BIO-TECHNE Corp

Previous wording

Bio-Techne and its subsidiaries, collectively doing business as Bio-Techne Corporation (Bio-Techne, we, our, us or the Company) develop, manufacture and sell biotechnology reagents, instruments and services for the research and clinical diagnostic markets worldwide. With our deep product portfolio and application expertise, we sell integral components of scientific investigations into biological processes and molecular diagnostics, revealing the nature, diagnosis, etiology and progression of specific diseases. Our products aid in drug discovery efforts and provide the means for accurate clinical tests and diagnoses.

Current wording

Bio-Techne and its subsidiaries, collectively doing business as Bio-Techne Corporation (Bio-Techne, we, our, us or the Company) develop, manufacture and sell biotechnology reagents, instruments and services for the research and clinical diagnostic markets worldwide. We use our deep product portfolio and application expertise to develop and sell integral components of scientific investigations into biological processes and molecular diagnostics, revealing the nature, diagnosis, etiology and progression of specific diseases. Our products aid in drug discovery efforts and provide the means for accurate clinical tests and diagnoses.

Previous wording

We are committed to providing the life sciences community with innovative, high-quality scientific tools that allow our customers to make extraordinary discoveries and treat and diagnose diseases. We intend to build on Bio-Techne’s past accomplishments, high product quality reputation and sound financial position by executing strategies that position us to serve as the standard for biological content in the research market, and to leverage that leadership position to enter the diagnostics and other adjacent markets. The Company’s strategic pillars for long-term growth and profitability are grow and leverage the core, capitalize on high potential markets, market expansion through innovation and acquisition, deliver best-in-class customer experience, and develop people through a transformative culture.

Current wording

We are committed to providing the life sciences community with innovative, high-quality scientific tools that allow our customers to make extraordinary discoveries and treat and diagnose diseases. We intend to build on Bio-Techne’s past accomplishments, high product quality reputation and sound financial position by executing strategies that position us to serve as the standard for biological content in the research market, and to leverage that leadership position to enter the diagnostics and other adjacent markets. The Company’s strategic pillars for long-term growth and profitability are to grow and leverage the core, capitalize on high potential markets, market expansion through innovation and acquisition, deliver best-in-class customer experience, and develop people through a transformative culture.

Previous wording

During the quarter ended September 30, 2024, the Company operated under two operating segments, Protein Sciences and Diagnostics and Spatial Biology (formerly Diagnostics and Genomics). The name change is intended to better reflect the focus and scope of our offerings. The manner in which we operate our business and review discrete financial information did not change. Segment information presented herein reflects the updated name of the operating segment. The operating segments the Company operated under were consistent with the Company's operating segments disclosed in the Company's Annual Report on Form 10-K for fiscal 2024.

Current wording

The Company manages its business under two operating segments, Protein Sciences and Diagnostics and Spatial Biology (formerly Diagnostics and Genomics). The name change is intended to better reflect the focus and scope of our offerings. The manner in which we operate our business and review discrete financial information did not change. Segment information presented herein reflects the updated name of the operating segment. The operating segments the Company operated under were consistent with the Company's operating segments disclosed in the Company's Annual Report on Form 10-K for fiscal 2024.

Previous wording

A key component of the Company's strategy is to augment internal growth at existing businesses with complementary acquisitions. The Company did not make any acquisitions during the first quarter of fiscal 2025.

Current wording

A key component of the Company's strategy is to augment internal growth at existing businesses with complementary acquisitions. The Company did not make any acquisitions in the first half of fiscal 2025.

Previous wording

Consolidated net sales increased 5% for the quarter ended September 30, 2024 compared to the same prior year period. Organic growth for the quarter ended September 30, 2024 was 4% compared to the prior year, with foreign currency exchange impacting sales by approximately 1%. A business held-for-sale did not have a material impact.

Current wording

Consolidated net sales increased 9% and 7% for the quarter and six months ended December 31, 2024, respectively, compared to the same prior year periods. Organic revenue for the quarter ended December 31, 2024 increased 9% compared to the prior year. Foreign currency exchange and a business held-for-sale did not have a material impact. Organic revenue for the six months ended December 31, 2024 increased 7% compared to the same prior year period. Foreign currency exchange and a business held-for-sale did not have a material impact.

Previous wording

Consolidated net earnings decreased to $33.6 million for the quarter ended September 30, 2024 as compared to $51.0 million in the same prior year period.

Current wording

Consolidated net earnings increased to $34.9 million for the quarter ended December 31, 2024 as compared to $27.5 million for the quarter ended December 31, 2023. The increase in net earnings is primarily due to favorable volume leverage and a non-recurring prior year impairment of a business held-for-sale. Consolidated net earnings decreased to $68.5 million for the six months ended December 31, 2024 as compared to $78.5 million for the six months ended December 31, 2023. The decrease in net earnings is primarily due to restructuring and restructuring-related costs.

Previous wording

Consolidated net sales for the quarter ended September 30, 2024 were $289.5 million, an increase of 5% compared to the same prior year period. Organic growth for the quarter ended September 30, 2024 was 4% compared to the prior year, with foreign currency exchange impacting sales by approximately 1%. A business held-for-sale did not have a material impact. Organic growth for the quarter ended September 30, 2024 was primarily driven by broad based performance of our Diagnostics and Spatial Biology portfolio as well as strong growth in our GMP reagent offerings within our Protein Sciences segment.

Current wording

Consolidated net sales for the quarter ended December 31, 2024 increased 9% at $297.0 million compared to the same prior year period. Consolidated net sales for the six months ended December 31, 2024 were $586.5 million, an increase of 7% from the same prior year period. Organic revenue for the quarter ended December 31, 2024 increased 9% compared to the prior year. Foreign currency exchange and a business held-for-sale did not have a material impact. Organic revenue for the six months ended December 31, 2024 increased 7% compared to the prior year same period. Foreign currency exchange and a business held-for-sale did not have a material impact. Organic revenue for the quarter and six months ended December 31, 2024 was primarily driven by broad based performance of our Diagnostics and Spatial Biology portfolio as well as improving biopharma end market conditions and continued uptake of our cell and gene therapy workflow solutions in our Protein Sciences segment.

Previous wording

Consolidated gross margin for the quarter ended September 30, 2024 was 63.2% compared to 66.9% for the same prior year period. Under purchase accounting, inventory is valued at fair value less expected selling and marketing costs, resulting in reduced margins in future periods as the inventory is sold. Excluding the impact of costs recognized upon the sale of acquired inventory, amortization of intangibles, stock compensation expense, restructuring and restructuring-related costs, and the impact of a business held-for-sale, adjusted gross margin for the quarter ended September 30, 2024 was 69.5% compared to 71.3% for the quarter ended September 30, 2023. Fluctuations in consolidated gross margin and adjusted gross margin, as a percentage of sales, have primarily resulted from changes in product mix. We expect that, in the future, gross margins will continue to be impacted by the mix of our portfolio growing at different rates as well as future acquisitions.

Current wording

Consolidated gross margins for the quarter and six months ended December 31, 2024 were 65.3% and 64.3%, respectively, compared to 64.8% and 65.8% for the same prior year periods. Under purchase accounting, inventory is valued at fair value less expected selling and marketing costs, resulting in reduced margins in future periods as the inventory is sold. Excluding the impact of costs recognized upon the sale of acquired inventory, amortization of intangibles, stock-based compensation expense, restructuring and restructuring-related expenses, and the impact of a business held-for-sale, adjusted gross margins for the quarter and six months ended December 31, 2024 were 70.5% and 70.0%, respectively, compared to 69.7% and 70.5% for the quarter and six months ended December 31, 2023, respectively. Fluctuations in consolidated gross margin and adjusted gross margin, as a percentage of sales, have primarily resulted from changes in product mix. We expect that, in the future, gross margins will continue to be impacted by the mix of our portfolio growing at different rates as well as future acquisitions.

Previous wording

2)Adjusted gross margin percentage excludes both $2,303 of revenue and $558 of gross margin for a business that has met the held-for-sale criteria since December 31, 2023.

Current wording

Adjusted gross margin percentage excludes both $1,849 and $4,152 of revenue and $(376) and $182 of gross margin for the three and six months ended for a business that has met the held-for-sale criteria.

Previous wording

Selling, general and administrative expenses increased 13% to $119.2 million for the quarter ended September 30, 2024 from the same prior year period. The increase in expense was due to restructuring and restructuring-related charges.

Current wording

Selling, general and administrative expenses increased 5% to $121.5 million and increased 9% to $240.6 million for the quarter and six months ended December 31, 2024, respectively, from the same prior year periods. The increase in expense for the quarter and six months ended December 31, 2024 was primarily due to restructuring and restructuring-related charges, and the re-instatement of incentive compensation accruals, partially offset by cost management initiatives.

Previous wording

Research and development expenses decreased 1% to $23.9 million for the quarter ended September 30, 2024 from the same prior year period. The decrease in expense was due to cost management initiatives.

Current wording

Research and development expenses increased 9% to $25.0 million and increased 4% to $48.9 million for the quarter and six months ended December 31, 2024, respectively, from the same prior year periods. The increase in expense was due to timing of strategic growth investments, offset by cost management initiatives.

Previous wording

Protein Sciences’ net sales for the quarter ended September 30, 2024 was $204.5 million, which remained flat compared to the same respective prior year period. As of December 31, 2023, a business within the Protein Sciences segment met the criteria as held-for-sale; this held-for-sale business has been excluded from the segment’s fiscal 2025 operating results. The exclusion of first quarter fiscal 2025 sales related to this held-for-sale business reduced sales by 1%. Organic growth for the segment was 1%, with foreign currency exchange having an immaterial impact.

Current wording

Protein Sciences’ net sales for the quarter and six months ended December 31, 2024 were $211.6 million and $416.1 million, respectively, with results increasing 7% and 3%, respectively, compared to the same respective prior year periods. As of December 31, 2023, a business within the Protein Sciences Segment met the criteria as held-for-sale; this held-for-sale business has been excluded from the segment’s fiscal 2025 operating results. The exclusion of fiscal 2025 sales related to this business held-for-sale reduced sales by 1% and 1% for the quarter and six months ended December 31, 2024, respectively. Organic revenue for the segment increased 8% and foreign currency exchange did not have a material impact for the quarter ended December 31, 2024. Organic growth for the segment increased 4% for the six months ended December 31, 2024. Foreign currency exchange did not have a material impact.

Previous wording

The operating margin was 39.4% for the quarter ended September 30, 2024 compared to 43.2% in the comparative prior year period. The segment’s operating margin was unfavorably impacted by product mix and re-instatement of incentive compensation accruals.

Current wording

The operating margin was 41.2% and 40.3% for the quarter and six months ended December 31, 2024, respectively, compared to 40.3% and 41.7% in both comparative prior year periods. The segment’s operating margin was impacted by volume leverage offset by re-instatement of incentive compensation accruals.

Previous wording

The operating margin for the segment was 5.1% for the quarter ended September 30, 2024 compared to 0.7% in the comparative prior year period. The segment’s operating margin was favorably impacted due to volume leverage and productivity initiatives, partially offset by re-instatement of incentive compensation accruals.

Current wording

The operating margin for the segment was 3.9% and 4.5% for the quarter and six months ended December 31, 2024, respectively, compared to 6.0% and 3.4% in both comparative prior year periods. The segment’s operating margin was impacted by volume leverage offset by re-instatement of incentive compensation accruals.

Previous wording

Income taxes were at an effective rate of 16.4% of consolidated earnings for the quarter ended September 30, 2024, compared to (2.9)% for the same respective prior year period. The change in the Company’s tax rate for the quarter ended September 30, 2024 was driven by a mix of net income and timing of discrete items.

Current wording

Income taxes were at an effective rate of 18.6% and 17.5% of consolidated earnings for the quarter and six month period ended December 31, 2024, respectively, compared to 17.7% and 5.4% for the same respective prior year periods. The change in the Company’s tax rate for the quarter and six months ended December 31, 2024 was driven by the composition and amount of net income across periods and the impact of discrete tax benefits of $2.2 million and $5.2 million, respectively, compared to prior year discrete tax benefits of $2.8 million and $16.3 million as further discussed in Note 12.

Previous wording

The forecasted tax rate as of the first fiscal quarter of 2025 before discrete items is 23.6% compared to the prior year forecasted tax rate before discrete items of 24.5%. Excluding the impact of discrete items, the Company expects the consolidated income tax rate for the remainder of fiscal 2025 to range from 23% to 27%.

Current wording

The forecasted tax rate as of the second fiscal quarter of 2025 before discrete items is 23.6% compared to the prior year forecasted tax rate before discrete items of 23.4%. Excluding the impact of discrete items, the Company expects the consolidated income tax rate for the remainder of fiscal 2025 to range from 23% to 27%.

Previous wording

Depending on the nature of discrete tax items, our reported tax rate may not be consistent on a period-to-period basis. The Company independently calculates a non-GAAP adjusted tax rate considering the impact of discrete items and jurisdictional mix of the identified non-GAAP adjustments. The following table summarizes the reported GAAP tax rate and the effective non-GAAP adjusted tax rate for the quarter ended September 30, 2024 and September 30, 2023.

Current wording

Depending on the nature of discrete tax items, our reported tax rate may not be consistent on a period-to-period basis. The Company independently calculates a non-GAAP adjusted tax rate considering the impact of discrete items and jurisdictional mix of the identified non-GAAP adjustments. The following table summarizes the reported GAAP tax rate and the effective non-GAAP adjusted tax rate for the quarter and six months ended December 31, 2024 and December 31, 2023.

Previous wording

Cash and cash equivalents and available-for-sale investments were $187.5 million as of September 30, 2024, compared to $152.9 million as of June 30, 2024. Included in the available-for-sale-investments as of June 30, 2024 were certificates of deposit that have maturity dates within one year of $1.1 million. During the first fiscal quarter of 2025, the certificates of deposit reached maturity. The Company had no available-for-sale investments as of September 30, 2024.

Current wording

Cash and cash equivalents and available-for-sale investments were $177.5 million as of December 31, 2024, compared to $152.9 million as of June 30, 2024. Included in the available-for-sale-investments as of June 30, 2024 were certificates of deposit that have maturity dates within one year of $1.1 million. During the first fiscal quarter of 2025, the certificates of deposit reached maturity. The Company had no available-for-sale investments as of December 31, 2024.

Previous wording

The Company generated cash of $63.9 million from operating activities in the first quarter of fiscal 2025 compared to $59.4 million in the first quarter of fiscal 2024. The increase from the prior year was primarily due to changes in the timing of cash payments on certain operating assets and liabilities.

Current wording

The Company generated cash of $148.2 million from operating activities in the six months ended December 31, 2024 compared to $142.5 million in the six months ended December 31, 2023. The increase from the prior year was primarily due to favorable timing of payments on certain operating assets and liabilities.

Previous wording

Capital expenditures for fixed assets for the first quarter of fiscal 2025 and 2024 were $9.2 million and $13.6 million, respectively. Capital expenditures for the remainder of fiscal 2025 are expected to be approximately $32 million. Capital expenditures are expected to be financed through currently available funds and cash generated from operating activities. Expected additions in fiscal 2025 are related to increasing capacity to meet expected sales growth across the Company.

Current wording

Capital expenditures for fixed assets for the six months ended December 31, 2024 and December 31, 2023 were $16.0 million and $28.5 million, respectively. Capital expenditures for the remainder of fiscal 2025 are expected to be approximately $20 million. Capital expenditures are expected to be financed through currently available funds and cash generated from operating activities. Expected additions in fiscal 2025 are related to increasing capacity to meet expected sales growth across the Company.

Previous wording

During the fiscal quarter of 2025, the Company invested $15.0 million into Spear Bio. There was no comparable activity in the first quarter of 2024.

Current wording

During the six months ended December 31, 2024, the Company invested $15.0 million into Spear Bio. There was no comparable activity in fiscal 2024.

Previous wording

During the first fiscal quarter of 2025, certificates of deposit reached maturity for $1.1 million. In the first quarter of 2024, the Company sold its exchange traded investment grade bond funds $23.8 million.

Current wording

During the first six months of 2025, certificates of deposit reached maturity for $1.1 million. In the first six months of 2024, the Company sold its exchange traded investment grade bond funds for $23.8 million.

Previous wording

During the first quarter of fiscal 2025 and 2024, the Company paid cash dividends of $12.7 million and $12.7 million, respectively, to all common shareholders. On October 30, 2024, the Company announced the payment of a $0.08 per share cash dividend, or approximately $12.7 million, will be payable November 22, 2024 to all common shareholders of record on November 11, 2024.

Current wording

During the six months ended December 31, 2024 and December 31, 2023, the Company paid cash dividends of $25.4 million and $25.2 million, respectively, to all common shareholders. On February 5, 2025, the Company announced the payment of an $0.08 per share cash dividend, or approximately $12.6 million, will be payable February 28, 2025, to all common shareholders of record on February 17, 2025.

Previous wording

Cash of $25.1 million and $14.4 million was received during the first quarter of fiscal 2025 and 2024, respectively, from the exercise of stock options.

Current wording

Cash of $30.6 million and $19.7 million was received during the six months ended December 31, 2024 and December 31, 2023, respectively, from the exercise of stock options.

Previous wording

During the first quarter of fiscal 2025 and 2024, the Company made repayments of $19.0 million and $70.0 million, respectively, on its long-term debt balance. The Company drew $160.0 million under its revolving line-of-credit facility during the first quarter of fiscal 2024. There was no comparable activity in the first quarter of fiscal 2025.

Current wording

During the six months ended December 31, 2024 and December 31, 2023, the Company made repayments of $19.0 million and $128.0 million, respectively, on its long-term debt balance. The Company drew $225.0 million under its revolving line-of-credit facility during the six months ended December 31, 2023. There was no comparable activity in fiscal 2025.

Previous wording

During the first quarter of fiscal 2025 and 2024, the Company received $5.0 million and $20.2 million related to taxes paid on restricted stock, restricted stock units and stock options exercised through a net share settlement classified as financing activities.

Current wording

During the six months ended December 31, 2024 and December 31, 2023, the Company paid $6.0 million and $21.3 million related to taxes on restricted stock units and stock options exercised through net share settlements classified as financing activities.

Previous wording

The Company's significant accounting policies are discussed in the Company's Annual Report on Form 10-K for fiscal 2024 and are incorporated herein by reference. The application of certain of these policies requires judgments and estimates that can affect the results of operations and financial position of the Company. Judgments and estimates are used for, but not limited to, valuation of available-for-sale investments, inventory valuation and allowances, valuation of intangible assets and goodwill and valuation of investments in unconsolidated entities. There have been no significant changes in estimates in the quarter ended September 30, 2024 that would require disclosure nor have there been any changes to the Company's policies.

Current wording

The Company's significant accounting policies are discussed in the Company's Annual Report on Form 10-K for fiscal 2024 and are incorporated herein by reference. The application of certain of these policies requires judgments and estimates that can affect the results of operations and financial position of the Company. Judgments and estimates are used for, but not limited to, valuation of available-for-sale investments, inventory valuation and allowances, valuation of intangible assets and goodwill and valuation of investments in unconsolidated entities. There have been no significant changes in estimates in the quarter or six months ended December 31, 2024 that would require disclosure nor have there been any changes to the Company's policies.

Previous wording

Our non-GAAP financial measures for adjusted gross margin, adjusted operating margin, and adjusted net earnings, in total and on a per share basis, exclude stock-based compensation, which is inclusive of the employer portion of payroll taxes on those stock awards, the costs recognized upon the sale of acquired inventory, amortization of acquisition intangibles, restructuring and restructuring-related costs. Stock-based compensation is excluded from non-GAAP adjusted net earnings because of the nature of this charge, specifically the varying available valuation methodologies, subjection assumptions, variety of award types, and unpredictability of amount and timing of employer related tax obligations. The Company excludes amortization of purchased intangible assets, purchase accounting adjustments, including costs recognized upon the sale of acquired inventory, and other non-recurring items including gains or losses on goodwill and long-lived asset impairment charges, and one-time assessments from this measure because they occur as a result of specific events, and are not reflective of our internal investments, the costs of developing, producing, supporting and selling our products, and the other ongoing costs to support our operating structure. Costs related to restructuring and restructuring-related activities, including reducing overhead and consolidating facilities, are excluded because we believe they are not indicative of our normal operating

Current wording

Our non-GAAP financial measures for adjusted gross margin, adjusted operating margin, and adjusted net earnings, in total and on a per share basis, exclude stock-based compensation, which is inclusive of the employer portion of payroll taxes on those stock awards, the costs recognized upon the sale of acquired inventory, amortization of acquisition intangibles, restructuring and restructuring-related costs. Stock-based compensation is excluded from non-GAAP adjusted net earnings because of the nature of this charge, specifically the varying available valuation methodologies, subjection assumptions, variety of award types, and unpredictability of amount and timing of employer related tax obligations. The Company excludes amortization of purchased intangible assets, purchase accounting adjustments, including costs recognized upon the sale of acquired inventory and other non-recurring items including gains or losses on goodwill and long-lived asset impairment charges, and one-time assessments from this measure because they occur as a result of specific events, and are not reflective of our internal investments, the costs of developing, producing, supporting and selling our products, and the other ongoing costs to support our operating structure. Costs related to restructuring and restructuring-related activities, including reducing overhead and consolidating facilities, are excluded because we believe they are not indicative of our normal operating costs. Additionally, these amounts can vary significantly from period to period based on current activity. The Company also excludes revenue and expense attributable to partially-owned consolidated subsidiaries as well as revenue and expense attributable to businesses held-for-sale in the calculation of our non-GAAP financial measures.