Bio-Techne - Q1 2024
October 31, 2023
Transcript
Operator (participant)
Good morning, and welcome to the Bio-Techne Earnings Conference Call for the First Quarter of Fiscal Year 2024. At this time, all participants have been placed in a listen-only mode, and the call will be open 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 (VP of Investor Relations & Corporate Development)
Good morning, and thank you for joining us. On the call with me this morning are Chuck Kummeth, Bio-Techne's Chief Executive Officer, Jim Hippel, Chief Financial Officer, and Kim Kelderman, Chief Operating Officer. Before we begin, let me briefly cover our safe harbor statement. Some of the comments made during this conference call may be considered forward-looking statements, including beliefs and expectations about the company's future results. The company's 10-K for fiscal year 2023 identifies certain factors that could cause the company's actual results to differ materially from those projected in the forward-looking statements made during this call. The company does not undertake to update any forward-looking statements because of any new information or future events or developments. The 10-K, as well as the company's other SEC filings, are available on the company's website within its investor relations section.
During the call, non-GAAP financial measures may be used to provide information pertinent to ongoing business performance. Tables reconciling these measures to the most comparable GAAP measures are available in the company's press release issued earlier this morning on the Bio-Techne Corporation website at www.bio-techne.com. Separately, we'll be participating in the Stifel, Stephens, Evercore, and J.P. Morgan healthcare conferences in the coming months. We look forward to connecting with many of you at these upcoming events. I will now turn the call over to Chuck.
Chuck Kummeth (President and CEO)
Thanks, Dave, and good morning, everyone. Thank you for joining us for our first quarter conference call. The Bio-Techne team continues to execute in a challenging environment as we deliver 2% organic growth for the first quarter of fiscal 2024, despite several headwinds that are impacting the broader industry, as well as Bio-Techne. The sources of these headwinds have remained relatively consistent during recent quarters, including a soft biotech funding environment, inventory destocking from a handful of our OEM customers, as well as broad economic challenges in one of our historically highest-growing geographies, China. While the primary culprits remain the same, the impact of the biopharma funding challenges in the U.S., as well as the evolving macroeconomic environment in China, were higher than our original expectations for the quarter, albeit not as onerous as we saw with many of our peers.
Despite these transitory challenges, our growth pillars remain intact and continue to perform well. Specifically, our GMP proteins business, ExoDx Prostate, and our ProteinSimple franchise all delivered impressive growth in the quarter. Our portfolio remains incredibly well-positioned in several high-growth and underpenetrated end markets, and our team will continue to leverage our strategic playbook and strong financial position to gain share, enter adjacent markets, introduce innovative products and solutions, and capitalize on the tremendous opportunity in front of the company. Before we dig deeper into the performance of the quarter, I'd like to personally congratulate Kim Kelderman on his recent appointment as Bio-Techne's incoming Chief Executive Officer, effective February 1, 2024. In the meantime, I will continue to lead Bio-Techne as CEO and work closely with Kim in his new role as Chief Operating Officer until Kim takes the reins as Bio-Techne's CEO in February.
I will continue to support Kim in a senior advisory capacity prior to my retirement from the company and the board on July 1, 2024. Kim has successfully led the diagnostic and genomic segment since joining the company in 2018. During Kim's leadership of the segment, the team gained significant market acceptance and traction with the ExoDx Prostate test. The revenue of our ACD business doubled. The segment portfolio was strengthened through the Asuragen and Lunaphore acquisitions, and multiple new product introductions and partnerships positioned the business for future growth. Prior to joining Bio-Techne, Kim ran multiple large businesses at Thermo Fisher Scientific, including most recently, leading its genetic analysis business unit. Kim will be taking over an incredibly strong and talented team, as well as a novel portfolio with leadership positions in some of the fastest-growing life science tools and diagnostic markets.
Kim has been working with me since 2009, so I can assure everyone that I know he is more than ready for this tremendous opportunity, and he is the right person to take Bio-Techne on our 10-year forward journey to $5+ billion revenue as a target, as outlined recently at our Investor Day in New York. I'd like to also thank both Will Geist and Jim Hippel, who created an incredibly difficult decision for the board. Jim, an extra thanks, as he too has been with me since 2009 and is the best financial partner I've ever worked with. Separately, I'd like to highlight Bio-Techne's latest corporate sustainability report, which showcases the continued progress the company is making on its environmental, social, and governance, or ESG, initiatives. The report is available in the corporate and social responsibility section of Bio-Techne's website.
As you will see in the report, Bio-Techne remains committed to our employees and the communities where we live and work. We are proud of the innovative culture we have built, as well as our commitment to corporate governance and operational integrity. Driving durable, sustainable, and responsible growth remains a cornerstone of our forward strategy. Now let's get into the details of the quarter, starting with an overview of our performance by geography and end market. Europe had a very strong quarter, as the region grew mid-teens overall, including particularly strong performance from our biopharma end market. As a reminder, Europe was the region that was first to experience the effects of the post-COVID slowdown, which contributed to a high single-digit decline in the comparable quarter of our last fiscal year.
That said, the European biopharma and academic end markets remain stable, and the new leadership team has maintained the positive momentum we experienced in the region over the last three quarters. In North America, we delivered, as expected, mid-single-digit growth, with the performance in the region nearing the growth rate we experienced in the region last quarter and last fiscal year. It's worth noting that this is the region where we are noticing the most impact from the soft biotech funding environment, as a subset of these customers continue to exhibit a disciplined approach to managing their businesses in the current environment. Now, let's discuss the geography that remains at the top of everyone's mind, China. This region declined low teens during the quarter and underperformed our original expectations, with the business climate deteriorating as the quarter progressed.
The funding challenges we highlighted in the last earnings call persisted in the quarter, as Chinese government funding for life sciences R&D at hospitals and academic institutions is significantly lower than last year. Given the challenging macroeconomic conditions in China, it remains very difficult to ascertain when R&D funding will stabilize and step back up again. Additionally, private equity and VC funding activity has slowed in the geography, which is creating more cautious near-term spending patterns for cash-dependent biopharma companies in the region. We view the temporary pause in China's growth trajectory as transitory, as the government remains focused on modernizing healthcare in both large metropolitan areas and rural communities. Our portfolio remains extremely well positioned in this geography, as our proteomic research reagents and analytical tools, and increasingly our spatial biology solutions, are the tools researchers rely on to advance scientific discoveries and improve healthcare.
We are as bullish as we have ever been on our long-term opportunities in China, but acknowledge that these headwinds will likely linger in the near term before improving. Now, I'll highlight the growth pillars that will propel our future, starting with those within the Protein Sciences segment, where organic growth was 2% in the current quarter. During the quarter, we continued to advance our portfolio of cell and gene therapy initiatives, as our portfolio of proteomic reagents and workflow solutions continue to enable our customers to further their therapeutic development work and make continued progress towards the commercialization of these next-generation therapies. Collectively, our portfolio of cell and gene therapy products and services increased over 25% in the quarter.
GMP proteins remain the cornerstone of our cell therapy offering, and Bio-Techne continues to benefit from having the broadest menu available, including several proteins that are unique to Bio-Techne. This broad offering is a critical selling point for customers working across the cell therapy spectrum, especially in regenerative medicine cell therapies, as these tend to require not only several different proteins in their workflow, but also require complex proteins that are very difficult to manufacture, playing right into one of Bio-Techne's top strong suits. Overall, our portfolio of GMP proteins grew nearly 40% in the quarter. We also continue to gain traction with our portfolio of GMP small molecules. Recall that these small molecules are key components in the reprogramming, cell renewal, storage, and differentiation processes that are key to regenerative medicine workflows.
This business grew almost 20% in the quarter and is on its way to becoming a significant contributor to our overall cell and gene therapy business. We are in the process of expanding our GMP portfolio to include additional media formulations, gene editing engineering capabilities, and antibodies, positioning Bio-Techne to remain a leader in this rapidly growing industry. Additionally, work continues to finalize our aseptic immune cell therapy manufacturing solution, which pairs our GMP proteins, GMP media, and Wilson Wolf G-Rex in a closed, sterile manufacturing solution. Moving on to our ProteinSimple-branded portfolio of proteomic analytical tools. Here, the team delivered 9% organic growth. It's worth noting that excluding China, the portfolio grew an even more impressive 18%, including over 35% growth in Europe.
Consumable pull-through from our growing installed base remains very strong and continues to grow on a per-instrument basis, reflecting the high value and productivity gains that these instruments deliver to our biopharma and academic customers. The ProteinSimple performance was led by our Simple Plex automated multiplexing ELISA instrument, branded as Ella, whose expanding menu of validated assays, including seven launches in Q1 and a growing install base, is driving consumable pull-through on the platform. We recently received ISO 13485 certification of our Wallingford, Connecticut, facility quality management system, demonstrating our commitment to producing products for clinical applications. With this important certification in hand, we are now ready to pursue clinical diagnostic opportunities on Ella, opening up a large potential end market for this fast, highly sensitive, and easy-to-use multiplexing immunoassay instrument.
Momentum continued in our biologics business, as we experienced continued uptake of our MauriceFlex instrument and strong demand for consumables. As a reminder, MauriceFlex's protein charge variant fractionation capabilities position this next-gen instrument as an easy-to-use replacement for legacy mass spectrometry fractionation methods, including ion exchange chromatography. This new application enters Maurice into a new $300 million market, approximately doubling the addressable market opportunity for the instrument. The capabilities of our legacy Maurice instrument, as well as the next-gen MauriceFlex, were recently highlighted by scientists from top pharmaceutical companies at the recent CE Pharm Conference, including a presentation from Pfizer scientists on MauriceFlex's capabilities for peak identification of AAV capsid proteins through fractionation.
I would note that there are several other MauriceFlex collaborations in progress with additional top-tier life science companies. Our fully automated Western blot solution, branded as Simple Western, also continued to increase its market share this quarter. The platform's ability to reduce the two day-long manual and messy Western blotting process into a three hour push-button, highly reproducible solution, continues to drive demand within our biopharma and academic customer bases. We are also seeing robust adoption of Simple Western in Cell and Gene Therapy applications, with the system increasingly being utilized to measure protein expression, potency, empty versus full capsid ratio, and for process impurity detection. Revenue from Cell and Gene Therapy applications and Simple Western increased over 25% in the quarter and now account for almost a quarter of the associated product rate of revenue.
Next, I'll highlight the growth pillars within our diagnostics and genomics segment, where organic revenue growth was flat in the quarter, current quarter compared to prior year, mostly due to the timing of large OEM orders within our diagnostics reagents business, as well as large lab orders for genetic tests within our molecular diagnostic business. I'll start with our ExoDx Prostate test, where we once again drove significant growth in test volume, as the valuable information on whether a man with an indeterminate PSA score should proceed with an invasive and potentially dangerous prostate biopsy, continues to resonate with both patients and physicians. ExoDx Prostate volume increased nearly 50% compared to prior year quarter, while revenue increased in the upper teens. Adjusting for a prior year cash to accrual adjustment, year-over-year revenue growth is approximately in line with our test volume growth.
As we highlighted during our recent Investor Day, applications for our exosome-based diagnostic platform are much broader than our current ExoDx prostate test. Our pipeline includes single gene mutation tests for monitoring several different cancers, a saliva-based test for the diagnosis of Sjogren's syndrome, a next-generation prostate cancer rule-in test, as well as a colorectal cancer screening test designed for early detection of both colorectal cancer and precancerous polyps. We look forward to sharing additional data on this exciting pipeline in coming quarters. Now, let's discuss our spatial biology business, which includes our ACD-branded catalog of over 47,000 unique probes, as well as the Lunaphore-branded spatial biology instrument, assay, and software portfolio. Our spatial biology business increased upper single-digits organically for the quarter, as our broad portfolio of multi-omic assays continue to play an important role in advancing gene therapy, neuroscience, and cancer research.
Within the portfolio, we are experiencing continued momentum in BaseScope, which enables the detection of target sequences down to one nucleotide differences, and microRNAscope for the visualization of microRNA and other nucleic acid targets. BaseScope and microRNAscope increased almost 20% and 50%, respectively, and are experiencing increasing acceptance and traction in gene therapy applications. Integration efforts of our latest acquisition, Lunaphore, are off to a great start, and the team is embracing their new home under the Bio-Techne umbrella. As a reminder, Lunaphore is currently commercializing its COMET instrument, a fully automated, high-throughput, hyperplex platform that does not require the use of conjugated primary antibodies. COMET's high value proposition is resonating with the translational research community, which is driving significant interest and rapid growth in its installed base.
We continue to make progress developing the first fully automated spatial multi-omic workflow that will leverage Lunaphore's COMET instrument, SPYRE antibody panels, as well as ACD's RNAscope HiPlex technology, to enable protein and RNA detection and visualization on a single slide. In summary, the Bio-Techne team continues to execute our strategic growth plan in this challenging environment. As you look at our relative performance to many of the life science companies that have reported so far this quarter, I'm especially proud of our team's execution and have even more confidence in the perseverance of our growth platforms. As we highlighted during our recent Investor Day, our portfolio of proteomic research reagents, Cell and gene therapy workflow solutions, analytical tools, spatial biology products, and liquid biopsy diagnostics are aimed squarely at a $27 billion addressable market with amazing long-term growth prospects.
Initiatives to cure cancer, neurodegenerative, and other diseases, along with understanding how these diseases develop and evolve, will remain a social priority for the foreseeable future, and Bio-Techne's portfolio will continue to play a critical role in these efforts. I am looking forward to when the transitory headwinds facing our industry subside, allowing the growth of our high-value tools to once again shine through. With that, I'll turn it over to Jim.
Jim Hippel (EVP and CFO)
Thanks, Chuck. I'll start with some additional detail on our Q1 financial performance, then give some thoughts on the financial outlook. Starting with the overall first quarter financial performance, adjusted EPS was $0.41 compared to $0.45 in the prior year quarter, a decrease of 9% over last year. Foreign exchange had an immaterial impact on EPS in the quarter. GAAP EPS for the quarter was $0.31, compared to $0.55 in the prior year. Q1 revenue was $276.9 million, an increase of 2% year-over-year on an organic basis and 3% on a reported basis. Foreign exchange translation had an immaterial impact, while acquisitions contributed 1% to reported growth. Moving on to our organic growth by region and end market.
In Q1, North America grew mid-single digits, Europe increased mid-teens, and China declined low teens in the quarter. As Chuck previously mentioned, the soft biotech funding environment remained a drag on our North American business, while Europe saw strong growth, but also had a less difficult comp as the region declined high single digits in the comparable quarter last year. For China, the funding environment continued to impact the region. Our long-term enthusiasm on China remains fully intact.... Healthcare remains a top priority for the government, and our proteomic reagents, analytical tools, and spatial biology solutions will play a critical role in advancing healthcare in this country. That said, the timing of this recovery remains incrementally more challenging to call at this point. Meanwhile, APAC, outside of China, increased low-single digits overall, with government funding constraints in Japan and South Korea.
By end market in Q1, both biopharma and academia, excluding China, grew upper single digits. However, the biopharma growth was much larger in Europe, given the less difficult comps. Below revenue on the P&L, total company adjusted gross margin was 71.3% in the quarter, compared to 70.9% in the prior year. The increase was primarily driven by productivity gains and foreign exchange, partially offset by the impact of the Lunaphore acquisition. Adjusted SG&A in Q1 was 31.3% of revenue, compared to 27.3% in the prior year, while R&D expense in Q1 was 8.7% of revenue, compared to 8.9% in the prior year. The increase in SG&A was driven primarily by the Lunaphore acquisition, and to a lesser extent, strategic investments to position the business for future growth.
The price increases implemented during the first half of fiscal year 2023 continue to offset the dollar impact of inflation to operating income, with pricing also largely offsetting the inflationary impact on our operating margin in Q1. Adjusted operating margin for Q1 was 31.4%, a decrease of 340 basis points from the prior year period. Excluding the Lunaphore acquisition, which closed at the beginning of Q1, adjusted operating margin was 100 basis points lower than the prior year due to strategic investments, which was partially offset by gains in cost management. Looking at our numbers below operating income, net interest expense in Q1 was $3.9 million, increasing $1 million compared to the prior year period due to higher debt levels, partially offset by higher interest income on cash deposits.
Our bank debt on the balance sheet as of the end of Q1 stood at $440 million, an increase of $90 million compared to last quarter, reflecting the Lunaphore acquisition, which was partially funded by debt and cash on hand. Other adjusted non-operating income was $1.6 million in the quarter, an increase of $0.4 million compared to the prior year, primarily reflecting our 20% share of Wilson Wolf's adjusted net income, partially offset by the foreign exchange impact related to our cash pooling arrangement. Moving further down the P&L, our adjusted effective tax rate in Q1 was 22%, a sequential increase from our Q4 tax rate due to international mix.
Turning to cash flow and return of capital, $59.4 million of cash was generated from operations in the quarter, and our net investment in capital expenditures was $13.6 million. Also, during Q1, we returned capital to shareholders by way of $12.7 million in dividends. We finished the quarter with 161.9 million average diluted shares outstanding. Our balance sheet finished Q1 in a strong position, with $148.7 million in cash, and our total leverage ratio remained below 1x EBITDA. Going forward, M&A remains a top priority for capital allocation. Before we get into the segment results, I'd like to quantify some of the impacts from headwinds we experienced in the quarter compared to our initial expectations for organic growth.
A more challenging China funding and macro environment than expected represented an additional approximately 200 basis points headwind, while order timing in our Diagnostics and Genomics segment was another unanticipated headwind of approximately 100 basis points. The more cautious spending from our biotech customers, which we primarily experienced in the U.S., is more difficult to quantify, but impacted the business nonetheless, especially in the last couple of weeks of the quarter. Now I'll discuss the performance of our reporting segments, starting with Protein Sciences. Q1 reported sales were $204.7 million, with both reported and organic revenue increasing 2% compared to the same period last year. As a reminder, it is our Protein Sciences segment that has the most exposure to the China geographic region, as well as to the biotech end market.
Operating margin for the protein sciences segment was 43.2%, an increase of 20 basis points compared to the prior year quarter, as productivity gains and cost management more than offset the impact from strategic investments. Turning to the diagnostics and genomics segment, Q1 reported sales were $72.8 million, with reported growth increasing 4% compared to the same quarter last year. Organic revenue growth for the segment was flat, with acquisitions having a 3% impact and foreign exchange having a favorable impact of 1%. As Chuck previously mentioned, organic growth was negatively impacted by the timing of certain OEM and lab orders for our diagnostic controls and genetic testing products. However, our ExoDx diagnostics business remained very strong in the quarter, as our fortified marketing message, strong clinical data, and the updated Medicare LCD drove both test volume and revenue growth.
Also, our spatial biology business delivered upper single-digit growth in the quarter, with continued growth in RNAscope and strong performances in our BaseScope and microRNAscope product lines. We are very pleased with the traction Lunaphore is having with its COMET launch. As Chuck highlighted, initial integration efforts are progressing well. While Lunaphore will not be in our organic growth rates for the year, they are executing well on their plan to grow more than 100% for the fiscal year. We continue to expect Lunaphore to contribute at least 1.5% to our overall company's reported growth for fiscal 2024.... Moving on to the Diagnostics and Genomics segment operating margin at 0.7%.
The segment's operating margin decreased compared to the prior year's 12.4%, due primarily to the impact of the Lunaphore acquisition and, to a lesser extent, strategic growth investments as well as unfavorable product mix. Before we get to Q&A, I'd like to provide some color on our current thoughts regarding the near-term outlook. As many of our life science tool peers have already mentioned, the macro environment in China continues to weaken, and the biopharma end market is softening, especially in the U.S. While we expect these headwinds to negatively impact our growth in the protein sciences segment relative to Q1, we also anticipate the timing of OEM and lab orders within our diagnostics and genomics segment to be accretive to growth relative to Q1. Net-net, we are forecasting overall company organic growth to be about flat in Q2.
Beyond Q2, the macro environment is too dynamic to provide guidance with any sort of resolve. While the headwinds of OEM destocking should be behind us in the second half of fiscal year 2024, it appears right now that a China and biopharma recovery will not be tailwinds as we once believed. Whatever the macro environment throws at us in the near term, our excellent management team and dedicated employees will continue to drive productivity to protect the bottom line, all while selectively investing in the growth pillars that will accelerate our overall company's growth rate when the market headwinds subside and turn back into tailwinds, and the winds will turn. As Chuck said, society's priority to cure disease is inevitable and endless. Bio-Techne is ready now and will be even more so in the future to help our customers fulfill the societal need.
That concludes my prepared comments, and with that, I'll turn the call back over to the operator to open the line for questions.
Operator (participant)
Thank you. We will now be conducting a question-and-answer session. We ask that all callers limit themselves to one question and one follow-up. If you have additional questions, you may re-queue, and those questions will be addressed, time permitting. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Thank you. Our first question comes from the line of Puneet Souda with SVB Securities. Please proceed with your question.
Puneet Souda (Senior Research Analyst, Life Science Tools and Diagnostics)
Yeah. Hey, guys, Puneet here from Leerink. So just, Chuck, could you maybe just help us clarify? I know a lot of uncertainties right now with China funding, and, and, just overall macro, but, you know, should we expect a sequential, recovery, and growth in the second half of this fiscal year? I know you said flat for the next quarter, but should we expect that to continue to step up from that? And what does that mean, in terms of the overall growth for the full fiscal year? If, if Jim could elaborate on that, that'd be super helpful.
Chuck Kummeth (President and CEO)
Sure, Puneet. So we just came back from China, and you know, we are pretty much saying what everyone else is saying on their calls here this past week or two. This quarter was disappointing. China definitely has cratered. They're out of money. We did talk about funding returning starting next quarter, last quarter, and there are some glimmers of that, but not enough to be material. So this next quarter is more of the same. Our, you know, the second half, we're hopeful, but there isn't anything, any real evidence right now that that there's gonna be any kind of a V recovery or recovery at all, to be honest. But the team's very hopeful. There's energy there. Streets are full. The economy looks great at a consumer commercial level.
But I think in terms of government funding, you know, for this segment, I think is right now we're kind of a wait and see. Met with a bunch of very important KOLs, and they all said the same thing, that there's a lot of hope and there's a lot of expectations. They don't doubt it's coming, but the government's not real forward on their planning, obviously. So we're all kind of wait and see. But you know, other segments there look better. It's just a downtime for biotech, and we're gonna go. We're gonna grind through it, I guess.
Jim Hippel (EVP and CFO)
And Puneet, I'll just add, I mean, you know, as Chuck alluded to, there's no sign right now any kind of V or even U-shaped recovery in this fiscal year, so we're just playing it fairly conservative. You know, the China situation is, as Chuck outlined, the other thing dynamic we saw was the U.S. market start to soften in the last couple of weeks of the quarter, and that has continued in October. So, that's reflected in our kind of flattish guidance here for Q2. But what's unknown is whether that trend continues beyond that or whether it stabilizes. So hence, we're not commenting on the back half of fiscal year 2024 at this point.
Chuck Kummeth (President and CEO)
I do want to also emphasize that, you know, you take out China, we had a not too bad a quarter, you know, mid- to high-single-digit growth, near 20% growth in instruments. All our growth platforms are growing actually right on plan, more or less. They just aren't big enough to cover the company right now. But, you know, so it won't be too much longer, you know, this kind of stuff won't matter that much. And, I do believe in a couple of quarters, China will be, start becoming a better story. But right now, for one more quarter at least, you know, we're all in a wait and see, so.
Puneet Souda (Senior Research Analyst, Life Science Tools and Diagnostics)
Okay, that's helpful. Then, you know, could you elaborate a bit more on sort of what you're seeing on the Wilson Wolf side of the business? The contribution you're expecting here for, you know, cell and gene therapy, and how much, if any, that could contribute to, you know, sort of the second half, you know, growth here in the fiscal second half. And then, I mean, it seems like, you know, a number of,
... unexpected pressures showed up in Diagnostics and Genomics segment. Maybe just, you know, talk to us a little bit about sort of the timing and recovery in that as well.
Chuck Kummeth (President and CEO)
Okay. I'll mention Wilson Wolf, and I'll let Kim discuss DGS. You know, Wilson Wolf is kind of more of the same, very flattish. We've not lost any customers. We're kind of grinding forward with them, too. They've got 800+ customers. We've got 400 overall with our protein side, but they are kind of the de facto standard out there in bioreactors. And you know, John's been focusing a lot on ScaleReady, the you know, the sister business that'll also carry our workflow through. That's going extremely well. We have just launched you know, our our new versions of our protein to be working towards a sterile type of a bioreactor module, I guess, a bundle. So everything's kind of going okay there.
We're just kind of, you know, waiting for the overall uptick, but we're not losing ground. It's just kind of treading water right now, and which means, you know, they're still making lots of revenue, a meager 75% operating income and, you know, pushing forward. So they're using all that income to keep investing and driving faster, so... And then Kim wants to follow?
Kim Kelderman (President, Diagnostics and Genomics Segment)
Yeah, Puneet, thanks for the question. So, obviously, larger companies have been optimizing their inventories, and for us, that mainly impacted the DRD organization as they mainly sell into the larger IVD companies. It also affected MDD a little bit, specifically in the genetic testing portfolio, which is the legacy of Asuragen. They sell into the laboratory space and the larger laboratory space. And, of course, these laboratories also want to optimize their inventories, specifically going into the end of the calendar year. But we see those as temporal, and we think that we're at the back end of the destocking phase.
Operator (participant)
Our next question comes from the line of Dan Arias with Stifel. Please proceed with your question.
Dan Arias (Analyst)
Hi, guys. Thanks for the questions. Chuck, Simple Western growth stepped up nicely this quarter, particularly given the instrument environment that we're in. What do you think drove that, and do you see that as sustainable? What do you think a reasonable growth rate for that portion of the portfolio might be this year?
Chuck Kummeth (President and CEO)
No, that's a great question. I think we're kind of back to original type thinking on Simple Western. I think we had roughly 9% growth or something like that with it. Consumables was even higher, much higher. We're knocking on the door of 3,000 out there, which is still under 20% penetration just for the Western blot application alone. And there's a bunch of new applications coming, using the instruments, including the diagnostic-related applications. So we're super bullish on our Simple Western platform. It's... We're in early innings yet, so I still think the long-term growth rate for this, you know, talk like a decade, is like a 15% CAGR for a decade. It's going to go up and down. You know, last year we're still fighting comps from last year.
We had 50% type growth last couple of years. So, you know, we're still kind of working through that, and we're still showing growth right now, strong growth and double-digit growth in consumables. So long term, I think it's going to bounce around 10%-30%, but it's going to be an average of 15, I think. And this is the only game in town where this type of technology has got strong IP. No one's ever been able to get close to it. It's automated Westerns, which is a nightmare for people, so it's nothing but a great future.
Jim Hippel (EVP and CFO)
Yeah, Dan, I'll just add to that. As Chuck just ended with, I think it speaks to the productivity nature of the instrument. We've been saying all along, it's an amazing productivity tool, and in this times of tightening budgets and concerns about funding-
Chuck Kummeth (President and CEO)
Should help it.
Jim Hippel (EVP and CFO)
It, that's what's driving the consumables growth there. You know, so it truly is, you know, the productivity tool. We've been saying it all along.
Dan Arias (Analyst)
Yep. Okay. And then maybe just on ACD, 9% growth, I think you said, during the quarter. Do you think that could get back up into the double-digit range? And then along those lines, can you just touch on where you are now, just in terms of the need for additional commercial scale up there? And then what do you think usage in the clinical translational setting is a reasonable expectation and one of the things that you need in order to get back up into that two-digit number?
Kim Kelderman (President, Diagnostics and Genomics Segment)
Yeah, Dan, it's Kim. Thanks for the question. Absolutely, I think it was mainly APAC slowing us down a little bit this quarter. By fixing just that, or normalizing, we will be back in the double-digits. That's the entitlement for not only the end markets, but also our unique solution with the RNAscope portfolio of products. Think about Lunaphore is going to give this business a boost as well, right? And we will definitely have more pull-through on the Lunaphore boxes, the COMET specifically. And then last but not least, our clinical business has been outpacing the overall product portfolio already, and it's becoming more than 10% of our revenues portion.
So, I think the undoubtedly answer is yes, it will be back in double-digits.
Dan Arias (Analyst)
Okay. Just really quickly, Kim, is the percentage of revenues from in China for your spatial business similar to the overall corporate average?
Kim Kelderman (President, Diagnostics and Genomics Segment)
No, it's much lower.
Dan Arias (Analyst)
Okay, thank you.
Kim Kelderman (President, Diagnostics and Genomics Segment)
Thank you.
Operator (participant)
Our next question comes from the line of Jacob Johnson with Stephens. Please proceed with your question.
Hannah Hefley (Senior Research Associate)
Hi, good morning. This is Hannah on for Jacob. Thanks for taking my questions. If the macro remains a headwind well into 2024, how does this impact your view on organic investment? Will you try to manage profitability, or does this change your approach to organic investment?
Chuck Kummeth (President and CEO)
... Yeah, Jim, can I cover this?
Jim Hippel (EVP and CFO)
Yeah, the short answer is no. I mean, we are putting in productivity measures in place. We have been anticipating this throughout the quarter, and we continue to do that. We are, of course, pacing our investments accordingly, but our intention is to hold the margin guidance that we gave out earlier in the year and manage our productivity to that while still investing in our growth platforms. So we're—That's what we're paid to do, is manage the support of the business, given the current environment, while still investing for the future, and that's what we intend to do.
Hannah Hefley (Senior Research Associate)
Thanks. And then, can you talk about the outlook in proteins and antibodies for the remainder of the year? Do you expect any of the bulk orders to be coming back?
Chuck Kummeth (President and CEO)
Yeah, I'll cover that. I just had a meeting yesterday with the team, and bulks are on the rise. So that's a very good early indicator that OEM business will be returning. Destocking, as Jim said, is kinda largely behind us. We're starting to see discussion on orders now and some very large orders. So I think we're turning the corner on that. I think our run rate business is hopefully kinda bottomed here, and we'll start to position that out. I mean, we had probably the worst quarter in 10 years at Fisher, this last quarter, and we see that kind of flattening as well. I mean, they talked about it in their call as well, and the segment that lives in it couldn't have been very great.
But, you know, these labs are running out of stuff, and they've got to start buying again, and we're starting to see the first inklings of that. So we think run rate will start improving some, you know, and I think our retail overall will start improving. Remember, now, our-- that's not a majority of our revenue, so it takes all these things together to get us in the double-digit growth. But, you know, they all matter, and this part here, I'm kind of bullish looking forward, finally.
Operator (participant)
Our next question comes from the line of Patrick Donnelly with Citi. Please proceed with your question.
Patrick Donnelly (Analyst)
Hey, guys. Thanks for taking the questions. Maybe first, just on the biopharma performance in the quarter, can you just talk about what you saw across the customer set, and how things progressed throughout the quarter, kind of, you know, the linear performance? And then maybe just disaggregate between the trends, smaller biotech versus mid and large pharma. You know, a few peers suggested things maybe deteriorated as the quarter went. So curious what you guys saw.
Chuck Kummeth (President and CEO)
Yeah. Well, overall, for the company, our academic versus biopharma was largely even, about the same, but it was lopsided. So it was much stronger for biopharma in Europe, okay, than it was in U.S. U.S. was low, almost mid-single-digit growth. So that's a much poorer performance than usual for us in U.S. As Jim said, most of our pain was in the U.S. and then China, and it was on the biopharma side. All in, without China, we actually didn't do too bad because academic was not too bad. I mean, probably better than many quarters, the past quarters, to be honest. So we're waiting on that biopharma to come back, and of course, as you mentioned, biotech is part of that biopharma, and biotech is still soft out there.
The funding environment for biotech, small to medium, you know, companies going after their second or third round or trying to get that next wave of clinicals going or rejuvenate the clinicals they're in, it's just softer. They're all being very careful because money's tight. It's gonna change, but it's gonna be a quarter or two, I think, on that part of biopharma. Pharma is just being conservative because they're just being conservative because they just see the, the, you know, the winds, the way they're looking, and that, that can turn on a dime. I'll give you some evidence why that can be very, very, you know, very quick to move.
We actually had a very good quarter on our immunoassay, ELISA, DuoSets, you know, high-single-digit growth, and that was not the case a quarter or two ago. So that could be early, you know, evidence of things starting to flip, 'cause that's mostly pharma driving most of that business. So ELISA is still more or less the standard for driving testing and clinicals, so.
Patrick Donnelly (Analyst)
Okay. That's helpful, Chuck. Thanks. And then maybe just a follow-up on China. I guess, what do you guys need to see, you know, to get a little more constructive in that market? Obviously, the prior guide, you're talking maybe a little bit about a second half recovery. You know, curious what you're baking in at this point in terms of the year for China and if there's any visibility into a level of improvement. Thank you, guys.
Chuck Kummeth (President and CEO)
Yeah, you know, with... We went how many quarters in a row at 25% growth or so? So, you know, we're definitely in a lull right now. This, you know, this is a negative teens% quarter coming off of a, you know, high teens% quarter growth last quarter. But going forward, it's gonna be more of the same. I think, you know, flattish should be hopeful the next quarter or two, to be honest. So, the second half, our Q4, you know, who knows? I mean, it wouldn't take. We're not that big in China, right, overall, so it wouldn't take that much or that many orders or, you know, rejuvenation in any area to actually get back into some growth. But we'll just have to wait and see.
We're just, you know, we're just gonna be cautious and not overpromise. There's not a lot of evidence, but the attitude is very high. Our team is at full strength. We have zero attrition. Talked to a lot of customers personally here a couple of weeks ago, and actually, they're fairly bullish as well. We're just waiting for the government to start, you know, loosening up here with what they usually do in April, and they still haven't done it. But once they do, you know, people will start talking favorably again about China. And you got to believe, we've talked to a lot of people, healthcare is still number one as a priority for China. You know, it looks, it looks great, you know, when you're in the middle of Shanghai.
You don't have to go too far outside the city, and you start seeing why the government is still concerned about healthcare.
Operator (participant)
Our next question comes from the line of Catherine Schulte with Baird. Please proceed with your question.
Speaker 13
... Yeah, hi, everyone. This is Tom on for Catherine. Wanted to maybe dig into Europe a little bit. Obviously, had a really strong quarter from an organic growth standpoint. Understand that there are some comp dynamics within that number, but kind of flagged the region as a, you know, perhaps leading indicator of some of the softness. So curious to see, you know, kind of what were the drivers here, and if you have anything to flag from a, a leading indicator standpoint, within Europe?
Chuck Kummeth (President and CEO)
Sure. Well, first, as you mentioned, the comps were quite easy, so that helped a lot. But, you know, 15% organic growth is 15% organic growth. That's, it's a great quarter to have that. We're at least not talking about a negative Europe right now. So we're two or three quarters into a real recovery for us in Europe, so that's also part of the story. We have a new management team in place. They have done some reorganization a couple of quarters ago, and quite frankly, it's working. We're getting more synergies, we're getting more cross-selling, we're nearly at full strength. We've invested more salespeople, as an example, in the Nordic regions. The new leader is German. You know, Germany should be our biggest subsidiary in Europe, and it's not, and he'll be correcting that.
There's already been great, you know, evidence that they were gonna have a strong, you know, future, I think, in Germany with him at the helm. And, I guess wait and see. But, right now, I'm not focused too much on Europe for a change. Things are going pretty well.
Speaker 13
Great. That's, that's helpful. And, and then, you know, clearly, we, we talked about a number of headwinds throughout the space, you know, that are popping up throughout peer reports. You know, but with, with that in mind, you know, I was wondering if you had any comments on or your thoughts around the M&A landscape. I mean, what does the funnel-
Chuck Kummeth (President and CEO)
Yeah
Speaker 13
... look like here? Is there any more willingness among private to, you know, maybe enter those conversations, kind of, given where we are from a macro perspective?
Chuck Kummeth (President and CEO)
Yeah, well, it's we've never been busier, to be honest. It's, I said all year, it's gonna be a great year in M&A, and we've, we've landed Lunaphore. I, I just came back from Aldo, where I'm on the board, and I've never received more confidence about a deal in my entire tenure here as this Lunaphore deal. It seems like everybody wanted it. So it's gonna be a marvelous platform, and it has lots of applications. And, you know, did we mention the growth, you know, year-on-year? 170%. This thing is exploding. It's gonna be a wonderful asset, you know, and Kim personally closed that deal. We've been involved in others. I mean, we just saw Olink, you know, we were there. We, we know a lot about Olink.
We sell them a lot of products, and, you know, they're a good partner, and we look forward to continuing our partnership on many fronts with Thermo Fisher, with Olink as well. So it's been a great relationship with Thermo, and, we don't see any problems there, but, we'd sure like to pick up a few more assets like that. There are lots of them out there. You mentioned private. This is definitely a year to be looking at, smaller deals, private deals, deals in the core, even that, you know, funding is tight, and, and, we're seeing multiples kind of picking up. The price tags in these latest deals have been pretty good, and that gives hope for owners, and they, you know, they pick up the phone.
So I'm still expecting a pretty, pretty good, you know, coming year here for M&A. We have lots of purchasing power for our size, and we will try to use it. And I mean, I'll be gone soon, but I'm sure Jim and Kim and the team here will continue the mission on that, so.
Operator (participant)
As a reminder, if you would like to ask a question, press star one on your telephone keypad. Our next question comes from the line of Matt Larew with William Blair. Please proceed with your question.
Matt Larew (Senior Equity Research Analyst, Life Science Tools & Healthcare Delivery)
Hi, good morning. Chuck, something you, I think Jim called it out in his comments, was the headwind around biotech funding, and I think you said that hurt, especially in the last couple weeks of the quarter. And so given that, you know, biotech funding has been under pressure for some time, just, just curious if, if there's anything that you picked up on in the last couple of weeks or, or have noticed since, on that front?
Chuck Kummeth (President and CEO)
Yeah, I mean, we've been saying how biotech is, was relatively stable for us after its initial kind of drop in the first part of fiscal year 2023, and that stabilization was pretty consistent up until, like I said, the last couple of weeks, we saw the run rates drop off. We saw some larger deals not close, and that's kind of continued here in October. I don't have a good answer as to why that's the case, except to say that all of our peers are pretty much saying the same thing. So it appears like as we get into the year-end here, there's another round of belt-tightening going on across biopharma, especially in biotech.
There's some optimism that it's an end-of-the-year belt-tightening exercise, and once we get into the accounting year 2024, but new budgets get approved at the business level, that we'll start to see you know the pickup in activity. But again, we're. It's a little bit too early to tell at this point.
Matt Larew (Senior Equity Research Analyst, Life Science Tools & Healthcare Delivery)
Okay, and then sort of aggregating your comments, it sounds like, you know, we should be thinking about China continuing down in this low teens as we're modeling now, but obviously growth in the business ex China. And that's fair to say, even though you're not actually providing guidance?
Chuck Kummeth (President and CEO)
That is fair to say, and that's consistent with Q1. I think, you know, one of the biggest drivers too, in terms of, you know, you think about the second half and so forth, is diagnostics and genomics. So our growth would have been better this quarter if it weren't for those timing issues that Kim talked about. And so we do see a nice snapback in the diagnostics genomics segment going forward. And to reiterate what I said earlier, you know, in the near term, protein sciences is going to still be very challenged by China. China is gonna get worse before it gets better. The view from our teams out in China we just visited is that Q2 is hopefully the bottom.
The question is, is it a dead cat bounce for a while, or does the funding come back in the early part of calendar year 2024? That remains to be seen.
Operator (participant)
Our next question comes from the line of Alex Nowak with Craig-Hallum. Please proceed with your question.
Alex Nowak (Senior Research Analyst, Diagnostics & Life Science Tools)
Okay, great. Good morning, everyone. Kim, I think we're all very excited to work with you in the CEO position. But maybe just expand, maybe the whole team here. Could you expand on the internal search process? It sounded the board considered Will and Jim as well. What ultimately led to the decision here?
Chuck Kummeth (President and CEO)
Well, I can't speak for the board, but we did announce very early. I went through that quite carefully. I mean, it's going on a year and a half ago. I think it was very clear why we announced it. One, which is uncommon, was to give enough time to be very thoughtful in the process, look at leading executives that might have non-competes to work through. I think the board went through an extensive and exhaustive list, doing their fiduciary duty.
I do know that there was more than half a dozen externals on the list at one point, and, but I think to say more or less what Bob had said at a meeting recently was, there just didn't seem to be that big a difference in what they thought the experience levels and the abilities of the externals versus our three top-notch internal candidates, which I've spent the last decade, and in some cases longer, from two different companies. And so why take the risk externally was their point of view, and I do think it was a tough decision, as I mentioned, and you know, Kim's thrilled.
Jim and Will, I'm sure, you know, are happy for Kim, but we're, they're still here, and we've been a good team with very low politics for many years together and both here and Thermo Fisher, where we all came from, and I see no reason why it won't continue. We've got a lot of work to do. Our stock is down like everybody else's in this industry, and so there's a lot of potential upside. We see a path to a $5 billion revenue company in 10 years, and my guess is the stock will be much higher then. So they'll probably stick around.
Alex Nowak (Senior Research Analyst, Diagnostics & Life Science Tools)
Makes, makes total sense. And, and Kim, there's always been at Bio-Techne, this unique combination of, you know, biotech products and then, call it, diagnostics and genomics. Would you anticipate with this move here, that Bio-Techne is going to lean a little bit more diagnostics-focused after the transition, or are you very focused on keeping this, you know, truly well-defined, high-growth areas?
Kim Kelderman (President, Diagnostics and Genomics Segment)
Absolutely. So, the latter. There's no internal bias to either one. I think we have defined our core growth platforms, our true growth platforms, our vertical markets that we're focused on, and I'm going to love all of them equally. And on top of that, some of them have higher potential than others, and we're going to invest in the true growth platforms, and that's going to be the best ones for the company as well as for the shareholders.
Operator (participant)
Our next question comes from the line of Paul Knight with KeyBanc. Please proceed with your question.
Paul Knight (Managing Director & Senior Equity Research Analyst, Life Science Technology)
Yeah, thanks very much. Chuck, you know, you're a long-time China expert. When you look at the funding, do you—what, what portion is the government funding, and what portion is this biotech private sector demand that, I guess, developed in the last five years? So what's, what's kind of the proportion of this kind of funding discussion you're seeing, or your perspective would be super interesting?
Chuck Kummeth (President and CEO)
It's a great question, and it's probably a very difficult answer to really answer definitively. You're absolutely right. In the last five years or so, it's been definitely a drift away from solely relying on government funding and government plans. And the biotech sector has definitely grown in China, and there have been some companies that have come, you know, and become real companies, you know, like BGI come to mind, that have been very successful. I think private equity, VC money has grown. I think you've got a lot of Chinese American people, you know, that are Chinese in descent, have gone home and taken with them business principles and business models from America, and it's gone quite well.
We have some great friends there. We know some. There have been some great track records of some Chinese firms that have been doing, you know, venture and done quite well. The percentage, I think, though, is hard to get at. I think, you know, we still, you know, we're going more and more direct all the time, all this there, but we still mainly fulfill through these master distributors in China. And so it's a little bit hard to understand, you know, you know, where it all really is coming from. There's a run rate component as well, and I think that is largely driven by institutions which are largely government-funded. We have some growing OEM opportunities as well, especially in our DRD segment.
And there are companies, you know, like Mindray and others, that have been around a long time, very successful in growing double-digit, that have taken a bigger and bigger, you know, piece of our business and going direct with us. But, so the government portion is definitely shrinking, but it's still such a major portion that it's going to drive the overall, you know, size of the business and the overall, call it, the pulse of the economy over there. Paul, I would add to it. I would add, if I could, that.
Jim Hippel (EVP and CFO)
... Perhaps unlike the U.S., the government funding in China has more of an indirect impact on VC funding than it does in the U.S. I think VC funding in the U.S. is irrespective of what NIH funding does. But in China, the VC funding often will follow or accentuate what the government does. So, that's why following the government money is really the lead, we believe, on where the direction, you know, direction of where it's, of where our space is going there.
Chuck Kummeth (President and CEO)
Yeah.
Paul Knight (Managing Director & Senior Equity Research Analyst, Life Science Technology)
Yeah. You know, what, that follow-up on that then to me would be: it does appear that the government, you know, clearly is behind hospitals and core healthcare. Some numbers across in the industry show improvement there. But do you think the government still is behind fundamentally picking up R&D to create that biotech sector? So, yeah, that would be my last follow-up. Thanks.
Chuck Kummeth (President and CEO)
I think they're very bullish on that. I think that's something they definitely want. China wants to be in a leadership position as best they can in biotech and life sciences and not be in a predicament like they are in semiconductor, for sure.
Operator (participant)
Our next question comes from the line of Justin Bowers with Deutsche Bank. Please proceed with your question.
Justin Bowers (Equity Research Analyst, Healthcare)
Hi, good morning, everyone. So just sticking with you know, the topic du jour, where you talked about next quarter being potentially the trough for China, and somewhat of a philosophical question, but if we exclude hope and return of government funding and just think about the infrastructure that's in place now and what's needed to sustain the business, is 2Q sort of like a good reflection of the run rate? And, you know, just taking a step back, I mean, you guys are outperforming peers a little bit in that market. You know, some are down 30, 40, 50%, right? And, you know, there's only so many quarters you can have those sorts of drawdowns before you start, you know, cutting into the bone.
Chuck Kummeth (President and CEO)
Yeah.
Justin Bowers (Equity Research Analyst, Healthcare)
So, just any thoughts on that would...
Chuck Kummeth (President and CEO)
Yeah, it's a good question. The institutions there, we had a good comment from our leader in APAC this week, and he said, "Well, they're not really into cutting people. They're just sitting around playing mahjong, waiting for money to come in." So the teams are there, and you're right, they've got to get work done, and they are labs, and they've got run rate needs. And I think they're, you know, it's about growth, it's about future growth, it's about money for new programs, but there is a certain level of keep the lights on funding happening. So it's shrinking, but it's not gone away, you know? So, I mean, you got to put it in perspective there, I think. I think other companies tough with that, too.
You know, we had 17% growth last quarter, and this quarter, we're down mid-teens. You know, maybe it'll end up being flat, but you know, it isn't like there's no money, no funding, and people aren't working or going to work. They're going to work, and they're doing work, but there isn't funding for new programs right now. So everything's kind of at a standstill, waiting on that. So that's really the tone going forward. Don't know of any real layoffs. We have our full team right now, and there isn't much attrition. I don't think they're that kind of economy anyway, but they are playing a lot of mahjong right long-term, waiting for the checks to come in. So it's pretty happy team, too. I mean, it's...
If you've gone to China as many times as I have, I'm just always come back pretty energized because they're just such hardworking people, and they just really enjoy seeing you, and they really are authentic, and you'll never get more honest questions and honest answers from than you will from the teams in China. You know, your teams or customers or anyone for that matter, so just love it.
Justin Bowers (Equity Research Analyst, Healthcare)
Got it. And then just one follow-up and sort of ending on a more positive note. Within the ProteinSimple franchise, you talk about a lot of runway left. Where have you had the most success? Which sort of, you know, accounts or which end markets and penetrating, and where do you think there's more sort of education that needs to happen around adoption of the platform?
Chuck Kummeth (President and CEO)
Well, yeah,
Justin Bowers (Equity Research Analyst, Healthcare)
You know, 15% growth going forward is highly attractive, and the comps that you put up this quarter as well, so.
Chuck Kummeth (President and CEO)
Yeah. Well, we do, you know, we've got a stable of nice businesses here, a good dozen or so platforms, but three of them are the three most important, where we put most of our energy and our funding, all had great quarters, with 50% growth in exosome. We had nearly double-digit growth in spatial. We had solid, you know, growth in cell and gene therapy, 40% in GMP proteins. We're gonna more than double the number of proteins that come out of the factory this coming year. We're building a new factory in China for GMP proteins because the demand there is actually accelerating as well. So yeah, you know, I think now is the time to be thinking ahead and not be short-term thinking.
It isn't just our company stock, it's a lot of them in our industry. You know, a year from now, this could all be behind us, you know, and there's gonna be a fast flight back to quality earnings, and that's us. You know, we make money, and we operate well. But, you know, we're definitely in a recession. In fact, the whole world's waiting and talking about, you know, rates, and interest rates are a big issue, obviously, and waiting for a pivot and whether or not we can hit a soft landing or, you know, for the economy. I'm an old pole vaulter.
I would say in life sciences, we missed the pit, so in terms of life sciences, it was a hard landing. So we're gonna, you know, but we'll get through it. Disease, neuroscience, cancer, they're not going away on their own. And you know, the big macro, you know, trends out there, aging, obesity, things like that are just getting worse, not better. So, you know, our time will come again, and smart investors will be there early, so.
Operator (participant)
Thank you. We have reached the end of the question and answer session. Mr. Kummeth, I would now like to turn the floor back over to you for closing comments.
Chuck Kummeth (President and CEO)
Well, again, thanks for the quarter. Probably my last full earnings call. This is, like, number 42, or something like that. Kim will probably take more of a lead next quarter, and I'll be around for a couple more or so. But we're all pretty energized here and still having a good time and we love what we do, and we love, we love the science, and we... Anyway, we'll see you next quarter. Thanks.
Operator (participant)
Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.