BIO-TECHNE Corp 10-Q for FY2024 Q1

BIO-TECHNE Corp (TECH)

10-Q 2023-11-07 For: 2023-09-30

Added on April 09, 2026

About this 10-Q

BIO-TECHNE Corp filed this 10-Q on November 7, 2023, covering the quarter ended September 30, 2023 (FY2024 Q1).

Headline figures

Quarter ended September 30, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $276.94M; up 2.7% from $269.66M a year earlier
Net income: $50.99M; down 43.1% from net income of $89.56M a year earlier
Diluted EPS: $0.31; down 43.6% from $0.55 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	20

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	27

Item 4.	Controls and Procedures	27

PART II: OTHER INFORMATION

Item 1.	Legal Proceedings	27

Item 1A.	Risk Factors	28

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28

Item 3.	Defaults Upon Senior Securities	28

Item 4.	Mine Safety Disclosures	28

Item 5.	Other Information	28

Item 6.	Exhibits	29

	SIGNATURES	32


	Quarter Ended
	September 30,
	2023		2022

Net sales	$	276,935	$	269,655
Cost of sales		91,744		90,060
Gross margin		185,191		179,595

Operating expenses:
Selling, general and administrative		105,331		99,375
Research and development		23,998		23,903
Total operating expenses		129,329		123,278
Operating income		55,862		56,317

Other income (expense)		(6,304)		47,399
Earnings before income taxes		49,558		103,716
Income taxes (benefit)		(1,435)		13,982
Net earnings, including noncontrolling interest		50,993		89,734
Net earnings attributable to noncontrolling interest		—		179
Net earnings attributable to Bio-Techne	$	50,993	$	89,555
Other comprehensive income (loss):
Foreign currency translation adjustments		(11,602)		(21,457)
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		(350)		4,695
Other comprehensive income (loss)		(11,952)		(16,643)
Other comprehensive income (loss) attributable to noncontrolling interest		—		(33)
Other comprehensive income (loss) attributable to Bio-Techne		(11,952)		(16,610)
Comprehensive income attributable to Bio-Techne	$	39,041	$	72,945

Earnings per share attributable to Bio-Techne⁽¹⁾:
Basic	$	0.32	$	0.57
Diluted	$	0.31	$	0.55

Weighted average common shares outstanding⁽¹⁾:
Basic		158,130		156,929
Diluted		161,940		162,172


	September 30,
	2023		June 30,
	(unaudited)		2023
ASSETS
Current assets:
Cash and cash equivalents	$	148,663	$	180,571
Short-term available-for-sale investments		—		23,739
Accounts receivable, less allowance for doubtful accounts of $4,920 and $4,738, respectively		204,570		218,468
Inventories		186,080		171,638
Other current assets		52,164		27,066
Total current assets		591,477		621,482

Property and equipment, net		231,683		226,200
Right of use asset		102,277		98,326
Goodwill		969,376		872,737
Intangible assets, net		578,971		534,645
Other assets		281,576		285,302
Total assets	$	2,755,360	$	2,638,692
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Trade accounts payable	$	28,084	$	25,679
Salaries, wages and related accruals		34,891		36,747
Accrued expenses		15,937		14,880
Contract liabilities		24,516		23,069
Income taxes payable		5,938		12,022
Operating lease liabilities - current		12,198		11,199
Contingent consideration payable		1,750		3,500
Other current liabilities		4,440		1,413
Total current liabilities		127,754		128,509

Deferred income taxes		83,134		88,982
Long-term debt obligations		440,000		350,000
Operating lease liabilities		97,332		93,766
Other long-term liabilities		9,394		10,919

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 158,354,579 and 157,641,914 respectively		1,584		1,576
Additional paid-in capital		746,606		721,543
Retained earnings		1,327,572		1,309,461
Accumulated other comprehensive loss		(78,016)		(66,064)
Total Bio-Techne’s shareholders’ equity		1,997,746		1,966,516
Noncontrolling interest		—		—
Total shareholders’ equity		1,997,746		1,966,516
Total liabilities and shareholders’ equity	$	2,755,360	$	2,638,692


	Employee
	severance
Expense incurred in fiscal year 2023	$	1,677
Fiscal year 2023 cash payments		(762)
Fiscal year 2023 adjustments		(18)
Accrued restructuring actions balances as of June 30, 2023	$	897
Fiscal year 2024 cash payments		(707)
Fiscal year 2024 adjustments⁽¹⁾		89
Accrued restructuring actions balances as of September 30, 2023⁽²⁾	$	279


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



Beginning balance	$	534,645
Acquisitions		66,400
Other additions		433
Amortization expense		(20,231)
Currency translation		(2,276)
Ending balance	$	578,971


Remainder 2024	$	60,132
2025		77,039
2026		73,092
2027		62,952
2028		59,308
Thereafter		223,748
Total	$	556,271


			Diagnostics and
	Protein Sciences		Genomics		Total
June 30, 2023	$	427,027	$	445,710	$	872,737
Acquisitions		—		102,560		102,560
Currency translation		(2,983)		(2,938)		(5,921)
September 30, 2023	$	424,044	$	545,332	$	969,376



	Preliminary allocation at acquisition date and at September 30, 2023
Current assets	$	12,512
Equipment and other long-term assets		1,470
Intangible assets:
Developed technologies		60,300
Tradenames		4,900
Customer relationships		1,200
Goodwill		102,560
Total assets acquired		182,942

Liabilities		7,096
Deferred income taxes, net		5,768
Net assets acquired	$	170,078

Cash paid		166,426
Estimated net working capital payable		3,652
Net assets acquired	$	170,078


		Total
		carrying
		value as of		Fair Value Measurements Using
	Balance Sheet Location	September 30,		Inputs Considered as
		2023		Level 1		Level 2		Level 3

Assets
Exchange traded securities⁽¹⁾	Short-term available-for-sale investments	$	—	$	—	$	—	$	—
Derivatives designated as hedging instruments - cash flow hedges	Other assets		16,398		—		16,398		—
Derivatives designated as hedging instruments - net investment hedge	Other assets		1,093		—		1,093		—
Total assets		$	17,491	$	—	$	17,491	$	—

Liabilities
Contingent consideration	Contingent consideration payable	$	1,750	$	—	$	—	$	1,750
Total liabilities		$	1,750	$	—	$	—	$	1,750


		September 30,		June 30,
Instruments	Designation	2023		2023
Forward starting swaps⁽¹⁾	Cash flow hedge	$	300	$	300
Cross-currency swap⁽²⁾	Net investment hedge		150		—


	(Gain) Loss Recognized in Accumulated Other Comprehensive Loss				(Gain) Loss Reclassified into Income
	Quarter Ended				Quarter Ended
	September 30,				September 30,				Location of (Gain) Loss
	2023		2022		2023		2022		in Income Statement
Cash flow hedges
Forward starting swaps	$	(1,587)	$	(4,376)	$	(2,539)	$	417	Interest expense
Net investment hedges
Cross-currency swap		(1,366)		—		(698)		—	Interest expense
Total	$	(2,953)	$	(4,376)	$	(3,237)	$	417


	Quarter Ended
	September 30,
	2023		2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings, including noncontrolling interest	$	50,993	$	89,734
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		28,540		26,641
Costs recognized on sale of acquired inventory		181		300
Deferred income taxes		(11,591)		(4,767)
Stock-based compensation expense		10,093		14,461
Fair value adjustment to contingent consideration payable		(1,750)		(100)
Gain on sale of CCXI investment		—		(37,176)
Fair value adjustment on available-for-sale investments		(283)		(911)
(Gain) loss on equity method investment		2,382		—
Gain on sale of Eminence		—		(11,682)
Leases, net		613		2,545
Other operating activity		182		(32)
Change in operating assets and operating liabilities, net of acquisition:
Trade accounts and other receivables, net		15,599		17,335
Inventories		(5,216)		(10,685)
Prepaid expenses		(2,572)		(2,760)
Trade accounts payable, accrued expenses, contract liabilities, and other		(2,695)		(1,401)
Salaries, wages and related accruals		(2,157)		(28,360)
Income taxes payable		(22,936)		2,939
Net cash provided by (used in) operating activities		59,383		56,081

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of available-for-sale investments		23,759		14,509
Purchases of available-for-sale investments		—		(14,500)
Proceeds from sale of CCXI investment		—		73,219
Additions to property and equipment		(13,592)		(9,556)
Acquisitions, net of cash acquired		(166,426)		(101,184)
Distributions from (Investments in) Wilson Wolf		2,149		—
Proceeds from sale of Eminence		—		17,824
Net cash provided by (used in) investing activities		(154,110)		(19,688)

CASH FLOWS FROM FINANCING ACTIVITIES:
Cash dividends		(12,654)		(12,545)
Proceeds from stock option exercises		14,394		11,950


	Quarter Ended
	September 30,
	2023		2022
Consumables	$	224,547	$	216,430
Instruments		24,860		26,458
Services		21,454		21,445
Total product and services revenue, net	$	270,861	$	264,333
Royalty revenues		6,074		5,322
Total revenues, net	$	276,935	$	269,655


	Quarter Ended
	September 30,
	2023		2022

United States	$	159,105	$	155,431
EMEA, excluding United Kingdom		54,798		46,021
United Kingdom		12,449		11,702
APAC, excluding Greater China		17,351		17,465
Greater China		25,485		31,521
Rest of World		7,747		7,515
Net Sales	$	276,935	$	269,655


	September 30,		June 30,
	2023		2023

Raw materials	$	84,739	$	84,551
Finished goods⁽¹⁾		106,539		92,474
Inventories, net	$	191,278	$	177,025


			As of
			September 30,
	Balance Sheet Classification		2023
Operating leases:
Operating lease right of use assets		Right of use asset	$	102,277

Current operating lease liabilities		Operating lease liabilities - current	$	12,198
Noncurrent operating lease liabilities		Operating lease liabilities		97,332
Total operating lease liabilities			$	109,530

Weighted average remaining lease term (in years):				9.05

Weighted average discount rate (%):				4.21


	September 30, 2023
	Operating
	Leases
Remainder 2024	$	12,166
2025		15,927
2026		16,076
2027		13,448
2028		13,444
Thereafter		62,491
Total	$	133,552
Less: Amounts representing interest		24,022
Total lease obligations	$	109,530


	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, 2023	157,642	$	1,576	$	721,543	$	1,309,461	$	(66,064)	$	—	$	1,966,516
Net earnings							50,993						50,993
Other comprehensive loss									(11,952)				(11,952)
Common stock issued for exercise of options	633		6		12,877		(15,460)						(2,577)
Common stock issued for restricted stock awards	47		1		0		(4,768)						(4,767)
Cash dividends							(12,654)						(12,654)
Stock-based compensation expense					9,981								9,981
Common stock issued to employee stock purchase plan	33		1		2,093								2,094
Employee stock purchase plan expense					112								112
Balances at September 30, 2023	158,355	$	1,584	$	746,606	$	1,327,572	$	(78,016)	$	—	$	1,997,746


	Unrealized
	Gains		Foreign
	(Losses) on		Currency
	Derivative		Translation
	Instruments		Adjustments		Total
Balance as of June 30, 2023	$	12,862	$	(78,926)	$	(66,064)
Other comprehensive income (loss), before tax:
Amounts before reclassifications, attributable to Bio-Techne		1,587		(11,069)		(9,482)
Amounts reclassified out		(2,539)		(698)		(3,237)
Total other comprehensive income (loss), before tax		(952)		(11,767)		(12,719)
Tax (expense)/benefit		(602)		(165)		(767)
Total other comprehensive income (loss), net of tax		(350)		(11,602)		(11,952)
Balance as of September 30, 2023⁽¹⁾	$	12,512	$	(90,528)	$	(78,016)


Decrease in translation of earnings of foreign subsidiaries (annualized)	$	5,623
Decrease in translation of net assets of foreign subsidiaries		82,608
Additional transaction losses		4,099


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 23, 2023*

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*


Exhibit Number		Description
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*

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 10-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*

10.21**		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*

10.22**		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*

10.23**		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*

10.24**		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*

10.25**		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*

10.26**		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*

10.27**		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*


Exhibit Number		Description
10.28**		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*

10.29**		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*

10.30**		Employment Agreement by and between the Company and Kim Kelderman – incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K dated October 19, 2023*

21		Subsidiaries of the Company - incorporated by reference to Exhibit 21 of the Company's Form 10-K dated August 23, 2023*

31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2		Certification 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, 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: November 7, 2023		/s/ Charles R. Kummeth
		Charles R. Kummeth
		Principal Executive Officer

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


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


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