Bio-Rad Laboratories, Inc. (NYSE: BIO and BIOb), a global leader
of life science research and clinical diagnostic products, today
announced financial results for the first quarter ended March 31,
2020.
First-quarter 2020 net sales were $571.6 million, an increase of
3.2 percent compared to $554.0 million reported for the first
quarter of 2019. On a currency-neutral basis, quarterly sales
increased 4.3 percent compared to the same period in 2019.
First-quarter gross margin was 55.5 percent compared to 56.3
percent during the first quarter in 2019.
Life Science segment net sales for the first quarter were $227.2
million, an increase of 5.3 percent compared to the same period in
2019. On a currency-neutral basis, Life Science segment sales
increased by 6.0 percent compared to the same quarter in 2019.
Currency-neutral sales growth was primarily attributed to sales of
Droplet Digital PCR, Gene Expression, Food Science, and Antibody
products. On a geographic view, currency-neutral sales increased in
Europe and Asia.
Clinical Diagnostics segment net sales for the first quarter
were $340.3 million, an increase of 1.9 percent compared to the
same period in 2019. On a currency-neutral basis, net sales were up
3.2 percent compared to the same quarter last year.
Currency-neutral sales in the first quarter were positively
affected by Quality Controls and Blood Typing products. Sales
during the first quarter of 2020 increased in the Americas and
Europe.
Income from operations during the first quarter of 2020 was
$74.4 million versus $56.6 million during the same quarter last
year.
Net income for the first quarter of 2020 was $685.9 million, or
$22.72 per share on a diluted basis versus the first quarter in
2019 in which net income was $865.2 million, or $28.74 per share,
on a diluted basis. Net income for the first quarters of both 2020
and 2019 were significantly and favorably impacted by the
recognition of changes in the fair market value of equity
securities of $827.7 million and $1,059.2 million, respectively,
primarily related to the holdings of our investment in Sartorius
AG. The effective tax rate for the first quarter of 2020 was 23.7
percent, compared to 23.2 percent for the same period in 2019. The
tax rates in both periods were driven by the large unrealized gains
in equity securities.
“Given the challenges associated with the coronavirus pandemic,
we are pleased with overall results of the first quarter,” said
Norman Schwartz, Bio‑Rad President and Chief Executive Officer.
“While the balance of this year is not as predictable as prior
years, Bio-Rad is well-positioned in a number of key areas. Our
responsiveness to the current crisis has allowed us to quickly
introduce products that are finding value in diagnosing and
understanding COVID-19,” he said.
GAAP Results
Q1 2020
Q1 2019
Revenue (millions)
$571.6
$554.0
Gross margin
55.5%
56.3%
Operating margin
13.0%
10.2%
Net income (millions)
$685.9
$865.2
Income per diluted share
$22.72
$28.74
Non-GAAP Results
Q1 2020
Q1 2019
Gross margin
55.9%
55.6%
Operating margin
13.9%
10.5%
Net income (millions)
$57.6
$49.6
Income per diluted share
$1.91
$1.65
A reconciliation between GAAP operating results and non-GAAP
operating results is provided following the financial statements
that are part of this press release. Non-GAAP adjustments include
amortization of purchased intangibles; acquisition-related expenses
and benefits; restructuring, impairment charges and valuation
changes in equity-owned securities; gains and losses on
equity-method investments; significant litigation charges or
benefits and legal costs; and discrete income tax events and the
income tax effect on these non-GAAP adjustments.
Non-GAAP net income and non-GAAP diluted income per share
(non-GAAP EPS) are non-GAAP measures that exclude certain items
detailed later in this press release under the heading “Non-GAAP
Reporting.”
Non-GAAP net income for the first quarter of 2020 was $57.6
million, or $1.91 per share on a diluted basis, compared to $49.6
million, or $1.65 per share on a diluted basis, during the same
period in 2019.
The non-GAAP effective tax rate for the first quarter of 2020
was 25.7 percent, compared to 28.5 percent for the same period in
2019. The tax rate was impacted by a change in the geographic mix
of earnings.
The following table represents a reconciliation of Bio-Rad’s
reported net income and diluted income per share to non-GAAP net
income and non-GAAP diluted income per share for the three months
ended March 31, 2020 and 2019:
Three Months Ended
March 31,
(in thousands, except per share data)
2020
2019
GAAP net income
$
685,912
$
865,195
Amortization of purchased intangibles
5,855
5,327
Legal matters
1,833
4,440
Acquisition related benefits
(47
)
(7,758
)
Restructuring benefits
(2,368
)
( 224
)
Valuation gain on equity-owned
securities
(827,671
)
(1,059,230
)
Loss on equity-method investments
1,313
317
Other non-recurring items
-
(759
)
Income tax effect on non-GAAP
adjustments
192,802
242,332
Non-GAAP net income
$
57,629
$
49,640
GAAP diluted income per share
$
22.72
$
28.74
Non-GAAP diluted income per share
$
1.91
$
1.65
2020 Financial Outlook
Given the uncertainties regarding the duration and impact of the
COVID-19 pandemic, we are withdrawing our previously issued annual
guidance for this year. We believe our second-quarter
year-over-year sales may decline by 10 to 15 percent.
Use of Non-GAAP Reporting and Currency-Neutral
In addition to the financial measures prepared in accordance
with generally accepted accounting principles (GAAP), we use
certain non-GAAP financial measures, including non-GAAP net income
and non-GAAP EPS, which exclude amortization of acquisition-related
intangible assets, certain acquisition-related expenses and
benefits, restructuring charges, asset impairment charges,
valuation changes of equity-owned securities, gains and losses on
equity-method investments, and significant legal-related charges or
benefits and associated legal costs. Non-GAAP net income and
non-GAAP EPS also exclude certain other gains and losses that are
either isolated or cannot be expected to occur again with any
predictability, tax provisions/benefits related to the previous
items, and significant discrete tax events. We exclude the above
items because they are outside of our normal operations and/or, in
certain cases, are difficult to forecast accurately for future
periods.
We utilize a number of different financial measures, both GAAP
and non-GAAP, in analyzing and assessing the overall performance of
our business, in making operating decisions, forecasting and
planning for future periods, and determining payments under
compensation programs. We consider the use of the non-GAAP measures
to be helpful in assessing the performance of the ongoing operation
of our business. We believe that disclosing non-GAAP financial
measures provides useful supplemental data that, while not a
substitute for financial measures prepared in accordance with GAAP,
allows for greater transparency in the review of our financial and
operational performance. We also believe that disclosing non-GAAP
financial measures provides useful information to investors and
others in understanding and evaluating our operating results and
future prospects in the same manner as management and in comparing
financial results across accounting periods and to those of peer
companies. More specifically, management adjusts for the excluded
items for the following reasons:
Amortization of purchased intangible assets: we do not acquire
businesses and assets on a predictable cycle. The amount of
purchase price allocated to purchased intangible assets and the
term of amortization can vary significantly and are unique to each
acquisition or purchase. We believe that excluding amortization of
purchased intangible assets allows the users of our financial
statements to better review and understand the historic and current
results of our operations, and also facilitates comparisons to peer
companies.
Acquisition-related expenses and benefits: we incur expenses or
benefits with respect to certain items associated with our
acquisitions, such as transaction costs, professional fees for
assistance with the transaction; valuation or integration costs;
changes in the fair value of contingent consideration, gain or loss
on settlement of pre-existing relationships with the acquired
entity; or adjustments to purchase price. We exclude such expenses
or benefits as they are related to acquisitions and have no direct
correlation to the operation of our on-going business.
Restructuring, impairment charges and valuation changes in
equity-owned securities and gains and losses on equity-method
investments: we incur restructuring and impairment charges on
individual or groups of employed assets and charges and benefits
arising from valuation changes in equity-owned securities and gains
and losses on equity-method investments, which arise from
unforeseen circumstances and/or often occur outside of the ordinary
course of our on-going business. Although these events are
reflected in our GAAP financials, these unique transactions may
limit the comparability of our on-going operations with prior and
future periods.
Significant litigation charges or benefits and legal costs: we
may incur charges or benefits as well as legal costs in connection
with litigation and other contingencies unrelated to our core
operations. We exclude these charges or benefits, when significant,
as well as legal costs associated with significant legal matters,
because we do not believe they are reflective of on-going business
and operating results.
Income tax expense: we estimate the tax effect of the excluded
items identified above to determine a non-GAAP annual effective tax
rate applied to the pretax amount in order to calculate the
non-GAAP provision for income taxes. We also adjust for items for
which the nature and/or tax jurisdiction requires the application
of a specific tax rate or treatment.
From time to time in the future, there may be other items
excluded if we believe that doing so is consistent with the goal of
providing useful information to investors and management.
Percentage sales growth in currency neutral amounts are
calculated by translating prior period sales in each local currency
using the current period’s monthly average foreign exchange rates
for that currency and comparing that to current period sales.
There are limitations in using non-GAAP financial measures
because the non-GAAP financial measures are not prepared in
accordance with generally accepted accounting principles and may be
different from non-GAAP financial measures used by other companies.
The non-GAAP financial measures are limited in value because they
exclude certain items that may have a material impact on our
reported financial results. The presentation of this additional
information is not meant to be considered in isolation or as a
substitute for the directly comparable financial measures prepared
in accordance with GAAP in the United States. Investors should
review the reconciliation of the non-GAAP financial measures to
their most directly comparable GAAP financial measures as provided
in the tables accompanying this press release.
Conference Call and Webcast
Management will discuss first-quarter ended March 31, 2020
results in a conference call at 2 PM Pacific Time (5 PM Eastern
Time) May 6, 2020. Interested parties may access the call at
855-779-9068 within the U.S. or 631-485-4862 outside the U.S.,
passcode: 3983228. You may also listen to the conference call via a
webcast that is available in the "Investor Relations" section of
our website under “Quarterly Results” at www.bio-rad.com. The
webcast will be available for up to a year.
About Bio-Rad
Bio-Rad Laboratories, Inc. (NYSE: BIO and BIOb) is a global
leader in developing, manufacturing, and marketing a broad range of
innovative products for the life science research and clinical
diagnostic markets. With a focus on quality and customer service
for over 65 years, our products advance the discovery process and
improve healthcare. Our customers are university and research
institutions, hospitals, public health and commercial laboratories,
biotechnology, pharmaceutical, as well as applied laboratories that
include food safety and environmental quality. Founded in 1952,
Bio-Rad is based in Hercules, California, and has a global network
of operations with more than 8,100 employees worldwide. Bio-Rad had
revenues exceeding $2.3 billion in 2019. For more information,
please visit www.bio-rad.com.
This release may be deemed to contain certain forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. These forward-looking statements include,
without limitation, statements we make regarding estimated future
financial performance or results, believing that our second-quarter
year-over-year sales may decline by 10 to 15 percent, that the
balance of this year is not as predictable as prior years, that
Bio-Rad is well-positioned in a number of key areas, and that our
responsiveness to the current crisis has allowed us to quickly
introduce products that are finding value in diagnosing and
understanding COVID-19. Forward-looking statements generally can be
identified by the use of forward-looking terminology such as,
"anticipate," "estimate," "expect," "continue," "believe," "will,"
"project," "assume," "may," "intend," or similar expressions or the
negative of those terms or expressions, although not all
forward-looking statements contain these words. Such statements
involve risks and uncertainties, which could cause actual results
to vary materially from those expressed in or indicated by the
forward-looking statements. These risks and uncertainties include
the duration, severity and impact of the COVID-19 pandemic, our
ability to develop and market new or improved products, our ability
to compete effectively, foreign currency exchange fluctuations,
global economic conditions, reductions in government funding or
capital spending of our customers, international legal and
regulatory risks, supply chain issues, product quality and
liability issues, our ability to integrate acquired companies,
products or technologies into our company successfully, recent and
planned changes to our global organizational structure and
executive management team, changes in the healthcare industry, and
natural disasters and other catastrophic events beyond our control.
For further information regarding the Company's risks and
uncertainties, please refer to the "Risk Factors" and "Management’s
Discussion and Analysis of Financial Condition and Results of
Operations" in the Company’s public reports filed with the
Securities and Exchange Commission (the "SEC"), including the
Company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2019, and its Quarterly Report on Form 10-Q for the
fiscal quarter ended March 31, 2020 to be filed with the SEC. The
Company cautions you not to place undue reliance on forward-looking
statements, which reflect an analysis only and speak only as of the
date hereof. Bio-Rad Laboratories, Inc. disclaims any obligation to
update these forward-looking statements.
Bio-Rad Laboratories, Inc. Condensed Consolidated
Statements of Income (In thousands, except per share
data) (Unaudited)
Three Months
Ended March 31,
2020
2019
Net sales
$
571,644
$
553,979
Cost of goods sold
254,276
242,217
Gross profit
317,368
311,762
Selling, general and administrative expense
193,692
207,581
Research and development expense
49,303
47,575
Income from operations
74,373
56,606
Interest expense
5,690
5,986
Foreign currency exchange losses, net
928
1,280
Change in fair market value of equity securities
(827,671
)
(1,059,230
)
Other (income) expense, net
(3,273
)
(18,696
)
Income before income taxes
898,699
1,127,266
Provision for income taxes
(212,787
)
(262,071
)
Net income
$
685,912
$
865,195
Basic earnings per share: Net income per basic share
$
22.97
$
29.03
Weighted average common shares - basic
29,865
29,801
Diluted earnings per share: Net income per diluted share
$
22.72
$
28.74
Weighted average common shares - diluted
30,196
30,104
Bio-Rad Laboratories, Inc. Condensed Consolidated
Balance Sheets (In thousands)
March
31, December 31,
2020
2019
(Unaudited) Current assets: Cash and cash equivalents
$
603,551
$
660,672
Short-term investments
438,710
459,533
Accounts receivable, net
380,476
392,672
Inventories, net
557,029
554,007
Other current assets
102,821
113,271
Total current assets
2,082,587
2,180,155
Property, plant and equipment, net
486,174
499,339
Operating lease right-of-use assets
200,487
201,868
Goodwill, net
264,131
264,131
Purchased intangibles, net
138,317
145,525
Other investments
5,434,760
4,638,205
Other assets
77,903
79,636
Total assets
$
8,684,359
$
8,008,859
Current liabilities: Accounts payable, accrued payroll and
employee benefits
$
248,423
$
287,098
Current maturities of long-term debt
426,308
426,172
Income and other taxes payable
32,298
36,285
Other current liabilities
162,225
155,940
Total current liabilities
869,254
905,495
Long-term debt, net of current maturities
12,205
13,579
Other long-term liabilities
1,509,821
1,334,728
Total liabilities
2,391,280
2,253,802
Total stockholders' equity
6,293,079
5,755,057
Total liabilities and stockholders' equity
$
8,684,359
$
8,008,859
Bio-Rad Laboratories, Inc. Condensed Consolidated
Statements of Cash Flows (In thousands) (Unaudited)
Three Months Ended March 31,
2020
2019
Cash flows from operating activities: Cash received from
customers
$
569,001
$
550,291
Cash paid to suppliers and employees
(509,683
)
(507,160
)
Interest paid, net
(231
)
(459
)
Income tax payments, net
(4,528
)
(4,567
)
Other operating activities
8,249
4,838
Net cash provided by operating activities
62,808
42,943
Cash flows from investing activities: Payments for
acquisitions
-
(16,083
)
Other investing activities
(12,422
)
(6,630
)
Net cash used in investing activities
(12,422
)
(22,713
)
Cash flows from financing activities: Payments on long-term
borrowings
(1,415
)
(237
)
Other financing activities
(97,202
)
2,398
Net cash (used in) provided by financing activities
(98,617
)
2,161
Effect of foreign exchange rate changes on cash
(5,977
)
1,982
Net (decrease) increase in cash, cash equivalents, and
restricted cash
(54,208
)
24,373
Cash, cash equivalents, and restricted cash at beginning of period
662,651
434,164
Cash, cash equivalents, and restricted cash at end of period
$
608,443
$
458,537
Reconciliation of net income to net cash provided by
operating activities: Net income
$
685,912
$
865,195
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization
33,591
32,904
Reduction in the carrying amount of right-of-use assets
9,561
10,038
Changes in working capital
(35,106
)
(7,615
)
Other
(631,150
)
(857,579
)
Net cash provided by operating activities
$
62,808
$
42,943
Bio-Rad Laboratories, Inc.
Reconciliation of GAAP financial measures to
non-GAAP financial measures
(In thousands, except per share data)
(Unaudited)
In addition to the financial measures prepared in accordance
with generally accepted accounting principles (GAAP), we use
certain non-GAAP financial measures, including non-GAAP net income
and non-GAAP diluted income per share (non-GAAP EPS), which exclude
amortization of acquisition-related intangible assets; certain
acquisition-related expenses and benefits; restructuring charges;
asset impairment charges; valuation changes of equity-owned
securities; gains and losses on equity-method investments; and
significant legal-related charges or benefits and associated legal
costs. Non-GAAP net income and non-GAAP EPS also exclude certain
other gains and losses that are either isolated or cannot be
expected to occur again with any predictability, tax
provisions/benefits related to the previous items, and significant
discrete tax events. We exclude the above items because they are
outside of our normal operations and/or, in certain cases, are
difficult to forecast accurately for future periods.
We utilize a number of different financial measures, both GAAP
and non-GAAP, in analyzing and assessing the overall performance of
our business, in making operating decisions, forecasting and
planning for future periods, and determining payments under
compensation programs. We consider the use of the non-GAAP measures
to be helpful in assessing the performance of the ongoing operation
of our business. We believe that disclosing non-GAAP financial
measures provides useful supplemental data that, while not a
substitute for financial measures prepared in accordance with GAAP,
allows for greater transparency in the review of our financial and
operational performance. We also believe that disclosing non-GAAP
financial measures provides useful information to investors and
others in understanding and evaluating our operating results and
future prospects in the same manner as management and in comparing
financial results across accounting periods and to those of peer
companies.
Three MonthsEnded Three MonthsEnded March
31, % of March 31, % of
2020
revenue
2019
revenue GAAP cost of goods sold
$
254,276
$
242,217
Amortization of purchased intangibles
(3,897
)
(3,663
)
Acquisition related benefits (costs) (1)
-
7,403
Restructuring benefits (costs)
1,456
190
Non-GAAP cost of goods sold
$
251,835
$
246,147
GAAP gross profit
$
317,368
55.5
%
$
311,762
56.3
%
Amortization of purchased intangibles
3,897
3,663
Acquisition related (benefits) costs (1)
-
(7,403
)
Restructuring (benefits) costs
(1,456
)
(190
)
Non-GAAP gross profit
$
319,809
55.9
%
$
307,832
55.6
%
GAAP selling, general and administrative expense
$
193,692
$
207,581
Amortization of purchased intangibles
(1,958
)
(1,664
)
Legal matters
(1,833
)
(4,440
)
Acquisition related benefits (costs) (1)
47
355
Restructuring benefits (costs)
513
2
Non-GAAP selling, general and administrative expense
$
190,461
$
201,834
GAAP research and development expense
$
49,303
$
47,575
Restructuring benefits (costs)
399
32
Non-GAAP research and development expense
$
49,702
$
47,607
GAAP income from operations
$
74,373
13.0
%
$
56,606
10.2
%
Amortization of purchased intangibles
5,855
5,327
Legal matters
1,833
4,440
Acquisition related (benefits) costs (1)
(47
)
(7,758
)
Restructuring (benefits) costs
(2,368
)
(224
)
Non-GAAP income from operations
$
79,646
13.9
%
$
58,391
10.5
%
GAAP change in fair market value of equity securities
$
(827,671
)
$
(1,059,230
)
Valuation (loss) gain on equity-owned securities
827,671
1,059,230
Non-GAAP change in fair market value of equity securities
$
-
$
-
GAAP other (income) expense, net
$
(3,273
)
$
(18,696
)
(Loss) gain on equity-method investments
(1,313
)
(317
)
Other non-recurring items (2)
-
759
Non-GAAP other (income) expense, net
$
(4,586
)
$
(18,254
)
GAAP income before income taxes
$
898,699
$
1,127,266
Amortization of purchased intangibles
5,855
5,327
Legal matters
1,833
4,440
Acquisition related (benefits) costs (1)
(47
)
(7,758
)
Restructuring (benefits) costs
(2,368
)
(224
)
Valuation loss (gain) on equity-owned securities
(827,671
)
(1,059,230
)
Loss (gain) on equity-method investments
1,313
317
Other non-recurring items (2)
-
(759
)
Non-GAAP income before income taxes
$
77,614
$
69,379
GAAP provision for income taxes
$
(212,787
)
$
(262,071
)
Income tax effect of non-GAAP adjustments (3)
192,802
242,332
Non-GAAP provision for income taxes
$
(19,985
)
$
(19,739
)
GAAP net income
$
685,912
120.0
%
$
865,195
156.2
%
Amortization of purchased intangibles
5,855
5,327
Legal matters
1,833
4,440
Acquisition related (benefits) costs (1)
(47
)
(7,758
)
Restructuring (benefits) costs
(2,368
)
(224
)
Valuation loss (gain) on equity-owned securities
(827,671
)
(1,059,230
)
Loss (gain) on equity-method investments
1,313
317
Other non-recurring items (2)
-
(759
)
Income tax effect of non-GAAP adjustments (3)
192,802
242,332
Non-GAAP net income
$
57,629
10.1
%
$
49,640
9.0
%
GAAP diluted income per share
$
22.72
$
28.74
Amortization of purchased intangibles
0.19
0.18
Legal matters
0.06
0.15
Acquisition related (benefits) costs (1)
-
(0.26
)
Restructuring (benefits) costs
(0.08
)
(0.01
)
Valuation loss (gain) on equity-owned securities
(27.41
)
(35.19
)
Loss (gain) on equity-method investments
0.04
0.01
Other non-recurring items (2)
-
(0.03
)
Income tax effect of non-GAAP adjustments (3)
6.39
8.06
Non-GAAP diluted income per share
$
1.91
$
1.65
GAAP diluted weighted average shares used in per share
calculation
30,196
30,104
Shares included in non-GAAP net income per share, but excluded from
GAAP net loss per share as they would have been anti-dilutive
-
-
Non-GAAP diluted weighted average shares used in per share
calculation
30,196
30,104
(1) Release of contingent consideration and
other acquisition-related (benefits) expenses. (2) Gain on
the sale of a product line (2019). (3) Excluded items
identified in the reconciliation schedule are tax effected by
application of a non-GAAP effective tax rate. The non-GAAP tax
provision is adjusted for items, the nature of which and/or tax
jurisdiction requires the application of a specific tax rate or
treatment.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200506006029/en/
Investor Contact: Bio-Rad Laboratories, Inc. Ilan Daskal
Executive Vice President and Chief Financial Officer 510-724-7000
investor_relations@bio-rad.com
Press Contact: Bio-Rad Laboratories, Inc. Tina Cuccia,
Corporate Communications 510-724-7000 tina_cuccia@bio-rad.com
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