Steven Etoch

Steven Etoch asked for an update on the interest in Bio-Techne's organoid offerings, given the FDA's focus on reducing animal models, and requested a sense of the revenue generated from these product lines in the quarter. He also inquired about the company's M&A strategy, including current valuations, pipeline, and specific areas for potential acquisitions.

Answer

President and CEO Kim Kelderman described organoids as a $1.4 billion market growing mid-teens, currently a $50 million run rate business for Bio-Techne. She highlighted the benefits of organoids (better human-related results, more humane) and the launch of Cultrex Synthetic Hydrogel, an animal-free gel for organoid growth. She noted that cell therapy reagents, spatial capabilities, and ProteinSimple tools (Maurice and Ella) all contribute to this opportunity. Regarding M&A, she stated it remains a core focus, with interest in deploying capital for strategic fits such as novel antibodies, broadening the cell therapy portfolio, and adding proteomic analysis capabilities. She also mentioned the ongoing Wilson Wolf acquisition, which is 20% owned and will be finalized by the end of calendar 2027, noting its 20% growth last quarter and 70%+ EBITDA margins.

Steven Etoch requested more detail on the customer dynamics within the AST segment that support the 6-7% growth outlook and asked if there have been any notable changes in client behavior in Life Sciences or AST due to the current macro environment.

Answer

President and CEO Daniel Carestio explained the AST outlook reflects a conservative approach, factoring in month-to-month volume variability and a cautious view on the bioprocessing recovery timeline. He noted that while discussions with clients about the macro environment are ongoing, there have been no concrete changes in behavior to report.

Steven Etoch asked if there was a shift in customer ordering patterns due to tariffs and requested a breakdown of the margin improvement drivers between EZ-fill recovery and the new facility ramp-ups.

Answer

CEO Franco Stevanato confirmed that customer ordering patterns have not changed due to tariffs; the recent increase is related to the end of destocking. CFO Marco Dal Lago clarified that the primary driver of margin improvement was the operational scaling of the Latina and Fishers facilities, followed by the favorable product mix from high-value solutions.

Steven Etoch asked CFO Ryan Lake about his near-term focus areas, opportunities for margin improvement beyond recent announcements, and whether the company is appropriately sized for sustainable growth.

Answer

Ryan Lake, CFO, stated his initial focus has been on the finance team, SEC filings, and the recent capital raise. He provided detailed financial cadence expectations, projecting revenue to be split 40/60 between the first and second halves of the year, with gross profit split 30/70. Lake noted that while OpEx will be similar to the prior year, it will be front-loaded, and he anticipates mid-single-digit million-dollar cost savings in the second half, leading to adjusted EBITDA being heavily weighted to H2.