BIO - Earnings call transcript Q1 2018 | Bio-Rad Laboratories, Inc.

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Operator

Good afternoon, ladies and gentlemen, and welcome to the Bio-Rad Laboratories First Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time.

As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Ms. and Officer. President Vice Executive Chief Financial Tsingos,

Christine A. Tsingos

Group; Thank joining and provide a Norman us. basis. Good Diagnostics to afternoon Group. Life Schwartz, our insight will some President you on for and thank results a Science our non-GAAP commentary With of our CEO; Today, Tumolo, and you, John Clinical then on Annette Hertia, of Paige. our President and review me results we today our are basis GAAP

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

move were of let's $XXX.X million of for quarter the impressive to XXXX a currency year On Net million. increased quarter same the first results. sales So financial growth period the X.X%. XX.X% sales of versus and last $XXX.X first sales basis, neutral

last an sales which comparing a $X million Diagnostics world, million segment first the of the last well for to royalty of for the quarter royalty quarter as million product as pulled our also When forward and estimated settlement sales $X remember around the last sales of of both sales deployment forward, recorded pull X.X%. $X quarter as year RainDance we go-live first to include as of associated XXXX. the result anticipation in that dispute of of sales $X strong well approximately currency-neutral In from quarter with year. neutralize addition sales still the in compares year estimate in this of the first April If was acquired growth European exclude settlement the the around our revenue we SAP of organic million year's was of

performance somewhat we key product Digital across both PCR Diagnostics at segment for currency-neutral of and first growth strong standpoint, grew of was particularly our segments. areas. and pull-forward on as products biggest our that geographic sales nearly little North in compare chromatography sales the America, quarter. instruments quarter, strong market notably Life the particular currency-neutral We first in a on for basis. $XXX.X investment growth Science the in a look of X% quarter last closer when the growth market, Much as driven two cell sales basis year. the and to an of last the increase XX.X% compared year reported were Life quarter region million, growth reagents well of Europe PCR, experienced by double-digit products biology and by are the of of slower a primarily which Science reflective quarter. our offset the quarter in media, most areas during Droplet controls of the From China process orders in to a many During the were Of quality sales Asia within note, sales auto of the immune Pacific, in Digital good tough and and the

X.X% basis, for Diagnostics a On growth was Europe. China, process of solid Diagnostic Life in for of by another quarter product. of our in North products basis, in Sales sales addition were of partially media a America, million demand the offset quarter of and also we $X were geographic currency-neutral the Clinical of in our quarter. year SAP particularly on strong grew experienced were a approximately as Diagnostic related sales X%. We group growth quarter last Science $X of go-live rate an quarter which to the somewhat last of million million neutral basis. forward $XXX.X of the currency the events overall revenue X.X%. current $XXX.X prepared These in for year, to million Europe pull sales first negatively of year-over-year compared the The reported reduced reported increase first the revenue by in unique the dispute the by customers impacted a settlement royalty approximately the On

and posted solid During testing quarter this of the first diabetes products. autoimmune growth we year, of

Our also first quarter. in nicely controls continued the quality to grow

XX.X% America. the China, at annual Looking in reported in product sales quarter last changes view, for and target last gross lower were compared North The strong particularly was inventory higher our margin as compares by was Asia-Pacific XX% costs The to first the regional year. mix, quarter margin when impacted products to and that at well of diagnostic year. than logistics as current

year as of versus $X.X increase for $X.X was $X.X terms the Total of quarter first of Other For SG&A to include in million recorded quarter acquisitions in this related the year. the up sales. related higher last that million costs, the amortization year. remember million to employee the quarter compares anticipated as XXXX prior than spend goods in of first million, dollars sales, first $XXX.X consideration was million a year, contingent quarter quarter The included recorded first in down the essentially in in fees. of was $X.X increases higher comparing RainDance. $X.X well first year compared sales QX to the of related XXXX, audit of quarter but first When reflects last or in and for million, of year our Research for to flat last versus with in in benefit first sold amortization and levels. last the of million. acquisitions of last line a SG&A of percent versus XX.X% investment SG&A year $XX.X of or last expenses which when cost were X% development expense as the to of targeted quarter inclusion amortization quarter

previously recorded segment line, operating we on divestiture our the that included small in resulting a quarter, the the several gain $X.X plus additional land for below in Europe. atypical product items the in of other was during of sale a income million line of Looking

In for addition, our change sizable on noticed you quarter. of the value the P&L income related equity to securities fair in the have may market

many equity you know, a As P&L. accounting re-measure regulations now of beginning through in value to XXXX, our us the change requires of in the holdings

value was our December ordinary the the $XXX and XXXX XXXX first to XX, preferred to quarter, March in holdings For from of substantially nearly million, related Sartorius. shares change XX, of

line XX%. as equity used will effective we size on potential of going continue a forward, P&L. The rate item the our and separate values the volatility during tax Given present to this investment, by first quarter of rate This with related was gain our in tax Sartorius was lower reform tax substantially the sizeable benefit the to coupled U.S. than driven expected the

and are non-GAAP financial is rate $XXX were Excluding during net to basis. With continue quarter effective any the tax the occur result basis. range million income diluted we first XX% we likely in reporting XX% results that mind, the now quarter surprise share earnings for expect why our for on year, the to on be discrete full-year items it a Reported per the to also in a may was $XX.XX. not extraordinary GAAP a that

These non-GAAP detailed that as and impacted well release. a our are income. operating in to excluded both look found items reconciliation have a margins, we unique results we our other as items certain chart our on or gross As press in basis, atypical

intangibles the well by million to the have Looking purchase as year note, XX.X% $XXX,XXX. $X.X project to margin first a earnings cost fourth XXX-basis-point GAAP the diagnostic on XX.X%. quarter a amortization basis first the of intangibles the we improvement first over at cost X.X% XXXX to consideration margin in of results $X.X XX.X% purchase than In versus has a basis, higher $X.X compares XXXX last results last discussed that X.X% of in improvement primarily SG&A non-GAAP of quarter margin basis for excluded our the This legal margin XX.X% amortization basis. contingent XXXX, margin year. This sold, the a of million, we restructuring of adjustments of of XXXX margin which the margin The non-GAAP from a of driven non-GAAP first represents cumulative XX%. sum X.X% consisted for year. restructuring in acquisition-related quarter operating moved first first non-GAAP adjustments was the particular highlight of the gross of and and of quarter in expense these pull-forward last from non-GAAP sales, related of on our operating quarter excluded high call. the of charges goods the decreased in from of on to quarter greater margin as of These on non-GAAP significant would operating non-GAAP non-GAAP consumables. quarter of costs a million, quarter we moving the $X.X shutdown we Remember to that that of have the substantially on for first Of of related million of our $XXX,XXX

excluded rate adjusted $XXX As million the the value $X.X well sale exclusions our resulting certain associated a Europe. product the these income as With effective were property which of we mind well of holdings of earlier, million first equity finally of million items XXXX as tax of and earnings these in in the small XX%. in line I of for below quarter share and $X.XX. owned And all per as mentioned we have a are line quarterly non-GAAP net of various non-GAAP and also with in operating our items tax for increase provision a $XX.X gains

were and It as but Moving small and the to that historically seem use like first forth. at cash typically million end tended as incentive investments has maintenance we annual total and heavy XX, annual quarter software compared the and bonuses March of million sheet change to be $XXX remember a hardware a XXXX. pay so quarter to $XXX costs of our balance may cash short-term commissions,

cash often resulted this period. such As historically operations the in from for flow negative has

just in expenditures XXXX net for we generated compares to year-ago over $XX.X Net progress $XX.X our more both Europe, improvement in versus of on a the or new million to decrease of quarter in million was ERP continue the the and primarily the For XX% significantly as payables sales. negative XXXX, towards quarter system. global the the million, $XX.X project. reflecting make capital the down first $XX quarter reflects of EBITDA This for operations on good was cash positive period. quarter first from stabilization noteworthy, which $XX million million efficiency result spend were Also than first adjusted in the collections ERP

sheet balance million expectation $XX.X increase of $XXX the million amortization Sartorius. million. of And full-year investments finally the is shares quarter CapEx now of in significant the the include to range. depreciation the was for which voting Our other the and note remains mark-to-market Also $XXX in for on ordinary

for in with Associated this stockholders' liabilities our a well as is increase in increase gain other write-up in retained on Sartorius reflected the tax as earnings significant the equity. long-term

take for at XX% positive XX.X% the Moving many targeting thinking our earnings goal is throughout our X% to our ability operating key coupled as top-line markets of that as the with current on guidance. call, And year. X.X% in estimated the we non-GAAP quarter using outlook year. margin the sales rate, we our XX% exchange with that, XX%. XX.X% Today we are to performance XXXX to On currency achieving to our XXXX. When the an questions. margin to and gross strong The the and foreign shared goals, range and thinking in neutral first to the reiterating reinforces in your about in growth for the an of that for are a guidance from margins X.X% target X%, estimated increases last outlook full-year confidence basis for our happy full operating sales end well margins the our expand growth to

Operator

of is with first from line Couillard Your Jefferies. the question Brandon

Brandon Couillard

Good Thanks. afternoon.

Christine A. Tsingos

Brandon. Hey,

Brandon Couillard

tougher? And be a Christine, two in last out quarter outlook made part on the question would that pull-forward chance effect of non-GAAP for year? you the basis then split first margin gross the secondly, of the Any your what that you year could on gross for comp margins.

Christine A. Tsingos

those math company terms So average without customers consolidated what last orders do than gross is higher kind of certainly consumables forward margin our we of who of in specific the recasting standing year on the that the to carry done and we on pull-forward, our but had are haven't pull a consumables.

So, then that it. didn't so specific the carry Brandon, And question? but XX% general the consumables we of part calculation, answer is second your in can margins that short was that make or be that better,

Brandon Couillard

margin gross for the the basis? guidance could you non-GAAP year If recast on a

Christine A. Tsingos

Sure.

the margin about margin that of if XX% line. found that the XX% gross of improvement. So XX% balance improvement then is also we XX.X% probably margin some and XX% margin will from and And a is operating on XX.X% to now is were on talking but going to to improvement operating target getting to XX.X% the operating gross of the you

Brandon Couillard

the we next pointed to absolute basis Thanks. That's flat in to dollars a through to year-over-year local that through that SG&A then can Analyst we how helpful. How cadence on of balance quarters? And the of margin we at expansion year. Day, I the us look will currency year, expect I to think be as the you think terms get particular, you few think had I help of And as you the progress progress you anticipate in year. over back for should if believe move the in the

Christine A. Tsingos

we question. experienced note as year, do easier year term imply improvement have top-line if that's the compare then look good great progress we of margins to that the the growth quarter go-live and helps will that we particular disruption which related margin on Yeah, to we our to quarter we solid with in through bit you with remember quite top-line the the would a a short a expansion. ERP as And anticipate this on second

driven expand. our to as the of line, the flat a So then strength type the improvement rest top you the see being wouldn't with strong out in the you'll then SG&A of look QX. SG&A QX surprise Much something we more and margin quarter as to and year, performance years terms the it it of growth and seen how ending back And tough maybe and work to top-line. second the hold at seasonal on quarter to the margin it in rolls we've that historically to then, is me if by through we continued spend, and see of this throughout grow in continue margins continue good

which a The is consideration product takes important the for top-line the X% divested of that other small we have sales line X.X% represented out a thing that to us. into reiterating about just million is year on to point $X

that we are and up looking guidance million. keeping So top-line other at make $X finding for our way to

Brandon Couillard

the Thanks. guess, be I with assets share That's at update the you you're now. are helpful, there Thanks. M&A thinking for businesses can how types pipeline, Norman, and then out looking that about any and lastly Thanks. you of us on the might you right

Norman D. Schwartz

of of So there category. tuck-in be number say continue to a interest would the in I things mostly

to would we're what do hope this can something continue by there that seeing be and we encouraged be We we'd year.

Brandon Couillard

Thank All right. back. you. I'll hop

Operator

is question from of the next Your from Leonard line Deutsche Bank. Dan

Dan Leonard

you. Thank

caution comp of so your pretty the looks ERP Christine on question put revenue a bit as in revenue of you first you're the can disruption QX strong off, where revenue half guidance, first prior make the a the me you given Is The full so higher seeing to are is a in quarter context anything So in – year. X% the -- help above flags would number that which year? guide. X.X% for had potential the there second you year than about growth organic thinking you a X.X% favorable in

Christine A. Tsingos

X.X% big the organic you to than Certainly neutral a year. higher it's up for second a of made because was a that's becomes year of QX tough And quarter year XXXX. everyone a end the disruptive in course compares, currency the QX reported on we QX basis. that, quarter up then the good X% maybe quarter a time us last tough remind but half last the for that of And being to very compare No. was has of can couple

in the to the probably are especially quarter. tougher rates So growth compare fourth and

Dan Leonard

so the typing of announced us, sense of the any Makes contract I remind you you then update that points revenue the getting say walking any some you in win and progress through November you yet were from or strength, U.S.? on secondly blood immunohematology you Okay. and immunohematology, when LabCorp in the didn't of notice ramp are can

Christine A. Tsingos

more just We growth pipe Hertia in set we pull-forward mixed that's it of I'll very as in because so the John and Europe. to in doing are result. lot and on terms gained blood Hertia, in was but last then the my year let talk that's a of good very, They very it had market also good traction not up little mentioning a the a is a blood probably comment for quick I'll had make and products, the script this about John important in specifically for U.S. a typing you they it. tough in compare in typing, Because

John Hertia

both typing North blood this for IH-XXXX in in what very, well I we're the kind Sure. new been time in America Things we Pacific, say with finishing then, are have volume just somewhat kick XX% And And market after been very strong both some strongly and the really, has beginning in in low us very, a technology the LabCorp of introduced. has systems blood also the acceptance the up very they're validation has that. the past from typing. been implementation at will sites blood typing. backup with about going also to Asia of well for U.S. and is the getting of growing and for been so respect really tired would revenue few done announced really is that first good the doing And Asia systems year. as and a introduction

Dan Leonard

my in much how comparison, the basis hop operating points currency operating weaker is question this dollar? that of that year-on-year back appreciate and expansion expansion, margin was and of possible foreign of Christine, XXX non-GAAP that I margin due to on queue. U.S. to then final Okay. the color I'll

Christine A. Tsingos

me. have question, I Dan, the the with don't I don't have details good details.

Dan Leonard

Okay. much. very Thank you

Operator

the is David question of C.L. from next line King. Your Westenberg with

David Westenberg

for question and thanks on taking the quarter. a Hi, congrats good

Christine A. Tsingos

Thank you.

David Westenberg

to Droplet year. acquired last strength instrument, Digital you talk you the So in about PCR the RainDance in continue

system, can seeing Droplet seeing you anticipate with own be So some R&D synergy? talk acquisition or you're the sales your it maybe RainDance of PCR in Digital the about synergies or that whether

Christine A. Tsingos

that... So Annette, I think

Annette Tumolo

Okay.

along Droplet results property our we're that intellectual and the I gained with our Digital able the PCR QXXXX programs So moving knowhow that lot generators we go with R&D think very a continue automated our acquisition integrate to into it. we are of grow RainDance We happy and and to certainly really with quite well forward. and

So we're really happy that with well. as

David Westenberg

guidance, in Yeah. your talk right. of that the growth then Thank you. All geographic about considerations products just versus down? we versus how and take general can might break And when you market expansion new

Christine A. Tsingos

And Investor make want going just so, in I back growth? sure looking I the Dave, Day at kind to just you're to general of our understand talking

David Westenberg

Exactly. of that this are you're Components proportions in this and out that guidance. the looking out three you kind there of in guidance? the the those that of Is growth still year's laid terms

Christine A. Tsingos

product et moves out lines in But time good we as is well the activity. Obviously the we're towards quarter negative line our couple and geographic have I still for product it market, you cetera, cumulative of new as but Annette as on their and the both the line. John Hertia seeing pointed gate very pricing expansion. some of first new products out I pressure, do think new extension to in think the as XXXX start experience of impacts target, geographic a of

David Westenberg

of year the non-GAAP are completely of inclusion in not I seeing or wondering, fees this I the your noticed is anticipation just fell consultant Got was it. ERP. there – any those off? And of you had numbers, still that the breakout on in

Christine A. Tsingos

year or have atypical No, costs it's call at hard unique. those to We still and this no. point, this either

the may I when it's as non-GAAP is and about part we talking remember the investment it of but the were would so the that we our we're significant think non-GAAP at pretty the out, year something going of project reduced outlook for you in in business But looking not out. And part spend were benefit XXXX. or it's ERP of to not margin that that's expansion. highlight something for the we

David Westenberg

I'll questions, good back much thanks I taking jump for appreciate quarter. congratulations it. queue. a and very the in on And then

Christine A. Tsingos

Thank you.

Operator

line Your question of with Couillard Brandon from next is Jefferies. the

Brandon Couillard

might activity question One for or Annette, you Hey, IP? the us the with progress any thanks. Droplet licensing made respect have Digital share with if could to any for PCR you updates

Christine A. Tsingos

thoughtful do Brandon. We're to technology. were for – use several to getting really rolling commercials licenses we parties engaged that with right Hi, commercially the – roll program out. that We about But for we're be ready we're how that. to now wanted going

it's along So had moving as hoped. we

Brandon Couillard

with candidate close then search externally update a And any us you could Okay. maybe looking be far as whether onboard? the share as COO to whether Norman, more might for you're coming or one and internally, pretty

Norman D. Schwartz

not-too-distant So we'll we've external I both something would And internal candidates. have got imagine future. the and in

Brandon Couillard

you. All righty. Thank

Operator

We no further questions. management I closing further back to have any to it Thank this for turn you. would time, remarks. comments At like or

Christine A. Tsingos

time to Okay. Paige. everyone taking next and the the Again a you, to today. speak. We appreciate you chance we interest forward your time to Thank have Bye-bye. us for join look thank

Operator

participation today's Ladies your day. this and a for you gentlemen, and have conference. Thank wonderful concludes

may disconnect. now You

Bio-Rad Laboratories (BIO) 8 May 182018 Q1 Earnings call transcript