Bio-Techne Corp

Q3 2021 Earnings Conference Call

5/6/2021

spk03: Good morning, and welcome to the Biotechnics Earnings Conference call for the third quarter of fiscal year 2021. At this time, all participants have been placed in a listen-only mode, and the call will be open for questions following management's prepared remarks. During our Q&A session, please limit yourself to one question and a follow-up. I would now like to turn the call over to David Clare, Biotechnics Senior Director, Investor Relations and Corporate Development.
spk11: Good morning, and thank you for joining us. On the call with me this morning are Chuck Cometh, Chief Executive Officer, and Jim Hippel, Chief Financial Officer of Biotechni. Before we begin, let me briefly cover our safe harbor statement. Some of the comments made during this conference call may be considered forward-looking statements, including beliefs and expectations about the company's future results, as well as the potential impact of the COVID-19 pandemic on our operations and financial results. The company's 10-K for fiscal year 2020 identified certain factors that could cause the company's actual results to differ materially from those projected in the forward-looking statements made during this call. The company does not undertake to update any forward-looking statements as a result of any new information or future events or developments. The 10-K, as well as the company's other SEC filings, are available on the company's website within its investor relations section. During the call, non-GAAP financial measures may be used to provide information pertinent to ongoing business performance. Tables reconciling these measures to most comparable GAAP measures are available in the company's press release issued earlier this morning on the Biotechnique Corporation website at www.bio-technique.com. I will now turn the call over to Chuck.
spk12: Thanks, Dave, and good morning, everyone. Thank you for joining us for our third quarter conference call. As you read in our press release earlier this morning, I am very pleased to announce that the biotechnic team delivered, again, another strong quarter in our fiscal Q3. Our year-over-year organic growth accelerated to 22% for the quarter as we continued to build on momentum from the first half of our fiscal year. This growth was the best organic growth the company has delivered in over 25 years, both year-over-year as well as on a two-year CAGR basis. As it has been all year, the growth in Q3 was broad-based across our segments and geographies, as penetration into biopharma remained very strong, and continued improvement in academia drove the year-over-year and sequential acceleration in our business. The growth within our product categories was also broad-based, with most accelerating sequentially from Q2, and continued by leadership from our SimplePlex, SimpleWestern, Cell and Gene Therapy, and genomics platforms. As we've been doing all year, we delivered our record organic growth with a focus on profitability, achieving 40.1% adjusted operating margin for the quarter. The timing of hiring to support growth investments combined with COVID-restricted travel once again benefited our profitability. However, our positioning in high-growth markets with high-gross margin products has strengthened the conviction in our ability to sustain 40% operating margins in the future pursuant to our strategic plan. Before we dive deeper into our Q3 performance, I would like to welcome the Asurgen team to Biotechnin. As a reminder, we announced the Asurgen acquisition in early March and closed the transaction in early April. Asurgen adds a portfolio of leading genetic carrier screening and oncology research products and diagnostic kits, complements our legacy clinical controls business with molecular diagnostic controls, and brings a pipeline of high-value products to accelerate its penetration and growth. The Asuragen team also brings deep diagnostic commercialization and regulatory expertise, which we will leverage to accelerate the growth of our clinical platforms across the organization. Unlike many diagnostic companies of its size, Asuragen is already profitable, and we anticipate this business to be accretive to biotechnies' top-line growth and accretive to our diagnostics and genomics segment operating margin over time. I look forward to giving you all updates on Asuragen's progress in coming quarters. Now let's discuss the performance of our growth platform, starting with the protein sciences segment, where growth accelerated to 24% organically in a quarter. Our core proteomic research reagent portfolio had another strong quarter, with research use only proteins growing nearly 10% and antibodies growing in the mid-teens. Our newest proteins are more frequently being used in mRNA research and production. Given the recent success and growing interest in mRNA-based vaccines, these could be a sustainable growth driver for this product line going forward. Meanwhile, our antibody business continues to benefit from our custom antibody service business, which grew over 50% in Q3. The catalog of over 6,000 proteins and approximately 450,000 antibody variations, we have amassed not only enables scientific research, but also has potential therapeutic applications. This potential is supported by the recently announced licensing agreement with Zencor, a clinical stage biopharmaceutical company developing engineered monoclonal antibodies, and cytokines for the treatment of cancer and autoimmune diseases. Zencor is now evaluating a third proprietary biotechnic antibody for its therapeutic development pipeline. This agreement speaks to the potential value of the vast protein and antibody content we have built over the last 30-plus years and represents a largely untapped potential revenue stream for the company. Our leadership in antibodies has also not gone unnoticed in our industry. With biotechnics, R&D systems, and Novus brands, recently named winners of the CITES Abb's COVID-19 Innovation Award. This award celebrates innovative solutions or products that help shape the life sciences sector's understanding of or resilience to COVID-19. The COVID-19 Innovation Award reflects Biotechnics' quick and impactful response to the COVID-19 pandemic, developing and commercializing new antibodies to support research as well as COVID-19 testing initiatives. This represents the fifth consecutive year Biotechnics' antibody innovation efforts have been recognized with the site Abb Award, and we are very proud of our antibody team. During Q3, we also continued to make significant progress advancing our cell and gene therapy initiatives, including our GMP protein business. As a reminder, GMP proteins are a key ingredient in the cell and gene therapy workflow, providing the nutrients to grow the genetically modified cells prior to being infused back into the patient. Our portfolio of GMP proteins increased over 90% in the quarter as customers leveraged our GMP cytokines to advance immune cell and regenerative medicine therapies. We continued to scale our state-of-the-art GMP production facility with qualifications completed and production lots of initial proteins currently underway. We have launched a digital marketing campaign to promote the new facility, our capacity, and capabilities. This marketing message is resonating with the cell and gene therapy industry as our funnel of potential GMP protein supply agreements with Biopharma customers continues to grow in Q3. We are also building momentum in market awareness and acceptance of another key component of our cell and gene therapy workflow solution, TC Buster. our novel non-viral transposon-based gene delivery system. During Q3, we announced the signing of a licensing agreement with Luminary Therapeutics for the use of TC-Buster in their development of a BAFF CAR-T therapeutic. Our genomic engineering service business, which includes a TC-Buster solution, is gaining traction with customers, developing cell and gene therapies with a growing funnel of biopharma companies, relying on our experience in hard-to-transfect cell lines to deliver solutions for their complex projects. Biotechnics' reach into cell and gene therapy is much broader than our best-in-class GMP proteins and DTC buster technologies. Biopharma companies, CROs, and CDMOs are increasingly relying on offerings across biotechnics' portfolio, including antibodies, media, and supplements, as well as our portfolio of analytical tools, including Simple Western, Simple Plex, RNA School, and our Maurice instrument to develop and scale their cell and gene therapy manufacturing capabilities. We have united our business leaders from across the company to develop strategies on how our products and technologies can be best positioned to create synergistic solutions and maximize productivity for these customers. Now let's discuss the proteomic and analytical tools portion of our protein sciences segment, where the strength we experienced in recent quarters continued into our Q3. Once again, our automated multiplex amino assay solution, SimplePlex, had a stellar quarter, with revenue increasing 90% globally. SimplePlex's ability to deliver high-quality and reproducible data with a sub-picogram level of sensitivity in a smaller footprint, comparatively less expensive offering, continues to drive awareness, interest, placements, and utilization of the platform. We are seeing increased SimplePlex adoption from cell and gene therapy customers and the broader biopharma industry as they leverage the platform for biomarker discovery, immune cell characterization, and quality control processes. We also helped accelerate broader adoption in Q3 by expanding SimpliPlex's immunoassay cartridge portfolio to include nine new cartridge formats. These new cartridge offerings provide SimpliPlex users with increased flexibility in the number of samples and biomarker assays run on each cartridge. Until now, SimpliPlex assay cartridges were only available in formats delivering one, four, or eight assays run simultaneously. The expanded portfolio of cartridge offerings provides users new options to better align their assay panels with the throughput requirements of their studies. Finally, to keep up with the high demand for our SimplePlex solution, we have added a second manufacturing shift in Q3 and are in the initial stages of expanding our physical capacity to meet the forecasted demand as SimplePlex's value proposition continues to resonate with customers in need of a fully automated, cost-effective multiplexing solution. It was a similarly stellar quarter for our fully automated Western platform. Simple Western, with year-over-year growth accelerating to approximately 50% in Q3. Even with the rapid adoption of Simple Western that we have seen for many quarters now, we continue to invest in the future of this platform and expand its addressable market. For example, we recently introduced the latest number of the Simple Western family, an instrument we call ADDIE. This lower-cost platform offers picogram-level sensitivity with the ability to perform sequential chemiluminescence assays within the same capillary. a feature we introduced in our higher-end GES instrument last year called REPLEX. Academic customers have been increasingly adopting our automated Western platforms to alleviate COVID-induced limitations on their lab activities and maximize productivity, and we anticipate ABBYY's features and cost profile to increase penetration of this technology into this customer segment. Finally, our biologics instruments, which provide protein purity information and are used directly in bioprocessing, also at a standout quarter with over 30% growth, as we continue to experience broad demand from biopharma, including several companies with COVID-19 vaccines in various stages of development or commercialization, as well as continued interest from companies working on cell and gene therapies. Now I will provide an update on our diagnostics and genomics portfolio, where organic revenue increased 17% in Q3. Let's start with an update on our ACD, or tissue pathology franchise, where organic revenue increased above 40% for the quarter, with RNA scope, base scope, and our multiplexing technology, HyPlex, all having a very strong quarter. ACD is seeing significant traction with cell and gene therapy applications, with RNAscope representing the only currently available method for understanding single-cell biodistribution information within the context of tissue histology. This information is critical to understanding the safety and efficacy profile of gene and RNAi therapies, and as a result, RNAscope is being used by these companies on many IND-enabling studies. ACD is also being increasingly used as a validation technology following superplexing experiments, with the single-cell resolution and spatial information provided by our solutions supporting the move from discovery to translational research. We remain in the early stages of penetrating both the research and clinical potential of this exciting technology and have plenty of room for continued growth. As we look ahead to Q4 and FY22, we are very excited about a new product to the ACD family that we launched recently, which leverages RNAscope technology and expands it to the rest of the market. Biotech's new chromogenic DNA in situ hybridization technology, DNAscope, employs the proven double Z probe design and signal application system of RNAscope, enabling rapid and flexible probe development for any DNA target and enabling visualization of targets in formalin-fixed paraffin-embedded tissues. DNAscope delivers benefits over current commercial fish techniques that fall short on morphological detail due to the use of fluorescent nuclear staining that rely on a high-revolution microscopy to visualize gene rearrangement and copy number variation signals. Additionally, traditional fish uses bacterial artificial chromosome back clone-based probes that are large and tend to span multiple genes and lack single gene detection specificity. Unlike most commercially available assays, DNAscope utilizes oligoprobes coupled with proprietary signal amplification system to enable high resolution and precise target detection for small genomic regions and single gene locus. Now let's discuss our exosome diagnostics liquid biopsy platform, starting with our prostate cancer liquid biopsy assay, the XODX prostate test. While urology practices have largely reopened at this point, the older population that is the primary audience for the XODX prostate test has remained hesitant to visit their doctor or urologist due to COVID-related concerns, clearly a headwind to test volumes since the pandemic began. During Q3, we experienced a continued recovery of XODX prostate test volumes, with March representing the best month for test sample inflow since the beginning of the pandemic. We are encouraged with the volume trajectory we experienced in March, and anticipate continued momentum in this business as vaccinations continue to work their way through the population and patients return to their physicians for checkups and their urologists for our XODX prostate tests. Private payers are increasingly recognizing the patient benefits and cost savings XODX prostate delivers by avoiding unnecessary biases, as well as the strong dossier of data we have supporting the efficacy and clinical utility of the test. During Q3, this recognition led to a contracted coverage decision with Humana. the first national payer to issue a favorable coverage decision. We remain in discussions with several other national and regional payers and look forward to expanding access to this test and enabling additional men to make more informed decisions on whether to defer or proceed with a prostate biopsy. We have also expanded our geographic reach with the ExoGates Prostate Test by completing its clinical validation with self-enabled certification as a CE IVD kit as of March 22, 2021. The YEPI CE test will be performed in our Munich ISO 15189 accredited clinical laboratory and be made available throughout Europe through various distribution channels beginning in Q4. In addition to the XODX prostate test, we continue to advance our pipeline of novel exosome-based liquid biopsy products. In Q3, we announced initial data on our next commercial test, ExoTrue, an assay designed to detect kidney transplant rejection. Initial data supporting the potential of ExoTrue was published in a journal of the American Society of Nephrology With the assay capable of discriminating between any cause rejection and no rejection with a negative predictive value of 93.3% and positive predictive value of 77.8%. We view this initial data as best in class compared to competing kidney transplant rejection assays. ExoTrue is not just differentiated with best in class data. The test uses urine, not blood. It is a sample which opens up opportunities for at-home sample collection allowing these immunocompromised patients the ability to take the test in the comfort of their home and avoid a trip to the hospital for a blood draw. We look forward to launching ExoTrue later in calendar 2021. The COVID-related headwinds and restrictions have not just impacted our ExoZone DX test volumes, with patients deferring routine visits to physicians also impacting broader diagnostic testing volumes. Despite these ongoing challenges, our diagnostic reagents division increased mid-single digits during Q3. This is the seventh quarter in a row that our Diagnostics Reagents Division has delivered positive growth as the development pipeline and new COVID-related opportunities continue to smooth out the impact of what can sometimes be lumpy bulk reagent orders. I'd like to now give an update on our COVID-19 initiatives. Since the start of the pandemic, biotechnics reagents and instruments have enabled insights into the virus, including ACD probes to detect the virus in tissue, sales of bulk diagnostic reagents used in COVID testing applications, as well as pathogen-specific antibodies and proteins to known variants of the COVID virus. COVID was an estimated 3% tailwind to our business in Q3, including initial revenue from sales of the Contero IgG Antibody Serology Kit. We expected COVID research and diagnostics to be around for many years, particularly as new viral strains continue to emerge, making this tailwind a sustaining new layer of our product portfolio going forward. Our business is clearly firing on all cylinders. Our innovative portfolio of proteomic research reagents and analytical tools, tissue biopsy, and spatial products are meeting the productivity needs of the scientific community to drive research and discoveries forward. Our emerging cell and gene therapy workflow solutions are set to enable the next class of biological therapies with increased efficiency at lower cost. And our liquid biopsy platform is expanding with the best-in-class assay for kidney transplant patients in need of a better solution for detecting allograft rejection. Layer on this a favorable research funding environment, and I believe biotech needs in the best position ever, or at least since I've been with the company, to deliver on our long-term revenue and profitability aspirations, which keep getting bigger every year. With that, I'll turn the call over to Jim.
spk10: Thanks, Chuck. I will provide an overview of our Q3 fiscal 2021 financial performance for the total company, provide some additional details on the performance of each of our segments, and give some thoughts on the remainder of our fiscal year. Starting with the overall third quarter financial performance, adjusted EPS was $1.79 versus $1.39 one year ago, an increase of 29% over last year, representing a new company record. Foreign exchange negatively impacted EPS by 4 cents. Gap EPS for the quarter was $1.12 compared to 92 cents in the prior year, representing a 22% increase year over year. Q3 revenue was $243.6 million, an increase of 25% year-over-year on a reported basis, and 22% on an organic basis. Foreign exchange translation had a favorable 3% impact on our revenue. All geographies had strong growth in Q3, led by China growing nearly 50%, followed by India with over 30% growth, and then the Americas with growth north of 20%. The rest of the world grew in a low team. You will recall that last year was the start of the pandemic, which severely hit China and, to a slightly lesser extent, Europe in our Q3 fiscal year 20. Our business in the U.S. was not materially impacted by pandemic shutdowns until April of last year. Hence, the comps in Q3 this year were easier in China and Europe than in the U.S. That being said, China's revenue in Q3 of this year was still nearly 60% higher than the same quarter in fiscal year 19. And Europe's revenue was over 20% higher than Q3 of fiscal year 19, while the America's revenue is up over 35% from the same quarter in fiscal year 19. By end market, biopharma continues to be very strong with year-over-year growth well over 25%, while academia continues to make big improvements, growing approximately 20% for the quarter compared to last year. Moving on to the details of the P&L, total company adjusted gross margin was 72.9% in the quarter, compared to 71.5% in the prior year. The increase was primarily driven by favorable product mix and volume leverage. Adjusted SG&A in Q3 was 25.8% of revenue, 100 basis point decrease compared to the prior year, and R&D expense in Q3 was 7% of revenue, 120 basis points lower than the prior year. While our adjusted SG&A and R&D spend both increased sequentially and versus the prior year, A tight labor market in the life science space did not allow us to fill all planned headcount additions to the team at the pace we had anticipated, especially in the more technical scientific and engineering fields. However, our pace of hiring did increase over the course of Q3, and we still plan to fill remaining open positions in Q4. This investment in critical human capital will position the company for growth going forward. The resulting adjusted operating margin in Q3 was 40.1%, an increase of 360 basis points from the prior year and 140 basis points sequential improvement from Q2, the highest adjusted operating margin for the company in six years. Looking at our numbers below operating income, net interest expense in Q3 was 2.5 million, decreasing 1.7 million compared to the prior year period. The decrease was due to a continued reduction of our bank debt during fiscal 2021, as well as lower floating rates. Our bank debt on the balance sheet as of the end of Q3 stood at $215.4 million. Other adjusted non-operating expense was $4.1 million per quarter, compared to $3 million of income in the prior year, primarily reflecting the foreign exchange impact related to our cash pooling arrangements. For GAAP reporting, other non-operating income included unrealized losses from our investment in chemocentrics. Moving further down the P&L, our adjusted effective tax rate in Q3 was 20.2%, 110 basis point improvement over the prior year, with the improvement primarily driven by geographic mix. We expect our effective tax rate going forward to be consistent with Q3, barring no changes in corporate tax law. Note that the GAAP effective tax rate in Q3 was favorably impacted by the discrete timing of stock option exercises. As a reminder, during Q2, we made a strategic equity investment in China-based Eminence, a company focused on providing media as well as custom cell line development and media formulation services to the Chinese biopharmaceutical market. The $380,000 non-controlling interest line item on the P&L reflects the loss of a portion of Eminence we do not own. The impact of other lines of the P&L as a result of consolidating Eminence was immaterial in Q3. Returning to cash flow and return of capital, $74.9 million of cash was generated from operations in the quarter, more than a 50% increase over the prior year. In Q3, our net investment in capital expenditures was $10.6 million, and during Q3, we returned $55.6 million of capital to shareholders by way of $12.4 million in dividends and $43.2 million in stock buyback. We finished Q3 with 40.7 million average diluted shares outstanding. Our balance sheet finished Q3 in a very strong position, with $276.2 million in cash and short-term available for sale investments, and in an essentially zero net debt leverage position. Next, I'll discuss the performance of our reporting segment, starting with the protein sciences segment. Q3 reported sales were $185.6 million, with reported revenue increasing 28%. Organic growth increased 24%, with foreign exchange having a favorable impact of 4% on revenue growth. Within the segment, the strong growth was very broad-based, with double-digit growth in nearly all reagent, assay, and instrument platforms. As Chuck described in his remarks, platforms of noble mention include SimplePlex, SimpleWestern, Biologics, and Cell and Gene Therapy, especially pertaining to GMP proteins, as well as our core proteomic reagent business. Operating margin for the protein sciences segment was 47.6%. an increase of 290 basis points year-over-year due primarily to favorable volume leverage and cost management. Turning to the diagnostic and genomic segment, Q3 reported sales were $58.1 million, with reported revenue increasing 18%. Organic growth of the segment was 17%, with foreign exchange translation having a favorable 1% impact on revenue. Similar to the first half of our fiscal year, our genomics division led the segment in the quarter. We experienced strength across the entire ACD-branded portfolio with RNAscope, miRNAscope, Bayscope, and our diagnostic partnership with Leica, all driving growth. Exosome diagnostics Q3 revenue increased over 20% from last year, with strong revenue from our companion diagnostic partnerships driving the growth as our exoDX prostate tests continue to recover from the pandemic lows experienced in our fiscal Q4 of last year. And as Chuck mentioned, our Diagnostics Free Agents Division continued its growth streak by executing on COVID-related opportunities to offset the headwinds many of its traditional OEM diagnostic customers are facing with patients foregoing routine visits to the doctor. Moving on to the Diagnostics and Genomic Segment Operating Margin at 17.9%, the segment's operating margin improved 360 basis points compared to the prior year. The increase reflects strong volume leverage in our Genomics Division as well as strong cost management across the segment. In summary, the momentum we experienced in the first half of our fiscal 2021 accelerated during Q3. With 17% organic revenue growth year-to-date, our products remain at the forefront of science, enabling cutting-edge scientific and therapeutic discoveries, while our key growth drivers remain underpenetrated in large and growing markets. We believe the COVID pandemic has elevated the profile and market awareness of our tools and solution offerings, positioning biotechniques to exit the pandemic stronger than before the pandemic hit. This brings us to our thoughts on how we might close the year. In short, for our base business, we see Q4 looking very strong and similar to Q3, both on the top line in terms of absolute revenue and on the bottom line in terms of adjusted EPS. With most of our customers, both in biopharma and academia, now back to work, and with a need and priority to fund medical research still high in both the private and public sector, we see the strong revenue run rate we experienced in Q3 continuing into Q4. To fuel and support further revenue growth in fiscal year 22 and beyond, it is critical that we catch up on the growth investments that were in our strategic plan to accomplish this year. As I've already mentioned, we made good progress at the end of Q3 on hiring the human capital needed, and we see that continuing into Q4. Thus, we fully expect our adjusted operating margins to finish sequentially lower than Q3, but still significantly higher than the prior year, as well as higher than previous analysts' consensus estimates. Also, we expect the acquisition of a surgeon in April to contribute 2% to 3% sequentially more revenue on top of our base business in Q4. However, as the surgeon has just recently become profitable, it will likely be diluted to our overall adjusted operating margins in Q4 by approximately 100 basis points. That concludes my prepared comments, and with that, I'll turn the call over to Maria to open the line for questions.
spk03: At this time, we will be... a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Our first question is with Dan Arias with Siebel. Please proceed with your question.
spk06: Hey, guys, good morning. Congrats on the performance that you're seeing here, very strong. Can you just talk a bit about the early days of servicing your customers with the expanded GMP capabilities? Are you seeing the orders come in the way that you'd hoped? And then how should we think about building out the portfolio there? And the reason I ask is because if I'm thinking about the situation right, It sounds like one of the key factors that will influence the ramp will just be the pace of expansion of the catalog. So can you just sort of touch on growing the product set there such that you feel like that will be less of a limiting factor than it might be in the near term?
spk12: Yeah. I'll start kind of from the back forward. It won't be a limitation of the catalog. We've got the most full GMP catalog already in the world. It's just a matter of qualification and getting an inventory. So the issue is all commercial, and it's all waiting for this industry to really happen. So we've had a really good quarter. We're further along with a dozen or so customers. We've talked about a couple that we've locked in already. It's hard for them, too, to talk about forecasts and numbers and stuff, so we've contracted in terms of percents, and we've had no issue with contracting at 95% of their needs, whatever those needs be. And I've talked in the past about they range anywhere from $10 million a year to over $50 million of just like a single, you know, protein. So we're making progress. We're also getting help because, you know, with Scale Ready out there, we've got, you know, a dozen different people in commercial, you know, between sales and technical. They're starting to drive more interest and, you know, awareness, and that's also helping find our way to more potential business more quickly. Okay. It's still a J curve like we've talked about. I mean, so you've been keeping track of the model and we've been talking about the growth rate. So you can do the math and you'll see that we're at a $15, $16 million run rate right now at GMP Proteins. I've talked in the past that even on this site here, Minneapolis headquarters, we could make as much as $40 million. So we've got plenty of time here before we exhaust our capacity, before we have to have this factory turned on. And, you know, we've slipped a couple months, but we're looking at, you know, September, October to be selling out inventory, but we're qualifying and making lots right now. So You know, we're in a good place. It's more about what are we going to do for commercialization to accelerate, and they come in two varieties. They come in new specs for new indications coming, which you've got a pretty good pipeline of stuff, and then doing a conversion of things that are in clinicals right now and going through, you know, talking them into equivalency studies so if they have it, nothing else, at least a backup protein. So we're making progress on all those fronts, and it has really nothing to do with the catalog. We've got the best catalog and the best proteins we can make, you know, anything you've heard about that's needed right out there for, for GMP proteins. And as I've mentioned also before, I think what the world thinks they need today, I think in five years will be radically different. And who would you rather put your trust in? The world leader in protein design or, you know, people who focus more on instruments or other parts of the workflow. I think over time, these proteins are going to continue to differentiate themselves for different reasons, and it's going to play to our strength because we make the best protein in the world, period.
spk06: Okay, helpful. And then maybe just moving over to SimplePlex, I mean, you're going to be rounding out a pretty big year there. How are you feeling about carrying that strength into next year? My initial thought, you know, a couple of quarters ago was that a lot of those L assistance were being driven by COVID, but it also sounds like Cell and Gene and some unrelated areas are influencing the placement right there.
spk12: You may have noticed our numbers are even bigger this quarter. Yeah, exactly. We have found ways to make more. We've been throttled because we couldn't make any more. It's hard to grow an instrument business at 90%. Talk to anybody. Now we've also beefed up our cartridge lines. We have more flexibility. We keep expanding our analyte lines, so the things that go in the cartridges for the customers. So we're giving them more flexibility. But it really comes down to, like I said, it's biomarker discovery. It's QC applications. It's being looked at and being, you know, highly received by cell and gene therapy applications. So all these things are way beyond our expectations four or five years ago. And then there are diagnostics applications that we really are just getting started on. We're in the middle of a 510K process. Of course, we've got the partner in China going through their own. So, you know, this thing is one of the big sleepers of our company. And, you know, we've got to get a new building. We've got to expand capacity. It's more than just adding shifts. We are all over this. It's, you know, right up there with Exxon being the number one, number two partners in the company. And we expect momentum to continue. We're now well over 500 boxes out there. That's kind of a tipping point where things start selling themselves. You know, people start seeing them. The word of mouth gets out. You know, just like we did with Simple Western a couple years ago, there was a tipping point where it just got a lot easier. And We're reaching that point now with simple Plex.
spk06: Okay, and just, I guess, a simple way of thinking about it would be to say that if you're expanding manufacturing the way that you are there, then obviously you've got a decent line of sight into some out-year demand that should... Yeah, and I think you've got to look at, you know, the competition here with Quanterix, and they've done a good job.
spk12: You know, I just read their print this morning, and they beat as well. It just speaks to the need. You know, look, this industry is opening up. There is a need for highly sensitive... you know, multiplexing amino assay systems. And right now there's only a couple of really good ones out there. It's kind of us and Quanterix that are sensitive enough. And ours just happens to be about, you know, one-tenth the size and one-tenth the price, you know, and still highly sensitive. So we're catching up to them. And, you know, but I think there's room for both of us. I think it's a really expanding market for all these different, you know, applications I just mentioned. It's kind of unknown. It's just going to get big. Yeah.
spk06: Okay. Okay. Thanks, Chuck.
spk03: Our next question is with Poni Tsuda with Leerink, with SCD Leerink. Please proceed with your question.
spk08: Hey, great. Thanks, Chuck. So, first of all, congrats on a strong quarter here. Great to see the strong growth and really impressive operating margin here. The key question is, you know, how sustainable is that, and Jim addressed some of that, you know, based on what you expect to see here in the fourth quarter. But, you know, given the sort of the pent-up demand that's already there, the reagents and consumables, which are more easier to order, and if you look back into the, you know, sort of the second half of the calendar year or the next fiscal year, obviously, you know, comps get tougher. So, Maybe just speak to us in terms of how long of a sustainable tail that you see here.
spk12: First of all, we put a pretty key phrase in the commentary from Jim. We talked about revenues being similar in Q4 to Q3 on a dollar basis. When you do the math, that's a big growth rate. That's going to give us something north of 20 if we hit that, and momentum looks very strong. Whether you talk about it for the year or take it for two years, it's double-digit for two years, too, and almost teens. And then you've got to talk about, well, we're hitting an all-cylinder. Everything is growing amazingly well. It speaks to the industry. It speaks to the funding. It speaks to us crossing all these tipping points as a company. It speaks to our digital presence and our investments and just the awareness of our company and our platforms. The quality has always been there in a lot of our brands, but we're expanding it. It speaks to us being able to entice companies to come on board like Assuragen. I don't think we could have talked to them to come on board three, four years ago. They see the candy in this store, and they want it. You know, they want to help out. So, you know, we see in the Q1 and Q2 and our further next year, you know, probably it's not a 20% year, but it's going to be strong. And right now it's too early to talk about what that could be. We've listened to all the other peers out there, and everyone's staying kind of shy about next year. Comps are going to be tough, but you've got to look at the market indicators. They're crazy good, and we're going to be good.
spk10: Panini, I would just add, I think we're a bit beyond the point of, pent-up demand. I think at the end of our Q2, we had a 19% quarter. We had some questions even among ourselves to how much that might have been some pent-up demand. But I think by the time we get here into Q3, that's no longer the case. What we're seeing is a really sustainable run rate. In fact, if anything, the momentum accelerated throughout Q3 as opposed to leveling off or sloping downward. So I don't think it's pent-up demand at this point. I think it's ongoing funding.
spk08: Got it. And then, Jim, you know, Operating margin, you're suggesting that these are sustainable in the near term, but how are you thinking about those longer term, given the level of investment that you want to do in the business? And, you know, obviously you have done, you know, successful acquisitions here and passed, and so how should we think about that operating margin profile longer term?
spk10: Yeah, and so I guess that's how you define long term and short term, but I think the message I'm trying to convey here is that the fact we were able to hit 40% well ahead of schedule, some of it for our some reasons like travel and things like that that were unforeseen a couple years ago. But the point being is that we have a highly profitable business model, and it shows that we can get to 40%. And we have that much more confidence that we can get that on a sustained basis going forward in the long term. In the short term, we need to catch up on some investments, and that catch-up on investments will bring that rate down for a while in the short term until we grow back up and get back to 40%.
spk12: But still on plan for our previous guidance. I would argue ahead of plan.
spk10: So I think compared to fiscal year 19 and definitely compared to fiscal year 20, we're well ahead of plan on that trajectory.
spk12: Things look good. Got it. We're getting great leverage. And we have – this quarter was a lot more investment than the previous quarter. So we've got great leverage, as you saw in our numbers, off of our scale. And that's going to continue. Okay. Okay.
spk08: That's very helpful. And, Chuck, on proteomics, obviously proteins are very much core to you. Great to see the growth here in simple Plex and all the platforms and protein simple. And, you know, when you think about the antibodies portfolio that you have, the combination of simpleplex. How are you thinking about proteomics now? Obviously, there are, you know, in linker technologies, Olink and others that are emerging on the market, and Aftamers and other approaches that are coming onto the market. So how are you thinking about, you know, proteomics overall? Are there opportunities that you think where you can potentially expand into? And how do you see the benefit flowing from that to broadly to the antibodies portfolio?
spk12: Well, don't forget, most of these people you mentioned are also our customers, first and foremost. And we enjoy great relationships with almost anybody in the field of proteomics. I think the core underlying growth level for just down to basic research is phenomenal. I do think that avenues like Thoma and Olink are high-plexing, kind of different niche, high-value applications that drive a lot of value. And I think we'll reach into those spaces as well to work with them and probably compete with them, but we'll be never giving up our core. And we'll be king of the core in terms of antibodies and proteins for some time to come, I think.
spk08: Okay. And then last one, if I could, please. And I'm sure, again, obviously, you know, a very interesting asset, and it appears to be intel inside for some of the NIPP assays. So just wanted to get your sense on the contribution this year and sort of next year, if anything you can provide there, that would be very helpful. And we expect this to be a fixed April close, so I suppose it's going to add to the next quarter, too. Thank you.
spk10: Yes. So, Puneet, in my comments, I addressed what we thought I would add for Q4, roughly 2% to 3%. revenue on top of our base, on top of our core business for next quarter. Minimal EBITDA contribution, they've just broken the profitability. And we'll provide more guidance as to what that might mean for fiscal year 22 as we wrap up our Q4 next quarter.
spk12: I think what you've got to remember is they've got a great pipeline. They're about to launch a trio of new assays when you get the cystic fibrosis out. And we're seeing that as a potential home run. So it's a They've got great credibility. They're known for great quality. In some cases, their indications are unique. In some cases, they've got competition, but we seem to be best in class. So stay tuned. I think as we launch these new things in their pipeline, which is really imminent over the next few months to a year, you're going to see some immediate help and support. And we're not used to buying companies that are already in the black to begin with, so this is all good.
spk08: Got it. Thank you. And, yeah, clarifying that that was more carrier screening in that versus NIPT. Thanks for the comments, Chuck. Yeah.
spk03: Our next question is with Jacob Johnson with Stevens. Please proceed with your question.
spk01: Hey, thanks. Good morning, everybody. Maybe first just a broader question than Dan's on cell and gene therapy. Chuck, I lost count on the number of times you mentioned cell and gene therapy in your in your prepared comments, can you just remind us the size of the end market across the portfolio today, what this could be in a few years, and then are you seeing more applications for this end market across your portfolio outside of things like GMP Protein, TC Buster, things like you are?
spk12: You're right, Jake. We probably overdid it, but it is a pretty exciting area for us, and it starts really paying for us in a year or two out here. But right now, it's on about a $50 million run rate across all our portfolio, and that's Probably we still are a little bit dark on just what potential is coming with ScaleReady, but our TC Buster is really starting to land a lot of deals, starting to become significant. You already know the fabulous growth in GMP proteins, but we also have media that's really growing well as well and other things. So we see it as a $500 million plus market within five years for us. It is addressable, to be honest. And as we talked, we alluded to all the different synergies across the company. They're just... There's a lot of unknowns. We have put in place, as you know, the company we designed here, the team, is a subsidiary model, multinational model. We have five divisional businesses right now, six if you want to call a surgeon one. We'll probably do some synergistic work to get all the diagnostics platforms over the next year or two. But looking forward, it's going to be six, eight, ten different divisions. They're going to be synergistic. And we run a tech council kind of process. We make sure all these scientists are actually working together. We have a strong pipeline of new things that nobody else can do because you add platform A to platform B, we've come up with new things that nobody else can do because they don't have all the things together. This goes back to my past and a lot of other people's past in this company and some fabulous companies we come from. Innovation reigns supreme here. And I... We probably oversaid cell and gene therapy, but it is probably the most exciting future market for our company. In terms of size, I still think Exosome as a platform is the biggest potential. But, you know, it's going to take years to really get all these things through because it's just so much more regulatory aligned with most of those. But we're really excited there, too. Don't be surprised in a year or two you see ExoTrue lap prostate. I mean, ExoTrue is just – there's crazy interest in it. And we're doing really well, as you saw in our report.
spk01: Thanks for that, Chuck, and I've probably been called out for saying cell and gene therapy too much as well. So we're in the same camp there. The other question, Chuck, my second one, just the last two quarters I think you've called out robust growth in custom products and proteins. Can you just remind us how much of proteins is custom work and maybe just talk about the kinds of customers that demand those custom products?
spk12: Yeah, it's as much about custom antibodies as custom protein. We have a custom group. It's really a great development situation for our leaders. We've taken some of these people who worked in those areas because they're very strong technically, but they have to be very articulate with customers, et cetera, and they turn out being great business people, technical business people. So we've been going into that camp. That said, it's roughly under $20 million. We don't want it too big because it's hard to scale everything. If we can get things in the catalog, it's great, but not everybody wants things in the catalog. They want them unique, built to them. So we charge an awful lot to get access to our really great intellect. But it's not something that we want to, you know, make a division or see a roadmap to $100 or $200 million. I think the scalability issue around a custom model because it's service is difficult. It would tap too many of our star people. And I'd rather have them working on products that we can sell to everybody, you know. But it's good. It's very profitable. It's growing very nicely. And it's an incubator. You know, it feeds into everything else we're doing. Yeah.
spk01: That makes sense. I'll leave it there. Congrats on the quarter. Thanks for taking the questions.
spk03: Our next question is with Alex Nowak with Craig Hellam Capital Group. Please proceed with your questions.
spk09: Great. Good morning, everyone. Chuck, one item that didn't get any mention was the OneWeb. And as you look through the metrics there, are you seeing a big step up, either increased traffic, increased cart sizes, or just – you know, ways that, you know, research labs can put multiple products together and fit into a solution, anything that can help explain the broad-based growth in the quarter.
spk12: Well, you know, here's the funny thing. We know what you're right. We've talked a lot about our digital presence and our investments in digital and SEO and how it's driven a lot of our growth, and it's explained a lot of our growth outside of our peers. And every time I talk too much about it, all my digital people come to me and say, you know, you're telling all our competition way too much. And they show me data showing that some of our competitors are actually paying for AdWords on Biotechni. They're buying Biotechni's AdWords. They're trying to creep in on our flow of customer contact. They're actually trying to lock up our own company name. So that was pretty clear to me that we certainly got their attention. And they're trying every avenue they can to get into our model because we're taking share from everybody in our core areas, everybody, because it's working. If you look at our website lately, it's phenomenal. And we just keep on making it better. And the one web is really an umbrella term over, you know, really a complete one basket approach to buying. And we're not there yet, but we've made big improvements so you can, where instead of, you know, you saw many things we sell, we continually have an issue of demystifying and talking about all the different potential single unicorn platforms in this company. And yet, can you buy them all together on one, you know, on one site? You couldn't. Now, more increasingly, you can. And, you know, we're not going to, talk as much about it going forward because it's one of our differentiators as a company. But it's going very well.
spk00: Yeah, understood.
spk12: It's clear by the numbers, right?
spk09: That makes sense. Okay. And then a ton of success in ACD right now. Is there really any new innovations or, you know, research-specific projects that are propelling the business unit forward? And then I guess to take a step back there, Is it fair to put ACD in a similar position as protein simple was, you know, maybe five years ago? Or would you say you don't expect ACD to hit the levels that protein simple is doing today?
spk12: To the contrary. I think that's very prolific of you, prophetic. But, you know, there's RNA scope, there's base scope, there's DNA scope, there's HyPlex, there's XPlex. We've got a hell of a portfolio coming. And, you know, all of our new extensions of our platform are higher Plex strategies. So, you know, so beware all the high Plex, you know, guys out there, and they know it. You don't need to have something in our boxes with our technology. You know, it doesn't destroy morphology. There is a lot of benefits to what we have, and we have strong IP protecting it. So, no, we've always said this could be a 200, 300 or more larger division. So it's very much at a... tipping point it's going to be knocking on 100 million next year probably you know real close if not exceeding and very profitable because you know at the end of the day it's kits right so great gross margins and uh the team is unbelievable um they're they are really good in terms of uh cross-linking other people in the company and technically and getting help and also also helping them strong one of the strongest technical teams i've ever seen in my career to be honest and uh you know If anything, our issue is how do we keep acquiring talent in the Bay Area and keep this machine moving? It's really competitive out there for people, and that's probably the bigger concern is can we fuel the growth with more investment in key people?
spk10: I would just add, Chuck, the recent launch of our DNAscope, the market for DNAscope basically doubled our addressable market from just RNAscope, and we've been asked for it for a year.
spk12: Very difficult. It's probably about a year late because it's just so technically difficult. We cracked it.
spk09: No, that's great. Appreciate the update. Thank you.
spk03: Our next question is with Catherine Schultz with ARD. Please proceed with your question.
spk04: Hey, guys. Congrats on the quarter, and thanks for the questions. I guess first in the core reagents business, you know, your last five-year outlook had a 5% to 7% growth rate there. Can you just talk through some of the newer growth drivers that you've referred to earlier, whether it's mRNA or proteomics, and the potential for those to be additive as you think about that next five-year outlook?
spk12: Yeah, and that's very astute, and it's true. I mean, going back, and you've been with us a long time, I mean, in the early days, we talked about getting us to a healthy mid-single-digit growth, and because the markets weren't really growing any more than that anyway in terms of antibodies and proteins, even assays, but, you know, That's not what's happened, right? So the markets have all improved. There's a lot more funding out there. There's a lot of halo effect off stimulus. You know, I've talked a couple quarters ago about don't be too worried about a 3% NIH budget. They're probably going to come back next year for something much bigger. Sure enough, they're talking 21% starting fiscal October. It's going to be big. And this is about infectious disease. This is just oncology and neuroscience, the traditional, you know, funding from NIH. COVID is going to be another layer, and there's a halo effect off all this. The vaccine makes, they're all buying, everyone's exploding. There's a halo effect off of all that. And it all starts with proteins and antibodies and assays. What can I say? I think high single-digit growth at a minimum going forward, and we've been exceeding that, as you know. We kind of look silly because we've been double-digit here for quite a few quarters.
spk04: All right, great. And maybe on ExoTrue, I can sense your excitement there. Can you just talk about your commercialization strategy and building out a sales course for the launch later this calendar year and maybe the timeline to Medicare coverage?
spk12: My number one question to these guys is why don't you start with that? It's a lot fewer barriers. We don't have to worry about 20,000 urologists. We don't have to worry about the pathologists that drive the urologists with being paid per sample off a biopsy. There's a lot of There's a lot of converting to do in exosome diagnostics, and we're doing it. We're growing and cranking. It's going to be sticky, but it's going to take some time. ExoTruid, kidney rejection, there's only 100 centers. They're very regionally located. Eighty-five percent of all the work is just in the top tier of them. So this is why it's important to have an at-home collection potential because a lot of these patients are going to have to be traveling a lot every couple months to get these You know, you get their new kidney checked, and now they don't have to. Now they can send in urine. It's simple. So we don't have a big commercial plan. It's going to be like a key account model. There's going to be a half a dozen different reps. We'll probably hire some heavy hitters that are well-known in industry and go to work. And right now we've got some good news, right? I mean, we've got Moldy X. offering up, you know, via CareDx as a solution. There's a lot more, I guess, acceptance of the LDT, just in general, for this issue of kidney rejection. And if we can get NGS to, you know, to abide by this opening, it's going to actually accelerate our process, our LTC process. So we don't know yet, but we're talking to NGS, and they've been very supportive so far and very open, and they're very Very interested. They like the data. They like the publication we've done already. I'm hoping, expecting this will be a much smoother commercial transition than XODX was for prostate, to be honest.
spk10: As most transplant patients are covered by Medicare, you don't have to worry about trying to convert a bunch of private patients.
spk12: Yeah, 85%. So that's another nice thing.
spk04: Yeah, okay. And then last one for me, maybe on the Zencore agreement. How should we think about the timeline for those antibodies to move through clinicals and potential magnitude of milestones for those agreements?
spk12: Yeah, well, it's unknown. As you know, working with therapeutic companies, you know, they won't tell you everything anyway. We're on our third different antibody. They're well along in the first one. I don't know. All I know is that, you know, we're getting paid a prime. We're getting paid milestones. We're getting royalties. You know, we hope that they are successful with their clinicals, but You know, we don't have their schedule for clinicals or what's going on, but it certainly won't be, you know, six months or a year or two out. I'm sure to see much come back from that beyond the milestone payments and everything else. But, you know, now we've got a list. I mean, we've got quite a few of these going out. And, you know, it's not 10 grand, 20 grand here. We're talking much bigger numbers of funds just to get access to our technology. We never used to do that. And that's becoming a nice new layer of new reference, as we mentioned.
spk04: Great. Thank you.
spk03: Our next question is with Patrick Donnelly from Citi. Please proceed with your question.
spk07: Hey, guys. Thanks for taking the question. Chuck, maybe just on XODX, you know, obviously you've got a nice payer on board, I think, in the beginning of April. You know, I know you've talked often about maybe if you get a big one, it'll be the first of a few dominoes to fall relatively quickly. Can you just talk about the conversation pace since then with payers and what we should expect, you know, over the next, you know, couple quarters? I'm pretty slow there. Sure.
spk12: Yeah, it certainly accelerates things. We have many more of the satellite Blue Cross Blue Shields now in the final throes of contracting with us. Of course, we're still going after United and all the other big ones. It always starts like this. One of the big ones has to go, and then eventually the other ones aren't going to be left behind. It gets to a point where patients are demanding it. It's going to happen. It's way too good a technology. It works way too well, and we're just going to keep grinding away at it and It's just too bad that this is a patient set that just aren't leaving their homes and going to see the urologist and getting checkups. But they're coming back now. And our numbers are improving dramatically, as we mentioned, in March for sure. And we're getting there. I think all in from the beginning, we're well north of 50,000 tests administered. So this is getting more than being a secret. So we're getting there.
spk07: Right. OK. And then on the COVID side, I know you talked about, you know, a few different product lines that played into the mRNA vaccines. Are you able to quantify what the impact was on the quarter, you know, even at a high level would be helpful?
spk12: Well, we had, as I mentioned, we had 90% growth, and some of that growth is mRNA. It's vaccine-related. I don't even have a number in front of me. I don't think it's half or anything, but it's just a component of the growth, and it's on all cells.
spk07: Okay. And then maybe last one, just on a geographic basis, China has been a source of strength for much of the group here. Can you just talk through your performance there and then the outlook? It certainly seems like things are putting up.
spk12: Well, as you remember, China fell off the table first, so they had the easiest comp. So 50% here is the number, and they're back strong, and the momentum is good. So we're kind of back on track, leveled all out. We're looking back a year or two. It's a 25% grower, so... at least 2022. We're pushing them for 25, and I think that's going to happen.
spk10: We fared better than most last year in China, where we still grew in China. It was single-digit growth as opposed to the typical 20% plus. So we had an easy comp for China, but not an easy comp compared to much of our competition in China. Yeah.
spk07: Understood. Thanks, Jeff.
spk12: And we've been hiring there. The group's expanding significantly. It's kind of business as usual in China, to be honest, except for some of our management trying to get in to help. They have to go through quarantine and stuff. And there aren't any Chinese extended visas yet, so you can only go in for two months and they kick you back out and you have to start over again. So no visits for a while for any of us.
spk07: Right.
spk12: Thanks, Chuck.
spk03: Our next question is with Paul Knight from Jamie Montgomery Scott. Please proceed with your question.
spk05: Hi, Chuck. You've emphasized how your catalog is the very best in a long time for any threat to it. Is it the annotation now that you have around it along with the content? How would you describe the barriers to your catalog now?
spk12: There really aren't any. I mean, in the beginning, and you're pretty up on this, I know, Paul, but, you know, IL-2 is kind of the first thing being sold, and it's probably still a leading protein being sold, and we make that as well. But we're into IL-7, IL-10, IL-15, and there's more. There's others. We have a catalog of roughly 50. Our competition is half less than that. I'm just saying we have a strong catalog. We are not the largest GMP protein provider yet, but, you know, we'll do what we'll be.
spk05: Right.
spk12: We kind of have to wait and see where these guys go with the process and the next spec and their next clinicals. Are they looking for IL-27 or IL-37 or whatever? We have all the hardest to make proteins from research to kind of lead the way for the whole world following on what proteins come about when. How many of these become asked for or put into the GMP format is unknown. And to be honest, we'll probably have to work with them. They'll have to use us more than they have been if they want to understand the benefits of an advanced new protein that they don't really understand or don't know about. Because we'll always have the most early information in the world on a new protein.
spk05: Is that also the profile of your St. Paul customer? Is it a technical product? What are they finding in your facility to book capacity?
spk12: Well, right now it's all about qualification. They want to see that they know that R&D Systems' brand is a high-quality protein. They want to see, instead of, you know, a couple hundred thousand dollars of purchases for research needs, can they get 10 million of it at the same quality level, large lot, consistency in lots, and all the paperwork that has to go with it for being GMP, right, because it's regulated. So they're coming to do audits and all that. It's not really about checking us out if we can make the protein or not. They kind of get that. It's more about everything else. Can you make enough fit? Is it consistent? Have we done all the GNC regulatory stuff correctly? Do we have the bandwidth of the teams in place, the leadership? Typical audit stuff. It's gone very well. You guys can start traveling again. We'll bring tours. It's a deal-closer facility. It's amazing.
spk05: Yeah. And then lastly, there has been a lot of M&A in the industry with the diagnostics assets. Is the pipeline, are the candidates out there much more attractive than they used to be due to the maturity of the industry? What's behind your M&A? What do you think is behind the activity in the industry?
spk12: Well, I think the growth of the industry is driving the activity, and now we're going to have a bunch of very difficult comps, and a lot of companies have worked just with COVID cash, and so it's going to drive a lot of M&A, I think, starting probably now. It's certainly been the next fall. I mean, start doing the math on what the big guys are going to have for cash. And, you know, they're not going to want to shrink next year. They're going to want to grow. So there's going to be more M&A. It turns out we'll be in there swinging like we always have. We're not trying to compete with Thermal or Danaher. And Asurgen is a perfect example of yet another private deal we did that's getting a great theme, a bolt-on, energy is in place, and we'll be able to grow much better with them than they would be on their own. We have certainly come in second and third on a few of the past year. Some sting. I really wanted them, but we're not going to overpay. And things are pricey right now. It's just because that's the industry we're in. And people are demanding innovation and growth, and they can't do it. It's just classic make versus buy in the end, I guess. But it's driving valuations. And the growth we're seeing in our company, and we're not the only one, right? It's driving valuations as well.
spk08: Yeah.
spk12: Okay. Thank you.
spk03: Ladies and gentlemen, we have reached the end of the question and answer session, and I would like to turn the call back over to Chuck for closing remarks.
spk12: All right. Well, thank you, Maria. It was a great quarter. You know, what's not to like with a 25-year record? So as you guys all know, Q4 should be even maybe more fun to talk about, and I look forward to next quarter when we're all together again. Thank you.
spk03: This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.
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