Bio-Techne (TECH) FY Conference Transcript

Summary of Bio Techne Conference Call Company Overview - Company: Bio Techne - Analyst: Matt Sykes, Goldman Sachs - CFO: Jim Hipple - Head of IR: David Claire Key Highlights from Fiscal Q3 Results - Overall Growth: Achieved 6% organic growth in Q3 despite macroeconomic headwinds [5][6] - Protein Sciences Segment: Notable 7% growth, driven by widespread demand across core reagents and instrument platforms [5][6] - Large Pharma Market: Contributed significantly to growth, accounting for 30% of total revenue, with double-digit growth observed [6][7] U.S. Academic Market Insights - Revenue Contribution: U.S. academic customers represent approximately 12% of total revenue [12] - Market Volatility: Academic market has been volatile due to budget cuts and NIH funding fluctuations, but core reagents remain stable [10][11] - International Exposure: Academic markets outside the U.S., particularly in Europe, have shown robust growth, helping to stabilize overall academic revenue [14] Tariff Exposure and Mitigation - Manufacturing Resilience: Most products manufactured in the U.S., with core reagents exempt from tariffs, minimizing exposure [16][17] - Mitigation Strategies: Ability to ramp up production in non-China facilities to avoid tariff impacts [18] China Market Performance - Revenue Impact: China accounts for about 8% of total revenue, with recent quarters showing negative mid-single-digit growth [20][21] - Customer Sentiment: A slight shift towards optimism among customers in China, indicating potential for future growth [22][23] Biopharma Market Dynamics - Market Segmentation: Distinction between large pharma and biotech, with large pharma showing more stability and less volatility [26][27] - R&D Budgets: Anticipated increases in R&D budgets for large pharma in 2025, despite recent caution due to external factors [28][30] Instrumentation and Consumables - Growth in Instrumentation: Achieved upper single-digit growth in instrumentation, driven by strong consumable pull-through [43][44] - Competitive Advantage: Unique product offerings with minimal direct competition in key instrument platforms [45][46] GMP Reagents and Cell & Gene Therapy - Revenue Dynamics: Growth in GMP reagents is lumpy due to reliance on clinical trial purchases, but reflects progress in customer development [50][52] - Wilson Wolf Acquisition: Bio Techne owns 20% of Wilson Wolf, with plans to acquire the remaining 80% based on performance metrics, enhancing growth potential in cell therapy [62][65] Spatial Biology and Diagnostics - Market Position: Bio Techne is a leading player in spatial biology, with a focus on translational applications and a profitable business model [67][68] - COMET Platform: New automated solution for spatial biology, capable of multi-omic detection, enhancing reagent pull-through [69][70] Financial Outlook - Q4 Expectations: Anticipating low single-digit growth due to continued market challenges, particularly in large pharma [73][75] - Margin Projections: Expected decline in operating margins due to tariff impacts, but viewed as a temporary issue [76][77] Capital Allocation Strategy - Share Repurchase Plan: Announced a $500 million share repurchase plan, indicating confidence in company valuation and a tactical approach to capital allocation [78][81] - M&A Strategy: Continued focus on M&A as a key growth strategy, particularly targeting private companies [80][82]