Earnings Call: Bio-Techne Reports Steady Growth in Q1 of Fiscal Year 2025

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Earnings Call: Bio-Techne Reports Steady Growth in Q1 of Fiscal Year 2025

Bio-Techne Corporation (NASDAQ: TECH), a leading developer and manufacturer of high-quality purified proteins and reagents, reported a 4% organic revenue growth on a year-over-year basis in its Fiscal Year 2025 Q1 earnings call. The company announced revenues of $289.5 million and an adjusted earnings per share (EPS) of $0.42, indicating a slight increase from last year's $0.41 EPS.

Despite challenging market conditions, Bio-Techne emphasized its cost control strategies and strong performance in the biopharma and cell and gene therapy markets. The company also highlighted the successful launches of new products, such as the high-performance Western Blot system Leo and RNAscope tests on the COMET platform. However, challenges in China affected overall performance, leading to a decline in revenue from the region.

Key Highlights:

  • Bio-Techne reported total revenues of $289.5 million with a 4% organic revenue growth year-over-year.
  • Adjusted EPS rose slightly to $0.42, while GAAP EPS fell from $0.31 to $0.21.
  • Strong performance in biopharma and cell and gene therapy markets, particularly with over 60% growth in GMP reagents.
  • Notable regional performances included growth in North America and Europe, while there was a decline in China due to funding issues.
  • Launch of new products, including the Leo system and RNAscope tests on the COMET platform.
  • The company anticipates growth in China and mid-single-digit growth overall in the second quarter.

Company Outlook: Bio-Techne aims for mid-single-digit growth in Q2 and expects acceleration in the second half of the fiscal year. The company anticipates lower adjusted operating margins in the first half but expects improvement in the second half. Due to government health investments, growth is projected in China until Q3.

Negative Aspects:

  • GAAP EPS decreased from $0.31 last year to $0.21.
  • Revenue in China declined by double digits due to funding issues.
  • Adjusted gross margin fell from 71.3% to 69.5%.

Positive Aspects:

  • Approximately 40% growth in the molecular diagnostics business, driven by successful tests like the ExoDx prostate test and Asuragen kit.
  • The Diagnostics and Spatial Biology segments saw a 14% revenue increase.
  • Wilson Wolf, in which Bio-Techne holds a 20% stake, reported growth of over 30%.

Shortcomings:

  • The Protein Sciences segment reported flat sales of $204.5 million, not meeting growth rates of other segments.

Q&A Highlights: Kim Kelderman discussed Q2 expectations concerning the potential impact of holiday timing on daily transaction volumes. Kelderman expressed uncertainty regarding year-end budget flows in biopharma, noting that there were no guaranteed budget releases based on current field reports. The company emphasized the competitive advantages of the G-Rex incubator in the biotechnology field.

In conclusion, Bio-Techne’s FY 2025 Q1 earnings call demonstrated that the company is navigating market challenges through strategic growth initiatives and new product launches. Despite the downturn in China and decline in GAAP EPS, the company remains optimistic about its growth trajectory and competitive position in the life sciences sector.

InvestingPro Forecasts: The recent financial performance of Bio-Techne Corporation aligns with several key metrics and forecasts from InvestingPro. The company's market capitalization of $12.07 billion reflects its significant presence in the life sciences sector.

One of the InvestingPro insights highlights that Bio-Techne has maintained dividend payments for 17 consecutive years, indicating the company's financial stability and commitment to shareholder returns. This is particularly noteworthy given the recent annual 4% organic revenue growth and slight increase in adjusted EPS.

The company's price-to-earnings (P/E) ratio of 70.78 indicates it is trading at a high earnings multiple, consistent with another InvestingPro insight. This valuation can be justified by the company’s strong positioning in growth markets like biopharma and cell and gene therapy, along with successful product launches such as the Leo system and RNAscope tests.

As of Q4 2024, Bio-Techne's trailing twelve months revenue was $1.16 billion with a gross profit margin of 66.47%. These figures are consistent with the company's Q1 FY 2025 revenue of $289.5 million and adjusted gross margin of 69.5%.

It is noteworthy that Bio-Techne saw a significant return of 11.19% in total price return over the last week. This recent uptick may relate to the positive aspects of the earnings report, such as growth in the molecular diagnostics and the Diagnostics and Spatial Biology segments.

For investors seeking a more comprehensive analysis, InvestingPro offers additional insights and forecasts that could provide a deeper understanding of Bio-Techne's financial health and market position.