BIO - Earnings call transcript Q1 2022 | Bio-Rad Laboratories, Inc.

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Operator

Good afternoon. Thank you for attending today's Bio-Rad Laboratories Q1 2022 Financial Results Call. My name is Hannah and I will be your moderator for today's call. All lines will be muted during the presentation portion of the call, with an opportunity for questions and answers at the end. [Operator Instructions] I would now like to pass the conference over to our host Ed Chung, Head of Investor Relations with Bio-Rad Laboratories. ahead. go Please,

Ed Chung

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

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

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

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

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

Ilan Daskal

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

Andy ask like operations. to Operating quarter Last, detailed on Officer, discussion, the to begin I provide first I an our Before Bio-Rad's would update Chief Andy?

Andy Last

Many thanks, Ilan.

interesting of our year pre-pandemic this declined. to incidence So the as dynamics close an quarter and business. testing of Overall, represented COVID demand, of has of COVID in macro shift the the levels first rates markets have to recovered our

compared However, especially higher-than-anticipated quarter. are country course during and The in surges, creating uncertainty significant the more sales around instrument our Overall, if demand, near-term in logistics and subsequent years. now localized that demand the to sales. quickly to two could which still drove in city PCR China, will adversely COVID-related QX increased expect surge protracted last lockdowns the major continue down China of impact ramp we

a In invasion of of addition, resulted in Russia. during and the Russian actions sanctions position Ukraine towards QX, significant

however, a remains uptick While have forward. an changing supply we the situation adjust impact overhang pandemic demands positive for a customers opened pleased In and to experience our result. a very rate the macro COVID to ability organization's the not year and pandemic's components, securing supply meetings. on we ongoing the closing, these we as sanctions instruments to employees. to of offices significant. order of safety chain easing for continue electronic logistics in we primarily half materials, to a this continued and seeing see material up did Operationally, And as high and of not the are effects second as other We costs. especially backlog, the well difficulty higher we are experienced until monitor have our going to us. major factors chain, while QX with dynamic do broad our closely continue for internal raw continually a return will carry we impacting this maintain cause workplace business to revenues, now To date, in The very on business-related travel the challenges,

So to back Ilan. at pass say I'll it and this you point, thank

Ilan Daskal

you, Andy. Thank

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

The first revenue which level the lower as $XX was result year. this quarter of in decline an We about million COVID-related sales in elevated COVID-related estimate that demand. in quarter, sales were reflects

regions Core Looking year-over-year a COVID we experienced sales, on in currency-neutral COVID-related a were which nearly all lockdowns revenue globally. to excludes prior the last year-over-year declined two significant ahead, to recovery March. full anticipate We tapering sales currency-neutral three the continue across in related final increased revenue note geographic core On during days that China to at while we X.X% sales year-over-year compared COVID-related the basis, of markets growth growth, basis. a key years. the

for of QX first end a million we carry of result which this XXXX supply As in XXXX, a midyear the group starting Science Life ease year. Sales compared is we of Science backlog chain currency-neutral a basis. X.X% as on X.X% decline to on the group and $XXX.X of quarter towards reported Overall, Andy elevated were Diagnostics mentioned $XXX.X group basis decline a the and the order a million the in earlier, constraints to still anticipate continue to Life for an to ease constraints. chain supply

fluctuate was saw revenue year-over-year growth Excluding last COVID-related can same The versus Life sales, strong core quarter quarterly double-digit PCR. Media the which Digital basis, currency-neutral Media, year-over-year growth growth the by Process XX.X%. on Droplet driven a year. was year-over-year Process Science underlying and

year-over-year growth increased a QX growth year-over-year basis. currency-neutral in sales, about million On Science was $XXX.X associated million was Core the basis offset experienced due When last due QX a excluding revenue currency-neutral Amortization gross the recorded initiative QX to XXXX. reported on X.X% compares XX.X% million The year-over-year growth, approaching expenses Americas with geographic of in first Excluding same on expenses employee QX QX and Process million for to the Europe $X.X versus partially associated of in same in the decreased to immunology a COVID-related currency-neutral Diagnostics on in COVID-related XX.X% On year-over-year also which compared placements $XXX.X QX Life and a the in $XXX.X to instrument sales, compared quarter XXXX testing, spend margin expenses QX sales Asia. were $X.X driven by franchise. million with year and in mainly core compared decline Life reported GAAP currency-neutral the SG&A to the XX.X% year, in $XXX.X year-over-year which XX.X% growth million Clinical is a clinical recorded the $X.X goods $XXX.X Science the and in was by decreased million year-over-year restructuring is were of the income Sales sales Supply a improvement the of higher acquisitions project geographic a levels. in revenue related well of XX.X% quarter QX flat. sold versus Media expenses. underlying of period restructuring sales. prior increased X.X% acquisitions cost of and revenue XXXX. for mix. logistics which a was Total Diagnostics, XXXX. diabetes in gross Americas an now XX.X% last million X.X% million less COVID-related currency-neutral initiative European increase excludes or which currency-neutral $X.X of sales, sales, expenses grew the on $XX.X basis. expense was or amortization year-over-year XXXX. was as or X.X% XXXX basis, was related XXXX year, constraints million routine XX.X% to Research QX Asia of Diagnostics basis, group higher The to declined on X.X% of sales was restructuring development to the decline and group XXXX. as Diagnostics million in higher XXXX. impact quarter the initiative Clinical by due partially or lower basis. SG&A employee-related to a in and Europe related to expenses. to blood-typing expenses pre-COVID The due of first or favorable sales, QX offset offset last or European recovery period compared same while was million basis and group $XXX.X currency-neutral in chain $XX.X for The was QX in costs mainly of in associated partially with and operating expenses was of XXXX, declined in European business of of on in SG&A basis of increased in had X.X% the expense margin R&D product period to on a a The compared and within by

of which the results market the Looking operating negatively below value Sartorius to by related equity impacted fair line, securities change the billion. are shares, $X.XXX holdings, ownership reported AG Bio-Rad's of substantially in

tax period senior The was the included in year. per XX.X% This $XX.XX to by the changes last $X equity last QX of first in $XX.X the loss million During rate the QX rate $XX XX.X%, equity valuation income billion the of to year XXXX in compared related of XXXX. of quarter, in driven also of first of XXXX largely related notes. million to quarter other for $X.XXXX affected primarily was to expense share effective year. QX million compared was compared the income per to The resulted reported of and rate XXXX share primarily $XX.X last Sartorius, million the in same holdings. QX year. loss the of recently million, net Sartorius unrealized issued XXXX from other net is XXXX quarter compared income tax unrealized was QX diluted $XX.X interest to in loss $XXX.X and in Reported XXXX. interest of dividend and was and net from tax the gains the of by effective $XXX.XX, decrease for the million for securities last in included securities of income

to non-GAAP the on results. Moving

as margin a benefit. basis. quarter non-GAAP press small of a QX sold, excluded of SG&A diagnostic first restructuring first sum result vitro restructuring have Non-GAAP an cost excluded for Non-GAAP XX.X% In million, R&D the in are exclusions reconciliation gross of XXXX. unique gross of on in non-GAAP a and purchased expenses million, SG&A atypical purchased The in million have to in detailed of that was impacted the expense in expense. XX.X%. of $X.X on non-GAAP the non-GAAP non-GAAP of items moved X.X% the we a first we $X.X basis as quarterly on In approved expense. of small intangibles items QX of versus basis, margin non-GAAP related These QX the well operating XX% goods of XX.X% results certain of XX% in a quarter $X.X in excluded XXXX Europe of the these registration Looking at operating of the products a of amortization on related the QX income. in a adjustments a intangibles operating XXXX margin in XXXX million fee from to GAAP quarter we the margin X.X% cumulative These restructuring in gross XXXX for XXXX. XX.X% versus of a XXXX. was versus R&D, basis, $X.X previously of moving other amortization in and non-GAAP we In release. small have operating table a and legal basis, and This margins, excluded XX.X% both non-GAAP compares have of to on margin

And million related below period the quarter also rate in driven by $XXX.X associated for $X.XXX associated venture diluted are per was of investments. operating the We mix first of as share billion, year. export loss The $XXX.X last benefit effective items XXXX. about equity was $X well non-GAAP sales. loan earnings The as for rate compared to quarter income same first a $X.XX decrease of $X.XX securities to net was of the finally, with in holdings earnings the preferential rate XXXX the in of XXXX line, of the million to and tax have value XX.X% certain and per or excluded XXXX non-GAAP for the receivable QX and tax share geographical million Sartorius with which lower XX.X% compared

to cash proceeds fourth end from notes Total sheet. the short-term $X.XXX end due to balance primarily the to the QX on billion at cash Moving million short-term compared from $X.X $XXX was quarter were of The investments billion investments senior change at and the XXXX. in of offering. and the recent

purchase we stock shares available million of first a our not potential and for of During buybacks. any $XXX had share total did the quarter, we

$XX excluding first the for The adjusted the capital in first XXXX were to or for the and was decrease $XXX.X EBITDA working For XX.X%. XX.X% and XXXX. million of operating first was was EBITDA in Sartorius generated million, operating XXXX of QX mainly amortization quarter cash of the was excluding $XX.X QX million sales and of or which million. was XX.X%. quarter sales, compares adjusted net $XX Sartorius $XXX from XX.X% change The dividend of in the cash was Net of and dividend capital. expenditures for quarter XXXX depreciation the XXXX, driven million activities first quarter in of the flows million was $XXX by The

maintain currency-neutral X.X%, X.X% COVID to to year when growth growth X% challenges full account guidance the be between and be we between into and group our chain year revenue guidance full we of to sales. the X% to excluding X% anticipate prior the Diagnostics on to current X% versus core supply X% guidance, or X%. Moving Taking our for

to Science now For expect XX%. between Life XXXX of end our be guidance we at the high core prior growth the XX% group, and

now Given and we year accordingly. EBITDA We adjusted and line of quarter, our between the concludes our will declared Operator? Sartorius are your XX.X% we versus prior our That the the full XX.X% remarks prepared guidance to questions. dividend open increasing project guidance adjusted now XX.X%. be first take to and EBITDA XX% higher in

Operator

from Certainly. proceed. the Donnelly Citi. is of [Operator question The Please line Instructions] with first Patrick

Patrick Donnelly

saw again Can on Hey you the guys. of confidence to in to business at touched end we the Ilan what top maybe the love guys talk better. again, expectations above were at And about that? come Thank a you that a certainly maybe nice know would some to of questions. you and the there Life there above in what was around just things initially and you suggesting there's for are taking the guide comes year rate. it supply the some things guide. on have that end all you you secondly, doing watching, chain first the but expecting little the drivers Science business, the and well bit in then color growth raise quarter give I of

Andrew Last

we -- Science this of constraints now to good take to digital the through So, in that look we off one. middle we good PCR Patrick Andy. of chrom had full also I QX, performance constraints year year supply to kind the again QX. from think the When I'll did when strong -- In have process look is through and But the we we visibility full the year chain easing for those by was see Life business. in particularly QX.

Life And the so guidance business. that's shift the of the on in basis slight Science

Patrick Donnelly

of the obviously to that know kind on number. talk maybe tracked the margin hitting front. of the on about maybe guys in I what quarter Again the saw Can just have at end start to different levers year, margin quarter kind pull there. how of into Ilan guys' visibility restructuring the the up you to talk help and you side you the reiterating guide expectations? your of just then about And margin Okay. relative that kind should the but

Ilan Daskal

were start ramp of, mix knew within for kind were difference that closure. customers. freight facility our associated the specifically with out headwind. of the were a that about several see And did -- some for quarter. subsiding are that our the Sure. the others COVID, expense obviously and year-over-year, headwind think which I'll that quarter back Thank as and is a transitioning -- you, our service example are And Logistics some is elevated with quarter, tailwind. in premises another And this to Singapore discretionary we out progressed, the of some With Appreciate quarter it the so starting are saw. of, from still of a European some duplication margin. to was as I'll margin. areas we with of the these there. the customers' part There the maybe of and here Patrick. in costs of kind with kind kind is question. come margin you There definitely which well point that's that is saw a we component that cost it's kind parts was starting moving that advance there. there bit the last of little servicing gross were of call definitely, headwind, But we costs we that product We a gross as expenses the that's when this there

Patrick Donnelly

then And a on ddPCR Analyst detail side, maybe gave product on helpful. the of that's at Okay, Day. you guys the good amount

update how I of for little what in quarter you wanted Simon terms there out? Just if thinking the don't about that the that of, for quarter, is an expectations year year. in talk playing about know performed how in the remainder again, the saw and bit of you're a maybe the kind to

Simon May

pleased with Yes, quarter. I'd say in we the were the performance overall pretty

strong but that ddPCR year. to outlook of say pretty through a on degree, and products we've I'd a experienced the chain supply moderate full demand remains got Some led we've challenges the bullish for pretty overall

Patrick Donnelly

allocation All one just maybe And Ilan last you side. for the capital right. on

shares hovering mentioned at the call in repurchased stock it You with $XXX. no XQ

window does market like been here the you. have opportunistic guys You given in What past. volatility? look Thank the the

Ilan Daskal

Patrick. Yes. are aspects a There Appreciate the few question. Thanks here.

and And approach. with it we that that in won't be with continue terms right of similar be terms First, continue be shy other of in, we continue amounts in to once step opportunistic feel in buyback. balance of for to capital And in to the larger we to balance of we matrixes timing the all to said, other activities buyback. step inorganic potential will us need we the comfortable, the allocation kind driver and the kind to With prioritize of aspects. of the determining the terms will between past, to in obviously the to

Patrick Donnelly

Thank you. Understood.

Ilan Daskal

you. Sure. Thank

Operator

Jefferies. Mr. is the question next with Brandon from you, Couillard Thank Donnelly. of line Please, proceed. The

Brandon Couillard

And to Hey. you Ilan, Are to XQ. year, anticipation the all terms tied in the outlook in is some lower Thanks lockdowns? able of of question. diagnostics that? for think that the impact China quantify you slightly the for mentioned I

Dara Wright

Yes, constraints, electronic and particularly, it's related plaguing largely the to not regulated highly environment. sort we're related to Largely, source supply particularly It's components, are which a broadly. supply and components, replace constraints industry in frankly. easy of to as because

So, frankly, throughout bit provide We're year. of a that's but bit headwind the it. for is customers, The our supporting a good. longer demand it does

Brandon Couillard

just with Maybe sticking that.

China I general. business think quantify of percent just is helpful, be able it that you're the to diagnostics might if the in

you're If quantify able to number. the

Ilan Daskal

portion revenue. I not that's between XX% just kind us. kind historically overall Asia had but of, So, high of did a We two generally speaking, if the kind the is is China to Brandon. of for Overall, it split groups, over of Asia a on material level, quantify

Brandon Couillard

the you you in expect like think earlier-stage Then Simon, success for might be winning in you're second market? feels the strength half And Media are gaining lapping would Process year? share the And through you some comps one Process pretty you continue having tough programs? It of Okay. ahead. to that maybe Do better Media.

Simon May

Yes.

modality growth with spots relatively are momentum a our -- esoteric sweet were we pretty think that lumpy pleased we And think technology in QX continue rate I it areas will from there, play the and play pretty continuing. the therapeutic is and about saw we're our overall, think as but remain that underpenetrated. strength in quarter-to-quarter, little we It for portfolio think, sure. see bit the some still growing hit to I I

Brandon Couillard

And And balance the should $XX bridge elaborate then, down the Ilan. you about we how SG&A, lastly just think OpEx the like Okay. Can through number we year? for on move non-GAAP phasing, of as sequentially. there? was the million

Ilan Daskal

slightly last $XXX restructuring was up was actually, that it GAAP On million. mainly $XXX the down. a to was a It year. million on non-GAAP, So from it it was

so, And received and these that year. insurance payment employee-related some we are last

many more not minor you're GAAP So to pretty alluding these on a were But, basis, on that is a basis. changes. non-GAAP GAAP overall, the

Brandon Couillard

Maybe check All Okay. Thanks. my I’ll amount. right.

Operator

question with Meehan next the The Couillard. of Jack is Mr. Please you, Nephron Thank from line Research. proceed.

Jack Meehan

some core afternoon. your around give what to I in growth for Good second Ilan, start, could wondering expectations Thank you was if quarter. you. color the by are segment

Ilan Daskal

Yes.

So, Jack, thanks for the question.

full reason the remain a constraints, during call probably where overall end of by the Life We and that's higher we the ease in the we And that say guidance. part of of I are chain kind to on midyear guidance the felt comfortable the of and to What the we as up between supply year terms of can Science. for of Life mentioned that's the guiding XX% XX%. basis Science expect for them we'll midpoint to range

For the Diagnostics it reason will of the through guidance there. take a the we lowered that and range year end that's little probably over the bit

Jack Meehan

front has the talked China, going additional on then all? And the within side COVID any And the on you exposed the of year Are instrument to full at mass is changed some demand. your on? target which you testing consumables Okay. about for

Andy Last

Andy. is This

testing China side. in of your clarify to the you're to referring last question consumables on COVID the Just piece

Jack Meehan

Yes. Correct.

Andy Last

– no particularly. not not to answer bit No Yes. so first last the

pretty the Our pandemic. entire the really much instrumentation footprint on has through been

so you the of the part as question first And could well? repeat

Jack Meehan

Yes. Sure.

contribution? Just for related the COVID the target the all full at that to has changed year

Andy Last

our currently at COVID No adjusting not we're year guidance in number right point full time. this

Ilan Daskal

that we of of number. I on mean to year. the the to a currently we most feel have that don't half We comfortable better Jack amount Yes. originally visibility first about the change be more thought

Jack Meehan

Right.

the business? in of expect related of mentioned travel some increase just to possible remaining it you work cost. the costs discretionary of the step-up for of year return quantify the to the sort then sort into to you back Is and And Okay. what coming

Ilan Daskal

pre-pandemic do back the But to That the into during it's first guidance. our going was year. we We assume of all, So in the XX% level. was not part forecast to it's of the our that go already of level above it not that it beginning baked pandemic.

pandemic from and So itself. it's the the above XX% pre-pandemic

Jack Meehan

Got then debt And another. raise. curious like question. – I it. year you This thing volatility. unprecedented of the Obviously, one midst had market you've was pretty the just final seems after did in

your just credit you've curious I I You well. the agreement. thinking was equals might deals. just how backdrop merger appetite larger vocal around in been your redid around know interest influence of as in interest

you if all curious that. in on could Just weigh

Norman Schwartz

Yes. mean well Maybe take in inorganic which actually obviously, Yes. as I'll that. I we is continue to growth pretty organic be the going growth, well. interested as

side On we're But we larger. several as doing the have few far do appetite obviously, we mean looking have said that M&A things are something for obviously, an do between. at. and And those we I

we're doing In So we are number of of continuing a to we'll kind meantime, and – the to just have wait tuck-in pursue a see. opportunities. number yes of

Operator

time. Thank additional you, are this Mr. questions waiting Meehan. at no There

Ed call Chung closing So remarks. I the to over for turn will

Ed Chung

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

Operator

concludes call. today's your participation. That Thank you for

disconnect now lines. may You your

Bio-Rad Laboratories (BIO) 29 Apr 222022 Q1 Earnings call transcript