Jim Hippel - CFO Chuck Kummeth - CEO.

Paul Knight - Janney Capital Katherine Lee - Robert W. Baird Dan Leonard - Leerink Drew Jones - Stephens Inc Anthony Faut - William Blair Bryan Kipp - Janney Capital.

Good morning and welcome to the Bio-Techne Earnings Conference Call for the Third Quarter of the Fiscal Year 2015. 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. I would now like to turn the call over to Mr. Jim Hippel, Chief Financial Officer..

Good morning and thank you for joining us as we discuss the third quarter results of fiscal year 2015. 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 identify 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 Web site 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 on the Company’s press release issued earlier this morning or on the Bio-Techne Corporation Web site at www.biotechne.com.

One other item before we get started, and as I mentioned in previous quarter call, please note that the commentary today regarding the total Company’s Q3 organic growth by end market and geography does not include the performance of our protein platform segment. Now I’ll turn the call over to Chuck..

Thanks Jim. Good morning everyone. Thank you for joining us today for our third quarter earnings call. This morning we reported a 19% increase in revenue for the third quarter driven by our recent deployments of capital in the form of acquisitions. Organic growth was essentially flat compared to same period last year.

When we break down our revenue results by business, by platform, by geography, different picture of the business emerges which gives us confidence that the current circumstances are temporary and mask the fundamental solid execution of our continuing strategies to drive long term growth for the Company and create value for our stakeholders.

Our strongest product line proteins and what we are most well-known for experienced the best growth in Q3 compared to previous eight quarter. Antibodies on other hand continue to experience the negative effects of extremely competitive landscape.

We are working hard in integrated strategies involving Novus Biologicals branded products, improving our customary Web site experience especially to price sensitive customers like academics that drive the largest market demand for antibodies. In North America, we continue to experience stable organic growth.

In this region, our bio-pharma end markets were especially strong experiencing double digit growth. Both our U.S. sales team and the Fisher partnership remain focused on engaging customers and understanding their specific needs via our new trade show investments and strategies.

In Europe too we experienced solid organic growth in most countries, the one exception being Germany where the pharma market there is still in between major research project cycles for us. You may recall that we experienced 20% growth in Germany last year largely driven by pharma and making for a difficult comp this year.

When we look at our results from Asia China continues to perform very well despite the continued apprehension in the overall market brought on by the Chinese government anti-corruption auditing activities.

We expect to see continued strength in China as the increase in government’s funded research is approved in our most recent five year plan starts to get released and audit activities wind down. For the full year, we still expect China to perform similar to last year with well over 20% organic growth.

This is supported by a strong fourth quarter currently being experienced. Japan on the other hand and to a lesser extent other Pac-Rim markets were negatively impacted by the strength of the U.S. dollar.

Here distributors reduced inventories in the wake of volatile exchange rates when currency markets stabilize and inventory frontload we expect the Pac-Rim region to return back to growth. In our clinical control segment, our hematology controls business continued to execute well of growing at 7%.

However, our blood glucose and blood gas business experienced delays in several key new projects with large OEM customers. We are very excited about the funnel of projects that we have in this business and have focused on this since the acquisition.

Contracts are in place but timing is beyond our control and we expect results in the next couple of quarters. These projects involve the transfer of specific customer, in house controls and packaging operations to our facility in Devens, Massachusetts.

As these transfers begin to occur in Q4, we believe we will see growth rates in this part of segment near those of the hematology controls business. Finally, our protein platform segment continued to post strong growth, with organic growth at 23% on a standalone basis.

Our teams from both R&D Systems and Protein Simple continue to work very closely together to expand the portfolio of qualified antibodies for the Simple Western platform as well as developing assays for the Simple Plex platform and rationalizing operational strengths and the manufacturer of instruments versus reagents for consumers.

Speaking of operational strengths teams across all businesses have done an exceptional job planning savings and achieving productivity in the work flows which have allowed for both gross and operating margins to expand in Q3 versus last year in our organic business despite the heavy negative impact that currency translation has had as a result of the strengthening dollar and especially the weaker euro.

I am proud of our teams perseverance to stay focused on our strategies that should enable long term growth and not get distracted not deterred by short-term aberrations.

And I am especially pleased with their effort on productivity which has enabled us to continue to make the investments needed to support our strategy while increasing our core margins along the way. With that, I’ll turn the call over to Jim for more detail on the financials before we open the lineup for Q&A.

Jim?.

Thanks Chuck. As on prior earnings calls, I will provide an overview of our Q3 financial performance for the total company and provide some color on each of our three segments. And as a reminder, at the total company level, we reported organic growth excluded the results of acquired companies up to the one year anniversary date of acquisition.

It also excludes the impact of foreign currency translation impact. However for the protein platform segment we’re providing organic growth on a pro forma basis as if we’d owned ProteinSimple and CyVek for all 2014, 2015 to give you more relevant inside into the growth performance of that segment.

So starting with the overall financial performance of the third quarter. Adjusted earnings decreased to 8% to $32 million, while adjusted-EPS was $0.86 versus $0.94 in the prior year. The impact of currency translation caused $0.07 of the year-over-year decline.

Under GAAP EPS was $0.65 in Q3 compared to $0.85 in the prior year, with the decrease including the amortization of intangibles and other costs related acquisition in addition to the impact of currency translation. On a top-line Q3 reported sales were $114.2 million an increase of 19% year-over-year and organic growth was essentially flat.

Q3 sales included 23% growth from acquisitions and negative 4% impact from foreign exchange. Moving on to the details of the P&L, total company adjusted gross margin came in at 72.5% in Q3, down a 110 basis points from the prior year due to the product mix change associated with the acquisitions occurred since last year.

Excluding acquisitions gross margins were up 80 basis points compared to the prior year. Adjusted-SG&A in Q3 was 21.5% of revenue and R&D was 9.5% of revenue. That’s 800 basis points and a 150 basis points higher than last year respectively. The increases in these operating expenses were driven by the acquisitions we made since Q3 of last year.

The resulted adjusted operating margin for the quarter was 41.5%. Operating margins excluding the impact of acquisitions increased 60 basis points compared to Q3 of last year. Looking at our numbers below operating income net interest expense in Q3 was $256,000 compared to $529,000 of net interest income last year.

As a result of line of credit that was opened in July to partially fund the acquisition of ProteinSimple and the CyVek. Our adjusted effective tax rate in Q3 was 31.4% up 50 basis points from third quarter of last year due to acquisition in geographic mix.

The GAAP reported effective tax rate for the quarter was 37.3% as it includes the change in the estimated state taxes for fiscal year 2014 and the first half of fiscal year 2015. This change in tax estimate results final state income proportionate factors being determined following the recent acquisition.

In terms of returning capital we paid out $11.9 million in the form of dividends to our shareholders in the quarter. Average diluted shares were 37,269,000 in Q3 that’s up 216,000 shares or less than 1% from last year as a result of option dilution.

Turning to cash flow in the balance sheet $30.8 million of cash was generated from operations in the third quarter and our investment in capital expenditures was $4.9 million. We ended the quarter with $160 million of cash and short-term available for sale investment, up $20 million sequentially from the end of Q2.

A long-term debt obligation at the end of Q3 were little changed from the end of Q2 at a $187 million. That wraps up my comments from a total company performance for the third quarter. Now to discuss performance of our three business segments starting with the biotechnology segment.

Q3 net sales were $83.2 million with reported growth of 4% compared to last year and organic growth that was essentially flat. Growth from acquisitions was 7% while the impact from foreign exchange was negative 4%. By geography North America increased in the low single-digits organically.

Bio-pharma sales were strong in North America with growth in the teens while academic and government declined by low single-digits during the quarter. Europe also declined in the low single-digits but with many of countries experiencing high single-digit and even double-digit growth.

However, this growth was more than offset by double-digit declines in Germany. As Chuck previously mentioned our business in Germany is being impacted by the timing of research projects in the regional bio-pharma market which was experience a highly active cycle last year making for a difficult year-over-year comp.

China experienced solid organic growth in the mid-teens even with the ongoing Chinese government anti-corruption auditing activities that slowed the release of research funds there. In the Pacific Rim sales declined in the mid single-digits led by Japan which decreased by the low-teen.

As sales in this region are handled through distributors and transacted in U.S. dollars, the strengthening U.S. dollar has encouraged our distribution partners to lower stocking level until we believe exchange rates stabilized.

Adjusted operating income for the biotechnology segment was essentially flat in Q3 compared to prior year adjusted operating margin was 55.6%, a decline of 200 basis points from the prior year. The lower adjusted margin percentage is attributable to a change in product mix associated with the acquisition of Novus Biologicals.

Turning now to our clinical control segment where Q3 net sales were $15.4 million with both reported inorganic growth essentially flat compared to last year. Revenue growth was strong in the hematology part of the business, however the delay of a few key OEM projects in the blood glucose and blood gas part of the business negated its overall growth.

We expect these projects to begin their transfer to us in Q4 with full ramp up in fiscal year 2016. Adjusted operating margin for the segment decreased 6% in Q3 and adjusted operating margin was 30%, a decrease of 180 basis points from the prior year. Decrease attributable to pricing pressures blood and glucose controlled market.

We expect higher margins from new projects beginning Q4 they will help to mitigate the pricing pressure going forward.

Moving on to our protein platform segment, where net sales in Q3 were $15.7 million on a pro forma basis assuming ProteinSimple and CyVek were on for the entire quarter in both current and prior years, organic revenues for this segment was 23%. We saw a growth across all product lines with over 200 instruments placed during the quarter.

Q3 adjusted operating margin was negative 10.9% as independent companies ProteinSimple and CyVek together reported negative 19.1% adjusted operating margin in the quarter ended March 31, 2014. That concludes my prepared comments and with that I'll turn the call back over to the moderator to open the line for some questions..

[Operator Instructions] Looks like our first question comes from Paul Knight with Janney Capital, please go ahead..

Hi Chuck, how are the second, excuse me, how is the current quarter resumed in terms of orders etc, is Germany back to what you think is more normal and overall for the quarter?.

Overall, we've had a much better start since that quarter, things are looking much better in a lot of areas but not specifically Germany. Germany is a little more of the same, it's going to take another quarter to get it back in the right cycle.

These are all real large, large company deals, lot of bulk sales and we reached, we’ve actually been working there, it’s just a cycle thing. But probably not much this quarter yet, but maybe a little better but not like last year..

You had lose additional day's sales to weather this quarter versus last year?.

We lost three like everybody else, there was comparable to the same three or four we lost last year so it was really no excuse there, no additional..

Lastly, what are you doing specifically to kind of recover from currency? Are you adjusting pricing and how quickly does that get changed?.

I'll let Jim handle that. We're looking at a couple of things..

Well, first of all on the cost side we're definitely driving productivity for a number of reasons but everyone internal obviously is aware the pressure that FX is putting on the business, and the fact that our core, gross and operating margins actually increased year-over-year with that FX headwind I think goes to the effort that we're doing internally to try to mitigate as much of that pressure as we can.

You know with regards to any kind of hedging activity we're not interested in doing that.

With regard to pricing the only area where that could come into play potentially would be in Japan, the Pac Rim but the reality is that most of the competition there's in the same boat we are and there's not a lot of internal source to that competition so we're not seeing any price decreases coming competitively yet so we believe that this kind of reduction in inventories will play itself out and we hope the business can come back at our historical pricing levels..

And then lastly, the reagent products I think were introduced for ProteinSimple -- in the March period.

Are you seeing traction with that antibody catalogue addition?.

Yes, we are actually, we're seeing a lot of good strong traction, we have well over 600 in the catalogue we'll be at double band at this calendar year and traction's beginning..

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

Hi guys, this is Katherine filling in for Jeff.

We were wondering if you could give us any color on the protein platforms margins, any reasons they've gone negative?.

Well I think year-on-year we've actually made a big improvement, over 10 points, it’s probably, it’s more aligned with CyVek being part of it..

And I'd also suggest that the revenue profile of the business as well, so the instrument business has a cycle that's a little bit different than our consumer business than that.

The calendar, the December calendar year-end, given that the year-end for many customers' CapEx budgets as well as our own fiscal year-end tend to be the stronger quarters for the instrument and so with a lower revenue dip in that naturally occurs in Q1, you know it's not so much the cost structure increase it was more of a cycle in a lower revenue dip..

Got to remember this is an instrument, it's very different than our normal consumer business that we are much more run ready. So end of calendar year and end of our fiscal year will be the better quarters so you'll see better results this quarter just because of the cycle time.

This last quarter is at natural levers, they were you know -- they were really great in line actually where they need to be. We've had the normal things to work with products coming up to speed and stuff, we had -- we actually had a couple of weeks, we had a slow down due to some issues which was published.

We had the same kind of thing last quarter which wasn't published, it's all normal service stuff we've had -- our backlog's been totally done with and taken care of the end of the quarter so this is actually it's a normal kind of cycle quarter for that business, 23% organic growth is above our model for this acquisition so, we’re hoping for 25 or better this quarter, we'll see..

So going forward I guess how should we think about those margins, just think about them on the instrument cycle?.

Well, you know it was all put out in the S1 and kind of [commented] -- we talked about it that they were in the high 60s overall. I think that will come down as we meld in the CyVek numbers, but ProteinSimple on its own will be, we always think hopefully north of 55% gross margins.

With a little extra volume and another strong IP holding out and 70 is still a goal for us but we haven’t achieved that yet..

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

A couple on the protein platform’s business, first off could you put the 200 instrument placements in the quarter in context.

How does that compare year-over-year and is that mix mostly West and any other color you could offer?.

Well, I don’t have the numbers, maybe Jim does, I’ll let him comment in a second. From a high level, we are actually right on target on forecast the imaging section of the business and the other two the Simple Western is roughly comparable to the Biologicals site. And both are kind of where they need to be.

I’d say Biologicals we’re little here above where we expected and Simple Western maybe just a hair below, but nothing out of the ordinary for that kind of -- it’s hard to divide up and get too much in the 200 instruments total across the board just not granular enough..

I guess I would add to that is that it give some color to the number we’ve had some questions in the past about instruments so I thought I’d put it out there, but I think the number of instruments year-over-year is comparable to the revenue growth that you see.

With regards to what the breakdown that looks like as a reminder we had three product lines imagers, Biologics as well as Simple Western and the price points to those instruments vary quite a bit. So, for example we have the Biologics instruments or over 100,000.

We have large Simple Western instruments that could be as much as 300,000 and then we have the desktop Simple Western which could be 50 to 60 and then the imagers they are much lower. So the number of instruments can mix can vary quite a bit on the profile..

Just timing on one or two what we call the big [indiscernible] 300,000 instruments can dramatically change the outlook of a quarter for us..

And then secondly my follow up, I was curious if you can quantify the various timing issues you spiked out in the press releases impacting the quarter. And regarding Germany did you just have more customer concentration in Germany than you do elsewhere and that’s why that’s worth calling out? Thank you..

We do. We have strong relations of largest bio-parma in Germany and you know the characterizes, I don’t like to comment on their businesses. But they are all strong with us and last year was an exceptionally good year. we sell a lot of what we call bulk to them. So these are large orders..

And I’d say in Germany roughly 20% of our revenue in Europe is concentrated in Germany..

Actually it’s 23..

It’s over 20..

And just in terms of the variance versus plan if you think about the issues divided between Germany, the OEM in clinical controls and the third, is there relative contribution you could offer?.

Could you repeat that question one more time, it didn’t come across clear..

So the three issues you spiked out in the press releases is timely related, one with Germany, the other was Japan currency and then the final was clinical controls.

Is there like a contribution you could offer in terms of how much each of those issues contributed to variance versus your plan, was it a third, a third, a third? Or was one of them more impactful than another?.

Honestly I’d say they were all fairly comparable than impact which is why we call them mild..

Got it..

They’re all are off, none of them are hugely materially large, but all together -- just a couple of points..

Okay, thank you..

I would like to point out we had pretty good U.S. business in Academia, we’re really in this call in the past and talked about our negative double digit contraction and we were only -- we were in low single digits. So that the Fisher relationship is still working our U.S. business is doing pretty well.

It was a lot of timing issues than I think when you consider the impact of the Japan -- impact of the controls from the Devens unit as well as Germany it does fill in that gap. The U.S. wasn’t a problem at all if we would have been at where we’re at usually with these other areas that have been normal kind of quarter for us really.

So we feel pretty confident, these are all pretty explainable and we can deal -- the FX is going to cause the issues, cause it [indiscernible] it’s caused stocking issues for us but as Jim said in areas like Japan we don’t have any Japanese competitor that has one up and so we don’t use inventories for the same issues as everybody else, things are going to run low and they’re going to be buying again.

And we’re actually already seeing a little of that..

Our next question comes from Drew Jones with Stephens Inc. Please go ahead..

Looking at operating margin improvements over the past couple of quarters and the drivers there, the gross margin improvements and improvements with SG&A spending are those sustainable?.

I think they are.

We’ve had as you know we’ve talked about our productivity projects we’re not trying to place into a Six Sigma unit or anything but there has been a lot of good work here on the operations side, starting with year and half ago when we created the operations unit we separated the business since the -- in actual factory versus what’s development here and that’s actually paid off quite well.

I could get in specifics but there is -- we're known for our quality, we’re known for having lot of quality data and these testing work flows are all being addressed, we’re doing much more statistical process control, we’re improving our quality with also with respect to reducing and taking out cost for the way of testing advantages is one example.

The Fisher work has created great savings for us in terms of how we buy a supply here. We've hired in house legal counsel which have paid us a ton of money compared to last year farming it all out going five acquisitions, I mean I can go on and on. But I think they are all very sustainable where we’re just getting started.

Jim and I and other come from larger companies, we’re used to driving productivity targets and lean ideas as well as Six Sigma and those are all taking root here I'm actually quite excited about continuing. It's not going to dramatic but I think these kinds of numbers are -- probably should be sustainable for your question. .

Perfect. You guys have talked a lot about the antibody certification program and just you touched on it a little bit earlier; can you give us any color about that group of -- I think you said 800 that you certified so far.

How they are doing compared to the rest of the portfolio?.

Well I said 600 or so, we've have about 1,200 - 1,250 at the end of the year. These things take a little while to catch speed because you know we lot has done over the Web and anything else. So there is traction. We have a hundreds of orders already on these and it's starting to pick up.

I guess way to look at it from our point of view, we look at it compared to how other new reagents that we offer start out and how they’re doing and these are fitting the model. For us it's all -- we see it all as all incremental upside, so it's all good. So we hope that it continues to track us on.

We think this is the way to go, this is why we bought ProteinSimple to have this value add solutions based focus into our customers, so they don't have to fuss with the antibodies themselves, they can get these and they right away have the recipe on how these things work. So we want to keep driving this. Is 600 enough? It's really not.

I mean we’re getting some traction but we need probably a couple of thousand here, it will take a couple of years to get this and one of our operational strategy is to figure out how to get more of these certified -- how to grind through it, it’s a lot of work.

And you need to get that data and you need to verify and got to get the marketing promotional, everything all round it, behind it and get all in line. It's a lot of work but the team is been really good at this and we’re actually great on schedule maybe in a little ahead of schedule on our account. .

And then last one from me but just to clarify as far as impact from the strong dollar is only place where you are seeing a transactional impact is Japan?.

No, let me clarify that. So in terms of the impact that’s fitting our translational adjustment to the P&L, it's more entirely out of Europe. With regards to Japan the Pac Rim we actually sell the distributor there in U.S. dollars. So there is no currency translation impact there for us. It does make the products more expensive in local currency; i.e.

yen, but gain we’re not seeing any -- there is not much in the way of local competition there and we’re not seeing price reductions from competition there yet that requires us to react at this point. .

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

This is actually Anthony in for Amanda how you are guys doing?.

Doing good. .

Real quickly even as a follow-up regarding this year distribution, in regard to that I guess could you provide a little bit more maybe inside or regarding the potential upside overtime?.

I have been very clear about this we started the arrangement and we’re looking at negative in the tens double-digit declines in our academia markets and how to catch up and so the one key thing that is starting out to coming in here with the from our [relationship] being I understand the Fisher model pretty well coming from Fisher.

And then Jim as well coming in later. I’ve always said getting back with our strategies getting this back to even, even would be great. We've bounced around between this negative 2 to positive 3 in the last couple of quarters and I expect we will be there.

I think it will drift into lower single-digits and be steady there, I don't ever see Fisher getting us into double-digit gains or anything like that. It will take other strategies, I think the strategies that we just talked about with certified antibodies there is a better strategy for incremental growth.

But how to take on competition, how to get more of that wall share of academia, it's all about coverage we have five reps in the key regions that help work with the bigger accounts and work with the inside sales team locally but how do you get actually hundreds or thousands of academic research, we largely buy online and through citations and references, et cetera.

So the combination of Fisher with [indiscernible] Street and the better web experience strategy for that.

We’re well on our way to Fisher, I am very happy about the result is working -- it’s working really well on their favor because there is a lot of swap right now but their numbers look [indiscernible] but the net of it all is positive, which we were after and that’s how we pay them as we’ve talked about in the past.

And into the coming year we’re adding features and improving our website all the time. It's our single biggest adventure here in IT and we have folks from Novus really working on this, and taking new ship rolls this being their website and their model is very good in this we think and more to come.

So combination should get us to, low to back to low mid single digit, I think we're on track with Fisher and it is what it is. I also know CyVek but I don't, they're also working hard as a company to really get their Life Tech portfolio online.

You got to remember these guys are good at dealing with millions of skews and we don't see any distraction right now with Life Tech at all, we've very little overlap with them, as you know we talked in the last quarter, somebody had a question so no issue there either and the teams get along very well.

It's the best non-conflict I've ever seen, so I'm very happy..

And I appreciate the insight, we know it's a huge undertaking and as another question, in regard to the recent acquisitions I guess would you also be able to provide a little bit more of a color regarding the actual revenue contributions or even the potential timing of synergies related from those recent acquisitions?.

Well, I think you're seeing some of it here, I guess in our margins, there are synergies coming, again the antibodies certifications are all sale synergies. In terms of cost synergies, not a whole lot, everybody knows how lean we are as a company so we never did any of the deals for real cost synergy opportunities, it's more about sale synergies.

There will be some synergies between the CyVek unit as we integrate that into ProteinSimple and we've seen some of that, certainly in the channel and the commercial activities.

That said, it's also got to be carefully worked because we don't want to distract or have any dilution of the activity on the ProteinSimple channel organization so we've been very careful there, but there are some synergies there.

And they're kind of you know -- the sales side these things are showing up a little bit along with the productivity numbers..

Perfect, thank you, then lastly, would you be able to provide just a little bit more insight as to while regarding this is M&A going forward?.

Well as you know, things aren't real cheap out there right now, we've actually been hunting as much as we've ever been hunting and we've been fairly quiet for nine months here still, but we've been very active, you just don't see it or hear about it and as I repeatedly said and Jim's here to make sure I'm always honest on it, that we aren't going to do a bad deal.

So we’ve been engaged and we've walked away from some, we're looking at some.

We're still interested in our primary strategies, we're interested in doing more to create more critical mass in our clinical and control segment, especially as it relates to more on the regulated side or more towards diagnostics or point of care type of direction which that industry is going, we're interested in diagnostics, we're interested in diagnostics in China, we're interested in other solutions like ProteinSimple that can give us platforms that can leverage our content here.

So those are still in strategies and we're engaged in some and I can't comment further, that they get done when they get done and then we'll do a deal when it makes sense. Other than that there's been no change in our philosophy or intent or our hunger, okay.

We have a strong balance sheet, we’ve got lots of debt capacity to take on yet, even to stay well [phase] beyond covenants we're roughly flat here and when you look at our cash we have, what we have for debt and so you know. We just need some better deals..

The next question comes from Thomas DeBourcy with Alger, please go ahead..

Thomas, your line is open, did you have a question?.

Okay, the next question in queue comes from Bryan Kipp with Janney Capital, please go ahead..

Hi guys, quick follow up here. I know PrimeGene you had a deferred lumpy order in 2Q, did that come through in 3Q? I know you continue to cite 20 plus percent organic growth in China, so just trying to think in context..

Our PrimeGene unit is roughly half on we'll call it OEM lumpy order side and half on a branded commercial retail kind of a business model. We're more focused on trying to expand that side of it if we can, for China for China, and leverage them as a factory for China, etc.

We want to drive this OEM business as best we can even globally but that's hard which is one reason you know they're coming to health. So there's some lumpiness.

This quarter is starting out better, some are coming through and you know it's not a large business so it's not that material but we're very happy so far we've not lost a single employee there, pretty must to say about in China. They're working on a new factory, so we bought them when they were kind of just getting started.

They're well connected to the Fudan University and we have a brand facility [indiscernible] mid-summer for an expansion of their business and give us a lot more G&P capability, so lot of good stuff to come, hopefully more China to China, but the OEM segment is still important, we're trying to drive that but obviously it's more competitive and trying to get that to work in orders that may over an year is difficult as well right now.

So. It's a little better..

As a reminder I'll add that we just we just passed our one year anniversary of acquiring PrimeGene here in April, so in Q4 those results will be included in our organic growth through the years for China..

Helpful and then any utilization color you can guys can give around ProteinSimple? I know the 600 proteins that you guys are augmenting to the platform, et cetera.

Are you seeing utilizations rate increase amongst the already placed instruments -- on consumables?.

Consumables? Well certainly on these yes, I mean it's all brand incremental -- in terms of what else is being bought for those machines is probably hard to get that actual data. In general our biggest area has been competition with antibodies, so I think we’re still quarter or couple away in these strategies that have traction.

I can tell you that we have quite a few machines ourselves here in Minneapolis and being used in development and we’re using a lot of content on them. So hopefully everybody else as well as -- if more install happened there will be more purchases.

They do even on their websites, they do support other company's products as well, it's just not a close business and open system which we’re very okay with. We will try to drive for more wells here by earning it and are still partial good. .

And then the last one from me, is I know you guys have tried to right size of portfolio for the most part, focused on core verticals and products et cetera.

What kind of runoff are you seeing from legacy products where maybe you are not investing in or maybe you are just letting fall the way side, are you seeing 1% to 2% pressure there or is it more now?.

Very little, as we've all seen the chart where we have this reserve waterfall, it's kind of build the life cycle for ever here.

We have not end of life a whole lot of anything here in the content side now we've done some good work on our inventory in our stock and cost reductions there, we've quite literally have things in our warehouse that have been here for like 20 years and are still good and still salable.

And I'm not sure we need all of it, so things like that have been dealt with. But in terms of taking out SKUs or fee reduction, as you and I've also commented in the past that the curing cost of these products is almost nothing. So there just isn’t a kind of complexity around having these product as other business models.

I think the complexity comes on the website and supporting everything online and as you will also know we don't have a single product over in the reagent side over $2 million. So it's very well -- even we dispersed and our bigger seller is almost our oldest product.

So it doesn't really mean much about the age of -- who it'll be, where it's going to be. And things can be rejuvenated, I mean we can add something kind of go softer couple of years and thinking that maybe that one is done and then somebody writes a right paper and guess what -- activity increases and fold again.

So it's kind of a strange model that way. .

[Operator Instructions] There are no other questions in queue. .

All right. Again we took more time than usual, that’s good, good questions. We’re very happy with a lot of results, we’re disappointed of course with some. It'd be nice if it had been at 2% or 3% growth but timing issues is really everything on this stuff. But I would like to thank all of you. I now our team is working hard here and even harder.

And we'll be back to talk to you again next quarter. Thank you..