• Organic Revenue Growth: 4% year-over-year.
• Adjusted EPS: $0.42, up from $0.41 in the prior year quarter.
• GAAP EPS: $0.21, down from $0.31 in the prior year.
• Q1 Revenue: $289.5 million, a 5% increase year-over-year on a reported basis.
• Adjusted Gross Margin: 69.5%, down from 71.3% in the prior year.
• Adjusted Operating Margin: 29%, a decrease of 240 basis points from the prior year.
• Cash Generated from Operations: $63.9 million.
• Dividends Paid: $12.7 million.
• Protein Sciences Segment Revenue: $204.5 million, flat compared to the prior year.
• Diagnostics and Spatial Biology Segment Revenue: $83.2 million, a 14% increase year-over-year.
• China Revenue Decline: Low double digits in the first quarter.
• Net Interest Expense: $1.1 million, a decrease of $2.8 million compared to the prior year.
• Cash on Balance Sheet: $187.5 million.

• Warning! GuruFocus has detected 3 Warning Signs with FMCC.

Release Date: October 30, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Bio-Techne Corp (NASDAQ:TECH) reported a 4% year-over-year organic revenue growth, driven by strong performance in molecular diagnostics and proteomic analysis.
• The company experienced significant growth in its GMP reagent product lines, with over 60% increase, indicating strong demand in the cell and gene therapy sectors.
• Bio-Techne's diagnostics and spatial biology segment saw a 14% increase in both reported and organic growth, highlighting robust demand in these areas.
• The company is making significant progress in its ESG initiatives, including commitments to reduce greenhouse gas emissions, positioning it for a sustainable future.
• Bio-Techne's strategic investments and cost containment initiatives have maintained its peer-leading operating margin profile, allowing for continued expansion and growth.

Negative Points

• Bio-Techne faced challenges in China, with a low double-digit decline in the first quarter due to a challenging funding environment.
• The company's adjusted operating margin decreased by 240 basis points from the prior year, impacted by unfavorable product mix and reinstatement of incentive compensation accruals.
• The Protein Sciences segment reported flat revenue compared to the prior year, with organic revenue increasing only 1%, indicating slower growth in this area.
• Bio-Techne's total company adjusted gross margin decreased to 69.5% from 71.3% in the prior year, driven by unfavorable product mix.
• The company anticipates continued margin headwinds in the first half of FY 2025 due to incentive compensation accrual reinstatement and negative product mix.

Q & A Highlights

Q: Can you elaborate on the sustainability of the momentum in diagnostics and spatial biology, and what gives you confidence that growth will continue into the next quarters? A: Kim Kelderman, President and CEO, explained that the momentum in diagnostics and spatial biology is sustainable due to the strong market penetration of the Exosome DX prostate test and the upcoming launch of new genetic tests. The spatial biology segment is also seeing strong adoption of the Comet platform, with enhanced capabilities and a growing portfolio of validated antibodies, which supports continued growth.

Q: Can you provide more details on the cell and gene therapy growth and the customer dynamics in this segment? A: Kim Kelderman noted that Bio-Techne has about 400 customers in the cell and gene therapy funnel, with 58 customers in various stages of clinical trials. The company is seeing increased order sizes and frequency from both large and small customers, indicating broad momentum in the business.

Q: How did Wilson Wolf perform in the quarter, and what impact did it have on your financials? A: Kim Kelderman mentioned that Wilson Wolf, in which Bio-Techne owns a 20% stake, experienced over 30% growth. Jim Hippel, CFO, added that a significant portion of the favorable non-operating income was due to FX translation from cash pooling arrangements, with Wilson Wolf contributing positively.

Q: What are your expectations for the China market, especially regarding the stimulus-related tender activity? A: Kim Kelderman stated that China represents about 9% of Bio-Techne's global revenues, with a typical 50/50 revenue mix between instruments and consumables. The company anticipates a slight benefit from tender activity in the third quarter, which could lead to a modest positive growth in the region.

Q: Can you discuss the competitive positioning and strategy for the GRX bioreactor in the cell and gene therapy market? A: Kim Kelderman highlighted the competitive advantages of the GRX bioreactor, including scalability, cost position, and flexibility. The company is leveraging synergies with its core portfolio, including GMP proteins and cytokines, and is actively seeding academic and biopharma customers with GRX bioreactors to drive adoption and long-term customer relationships.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.