Bio-Techne Corp (TECH) 2014 Q4 法說會逐字稿

Good morning, and welcome to the Bio-Techne earnings conference call for the fourth quarter of the full year FY14. At this time, all participants have been placed in a listen-only mode, and the floor will be opened for questions following the management's prepared remarks.

I would now like to turn the call over to Mr. Jim Hippel, Chief Financial Officer.

(no audio - technical difficulty) -- as well as meeting with customers. Also on the call with me is Frank Mortari, Vice President of Corporate Development.

Before we begin, let me briefly cover our Safe Harbor statement. Some of the remarks made during this conference call can be considered forward-looking statements. The Company's 10-K for FY13, and the 10-Q filed for the fiscal quarter ended March 31, 2014, identify certain factors that could cause the Company's actual results to differ materially from those projected in any forward-looking statements 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 and 10-Q, as well as the Company's other SEC files, 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, or on the Techne Corporation website at www.techne-corp.com.

With that, I will turn the call over to Chuck.

Thanks, Jim. Good morning, and thank you for joining us today. As I stated in our earnings release, I'm extremely pleased with the quarter, but even more pleased with the year-end results. To come back from negative growth last year to 3% organic growth this year, given the head winds of NIH funding and increasing competition, is a great achievement for this team.

We started the year telling all of you in our first-ever earnings call that we would achieve better than historical growth rates in China, which were in the 15% to 20% range, raising them into the high 20%s. We actually achieved 37% organic growth in China for Q4, and 27% for the year.

The investments made in China are paying off. By next year, with our continuing growth in China over 25%, and the acquisitions of PrimeGene growing 30%, Novus, and ProteinSimple, we should be able to boast a Bio-Techne China Company that has grown from $12 million in revenue last year to well over $30 million by this time next year. It is a very exciting time for our Asia business.

As we have done all year, we continue to strengthen our commercial execution in North America this quarter. While we have no weather to contend with like last quarter, we still had a difficult year-over-year comp with regard to academic sales. However, by leveraging our field sales investments and the [FISHA] relationship, our academic sales have stabilized since Q1 of 2014, positioning us to accelerate growth next year with the introduction of the PrimeGene and Novus fighter brands.

Turning to Europe, we did some lumpiness there the past several quarters, similar to where other peers have reported. In Q4 we had some Easter seasonality in the results, but the quarter was less than we had hoped for. Overall for the year, we did have some organic growth over the previous year.

We believe the strategic acquisitions we have made will really help our Europe business, since these businesses can leverage our strong operations in Europe. Novus is growing at a double-digit rate in Europe, as an example. We are also confident of the potential future of ProteinSimple in Europe. These businesses are firing on all cylinders.

Speaking of strategic acquisitions, 2014 was a very active year for Bio-Techne, especially Q4 of FY14. We started the year with the acquisition of Bionostics, which expanded our clinical control segment to include control, solutions, and IVD devices used in blood glucose, coagulation, and blood gas testing. Our team then worked very hard throughout the year on a number of targets that accumulated into two acquisitions in Q4, and two more which closed in July.

First, we made a substantial equity investment in CyVek, structured to be an acquisition after certain commercial thresholds are met. CyVek produces a transformative immuno-assay platform, which delivers the most advanced and efficient bench top immuno-assay system. We followed this in Q4 by acquiring PrimeGene, which will provide us manufacturing capabilities in China, and a fighter brand for recombinant proteins here in the US.

In July we announced and subsequently closed the acquisitions of Novus and ProteinSimple -- Novus to expand our portfolio of antibody offerings to approaching 250,000, which can be delivered to our customers through an innovative digital commerce program; and ProteinSimple, to provide our customers with instruments that have revolutionized the analysis of proteins in terms of reliability, consistency, and productivity. All these acquisitions fuel our long-term strategic plan to expand our customer offering and geographic coverage while leveraging our core product base of reagents and controls. We even changed the trade name of the Company to Bio-Techne, which unifies and positions our brands under one complete portfolio.

Despite all of the activity this year around acquisitions, we have not lost focus on our strategic pillar of driving innovation to produce core products that fulfill a greater number of our customers' needs. In FY14, we released approximately 1,600 new products, which generated $3.4 million of new revenue in the first year. This compares to approximately 2,100 new products released in FY13, which generated only $2.4 million of new revenue in year one.

Our prioritization process is already starting to bear fruit, and we believe there is much more to come with a key opinion leader network and scientific advisory board that our new CTO has created to collaborate on tools needed to support the leading edge of life sciences research.

Overall, I'm extremely proud of the work our team has done this year, and want to thank our employees for all their efforts. We have worked hard to build a stronger global team, and it is paying off.

As NIH and other funding return to more healthy levels, we intend to capitalize on the pent-up need for tools and reagents that researchers need for their work. We have and we will continue to invest in innovation and quality, further demonstrating that Bio-Techne has the premiere brand in a premiere global biotech Company.

Jim, I'll turn it over to you now for a dive into these financials.

All right. Thanks, Chuck. Given that this is a year-end call, and we just closed the Novus and ProteinSimple acquisitions, I have a number of topics to cover in my remarks this morning. First I'll start with an overview of our Q4 and full-year 2014 financial performance. Next I'll provide you a recap of the terms regarding the revolving credit facility that was open to partially fund the protein simple acquisition. Finally, although we do not provide future guidance, I will provide today some financial data and longer-term goals regarding our recent acquisitions, giving more clarity as to the impact these acquisitions may have on our financial performance in 2015 and the years following.

Starting with the overall recent financial performance, we delivered a solid fourth quarter, resulting in a 7% increase in adjusted EPS to $0.88. For the full year, adjusted EPS was up 6% compared to the prior fiscal year, to a record $3.39. As detailed in our press release, adjusted earnings per share exclude acquisition-related costs.

These are costs such as intangible asset amortization, costs recognized upon the sale of inventory that was written up to fair value, and professional fees related to ongoing acquisition activity. Also excluded are the impact of certain taxes. Under GAAP, EPS was $0.72 in Q4, and $3 even for the full year, compared to $0.77 and $3.05 in Q4 and full-year 2013 respectively.

On the top line, Q4 total revenue was $92.5 million, an increase of 16% year over year, and organic growth was 2%. Q4 reported revenue includes 13% growth from our Bionostics and PrimeGene acquisitions, PrimeGene nominally so; and approximately 1% impact from foreign exchange.

For the full year, total revenue increased 15% year over year, and organic growth was 3%. Full-year growth included 11% from acquisitions, and also 1% impact from foreign exchange.

Moving on to the details of the P&L, total Company adjusted gross margin came in at 73.4% in Q4, down 320 basis points from the prior year, due to the product mix change associated with the acquisition of Bionostics last July. Excluding Bionostics, gross margins were essentially flat compared to last year.

Adjusted SG&A in Q4 was 14.1% of revenue, approximately 30 basis points more than the prior year. For full-year 2014, adjusted SG&A was 13.5% of revenue, 40 basis points higher than 2013. The modest increase is the result of the commercial and infrastructure investments made throughout FY14.

Finally, R&D expense came in at 8.3% of revenue for the quarter, 80 basis points below the prior year. For full-year 2014 R&D expense was 8.6% of revenue, also 80 basis points below 2013. For both Q4 and full year, higher overall spend on R&D activity was partially offset by greater revenue generation from new products launched, as Chuck's discussed in his opening comment.

Turning to cash flow and the balance sheet, the headline numbers are $37.9 million in cash generated from operations for the fourth quarter, and $136.8 million for the full year. That's up 26% and 11%, respectively, over the prior year. A

t year end, we had $367 million of cash and short-term available for sale investment, with a large portion of these investments liquidated into cash in Q4, to prepare for the funding of the July Novus and ProteinSimple acquisitions. As of fiscal year end we had no debt. Our investment in capital expenditures was $13.8 million for the full year, and we returned over $45 million to our shareholders in the form of dividends.

That wraps up my comments on the total Company performance for the fourth quarter and the full fiscal year. Now I'll walk you through the revenue performance of our two business segments, starting with the biotechnology system. This is the larger of the two segments, which develops, manufactures, and sells biotechnology research and diagnostic products worldwide.

For the fourth quarter, the biotechnology segment reported $76.7 million of revenue, and 1% organic growth compared to fourth quarter last year. Full-year revenue for the segment were $300.6 million, with organic growth at 3% for fiscal year.

The lower growth in Q4 was mostly attributable to Europe, which was down 3%. The timing of Easter in Q4 this year versus Q4 last year, as well as the timing of some larger bulk orders that occurred in Q3 versus Q4 of last year, attributed to the decrease. However, despite continued softness in the academic market and consolidation in Big Pharma, Europe managed to have positive 1% for the year.

In the US, industrial customers such as pharma and biotech in the biotechnology segment continue to grow at 4% in Q4, which is consistent with the growth that we saw from these customers all year. US academia, on the other hand, continued to be soft compared to last year, down 8% for the fourth quarter, and down 9% for the year.

However, as Chuck indicated in his opening comments, US academic sales seemed to have bottomed in the first half of FY14, and the run rate has been relatively stable since. Thus we are expecting this piece of our business to improve next year, with the addition of newly acquired fighter brands to our portfolio, as well as an overall more stable environment the proposed NIH funding.

As for biotechnology sales in China, Chuck has pretty much shared the highlights there -- just a great quarter in Q4, with 37% organic growth in the quarter compared to fourth quarter last year, to cap off what was a great year that experienced 27% organic growth over last year. I will note that these numbers are slightly different than those in the press release which discloses China region.

Included in those figures are Taiwan and Hong Kong, which are more mature markets, and thus usually experience lower growth rates than mainland China. Looking ahead to next year, we expect to continue to achieve strong growth in China both organically, and from our recent acquisitions.

Finally, the Pacific rim, which generates about 10% of the biotechnology segment's revenue, we experienced organic growth of 5% for Q4, and 10% for the full year. The lower growth rate in Q4 was driven by the timing of a number of orders in Japan that occurred on the cusp of Q3 versus Q4. The region's growth rate for the full year is indicative of our expectations going forward.

Turning now to our other segment, clinical controls, which develops blood controls and calibrators for use in hospitals and clinic, this segment closed Q4 with $15.8 million of revenue, and finished the full year with $57.2 million. Organic growth, which excludes the Bionostics acquisition last July, was 8% in Q4, and 7% for the full year, rounding out a year of solid and consistent demand and operational execution.

Now before we turn the call over for Q&A, I would like to provide some additional insight into the financials of our most recent acquisitions and investments, as well as a reminder on the financing details, most of which were communicated in the recently released 8-K. I will start with the financing.

All of our acquisitions and investments in Q4 were funded with cash on hand, which includes our investment in CyVek, as well as our purchase of PrimeGene. In early July of FY15, our purchase of Novus was also funded with cash on hand. In late July of FY15, our purchase of ProteinSimple was funded by a combination of cash on hand, as well as $150 million revolving credit facility, that was opened with BMO Harris Bank. $125 million of this credit facility was drawn upon to fund the purchase of ProteinSimple.

The interest on this facility accrues at a variable rate of LIBOR plus a margin ranging from 1% to 1.75%, depending on certain leverage ratios. Currently, our interest expense on our debt is accruing at 1.16%. The one-time bank fee associated with opening the credit facility was $375,000, and ongoing fees for any unused portion of the credit facility, or 15 basis points per annum.

Now some financial details on the acquisitions themselves. Going in chronological order, I will start with CyVek. CyVek is not really an acquisition yet, but rather an equity investment that was made on April 1, 2014, with a commitment to acquire within 12 months if certain future milestones are met.

CyVek will have no impact on our P&L until the time it is fully purchased. As of right now, the milestones are on track, and we expect a full purchase to consummate sometime in the second half of FY15.

Next is PrimeGene. As we announced in a prior press release, PrimeGene was acquired on April 30, 2014, and had an immaterial impact to our FY14 results. In calendar year 2013, PrimeGene had product sales of approximately $4 million, with gross and operating margins that were similar to the rest of our biotechnology segment. Over the next five years, we have aspirations for this business to increase 30% annually, as it continues to grow in the rapidly-expanding local Chinese market, but also has an OEM supplier of fighter brands to be launched in the US and Europe.

The acquisition of Novus followed PrimeGene on July 2, 2014. Novus' calendar year 2013 revenue was approximately $19 million. Its wide product offering of over 225,000 antibodies necessitate the large mix of OEM supplies versus proprietary products. Thus its gross margins are lower than our current biotechnology segment, at roughly 50%, while EBITDA margins are in the mid-teens.

Our aspirations over the next five years are for this business to grow organically in the upper single digits annually, with EBITDA margins approaching 30% by year five. Our intentions for this growth is to be supplemented by R&D systems brand leveraging of Novus' digital commerce platform, and Novus leveraging existing biotech in its global sales channels and proprietary capabilities.

Finally, our latest acquisition, and thus far our largest, ProteinSimple, closed July 31, 2014. ProteinSimple's revenue for the last 12 months ended June 30, 2014, was approximately $60 million, with EBITDA of approximately $9 million. Gross margins for the past year have been in the upper 60% range, which is quite strong for an instrument-based business, signifying a novel technology of their platform, and high consumable pull-through.

Our aspiration over the next five years for this business is to maintain a 20% annual revenue growth rate, as ProteinSimple continues to revolutionize, the way [Western Blotty] have been in the past 30 years, by investing in further global commercial penetration of their existing instruments, and further innovation on next-generation platforms. Through gradual sales leverage on these investments, we see the potential for EBITDA margins to approach the upper 20% range by year five.

These numbers don't factor in our other aspirations to source consumables used by ProteinSimple's instruments from existing Bio-Techne reagents, nor possible sales synergies with the eventual CyVek instruments, which we expect to own by the end of this year. These synergies we believe are real, but putting a time table and valuation on them right now is not practical.

That concludes my prepared comments. With that, I will turn the call back over to the moderator to open the line up for some questions.

(Operator Instructions)

Our first question will come from Matt Hewitt with Craig-Hallum Capital. Please go ahead.

Good morning, gentlemen. Congratulations on a very successful 2014.

Great, Matt. Hi, good to see you.

A couple questions. First, you have been very busy on the M&A front and the investment front. I'm curious, as you look at your portfolio today, where do you see some gaps? What should we be anticipating as we get into FY15? Where are some areas that you think you might be investing to broaden your portfolio?

Thanks, Matt. Well one, we're not following any schedule for acquisitions. You run a process, and you run an offer, and you work it, and they kind of pick their own timing. We are very fortunate to succeed in a pretty high percentage of tries this year. There will be more, I'm sure, in the future. We're following our strategic plan pretty carefully. We have talked to this as far back as about a year ago, almost now, with our initial come-out of our strategic plan. Broadening our portfolio in antibodies is one of the key things we want to do, which we've done with Novus.

There are certainly other categories of antibodies that are in more narrow product platform ranges, like antibodies around flow, around IHC, that could be significant, and could be more than useful, especially antibodies that could work within our systems, our new platforms that we have acquired, and going after new territories like China for IVD and other areas like that, et cetera.

We're also always on the hunt for new CyVek-like and ProteinSimple-like platforms. We have mentioned many times that we are not going to get in the instrument business to be an instrument business. We like content. We want to drive the content, the value of our content in full solutions for our customers. If this can be done with a novel, new instrument that leverages our content in ways never done before, like CyVek and ProteinSimple do, then we're interested.

There are other areas, categories that we're looking at, and you're probably as well familiar with them as we are. This is a biotech industry, and there's a new way to do all these laboratory processes all the time. Any ones that come out that have IP that look novel, that look like they can really leverage and benefit from our content, we're interested.

I would say stay tuned.

Fair enough, and maybe one more. There is a new proposal in the Senate right now that is looking to boost the NAH funding. It's not the 2% to 3% type increases that I think we have become accustomed to over the past few years, or even cuts. This drive could drive 10% growth in NAH spending over the next few years. I'm curious if you had to -- I realize it's the government, but if you had to handicap the reality or the potential for that to occur, and what that would mean for your business, that type of an increase in NAH spending?

Yes, I saw the article. I think right now it's pretty early to conjecture its merits or how long it will take. Obviously if it goes through and there's funding levels getting back to upper single digits or 10%, we are going to benefit for sure, being we're the leader in proteins in the world.

For sure, that will happen. Let's hope it does, because as we broaden our portfolio and expand in other offerings, and hopefully become one of the largest providers of antibodies as well in the world, we should do well with this. I wish the bill luck.

Fair enough. Thanks, gentlemen.

Our next question comes from Jeff Elliott with Robert W. Baird. Please go ahead, sir.

Good morning, and congratulations on the quarter. I heard the comments about China, where you expect the run rates to be next year, but what do you thinking from a split of organic growth and acquired growth? What's baked into that assumption?

I would say right now, on our core organic growth, you could continue to count on us in the 25% range, like we stated. Everything above that, which the numbers I we showed would be on top of the inorganic, of course. As ProteinSimple and Novus and PrimeGene grow in China, which will also grow with great numbers, great growth rates, it will, hopefully, at least keep pace with our core organic growth. I would say long term if we could stay paced organically, remember a year from now these deals would become organic. If we could stay at that 25% rate or better that will be a fantastic goal for us.

Got it.

That is as close as we think it can be.

Okay. Chuck, in your opening comments you mentioned increasing competition. Can you elaborate on what you meant by that?

Nothing more than what we have seen. The likes of Pepper Techs and Abcams and then a lot of smaller players are getting bigger and stronger. The door was opened to all of the funding cuts here in the last two, three years, with budgets being tight, and the customers taking chances on the lower quality of products, and in some instances getting their work done acceptably, at least initial research done that way. It's, as you know from our gross margins, it's a profitable business, and it's going to attract attention. I don't see that going away.

In China, it's only going to -- there are great opportunities here in China. The growth rates are wonderful, but with all that growth and these opportunities and the embryonic nature of the bio technology in China, I think you're going to see more and more players, as well. This is why we have such a strong strategic initiative in China to remain a leader, and even accelerate that leadership position. Having PrimeGene is going to allow us a double-decker approach here.

What do the margins look like on the PrimeGene product? I guess you can expand that over to the US and Europe. How should we think about the gross margins on that?

Actually, it's kind of weird. As you know, most companies expand in China, and we have done it a few times in different industries. The Chinese are very price conscious and you usually have lower margins in China. I would say overall, and we state overall, we will see lower margins in China.

PrimeGene is very [similar] to our business right now, but it's also very small. With that kind of basis, it's really not something to glean a lot of input out of. But they run a good business, and the margins are very strong; probably much better than typical for what was a Chinese competitor.

Got it. Okay, I will get back in queue. Thanks.

Our next question comes from Amanda Murphy with William Blair. Please go ahead.

Good morning. Just a question on organic growth. Obviously there's a lot of moving parts with Europe and China and then some of the comp dynamics going forward. I'm just curious, how should we think about the rate -- organic growth rate? It's been a bit lumpy over the past year, although obviously accelerated from prior levels. Just trying to get a sense of -- is it 3%, is it 5%, for example?

We don't provide guidance. We have given you what our long-term thinking is. Our goal is for us to get to the mid-single digits. We made a good move that direction from negative territory last year. I would like to tell you, Amanda, that we're going to be able to hit 5% in organic growth this year. It's just too early to tell. We will see what happens. If we truly have the funding issues behind us, with all of this competition we have a better chance, we think.

It will rely on how well we do with the Fisher-type relationships, how we manage our channels, and how we leverage possible synergies with these new acquisitions with our core organic products right now. If all that comes together, I think north of 3% is more than just possible. It should be doable. Getting above 5%, though, would be very difficult at this point, given what we still see as head winds. Europe is still a difficult question.

Actually, in terms of Fisher, I don't think you mentioned the contribution from that this quarter. Has that been meaningful? Thinking about that going forward, obviously there's a lot going on in the space in terms of M&A. Curious how you're looking at that specific relationship?

It has been going very well. The work together on the two companies with the systems we call the punch-out systems, especially in areas with like Luminex kits and the other concept that they are very eager to get their hands on and move for us, is going very well. The growth rates are amazing. It's just still small. They are getting trained in. They're getting more comfortable. The numbers are roughly double the levels that they were a quarter ago. We only had a partial quarter, so it is moving in the right direction, for sure.

As you know, Amanda, we have to also deal with potential swap and what are the real numbers. There's certainly some swap in that, too. We certainly have some institutions that are saying, now let's make simple. Let's put everything through Fisher since we buy so much of this stuff from Fisher. We had some sales from direct before. Some of that's working through, as well. We are creating all of the right dashboards and working together to find out what's what.

They are extremely focused on incremental growth. They're paid that way, as you know. That's where the incentives are. Areas like really going into Canada very heavily, there are some strong areas we're looking at with them. Overall, I'm very encouraged. It's looking very good.

If you look at what we would call the US retail segment in the academic sector, the -- as we mentioned we were a negative 9 for the year, we were negative 8 this quarter. We've been double-digit down every quarter before this. I think some of that is coming from channel, and some of it from the health of Fisher. It was definitely picking up the ball in our academic retail space.

Got it. Okay, that's helpful. Last one, you talked a little bit about M&A. I'm curious, I think you said in the past that you were comfortable with three times leverage number. Is that still true? Curious, what -- generally, what's your appetite for larger deals, and what's the opportunity there? I know you've done quite a few already, so curious if you're done -- (multiple speakers).

Yes, well we've got plenty of dry powder left. I'm going to let Jim follow on with my answer with some more detail. But I think we're not out to be a PE-type company. We're not going to be riding the line like a Thermo Fisher. We just don't have that kind of experience or credibility yet.

I think staying safe after 35 years of no debt, I think being between two and three times of leverage is, I think, a safe place -- always cover all covenants, cover any mishap in the economy, whatever else should happen. We're being patient, very patient.

Jim, you want to say anything else?

Yes, I would just say I think the three times leverage is still our comfort range in general. We do have a lot to digest right now with the recent acquisitions we did. But the good news there is that we also inherited some strong Management teams with those acquisitions, which I think will make the assimilation, so to speak, into Bio-Techne go that much smoother and quicker. If and when the right opportunity comes, if it's a larger one, I think we will be ready.

Okay, thanks.

(Operator Instructions)

Our next question comes from Dan Leonard with Leerink. Please go ahead.

Thank you. ProteinSimple considered coming public to aggressively expand their investment in sales and marketing, among other things. Is that still the plan, now that the business is part of Bio-Techne, or do you envision a different level of investment for that business?

Our plan with ProteinSimple is to leverage their plan with the content we create. Since this instrument has to have antibodies and proteins that really work within the customer's hands, we can provide a lot of different content related to the customer they want for full solutions. That's the magic. It's going to take probably years to make all that really happen. But it's a rocket ride (inaudible -- technical difficult).

To be honest, my biggest issue is to make sure all of us stay out of the way. This thing is doing great. It's growing in Europe. We're going to leverage a lot of our resources in Europe operationally. They're very small in China but exploding. We're going to be able to leverage that heavily. I would say tactically, operationally, we are going to be helped a lot.

On the science, synergy front, the long-term points are where there will be where the investments may be you're talking about, are going to be coming over the next year as we integrate. As we work together, where is the appropriate integration? What should we work on together, okay?

Okay.

I don't know if you've heard anything from the S-1 or anything else. Their West platform is just way ahead of expectations. What really excited us was the fact that academia is eating it up. They love it. We always thought that might be a hard pill to swallow with their funding concerns, but it appears not.

Chuck, how much detail do you plan to offer on ProteinSimple's business? For example West, can you disclose how many West placements they had in the June quarter?

We're not going to disclose anything yet, but we expected this question. We have two divisions so far. Now going forward with these instrument businesses, we're going to have to have an instruments division -- probably an instrumentation segment to lay out for you. You're going to get lots of data, but it is too early right now. Within this next quarter we report, you're going to see I think a lot of your answers coming to you.

Okay. I know you don't want to provide guidance, but at least on the expense line, can you talk about what you're budgeting for operating expenses in FY15? The reason I ask is it is just difficult to figure out if the ProteinSimple deal is accretive, dilutive, or neutral to 2015?

Well, I will say that we feel it will be accretive. We're not going to give much guidance beyond that. In terms of our operating expenses this year going forward, in the last year -- I mean nine months ago on the first call you gave me lots of questions about how hard will I invest, what will we do, will it eat into margins significantly. There was a lot of potential fear around that, and you can see from our result, we didn't really impact our gross margins at all.

With a lot of hiring, a lot of new execs, a lot of new promotional activities, we more than doubled -- it from 12 people to like 30 in China with the core business. In all of that, it's paying for itself, all right? That level going forward is probably going to be reduced. We're not going to be investing at the same level. Our goal is to definitely have EPS growth. I think I'll leave it at that.

Jim, you may want to give a little more color around this?

Yes, I would say for our core business, we are still in a -- I would say at least a two-year build in terms of investment in basic infrastructure and sales, commercial reach, et cetera, that Chuck kicked off last year. FY15 will be year two of that. It will be at somewhat lesser rates, but there will still be investments.

I would say overall when you look at the core business as well as ProteinSimple, we are going to reinvest in par with our revenue growth rate. That's the way I'd think about it.

Got it.

Particularly in ProteinSimple, where they are still very much in a ramp mode.

Yes. We definitely want to feed that beast.

Great. Thank you.

Our next question comes from Saresh with SBH. Please go ahead. Good morning, Saresh with SBH. If you have a question, please go ahead. All right, maybe not.

(Operator Instructions)

We have a question from Paul Knight with Janney Capital. Please go ahead.

Hello. This is actually Brian Kipp on behalf of Paul. Thanks for taking the question. You guys alluded to your Novus platform and the potential to expand your e-commerce channels via the Novus acquisition. Where are you with current -- the Bio-Techne franchise -- on converting from catalog to e-commerce?

In conjunction with that, what's your horizon to consolidate all these new acquisitions into a uniform platform to drive additional cost synergies? Is that several years out, or just thoughts around that?

That's a great question. Clearly when I arrived we talked a lot about branding and improving the customer experience with a much better website. We kicked off a lot of that work, and we're going to be launching a first phase of that this next quarter for Bio-Techne. Now here we make these acquisitions, and guess what, they've got their own initiatives, their own websites, and all this has to be integrated and melded, right,? You've seen this movie before.

We love it Novus because they've got a lot of great digital platforms. They have some internal platforms that make running a 225,000 SKU business very efficient. We are very impressed. We would like to leverage that across our Company. It will take us a year to probably do that. We do see it very possible. We are definitely going to merge the websites. Now you are not going to get to PrimeGene products via an R&D systems-branded part on the website.

Think of it as a tree coming down from Bio-Techne.com, and you'll either go one direction or the other, all right? You're going to be looking at branded quality things under R&D systems, or you may be looking at fighter brand if you're academia and some areas maybe in Novus, maybe in prime Gene. We're going to be very distinct and very careful how we do that, how we integrate. In a way, they can operate as it is as punch-outs for now, and we'll be integrating them together for typical SEO-type initiatives over the coming year.

Your question whether it will take two years or not, I'm not sure if they're ever done. But I think it will take a full year to try and get something really out there and working cohesively together as a Bio-Techne type of umbrella system.

It's going to probably take two years, and there will be other initiatives, as well. But it's all exciting stuff. We believe it's very imperative to get this part right, long term going forward.

Definitely. Another follow-up. I know there's been a lot of thought and a lot of new product launches over the last year on the analytical instrumentation side to reduce consumer utilization and make it more efficient. Is that a pressure you are seeing on your biotechnology business? Is that a driver for you to augment that with ProteinSimple?

I'm sorry, I'm trying to hear you. This question is breaking up. The line is getting goofy on me here. Would you mind repeating it?

Yes, can hear me -- is it better now?

It is tough. Try it one more time. I'll have Galev fill in their answer if I can't.

Any better?

Sounds better now.

That's better. Ask your question again.

Analytical instrumentation, a lot of new product launches over the last couple years have focused on reducing reagent utilizations, just to naturally drive efficiencies. Is that something you are seeing as a pressure within your biotechnology franchise and why you're seeing some anemic or more anemic organic growth rates? Is that why you're augmenting your legacy reagent business with more analytical instrumentation products that you can synergize and drive top-line growth? Color around that would be helpful.

I think you have to back up a little bit. What's driving things is the need for productivity, right? ELIZA is a great tool. It's been around 35 years, uses a lot of reagents. We like it. We're the leader. But it's not that efficient.

We look at CyVek as kind of a next-generation ELIZA. It is micro-fluidic. There are a lot of different fluid platforms coming out that are getting into micro-fluidics and they're doing it not to use really less reagents. They're doing it because the less reagents you use, you can react quicker. There's a lot of speed involved here. It's a big component of productivity. Now, we don't equate the amount of reagent with the value, at all.

That's true.

In fact, we're well known for our purity in our bioactivity. In a lot of cases, you can get a lot more action out of a lot less of our reagents than our competitors. You may pay a lot less money for the same amount of material from them versus us, but you'll get a lot more work done with ours, because we just have more bioactivity.

You have to be careful when you delve into this, because it is really -- your question really I think is more around productivity -- what's going to help drive productivity. I think speed and accuracy are going to do that. I think solutions that use smaller amounts of reagents help drive that speed component, I think. I think people at least think so, and that's where they're designing systems -- micro-fluidics happens to be that route. We're very interested in that, as we should be, being a leader in reagents selling.

That said, is that why we're getting instrumentation? Again, no. We're getting instrumentation because it's part of the solution. We were trying to solve, work with researchers to give their -- help their needs for their experiments, and help drive science, all the way. That's why we're working with more KOLs now. That's why we have a big name CTO. That's why we have a science advisory board now helping drive our directions. We're prioritizing which way we go. How deep in the stent cell, why, where are we going with it -- who even to work with?

Through all of these collaborations, if we come across new tools that change the game and affect or not affect the use of reagents, we're interested. Again, we understand all these processes. Again, as an example, if you want to look at a big Western Blot shop, come see us. We will show you a lot of Western Blot.

ProteinSimple makes really nice sense for us. I tell you our labs are screaming for tools themselves. If that's the indication, we're really bullish on ProteinSimple's value to the industry. I hope that answers you, kind of.

Yes, definitely. Thank you.

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(Operator Instructions)

Okay. Well, I want to thank you all for getting on this call, and we intend to continue doing earnings calls. I know you're appreciative for that. We are doing what we said we would do, all the way back to our come-out strategy meeting last fall. The team has done I think wonderful things this year. We have changed a lot of things. We're really focused on change management and on talent management, and helping employees deal with all this; and integrating the fine new teams that we have acquired. That's also going very well.

I would say stay tuned. We are following our plan. We don't think we've let you down on that at all, and we're glad you're with us. Thanks again, one last time, I'd like to thank all our employees for a great year, and we hope that the coming FY15 will be as good or better. Thank you.