BIO - Earnings call transcript Q1 2019 | Bio-Rad Laboratories, Inc.

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Operator

Good day, ladies and gentlemen, and welcome to the Q1 2019 Bio-Rad Laboratories Inc 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. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Mr. Hutton. Ron begin. may you Sir,

Ron Hutton

you, Jimmy. Thank

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

like income in measures over diluted are results Principles. remarks review release. share With the which comparable are and per EVP that the reconciliation Investors and I'd GAAP non-GAAP turn Generally to CFO. of Our non-GAAP earnings our Ilan also should non-GAAP measures will today Daskal, Accepted financial income defined to the include contained not these under references Accounting that to net call to

Ilan Daskal

Diagnostics XXXX. the Thank quarter joining us. and Hertia, Officer; Annette review Good the Science all financial of you Life for Group. our Clinical you, we President are Group; will John results Last, afternoon Ron. Today Norman today Chief Operating and thank With of for Schwartz, Andy me first CEO; Tumolo, our President

QX X%. a neutral On the on XXXX. non-GAAP currency were first reported basis, review XXXX X.X% results GAAP quarter as a the is million a sales versus basis. million $XXX.X a will We for on a growth which increased in basis $XXX as sales of basis well on Net commentary of

of media in science the to of reported a XXXX basis the is was can process compared quarter neutral million comparing all royalty on included demand across When XX% During the particular very growth key settlement in first QX in $X X%. approximately remember million revenue strong quarter product reduction basis. X.X% XXXX that quarter. across line of a was of a product our many Life biology areas QX Digital the million sales strength of of XXXX and growth XXXX, an in the also a of within QX the year-over-year that RainDance was had regions Also of RainDance and XXXX, quarterly in excluding of $XXX.X had QX estimate fluctuate million within sales of we segment. sales food on all and first of $X compared a areas the year, with Diagnostics XXXX. QX particular Americas. sales included exclude QX growth currency-neutral growth RainDance noted is in $X a to last for the of which on and If nice the with experienced strength million we about safety. $XXX.X we sales and the when three in growth our to the cell which quarter, about settlement of basis, good PCR royalty about of QX increase XXXX product The a currency in

reported decline in on million is quarter a a $XXX.X Clinical were basis XXXX X.X% a Diagnostics than compared in regions sales were currency Excluding and currency-neutral across the neutral year-over-year media products Life Americas. grew X% sales, decline Sales Science a Life three the X.X% to business basis. less a and geographic in of the most process about basis. notable Science on basis, neutral QX on of million currency which strong On all $XXX.X

important of to Despite versus of during tough compare of basis. diagnostic QX a on business placements the it a quarter growth our that grew diagnostics the about Excluding X% XXXX know currency year-over-year is of first XXXX. neutral consistent the last year's systems settlement, steady key royalty showed growth,

note with to in group. the for and sold prior were gross in XXXX goods product offset of testing margin this growth was logistics quarter, improvement million $XXX.X acquisitions expenses $X.X The blood compared of to Diagnostics QX cost offset remains for The and of of reported the Science in margin Life SG&A associated the Asia to typing The related EMEA in QX a with the from our benefited Overall, or tough related partially in a QX of on in Americas, of positive. Amortization compared by Escrow parts solid XXXX from of recorded to QX was Group million decline Asia. gross the costs. amortization development $X.X product XXXX. improved Asia GAAP QX During to X% an reserves. of also inventory Total geographic from $XX.X growth first XX.X% mix basis autoimmune expense quarter and recorded posted a sales or service benefited in cost million X.X% The quarter acquisition million across related $X.X products. higher of the of $XX.X XXXX by Research in growth or of within million These XX.X% in to of $X.X QX in and acquisitions $X.X sales compared in XXXX. gross order versus XXXX. QX of of to million release The was in in current and and million QX was SG&A million and was XX.X% XXXX. areas for in and was was outlook the for somewhat timing weaker all quarter margin compare XX.X% XXXX. compares quarter XXXX. an quarter

income income other share and operating interest the Sartorius market value it the $X of declared gross million Sartorius substantially net million XXXX, reported $XX.X change dividend in in related and QX added from the XXXX to was income the million of in share results, quarter of income year is below in the and versus the The $X.X XXXX, substantially in in of million paid related the that were first year of quarter $XXX.X AG. earnings to to XXXX increase was QX the sale million XXXX. Remember the line, QX XX% in Reported this in was per paid equity for other quarter. second rate and product declared was land for other holdings income In Looking income in Sartorius dividend of and in and divestiture the the the securities shares tax resulted the $X.X April. last to during included of was holdings and of line $XX of last which per billion to the small includes and compared of Also share effective quarter quarter. for the March $XX.XX. net of XX.X% a earnings of compares first diluted surplus used year. valuation and million $XX.X Europe. of Holding. income income The net the

non-GAAP the results. to on Moving

our These basis, well that at detailed excluded income. reconciliation we results table press in release. non-GAAP gross as on operating the other atypical as items Looking have a items certain are and margins, in the the impacted and both unique

quarter first the for in cost sold. results non-GAAP the at of goods Looking

acquisition move in to XXXX. of compares of benefits in small of restructuring quarter in expenses $X.X costs. margin compares of cumulative These amount release our line costs. quarterly improvement of and to non-GAAP in $X.X basis. the amortization was $XXX,XXX XXXX Escrow non-GAAP acquisition legal margin We a purchased of first R&D, have XXXX XXXX. have a $X.X an from QX was million restructuring operating non-GAAP basis on non-GAAP to margin million, $X.X which in non-GAAP of XX.X% and non-GAAP of have XX.X. group In from small amortization related gross margin excluded X.X%. in for adjustment. of X.X%, XX.X% of related The The of this we of million XX.X% with a excluded adjustments intangibles, gross operating adjustments restructuring of QX the a These prior in to sum XX.X% Life R&D margin a within on a our to million, first XX.X% QX versus intangibles SG&A excluded These margin XX.X% Science gross expectation. the GAAP QX SG&A, non-GAAP non-GAAP non-GAAP The related a we operating In is these result on purchased quarter of small basis, the moving a

as earnings and XX% the well with We stocks are tax And full-year as for have higher nonrecurring geographic non-GAAP also of million was still however, rate rate associated line excluded billion of we mix items. tax of profitability, the the this certain a items in holdings effective below first XX.X%, The EPS increase dividend benefit the $X in in finally, $XXX,XXX non-GAAP of $X.XX share reflects the an be and Sartorius $XX rate to quarter of for estimation future Sartorius non-GAAP may The between first calendar million per were of of dividend estimated compared to shift net year. QX in share and from annual and provision quarter per declare the stocks Sartorius million of that $X.XX of the net QX $XX.X it's totals distributions to $X.XX. QX $XX.X continue We $X.XX and quarter and equity other investments venture expect the per operating to which share effective change the each estimate XXXX. income XXXX and value XX%.

as of March XXst, $XXX cash investments XXXX. million end $XXX and sheet, Moving were of million total onto balance compared the at the short-term to

and first first and liabilities cash the of offerings. Life during the us we standard the most of software recognize related typically bonuses we annual completed acquisition genomic small leases be in which to requires on expand an as balance quarter, will historically a adopted commissions quarter, has sheet. leases related reagent pay maintenance as as quarter suite assets tended the well expenses. as Science to The we that Also In use group annual quarter and the IT to heavy a accounting our new the company

assets other for are and liabilities sheet represent the included the has our liabilities You a $XXX primarily other at minimal leases. and facilities addition duration global which of the long-term adoption These income in liabilities. current effect the will statement. right-of-use lease in other the to to standard balances associated million balance of obligations operating note of The and

XXXX million of reflects in control. compares was This of dividend adjusted includes $XX of first of estimated of the quarter For excluding from $XX.X a million or was million higher the for QX result $XXX.X or XXXX. in $XX.X sales. million first first as expenditures in capital QX Sartorius The sales. the of were partially improvement the sales. the a XXXX, EBITDA adjusted net of was the which XX.X% of operating was about about dividend The for XXXX which disciplined the Net the adjusted EBITDA cash quarter quarter or EBITDA XX.X% XXXX of XXXX quarter profits million operations XX.X% to generated cost X.X% and $XX first of Sartorius

for expectation amortization the year spend million remains of in range for $XX.X full $XXX the and million was the quarter depreciation CapEx to and million. Our $XXX

last was Norman, questions? open currently that we on the would guidance with call have provided you say you to annual track during are anything We the before with do And the this the like call. for

Norman Schwartz

Sure.

covered they experience wanted well. us wealth both the recently Ilan say last Bio-Rad. of to on and and to Andy, Ilan think both it's I to fresh that a Board, just great I both perspectives Andy bring have and quarter joined

and industry his Ilan's is through finance career As of with the in bringing and in some accounting over biological with has recognizable he him Biosystems, a you background global mostly like experience. product and years is and may companies. industry and semiconductor operational Andy, BD at wealth the rooted management and Applied general most sciences of Affymetrix and has he in progressed the know, spent names

organization joined their start to think a line think take for we'll Jimmy, open contributions. And off the year. your I looks I with And they as to the that, both to we're questions. up us the forward good

Operator

[Operator Instructions] Mike Sarcone Our first question with Bank. Deutsche comes from

now is Your open. line

Mike Sarcone

Dan afternoon, this Leonard. on for is Mike Thanks, good Sarcone

on give us Just Sciences business, first in Americas. more strength granularity Can the what and out APAC some Europe? Life you you called saw in on you particularly the

Annette Tumolo

is Annette. this Hi,

good out our they because all were saw we the So growth geographies, we particularly across strong. called Americas

in areas. Europe and So across I don't Asia. growth product EMEA have say They of key are anything bad about all and our growing to

Mike Sarcone

business. the And just on Diagnostics Clinical one

there? gave to You into you where autoimmune blood saw some Can delve maybe positive granularity to areas weakness you any and typing. particular mentioned just a get

Ron Hutton

Mike, you're looking for a year-over-year increase?

Mike Sarcone

kind the well, weak positives mentioned, in stood clinical was you the had you called in just curious No, talk particularly being I quarter diagnostic. for if you out out as could quarter. of And if was anything the that. there that to

Ron Hutton

weak in the Particularly quarter?

Mike Sarcone

Yes.

Ron Hutton

because Europe parts think little bit about say of diabetes were strong some narrative, of didn't and bit Europe, quality that certain highlight we on as and the did that level it talked there of global probably parts ordering growth being Well, earlier a the little blood sort lumpiness a And weak see Asia in because Asia in business both I control non-core BioPlex we autoimmune in Europe as the were a we typing. of wasn't the I'd weaker. but and and

Norman Schwartz

And let not weakness me kind specifically, to so Asia, issue far. timing and it's that for that see believe add we we it's sustained of also a a

Mike Sarcone

the growth expecting Got last you this it. Are And to you. EMEA diagnostics still on year? one Thank me. to return for clinical side,

Ron Hutton

We actually Yes. growth see quarter in some did one.

years, few Europe of there load and our to growth last continuing last they seems you the EMEA for this I then back encouraging. we did having couple assets calls, and earnings about some transition through if think which worked mentioned the to quarter, talked overall show for DX in be at call growth that was SAP was go consolidation we've over and

Operator

comes question next Brandon with our Couillard from And you. Thank Jefferies.

now line is open. Your

Brandon Couillard

near actually something curious I'm in start margins are over sort you at priorities good opportunities like Bio-Rad, CEO from there points you are biggest if up at operating time near-term Andy. that basis apply of some adhere Thanks, you draw with of where you I take that XXX can see your any term? over think can this and similarities, the like What took afternoon. role of Affymetrix to as your I you some time

Andy Last

Thank you, Brandon.

basis So that. for points XXX

similar Bio-Rad, the was the think, biggest make were. applying opportunities I managing Well, into is I a really When would portfolio the company Okay. on I'm main resource I probably comments mean where that and come question the a I've and to of growth the fully of we I the as Affymetrix confident got early. that couple but feel I apply -- of very weeks mix and forward. business, and the it's got principles profile a move the it's the understand business of can we to same

Brandon Couillard

reason your super targets? were more be the thoughts cash right, those you, $XXX for company, use one XXXX but of level Ilan how by carrying and based sort you you the All off just predecessor? then any of to at would $XXX as sensibly few the of How early first weeks for think it's balance that maybe your any of back do and describe on sort your established million you to with of to the to is position And million sheet. might able balance sheet net an optimal comfort

Ilan Daskal

Brendan. Thanks, sure. Yes,

target. that that's at down So target have the conclusion, look start XXXX. of talk kind of with first a let me is XXXX -- and and think the I I a end did kind at is it and achieve of the to reasonable by

Andy to bottom-up and look into we initiatives expansion. And and dive in of initiatives the a and several But margin to again believe each of them. targeted, have are basis the We it is overall, I going I we're on achieve end one XXXX. can into focused that those by several in SG&A the within gross Company, are going

your Going the back allocation second question capital to model. regarding

activities, this as when the you so the buyback an So quarter. program we we have when did think we right And acquisition look inorganic million you $XXX XX that far. at about about it, now, example did a

to being, of of the model at We in free continue allocation cash we acquisitions that the for the augment alternatively IP flow this think overall is either year nice to will with overall at flow technology capital and have this acquisitions best least time use approach or cash the tuck-in deploy. the or same kind of order

Brandon Couillard

share chance moderation with the your installed Okay and in net applications on you speak you're some and Thank you at base in any the -- in global of ddPCR update adoption then of are the stands what could to growth now? what driving And and key any seeing could system all? demand that drivers of us where you. the trends are that there are sort the business

Annette Tumolo

Brandon. answer probably some of those can I questions,

So we growing all really continue biopsy for to It's adoption application. liquid across geographies. good see is

strong biopharma newer very the the So and of manufacturing we about QC into discovery really and are segment, and cell-based that sales drugs. manufacturing and these are as people both happy in some we in see

So base, well. through it's say those but good are this we me all to expect consumable X areas drive that us. installed what and don't of growing, continue question about our growth your Tell continue those other for talk products the We pull as year on really to really to was?

Brandon Couillard

how business, a last maybe in that to then start market? John, slower dynamics of in And sort but the you. one grow growth Asia to then do timing newer the relative speak perhaps the platforms And your launch on if expect there bit you some some Thank competitive and typing diagnostics think specifically of year you blood your a these X% for in could X% for little arguably you win business Okay. to of the of stacks up rate in perhaps to you that U.S.? level still

Ron Hutton

is good IHXXX volume prospects and largest been in first Yes. just States improve. start Brandon start in the competitive that, Adoption really medium continue so we overall first FDA of stick market the month we for then the be always United the confidence well in continues nicely last for we both would IHXXX, suited approvals don't in we to with the the guidance the see to the business us particularly that the U.S. shares but the really with question typing and that. I'll level the part to and is for talk recent of grew We with about overall. Blood has quarter. strong, IHXX at was Asia good market business fine we group and and that expect

Operator

Thank Sachs. you. with our next And Donnelly from Patrick question comes Goldman

is now Your open. line

Patrick Donnelly

the start Maybe magnitude I business, one on Science a more double-digit will much know the the any doesn't think dynamic the the the guidance put great growth thanks. but the X% Life the to materially closer the quarter. through nice year, durability that dynamics. there get again beat there to Is reason us like maybe pull of type to up forward through any just walk it range? is growth, changed growth, Great, seem of the you growth X% or Maybe just obviously slow just talk for kind to that of guidance outlook to

Annette Tumolo

We had were our we we of of business. growth that from newer that's our process to in businesses can really and strong happy all businesses lumpy growth those don't across fluctuations where orders and and some that see we and good we but chromatography like customer resins core of businesses a quarter-to-quarter one call

pull So through to we in quarter, we we that in orders got in them the of some QX, have first QX. expected did come

that I our So think moving of forward. that expectations moderates some

Patrick Donnelly

maybe Okay, it had the makes particularly story, this ahead margin half-weighted. some sense. a more then year We schedule. a back the seems little little on of Ilan And

of So on you can you guys just ahead a levers pull maybe to able talk expectations through a what little side, ahead of expectations? what came again little margin the been in

Ilan Daskal

Yes.

a or so. well On from as get XX.X, that outcome revenue about initiative as was recap So which the a pickup of from basis, -- was first a the about A last let's lot margin the pickup year. When last year, you royalties about the you of flat RainDance out year-over-year. back point in is the non-GAAP of

chain this kind of from incremental lot logistics contributed consolidation know, other quarter. process for margin warehouses If of that the obviously kind you recall, and the of and a and improvement of was you the piece supply and the of

Patrick Donnelly

revs Can just me Okay. see it timing the more was Asia. to give the the last just into you XQ terms And or that that there? and recognized on a more one softness then a in bit things XQ timing catch slip already of expect color you've uncertain in up on from on in order

John Hertia

John It's Hertia.

year, Asia I the over changed will think so that come we -- in. course we're guidance the again anticipated of expecting orders for the will the hasn't think

Operator

Instructions]. Thank you [Operator

question Our Barclays. from Meehan Jack comes next with

Your line open. now is

Jack Meehan

one-time controls afternoon. Good in the would growth, it in in you. wasn't called how start hoping the business was highlight? or steady-eddy, just I'm quality usually quarter, geographic Thank was were you factors you performed the curious out business. given surprised for I could quarter that pretty point there the diagnostics I any

John Hertia

a related in did This was and is certain mitigated a Heritia. the bit the part parts patterns but and business, but, quarter a earlier Europe. It grow that John little in comments ordering of not in had call China we that to of out growth

Jack Meehan

then, rollout, single And any rollout it. Digital curious cell? the the and similarly how I some of of on Got applications was biopsy timing going liquid Droplet on how that's in side, updates of

Annette Tumolo

Sure.

response clearance So you second Digital that lukemia the in that Droplet test for second going achieved heard biopsy in monitor are and quarter the may have chronic quarter. platform of to liquid use to launch the and to we product by of first the end molecular FDA we

really big that that help expand our a lab for market. us see on all biopsy these adoption So and expect of tests the the that developed expand are liquid share things so platform, we to helping in are that was development

launching weeks, attack epigenomics sample kit a we new cell, of we prep application On single few NGS have it's in are front, announced that an sample next single single NGS interrogating prep. for the the seek the cell cell for

next our that's application out. coming So

Jack Meehan

on the Great and the sizing a and could bit give just of this one color in little around quarter acquisition point? buyback nature any on the thoughts side at and Life more final Science attractiveness question, the the the of you

Annette Tumolo

say of down, we'll on kind launch. quarter to probably into to for Xth more plan application I in and can to right manufacturing year transferred now our novel heads focused this acquired the plants, the we product reagent answer getting the part. first We of a and it have technology genomic launch about we're closer

Ron Hutton

second your question. to Jack And

the to be window, opportunistic year Generally and filed, timing of in be to the speaking not mean able the QX, feel I So close were and it market. the since will had right in with continue that buyback sees to us we depends the step to a we in. we for it opportunity the we we beginning on so after when

Jack Meehan

Okay, sense. makes Thank that you Ron.

Ron Hutton

you. Thank

Operator

no to Daskal am and I back any at the you remarks. Ilan call questions queue turn your in Thank further showing for like time, this closing I'd the to

Ilan Daskal

Do you want be? pull time to one more may

Operator

Certainly. up [Operator Instructions] we'll if queue. do Jack final take the a have any . questions see follow-up moment in Barclays Meehan here to with a We from

Your line now is open.

Jack Meehan

continue out first the couple there I'll anything Is others into of quarter a second that one-timers as the into think some the with I had, quarter. just called the we the progression half. I guess you in about and second

of know, one-timers in just would You year-over-year? terms

Norman Schwartz

So, process right that's on for on I to as it that does going now. one the top-line and the think can one timers every fluctuate it's year here example about from, the

Jack Meehan

to And gross movement we Okay. as I I versus rest bit instrument reagent out related the know the of ask point on the typing to just wanted that think other the blood pieces then been year, of progression anything little a margin about would was the there's through you you? on but the side, to progression

Norman Schwartz

blood In specifically? typing

Jack Meehan

which the margins Or just business. the overall, gross for impact would

Norman Schwartz

U.S. and each to through is market. don't I very progress, pleased the down typing into specific break continues the are with but product the healthy be line and between growth very pull mean the the including the we generally, of blood So penetration we nice

Jack Meehan

think is year? range full XX to a for the Do still you good Okay. XX.X

Norman Schwartz

do. we Yes,

Operator

a Investor. question [Christine Cyngles], have from We Private a

open. now is line Your

Unidentified Analyst

support hands say I confident community future the with you, you working Hello and the everyone. excited say like wanted the wanted in be take minute positioned good I you. years. these I'll all thank you, for I've future and very well just investment unfolds. and certainly Bio-Rad that to farewell to I'm over interest to for enjoyed like we to much. your And that also is and certainly what a Thank many be

So say day. I'll best one for and paths that, again wishes success will goodbye hopefully continued cross our with and

Ron Hutton

want support anything? for to my in wanted if few Christine. don't here I in you, also you past transition add know, your you weeks. Thank Norman the I thank to

Norman Schwartz

No.

Ron Hutton

okay, No, Christine. you, good. Thank

Operator

at [Operator no in you questions am Instructions] Thank time. this I the showing queue

Ron Hutton

your everyone you call interest. Okay, appreciate Thank thank for we and continued joining you. today our

Operator

Ladies participation a Everyone and all and you day. for gentlemen, concluded great today's thank in This have does may program. you your disconnect.

Bio-Rad Laboratories (BIO) 9 May 192019 Q1 Earnings call transcript