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    Bio-Techne Corp (TECH)

    Business Description

    Bio-Techne Corporation develops, manufactures, and sells biotechnology reagents, instruments, and services for research and clinical diagnostic markets worldwide. The company operates through two main segments: Protein Sciences and Diagnostics and Genomics . Bio-Techne's offerings include high-quality biological reagents, diagnostic products, and advanced tissue-based assays, catering to both research and clinical needs .

    1. Protein Sciences - Develops and manufactures high-quality biological reagents, including cytokines, growth factors, antibodies, immunoassays, and small molecule compounds. Offers proteomic analytical tools for protein analysis, automated western blot, and multiplexed ELISA workflows.

    2. Diagnostics and Genomics - Develops and manufactures diagnostic products such as controls, calibrators, diagnostic assays, and exosome-based molecular diagnostic assays. Provides advanced tissue-based in-situ hybridization assays for spatial genomic and tissue biopsy analysis.

    Q4 2024 Summary

    Initial Price$70.75March 30, 2024
    Final Price$71.65June 30, 2024
    Price Change$0.90
    % Change+1.27%

    What went well

    • Bio-Techne expects to significantly outperform peers, targeting double-digit organic growth when the market recovers to mid-single-digit growth, leveraging company-specific activities like the Lunaphore COMET launch and new instruments in their protein franchise.
    • The company's consumables related to instruments have been growing double digits for seven consecutive quarters, indicating strong utilization and potential for increased instrument sales as funding returns.
    • Bio-Techne anticipates improved margins, with a line of sight to adjusted operating margins being 100 to 200 basis points higher, aiming to reach north of 35% operating margin, and ultimately up to 40% over time.

    What went wrong

    • Instrumentation growth rates have been under pressure, particularly due to constraints in China and the biopharma markets.
    • Biopharma revenues experienced a low single-digit decline, and the recovery is expected to be gradual, adding uncertainty to future growth prospects.
    • Operating margins are facing headwinds, impacted by incentive compensation accrual restatements amounting to about 100 basis points, and recent acquisitions have further lowered margins, potentially delaying a return to historical levels.

    Q&A Summary

    1. Margin Outlook
      Q: Can margins return to previous levels over time?
      A: Management expects adjusted operating margins to improve by 100 to 200 basis points this year, ending somewhere in the mid-30s. They acknowledged a significant headwind from incentive compensation accrual restatements of about 100 basis points. Over time, they see no reason why margins couldn't get back to their long-term target range of 35% to 40%, consistent with past performance.

    2. Growth Outlook FY '25
      Q: What is the organic growth guidance for fiscal year '25?
      A: The company anticipates mid- to high single-digit overall organic growth for fiscal year '25, with an exit rate in the fourth quarter of '25 at low double digits. Growth is expected to progress gradually based on baseline market expectations, with improvements in biotech funding and Chinese stimulus contributing to growth.

    3. China Sales
      Q: How are China sales expected to trend, given the stimulus?
      A: China sales were stable in Q4, with reagents growing double digits while instruments remained down. Management doesn't project a major pickup in instruments until the first calendar quarter of 2025, when the Chinese stimulus is expected to kick in. They are confident the stimulus will positively impact instrumentation sales over the coming years.

    4. Biopharma End Market
      Q: How did the biopharma end market perform, and what is expected?
      A: Biopharma revenues, excluding China, declined low single digits, consistent globally. Sequential performance was stable from Q3 to Q4. Management is encouraged by the stabilization and believes an improving market will lead to growth recovery.

    5. GMP Reagents Growth
      Q: How did GMP reagents perform, and what's the outlook?
      A: GMP reagent revenue grew roughly mid-single digit for fiscal year '24. Management expects growth rates to increase with an improving market.

    6. Lunaphore Capacity
      Q: Is the company addressing Lunaphore's capacity constraints?
      A: Teams have worked diligently to increase capacity, and the constraints should be resolved in Q1 fiscal '25. From then on, they expect to meet demand without limitations and focus on increasing sales.

    7. Growth Platforms Confidence
      Q: Are you still confident in your key growth platforms?
      A: Management remains committed to their four growth verticals and believes they have a differentiated market position. While end market slowdowns have slightly delayed timelines, they are confident in achieving their long-term targets.

    8. RUO Reagents Growth
      Q: Can you accelerate growth in RUO reagents independent of the market?
      A: By linking RUO reagents to growth platforms and ensuring they pull through core reagent sales, the company aims to drive growth. Enhancements in marketplace transactions and website improvements are also expected to boost sales.

    9. Spatial Portfolio Growth
      Q: How sizable is the spatial portfolio, and what's its growth outlook?
      A: The spatial biology business has a run rate of $120 million, with expectations of double-digit growth in the coming years. Management sees strong potential, especially as instruments like COMET pull through reagent sales.

    10. Academic End Market
      Q: What is the outlook for the academic end market?
      A: The company predicts low single-digit market growth in academia. They believe funding mixes will favor their strengths in neurology and immuno-oncology research areas.

    11. Molecular Diagnostics Growth
      Q: Can the strong growth in Molecular Diagnostics continue?
      A: Management sees underlying strength in these healthy end markets and believes they are taking market share. While some momentum may normalize after inventory adjustments, they expect continued growth.

    Key Metrics

    View all financials →
    Revenue by Segment - in Millions of USDQ2 2014Q3 2014Q4 2014FY 2014Q1 2015Q2 2015Q3 2015Q4 2015FY 2015Q1 2016Q2 2016Q3 2016Q4 2016FY 2016Q1 2017Q2 2017Q3 2017Q4 2017FY 2017Q1 2018Q2 2018Q3 2018Q4 2018FY 2018Q1 2019Q2 2019Q3 2019Q4 2019FY 2019Q1 2020Q2 2020Q3 2020Q4 2020FY 2020Q1 2021Q2 2021Q3 2021Q4 2021FY 2021Q1 2022Q2 2022Q3 2022Q4 2022FY 2022Q1 2023Q2 2023Q3 2023Q4 2023FY 2023Q1 2024Q2 2024Q3 2024Q4 2024FY 2024Q1 2025
    Protein Sciences223.05845.747204.7197.67214.589213.94830.902204.5
    Biotechnology--------
    Diagnostics and Genomics79292.60272.875.4187.51190.67326.392-
    Diagnostics--------
    Protein Platforms--------
    Diagnostics and Spatial Biology-------83.2
    Other Revenue----2.093-4.1532.3
    Intersegment Revenue-(1.647)---0.765--2.387-0.572
    Consumables243.33917.733--246.732-928.180230.8
    Instruments27.89112.085--26.493-108.27026.2
    Services25.1885.784--25.501-99.26527.4
    Royalty Revenues521.100--4.702-23.3455.1
    Clinical Controls--------
    Total Revenue301.31,136.702276.9272.60303.428306.131,159.060289.5
    Revenue by Geography - in Millions of USDQ2 2014Q3 2014Q4 2014FY 2014Q1 2015Q2 2015Q3 2015Q4 2015FY 2015Q1 2016Q2 2016Q3 2016Q4 2016FY 2016Q1 2017Q2 2017Q3 2017Q4 2017FY 2017Q1 2018Q2 2018Q3 2018Q4 2018FY 2018Q1 2019Q2 2019Q3 2019Q4 2019FY 2019Q1 2020Q2 2020Q3 2020Q4 2020FY 2020Q1 2021Q2 2021Q3 2021Q4 2021FY 2021Q1 2022Q2 2022Q3 2022Q4 2022FY 2022Q1 2023Q2 2023Q3 2023Q4 2023FY 2023Q1 2024Q2 2024Q3 2024Q4 2024FY 2024Q1 2025
    United States174.83642.465159.1147.793173.315177.54657.747165.015
    EMEA-220.23054.862.53860.53363.56241.43259.063
    United Kingdom-49.45712.410.67515.12211.8150.01213.944
    - United Kingdom--12.4-----
    - EMEA, excluding United Kingdom--------
    APAC-73.19017.419.04218.25319.2173.90418.122
    - APAC, excluding Greater China--------
    Greater China25.76113.86825.524.45925.59823.9199.46724.321
    Rest of World10.0737.4927.78.09110.60710.136.4988.993
    Other Asia--------
    Total Revenue301.321,136.702276.9272.598303.428306.131,159.060289.458

    Executive Team

    NamePositionStart DateShort Bio
    Kim KeldermanPresident, Chief Executive Officer, and DirectorFebruary 1, 2024Kim Kelderman was appointed as the President and Chief Executive Officer of Bio-Techne, effective February 1, 2024. He has been with the company since 2018, initially serving as the President of the Diagnostics and Genomics Segment. Before joining Bio-Techne, Mr. Kelderman held various executive roles at Thermo Fisher Scientific and was a Senior Segment Leader at Becton Dickinson .
    James HippelExecutive Vice President and Chief Financial OfficerApril 1, 2014James Hippel has been the Executive Vice President and Chief Financial Officer of Bio-Techne Corporation since April 1, 2014. Before joining Bio-Techne, he served as Senior Vice President and Chief Financial Officer for Mirion Technologies, Inc., and as Vice President, Finance at Thermo Fisher Scientific. He also held financial roles at Honeywell International and began his career with KPMG LLP .
    William GeistPresident, Protein SciencesJanuary 3, 2022William Geist has been serving as the President of the Protein Sciences segment at Bio-Techne since January 3, 2022. Before joining Bio-Techne, he was the Chief Operating Officer at Quanterix and held senior management roles at Thermo Fisher Scientific and QuantaBiosciences, a QIAGEN company .
    Matthew McManusPresident, Diagnostics and GenomicsJanuary 8, 2024Matthew McManus joined Bio-Techne as President, Diagnostics and Genomics on January 8, 2024. Prior to joining Bio-Techne, he served as Chief Operating Officer for Azenta Life Sciences and was the Chief Executive Officer of Asuragen before its acquisition by Bio-Techne .
    Shane BohnenSenior Vice President, General Counsel & Corp. SecretaryMarch 3, 2023Shane Bohnen serves as the Senior Vice President, General Counsel & Corporate Secretary at Bio-Techne Corporation. He was promoted to this position on March 3, 2023. Before his promotion, Mr. Bohnen had been an attorney on the company’s legal team since July 2019. Prior to joining Bio-Techne, he spent 10 years in private practice as a life sciences litigator and seven years as in-house corporate counsel with a broad range of responsibilities and a global scope .

    Questions to Ask Management

    1. Given the 100 basis point headwind from incentive compensation accrual restatements impacting operating margins, what concrete steps are you taking to improve margins back to historical levels, and what is your timeline to achieve your long-term target of up to 40% operating margins?

    2. Demand for your COMET platform continues to outpace your manufacturing capacity; what specific measures are you implementing to scale production, and how will you address potential supply constraints that could limit growth in this high-demand area?

    3. The strong growth in your Molecular Diagnostics segment was partly driven by one-time factors like inventory normalization; how sustainable is this growth moving forward, and what factors give you confidence that momentum can continue into fiscal 2025?

    4. With instrumentation sales under pressure and peers experiencing weakness in this area, how do you plan to drive growth in your instrumentation business, and can the double-digit growth in instrument-related consumables be sustained without corresponding instrument sales?

    5. The Protein Sciences segment has been heavily impacted by macroeconomic pressures, especially in China and biotech funding constraints; what strategies are you implementing to accelerate growth in this segment, and how confident are you in a second-half recovery given the uncertainties in these markets?

    Share Repurchase Program

    Program DetailsProgram 1
    Approval DateFebruary 2, 2022
    End Date/DurationN/A
    Total additional amount$400 million
    Remaining authorization amount$180.7 million
    DetailsMitigate the dilutive effect of stock option exercises

    Past Guidance

    Q1 2025 Earnings Call

    • Issued Period: Q1 2025
    • Guided Period: FY 2025
    • Guidance:
      • Organic Growth: Mid- to high single-digit organic growth for FY 2025, with an exit rate in Q4 of low double digits.
      • Growth Progression: Low single-digit growth in the first half, moving to mid-single-digit growth as biotech funding returns. High single digits in the second half as Chinese stimulus funds are released.
      • Operating Margin: 100 basis point headwind to full-year adjusted operating margin due to incentive compensation accruals. First half margin 200 to 300 basis points lower than prior year; second half margin 100 to 200 basis points higher.
      • End Market Recovery: Gradual recovery expected over the next 18 months.
      • China: Stabilization expected, with growth rates picking up in the back half of the fiscal year due to government stimulus .

    Q4 2024 Earnings Call

    • Issued Period: Q4 2024
    • Guided Period: FY 2025
    • Guidance:
      • Organic Growth: Low single-digit growth in the first half, potentially mid-single-digit growth as biotech funding returns. High single digits in the second half as Chinese stimulus funds are released.
      • Operating Margins: Adjusted operating margins 100 to 200 basis points higher than end of FY 2024, aiming for mid-30s. Long-term goal of margins north of 35%, up to 40%. 100 basis point headwind due to incentive compensation accruals.
      • Segment Performance: Protein Sciences segment expected to recover fastest.
      • China Market: Stabilization expected, with significant growth in the first calendar quarter of 2025.
      • Overall Market Recovery: FY 2025 expected to be a year of gradual recovery, setting up for double-digit growth in subsequent years .

    Q3 2024 Earnings Call

    • Issued Period: Q3 2024
    • Guided Period: Q4 2024
    • Guidance:
      • Margins: Aim to achieve mid-30s margins by end of fiscal year.
      • Revenue: Expect revenues to be slightly higher in Q4 than Q3.
      • Organic Growth: Slightly challenged in Q4 due to tough year-over-year comparisons, particularly in China .

    Q2 2024 Earnings Call

    • Issued Period: Q2 2024
    • Guided Period: N/A
    • Guidance:
      • Organic Growth: Hopeful for stabilization, particularly in China, with potential for slight growth in Q4 if conditions improve.
      • Margins: Expect margins to improve sequentially, targeting mid-30% range by end of fiscal year for Q4.
      • General Outlook: Optimistic about long-term growth potential, expecting return to double-digit growth when markets normalize .

    These summaries reflect the guidance provided in each of the last four earnings calls, including the periods for which the guidance was issued and the periods they pertain to.