Bio-Techne(US:TECH)2021-05-07 20:32PART I. FINANCIAL INFORMATION Condensed Consolidated Financial Statements (Unaudited) Presents Bio-Techne Corporation's unaudited interim financial statements as of March 31, 2021, including earnings, balance sheets, cash flows, and notes on key accounting policies and acquisitions. Condensed Consolidated Statements of Earnings and Comprehensive Income Net sales for Q3 2021 increased 25.1% to $243.6 million, with net earnings rising to $45.8 million, while nine-month net sales grew 19.4% to $672.0 million, with net earnings decreasing to $125.5 million. Condensed Consolidated Statements of Earnings (in thousands, except per share data) | | Quarter Ended March 31, | | Nine Months Ended March 31, | | :--- | :--- | :--- | :--- | :--- | | | 2021 | 2020 | 2021 | 2020 | | Net sales | $243,552 | $194,680 | $672,004 | $562,857 | | Gross margin | $168,274 | $130,063 | $456,906 | $369,880 | | Operating income | $68,626 | $47,791 | $168,714 | $118,109 | | Net earnings attributable to Bio-Techne | $45,782 | $36,432 | $125,450 | $170,451 | | Diluted EPS | $1.12 | $0.92 | $3.11 | $4.33 | Condensed Consolidated Balance Sheets Total assets increased to $2.08 billion as of March 31, 2021, from $2.03 billion at June 30, 2020, driven by higher cash and receivables, while total shareholders' equity rose to $1.55 billion. Condensed Consolidated Balance Sheet Highlights (in thousands) | | March 31, 2021 | June 30, 2020 | | :--- | :--- | :--- | | Total current assets | $566,606 | $520,920 | | Total assets | $2,084,642 | $2,027,589 | | Total current liabilities | $137,640 | $106,668 | | Long-term debt obligations | $202,931 | $344,243 | | Total shareholders' equity | $1,547,942 | $1,381,192 | Condensed Consolidated Statements of Cash Flows Net cash from operating activities significantly increased to $230.1 million for the nine months ended March 31, 2021, while net cash used in investing and financing activities also increased due to acquisitions, debt repayments, and share repurchases. Condensed Consolidated Statements of Cash Flows (in thousands) | | Nine Months Ended March 31, | | :--- | :--- | :--- | | | 2021 | 2020 | | Net cash provided by operating activities | $230,144 | $160,426 | | Net cash provided by (used in) investing activities | ($16,613) | $37,568 | | Net cash provided by (used in) financing activities | ($180,239) | ($139,082) | | Net increase in cash and cash equivalents | $39,511 | $55,330 | Notes to Condensed Consolidated Financial Statements Notes detail accounting policies, revenue disaggregation, the acquisition of a 47.6% interest in Eminence Biotechnology for $9.8 million, and subsequent acquisitions of Asuragen and further Eminence investment. - The company operates under two segments: Protein Sciences and Diagnostics and Genomics16. Revenue by Type (Nine Months Ended March 31, in thousands) | Revenue Type | 2021 | 2020 | | :--- | :--- | :--- | | Consumables | $542,909 | $462,660 | | Instruments | $70,849 | $53,381 | | Services | $45,142 | $32,917 | | Royalty revenues | $13,104 | $13,899 | | Total revenues, net | $672,004 | $562,857 | Revenue by Geography (Nine Months Ended March 31, in thousands) | Geography | 2021 | 2020 | | :--- | :--- | :--- | | United States | $359,586 | $311,815 | | EMEA | $177,221 | $140,612 | | Greater China | $63,685 | $49,655 | | APAC, excluding China | $52,744 | $46,982 | | Rest of World | $18,768 | $13,793 | | Total revenues, net | $672,004 | $562,857 | - On October 20, 2020, the Company acquired a 47.6% controlling interest in Changzhou Eminence Biotechnology Co., Ltd. for approximately $9.8 million, net of cash acquired3638. - Subsequent events include the acquisition of Asuragen, Inc. on April 6, 2021, for approximately $215 million plus up to $105 million in contingent consideration, and an additional $6 million investment in Eminence on April 2, 2021, increasing ownership to 57.42%81. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses Q3 2021 financial results, highlighting a 25% increase in consolidated net sales driven by organic growth and COVID-19 offerings, with improved gross margins and a strong liquidity position. Q3 FY2021 vs Q3 FY2020 Performance | Metric | Q3 FY2021 | Change vs Q3 FY2020 | | :--- | :--- | :--- | | Consolidated Net Sales | $243.6M | +25% | | Organic Growth | - | +22% | | Foreign Currency Impact | - | +3% | | Acquisition Impact | - | Immaterial | - The reopening of customer sites after initial COVID-19 shutdowns and a robust COVID-19 product offering (contributing approximately 3% to growth) helped the company achieve record growth in Q3 202190. - On April 6, 2021, the company acquired Asuragen, Inc. for approximately $215 million, plus contingent consideration of up to $105 million87. - The company expects capital expenditures for the remainder of fiscal 2021 to be approximately $10.8 million115. Results of Operations Q3 FY2021 net sales increased 25% to $243.6 million with 22% organic growth, driven by strong performance in both Protein Sciences and Diagnostics and Genomics segments, leading to improved gross and operating margins. Segment Performance (Q3 FY2021 vs Q3 FY2020) | Segment | Net Sales (Q3'21) | Reported Growth | Organic Growth | | :--- | :--- | :--- | :--- | | Protein Sciences | $185.6M | +28% | +24% | | Diagnostics and Genomics | $58.1M | +17% | +17% | Gross Margin Analysis | Margin Type | Q3 FY2021 | Q3 FY2020 | | :--- | :--- | :--- | | Consolidated Gross Margin % | 69.1% | 66.8% | | Non-GAAP Adjusted Gross Margin % | 72.9% | 71.5% | - Selling, general and administrative (SG&A) expenses increased 25% for the quarter, primarily due to additional stock compensation expense and increased headcount to support sales growth98. Liquidity and Capital Resources The company maintained a strong liquidity position with $186.1 million in cash and $230.1 million in net cash from operations for the nine-month period, enabling significant dividend payments, share repurchases, and debt repayments. - Cash and cash equivalents stood at $186.1 million as of March 31, 2021110. - For the nine months ended March 31, 2021, the company generated $230.1 million in cash from operating activities113. - Key financing activities for the nine months ended March 31, 2021, included $37.2 million in dividend payments, $43.2 million in share repurchases, and $141.4 million in debt repayments116118. Quantitative and Qualitative Disclosures about Market Risk The company faces market risk from its $77.6 million investment in CCXI common stock and foreign currency fluctuations, with a hypothetical 10% USD appreciation potentially decreasing annualized foreign earnings by $4.4 million. - The company holds an investment in CCXI common stock valued at $77.6 million as of March 31, 2021, where a 10% decrease in its market value would result in a $7.8 million loss in fair value130. - Approximately 31% of consolidated net sales in Q3 2021 were in foreign currencies, and a hypothetical 10% appreciation of the U.S. dollar would decrease the translation of net assets of foreign subsidiaries by an estimated $54.2 million and annualized earnings by $4.4 million131132. Controls and Procedures Management concluded the company's disclosure controls and procedures were effective as of March 31, 2021, with ongoing evaluation of internal control changes related to the Eminence acquisition. - The Chief Executive Officer and Chief Financial Officer concluded that as of March 31, 2021, the company's disclosure controls and procedures were effective135. - There were no material changes to internal controls over financial reporting during the third quarter of fiscal 2021, other than those related to the ongoing integration of the Eminence acquisition, which are still under evaluation136137. PART II: OTHER INFORMATION Legal Proceedings As of May 7, 2021, the company is not involved in any legal proceedings expected to have a material adverse effect on its business or financial condition. - The Company is not a party to any legal proceedings that are reasonably expected to have a material adverse effect on its business140. Risk Factors No material changes to the risk factors previously disclosed in the Annual Report on Form 10-K for the fiscal year ended June 30, 2020, were reported. - No material changes from the risk factors disclosed in the Annual Report on Form 10-K for the year ended June 30, 2020, were reported142. Unregistered Sales of Equity Securities and Use of Proceeds During the nine months ended March 31, 2021, the company repurchased 120,000 shares for $43.2 million, with approximately $67 million remaining authorized under the share repurchase plan. - In the nine months ended March 31, 2021, the Company repurchased 120,000 shares for $43.2 million143. - As of March 31, 2021, approximately $67 million remains authorized for share repurchases under the existing plan143. Exhibits This section lists exhibits filed with the Form 10-Q, including corporate governance documents, material contracts, and required CEO/CFO certifications. - The exhibit index lists various corporate documents, credit agreements, and required CEO/CFO certifications (Sections 302 and 906 of Sarbanes-Oxley Act)152153.