. to of to money diagnostics our up be make in diagnostics. no We areas decade if idea in

we're say once see focused out on But for so of you remarks. Please presentation guys a more. be making to horse one that ride is Mr. with I've company, and at major our few the we're see going time. told This things years. this are dollars look a in the we XX we'll a that you it happens. to major, what company. than more Kummeth, continue or here still further should And then platform your five billion while closing And questions can there or for no

Chuck Kummeth

While us coming we're quarter to great Anyway, give it and a we great year, on for you questions this for was and and a end the even better thanks an best hope one hour. the the ever to year.

So talk to you soon. Thank you.

Operator

disconnect you today. your That We line. great everyone. does conclude ask that thank day your call Have you and a for the participation conference please for

Bio-Techne (TECH) 7 Aug 222022 Q4 Earnings call transcript