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01/11 03:19
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call presents a mixed outlook. While there are positive elements such as expected growth in Q2 and promising developments in cell therapy and spatial biology, uncertainties around NIH funding, tariff policies, and drug pricing reforms pose risks. Management's cautious optimism and strategic investments provide some reassurance, but the lack of specific guidance and flat overall growth tempers expectations. The stock price reaction is likely to remain neutral in the absence of strong catalysts or market cap information.
Organic Revenue Declined 1% year-over-year. The decline was primarily due to clinical stage timing from a couple of large customers in the cell therapy business and the anticipated ongoing softness in biotech funding.
Adjusted Operating Margin Expanded 90 basis points year-over-year to 29.9%. This improvement was driven by a focus on productivity and cost management.
Revenue from Large Pharma Customers Increased low double digits year-over-year, reflecting continued demand for tools and technologies.
Revenue from Biotech End Market Declined high single digits year-over-year due to a challenging funding environment.
Global Academic Markets Revenue Remained stable overall. A modest decline in the U.S. academic business was offset by mid-single-digit growth in Europe.
Revenue in the Americas Declined mid-single digits year-over-year.
Revenue in EMEA and Asia Delivered low single-digit growth year-over-year.
China Revenue Achieved second consecutive quarter of growth, driven by improving CRO pipelines and increased CDMO activity.
Protein Sciences Segment Revenue Declined 3% organically year-over-year. The decline was attributed to end market dynamics, including clinical stage timing in cell therapy.
Diagnostics and Spatial Biology Segment Revenue Declined 4% year-over-year. Organic growth was 3%, with Diagnostics Products growing mid-single digits and Spatial Biology being flat.
Adjusted Gross Margin Improved to 70.2% from 69.5% year-over-year, driven by the Exosome Diagnostics divestiture and productivity initiatives.
Adjusted SG&A Expense Remained nearly flat year-over-year at 32.1% of revenue.
R&D Expense Stable year-over-year at 8.2% of revenue.
Adjusted EPS Flat year-over-year at $0.42.
GAAP EPS Increased to $0.24 from $0.21 year-over-year.
Total Revenue $286.6 million, representing a 1% year-over-year decline on both an organic and reported basis.
ProteinSimple instrument franchise: Continued to build momentum with strong performance in China and spatial biology business resuming sequential improvement.
G-Rex bioreactor line: Developed by Wilson Wolf, enables high-yield, cost-effective workflows for cell therapy manufacturing. Bio-Techne plans to acquire the remaining interest in Wilson Wolf by 2027.
Simple Plex immunoassay platform (Ella): Upcoming launch of ultrasensitive cartridge offering two to fivefold improvement in sensitivity for neurodegenerative disease research.
Simple Western platform (Leo): Exceeding revenue and placement expectations in its first 3 quarters, gaining momentum with large pharma customers.
Maurice biologics platform: Delivered its sixth consecutive quarter of growth, benefiting from increased bioprocessing activity.
ProximityScope: New product launch enabling researchers to interrogate functional protein-protein interactions, enhancing spatial biology research.
AmplideX PML-RARA kit: Newly launched qPCR assay for detecting fusion variants in leukemia, broadening hematology menu.
China market: Achieved second consecutive quarter of growth driven by ProteinSimple instruments and spatial biology portfolio.
Large pharma customers: Revenue increased in low double digits, reflecting strong demand for tools and technologies.
Emerging biotech: High single-digit revenue decline due to challenging funding environment, but early signs of stabilization observed.
Global academic markets: Stable overall with mid-single-digit growth in Europe offsetting modest decline in the U.S.
Adjusted operating margin: Expanded 90 basis points year-over-year to 29.9%, driven by productivity and cost management.
Adjusted gross margin: Improved to 70.2% from 69.5% last year due to productivity initiatives and divestiture of Exosome Diagnostics.
Diagnostics and Spatial Biology segment margin: Improved to 11.2% from 5.1% last year, driven by divestiture and productivity initiatives.
FDA Fast Track designation: Awarded to largest cell therapy customers, accelerating clinical timelines but reducing near-term reagent demand.
Wilson Wolf acquisition: Bio-Techne plans to acquire remaining interest in Wilson Wolf by 2027, integrating G-Rex bioreactors with GMP reagents for scalable cell therapy manufacturing.
Sustainability efforts: Achieved 40% reduction in Scope 1 and 2 emissions by transitioning to 100% renewable electricity at largest site.
Organic Revenue Decline: Organic revenue declined 1% in the quarter, primarily due to clinical stage timing from large customers in the cell therapy business and ongoing softness in biotech funding.
Cell Therapy Business Challenges: The inherent lumpiness of late-stage clinical programs and FDA Fast Track designation reduced near-term reagent demand, creating revenue headwinds.
Biotech Funding Environment: Challenging funding environment in the biotech end market led to high single-digit revenue declines, though early signs of stabilization were noted.
Geographic Revenue Declines: Revenue declined mid-single digits in the Americas, driven by order timing in cell therapy and funding pressures in biotech.
NIH Budget Uncertainty: Uncertainty around the NIH budget and potential government shutdown clouds visibility into future funding for academic markets.
Volume Deleverage: Volume deleverage in the Protein Sciences segment impacted operating margins, alongside promotional activity.
Tariff Concerns: Lingering tariff concerns, though less pronounced, continue to pose risks to growth in certain regions.
Phase III Clinical Trial Dynamics: Customers progressing through Phase III trials led to a temporary slowdown in reagent purchases, impacting near-term revenue.
Revenue Growth: The company anticipates overall Q2 organic growth to be consistent with Q1, with expectations of returning to positive organic growth in the second half of the fiscal year as prior year headwinds subside.
Cell Therapy Business: FDA Fast Track designation for major customers is expected to accelerate clinical timelines but reduce near-term reagent demand. This headwind is projected to intensify in Q2, impacting growth by approximately 400 basis points year-over-year, before moderating in the second half of the fiscal year.
Spatial Biology: The company expects a rebound in spatial biology growth in Q2, supported by positive momentum in the COMET instrument and new product launches like ProximityScope.
China Market: Renewed growth in China is anticipated, driven by improving CRO pipelines, increased CDMO activity, and strong demand for ProteinSimple analytical instruments and spatial biology portfolio.
Biotech Funding Environment: Signs of stabilization in biotech activity levels are noted, with an uptick in M&A activity, favorable pharma in-licensing trends, and potential for lower interest rates supporting a more constructive outlook for investment levels in emerging biotech companies.
U.S. Academic Market: Gradual stabilization is expected in the U.S. academic market, with improving visibility and demand trends as the fiscal year progresses.
Operating Margin: The company remains on track to achieve at least 100 basis points of margin expansion for the full fiscal year, driven by operational efficiency and productivity measures.
Dividends Paid: $12.4 million was returned to shareholders via dividends during the quarter.
Share Repurchase: The average diluted shares outstanding decreased by 3% year-over-year, indicating share repurchase activity.
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