Bio-Techne Corp Q3 2025 Earnings Call Transcript

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

Question: Puneet Souda - Leerink Partners - Analyst : Yeah, hi, guys. Thanks for taking my questions here. Maybe the first one, on the guide, could you provide more context into that, Jim, in terms of the impact you're expecting on academic and it's just, it's a meaningful reduction versus what you had before and what you're seeing in the quarter. So it does beg a question was there a pull forward that you saw on the pharmacy side, and as a result you're seeing, more impact in the 4th quarter. Also on the pharma side, if you could clarify. I think you said low double digit at first, but then, mid-single digit for biopharma. So could you just clarify what was the growth in pharma, in large pharma? James Hippel - Bio-Techne Corp - Chief Financial Officer, Executive Vice President - Finance Alright, I don't recall saying anything about biopharma, but so to clarify, large pharma was a double-digit growth for the quarter with respect to -- we think about Q3 versus Q4, Kim mentioned in his comments that you know we have -- our reagents, our quality reagents are also sold to other life science tools companies or partners, as call it ingredients into some of their products. And we had some nice orders come from those customers who are largely serving from our customers as well this most recent quarter and some of those orders we don't expect to repeat again the selling Q4. So that's going to be part of the reason for the step down on organic growth but as it pertains to academia, we started our Q3 in academia very strong in January and then of course, in February with all these announcements, there was a great slowdown in academia and then it kind of stabilized again in March, and we kind of expect that stabilization to occur or continue throughout Q4, but thus be lower than where we were in Q3. 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 - Analyst : Got it. That's helpful. And then, since we're fiscal year 2026 is around the corner, wondering, what you can provide there just given a lot of -- I appreciate the uncertainty, but with China, NIH, and with tariffs, I appreciate you quantifying at least the gross impact, but how should we think about 2026 and this may be a specific question on China. I believe it's 50-50 instrumentation and consumables for you there. How should we think about the China growth rate in 26? Thank you.

Question: Dan Leonard - UBS Investment Bank - Analyst : Thank you. My first question is on tariffs. I would love to understand your exposure a bit better. I mean, China is 9% of your revenue, and I think you quantify the analytical instrument exposure into China, but as Puneet mentioned, you sell more than analytical instruments into China, and I would assume that most of that is manufactured outside of China. So any kind of color commentary, Kim, you can provide on why that tariff headwind is not larger.

Question: Dan Leonard - UBS Investment Bank - Analyst : Understood, thank you for that clarification. And then just a follow up. Does the current tariff situation impact at all you're thinking on having more of a local manufacturing footprint in China?

Question: Matt Larew - William Blair & Company, LLC - Analyst : I think maybe I'll just circle back on the first question actually as you'd originally built the guide for this year, which I think you've called fairly well, it was exiting in the high single digits and in the streets were used as a proxy for fiscal 26, as you alluded to, much has changed. But to the point, Jim on sort of lemons and lemonade, it feels like maybe the lemons are accumulating in your term and the lemonade takes a little longer to squeeze out. So 8.5% organic growth for next year, is maybe the way you're guiding us for fiscal 25, at least more reasonable starting points than the Maple Street at today. James Hippel - Bio-Techne Corp - Chief Financial Officer, Executive Vice President - Finance Yeah, I mean what I would say Matt, is that what we're experiencing right now is very abrupt, but we also, I think everyone hopes will be somewhat temporary, right? Our momentum going into Q3 was very strong. We were basically on our projections for smaller biotech. We were on our projections and trajectory for China and academic was holding up very well as it has been consistently up until this last couple of months, and in pharma was actually ahead of our expectations. So it's really this temporary -- I call it temporary jolt of uncertainty caused by proposed changes in policies and tariffs, and I think once that uncertainty is resolved and becomes more certain, almost regardless of what the outcome is, we will be extremely well positioned to basically resume the trajectory that we are on. With our, now is that a quarter out or six months out or a year out, hopefully we'll have more clarity in three months, but you know at some point the uncertainty becomes more certain.

Question: Daniel Markowitz - Evercore ISI - Analyst : Hey, thanks for taking the question. The first one I had is based on the guidance, it seems like four margins are expected in like the 32%-ish type range, and that's before tariff mitigation flows through. Is it fair to assume that fiscal '26 margins at that 4Q exit rate of about 32% makes sense, or should we be more prudent given the macro could imply that 26% organic needs to come down a few percent? James Hippel - Bio-Techne Corp - Chief Financial Officer, Executive Vice President - Finance Yeah, I mean, we're not going to comment on guidance for fiscal year '26 at this point in time, again, given all the uncertainties we're still dealing with. And so some of the top line, hopefully those uncertainties become more certain or less uncertain three months from now we can provide some more direction then. All I can share with you today is that I think this quarter demonstrated that we are positioning the company extremely well for whatever fiscal year 2026 brings and market perspective.

Question: Dan Arias - Stifel, Nicolaus & Company, Incorporated - Analyst : Yeah, hey, good morning guys. Thanks, Jim. I'm sorry, but I think I need to go back to the academic stuff here. You're calling out the headwinds there which makes total sense and then you're guiding organic down next quarter partially with that in mind, but I think your comment was that even under the most severe scenarios, funding would have an immaterial impact to getting to double digit growth long term. So you know if the budget over the next couple of years is down 20%, 30%, 40%, which is in line with the proposals for 2026, is the idea that you can still get back to double digits once the smoke clears on the other macro elements? I think I just need a little help with how you're framing that over the 2026, 2027 period. James Hippel - Bio-Techne Corp - Chief Financial Officer, Executive Vice President - Finance Yeah sure, Dan, thanks for the question. So yeah I mean, at the end of the day when you look around our strategic plan, the key academic is, it's even -- it's an important part of our business because it feeds into the biotech and karma, etc. 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: Dan Arias - Stifel, Nicolaus & Company, Incorporated - Analyst : Okay, thanks for that. And then just maybe on selling gene, apologies if you did give it, but I didn't catch it. Is there a growth rate for the quarter? And just given what we're talking about some of the fluctuations in pharma ordering patterns, can you just sort of orient orientate us around what a good growth rate for GMP reagents selling gene would be for this year since it's pretty important to the model? Thanks so much.

Question: Thomas Deversy - Nephron Research LLC - Analyst : Hey guys, thanks for taking the question. My question is just diagnostic, the genomic organic growth. I know you have more difficult cubs in the second half of the year, but would have expected, I guess, a urid overall to kind of be more, I guess, unaffected by changes and so just curious whether there's -- I guess, just, timing issues, related to some of the diagnostic and you know with portfolio?

Question: Thomas Deversy - Nephron Research LLC - Analyst : Great, thank you.

Question: Patrick Donnelli - Citi Global Markets Inc. - Analyst : Hey guys, thanks for taking the questions. Maybe one on the biopharma piece that you talked about mid-single digit growth this quarter. Can you break that down a little bit? I just wanted to talk about the biotech piece in particular. I know you talked a little bit about GMPs, but can you talk about what you're seeing from the biotech customer base? Certainly been a concern across the industry just given the volatility of the funding backdrop, so curious what you're hearing from the customers there and expectations on that front.

Question: Patrick Donnelli - Citi Global Markets Inc. - Analyst : Okay, alright, that's helpful. And then if you don't mind, just a quick update on what's happening with Wilson Wolf, what the trends were this quarter, I just want to keep an eye on that as we go as well. Thanks. James Hippel - Bio-Techne Corp - Chief Financial Officer, Executive Vice President - Finance Yeah Patrick, this is Jim. Thanks for the question. So yeah, Wilson Wolf continues to perform very well. They had growth very solidly into the into the double-digit growth rates at this most recent quarter. So they were projecting to have a very strong year in our, in what will be calendar year 2025 for them going into the year 2026. And so far, they're right on track for that.

Question: Sung Ji Nam - Scotiabank Global Banking and Markets - Analyst : Hi, thanks for taking the questions. Maybe if I could go back to pharma, biopharma, the sectoral tariffs that are under discussion that expanding US manufacturing, restoring, etc. But potential pressure on the early stage or early discovery development work. Just curious how bio-technique is positioned in that environment or if you have different thoughts in terms of how the tariffs could play out. Thanks. James Hippel - Bio-Techne Corp - Chief Financial Officer, Executive Vice President - Finance I'll start off this is Jim. Thanks for the question. I think part of the looming discussions we're hearing the administration around terrorists for pharmaceuticals is again part of the reason for the guide that we did for Q4. I think there's going to be, perhaps another level there is right now, another level of uncertainty as it pertains to our pharma customer base. And so we've seen how uncertainty impacts other parts of our end market. So we kind of expect the thing for pharma at least temporarily. I don't know. It's probably anyone's guess as to how it ultimate plays that's hard to play. It's hard to put out different scenarios when we don't even know what the proposal is going to be with regards to tariffs on our pharma base. But I would say this, pharmas spent a good part of last year already realigning their pipelines for, what was the IRA Act, and that's not something they do, take lightly and it's a pretty great large endeavor. And for the most part, what we're hearing from our customers is that's behind them. So, I think there'll be there clearly going to be some changes with regards to CapEx spending and so forth, but at the end of the day, the pharma companies overall are flush with cash. They're overall doing very well, and just because they need to perhaps spend some more on CapEx because that's what they need to do to move some manufacturing lines around. Doesn't necessarily mean that they'll cut that out of their, take that out of their P&L for R&D, but you know it's a good question remains to be seen.

Question: Sung Ji Nam - Scotiabank Global Banking and Markets - Analyst : Got it. That's helpful. And then just quickly on the spatial biology side, thanks for the color there and the exposure to the academic market. I was wondering about academic market outside the US whether spatial, could be growing faster. And then also the recent launch of the spatial protein proximity detection capability was curious if that could be also at, it could be utilized within pharma, and kind of you could talk about the competitive dynamics there for that particular application just not familiar with it? Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.