BIO - Earnings call transcript Q2 2022 | Bio-Rad Laboratories, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good afternoon. Thank you for attending today's Bio-Rad Second Quarter 2022 Earnings Results Conference 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 Edward Chung, Head of Investor Relations. ahead. go Please

Edward Chung

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

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

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

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

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

Ilan Daskal

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

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

Andy Last

afternoon, All Many thanks, Ilan. Good right. everybody.

year and profile quarter. So the strong Clinical Life to demand. of continued. higher-than-expected continued China surges be both instrument particular COVID Overall the Diagnostics of Science drove second with the quarter localized to and a demand first in continued for PCR similar

the stringent However, a in have the local the negative sales quarter. did and lockdown on the impact on policies of sides nature extended China both business lockdown during the of

further The we second now With had also the some we for on relaxation the have ongoing chain conditions supply lockdown the improved of negative seeing the of are been lockdown, effect year. the half experiencing. all challenges

constraints operations not chain the challenging backdrop organization for and supply continued QX the work supply despite in level second strong sporadic our of demand. offices the expected instruments was fully quarter. improvement of localized of to in have efficiently and materialize remained during upticks The open. against Our And did quarter COVID, in again

to order of a work-in-progress be inventory have found patient. sticky along and backlog continued that our instruments. orders said, build our our to being result, raw levels our with As are and customers With we materials

improvement we quarter, of and elevated half this material of back putting towards into procuring effort are the experienced also the During optimistic Overall, required costs. a logistics we and remain raw significant around year. constraints supply continuation materials chain in

least our did and year. the the Science Ukraine Clinical modest the products With in we of our ongoing through largely Russia during a sanctions sales while imposition business remainder unaffected. sales on to experience Russia, the And of continue we of this Diagnostics quarter, decline Russian further expect of were invasion dynamic Life to at

chain demand to despite and improvement by our its and Ukraine, the challenges the in organization particular Russian the war has and strong in the comment, continued supply supporting of of encouraged impact consistent our very businesses. our As customers. we're across on And in Diagnostics in Science COVID a the Clinical Life final challenges China needs managing excel and

pass you Ilan. back that, to it with and say So I'll thank

Ilan Daskal

Thank you Andy.

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

were Asia of was mainly million in elevated the as and an currency-neutral in X.X%. decline estimate quarter sales second COVID-related increased about China. the basis year. The result of sales COVID-related in to On a quarter that outbreaks continued ongoing lower particularly revenue a reflect level in a demand result sales We this $XX in

lockdowns compared we to in year. a the currency-neutral ahead, excludes Americas sales this sales reflects the million Asia continue years back in Looking our $XX negatively that the COVID-related X.X% two last expect geographic Core we in to on Core anticipate growth of which and in tapering during diagnostics COVID-related revenue, of basis. core On revenue year-over-year currency-neutral a and extended declined, which a basis, half experienced increased the about China quarter. business year-over-year impacted revenue the Europe. significant

we to a and chain supply elevated strong mentioned constraints earlier, an of Andy continued carry continue demand. customer result As as order backlog

We growth, same COVID-related second million, first products. through double-digit the strong $XXX.X basis. Process we a process quarter constraints was Group million XXXX in which media of western driven PCR currency-neutral Despite blotting, Science on Droplet a Sales $XXX.X having quarter growth to X.X% QX Life reported the by XX.X%. remainder quarterly on core was and of expect X.X% increase decline a which the qPCR compared fluctuate of excludes growth of placements improvement in were and anticipate impact can year-over-year on The although, supply media, last saw the on versus Science Digital Life an chain sales underlying revenue to currency-neutral basis continue instrument year-over-year year. back which is a the year-over-year a the half basis orders the XXXX, of year, relative XXXX. to

that pre-packed CHT from pleased media and continued are columns with believe recently our introduced enhance should segment. momentum in We this the business position the our process

and COVID-related QX Excluding was XXXX due the of on underlying declined On to sales, Science also is XXXX, on Life increased X.X% by compared geographic growth as I mentioned year-over-year the a regions. of a on X% growth a basis media diagnostics Sales revenue currency-neutral COVID-related reported on Science and core X.X% currency-neutral sales. revenue supply Diagnostics in lower versus clinical in $XXX.X And X.X% excluding basis, COVID-related process currency-neutral When million growth three growth, sales, business QX blood-typing, Life experienced to Core were of a Clinical basis. impact currency-neutral all sales basis. chain year-over-year immunology. control of sales basis basis. group placements. year-over-year was The excludes the quality had decline currency-neutral a Clinical instrument on a which X.X% million, Group an revenue across which earlier, constraints currency-neutral quarter increase driven $XXX.X Diagnostics a second on

both hospitals seen surgeries to have recovery elective levels seek global expand resume products, pre-pandemic capacity. We demand increasing and and for to typing blood as

and QX in to QX sales the core acquisitions the $X.X improvement was Specifically, $X.X $XXX.X $XXX.X continued in the margin in of compared new million, or higher QX year-over-year but mainly development for and of dollar was the a product stronger The QX sold of Americas $XX XX.X% QX recorded XX.X% versus we for benefited East or from geographic and from million XXXX. offset on was XXXX. and to expansion by employee-related of XXXX expenses million, new declined income in grew and or to in $X.X million compared XXXX. increased in due sales normalized basis, expenses, million, was year-over-year and wins. million, or expenses amortization offset quarter compared $X.X mix to gross compares of X.X% to in second US expense year-over-year The benefiting group expense. prior R&D in mainly to in meaningful are account was QX compared operating to XXXX. year-over-year, efficiencies, $XX.X SG&A partially related costs. $XXX.X which basis, Asia. XXXX. XX.X% Africa of were was margin the the a of and sales million, currency-neutral XX.X% revenue QX $XXX.X gross QX for as of tender elevated or due partially QX to million X.X% project cost of of stronger in Amortization discretionary diagnostics or dollar, spend. million Research in acquisitions quarter goods sales expenses XX.X% Middle recorded by operational SG&A from logistics The decreased, Total of in expense Europe related XXXX. XX.X% to of On reported was GAAP of XXXX The SG&A the million

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

business XXXX. the interest in of XX.X% loss tax million of net of and in to quarter $XX.XX of compared from interest million $XXX.X this informatics escrow second changes rate for securities diluted same to the During year, securities. QX to in earlier Reported of billion for rate was of affected back share of the related XXXX. an was the The to XXXX compared other release income in tax equity $XX.X resulted year million of The of QX $X expense for million, was gain per last the expense of related quarter the XXXX largely is million effective $X.X to related XX% other was Sartorius $X.X unrealized an and the in XXXX. by tax decrease the as effective of and quarter in second loss the XXXX, notes rate This sale offset QX to period was compared by interest per $XXX.X primarily or income in by year. reported net in well XXXX the the million as of income the QX unrealized $X.X holdings. net in affected senior equity last reported $X.X issued valuation partially share net income $XX.XX included other primarily loss million

to on non-GAAP results. Moving the

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

quarter. for of R&D, in from X.X% result of margin expense. sum the of to of have of excluded of GAAP $XXX,XXX $X.X have of QX This the XXXX expenses million, XX.X% $X.X in fee registration XXXX in have Europe cumulative purchased XXXX. the small non-GAAP versus small versus of and In Non-GAAP XX.X% was excluded of XXXX products XX.X% basis, of In these SG&A, intangibles second QX operating vitro previously on operating expense non-GAAP The a on second the of XXXX. of non-GAAP for non-GAAP operating quarter the to on of X.X% in diagnostic the In amortization XXXX. a million intangibles. quarter on in QX purchased legal-related quarterly cost for a gross the non-GAAP second basis. versus gross benefit. goods a moving second at XX.X% R&D of was a exclusion restructuring-related non-GAAP excluded restructuring $X.X moved we sold, of non-GAAP to a This of a in Looking amortization margin quarter basis, XX.X% XXXX. margin results non-GAAP we Non-GAAP adjustments margin XX.X% we a margin QX SG&A in in in compares an XX.X% million, basis of approved

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

was supply billion Inventory $XXX.X Total and XXXX. on at end QX million were to sheet. to at cash end the $X.XXX reached $XXX.X the billion in balance ongoing QX increase end short-term chain the Moving the of of million of prior $X.XXX The from the result the investments constraints. the of compared at quarter. QX of

reflects For $XXX.X in XXXX. which was in the QX activities lower flow, mainly cash working second quarter of operating generated million from to cash XXXX, The quarterly million, of operating net compares capital. $XX.X changes

potential XXXX the capital XX.X% in purchased for second Last During the was have adjusted a total existing buybacks. million and additional program. we an of quarter, week, of The depreciation for for second XX.X%. other expenditures million our The XXXX were EBITDA million. million of for of EBITDA quarter was $XX.X $XXX shares In now on for Board of XXXX second repurchase quarter the our share cost quarter stock XXX,XXX $XX.X for $XXX authorized top amortization available approximately Net second QX adjusted the of $XXX the was million. ways, sales. we of and

the XXXX. growth COVID-related now contribution first ongoing achieved of about our supply year a revenue we of the in prior of X% high assume second lower to we This versus of currency this X% first guidance between for in year neutral as continue Moving million is be $XX now XXXX. be on the X.X% balance guidance currency range half currency the the to which sale of strong basis to are growth, the chain of represents approximately over sales year second half of at non-GAAP year, projected $XX now X% on to approach of and of of million XXXX. of year the the growth end expected revenue to about to half end X.X% full sales Based We to stronger-than-anticipated anticipate full our for half first COVID-related COVID second We this in constraints. expect and the the half half demand XXXX which the of growth X%. half XX% it of guidance. customer excludes at on revenue Core neutral neutral second the the

prepared margin income we We are XX% be be the to and your our line maintaining to open the and operating projection and That questions. approximately remarks, XX.X%, to adjusted XX.X%. about Operator? gross now at EBITDA full take XX% year between concludes margin will

Operator

proceed. Instructions] Please The the Couillard with question of Jefferies. [Operator from Brandon line first Certainly. is

Unidentified Analyst

just the of the Thanks the talked on half terms in segments Hi, growth you're the in guidance. for This of questions. visibility plus can the step-up year in acceleration guys. level and Matt [ph] of COVID? year is have on here? you out between appreciate XX% what of in Brandon. excluding expecting X% my on now half then back the you've the first of updated break taking that color the Could about about for confidence basis kind you guys in from for full all the core Ilan And two just plus talk back the half, you a

Ilan Daskal

Sure.

with start groups the the for I'll We earlier part. in maintain business So the the of both generally similar first what overall provided we to year. guidance

softness each some in the add… But if know we are China. year. of the maintaining for again the generally groups we the second diagnostics quarter, full the don't for Andy want I saw you guidance to in in specifically business Specifically business

Andy Last

think got that's nothing to now I time. I've add at No this right.

Unidentified Analyst

Okay. And you on maybe Andy then the chain. sticking supply with

level longer you it maybe talked back about you continuing for it level a relative You do some to to saw expect handle here taking talk year. are just the challenges better worse what we you initiatives Can first in in half, about type expect of the and maybe half scenario? the versus guys a back the get to half basis that kind of the in you on the of some ease

Andy Last

the relative obviously. been half We absolutely. do in challenging first ease No to to it expect has half, which the Sure. second

note You during handful in just lot that small we sitting of some a mentioned inventory on waiting instruments; waiting increased did work QX, we of a progress sitting components. on

end completely of on mean, in but become come taking, to half. in expect they move don't procurement and as year And the to put internally certainly we're as of organization second them do going our pacing to expect lines second supply terms flexible forward. we're when side sales on available lot components the to the actions continue improve ease being continue by We So away to in and the staged we the a constraints half. anticipate that we through do manufacturing emphasis we I the of of we

Unidentified Analyst

then And one Great. last for one of housekeeping a you more Ilan.

the rate XX% a in below row. tax quarters two On it's come in here

year. in pencil the Thanks. in for for was right still guide what initial range the the the tax should we to that XX% range, thinking now? rate for think any I XX% or year updated the Is on the

Ilan Daskal

range. It's And in. overall, the a from But right geographical still are we'll of bit We quarterly Obviously did does the mix Yeah. yes, basis, earnings the maintaining which weigh generally later it. year probably some benefit continue get the sales in does export benefit on a speaking the we get. little rates.

Unidentified Analyst

thank Super, you.

Ilan Daskal

Thank you.

Operator

The you. Donnelly question proceed. with Citi. next line Patrick is of Please the from Thank

Patrick Donnelly

normal. was and numbers. of because guess of start to just supply like it year growth what in the guys questions. Ilan, healthy talked willing guys. Can help better build maybe a backlog could it could normalized you're you a back I just holding the little was what Hi you you to to at about taking the guess you kind up to for continuing I the about order be good if what is? seeing bit chain environment Science you my maybe feels the order the supply quantify kind again one on business, supply Thanks putting relative us It Life backlog demand of environment, Maybe the to deliver growth there. seems think the metrics some chain what are talk about chain be if

flesh So little I'm trying that bit. a out to just

Simon May

I'll Simon that its one. Patrick, here, Hi. take

backlog terms to In of not hang numbers on the we're that. going

areas pillars conversation Life degree that and about couple previously supply where consumables robust be business I in as of challenges continues the And chain strong the demand. already that's to we we in earlier healthy to really growth commentary in core continue we've think demand say think see as moderated demand got business. out provided I seen Science some in areas couple of recovery I'd seeing the assays, a we've a to some across by spoken really here. in been And we've the called that here. of board markets. that we've And we're

we second about the the the healthy we're But on, thinking remains I year, enter backlog. underlying echo think of half as demand in I'd comments got Andy's chain. a how we've And supply improvement strong.

Patrick Donnelly

of of and finished supply to guys it's of a those with And side, Okay. with chatted case? things work-in-progress quarter just or here lot visibility where right and things on you on last that chain two building inventory saw I inputs just what waiting or bit what waiting mentioned we maybe almost two chip ease? kind had time it on little now on looks you or of to one kind then, kind last a the like that up And on know just one still there. Andy again, that some relative you Is of the things? now Is inventory you waiting

Andy Last

a think our so about lift QX QX profile inventory on component, is I million one we QX. in over Yeah. sometimes in I just $XX the versus levels waiting A increased too the QX had same. lot and of quarter-over-quarter that work progress mean,

relief you to we ship. the see right component So get procuring we're really staged can that as by

as might different the are during profiles you shipping our quite expect. So well as quarters

I half the continue, improvement but the will first half. with that just in second think versus

Ilan Daskal

Patrick to and I'll that also. maybe, add Yeah

Patrick Donnelly

Okay.

Ilan Daskal

to order be elevated Obviously, actually more able level inventory the few Andy procure once will mentioned level to the earlier, healthy continues And a fulfilled are and is we components. grow. that

don't by that generally, any backlog out we that actually risk And inventory. So see there. are order are encouraged. really we encouraged to We see we the

Andy Last

our in a our add order sure on it's do lot backlog the really It's a kind of about Yeah. We right feel the I'm very against And sticky. and good relationships. players of now. number customer orders. of to common just attrition see We not industry across

So we've sense got on what's going pretty about there. good

Patrick Donnelly

ready the things one are that's No these nice things side. just go Okay. And to be the inventory cost maybe two there will on on good there. the are see on last kind inflection know [indiscernible] you as side one well or waiting Ilan a and able orders guys just to of to where

take obviously guys significant in of our You they hold where cost put to restructuring back kind you like half the the you activities. those that we when margin should feels up work lever side? see the It Can of start us we update like year. way transition, just through some pretty should some to benefits feels as nice pull. for on It are to you a show of on guys start

Ilan Daskal

Sure. Patrick question. the Yes, thanks for

start in I'll of restructuring some this improvement the if in we're And is look activities as of well starting already margin, the already in productivity that in you terms the we track the are as to Asia. restructuring first So, part the of associated and that itself efficiency all with activities associated are improved activity year-over-year with Asia. Europe ramp gross and with addition seeing. results And on in quarter's in both even

contribute there some some hand gross the other efficiency were obviously definitely benefiting foreign of did -- benefit ratio. the But And there the and exchange elevated on year-over-year piece productivity elevated from Another margin. on that was cost. to logistics

delays So is year in no again everything and full line there. our baked guidance is into and

Patrick Donnelly

guys. you Thank Great.

Ilan Daskal

Thank you.

Operator

you. Thank

question the last Meehan with Please of Jack Our Research. from is proceed. line Nephron

Jack Meehan

if I just I in Good was supply first wanted I fourth chain the were I you of to have been here afternoon. sales about up what million the talked it back quarter that think on theme. the Thanks. or $XX possible quantify is to question is didn't impacted. And guess that of you sales quarter? would shortages my continue second if impact -- any these on year-to-date? in have the curious caught you've what

Andy Last

had this actually there We point backlog the you in afraid right, QX. at at But we put we are But I'm yes, not didn't going then a backlog end as to has of far Jack. since our the supply we're recapture backlog of constraints. numbers quarter. the reflecting all anticipate increased would out the that Yes as following

You order another consider chain supply as strong at and selling it. way we're right healthy pipeline constraints a it could on now. to backlog is But look based

Jack Meehan

that And is about, shortages chips predominantly anything talk broadened else? the has it still you component it semiconductor or to

Andy Last

it or mostly electronic chips And be some biggest-- here as simple one -- you bearing and unanticipated components the [indiscernible] component. it's electronic No as as some a and components. can get chip there But it mostly is are

Jack Meehan

families are impacted it's And the products that predominantly other what hurt? ddPCR, product would that or

Andy Last

across instruments. And have fairly all Yes a they're as of or know. instrumentation you broad science. It's our whether portfolio lines clinical instrument life we

see in. fluctuates So large those just -- based our of ability we supply across And that on number it areas. different product to components those getting a

Jack Meehan

for Thanks humoring couple have a those I of Okay. questions. did other ones.

it Just one quarter. that this that's declined that China is region possible the -- so

for lockdowns? decline the in would diagnostics business. about segment have if the of what Like not the rate talk the done the Just

Andy Last

around I have on she's make the Dara think she we and got a I comments, can know probably few that. line

Dara Wright

one-two I quarter by to The that impact. hadn't for lockdown lockdown, lockdown what of punch. of would of China the but going was Yes, a been and of compounded it we're and think growth we challenges the don't had of the articulate the a logistics if kind sort have Sure. sort a most bit was was material

need from just anything instrument year. impact don't than mean broadly the was China, strong. QX. a want supply the the of up catch that other know I it frankly. similar back I half constraints, So, to to if to It's add we're in challenges, demand in going about you specifically real fulfillment there's Andy, to is

Andy Last

without specific details into think the well numbers. on I No, profiles that getting it

Jack Meehan

Okay. can Last like pricing Do trying to inflationary manage you feel more you in or have any you environment? just how the trending? there been -- color the that's year active in in Is for question, this quarter me. that give on,

Andy Last

materials. averaging those X% Yes, we realization across the now. first price see out experiencing mostly the inflation, We Science We some second try increases started raw bit business before year. of us. can. and price the further And we the we're looking inflationary to largely to very and is are half. price did that like good inflation coming increases take the at increases yes, on overall, half, Life have. costs with are logistics we feel a would if We've And to offset the We're the in more cost in It -- price end but offsetting roll assessing X% we of to question. the

Jack Meehan

guys Super. Thank you,

Andy Last

you. Thank

Operator

Thank you. additional this at There are questions time. running no

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

Edward Chung

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

Operator

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

disconnect may lines. You your now

Bio-Rad Laboratories (BIO) 29 Jul 222022 Q2 Earnings call transcript