BIO-TECHNE Corp 10-Q for FY2023 Q3

BIO-TECHNE Corp (TECH)

10-Q 2023-05-08 For: 2023-03-31

Added on April 09, 2026

About this 10-Q

BIO-TECHNE Corp filed this 10-Q on May 8, 2023, covering the quarter ended March 31, 2023 (FY2023 Q3).

Headline figures

Quarter ended March 31, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $294.15M; up 1.3% from $290.38M a year earlier
Net income: $70.22M; up 15.6% from net income of $60.74M a year earlier
Diluted EPS: $0.43; up 16.2% from $0.37 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	24

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	33

Item 4.	Controls and Procedures	33

PART II: OTHER INFORMATION

Item 1.	Legal Proceedings	33

Item 1A.	Risk Factors	34

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34

Item 3.	Defaults Upon Senior Securities	34

Item 4.	Mine Safety Disclosures	34

Item 5.	Other Information	34

Item 6.	Exhibits	35

	SIGNATURES	38


	Quarter Ended				Nine Months Ended
	March 31,				March 31,
	2023		2022		2023		2022

Net sales	$	294,146	$	290,376	$	835,382	$	817,371
Cost of sales		91,984		88,918		270,265		261,225
Gross margin		202,162		201,458		565,117		556,146

Operating expenses:
Selling, general and administrative		99,238		89,269		291,624		276,137
Research and development		22,713		21,742		69,074		63,992
Total operating expenses		121,951		111,011		360,698		340,129
Operating income		80,211		90,447		204,419		216,017

Other income (expense)		(15)		(21,675)		45,924		6,317
Earnings before income taxes		80,196		68,772		250,343		222,334
Income taxes (benefit)		9,978		8,628		40,385		21,150
Net earnings, including noncontrolling interest		70,218		60,144		209,958		201,184
Net earnings (loss) attributable to noncontrolling interest		—		(595)		179		(9,343)
Net earnings attributable to Bio-Techne	$	70,218	$	60,739	$	209,779	$	210,527
Other comprehensive income (loss):
Foreign currency translation adjustments		3,282		(2,851)		(805)		(9,573)
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		(1,708)		7,179		2,302		11,745
Other comprehensive income (loss)		1,574		4,328		1,616		2,172
Other comprehensive income (loss) attributable to noncontrolling interest		—		(1)		(33)		26
Other comprehensive income (loss) attributable to Bio-Techne		1,574		4,329		1,649		2,146
Comprehensive income attributable to Bio-Techne	$	71,792	$	65,068	$	211,428	$	212,673

Earnings per share attributable to Bio-Techne⁽¹⁾:
Basic	$	0.45	$	0.39	$	1.34	$	1.34
Diluted	$	0.43	$	0.37	$	1.30	$	1.28

Weighted average common shares outstanding⁽¹⁾:
Basic		157,311		157,087		157,071		156,899
Diluted		161,615		163,874		161,768		164,292


	March 31,
	2023		June 30,
	(unaudited)		2022
ASSETS
Current assets:
Cash and cash equivalents	$	127,282	$	172,567
Short-term available-for-sale investments		29,915		74,462
Accounts receivable, less allowance for doubtful accounts of $3,491 and $2,568, respectively		216,415		194,548
Inventories		169,464		141,123
Other current assets		27,920		22,856
Total current assets		570,996		605,556

Property and equipment, net		223,571		223,242
Right of use asset		97,976		65,556
Goodwill		870,542		822,101
Intangible assets, net		553,257		531,522
Other assets		283,354		46,828
Total assets	$	2,599,696	$	2,294,805
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Trade accounts payable	$	27,120	$	33,865
Salaries, wages and related accruals		38,518		61,953
Accrued expenses		15,641		17,886
Contract liabilities		24,878		23,406
Income taxes payable		18,168		13,237
Operating lease liabilities - current		10,723		11,928
Contingent consideration payable		5,250		—
Current portion of long-term debt obligations		—		12,500
Other current liabilities		865		1,243
Total current liabilities		141,163		176,018

Deferred income taxes		94,607		98,994
Long-term debt obligations		370,000		243,410
Long-term contingent consideration payable		—		5,000
Operating lease liabilities		93,267		58,133
Other long-term liabilities		10,973		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 400,000,000; issued and outstanding 157,339,318 and 156,644,212, respectively⁽¹⁾		1,573		1,566
Additional paid-in capital⁽¹⁾		715,052		652,467
Retained earnings⁽¹⁾		1,246,612		1,122,937
Accumulated other comprehensive loss		(73,551)		(75,200)
Total Bio-Techne’s shareholders’ equity		1,889,686		1,701,770
Noncontrolling interest		—		(759)
Total shareholders’ equity		1,889,686		1,701,011
Total liabilities and shareholders’ equity	$	2,599,696	$	2,294,805


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


	Employee
	severance
Expense incurred in the second quarter of 2023	$	780
Cash payments		(176)
Adjustments		—
Accrued restructuring actions balances as of December 31, 2022		604
Cash payments		(586)
Adjustments		(18)
Accrued restructuring actions balances as of March 31, 2023	$	—



Beginning balance	$	531,522
Acquisitions		75,600
Other additions¹⁾		5,596
Amortization expense		(58,400)
Currency translation		(1,061)
Ending balance	$	553,257


Remainder 2023	$	19,190
2024		75,232
2025		71,958
2026		67,986
2027		57,824
Thereafter		238,367
Total	$	530,557


			Diagnostics and
	Protein Sciences		Genomics		Total
June 30, 2022	$	376,493	$	445,608	$	822,101
Acquisitions		51,051		-		51,051
Currency translation		(2,710)		100		(2,610)
March 31, 2023	$	424,834	$	445,708	$	870,542



	Preliminary allocation at acquisition date and at March 31, 2023
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
	March 31,		Inputs Considered as
	2023		Level 1		Level 2		Level 3

Assets
Exchange traded securities⁽¹⁾	$	23,915	$	23,915	$	—	$	—
Certificates of deposit⁽²⁾		6,000		6,000		—		—
Derivative instruments - cash flow hedges⁽³⁾		13,557		—		13,557		—
Total assets	$	43,472	$	29,915	$	13,557	$	—

Liabilities
Contingent consideration	$	5,250	$	—	$	—	$	5,250
Total liabilities	$	5,250	$	—	$	—	$	5,250


			As of
			March 31,
	Balance Sheet Classification		2023
Operating leases:
Operating lease right of use assets		Right of Use Asset	$	97,976

Current operating lease liabilities		Operating lease liabilities - current	$	10,723
Noncurrent operating lease liabilities		Operating lease liabilities		93,267
Total operating lease liabilities			$	103,990

Weighted average remaining lease term (in years):				9.61

Weighted average discount rate (%):				4.25


	March 31, 2023
	Operating
	Leases
Remainder 2023	$	7,313
2024		13,463
2025		13,058
2026		13,275
2027		11,676
Thereafter		70,959
Total	$	129,744
Less: Amounts representing interest		25,754
Total lease obligations	$	103,990


	Nine Months Ended
	March 31,
	2023		2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings, including noncontrolling interest	$	209,958	$	201,184
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		80,315		75,203
Costs recognized on sale of acquired inventory		400		1,596
Deferred income taxes		(22,651)		7,888
Stock-based compensation expense		41,315		33,777
Fair value adjustment to contingent consideration payable		(10,350)		(20,600)
Contingent consideration payments - operating		—		(3,300)
(Gain) Loss on investment, net		(37,176)		—
Fair value adjustment on available-for-sale investments		(1,153)		(15,569)
Asset impairment restructuring		—		546
Eminence impairment		—		18,715
Gain on sale of Eminence		(11,682)		—
Leases, net		1,434		(974)
Other operating activity		296		549
Change in operating assets and operating liabilities, net of acquisition:
Trade accounts and other receivables, net		(20,775)		(60,930)
Inventories		(28,816)		(16,034)
Prepaid expenses		(5,557)		(3,576)
Trade accounts payable, accrued expenses, contract liabilities, and other		(5,647)		11,229
Salaries, wages and related accruals		(22,759)		2,059
Income taxes payable		3,848		(9,208)
Net cash provided by (used in) operating activities		171,000		222,555

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities of available-for-sale investments		29,161		26,055
Purchases of available-for-sale investments		(20,500)		(47,998)
Proceeds from sale of CCXI investment		73,219		—
Additions to property and equipment		(27,413)		(31,338)
Acquisitions, net of cash acquired		(101,184)		—
Proceeds from sale of Eminence		17,824		—
Investment of forward purchase contract		—		(25,000)
Investment in Wilson Wolf		(232,000)		—
Net cash provided by (used in) investing activities		(260,893)		(78,281)


	Quarter Ended				Nine Months Ended
	March 31,				March 31,
	2023		2022		2023		2022
Consumables	$	240,659	$	239,171	$	674,419	$	657,568
Instruments		25,449		28,899		84,208		92,121
Services		23,312		17,815		60,609		51,426
Total product and services revenue, net	$	289,420	$	285,885	$	819,236	$	801,115
Royalty revenues		4,726		4,491		16,146		16,256
Total revenues, net	$	294,146	$	290,376	$	835,382	$	817,371


	Quarter Ended				Nine Months Ended
	March 31,				March 31,
	2023		2022		2023		2022

United States	$	163,197	$	163,976	$	467,633	$	447,045
EMEA, excluding United Kingdom		59,702		55,301		160,246		164,003
United Kingdom		13,811		12,920		36,385		37,240
APAC, excluding Greater China		20,159		21,100		55,592		58,204
Greater China		26,256		26,554		88,103		85,997
Rest of World		11,021		10,525		27,423		24,882
Net Sales	$	294,146	$	290,376	$	835,382	$	817,371


	March 31,		June 30,
	2023		2022

Raw materials	$	87,006	$	79,291
Finished goods⁽¹⁾		88,038		66,943
Inventories, net	$	175,044	$	146,234


	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	156,644	$	1,566	$	652,467	$	1,122,937	$	(75,200)	$	(759)	$	1,701,011
Net earnings							89,555				179		89,734
Other comprehensive income (loss)									(16,762)				(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	(222)		(2)				(19,560)						(19,562)
Common stock issued for exercise of options	425		5		9,418		(11,428)						(2,005)
Common stock issued for restricted stock awards	45		0		0		(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	36		0		2,517								2,517
Employee stock purchase plan expense					97								97
Balances at September 30, 2022	156,928	$	1,569	$	678,863	$	1,162,532	$	(91,810)	$	—	$	1,751,154
Net earnings							50,005						50,005
Other comprehensive income (loss)									16,685				16,685
Share repurchases													—
Common stock issued for exercise of options	155		1		5,074								5,075
Common stock issued for restricted stock awards	11		1		1								2
Cash dividends							(12,561)						(12,561)
Stock-based compensation expense					16,413								16,413
Common stock issued to employee stock purchase plan													—
Employee stock purchase plan expense					333								333
Balances at December 31, 2022	157,094	$	1,571	$	700,684	$	1,199,976	$	(75,125)	$	—	$	1,827,106
Net earnings							70,218						70,218
Other comprehensive income (loss)									1,574				1,574
Common stock issued for exercise of options	201		2		1,871		(10,733)						(8,860)
Common stock issued for restricted stock awards	6		0		0		(267)						(267)
Cash dividends							(12,582)						(12,582)
Stock-based compensation expense					9,995								9,995
Common stock issued to employee stock purchase plan	38		0		2,389								2,389
Employee stock purchase plan expense					113								113
Balances at March 31, 2023	157,339	$	1,573	$	715,052	$	1,246,612	$	(73,551)	$	—	$	1,889,686


	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		4,172		(805)		3,367
Reclassification from (gain) loss on derivatives to interest expense, net of taxes, attributable to Bio-Techne⁽¹⁾		(1,870)				(1,870)
Reclassification of cumulative translation adjustment for Eminence to non-operating income, net of taxes, attributable to Bio-Techne		—		152		152
Balance as of March 31, 2023⁽²⁾	$	10,371	$	(83,922)	$	(73,551)


Decrease in translation of earnings of foreign subsidiaries (annualized)	$	5,156
Decrease in translation of net assets of foreign subsidiaries		71,344
Additional transaction losses		4,086


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 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*

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 and nine months ended March 31, 2023, 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:May 8, 2023		/s/ Charles R. Kummeth
		Charles R. Kummeth
		Principal Executive Officer

Date: May 8, 2023		/s/ James Hippel
		James Hippel
		Principal Financial Officer


	/s/ Charles R. Kummeth
	Charles R. Kummeth
	Principal Executive Officer May 8, 2023


	/s/ James Hippel
	James Hippel
	Principal Financial Officer May 8, 2023