Bio-Techne Corp Q1 2026 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Dan Leonard - UBS AG - Analyst : My first question, I appreciate all the quantification on the GMP protein timing dynamics. But what I'm curious about is how long might that air pocket persist? And how are you thinking about growth right now for GMP proteins in light of that greater than 30% growth in the prior year?

Question: Dan Leonard - UBS AG - Analyst : Understood. And my follow-up, Kim, are you still managing the business as a low single-digit grower in fiscal '26? Or have those plans changed given the Q1 result and the upcoming comp you're facing here in Q2?

Question: Matt Larew - William Blair Capital Partners - Analyst : Maybe I'll just follow up on that point there. Kim, you referenced the headwind accelerating, I think, to 400 bps in the fiscal second quarter, but still targeting low single digits for the business for the year. So it sounds like you are seeing an improvement in the underlying core, and I think that would suggest sort of mid-single-digit growth in the back half of the fiscal year, which may be consistent with what some of your peers have said 3% to 6%. So can you maybe just speak to ex-CTX, how you see the balance of the year unfolding in light of the macro dynamics you referenced? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Matt Larew - William Blair Capital Partners - Analyst : Okay. Great. That's really helpful, Jim. And then on the biotech side, you referenced sort of the variety of improving macro indicators and obviously, recently, some of the nice news on biotech funding. Historically, you've thought about kind of a two to three quarter lag there. I'm curious given how long we've sort of been in the doldrums, if you expect that to be the same time line or perhaps you've already started to see some signs of life from some of your biotech customers who might feel better about the interest rate environment and their ability to raise capital?

Question: Puneet Souda - Leerink Partners LLC - Analyst : Kim, I wanted to understand on the GMP protein side. Could you talk about just knowing the number of trials that you're involved with, the ones that have Fast Track designation and the ones that are program starts, can you maybe -- or clinical trial starts, maybe can you talk about -- are you continuing to see the momentum on new clinical trial adds? And for the same-store customers that have Fast Track designation, I mean, when do you think -- just given the timing, ordering pattern, the size of the trials, can you give us a view into when this business starts to recover again for REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Puneet Souda - Leerink Partners LLC - Analyst : Okay. That's helpful. And then if I could ask on the academic side, net-net, academic sentiment is improving. I appreciate that. But there is multiyear funding number of grants that are lower in '26 versus '25, more concentration, fewer grad students, fewer bodies in the lab, fewer post docs. So how does that impact your business into '26 and beyond? And then when we look at the guide overall, Jim, low single digit is lower than a large-diversified peer in the space in life science tools. Just wondering, historically, you've grown ahead of that peer by a few points. Is that still the assumption longer term? And by that, I mean '26 and '27 -- eventually into '27, I mean?

Question: Patrick Donnelly - Citi Infrastructure Investments LLC - Analyst : Maybe one on the Wilson Wolf piece. I always try to keep tabs on that. Can you just give an update as to what the quarter looked like there, what the momentum looks like? Is there potential for anything to trigger before the end of that -- the time line, even if they don't hit some of those milestones? I would love just a little more color on how you're thinking about that piece.

Question: Daniel Arias - Stifel, Nicolaus & Company Inc - Analyst : Jim, apologies for going back on the same question that was asked about 2Q, but I just want to make sure I understand the cadence here because it sounds like you feel like demand has troughed and it's on its way back, and now it's really kind of just about rounding the corner on growth itself. So plus 1% organic this quarter, ex the GMP customers and you're expecting the same thing next quarter ex those accounts, 3% without them, so 1% with them presumably despite the comp being 5 points, more difficult. So like the underlying momentum that you guys are talking about basically feels like it can drive 500 basis points or so of sequential improvement in the context of the compares, excluding these two accounts, obviously. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Daniel Arias - Stifel, Nicolaus & Company Inc - Analyst : I see. Okay. Okay. And then can you just maybe refresh us on what kind of 80-20 type rule exists when it comes to these cell therapy accounts? I mean there's obviously a concentration here. So for instance, what portion of the GMP revenue base is coming from the two customers or, say, the five Phase III partners that I think you mentioned that you have?

Question: Catherine Ramsey - Robert W. Baird & Co. Incorporated - Analyst : Maybe first for the fiscal second quarter outlook, what does that assume for a government shutdown impact? And can you maybe talk through the range of outcomes if we get a reopening tomorrow versus a month from now? James Hippel - Bio-Techne Corp - Chief Financial Officer, Executive Vice President - Finance Catherine, this is Jim. I'll just start by saying that we're obviously in more record territory already with the government shutdown. And we haven't seen any noticeable major differences in our academic customer buying patterns like this month versus the prior month. So again, we're encouraged that academic has appeared to have stabilized over the past quarter, and we're seeing that continue thus far even with the academic shutdown or even with the government shutdown, sorry.

Question: Justin Bowers - Deutsche Bank AG - Analyst : So in the prepared remarks, you talked about instruments that could benefit from the onshoring and reshoring dynamic. Can you point to which cohort of instruments across the portfolio that might be the beneficiary -- biggest beneficiaries of this and potential timing of when we might see some benefit from that?

Question: Daniel Markowitz - Evercore Inc - Analyst : I have a couple of quick ones. So first, on cell therapy customer order timing, I just want to make sure I understand the driver here correctly. And sorry for asking another question on this. Have these customers who received FDA Fast Track already placed orders for their Phase III clinical trials and you've already recognized revenues for those Phase III projects and now you're just waiting for them to commercial. I just want to make sure I'm understanding that right.

Question: Daniel Markowitz - Evercore Inc - Analyst : Understood. That's helpful. And then the second one, you mentioned promotional activity in Protein Sciences when talking about the margins there. Can you talk about these activities? Where were they focused? And would you expect them to continue in the coming quarters? And then I just had one more quick question at the end. James Hippel - Bio-Techne Corp - Chief Financial Officer, Executive Vice President - Finance Yes, I'll try to take that. This is Jim. So on the promotional activities, as you can imagine, we all know the academic environment is tough right now. Biotech environment has been tough. And so therefore, you want to make sure that you stick with your customers in good times and bad. And so that means perhaps a little bit heavier discounting, promoting certain product lines, helping with their solutions. So it's really more about supporting our academic and biotech customers as they as they go through a tough time right now. And so those additional promotional activities, I think, helps our absolute performance relative to those markets as well. So at the end of the day, it paid off.

Question: Daniel Markowitz - Evercore Inc - Analyst : Okay. And then my last one, it's impressive you're able to deliver on margins and EPS despite the customer timing in a very high-margin business. I'm curious if there was anything you wanted to call out that helped flex the business to make that happen. One thought that came to mind is maybe 1Q had less ExoDx reinvestments and you let more of it drop down to the bottom line. And then what's expected for the balance of the year? Anything you wanted to call out on that front? James Hippel - Bio-Techne Corp - Chief Financial Officer, Executive Vice President - Finance I mean, yes, so as we talked about, we continue to want to balance our cost initiatives and productivity initiatives with reinvestment back into our growth drivers. And it's a lever we have to work with. And so it's a combination, I'd say, of the timing of some of those investments, perhaps pushing them out to later in the year in some cases, but also accelerating on the productivity front. So we initiated some new streamlining activities this quarter, which bolstered our efficiencies and will set us up to be able to continue that -- to deliver that margin performance even with these new headwinds that we're facing here with the cell therapy.