Bio-Techne ((TECH)) has held its Q1 earnings call. Read on for the main highlights of the call.
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Bio-Techne’s earnings call presented a mixed sentiment, reflecting both challenges and opportunities. The company faces significant hurdles in biotech funding and revenue declines in specific segments. However, there are positive developments in large pharma growth, geographic expansion in China, and margin improvements. Notably, progress in sustainability and certain product lines was highlighted, although challenges persist in cell therapy and biotech funding.
Strong Large Pharma Growth
Revenue from large pharma customers increased in low double digits, showcasing continued demand for Bio-Techne’s tools and technologies. This growth indicates a robust relationship with large pharmaceutical companies, which remains a critical revenue stream for the company.
China Market Growth
China delivered its second consecutive quarter of growth, supported by improving CRO pipelines and increased CDMO activity. This geographic expansion highlights Bio-Techne’s strategic focus on international markets, particularly in Asia.
Adjusted Operating Margin Expansion
The company achieved a 90 basis points year-over-year expansion in adjusted operating margin, reaching 29.9%. This exceeded initial expectations and underscores Bio-Techne’s focus on operational efficiency and cost management.
ProteinSimple Instrument Momentum
The ProteinSimple instrument franchise showed strong utilization, with double-digit growth in cartridge consumable pull-through. This momentum reflects the franchise’s critical role in driving revenue and supporting the company’s growth strategy.
Sustainability Achievements
Bio-Techne made significant strides in sustainability by achieving an estimated 40% reduction in Scope 1 and 2 emissions through transitioning to 100% renewable electricity at its largest site. This achievement aligns with global sustainability trends and enhances the company’s environmental credentials.
Organic Revenue Decline
Organic revenue declined by 1%, primarily due to clinical stage timing from large cell therapy customers and ongoing softness in biotech funding. This decline highlights the challenges Bio-Techne faces in maintaining growth amid market headwinds.
Biotech Funding Challenges
The challenging funding environment in the biotech end market resulted in high single-digit declines in Q1. This funding issue is a significant concern for Bio-Techne, affecting its ability to capitalize on growth opportunities.
Geographic Revenue Decline in the Americas
Revenue declined mid-single digits in the Americas, while EMEA and Asia delivered low single-digit growth. This geographic disparity underscores the need for a balanced global strategy to mitigate regional revenue fluctuations.
Protein Sciences Segment Decline
The Protein Sciences segment experienced a 3% organic revenue decline, affected by cell therapy business headwinds. This decline signals the challenges within specific business segments that Bio-Techne must address.
Diagnostics and Spatial Biology Segment Decline
The segment saw a 4% year-over-year decline in sales, with spatial biology being flat and challenges in academic funding. This decline reflects the broader challenges in securing academic funding and the need for innovation in these segments.
Forward-Looking Guidance
During the earnings call, Bio-Techne’s management provided guidance that reflects a disciplined approach to navigating a challenging market environment. Despite a 1% decline in organic revenue, the company achieved an adjusted operating margin of 29.9% and maintained flat adjusted EPS at $0.42. Looking forward, Bio-Techne anticipates continued headwinds in Q2 due to cell therapy dynamics but expects a return to positive organic growth in the second half of the fiscal year. The company remains on track to achieve at least 100 basis points of margin expansion for the full fiscal year.
In conclusion, Bio-Techne’s earnings call highlighted a mixed performance with both challenges and opportunities. While the company faces significant hurdles in biotech funding and specific segment declines, there are promising developments in large pharma growth and geographic expansion. The company’s focus on sustainability and operational efficiency positions it well for future growth, despite the current market headwinds.