BIO,BIO.B - Earnings call transcript Q1 2020

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Q1 2020 Bio-Rad Laboratories Incorporated Earnings Conference call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions]. Thank you. to call like speaker to now Mr. today, would hand over the your I Hutton. Ron ahead. go Please

Ron Hutton

Group. Thank afternoon, first Buena. are, Today, XXXX. you, Good me Norman we joining all With Executive will Group; Chief us. the Ilan Schwartz, for our Operating President Tumolo, review Officer; Officer; the and Andy and Wright, Executive of Financial Science the President Dara on Daskal, quarter Chief Diagnostics Executive for Vice and Vice Last, results Clinical Annette of Officer; phone thank you President President Chief Life and

Before and and on that to performance making in financial we the we response and assumptions is and begin impact forward-looking of to our of everyone are Included be future statements, statements Bio-Rad based risk on review, steps our pandemic. and I operations expectations other pandemic to plans subject results would regarding will uncertainties. goals, our expectations, events and caution like Bio-Rad the matters. the statements forward-looking these and These future taking COVID-XX management's about are that statements

actual duration Our pandemic will demand the materially able may to responses unknown. and Bio-Rad be these will that Bio-Rad's successful the demand. for is related to certain cannot Bio-Rad’s of We be COVID-XX sustainable COVID-XX that impact or the pandemic results expectations, and the meet is plans be differ and from that this products

update made does and with call in these on factors in to today. statements the The the discuss reliance I we our business. you where detail undue place our intend forward-looking any not during should company SEC, to encourage statements You review the filings forward-looking not risk

Daskal, accepted per financial Executive call to contained will diluted accounting GAAP also Ilan Vice earnings principles. income review which should generally not now include measures will are Our Chief share, Financial non-GAAP turn of to the comparable net the these the defined non-GAAP and to over in non-GAAP under Officer. are remarks turn reconciliations Investors today results references our and measures that to I release. President income

Ilan Daskal

Good Ron. and your make and the families joining all our our for would to continue globe customers circumstances. recognize And employees the serve that current you, well Thank you who staying around extraordinary efforts we afternoon, healthy. you like hope thank thank We and are us. to under to

current Last, Before will Andy? Operating Andy we provide globally. I operations into update environment experiencing that Bio-Rad’s discussion, our on the get Officer, quarterly pandemic detailed are an in light Chief related of

Andy Last

Thank you, Ilan.

To current minutes the oversight to COVID-XX of pandemic manage So I'd operations state like we've sites, our around situation. respond and closed to team on update of the and take a keep the few you established to all world. closely our to monitor

of for visits essential our are is employee of only of operations the customers; and sure safety field employees to maintaining As on we use production progress manage and not challenging base through our strategies. have safety, for work to focused ongoing key essential area to make facilities. period, on three supply all we're making product support globally we our to the home employees; and ongoing from continuing ensure manufacturing In core areas; the our who personnel. of our customer continue safe implemented we Travel limited

are where China adopting our For been have we has region all local and/or employees lifting employees. as who where return CDC with very place reasons response positive pleased to still our work other routines when and we countries shifts, have line we're and this authorities begin are social Asian shelter procedures back stay applicable in recommendations with accordance and at with distancing the monitoring continue home other in at work, to implemented follow In safety we office of in temperatures teams required. maintaining local restrictions. We'll the approach in cleaning lifted, guidelines. Overall, phased

to extremely production operations we've our responded teams situation. well sites customers continuity. And able overall product been manufacturing to-date, closely been supply have to in the continuous ensure and most with have maintain to working Our of our

been our suspended place As other customer some up in changes These across as demands. first to generally mitigate to production quarter balancing of down in impacted inability response for have in and Droplet particular, being able challenges instances part well efforts, PCR many procurement as the their demand all shelter and In to and our we we experienced few challenges and in high in the we've products and scaling and suppliers by both PCR have Digital been companies, of resources sites increased production. our requirements, saw by similar have demand temporarily to a due meet production.

With expected the and recent we're our of now serology Europe U.S. meet manufacturing the demand. SARS-CoV-X test, the to launch scaling also in both

continuity adjust ensure look and we high the initiatives impact our to our energy you. manage capacity continue and customers. lastly, strategies. to situation, And time global As product forward, through and chain demand we optimally while on focused recently much to Thank has supply continue our And pass I'll work Ilan. we this of monitor portfolio quality of in back pandemic, to on managing to it been the our core across

Ilan Daskal

in Asia. quarter. of impacted increase the basis XXXX we in X.X% Net increase in basis, COVID-XX all And QX was in were is X.X%. quarter the Europe. $XXX.X This to tapering the a experienced now, And the as of global in a in sales U.S. neutral quarter, and review the $XXX first demand quarter for were the XXXX. progressed. of versus of I'd sales On which regions million, the spread currency million the first late Sales by evident Andy. you, first on Thank results like in reported

due million $XX estimated probably attack. we by to recall, benefited carryover QX now the first million. you As the that closer cyber We from $X feel revenue quarter to

the products testing of currency of antibody and Group strong increase million product the place $XXX.X across related the PCR, XXXX, portfolio. QX first demand impacted was increase As guidelines. Andy in a lower expression, Sales growth safety. saw of We demand mix $XXX.X based and quarter resulted X% double-digit COVID-XX neutral Droplet alluded X.X% a the in and on was on of and XXXX clinical diagnostics basis. the for in Much to, change which is compared growth a to to in quarter basis Science PCR by the food first research, driven which million were mainly shelter Life by gene products the in reported within pandemic our in portfolio, in significant Digital of year-over-year orders

well related were the research. related strong Life research offset products testing demand PCR was in and our driven tough somewhat as Our by Media by to core related to XXXX COVID-XX PCR, and demand, increases Process produce Droplet Digital Growth the compare academic to segment revenue line. softer as Science

growth is Americas in products to when on diagnostics $XXX.X of grew Life as Life versus Media. neutral reported the on business Europe, were basis the neutral X.X% excluding million Asia XXXX, Process and neutral as of and quarter nice a Sales in of million $XXX QX grew growth geographic growth currency Excluding a Process on basis, the basis. X.X% currency Media a On Science which first a currency well in in QX XX.X% clinical sales, basis XXXX. a Science year-over-year compared sales in the

by diagnostic quality product This controls. first earliest decline blood typing diabetes growth posted in due the impacted led offset within growth lower the and in and in in solid and decrease reduced which Europe. showed times and group During quarter, we revenue. the clinic basis, and year-over-year posted geographic somewhat Americas the the routine visits. non-critical elective of testing lines, diagnostic was growth our to hospital surgeries Overall, immunology On demand a a group

evaluation specificity more of first for also to for XX%, than test diagnostics in we a tests eight XX% the met receive FDA are symptoms. seen after this Mark test, CE press onset which antibody for demonstrated is the has have COVID-XX. requirement may of of total diagnostics company authorization of emergency recent you Europe. sensitivity As and A serology releases, our days use Clinical

$XXX.X of expense of in QX of spend, were prior expenses XXXX. million mainly of of benefited million acquisitions was to to and and for due SG&A of related disciplined million sales or expense. acquisition cost of impact reserves inventory XXXX $X.X to XX.X% expense QX XXXX. COVID-XX is margin of kit. XXXX. QX $X.X million $X.X Net was the escrow recorded the quarter Amortization emergency compared compared to or this, a Total better compares SG&A expenses $XX.X from our compared initiatives, basis XX% QX or X.X% the related to XXXX. discretionary test driven sensitivity million SG&A when to XX.X% The and in were XXXX. XXXX. We to savings related operating XX.X% also detect viral $XX.X gross for the $X.X to in margin low marketing benefited $XXX.X release in Digital of present. income QX versus million hiring million high ongoing to in in virus an sold X.X% travel XX.X% for in The of can $XX.X of for of by the XX.X% QX in Research QX on the of as PCR of even was or test recorded $XX.X as QX an in million first mix margin low cost GAAP a expenses authorization well XXXX. of was quarter FDA and in In was sales the XXXX development compared or of from from gross quarter gross lower million or QX load million result with product reported in goods Reduction $X acquisition million received COVID-XX. amortization Droplet use XXXX, sales current

Reported holding last fair per Looking a $XX.XX. included which below million securities first other to was of in tax QX of the dividend of million the during resulted of to Sartorius $XXX.X and Also in quarter The is income in of was change the earnings of decrease related effective at the XXXX. XXXX compared the for XX.X% $XXX.X XXXX. is million Sartorius AG. of the was income of not year of $X.X QX last rate $XX.X This Sartorius, related results, income net is operating and substantially is to valuation market shares the net diluted substantially declared expense line, to from and value were million of quarter, in share other interest from income Holdings. $XX.X and holdings compared to million QX the year. equity XX.X% reported of

Moving results. non-GAAP on to the

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

GAAP XXXX first first have the the at operating the of a of XX.X% margin margin QX excluded of in operating we non-GAAP goods to had purchased XXXX. non-GAAP of cumulative These related first X.X%. gross million of of exclusions to $X.X a and acquisition $X result operating a $X.X have $X.X versus XX.X% quarter of consequently benefit. R&D, non-GAAP XX.X%. the from of basis, of And non-GAAP and the we The amortization Looking related was of quarter sold, gross million $XXX,XXX XX.X% basis of results compares for and XX% intangibles for versus non-GAAP on on the to was these In XX.X% XX.X% non-GAAP million, quarterly margin SG&A R&D XXXX a the amortization benefit. of we of on in sum In adjustments in non-GAAP excluded expense QX in in of margin quarter. move QX restructuring non-GAAP margin Non-GAAP $XXX,XXX. restructuring intangibles million purchased restructuring This QX of of XXXX a moving SG&A cost expenses legal In basis. of excluded in benefit XXXX.

of $X.XX changes XX.X% venture We the million value items are associated XXXX. was tax for below share per in tax diluted also certain non-GAAP and QX $XX.X the mix million XX.X% geographic increasing per QX $X.X earnings first have $X.XX the versus operating impacted of to excluded with And The rates The investments. of by non-GAAP for million in or Sartorius was $XXX.X the line, net quarter of in XXXX loss and compared which quarter earnings. effective finally, the million share was equity rate of income XXXX. of the $XX.X of holdings

of Moving at on to the balance and were end sheet. to investments short-term $X.XXX QX cash $X.XX the the of The XXXX. billion compared end billion at

of of total for During average of we the approximately at XXX,XXX first price quarter, an a $XXX per shares $XXX our purchased million stock share.

higher QX For from about capital. $XX quarter and in generated to reflects compares the of XXXX, of improvement profits the $XX net XXXX. mainly million This was which cash first working operations million, improved operating

acquisition cash. $XXX the Following We stage with of the enhance early completed Celsee plan products Celsee's the to Celsee company to technology. new for detection an in single end on invest cells. is of further quarter, focused of we exciting million and in applications analysis

in Sartorius a for XXXX XX.X%. The Sartorius non-core part business adjusted EBITDA for the dividend, to million was expenditures adjusted adjusted our We small or and amortization early the used in XX.X% was $XX.X proceeds instruments dividend. or XXXX a in The former EBITDA also the XXXX be of capital of sales. divestiture of the group. $XXX.X about XXXX from first transaction of for completed of million. $XX.X first this were $XX was about $XXX.X million XXXX, The The QX XX.X% was million. of April first quarter quarter of analytical QX million or depreciation excluding sales, EBITDA included quarter Net which of and that’s the

Moving guidance. on the to

uncertainties our We previously the this believe annual may withdrawing the second issued pandemic, year-over-year for regarding XX% currently by impact we XX%. sales duration of quarter that to the and decline the are Given COVID-XX year. guidance

prepared We continue will believe protocols. that work some various of remarks predict would the indicators, year. now and as in might recovery we Operator? the second to to well take demand impact currently and That the open our difficult recovery half as to it COVID-XX line We be experience. the we supply will of concludes But and transitory rate your questions. we expect to return assess that is the

Operator

the [Operator line from Instructions] Brandon And of your Couillard. first is question

Brandon Couillard

just Dara with start the serology actually antibody I’d on test.

At entrenched to immunoassay the expect faced can as is fight of stands it high our you terms great You what in help installed where level, on Bio-Rad’s tests share from an secondly, throughput us that with of a systems with win manufacturing expected with? to capacity, that well. of per your today platform ASP? of terms of any then high kind market you the terms many have color where category? can volume And metrics in And kind us number color tests of EVOLIS in in any in of be few months month now, a you

Dara Wright

players system platform format or well said, variety positioning. our are medium labs, with We a who you for So incredibly differentiator the and of question typically throughput is I that is systems, key your as an a first complementary systems. starting around market. to entering throughput opens suited are capabilities closed mean, believe as sized there other high a are for with that which

for will in And those up expect so as recent competition we systems. testing those large ramp there that starts laboratories, also be more volume to on closed

which really either automated our flow approach for is is great And batch than so based platform, to the X,XXX handling. reader that adapted refer more to of globally, system of plate of are to, automate tens which the there Or any and the installs there can work and/or platform plate we do sized nice labs. our EVOLIS think It of really, be it globally. we which alongside on can that we thousands believe really of are our systems processing run those systems heading a the pipe offers plate to medium both kind be

is manufacturing flexibility an well. approach exceptionally So, capacity scalable From great perspective, as there. from a this format

still read, you opportunity So week asked the of And about we serology And you've millions routine that the tests is is then the practice if believe adoption to ASP. meaningful. as the established got but few lastly, capability we've of is being demand manufacturer there. probably a

think on the in America range. CPP entrants code pricing be questions, still will ASP but we market your being North as other in that for So that as established, the depend volume, that all Was well mid-single-digit Brandon? to likely

Brandon Couillard

one science. the just Maybe more on

as others oriented others of just secondly, speak kind And sort to around the you the talked approach have of You infection, on? many post to antibodies say sort have about than eight of of XX-day IgA window. antibody total many a days focus measuring could decided rather measuring value then

Dara Wright

IgG symptom IgM that post appears is days Our and protect And six, infection. type the IgM, onset product seven to first is post early as IgA. designed as antibody

kit designed earlier of onset. virtue XXX%, enables it early by serotypes, detect these So as post detection, of having upwards that's to days a eight of about sensitivity as all symptom so XX%

PCR So has especially patient earlier believe workup, a we to negative the test, as are being diagnostic detection useful. these really a complement is tests quite used if

Brandon Couillard

chance XX. seen And the might companies that just of to the XQ of one is how of we've COVID so Life able sort the closures? get follow to you one be Ilan of tailwinds being wildcard for the lab of to-date reopenings? the many directional quantify tightest XX from actually pace through you commentary And headwinds a positive of be let's lap between in other sort Could Sciences, terms far. down COVID just related up break relative main there might any from down to sense say ranges that might the

Ilan Daskal

components are And instruments. QX you for the return to regions. about think have speaking, of There kind it potential that about and return several see And think to do gradual to to other we revenue. wait evolves we continued Asia the to how core when see obviously have if it's a China, obviously, in we or work. we PCR Generally the work consider the demand

the to diagnostics kind to the revenue. impact of driving then group. to be continue return kind will clinics, and terms the driver continue in QX to of we surgeries a elective and that of they had of kind to So, the how for And monitor the

for we'll scenarios came have seen QX and see QX, range different how is and how going to so with up and that's we've to evolve. wait So, a we far,

Operator

Your question Patrick from of is the next line Donnelly.

Patrick Donnelly

you about have you about the Ilan, nimble It’s Certainly side? there. guys guys obviously was the here coming? some obviously and range. a big nicely for in pressure guidance Can of growing of mid-single-digits on what that levers talk the the nobody you. the maybe you been initiatives Can with that on are when you just pulling talk can there? the are saw How revenue out revenue margin one good in appreciate given kind you those times near-term you for be focus

Ilan Daskal

you do start Andy, want to on…

Andy Last

Your sure end. on add to hell I'm question at the was Ilan,

an absorption, And factors watching at critical clearly be looking chain through On the as supply closely overhead side, we go, quarter. when that go makes the margin. we'll as we

areas capacity Some picks our us supply, demand position of to in we a had mitigation pace that closely up for quickly monitoring be expectation. and so again, are versus and so also we reduce can if demand a respond

our we’re situation how at supply that’s So its and looking margin. on chain impact

Ilan Daskal

be And also overall, Patrick, disciplined. I very add would to we that, to continue that

travel, react And so we’ll expenses, discretionary in disciplined change to the the whether whether and any its hiring, its marketplace.

Patrick Donnelly

clear, And the has been just XX% also correct? be pulled,

Ilan Daskal

And XX%, EBITDA. have this shape how we'll to of second year the XX% yes. see The the half will and up, generally,

Patrick Donnelly

blood And like environment. then or obviously, now one a maybe mostly right typing. people there's And been to for seems on go It and this donation reluctant great center. to have that in unwilling need demand

that be we’d thinking the the So growth in how business here? should about near-term for

Norman Schwartz

come open think to Obviously, one Overall, typing surgeries down, that think been and to that slow back with market of it elective for is normally. maybe hospitals to that elective seeing I look it's -- to more it. market. to things surgeries take second, kind I a people -- growing I'll is has two So little at we'll returned way a weaker as blood up, the as getting normal. look there back One a maybe ways at

normalcy we then to And of pace. continue come it and so again, expect some to, back at that would degree

Patrick Donnelly

in And really, then million last encouraging share on the the one, to really $XXX repo quarter, see.

market that a being certainly think cadence Should guys going given do. into we higher biggest I've Was expect it I number you just pullback? Thanks. the it's the seen little opportunistic forward? dive Maybe bit? just

Ilan Daskal

about approach see pool. we what to this part $XX continue of have currently, that was approach does of a But said, been left with be to and to the and communicating visibility clarity and the generally speaking, market we year. the that how took get the while. we for mean, in evolves of opportunistic. And It get the we'll million we what it And have we we type and rest have

Operator

question Your of from line the is Leonard. next Dan

Dan Leonard

say versus question that volume noncritical diagnostics is a first on might like any proportion rate business of what be So business. your to you environment? offer in more you run Could in insulated what sensitive would testing

Dara Wright

Ilan, take or would Do like you to me you want that to?

Ilan Daskal

that take can you Sure, Dara…

Dara Wright

tied have like think of business those Things routinely testing for surgeries. I controls, that are aspects are quality in used the it’s, protective and/or start any to obviously our you has levels. products away hematology of miss environment. we in previous relatively shelter like come are diabetes been routine being that But not people of expect as staying lift testing to kind countries back to the been to as what from constraint that certain orders place

Dan Leonard

PCR the is PCR Can you you're selling mentioned constraints? issues supply limiting on only then issues. And that the to when you And factor supply these resolve? the on can rate is might elaborate infer and everything in right it I chain now, you right Andy, think business,

Andy Last

is increasingly solvable. rush COVID it the think When hit, for I more side, surge chain demand was supply that demand crazy hadn't becoming expected. and more was the industry So and this there

for there core that of able Droplet we've co-PCR manufacture, we with been PCR the everyone fair been our but been we've share I So and and some reagents. hard to at capacity couple the problems. Digital moment, secure to think and say largely, sell working to with little large platforms, And competition both is stuck sites I pretty at consumables would There same produce. we much degree, can a components a that we've a out broadly able everything expand that. And to

Dan Leonard

over What question to be you. or you you’re are that develop an like Celsee and final the is and the going is DDC And then it it IT more hoping elaboration RainDance something of the perhaps objectives helpful, expect complement Is my somebody obsolete DDC? acquisition. play on Any the would time just or could there? elaborate thank

Norman Schwartz

that one. I we'll invite Annette think on

Annette Tumolo

happy I partitioning I'd technology we and intellectual Yes, in cell to its is can suited with the markets comes But acquisition And genomic really high it's effective, applications has sorting to certainly cost property. broad be interrogate and flexible, say one that throughput take to the cell that that. important this single trying analysis. of scalable customers it's and transcriptomic it's multiomic well kind and to applications to the single the many cells many certainly are of so on in for interested now, in interested things do. good And the single kinds tube doing. for of people the test cell application now droplets doing, we're test right the so we platform trying to that in we're right focused right really expanding have Celsee are applications and choosing we're a But of excited. flexibility the are so tube think

Operator

[Operator Instructions]

Ron Hutton

line operator, questions, no Okay, the if can you there pull more again? are

Operator

continue. Please the sir. at moment questions No

Ron Hutton

call you thank the you today. everyone. appreciate We joining Okay,

Operator

for this today's your you Ladies and participation. gentlemen, concludes And call. conference thank

may You disconnect. now

Bio-Rad Laboratories (BIO) 7 May 202020 Q1 Earnings call transcript