BIO - Earnings call transcript Q1 2024 | Bio-Rad Laboratories, Inc.

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Operator

Good afternoon, everyone, and welcome to today's Bio-Rad First Quarter 2024 Earnings Results Conference Call. [Operator Instructions]. Also today's call is being recorded [Operator Instructions]. And now at this time, I'll turn things over to Mr. Edward Chung, Head of Investor Relations. Mr. ahead, go Please Chung.

Yong Chung

are the Chief trends Chief and Executive Schwartz, afternoon, will on thank Chief and Officer; of review provide key results Good us. XXXX Roop for Today, Last, me Vice Norman and Vice business Financial on update we the an President Bio-Rad. Andy and Executive everyone, our today Bob. call With President Operating Officer; you Lakkaraju, and Executive joining financial for Thanks, first quarter Officer.

Before I everyone we about and risks like that that on expectations, and would we plans based and statements uncertainties. are performance our assumptions goals, events our are forward-looking other expectations begin subject review, statements future to matters. future financial to will remind be management's These and making of

actual materially may these and goals differ plans, expectations. results Our from

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

I'll results share, our in are are review will remarks CEO, Norman to per references financials, turn financial contained release. net of these call principles. now reconciliation that, Finally, Schwartz. the the the income generally earnings GAAP diluted our measures to include including that accepted under comparable not and should over defined non-GAAP to accounting today which Investors With measures our non-GAAP earnings

Norman Schwartz

Ed. Thanks,

of on X to Roop to we be which new Lakkaraju, has us want valuable experience already forward. as a officially weeks Roop wealth now will our and operational First, contributing. and He do welcome about been is financial certainly what board and comes introduce move with CFO. I

through I words. results you say in few quarter a want financial the fact, just few minutes. our walk But for first will to Roop In a

thought I X useful say succession turnover it a in to the We few months. questions and management about received words. would have last be

discrete it's departures either normal other a all in think So perspective, as centered decisions, I opportunities short, really these to progression to From is want just thank with each of I or my retirement. part take of around a for these course, personal And their the about company. it, and of recognize related of individuals, for contributions. all these and for to them individuals minute

move making progress we as filling of forward, So some we are these open good positions.

are filled like gives brings announced in and of being who with are Head positions Science. with experience an Roop, bring the new company opportunity deep expertise a perspective. Some And areas. of variety a like being the others to outside with our significant candidates we've filled of company along Jim internal Life which in as fresh recently candidates Barry, understanding external Jim

Roop today I an as with new to think close So fully we're it finance Head the on announcement the Diagnostics. board, team of And is about staffed. on

continue we In fresh as changes addition, for transformational I ideas to candidate the bring these position. initial do view journey. and to our the pool have as COO insights we good opportunities table

with So on provide to call turn Global that, Bio-Rad's to over Andy? I'll the Andy maybe an Operations. update

Andrew Last

everybody. Okay. for Norman, you good Thank us. Thank and joining you, afternoon,

and we Russia. segments as of the macroeconomic Biopharma as and continuation quarter in reflected same and in trends first XXXX a XXXX The Biotech of market experienced the well had China

all overall of contrast, balance regions solid 'XX. a were with was and sales expectations In a provided quarter a growth our from Bio-Rad also with which our QX tough and reflected Science soft decline a year-over-year Life in Clinical As we a for offsetting comparison line presented result, showed pleased Group Diagnostics with which sales. group, across

double-digit business Our product and Core families. across our experienced Bioprocessing both declines, Science Life

significantly against compare down Process Chromatography our in communicated, XXXX. QX previously As a which lumpiness tough were sales, quarter-to-quarter have

the still is us inventory. large through the reflects of result destocking excess across a customers This few for trend working and industry the general

we expecting this seen While of further have purchase Process forecast are a we indications sales year. Chromatography for decline some to improvements, overall, customers starting

from converted have quarter not the resins to we any first some competing However, early our during customers lost have platform customers. and

Resins in whereas such, growth line essentially in flat, positive and remain the Science both we was reagent on consumable in regions, were sales excluding As and for this Overall, Process mid-teens with Life Notably, long-term business, declines our all instrument the business. potential sales, which Core concentrated in were sequentially year-over-year. Chromatography expectations. declined

particularly Solution to in looking the more product on new the contemplated of year, Continuum for which are QX. in later new this outlook new platform are Single-cell year, our QX Go our all the course, And We year. ChemiDoc forward and launches of also Prep Sample the

Science Droplet franchise Digital Our overall PCR compare, XXXX sales. the -- but again, single our soft QX digit in QX tough Life with Digital compared was to our was a Core decline

strategy, During progress we announced support our into of the to penetration uses. diagnostic make in and the deals continued we on clinical driving platform quarter, of two advanced

is types Digital with technology for tumor-informed PCR Allegheny Bio-Rad's across generating a residual minimal using cancer tumor following treatment. Health patients Network clinical monitoring solid range Droplet focused evidence The with disease on first of of cancer

a next-generation highly agreement Assays their could Digital sensitive centralized collaboration second Monitoring Bio-Rad's providers. a commercialize Advanced on attractive that for currently System is sequencing Droplet deploying to provide PCR test Transplant with solution rely laboratories more that provide a alternative The QXXXX to Oncocyte

cancer. new a also released in key providing Detection of readout a Mutation During mutations ESR-X, QX, we in a Assay, status which is comprehensive Multiplex gene breast

seen initial response very are for this We the we assay. have by excited

new a PCR RNA-based test, runs on a to announcing FDA that ColoSense, partner, Geneoscopy, We're platform. our also colorectal see noninvasive of Digital screening cancer approval key pleased

in matched were pleased an sales quality QX and our Strong benefit of as in were as is QX supply conditions, and note, clinical market biotech Moving stabilized Asia into manufacturing strength Reflecting on Diagnostics a to platform our is pleased compared We to flowing immunohematology in facility instrument a performance now the half growth. for broad-based mid-single-digit controls, softer prerequisite diabetes XXXX were saw which with very quarter's markets, and Clinical positive business. to our products second and biopharma we solid with growth for the in our they EMEA particular which raises new Singapore, Pacific. the the trend see expectations. we We our macroeconomic is capital first for fully broadly operational. on from of

China Although stimulus recovery was orders announcement funding the we the Life this not a Chinese to its yet way half Science impact. into business, of any soft for for the governments second and signs longer-term have the of encouraging year the making of remains although the market. expect be seen

In continue the a And to mind, also NIH was on are half. more magnitude the maintain and remain finalization timing We the some bag anticipating key supply the than U.K. Diagnostic funding delayed we backdrop we cautious lower imposed in recovery France. in improvements but this Germany European on Russia navigate still was budget level the with until Clinical the down slightly of March, anticipated. of markets, the second mixed critical Science U.S., in Life government and With flat generally markets, the late and and in in of where a sanctions of at products.

Diagnostics normalized to growth continue XXXX. in Clinical through our expect We business

pass Roop and With you to to results. that, the now financial I'll say thank review you, I'll

Roop Lakkaraju

currency-neutral sales the review QX the to like Net now I'd year-over-year on million, basis, Andy. for $XXX first quarter. a quarter was a a of the results you, the $XXX XXXX. which X.X% On for X.X%. reported of basis in first decline is was versus Thank revenue decline XXXX million

the of weakness offset Science primarily quarter $XXX of in were QX As Andy mentioned, is the of to $XXX in growth by XXXX and ongoing a Clinical on year-over-year and decrease markets, on the Group. decline XX.X% most result basis. a Group currency-neutral first Science The Diagnostics of reported million XX.X% of decline XXXX a which year-over-year million end impacted of Sales Life decline key geographic areas. compared the was the steady product a basis of Life in somewhat

on a quarter-to-quarter, currency-neutral basis. revenue Excluding Process which Science Group Life fluctuate Chromatography decreased can sales, XX.X%

the a Clinical Group basis compared X.X% $XXX an on were Diagnostics is Clinical basis. $XXX currency-neutral quarter a the of in million first reported XXXX, Sales which and increase on in X.X% QX of to million of posted balanced group diabetes. demand for geographic primarily quality was and all a Diagnostics the group across increased for controls, On blood the regions. typing Diagnostics driven revenue growth of by basis, Growth three currency-neutral year-over-year

our For was partially first in of manufacturing in offset the margin XX.X% lower we focus XXXX line company, as and costs reported maintained was by expectations gross as QX a XX.X% higher GAAP which with quarter material absorption. costs, to on compared of the tight

million in discussed employee-related $XXX in decrease $XXX XX% in million goods spend Amortization or was SG&A QX related compared XX.X% as XX.X% of and the in The prior versus was expense to expenses sales The for recorded cost or was the previously quarter restructuring positive of $X is related expenses lower primarily QX initiatives to the discretionary XXXX in year-over-year lower to Total sales employee-related and of million the cost in in of SG&A reduction expenses period. $XX XXXX. million of decrease charges QX approximately by higher including was in acquisitions were Development impact year recorded well sold acquisitions spend Research both ago of as periods. amortization quarter restructuring compared driven of XX.X% or costs. for sales to in XXXX. approximately decreased XXXX. our or approximately QX to million million expense million $XX SG&A $X $X of due and first

by sales sales or management of primarily million was QX of or lower sales ago the year versus offset QX were in due compared which expense operating million of partially $XX period, income to X.X% initiatives. XXXX, $XX X.X% our to

Sartorius added results. security million to change income operating value to Bio-Rad's are shares Looking the of of equity in line, substantially ownership the which reported the AG holdings, market of fair related below $XXX

The $XX interest in $XX accounting our of primary lower year-over-year quarter in primarily XXXX of for million XXXX. XXXX quarter During resulted for in these XX.X% the compared periods of income reported the other and net in was The the income tax year. rate last was XXXX. securities. of declined first The other versus the million equity XX.X% change tax effective of income to compared by net QX of effective which rate dividend, million of treatment same is affected the driver other the period the Sartorius to $XX quarter, to

$XXX in to net Holdings. or the from net $X.XX QX XXXX. valuation to First was of million income per earnings last earnings This change or share is per largely related diluted million year Sartorius of quarter changes our $XX.XX income share in $XX diluted of compared of reported a

results. the non-GAAP to on Moving

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

the at results quarter. the non-GAAP for Looking first

goods $X flat to sold, approximately we These of to of approximately the of In which 'XX. was quarter Non-GAAP exclusions QX amortization margin slightly gross of intangibles lower cost to year-over-year XXXX. of million of as percentage purchased is restructuring higher excluded of basis, in XXXX, first for QX due moved a to but $X spend sales XX.X% dollar expenses. have million of non-GAAP on a SG&A revenue was lower

operating previously registration diagnostic expenses. approved quarter XX.X% approximately quarterly first in QX SG&A, of non-GAAP XXXX. from result XXXX. non-GAAP basis of a The operating basis, excluded margin versus quarter approximately GAAP operating in of and have of in a $X XX.X% margin vitro as In intangibles million of of $X these the non-GAAP in on This restructuring fee sum million in non-GAAP compares products a X.X% on sales excluded to have non-GAAP small for a of of as percentage and a $X R&D versus a we cumulative percent XX% million amortization margin in X.X% the in moving on In basis, acquisition in was QX restructuring-related we of XX.X% a XXXX. approximately XX.X% of approximately expenses first 'XX, of non-GAAP the R&D, to expense. for QX the on million, adjustments XXXX Non-GAAP basis. of was Europe Specifically SG&A $X an

A XXXX. XXXX XXXX XX.X% of to allowance tax XX.X% quarter higher the in of compared geographical line, operating in the related below of Securities loan tax by assets. to the receivable earnings first million. to change Equity for was of and mix and period holdings rate in was Sartorius the increase $XXX The items certain excluded in primarily non-GAAP rate effective also the is valuation our same which driven deferred related for value We've

Finally, compared income a XXXX $X.XX of XXXX. $XX for million or was share share diluted earnings QX in first of $X.XX non-GAAP earnings to net $XX the per or million diluted quarter of per

Moving of and cash on was cash XXXX. end end billion the in to XXXX primarily $X.XXX the and Total short-term compared $XXX Inventory million of capital. change the prior of quarter. the XXXX investments QX balance flat due in to investments short-term sheet. compared quarter at $X.XXX at billion from to was working the was million in the fourth essentially to of change $XXX The

quarter XXXX, QX the from of of which was to $XX million For cash first $XX operating net generated million, XXXX. in activities compares

of dividend, and XX.X%. the XX.X% first $XXX the of XXXX EBITDA excluding and of Sartorius first the of million, adjusted quarter XXXX was first depreciation million was dividend quarter was and XX.X% Net sales of $XX amortization for sales was for EBITDA The Adjusted capital expenditures quarter Sartorius were or million $XX for excluding was $XXX XXXX XX.X%. or and the million. the

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

We share under repurchases continue buyback the and current have with program be still our program. authorized available approximately to million $XXX for Board opportunistic

the Moving guidance. non-GAAP on to

are As some encouraging markets. in seeing Andy's commentary, Life Science referenced the signs we in end

the magnitude the year. the on cautious but improvement Group are recovery anticipating remain the we second Science for timing during However, and the still of half of Life

in We Clinical Diagnostics to growth continue normalized for the expect group XXXX.

XX.X% projected XX%. we I'll make Taken X% to a year be and between currency-neutral hand with revenue margin to full operating our to X.X% are growth be back few the and to now call between together, non-GAAP maintaining remarks. concluding Norman and outlook

Norman Schwartz

Thanks, Roop.

continue certainly, we platform example, out, we for close our maintain in a development Droplet I'd a We growth biology. for our high-value company around especially it to Life In the for we an And the intact. in to segment us, Digital to do to positions niches. business, segment on opportunity sustained time acquisition supporting in reiterate leveraging new this enhance Clinical into that's PCR-X and our believe leading and our cell of of in some our Biopharma products we in strategy our focus Digital a Just Molecular new like academic continue PCR, core to in the products Diagnostics long-term platform our growth development, invest leading market market globally other building platforms, that and serve. around In continue all these and focus the in, for Process of Digital PCR Science, particularly leadership solid. position to for growth Diagnostics made going and PCR spite invest and Chromatography is the we also is future we positions on have through the that Biopharma, markets say, ago

Science Overall, move well as drive Life do we we're we between and growth long-term believe through Diagnostics, dynamic positioned period. this to

Yong Chung

take to open we line the questions. All and right. now prepared remarks, concludes your our That will Operator?

Operator

this to Citi. Patrick Donnelly go [Operator first Instructions] of We afternoon

Patrick Donnelly

a came way -- calling what year bit an you we in the Science business what like bit guide, we area through that business. light of the the segment? for. about Can quarter? it for were can here Chrome you and talk work Maybe for looking on Process It you our expectations Can about the on year expectations full talk as with then about talk Life little you growth saw obviously And the Life seems is in the the out start little year maintaining a Science you're softness. of the

Andrew Last

Andy. Patrick, it's

let question. take that me So

compare business a of the kind sure, Core to the expectations. quarter, So the really mean, I for XXXX Science first big in on Life -- met tough think I Process Chromatography

Process think drove out delta softer is of did So for than the anticipated. that we us, we that call I for And Chromatography kind us.

to I rest a As that not we just we're to share. it's question. point We're reiterate anticipated. We're of look we're in originally maintaining the want losing to considering Process this is the seeing year, be because the than customers. at time, softer Chrome forward valid going

script. believe in we still we share out called as we fact, the In winning are

higher think, Sciences -- level and performing are where most sequentially it's a we pretty if Science, the And of of delta uncertainty, all in Life instrument. consumables year-over-year. The of right sit not now. Life just actually reagents and I virtually On the consistently, is

on -- capital So the it's just kind spend spend of the -- it's us equipment, which right is on now. delta for major

Patrick Donnelly

Okay.

trying came softened thinking So this? guide better out the and I [ Process Are overall, little the guess Chrome that you ] visibility the there are here balance a into year bit the year? now offsets -- think when you're a higher just I'm about you maintaining than expected a to growth that for for in figure bit.

Andrew Last

Yes.

So with caveats the which -- in mentioned, us that good Sciences now. Life to diagnostics I we're within range some that clinical line. think right I the guide of in overall. think kind the core it's our I strength There's keeps just looks us

Patrick Donnelly

How how there? in Okay. on well front the expectations How maybe year and as the are just you on for trend landscape And did that perform the things ddPCR, that be seeing would quarter? competitive then helpful. did

Andrew Last

Yes.

interestingly, segment this we a single it And year. in not franchise of the view that through mid-teens, Science, instruments. to any lost ratio. in So entered not entering some which It's just good. line was which performance. was want yet we later market major is percentage. seeing the we in improvement be their recovery recovering we'll they're course, competition to to on year-over-year our pretty but change we've Competitively, the core us, as not our quarters the the franchise look The PCR we're in win-loss pull-through consumable relative out reiterate was remaining down year. calling all was forward, in which we reagent go And And down with concentrated as digit Life Digital

Operator

We now Dan go to Leonard of UBS. next

Unknown Analyst

This Great. on for is Dan. Lou ] [

little the Can maybe think Sciences customers? about think activities? Life activities I funnel the more color something as Have increasing new you well. first in question, also I I like share on to touch in mentioned a any order the wanted bit some the you little you And trends? bit a improvement. seen

Andrew Last

Yes.

Andy the It's So for you again. thank question.

not we prerequisite where Biotech, capital a is showed by I So half now And yet. encouraged up we're as It's books influx segment. ] are in really hard x order into fast think within of it's sit Biopharma. really growth. That [ positive second the to yet funnel our no more a and showed and conversations that sentiment But to is have the starting [ ] orders. not right up

Unknown Analyst

Got it. Appreciate it.

I to touch as guidance So the on wanted bit well. guess probably a on I little

So the ] mentioned look margin? revenue you is haven't then in deeper ramp And second half, the it just orders you at anything [ also both seen does the lot a and yet. --

the So maintaining and a help visibility QX well. bit share can the the maybe signals improving sequential should in confidence you just like then see April? you guide? see of also in maybe So how as you your improvement? terms And to little we about could in Do think

Andrew Last

Yes.

we see overall of kind half, really turn growth challenging kind think on biopharma. in that the Process to the we envisage continuing do answered And second my the But need biotech, year. the I of throughout question due relates a to destocking. for which Clinical encouraging as And will think view Chromatography, Diagnostics orders signs see I obviously previous some that good as we it business. generate year that answer do into a more carry from our as we I ramp. to being

script in a we just really of made the that my think comments reconfirmation I So and answer. earlier the

Unknown Analyst

it. Got

share we the margin. better volume. your drivers bit does the lower given year? the Can what expectation what's of little then on question final you a come full It the And expected that? Just for gross than

Roop Lakkaraju

Yes, this start. is Roop. I'll take this to

about. played a did cost it come these and mix. happy expected sort all, the it what we've of which bit And on just actions stronger, a of little but First the in taken were we part part based of also things, was is very

there. helps And so bit gross that a margin of little stronger support a

Andy we think for in the pointed for for about year. quarter-to-quarter in think I margin. year, movement margin relates our with to we and the and slight gross the of confident a on about still see it full overall overall, the how the gross mix rest that as the the we very fits But movement, overall out, good may feel feel as year it year, based view as we full outlook on

Operator

We'll go now with Nephron Research. Meehan to next Jack

Jack Meehan

wondering First new a plan the question COO? color expect if is when Head hires And give should for the updates little terms bit the for just Norman. in management also could on more Diagnostics? of for we was I the new of you

Norman Schwartz

Yes.

pretty hire. getting close we're think diagnostics on the I

side. we've think pretty have announce will the soon. to I we're pool really take longer, but a pretty candidates we'll probably encouraged. And That something little of got good a COO on

Jack Meehan

And for for to first, Bio-Rad welcome I Roop, Great. a you. questions couple and had then of

cadence to is, the that? talk from the The how target? you new XXXX? full confidence up just just could about to feel that sizing could the how first seat, talk went for second as you margins got expecting about, in is, Like you you you're like if get like X.X% throughout And about guidance and year in you phases you're the year for how the starting

Roop Lakkaraju

Sure.

for thank you all, So first the welcome. of

on In first terms review existing an the that all, guidance, already in was process, existence. the of process business cadence company of the has

And part for was into existing of the so processes. this seamlessly me integrate to really

margins margin sort that actions impact things progress. as sort been of cost affect that that actions piece, is have of cost quarterly with -- part a which number basis quarterly how also and of As revenue There's of those with profiling materials around might what also walking dynamics at monitoring market well our things. market of and revenue taken we mix that on sort historically start these might things. as And of and against the of these a those kind teams out drivers trends, the then were understanding through and affect the logistics, And were the these we sales and how we conditions expecting. pricing, next looking processes,

we When So through. we to rate, really of just is around things areas then the the more merit of a got and how walked down P&L. like it OpEx, kind the through plays different that effect of the run

walked then And obviously, that income. we down, through analytically. So the to getting operating

expectations the on sales gave So about I think, ramp overall. of feedback how our how an finish might call guidance the team from or off our reiterating flow think based Then on through need gave the us thought, to your look, about the more perspective confidence then there's quarter-to-quarter and we different any us trend phasing from the specifically. drivers question just year. that think also, that how if specific standpoint, also the on might factory absorption And to that out to it on our and kind through to things

Operator

now next Markets. Capital go We'll McNamara RBC to at Conor

Conor Noel McNamara

related, nonmanagement Norman, of us I give the personal was been on can timing the has for fallout how but of there a color just one these was more other you. it you appreciate from any how some lot employee color and -- management the Has departures? retention departures on that been?

Norman Schwartz

a no, have No, X% mean, the turnover range. to every obviously, -- you have year company the I kind certain and departures in size these there any of else. actually in that's precipitated but of natural anything amount size, not a hasn't. our But XX% of

Conor Noel McNamara

But benefit there's you expected equipment do of of placements additional see those -- some announcements. And kind announced of color some the these revenue sales a the Bio-Rad. for gave you pull-through? And some opportunity that What's talk on consumable great for partnerships? any can the just Okay. is kind are these you just of ramp of those ddPCR as result about then of partnerships of

Andrew Last

Yes. Yes. is Thanks, This Andy. Conor.

for announcements. minimal deploy profile our these area. much focused more is to insight technology different real be on slightly how Allegheny in around of clinical a and the to best effective that more disease there's So each residual

particular, from to some So in then near that It kind then Oncocyte will that with as are creation The no is very is And us. solution they for clinical that Oncocyte that's And forward, system and more sales a on. of and test and that Geneoscopy, a other generate platform through for beneficial effect consumable information. longer-term we'll revenue beyond long-term reagent is the that. they markets, chose systems take immediate have an believe really None that's value to But will this learning, and impact strategy. there it's succeed near-term platform tangible in we material the which of placements create have And in revenue long-term the the term. if develop they consumable moving spoke this would we I stream and a U.S. impact, and opportunity, test solid creates to into strategy. there's and but revenue opportunities. what call is really insight

Conor Noel McNamara

Roop, if know Great. last don't is the but I best And this call, your in team. and retirement, welcome -- to earnings if so of luck

Norman Schwartz

of Andy's be made to last be it call. sure won't that. We've earnings clear, Just

Operator

no we And things any I'd like comments. this Instructions]. appears turn Chung, further afternoon. [Operator back it closing gentlemen, to Mr. have sir, you, questions for to

Yong Chung

joining you today's call. for Thank Yes.

Global we'll Conference. June in Markets New We week, and the next will be for York back York in Healthcare Jefferies at the Healthcare RBC New be in Capital Conference

and we we as soon. So your forward look always, appreciate interest, Thanks. to connecting

Operator

Goodbye. results Ladies we'll gentlemen, you Thank you, wish and quarter thanks us, day. and conclude Mr. Bio-Rad the of your great call. much for all Chung. a first we earnings remainder so joining Again,

Bio-Rad Laboratories (BIO) 7 May 242024 Q1 Earnings call transcript