Bio-Techne Corporation
CEO : Mr. Charles R. Kummeth
Quarterly earnings growth(YoY,%)
| Period | Revenue | Operating Income | EPS | Release Date |
|---|---|---|---|---|
| 2023 Q2 | 0.9% YoY | 8.9% | -34.2% | 2023-02-02 |
Chuck Kummeth says,
Organic Growth
- Delivered 4% organic growth in Q2 of fiscal 2023 on top of a challenging year-on-year comp where they grew 17% in Q2 of last year
- Experienced a divergence in ordering patterns from biotech end-market versus larger pharma customer base
- Underlying research activity continues with strong growth in bio-pharma research reagent run rate business, continued cell and gene therapy growth and strong utilization trends within proteomic and analytical tools
- The order funnel for protein and analytical instruments remains full, and they continue to experience record uptake of the ExoDx Prostate test
Performance by Geography and End Market
- Europe drove mid-single digit revenue growth in the quarter, recovering nicely sequentially from the growth rates experienced in Q1
- North America grew low single digits on top of a prior year comp that experienced greater than 30% growth in bio-pharma and over 20% growth overall
- China was still able to produce mid-single digit growth in Q2 despite disruption caused by rapid spread of COVID
Growth Platforms
- Protein Sciences segment organic revenue increased 2% for the quarter on top of a strong comp from last year when the segment grew 19%
- GMP protein sales are driving cross-selling activity throughout the portfolio as this growing list of customers are also frequently purchasing additional items, including RUO media, proteins and small molecules
- RUO reagents grew in the low teens in Q2 of last year, driven in part by a strong contribution from bulk reagent orders from biotech customers
- ProteinSimple branded analytical tools delivered low single-digit growth in the quarter, with order funnel remaining full
- SimplePlex branded multiplexing immunoassay system Ella nearing 1,000 placements and utilization trends remain robust
Jim Hippel says,
Q2 Financial Performance
- Adjusted EPS was $0.47, consistent with the prior year quarter
- Q2 revenue was $271.6 million, an increase of 4% year-over-year on an organic basis and 1% on a reported basis
- North America grew low single digits, Europe grew mid single-digits, China grew mid single-digits, while APAC was flat
Performance of Reporting Segments
- Protein Sciences segment reported sales were $203.9 million, with reported revenue decreasing 1%
- Diagnostics and Genomics segment reported sales were $68 million with reported revenue increasing 5%
- Exosome Diagnostics business remained incredibly strong in the quarter, with spatial biology business grew mid-single digits
Outlook and Expectations
- Normalization of purchasing trends from biotech customers after RedHawk biotech funding last year
- Temporary impact of COVID in China on growth of proteomic research reagents, analytical tools, and spatial biology products
- Organic growth expected to improve significantly in Q4, positioning the company for continued progress on delivering long-term strategic and financial targets
P&L Details
- Total company adjusted gross margin was 71.7% in the quarter compared to 72.3% in the prior year
- Adjusted SG&A in Q2 was 27.9% of revenue compared to 26.5% in the prior year
- Adjusted operating margin for Q2 was 35.5%, a decrease of 280 basis points from the prior year period
Cash Flow and Return of Capital
- $64.3 million of cash was generated from operations in the quarter
- Returned capital to shareholders by way of $12.5 million in dividends
Q & A sessions,
e OEM and biotech funding issues impacting our growth in Q2 2023. However, we expect the biotech funding issue to wash through and OEM growth to recover quickly. Here are some points that are expected to have a significant impact on the stock’s movement:
Biotech Funding
- Biotech funding is solid right now, but start-ups looking for their second round of funding may face difficulties
- This has driven potential growth in OEM and larger orders as people are starting these clinicals and doing special things with us
China Market
- China had mid-single-digit growth in Q2, but we expect it to explode in Q4 with the government stimulus kicking in
- Tenders are going out now, and we expect it to be a one-two punch for China in Q4
New Offerings
- We have a new product that can save weeks and months of work in an analytical lab at biopharma customers
- We are expanding in the protein characterization market and exosome diagnostics
- Our new ELA factory will produce 500,000 cards and we will have diagnostic research coming out of our ears
Europe Market
- Europe had a good recovery in Q2 with mid- to high single-digit growth
- We have new management going into place and new ERP and warehousing systems coming online
Investments and Hiring
- We caught up on our investments and headcount in Q4, which impacted our margin in the first half of the year
Overall, despite some challenges in the OEM and biotech funding space, we are still confident in hitting our $2 billion number and expect growth to pick up with new offerings and expansion in markets like China and Europe.
No bad stock 