BIO-TECHNE Corp 10-Q for FY2023 Q2

BIO-TECHNE Corp (TECH)

10-Q 2023-02-07 For: 2022-12-31

Added on April 09, 2026

About this 10-Q

BIO-TECHNE Corp filed this 10-Q on February 7, 2023, covering the quarter ended December 31, 2022 (FY2023 Q2).

Headline figures

Quarter ended December 31, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $271.58M; up 0.9% from $269.28M a year earlier
Net income: $50.01M; down 37.6% from net income of $80.17M a year earlier
Diluted EPS: $0.31; down 36.7% from $0.49 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				Six Months Ended
	December 31,				December 31,
	2022		2021		2022		2021

Net sales	$	271,581	$	269,276	$	541,236	$	526,995
Cost of sales		88,221		85,585		178,280		172,307
Gross margin		183,360		183,691		362,956		354,688

Operating expenses:
Selling, general and administrative		93,010		100,693		192,386		186,868
Research and development		22,459		20,650		46,362		42,250
Total operating expenses		115,469		121,343		238,748		229,118
Operating income		67,891		62,348		124,208		125,570

Other income (expense)		(1,462)		23,831		45,938		27,992
Earnings before income taxes		66,429		86,179		170,146		153,562
Income taxes (benefit)		16,424		14,120		30,407		12,522
Net earnings, including noncontrolling interest		50,005		72,059		139,739		141,040
Net earnings (loss) attributable to noncontrolling interest		—		(8,114)		179		(8,748)
Net earnings attributable to Bio-Techne	$	50,005	$	80,173	$	139,560	$	149,788
Other comprehensive income (loss):
Foreign currency translation adjustments		17,370		1,924		(4,087)		(6,722)
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		(685)		2,884		4,010		4,566
Other comprehensive income (loss)		16,685		4,808		42		(2,156)
Other comprehensive income (loss) attributable to noncontrolling interest		—		66		(33)		27
Other comprehensive income (loss) attributable to Bio-Techne		16,685		4,742		75		(2,183)
Comprehensive income attributable to Bio-Techne	$	66,690	$	84,915	$	139,635	$	147,605

Earnings per share attributable to Bio-Techne⁽¹⁾:
Basic	$	0.32	$	0.51	$	0.89	$	0.95
Diluted	$	0.31	$	0.49	$	0.86	$	0.91

Weighted average common shares outstanding⁽¹⁾:
Basic		157,011		157,240		156,887		156,808
Diluted		161,750		164,828		161,766		164,636


	December 31,
	2022		June 30,
	(unaudited)		2022
ASSETS
Current assets:
Cash and cash equivalents	$	164,682	$	172,567
Short-term available-for-sale investments		32,074		74,462
Accounts receivable, less allowance for doubtful accounts of $3,250 and $2,568, respectively		184,763		194,548
Inventories		160,233		141,123
Other current assets		23,431		22,856
Total current assets		565,183		605,556

Property and equipment, net		223,851		223,242
Right of use asset		83,937		65,556
Goodwill		869,589		822,101
Intangible assets, net		567,647		531,522
Other assets		53,194		46,828
Total assets	$	2,363,401	$	2,294,805
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Trade accounts payable	$	24,100	$	33,865
Salaries, wages and related accruals		28,633		61,953
Accrued expenses		16,279		17,886
Contract liabilities		21,812		23,406
Income taxes payable		25,277		13,237
Operating lease liabilities - current		10,975		11,928
Current portion of long-term debt obligations		—		12,500
Other current liabilities		1,319		1,243
Total current liabilities		128,395		176,018

Deferred income taxes		111,381		98,994
Long-term debt obligations		200,000		243,410
Long-term contingent consideration payable		7,000		5,000
Operating lease liabilities		78,183		58,133
Other long-term liabilities		11,336		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 157,093,879 and 156,644,212, respectively⁽¹⁾		1,571		1,566
Additional paid-in capital⁽¹⁾		700,684		652,467
Retained earnings⁽¹⁾		1,199,976		1,122,937
Accumulated other comprehensive loss		(75,125)		(75,200)
Total Bio-Techne’s shareholders’ equity		1,827,106		1,701,770
Noncontrolling interest		—		(759)
Total shareholders’ equity		1,827,106		1,701,011
Total liabilities and shareholders’ equity	$	2,363,401	$	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



Beginning balance	$	531,522
Acquisitions		75,600
Other additions		713
Amortization expense		(38,861)
Currency translation		(1,327)
Ending balance	$	567,647


Remainder 2023	$	38,462
2024		74,764
2025		71,341
2026		67,478
2027		57,326
Thereafter		235,576
Total	$	544,947


			Diagnostics and
	Protein Sciences		Genomics		Total
June 30, 2022	$	376,493	$	445,608	$	822,101
Acquisitions		51,051		-		51,051
Currency translation		(3,623)		60		(3,563)
December 31, 2022	$	423,921	$	445,668	$	869,589



	Preliminary allocation at acquisition date and at December 31, 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
	December 31,		Inputs Considered as
	2022		Level 1		Level 2		Level 3

Assets
Exchange traded securities⁽¹⁾	$	23,574	$	23,574	$	—	$	—
Certificates of deposit⁽²⁾		8,500		8,500		—		—
Derivative instruments - cash flow hedges⁽³⁾		15,791		—		15,791		—
Total assets	$	47,865	$	32,074	$	15,791	$	—

Liabilities
Contingent consideration	$	7,000	$	—	$	—	$	7,000
Total liabilities	$	7,000	$	—	$	—	$	7,000


			As of
			December 31,
	Balance Sheet Classification		2022
Operating leases:
Operating lease right of use assets		Right of Use Asset	$	83,937

Current operating lease liabilities		Operating lease liabilities current	$	10,975
Noncurrent operating lease liabilities		Operating lease liabilities		78,183
Total operating lease liabilities			$	89,158

Weighted average remaining lease term (in years):				9.77

Weighted average discount rate (%):				4.23


	December 31, 2022
	Operating
	Leases
Remainder 2023	$	7,237
2024		13,236
2025		12,328
2026		11,211
2027		9,524
Thereafter		57,035
Total	$	110,571
Less: Amounts representing interest		21,413
Total Lease obligations	$	89,158


	Six Months Ended
	December 31,
	2022		2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings, including noncontrolling interest	$	139,739	$	141,040
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		53,344		49,836
Costs recognized on sale of acquired inventory		400		1,596
Deferred income taxes		(6,365)		7,233
Stock-based compensation expense		31,205		25,706
Fair value adjustment to contingent consideration payable		(8,600)		(16,400)
Contingent consideration payments - operating		—		(3,300)
(Gain) Loss on investment, net		(37,176)		—
Fair value adjustment on available for sale investments		(839)		(33,672)
Asset impairment restructuring		—		546
Eminence impairment		—		18,715
Gain on sale of Eminence		(11,682)		—
Leases, net		640		(501)
Other operating activity		112		383
Change in operating assets and operating liabilities, net of acquisition:
Trade accounts and other receivables, net		11,425		(9,347)
Inventories		(18,362)		(8,700)
Prepaid expenses		(2,005)		(7,025)
Trade accounts payable, accrued expenses, contract liabilities, and other		(11,541)		(175)
Salaries, wages and related accruals		(33,265)		(10,408)
Income taxes payable		13,435		(6,100)
Net cash provided by (used in) operating activities		120,465		149,427

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities of available-for-sale investments		26,509		12,450
Purchases of available-for-sale investments		(20,500)		(13,500)
Proceeds from sale of CCXI investment		73,219		—
Additions to property and equipment		(15,665)		(16,238)
Acquisitions, net of cash acquired		(101,184)		—
Proceeds from sale of Eminence		17,824		—
Investment of forward purchase contract		—		(25,000)
Net cash provided by (used in) investing activities		(19,797)		(42,288)

CASH FLOWS FROM FINANCING ACTIVITIES:


	Quarter Ended				Six Months Ended
	December 31,				December 31,
	2022		2021		2022		2021
Consumables	$	217,330	$	212,706	$	433,760	$	418,397
Instruments		32,301		33,353		58,759		63,222
Services		15,852		17,354		37,297		33,611
Total product and services revenue, net	$	265,483	$	263,413	$	529,816	$	515,230
Royalty revenues		6,098		5,863		11,420		11,765
Total revenues, net	$	271,581	$	269,276	$	541,236	$	526,995


	Quarter Ended				Six Months Ended
	December 31,				December 31,
	2022		2021		2022		2021

United States	$	149,005	$	142,367	$	304,436	$	283,069
EMEA, excluding United Kingdom		54,523		57,159		100,544		108,702
United Kingdom		10,872		11,842		22,574		24,320
APAC, excluding Greater China		17,968		19,603		35,433		37,104
Greater China		30,326		31,009		61,847		59,442
Rest of World		8,887		7,296		16,402		14,358
Net Sales	$	271,581	$	269,276	$	541,236	$	526,995


	December 31,		June 30,
	2022		2022

Raw materials	$	84,757	$	79,291
Finished goods⁽¹⁾		80,548		66,943
Inventories, net	$	165,305	$	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 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 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


	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		4,484		(4,087)		397
Reclassification from (gain) loss on derivatives to interest expense, net of taxes, attributable to Bio-Techne⁽¹⁾		(474)				(474)
Reclassification of cumulative translation adjustment for Eminence to non-operating income, net of taxes, attributable to Bio-Techne		—		152		152
Balance as of December 31, 2022⁽²⁾	$	12,079	$	(87,204)	$	(75,125)


Decrease in translation of earnings of foreign subsidiaries (annualized)	$	7,079
Decrease in translation of net assets of foreign subsidiaries		73,070
Additional transaction losses		4,255


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 six months ended December 31, 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: February 7, 2023		/s/ Charles R. Kummeth
		Charles R. Kummeth
		Principal Executive Officer

Date: February 7, 2023		/s/ James Hippel
		James Hippel
		Principal Financial Officer


	/s/ Charles R. Kummeth
	Charles R. Kummeth
	Principal Executive Officer February 7, 2023


	/s/ James Hippel
	James Hippel
	Principal Financial Officer February 7, 2023