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    BIO-TECHNE (TECH)

    Q3 2024 Earnings Summary

    Reported on Jan 10, 2025 (Before Market Open)
    Pre-Earnings Price$63.21Last close (Apr 30, 2024)
    Post-Earnings Price$70.54Open (May 1, 2024)
    Price Change
    $7.33(+11.60%)
    • Bio-Techne's ProteinSimple platform demonstrated double-digit growth in both instrument placements and consumables, showcasing the resilience of their instrument portfolio and positioning the company for accelerated growth as markets normalize.
    • The company's GMP protein business for the immunotherapy market has sufficient capacity for the next decade, eliminating capacity constraints and supporting long-term growth in the CAR-T and cell therapy markets.
    • Investment in Wilson Wolf, which participates in 45% of all clinical trials in the cell and gene therapy space, is yielding positive results with the company growing at 14% this quarter and operating margins over 72%, positioning Bio-Techne to benefit from this growth and future ownership.
    • The company expects organic growth percentage in Q4 to be challenged, mainly due to tough comps in China, where they had mid-teens growth in the prior year period, creating a ~1.5 point headwind.
    • There is uncertainty about when markets will return to normal growth rates, affecting expectations for future growth; the company is not predicting exactly when the markets will come back to their normal rate.
    • Achieving the mid-30s operating margin target by the end of the fiscal year is "not a slam dunk", indicating potential challenges in improving margins as planned.
    1. Fiscal Year 2025 Growth
      Q: Can you achieve high single-digit or 10%+ organic growth in FY’25?
      A: Management is confident that when the market returns to mid-single-digit growth, they will outperform by 500 to 1,000 basis points ( ). This implies they could achieve high single-digit or even double-digit organic growth in fiscal year 2025, depending on market recovery timing ( ).

    2. Margin Outlook
      Q: What are your margin expectations for Q4 and beyond?
      A: The goal is to reach mid-30s margins by fiscal year-end ( ). While not guaranteed, management believes it's within reach and views current consensus for Q4 as a good starting point for FY’25 ( ). Margin expansion will depend on revenue growth and continued investment in growth pillars ( ).

    3. China Sales and Outlook
      Q: What is the outlook for China revenue?
      A: Despite recent challenges due to funding shortages, management expects improvement with the government's $70 billion stimulus aimed at instrumentation ( ). They are optimistic about benefiting from this funding and believe momentum will build over time ( ).

    4. Cell and Gene Therapy Growth
      Q: Is the strong growth in cell and gene therapy sustainable?
      A: Management is encouraged by this sector's performance, with GMP proteins annualizing at about $60 million in revenue and reporting a record quarter ( ). While quarterly results may vary, they believe in the long-term potential due to the sector's ability to address previously untreatable diseases ( ).

    5. Wilson Wolf Stake
      Q: How is Wilson Wolf performing, and what's your plan?
      A: Wilson Wolf is growing at approximately 14% this quarter with margins over 72% ( ). Bio-Techne currently owns 20% of Wilson Wolf and plans to acquire the entire company eventually, enhancing their cell and gene therapy offerings ( ).

    6. Spatial Biology Business
      Q: What's the status of production for the Comet instrument?
      A: Demand for the Comet instrument exceeds expectations, causing production constraints ( ). Management expects to meet demand by the first fiscal quarter of next year and is optimistic about the spatial biology market's growth potential ( ).

    7. Expanded Fisher Agreement
      Q: How will the expanded Fisher agreement in Europe impact growth?
      A: The new distribution agreement with Fisher Scientific in Europe enhances customer reach and transaction ease, mirroring the successful U.S. partnership since 2014 ( ). Management believes this will improve customer service while maintaining direct channels ( ).

    8. Reacceleration in Growth
      Q: Does growth depend on macro conditions or strategy changes?
      A: Reacceleration largely depends on the macro environment ( ). Management is confident in their current strategy, product positioning, and investments, including a new GMP plant in China ( ).

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