Earnings call transcript Q4 2023

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Operator

Good morning, and welcome to the Bio-Techne Earnings Conference Call for the Fourth Quarter of Fiscal Year 2023. At this time all participants have been placed in 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.

David Clair

Good morning and thank you for joining us.

and me Jim are Kim Hippel, and Segment with Chief Kummeth, Kelderman, call Sciences Genomics Officer; Protein Executive Chief President; the this Chuck morning Bio-Techne's Diagnostic Segment On President. Geist, Will Financial Officer;

our let cover harbor statement. Before we briefly safe begin, me

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

the and at Investor of We Separately, in many City at ongoing August business events. and X look measures During issued Stanley morning the Bio-Techne Morgan to most reconciling press measures with these available Day we also upcoming the information Tables forward comparable connecting website company's on you may to UBS, to provide this in call, hosting Corporation September. release will be in be an measures in conferences performance. participating www.bio-techne.com. pertinent are September used to earlier financial GAAP the on New York these Baird non-GAAP and

call the turn over will I Chuck. to now

Chuck Kummeth

refer to fiscal call. environment. as finished transitory we our and fiscal Thank growth nearing as capped for year. this year X% you quarter expected our majority faced past growth the we organic proud that hangover for fourth morning, a face fiscal good quarter headwinds, joining for and in ability of full largely the delivered everyone. transitory COVID us we Dave, navigated a of extremely the we where fourth to XXXX growth with which successfully XXXX for We the I'm conference this macroeconomic team's deliver of the Thanks,

platforms headwinds induced from was demonstrated a China. OEM spatial QX our the funding macroeconomic endurance our portfolio, subset double-digit cell and ProteinSimple customers biology and exosome Despite instrument and yet gene biopsy ACD destocking environment, a platform, again solutions, key in workflow of in growth growth inventory challenges these in therapy post-COVID our branded These biotech included challenges, liquid platform. softer of and our

a both appear may by the America, overview get mid-single quarter starting let's end underwhelming. into grew digits market. our an the details bit, of with performance fiscal year. and North the Now geography for and we In This

QX, finishing both in strong incredibly Europe was year was the growth single This year growth that end high the the last with a low from of mid-teens in digits. great and XXXX. also had top to growth fiscal end year this faced keep XX% full that growth. quarter in can you biopharma America XX% that America comp, However, grew the the year as for lower driven year. that was our from With and kind fire greatest imagine, on quarter with with comp the a fiscal markets by full in for year double-digit over in mind North North on headwind biotech XXXX funding with over QX of

annual in will Now China once QX our back quarter from recall COVID during April-May faced has it back region New China through throughout roaring Year. is funding for when our everyone's volatility timeframe. during call, we we during first Chinese the come the COVID That programs strength that half of does minds hangover, a work the region China. recovered of the new talked illness the you as third to the the occur Chinese everyone government not continued that even did abruptly the and most there usually now on saw was conference the COVID after from about stalled then and is how business

delay was still delivered well the our China able funding, for and team this to Despite in extremely in QX. mid-teens in execute growth

they moment, when growth when at is long. will this expect However, the returned, History it funding of programs suggests And to sciences robust. unclear resume. in it still new government we life be however, be won't

it to disruptive of to be While pursuit only its that have China aftermath long-term priority. will healthcare top national COVID and continue a China, the strengthened has business extremely the been in better thesis in

differentiated in them meantime, the providing the in We are their have. make our with well as extremely to enable China In to will possible customers the continue serve by tools China we research portfolio to as with productive they funds positioned their pursuit. our

on the periods, starting grew Now XX% we in and growth delivered where year let's growth discuss our we XX% X% our prior a the grew comparison both challenging platform, This fiscal year, quarter particularly and the the Sciences respectively. where segment, for was with Protein year. fiscal both in and quarter

exclamation cell and XX% the and continue our customers' aid solutions as development to going a grew gene puts advanced soft despite an where positioned year. are Collectively, clinical point to for trials. gene full on forward. funding a and and our progress key our increased remain driver initiatives portfolio business of gene year a workflow This quarter, and XX% therapy therapy analytical almost growth and the During cell over strong we therapy our therapy, cell on media our biotech performance products reagents, QX in environment,

proteins level used revenue. become portfolio broadest highest proteins the purity medicine we therapies It's that to drove market, These protein of prior applications. of the XX% QX offering in cell have with GMP worth our unique over as our more manufactured proteins quarter growth well the a immuno-oncology reputation industry-leading continue GMP of XX% our of proteins, over including are R&D for and For producer the Systems date, reagents. GMP high than noting XXX as This record consistency and our lot-to-lot accounts as offer regenerative quality synonymous therapy GMP accounts and for year. an consecutive third brand with menu bioactivity, in to has almost

we in that cross-selling of realizing and the Additionally, very these Bio-Techne accounts. and opportunities reagents, immunoassays, the strategies base in culture RUO the stages analytical within large solutions broader customer has exist to GMP biology adoption portfolio are early products, spatial protein our drive throughout place cell tools and of

roster we Factoring of to acquisition this via XXX pending customers cross-selling larger. that and Wilson immense have in their our even approximately opportunity becomes access ScaleReady, Wolf

molecule within unique we as not proteins is offer of our GMP portfolio. portfolio small GMP also versions [indiscernible] several Our reagents

critical demand our develop reagents. will areas and to molecules media reminder, growing other of There are reprogramming, ripe expansion commercialize the and portfolio small offerings, and in medicine growth our meet over portfolio are ingredients key these XXX% including stages that for anticipated for these we demand to adding GMP demand bioactive molecules continue antibodies, small reagents are meet current regenerative critical High of forward. cell which key going vast quarter, differentiation, and of of and drove to our a workflows. products capacity we for represent As in and for are GMP products for

proteins XXX,XXX RUO, of X,XXX or Moving our over types. to antibody which catalog research only and on includes reagents, use

consumable on cell immunohistochemistry, majority their researchers is Western RUO disease foundational a needed our research. small blots imaging, the of critical growth lab, as a researchers reagent products cell key run functions research enable reminder, immunoassays, ongoing monitoring, including inputs where rely reagents other antibodies for proteins, and differentiation, as As these within and these their for functions. and The rate, business as order molecules experiments

for a content frequently, their for they which of also purchase These a handful customers turn products, generate in where component of as Bio-Techne. reagents antibodies our as serve reagents royalties OEM key end

caution destocking industry inventory, handful that during crunch. chain of a expect QX OEM effect we through these in as out a way they the predicted, COVID induced stocked excess work again supply As customers their with of

We dynamic of in normal the for half over to wind down patterns months XXXX. resume these ordering expect back fiscal next our this customers the before destocking six gradually

antibodies quarter, the our Miltenyi are a is of result own Biosciences, antibodies. commercialized in internally developed we the two property. branded our obtained intellectual Systems products prevailed pride During R&D that the competitors, that one great announced Bio-Techne's by that engineering our proprietary Bio-Techne claim on of we proprietary reverse that fact of takes

long but will history arrangements, sharing through our defend discoveries. position have vigorously of a selectively property We intellectual any licensing partners biopharma unlawful with against and our our proprietary academic of use

solution Western a continues we two-day with blotting the biopharma Sciences Western. and by ProteinSimple solution was Western platform's Continuing three-hour growth nearly Protein and The button, in Simple double-digit fully our of QX drive growth discuss low branded highly performance delivered push customer reproducible branded manual of performance bases. blot within ability the long demand automated our into the in The portfolio academic where process messy our quarter. consumables led to XX% segment, instruments reduce to the as let's

We also utilized robust and ratio seeing with detect gene expression impurities. increasingly Western measure adoption of and being therapy full to capsid Simple system empty applications potency, to the versus are protein process

of for single demand we initial biologics growth experienced last our as comp Our of digits the strong year quarter sales business instrument. upper top a of and increased XX% on MauriceFlex nearly

resolves fractionation market, ion-exchange the of charge As legacy identity, a the to $XXX market doubling million instrument. challenges This chromatography. mass new Maurice's frontend purity protein for methods, of using a reminder, addressable including time-consuming capabilities and MauriceFlex Maurice step capabilities, variant enters to new MauriceFlex fractionation approximately and charge as the protein the into opportunity fractionation and legacy labor-intensive application spectrometry

to We initial are very strong response the exciting instrument. by encouraged new this

Ella, assays the titer gene fiscal of four markers. ELISA including instrument For the XX our and XXXX platform during branded assays launching we multiplexing as Plex build Simple validated Simple for automated assays continue therapy Plex AAV to neuroscience on five menu

neuroscience and and expansion a development initiatives. opportunities application cell therapy gene menu for and forward, and focus Ella represent both large of Going remain

end audit diagnostics During progress completed also are Ella back as be clinical successfully this highly and of platform to fast large a sensitive, immunoassay With the to we as on clinical the positioning opportunities the easy-to-use XXXX hand, we for Wallingford quarter, waiting ready instruments. hear certification made this and ISO in diagnostic facility results. multiplexing a opening we our pursue will potential significant market

to once organic with again the quarter and business, year. where valuable the X% Now Genomics and drove whether as indeterminate performed associated XX% an in year increased should significant continues for information Diagnostics where by invasive man a for increased with and the test we ExoDx over year prior and potentially score an our physicians. and capping resonate increased Molecular breakout nearly we quarter the to our prostate PSA and on prostate the segment, for both XX%, ExoDx volume volume discuss with to surpassed start XX%, proceed over growth XXX,XXX I'll revenue revenue XX% prostate date. tests where patients compared a let's revenue ExoDx Diagnostics fiscal dangerous biopsy test our with both increased

for recent be of The further in to now testing value was high-grade the of solidified Prostate prostate repeat Diseases Prostatic of decision interim results prostate year likely designed ExoDx and a the future our study from the patients Cancer reflective randomized publication positioned our Medicare in as clinical fiscal utility Journal strong a a and diagnosed X,XXX with of sales team over less patients utility study, biopsy, test, the fewer first prostate risk and deferred growing prostate cancer. guidelines for to we're the of XXXX the show test. fortified to with significantly time identified local acceptance In as the the reimbursement The force and annual as coverage biopsies, of data, their low access received clinical ExoDx to test. another test NCCN be by the market the test significantly ExoDx includes record well is

single more includes over Now single branded in our in enable cell franchise, portfolio Biology species probes molecule let's that Spatial imaging discuss biomarker at XXX than resolution. of XX,XXX which sensitivity our ACD

the research half technology spatial low utilization calendar business and translational both first as the interest biology QX over X,XXX. apparent and which double growing the technology, digits year. totaled increased biology of of growing is number applications during the spatial citing Our for the XX% publications increased and go-to The of now in our fiscal in technology over ACD XXXX

siRNA, of highly in short these portfolio, the detection specific assays we sequences ASO, microRNA over the target as and are targets continued and and nucleic respectively Within momentum which other and microRNA visualization and XX% BaseScope, of acid scope, experiencing in for XX% sensitive increased RNA the allows which QX. enables

growth the the spatial microRNA to Following year, the for fiscal becoming increasingly robust are BaseScope scope and both and biology franchise. more both our quarter spatial overall

of our standard Hyperion gold release we our for the technology of Separately, the with Biotools System. the RNAscope multiomic strategy standard an furthered for RNAscope partnering Imaging workflow

of specific or ASRs RNAscope Lambda lymphomas and launch and maintaining for probes with biomarkers for We important the analytical while ASRs. analyte and are also customized and of ASR tests labs B-cell as develop enable of arsenal Lambda and clinical Kappa probes expanded oncology CLIA growing high our to Kappa these will standards performance. reagents

the Finally, welcome I’d like Lunaphore officially Bio-Techne. team to to

we is as our a the is This to As biology reminder, adding CEO. spatial tenure Lunaphore team acquisition the closed which recently my the company. during acquisition XXth of strengthens a talented group acquisition, innovators closed franchise while our

and stock Our of of has track significant in return on technologies been strong in over cusp last a double-digit platforms market key growth driver CAGR the of like record identifying the XX state-of-the-art revenue total our years. uptake Lunaphore

high two partnered with we Lunaphore’s partnership staining high-plex is spatial be fully traction platform. biology the capable pairing capabilities is same technology. develop a conjugated of automate Lunaphore pre-processing market protein image This to This system’s Use fully and and novel multiomics earlier instrument COMET panels antibodies companies of design interrogating automated expression single imaging commercialization, significant fully with RNAscope acquisition this placements. and legacy in RNA at initial steps. end-to-end year. offering cell inspire a The early its generating automated but workflow off simultaneously and of our COMET using will interest, revolution builds first the announced that antibody slide throughput

successfully life year tool facing company where industry. In team navigated sciences QX the broader concludes summary, the the challenges and several fiscal the

forward. While macro more in halo funding COVID with we the from our less a OEM encouraged diminish challenges biotech will over, by not days, short-term destocking customers that stable the gradually hangover comps less going the year are days, ahead. the from are Starting they environment challenging and COVID the [ph]

But returns, us big it China China, when half the While believe QX [ph] be of the likely was we at for will in healthcare a quarter in better for year. environment funding good first and come doubt funding China’s for resolved the strong. will challenge a back least the don’t

year can to growth come. past years We’ll challenging platforms as these focus as and stable our proven, company persevere execution this and good this As times which ones. platforms to growth prioritize well has continue to in profitability our accelerated of growth propel the on in

I’ll turn over it Jim. that, With to

Jim Hippel

performance in some EPS financial and the some with $X.XX, start for on the to ahead. year. I’ll with detail financial our financial over prior increase give of on fourth year Chuck. Thanks, the QX last Starting was year outlook XXXX additional thoughts quarter, $X.XX fiscal quarter and an the then X% overall adjusted performance, compared

for an impacted quarter was Foreign GAAP million, minus compared year. both basis. revenue reported EPS or quarter. negatively $X.XX, to QX an on by in $X.XX a X% X% adjusted the $XXX.X in exchange EPS the increase $X.XX and year-over-year of organic the prior was

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

unfavorable our of revenue fiscal had on full X% and an had translation year an immaterial exchange acquisitions impact Foreign growth. impact

our and America by digits. increased grew to end on organic quarter. low-double grew the mid-teens Europe mid-single North China market Moving in in and region digits growth QX,

It’s more in As COVID mentioned, China was Chuck and of on what volatile they very first the the has when halo the already to weak followed year. prior high it refer a was year a now by half the America rather all strong were half. as we North Europe effect. comps been experiencing top quarter of from growth as very

bioactive speaks customers analytic overall delivered the solutions appears value we to delivered mid-teens in to one along spatial science and resiliency Nonetheless, life region. peers, of and reagents, best the the tool biology that tools results to growth and in be our our rate our China company the

year. in declined China the end of top outside biopharma prior mid-single overall in as China grew countries APAC the QX, in hangover low-single COVID comps digits region. challenges induced very of digits with market tough By similar in several on

grew academia While single upper digits.

P&L, destocking was Similar [Indiscernible] our overall driven Sciences, adjusted revenue the licensing company gross Protein supply and total XX.X% primarily in by XX.X% OEM prior customers growth The QX impacted year. on of product X%. handful by in the quarter margin by our compared to unfavorable to mix. the decreased revenue negatively approximately a was company

QX XX.X% XX.X% year. Adjusted to in compared the revenue, of was prior SG&A in

businesses While X.X% increases was ongoing to price impact operating by The X.X% partially expense offsetting dollar revenue R&D margin first inflation to and also largely compared in by was of which decrease QX. on strategic year of impact inflation in to growth fiscal QX with and strategic prior during offset year. investments. management, R&D the in half income The the implemented diligent operating the pricing was relative the expense efficiencies our SG&A driven of offset in XXXX operational

from Adjusted operating prior was point decrease margin a year period, basis for points a sequentially. basis XX.X%, of XX QX XX the improvement

acquisition from Namocell points year and due the than Excluding diligent year, management operating prior prioritization. XX margin adjusted earlier this higher fiscal cost basis was

QX net our expense million by interest partially to to Looking levels higher due debt was million, cash $X.X higher operating year increasing compared numbers at income, deposits. prior in earned offset income below interest $X.X on the

bank to $XXX as Our to of sheet a last the QX balance stood of $XX quarter. at million the on decrease million, compared end debt

note the to our net closed debt at first fiscal current in the which fiscal XXXX. and $X.X hand this beginning acquisition approximately the of year by we quarter of sequentially to we was year, interest Lunaphore and cash I increase partially would on expense funded anticipate million

$X.X related than foreign to to $X.X the decrease by which XX% $X.X exchange compared Wilson million income, our year, million more impact a of Wolf prior our to adjusted adjusted not in operating expense primarily Other pooling offset the cash share reflecting a was net amounted arrangements. million quarter quarter, the of

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

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

remained balance short leverage finished sheet and investments. our one strong Our times QX sale with in a EBITDA. And below position for cash ratio term total available in million TTM $XXX.X well

priority remains forward, for Going a capital top allocation. M&A

X% with Next, segment of having this X% for reported period starting $XXX reporting impact million our QX Sciences growth sales year. the I’ll increasing was segments, last performance Protein foreign X%. discuss to were the Organic revenue with the with reported segment. same of unfavorable compared exchange

our reminder, most a among As considerations, commercial funding to the our that licensing supply has Protein geographic segment as exposure to has the and Sciences customers, as well that China region. occurred the OEM biotech destocking

the XX.X%, the impact a Namocell year-over-year the margin Protein points driven by Operating acquisition. basis segment Sciences was XX of of for decrease

both Turning QX million to Diagnostics reported with XX%. increasing the and Genomics were sales and reported revenue $XX organic segment.

in message, Our in product low-double Exosome our revenue microRNA the marketing drove remain recently business test delivered quarter digit volume growth. our strength in and as data biology and updated the and spatial strong Diagnostics in the LCD very BaseScope, growth Medicare fortified Also, clinical business team strong our quarter strong commercial performances RNAscope, with line.

about expect highlighted acquisition a XXX%. we X.X% with very are Chuck reported at rate over it’ll fiscal least growth earlier, Lunaphore the XXXX year a in of our to company’s As add standalone growth and recent excited

year. XX.X%, margin increased operating volume basis margin Diagnostics the operating favorably margin the to the to by The operating on Genomics compared segment, XXX prior leverage. segment’s was at impacted Moving and segment’s points,

Through for shutdowns supply upcoming off to it This took QX winning get during be extremely as China the risk fiscal still induced and will biotech follows. included XXXX followed halo. that as that highest growth. and of platforms and more of for with refer our COVID view double-digit a view investing, how smaller fiscal demonstrated, in as hangover the induced government XXXX the We Before to hangover, two shapes it the XXXX region year all COVID our fiscal I COVID mentality which the chain that are strong Q&A, years destocking growth our growth inventories we year excessive summarize crunch. our as in place we

is mind long last crystal we us answer. have diminished. faced on a that fiscal has else, with spending halo year a everyone ball we going COVID biotech gives XXXX, Therefore, are we question do the that that hopeful the Now everyone’s We hangover COVID Well, is, don’t into will fiscal as is as did? stabilized. in this XXXX see year that headwind as

suggest we noticed in However, tailwind a this any increases haven’t anytime meaningful biotech would that funding soon. becomes

destocking and resumed. supply year estimate do that unwind end calendar from a this licensing XXXX the in tailwind should calendar commercial by become We of and customers OEM customers our year from as buying these will

halfway cycle its when most government not surprising usual of Chuck earlier, and revenue through renewed trajectory sudden and took quarter recent As reversal occur. described China the funding annual did fourth the

this life funding will and sciences the China we when China’s guess. does, anyone’s government to sciences life return will like that returns, funding publicly continued and of sovereign in rather Chinese government When return expect will companies importance see tools Until given The us region. will in is strong. their life it be the it by later, headwinds of history stated than of sciences sooner funding strategy,

to biopsy, our wallet the means be what the investing do share analytical grow cell spatial as in financial this half of liquid year and Thus, revenue similar biology, and first our growth environment namely we XXXX. gene So organic of year our XXXX selectively to we to this by gaining organic in XXXX? and promoting therapy, year primarily platforms. our need expect fiscal believe in long-term it growth year just instrument platforms, fiscal we to our growth for fiscal continue we all will for We’ll this did by mean fiscal XXXX. that entirety Well, does potentially cautionary

regards year, growth Year. sciences if path to Chinese funding China life of rates purchasing of returns and and New back a half accelerating our the before next fiscal to government is occurs OEM With the there

of our selective XXX as together driven will estimate macro due XXXX, of growth for growth fiscal long-term As extent lesser as experience. year Lunaphore down adjusted customer approximately investment points we of to look the we be acquisition basis with to year in key by our digital well acquisition as Lunaphore to we a track improve. that the mostly overall goals stay ahead, conditions our will continued on margins and from they platforms ensure These investments our operating

slightly improve base can from the Margins growth how this and on the depending case in by half second improve rates of year. revenue if much

the prepared concludes that, line the comments. That my to back over call with turn operator And the will open I for questions.

Operator

[Operator Instructions] Our first question with comes from Leerink Puneet Partners. Souda

Puneet Souda

Europe, and much Chuck, is including that there understand moving I then how growth and look you're XXXX at a how parts – uncertainties is is about that for sort America that the moving means in you. you parts, to that, full and half what but questions at we we year want maybe appreciate sector look for that of single-digits of know sustainable? few mentioned, of that line similar improve XXXX, a number And different could Hey, to to think for Thank really all Thanks being But China given mid-single the destocking we thinking Jim. as hard in at despite on organic, think year to taking all numbers get of North if in questions. seeing versus we How you least second XXXX? the comp just it's those high strength about could? to the digits when fiscal first you're the the have the is potentially should thoughts really you and expectations for your the Jim, guide half I that more there. the XXXX, facing. do a

Chuck Kummeth

Puneet. Thanks, Yes.

going around time XX today, some off question repeated is Let about be because me comments probably. with start that high-level your to

I year companies next So of coming on lot the about first about come one talk And hangover we sooner of beginning out the about talked quarter. of ago, the think, we'll be end all, we're a are. we a and and really first front to kind

little surprise, have of expected have we by wouldn't would everyone this China so to a been be In quarter, anyway. ahead a if really fact, been us – where bit

all stronger North China. expected did, went expected. well. to south really so North about in okay expected in America, than a up America that minute. it's the actually corner, they has stacked came we as So turning get We'll before is but that and as Europe

doing the scenes, right? you we've have a hired of for off the we executives. homework come work and senior know don't guys getting the Behind three out ready party, in So is of done this year lot

We have a new Europe. leader in

We for new America have [indiscernible]. a North from leader commercial

We divisional new a have for President Senior RSD. Vice

to North lot the coming off. here. start yet a even America are already of are a finish We and Snook making relaunching James have a and bit now – guidance, with we of Peter's we're lot – we're reorganizing Europe we're going he's with changes, further of we're kind done commercially stronger with what's seeing probably coming of that fully observations paying from made, a little and of happening those

– very, only down rep, in there. a we're at we're increasing down – we and competitive. you still for We've rep, to other of always actually while. been We're our it's not down as segment efficiencies, very very We're but strength aggressive and know, full be increasing we're one spatial, like inventories five. seem especially one short We're Europe. in And

has is this or – huge been made our So what lot improvements ERPs last to quarter better. there's All on about talk We've experience much making be of starting, on doing well. in side there customer coming so and we're which we're ready hit, wave new are quarter. place, I going the as really in they these coming for growth this two coming the think, – to and digital are

for need of a what but bit noticed it's comments, China. softened little kind as at Jim's to We happens first And see wait this half, have and you we unknown.

down good I We all really really half funding good, government shut just a started around the quarter. us think I again, come the this It China second out and quarter. the start surprised by for mean, bit the expect little yet, quarter. way. of us If it and of that's for do same more ahead well don't, results haven't then our beat and And everybody it's hard of in they to get field will literally this we had that they too everybody. things. while, for so but a be will

what's So good feel about up. right? about we it's the happened all though, forward So not really things where ended

But As We make bottom how experts is large companies. from won't all target you to had notice, come operate, met We're we and every operational we what to line. can't growth, our markets we know we and do. nail. nailed We do markets every, here. growth

it's the in other it, already for gene it killing and which really but therapy core And and banner the by progression in mean coming expectations on back. Europe instruments, and our year, it's everything we're segment, a all commented it's side, talking really spatial I all investment way, all had the only our areas the fronts. when RSD other hope exosome, quarters the and seeing banner and let's especially not China, consumables, back our party its and three coming continues not and major exceeding platforms, And are we're many like on we're cell here. instrument on. ready about And so we – in

we and even much the So more can will accelerating doing will, that's anymore. in same, offset becoming start headwind and have more – our year, – of any core which maybe material by next it

told XX% to and on we more don't out thrilled this of of are We're setting and now, we're bit day. back XX%, up after be ready. just working probably that, numbers, our the terror, us will with question to for so we is lights they is horrendous our comment stage infrastructure. think out quite it's the still quarter hedging government peers when think we come they'd think, sake, everybody. China honest, probably telling everything down, with the everybody. I to more will with and off feel more it to the last year be a wants for were – maybe the We like ended we going XX% a quarter. really and a to shutting likely, happen same we just came but quarter, -- but – China, or which And It's last we with really and good around you'd it be who trip simply, be this what quarter within it a spent a on I we kind better God's So Jim a numbers, quarter, I be the especially as saw cover soft it's than want we're But turn than right on,

starting sometime tell pay put where about expanded more place one for and you really, for the it's already everything us. off we've to in coming website, And we're improve our Bio-Techne, in customers really experience new their got one to to getting quarters, and our

So...

Puneet Souda

You updated about on Any side you far. life the talked me. so are doing M&A? is diagnostics the great but sciences very that's good. thoughts XX how about side, on I'll for Exosome versus the acquisitions Diagnostics think – helpful, maybe – thanks one context final him Co call, super more questions back that's for and Chuck, and the follow-up there. to No, you How for do Jim obviously, – one for spare thinking come just

Asuragen. I are – much hear about you overall? on thinking didn't M&A You didn't you How

Chuck Kummeth

really feel We good.

asset. came we working That long you pulled I We've many how an tell you just was people wanted and asset. time. off been a As know, that on Lunaphore.

spatial getting no a everybody much going over we're okay really other and crossing platform are – – the ubiquitous, create stronger, but any with us and others, you areas all like is to partners not platform. to to mentality or which we working this. only so conflicts of pathology we actually in And don't on without work with going that all here As into go research, after to side in want an in thing and Lunaphore kind amazing. be But that very open it's allow different, have know, is [indiscernible]

strong go. But automate hand. need all and two The figure going Plex got out this to this we and to numbers always a revenue, coming are a bigger off. for acquisition. waiting year couple already a But get translational weeks, the not in be can there's do numbers. without those down points a our running XX synergies two taking do of assays It's in it's dilution in already the and future. Jim We way going easily about amazing. thing platform, our growing and heavy now, we or of with year we've They're more we're and to XX/X under ready to to here out is happening, as and talked platform, that of the the a already this take we so need by discovery,

So that is one area.

to M&A and owners, lot issues. same. Other would proteomics said be more Smaller should and acquired, staying starting there at that for even still lot media look a there therapy being have for now, M&A, few is wouldn't been address days. companies. it able already in it's and IPO all We're right aren't funding the year, It's thought gene happened big of They're busier. and we're right lot like everyone busy Abcam the the now. outside surprises there's these even areas very they're busy than all time partners is in we lot – have and is to is I And that there a finding coming. a don't but ever we're things think new of a out very on public, as other and looking companies sale, areas And to a being we've of and cell a market I we're of yet,

Puneet Souda

Super. Thanks guys. right. All

Operator

The with next Donnelly question Patrick from Citi. comes

Patrick Donnelly

organic core dilution just the Can that get the number? levers Hi, guys. a maybe XXX of a you the margin to you Thanks you maybe kind guess dilution. key there there XX%. about mentioned maybe the just side? And Jim, outlook long-term know path can the bps. bridge you taking little are guys Lunaphore for questions. that the I M&A pull on down versus one target obviously What I the bit margin out talk of going on of have

Chuck Kummeth

So from our areas past – brings it about I'd strictly being call. rest it that if down Lunaphore see year, we exclude during see do We those you it results, just driven did we finishing acquisition. our – in below. better We organic – say see has talked – The we've over the strategic is investments third the the like Lunaphore this than with be continued our to this year that margin similar year. to that this growth we two dilution Lunaphore of by

gain. improve base more our I a my better get revenue think on increases, margins, improvement, I leverage if in the mean mentioned with of there is going do growth But prudent already extremely be on I But those regards opening could to I more it's cost to margins. margins we're our would But back the triggers – growth revenue not in improving that biggest growth investments strategic the for lever on being half our year, sacrifice largely back improves very, our think and those – and of our very like the future. in increase selective the in definitely spend. to the of we're my comments, revenue prioritizing to in the not discretionary half in year. spend higher the strategic the revenue

Patrick Donnelly

Understood. Yes.

you six or that? you talk you obviously Chuck, industry. maybe Can you any helpful. any but comment, so. would for on be of out in visibility level six And the entire ends just certainly conversations, Okay. the mention I assuming just has maybe about target, moving you been confidence the into stocking for do customer Can of not months guess for only have one a the months destocking

Chuck Kummeth

Yes.

customers. talked us. by more handful growth It's that's of of for mentioned same. literally very And a lumpy double-digit we've past, As about missing in the in previous kind the OEM of quarters, we've

OEMs a stocking a it's they down. larger through especially COVID the and antibodies of risk So lot supply coming already areas were in era. our lot And

So that's moving the direction. in right

seen softened that or funding period, of overall – it, run softened. quarters still period have call we rate have we strong very because think I let's three two through ago, had and those

dramatic. barbell of here, seeing a shift we're not but So a bit

Fisher, So point other strong Fisher has been strong, is is all data like year. very

lot So look channels of our good. a

lumpy. it's at. So of get licensed targeted. We got as very, they're And customer royalties of pretty guys by lot these know in – of It's lot stuff. we a a we and where are kind you very exactly know,

only just outlook. them not we what but they're what they're metrics, they how data we from their on have expect and actual decent So have buying, doing,

calendar recovered there think I the by a year ahead and year, in next brighter end this year, of of a things certainly will areas. lot So be OEM the

So main that's still. think, I difference, the

Patrick Donnelly

Yes.

faded it rate? And if the China. sneak give like last one in linearity, obviously, know ends. to exit about this of year do exit think kind just quarter I think of I Okay. just about on beginning, July, markets one the you that were strong at Thank kind Anybody of was could sounds a could it eroded little bit the kind different you. rate there how and Anyway quickly? as

Chuck Kummeth

more and transparent. not been we've any than very always say been. we Well, sure have I'm We can know we

much This off worse it quarter industry. ended else great know started in everybody we in and China, for terribly ended our

all government. for we're think this the I of waiting in pattern kind

they think so that money. I they have badly any don't their have shutdown economy think I

very we a public priority how about – what is. know but – So do healthcare they're

everybody, really population October, getting have and outlay. their the they very, expect it's And that where areas, is for when some to nothing It's downtime things reopening on the start better I very of and XX as to think like health come institutions get world back X There of to but stimulus we're of start but dramatic. and told China. initial so seeing been they track, whole rest a new on where an the is. scale care they school all a This year to getting is country, surprising two. just across the are the They're the targeted

on out government certainly see a but one don't big healthcare far good the shape, too have lot their plan expect that there. to go change So is I it's cities don't priority, to is the and anything struggle number still you of really are the will in and and

then about comes back – and a been before, it China, here wondering tiger. we've So roaring like

end year before sometime of – be here, to that calendar but expect I the So

Operator

Next question…

Chuck Kummeth

Our team any alarm. didn't they sound the – there by is very just bullish

So surprised even them. it's

also have So a is is future employees, strong China sees I – the in team a very we that and that's I good very very, big think ahead. really XXX-plus guess, very positive sign

So…

Operator

Stephens. Johnson Jacob from comes question Next with

Jacob Johnson

But things, XXXX. questions quarter on I instrument about to for attributing XX of I Hi. a apologize everybody. the the maybe side strong suppose Good morning, Chuck, there.

I year could the into be guess out that we sounds MauriceFlex the something opportunity. the any should be like that business side, about clinic being about thinking a this next looking Just China but quarter, kind any in could on how bad just of around thoughts we And an particular, Ella the move instruments. should you for, maybe contributor be about talked commentary then XXXX. for is maybe into guy outlook

Chuck Kummeth

sales business. China we ratio actually is for of our instrument strongest have Well, Yes. the area

So XX:XX really it's with nowhere It's our else. like core. anywhere that

so takes on the soft, being instrument. it hit a China big with overall So

and quarter good board, the for And that pretty Simple but It here pretty been the and instruments but great. and from the too overall. across being are not in instruments consumables. were mean they're should ago, are yes, coming. is I good that used, a mainly has had a the XXXX bad, Western have really month in productivity We paperwork, shape known coming. good it's Ella gone definitely

ready India they're X,XXX tears there and clinical launch different – as they degeneration predicate big here, on eye-related using person go clinical analyte a be that's cartridge. their process very macro in soon. through XXX(k) process illnesses the We in [ph] the – application eye a but have to that with or like a would

let have Will coming. words that's So of a here. bunch And say I'm to going a then But we couple more.

I the applications getting Western more have. we're and getting we're purity anymore. we – just the of There's of more more anymore. about instruments, now but Simple Flex isn't future in just more coming. have bunch isn't more – blots converting protein manufacturing think instruments we about the and line stuff a Western

application, come. you of we our and the Will, what see the actually lot see and But of a improving things there's buy future now. a on instruments where couple more growth Now words maybe

Will Geist

future, indicators As the quarter. we thanks nice utilization, Jacob. hit strong Yes. A our of at Chuck look for Thanks, right? last the things. question, Chuck, super on of this already for and consumables some couple

We service and the being at industry. also used look know instruments across are these contracts. We leveraged

our Western, XX launched growth across for emerging these to the like future, platform cell ProteinSimple of nodes When applications as application gene thing, XXXX certification the platforms. of I'll Simple but real those Western come on more in therapy, positives. kind those excuse are you and to back think recent look we one are me, So new Ella the second, we and Simple hit ISO so portfolio, areas a the we

So example, things is on potency product, potency FDA ratios, like assay AAV empty-full assays, the – Western. Even recently Simple release assay for Western. on capsid an approved titer, in run Simple

of there is, can’t we indicator confidentiality, what strong it but how gives For that you share we an are.

If potency, we in we’ve got the applications on Ella, for therapy look five at gene our to cell and applications new addition neuro applications.

that out take platform We for clinical seen finally the in adoption Ello their them with tests. know will adoption as boxes, applications. already and of then space fill broader lends nice to we expect just portfolio. assays, We us that is because strong to off well itself on really rest And those clinical already put of start adoption. driving seen enable to we’ve laboratory XXXX kind take the hitting the developed that our pending, so XXXX customers on ISO We’ve certification what

Jacob Johnson

to I to Chuck, thanks gene and segue. Got and Will, a wanted back cell And for go it. therapy. good that that’s

ways that’s child some a for concerns. think in been I poster biotech funding

And be helped GMP the had commentary it on like like alluded two, has the the customer just thinking may of things? that but you think a what of you’re well, markets small that side side, talk antibodies, like else new trending sounded I to the quarter space. around company. growth? maybe on It you molecules good varied products But new curious just for the then kind that GMP potential end depending about in It seems seems what’s wins there. driving on about

Chuck Kummeth

the We’ve in there. for we’ll Yes. is be in year. news We in Paul eight would another blew to year really. good quite [ph] I’ve – to fully so XX% hour. proteins. There’s away we’ll adding space ever growth products our St. pretty be six good. take facility, But XX% everybody everybody Yes. an The from beat and coming gone quarter exceptional the this cover blow answer much to an had noticed

way to cylinders. quoting regenerative customers more this We the on roughly as just XXX XXX getting were we’re therapies, cell is all So quarter. well. side customers on until Strength beyond up

over XXX now We’re customers.

lot now, much be growing doldrum may more to taking new growth And from growing coming area and therapies, the industry comes a a of and and cell in getting it that when share is So there but still yes, customers. a it’s visibility. we’re

for five, track here laying years. after real six becoming We’re

going acquisition of one of our help. the happen. just CellReady that’s there facto XXX new still got being And sister We standard are smoke’s is the coming as only to be will therapy our customers. and to It’s out [ph] well. partnerships It probably de course, company inevitable. the going and for They’ve going is helping guys. It’s to big bioreactor cell used

So we’ve our this small there’s we’ve year it’s it across ScaleReady really And you for XXX% those now it’s business off, now. more and CellReady over that and molecule, platforms a got and sleep? portfolio, working driving take waiting our long quarter. that platform molecule – no for it the been way small Did time stopping to put to bad finally is and XXX, our are really proteins and a for growth number, a not

Operator

next The Stifel. Arias comes question Dan from from

Dan Arias

doesn’t because we’re have fiscal and too offer think really a finishes year Good that I’m to And apologize going outlook. a morning I I company guys. year just Thanks. Chuck, guess going their here, don’t offering all the full view just call tough seems now. right year Jim, they’re a a challenging to given with forecast, it dealing that on China harder like obviously, a of is set And of the you’re portion circumstances. to

willing the first themselves of you of these Chuck are rather to issues why in than the half I be term there. comps the you what if basically some resolve term, year second commit acceleration I longer think shorter expect So half. said which second same half guess, to the versus wouldn’t more meaningful the the in is to And

Jim Hippel

we’re six are out. year months out fortunate guidance Well, first have – that’s a in there for calendar of all, through XXXX, the further of a and peer the the giving rest that year fiscal companies we’re year position where this

putting we most don’t the about, end tea think regards out the the OEM the to eventually the that destocking to when will that has, do. read confident that of our rebuying. answer. necks to when day, can second we back And anyone have timing there back is stopping, we’re the at coming at feel thing knows exactly about thing So tell start completely with leaves most this one some I exactly code mean, I of and XXXX. and point itself. course, but is can feel know someone as difficult hangover confident coming that the me And pinpoint very we strong, who say happen who China I’d you resolves is to

regards the rest or I’m mean, of tailwinds. with markets, headwinds, think whether hearing it’s being the in are the in They the I mostly whether and of funding right we’re end view biotech behind I into not now overall it’s just see, about academic, at of then major us. And the yet funding wait the or to kind cautious think biopharma and haven’t at day, we this reading biotech point. turned because increases

think I it’s this. So

budgets forward. is going thing academic to then if the on same news the about adding side And anything, them cutting not where NIH

call be any guidance where mixed well of oncology parts Now, where But it’d more environment we’re I next six and us. the it calendar will the and components I hoping those help where moving gets think dynamics where And the to upside months right could for us cuts out actually redirected as happen there’s neurology into think are we just sort, – the well an – could macro a funding COVID-related don’t academic that wise positioned, close give very and clear and to the in that to of of be come that firm it’s, come this things more variables areas lot be beyond positioned now. there’s within guidance if the towards year. actually we with funding

Chuck Kummeth

guys couple you’d would better what is And hear we’re just to hear. our next a or things that would it’s like back you, too. quarter. plan to What you love work XX% to coming add growth from me backwards Let

starting QX. in couple our a start happening have away really these We from good comps. in horrible We favor getting things comps

from expect about full year now. end talking So to back one finishing only the right. is By that’s going We’ll talking Jim the of the year. this Everybody’s year calendar help. a fiscal be starting beginning and about in a got again. I year, of now. digit, run year we’ve of rates of mid-teens end if be fiscal And a by to And fiscal the us this not double the

quarter a how two, But averages? company. year being growth this and stack especially acknowledge And now to XX%, XX% for next with China. that’s that hard does there company for XX% of coming It’s points right with growth, China quarter of the our off three with rate up

quarter number to we more, So got If term. only it’ll that factor Maybe of long another it’s it’s in. Maybe that. affect more. the it’s

don’t We than forwards, you’re can and and you guidance. smarter So down are and see. up you we’re for coming backwards knowing looking at We a give range and the and we all give that. our year numbers officially

platforms now, to become we material. of from our growth expect a maybe more run can rates accelerating, be think I decelerating higher year where because to seem be not it even our

XX%, slack here way transparent what We five-year quite quarter quarter. quarter have quarter negative, that. company that. so we continue up of that, we they the being next our going the will And major it you back two, we’re see for we’re just when in and to three didn’t this fact. But here in the years But got we’re hangover at to happens track we goal, be I we’ll a to we’ve better did guys the think But on least And talk – higher growth talk at the much, some a we’re going negative, it. about need the you least should we’re bit start way at on and core. stabilize we’ll with it’s growth that If the about And that’s on all longer a that better was core. pick markets then these with and they’re in the into comparatively, improving most do is think now. more running know dramatically. the getting one you negative, than I think quarter to comp things we easy this As bad overall. in tell to get much the And us else have an everybody bit post about more

run but should end be rate think. we within a tuned. We’ll of the know year pretty good So quarter, stay more

Dan Arias

with fair can Okay, enough. color work that. I that Appreciate there.

you, we Is While I touch driving proteins. you about the larger growth GMP talk expansion? there? existing orders maybe can from on is customers what’s it or just have just Is And most menu have it… it

Chuck Kummeth

orders we for mentioned. as expanded It’s and We’ve as list new customers. existing customers you the larger customer –

component one part growth. that’s So

tuna further into whales. that other in that plankton us tuna is and along been have and with We talk in two, the for more. minnows minnows they’re their and The customers getting years, turning asking about into clinicals three they’re into for the past of

we’ve whales got got only and and we’ve tuna XXX of a customers. – We’re need, we handful

a going to we where have see. amazing in day three, be a whales. imagine of just So years It’s five couple, to dozens two,

Operator

The from Leonard Suisse. next Dan Credit question comes from

Dan Leonard

talk bit the biopharma, for Thank and total any government, academic about you. growth China half first digit that and a mix view Could mid-single of market difference in in rate in in the the for you’re your China end company? Hi. between you trends is seeing assumed what year

Chuck Kummeth

well-funded far a well-funded, market little It’s China’s our for There and academic. government, we’d of in But academic there. call most academic. We And going biosimilars versus us. really are industrial. almost most is of all more a kind a Well, forming like are don’t the them things government biotech there, spell is it’s regions. out where Yes, pharma of of kind sure. different more than have sponsored pharma versus by institutions sponsored,

So instruments. research, it’s – had talked evenly right? research, a about. And we’ve our we instruments and research it’s between we’ve very reagents mainly, as our couple really And there, boom years split had

issues comes back back, up as through But comps COVID the there. it’ll heavy coming their then come funding dry issues, we’re institutions. just it now. a And with the things for off So

and about two have everything. XXX cities institutions and that’s both nothing you like but Shanghai. modest then in in than Now other what roughly it’s major drives Beijing And some the numbers cities, major

probably we’re seen haven’t never in consternation years. they’ve they think government, I a as many, very interesting many this with – they’ve China much think for a time because I many,

got a You’ve lot got people [indiscernible] in have whole charge, this. but seen a that used you’ve to not of negative generation are never seeing of people that GDP,

administration estate there on healthcare a issues, it, the country, begin high real And with tipping over, of way it’s the for to got got that’s all you’ve their for of through. to got work its But kind for you’ve of people. research. a got You’ve lot got underneath priority

so end could say million of million the we’re at $X opportunity. I’d of small it’s in the $XXX $XXX only a still China, or revenue it day, billion. compared be to And the

we’re getting back very strong. So

a have there. of the lot We for products size our business our company and of

there’s plenty of board. to interest across of levers plenty We businesses, have the pull of and a lot so

Operator

question with Schulte Catherine comes next Baird. from The

Catherine Schulte

in thanks guys, on any is this on I how a Wolf for commentary acquisition thoughts Wilson when could guess questions. environment first, performing the and occur? change any just in Hey full

Chuck Kummeth

moving anything either, we’re last I’d but growth flat quarter to the think data heavy or two. Yes, they’re say mid-single right They’re have not for now I they don’t yet. digit the – growth game, don’t

is us this sign. market good there imploded that down. in the John, has a actual Given funding actually,

taking actually share. We’re

compared everyone more to with. thought else getting dealing is what business actually he’s So than he

there good – a So it’s time.

going we’re So off to be of this get lever going we’re a next year. come – to

the EBITDA or in you is revenue at first, we’re full years the to expectations, three us beyond again, that Probably know, on they and trigger to our allowed acquisition, way As will four would for the so which million But be probably EBITDA. million way happen or the early. for XX% $XXX if track profitability one dollars XXX the continue things are. do

very helping We’re diversifying be want should profitable [indiscernible] at any But he more investments on that right working than comment more more as that. it and investment we’re have And running –probably to now growth for and if more to with and with it’s the [ph] on things a you more should very, do. is John probably well. for model.

Unidentified Company Representative

I is Yes, share great. taking about comment think

I think declined. the total has number not of customers

not them. they’re So losing

folks a spend, that’s as their So indicator. good rationalize

think that some insight nice strong indicator I product the are development be the of closed Media is off having joint too. our finally, now. the GMP. kind quite system, and delivery really some other expect to the And cytokine platform elements and right developmental of projects their of in on closing the mix portfolio development is media and we uptake in into

portfolio and we’ll that kind with overlaps start a synergies customers more seeing closed proposition system. with value deliver our and of that higher we So as more

Chuck Kummeth

then Since much it other places, didn’t team EPI, but growth we’re don’t maybe I talking and in in off the leave want to killing really about growth Exosome just is our call, about I right China, platform that talk shout now. we this

We’re getting record test We XXX,XXX days, tests. virtually weekly. crossed a

that’s We progress. a making colorectal great have program

I many, upstream it’ll it coming where beyond DNA. component other tests. – you more with is to tests numbers. pre-cancer builds the do want going about great coming in methylation, it’s the guys quarters, We you’re go so have a on well the damage of numbers talk to above and what Exosome The than Exosome competitors as multi be never be And doing is, screening amazing. that’ll – field type you but see are analyte And focus many more cell-free for future think on top the

people more now and getting investing The is We’re very over close. we large are private tipping list payers of very the close.

Operator

for to today. I would like turn Chuck remarks. session to question-and-answer conference over the any closing our for concludes This back

Chuck Kummeth

we a there. interest time Thank just your you. thanks be our out count very there’s go, call next back list. competition lot there’s We quarter. attending we’ll everyone for and the Well, know I glad and company in always a We as we’re it’s for the for the big of all call. guess see And

Operator

The Thank concluded. today’s presentation. for attending Thank you. now you conference has

disconnect. now may You

Bio-Techne (TECH) 8 Aug 232023 Q4 Earnings call transcript