BIO - Earnings call transcript Q3 2021 | Bio-Rad Laboratories, Inc.

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Operator

Good afternoon, ladies and gentlemen and welcome to the Third Quarter 2021 Bio-Rad Laboratories, Inc. Financial Results Conference Call. My name is Lydia and I'm your operator today. [Operator Instructions] I would now like to turn the conference call over to your host, Mr. Edward Chung, Head of Investor Relations. Edward. ahead, go Please

Edward Chung

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

and the XXXX Bio-Rad. third provide review Ilan Norman will We Officer; Clinical quarter Executive Annette Executive Chief on the of Tumolo, the Financial today Officer; Executive Dara President President the Andy Group; of business Wright, President Schwartz, Group. on our Vice Chief an and financial Vice Diagnostics key President Life Last, and trends me Chief for With Officer; Science Operating Daskal, phone are update and results

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

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

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

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

Ilan Daskal

you joining hope and and well all challenging and staying Good your you, these us healthy you that are Ed. afternoon. Thank during we for Thank families times.

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

Andrew Last

Ilan. Thank you,

of good everybody. a take start moment like the So we Science for thank this years President at the company Bio-Rad Life significant year. Group will I'd Tumolo, Annette's Bio-Rad with, at the and for our as to and growth the the efforts To plans Life a afternoon, an nearly to of to and she successor of provide end update contributed search a Annette to Group started leadership service Science and months. in have retire for has XX coming

review COVID Now, the my the comments quarter brief now to to practices. as embedded consecutive I'd we current world. safety state take so minutes shall seventh like our the entering around now and operating with pandemic We're cadence employee a established operations an within operating of I of few have make

supply during markets in science chain diagnostic however, all constraints with and in pickup through particular, in end show The balance life plastic in both components of to To call, have been markets we costs. supply for persisted have improvement and higher able regions. and continued Our QX and highlighted raw logistics our QX, materials, supply electronic date, demand management. cost to demand careful

increasing continuing trends of However, through meeting thus customer and challenge into year-end XXXX the and we adequately see this supply constraint demand.

the the of pushed variant, early COVID-XX result date return recently November. our into for a U.S. workplace out Delta the As we to

of vaccination introduced with we a QX, During pleased for all are results this in employees requirement the mandatory extremely and U.S. decision. the

a are we all commitment our believe safe maintaining for to we -- workplace our believing are We employees.

markets end we COVID-related QX, expect believe lower. to to overall, to continue are recognize be dynamic And will our As close products sequentially market operations, although of challenges. demand create for enter we the approaching COVID that we our we normal majority

turn it Thank this Ilan. point, So back you. at to I'll

Ilan Daskal

Thank you, Andy.

Now third quarter million versus basis, a a XXXX would is $XXX results which $XXX.X On I like the a XX.X%. of of to the on sales quarter. in for review XX.X% increase were third increased of XXXX. QX reported the the basis sales million currency-neutral Net

third royalties million $XX quarter The back XXx. sales for include settlement a from

in benefit basis to Life XXXX occurred. continue third Sales $XXX.X were Asia, that year-over-year million the basis. was Science we Group back to growth basis, which in have currency-neutral XXXX of COVID-XX-related currency-neutral a of outbreaks XX.X% currency-neutral the as compare Americas reported the and geographies from Excluding experienced in year-over-year the compared demand new and royalties, spikes in QX a the $XX quarter in declined quarter we were about a a strong tough slightly where a million Europe sales of on geographic XX.X% in sales. $XXX million due increase We in increase On in revenue on estimate X%. while the growth growth to QX COVID-related is of a

X.X% strong a quarter business fluctuate year-over-year business Excluding double-digit newer growth the year-over-year basis, qPCR basis the growth $XX on Media Life sales Process on the growth royalties, COVID-related our million the CFX year. settlement versus in excluding for quarterly and products third was Droplet nice sales, last quarter QX platform. PCR of increases currency-neutral strong grew saw experienced mainly a of generation by underlying by Digital driven back core Science uptake in XXXX. also Opus The versus can which our driven same

X% currency-neutral lower sales, we have COVID-related to Excluding sales and underlying due QX When was growth versus business a Overall, settlement growth XX.X%. the market for strong the Droplet platform. XXXX of sales. currency-neutral Digital the revenue also in royalties, year-over-year Science $XX excluding COVID-related Process Media for Life million our PCR seen basis biopharma declined Science back Life on

year-over-year posted and COVID-related declined sales, Life Europe. region grew to see ddPCR government but geographic to is adoption currency-neutral sales QX compared $XXX.X When were a health a the increase the the a continue from the XX.X% XXXX on in a XX.X% currency-neutral Sales wastewater which a Group double-digit in of revenue third supported in reported on excluding increase Science by Americas public $XXX.X Clinical basis. European million funding also of year-ago On a in solutions, We million steady period. increase towards across labs. Diagnostics and basis, basis Asia quarter of

to The a year-over-year pace. or related XX.X% digits SG&A $XXX.X the a On in million Group of Group grew sales sales During blood Increases product and expenses which growth in approaching posted to across in the million productivity its for XXXX. XXXX compared sales XXXX XXXX. was routine of Diagnostics third mainly a The to $XX.X expense. QX initiatives. improvement QX related of GAAP compares was the XXXX. regions. margin a testing the income $X.X expense was or spend SG&A The $XXX.X and gross for QX as recovery at Total driven is to of of quarter reported sales $X.X XXXX. for million double basis levels, acquisitions in $XX.X operating was geographic in basis, to million and in cost driven SG&A all mainly across in compared was sales typing of quarter, to third by or with in compared versus year-over-year margin million slower all of in of the of million of $X.X appears as Amortization Research growth currency-neutral XX.X% employee-related on million of exception settlement recorded quarter efficiency normal XX.X% of progressing by XXXX. recorded result the in Diagnostics million or were $XXX.X was X.X% XX.X% lines. of development X.X% be compared $X.X our million of the QX which XXXX XX% was amortization payments prior $XXX.X sales was the or well QX gross QX to XXXX. sold of of expense acquisitions as XX.X% of QX QX QX to million or QX of goods

compared in income the for $X.XXX market of XX.X% XXXX period share rate the The $X.XXX tax and Sartorius of the billion of is to billion of operating substantially was shares changes holdings reported for the Reported for in $X.X Looking of large the were earnings XX.X% below XXXX. added increase equity per holdings. line, to results $XXX.XX. an quarter diluted year of is holdings Sartorius value unrealized third fair and both for driven net by related from change periods and This to the resulted securities $X.X the of in the of valuation to AG. The equity last securities. and to to million effective other net in losses a Also due same compared during largely quarter is rate the foreign tax were related was income income gain third year. exchange the last quarter, expense interest expense in primarily million, and

on to Moving results. non-GAAP the

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

XX.X% excluded and In $X.X intangibles have on in have we was million margin versus third of quarterly Looking The of third adjustments X.X% we In of cumulative XXXX XXx goods result operating $XX quarter legal the million XXXX. on a a purchased quarter license of of margin moving a to compares non-GAAP in This non-GAAP cost of with exclusions basis. versus purchased these XXXX a small XX.X% XX.X% $X.X R&D, of XX.X% the a the the non-GAAP and restructuring These and at we of of settlement. cost. Non-GAAP in expenses of intangibles, In a QX non-GAAP in restructuring of amortization gross small million royalty operating QX related Non-GAAP associated sum XXXX. in of was versus the XXXX QX benefit. XXXX. margin for operating of to the GAAP excluded cost. quarter, third million, $X.X to have non-GAAP to of from basis, XX.X% XXXX. small we IP margin a basis basis, restructuring of $X.X XX.X% XX% SG&A sold, payment on results gross non-GAAP million non-GAAP quarter of margin third debt moved X% costs expense legal-related in acquisition-related excluded non-GAAP for in in QX a on sales, R&D a SG&A, in the excluded amortization the have

in effective by driven was rate the tax XX.X% same XX% equity of XXXX operating which value are We associated below Sartorius with excluded investments. $X billion of the in loss venture the to and The period was mix XXXX. in have items The geographic the increase for non-GAAP also earnings. line XXXX rate quarter the million certain compared holdings a of for $X.XXX the third low about of

the million that addition, tax diluted tax in earnings net In as compensation-related the $X.XX share per third quarter and an per XXXX. increase QX result in or compares share lower deductions. was of was effective for finally, rate of And non-GAAP and of a million $X income $XX.X to $XXX.X XXXX

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

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

of operating cash operating million reflects third XXXX, XXXX. compares profits. This activities QX was quarter which the For in million $XXX.X increase to from generated mainly of $XXX.X net higher

qPCR the of billion platforms. thereby the billion adjusted in to EBITDA The segment, third significantly science opportunity solution quarter Dropworks XXXX the approximately lower-end segment droplet-based digital to streamline digital cost-effective Dropworks Dropworks our Bio-Rad's adjusted sales. was the could $X.X digital for and for of see that allow $X into ddPCR business increasing quarter, PCR The XX.X% expenditures XXXX the entry diagnostic quarter developing capital of and the PCR were of the for the life depreciation third third system for was for million of expansion a the in a in million. accelerating $XX.X quarter we is was XXXX provide and of workflow end applications. of PCR QX as for research We the $XX.X EBITDA acquisition for XX.X%. more million the completed and cash. amortization Following $XXX Net

guidance. growth rate. we a continued Overall, normalized Moving to more on expect to the trend a

seeing of constraints around uncertainty chain timing are we elevated However, increased that creates of supply customer an deliveries. level

now and to a outlook XX.X% $XXX XX.X% million This growth the forecasted we revenue XX.X% versus prior We of and operating XX.X%. supply are are the revenue and versus Full $XXX XX% guidance now million $XXX to Full reflects versus $XXX versus challenges year to XX%. of expected margin year between guidance million XX% of between be be COVID-related prior prior our now our guiding currency-neutral XX.X%. and gross non-GAAP projected year XX% experiencing. are full year to margin XXXX is range wider guidance range million. Full updated in of non-GAAP XX% due which guidance of prior is to sales about to be non-GAAP

operating Our to more activity updated QX guidance anticipate assumes a gradual as expenses return normal continue higher we levels. to in

be tax Our between margin updated increase versus EBITDA now forecasted guidance rate XX.X%. deductions. is Full projected annual of due between prior guidance The to non-GAAP effective XX% is to lower and and to in XX% compensation-related tax rate is mainly an be our XX%. adjusted year XX.X% XX% versus and prior

to event. now Lastly, an COVID, our That our concludes your open the February hold surrounding with planning preference uncertainties our in Investor in-person are due and the to line questions. prepared Day Operator? will we to take host we now to remarks

Operator

Patrick of comes today question Citi. first Our Instructions] from [Operator Donnelly

of open. your Dan Dan Wells next Fargo. comes Our Leonard is from line question

Dan Leonard

you. Hi, thank

first, hoping, the are further quarter. like looks margins XX%? on It elaborate fourth guidance stepping you margin to operating could the So down in

Ilan Daskal

guiding if I'm -- the one. operating Actually, little guidance? think versus comparing more also to a versus which just margin, guidance Dan. Sure, slightly Are bake it comparing trying prior we into you are fourth you bit it year-over-year, to to? quarter, a gauge it's quarter it sequential the are you higher. higher And I

Dan Leonard

Well, full for guide. plug year the the

quarters, sequentially. for I than we're through full the or in compares and non-GAAP implied get to year-on-year the said with results first XX.X% and quarters, the XX.X% three think an to QX coming you that given XX% up previous lower either year

Ilan Daskal

Yes.

that expenses of expenses the yes. quarter of are fourth operating in expenses also employee-related higher. back of seasonality, That's that's indicate terms we So some And discretionary sequentially. slightly are higher and the correct, sequentially did then some that

Dan Leonard

is seeing offer you follow-up. the restructuring those making of on just you back then, from savings And event? efforts? initiatives any a February? an Are in announced cost more a you that Okay. Or against you're Can update XXXX progress the

Andrew Last

Yes. Dan, it's Andy here.

would first, is say with very going our So I well. progress to expectations. track parse on question the we're

performance So performance, contributions operating effect. thinking The to coming XXXX. really delayed in enhancement that of of a is it majority

Some is track the But everything of will now. against our to expectations the materialize in more on half right latter year. 'XX

Dan Leonard

Thank you.

Operator

question. has the Donnelly Patrick Citi you. Thank of re-registered

Patrick Donnelly

hear you right now? Can me all

Ilan Daskal

Yes, we can. Thank you.

Patrick Donnelly

Okay, great.

just doing more like business segments? expect pressures, the expecting the can couple Maybe, Ilan, you're quarters? you're to you on through talk Maybe out we then address that. maybe it can a And through through touching the where it, issues what about particular to and it or Sorry 'XX. just sounds of that talk persist you called again, kind over play just supply little guys of demand to and detail Andy, you it's guys impact out line how are next seeing you whether

Andrew Last

this Patrick, Andy. Yes, is

So products. look, the challenge, fairly it's complex we broad sell and

be So you chain to missing component only supply in one impact need you. to the

determine the it hard industry this to when experiencing we're globally. think very rest don't beyond just tail of off. sector our the And I different So or anything is that's to even will

But expecting can simple So on-off products. as boards XXXX integrated switch as transition into well. various to be we're it and as it to plastics full an prudently,

The are extremely So are our facing. that's supply partners. really we're been and very on supply the we issue We team What And procurement working to doing? doing we've is date, chain to timely start working there meet prudent point, But we way. them as in because think view call customers out constraints impact they at some well. to it ability to are I and a hard. your

Patrick Donnelly

you you from talk might Are just costs with the a margin talk there? this the seeing come increased just And whatever impact inflation, it as you're seeing about, sure. Ilan. any input from it expecting with about costs, this? potential along Right, be? you costs if obviously, impact disruption, along revenue well, increased Can guys are Maybe could

Ilan Daskal

moving initiatives we balance forward. does far, Obviously, what I productivity that some kind mean, Yes. to everything internally. last Thank have were We'll do it that with so you, continue see components of we of baked we it areas of able off guidance. Patrick. kind to see how mean are increase. it long have pockets there some and in into and obviously, price also does of the and But we our

bake So our yes, we guidance. of into it did some

Patrick Donnelly

going What the so It but ddPCR, sounds the then her retirement. the COVID you're about the like in Annette. demand? one terms is? how you on of seeing wastewater is up last picked And maybe that maybe Obviously, pretty profile. impact terms of kind How segment do the you the is growth sounds it call, Okay. talk going ONE of around for in durable expectations think congrats is this But this just on and just QX forward of strong. like biopharma Can there?

Annette Tumolo

Sure. were We our PCR sustainability And pandemic, throughout growth the maintained to strong seeing Digital have is it. level that the portfolio. seeing from strongly entire there playing certainly have a continue before strong we to demand moving great platforms, we're we we have QC Well, that that biopharma Thanks, all double-digit penetrated Patrick. of discovery pipeline QX growth in the the believe into Droplet the segment. the QC and more manufacturing with our And really in of the in out and across forward. a ONE we manufacturing market

product very line. very, the we're So across optimistic entire

Patrick Donnelly

Any about Very or how for capital on change appetite the Maybe deployment just one just component can us Norm? to side, quick you forward, going update helpful. strategic for you're Norm, on of the Sartorius one your larger last thinking deals? Sartorius

Norman Schwartz

Yes.

a asset we Sartorius obviously, So for strategic as very still think us. of

closed we of last continue we're good kind portfolio fact exploring that have and about we going this the that we of forward. to think opportunities a the feel successfully quarter I Dropworks acquisition

busy it's So pretty a time.

Patrick Donnelly

much. very All right, you thank

Operator

with Meehan Jack please of Nephron your from proceed comes question. question next The Jack Research.

Jack Meehan

market initiatives focus centralized a in what seeing question be might you I was that good on was China. how in curious How lot My the Bio-Rad's think positioned is on business on There's first broad side? diagnostics you, there ground? purchasing And might been region. the be? diagnostics just the the afternoon. Thank you of on

Ilan Daskal

Jack, let answer question. I will Dara this

Dara Wright

Yes. Yes.

the for of So in in much really our see other mix impact impact level It I But given related where our there inform strategies. China general, chain just don't we from certainly we will trend point, market to trend we those think China negative monitor, see sort localization continue macro participate. ongoing don't despite both and to of a manufacturing the supply any kind China and and and we this to implications, at trends. is

Jack Meehan

guess, when The quarter in looked pretty September? the utilization? And of terms throughout then up a Great. Obviously, though, think you Maybe good you business the the good during -- I ended what comment and August just spot you see diagnostics. with had but stick impact the recovery on in any do quarter. did Delta in

Dara Wright

from to balance burden health testing dealing versus really health quarters, prior how was kind Similar care mix America, to In sort In of elective delivery bit to systems of Europe, a the an articulated sort surgeries we levels, diagnostic are Ilan. with Yes. and from it's and pre-pandemic region-specific able COVID-related of cases. as certain routine care to almost increased impact an in XXX%. really North opening of see of little comments operating the

But little care of that's the overall, we're only acute care So and in accommodating of care. are area routine this new the in pre-COVID sort normal really COVID-related would operate bit I of a systems to health spikes delivering sort say, how where learning levels. behind

Jack Meehan

to I to final the Science business. turn question, want Life my Great. And then

the compounding ex-COVID, So like high of lot peers math, but you're in that's digits so more XX% been just by the we've really are And my what standing it's about also, of your broadly mid- have that Ilan, there environment? are products double seeing. A growth, sure kind Not funding Media, ddPCR your I out? think I comments, digits. single caught, to feeling if other maybe any how been in is ex-Process all

Ilan Daskal

Sure. address question? the Annette, to do you Or... want

Annette Tumolo

be compare seen we've business even our in really protein XXXX. to we've performance when course we and base good it Well, from year, Sure. of the quantitation seen really recovery Throughout business. our the the for strong Life And I growth is Certainly, the digital a driving there but I'm a of not well driver very PCR lot growth continues as important if group. Science sure to process answered...

Jack Meehan

on Annette retirement. that's helpful. the Yes, Congrats

Annette Tumolo

you. Thank

Operator

from Jefferies. next line of Our Brandon Brandon open. Couillard Instructions] question is comes [Operator your

Brandon Couillard

the of best you sense thanks, wishes well. today of And couple it question Any the equipment some recurring ddPCR consumables? And introductions on companies. afternoon. seen of a and kind want could give mix Hey things. us where out landscape? competitive a the any new chance there as other echo capital in business, couple Annette, a of good between a your retirement I to just future from We've stands follow-up on comments

might having, Just curious at if what be all. impact those

Annette Tumolo

essentially have we systems. closed Well, Sure. Sure.

all So it I XX-XX. really, think was pull-through good really sell. almost I that we on get the looked, we systems last And

Thermo and So consumable the the our pretty sales. field. really a new in win entrants platform continue certainly good value products see feel differentiated I product these performance. We PCR superior and the that we pull-through we of launched digital based frankly, new occasionally aware sales the offering market. the balance strategy new our and proposition into recently that And confident we We're in current But have. throughput between think we system. know to And low on

the of the application in utility new anything, if digital I competition really bigger PCR think, this validates just the market. PCR

we we're where about So pretty are. good feeling

Brandon Couillard

the the tool years? could could suited of with I'd right customer? And a that if on margin kind is over the Dropworks touch type As business. for maybe follow-up research on market, the exactly Can last revenue bit a growth for QX basic share whereas more this low-end curious ONE and you little just profile, I'd platform also diagnostics, why be us, particularly you isn't curious of elaborate if that, of kind more a sense be of to of base couple the you the the

Annette Tumolo

really was market, Sure. developed throughput and for the the high key QX drivers. and -- really performance biopharma were automation high was the ONE where really very

low certainly the digital design workflows saving products, market. have disrupt platform and for we we this were we qPCR the of that's integrated platform we of the well. market is of the I of to end PCR think for something the some well want this qPCR the and we address think markets looking product segments, suited can certainly, Dropworks and cost-sensitive with with with a end higher -- that digital as And broader when

Brandon Couillard

can any with Ilan, base share the or you terms of on business? financials profitable numbers us in or kind Is Maybe Okay. of it revenue Any profile? not? that margin

Ilan Daskal

we Yes, the break level of down details don't usually, each Brandon, groups. of business within that

Annette Tumolo

Yes.

Brandon Couillard

be core follow up XXx? year Okay. May include sure. growth I'll then, just to for back does be royalties that a XX%, clarification, $XX XX% to of Just The the the million Ilan. from of want

Ilan Daskal

No, include not. It that that million of does XXx. does not $XX

Brandon Couillard

Got you.

would think And Okay. the but next be out and relevant of of next And about profitability a as we if sort to the year? as washed how likely sense sort down lastly, at about of not COVID just expecting point where of trend year? of sort think manage that good this a of ability to most of you fourth then P&L the revenues should think the give have 'XX kind in revenues about guidance the granted, come COVID it kind you baseline as quarter context year next your

Ilan Daskal

to in the at about COVID-related about already to And us, fourth it are is a still for quarter, it's prepared it guidance. does of thinking the longevity to question, thinking, the will how kind generally, We'll of going implies to our not aspects to But point, constraints, you we the down. sales continue what guidance continue The for think million on if go $XX and it and $XX cost, comment great quarter, that you will it this million about material -- Obviously, for this COVID-related the to are XXXX. chain going the inputs, regarding our need we for the a Yes, believe mean balance -- Brandon. different yet initial compile if and full different to that overall impact about to it see have sales kind the down. supply there and range think in is do of go we believe XXXX. we what

have core of top good continue be We terms back kind communicated we we to to think about XXXX it, about target in kind the next the path terms you our that December. the level think the XXXX. our In current we model believe really of line, achieve of That's continue -- that in of to base thinking. in we if to

Operator

[Operator Instructions] queue. We no further have the questions in

So hand to I'll the to close. back team

Ilan Daskal

you, for you, everyone, Lydia. forward appreciate we interest We you. your Thank Thank Thank soon. to and today's call. look connecting joining

Operator

joining call. for concludes This you us. Thank today's

You may now disconnect your lines.

Bio-Rad Laboratories (BIO) 29 Oct 212021 Q3 Earnings call transcript