BIO-TECHNE Corp 10-Q for FY2023 Q1

BIO-TECHNE Corp (TECH)

10-Q 2022-11-07 For: 2022-09-30

Added on April 09, 2026

About this 10-Q

BIO-TECHNE Corp filed this 10-Q on November 7, 2022, covering the quarter ended September 30, 2022 (FY2023 Q1).

Headline figures

Quarter ended September 30, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $269.66M; up 4.6% from $257.72M a year earlier
Net income: $89.56M; up 28.6% from net income of $69.62M a year earlier
Diluted EPS: $2.21; up 30.8% from $1.69 a year earlier

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Minnesota	41-1427402
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

614 McKinley Place N.E. Minneapolis, MN 55413	(612) 379-8854
(Address of principal executive offices) (Zip Code)	(Registrant's telephone number, including area code)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	TECH	The NASDAQ Stock Market LLC


Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☐


		Page
PART I. FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Financial Statements (Unaudited)	1

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	21

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	29

Item 4.	Controls and Procedures	29

PART II: OTHER INFORMATION

Item 1.	Legal Proceedings	29

Item 1A.	Risk Factors	30

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30

Item 3.	Defaults Upon Senior Securities	30

Item 4.	Mine Safety Disclosures	30

Item 5.	Other Information	30

Item 6.	Exhibits	31

	SIGNATURES	34


	Quarter Ended
	September 30,
	2022		2021

Net sales	$	269,655	$	257,719
Cost of sales		90,060		86,722
Gross margin		179,595		170,997

Operating expenses:
Selling, general and administrative		99,375		86,175
Research and development		23,903		21,600
Total operating expenses		123,278		107,775
Operating income		56,317		63,222

Other income (expense)		47,399		4,161
Earnings before income taxes		103,716		67,383
Income taxes (benefit)		13,982		(1,598)
Net earnings, including noncontrolling interest		89,734		68,981
Net earnings (loss) attributable to noncontrolling interest		179		(634)
Net earnings attributable to Bio-Techne	$	89,555	$	69,615
Other comprehensive income (loss):
Foreign currency translation adjustments		(21,457)		(8,646)
Foreign currency translation reclassified to earnings with Eminence deconsolidation		119		—
Unrealized gains (losses) on derivative instruments - cash flow hedges, net of tax amounts disclosed in Note 8		4,695		1,682
Other comprehensive income (loss)		(16,643)		(6,964)
Other comprehensive income (loss) attributable to noncontrolling interest		(33)		(39)
Other comprehensive income (loss) attributable to Bio-Techne		(16,610)		(6,925)
Comprehensive income attributable to Bio-Techne	$	72,945	$	62,690

Earnings per share attributable to Bio-Techne:
Basic	$	2.28	$	1.78
Diluted	$	2.21	$	1.69

Weighted average common shares outstanding:
Basic		39,232		39,094
Diluted		40,543		41,158


	September 30,
	2022		June 30,
	(unaudited)		2022
ASSETS
Current assets:
Cash and cash equivalents	$	165,257	$	172,567
Short-term available-for-sale investments		37,818		74,462
Accounts receivable, less allowance for doubtful accounts of $2,496 and $2,568, respectively		174,174		194,548
Inventories		150,009		141,123
Other current assets		24,773		22,856
Total current assets		552,031		605,556

Property and equipment, net		224,098		223,242
Right of use asset		69,745		65,556
Goodwill		865,418		822,101
Intangible assets, net		585,534		531,522
Other assets		53,895		46,828
Total assets	$	2,350,721	$	2,294,805
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Trade accounts payable	$	30,475	$	33,865
Salaries, wages and related accruals		32,557		61,953
Accrued expenses		13,790		17,886
Contract liabilities		22,059		23,406
Income taxes payable		17,270		13,237
Operating lease liabilities - current		12,115		11,928
Contingent consideration payable		7,400		—
Current portion of long-term debt obligations		—		12,500
Other current liabilities		1,963		1,243
Total current liabilities		137,629		176,018

Deferred income taxes		112,920		98,994
Long-term debt obligations		264,661		243,410
Long-term contingent consideration payable		8,100		5,000
Operating lease liabilities		64,756		58,133
Other long-term liabilities		11,501		12,239

Bio-Techne’s Shareholders’ equity:
Undesignated capital stock, no par; authorized 5,000,000 shares; none issued or outstanding		—		—
Common stock, par value $.01 per share; authorized 100,000,000; issued and outstanding 39,232,094 and 39,160,000, respectively		392		392
Additional paid-in capital		680,057		653,657
Retained earnings		1,162,515		1,122,921
Accumulated other comprehensive loss		(91,810)		(75,200)
Total Bio-Techne’s shareholders’ equity		1,751,154		1,701,770
Noncontrolling interest		—		(759)
Total shareholders’ equity		1,751,154		1,701,011
Total liabilities and shareholders’ equity	$	2,350,721	$	2,294,805



	Employee		Asset
	severance		related and other		Total
Selling, general and administrative	$	1,328	$	842	$	2,170



Beginning balance	$	531,522
Acquisitions		75,600
Other additions		63
Amortization expense		(19,504)
Currency translation		(2,147)
Ending balance	$	585,534


Remainder 2023	$	57,712
2024		74,475
2025		71,089
2026		67,285
2027		57,177
Thereafter		235,096
Total	$	562,834


			Diagnostics and
	Protein Sciences		Genomics		Total
June 30, 2022	$	376,493	$	445,608	$	822,101
Acquisitions		51,051		—		51,051
Currency translation		(7,582)		(152)		(7,734)
June 30, 2023	$	419,962	$	445,456	$	865,418



	Preliminary allocation at acquisition date and at September 30, 2022
Current assets, net of cash	$	3,248
Equipment and other long-term assets		405
Intangible assets:
Developed technologies		73,900
Tradenames		700
Customer relationships		900
Non-competition agreement		100
Goodwill		51,051
Total assets acquired		130,304

Liabilities		546
Deferred income taxes, net		17,974
Net assets acquired	$	111,784

Cash paid, net of cash acquired		101,184
Contingent consideration payable		10,600
Net assets acquired	$	111,784


	Total
	carrying
	value as of		Fair Value Measurements Using
	September 30,		Inputs Considered as
	2022		Level 1		Level 2		Level 3

Assets
Exchange traded securities⁽¹⁾	$	23,318	$	23,318	$	—	$	—
Certificates of deposit⁽²⁾		14,500		14,500		—		—
Derivative instruments - cash flow hedges		16,685		—		16,685		—
Total assets	$	54,503	$	37,818	$	16,685	$	—

Liabilities
Contingent consideration	$	15,500	$	—	$	—	$	15,500
Total liabilities	$	15,500	$	—	$	—	$	15,500


			As of
			September 30,
	Balance Sheet Classification		2022
Operating leases:
Operating lease right of use assets		Right of Use Asset	$	69,745

Current operating lease liabilities		Operating lease liabilities current	$	12,115
Noncurrent operating lease liabilities		Operating lease liabilities		64,756
Total operating lease liabilities			$	76,871

Weighted average remaining lease term (in years):				8.47

Weighted average discount rate:				4.00	%


	September 30, 2022
	Operating
	Leases
Remainder 2023	$	14,201
2024		12,044
2025		10,907
2026		9,542
2027		7,724
Thereafter		24,900
Total	$	79,318
Less: Amounts representing interest		2,447
Total Lease obligations	$	76,871


	Bio-Techne Shareholders
								Accumulated
				Additional				Other
	Common Stock			Paid-in		Retained		Comprehensive		Noncontrolling
	Shares	Amount		Capital		Earnings		Income(Loss)		Interest		Total
Balances at June 30, 2022	39,160		392		653,657		1,122,921		(75,200)		(759)		1,701,011
Net earnings	-		-		-		89,555		-		179		89,734
Other comprehensive loss	-		-		-		-		(16,762)		0		(16,762)
Reclassification of cumulative translation adjustment for Eminence to non-operating income	-		-		-		-		152		(33)		119
Elimination of noncontrolling equity interest from sale of Eminence	-		-		-		-		-		613		613
Share repurchases	(55)		(1)		-		(19,561)		-		-		(19,562)
Common stock issued for exercise of options	107		1		9,422		(11,428)		-		-		(2,005)
Common stock issued for restricted stock awards	11		-		-		(6,427)		-		-		(6,427)
Cash dividends	-		-		-		(12,545)		-		-		(12,545)
Stock-based compensation expense	-		-		14,364		-		-		-		14,364
Common stock issued to employee stock purchase plan	9		-		2,517		-		-		-		2,517
Employee stock purchase plan expense	-		-		97		-		-		-		97
Balances at September 30, 2022	39,232	$	392	$	680,057	$	1,162,515	$	(91,810)	$	-	$	1,751,154


	Quarter Ended
	September 30,
	2022		2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings, including noncontrolling interest	$	89,734	$	68,981
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		26,641		24,734
Costs recognized on sale of acquired inventory		300		1,512
Deferred income taxes		(4,767)		5,407
Stock-based compensation expense		14,461		11,737
Fair value adjustment to contingent consideration payable		(100)		(2,800)
Contingent consideration payments - operating		—		(3,300)
(Gain) Loss on investment, net		(37,176)		(5,277)
Fair value adjustment on available for sale investments		(911)		—
Asset impairment restructuring		—		546
Gain on sale of Eminence		(11,682)		—
Leases, net		2,545		(79)
Other operating activity		(32)		497
Change in operating assets and operating liabilities, net of acquisition:
Trade accounts and other receivables, net		17,335		(3,637)
Inventories		(10,685)		(2,981)
Prepaid expenses		(2,760)		(5,852)
Trade accounts payable, accrued expenses, contract liabilities, and other		(1,401)		(2,303)
Salaries, wages and related accruals		(28,360)		(18,933)
Income taxes payable		2,939		(19,818)
Net cash provided by (used in) operating activities		56,081		48,434

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities of available-for-sale investments		14,509		12,450
Purchases of available-for-sale investments		(14,500)		(13,500)
Proceeds from sale of CCXI investment		73,219		—
Additions to property and equipment		(9,556)		(6,070)
Acquisitions, net of cash acquired		(101,184)		—
Proceeds from sale of Eminence		17,824		—
Net cash provided by (used in) investing activities		(19,688)		(7,120)

CASH FLOWS FROM FINANCING ACTIVITIES:
Cash dividends		(12,545)		(12,493)
Proceeds from stock option exercises		11,950		37,880


	Employee		Asset
	severance		Impairment and other		Total
Expense incurred in the first quarter of 2022	$	639	$	546	$	1,185
Incremental expense incurred during fiscal 2022		—		242		242
Cash payments		(589)		(554)		(1,143)
Adjustments⁽¹⁾		(50)		(234)		(284)
Accrued restructuring actions balances as of June 30, 2022	$	—		—		—


	Quarter Ended
	September 30,
	2022		2021
Consumables	$	216,430	$	205,691
Instruments		26,458		29,869
Services		21,445		16,257
Total product and services revenue, net	$	264,333	$	251,817
Royalty revenues		5,322		5,902
Total revenues, net	$	269,655	$	257,719


	Quarter Ended
	September 30,
	2022		2021

United States	$	155,431	$	140,702
EMEA, excluding United Kingdom		46,021		51,543
United Kingdom		11,702		12,478
APAC, excluding Greater China		17,465		17,501
Greater China		31,521		28,433
Rest of World		7,515		7,062
Net Sales	$	269,655	$	257,719


	Unrealized
	Gains		Foreign
	(Losses) on		Currency
	Derivative		Translation
	Instruments		Adjustments		Total
Balance as of June 30, 2022	$	8,069	$	(83,269)	$	(75,200)
Other comprehensive income (loss) before reclassifications, net of taxes, attributable to Bio-Techne		4,376		(21,457)		(17,081)
Reclassification from loss on derivatives to interest expense, net of taxes, attributable to Bio-Techne⁽¹⁾		319				319
Reclassification of cumulative translation adjustment for Eminence to non-operating income, net of taxes, attributable to Bio-Techne		—		152		152
Balance as of September 30, 2022⁽²⁾	$	12,764	$	(104,574)	$	(91,810)


Decrease in translation of earnings of foreign subsidiaries (annualized)	$	6,366
Decrease in translation of net assets of foreign subsidiaries		69,183
Additional transaction losses		2,350


Exhibit Number		Description
3.1		Amended and Restated Articles of Incorporation of the Company--incorporated by reference to Exhibit 3.1 of the Company's 8-K dated November 1, 2022*

3.2		Fourth Amended and Restated Bylaws of the Company--incorporated by reference to Exhibit 3.1 of the Company’s Form 8-K dated April 27, 2022*

4.1		Description of Capital Stock -- incorporated by reference to Exhibit 4.1 of the Company's Form 10-K dated August 24, 2022*

10.1**		Management Incentive Plan--incorporated by reference to Exhibit 10.13 of the Company's Form 10-K for the year ended June 30, 2013*

10.2**		Second Amended and Restated 2010 Equity Incentive Plan--incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K dated October 26, 2017*

10.3**		Form of Time Vesting Restricted Stock Award Agreement - incorporated by reference to Exhibit 10.3 of the Company's Form 10-K dated August 25, 2021*

10.4**		Form of Performance Vesting Restricted Stock Unit Award Agreement - incorporated by reference to Exhibit 10.4 of the Company's Form 10-K dated August 25, 2021*

10.5**		Form of Time Vesting Restricted Stock Unit Award Agreement - incorporated by reference to Exhibit 10.5 of the Company's Form 10-K dated August 25, 2021*

10.6**		Form of Performance Vesting Restricted Stock Unit Award Agreement - incorporated by reference to Exhibit 10.6 of the Company's Form 10-K dated August 25, 2021*

10.7**		Form of the Time Vesting Performance Unit Award Agreement - incorporated by reference to Exhibit 10.7 of the Company's Form 10-K dated August 25, 2021*

10.8**		Form of Performance Vesting Performance Unit Award Agreement - incorporated by reference to Exhibit 10.8 of the Company's Form 10-K dated August 25, 2021*

10.9**		Form of Time Vesting Incentive Stock Option Agreement - incorporated by reference to Exhibit 10.9 of the Company's Form 10-K dated August 25, 2021*

10.10**		Form of Performance Vesting Incentive Stock Option Agreement - incorporated by reference to Exhibit 10.10 of the Company's Form 10-K dated August 25, 2021*

Exhibit Number		Description

10.11**		Form of Employee Non-Qualified Stock Option Agreement - incorporated by reference to Exhibit 10.11 of the Company's Form 10-K dated August 25, 2021*

10.12**		Form of Director Non-Qualified Stock Option Agreement for Second Amendment and Restated 2010 Equity Incentive Plan - incorporated by reference to Exhibit 10.2 of the Company's Form 8-K dated October 26, 2017*

10.13**		Employment Agreement by and between the Company and Charles Kummeth - incorporated by reference to Exhibit 10.11 of the Company's Form-K dated September 7, 2017*

10.14**		Form of Employment Agreement by and between the Company and Executive Officers of the Company other than the CEO --incorporated by reference to Exhibit 10.12 of the Company's Form 10-K dated September 7, 2017*

10.15**		Form of Amendment No. 1 to Executive Employment Agreement – incorporated by reference to Exhibit 10.15 of the Company’s Form 10-Q dated May 11, 2020*

10.16		Amended and Restated Credit Agreement by and among the Company, the Guarantors party thereto, the Lenders party thereto, and BMO Harris Bank N.A., as Administrative Agent, dated August 31, 2022--incorporated by reference to Exhibit 10.1 of the Company's Form 8-K dated September 7, 2022*

10.17**		Form of Indemnification Agreement entered into with each director and executive officer of the Company - incorporated by reference to Exhibit 10.1 of the Company's Form 10-Q dated February 8, 2018*

10.18**		Bio-Techne 2020 Equity Incentive Plan – incorporated by reference to Exhibit 10.1 of the Company’s Form 8-k dated November 3, 2020*

10.20		Form of Director Non-Qualified Stock Option Agreement – incorporated by reference to Exhibit 10.2 of the Company’s Form 8-k dated November 3, 2020*

10.30**		Form of Employee Non-Qualified Stock Option Agreement (Global) – incorporated by reference to Exhibit 10.3 of the Company’s Form 8-k dated November 3, 2020*

10.40**		Form of Performance Vesting Cash Unit Agreement– incorporated by reference to Exhibit 10.4 of the Company’s Form 8-k dated November 3, 2020*

10.50**		Form of Performance Vesting Incentive Stock Option Agreement– incorporated by reference to Exhibit 10.5 of the Company’s Form 8-k dated November 3, 2020*

10.60**		Form of Performance Vesting Restricted Stock Agreement– incorporated by reference to Exhibit 10.6 of the Company’s Form 8-k dated November 3, 2020*

10.70**		Form of Performance Vesting Restricted Stock Unit Agreement– incorporated by reference to Exhibit 10.7 of the Company’s Form 8-k dated November 3, 2020*

10.80**		Form of Time Vesting Incentive Stock Option Agreement– incorporated by reference to Exhibit 10.8 of the Company’s Form 8-k dated November 3, 2020*

10.90**		Form of Time Vesting Cash Unit Agreement– incorporated by reference to Exhibit 10.9 of the Company’s Form 8-k dated November 3, 2020*

10.10**		Form of Performance Vesting Incentive Stock Option Agreement - incorporated by reference to Exhibit 10.10 of the Company's Form 10-K dated August 25, 2021*
20**		Form of Time Vesting Restricted Stock Agreement– incorporated by reference to Exhibit 10.10 of the Company’s Form 8-k dated November 3, 2020*

20.1**		Form of Time Vesting Restricted Stock Unit Agreement– incorporated by reference to Exhibit 10.11 of the Company’s Form 8-k dated November 3, 2020*

21		Subsidiaries of the Company - incorporated by reference to Exhibit 21 of the Company's Form 10-K dated August 24, 2022*

31.1		Certificate of Chief Executive Officer pursuant to section 302 of the Sarbanes Oxley Act of 2002

31.2		Certificate of Chief Financial Officer pursuant to section 302 of the Sarbanes Oxley Act of 2002

32.1		Certification of Chief Executive Officer pursuant to section 906 of the Sarbanes Oxley Act of 2002

32.2		Certification of Chief Financial Officer pursuant to section 906 of the Sarbanes Oxley Act of 2002

101		The following financial statements from the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, formatted in Inline Extensible Business Reporting Language (iXBRL): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Earnings and Comprehensive Income, (iii) the Condensed Consolidated Statements of Cash Flows, and (iv) Notes to the Condensed Consolidated Financial Statements.

104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)


		BIO-TECHNE CORPORATION
		(Company)

Date: November 7, 2022		/s/ Charles R. Kummeth
		Charles R. Kummeth
		Principal Executive Officer

Date: November 7, 2022		/s/ James Hippel
		James Hippel
		Principal Financial Officer


	/s/ Charles R. Kummeth
	Charles R. Kummeth
	Principal Executive Officer November 7, 2022


	/s/ James Hippel
	James Hippel
	Principal Financial Officer November 7, 2022