Bio-Techne Corp (TECH) 2015 Q4 法說會逐字稿

Good morning, and thank you for joining us. Also on the call this morning is Chuck Kummeth, Chief Executive Officer of Bio-Techne.

Before we begin, let me briefly cover our Safe Harbor statement. Some of the remarks made during this conference call may be considered forward-looking statements. The Company's 10-K for fiscal year 2014 identified certain factors that could cause the Company's actual results to differ materially from those projected in any 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 the most comparable GAAP measures are available in the Company's press release issued earlier this morning, or on the Bio-Techne Corporation website at www.biotechne.com.

One other item before we get started, and as I've mentioned in previous quarter calls, please note that the commentary today regarding the total Company's Q4 organic growth by end market and geography does not include the performance of our Protein Platforms division.

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

Thank you, Jim. And good morning, everyone. Thanks for joining us today for our fourth-quarter call.

This morning, we reported a 27% increase in revenue for the fourth quarter with strength organically in most of our end markets, and with sales contribution from the acquisitions we've made over the past year. Organic growth was solid for the quarter at 7%, with a nice contribution from both our Biotechnology and Clinical Control segments. The strong finish to the year allowed us to end the fiscal year 2015 with full-year revenues that grew 26% overall and 4% organically.

Proteins, the Biotech Product category that we are most well-known for, experienced mid-single-digit growth in Q4, just as it has for the last several quarters. We feel proteins are positioned well to continue this growth trajectory going forward. Antibodies, another significant Biotech Product category, also had a solid quarter with mid-single-digit organic growth. This marks the first quarter in over eight where we have had positive growth in antibodies.

Biotech's Assays product category also performed similarly, and together, this is the reason the Biotech division had the best quarter in years. We are delighted to see this, and it gives us confidence that we are doing the right thing to rejuvenate the core of the Company.

We are very excited about the progress with integrating our reagents-based acquisitions, PrimeGene and Novus. PrimeGene has experienced near 100% growth in our China-for-China branded strategy. They have just moved into a new factory, where we will focus on GNP level products as well as boosting their product portfolio.

Novus is completely integrated now, and the internal systems infrastructure that managed over 200,000 antibody products is now a central system in our overall antibody commercial operations. We have now crossed the 800 mark for certified antibodies to run on our Simple Western platform within our ProteinSimple business. This will allow researchers to purchase our antibodies with confidence that they perform as advertised.

In Q4, North America continued to experience stable organic growth for the Biotech division. In this region, our biopharma end markets experienced approximately 10% growth, as they have done for all fiscal year 2015. And our academia end market continued with its streak of sequential improvement since the Fisher channel partnership was put in place over a year ago, with growth this quarter in the mid-single-digits. Both our US sales team and the Fisher channel remain focused on engaging customers and understanding their specific needs in combination with our new tradeshow investments and strategies.

Europe rebounded in Q4, with most countries continuing to perform nicely. Germany was less of a drag on organic growth during the quarter with low-single-digit declines year-over-year compared to the double-digit declines experienced throughout the rest of fiscal year 2015. There are signs now that the primary research cycle in Germany may have bottomed and we could see an uptick in growth here later in fiscal year 2016.

Currency translation in Europe continued to be a significant headwind in Q4, and this headwind will stay with us throughout the first half of fiscal year 2016, assuming rates stay where they are today. When we look at our results in Asia, China really knocked it out of the park in Q4 with 35% organic growth, finishing the year with organic growth in the mid-20s, just as we expected at the beginning of the fiscal year.

What we didn't foresee a year ago was the disruption caused by the Chinese government's anticorruption auditing activities. But our team in China has persevered despite the distractions and I'm very proud of what they achieved this year. We now have grown the Bio-Techne organization in China from just 12 people two years ago to now near 100. We expect the exciting times in China to continue.

In the Pacific Rim, we reported last quarter this region was impacted negatively by distributors reducing inventories due to the sudden strengthening of the US dollar. In Q4, Japan was still soft, but showing signs of stabilizing, while the rest of the Pacific Rim markets returned to double-digit growth. Assuming no further change in exchange rates, we believe the worst is behind us in Japan to return to growth in fiscal year 2016.

In our Clinical Controls division, some new projects from OEM customers that were delayed last quarter began to transfer in Q4, resulting in revenue growth in the high-single-digits for the quarter. For the year, Clinical Controls grew mid-single-digit. We remain excited about the funnel of projects that we have with this business and we expect this kind of annual growth rate to continue.

Lastly, our Protein Platform segment finished the year with 22% organic growth on a standalone basis. We suffered in Q4 with roughly flat year-over-year revenue and breakeven operating profits. The year-over-year comparable was especially difficult in Q4, given it was the last full quarter under prior ownership. However, the Q4 performance of this division was still below our expectations.

There were several setbacks in the quarter, mostly related to the integration of CyVek and the commercial team attrition. We have done a lot of reviewing of the situation, the operations, the team and the commercial processes, and feel we have corrected the primary issues causing the bump in the road. We also recognize that it's an instrument business that will be more lumpy quarter-to-quarter than our core run rate reagents business model.

Nothing has changed in our view of the market potential of these game-changing platform solutions. We continue to expect the business to operate at 20% organic growth annually for the foreseeable future.

We must also remember that CyVek is a pure startup. And while we are now selling instruments, the product line should be viewed as a few years behind ProteinSimple. Thus, this product line will be dilutive to adjusted earnings until revenue starts to scale, with profitability not expected until fiscal year 2017. But the future is very bright here. It's just not here yet.

To help guide us towards this bright future, we have hired a new Head of Human Resources who is experienced in change management. We are very excited about this new addition to our executive team. The Company has grown in the past two years from 750 people to nearly 1,500, and from six sites to 21.

The promise of success for Bio-Techne will be directly related to how fast we can get businesses and teams working together, collaborating on complete solutions that are comprised of both reagents and instruments in our strategic markets. Focusing on managing change, culture, and collaboration will accelerate our time to success.

I am proud of our team's record performance this quarter and increasing amount of dedication to our business. There is true excitement and energy coming not only from our headquarters in Minneapolis, but all our new sites and regions. It shows in our recently conducted commercial reviews and in the faces of all those involved.

We look forward to another strong year ahead with ever-increasing growth levels for the Company, given the new many platforms that we now have in our photo.

With that, I will turn the call over to Jim for more detail on the financials before we open the line up for Q&A. Jim?

Thanks, Chuck. As on prior earnings calls, I will provide an overview of our Q4 financial performance for the full Company, and then provide some color on each of our three segments.

As a reminder, the total Company -- at the total Company level, reported organic growth excludes the results of acquired companies, up to the one-year anniversary date of acquisition, and also excluding the impact of foreign currency translation. However, for the Protein Platforms segment, we are providing organic revenue growth on a pro forma basis, as if we'd owned ProteinSimple and CyVek for all of 2014 and 2015.

So, starting with the overall financial performance for the fourth quarter, adjusted earnings was approximately flat with the prior year at $32.6 million, while adjusted EPS was $0.87 versus $0.88 in the prior year. The impact of currency translation was a $0.05 year-over-year headwind. For the full-year 2015, adjusted earnings were $126.8 million, a 1% increase versus prior year. Adjusted EPS was $3.40 versus $3.39, with a foreign currency translation headwind of $0.18.

Under GAAP, EPS for the quarter was $0.71 compared to $0.72 in the prior year. And for the full year, GAAP EPS was $2.89 versus $3.00 last year. The decrease in last year for both the quarter and the year was driven by the amortization of intangibles and other costs related to acquisitions in addition to the impact of currency translation.

On the top line, Q4 reported sales were $117.7 million, an increase of 27% year-over-year, with organic growth of 7%. Q4 sales included approximately 25% growth from acquisition and negative 4% impact from foreign exchange. Full-year reported revenue was $452.2 million, an increase of 26% with organic growth at 4%. Revenue for the full year included approximately 25% growth from acquisitions and a 2% headwind from currency translation.

Moving on to the details of the P&L, total company adjusted gross margin came in at 70.8% in Q4, down 250 basis points from the prior year. The decrease is due to the product mix change associated with the acquisitions that have occurred since last year, as well as the impact of currency translation. For the full year, adjusted gross margin was 71.6%, down 190 basis points from last year. Excluding the impact of acquisitions and FX, core gross margin marginally improved year-over-year for both the quarter and the full-year, due to the businesses' productivity initiative.

Adjusted SG&A in Q4 was 21.7% of revenue and R&D was 9.2% of revenue, 650 basis points and 100 basis points higher than last year, respectively. The increases in these operating expenses were driven by the acquisitions made since Q4 of last year. The resulting adjusted operating margin for the quarter was 39.9%. Operating margins, excluding the impact of acquisitions and FX, were flat compared to Q4 of last year.

For the full-year, adjusted SG&A was 21.7% of revenue and R&D expense was 9% of revenue, a 700 basis point and 30 basis point increase, respectively, from prior-year. The resulted adjusted operating margins for full-year were 40.8%. Again, excluding the impact of acquisitions, FX and higher non-cash stock-based compensation, operating margins were essentially flat to the prior year.

Looking at our numbers below operating income, net interest expense in Q4 was $260,000 compared to $1 million of net interest income last year. This is as a result of the line of credit that was opened in July 2014 to partially fund the acquisitions of ProteinSimple and CyVek. Net interest expense for the full year was $0.9 million versus interest income of $2.7 million in the prior year.

Adjusted other nonoperating income for Q4 was $0.7 million compared to $0.4 million of nonoperating expense in the prior-year quarter. And for the full year, adjusted nonoperating expense was $0.3 million versus $1.1 million in the prior year. Adjusted nonoperating year-over-year improvements for both the quarter and the full-year were driven by favorable transactional currency exchange fluctuations.

Our adjusted effective tax rate in Q4 was 31.2%, up 50 basis points from the fourth quarter of last year, due to acquisition and geographic mix. And for the full year, the adjusted effective tax rate was 31% even, up 10 basis points from the prior year.

In terms of returning capital, we continue to pay our dividend and paid out $11.9 million in the quarter and $47.1 million for the year. Average diluted shares were up 0.2 million shares for both the fourth quarter and the full year at 37.3 million and 37.2 million shares, respectively. Both time periods represent less than 1% dilution from last year as a result of stock option grants.

Turning to cash flow in the balance sheet, $37.1 million of cash was generated from operations in the fourth quarter and $139.4 million was generated during the full-year. Our investment in capital expenditures was $6.9 million for the quarter and $19.9 million for the year. We ended the year with $110 million of cash and short-term available-for-sale investments, down $50 million sequentially from the end of Q3. The decrease was driven by incremental paydown of our line of credit. As a result our long-term debt obligations at the end of Q4 stood at $112 million, a decrease of $75 million from the end of Q3.

That wraps up my comments on the total company performance for the fourth quarter and full-year. And now I'll discuss the performance of our three business segments, starting with the Biotechnology segment. Q4 net sales for the segment were $83.83 million, with reported growth of 9% compared to last year and organic growth of 7%. Growth from acquisitions was 7% while the impact from foreign exchange was negative 5%.

By geography, North America increased in the high-single-digits organically. Biopharma sales continue to be strong in the region with growth nearing 10%, while academic and government experienced its best quarter in many years with growth in the mid-single-digits. Europe rebounded from Q3 and experienced organic growth in the mid-single-digits, with most countries performing well and Germany less of a drag on the growth of the region.

China experienced fantastic organic growth in the mid-30s, while Pacific Rim was flat year-over-year. As Chuck noted earlier, excluding Japan, the Pacific Rim grew approximately 10%. And for the full-year, Biotechnology segment revenue was $325.9 million with organic growth at 3%. Adjusted operating income for the Biotechnology segment increased 2% in Q4 compared to the prior year and adjusted operating margin was 52.4%, a decline of 340 basis points year-over-year.

Foreign exchange currency translation impacted adjusted operating income negatively by 7% and operating margin by 120 basis points. The remaining decline in adjusted margin percentage is attributable to a change in product mix associated with the acquisition of Novus Biological. For all of fiscal year 2015, adjusted operating margin was 52.5%, also a decline of 340 basis points year-over-year, driven by the negative impact of FX and mix from acquisition.

Turning now to our clinical Control Segment where Q4 sales were $17.2 million. Both reported and organic growth was 9% compared to last year. For all of fiscal year 2015, sales were $60.4 million and organic growth was 5%. Adjusted operating income for the segment increased 5% in Q4 and adjusted operating margin was 30.1%, a decrease of 120 basis points in the prior year.

The decrease was attributable to pricing pressures in the blood glucose control market. However, margins have since stabilized and were flat to Q3. For the full fiscal year 2015, adjusted operating margin was also 30.1%, a decrease of 60 basis points year-over-year.

Moving on to our Protein Platform segment where net sales in Q4 were $17.2 million. On a pro forma basis, assuming ProteinSimple and CyVek were owned for the entire quarter, in both current and prior years, organic revenue for the segment decreased 2%. As Chuck mentioned earlier, the ProteinSimple business experienced a very tough comparable where they grew 48% last year in what was their final quarter of prior ownership.

This tough comparable, together with the integration of CyVek and commercial transition activities in Q4, contributed to a lack of growth. For the full-year, on a pro forma basis, Protein Platforms grew 22% organically, and we expect to see this type of growth in fiscal year 2016 and beyond. Adjusted operating margin in Q4 was essentially breakeven.

As independent companies, ProteinSimple and CyVek together reported a negative 6.2% adjusted operating margin in the quarter ended June 30, 2014. In all fiscal year 2015 for the period of time since the acquisitions that formed this new segment, adjusted operating margin was 6.7%.

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

(Operator Instructions) Dan Leonard, Leerink.

So my first question is on the Platforms business. Can you speak to the visibility you have on the 20% organic growth view and whether there is any sort of backlog to support that or new product funnel?

There's a strong new product funnel. In fact, the ProteinSimple organization has three different product lines -- Simple Western Biologics and then some other analytics to go along with the imaging and stuff. The Biologics was the biggest issue for this bump in the road this quarter. They actually, on the Simple Western platform, we had a record quarter for installations. So it was a record number. So the pipeline is strong. It got deep programs in all the areas, so, including Biologics. So more products coming and announcements soon to be had.

Okay. And then my follow-up. Is there anything we should be aware of as it relates to pacing throughout fiscal 2016? Any days issues in any given quarter or anything you'd call out?

Yes, Dan, nothing I'd call out specifically. There may be a day here or there quarter to quarter, but nothing that we haven't seen in our pacing from last year. No. Nothing different.

Okay, thank you.

Matt Hewitt, Craig-Hallum.

This is actually Dillon on for Matt. Digging into the Biotech segment growth, I'm just wondering -- or trying to get a better sense of the customer mix that's driving that growth. Is that just new product growth? Getting deeper with existing product or existing customers? Or are you guys taking business from peers?

Well, it's a combination of things. I mean, one is -- we've talked about announcing a new website. We've had strong traction with that. We've had a pretty good lift with our academia side of the market this quarter. And the Fisher number is the strongest we've ever had as well.

Biotech pharma was also kind of on par where it's been. You know, right at around 10% or around there, which is also very good. And all things considered, that's what's been adding up to the 7% organic growth in the biotech side. A record for us while I've been here anyway. It's probably been many years.

Yes, I would just add I think it's too early to claim victory in terms of taking share from anywhere. I mean, what we've seen from reported results of other companies in our space, biopharma and academic have performed fairly well this quarter as well. So I think we are definitely keeping up with the market, but I think it's too early to say that we are at the point of taking share.

I think the thing to point out is we were much stronger than we have been in the past in antibodies. So I mean, that's our biggest, deepest -- our broadest investment area for the Company. And we are in defense in proteins, and that's going fine. It's about antibodies and we've made some pretty good strides there.

Okay. And then a quick follow-up. Just in terms of the capital deployment strategy in 2016. In the form of M&A, were you expecting any changes in the form of pace or size of deals?

Well, in terms of capital, we were kind of consistent with the capital layout we've been in the past and for operations. On the M&A side, we did officially one deal, but in the last -- with most of these, we did kind of the first month into the fiscal year this last year, and well on our way to integrating most of them.

Novus is completely integrated at this point. Looking forward, we've never worked any less hard than we are now. We are trying like everyone does. We've got a strong funnel, 60-some-plus targets as we've had. They range in size from startup to large transformational deals. We are in the hunt all the time for things that hit our strategy. But we are thinking strategically first.

That said, especially on the front where there is auctions, it's not a great time for finding great deals. It's a good time for owners thinking that they should think about selling because everyone knows the market is pretty hot. So that's hopeful that you've still got to get a good price, and it's hard on both the private and public side.

So we are diligent. We're working across this. We have a deep and a very rigorous process, but as I've obviously said before, we won't do a dumb deal. We walked away from a lot of this last year because the numbers weren't good enough for us. But the strategy first, numbers second, and we'll keep hunting.

Great, thanks. Congrats on a good quarter.

Jeff Elliott, Robert W. Baird.

Nice quarter, guys. Chuck, can you provide any other color on the issues you had in the Protein Platforms division?

Yes, we've been digging in it pretty hard as you might imagine. We had a lot of integration, typical type concerns. We had some market conditions as well. We had -- as you already know and others know -- we had some bumps and some running buffers from ancillary products that go with instruments. We've had those corrected this last quarter but that probably flowed through a little bit.

Everything is caught up there. The backlog is caught up. As I mentioned, it was a record quarter for shipping West systems. Biologics a little bit lumpy. And you know on the Biologics side, we have some larger platforms that are hundreds of thousands of dollars. And that's where we've had some, I think, some issues of just trying to -- you know you miss a couple of those and you are off quite a bit.

And so it could be timing in some of those orders but they didn't hit. I think also I've got to point out, the FX in Europe, this has affected us in the demand in our numbers in Europe quite a bit. And we see all that returning. Things are looking much better. We did have some commercial team attrition. Fully expected that -- we knew that a lot of that team would move on with Tim and Terry when they transition out of the business, and they did.

I will mention we brought in an individual from my past at Thermo Fisher that was -- that ran the entire mass spec business for us. Head of Operations in a large segment of Perkin-Elmer, very strong person. He's onboard and like a kid in a candy shop putting in processes for the phase this company is in right now and the growth level.

So it's coming together. I'm very confident that we've got things under control here. It's just lumpy and it is an instrument business. This is going to be a lumpy year. And I think our full plan was low-double-digits coming off of a record fourth quarter last year, as they sold everything they could before they sold to us and that's natural. So we'll see.

Now if we have another quarter or two of flat going forward, then things are going to change. But we're not -- we don't have any hair on fire alarms here yet so it's kind of, I think, business as usual. And things are looking pretty good there this quarter. I think it's just a natural transition with this type of business model, we think.

Got it. And then it sounds like you don't want to give fiscal 2016 guidance, but would you be able to comment on the estimates that you see out there, the sell side consensus?

Yes, we think you guys are closer on the revenue side and there's still some work to do, I think, on the bottom line with our investments in SG&A. So I think you are closer to catching up. It looks good. We'll give the feedback we can.

We're still not giving guidance. We put out our notes for the future and our goals. I will say that we've been very public with everybody about as we annualized these deals. And looking forward, we should be in the 8% to 12% kind of growth range going forward. And it's going to -- it could vary a lot, depending on the lumpiness of our instruments platform businesses.

But that should be kind of the range. And saying whether we can continue in the 7% range, we are not saying that in the organic core. We said victory for us is mid-single-digits and that's what we're sticking with right now. If we do better with antibodies, if we start taking more share, things could be better.

It's just -- as Jim said, it's not time to claim any victory lap yet. That's for sure. But we are really happy with the quarter. It's obviously a lot better than last quarter. For the year, we are right on track with what we told everybody we need to kind of be at in that mid-single-digit level in our core, so we are excited. We are happy. We don't have really any homework to do in the core side. Everything is looking good.

Even the last we talked about the assays as being kind of a drag this year. They've done a lot better. You know, I think a lot of it is market as well. Everybody is looking pretty good this quarter. So again, no victory laps. We are just happy to be in the upper end of the path.

And the only other thing I'd add to the modeling aspect of it is two things, just to make sure. And also being mindful of one is, of course, the FX impact and making sure we're taking into account the bottom line impact, the very, very high dropthrough for us on that FX impact. And that's going to definitely be what at least for the first six months of fiscal year 2016, and depending on where rates go from there we'll see. But that's one item.

The other item I'd mention is the fact that we had one month of fiscal year 2015 that we did not own ProteinSimple. And in that one month, given how that instrument business works, it's very, very light on revenue, but still has the cost burden of its SG&A and R&D run rate. And so that one month worth of cost was not in our fiscal year 2015 numbers, but will be in our fiscal year 2016.

And the same goes for CyVek where we purchased CyVek outright in November of fiscal year 2015. So there's a good four months there of SG&A, R&D costs in our first four-month run rate in fiscal year 2015 -- or not in 2015, that will be in 2016. So I just would have to be mindful of those two items.

Yes, good catch, Jim.

Good. Thanks guys.

Drew Jones, Stephens.

This is actually Garrett on for Drew. But first question, you just talked about placement strength with Simple Western in the quarter. Was any of that seen on the academic market that you kind of (technical difficulty) --?

Sorry, Drew. You are breaking up. We can't understand the question.

Did we lose him?

Can you hear me better now?

Yes, that's better.

Okay, this is Garrett on for Drew. You talked about the Simple Western placements in the strength in the quarter. Did you see any of that coming from the academic market that you kind of talked about addressing that market with ProteinSimple in the past?

It's been an even mix. So one of the major factors of us even making the acquisition, if you might recall with ProteinSimple was the desktop platform that West had refined a significant following with academia, because we were concerned academia wouldn't make the switch and they did. Half their sales have been roughly with academia and I do believe that is continuing at about the same trend.

Okay, great. And then also just on China, given the strength we've seen in the quarter, is this something where you think the strength will continue, given more released funding? Or is this kind of a flood coming through of the funding that you saw in the quarter?

We were pretty bullish all last year. Even when others were flat to low-single-digits, we were still on strong double-digit growth and now, as we are largely a run rate business there and not heavy in instruments yet. That's probably part of it. But we are still in a -- very much an expansion mode. And while we are near 100 people, it's still -- we are still in the front-end of all of our opportunities in China.

So, as we open and grow in Beijing and other cities, I think we're going to find more growth as these institutions keep driving for healthcare. I think the audit activities are probably progressing and traveling from this space to the next base they want to look at, in terms of markets. And I think we are getting and moving through that.

I think the next risk, of course -- their market in general with everything crashing over there and the government stepping in, I think there is a lot of unknowns for all of us, and think that's going to again trickle down into the way purchasing happens within these programs they are funding. Right now, we believe and we hear that all funding in these areas is still there, still strong, as it was through the audit trackdown type of operations this year.

It's just people waiting for the process and the government of how to actually spend the money. They are putting in place templates and processes of actually how to account for their funding, which they didn't have a lot of controls before, so now they do. So I think if all those controls get put in place, we'll probably see maybe hopefully some of that pent-up funding, even see it come forward.

For us to say we are going to do better than 25% growth, probably not. We're going to stick with we hope to be in that range for the foreseeable future, which we think is a pretty darn good growth rate. You know, we are just really ecstatic that we had a quarter at 35%. And I could just tell you that the team is really a great team, really jazzed.

We've had zero attrition in over a year in our China team. I mean, kind of unheard of. So that's how happy they are. We're getting them a new site again. They've outgrown the other one they only had for like two years. We are emerging that team with the ProteinSimple team, which is also growing and building over there.

So we'll have a full-fledged company there with demo capabilities and everything else. So that's all coming in the coming years. So, they are happy, they are excited. They are young. But it's a nascent market and an industry, as we all know. And we are trying to ride that wave as best we can.

All right. Thanks, guys.

Andrew Peck, Baron Capital. (Operator Instructions) Karen Padgett, Bio-Techne.

Hello, Karen. Might be a mistake. She is probably listening in, but --.

And our next question is going to come from John Souter from Rail-Splitter. Please go ahead. (Operator Instructions) Our next question is going to come from Paul Knight from Janney Montgomery. Please go ahead.

Hey, Chuck. I think everybody is confused on the star 1 or 1 star. So (laughter) we figured it out now.

We know you know how to do this, Paul, so. (laughter)

How big is China, do you think? Can you say?

How big? What do you mean --?

$30 million of revenue? Or is it $35 million?

I think all-in this year, we are in the $35-million-ish range for ProteinSimple and everything. We are mid to high-20s in the core range and side of the business.

And on ProteinSimple, what are people saying? What would be their complaint or what do you see is the issue? Is it not enough people on the ground? Is it applications?

No, I think it's just as I said. It was a bit of a perfect storm. We had a plan and low double-digit growth because of 48% growth comp from last year. We had a backlog issued to clear out from the quarter before on some of what's called running bumpers or reagents that work with the system. That's all been corrected.

Remember, that whole company, that whole business moved to a new building in the past here. And there were a lot of new building startup issues which were all -- we are through all that. The FX piece is a strong component. When you are in the instrument business and these are big-ticket items, they -- there's a lot of currency issues in Europe around that. So that was a hit in the quarter. That too has come around.

And you know we have had some commercial turnover. With Terry, the Head of Commercial of the Company before moving on six to nine months ago, we've had to transition through that. We've gone with an incumbent. It was actually the person that trained-in Terry years ago who is Head of Commercial for the Company now. She has 20-some years experience. She is wonderful, we think, and knows all the people, and is driving it. And so we are filling in around that.

And then on the operations side, with one of my people from my past at Thermo Fisher is in operations. I think we are on track. For us, always -- was always probably will be and it was the plan going forward, our deepest concern was the R&D team, the development team with this young company with a strong pipeline of technology and new products, and that we preserve that and we preserve all that.

We've had zero attrition there on the R&D front, with Bob Gavin, the Head of that and running the business for us as the SVP for the division. And that's all gone very well. He's been in the role here for nine months or so. Very pleased with that.

So, it's just a lot of little things going forward. We do still think this is a 20% kind of grower. I do believe that it is probably more feet in the street. Even yet is probably important. I think regionally, for sure, we've got some coverage issues to deal with. It is a very, very exciting platform, as I mentioned, with all this -- these issues, of course, we had a record quarter on our Simple Western and our West platform.

So we are shipping a lot of systems now a quarter and it's starting to scale. So it's the rest of the pipeline that needs to get out. It's the bigger platforms we need to do a little better on. And I think it's coming. So we'll watch it this quarter and have more input, I guess.

Paul, this is Jim. Just to clarify, in case you are looking at this from a modeling perspective for China. It's a very good guess by Chuck on the $35 million. I actually have the exact numbers here in front of me.

What we call our China region finished the year around $33 million. But that also includes that Taiwan and Hong Kong. And it also includes about products that are made in China that ultimately get exported out of China from PrimeGene. So from a modeling perspective, if you are thinking about Mainland China with the high organic growth, it's coming from -- it's probably more in the mid to high-20s.

Okay, got it. And then, lastly, China -- excuse me, Europe was a problem in the first quarter. I guess that's over now?

In the fourth quarter, last quarter, you mean?

Sorry, in the March quarter.

It was certainly a problem. It's less a problem this quarter. Is it over? Is Europe ever over? We are comfortable saying that we think we've seen the coming back of a lot of projects with our Biotech Pharma, our largest customer base in the German region. That's all I can say right now on that. We like what we see. Numbers are improving. It was still a low negative single-digit drag but that's a lot better than double-digit like last quarter.

Did the quarter's orders finish stronger or was it even throughout the period?

It finished strong at the end of the quarter. It's definitely been a trend. Another quarter or two and we hope to have Germany something like last year. Remember, last year was new double-digit growth, right? So it's a little bit cyclical there.

Lastly, what do you think market growth is for your core protein ELISA business, antibody business?

I think as a composite in the market, it's probably 5% to 6%. I think the best one, of course, is antibodies. We get all the primary research like you guys do if it's high single-digit. And proteins, we think, are 2% to 3%, as the market being the smallest market of the bunch we've been averaging -- we are in the mid-single-digit -- we definitely think we've been taking some share back the last couple of years from these ankle-biters that have been chasing us.

Our brand-new strategies we think are working. We think that the website has been phenomenal. Our traffic and our orders are up 8% in only the first month of this new website. And I've got to tell you that the website previously was about flat the two years I've been here. So we've had immediate response on the new website.

And again, that's coming off a lot of the infrastructure, the process, the systems, the tools and experience that Novus team brought with them, who are really running this whole thing for us now. And it's been really wonderful -- on time, on target, on budget. And I hope the growth and the traffic keeps going.

Great, thank you.

(Operator Instructions) Amanda Murphy, William Blair.

So just a couple on the competitive dynamics. I appreciate all the commentary around the antibodies business. And it sounds like Fisher is doing pretty well for you. But have you seen any change? It sounds like you are gaining share, but any change in terms of pricing from any of the competitors?

And then I guess you mentioned some pricing pressure in the blood glucose segment, so maybe just talk a little bit about that as well.

I'll go in reverse but the glucose is kind of old history. It's old news. That really happened almost a full year ago and we kind of worked through it. Jim's comments said it was quarter-on-quarter the same. So we're through that.

It's almost the last man standing kind of strategy here, so we don't think there's a whole lot more downside. It's one reason about the business. And for us it's all about building out that funnel to the ever-increasing content. It's a bit of a super-specialized, high-content packaging organization. So it's high-volume processes, so we love it for that.

And the other side, antibodies -- I would say no real pricing differences there. We are still building who we are in antibodies. We are not the same level of clout that we are in proteins, of course. We are probably officially the largest supplier in the world right now. But that's not to say that we are maybe selling the most.

We have processes and a website and everything, including our wonderfully trained Fisher channel now to really move things along. And I think it's working. We have the best quarter so far with Fisher. They just keep getting better. We'll keep feeding that beast and hopefully it keeps working well.

They are very committed to us. They are very good with our teams. We've had actually no channel conflict. It's been marvelous to watch how we all work together on that. They really like having us on the Board as a partner, and as a platinum partner at that. And so, you know, content rules in this space. It helps pull through all the other million products they do, so it's a good thing for all of us.

So net-net, the market share gains were driven by Fisher and then the website. Is that fair?

I would say less the website. It's been a month. But they're giving some good initial data, but it isn't material yet probably. Fisher definitely helped on the academic side in the quarter, no doubt about it.

Got it. Okay. And then just the last one on that ProteinSimple side I don't think you guys talk specifically about sort of the whole revenue synergy opportunity and what that added, if anything, the quarter.

Oh, like for the antibody catalog?

Exactly, yes.

It's growing. It's still not materially enough to say like again, no victory lap period either. We are over 800 antibodies now. We're on track for over 1,000 end of the year here, annual year. And we like what we see. I think this is the kind of thing that takes some time. You are trying to woo academics mainly online, and it's taking going after your certification process. And we are getting traction and it's going the right direction. I think it's the right strategy. And for us, it's probably all incremental growth, right? So it's important.

Amanda, the other revenue synergy that's much harder to measure is how much of additional instruments we are selling. Because there is an antibody solution, a whole gear for it and it doesn't always show up in the numbers either. So it is hard to measure, but we believe that the combined offering helps both sides of the business.

No doubt.

Got it, thank you.

(Operator Instructions) There are no questions in queue at this time.

All right. Well, I want to thank everybody for joining in. (audio ends)