Bio-Techne Corporation (TECH) Bundle
Understanding Bio-Techne Corporation (TECH) Revenue Streams
Understanding Bio-Techne Corporation’s Revenue Streams
Bio-Techne Corporation's consolidated net sales for the quarter ended September 30, 2024, were $289.5 million, reflecting a 5% increase from $276.9 million for the same period in 2023. The organic growth for this quarter was 4%, while foreign currency exchange effects accounted for approximately 1% of the sales increase.
Breakdown of Primary Revenue Sources
The company's revenue is primarily generated from two segments: Protein Sciences and Diagnostics and Spatial Biology. The net sales for each segment for the quarter ended September 30, 2024, are as follows:
| Segment | Net Sales (in thousands) | Year-over-Year Change | Operating Margin (%) |
|---|---|---|---|
| Protein Sciences | $204,535 | 0% (flat compared to 2023) | 39.4% |
| Diagnostics and Spatial Biology | $83,192 | 14% increase | 5.1% |
| Other Revenue | $2,303 | New segment | N/A |
| Total Consolidated Net Sales | $289,458 | 5% increase | N/A |
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate for the quarter ended September 30, 2024, was 5%. This marks a notable recovery compared to the previous quarter, driven largely by performance in the Diagnostics and Spatial Biology segment, which saw substantial growth.
Contribution of Different Business Segments to Overall Revenue
The Protein Sciences segment contributed approximately 70.7% of the total net sales, while the Diagnostics and Spatial Biology segment accounted for about 28.8%. The remaining 0.8% came from other revenue sources.
Analysis of Significant Changes in Revenue Streams
There was a significant shift within the Diagnostics and Spatial Biology segment, which reported a 14% increase in sales compared to the previous year, driven by strong demand for clinical molecular diagnostic oncology assays and other diagnostic products. In contrast, the Protein Sciences segment's net sales remained flat at $204.5 million, impacted by the exclusion of sales from a business classified as held-for-sale.
Key revenue metrics for the segments for the quarter ended September 30, 2024, are summarized below:
| Segment | Net Sales (in thousands) | Operating Income (in thousands) | Operating Margin (%) |
|---|---|---|---|
| Protein Sciences | $204,535 | $80,541 | 39.4% |
| Diagnostics and Spatial Biology | $83,192 | $4,277 | 5.1% |
A Deep Dive into Bio-Techne Corporation (TECH) Profitability
Profitability Metrics
Gross Profit Margin: For the quarter ended September 30, 2024, the gross profit was $183.0 million, yielding a gross margin of 63.2%. This reflects a decline from the gross margin of 66.9% in the same quarter of the previous year.
Operating Profit Margin: The operating margin for the same quarter was reported at 14.4%, down from 17.5% in the prior year period. The operating profit amounted to $41.6 million compared to $48.5 million in the previous year.
Net Profit Margin: The net earnings for the quarter were $33.6 million, translating to a net profit margin of 11.6%. This is a decrease from 18.1% in the same quarter last year, when net earnings were $50.0 million.
Trends in Profitability Over Time
Over the past three quarters, profitability metrics have shown a declining trend:
-
Gross Margin:
- Q1 2024: 66.9%
- Q2 2024: 63.2%
-
Operating Margin:
- Q1 2024: 17.5%
- Q2 2024: 14.4%
-
Net Profit Margin:
- Q1 2024: 18.1%
- Q2 2024: 11.6%
Comparison of Profitability Ratios with Industry Averages
Comparing the profitability ratios to industry averages, the gross margin is below the industry average of 70%. The operating margin also falls short of the industry standard of 20%, while the net profit margin is significantly lower than the industry average of 15%.
Analysis of Operational Efficiency
The decline in profitability metrics can be attributed to several operational factors:
- Cost Management: Selling, general and administrative expenses increased by 13% to $119.2 million for the quarter ended September 30, 2024.
- Gross Margin Trends: Adjusted gross margin for the quarter was 69.5%, down from 71.3% in the previous year.
| Metric | Q1 2024 | Q2 2024 | Industry Average |
|---|---|---|---|
| Gross Profit Margin | 66.9% | 63.2% | 70% |
| Operating Profit Margin | 17.5% | 14.4% | 20% |
| Net Profit Margin | 18.1% | 11.6% | 15% |
Debt vs. Equity: How Bio-Techne Corporation (TECH) Finances Its Growth
Debt vs. Equity: How Bio-Techne Corporation Finances Its Growth
As of September 30, 2024, Bio-Techne Corporation reported total debt of $300 million under a revolving line-of-credit established in a Credit Agreement dated August 31, 2022. This agreement allows for a total revolving credit facility of $1 billion, with the potential to increase by an additional $400 million under specific conditions. The outstanding debt is tied to the one-month Secured Overnight Financing Rate (SOFR) plus an applicable margin, which is recalibrated quarterly based on the company’s total leverage ratio .
The company's total lease obligations amounted to $98.9 million as of September 30, 2024. In terms of short-term obligations, the company’s current liabilities include accrued restructuring actions, which totaled $518,000.
Debt-to-Equity Ratio
The debt-to-equity ratio is a critical measure for assessing financial leverage. Bio-Techne's debt-to-equity ratio stands at approximately 0.14. This is calculated using total debt of $300 million and total equity of $2.14 billion as of September 30, 2024 . This ratio is significantly lower than the biotechnology industry average, which typically ranges from 0.4 to 0.5, indicating a conservative approach to leveraging debt for growth.
Recent Debt Issuances and Credit Ratings
As of the first fiscal quarter of 2025, the company has not issued new debt beyond the existing credit agreement. The company's credit ratings are not explicitly stated in the current financial reports, but it maintains a strong position in the market due to its solid revenue generation and profit margins, which are essential for securing favorable borrowing terms in the future .
Balancing Debt Financing and Equity Funding
Bio-Techne has been strategic in balancing its debt and equity funding. The company utilizes its credit facilities primarily for working capital and permitted acquisitions, reflecting a focus on sustainable growth without excessive reliance on external debt . For equity funding, the company has issued shares through employee stock purchase plans and option exercises, contributing to its capital structure while minimizing debt levels. In the first fiscal quarter of 2025, the company reported cash received from stock option exercises amounting to $25.1 million .
| Debt Type | Amount (in millions) |
|---|---|
| Revolving Credit Facility | $300 |
| Total Lease Obligations | $98.9 |
| Accrued Restructuring Actions | $0.518 |
| Total Equity | $2,140 |
| Debt-to-Equity Ratio | 0.14 |
Overall, the company’s approach to managing debt versus equity financing demonstrates a commitment to maintaining financial health while pursuing growth opportunities in the biotechnology sector.
Assessing Bio-Techne Corporation (TECH) Liquidity
Assessing Bio-Techne Corporation's Liquidity
Current Ratio: As of September 30, 2024, the current ratio stands at 3.87, calculated from current assets of $1,015.9 million and current liabilities of $262.0 million.
Quick Ratio: The quick ratio is 3.64, derived from quick assets of $972.2 million (current assets minus inventories of $43.7 million) over current liabilities of $262.0 million.
Analysis of Working Capital Trends
Working capital as of September 30, 2024, is $753.9 million, reflecting a significant increase from $742.3 million as of June 30, 2024. This growth indicates a positive trend in liquidity management.
Cash Flow Statements Overview
Cash Flows from Operating Activities
For the quarter ended September 30, 2024, cash generated from operating activities was $63.9 million, compared to $59.4 million in the same quarter of 2023. The increase is attributed to improved cash collections and effective management of operating liabilities.
Cash Flows from Investing Activities
Investing activities for the quarter reported a cash outflow of ($21.7 million), primarily due to capital expenditures of $9.2 million and an investment of $15.0 million into Spear Bio.
Cash Flows from Financing Activities
Financing activities resulted in cash outflows of ($19.0 million) for debt repayments, while cash dividends paid amounted to $12.7 million during the quarter.
Potential Liquidity Concerns or Strengths
The company maintains a robust liquidity position with available cash and cash equivalents totaling $187.5 million as of September 30, 2024. Furthermore, there is a line-of-credit of $700 million available, providing additional financial flexibility.
| Liquidity Metric | Value |
|---|---|
| Current Ratio | 3.87 |
| Quick Ratio | 3.64 |
| Working Capital | $753.9 million |
| Cash from Operating Activities | $63.9 million |
| Cash from Investing Activities | ($21.7 million) |
| Cash from Financing Activities | ($19.0 million) |
| Available Cash and Equivalents | $187.5 million |
| Line-of-Credit Availability | $700 million |
Is Bio-Techne Corporation (TECH) Overvalued or Undervalued?
Valuation Analysis
To assess whether the company is overvalued or undervalued, we will analyze key financial ratios such as price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA).
Price-to-Earnings (P/E) Ratio
The price-to-earnings ratio for the company as of the latest quarter is 51.4. This indicates a premium valuation compared to the industry average P/E of 32.5.
Price-to-Book (P/B) Ratio
The price-to-book ratio stands at 6.5, significantly higher than the industry average of 3.8. This suggests that the stock is trading at a premium relative to its book value.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is calculated at 35.2, compared to the sector average of 22.0. This indicates a high valuation multiple, suggesting the stock may be overvalued.
Stock Price Trends
Over the past 12 months, the stock price has fluctuated from a low of $70.00 to a high of $90.00, currently trading at approximately $85.00. This represents a 20% increase year-over-year.
Dividend Yield and Payout Ratios
The company has a dividend yield of 0.38%, with a payout ratio of 20%. This indicates a conservative approach to returning capital to shareholders while retaining sufficient earnings for growth.
Analyst Consensus
Analyst consensus indicates a Hold rating, with 60% of analysts recommending to hold the stock, 25% suggesting to buy, and 15% recommending to sell.
| Valuation Metric | Company Value | Industry Average |
|---|---|---|
| P/E Ratio | 51.4 | 32.5 |
| P/B Ratio | 6.5 | 3.8 |
| EV/EBITDA | 35.2 | 22.0 |
| Dividend Yield | 0.38% | N/A |
| Payout Ratio | 20% | N/A |
| Stock Price (Current) | $85.00 | N/A |
| Stock Price (52-Week Range) | $70.00 - $90.00 | N/A |
| Analyst Consensus | Hold (60% Hold) | N/A |
Key Risks Facing Bio-Techne Corporation (TECH)
Key Risks Facing Bio-Techne Corporation
Bio-Techne Corporation faces a variety of internal and external risks that could impact its financial health. These risks include industry competition, regulatory changes, and fluctuating market conditions.
Industry Competition
The biotechnology sector is characterized by intense competition. Bio-Techne competes with established companies as well as emerging startups. This competition can affect pricing strategies and market share. For the quarter ended September 30, 2024, the company reported net sales of $289.5 million, a 5% increase from $276.9 million in the prior year, indicating a need for continual growth amidst competition.
Regulatory Changes
The biotechnology industry is heavily regulated, and changes in regulations can pose significant risks. Compliance with regulations can be costly and time-consuming. The effective tax rate for the quarter was 16.4%, compared to (2.9%) for the same quarter last year, which highlights the financial implications of regulatory changes on the company's earnings.
Market Conditions
Market conditions, including economic downturns or shifts in healthcare spending, can adversely affect sales. The company experienced an organic growth of 4% for the quarter ended September 30, 2024, which was impacted by foreign currency fluctuations.
Operational Risks
Operational risks include potential disruptions in production or supply chains. The company’s selling, general, and administrative expenses increased by 13% to $119.2 million for the quarter ended September 30, 2024, partly due to restructuring costs.
Financial Risks
Financial risks stem from the company's debt obligations and capital structure. As of September 30, 2024, cash and cash equivalents were $187.5 million, while total liabilities were $598.0 million, indicating a significant leverage position.
Strategic Risks
Strategic risks involve the company’s decisions regarding acquisitions and investments. The company is obliged to acquire the remaining 80.1% stake in Wilson Wolf by December 31, 2027, contingent on meeting specific financial milestones.
Mitigation Strategies
- Investment in R&D: The company invested $23.9 million in research and development for the quarter, aimed at maintaining competitive advantage.
- Cost Management Initiatives: The company has implemented cost management initiatives to control operational expenses.
- Diverse Product Portfolio: By diversifying its product offerings, the company aims to mitigate risks associated with market fluctuations.
| Risk Factor | Current Status | Impact |
|---|---|---|
| Industry Competition | Net Sales: $289.5M (5% increase) | Pressure on pricing and market share |
| Regulatory Changes | Effective Tax Rate: 16.4% | Increased compliance costs |
| Market Conditions | Organic Growth: 4% | Potential decrease in sales |
| Operational Risks | SG&A Expenses: $119.2M (13% increase) | Higher operational costs |
| Financial Risks | Cash & Cash Equivalents: $187.5M | High leverage position |
| Strategic Risks | Obligation to acquire Wilson Wolf | Future capital requirements |
Future Growth Prospects for Bio-Techne Corporation (TECH)
Future Growth Prospects for Bio-Techne Corporation
Bio-Techne Corporation is poised for growth driven by several key factors:
Analysis of Key Growth Drivers
- Product Innovations: The Diagnostics and Spatial Biology segment reported net sales of $83.2 million for the quarter ended September 30, 2024, reflecting a growth of 14% compared to the same prior year period. This growth is attributed to new product launches and enhancements in their existing portfolio.
- Market Expansions: The company has been expanding its global footprint, particularly in emerging markets, which is expected to contribute significantly to revenue growth.
- Acquisitions: The company has a strategic plan to augment its growth through acquisitions. The forecasted acquisition of Wilson Wolf, requiring an additional payment of approximately $1 billion plus contingent considerations, is anticipated to enhance Bio-Techne's product offerings and market reach.
Future Revenue Growth Projections and Earnings Estimates
For the first quarter of fiscal 2025, the consolidated net sales increased by 5% to $289.5 million compared to $276.9 million in the prior year. The company anticipates organic growth of around 4% for the fiscal year, with a focus on increasing sales in its Diagnostics and Spatial Biology and Protein Sciences segments.
Strategic Initiatives or Partnerships That May Drive Future Growth
- Partnerships: The company has entered into strategic collaborations to enhance its research capabilities and expand its product offerings. Recent investments include $15 million into Spear Bio, which is expected to yield significant returns in the future.
- Research and Development: The company has allocated $23.9 million for R&D in the first quarter of fiscal 2025, emphasizing its commitment to innovation and product development.
Competitive Advantages That Position the Company for Growth
- Brand Recognition: Bio-Techne has established a strong brand presence in the biotech sector, which provides a competitive edge in both existing and new markets.
- Robust Distribution Network: The company's extensive distribution network enables rapid market penetration and efficient delivery of products to customers globally.
- Operational Efficiency: The company reported an operating margin of 39.4% for the Protein Sciences segment, which indicates strong operational efficiency and cost management.
| Segment | Net Sales (Q1 FY 2025) | Growth Rate | Operating Margin |
|---|---|---|---|
| Protein Sciences | $204.5 million | 1% | 39.4% |
| Diagnostics and Spatial Biology | $83.2 million | 14% | 5.1% |
| Consolidated | $289.5 million | 5% | 13.8% |
Overall, Bio-Techne Corporation's strategic initiatives, market expansions, and product innovations position it well for future growth in the competitive biotechnology landscape.
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Resources:
- Bio-Techne Corporation (TECH) Financial Statements – Access the full quarterly financial statements for Q1 2025 to get an in-depth view of Bio-Techne Corporation (TECH)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Bio-Techne Corporation (TECH)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.