Yahoo Finance Bio-Techne Corp (TECH) (Q3 2024) Earnings Call Transcript Highlights: Navigating Market ...
Revenue: $303.4 million, 2% year-over-year organic growth, 3% reported growth.
Net Income: Adjusted EPS $0.48, down from $0.53 year-over-year; GAAP EPS $0.31, down from $0.43 year-over-year.
Gross Margin: Adjusted gross margin 71.9%, down from 72.6% year-over-year.
Operating Margin: Adjusted operating margin 33%, up 290 basis points sequentially, down 400 basis points year-over-year.
Segment Performance - Protein Sciences: Revenue $214.6 million, 1% organic decline year-over-year.
Segment Performance - Diagnostics and Genomics: Revenue $87.5 million, 10% organic growth, 16% reported growth.
Geographical Performance: North America low single-digit growth; Europe and China mid-single-digit decline.
End Market Performance: Biopharma low single-digit growth; Academic relatively flat.
Free Cash Flow: $81 million from operations, net investment in capital expenditures $16.4 million.
Debt: Bank debt at $389 million, down $58 million from last quarter.
Release Date: May 01, 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 2% year-over-year organic revenue growth, surpassing initial expectations for the third quarter.
Adjusted operating margin increased by 290 basis points sequentially to 33%, indicating effective cost management and profitability focus.
Recognition by CiteAb as ELISA Kit Supplier of the Year and for innovation in RNAscope HiPlex12, highlighting strong market adoption and leadership in research tools.
Strong performance in growth pillars such as GMP reagents, ExoDx Prostate test, and proteomic analytical tools, with new records set in quarterly revenues for GMP reagents.
Strategic initiatives like leveraging AI for developing new patentable proteins and the expansion into clinical diagnostics with the Ella platform, positioning TECH for future growth.
Negative Points
Continued macroeconomic challenges and biotech funding issues, although showing signs of stabilization, still pose risks to sustained growth.
Revenue decline in China by mid-single digits year-over-year, reflecting ongoing market challenges despite stabilization in recent quarters.
Protein Sciences segment saw a 1% year-over-year decline in organic revenue, mainly due to exposure to biopharma and Chinese markets.
Higher operating expenses due to acquisitions, such as Lunaphore, impacting the adjusted operating margin which decreased by 400 basis points from the previous year.
Uncertainties in biotech funding recovery and Chinese economic stimulus, making it difficult to predict the timing and impact on future growth.
Q & A Highlights
Q: Jim, based on current trends, can we expect high single-digit or even 10%+ organic growth in fiscal year '25? A: James T. Hippel - Bio-Techne Corporation - Executive VP of Finance & CFO: Yes, historically, our growth rates have been 500 to 1,000 basis points better than the market. When the market returns to mid-single-digit growth, we expect to achieve high single-digit or double-digit growth. The exact timing of market normalization is uncertain, but the sentiment and funding are improving.
Q: Kim, regarding the early-stage biopharma funding, how much could flow into discovery versus development stages? Also, can you elaborate on the sustainability of the 40% growth in GMP in the cell and gene therapy sector? A: Kim Kelderman - Bio-Techne Corporation - CEO, President & Director: Funding typically flows into consumables first, with a delay before impacting CapEx. The cell and gene therapy sector has consistently outpaced overall company growth, and we have a strong product line there. The growth can be somewhat lumpy due to large orders from advanced pipeline companies, but the foundation is strengthening with more early-stage companies starting to order.
Q: What are you watching for to signal an improved backdrop in China? A: Kim Kelderman - Bio-Techne Corporation - CEO, President & Director: We're optimistic about China's long-term growth and are monitoring funding efforts and customer interest in our automation, which offers consistency, efficiency, and fast results. The $70 billion government funding aimed at innovating instrumentation could benefit us significantly.
Q: Jim, can you clarify the guidance on margins and revenue for Q4? A: James T. Hippel - Bio-Techne Corporation - Executive VP of Finance & CFO: We aim for mid-30s margin by fiscal year-end, aligning with consensus expectations. Revenue should be slightly higher in Q4 than Q3, but organic growth may face challenges due to tough comps, especially from China.
Q: Kim, can you discuss the expanded Fisher agreement in Europe and its potential impact? A: Kim Kelderman - Bio-Techne Corporation - CEO, President & Director: The agreement with Fisher Scientific in Europe mirrors our successful 10-year partnership in the U.S., enhancing customer reach and transaction ease. We expect similar benefits in Europe, improving customer service and expanding our direct channels.
Q: What trends are driving the strong performance in cell and gene therapy, and what's the status of Wilson Wolf? A: Kim Kelderman - Bio-Techne Corporation - CEO, President & Director: The cell and gene therapy market is robust, driven by our comprehensive product offerings and partnerships, like with Wilson Wolf. Wilson Wolf is growing again, participating in 45% of clinical trials in this space, and showing strong revenue and margin performance.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
