BIO - Earnings call transcript Q3 2017 | Bio-Rad Laboratories, Inc.

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Operator

Good day, ladies and gentlemen, and welcome to the Bio-Rad Laboratories Third Quarter 2017 Earnings Conference Call.

As a reminder, this call is being recorded. I would now like to introduce your host for today's conference, Mr. Ron Hutton. Sir, you may begin.

Ronald W. Hutton

Skylar. you, Thank

any we patience all, We to you sorry thank they've have First we would were your for are we as overcome difficulties. this experiencing for may been caused. of and like inconvenience some trust technical

begin any and I would these the encourage in matters. financial statements and call expectations, the that filings our caution With And like detail and about our with statements Tsingos, Because made though, you business. making should reliance it that, undue forward-looking to expectations, factors may and today. other Officer. discuss from President I'd be Vice future risk Christine plans update Chief we will our forward-looking call, differ in to where not Financial our forward-looking I management's we to everyone the does place Before you Executive we goals, materially these results The over during plans the to review turn like company performance not on SEC, statements. to intend

Christine A. Tsingos

of reported everyone, sales and when On the thank of Group. Good million. X.X% Tumolo, a the last increase and afternoon, year. John basis Today third sales year's of are Annette Also $XXX.X Science on for basis, are Norman net X.X% versus sale report period quarter to an and call President Ron. of you million, Schwartz; a of $XXX compared Goetz; us. increased same currency-neutral last for President Life pleased to our on John Thanks, Hertia, the Group; joining today we Diagnostics

acquired contributing manufacturing our most to and ERP to Europe diagnostics the science $XX many in quarter. margin the Technologies Europe control life disrupted recovered the decreases in across as growth quality and Asia of Also cell testing we diagnostic and increase million were for many as and period. XX.X% of and including transition amortization quarter, in global $X intangibles Droplet experienced XX.X% and The compares was in is autoimmune safety XX.X% versus expense life acquired favorable and year products and the the by sales at well the of good were third Digital group, PCR and the last to to quarter for This and RainDance as quarter in of the in our blood our group. in last of biology reported margin ahead variances. areas, science related instruments sales food recently second from growth regions, consumables, in million product year-ago quarter notably, strong sales the During of across expectations product key royalty Pacific, approximately currency-neutral as typing, gross well part that in sales

well SG&A sales were million driven sequential by expense $XXX.X related operation. quarter, decreased accounting $X.X of SG&A amortization intangibles. inclusion as Also $XXX,XXX third million to the million a And income. In and X.X recorded amortization global approximately for These were SG&A $X.X added $X to XX.X% increase has transition-related sold in of decline the for or in for addition, margin, expense gross And, versus and sold, I year-ago the is finally, $X.X of $XX acquisitions of development the year the million of corrections partially RainDance. have sales amount to sales quarter expenses DiaMed-related to $XXX.X accounting and million, sales, should revaluation goods The to to year. benefit corrections decrease no items operations basis, was occurred a period. total $XX X.X% the of of predominately consolidated of quarterly we compares last primarily XX.X% adjustment $XX.X offset the includes of two The These million. the compared or total COGS million quarter. in that between the million was $X.X from related European This by consideration. for gross expense acquisition-related increased quarter project, in purchase completion a in the the our to million the transitioned related year. expense goods And, million, XX.X% the million spend in GnuBIO the the in we just a in item of lower million to at Research during cost margin SG&A third On the benefited the margin. acquisition in the ERP our to quarter as a ERP points quarter essentially in partially offset and by RainDance. correct of the that of by second of the third quarter looking system. when prior that ago last which for shutdown amortization of spend cost finally, period was approximately discussed, items $XX.X or approximately gross as $X.X our recorded purchase non-cash severance net the recorded to ERP which QX second of the a that SG&A second contingent by reclassification the was two impact small compares reflects classification been

quarter. decision GnuBIO during sequencer the During terminate the market resulted third our on $X.X in diagnostic to quarter, R&D based we XXXX. for This with expense develop targeted acquired the efforts decision made shutdown technology in million a to the the of

includes biology cell addition, for for higher cytometer new market. a flow accrual In of spend the R&D our $X milestone the million

cytometer, events, and base for of GnuBIO the these Excluding shutdown R&D for milestone two flow X.X% the the would expense been have costs sales.

the expense margin million but year-over-year. the of range. profit, The increase on in professional This we X% current the services. quarter the operating significant this expect Going spend added reported million profitability a project. well one-time XX% improvement the of was and shutdown is ERP sequentially more sales, of by operating and both to as GnuBIO decreased in sales, of driven forward, third offset sales expense continue included improvement was of the by in R&D be The to for to X.X% than reflecting sales misclassification the approximately $X.X for in quarter results as $X.X largely

the been Excluding for quarter items, these have margin net than impact two the unusual would X.X%. operating of the third more

million Europe. model effective income The of with to the to year. largely net tax approximately related quarter, our discrete the used the quarter expense interest third XXXX, million increase associated higher of and exchange last expense rate a During than foreign $X.X the This net costs, to benefit increase was lower to in other to quarter. result tax rate transition compared last third share-based is currency $X.X quarterly of for This foreign in that new operating remember expected year's When of XX%, in XX%. was an comparing reflects the related rate and credit. unusually at quarter the a low, was compensation

the that Reported third million which $X.XX. items we be in were in year occur, the the ago may the discrete period. range. diluted $XX.X continue compares to income was full expect to the for for to million, quarter tax Net XX% quarter $XX.X any per Excluding share XX% year earnings rate to

net mentioned not between of income. earlier, the reclassification I SG&A cost and goods As impact sold does

last Science reported share million the increased along across key revenue to product with in This versus X.X% of $X our a by continue that Droplet action products. year. well both many traditional third to quarterly quarter quarter to to PCR million per $X.XX approximately the Science Life result year. reported share $X.X approximately process and particular sales safety Science all and for earnings decline expression also looking with in to of gene do areas. quarter, growth Sales sales Of results food our in impacted for of the sales media, to last the up segments, On of note, the third million. for biology current year. In versus the reflects more $X.XX. million approximately Digital products X.X% basis, the was included performed in for our a regions last impacted versus earnings cell quarter growth quarter, Life sales continued expense products of the added our of currency-neutral well, grew lower per $XXX.X be Life strong $X.X related sales GnuBIO the However, while negatively negatively third by double-digits

We expect this quarter. downward turn to begin to trend media for fourth around process the in

to quarter, quarterly and Our was million, Clinical last year. an of Diagnostic of Growth panels by grew the Diagnostic our to currency-neutral virus business. our the BioPlex Much quarter blood Pacific geographic compared to X.X%. typing X.X% decline view, a a down and sales for is On the demand our Diagnostics products, good was quality continuing primarily Europe basis, this Group blood the controls. posted fueled growers last were during for in increase in Asia instruments sales $XXX weakness and the compared Americas year. of attributed testing On while

In our regulatory due also slowing in addition, related changes. some a of Diagnostics as the quarter U.S. customers believe tepid third PAMA for while the difficult partially during is as lost recent quantify, hurricanes it growth sales well general we as the digest to was the to to the

$XX to the million September the million of Net to quarter $XX.X million. cash last $XXX during cash U.S. XX, and generated This operations in down we Moving in in near-term. the last transition were our in $XX the Not third XXXX, quarter year. cash balance quarter of investments to million collections as substantially decrease second unlike total our compared and related short-term ERP sheet from are in saw quarter the summer with second Europe. flow is of what deployment the during was versus the

quarter. sales. European our well related In sequentially finally, of year-to-date of And, to approximately full to million some and CapEx million, is expenditures current for prepared amortization to are XX.X% million the XX% $XXX spend project outlook Net spending and our the range. EBITDA quarter the spend $XX.X the or lower represents both projects. for which ERP up suppliers depreciation year-over-year. for were for in million we $XX.X be revising $XXX quarter Year-to-date $XXX to With fourth decrease the slightly as quarter as more we quarter a $XX million or of $XX completion than was addition, of was are our the as on the million sales. in million. lower for key This capital decrease, inventory is payments nearly EBITDA capital infrastructure

in of using quarter outlook we've quarter, operating of the for acceleration we guidance margin of diagnostic $XXX From our side Moving family fourth blood fourth XXXX to be demand which of product general, margins XX.X% and revised sales we good the for company original in lines somewhat are third standpoint, and lines in margin that the XX% we affirmed With margin anticipating slowing profitability mind, RainDance. On operating we are the full acquisition business. the gross the gross of call, earnings fourth we for to pleased margin anticipates XX.X% current such on science range had the the for and year. especially cautious quarter between the business. annual for target quarter, X.X% in range a as exchange BioPlex to and to fourth in year that margin in $XXX guidance, year, affirming the of seeing life around see our in to while and million our of our guidance but are Today the X% million full assumes X.X% are sales in for of to product to products operating been currency-neutral consolidated quarter. foreign during estimate IH-XXXX are some the the This XX% XXXX the our rates. revenue And our last range. be the we annual our markets for key be about key our to slightly the to full U.S. including be a full net typing gross X%

for outlook As practice we're will has and happy And the now, our we your our during prior years, take in call. share fourth February XXXX earnings quarter questions. been in thinking to

Operator

Brandon Our first question Jefferies. Couillard comes with from

line open. is Your now

Brandon Couillard

puts margin Thanks. Good on takes. afternoon. appreciate Christine, the all the detail and

line? of to bottom I clear, the XX.X%. GnuBIO of about said you're Just first that million that benefit going guess And any $XX all, in fourth drop the guidance, to from quarter? to then Is terms the quarter had is investment. shutdown, a lastly could spending business year be much help of X.X% operating that in us there How in fourth of to I margin in you the terms been understand think you

compare think make step to the we're to apples-to-apples, said in Just clear quarter. X.X% correct? third be would that the core up? So sure would Is a you I versus, that that

Christine A. Tsingos

question, outlook quarter, year. essentially, over it certainly little because at was the So rates taking a last what it of moved exchange that yes, they from the the but assumes the and different bit current third than beginning

So think, a right. of year regarding spending you're the GnuBIO $XX shutdown, kind operation. the millions low were We I on that in

our will areas on in Day new lot benefit some there XXXX of fourth are have the demand a about but will savings more the XXXX. November plan in bottom talk at redirect we getting on line But technology bolus biopsy going liquid great XX. be we'll some of the so come and and We where we like R&D Investor there. certainly And savings quarter, will some that do the spend into in to really of

Brandon Couillard

this the share. period up business long Be memory can And turn quarter. the the guess, a pricing European I what's corner in you starting peaking I of on and actually is time, to is headwinds recall there first the market recent maybe we're been third that think in curious year-over-year Thanks. finally if diagnostic

Christine A. Tsingos

I in mean are good a there that's takes Brandon, and question and Yes. puts Europe.

probably was. of think the during sales that second was bolus in of the that what were was was Europe make-up that the that is million of but the quarter. that made disrupted Europe, I growth diagnostics. all during $XX part we Not transition of up in bolus this And driving

that so did to contribute flat, the said some Europe we that at growth Europe. least sign be forward. a that strip Having going that, in of out, guess if was So I could good

Brandon Couillard

one more. And Super. then

fourth quarter quarter? backlog In fourth second terms recoup outstanding of the $X is disruption guide, the does million you or that another quarter guess contemplate what the $X of that million from in I

Christine A. Tsingos

Yes.

that, of we now a there's catch-up. million level. kind $XX back to probably quarter. running $XX getting a So estimating through small fourth normalized quarter we to we're think in estimated the I million, When we're also normalized amount of And the second were really as

because be small But, you. what for disrupted may hard from is made to make-up, and frankly, business there the you it's of a amount sales. products now will, if that, So have flowing and are us being decipher and along shipped

of to fourth having business. the I as think base we really feel recovered. the in we about is driver so And the And in good look growth quarter, much

Brandon Couillard

Good to Thank you. hear.

Operator

Our David next question C.L. comes with Westenberg from King.

now Your line is open.

David Westenberg

for Hey. Thank you taking the question.

– of that's to margin. or XX.X%. something usually been is good here? in there difficulty I operating you QX So talk cell if I had And can a dialing sorry little operating you out it's in the case bit of QX X.X% and when of so a this. The have in But certainly guide, stuff GnuBIO from X.X% my the quarter terms income of that did pretty why quarter the kind margin. then, the about with strip some Was operating charge, the missed technical note in, you would

Christine A. Tsingos

I with question, where I'm going the understand not fully you're Dave. sure

case? What the quarter, stronger is the in Why or? fourth margin the Sorry. is

David Westenberg

Yes.

was usually, anticipating. you of So anticipating, your fourth is usually, think quarter. at out what the did than And what else GnuBIO, look when I when I your you I everyone think lot was operating I best mean, better you a strip and like, performance, quarter

you, And quarter I'm QX, then, don't cadence is I improving, think So lot strongest right of guys. I the for into know. would particularly would a typically which that improvement seeing I guess of the continue here. kind

Christine A. Tsingos

Yes.

think fourth I in it think think that into well, some to year-to-date we but us for And will into strength we at margin these then reclassifications helps results, results. were talked I look QX some the looking because the the year-to-date feel between footing is the discussion of and kind growth. you'll And X.X% QX, where like thus of at quarter, quarter, So, solid XX.X%. about to puts continue I do fourth mean, see I about moving the that that just the really the of and on

David Westenberg

then, perspective Okay. for question just purposes. And a

I'm your – And company the when is think are, talk can were relative call, on you let's and had year? on QX about ERP I the you to is say, keep all sort go-live It's expectations trying can remember your quarter, in you or perspective now when qualitative we've guess quantitative where QX relative time. the that a data matter. deck. on laying know So related into data it out check. hands that. you QX you you don't QX, cleared – expectations go-live of your just doesn't give if piece you in to what your reported where you going you when really that maybe any on to QX like just or I said together

Christine A. Tsingos

line So perspective or... your on top question is the

David Westenberg

bottom in you in are your of terms thoughts of where both your relative expectations ERP and in Yes, terms QX. line. referencing to related in of top disruption – terms I'm mostly

Christine A. Tsingos

the see. there let's There right. we're should the this? QX, live. of a X% business change original So original also up was The of going take RainDance. points to was line we for would Where acquisition RainDance. Both ready, Well, with year. the point, top In basis maybe and a base Okay. adding the kind XX you're of get outlook around currency-neutral perhaps was outlook for

media, plan lower I we probably the that is to As with a headwinds parity, biggest starting come But on are original And that. on basis. would currency-neutral will. from we currencies may in which true the be about change call if at still be of talked that the process the you last think to

top are we FX, in that line current using for again, growth. think, the I So range

we the every smoother. that smoother we've And catching what the the, of The see and that of we prior normalized out, ERP, saw all the on has will, first two along add the invoicing that after that's day process of that, get this like – in some is both a part the well sales of and But gone gets that terms saw more smooths with this getting built deployments efficiencies the evens question? quarters spend interruption takes only you two the working day-to-day deployments, that that answer as becomes passed from for three – terms improves system. disrupted and we your collection and since that you first can operations but we've side, you with with the call, to if that level. because of business to really and out, in to evident of Does capital there time with In up not live, more and normal, four really into back as transition. through that come

David Westenberg

Yes. I synergy part was talk relative you expectations can own part, the of don't yes, Droplet helpful incredibly Digital And your more me. the contribution, terms mean and then to there? qualitative how but Definitely about and of you've PCR actually, RainDance quantify, with say necessarily need had RainDance its you system second sort in for much

Christine A. Tsingos

of You in mean technology? synergy terms

David Westenberg

back synergy. more looking I'm synergy sales The at sales there. like

Christine A. Tsingos

Well, I RainDance with acquisition. think talked we've Okay. about the this before so

the of that and plan have top is acquisition. our The business products a foremost, and and RainDance And and Myriad a was we as we're and if customer, where and base business. perhaps, represent to But you'd and existing intellectual developing technology of the bulk adding focus First Genetics, of on value continues and market the it they that, the do that in the talent very going. been add it group technology-driven, to Having a the we've be digital was terms said of that really they to sales. and so majority vast single much good our in forward. of some selling biology anything on move Anette, IP like technologies of in property-driven

Annette Tumolo

sure, Well, Christine.

very intellectual original really had RainDance really share much forward. products property products. of and out, well. think important I very for we larger important us the which have was very, moving really had good Bio-Rad overlapping as technology turns described But it uptake lot think it market. you and developed And in the certainly a We

mainly, acquisition. leverage So to that's going how I think, we're that

Christine A. Tsingos

Yes. And the other, Dave?

David Westenberg

Great. And -

Christine A. Tsingos

Sorry.

David Westenberg

thought. your Finish

Christine A. Tsingos

Yes. Okay.

be contributing price income within purchase off The we the But was did was thing months. we when to get second the add just the other we're the the on, additional line, a on negative added was, this acquisition, which I it And drag goal of was did half write is operating on a I year. bit well of it by to contributing that track of initially goal while part XXXX. going the the to XX think early to have

David Westenberg

you end the Great. Thank much and of forward I month. appreciate seeing it. to at very look the you

Christine A. Tsingos

Okay.

Operator

to this time, further closing I'd I'm At over call questions. Christine no like showing to turn back the remarks. for

Christine A. Tsingos

last poll just to just one I'm just to otherwise, to we you happy beginning, Because make I technical Can be wrap the at had sure. Skylar. Sorry, time want the difficulties sure? And up.

Operator

We Couillard have Brandon with a from follow-up Jefferies.

line Your open. now is

Brandon Couillard

Thank end Would that on to Great. Christine. love We John hear note. can't you. Hertia, from

the spoke us those on the recurring that's cusp is can love get to that perspective business or placements to Anything launch revenues revenues, on for many are tell whether generate if the your traction some and of John, yet, would to in starting of you consumables typing You actually in seeing still instruments how blood terms going. U.S. XXXX?

John Hertia

traction Sure, taking going were The for that we Brandon. It's is place. hoping well.

give our which numbers, system be at can't we going or of I for that good little I think XXXX, specific forecasts a Although can we're were tell out what news. is to you ahead

have a you to As that in. they're goes large. these validation systems, There's remember of with lot

see but the begin to place this more begin you'll that so in year, reagent impact of the And will flow of XXXX. taking

Brandon Couillard

Thanks. Very good.

Operator

And Westenberg. we from have follow-up David a

open. Your line is now

David Westenberg

follow-up. the taking for you Thank

acquisition would know Can would for on more where you aim segment Science us Life front, to towards let the target? Diagnostic you you'd that any or thoughts why aim just towards be segment? the whether the So more

Christine A. Tsingos

Investor be to we going we XX that Day So to a are interesting do on going have talking answer because now. pretty save to right for November the question pipeline I'm acquisition and have and Hertia from both it, John Tumolo Schwartz. Science Norman on management John and side Diagnostics as and presentation side Annette Life Goetz the we the myself on about the

I definitely that's conversation, part of save Dave. okay, so, that's I'll And then think for that so if the

David Westenberg

problem. you Thank No so much.

Christine A. Tsingos

everyone, at of difficulties our technical apologies the the again, Well, for call. Okay. beginning the

have. here thank for time answer we're available always, Bye-bye. and again As and your you other your interest. And may any to you questions

Operator

Ladies and gentlemen, thank in conclude conference. for you today's participation program. your the does This

disconnect. You Everyone, a day. may great now have

Bio-Rad Laboratories (BIO) 2 Nov 172017 Q3 Earnings call transcript