All right, great. Welcome, everybody. Wells Fargo Healthcare Conference 2023, day 2. My name is Tim Daley. I'm Life Science Tools, Diagnostics and Pharma Services Analyst. We are pleased to have here , with Dave Naemura, CFO. Again, thanks for coming. We're gonna, I guess, kick things off. You know, this morning you guys filed an 8-K, laid out some, I guess, more re-refined expectations around the first quarter. Just, you know, if you could kind of run us through what the update was, you know, how that compares to, I guess, how you kind of previously talked about the first quarter, that'd be great.
Yeah, sure, Tim. Thanks. We're happy to be here. Obviously, we just ended a quarter, so our timing being a May year-end is a little bit tricky. So we ended a quarter last Friday before the holiday weekend, but got a view of the top line, which came in a little bit lighter than we had thought, but directionally, I would say in the same shape that we had talked about. We'd always talked about Q1 being the lowest growth quarter of the year, and it's seasonally a smaller quarter anyway to begin with. So, you know, we see a slight decline, less than a point, but generally, the same market backdrop that we talked about coming out of the fourth.
I think if you go back to our year-end, we talked about some food volume production headwinds that we're seeing, particularly in the developed markets, where people are still growing on price, but maybe testing a little less as production volumes come down. We continue to see that in the first from what we saw in the fourth. We also saw large distributors rebalancing inventory on the Animal Safety side, and that, again, continued in the first from what we saw in the fourth. Maybe a little bit worse than we had thought. I think on the good news side, 3M, some of the continuity of supply, you know, manufacturing improvements that we saw in the fourth quarter continued to be sustained in the first quarter, so that was very encouraging.
We talked about 3M being a little bit flat on a pro forma basis globally, but that was really pulled down by Asia Pacific, where we saw bigger headwinds in China and I would say regionally, probably more broadly softer in Asia Pacific due to some of the hangover effects, maybe of some of the supply constraints, but outside of Asia Pacific, growing more in line with our expectations. So, you know, not a big delta from what we were thinking, but we knew we'd be here, so we wanted to get that out there so we could talk about it.
Yeah, no, it's always, it's always fun when you got some live numbers to toy around with. So, you know, just again, I think just detailing the update, so legacy food, mid-single up, animal high single down, combined 3M flat year-over-year, as you said. So, you know, I think you guys were up on our expectations on food, both on a legacy and a pro forma basis, as well as, I guess, down on animal. So, you know, we guess we mismodeled on animal here, but you know, just wanted to, I guess, start off on that front.
So, you know, you guys have detailed the kind of more macro sensitive side of the business, and just want to make sure we understand, you know, these dynamics within animal as it relates to macro headwinds and-
Mm-hmm
... specifically, you know, did things get worse? Did things get better, you know, over the last, say, three months or so?
Yeah, I think if we look at, you know, kind of end user consumption, we probably saw that soften a little bit. We know there's some more cyclicality with kind of herd sizes and things like that, that tend to drive that side of our business. I'd say directionally, it was what we were anticipating, maybe a little bit softer. These things are pretty tough to call. We did, and I think we noted this morning, we did see a little more softness on the genomic side as well. We see that more in kind of poultry and swine, which, you know, some business that, you know, frankly, we've walked away from historically. And you see a little bit of a, you know, a bias towards cattle from us. And so some of that reading through as well.
So I think those things compounded to make it maybe, maybe a little bit worse than we'd anticipated on that side. And I think, you know, clearly, Asia Pacific and China in particular, came in a little softer than we had anticipated.
Okay. All right. And then China's relatively small-
Yeah
... percentage of total revenues.
Yeah.
You know, where is it at today, and-
Yeah, China's small. 3%, maybe a little under-
Okay
... at the consolidated level, but still came in soft enough that, you know, had an impact at the consolidated level that was a little more than we had anticipated.
Okay. All right. Got it. And, you know, just granted, I know it's early, just closed the books, a lot of moving parts, but just did notice, didn't call out margins. Should we still be kind of thinking about, you know, I think the margin rough guide was 100 basis points on a pro forma basis of accretion-
Mm-hmm
... from one Q to one Q. You know, animal, thinking about that softness, how should we digest all that?
I'd love to give you that answer.
Yeah.
I think we're kind of two days into it-
Yeah
... so too early to put a stake in the ground there. You know, we got to just wait and get the books closed.
Yep. Yep, that makes sense. All right. So, it's interesting. Again, as I said, I think the food, the 3M business being, you know, flat year-over-year was, I think, $5-$10 million above our expectations. I think we were modeling a bit of a pullback on the pent-up demand or the backlog burn that you benefited from in the fourth quarter. But if we were to think about, you know, food within 3M going forward, like, what's a good quarterly run rate, you know, for the near term until we bring on additional capacity? I think $80 million-ish, I think a little bit above, was the implications this quarter. Is that a good place to start?
... Well, look, we know historically, and I think you've seen us publish a chart that shows the long-term, I think, 20-year CAGR of that business in the high single digits. So we think through the cycle, you know, this is a high single-digit growing business. But of course, that's not, that's not linear. And I think what we're experiencing here is, you know, a little bit of this uncertainty of, you know, like, you know, a couple of factors. One, you know, what's happening in production volumes. And I think we've, you know, generally tracked that pretty well, but it's a little difficult to predict with, you know, 40-year high inflation and interest rates doing what they've done, and how does that read through to consumption? So, I think, I think that makes it a little tricky to predict.
You know, as well as, as we kind of come back from some of the supply constraints, a couple of good quarters in a row, as you point out, we think we're through some of the big challenges, but, you know, there's a little bit of trust we need to earn back with some folks, particularly, I would say, in some of the, some of the international markets. We're in the process of doing that. So, you know, I, I'd say more to come. I don't want to guide where the right run rate is. We'll get more into that here, as we get into the year. But, I would just say that, you know, I think we're pleased with getting another, you know, more stable quarter under our belt.
Mm-hmm. No, that's, that's helpful. You know, on the 3M business you did in the press release call out, you know, the improvements within the Transition Manufacturing Agreement were sustained or continue. You know, how is that progressing? I know you guys provided a good update last time, maybe some reshuffling of your direct line of sight senior management at 3M. You know, is, is all the same there, more or less kind of consistent with, with the state of the union that you provided on the earnings call?
Yeah, Tim, I think it's kind of continued, continuing to see that work as we had anticipated. I mean, you know, the path of escalation, some great things that our manufacturing partner has done to insert some more oversight to help make some calls here to get things processed through their organization more rapidly, has been helpful. We have more people embedded now over at that manufacturing facility, which is very helpful. So all of those things that we saw benefits from in Q1, we've continued to do, and they've continued to work. You know, there's always going to be some challenges, right? I mean, but what we want is kind of normal challenges, and I think that's what we've kind of seen, experienced on a little more of a sustained basis here.
Okay, great.
That's great.
Any, you know, update, again, two quarters in a row of, of good volumes. I know there's still some backlog to burn out here, but, you know, can you update us on the supply of, of the sterilization, you know, raw materials that I guess kind of held up some of the volumes last year is, again, that's everybody's struggling with it. Medtech, you know, no, no environmental protection groups, what have you, are approving new facilities.
Mm-hmm.
Is that, is that still weighing on you guys, or has that alleviated a bit?
Well, it wasn't a constraint force this quarter.
Okay.
And I think, I think we found ourselves not manufacturing constrained. But as you know, I mean, we're a big believer here that our focus on this business and this incredible franchise is going to give us the opportunity to to drive incremental demand. So as we prosecute that over the coming quarters and frankly, years, you know, hopefully, we do have to continue to address that bottleneck. So I'd say more to come as we continue to drive demand.
Okay, perfect. You know, stepping back from 3M a bit onto the legacy side of the business. So, you know, I guess thinking about the longer-term, you know, thesis around growth, I know you guys have talked about, you know, taking to double-digit, high single-digit companies and wanting that to be the go-forward growth rate. But, you know, I guess in the kind of near term, as we progress to 2025, if we were to think of what's maybe a good CAGR over the next few years for food versus animal on a legacy basis, obviously with ebbs and flows, just kind of if we were to think of a normal market environment, if you will.
Yeah. Yeah, look, we think kind of... I don't know if it's rich or move, you know, kind of through the cycle, that the Food Safety backdrop is a little higher and growth market than, than the Animal Safety market exposures that we have. So maybe that kind of mid, mid-plus on the Food Safety side, with maybe a kind of low to mid on the Animal Safety side, neither one of which is, you know, really, really linear. But that's why you see some of the strategic focus for us in some of the steadier growth businesses like, like genomics, some specific areas within animal, but obviously a bias towards food with the big, the big transaction with 3M. You know, we like our exposures.
Now, again, right now we see, you know, for a period of time, production volumes lower than we had seen in previous years. And that, that's okay. That, that too, shall change. But, as we continue to work through the integration, accelerate our strategy, opportunities to go out there and take share what's a good end-market backdrop with, as you know, great growth drivers.
Mm-hmm.
You know, we like our end-market exposures and how that positions us for growth.
Okay, great. And you know, again, kind of similar question, but if we were to just bifurcate a bit on price, you know, what is the, I guess, price assumption embedded in the next few years, you know, differences on food versus animal? Just staying with legacy here.
Yeah. Look, I think pricing is always a bit dependent on the market backdrop, right? So what we want to do is be dynamic and really focus on price cost, and we want to be price cost positive at the gross margin level. So we need to look at what material inputs are doing. Some 2021 and 2022 provided a backdrop for pricing that was far favorable to what we'll see in, you know, 2024 and 2025. But we're gonna respond to what's appropriate in the market, and, you know, we don't take a cost plus mentality, particularly with a lot of our, you know, real value-add products. Rather, we're value pricing.
We'll continue to lean in and really focus on maintaining positive margin at the price cost level and see how the backdrop develops.
Okay. Well, that's—that makes a lot of sense, and I know you guys were focused on price here, given some of the legacy dynamics that, that were going on recently. But so that's helpful. And then, you know, I guess stepping back into 3M here, so, you know, this is something that, I get asked a lot by investors is, you know, the roadmap to new capacity, right? Can you kind of just walk us through when, you know, I guess, how the construction's going of the new facility?
Mm-hmm.
I know that there is a bit of a lag between the equipment getting installed, given its specialized and bulky nature, obviously.
Mm-hmm.
But yeah, could you just kind of give us an update on timing, you know, roughly when, when we should see, number one, kind of doors open-
Mm-hmm
... fully installed, capacity, and then obviously, you ramp up utilization over time. But-
Yeah
Just kind of rough, rough timeline.
Yeah, I think roughly speaking. So when we look at all the integration activities, the one kind of long, long pole in the tent is Petrifilm manufacturing, and we need to bring that in-house. It's on a dual shared line with some other products within 3M in that manufacturing facility. So, you know, we're standing up the new facility. If you were there six months ago and what you see today, and I was just telling Bill we need to put some pictures or something on the website because it's amazing. So that's really coming together. I would say we're well on track with the new facility. The equipment has been designed. It's on order. I know we had a team over in Asia checking on production.
I don't have a real-time update on that, but I think we're tracking to our expectations. When we look back, I mean, our goal is to move as fast as possible. So we had a four-year agreement with a potential one-year extension beyond that with the folks at 3M, and we want to be well within that. That would say that we should, you know, look to be producing, you know, after that, after that third year, which means, you know, of which we're a year into. So I think we're well on track for that. There are some big milestones.
To your point, we got to, you know, see some equipment hit the ground and get, get stuff in the building, and, you know, this is big stuff, you know, and close up the side of the building and get going. But we'll bring people, we'll bring people along for the progress. I think it'll really progress will really ramp up notably with a lot of parallel activities starting to happen here over the, over the coming, over the coming couple of years, and we'll, we'll we're gonna look forward to kind of sharing the progress here.
Okay. Well, that's helpful. And then just kind of, I guess, a similar vein of question, the cost, you know, the operating dollars, if you will, operating expense dollars. You know, you are kind of running parallel capacity as you're standing it up. You're hiring people without revenues coming through. So, you know, could you help us think of, you know, even broad strokes, dollars, percent of revenues that you might have kind of in that overlap period of, you know, staffing a facility that's not yet running revenues through?
Yeah. If you think of it from a people standpoint, you know, this isn't a labor-intensive production. It's highly automated, so I don't think people will be the big part. And then, of course, you know, we won't start depreciation of some of the stuff until we really, you know, get it, get it online. So it's hard to predict, and I'm not, I'm not kind of trying to bail on it. I just don't want to give anyone a wrong number here. I think what we need to do is really dimensionalize that for folks as we start to see some of that. I think right now, more of the noise is on the operating expense side. You know, the, the, the business came over, you know, and it leaves a significant amount of cost behind.
So we saw an immediate pop in EBITDA margin by consolidating this business in. At the time, we were then adding in cost, so we had a partial year of the cost we needed to add last year, and then we get, you know, we get a full year of that this year, plus we need to add more, which creates kind of an interesting year-over-year operating expense dynamic. But what it equates to is the synergies that we had anticipated. We're still gonna do it significantly cheaper and hit our synergy target to what the business was burdened with at the operating expense level previously. So we're on track, but there's, to your point, a lot of noise, and I think incumbent upon us to help dimensionalize that for folks.
Okay. And then just on the agreement, you know, are you paying... Like, you know, what is the fee? What's the middleman getting, if you will, for the CMO relationship? You know, if we think about current state of 3M standalone margins, are they, you know, five points below because you're paying an extra fee to the third-party manufacturer?
Well, we pay a fee, right?
Yeah.
We have three types of transition services: one for the back office, one for distribution, and one for manufacturing at various rates. Yeah, yes, of course, we pay a fee, but we're adding the cost to, you know, get those off. So I think at least on the operating expense side for distribution and the back office, it gets into how much of that's duplicate. And we do get some of that fee back where it'll fall off. You know, 2025, we won't be burdened with the fee, or we'll be burdened with it for, call it three-quarters of 2024. And then as manufacturing comes in, yes, we're bringing that expense on-
Mm-hmm
... but you know, we're paying a markup to folks to do that. How much savings that equates to, you know, TBD, I think, on a net basis, once we see how our cost structure exactly equates to not just what we're paying, but the cost that is the base that's being marked up. So I want to be careful not to put an expectation around that. But you know, we think once we get through the integration and we get up and running, that we can do this pretty darn efficiently.
Okay. You know, on that, on that front, you know, again, before your time, but, the initial kind of pro forma for Q 2024 target was for 40% EBITDA margins on a pro forma basis. You guys obviously took a, you know, nice conservative view here. You've rolled that back to 4Q 2025 at a squishy 30%. Again, I know you're using dollars, but, you know, is there a governor or anything structurally different than when those numbers were looked at in the initial model that'll hold you back from achieving a 40% margin? It's like, is the governor below that? Was that too optimistic? Just kind of, just helping folks think about, you know, beyond the, the, the milestone of, of 4Q 2024.
Obviously, there's a lot of other stuff operationally I want to dig into after this, but-
Yeah. Yeah, yeah. Well, look, I think from the time the deal was announced and initial projections were put out, to your point, I wasn't there, but familiar- very familiar December 2021 to the time the deal was closed, it's a pretty different environment. I think the inflationary environment, the interest rate environment, and that, that had a compression-- that had an impact on the margins of the acquired business. And I... You know, it, it, it is what it is, and I think that read through the pro forma, and that doesn't come back overnight. So I think what you saw us adjust for was, was, was just that. That was a significant amount of it. And, and, and so we need to, we need to see, and I think part of it goes to the market backdrop as well, the relevant growth rate.
You know, these are really high fall through products. You know, the demand environment is going to be really important to the margin profile.
Mm-hmm. Okay. No, that's great. So again, just thinking about, you know, what you bring to the table here. So given your background, you know, the legacy, specifically on the animal side, was a lot of acquisitions.
Mm-hmm.
You know, really focused on growth, much less so on efficiency, if you will.
Yeah.
You know, just curious if you could kind of lay out for us some of the, you know, self-help, if you will, on the legacy side of things that you, you know, that you see both from a kind of low-hanging fruit perspective as well as, you know, more longer term after kind of we get through all the fun, fun transition period?
Yeah.
you know, should we be expecting a fun three-letter acronym for the Neogen?
Well, you always have to have one of those.
Operational excellence. Yeah.
So look, growth is, you know, growth, growth is hard and sometimes not eloquent, right? Neogen's a great business, and it, and it's got a tremendous track record of growth. And I think, you know, we're-- I think everyone in Neogen, no matter how long you've been there, you know, is really respectful and, and honors that and has put us in this position we're in. And I think it's now kind of an evolution to a bit of a, a next stage. And I think, you know, not just me, but many others in the organization are focused around, okay, what's the right move from here?
I think that is taking a look at, you know, always as we always are, taking a look at the portfolio and saying, what, you know, what, what is the exact right stuff for us, given the strategy we're trying to accelerate today versus maybe, you know, years, years prior? When you grow, you do it however you can. And so you, you know, we have a lot of sites around, you know, certain places, particularly in Lansing, where you're seeing a lot of those sites now, integrated into our new manufacturing facility. So I think, you know, those are opportunities to kind of address this idea of, you know, well, if you had done it ideally, you would have done it differently, and now we get to drive some of that.
And there really are a lot of opportunities, not because we did things wrong, because we did things, you know, relative to the times we were in. And now we get to go back and look at some of that stuff, and I think part of that is taking some functions. An example might be procurement. You know, we have a great global procurement leader that will be taking over something that happened in many different places around the world and bringing a lot of a different lens and expertise to that function, which is a real opportunity for us.
So I think that's one example of many, looking at how we contribute from a, you know, how R&D is engineering cost out of the products, to, you know, our manufacturing efficiency, to how much capital we have tied up in working capital. All of those things are opportunities now that, you know, we've really kind of graduated to this, to this next stage. And, and I do think some of the opportunity to drive some efficiencies out of legacy businesses is a bit underappreciated.
Mm-hmm. Yeah, that's, that's one of, I think, the most compelling pieces of the Neogen story as I was building my model, just really looking at the ROIC, you know, on a legacy basis. And then as we pro forma out and get to kind of the... even the, you know, new reset, if you will, expectation here, pretty significant ROIC accretion. So just, you know, is it- is the majority of that, is it the-- obviously, the margins significant. But if we were to think about other factors behind that, I know you talked about, you know, balance sheet optimization, talked about site management. Just kind of if you guys have a target, if you will. I know you've got some, you know, in-house targets that you guys like to use, back-of-the-envelope math.
Anything to help people out, you know, in their own modeling?
I think generally speaking, you know, when we look at the P&L, we look to grow faster than the market, right? And that's not the same every year. It's not linear, but we look in the environment and try to build an algorithm that says we're going to do better. You know, we're going to take- we're going to take some amount of share every year. We're going to- and at the margin level, we need to drive gross margin improvement. Some years, the opportunity is greater than others, depending on volume, but we need underlying operational improvement, which implies that we're appropriately pricing for raw material inflation. We've got favorable price material economics at the margin level, that we're contributing through things like procurement and those activities and productivity on an annual basis.
And I think you'll see very much an increased focus on those things, you know, there's got to be some minimal threshold there that, you know, I don't know, probably 50 basis points or something we'll always be shooting for. Although, you know, years, particularly years of good volume growth, you know, should afford us an opportunity above that. And then operating expenses has been a lot of noise. But look, if we're gonna grow faster than the market, we got to expand margins on that growth appropriately. And so we look at that relationship, and we look to grow, we look to grow, obviously, earnings faster than revenues.
And then we'll look at free cash conversion, which we think is an opportunity in the near term, given some of the legacy working capital opportunities. That will fund some of this integration capital, and then we look to reinvest it. And I think doing that in a little more focused manner and maybe a little more disciplined manner, which I think is, again, the right evolution for us. I think you've heard John talk about kind of the same focus in a way that really accelerates strategy. And we if we get that going and that, you know, kind of that cycle going, it creates nice momentum.
Yeah, yeah. The, the flywheel's really compelling, especially from kind of starting point, for sure. So, you know, like we were talking about reinvestments on that theme. You know, you guys recently launched a few new product lines, I think a new insecticide line. I think you introduced a batch of 100 new genomic tests. Like, how much, you know, incremental growth comes from these, these launches? And, you know, is, is this kind of the, the thought going forward of new organic investments via R&D internally, or, you know, is there any kind of white space or adjacencies within the portfolio once you've digested 3M, obviously?
Yeah. Well, look, I think in parallel with 3M, and I'm... I don't want to give a number where I don't know the exact number, but I think what you'll see from us is a focus to continue to get more drop through from our R&D investment. That is a primary focus. And, you know, we've got complicated products. We spend a lot of time and, you know, what some people may think of as sustaining, but, you know, we spend a lot of time on making sure our products, you know, meet the high-quality specs that we demand. But, you know, we also believe we have an opportunity to continue to get more return on the R&D investment dollars spent.
As a bigger company, you know, we need to do probably fewer, more impactful things, and I think you'll see that as a focus in the coming years.
Okay. And I guess on the flip side of the coin, like you said, there was a lot of investments, a lot of, you know, not things that were done wrong, but maybe things that, in hindsight, maybe would have been done differently. Are there any businesses, as you look at the portfolio, you know, that maybe might have a better fit elsewhere? You know, maybe some capital could be reallocated to higher growth adjacencies or higher growth businesses. Any thoughts?
You know, look, I wouldn't wanna call somebody out here, but I think at the end of the day, what we need to be in is a mode of continually continuing to look kind of proactively at our portfolio. And I think, you know, it includes kind of putting on that lens that you just described, and we're doing that. And, you know, having said that, one of the strengths of this business is the breadth of the offering, and so we need to really be, really be thoughtful about that. But I think, we've definitely got a renewed focus on making sure we step back and look at the portfolio.
Again, not, not because we think we did something wrong, but it's more about just what is the kind of the course we're charging going forward and making sure we are, you know, trying to accelerate this focus strategy around, you know, some of these attractive end markets that we have.
Okay. And then, you know, taking, I guess, one step forward there, capital allocation.
Mm-hmm.
You know, how should we be thinking about... Obviously, I think you guys have laid out pretty good, you know, framework around the new facility. But in terms of, like, maintenance, CapEx, as a % of revenues, and then, you know, thinking about debt paydown, like how should we kind of-
Mm-hmm
... rank, order, and organize these, these moving pieces in our mind?
So generally speaking, first of all, capital allocation priority in the near term is going to be the integration. Building the new plant is no small task. Some of the systems work and kind of the enterprise platform that we're building here is clearly the near-term priority. Not to say we wouldn't do any M&A. Sometimes you can't choose, you know, small deal timing and some of those things, but integration capital is a near-term priority. But we operate in very attractive fragmented end markets, and we have a history of effective growth through M&A, and I think we'll continue to look for M&A to be a big lever in accelerating strategy. But I think you'll see us get to that more once we work through, you know, the integration.
It becomes a balance, you know, from a returns perspective with debt paydown. You saw us pay down $100 million, the initial $1 billion of debt. We wouldn't anticipate in the near term, reducing gross debt. We think we'll delever, obviously, as we continue to grow the business over time. You asked specifically about CapEx. CapEx tends to run 2.5%-3% of sales. I think overall that's, you know, kind of 50/50 growth and maintenance. Maybe 60% growth, 40% maintenance. And then the other item we'll put some cash into this year is bringing in the 3M finished goods. As we stand up the distribution network on our side, we've got to load in the finished goods, so we'll do that.
I think we said at year-end, that's kind of $40 million-$45 million. So we've got to work through all that stuff on the front end. And, you know, we also said we'll fund that stuff with free cash generation for the most part, which includes hopefully some working capital improvement in the underlying business.
Okay. Yeah, and as we, you know, as we kind of get those, those chunky costs out of the way, how should we think about, like, a long-term or even, you know, near-term leverage target? You know, granted you said gross, you know, but thinking about, like, net.
Yeah, net leverage. Look, we kind of view a top end in the three-ish range. We'd go above that with line of sight to coming back below it in a reasonable timeframe. I think if we get down, you know, below two, we should be asking ourselves if we should, you know, be more aggressive in deploying some capital. You know, I think that those are probably the goalposts. You know how it goes, you know, never works out perfectly.
Yeah. Yep, of course. And, you know, I guess just, you know, again, back to the, you know, the kind of quarterly update here. You know, should we be anticipating animal, you know, in the second half of 2023 returning to growth? Or, you know, is this kind of a full year type of headwinds from the various macro-
Well-
gives and takes?
Well, we said at year-end. I'm going to go back to what we said at year-end. You know, we said at year-end that we anticipated this inventory rebalancing continuing through the first half of our fiscal year or, you know, kind of the calendar year-end. I don't know why we'd see that any different now. Now, as you pointed out, we're a couple of days into the new quarter, so we've got some digesting to do. We're going to see what September looks like and come back and talk to folks. But, you know, I take what we said this morning and, you know, kind of this conversation, it's pretty aligned with what we talked about, the shape of the year, the shape of the quarter.
You know, a couple points, you know, of growth isn't a lot from a dollar perspective. So I see things developing kind of as we had discussed. But, you know, more to come. We'll see another month, we'll get back together, talk about the quarter, and at that time, you know, share with you our best insights. But I kind of see things developing as we'd anticipated.
Okay, that's helpful. And, you know, I just did want to touch on genomics here. You know, again, it's, I think, faster-growing above you know, group average, if you will. You know, what's the ambition there in terms of, you know, Total Revenue mix? You know, is there enough like, if you guys look at your TAMs versus your actual market size, there's a lot of white space there. Is that, you know, a priority?
Yeah. I would say genomics has been and remains a strategic priority for us. I think you see us, you know, continuing to kind of shift that focus to some of the more... what we see as some of the places that we play very well, particularly cattle, which is also a very profitable segment there. Obviously, we're very active in companion as well, so you'll see a continued focus on that end market. It's a little disrupted right now, I think from some of the poultry and, and, and swine impacts, some reduced spending in those areas, some customer churn as we continue to work through our focus. Definitely will remain an area of focus for us and a place where, you know, we've built a really nice business.
Okay, great. You know, I've got a couple more, but I know it'd get us way past limit, so I think I'll end it there with one minute left here. Appreciate it. Obviously, Dave, appreciate, you know, Bill, thanks for being here and everybody for attending, and hope you all have a productive rest of the day.
Thanks, Tim. Appreciate it.