BIO - Earnings call transcript Q2 2021 | Bio-Rad Laboratories, Inc.

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Operator

Good afternoon, ladies and gentlemen, and welcome to the Q2, 2021 Bio-Rad Laboratories, Inc. Financial Results 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] I would now like to turn the conference over to your host, Mr. Investor of Head Chung, Relations. Edward ahead. Sir, please go

Edward Chung

key you Thank us. joining XXXX the results update phone Science thank me Last, Norman Bio-Rad the you, Good afternoon financial on an Wright, Ilan Tumolo, provide Joanna. and President today all and trends Today, Chief of on quarter for Officer; with for Annette second and business Schwartz, Officer; we Vice Diagnostics are and review Vice Daskal, our Group. Chief Dara Chief Executive President of Group; the the Clinical Life President Executive President Executive Financial will and Officer; Andy Operating

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

is and these Our and impact expectations materially COVID-XX duration unknown. pandemic actual of from plans the the results differ may and

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

not that earnings Generally Accounting now and review net Chief which measures financial results comparable earnings share, should GAAP I over today remarks Daskal, are the Financial our contained non-GAAP under the call President in release. our income these to will Accepted Officer. are Vice Ilan and to that our include diluted Investors reconciliation the will Executive non-GAAP to turn of Finally, references Principles. measures per defined With

Ilan Daskal

you joining hope want officially our and and well to all challenging and staying Good welcome your Thank these he us, healthy we you that are Chung, you, afternoon. also Thank Relations. during is we Investor Edward for Ed. families And of Head times.

details update to I operations to our Bio-Rad’s environment like Before of in Last, an related Officer, provide experiencing Chief current light second I we the would on Operating ask that Andy? pandemic globally. quarter discussion, begin are Andy the

Andrew Last

Thank you, Ilan.

to our well So to of we operations review imposed I'd and demands. Bio-Rad to few the react constraints adapted has able us COVID to around operational working world. current and like minutes changes everyday to well upon a respond take has the and Overall that ourselves find state

We continue hard end in to improvement Life as other work such make well our raw to increased solid a safety with year electronic but we manufacturers of procure after as are and as our With significant plastics well our core raw our some with on Sciences demand, strategies are increased of to materials the dealing in in pressure markets to downturn employees. costs. material as progress having areas ago, we on support responding customers in challenged components

COVID costs to of monitor quarter near the policies this variant, logistics our as indicated typical targeted carefully. pandemic than emergence as and QX work term higher experience global to continue situation to on we call. home later workplace for we XX maintaining also are With the from work We return the for plans in our we Delta the continue

growing has organization. a of record vaccination Employee and and the created. safety the our our Given principal are the delta fluidity, focus with status pleased we variance safety remains

our a half we As to result. and in continued we customers some to we second improvement year through adapt. our emergence flexibility the expect create of the continue we and markets vigilance end as are as the enter delta Overall, expect see QX, will continue to variant maintaining of challenges the

However, the move to and introduces Thank pass you of your attention, an Ilan. it element we I'll variant delta as new forward. for back clearly uncertainty

Ilan Daskal

Andy. you, Thank

seeing We increased sales of labs, quarter. would a by million which second on is increase $XX XX.X%. three the for negatively $XXX.X Sales geographic improvement currency-neutral sales XX.X% in reported which Now mainly of growth the $XXX.X gradual to was quarter sales XX% between driven I in currency second QX million, the the basis. were at and second On and of related neutral million of of in the like experienced regions. a basis in COVID-XX blotting, the PCR products. quarter both neutral a XX% a Group On pandemic currency western XXXX, were in a our and estimate of a we XXXX compared review sales products basis, quarter. by reported diagnostic $XXX.X increase Science quarter Life million of results growth the to Sales and capacity year-over-year we impacted on Droplet year a XX.X% XX.X% increase is million in we were generally increases The across in all of which core levels. estimate basis a a last Digital that quarter XXXX. on and second about of $XXX.X XXXX pre-COVID second were are qPCR academic the continued the the versus QX basis, Net

our We Digital biopharma market have platform. Droplet in growth for seen the strong PCR

on uptick quarter double-digit products last can versus DD for health funding We the driving basis with public are a demand Media, high is PCR wastewater a accuracy increased government offer towards year. year-over-year automated PCR sensitivity. for quarterly same growth also DD labs seeing solutions solutions, and our that which saw in a fluctuate healthy Process

versus currency-neutral Life business all currency-neutral of on basis, Science grew XX.X% a Life Media the QX Process On regions. Excluding geographic basis year-over-year XXXX. across a grew sales, underlying sales Science,

issues and global XXx highlight license the I settlement to this a litigation moving in outstanding resolved agreement. legal XXx of global the announced we over earlier single-cell settlement Before week. on, multi-year cross growth Genomics would like field This the with includes

and in to IT. of third basis the legal $XXX million second on that this as Sales to runs includes the $XXX period the freedom a This broad royalties the the XXXX. payments agreement, settlement XX.X a currency-neutral future the were to In micro exclusivity quarter XX% over royalty a settlement XXXX royalties in in from to future payments fees market year million estimate past a of single-cell Clinical maintain received compared and We is Bio-Rad in well life December for $XXX.X million increase on as QX addition to our $XXX.X quarter back and operate increase and of $XX reported of through the basis. could Diagnostics million from which the Bio-Rad which total % XXXX million to owed for XXXX for November interest. through the Group well single-cell

routine quarter, by During growth Diagnostics of a Group year-over-year basis, recovery grew pace. posted recovery was progressing, a The sales Elective currency-neutral second the slower is double-digit Group growth regions. year-over-year across On the lines. a Diagnostics still although driven the all surgery product across its testing. geographic of at all

partnership market a Bio-Rad diagnostic a gross Reported as XX.X% QX margin XXXX basis the multiplex our efficiency GAAP included Bio-Rad charge and the approvals, specificity and improved Diagnostics global compares XXXX. pending this XXXX Our Real-Time result in margin of for with of announced with Celgene products and our productivity the margin exclusively of the to optimized Celgene million in Group further The leader was last in reported Celgene, regulatory on to in U.S., which quarter an test the second will customs XX.X% work molecular high-sensitivity diagnostics. excluding CFX a of gross that PCR is and gross $X and charge, duty month, quarter QX QX initiatives. of systems.

currently pressure compensation of XXXX. of million million of on costs million expense in X.X% or $XX.X sales Total prior X.X% in sales was expense $XXX.X was or and of employee-related and raw $XX.X million acquisitions sales the in to expense costs. SG&A $X.X were QX mainly However $X.X as million compared income recorded Amortization for sales in recorded operating million versus related result in to of was and expense. higher to the of Research amortization was expenses million of million cost QX compared was acquisitions material XX% QX QX development XXXX. of in compared QX million of Increases logistics quarter QX XXXX. QX or of $XXX.X XX.X% performance SG&A to or compares to mentioned, $XX SG&A million for $XXX.X of X.X% or of QX sales to in of in or $X.X XX.X% $X XXXX. goods XXXX. XXXX related increased we in sold see

interest and was results effective million of securities Looking Sartorius the billion was to is XXXX, foreign fair in both tax an large includes The the July. below XXXX income in dividend the second market the gain and which net Sartorius million paid in to of Also due quarter. other rate income quarter, $X.X in resulted from exchange of XX% same related holdings equity compares value the QX to year. of the XXXX. AG. Sartorius tax equity was the $XX.X income the for The of last operating XX.X% period for driven $X.XXX in to and unrealized of XXXX reported compared the by quarter for in in income to line, securities. during of declared and was first substantially June declared shares primarily $X.X of added the dividend the In periods million holdings was change rate other

from XXXX of certain for tax due $XXX.X quarter was share year addition, changes Holding. Sartorius limitations diluted second in to of of In $XX.XX. less was a quarter this decrease and also is million net lower related effective statute This reserves. of earnings a were per rate of the the valuation second Reported tax the and to last income

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

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

R&D SG&A amortization excluded excluded of of on and million XXXX. in exclusions second we related gross SG&A non-GAAP of the XX.X% of on a restructuring have of purchased quarter $X.X for excluded of Non-GAAP in expenses gross million R&D of and second a versus $X legal basis, XXXX. of of XXXX on XX.X% operating million from XXXX versus cumulative The non-GAAP adjustments XX.X% to to These non-GAAP $X.X XXXX. GAAP of XX.X%. versus million. QX XX.X% and these of million margin have X.X% million margin of basis, In XXXX basis. a intangibles restructuring of was the of XX.X% in $X.X moving second We of purchased the of the of of quarterly acquisition-related restructuring-related amortization expenses. margin in we a These moved X.X% sum In the expense in in QX $X.X Non-GAAP intangibles have XX.X% QX QX was margins non-GAAP benefits $X.X quarter a in benefits. non-GAAP quarter margin operating non-GAAP a basis result compares to operating XXXX on non-GAAP

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

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

During did purchase any quarter, our second the shares stock. we not of

and was the excluding and amortization second was from increase sales. QX depreciation $XX.X quarter quarter QX EBITDA of second For of This mainly capital profits. XXXX, cash and of XXXX Net higher million. of compares dividend for second for the to The EBITDA second million was of XXXX was in net XX.X%. the the of expenditures The XX.X% reflects million adjusted activities quarter XX.X% was $XX.X which generated operating quarter for the XXXX adjusted in operating XXXX. $XX.X $XXX.X Sartorius million, were

could which the and on to Andy to Moving create pandemic, uncertainties alluded sorry. previously continued guidance the we challenges some surrounding look,

business pre-pandemic mix look to activity a environment, a the normalized and customers said, of As to year. continuing XXXX. of better more during That half we adapt to in with this return we half gradual being the assume this second

updated versus guiding X% and XX.X% the growth of million sales to $XX approximately and between XXXX $XX now half are be to our $XXX year guidance non-GAAP, revenue XX% to assumes COVID-related projected between million X%. for second are which This XXXX. We of million currency prior neutral be for of to outlook million full the $XXX

Excluding normal X.X% in benefit projected the levels. and any is COVID-related the half growth to in as of and is sales operating the XXXX the of first activity sales, are half about in continued second between XX%, the second related half margin first guidance more non-GAAP forecasted we and which second half settlement be between XXXX we year-over-year operating between XX% XX.X%. is higher expected return Genomics. expenses Full year non-GAAP year currency-neutral to represents the Full excludes XX%. margin the be growth This over These XX% XXx non-GAAP anticipating X.X% XXXX. now be to to of gross to gradual versus assumes half

and non-GAAP open That the updated is remarks XXXX we is between annual to line tax and XX% year rate now XX% concludes be Operator? XX.X%. forecasted Our projected your effective prepared EBITDA to our be margin take for will adjusted XX%. and questions. Full to between

Operator

Instructions] the [Operator Your Citi. line question Patrick of from first comes from Donnelly

is open. line Your

Patrick Donnelly

is stuff margin, levers much kind guys, you the pulling terms moving coming lot to just just the margin levers just to margin is be in a guess to really the are on out I see performance the half. restructuring you side, it how mean, the years, of of flow COVID through, Thanks back guys Can in of going pieces versus know the nice cost the initiatives high to kind talk through some I just start but what seeing have Ilan of raise there? the of wondering maybe the on I you're of going, through strong you

Ilan Daskal

we benefit for Similarly, et benefit cetera. from think headwinds margin for we part ongoing half gross various but Patrick – associated know the thanks already, Hey question. continue start the of productivity the our from with results line, the initiative. follow that There not you definitely productivity. and to you is part to of, be Yes when utilization see the only pretty of the see good for will of and around in from the higher year. do with this some quarter productivity We the most efficiencies and continue were the second those initiatives afternoon in let's But lot the and about the through FX was the guidance and around the margin. on part second top had that the a associated know with also benefit and half, initiatives improved efficiencies obviously the and continued guidance you

Patrick Donnelly

Are you still yes go ahead….?

Ilan Daskal

to the of for Sorry the half mix some COVID-related the then, kind impact in the of overall the obviously headwind sales to drop-off $XX million create does have you the of COVID half, half $XX second about level second to margins. versus first and then versus million

Patrick Donnelly

seeing of the costs or anything input you given supply comment and chain versus terms in are peers. in issues And offset terms that of

wondering are seeing that Just guys what front? you on

Ilan Daskal

you take Do Andy? want to it

Andrew Last

then rest Well, modest is experiencing I challenges coming the procurement. through absorbing and think don't breaking certainly really some and and the out from I you logistics but increases just we raw it mean higher in material costs we're are some know

Ilan Daskal

freight. And

Andrew Last

freight yes. And

Patrick Donnelly

over again, with one you you single-cell know Right, plan seeing potentially Is will for the guys C. and year. products Cell had you it's previously to side stuff that okay litigation some XXx the Annette talked on maybe this then the later for deck guys feels great see like and a be maybe the still clears guys. I about for it rollout think I

update on terms So I front of timing just wanted and to an get expectations? in that

Ilan Daskal

if Annette you're if the, able on you're Yes respond. to

Annette Tumolo

stage, technology progress investment down all pretty was early really a and the we to little and were make we we R&D. out for so staff are that C COVID Cell and start getting acquired rolling said, expect XXXX. Sure, making good their on by slowed board That early the in and we're admit bit in to will I – want product we we

Patrick Donnelly

Okay, thoughts Any what the just sheet allocation. that's Norm, an for your are of desire like, one would one large of on there? on looking the always and balance looks Sartorius helpful. I And your pipeline terms M&A changes update terms last capital quick in in just or guys you know love

Norman Schwartz

number call, and for transformational. I Yes candidly I look opportunities and something I evaluate I robust mean, tuck-in say we to guess to both would continue what technology of more a

continue all that. we of So work to on

Patrick Donnelly

guys. you, thank Understood,

Ilan Daskal

Thank Pat. you,

Operator

question comes from next Jefferies. of Couillard the Brandon of Your line

Your line is open.

Brandon Couillard

Hey, business of most you just up seeing points, by the of and the talk guidance for of what of between you so Ilan what year two COVID which an full about that. revenues segments, on the updated thanks, you're good upside you're the core only in? the penciling took basis the afternoon. for Life account And of in XXX for growth growth QX? areas bps you Can view sort share could organic the in Sciences terms year XXX

Ilan Daskal

want you start. do Andy, Sure, to

Andrew Last

well uptick we of coming is and is is bit lagging that's academic testing and the Clearly, across the which back be more core in maybe on coming side, back robust little Sure, surgeries, routine institutional which forecasting has broad-based. as the exception all to so more both broad-based Anyhow the seem I as are elective the in regions, clinical nicely background. a the still well. with the behind business been the fairly side Brandon as industrial think that

across our regions. in in we both segments all to it's the of all product really lines look market as So half, second

half. our that's the summary I So version think second of

Ilan Daskal

to for we it I a also it growth. that XXXX over Brandon, the on kind two XX% when stack overall two-year will the years for Bio-Rad stack of also results add compare represent Yes

Brandon Couillard

Right, right.

Ilan Daskal

Yes.

Brandon Couillard

on XQ revenue the any I able I XQ. between share terms and of share highest color sort quarter you mean for give model profitable can to a XQ color is there the mean and Any follow-up Guys a you Ilan margins just us update back as in your that, we of are typically phasing of is half? with seasonally. and revenues result

Ilan Daskal

little the the is is utilization the very unpredictable there as speaking, Generally bit, through some mentioned, fourth but you have this very, of half usually first when is Brandon you obviously always a margin, the was gross half. kind quarter Yes, top a benefit higher, line. good seasonally year to fall first and higher the a from

well it's as gross gradual again up. a improvement on bottom how but margin, will will top-line depend line shape as So the the the it

Brandon Couillard

you color the any and Annette now? on PCR what between of talk about business of can in applications share for a the mix now how about end One into QX ONE see three you between right kind year of launch that the or terms markets demand okay, That's top evolved of just the and you has growth platform drivers the is DD legacy

Annette Tumolo

in are segment. really and System, seeing for biopharma it strong really pharma we for Sure, market that demand was the because QX developed frankly ONE

have really So lot ONE. into QX our it surveillance the in adding XXX systems we to biopharma incremental that and And awful sell don't business QX systems. as we QX and now strong growth well. The to wastewater lot XXX in market expect of pharma also up-take we a of U.S., started seeing slowdown. still the it's growth in EMEA demand is more evolving the we're an for strong But

with and market across platforms three academic go always really and and So mix it's good our a consumables been has it. all the that along strong of segments strong

Operator

the from Your next Wells Leonard Fargo. Dan line of from is question coming

Your is open. line

Dan Leonard

Thank you.

the you business was hoping elaborate demand Sciences on Life drivers could in excluding So COVID. even I further maybe your

seeing Science we're stack If that year compared Life not the business. from is you look and trajectory at XXXX, rates growth the two to used double-digits are the that to in

could big you the on offer color further any demand So drivers?

Ilan Daskal

one. Annette, do want to you take that

Annette Tumolo

recovery. seeing definitely strong Sure, sure we're

that's So right growth. like of what's part our you're behind it

we strong a government some have of certainly If the extent the XXXX that. really you of broad the pandemic vaccine funding product environment, and strong. translational have It's that may be to that across is U.S. look one at is all EU and customer portfolio lot in infectious a growth funding disease, scored a of of pre-COVID over speaks benefits really to need development, into medicine, the

lot moving optimistic and think we're the environment forward. we driving a of about really So that's growth the

Dan Leonard

is that it that worry So next XXXX? a touches this you bit into as we my is question as you of it challenging or think comparison something sustainable is it roll about

Ilan Daskal

Dan, generally we on I can’t number today guide speaking, the mean, comment say let's we cannot for So XXXX that.

Dan Leonard

a clarifications settlement. quick Ilan couple of the royalty on

say your include you you're did Genomics in non-GAAP XXx royalties any off, not from was going your to First out? P&L

Ilan Daskal

it non-GAAP, not I'm guidance I'm provided. not that no, in So to sure but that our going I was included

Dan Leonard

and might in Okay a number is you owe or number. that of Net $XXX million is them between XXXX? owe that you plus potentially the is they'll net royalties, what now that

Ilan Daskal

you what So referring net to exactly of, are Dan sorry.

Dan Leonard

you was money it million, some is chance them the or money, a it pay net $XXX they presumably pay agreement some there you number? number gross right, license across is so is some a So

Ilan Daskal

receive Dan we the amounts So are to from XXx. anticipate these that

Dan Leonard

From XXx, Thank okay. you.

Ilan Daskal

Sure.

Operator

question Your Nephron line from the Jack of Research. from next Meehan is

open. Your line is

Jack Meehan

color the you could a good give revenue if more was you COVID I on that you, duration little bit afternoon. see. wondering Thank the of

million million So back you have the $XX to half year. the $XX of in

the XXXX, Just there you how more do that look wastewater might as much what beyond Do to durable, portion here. on have there? as of you in tail some carry you kind at view any is, like seems

Norman Schwartz

that were driven depends again So and wastewater much to revenue, be very of more our but on terms have small set. we instrumentation very saturated peer that instruments as in is by you and durable the the environment. the the right do funding there for very We potential market majority of our test becoming now. relation in But capacity it's view revenues is to do some know to

when by the and end brings year tailing get XXXX COVID our number we'll small there. So we see to then next for of a relatively guidance we see year, in this what currently off

Jack Meehan

western an area And more, it's strength this second been of Sciences. if driving kind think you've demand out as is that's general of that's wondering is anything there in that if I you quarter been was funding called the Life consecutive or blotting supportive. specific just within

Norman Schwartz

more and funding of in trend labs. a staple general it's a I kind it's think

So we and during the it getting of based, up view that typically the they COVID labs doing as work are do kind coming and labs running up just now are of characterization routine kind broad broad and dry based they back and it's return.

Jack Meehan

Great elective have on you was are could is but the taking just as exit diagnostics of and come called you year? have side then just Do the clinical longer diagnostics. some or maybe look lingering the curious, might impact you back, you family then if kind think you expected procedures, the to any out within about product

Ilan Daskal

Dara question. answer you to do the want

Dara Wright

No, Sure. family just product mean that elective blood that with I surgeries. associated is a one really typing

by right routine impacted overwhelmed really of quality when cases, systems recovery controls pre-COVID across all across line most hospital to are what in COVID diabetes get area that's all XX% said the the other core Ilan and good but the testing, around that's So cetera all with areas levels regions. so, et

Operator

showing not I’m any Instructions] other questions. [Operator

the the moment, would As of back management. turn to conference this I like to

Ilan Daskal

look we appreciate your Bye-bye. today's to Thank soon. call. interest We joining connecting you and for forward

Operator

Ladies you. today's concludes and conference call. this all Thank Thank for gentlemen, you joining.

You disconnect. may now

Bio-Rad Laboratories (BIO) 30 Jul 212021 Q2 Earnings call transcript