Bio-Techne Corporation (NASDAQ:TECH) Q2 2023 Earnings Call Transcript

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Operator: Our next question comes from Catherine Schulte with Baird. Please proceed with your question.

Catherine Schulte: Hey guys, thanks for the questions. I guess first, Jim, just circling back, you said adjusted for China and RUO region bulk ordering organic growth would have been double digits. Can you just quantify the bulk ordering portion? It seems like China is maybe a two-point headwind in bulk orders, four points or maybe a little bit more. Is that the right — about the right ballpark? And then can you just quantify any bulk purchasing activity in the third or fourth quarter of last year, just as we think about comps heading into the back half of the year?

Jim Hippel: So yeah, your percentages are pretty close to what we show as well. And yes, that’s why we said we expect Q3 to be very similar to Q2 in terms of organic growth because the number of one-time bulk orders from these small biotechs was similar to Q2, perhaps a little bit less, but also keep in mind that we had the very large ExoTRU licensing agreement with Thermo Fisher in our Q3. We knew €“ we didn’t know all along that Q3 was going to be our most challenging growth quarter because of that very large ExoTRU agreement that occurred. So that’s an additional headwind that we didn’t have. But we think with the overall momentum of the business, we’ll be able to cover some of that sequentially, so that sequentially our growth rates will be similar.

Catherine Schulte: Okay. Got it. And then can you just talk to the rebound in Europe. On your last earnings call, you talked about September being up double digits and that strength continuing into October. So can you just walk through how things unfolded throughout the rest of the quarter?

Chuck Kummeth: Yes, it was definitely a story of Europe doing better than the US and from last quarter. We had run rates 12% plus in Europe. Overall, it was about a mid- to high single-digit kind of level in Europe. So, a good recovery, not all the way back, we want, but remember they were negative last quarter. So, that was good. We have new management, hopefully going into place soon. There as well working on that. We didn’t talk about — we put in a whole new ERP system and without a glitch. So, we’re — that’s all coming online. We have a whole new warehousing system in Dublin now to supporting Mainland Europe, and that’s coming online with no glitches. So, been a lot of good things in Europe as well. Going forward, I think the risk of the war and energy in Europe, the winter and stuff has been mitigated pretty well.

So, we’re kind of focused on really getting the teams up to speed, new management in place, completing the mission on cross-selling and the commercialization strategies and tactics that we were in the middle of doing before COVID hit and all that. And funding seems reasonable in Europe, country-by-country. We’re still weaker in Germany than we want to be. We always have been. So, we’re really focused on trying to build on Germany more going forward. I think that’s key. I think there’s a risk in the UK given Brexit still, but so far, so good, but I guess I’d answer it that way for now. Europe is out of the hot seat from last quarter. Now, we got OEM issues in the US to deal with.

Operator: Our next question comes from Patrick Donnelly with Citi. Please proceed with your question.

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