BIO - Earnings call transcript Q3 2019 | Bio-Rad Laboratories, Inc.

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Bio-Rad Laboratories' Third Quarter Earnings Call. [Operator Instructions].

I'd now like to hand the conference over to your speaker today, Mr. Ron Hutton, Vice President and Treasurer. Please go ahead.

Ronald Hutton

Liz. you, Thank thank and joining us. Good you afternoon, for quarter we XXXX. for review third will the financial results Today, With the Chief Diagnostics the Ilan Operating Science Daskal, Last, me Group; our Vice Group. Officer; Executive Schwartz, on Executive Hertia, of Vice call Annette today and Tumolo, President the and John Clinical and President Financial President Andy Norman Officer; Chief are Life CEO; of President

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

the accounting non-GAAP will in Investors remarks GAAP our not non-GAAP non-GAAP and defined income that share, references generally contained financial income include measures per under to accepted Our the net diluted which review are these to should are also reconciliation results today of measures principles. comparable earnings release.

Daskal. Ilan? to like Ilan now the turn to I'd over call

Ilan Daskal

afternoon, Good Ron. and thank you you, joining Thank for all us.

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

product good many experienced X we areas regions. demand key across quarter, growth in the all and our of During

of QX, that Diagnostics it business. QX to pulled XXXX, quarter second compare year-over-year year, our all estimate we last currency-neutral last of easy sales pulled that If about XXXX of included about third XXXX that of QX related $X sales substantially to for the year quarter X.X%. that comparing of remember we the the adjust of the QX sales customers to the was million in from growth customers When of into

of Life XXXX of group were third currency-neutral Sales XXXX, million year-over-year of million a expression as by of growth. the in growth to growth reported year-over-year in a in is $XXX.X basis increase QX within demand the gene Science can PCR blotting had X.X% basis, the third an in product quarter and X.X% basis. fluctuate compared $XXX.X which lines. media, on Digital on of Much Process the good was Droplet quarter and in as Safety slight double-digit a driven a western well and Food quarterly on which increase

on Science media basis. a year-over-year about sales, process the X.X% grew Excluding business Life currency-neutral

year-over-year Science a On across grew sales all basis, Life geographic X regions. currency-neutral

capability. Droplet fully Our are Digital and customers increases QX This the momentum, workflow the good Digital Droplet a system. ONE, fully have automate multiplexing integrated to is PCR we the allows PCR next introduce scheduled which to month platform and continues to

ramp of and next backlog instrument, orders initial for an new we anticipate production have over We shipment this and months. XX the

was X.X%. sales X.X% Sales QX adjusting million QX, million XXXX, on the $XXX.X million for a in were basis $XXX the year-over-year in a growth pulled a of products growth to growth is customers QX from sales about third that currency-neutral X.X% Diagnostics the Clinical last compared currency-neutral which year When $X in of to reported a quarter and on basis.

of diabetes year-over-year in a of on posted somewhat the as During the the core quarter, solid we result growth price posted was Typing, in in control while by decline Europe in Americas This region. the rates and Asia, macroeconomic quality Blood nice immunology group lines. Diagnostics growth growth growth pressure and weighs the product the a within markets. On environment geographic basis, in offset

of on for XX.X% reserves. year-over-year and of third mix XX% of cost compared goods driven in QX of contingent sold mainly lower gross margin million cost sales. related margin the reported in recorded Amortization million quarter XXXX XXXX. a consideration increase XXXX $XXX.X by prior of XXXX. compares QX of benefit. $X.X including GAAP expenses were The was is of million $XXX.X product The was for $X.X million QX of acquisitions or expenses SG&A XXXX to QX in to million of and in basis XX.X% SG&A were inventory The to XX.X% $X or and

XXXX. $X.X related continues for Reducing spend to of our in expense acquisitions in remain QX achieve million $X.X amortization to Total million SG&A X.X% in of QX QX or sales recorded expense area compared goals. focus the Research a was in development SG&A was X% to versus XXXX. the or $XX.X $XX.X and quarter million XXXX million of to

of this QX QX million or of income adds $XX.X in of to X.X% to $XX.X compared or a reported XXXX. million up operating All sales of XX.X%

value last other million to of income. in reflect is securities below primarily quarter, to income the related during the Sartorius The million expense interest the fair Also $X.X the improvement of AG. and compared substantially line, resulted the operating $X.X holdings of by year. reduced shares net and equity investment Looking $XXX.X the the market change year-over-year other higher in reported holdings million income of

holdings. $X.XX. tax earnings quarter and of XX.X% rate the XXXX. in Sartorius the million, for is year was XX.X% versus per for and QX related loss The diluted of compares the quarter in valuation share was of and last per and decrease effective substantially income XXXX, third QX $XXX.X loss to The to net the Reported was net in share

the Moving non-GAAP on to results.

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

XXXX of intangibles and versus restructuring of quarter the quarter. for third of to we excluded million for In margin of results amortization XXXX. cost QX $X.X sold, purchased non-GAAP a goods expenses. the These the at non-GAAP margin gross XX.X% XX% gross of of the of in $X.X exclusions moved Looking million third have

non-GAAP million and have The which quarter with basis, in XX.X% cost non-GAAP was The XXXX amortization $X.X in of in SG&A, In reserves. excluded we of XX.X% R&D, our QX have legal of on In a benefit. versus is of in restructuring of a adjustment small a was R&D QX of X.X%, line $X.X restructuring million amount expense SG&A the to expectation. excluded third million, XXXX. purchased $X.X non-GAAP we intangibles

in from moving of to basis operating non-GAAP non-GAAP margin non-GAAP a margin non-GAAP adjustments on GAAP XXXX the QX operating quarterly compares XX.X% in X.X%. on The cumulative sum operating these of XX% a of a This result to margin basis.

which and $X.XX were earnings. compared non-GAAP share for of per non-GAAP geographic third a as share share We $XXX.X is items to and earnings $XX.X equity certain well million XX%, income diluted we Sartorius was also year $XX.X to rate as associated the investments. XXXX basis, of holdings the operating mix be full of XXXX. primarily estimate quarter the small driven have tax with per the line, below the on for tax net million which And excluded of and effective and venture finally, The XX.X%, per the million of in value by loss the are $X.XX in approximately a quarter decrease QX non-GAAP rate,

the liabilities sheet. on on most standard we assets requires Moving associated of represent liabilities first adopted quarter right-of-use operating this balance The balance current the and These for as on to included statement. in effect the us which third a recognize of standard and million are in quarter accounting to other obligations the and The auto facilities assets In leases balance the other new long-term has the our a leases, adoption XXXX, related liabilities to income and sheet. $XXX.X was balances in liabilities. leases. primarily minimal lease

and at short-term to end the of investments QX million $XXX cash the of compared were at $XXX XXXX. end million Total

manufacturer acquisition our we that expand quarter, the the control Diagnostics within products. of completed a group small will quality our in capabilities During an

we quarter, million our shares XX,XXX for of average $X purchased of an share the during stock Also price $XXX.XX. third at

sales. generated in capital. For the XX.X% million XXXX. XX.X% was about third the reflects and quarter adjusted EBITDA million about This mainly of profits improvement cash of to million, XXXX, compares the of first EBITDA in months for net or The which operating or The XXXX. of XXXX of first X from XXXX adjusted months working X XX% $XXX.X or improved was million of in $XX third higher operations the $XXX million QX $XX.X the $XXX.X quarter compared was about to

of range for likely expenditures million for the quarter year We million. third XXXX the CapEx was and low of forecasted end amortization of capital the $XX.X Depreciation third project $XXX full to the that million. will quarter were $XX.X at be spend Net million. the $XXX

first the of months to guidance, performance on Moving the year. in X the overall the

to continue strong We quarter. fourth for see the momentum

we in that guidance However, year global as mind, are macroeconomic of range. geopolitical other Europe With tension in cautious and we softness our well globe. trade remain as of maintaining environment parts full the the in

We growth non-GAAP and projected full non-GAAP between gross is X% XX%, revenue estimate X.X%. XX.X% and XX%. margin a between operating full and between year year-over-year XX.X% margin currency-neutral and year Full

that, your Operator? And we take to open will with the line questions.

Operator

[Operator Instructions].

of question Jefferies. Couillard Our line from first with Brandon the comes

Brandon Couillard

parts the my Can least you of I Maybe perceive in generally on as for business the being universe. sort then Bio-Rad the of little Diagnostics placements? dynamic? or Ilan. that a being in in elaborate you'd think X? that regions more that as some about instrumentation macro-sensitive coverage mostly If sensitive, pricing And what in? diabetes is X And the concentrated macro a it on perhaps script, is competitive mentioned you business

John Hertia

an We're to the not about say pretty some of at that's out reflected. macro look I'll it's just EMEA that EMEA. fact growth year. we're function was been of is the modest price this certainly how we last some the line, Europe related of the in our the year general, to to our as did But business We That's take impact Hertia, soft. reports in decline in you It's look regions. East. Ilan overall and business, but We quarters. John product With just diabetes timing, and quarter. respect and the growth there, in diabetes, I'd easy if to pressure diagnostics -- this see say most of the many with compare continue do happens was shipments also our this have from that market in might continuing in that a mindful market see watchful our that. is I'd the mentioned, over which business. geopolitical instability to But that affected sometimes across trend a I'd say Middle certainly Brandon,

Brandon Couillard

Annette. for one And

accounts expect you help of that system launch, of the between the the just the can to markets you adopt us and the sort users? ONE the who traction could and given backlog it advantages? sort of system understand plexing workflow sort clinical current of right of QX Do in now? of speak sort would sort of upgrades And up to you the On open new mix

Annette Tumolo

have Sure. of we and customers, interested who all This as system and we questions, new for if current been answered But I'm primarily multiplexing adopting for that designed customers BioPharma because know Brandon. the have not system customers your really sure who system of that the well. there capability. the BioPharma workflow was are waiting in this are

Brandon Couillard

so. I think Oh,

where for specific kind of Ilan, maybe -- you of months, see next would I'm some outs? -- be to to months business XX take the -- been expect And that would here. in Maybe you the Andy's then sort do about sure speak opportunities for best you over now you've And the any X if of actions Okay. helpful. could not cost specifics

John Hertia

to? want you If

Andrew Last

-- to reduce primary -- guidance SG&A to for add. as percent This -- think SG&A it a around efficiencies SG&A we'll of I the I gain continue I'm and I us. continues sales. though or that, a to broadly we're the for Ilan focus is out Operating to and a release the Andy, us, not but working well yet focus that XXXX can certainly expectations sorry. in be mean any script. called is area work

Operator

Instructions]. [Operator

of Our next Jack from Meehan Barclays. with the question line comes

Jack Meehan

menu I wanted the assays next with? that the X? QX initial you're a to planning or continue over launch of out ONE game to to the launch on the there looking are a and you're some year that roll plan. that What get key sense for with just Is

Annette Tumolo

great a question. That's

platform current So this XXX% was we and our that made sure with platform assays. compatible

So available we today the RUO people of assays for buy them thousands they to and buy have that tomorrow can QX are for ONE.

with could menu move they into assays, be and one this IVD developed. that's we'll versions out validated will we'll multiplexing addition, color when likely well In in so assays. have Over rolling regulated increase of market, we the platform X their those time,

Jack Meehan

color you the platform? And many the Is on it. installed economics new you -- also, the how to system? and there maybe just And give to is Got the the any on of can base? expect of of those there current size move

Annette Tumolo

Well, add quite platform to customers I workflow, we with have this spoken a few can their QXXXX. and say few a quite that use and to is the also we continue a platform have than who customers well as have intend platform their don't into spoken old to higher-end platform new our This who yet. current

flexibility, use bit you a a more of So get and the have ease little and for and platform. workflow you'll pay flexibility to lot more

Jack Meehan

the new you in using in the product can Keep technology? Maybe of Great. of going, it development updates there any cell some provide droplet single terms Annette. are

Annette Tumolo

tell launched a generating that ATAC-Seq We product on with data for active product of a And epigenomics kit. a I lot are It's generating is our using lot single have What single-cell we for customers, a well. cell. just of RNA-Seq working can and as we're systems programs. next-generation great collaborators that really interest new in you several our is our

Jack Meehan

hop And Great. and back the one I'll one, queue. final in

Just about revenue on line. get the with in my can numbers as as results the line you are

quantify related it may So to the some quarter? how -- Is That I follow-up related only moved mentioned possible that? could John, I there much question delta see. to you to fourth into Brandon's was have really the have have timing some been on to diabetes.

John Hertia

Not really.

Operator

line We of Jefferies. the Couillard have from follow-up Brandon a question with

Brandon Couillard

you, Maybe one John. for

other material China, diagnostics alluded of in the to change space specifically diagnostics. One players the environment in some the in for macro

if changes Just in any there. curious seen the landscape you've

John Hertia

talk then I if over we Well, to But it we to after you maybe see for I'd have the Asia. follow-up turn any general do a to China significant diagnostics that. -- growth And about in from in continue perspective, questions guess Andy company.

Andrew Last

So to QX. more with performance. for our we've We specifically, China, year-to-date optimistic respect encouraged been remain by

everybody But on been, exposure. like put modest else, we long we're our and for think and closely caveat which any changes. geopolitical the also the tariffs, so I situation eye keep watching term impact far, that we'd in of that out the have an

optimistic So look as we're cautiously we forward China. in

Brandon Couillard

an the portfolio. in update for follow-up any cell Annette. Cell then to interest Okay. specifically, ZEX Would And love maybe one seeing get the analysis on And you're imager?

Annette Tumolo

seeing of demand the feature products. in we those good proposition our in analysis I offers we're the customers. with value to And due set Well, think traction and flow respect ZEX, to see particular and lot BioPharma a it pharma

Brandon Couillard

one immaterial build balance to just in The substantially the third Cash Norman, continues the to round relatively for sheet. out on Maybe Right. quarter. pretty buyback is here.

attractive and your closer there. why out to perhaps give priority? seem M&A Just something buyback the not a us on higher doesn't finding of sense be pipeline kind be And of the a any might to whether view you current or

Ronald Hutton

So Brandon, I'm [indiscernible].

Norman Schwartz

Yes. It's always...

Ronald Hutton

Norman. Go ahead,

Norman Schwartz

I've got Yes. that. Yes.

that balance. think it's always a I

at. You've opportunities that you're got looking

we -- the during try it's did buy the those. get we -- to for some But market did back keep so cash and the shares nevertheless, And in you quarter.

balance a right between it's buyback. again, saving and for acquisition it So the the

So we're the we it trying manage can. to best

Operator

have question with We the a Barclays. of follow-up Jack line from Meehan

Jack Meehan

start up on I to was so year-over-year. know just that the modestly business, Maybe process-risen

over half is fourth back the still assuming previously, growth implied that assumption the through think half. you're modest of back some levels I But quarter?

Ilan Daskal

is be thanks we I the answer project The still the Jack. this mean year. for short the to So, incremental Yes, growth -- question. answer yes.

in of projected most obviously, the growth QX. So we

Jack Meehan

the initiatives the helped consumable there the was year-over-year. mix And strong, terms bps of which instrument, then Okay. some in in XX% might call anything progression efficiency versus of to of or out of that really have gross Was margin XXX quarter?

Ilan Daskal

the relative improved, question. is, will logistics definitely Great assay other the last called time. contributed That lower reserves lower in that more be to the we component highlight quarter And and And gross cost. out Yes. items to obviously, was Thanks, consumables with are XXXX. one that that two year would at same definitely margin QX Jack. we quarter. that the the are that inventory items this areas mix There major items and I in of these incremental this there. These two

Jack Meehan

mentioned in guidance Great. giving But you weren't know Day And this last November Andy, of at XXXX maybe, the point. you you I Analyst had at the XXXX, XX% target.

pretty given I Just progression had doable? few the you've the the and that still years feel last year-to-date, does mean trajectory

Andrew Last

Yes.

our can't I I've -- to say targets think stated And with in we're I optimistic hand, XXXX. that. we about think exiting this achieve at stated point

Jack Meehan

a forecast, the pushing a a just good have rate on opportunity there's a Ilan, the number in that like little to maybe still a in And time. go-forward final tax over you one feels my on bit is is number of statement, Like to income down it came this mind? there below lot but basis? Great. keep XX.X% use

Ilan Daskal

you. Jack. So, Yes, thank

we rate. the but that one at right the this long the kind I'm I'll a mean year, we now For rate. to it's XX% overall on forecast not That's XXXX, main next But Overall, I mix. the -- term, the year, provide level. this ready geographic impact I'm an project get non-GAAP it update for not depends call. does item still on mid-XXs, XX% to And of and may

Operator

queue in Thank showing call. I'm that conference for Ladies this and gentlemen, conclude will today's concludes no session. today's time, at questions further you so this question-and-answer participating.

You now disconnect. may

Bio-Rad Laboratories (BIO) 31 Oct 192019 Q3 Earnings call transcript