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01/11 03:11
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call presented a mixed picture. Financial performance showed strong EPS growth and effective cost control, yet GAAP EPS declined significantly. The Q&A highlighted uncertainties, particularly in academic revenue and China, with management avoiding specific guidance. Positive elements include strong growth in cell and gene therapy and a substantial share repurchase program. However, revenue growth was modest, and there are concerns about macroeconomic conditions and tariff impacts. Without clear guidance, the stock is likely to remain stable, leading to a neutral sentiment.
Adjusted EPS $0.56 compared to $0.48 in the prior year, an increase of 16.7% year-over-year.
GAAP EPS $0.14 compared to $0.31 in the prior year, a decrease of 54.8% year-over-year.
Q3 Revenue $316.2 million, an increase of 6% year-over-year on an organic basis and 4% reported.
Total Company Adjusted Gross Margin 71.6% compared to 71.9% last year, a decrease of 0.3 percentage points year-over-year due to unfavorable foreign exchange.
Adjusted SG&A 29% of revenue compared to 30.3% in the prior year, a decrease of 1.3 percentage points year-over-year due to structural streamlining and diligent expense control.
R&D Expense 7.8% of revenue compared to 8.5% in the prior year, a decrease of 0.7 percentage points year-over-year driven by expense control.
Adjusted Operating Margin 34.9%, up 190 basis points compared to the prior year due to favorable volume leverage, productivity gains, and cost control.
Net Interest Expense $0.8 million, decreasing $2.3 million compared to the prior year due to lower net debt levels.
Cash Generated from Operations $41.1 million in the quarter.
Net Investment in Capital Expenditures $10.1 million.
Dividends Returned to Shareholders $12.6 million.
Stock Buybacks $100 million.
Cash Position $140.7 million at the end of Q3.
Total Leverage Ratio Well below one time EBITDA.
Protein Sciences Segment Revenue $227.7 million, with reported revenue increasing 6% compared to the prior year.
Protein Sciences Organic Revenue Growth 7% for the quarter.
Diagnostics and Spatial Biology Segment Revenue $89.2 million, with both reported and organic growth increasing 2% compared to the same quarter last year.
Diagnostics and Spatial Biology Operating Margin 9.4%, relatively consistent with the prior year's 9.3%.
Core Reagents: Over the last 49 years, Bio-Techne has amassed a catalog of over 6,000 proteins and 400,000 antibody types, which are essential for developing advanced therapeutics.
Organoid Solutions: The FDA's recent announcement to replace animal testing with human-relevant methods opens opportunities for Bio-Techne's organoid solutions, which are expected to accelerate growth.
AmplideX Nanopore Carrier Screening Plus Kit: Launched a new product utilizing Oxford Nanopore’s long-read sequencing technology to capture complex genomic variants.
Pharma Growth: Low double-digit growth in pharma expected to return to historical rates in calendar 2025.
Asia Market Growth: Rest of Asia increased mid-teens, indicating strong market conditions.
NIH Funding Impact: Uncertainty around NIH funding may impact US academic customers' purchase decisions.
Adjusted Operating Margin: Adjusted operating margin of 34.9% achieved through operational efficiencies and cost control.
Cost Containment Measures: Continued execution of cost containment measures to maximize operating leverage.
Global Operational Footprint: Utilizing a global operational footprint to mitigate tariff impacts.
M&A Focus: M&A remains a top priority for capital allocation.
Share Repurchase Program: Board approved a new share repurchase program for up to $500 million.
Tariff Mitigation Strategy: Specialized team focused on optimizing global footprint and supply chain to mitigate tariff impacts.
NIH Funding Uncertainty: The NIH has issued guidance for a flat indirect cost reimbursement rate of 15% across all NIH grants, creating uncertainty for US academic customers regarding future funding for research projects, which may impact their purchase decisions.
Tariff Impacts: The recent escalation of tariffs, particularly affecting the life science tools industry, could result in an estimated $20 million annual impact on adjusted operating income, primarily from Chinese tariffs on proteomic analytical instruments.
Economic Conditions in China: The economic situation in China remains challenging, with a reported mid-single digit decrease in revenue from that region, indicating potential risks in market performance.
Regulatory Changes: The new emphasis from the Department of Health and Human Services on combating chronic diseases may shift funding priorities, impacting the company's alignment with NIH grants.
Market Uncertainty: The overall macroeconomic environment is uncertain, which may lead to a temporary slowdown in growth momentum for the company, particularly in Q4.
Organic Revenue Growth: Bio-Techne reported a 6% organic revenue growth in Q3 2025, with expectations of returning to historical growth rates in pharma by calendar 2025.
Operational Efficiency: The company achieved an adjusted operating margin of 34.9%, emphasizing profitability while balancing investments for future growth.
Growth Drivers in Protein Sciences: The Protein Sciences segment saw a 7% organic revenue growth, driven by demand for research reagents and cell therapy workflow solutions.
FDA Announcement Impact: The FDA's announcement to reduce animal testing opens opportunities for Bio-Techne's organoid solutions, expected to accelerate growth.
Tariff Mitigation Strategies: Bio-Techne is implementing strategies to mitigate tariff impacts, including optimizing global production and adjusting pricing.
M&A as Capital Allocation Priority: M&A remains a top priority for capital allocation, with a new share repurchase program authorized for up to $500 million.
Q4 Growth Expectations: Growth momentum is expected to slow to low-single digits in Q4 due to macro uncertainties around tariffs and NIH funding.
Adjusted Operating Margin Guidance: Adjusted operating margin is anticipated to be 100 to 150 basis points lower than Q4 of the previous year due to tariff impacts.
Long-term Growth Rate Expectations: Despite uncertainties, the company maintains a long-term double-digit growth rate expectation.
NIH Funding Impact: Approximately 12% of annual revenue is from US academic customers, with half sourced from NIH grants, but severe cuts are viewed as unlikely.
Dividends Paid: $12.6 million in dividends during Q3.
Stock Buyback: $100 million through stock buybacks in Q3.
New Share Repurchase Program: Authorized the repurchase of up to $500 million of common stock.
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